RBOT 10-K
Vicarious Surgical Inc. (RBOT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the fiscal year ended
OR
For the transition period from to
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*On March 3, 2026, the New York Stock Exchange determined to commence proceedings to delist and immediately suspend trading in the Class A common stock, par value $0.0001 per share, of Vicarious Surgical Inc. The registrant’s Class A common stock is currently quoted on the OTCID market tier operated by The OTC Markets Group, Inc. under the symbol “RBOT.”
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As of February 25, 2026, the registrant had
TABLE OF CONTENTS
i
EXPLANATORY NOTE
In this Annual Report on Form 10-K, the terms “we,” “us,” “our,” the “Company” and “Vicarious Surgical” mean Vicarious Surgical Inc. (formerly D8 Holdings Corp. (“D8”)) and our subsidiaries. We were incorporated in the Cayman Islands on May 6, 2020. The Company’s legal name became Vicarious Surgical Inc. following a business combination between the Company and Vicarious Surgical Inc. (“Legacy Vicarious”) on September 17, 2021 (the “Business Combination”).
On June 12, 2024, we effected a 1-for-30 reverse stock split (“Reverse Split”) of our issued and outstanding shares of Class A and Class B common stock. The Reverse Split did not change the number of authorized shares of Class A and Class B common stock. No fractional shares were issued in connection with the Reverse Split. Each stockholder who would have otherwise been entitled to receive a fraction of a share of our common stock was entitled to receive cash. All references in this Annual Report on Form 10-K to shares, share prices, exercise prices, and other per share information in all periods have been adjusted, on a retroactive basis, to reflect the Reverse Split (see Note 11, “Stockholders’ Equity and Stock-Based Compensation – Reverse Stock Split” in our financial statements contained in this Annual Report on Form 10-K).
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that relate to future events, our future operations or financial performance, or our plans, strategies and prospects. These statements are based on the beliefs and assumptions of our management team. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or performance, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or “intends” or the negative of these terms, or other comparable terminology intended to identify statements about the future, although not all forward-looking statements contain these identifying words. The forward-looking statements are based on projections prepared by, and are the responsibility of, our management team. Forward-looking statements contained in this Annual Report on Form 10-K include, but are not limited to, statements about:
| ● | our ability to maintain the quotation of our Class A common stock on the OTCID market tier (“OTCID”) operated by The OTC Markets Group, Inc. (“OTC Markets”); |
| ● | plans and expectations that depend on our ability to continue as a going concern; |
| ● | the success, cost and timing of our product and service development activities; |
| ● | the approval, commercialization and adoption of our initial product candidates and the success of our single-port surgical robot, called the Vicarious Surgical System, and any of our future product candidates and service offerings; |
| ● | the potential attributes and benefits of the Vicarious Surgical System and any of our other product and service offerings once commercialized; |
| ● | our ability to obtain and maintain regulatory authorization for the Vicarious Surgical System and our product and service offerings on the timeline we expect, and without unexpected restrictions and limitations of any authorized product or service offering; |
| ● | changes in U.S. and foreign laws; |
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| ● | our ability to identify, in-license or acquire additional technology; |
| ● | our ability to maintain our existing license agreements and manufacturing arrangements and scale manufacturing of the Vicarious Surgical System and any future product candidates to commercial quantities; |
| ● | our ability to compete with other companies currently marketing or engaged in the development of products and services for use in ventral hernia repair procedures and additional surgical applications, as well as with the use of open surgeries; |
| ● | the size and growth potential of the markets for the Vicarious Surgical System and any of our future product and service offerings, and the ability of each to serve those markets once commercialized, either alone or in partnership with others; |
| ● | our estimates regarding expenses, future revenue, capital requirements, cash runway and needs for additional financing; |
| ● | our ability to raise financing in the future; |
| ● | our financial performance; |
| ● | the ongoing effect of the reverse stock split of our Class A common stock on the price or trading of our Class A common stock, including potential continued adverse impacts on the liquidity of our Class A common stock; |
| ● | our intellectual property rights and our ability to protect or enforce these rights, and the impact on our business, results and financial condition if we are unsuccessful in doing so; |
| ● | our ability to address economic downturns and political and market conditions beyond our control and their potential to adversely affect our business, financial condition and results of operations, including, but not limited to, increasing our expenses and cost of capital and adversely impacting our supply chain; and |
| ● | other factors detailed under the section titled “Risk Factors.” |
These forward-looking statements are based on information available as of the date of this report, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Important factors could cause actual results, performance or achievements to differ materially from those indicated or implied by forward-looking statements such as those described under the caption “Risk Factors” in Item 1A of Part I of this Annual Report on Form 10-K, elsewhere herein and in other filings that we make from time to time with the Securities and Exchange Commission. The risks described under the heading “Risk Factors” are not exhaustive. New risk factors emerge from time to time, and it is not possible to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the date hereof. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
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SUMMARY OF RISK FACTORS
We are providing the following summary of the risk factors contained in this Annual Report on Form 10-K to enhance the readability and accessibility of our risk factor disclosures. The risk factors described below are a summary of the principal risk factors associated with an investment in us. These are not the only risks we face. You should carefully review the full risk factors contained in this Annual Report on Form 10-K in their entirety for additional information regarding the material factors that make an investment in our securities speculative or risky. These risks and uncertainties include, but are not limited to, the following:
| ● | If we are unable to raise additional funds in the near term, we will be unable to continue to operate our business and remain a going concern. |
| ● | Our suspension from the New York Stock Exchange in connection with its decision to commence delisting proceedings and transition to OTCID market tier may adversely affect the liquidity and market price of our Class A common stock. |
| ● | We have a limited operating history on which to assess the prospects for our business, we have not generated any revenue from sales of our product candidates, and we have incurred losses since inception. We anticipate that we will continue to incur significant losses for at least the next several years as we develop and commercialize our product candidates and applications. |
| ● | We will need to raise additional funding to develop and commercialize the Vicarious Surgical System and to expand our research and development efforts. This additional financing may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product commercialization or development efforts or cease our operations. |
| ● | We are a development stage company with a limited history of operations and no product candidates with marketing authorization in any jurisdiction, and we cannot assure you that we will ever have a commercialized product. |
| ● | Our success depends upon market acceptance of our product candidates, our ability to develop and commercialize our product candidates and additional applications and generate revenues, and our ability to identify new markets for our technology. |
| ● | We are highly dependent upon the continued contributions of our key personnel. The loss of their services could harm our business, and if we are unable to attract, recruit, train, retain, motivate and integrate key personnel, we may not achieve our goals. |
| ● | We have no experience in marketing and selling our product candidates and if we are unable to successfully commercialize our product candidates, our business and operating results will be adversely affected. |
| ● | We expect to generate an increasing portion of our revenue internationally in the future and may become subject to various additional risks relating to our international activities, which could adversely affect our business, operating results and financial condition. |
| ● | We rely on limited or sole suppliers for some of the materials and components used in our product candidates, and we may not be able to find replacements or immediately transition to alternative suppliers, which could have a material adverse effect on our business, financial condition, results of operations, and reputation. |
| ● | If we do not successfully develop, optimize, and operate our sales and distribution channels or we do not effectively expand and update infrastructure, our operating results and customer experience may be negatively impacted. |
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| ● | If we are unable to establish and maintain adequate sales and marketing capabilities or enter into and maintain arrangements with third parties to sell and market our product candidates, our business may be harmed. |
| ● | We have identified a material weakness in our internal control over financial reporting. If we are unable to successfully remediate this material weakness in our internal control over financial reporting, we may not be able to report our financial condition or results of operations accurately or in a timely manner, which may adversely affect investor confidence in us and, as a result, materially and adversely affect our business and the value of our Class A common stock. |
| ● | We are subject to extensive government regulation, which could restrict the development, marketing, sale and distribution of our product candidates and technologies and could cause us to incur significant costs. |
| ● | There is no guarantee that the U.S. Food and Drug Administration (the “FDA”) will grant marketing authorization for our product candidates or any of our future product candidates and technologies, and failure to obtain necessary marketing authorization for our current product candidates and our future product candidates and technologies would adversely affect our ability to grow our business. |
| ● | If we are unable to protect our intellectual property, our ability to maintain any technological or competitive advantage over our competitors and potential competitors would be adversely impacted, and our business may be harmed. |
| ● | We may need or may choose to obtain licenses from third parties to advance our research or allow commercialization of our current or future product candidates and technologies, and we cannot provide any assurances that we would be able to obtain such licenses. |
| ● | We and our partners may be sued for infringing the intellectual property rights of third parties. If that happens, such litigation would be costly and time consuming, and an unfavorable outcome in any such litigation could have a material adverse effect on our business. |
| ● | We face the risk of product liability claims and may be subject to damages, fines, penalties and injunctions, among other things. |
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PART I
ITEM 1. BUSINESS.
The following discussion reflects the business of Vicarious Surgical, as currently embodied by Vicarious Surgical. Unless the context otherwise requires, all references in this section to the “Company”, “we”, “us” and “our” generally refer to Vicarious Surgical in the present tense or Vicarious Surgical from and after the Business Combination.
Overview
We are combining advanced miniaturized robotics, computer science, sensing and 3D visualization to build a new category of intelligent and affordable single-port surgical robots that virtually transport surgeons inside the patient to perform minimally invasive surgery. With our next-generation robotics technology, which is being designed with proprietary human-like motion, we are seeking to improve surgical precision, ergonomics, and procedural efficiency, with the goal of improving patient outcomes and the cost and efficacy of surgical procedures over time. Led by a visionary team of engineers from MIT, we intend to deliver the next generation in robotic surgery, designed to solve the shortcomings of both open surgery, as well as current manual and robot-assisted minimally invasive surgery.
Our single-port surgical robot, called the Vicarious Surgical System, is designed to address certain deficiencies that have limited broad adoption of robot-assisted minimally invasive surgery to date. By fundamentally engineering a better solution, we believe we have designed a surgical robot with capabilities intended to address limitations of systems currently available on the market, and if authorized by the FDA, the Vicarious Surgical System will offer surgeons the ability to perform surgical procedures with greater dexterity and greater access across the abdomen, with better visibility and sensor-based feedback, through a small single incision in the abdomen. The Vicarious Surgical System features proprietary “de-coupled” actuators, which are intended to enable a cascade of benefits, including improved robotic mobility, reduced size, improved functionality and lower materials costs. If authorized by the FDA, the Vicarious Surgical System is designed to enable surgeons to perform procedures inside the abdomen with human-equivalent motion, with a full nine degrees of freedom per robotic arm, providing an experience that is more natural, and more akin to the surgeon’s own upper body movements. In surgical procedures conducted on cadavers, the Vicarious Surgical System has demonstrated expanded reach within the abdomen, and if authorized by the FDA, it will enable the surgeon to enter the abdomen from a wide range of angles and directions, without having to triangulate to the surgical area from multiple incisions or to operate only within the limited area directly in front of a single incision. The Vicarious Surgical System is designed to provide exceptional visualization, with a high-performance, stereoscopic camera that rotates in three degrees of freedom (yaw, pitch, and roll) to provide the surgeon with stereoscopic imaging of a broad range of surfaces in the abdomen. The Vicarious Surgical System also contains 28 sensors per instrument arm, which allows the system to provide real-time feedback to the surgeon on force, motion and other data that are intended to enhance surgical procedures and patient outcomes.
The Vicarious Surgical System is being developed to provide attractive advantages to hospitals and ambulatory surgical centers, or ASCs, which we believe will drive rapid and widespread adoption. Unlike many legacy surgical robotic systems with larger physical footprints that may require dedicated operating room configurations, the Vicarious Surgical System is designed to be smaller and mobile, supporting flexibility of use across multiple operating rooms within a medical facility. We anticipate that, if authorized by the FDA, the smaller size and advanced engineering of the Vicarious Surgical System and related disposable instruments is expected to be offered at a cost-effective price point compared to existing legacy robotic systems. Hospitals and ASCs would not be required to dedicate permanent space and would reduce expenses relating to sterilization and operating room turnover. We believe that, if authorized by the FDA, adoption of the Vicarious Surgical System could be facilitated by a streamlined training regimen, where surgeons may be able to develop proficiency much more quickly than for legacy robotic systems. This is due to the design features of the Vicarious Surgical System, such as the ease of use and more natural, human-equivalent motion of the Vicarious Surgical System, the reduced surgeon burden during setup, and the fact that the Vicarious Surgical System would not be confined to a dedicated operating suite and therefore could have more availability for training purposes. In addition, with its increased capability and dexterity, the Vicarious Surgical System is designed to enable many procedures to be performed more efficiently and effectively, with the potential to reduce procedural burden and overall healthcare costs. Because the Vicarious Surgical System has not yet been authorized by the FDA or commercialized, the intended advantages of the Vicarious Surgical System have not yet been realized and are dependent upon the successful development of the Vicarious Surgical System and a timely authorization by the FDA.
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We estimate that there are 45 million soft tissue abdominal and gynecological surgical procedures performed annually worldwide that could potentially be addressed with the Vicarious Surgical System, including use for ventral hernia, other types of hernia, hysterectomy, cholecystectomy (gall bladder) and certain other gastrointestinal procedures. We intend for use in ventral hernia procedures to be the first clinical application for the Vicarious Surgical System, of which there are estimated to be 3.9 million cases worldwide and 0.9 million in the U.S. annually. We then intend to seek FDA clearance or authorization to enable the expansion into the other applications addressable by the Vicarious Surgical System.
Industry Background
Despite the advancements in manual and robot-assisted minimally invasive surgery over the last 40 years, of the estimated 45 million annual worldwide procedures addressable by the Vicarious Surgical System, it is estimated that a significant portion are currently performed by open surgery and a relatively small percentage are performed by existing robot-assisted minimally invasive surgery technologies. The large incisions required for open surgery, while allowing the surgeon to see with their own eyes and operate with their own hands, create significant trauma to the patient, resulting in long hospitalization and recovery times, high hospitalization costs, as well as pain and suffering. Open surgical procedures are associated with a meaningful risk of post-operative complications, including incisional hernias, which in some cases may require additional corrective surgery. Although there have been significant improvements in minimally invasive surgery procedures over open surgery, the following limitations associated with minimally invasive surgery still exist:
| ● | Laparoscopic surgery results in improved patient outcomes, but it presents significant challenges for surgeons, primarily associated with using long, rigid instruments through multiple incisions across the abdominal wall, which introduces the “fulcrum effect” requiring the surgeon to adjust for the inversion and scaling of movements. These laparoscopic instruments can be difficult to manipulate, have limited degrees of freedom, limited reach and reduced depth-perception and visibility, which can require significant coordination among the surgical team to perform the procedure. |
| ● | Multi-port robotic systems introduced in the early 2000s have managed to overcome some of the challenges associated with laparoscopy, but they require multiple incisions. While the wristed robotic instruments provide more dexterity than the long, rigid instruments used in laparoscopy, these robotic systems still require multiple system components and place responsibility on the surgeon to define the workspace and kinematic motion profile of the robotic system for every procedure, based on where they create the incisions and where they intend to operate. Additionally, these systems are expensive and often involve a steep learning-curve for surgeons. In addition, these systems are often underutilized because they have large footprints, limited portability and require extensive setup and longer operating room turnover time. |
| ● | More recently, single-port surgical robots have been developed, but these systems are limited in that they rely on legacy robotic architecture, and thus require a much larger incision than multi-port robotic systems, have limited motion, strength, and visualization, and can only operate in a small procedural area. Given the relatively large size of the trocar incision required to be made by the surgeon to accommodate existing single-port robotic systems, among other limitations, these existing single-port robots have faced adoption challenges due to these architectural and functional limitations, which may constrain surgeon performance in certain procedures. For all these reasons, legacy single-port robotic solutions, much like multi-port manual and robotic minimally invasive surgery, have received limited adoption to date. |
We believe this slow adoption of robot-assisted surgery has occurred because of several factors, including the following:
| ● | Significant Capital Investment. Legacy robotic systems require high upfront acquisition costs and burdensome annual service contracts that are often prohibitively expensive, especially in outpatient settings. Based on discussion with industry sources, we estimate these capital costs to be up to $2.0 million or more per system upfront, plus an additional 10% to 20% annually for maintenance and service contracts. |
| ● | Low Utilization. In addition to the significant acquisition costs, existing robotic systems create inefficiencies and increase costs to medical facilities considering adoption. Due to their large size and limited portability, existing robotic systems often require dedicated operating room configurations, occupying valuable real estate within the hospital. Once in place, these robotic systems require extensive set-up and operating room turnover times, which limits the number of procedures that can be performed with the robotic system. |
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| ● | Limited Capabilities. Existing robotic systems have limited capabilities and are ill-suited for many outpatient procedures. Due to their limited degrees of freedom inside the abdomen, they depend on significant, complicated, robotic motion outside the body, and they have limited ability to operate in multiple quadrants, difficulty operating on the “ceiling” of the abdomen, create collisions inside and outside of the patient’s abdomen, and restrict overall access of the operating team to the patient. |
| ● | Difficult to Use. Existing robotic systems require the surgeon to develop an extensive procedure plan in advance to determine appropriate incision sites and angles for each procedure, in order to avoid collisions inside and outside of the patient’s abdomen. Surgeons must develop this plan with fewer degrees of freedom than they would employ using open surgery, restricting their natural movements. Becoming proficient at manipulating these legacy robotic systems to perform the procedures they otherwise were trained to perform via open surgery requires extensive training and several dozen procedures on live patients. As these systems are maintained in dedicated, expensive, operating rooms, obtaining access to train on the system becomes a significant impediment to adoption, which may contribute to continued reliance on open surgeries. |
The Vicarious Surgical System
The single-port Vicarious Surgical System with advanced, miniaturized robotics and exceptional visualization is designed to address certain limitations of open surgery and existing single- and multi-port robotic surgical approaches, with the goal of improving surgical workflow and supporting adoption by hospitals and other medical facilities. The Vicarious Surgical System is designed with a fundamentally different architecture, and proprietary “de-coupled actuators,” intended to address limitations of open surgery and existing robot-assisted surgical procedures with a minimally invasive robotic system. This architecture is designed to enable a high degree of dexterity inside the abdomen through an ultra-thin support tube, which we believe may offer advantages relative to existing robotic systems and support minimally invasive surgical approaches. The Vicarious Surgical System has not yet been authorized by the FDA. We have conducted pre-submission meetings with the FDA to align on our regulatory strategy and plan to file a De Novo classification request for use in ventral hernia procedures as our first indication.
| (1) | The Vicarious Surgical System is capable of incision sizes as low as 1.8cm. |
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The Vicarious Surgical System consists of the following components:
| ● | Camera and Instrument Arms. The Vicarious Surgical System incorporates a high-performance stereoscopic camera that, when combined with robotic motion, is designed to provide a broad range of viewing angles and is being developed to continuously map the depth of the abdominal cavity. Based on cadaver studies, the camera and instrument arms are designed to support operation across a wide range of direction within the abdomen, including the ability to rotate and operate around the trocar incision point. Each surgical instrument arm is designed with nine degrees of movement, intended to approximate the range of motion of the surgeon’s wrists, elbows and shoulders, and to support a more natural range of motion during surgical procedures. While existing robotic systems are often constrained to operating primarily in front of the rigid instrument, the Vicarious Surgical System is designed to support operation across a broader working envelope within the abdomen, which we believe may enhance surgical flexibility while supporting minimally invasive approaches. The camera and both instrument arms are being developed to enter the abdomen through a single, 1.8 centimeter trocar, which is within the size range of conventional minimally invasive surgery trocars. If authorized by the FDA, the Vicarious Surgical System is designed to provide enhanced sensing capability relative to existing systems due to its increased number of joints and sensors. The system features 28 sensors per instrument arm, to provide real-time feedback to the surgeon on force, motion and other data, and to generate intraoperative data intended to support continued refinement of system performance and surgeon capabilities over time. |
| ● | Surgeon Console. The Vicarious Surgical System surgeon console is designed for an immersive operating environment that allows the surgeon to visualize the surgical field and control robotic motion. If authorized by the FDA, the surgeon console is intended to support precise control and situational awareness during procedures. The console includes a peer-in stereoscopic vision screen that enables surgeons to operate in a three-dimensional environment without the use of 3D glasses, while maintaining awareness and line of sight to the operating room. |
| ● | Patient Cart. The Vicarious Surgical System patient cart is designed to support maneuverability within hospitals, outpatient clinics, and ambulatory surgical centers, including the ability to pass through standard doorways. Unlike many existing robotic systems, the Vicarious Surgical System, if authorized by the FDA, is designed to support use across multiple operating rooms without requiring permanent room dedication. The system is intended to be wheeled into and out of operating rooms and stored when not in use, similar to other mobile medical devices. |
Because the majority of the robotic motion occurs inside the abdomen through a single port, the Vicarious Surgical System is designed without multiple large robotic arms operating outside the patient’s body. We believe that architectural approach, together with the potential use of advanced manufacturing processes, may enable the Vicarious Surgical System to be manufactured at a lower cost than certain existing robotic systems, based on publicly available information.
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Vicarious Surgical System Advantages
We believe that addressing the factors that have limited broad adoption of robot-assisted minimally invasive surgery to date including cost, system size, capability, ease of use, setup time, throughput, and training requirements, requires a solution that considers these challenges. The Vicarious Surgical System incorporates advanced engineering and proprietary “de-coupled actuators,” which are designed to support a differentiated approach to surgical robotic system architecture and may help address certain factors that have historically limited broader adoption of robot-assisted minimally invasive surgery. Based on this design, the Vicarious Surgical System is intended to provide increased degrees of freedom and dexterity to support more natural surgical motion, as well as enhanced visibility, sensing and functionality for the surgeon, all through a small, single port minimally invasive approach. We believe these design features may address certain limitations associated with existing single- and multi-port surgical modalities and support improved surgical workflow and system utilization.
| ● | Decoupled Actuators. Robotic arms are controlled by actuators located at each joint. In many existing robotic systems, these actuators are mechanically “coupled,” such that movement at one joint results in corresponding movement at subsequent or prior joints. In legacy robotic systems, software is used to coordinate joint motion and compensate for this coupling in order to reduce unintended movement. However, this approach does not eliminate the accumulation of forces across multiple joints that can arise from coupled mechanical architectures. As a result, such systems often require larger and more robust cables, pulleys, and structural components, which can increase system size and cost and constrain overall mobility. |
The Vicarious Surgical System is designed with a decoupled actuator architecture intended to reduce mechanical interdependence between joints. We believe this approach may enable greater integration of components and materials, and support improvements in system flexibility, strength, and form factor. These design features are intended to provide benefits for surgeons, hospitals, and ambulatory surgical centers by supporting enhanced system capability and more efficient use within the operating environment. Because the Vicarious Surgical System has not yet been authorized by the FDA or commercialized, the intended benefits of this architecture have not yet been realized and are dependent on successful development and regulatory authorization.
Because the Vicarious Surgical System has not yet been authorized by the FDA or commercialized, the intended advantages of the Vicarious Surgical System have not yet been realized and are dependent upon the successful development of the Vicarious Surgical System and timely authorization by the FDA.
Surgeon Experience
| ● | Human Equivalent Motion — Nine Degrees of Freedom. The Vicarious Surgical System is designed to provide nine degrees of freedom per instrument arm, intended to approximate the range of motion of a surgeon’s wrists, elbows and shoulders. Based on data from cadaver studies, this design is intended to support a broader range of motion than that available with many existing single- or multi-port robotic systems, which often require surgeons to adapt their movements to the constraints of the robotic architecture. We believe this approach may provide a more natural operating experience by allowing surgeons to work in a manner that is more consistent with their training in open surgery, while performing procedures through a minimally invasive approach. |
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| ● | Expanded Reach Inside the Abdomen. With nine degrees of freedom per instrument arm, the Vicarious Surgical System is designed to support operation across a wide range of angles and directions within the abdomen through a single incision. This design is intended to reduce the need for triangulation and the limitations associated with operating only within a narrow working area directly in front of the incision, which is common in manual and robotic minimally invasive surgery. The system architecture is designed to allow the surgeon to reposition and pivot the instruments within the abdominal cavity, including operating in proximity to the incision site, in order to support procedural flexibility. |
| ● | Sensing, Visualization and Future AI. The surgeon utilizes a peer-in stereoscopic display on the console for visualization of the surgical field. The Vicarious Surgical System incorporates a high-performance stereoscopic camera that is designed to support a broad range of viewing operations and is being developed to provide three-dimensional spatial mapping of the surgical environment. The system includes more than two dozen sensors per instrument arm that are designed to provide real-time feedback to the surgeon on force, motion and other data. These data are also intended for to support future software and analytics development, including potential artificial intelligence-enabled capabilities, which may be used to enhance surgical workflow and to explore relationships between intraoperative data and procedural outcomes over time. |
Hospital and Ambulatory Surgical Center (ASC) Advantages
| ● | System Size and Mobility. Unlike many legacy robotic systems that often require dedicated operating room configurations or physical modifications to accommodate their size, the Vicarious Surgical System is designed with a smaller footprint intended to allow it to pass through standard hospital and operating room doorways. This design is intended to support system mobility within a medical facility and may help reduce set-up and break-down time, enabling use across multiple operating rooms rather than permanent room dedication. |
| ● | Training and Accessibility. The Vicarious Surgical System is designed to support more natural surgical motion and, due to its mobility, is not intended to be confined to a dedicated operating suite. We believe this design may increase system availability for surgeon training and practice. As a result, surgeons may be able to develop proficiency more efficiently compared to certain existing robotic systems, which could support surgeon adoption and improve utilization for hospitals and ASCs. |
| ● | Economics and System Cost. If authorized by the FDA, we intend to offer the Vicarious Surgical System, along with maintenance and service support, at more pricing we believe may be more attractive relative to certain existing robotic systems. In addition, the system’s design is intended to support efficient procedural workflow, which may enable procedures to be performed more efficiently and could contribute to reductions in overall operating room time and associated costs. |
| ● | Disposable Instruments and Accessories. The Vicarious Surgical System’s instruments and accessories are designed for single use and are intended to be offered at pricing that supports disposability. We believe this approach may reduce the need for hospitals and ASCs to dedicate space, equipment, and personnel to instrument reprocessing and sterilization, potentially simplifying logistics and reducing associated operational costs. |
Patient Outcomes
| ● | Enhanced Surgical Capability. The Vicarious Surgical System is designed to provide enhanced visualization, dexterity, and access within the abdomen to support precise surgical technique. If authorized by the FDA, these design features are intended to allow surgeons to perform advanced minimally advanced techniques that are already established in clinical practice. We believe that supporting such techniques may contribute to improved procedural execution and patient outcomes when compared to open surgical approaches. |
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| ● | Minimally Invasive Access and Trocar Size Considerations. Clinical experience with minimally invasive surgery has demonstrated that smaller incisions are generally associated with reduced tissue disruption and lower rates of incision-related complications when compared to open surgical procedures. Existing minimally invasive approaches typically utilize smaller trocar sizes than those required for open surgery, which may reduce the risk of wound-related complications. |
Our Strategy
We seek to expand access to robot-assisted minimally invasive surgery through the development of a surgical robotic platform designed to be capable, flexible, and accessible across a range of care settings. Our objective is to establish the Vicarious Surgical System as a differentiated robotic platforms for soft tissue surgery. The execution of our strategy is dependent upon the successful development of the Vicarious Surgical System and receipt of FDA authorization:
| ● | Initial Focus on Ventral Hernia Procedures. We plan to initially focus commercialization efforts on ventral hernia procedures, targeting surgeons, hospitals and ambulatory surgical centers that perform general surgery procedures which may benefit from a single-incision robotic approach. We believe ventral hernia repair represents an attractive initial indication due to procedure volume, clinical need, and the opportunity to apply minimally invasive techniques. As part of this strategy, we intend to engage with experienced surgeons and clinical advisors to gather feedback that may inform product development, clinical protocols, and surgeon training. |
| ● | Expansion of Indications. The Vicarious Surgical System is designed to provide broad access within the abdomen, which we believe may support use across additional surgical procedures over time. Subject to regulatory authorization, we plan to pursue expanded indications that may include inguinal and hiatal hernia repair, hysterectomy, cholecystectomy (gallbladder), colorectal and other gastrointestinal procedures. We estimate that 39 million of these procedures are performed annually worldwide today. |
| ● | Recurring Revenue Model. Following initial system placement, we intend to focus on increasing system utilization by supporting efficient procedural workflow and repeat use. Increased utilization may enable hospitals and ASCs to perform a greater number of procedures using the Vicarious Surgical System, which could drive recurring revenue through the sale of single-use and disposable components, including robotic arms, camera and instrument tips. |
| ● | Demonstration of Clinical and Economic Value. A significant portion of ventral hernia procedures are currently performed as open surgical procedures in hospital settings. We believe there is an ongoing trend toward shifting appropriate procedures from hospitals to ASCs, driven by cost, efficiency, and patient preference. Subject to regulatory authorization, we believe the Vicarious Surgical System may support the performance of more complex minimally invasive hernia procedures in ASC settings. Because ASCs often have limited capital and infrastructure budgets, our value proposition is designed to address considerations related to system cost, footprint, and operating room flexibility. |
| ● | Expansion of Product Capabilities. We believe that advancements in software, data analytics, and automation may further enhance robotic-assisted surgery over time. We plan to evaluate and develop additional features for future generations of the Vicarious Surgical System, which may include enhanced visualization, data-driven insights, and automation-enabled functionality, subject to technical feasibility and regulatory requirements. |
| ● | International Commercialization. If the Vicarious Surgical System receives FDA authorization for commercialization in the U.S., we intend to pursue applicable regulatory clearances or approvals in additional markets, including Asia, Europe and other international regions, in order to support global commercialization of the system. |
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Historical Development of the Vicarious Surgical System
The foundational technology underlying the Vicarious Surgical System was developed by the Vicarious Legacy founders Adam Sachs, Sammy Khalifa, and Barry Greene. The founding team conducted extensive prototyping and experimentation focused on robotic arm architecture and motion control. Through this work, they developed and patented a cable pathway design intended to de-couple motion within the robotic arm, reducing mechanical interdependence between joints. This approach supported the development of an early robotic arm prototype designed to approximate aspects of natural human arm motion.
Following the development of this initial prototype, the founding team expanded the design into a more complete robotic system. Early versions of the device were constructed using internally machined components and were funded by the founders. The system was subsequently integrated with internally developed software and a surgeon input tracking system to support coordinated robotic motion. After achieving a fully functioning prototype, the company raised outside capital and expanded the engineering and development team to continue advancing the system.
We have conducted, and continue to conduct, synthetic cadaver and cadaver studies with the Vicarious Surgical System being developed, as part of our iterative development process. The primary objective of these studies has been to evaluate system design, refine performance characteristics, and inform ongoing product development. In these studies, surgeons have used the system to perform a range of procedures, including ventral hernia repair, hysterectomy, and cholecystectomy. Surgeons have also evaluated multiple ventral hernia repair techniques, including robotic transabdominal preperitoneal (rTAPP), retrorectus, and intraperitoneal onlay mesh repair (IPOM) plus. Insights gathered from these cadaver studies have informed design considerations across multiple aspects of the system, including:
| ● | Instrument length requirements for ventral hernia repair procedures; |
| ● | Camera field of view and depth perception; |
| ● | User interface elements, including foot pedals and digital controls; |
| ● | Responsiveness and quality of robotic end-effector motion relative to surgeon input; |
| ● | Instrument and camera insertion and extraction workflow; and |
| ● | Reliability and durability of the robotic instruments and camera. |
These development activities have been conducted to support the continued refinement of the Vicarious Surgical System and to inform our regulatory strategy. The system has not yet been authorized by the FDA, and further development, testing, and regulatory review and authorization will be required prior to any potential commercialization.
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Regulatory History and Pathway
In November 2019, the FDA granted Breakthrough Device designation to a prior prototype version of the Vicarious Surgical System for a proposed indication for use in ventral hernia repair procedures. We anticipate that after FDA authorization, the Vicarious Surgical System will be classified as a Class II medical device. We have held multiple pre-submission meetings with the FDA to align on our regulatory strategy and currently plan to pursue a De Novo classification request with the FDA for use in ventral hernia procedures as our initial indication.
In December 2021, we conducted a preliminary meeting with the FDA to discuss two technology changes made to the Vicarious Surgical System design that had received Breakthrough Device designation in November 2019. Based on these changes, the FDA determined that the current Vicarious Surgical System design planned for our initial limited launch differs from the prior design that received Breakthrough Device designation. As a result, the FDA stated that the Breakthrough Device designation remains applicable only to the prior device design. In the future, we may seek to reincorporate elements of the prior design to potentially leverage the previously granted Breakthrough Device designation. However, medical device development is inherently uncertain and there can be no assurance that Breakthrough Device designation would be granted to a different device design, and if granted, that such designation would accelerate the timeline for authorization or increase the likelihood of FDA authorization.
In February 2022, we held an additional pre-submission meeting with the FDA focused on the current Vicarious Surgical System design. During this meeting, the FDA emphasized that each robotic-assisted surgical system is highly complex and that differences in system architecture, kinetics, software, data transmission, interfaces, and user interaction create unique safety and effectiveness considerations. The FDA indicated that these system-level differences may raise questions of safety or effectiveness that are not applicable to predicate devices and that robotic-assisted surgical systems are generally not sufficiently similar to permit meaningful comparison for purposes of a traditional 510(k) submission. Based on FDA feedback, the evaluation of the Vicarious Surgical System is expected to require a holistic assessment incorporating software verification and validation, bench testing, animal studies, human factors and usability testing, and clinical data, among other verification and validation data. The FDA indicated that, due to the unique technological characteristics and clinical implementation of the system, an independent evaluation of safety and effectiveness would be required. As a result, the FDA advised that a 510(k) submission would likely be found not substantially equivalent to a predicate robotic-assisted surgical system. In accordance with this FDA feedback, we revised our regulatory pathway to pursue a De Novo classification.
In February 2024, we submitted an application to the FDA seeking acceptance into its Safer Technologies Program (“the STeP Program”). The FDA accepted our robotic system, intended to assist in visualization and control of endoscopic instruments during ventral hernia repair procedures in adults, into the STeP Program. This acceptance means the device meets STeP eligibility criteria, but it does not change requirements for granting Investigational Device Exemption (“IDE”) or marketing authorization, nor does it guarantee future authorization. Through the STeP Program, we can utilize available feedback mechanisms that prioritize interactive and timely communications with the FDA, as resources permit. The goal of the STeP Program is to expedite the development of devices and offers program-specific feedback mechanisms, including early engagement on Data Development Plans (“DDPs”) for aligning on necessary safety evidence, “sprint discussions” with FDA experts to address development challenges, and potential senior management engagement for discussing high-level strategic issues. In addition, general FDA feedback mechanisms like the Q-Submission Program (including Pre-Submissions and Informational Meetings) continue to be available to us.
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Regulatory Roadmap for Market Authorization
Based on the outcome of the pre-submission meeting with the FDA in February 2022, the FDA determined that there is no legally marketed predicate device. Therefore, we will plan to file a De Novo classification request for the proposed initial indication for use in ventral hernia repair procedures as a regulatory pathway to classify the Vicarious Surgical System. Devices that are classified into Class I or Class II through a De Novo classification request may be marketed and used as predicates for future premarket notification (or 510(k)) submissions, when applicable. Accordingly, we believe that the 510(k) pathway will be available as a regulatory pathway for the Vicarious Surgical System with respect to future indications or other significant modifications to the device system.
We plan to conduct a prospective human pivotal clinical investigation under an FDA IDE to evaluate the safety, effectiveness, and performance of the Vicarious Surgical System to support a De Novo classification request and obtain U.S. marketing authorization for the proposed indication for use in ventral hernia repair procedures. In addition to conducting a human pivotal clinical investigation, we plan to conduct non-clinical testing activities to verify and validate the safety, performance, effectiveness, functionality, usability and reliability characteristics of the Vicarious Surgical System with respect to the intended use and defined requirements. A verification and validation process is expected to provide the necessary data to submit to the FDA for IDE approval.
We expect that non-clinical verification and validation testing will be conducted to verify and validate that the Vicarious Surgical System meets all design specifications for its intended use. These tests will include in vitro, simulated clinical bench testing and cadaver studies, as well as in vivo animal studies to support and demonstrate the safety, performance, effectiveness, functionality, usability, and reliability characteristics of the Vicarious Surgical System with respect to the intended use and defined requirements. Cadaver studies, representing realistic dimensions and contours of the human abdominal space, will be used primarily to verify and validate system functionality, performance, and safety relevant to patient anatomy and contexts of use with respect to insertion, access and movement within the abdominal cavity, visualization, manipulating tissue, cutting, and suturing as needed during a simulated ventral hernia repair procedure. Animal studies will be used primarily to demonstrate performance, safety, effectiveness, and usability of the system as relevant to a live model with respect to insertion, access and movement within the abdominal cavity, visualization, manipulating tissue, cutting, coagulating, and suturing, during a simulated ventral hernia repair procedure. This testing may also be used to demonstrate that applicable risk mitigation features, including software alarms, alerts, extraction of multi-jointed instrumentation in case of system failure, misuse, or other errors are adequate and perform to specifications. Summative usability testing will be conducted by surgeons, nurses and technicians in a simulated operating room environment to provide objective evidence that the Vicarious Surgical System can be used safely and effectively by end users for its intended uses, the device functions as expected and intended, and all risk mitigations implemented are safe and effective. In addition, we plan to conduct simulated bench-top testing on transparent anatomical models to evaluate, among other things, how the Vicarious Surgical System performs in “worst case” scenarios to verify and validate safe anatomical access, instrument/camera angulation and movement at the extremes of various surgical procedures with respect to patient anatomy and dimensions that cannot be readily controlled for when using live animal and human cadaver models.
Future Indications
We plan to expand upon our claims and/or indication for use to address additional unmet clinical needs in different anatomical areas as well as therapeutic procedures. Following the initial authorization for use in ventral hernia repair procedures under a De Novo classification, if obtained by the FDA, we plan to submit 510(k) premarket notifications for other indications for use, using the Vicarious Surgical System’s first De Novo authorization as a predicate, along with other predicate devices with similar cleared indications for use. We may also include a predetermined change control plan in our De Novo classification, or future premarket notification submissions, which if authorized by the FDA, would allow us to implement the modifications to the Vicarious Surgical System described in the plan without submitting a new application for marketing authorization. We have identified several potential future indications and procedures that align well with the Vicarious Surgical System’s ability to access and visualize the abdominal cavity. Possible future indications may include but not be limited to inguinal and hiatal hernias, hysterectomy, cholecystectomy (gallbladder), colorectal and other gastrointestinal procedures. We will perform an assessment to determine the appropriate regulatory strategy required to expand claims and obtain applicable regulatory clearances in the United States and in other global markets.
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Intellectual Property
We strive to protect and enhance the proprietary technology, inventions and improvements that are important to our business by seeking, maintaining and defending our intellectual property, all of which has been developed internally and not in-licensed from third parties. We also rely on trade secrets, know-how, continuing technological innovation and in-licensing opportunities to develop, strengthen and maintain our proprietary position in the field of surgical robotics. Additionally, we intend to rely on regulatory protection afforded through data exclusivity and market exclusivity as well as patent term extensions, where available.
We currently do not rely heavily on technologies from third parties. However, in the future, we may need to rely or be dependent on patented or proprietary technologies that we may license from third parties.
We maintain a patent portfolio that includes issued U.S. and foreign patents as well as pending U.S. and foreign patent applications, which include claims directed towards our proprietary technology. We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost-effective. As of February 9, 2026, we owned approximately twenty (20) issued U.S. utility patents, one (1) issues U.S. design patent and approximately thirty-one (31) issued utility patents in foreign jurisdictions, including one (1) in Canada, five (5) in China, eleven (11) in Japan, and thirteen (13) in European jurisdictions, and three (3) Hong Kong patents. We also had approximately 115 pending utility patent applications in the U.S. and foreign jurisdictions, including in Canada, China, Europe, Japan, and Hong Kong. These issued utility patents and pending utility patent applications (if they were to issue as patents) have expected expiration dates ranging between 2039 and 2045. Our patents and patent applications are directed to, among other things, our core technology. This includes the surgical robotic and camera system; sensing capabilities, controls and visualization interfaces; the surgical tools suite; and related technologies.
The term of individual patents may vary based on the countries in which they are obtained. Generally, patents issued for applications filed in the United States are effective for 20 years from the earliest effective non-provisional filing date. In addition, in certain instances, a patent term can be extended to recapture a portion of the term effectively lost as a result of the FDA regulatory review period. The restoration period cannot be longer than five years and the total patent term, including the restoration period, must not exceed 14 years following FDA approval. The duration of patents outside of the United States varies in accordance with provisions of applicable local law, but typically is also 20 years from the earliest effective filing date.
In addition to patents and patent applications, we rely on trade secrets and know-how to develop and maintain our competitive position. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, and obtain and maintain ownership of certain technologies, in part, through confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors, contractors and commercial partners. We also seek to preserve the integrity and confidentiality of our data, trade secrets and know-how, including by implementing measures intended to maintain the physical security of our premises and the physical and electronic security of our information technology systems.
Our future commercial success depends, in part, on our ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions and know-how related to our business; defend and enforce our patents; preserve the confidentiality of our trade secrets; and operate without infringing the valid enforceable patents and proprietary rights of third parties. Our ability to stop third parties from making, using, selling, offering to sell or importing our product candidates will depend on the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities. Moreover, we may be unable to obtain patent protection for the Vicarious Surgical System generally, as well as with respect to certain surgical indications. See the section entitled “Risk Factors — Risks Related to Our Intellectual Property” for a more comprehensive description of risks related to our intellectual property.
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Research and Development
Our research and development programs are generally pursued by our engineering, scientific and technical personnel employed by us in our offices in Massachusetts on a full-time basis or as consultants, or through partnerships with industry leaders in manufacturing and design and with researchers in academia. We are also working with subcontractors in developing specific components of our technologies.
The primary objectives of our research and development efforts are to continue to introduce incremental enhancements to the capabilities of the Vicarious Surgical System and to advance development.
For the fiscal years ended December 31, 2025 and 2024, we incurred research and development expenses of $33.6 million and $40.2 million, respectively.
Manufacturing
We have manufacturing capabilities within our headquarters in Waltham, Massachusetts. We currently rely and expect to expand on third parties for the manufacturing of certain products for preclinical and clinical testing, as well as for commercial manufacturing.
We purchase both custom and off-the-shelf components from a large number of suppliers and subject them to stringent quality specifications and processes. Some of the components necessary for the assembly of the Vicarious Surgical System are currently provided to us by sole-sourced suppliers or single-sourced suppliers.
We are committed to developing an ethical, safe and sustainable supply chain. This extends to our supplier base as well, so we are seeking partnerships with suppliers who share our commitment to strong ethics and full compliance with all applicable laws.
We promote the following basic principles in our supply chain:
| ● | Business practices that respect human rights that align with international standards of responsible business conduct; |
| ● | Compliance with conflict mineral laws; |
| ● | Business integrity; |
| ● | Environmental responsibility and sustainability; |
| ● | Protection of confidential information. |
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Competition
We face competition in the forms of existing open surgery, conventional minimally invasive surgery, drug therapies, radiation treatment, and emerging interventional surgical approaches. Our success depends on continued clinical and technical innovation, quality and reliability, as well as educating hospitals, surgeons, and patients on the results associated with robotic-assisted surgery using the Vicarious Surgical System and our value proposition relative to other techniques. We also face competition from several companies that have introduced or are developing new approaches and products for the minimally invasive surgery market. We believe that the entrance or emergence of competition validates robotic-assisted surgery.
We face competition from larger and well-established companies. The companies that have introduced products in the field of robotic-assisted surgery or have made explicit statements about their efforts to enter the field, include, but are not limited to: Intuitive Surgical, Inc.; Johnson & Johnson (including their wholly-owned subsidiaries Ethicon Endo-Surgery, Inc., Auris Health, Inc. and Verb Surgical Inc.); Medtronic plc (including their wholly-owned subsidiary Covidien LP); Virtual Incision Corporation; Stryker Corporation; and CMR Surgical Ltd. Other companies with substantial experience in industrial robotics could potentially expand into the field of surgical robotics and become a competitor. In addition, research efforts utilizing computers and robotics in surgery are underway at various companies and research institutions. Our ability to generate future revenue may be adversely impacted as competitors announce their intent to enter these markets and as our potential customers anticipate the availability of competing products.
Commercialization
We have not yet established a sales or product distribution infrastructure for the Vicarious Surgical System. We plan to access the U.S. market with the Vicarious Surgical System through strategic partnerships and also develop our own focused, specialized sales force or distribution channels once we have commercialized the Vicarious Surgical System.
Government Regulation
Our operations are subject to comprehensive federal, state, and local laws and regulations in the jurisdictions in which we or our research and development partners or affiliates do business. The laws and regulations governing our business and interpretations of those laws and regulations are subject to frequent change. Our ability to operate profitably will depend in part upon our ability, and that of our research and development partners and affiliates, to operate in compliance with applicable laws and regulations. The laws and regulations relating to medical products and healthcare services that apply to our business and that of our partners and affiliates continue to evolve, and we must, therefore, devote significant resources to monitoring developments in legislation, enforcement, and regulation in such areas. As the applicable laws and regulations change, we are likely to make conforming modifications in our business processes from time to time. We cannot provide assurance that a review of our business by courts or regulatory authorities will not result in determinations that could adversely affect our operations or that the regulatory environment will not change in a way that restricts our operations.
FDA Regulation
Medical devices are strictly regulated by the FDA in the United States. Under the Federal Food, Drug, and Cosmetic Act (“FDCA”), a medical device is defined as “an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component, part or accessory which is, among other things: intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals; or intended to affect the structure or any function of the body of man or other animals, and which does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its primary intended purposes.” This definition provides a clear distinction between a medical device and other FDA regulated products such as drugs. If the primary intended use of a medical product is achieved through chemical action or by being metabolized by the body, the product is usually a drug or biologic. If not, it is generally a medical device.
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We are currently developing a robotic-assisted surgical system, which is regulated by the FDA as a medical device under the FDCA, as implemented and enforced by the FDA. The FDA regulates, among other things, the development, testing, manufacturing, labeling, packaging, storage, installation, servicing, advertising, promotion, marketing, distribution, import, export, and post-market surveillance of medical devices. The Vicarious Surgical System is not yet authorized for commercialization in the United States.
Device Premarket Regulatory Requirements
Before being introduced into the U.S. market, each medical device must obtain marketing clearance, authorization, or approval from the FDA through the premarket notification (510(k)) process, the De Novo classification process, or the premarket approval (“PMA”) process, unless they are determined to be exempt from premarket review by the FDA. Under the FDCA, medical devices are classified into one of three classes — Class I, Class II or Class III — depending on the degree of risk associated with each medical device and the extent of control needed to provide reasonable assurance of safety and effectiveness. Classification of a device is important because the class to which a device is assigned determines, in part, among other things, the necessity and type of FDA review required prior to marketing the device. Class I devices are those for which reasonable assurance of safety and effectiveness can be maintained through adherence to general controls that include compliance with the applicable portions of the FDA’s Quality Management System Regulation (“QMSR”), as well as regulations requiring establishment registration and device listing, reporting of adverse medical events, and appropriate, truthful and non-misleading labeling and promotional materials.
Class II devices are those for which general controls alone are insufficient to provide reasonable assurance of safety and effectiveness and there is sufficient information to establish “special controls.” These special controls can include performance standards, post-market surveillance requirements, patient registries and FDA guidance documents describing device-specific special controls. While most Class I devices are exempt from the 510(k) premarket notification requirement, most Class II devices require a clearance of a 510(k) premarket notification prior to commercialization in the United States; however, the FDA has the authority to exempt Class II devices from the premarket notification requirement under certain circumstances. As a result, manufacturers of most Class II devices must submit 510(k) premarket notifications to the FDA in order to obtain the necessary clearance to market or commercially distribute such devices. To obtain 510(k) clearance, manufacturers must submit to the FDA adequate information demonstrating that the proposed device is “substantially equivalent” to a “predicate device” that is already on the market. A predicate device is a legally marketed device that is not subject to PMA, meaning, (i) a device that was legally marketed prior to May 28, 1976 (“preamendments device”) and for which a PMA is not required, (ii) a device that has been reclassified from Class III to Class II or I, or (iii) a device that was found substantially equivalent through the 510(k) process. If the FDA agrees that the device is substantially equivalent to the predicate device identified by the applicant in a premarket notification submission, the FDA will grant 510(k) clearance for the new device, permitting the applicant to commercialize the device. Premarket notifications are subject to user fees, unless a specific exemption applies.
After a medical device receives 510(k) clearance, any modification that could significantly affect the device’s safety or effectiveness, or that would constitute a major change in its intended use, requires a new 510(k) submission or could require a De Novo classification request or PMA application. The FDA requires each manufacturer to make the determination of whether a device modification requires a new 510(k), De Novo, or PMA in the first instance, but the FDA may review any such decision. If the FDA disagrees with a manufacturer’s decision not to seek a new 510(k) clearance, De Novo authorization, or PMA for a particular change, the FDA may retroactively require the manufacturer to submit a 510(k), De Novo, or PMA application. The FDA may also require the manufacturer to cease its marketing activities for the modified device in the United States and/or recall the device until the appropriate marketing authorization for the modification is obtained.
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If there is no adequate predicate to which a manufacturer can compare its proposed device, the proposed device is automatically classified as a Class III device. In such cases, a device manufacturer must then fulfill the more rigorous PMA requirements or can request a risk-based classification determination for its device in accordance with the De Novo classification process.
Devices that are intended to be life sustaining or life supporting, devices that are implantable, devices that present a potential unreasonable risk of harm or are of substantial importance in preventing impairment of health, and devices that are not substantially equivalent to a predicate device and for which safety and effectiveness cannot be assured solely by the general controls and special controls are placed in Class III. Such devices generally require FDA approval through the PMA process, unless the device is a novel or preamendments device not yet subject to a regulation requiring premarket approval. The PMA process is more demanding than the 510(k) process. For a PMA, the manufacturer must demonstrate through extensive data, including data from preclinical studies and one or more clinical trials, that there is a reasonable assurance that the device is safe and effective for its proposed indication. The PMA application must also contain a full description of the device and its components, a full description of the methods, facilities and controls used for manufacturing, and proposed labeling. Following receipt of a PMA submission, the FDA determines whether the application is sufficiently complete to permit a substantive review. If the FDA accepts the application for review, it has 180 days under the FDCA to complete its review and determine whether the proposed device can be approved for commercialization, although in practice, PMA submission reviews often take significantly longer, and it can take up to several years for the FDA to issue a final decision. Before granting a PMA, the FDA generally also performs an on-site inspection of manufacturing facilities for the product to ensure compliance with the QMSR.
The FDA may refer any PMA application, including applications for novel device candidates or device candidates that present difficult questions of safety or effectiveness, to an advisory committee for review. Typically, an advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and, if so, under what conditions. The FDA is not bound by the recommendation of an advisory committee, but it considers such recommendations when making final decisions on approval.
If the FDA’s evaluation of the PMA application and inspection of the manufacturing facility is favorable, the FDA may issue an approval order authorizing commercial marketing of the device, or an “approvable letter,” which usually contains a number of conditions that must be met in order to secure final approval of the PMA. When and if those conditions have been met to the satisfaction of the FDA, the agency will issue a PMA approval order, subject to the conditions of approval and the limitations established in the approval order. If the FDA’s evaluation of a PMA application or manufacturing facility is not favorable, the FDA will deny approval of the PMA or issue a “not approvable letter.” The FDA may also determine that additional studies are necessary, in which case the PMA may be delayed for several months or years while such additional studies are conducted and data is submitted in an amendment to the PMA. The PMA process can be expensive, uncertain and lengthy, and each PMA submission is subject to a substantial user fee unless a specific exemption applies. The FDA may also grant a PMA subject to post-approval requirements, such as the need for additional patient follow-up or requirements to conduct additional clinical trials.
New PMA applications or PMA supplements may be required for any modifications to the manufacturing process, labeling, device specifications, materials or design of a device that is approved through the PMA process. PMA supplements often require submission of the same type of information as an initial PMA application, except that the supplements are limited to information needed to support any changes from the device covered by the approved PMA application and may or may not require as extensive clinical data or the convening of an advisory committee.
The De Novo classification process allows a manufacturer whose novel device is automatically classified into Class III to request down-classification of its device to Class I or Class II, on the basis that the device presents low or moderate risk, as an alternative to following the typical Class III device pathway requiring the submission and approval of a PMA application. Under the Food and Drug Administration Safety and Innovation Act of 2012, the FDA is required to classify a device within 120 days following receipt of the De Novo classification request from an applicant; however, the most recent FDA premarket review goals state that the agency will attempt to issue a decision within 150 days of receipt on 70% of all De Novo classification requests received during each fiscal year. If the manufacturer seeks reclassification into Class II, the classification request must include a draft proposal for special controls that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device. The FDA may reject the classification request if it identifies a legally marketed predicate device that would be appropriate for a 510(k) notification or determines that the device is not low to moderate risk or that general controls would be inadequate to control the risks and special controls cannot be developed. If a De Novo classification request results in the classification of the novel device into Class II, the device may be used as a predicate for future 510(k) premarket notifications for other similar devices with the same intended uses. De Novo classification requests are subject to user fees, unless a specific exemption applies.
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As with the 510(k) premarket notification process described above, any modification to a device authorized through the De Novo process that could significantly affect the safety or effectiveness of such device, or that would constitute a major change in its intended use, requires a new 510(k) clearance or could require the submission of a new De Novo classification request or PMA application.
Predetermined Change Control Plans for Medical Devices
As part of the Consolidated Appropriations Act for 2023, Congress amended the FDCA to give FDA the authority to authorize certain potential, future changes to a medical device in a predetermined change control plan (“PCCP”) as part of a PMA application or 510(k) premarket notification for a medical device, including a device that incorporates artificial intelligence or machine learning technology. In practice, FDA will also allow for inclusion of a PCCP in a De Novo. A PCCP must describe the specific proposed modifications and provide sufficient information to demonstrate that the device will remain safe and effective for its intended use, and in the case of a 510(k) cleared device that the device will remain substantially equivalent to the predicate device, if the applicant implements the proposed modifications to the device as described in the PCCP. If FDA authorizes a PCCP for a device, any modification to the device within the authorized scope of the PCCP will not require the submission and authorization of a new PMA application, PMA supplement, or new 510(k) premarket notification. However, modifications to a previously authorized PCCP will generally require submission of a PMA supplement or new 510(k) premarket notification, depending on the original authorization pathway for the device, with the modified PCCP.
Medical Device Clinical Studies
Clinical trials are almost always required to support PMAs and are sometimes required to support 510(k) and De Novo classification submissions. All clinical investigations of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s IDE regulations that govern investigational device labeling, prohibit promotion of investigational devices, and specify recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. If the device presents a “significant risk,” as defined by the FDA, the FDA requires the device sponsor to submit an IDE application to the FDA, which must become effective prior to commencing human clinical trials. The IDE will automatically become effective 30 days after receipt by the FDA, unless the FDA denies the application or notifies us that the investigation is on hold and may not begin until the sponsor provides supplemental information about the investigation that satisfies the FDA’s concerns. If the FDA determines that there are deficiencies or other concerns with an IDE that require modification of the study, the FDA may permit a clinical trial to proceed under a conditional approval. In addition, the study must be approved by, and conducted under the oversight of, an institutional review board (or IRB) for each clinical site. If the device presents a non-significant risk to the patient according to criteria established by the FDA as part of the IDE regulations, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate authorization from the FDA, but must still comply with abbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping requirements.
As part of its clinical trial oversight responsibilities, an IRB must review and approve, among other things, the trial protocol and informed consent information to be provided to clinical trial subjects. An IRB must operate in compliance with FDA regulations. Information about certain clinical studies, including details of the protocol and eventually trial results, also must be submitted within specific timeframes to the National Institutes of Health (“NIH”) for public dissemination on the clinicaltrials.gov data registry. Information related to the product, patient population, phase of investigation, trial sites and other aspects of the clinical trial are made public as part of the trial registration. Sponsors are also obligated to disclose the results of their clinical studies after completion. Disclosure of the results of these studies can be delayed in some cases for up to two years after the date of completion of the trial. Failure to timely register a covered clinical study or to submit study results as provided for in the law can give rise to civil monetary penalties and also prevent the non-compliant party from receiving future grant funds from the federal government. The NIH Final Rule on clinicaltrials.gov registration and reporting requirements became effective in 2017, and the government has brought enforcement actions against non-compliant clinical trial sponsors.
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Progress reports detailing the results of the clinical studies must be submitted at least annually to the FDA and more frequently if unanticipated serious adverse events (“SAEs”) occur. The FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the clinical protocol, GCP, or other IRB requirements or if the investigational product has been associated with unexpected serious harm to patients.
In the Consolidated Appropriations Act for 2023, Congress amended the FDCA to require the sponsor of any pivotal clinical trial that will be used to demonstrate the safety and effectiveness of a medical device marketing authorization submission to develop a diversity action plan for such trial, and if submission of an IDE application is required, to submit such diversity action plan to the FDA. The action plan must include the sponsor’s diversity goals for enrollment, as well as a rationale for the goals and a description of how the sponsor will meet them. The FDA may grant a waiver for some or all of the requirements for a diversity action plan. It is unknown at this time how the diversity action plan may affect device pivotal clinical trial planning and timing, but if FDA objects to a sponsor’s diversity action plan and requires the sponsor to amend the plan or take other actions, it may delay trial initiation.
Post-Marketing Restrictions and Enforcement
After a device is placed on the market, numerous regulatory requirements apply. These include, but are not limited to:
| ● | submitting and updating establishment registration and device listings with the FDA; |
| ● | compliance with the QMSR, which requires manufacturers to follow stringent design, testing, risk management, control, documentation, record maintenance, including maintenance of complaint and related investigation files, and other quality assurance controls during the manufacturing process; |
| ● | unannounced routine or for-cause device facility inspections by the FDA, which may include our suppliers’ facilities; |
| ● | labeling regulations, which, among other things, prohibit the promotion of products for uncleared, unauthorized, or unapproved (or “off-label”) uses and impose other restrictions relating to promotional activities; |
| ● | corrections and removal reporting regulations, which require that manufacturers report to the FDA field corrections or removals if undertaken to reduce a risk to health posed by a device or to remedy a violation of the FDCA that may present a risk to health; and |
| ● | post-market surveillance regulations, which apply to certain Class II or III devices when necessary to protect the public health or to provide additional safety and effectiveness data for the device. |
In addition, under the FDA medical device reporting (“MDR”) regulations, medical device manufacturers and importers are required to report to the FDA and/or the manufacturer information that a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would likely cause or contribute to death or serious injury if the malfunction of the device or a similar device of such manufacturer were to recur. The decision to file an MDR involves a judgment by the manufacturer or importer. If the FDA disagrees with the manufacturer or importer’s determination, the FDA can take enforcement action.
The medical device reporting requirements also extend to health-care facilities that use medical devices in providing care to patients, or “device user facilities,” which include hospitals, ambulatory surgical facilities, nursing homes, outpatient diagnostic facilities, or outpatient treatment facilities, but not physician offices. A device user facility must report any death caused or contributed to by a device to both the FDA and the device manufacturer, or any serious injury caused or contributed to by a device to the manufacturer (or, if the manufacturer is unknown, to the FDA) within 10 days of the event. Device user facilities are not required to report device malfunctions that would likely cause or contribute to death or serious injury if the malfunction were to recur but may voluntarily report such malfunctions through MedWatch, the FDA’s Safety Information and Adverse Event Reporting Program.
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The FDA also has the authority to require the recall of commercialized medical device products. The authority to require a recall must be based on an FDA finding that there is a reasonable probability that the device would cause serious adverse health consequences or death. Manufacturers may, under their own initiative, recall a product if any distributed devices fail to meet established specifications, are otherwise misbranded or adulterated under the FDCA, or if any other material deficiency is found. The FDA requires that certain classifications of recalls be reported to the FDA within ten working days after the recall is initiated.
The failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions:
| ● | warning letters, fines, injunctions or civil penalties; |
| ● | recalls, detentions or seizures of products; |
| ● | operating restrictions; |
| ● | delays in the introduction of products into the market; |
| ● | total or partial suspension of production; |
| ● | delay or refusal of the FDA or other regulators to grant 510(k) clearance, De Novo authorization, PMA approvals, or other marketing authorization to new products; |
| ● | withdrawals of marketing authorizations, clearances, or approvals; or |
| ● | in the most serious cases, criminal prosecution. |
To ensure compliance with regulatory requirements, medical device manufacturers are subject to market surveillance and periodic, announced and unannounced inspections by the FDA, and these inspections may include the manufacturing facilities of subcontractors.
Breakthrough Device Designation and the Safer Technologies Program
The 21st Century Cures Act, which was signed into law on December 13, 2016, established and directed FDA to implement the Breakthrough Devices Program. Under the program, device manufacturers may voluntarily request breakthrough designation for devices that provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human disease or conditions over currently available technology and that meet at least one of the following criteria:
| ● | The device represents breakthrough technology; |
| ● | There are no approved or cleared alternatives for the device; |
| ● | The device offers significant advantages over existing approved or cleared alternatives; or |
| ● | Availability of the device is in the best interest of patients. |
The goal of the Breakthrough Devices Program is to accelerate the timeline to market for novel devices that will likely provide a benefit to patients. A Breakthrough Device designation offers multiple benefits to the device manufacturer, including priority review of the pre-market submission for the device, opportunities to interact directly with FDA’s experts throughout the process, and engagement of FDA senior management, to the extent permitted by the FDA’s resources.
In November 2019, the FDA granted Breakthrough Device designation to a prior prototype version of the Vicarious Surgical System for a proposed indication for use in ventral hernia repair procedures. We anticipate that after FDA authorization, the Vicarious Surgical System will be classified as a Class II medical device. We have held multiple pre-submission meetings with the FDA to align on our regulatory strategy and currently plan to pursue a De Novo classification request with the FDA for use in ventral hernia procedures as our initial indication.
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A preliminary meeting with the FDA was conducted in December 2021 to discuss with the FDA our decision to make two technology changes to the Vicarious Surgical System design that was granted Breakthrough Device designation in November 2019. Based on these changes, the FDA has determined that the current Vicarious Surgical System design that is planned for the initial limited launch and was submitted to the FDA in the November 2021 FDA pre-submission meeting request is different from the device that was granted Breakthrough Device designation for the device design filed in November 2019. The FDA stated that the Breakthrough Device designation remains active for the prior device design granted Breakthrough Device designation in November 2019. In the future, we may attempt to reincorporate the technologies from such prior device design to leverage the previously granted Breakthrough Device designation. The process of medical device development is inherently uncertain and there is no guarantee that a Breakthrough Device designation will be granted to a different device design, and if it were granted, there is no guarantee that such designation will accelerate the timeline for authorization or make it more likely that the Vicarious Surgical System will be authorized.
Devices that may significantly improve the safety of currently available medical products that target a disease or condition, but the morbidities or mortalities associated with the disease or condition are less serious than those eligible for Breakthrough Device designation, may be eligible for the STeP Program. The goal of acceptance into the STeP Program is to provide opportunities to interact with FDA experts, as resources permit, through various program options to address design and development issues efficiently. In February 2024, we submitted a STeP Program application to the FDA, and the agency subsequently accepted Vicarious Surgical’s robotic system into the program.
Federal Trade Commission Regulatory Oversight
Our advertising for our products and services is subject to federal truth-in-advertising laws enforced by the Federal Trade Commission (“FTC”), as well as comparable state consumer protection laws. Under the Federal Trade Commission Act (the “FTC Act”), the FTC is empowered, among other things, to (a) prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce; (b) seek monetary redress and other relief for conduct injurious to consumers; and (c) gather and compile information and conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce. The FTC has very broad enforcement authority, and failure to abide by the substantive requirements of the FTC Act and other consumer protection laws can result in administrative or judicial penalties, including civil penalties, injunctions affecting the manner in which we would be able to market services or products in the future, or criminal prosecution.
Healthcare Law and Regulation
If the Vicarious Surgical System or our other product candidates are authorized in the United States, we will have to comply with various U.S. federal and state laws, rules and regulations pertaining to healthcare fraud and abuse, including anti-kickback laws and physician self-referral laws, rules and regulations. Violations of the fraud and abuse laws are punishable by criminal and civil sanctions, including, in some instances, exclusion from participation in federal and state healthcare programs, including Medicare and Medicaid. These laws include the following:
| ● | the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid; |
| ● | the federal False Claims Act imposes civil penalties, and provides for civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; |
| ● | the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; |
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| ● | HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; |
| ● | the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; |
| ● | the federal transparency requirements under the Physician Payments Sunshine Act require manufacturers of FDA-cleared, authorized, or approved drugs, devices, biologics and medical supplies covered by Medicare or Medicaid to report, on an annual basis, to the Department of Health and Human Services information related to payments and other transfers of value to physicians, teaching hospitals, and certain advanced non-physician health-care practitioners and physician ownership and investment interests; and |
| ● | analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by nongovernmental third-party payors, including private insurers. |
Some state laws require pharmaceutical or medical device companies to comply with the relevant industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug and device manufacturers to report information related to payments to physicians and other health-care providers or marketing expenditures.
State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. We also may be subject to, or may in the future become subject to, U.S. federal and state, and foreign laws and regulations imposing obligations on how we collect, use, disclose, store and process personal information. Our actual or perceived failure to comply with such obligations could result in liability or reputational harm and could harm our business. Ensuring compliance with such laws could also impair our efforts to maintain and expand our customer base and thereby decrease our future revenues.
Third-Party Coverage and Reimbursement
In the United States, third-party payors, including government health programs such as Medicare and Medicaid, commercial health insurers and managed care organizations, are responsible for hospital and surgeon reimbursement for covered surgical procedures. Third-party payors generally reimburse hospitals and physicians for surgery when the procedure is considered medically necessary. The Centers for Medicare and Medicaid Services, or CMS, manages the Medicare program and administers the Medicaid program in conjunction with applicable state governments. Many commercial health insurers model their reimbursement methodologies after the Medicare program. As the single largest payor, the Medicare program has a significant impact on other third-party payors’ payment systems.
Generally, reimbursement for professional services performed at a facility by physicians is reported under billing codes issued by the American Medical Association, or AMA, known as Current Procedural Terminology, or CPT, codes. Physician reimbursement under Medicare generally is based on a fee schedule and determined by the relative value of the professional service rendered. In addition, CMS and the National Center for Health Statistics are jointly responsible for overseeing changes and modifications to billing codes used by hospitals to report inpatient procedures, known as ICD-10-PCS codes. Under the Medicare program, CMS generally reimburses hospitals for services provided during an inpatient stay based on a prospective payment system that is determined by a classification system known as Medicare-Severity Diagnostic Related Groupings, or MS-DRGs. MS-DRGs are assigned using a number of factors, including the principal diagnosis, major procedures, discharged status, patient age, and complicating secondary diagnoses, among other things. Hospital outpatient services, reported by CPT codes, are assigned to clinically relevant Ambulatory Payment Classifications used to determine the payment amount for services provided.
Since October 1, 2015, a new family of ICD-10-PCS codes can be used, in conjunction with other applicable procedure codes, to describe various robotic-assisted procedures. An inpatient surgical procedure, completed with or without robotic assistance, continues to be assigned to the clinically relevant MS-DRG.
Third-party payors carefully review and increasingly challenge the prices charged for medical products and surgical services. Reimbursement rates from commercial health insurers vary depending on the procedure performed, the specific payor’s reimbursement policies, contract terms, and other factors. Because both hospitals and physicians may receive the same reimbursement for a surgical procedure, whether it is performed with robotic assistance or not and regardless of actual costs incurred in furnishing the patient care, including for the specific medical products or supplies used during that procedure, hospitals and physicians may decide not to use our products if reimbursement amounts are insufficient to cover any additional costs incurred when purchasing and using our products.
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For procedures that would involve assistance from our robotic-assisted surgical system, U.S. health-care institutions typically bill various third-party payors, such as government health programs (e.g., Medicare and Medicaid) and commercial health insurance plans, for the primary surgical procedure only. If our robotic-assisted surgical system receives marketing authorization from the FDA, coverage and reimbursement by third-party payors will generally be determined by the medical necessity of the primary surgical procedure. Government health programs and other third-party payors may also consider additional factors when determining coverage and reimbursement, including the designation of the surgical procedure as a covered benefit, the appropriateness of the procedure for the specific patient, guidelines for the procedure established by the relevant professional college or medical society, and a payor determination that the procedure is neither experimental nor investigational. We believe that the procedures we intend to pursue as indications for use for our robotic-assisted surgical system are established surgical procedures that are generally already reimbursable by government health programs, commercial health insurers, and managed care organizations for appropriately selected patients. If hospitals do not obtain sufficient reimbursement from third-party payors for procedures performed with our products, or if government and commercial payors’ policies do not cover surgical procedures performed using our products, we may not be able to generate the revenues necessary to support our business.
The process for determining whether a third-party payor will provide coverage for a product or procedure may be separate from the process for establishing the reimbursement rate that such a payor will pay for the product or procedure. A payor’s decision to provide coverage for a product or procedure does not imply that an adequate reimbursement rate will be approved. Further, one payor’s determination to provide coverage for a product or procedure does not assure that other payors will also provide coverage. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to ensure profitability.
Healthcare Reform
The FDA’s and other regulatory authorities’ policies may change and future legislative and regulatory proposals may prevent, limit or delay regulatory authorization of our product candidates or, more broadly, may materially impact the ability of the FDA and other regulatory agencies to operate as they have historically operated. We cannot be sure whether additional legislative changes will be enacted, or whether any of the FDA’s regulations, guidances or interpretations will be changed, or what the impact of such changes on the agency and its scientific review staff, if any, may be. For example, the next FDA user fee reauthorization package entered stakeholder negotiations beginning in mid-2025, with any agreement expected to be sent to Congress in early 2027 for purposes of initiating the legislative process. Reauthorization of the prescription drug user fee program would need to be finalized by Congress by the end of September 2027 in order to avoid a disruption in FDA’s review goals for 510(k), De Novo classification and PMA submissions and other activities supported by user fees assessed against industry. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing authorization that we otherwise may have obtained, and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.
In December 2022, the U.S. Congress enacted the Consolidated Appropriations Act for 2023, an omnibus appropriations bill, which included amendments to the FDCA under the Food and Drug Omnibus Reform Act of 2022 (“FDORA”). In addition to the requirement that sponsors of pivotal trials submit diversity action plans for pivotal trials (see “—Government Regulation-Regulatory Landscape in the United States-Device Clinical Studies”), FDORA included new requirements for cyber devices, defined as any medical device that is or includes software that is validated, installed, or authorized by the manufacturer; can connect to the internet; and may be vulnerable to cybersecurity threats. Under the FDORA amendments to the FDCA, any application for marketing authorization of a cyber device must include a software bill of materials and a cybersecurity plan describing the methods by which the manufacturer will monitor, identify and address cybersecurity vulnerabilities. Any failure by a cyber device manufacturer to comply with applicable cybersecurity requirements is considered a violation of the FDCA and will subject the manufacturer to enforcement actions and possibly legal sanctions.
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In the United States, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system. In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, (collectively, the “ACA”) was signed into law and substantially changed the way healthcare is financed by both governmental and private insurers in the United States. The ACA contains a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement adjustments and fraud and abuse changes. Additionally, the ACA provided incentives to programs that increase the federal government’s comparative effectiveness research and implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models.
Legislative and regulatory changes under the ACA remain possible, although it is unknown what form any such changes or any law would take, and how or whether it may affect the medical device industry as a whole or our business in the future. We expect that changes or additions to the ACA, the Medicare and Medicaid programs and changes stemming from other healthcare reform measures, especially with regard to healthcare access, financing or other legislation in individual states, could have a material adverse effect on the healthcare industry in the United States.
Moreover, there has recently been heightened governmental scrutiny, including increasing legislative and enforcement interest, over the manner in which manufacturers set prices for their marketed healthcare products, which has resulted in several Congressional inquiries and proposed and enacted legislation designed, among other things, to bring more transparency to healthcare product pricing, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for healthcare products. Individual states in the United States have also become increasingly active in implementing regulations designed to control healthcare product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures.
We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services. Moreover, if we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, our medical devices may lose any marketing authorization that may have been obtained and we may not achieve or sustain profitability, which would adversely affect our business.
U.S. and Foreign Data Security and Data Privacy Laws
HIPAA, as well as a number of other federal and state privacy-related laws, extensively regulate the use and disclosure of individually identifiable health information, known as “protected health information” or “PHI”.
HIPAA applies to health plans, healthcare providers who engage in certain standard healthcare transactions electronically, such as electronic billing, and healthcare clearinghouses, all of which are referred to as “covered entities” under HIPAA. State imposed health information privacy and security laws typically apply based on licensure, for example, licensed providers or licensed entities are limited in their ability to use and share health information.
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Additionally, all U.S. states have enacted legislation protecting the privacy and security of “personal information”, such as identifiable financial or health information, social security numbers, credit card information and other personally identifiable information. These laws overlap and apply simultaneously with federal privacy and security requirements and regulated entities must comply with all of them. The California Consumer Privacy Act (“CCPA”) went into effect January 1, 2020, and is one of the most restrictive state privacy laws, protecting a wide variety of personal information and granting significant rights to California residents with respect to their personal information. Regulations under CCPA have been modified several times, and continue to be modified. Additionally, a new privacy law, the California Privacy Rights Act, (“CPRA”) was approved by California voters in the election of November 3, 2020 and went into effect in January of 2023. The CPRA modified the CCPA significantly, and may result in further uncertainty, additional costs and expenses stemming from efforts to comply with this law, and increases the potential for harm and liability for failure to comply. Among other things, the CPRA established a new regulatory authority, the California Privacy Protection Agency, which is enacting new regulations and has expanded enforcement authority. Other states in the U.S. are considering privacy laws similar to CCPA. Colorado, Connecticut, Delaware, Florida, Indiana, Iowa, Montana, New Jersey, Oregon, Tennessee, Texas Virginia, and Utah have enacted similar data protection laws to California and other U.S. states have proposals under consideration, increasing our regulatory compliance risk. In dealing with health information for the development of our technology or for commercial purposes, we will be indirectly affected by HIPAA and state-imposed health information privacy and cybersecurity laws because these laws regulate the ability of our potential customers and research collaborators to share health information with us. Additionally, we must identify and comply with all applicable state laws for the protection of personal information with respect to personal information that we collect.
In the event we market outside of the United States, we will be subject to foreign privacy and data security laws that vary by jurisdiction, differ from those in the United States, and may require us to implement additional compliance measures or change our business practices related to the collection and use of personal and patient data. For example, in the European Union (“EU”), we will be subject to the EU General Data Protection Regulation (“GDPR”) that significantly regulates the possession, use, and disclosure of personal information. In particular, medical or health data, genetic data and biometric data where the latter is used to uniquely identify an individual are all classified as “special category” data under the GDPR and are afforded greater protection and require additional compliance obligations. Noncompliance could result in the imposition of fines, penalties, or orders to stop noncompliant activities. We may be subject to GDPR if we undertake operations or transact business in the EU, offer products or services to individuals in the EU or monitor the behavior of individuals within the EU.
Disruptions to Information Technology Systems and Cybersecurity Incidents
We rely, and will continue to rely on, information technology systems to keep financial and employment records, facilitate our research and development initiatives, manage our operations, maintain quality control, maintain corporate records, communicate with staff, provide our services and operate other critical functions. Our information technology systems, and those of our vendors and partners, are potentially vulnerable to disruption due to breakdown, malicious intrusion and computer viruses or other disruptive events, including, but not limited to, natural disasters and catastrophes. Cyberattacks and other malicious internet-based activity continue to increase, and cloud-based platform providers of services have been and are expected to continue to be targeted, especially in the health-care industry. Methods of attacks on information technology systems and data security breaches change frequently, are increasingly complex and sophisticated, including deployment of harmful malware and key loggers, ransomware, a malicious website, social engineering and phishing scams, and other means to affect the confidentiality, integrity and availability of our technology systems and data, and can originate from a wide variety of sources. In addition to traditional computer “hackers,” malicious code, such as viruses and worms, denial-of-service attacks and sophisticated nation-state and nation-state supported actors present a constant threat, including advanced persistent threat intrusions. Cyberattacks may also be due to employee error or malfeasance, power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events, and our system redundancy and other disaster recovery planning may be ineffective or inadequate in preventing or responding to any of these circumstances. Techniques used in cybersecurity attacks to obtain unauthorized access, disable or sabotage information technology systems are evolving rapidly with data breaches and other cybersecurity incidents becoming commonplace. We recognize the risk of cybersecurity incidents and work to constantly evolve our incident response plans as the known threat vectors emerge. We vet and verify the cybersecurity practices and compliance of our vendors to ensure they follow established guidelines, compliance requirements, and best practices related to their industry. Internally, we utilize a cybersecurity maturity model based on the National Institute of Standards and Technology, or NIST, standards to track and report on the current and future compliance and progress within the multiple areas of compliance and concern. We intend to make steady measured improvements to our cybersecurity maturity along with investments in tools, and services that are aligned with our growth and maturity. We intend to adhere to a baseline of best practices that include proper use of encryption of data and communications, policies and procedures, and mitigation/validation practices that seek to ensure the approach is meeting or exceeding our commitment to our plan. Despite our current or future efforts to protect against cybersecurity attacks and data security incidents, there is no guarantee that our efforts are adequate to safeguard against all such attacks and incidents. Moreover, it is possible that we may not be able to anticipate, detect, appropriately react and respond to, or implement effective preventative measures against, all cybersecurity incidents.
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Human Capital
As of March 9, 2026, we had 26 employees, 11 of whom were engaged directly in research, development, regulatory and clinical activities, 8 in manufacturing and quality assurance and 7 in marketing, sales, and administrative activities.
Facilities
Our principal executive offices are currently located at 78 Fourth Avenue, Waltham, Massachusetts 02451, consisting of approximately 42,000 square feet. On October 14, 2021, we entered into a lease amendment pursuant to which we agreed to lease additional space consisting of approximately 30,000 square feet located at 62 Fourth Avenue Waltham, MA 02451. On October 17, 2025, we entered into a second lease amendment which eliminates the second building at 62 Fourth Avenue commencing on December 23, 2025. The leased space at 78 Fourth Avenue will expire on March 31, 2032. We consider our current office space adequate for our current operations.
Legal Proceedings
As of the date of this Annual Report on Form 10-K, to our knowledge, we are not party to and our property is not subject to any material pending legal proceedings. However, from time to time, we may become involved in legal proceedings or subject to claims that arise in the ordinary course of our business activities. Regardless of the outcome, such legal proceedings or claims could have an adverse impact on us because of defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors.
NYSE Delisting Proceedings
On March 3, 2026, the NYSE notified us that it had determined to (A) immediately suspend trading in our Class A common stock due to a determination that we had fallen below the NYSE’s continued listing standard requiring listed companies to maintain an average global market capitalization over a consecutive 30 trading day period of at least $15,000,000 pursuant to Section 802.01B of the NYSE Listed Company Manual, and (B) commence proceedings to delist the Class A common stock. We will not appeal the delisting determination. The NYSE has indicated that it will apply to the Securities and Exchange Commission to delist the Class A common stock by filing a Form 25.
We received approval of our application to have the Class A common stock quoted on the OTCID market tier operated by OTC Markets. The Class A common stock commenced quotation on the OTCID at the open of business on March 4, 2026 under the trading symbol of “RBOT.”
The OTCID is a significantly more limited market than the NYSE, and quotation on any OTC market will result in a less liquid market for existing and potential holders of Class A common stock to trade their shares and could further depress the trading price of the Class A common stock. We can provide no assurance that the Class A common stock will continue to trade on this market, whether broker-dealers will provide and continue to provide public quotes of the Class A common stock on this market, or whether the trading volume of the Class A common stock will be sufficient to provide for an efficient trading market.
Information Available on the Internet
Our internet address is https://www.vicarioussurgical.com, to which we regularly post copies of our press releases as well as additional information about us. We also maintain an Investor Relations website as a routine channel for distribution of important information, including news releases, presentations, and financial statements (https://investor.vicarioussurgical.com). We intend to use our Investor Relations website as a means of complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor our Investor Relations website in addition to press releases, Securities and Exchange Commission (the “SEC”) filings, and public conference calls and webcasts. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, will be available to you free of charge through the Investor Relations section of our website as soon as reasonably practicable after such materials have been electronically filed with, or furnished to, the SEC. The SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. We include our web site address in this Annual Report on Form 10-K only as an inactive textual reference. Information contained in our website does not constitute a part of this report or our other filings with the SEC.
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ITEM 1A. RISK FACTORS.
Careful consideration should be given to the following risk factors, in addition to the other information set forth in this Annual Report on Form 10-K, including the section of titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, and in other documents that we file with the SEC, in evaluating our company and our business. Investing in our securities involves a high degree of risk. If any of the events described in the following risk factors actually occur, our business, financial condition, results of operations and future growth prospects could be materially and adversely affected and the trading price of our securities could decline. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of factors that are described below and elsewhere in this Annual Report on Form 10-K.
Risks Related to Our Financial Condition and Capital Requirements
There is substantial doubt about whether we can continue as a going concern.
To date, we have earned no revenues and have incurred an accumulated deficit of $246.1 million. In addition, we have limited financial resources. As of December 31, 2025, we held cash and cash equivalents of $2.6 million and short-term investments of $7.2 million, which, due to a reduction in headcount effective March 6, 2026, we believe will provide funding for our operations through the second quarter of 2026. Accordingly, there is substantial doubt as to whether existing cash resources are sufficient to enable us to continue our operations for the next 12 months after the date financial statements are issued as a going concern. Our management is evaluating and pursuing multiple strategies to obtain the required funding for our operations. These strategies may include but are not limited to public offerings and private placements of equity and/or debt securities, licensing and/or collaboration arrangements and strategic alternatives with third parties, or other funding from the government or third parties. There can be no assurance that these funding efforts will be successful. If we are unable to obtain funds when needed or on acceptable terms, we may be required to curtail our current development programs, cut operating costs, forego future development and other opportunities or even liquidate our business interests, and investors may lose their investment.
Our suspension from the New York Stock Exchange in connection with its decision to commence delisting proceedings and our transition to OTCID market tier may adversely affect the liquidity and market price of our Class A common stock.
On March 3, 2026, the NYSE notified us that it had determined to (A) immediately suspend trading in our Class A common stock due to a determination that we had fallen below the NYSE’s continued listing standard requiring listed companies to maintain an average global market capitalization over a consecutive 30 trading day period of at least $15,000,000 pursuant to Section 802.01B of the NYSE Listed Company Manual, and (B) commence proceedings to delist the Class A common stock. We will not appeal the delisting determination. The NYSE has indicated that it will apply to the Securities and Exchange Commission to delist the Class A common stock by filing a Form 25. The Class A common stock commenced quotation on the OTCID at the open of business on March 4, 2026 under the trading symbol of “RBOT.”
The OTCID is a significantly more limited market than the NYSE, and quotation on any OTC market will result in a less liquid market for existing and potential holders of Class A common stock to trade their shares and could further depress the trading price of the Class A common stock. We can provide no assurance that the Class A common stock will continue to trade on this market, whether broker-dealers will provide and continue to provide public quotes of the Class A common stock on this market, or whether the trading volume of the Class A common stock will be sufficient to provide for an efficient trading market. The suspension and/or delisting of the Class A common stock from the NYSE could negatively impact us by:
| ● | reducing the liquidity and market price of the Class A common stock as a result of the loss of market efficiencies associated with the NYSE and the loss of federal preemption of state securities laws; |
| ● | reducing the number of investors willing to hold or acquire the Class A common stock, which could negatively impact our ability to raise equity financing; |
| ● | impacting our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing us from accessing the public capital markets; |
| ● | impairing our ability to provide equity incentives to our employees; |
| ● | result in the potential loss of confidence by investors, suppliers, partners and employees and fewer business development opportunities; and |
| ● | result in limited news and analyst coverage. |
Additionally, the market price of our Class A common stock may decline further, and stockholders may lose some or all of their investment.
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We have a limited operating history on which to assess the prospects for our business, we have not generated any revenue from sales of the Vicarious Surgical System, and have incurred losses since inception. We anticipate that we will continue to incur significant losses for at least the next several years as we develop and commercialize the Vicarious Surgical System for use in ventral hernia repair procedures and future indications.
Since inception, we have devoted substantially all of our financial resources to developing our surgical robot. We have financed our operations primarily through the issuance of equity securities. We have not generated revenue from the sale of the Vicarious Surgical System to date and have incurred significant losses. We incurred net losses of $50.2 million and $63.2 million for the years ended December 31, 2025 and 2024, respectively. The amount of our future net losses will depend, in part, on future sales and on-going development of the Vicarious Surgical System, the rate of our future expenditures and our ability to obtain funding through the issuance of our securities, strategic collaborations or grants. We expect to continue to incur significant losses for at least the next several years as we commercialize the Vicarious Surgical System for use in ventral hernia repair procedures and seeks to develop and commercialize new surgical applications for the Vicarious Surgical System, such as gynecological, urological or other general surgical applications. We anticipate that our expenses will increase substantially if and as we:
| ● | continue to build our sales, marketing and distribution infrastructure to commercialize our Vicarious Surgical System for use in ventral hernia repair procedures; |
| ● | continue to develop the Vicarious Surgical System; |
| ● | seek to identify, assess, acquire, license and/or develop other product candidates and technologies or components thereof and subsequent generations of our current product candidates and technologies; |
| ● | seek to maintain, protect and expand our intellectual property portfolio; |
| ● | seek to attract and retain skilled personnel; and |
| ● | support our operations as a public company. |
Our ability to generate future revenue from the Vicarious Surgical System sales depends heavily on our success in many areas, including but not limited to:
| ● | launching and commercializing current and future uses for the Vicarious Surgical System, either directly or in conjunction with one or more collaborators or distributors; |
| ● | obtaining and maintaining regulatory authorization and/or clearance with respect to each application for the Vicarious Surgical System and maintaining regulatory compliance throughout relevant jurisdictions; |
| ● | maintaining clinical and economical value for end-users and customers in changing environments; |
| ● | addressing any competing technological and market developments; |
| ● | negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; |
| ● | establishing and maintaining distribution relationships with third parties that can provide adequate (in amount and quality) infrastructure to support market demand for the Vicarious Surgical System; and |
| ● | maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how. |
We have incurred significant losses since inception. As such, you cannot rely upon our historical operating performance to make an investment or voting decision regarding us.
Since inception, we have engaged in research and development activities. We have financed our operations primarily through the issuance of equity securities. Our accumulated deficit as of December 31, 2025 was $246.1 million. We do not know whether or when we will become profitable. Our ability to generate revenue and achieve profitability depends upon our ability to accelerate the commercialization of the Vicarious Surgical System in line with the demand from new partnerships and our aggressive business strategy. We may be unable to achieve any or all of these goals.
We will need to raise additional funding to develop and commercialize the Vicarious Surgical System and to expand our research and development efforts. This additional financing may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product commercialization or development efforts or cease our operations.
Our operations have consumed substantial amounts of cash since inception. We expect to expend substantial additional amounts to commercialize the Vicarious Surgical System for use in ventral hernia repair procedures and to develop new surgical applications for the Vicarious Surgical System. We will require additional capital to develop and commercialize the Vicarious Surgical System for abdominal surgeries and to develop the Vicarious Surgical System for new surgical applications. As of December 31, 2025, we held cash and cash equivalents of $2.6 million and short-term investments of $7.2 million. Due to a reduction in headcount effective March 6, 2026, we estimate that our cash resources will be sufficient to fund operations and meet our obligations through the second quarter of 2026. We follow the guidance of ASC Topic 205-40, Presentation of Financial Statements-Going Concern, in order to determine whether there is substantial doubt about our ability to continue as a going concern for one year after the date our financial statements are issued. Based on our current cash forecast, we expect that our present capital resources will not be sufficient to fund our planned operations for that period of time, which raises substantial doubt as to our ability to continue as a going concern. In addition, our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned.
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We cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any future financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our common stock to decline. The incurrence of indebtedness could result in increased fixed payment obligations, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable, and we may be required to relinquish rights to some of our technologies or otherwise agree to terms that are unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects. In addition, raising additional capital through the issuance of equity or convertible debt securities would cause dilution to holders of our equity securities, and may affect the rights of then-existing holders of our equity securities. Even if we believe that we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.
Risks Related to Our Business and Operations
We are a development stage company with a limited history of operations and no products with marketing authorization in any jurisdiction, and we cannot assure you that we will ever have a commercialized product.
We are a development stage medical device company with a limited operating history, and we currently do not have any products authorized for commercialization in any country or jurisdiction or any source of revenue. We have been engaged in research and product development since our inception in 2014 and have invested all of our time and resources in developing our technology and the Vicarious Surgical System, which we intend to commercialize initially for use in ventral hernia repair procedures, followed by subsequent indications. The future success of our business will depend on our ability to obtain regulatory authorization to market our Vicarious Surgical System, drive adoption, successfully introduce new surgical applications for the Vicarious Surgical System, establish our sales force and distribution network, and control costs, all of which we may be unable to do. We have a limited history of operations upon which you can evaluate our business and our operating expenses may increase significantly. Our lack of a significant operating history also limits your ability to make a comparative evaluation of us, the Vicarious Surgical System and our prospects.
If we do not successfully manage the development and launch of the Vicarious Surgical System, our business, operating and financial results and condition could be adversely affected.
We aim to launch the Vicarious Surgical System initially for use in ventral hernia repair procedures, but to later expand the product to other abdominal surgical applications, including gynecological, urological and general surgery uses. We face risks associated with developing and launching the Vicarious Surgical System for the first indication specific use and other surgical applications. We are in the process of developing the Vicarious Surgical System, and will need to complete beta testing, verification and validation prior to filing De Novo authorization with FDA. If we encounter development or manufacturing challenges or discover errors during our development cycle, the launch dates of the initial and new surgical applications may be delayed, which will cause delays in our ability to achieve our forecasted results. The expenses or losses associated with unsuccessful product development or launch activities or lack of market acceptance of the Vicarious Surgical System could adversely affect our business or financial condition.
The market for the Vicarious Surgical System and the use of robotic-assisted surgical technology is rapidly evolving, and increasingly competitive, as the healthcare industry is undergoing significant structural change, which makes it difficult to forecast demand for our product candidates and technologies.
The market for the Vicarious Surgical System and the use of robotic-assisted surgical technology is rapidly evolving, and it is uncertain whether we will achieve and sustain high levels of demand and market adoption. Our future financial performance will depend in part on growth in this market and on our ability to adapt to the changing demands of customers. It is difficult to predict the future growth rate and size of our target market. Negative publicity concerning the Vicarious Surgical System could limit market acceptance of the Vicarious Surgical System. If our customers do not perceive the benefits of the Vicarious Surgical System, when or if it is authorized for marketing, or if the Vicarious Surgical System does not attract new customers, then our market may not develop at all, or it may develop more slowly than we expect. Our success will depend to a substantial extent on the willingness of healthcare organizations to increase their use of our technology and our ability to demonstrate the value of our technology relative to competing products to existing and potential customers. If healthcare organizations do not recognize or acknowledge the benefits of the Vicarious Surgical System or if we are unable to reduce healthcare costs or drive positive health outcomes, then the market for our solutions might not develop at all, or it might develop more slowly than we expect.
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Because our markets are highly competitive, customers may choose to purchase our competitors’ products or services or may not accept the Vicarious Surgical System for use in ventral hernia repair procedures, which would result in a reduced ability to generate future revenue.
Robotic-assisted surgery using the Vicarious Surgical System is a technology that competes with established and emerging treatment options in both disease management and reconstructive medical procedures. These competitive treatment options include conventional open surgery and minimally invasive approaches. Some of these procedures are widely accepted in the medical community and, in many cases, have a long history of use. Studies could be published that show that other treatment options are more beneficial and/or cost-effective than robotic-assisted surgery. We cannot be certain that physicians will use our product candidates to replace or supplement established treatments or that our product candidates will be competitive with current or future technologies, when or if those product candidates are authorized for marketing.
Additionally, we face or expect to face competition from companies that develop or have developed robotic-assisted surgical systems and products. Companies have introduced products in the field of robotic surgery or have made explicit statements about their efforts to enter the field including, but not limited to, the following companies: Intuitive Surgical, Inc.; Johnson & Johnson (including their wholly-owned subsidiaries Ethicon Endo-Surgery, Inc., Auris Health, Inc. and Verb Surgical Inc.); Medtronic plc (including their wholly-owned subsidiary Covidien LP); Virtual Incision Corporation; CMR Surgical Ltd.; and Stryker Corporation. Other companies with substantial experience in industrial robotics could potentially expand into the field of surgical robotics and become competitors. Our ability to generate future revenue may be reduced due to pricing pressure if our competitors develop and market products that are more effective or less expensive than our future commercial product candidates. If we are unable to compete successfully, our ability to generate future revenue will suffer, which could have a material adverse effect on our business, financial condition, result of operations, or cash flows.
Our success depends upon market acceptance of the Vicarious Surgical System for use in ventral hernia repair procedures, our ability to develop and commercialize the Vicarious Surgical System for use in ventral hernia repair procedures and additional surgical applications and generate revenues, and our ability to identify new markets for our technology.
We have developed and are engaged in the development of the Vicarious Surgical System initially for use in ventral hernia repair procedures. Achieving physician, patient, and third-party payor acceptance of robotic-assisted surgery as a preferred method of performing surgery is crucial to our success. Our success will depend on the acceptance of the Vicarious Surgical System in the United States and global health-care markets, when or if it is authorized for marketing in those jurisdictions. We are faced with the risk that the marketplace will not be receptive to the Vicarious Surgical System over competing products, including traditional and existing robotic-assisted surgical procedures used in hospitals and ASCs, and that we will be unable to compete effectively. Factors that could affect our ability to successfully commercialize the Vicarious Surgical System for use in ventral hernia repair procedures and to commercialize any potential future product candidates and technologies include:
| ● | challenges of developing or acquiring externally-developed technology solutions that are adequate and competitive in meeting the requirements of next-generation design challenges; and |
| ● | dependence upon hospitals, ASCs, surgeons and other healthcare practitioners’ acceptance of the Vicarious Surgical System. |
Even if we can prove the safety and effectiveness of the Vicarious Surgical System and it receives marketing authorization, hospitals, ASCs, or surgeons may elect not to use it. In addition, hospitals, ASCs and surgeons may be slow to adopt the Vicarious Surgical System because of the perceived liability risks arising from the use of new products and the uncertainty of reimbursement from third-party payors, particularly in light of ongoing healthcare reform initiatives and the evolving healthcare environment.
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Broad use of the Vicarious Surgical System will require training of surgical teams. We expect that there will be a learning process involved for surgical teams to become proficient in the use of the Vicarious Surgical System. Market acceptance could be delayed due to the time required to complete this training. We may not be able to rapidly train surgical teams in numbers sufficient to generate adequate demand for our product candidates. We cannot assure investors that the Vicarious Surgical System or any future product candidates and technologies will gain broad market acceptance. If the market for the Vicarious Surgical System or any future product candidates and technologies fail to develop or develops more slowly than expected, or do not achieve or sustain market acceptance, our business and operating results would be materially and adversely affected.
Surgeons, hospitals, ASCs and distributors may have existing relationships with other medical device companies that make it difficult for us to establish new relationships with them, and as a result, we may not be able to sell and market the Vicarious Surgical System effectively.
We believe that to sell and market the Vicarious Surgical System effectively, when or if the product receives marketing authorization, we must establish relationships with key surgeons, hospitals and ASCs in the field of abdominal surgery. Many of these key surgeons, hospitals and ASCs already have long-standing relationships with large, well-known companies that dominate the medical device industry through collaborative research programs and other relationships. Because of these existing relationships, some of which may be contractually enforced, surgeons, hospitals and ASCs may be reluctant to adopt the Vicarious Surgical System, particularly if it competes with or has the potential to compete with products and technologies supported by these existing relationships or through their own collaborative research programs. Even if these surgeons, hospitals and ASCs purchase the Vicarious Surgical System, they may be unwilling to enter into collaborative relationships with us to promote joint marketing programs or to provide us with clinical and financial data.
Any failure in our efforts to train surgeons, hospital or ASC staff could result in lower than expected product sales and potential liabilities.
A critical component of our future sales and marketing efforts is the training of a sufficient number of surgeons and hospital staff to properly use the Vicarious Surgical System, when or if it is authorized for marketing. We rely on surgeons and hospital staff to devote adequate time to learn to use our future product candidates and technologies. Convincing surgeons, hospital and ASC staff to dedicate the time and resources necessary for adequate training in the use of the Vicarious Surgical System will be challenging, and we cannot assure you we will be successful in these efforts. If surgeons, hospital or ASC staff are not properly trained, they may misuse or ineffectively use the Vicarious Surgical System. If nurses or other members of the hospital or ASC staff are not adequately trained to assist in using the Vicarious Surgical System, surgeons may be unable to use the Vicarious Surgical System. Insufficient training may result in unsatisfactory patient outcomes, patient injury and related liability or negative publicity, which could have an adverse effect on our product sales or create substantial potential liabilities.
Robotic-assisted surgical device development is costly and involves continual technological change, which may render the Vicarious Surgical System obsolete.
The market for robotic-assisted surgical devices is characterized by rapid technological change, medical advances and evolving industry standards. Any one of these factors could reduce the demand for the Vicarious Surgical System, when or if it is authorized for marketing, or require substantial resources and expenditures for research, design and development to avoid technological or market obsolescence.
Our success will depend on our ability to enhance our current technology, services and systems and develop or acquire and market new technologies to keep pace with technological developments and evolving industry standards, while responding to changes in customer needs. A failure to adequately develop or acquire device enhancements or new devices that will address changing technologies and customer requirements adequately, or to introduce such devices on a timely basis, may have a material adverse effect on our business, financial condition and results of operations.
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We might have insufficient financial resources to improve existing devices, advance technologies and develop new devices at competitive prices. Technological advances by one or more competitors or future entrants into the field may result in the Vicarious Surgical System becoming non-competitive or obsolete, which may decrease revenues and profits and adversely affect our business and results of operations.
We may encounter significant competition across our existing and future planned product candidates and technologies and in each market in which we sell or plan to sell the Vicarious Surgical System from various companies, many of which have greater financial and marketing resources than us. Our primary competitors include Intuitive Surgical, Johnson & Johnson (including their wholly-owned subsidiaries Ethicon Endo-Surgery, Inc., Auris Health, Inc. and Verb Surgical Inc.), and Medtronic, which are currently the top manufacturers of robotic-assisted surgical devices.
In addition, our primary competitors, which are well-established medical device manufacturers with significant resources, may engage in aggressive marketing tactics. Competitors may also possess the ability to commercialize additional lines of products, bundle products or offer higher discounts and incentives to customers in order to gain a competitive advantage. If the prices of competing products are lowered as a result, we may not be able to compete effectively.
We are highly dependent upon the continued contributions of our management team. The loss of their services could harm our business, and if we are unable to attract, recruit, train, retain, motivate and integrate key personnel, we may not achieve our goals.
Our future success depends on our ability to attract, recruit, train, retain, motivate and integrate key personnel, including our Chief Executive Officer, Stephen From, our co-founder and President, Adam Sachs, our Chief Financial Officer, Sarah Romano, and our co-founder and Chief Technology Officer, Sammy Khalifa, as well as our management team and our research and development, manufacturing, sales and marketing personnel. Our future business and results of operations depend in significant part upon the continued contributions of Messrs. From, Sachs, and Khalifa, and Ms. Romano. If we were to lose their services or if they fail to perform in their current positions, or if we are not able to attract and retain skilled employees in addition to Messrs. From, Sachs, and Khalifa and Ms. Romano, this could adversely affect the development and implementation of our business plan and substantially harm our business. Competition for qualified personnel is intense.
In addition, we rely upon technical and scientific employees or third-party contractors to effectively establish, manage and grow our business. Consequently, we believe that our future viability will depend largely on our ability to attract and retain highly skilled robotics engineers, artificial intelligence engineers, software engineers, hardware engineers and optical engineers, as well as other managerial, sales, scientific and technical personnel. In order to effectively recruit these personnel, we may need to pay higher compensation or fees to our employees or consultants than we currently expect, and such higher compensation payments may have a negative effect on our operating results. Competition for experienced, high-quality personnel is intense, and we cannot assure investors that we will be able to recruit and retain such personnel. Our growth depends, in particular, on attracting and retaining highly trained sales personnel with the necessary technical background and ability to understand the Vicarious Surgical System at a technical level to effectively identify and sell to potential new customers and develop new uses for the Vicarious Surgical System. Because of the technical and complex nature of the Vicarious Surgical System and the dynamic market in which we compete in, any failure to attract, recruit, train, retain, motivate and integrate qualified personnel could materially delay development of the Vicarious Surgical System and harm our operating results and growth prospects.
We will need to expand our organization, and we may experience difficulties in recruiting needed additional employees and consultants, which could disrupt our operations.
As our development and commercialization plans and strategies develop, we will need additional managerial, operational, sales, marketing, financial, legal and other resources. The competition for qualified personnel in the medical device industry is intense. Due to this intense competition, we may be unable to attract and retain the qualified personnel necessary for the development of our business or to recruit suitable replacement personnel.
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Our management may need to divert a disproportionate amount of our attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of additional surgical applications for the Vicarious Surgical System. If our management is unable to effectively manage our growth, our expenses may increase more than expected, our ability to generate and/or grow revenue could be reduced and we may not be able to implement our business strategy. Our future financial performance and our ability to commercialize the Vicarious Surgical System and compete effectively will depend, in part, on our ability to effectively manage any future growth.
We face significant risks to our business when we engage in the outsourcing of engineering work, including outsourcing of software work overseas, which, if not properly managed, could result in the loss of valuable intellectual property, increased costs due to inefficient and poor work product, and subject us to export control restrictions which could impede or prevent us from working with partners internationally, which could harm our business, including our financial results, reputation and brand.
We have outsourced engineering work related to the design and development of software. We have worked, and expect to in the future work, with companies located in jurisdictions outside of the United States. We have limited experience in the outsourcing of engineering and software development to third parties located internationally that operate under different laws and regulations than those in the United States. If we are unable to properly manage and oversee the outsourcing of this engineering and other work related to our products, we could suffer the loss of valuable intellectual property, or the loss of the ability to claim such intellectual property, including patents, trademarks, trade secrets and copyrights. We could also be subjected to increased regulatory and other scrutiny related to export control restrictions which could impede or prevent us from working with international partners. Additionally, instead of saving money, we could incur significant additional costs as a result of inefficient or delayed engineering services or poor work product. If this were to occur, our business would be harmed, including our financial results, reputation and brand.
We have no experience in marketing and selling the Vicarious Surgical System and if we are unable to successfully commercialize the Vicarious Surgical System, our business and operating results will be adversely affected.
We have no experience marketing and selling the Vicarious Surgical System, should we receive marketing authorization from the FDA and other regulatory authorities. We currently intend to sell the Vicarious Surgical System to hospitals and ASCs. Future sales of the Vicarious Surgical System will depend in large part on our ability to effectively market and sell the Vicarious Surgical System, successfully manage and expand our sales force, and increase the scope of our marketing efforts. We may also enter into distribution arrangements in the future. Because we have limited experience in marketing and selling the Vicarious Surgical System, our ability to forecast demand, the infrastructure required to support such demand and the sales cycle to customers is unproven. If we do not build an efficient and effective marketing and sales force, our business and operating results will be adversely affected.
We expect to generate a portion of our revenue internationally in the future and may become subject to various additional risks relating to our international activities, including any clinical trials or product studies conducted outside of the United States, which could adversely affect our business, operating results and financial condition.
We intend to generate revenues from international sources as we expand our sales and marketing opportunities internationally. We have limited experience operating internationally and engaging in international business involves a number of difficulties and risks, including:
| ● | the challenges associated with building local brand awareness, obtaining local key opinion leader support and clinical support, implementing reimbursement strategies and building local marketing and sales teams; |
| ● | required compliance with foreign regulatory requirements and laws, including regulations and laws relating to patient data and medical devices; |
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| ● | trade relations among the United States and those foreign countries in which our future customers, distributors, manufacturers and suppliers have operations, including protectionist measures such as tariffs and import or export licensing requirements, whether imposed by the United States or such foreign countries; |
| ● | difficulties and costs of staffing and managing foreign operations; |
| ● | difficulties protecting, procuring or enforcing intellectual property rights internationally; |
| ● | required compliance with anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act, data privacy requirements, labor laws and anti-competition regulations; |
| ● | laws and business practices that may favor local companies; |
| ● | longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; |
| ● | political and economic instability and war or other military conflict, which could have a material adverse impact on our sales; and |
| ● | potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements and other trade barriers |
We dedicate significant resources to our international operations and are unable to manage these risks effectively, our business, operating results and financial condition may be adversely affected.
If we experience decreasing prices for our product candidates and technologies and are unable to reduce our expenses, including the per unit cost of producing our product candidates and technologies, there may be a material adverse effect on our business, results of operations, financial condition and cash flows.
We may experience decreasing prices for the Vicarious Surgical System upon regulatory authorization due to pricing pressure from managed care organizations and other third-party payors and suppliers, increased market power of our payors as the medical device industry consolidates, and increased competition among suppliers, including manufacturing services providers. If the prices for the Vicarious Surgical System decrease and we are unable to reduce our expenses, including the cost of sourcing materials, logistics and the cost to manufacture the Vicarious Surgical System, our business, results of operations, financial condition and cash flows may be adversely affected. To the extent that we engage in sales to large hospital networks, we may be subject to procurement discounts, which could have a negative impact on the prices of our product candidates and technologies.
We may experience manufacturing problems or delays that could limit the growth of our revenue or increase our losses.
We may encounter unforeseen situations that would result in delays or shortfalls in our production as well as delays or shortfalls caused by our outsourced manufacturing suppliers and by other third-party suppliers who manufacture components for the Vicarious Surgical System. The FDA has established comprehensive and prescriptive regulations for manufacturers of finished medical devices and device components, which require them to establish and maintain processes and procedures to adequately control device manufacturing operations and environmental conditions that could adversely affect product quality and impact patient safety. Clean room standards are an example of these requirements. The failure of us or our third-party component manufacturers or suppliers to comply with applicable standards and regulatory requirements could delay the production of the Vicarious Surgical System.
We or our third-party component manufacturers or suppliers may encounter difficulties in scaling up or maintaining production relating to the Vicarious Surgical System, including:
| ● | problems involving production yields; |
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| ● | quality control and assurance; |
| ● | component or material supply shortages; |
| ● | import or export restrictions on components, materials or technology; |
| ● | shortages of qualified personnel; and |
| ● | compliance with state and federal regulations. |
If we are unable to keep up with demand for the Vicarious Surgical System, our future revenue could be impaired, market acceptance for the Vicarious Surgical System could be adversely affected and our customers might instead purchase our competitors’ products. Our inability to successfully manufacture the Vicarious Surgical System would have a material adverse effect on our operating results.
We rely on limited or sole suppliers for some of the materials and components used in the Vicarious Surgical System, and may not be able to find replacements or immediately transition to alternative suppliers, which could require us to redesign aspects of the Vicarious Surgical System and which would have a material adverse effect on our business, financial condition, results of operations and reputation.
We rely on limited or sole suppliers for certain materials and components that are used in the Vicarious Surgical System. While we periodically forecast our needs for such materials and enters into standard purchase orders with them, we do not have long-term contracts with some of these suppliers. If we were to lose such suppliers, or if such suppliers were unable to fulfill our orders or to meet our manufacturing specifications, there can be no assurance that we will be able to identify or enter into agreements with alternative suppliers on a timely basis or on acceptable terms, if at all. Furthermore, if we are required to change the manufacturer of a key component of the Vicarious Surgical System, we would be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines, and we may be required to redesign aspects of the Vicarious Surgical System to accommodate the new component, which would result in significant delays and additional costs. An interruption in our operations could occur if we encounter delays or difficulties in redesigning the Vicarious Surgical System, or securing these materials and components, or if the quality of the materials and components supplied do not meet our requirements, or if we cannot then obtain an acceptable substitute. The time and effort required to redesign the Vicarious Surgical System, or to qualify a new supplier and ensure that the new materials and components provide the same or better quality results could result in significant additional costs. Any such interruption could significantly affect our business, financial condition, results of operations and reputation. While we believe that our supplies of components and materials are currently sufficient for us to continue the development of our product candidates and technologies without a disruption to our business, in the event that we must replace one of our suppliers, there can be no assurance that we can maintain this level of inventory in the future.
Acquisitions, joint ventures or strategic alliances could disrupt our business, cause dilution to our stockholders and otherwise harm our business.
We may acquire other businesses or product candidates and technologies, as well as pursue strategic alliances, joint ventures, technology licenses or investments in complementary businesses. We have not engaged in any of these strategic transactions to date, except for our Center of Excellence partners, and our ability to do so successfully is unproven. Any of these strategic transactions could be material to our financial condition and operating results and expose us to many risks, including:
| ● | disruption in our relationships with customers, distributors, manufacturers or suppliers as a result of such a transaction; |
| ● | unanticipated liabilities related to acquired companies; |
| ● | difficulties integrating acquired personnel, technologies and operations into our existing business; |
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| ● | diversion of management’s time and focus away from operating our business to acquisition integration challenges; |
| ● | increases in our expenses and reductions in our cash available for operations and other uses; and |
| ● | possible write-offs or impairment charges relating to acquired businesses. |
Foreign acquisitions involve unique risks in addition to those mentioned above, including those related to the integration of operations across different cultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific countries.
In addition, the anticipated benefit of any acquisition may not materialize. Future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses or write-offs of goodwill, any of which could harm our financial condition. We cannot predict the number, timing or size of future joint ventures, strategic alliances or acquisitions, if any, or the effect that any such transactions might have on our operating results.
If we do not successfully develop, optimize and operate our sales and distribution channels or we do not effectively expand and update infrastructure, our operating results and customer experience may be negatively impacted.
If we do not adequately predict market demand or otherwise develop, optimize and operate our sales and distribution channels successfully, it could result in excess or insufficient inventory or fulfillment capacity, increased costs, or immediate shortages in product or component supply, or harm our business in other ways. In addition, if we do not maintain adequate infrastructure to enable us to, among other things, manage our purchasing and inventory, it could negatively impact our operating results.
If we are unable to continue the development of an adequate sales and marketing organization and/or if our direct sales organization is not successful, we may have difficulty achieving market awareness and selling our product and technologies in the future.
We must develop and grow our sales and marketing organization and enter into partnerships or other arrangements to market and sell our product candidates and technologies and/or collaborate with third parties, including distributors and others, to market and sell our product candidates and technologies to develop and maintain the commercial success of the Vicarious Surgical System, when or if we are authorized for marketing, and to achieve commercial success for any of our future product candidates and technologies. Developing and managing a direct sales organization is a difficult, expensive and time-consuming process.
To develop our sales and marketing organization to successfully achieve market awareness and sell our product candidates and technologies after they receive appropriate marketing authorization, we must:
| ● | continue to recruit and retain adequate numbers of effective and experienced sales and marketing personnel; |
| ● | effectively train our sales and marketing personnel in the benefits and risks of the Vicarious Surgical System; |
| ● | establish and maintain successful sales, marketing, training and education programs that educate healthcare professionals so they can appropriately inform their patients about the Vicarious Surgical System; |
| ● | manage geographically dispersed sales and marketing operations; and |
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| ● | effectively train our sales and marketing personnel on the applicable fraud and abuse laws that govern interactions with health-care practitioners as well as current and prospective patients and maintain active oversight and auditing measures to ensure continued compliance. |
We may not be able to successfully manage our sales force or increase our product sales at acceptable rates.
If we are unable to establish and maintain adequate sales and marketing capabilities or enter into and maintain arrangements with third parties to sell and market the Vicarious Surgical System, our business may be harmed.
We cannot guarantee that we will be able to establish and maintain an adequate volume of sales in the future. A substantial reduction in sales could have a material adverse effect on our operating performance. To the extent that we enter into additional arrangements with third parties to perform sales or marketing services in the United States, Europe or other countries, our product margins could be lower than if we directly marketed and sold the Vicarious Surgical System. To the extent that we enter into co-promotion or other marketing and sales arrangements with other companies, any revenue received will depend on the skills and efforts of others, and we cannot predict whether these efforts will be successful. In addition, the growth of market acceptance of the Vicarious Surgical System by healthcare practitioners outside of the United States will largely depend on our ability to continue to demonstrate the relative safety, effectiveness, reliability, cost-effectiveness and ease of use of the Vicarious Surgical System. If we are unable to do so, we may not be able to increase product revenue from our sales efforts in other countries. If we are unable to establish and maintain adequate sales, marketing and distribution capabilities, independently or with others, our future revenue may be reduced and our business may be harmed.
Quality problems could lead to recalls or safety alerts and/or reputational harm and could have a material adverse effect on our business, results of operations, financial condition and cash flows.
The quality of our product candidates and technologies and future commercial product candidates and technologies is very important to us and our customers due to the serious and costly consequences of product failure. Our success depends on the quality and reliability of the Vicarious Surgical System. Our business exposes us to potential product liability risks that are inherent in the design, manufacture, and marketing of medical devices. While we take measures to ensure that components, product candidates and technologies are manufactured to stringent quality specifications, the Vicarious Surgical System incorporates mechanical parts, electrical components, optical components, packaging and computer software, any of which may contain errors or exhibit failures, especially when the finished system is first introduced. In addition, new product candidates or modifications may contain undetected errors or performance problems that, despite testing, are discovered only after marketing authorization and commercial shipment. Because the Vicarious Surgical System is being designed to perform complex surgical procedures, due to the serious and costly consequences of product failure, we and our future customers have an increased sensitivity to such defects.
Although the Vicarious Surgical System is subject to stringent quality processes and controls, we cannot provide assurance that our system will not experience component aging, errors, performance problems, manufacturing nonconformities, or design defects or that unexpected risks to users or patients will not be discovered during commercial use. If we experience product flaws or performance problems, any or all of the following could occur:
| ● | delays in shipments; |
| ● | loss of revenue; |
| ● | delay in market acceptance; |
| ● | diversion of resources; |
| ● | damage to reputation; |
| ● | product recalls; |
| ● | regulatory actions; |
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| ● | increased service or warranty costs; or |
| ● | product liability claims. |
Additionally, the manufacture and production of the Vicarious Surgical System requires a highly controlled and clean environment to minimize particles and other yield- and quality-limiting contaminants. Weaknesses in process control or minute impurities in materials may result in defective products. If we are not able to maintain stringent quality controls, or if contamination problems arise, we may experience delays in development and commercialization efforts and may be subject to regulatory enforcement actions, which would harm our business and results of operations.
If we or our third-party component manufacturers or suppliers fail to meet any applicable product quality standards and the Vicarious Surgical System is the subject of recalls, safety alerts or other regulatory enforcement actions, our reputation could be damaged, we could lose customers, and our revenue and results of operations could decline.
If we are not able to develop and release new surgical applications for the Vicarious Surgical System, or successful enhancements, new features and modifications to the Vicarious Surgical System or to achieve adequate clinical utility, our business, financial condition and results of operations could be adversely affected.
The markets in which we operate are characterized by rapid technological change, frequent new product and service introductions and enhancements, changing customer demands, and evolving industry standards. The introduction of products embodying new technologies can quickly make existing products obsolete and unmarketable. Additionally, changes in laws and regulations could impact the usefulness of the Vicarious Surgical System and could necessitate changes or modifications to the Vicarious Surgical System to accommodate such changes. We invest substantial resources in researching and developing new developments to the Vicarious Surgical System and enhancing the Vicarious Surgical System by incorporating additional features, improving functionality, and adding other improvements to meet customers’ evolving needs. The success of any enhancements, improvements or any new features to the Vicarious Surgical System, when or if authorized for marketing by the FDA, depends on several factors, including timely completion, competitive pricing, adequate quality testing, integration with new and existing technologies and third-party partners’ technologies and overall market acceptance. We may not succeed in developing, marketing and delivering on a timely and cost-effective basis enhancements or improvements to the Vicarious Surgical System or any new product candidates and technologies that respond to continued changes in market demands or new customer requirements, and any enhancements or improvements to the Vicarious Surgical System or any new solutions may not achieve market acceptance or authorization. Since developing the Vicarious Surgical System is complex, the timetable for the release of new enhancements is difficult to predict, and we may not offer new updates as rapidly as our customers require or expect. Any new product candidates and technologies that we develop may not be introduced in a timely or cost-effective manner, may contain errors or defects, or may not achieve the broad market acceptance necessary to generate sufficient revenue. Moreover, even if we introduce new product candidates and technologies, we may experience a decline in revenue from the Vicarious Surgical System that is not offset by revenue from the new product candidates and technologies. For example, customers may delay making purchases of new product candidates and technologies to permit them to make a more thorough evaluation of these product candidates and technologies or until industry and marketplace reviews become widely available. Customers may also delay purchasing a new product because their existing Vicarious Surgical System or other devices continues to meet their needs. Some customers may hesitate to migrate to a new product due to concerns regarding the performance of the new product. In addition, we may lose existing customers who choose a competitor’s products. This could result in a temporary or permanent revenue shortfall and adversely affect our business, financial condition and results of operations.
The introduction of new products and solutions by competitors, the development of entirely new technologies to replace existing offerings or shifts in healthcare benefits trends could make our future commercial products and technologies obsolete or adversely affect our business, financial condition and results of operations. We may experience difficulties with industry standards, design or marketing that could delay or prevent our development, introduction or implementation of new product candidates and technologies, enhancements, additional features or capabilities. If customers do not widely purchase and adopt our future product candidates and technologies, we may not be able to realize a return on our investment. If we do not accurately anticipate customer demand or if we are unable to develop, license or acquire new features and capabilities on a timely and cost-effective basis, or if such enhancements do not achieve market acceptance, it could result in adverse publicity, loss of revenue or market acceptance or claims by customers brought against us, each of which could have a material and adverse effect on our reputation, business, results of operations and financial condition.
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Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.
Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including changes in inflation, interest rates and overall economic conditions and uncertainties. To the extent inflation or other factors increase our business costs, it may not be feasible to offset higher costs through manufacturing efficiencies. An economic downturn could result in a variety of risks to our business, including weakened demand for our future product candidates and technologies and our inability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also result in further constraints on our third-party component manufacturers and suppliers or cause future customers to delay making payments for our product candidates and technologies. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely affect our business.
Geopolitical conflicts could potentially affect our sales and disrupt our operations and could have a material adverse impact on us.
Geopolitical conflicts could adversely impact our operations or those of our suppliers, manufacturers or customers. The extent to which these events impact our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence. If the uncertainty surrounding geopolitical conflicts and in the global marketplace continues, or if we, or any of our suppliers, manufacturers or customers encounter any disruptions to our or their respective operations or facilities, then we or they may be prevented or delayed from effectively operating our or their business, respectively, and the marketing and sale of our product candidates and our financial results could be adversely affected.
The requirements of being a public company may strain our resources and divert management’s attention, which could adversely affect our business, results of operations, and financial condition.
We have incurred and will continue to incur significant legal, accounting and other expenses that we did not incur as a private company, including costs associated with public company reporting requirements. We will also continue to incur costs associated with corporate governance requirements, including requirements under the Sarbanes-Oxley Act, as well as rules implemented by the SEC and the applicable stock exchanges or quotation services. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting, and financial compliance costs, make some activities more difficult, time-consuming, and costly, and place significant strain on our personnel, systems, and resources. For example, our management team will need to devote substantial time regarding operations as a public company and compliance with applicable laws and regulations. As a result of the complexity involved in complying with the rules and regulations applicable to public companies, our management’s attention may be diverted from other business concerns, which could harm our business, results of operations, and financial condition.
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We have identified a material weakness in our internal control over financial reporting. If we are unable to successfully remediate this material weakness in our internal control over financial reporting, we may not be able to report our financial condition or results of operations accurately or in a timely manner, which may adversely affect investor confidence in us and, as a result, materially and adversely affect our business and the value of our Class A common stock.
We have identified material weaknesses in our internal control over financial reporting for the years ended December 31, 2025, and 2024. The material weaknesses we identified were as follows:
| ● | we did not maintain an effective control environment as we did not maintain a sufficient complement of accounting and financial reporting resources commensurate with our financial reporting requirements. |
| ● | we did not maintain an effective risk assessment process, which led to improperly designed controls. |
| ● | we did not maintain appropriate control activities to support the appropriate segregation of duties over the review of account reconciliations and manual journal entries, and safeguarding of assets. |
| ● | we did not design and implement controls related to information technology, including access and change management. |
| ● | we did not document, thoroughly communicate and monitor controls processes and relevant accounting policies and procedures. |
These material weaknesses could result in a misstatement of account balances or disclosures that would result in a material misstatement to our annual or interim financial statements that would not be prevented or detected. Had we performed an evaluation of our internal control over financial reporting in accordance with Section 404, additional control deficiencies may have been identified by management, and those control deficiencies could have also represented one or more material weaknesses.
While we have taken steps to remediate the material weaknesses, we cannot assure you that these measures will significantly improve or remediate the material weaknesses described above. We also cannot assure you that we have identified all or that we will not have additional material weaknesses in the future. Accordingly, a material weakness may still exist when we report on the effectiveness of our internal control over financial reporting for purposes of our attestation when required by reporting requirements under the Exchange Act or Section 404 of the Sarbanes-Oxley Act. Further, while we remain a non-accelerated filer and smaller reporting company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
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We expect to incur additional costs to remediate these control deficiencies, though there can be no assurance that our efforts will be successful or avoid potential future material weaknesses. If we are unable to successfully remediate our existing or any future material weaknesses in our internal control over financial reporting, or if we identify any additional material weaknesses, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting, and our stock price may decline as a result. We also could become subject to investigations by FINRA, the SEC or other regulatory authorities.
Our ability to use net operating losses to offset future income may be subject to certain limitations.
As of December 31, 2025, we had federal net operating loss carry forwards (“NOLs”) to offset future taxable income of approximately $209.9 million, of which approximately $2.8 million will expire at various dates from 2034 through 2037, if not utilized. A lack of future taxable income would adversely affect our ability to utilize these NOLs. In addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs and other pre-change tax attributes (such as research tax credits) to offset post-change taxable income. For these purposes, an ownership change generally occurs where the equity ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a three-year period (calculated on a rolling basis). Our existing NOLs may be subject to limitations arising out of previous ownership changes and we may be limited as to the amount that can be utilized each year as a result of such previous ownership changes. In addition, future changes in our stock ownership, including future offerings, as well as other changes that may be outside of our control, could result in additional ownership changes under Section 382 of the Code. Our NOLs may also be impaired under similar provisions of state law. We have not conducted a study to assess whether an ownership change has occurred, whether there have been multiple ownership changes since inception or whether there has been an ownership change as the result of the Business Combination due to the significant complexity and costs associated with such a study. We have recorded a full valuation allowance related to our NOLs and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.
In addition to the limitations discussed above under Sections 382 of the Code, the utilization of NOLs incurred in taxable years beginning after December 31, 2017, are subject to limitations, as modified by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). In general, NOLs generated in taxable years beginning after December 31, 2017 may offset no more than 80 percent of such year’s taxable income and there is no ability for such NOLs to be carried back to a prior taxable year. The CARES Act modifies this limitation on the deduction of NOLs and provides that NOLs arising in taxable years beginning after December 31, 2017 and before January 1, 2021, may be carried back to each of the five taxable years preceding the tax year of such loss, but NOLs arising in taxable years beginning after December 31, 2020 may not be carried back. In addition, the CARES Act eliminates the limitation on the deduction of NOLs to 80 percent of current year taxable income for taxable years beginning before January 1, 2021. As a result of such limitation, we may be required to pay federal income tax in some future year notwithstanding that we have a net loss for all years in the aggregate.
Changes in our effective tax rate or disallowance of our tax positions may adversely affect our financial position and results of operations.
We are subject to income and other taxes in the United States and foreign jurisdictions. The amount of income taxes we pay is subject to our interpretation and application of tax laws in jurisdictions in which we file. Changes in current or future laws or regulations, the imposition of new or changed tax laws or regulations or new interpretations by taxing authorities or courts could affect our results of operations and lead to volatility with respect to tax expenses and liabilities from period to period. For example, limitations on the ability of taxpayers to claim and utilize foreign tax credits and the deferral of certain tax deductions until earnings outside of the United States are repatriated to the United States could impact the tax treatment of future foreign earnings. In addition, on August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the “Inflation Reduction Act”), into law, which includes a new corporate alternative minimum tax beginning in fiscal 2024 and an excise tax of 1% tax on the fair market value of net stock repurchases made after December 31, 2022. We have assessed the provisions of the Inflation Reduction Act and concluded that the Act did not have a material impact on its consolidated financial statements for the year ended December 31, 2025.
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We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and other worldwide anti-bribery laws by us or our agents.
We are subject to the U.S. Foreign Corrupt Practices Act (“FCPA”), which prohibits companies and their intermediaries from making payments in violation of law to non-U.S. government officials for the purpose of obtaining or retaining business or securing any other improper advantage. Our possible future reliance on independent distributors or strategic partners to sell the Vicarious Surgical System internationally demands a high degree of vigilance in enforcing our policy against participation in corrupt activity, because these distributors or strategic partners could be deemed to be our agents, and we could be held responsible for their actions. Other U.S. companies in the medical device and pharmaceutical fields have faced criminal penalties under the FCPA for allowing their agents to deviate from appropriate practices in doing business with such non-U.S. government officials. We are also subject to similar anti-bribery laws in the jurisdictions in which we plan to operate, including the United Kingdom’s Bribery Act of 2010, which also prohibits commercial bribery and makes it a crime for companies to fail to prevent bribery. We have limited experience in complying with these laws and in developing procedures to monitor compliance with these laws by our agents. These laws are complex and far-reaching in nature, and, as a result, we cannot assure investors that we would not be required in the future to alter one or more of our practices to be in compliance with these laws or any changes in these laws or the interpretation thereof.
Any violations of these laws, or allegations of such violations, could disrupt our operations, involve significant management distraction, involve significant costs and expenses, including legal fees, and could result in a material adverse effect on our business, prospects, financial condition, or results of operations. We could also incur severe penalties, including criminal and civil penalties, disgorgement, and other remedial measures.
Risks Related to Healthcare Industry Shifts and Changing Regulations
We are subject to extensive government regulation, which could restrict the development, marketing, sale and distribution of our product candidates and technologies and could cause us to incur significant costs.
We and the Vicarious Surgical System are subject to extensive pre-market and post-market regulation by the FDA and various other federal, state, local and foreign government authorities. Government regulation of medical devices is meant to assure their safety and effectiveness, and includes requirements for, among other things:
| ● | design, development and manufacturing processes; |
| ● | labeling, content and language of instructions for use and storage; |
| ● | product testing, pre-clinical studies and clinical trials (if applicable); |
| ● | regulatory authorization, including but not limited to pre-market clearance, authorization or approval; |
| ● | establishment registration, device listing and ongoing compliance with the QMSR requirements; |
| ● | advertising and promotion; |
| ● | marketing, sales and distribution; |
| ● | conformity assessment procedures; |
| ● | product traceability and record-keeping procedures; |
| ● | review of product complaints, complaint reporting, recalls and field safety corrective actions; |
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| ● | post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; |
| ● | post-market studies (if applicable); and |
| ● | product import and export. |
The laws and regulations to which we and our product candidates, technologies and future commercial product candidates will be subject are complex and subject to periodic changes. Regulatory changes could result in restrictions on our ability to carry on or expand our operations, and may result in higher than anticipated costs or lower than anticipated sales.
Before a new medical device, or a significant modification of a medical device, including a new use of, or claim for, an existing product, can be marketed in the United States, it must first receive either 510(k) clearance, De Novo authorization, or PMA from the FDA, unless an exemption applies. In the 510(k) clearance process, the FDA must determine that a proposed device is “substantially equivalent” to a device legally on the market, known as a “predicate” device, with respect to intended use, technology and safety and effectiveness, in order to clear the proposed device for marketing. Clinical data is sometimes required to support substantial equivalence.
Obtaining marketing authorization for a medical device through the 510(k) premarket notification process, the PMA process, or the De Novo classification process can be expensive and time-consuming, and entails significant user fees to the FDA, unless an exemption is available. The FDA’s review of premarket notifications for 510(k) clearance usually takes 90 to 270 days, and review of De Novo classification applications usually takes 120 to 330 days, but both review processes can last longer. In addition, after a device is cleared or authorized under a reclassification order, any modification that could significantly affect the device’s safety or effectiveness, or that would constitute a major change in its intended use, will require a new 510(k) clearance, or possibly another De Novo authorization or a PMA, depending on the extent of the modification and the associated risks.
The De Novo classification process allows a manufacturer whose novel device is automatically classified into Class III to request down-classification of its device to Class I or Class II, on the basis that the device presents low or moderate risk, as an alternative to following the typical Class III device pathway requiring the submission and approval of a PMA application. Under the FDCA, the FDA is required to classify a device within 120 days following receipt of the De Novo classification request from an applicant; however, the most recent FDA premarket review goals state that the agency will attempt to issue a decision within 150 days of receipt on of all De Novo classification requests received during the year. If the manufacturer seeks reclassification into Class II, the classification request must include a draft proposal for special controls that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device. The FDA may reject the classification request if it identifies a legally marketed predicate device that would be appropriate for a 510(k) notification or determines that the device is not low to moderate risk or that general controls would be inadequate to control the risks and special controls cannot be developed. De Novo classification requests are subject to user fees, unless a specific exemption applies.
In the PMA approval process, the FDA must determine that a proposed device is safe and effective for its intended use based, in part, on extensive data, including but not limited to, technical, pre-clinical, clinical trial, manufacturing and labeling data. The process for obtaining a PMA is more costly and uncertain and approval can take anywhere from 180 days to, in some cases, a year or more from the time the application is initially filed with the FDA. Modifications to devices that are approved through a PMA application generally require FDA approval of a supplemental PMA application. The Vicarious Surgical System and some of our future product candidates and technologies may require obtaining a PMA. In addition, the FDA may require that we obtain a PMA prior to marketing future changes of the Vicarious Surgical System. Further, we may not be able to obtain additional 510(k) clearances, De Novo authorizations, or PMAs for new product candidates and technologies or for modifications to, or additional indications for, the Vicarious Surgical System in a timely fashion or at all. Delays in obtaining future clearances, authorizations, or approvals could adversely affect our ability to introduce new or enhanced product candidates and technologies in a timely manner, which in turn could harm our revenue and future profitability.
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In order to conduct a clinical investigation involving human subjects for the purpose of demonstrating the safety and effectiveness of a medical device, if necessary, for a PMA application, 510(k) premarket notification or De Novo classification request, a company must, among other things, apply for and obtain institutional review board (“IRB”) approval of the proposed investigation. In addition, if the clinical study involves a “significant risk” (as defined by the FDA) to human health, the sponsor of the investigation must also submit and obtain FDA approval of an investigational device exemption (“IDE”) application and follow applicable IDE regulations. Unless IDE-exempt, nonsignificant risk devices are still subject to certain abbreviated IDE requirements; however, an IDE application is not required if such abbreviated requirements are met. We may not be able to obtain any necessary FDA and/or IRB approval to undertake clinical trials in the United States for the Vicarious Surgical System or future devices we develop and intend to market in the United States. If we do obtain such approvals, the FDA may find that our studies do not comply with the IDE or other regulations governing clinical investigations or the data from any such trials may not support marketing authorization of the investigational device. Moreover, certainty that clinical trials will meet desired endpoints, produce meaningful or useful data and be free of unexpected adverse effects, or that the FDA will accept the validity of foreign clinical study data (if applicable) cannot be assured, and such uncertainty could preclude or delay marketing authorization resulting in significant financial costs and reduced revenue.
To ensure compliance with regulatory requirements, medical device manufacturers are subject to post-market surveillance and periodic, pre-scheduled and unannounced inspections by the FDA or other regulatory authorities, and these inspections may include the manufacturing facilities of our subcontractors.
If any of our product candidates receive marketing authorization in the United States, we, as well as our third-party manufacturers or suppliers that are regulated by the FDA, will also be subject to numerous post-marketing regulatory requirements, which include QSMR related to the manufacture of the Vicarious Surgical System, labeling regulations and MDR regulations. The last of these regulations requires us to report to the FDA if any of our commercial devices, when and if authorized for commercialization, causes or contributes to a death or serious injury, or malfunctions in a way that would likely cause or contribute to a death or serious injury if the malfunction recurred. The failure to comply with applicable regulatory requirements can result in enforcement actions by the FDA, which may include any of the following sanctions:
| ● | untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; |
| ● | customer notifications, or orders for repair, replacement or refunds; |
| ● | voluntary or mandatory recalls, detentions or seizures of product candidates; |
| ● | operating restrictions, including total or partial suspension of production; |
| ● | delays in the introduction of product candidates into the market; |
| ● | delay or refusal of for the FDA to grant 510(k) clearances, PMA approvals or De Novo classification orders for new product candidates or new intended uses or modifications to authorized products; |
| ● | rescission of 510(k) clearance, De Novo authorizations, or suspension or withdrawal of PMAs that have already been granted; or |
| ● | in the most serious cases, criminal prosecution. |
The occurrence of any of these events may have a material adverse effect on our business, financial condition and results of operations.
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There is no guarantee that the FDA will grant marketing authorization for the Vicarious Surgical System or any of our future product candidates and technologies, and failure to obtain necessary marketing authorization for the Vicarious Surgical System and our future product candidates and technologies would adversely affect our ability to grow our business.
The Vicarious Surgical System and our new or modified product candidates and technologies will require FDA marketing authorization before they may be marketed in the United States. The FDA may refuse our requests for pre-market review of new product candidates and technologies or may not grant marketing authorization for these product candidates and technologies for the indications that are necessary or desirable for successful commercialization. Early-stage review may also result in delays or other issues.
The FDA may delay, limit or deny marketing authorization of a device for many reasons, including:
| ● | our inability to demonstrate to the satisfaction of the FDA that our product candidates are safe and effective for their intended uses; | |
| ● | the disagreement of the FDA with the design or implementation of our clinical trials or the interpretation of data from non- clinical studies or clinical trials; | |
| ● | serious and unexpected adverse device effects experienced by subjects enrolled in our clinical trials; | |
| ● | the data from our nonclinical studies and clinical trials may be insufficient to support marketing authorization or clearance, where required; | |
| ● | our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; and | |
| ● | the manufacturing process or facilities we use may not meet applicable requirements. |
The FDA may also change its marketing authorization policies, adopt additional regulations or revise existing regulations, or take other actions that may prevent or delay authorization of our product candidates and technologies under development or impact our ability to obtain marketing authorization for modifications to our authorized products in a timely manner. Significant delays in receiving or failure to receive FDA marketing authorization for our new product candidates and technologies would have an adverse effect on our ability to expand our business.
Unsuccessful animal studies, clinical trials or procedures relating to product candidates and technologies under development could have a material adverse effect on our prospects.
The regulatory clearance, authorization, or approval process for new device product candidates, technologies and new indications for existing device product candidates and technologies requires extensive data and procedures, including the development of regulatory and quality standards and, potentially, studies involving animals or human subjects. Based on pre-submission communications with the FDA, we intend to file a De Novo classification request for the Vicarious Surgical System with respect to use in ventral hernia procedures, which would require human clinical studies to ensure that the product candidate is safe and effective. Unfavorable or inconsistent data from future animal studies, clinical trials or other studies conducted by us or third parties, or perceptions regarding such data, could adversely affect our ability to obtain necessary device regulatory authorization and the market’s view of our future prospects.
Failure to successfully complete any required studies in a timely and cost-effective manner could have a material adverse effect on our prospects with respect to the Vicarious Surgical System or other product candidates and technologies. Because animal studies, clinical trials and other types of scientific studies are inherently uncertain, there can be no assurance that these trials or studies will be completed in a timely or cost-effective manner, be suitable to support marketing authorization or result in a commercially viable product. Clinical trials or other studies may experience significant setbacks even if earlier preclinical or animal studies have shown promising results. Furthermore, preliminary results from animal studies or clinical trials may be contradicted by subsequent clinical analysis. Results from animal studies or clinical trials may also not be supported by actual long-term studies or clinical experience. If preliminary study results are later contradicted, or if initial results cannot be supported by actual long-term studies or clinical experience, our business could be adversely affected. Clinical trials also may be suspended or terminated by us, the FDA, the responsible IRB or other regulatory authorities at any time if it is believed that the trial participants face unacceptable health risks. The FDA may disagree with our interpretation of the data from the animal studies or clinical trials, or may find the design, conduct or results of such studies or trials inadequate to demonstrate safety and effectiveness of the product candidate. The FDA may also require additional non-clinical studies or clinical trials for use in ventral hernia procedures or other indications, which could further delay authorization of our product candidates and technologies.
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Attracting patients to perform clinical trials and meeting clinical trial objectives can be more costly and time-consuming than expected and could be adversely affected by another health crisis.
In order conduct our clinical trials, we must recruit, screen and enroll eligible patients. Patients may be identified from the investigator’s own clinical practice or hospital or may be referred by another physician. Potential clinical trial participants must provide informed consent before undergoing certain clinical tests that are used to determine patient eligibility based on inclusion/exclusion criteria. As a result, at the time of informed consent, we do not know if a patient will be eligible to participate in the trial, so we will need to screen many more patients than we intend to enroll in order to meet our enrollment criteria. Not all patients who undergo screening will ultimately be eligible for enrollment in our clinical trials. Moreover, some of the enrolled participants may not comply with the requirements of the trial, thereby leading to poor or unusable data, or some may withdraw from the trial, which may compromise the results of the clinical trial.
We may not be able to initiate, continue and/or complete in a timely manner clinical trials if we are unable to locate and enroll a sufficient number of eligible patients within the planned recruitment period to participate in these trials as required by the applicable regulatory authorities in the United States, Europe and any other applicable jurisdictions.
Delays in subject enrollment or failure of trial subjects to continue to participate in a clinical trial may delay commencement or completion of the clinical trial, cause an increase in the costs of the clinical trial and delays, or result in the failure of the clinical trial. The trial enrollment process may be affected by many factors including:
| ● | the use of the investigational device and the nature of the procedures being performed under the clinical trial protocol; |
| ● | the existence of a competing device with FDA marketing authorization and long-term data supporting its safety and efficacy; |
| ● | clinicians’ and patients’ perceptions as to the potential advantages and risks of our investigational devices in relation to other available therapies, including any new product candidates that may be approved for the indications we are investigating; |
| ● | the size and nature of the patient population; |
| ● | the severity of the disease under investigation; |
| ● | the eligibility criteria for the trial in question; |
| ● | subject compliance with the trial protocol; |
| ● | the design of the clinical trial; |
| ● | the referral practices of physicians; |
| ● | limitations placed on enrollment by regulatory authorities or other bodies; |
| ● | the ability to monitor trial subjects adequately during and after treatment; |
| ● | the proximity and availability of clinical trial sites for prospective subjects; |
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| ● | efforts to facilitate timely enrollment; and |
| ● | other clinical trials competing for the same target patients as those of our clinical trials. |
Any difficulties in enrolling a sufficient number of subjects for any of our clinical trials, or any subjects withdrawing from the clinical trials or not complying with the trial protocols, could result in significant delays and could require us to abandon one or more clinical trials altogether. If our trial sites are restricted or delayed in performing the required procedures or following up with their trial subjects, this may lead to missing information and may potentially impact clinical trial data quality and integrity. Enrollment delays and other issues with our clinical trials may result in increased research and development costs that may exceed the resources available to us and may lead to delays in obtaining marketing authorization in target markets.
If allowed to proceed with our clinical development programs, we may conduct clinical trials for certain of our product candidates at sites outside of the United States, and the U.S. regulatory agencies may not accept data from trials conducted in such locations.
The acceptance of data from clinical trials conducted outside the United States by the FDA may be subject to certain conditions or may not be accepted at all, and other comparable non-U.S. regulatory authorities may have similar restrictions and conditions with respect to clinical trials conducted outside of their respective jurisdictions. In cases where data from clinical trials conducted wholly outside of the United States are intended to serve as the basis for marketing approval in the United States, the FDA will generally not accept such foreign trial data unless (i) the data are determined to be applicable to the U.S. population and U.S. medical practice; (ii) the trials were performed by clinical investigators of recognized competence and pursuant to GCP or equivalent regulations; and (iii) the FDA is able to validate the data through an onsite inspection, if necessary. Additionally, the FDA’s clinical trial requirements, including sufficient size of patient populations and statistical powering, must be met. Many comparable non-U.S. regulatory authorities have similar approval requirements.
In addition, while these clinical trials are subject to the applicable local laws, the FDA acceptance of the data will be dependent upon its determination that the trials also complied with all applicable U.S. laws and regulations. There can be no assurance that the FDA will accept data from trials conducted outside of the U.S. If the FDA does not accept the data from any of our clinical trials that we determine to conduct outside the U.S., it would likely result in the need for additional trials that would be costly and time-consuming and delay or permanently halt the development of our product candidate.
In addition, the conduct of clinical trials outside the U.S. could have a significant impact on us. Risks inherent in conducting international clinical trials include:
| ● | Foreign regulatory requirements that could restrict or limit our ability to conduct our clinical trials; |
| ● | Administrative burdens of conducting clinical trials under multiple foreign regulatory schemes; |
| ● | Foreign exchange fluctuations; and |
| ● | Diminished protection of intellectual property in some countries. |
We may rely on third parties to perform clinical trial planning, provide critical advice, conduct our clinical trials and facilitate obtaining regulatory approvals, authorizations, or clearances for our product candidates. Such third parties may not perform satisfactorily, including failing to meet deadlines for the completion of clinical trials.
We may rely on third parties to provide clinical trial planning, conduct certain clinical trials, perform data collection and analysis and provide marketing, manufacturing, regulatory advice and other services that are crucial to our business. We may be unable to find suitable partners, external consultants or service providers to provide such services or such arrangements may not be available on commercially reasonable terms. Further, we may engage third parties that may cease to be able to provide these services or may not provide these services in a timely or professional manner. In particular, our technology and product development activities or clinical trials conducted in reliance on third parties may be delayed, suspended, or terminated if the third parties do not devote a sufficient amount of time or effort to our activities or otherwise fail to successfully carry out their contractual duties or to meet regulatory obligations or expected deadlines; if we replace a third party; if the quality or accuracy of the data obtained by third parties is compromised due to their failure to adhere to clinical protocols, regulatory requirements, or for other reasons including the loss of data; or if the third party becomes bankrupt or enters into liquidation.
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We may not always have the ability to control the performance of third parties in their conduct of their activities. If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, or agreements with such third parties are terminated for any reason, we would be required to find a replacement third party to conduct the required activities. We may be unable to enter into a new agreement with another third party on commercially acceptable terms, if at all. Furthermore, if the quality or accuracy of the data obtained by the third party is compromised, or if data are otherwise lost, we would be required to repeat the affected trial. Third-party performance failures may therefore increase our development costs, delay our ability to obtain regulatory authorization, and delay or prevent the commercialization of our products in target markets. In addition, our third-party agreements usually contain a clause limiting such third party’s liability, such that we may not be able to obtain full compensation for any losses that we may incur in connection with the third party’s performance failures.
Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of our responsibilities. For example, we will remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA and other regulatory authorities require us to comply with good clinical practice regulations and international standards relating to the conduct, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. Our reliance on third parties, over which we have limited control, to manage those operations does not relieve us of these responsibilities and requirements. Our failure or any failure by these third parties to comply with these regulations or to recruit a sufficient number of patients may require us to repeat clinical trials, which would delay the marketing authorization process. Moreover, our business may be implicated if any of these third parties violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws. We also are required to register ongoing clinical trials and post the results of certain completed clinical trials on certain government-sponsored databases, such as clinicaltrials.gov in the United States, within specified timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.
Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties do not successfully carry out their contractual duties for any reason, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, regulatory authorizations for our product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our product candidates.
If we are unable to establish such arrangements when, and as necessary, we could be required to undertake these activities at our own expense, which would significantly increase capital requirements and may delay the development, approval and future commercialization of our product candidates, which could have a material adverse effect on our business, financial condition and operating results.
The FDA may propose new guidance and/or regulations, or Congress may propose new legislation, to enhance and modernize the agency’s regulatory approach to device products and technologies, which may significantly affect product development costs, requirements, and other factors and additional uncertainty for our product candidates, technologies and business.
Regulatory requirements may change in the future in a way that adversely affects us. Any change in the laws or regulations that govern pre-market authorization processes or the post-market compliance requirements relating to our current and future product candidates could make it more difficult and costly to obtain marketing authorization for new product candidates, or to produce, market and distribute existing product candidates that receive such authorization.
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For example, the FDA and other government agencies have been focusing on the cybersecurity risks associated with certain medical devices and encouraging device manufacturers to take a more proactive approach to assessing the cybersecurity risks of their devices both during development and on a periodic basis after the devices are in commercial distribution. These regulatory efforts could lead to new FDA requirements in the future or additional product liability or other litigation risks if the Vicarious Surgical System is considered to be susceptible to third-party tampering.
More recently, in December 2022, Congress enacted the Consolidated Appropriations Act for 2023, an omnibus appropriations bill, which included amendments to the FDCA under FDORA. The legislation included new requirements for cyber devices, defined as any medical device that is or includes software that is validated, installed, or authorized by the manufacturer; can connect to the internet; and may be vulnerable to cybersecurity threats. Under the FDORA amendments to the FDCA, any application for marketing authorization of the cyber device must include a software bill of materials and a cybersecurity plan describing the methods by which the manufacturer will monitor, identify and address cybersecurity vulnerabilities. Any failure by a cyber device manufacturer to comply with applicable cybersecurity requirements is considered a violation of the FDCA and will subject the manufacturer to enforcement actions and possibly legal sanctions.
In addition, changes in the FDA’s marketing authorization pathways for medical devices could make authorization more difficult to obtain, increase delay, add uncertainty and have other significant adverse effects on our ability to obtain and maintain authorization for our product candidates.
Future legislative and regulatory proposals may prevent, limit or delay regulatory authorization of our product candidates or, more broadly, may materially impact the ability of the FDA and other regulatory agencies to operate as they have historically operated. We cannot be sure whether additional legislative changes will be enacted, or whether any of the FDA’s regulations, guidances or interpretations will be changed, or what the impact of such changes on the agency and its scientific review staff, if any, may be. For example, the next FDA user fee reauthorization package entered stakeholder negotiations in mid-2025, with any agreement sent to Congress in early 2027 for purposes of initiating the legislative process. Reauthorization of the medical device user fee program would need to be finalized by Congress by the end of September 2027 in order to avoid a disruption in FDA’s review goals for 510(k), De Novo classification and PMA submissions, as well as other activities supported by user fees assessed against industry. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing authorization that we otherwise may have obtained, and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.
If we fail to obtain regulatory authorizations in other countries for existing or future product candidates, we will not be able to commercialize these product candidates and technologies in those countries.
In order for us to market the Vicarious Surgical System in countries outside of the United States, we must comply with extensive safety and quality regulations in other countries regarding the quality, safety and efficacy of the Vicarious Surgical System. These regulations, such as the requirements for obtaining marketing authorization, including CE mark grant in the European Union, as well as regulatory authorization in the Asia-Pacific region and the time required for regulatory review, vary from country to country. Failure to obtain marketing authorization in any foreign country in which we plan to market the Vicarious Surgical System may harm our ability to generate revenue and harm our business. Marketing authorization requirements and processes vary between countries and can involve additional product testing and additional administrative review periods. The time required to obtain marketing authorization in other countries might differ from that required to obtain FDA authorization. The pre-market review and authorization process in other countries may include all of the risks detailed above regarding FDA clearance, authorization, and approval in the United States, as well as other potential risks relating to delays, refusals, or uncertainties in the application preparation, submission, and review procedures specific to the regulatory processes in such countries. Regulatory authorization of a product in one country does not ensure regulatory authorization in another, but a failure or delay in obtaining marketing authorization in one country may negatively impact the regulatory process in others. Failure to obtain regulatory authorization in other countries or any delay or setback in obtaining such authorization could have the same adverse effects described above regarding FDA authorization in the United States.
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If we, our contract manufacturers or our component suppliers are unable to manufacture the Vicarious Surgical System in sufficient quantities, on a timely basis, at acceptable costs and in compliance with regulatory and quality requirements, the manufacturing and distribution of our devices could be interrupted, and our product sales and operating results could suffer.
We and our contract manufacturers and our component suppliers are required to comply with the FDA Quality Management System Regulation (“QMSR”), which is a complex regulatory framework that covers the procedures and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage, distribution and servicing of our devices. We are required to implement an adequate, compliant quality system at our manufacturing facilities and verify that our suppliers maintain facilities, procedures and operations that comply with our quality standards and applicable regulatory requirements. If we obtain marketing authorization for any of our product candidates, we and our contract manufacturers and regulated component suppliers will be subject to periodic unannounced inspections by the FDA and other regulatory authorities to monitor and ensure compliance with post-market regulatory requirements. We cannot assure investors that the FDA or other regulatory authorities will not discover evidence of noncompliance at our facilities or the facilities of our third-party manufacturers or suppliers during a future quality system inspection.
Accordingly, assuming we receive marketing authorization for one or more product candidates, we and our contract manufacturers will continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance, and quality control. Failure of us or our third-party manufacturers and component suppliers to adhere to QMSR requirements or take adequate and timely corrective action in response to an adverse regulatory inspection finding could delay production of the Vicarious Surgical System and lead to fines, difficulties in obtaining regulatory authorizations, recalls, enforcement actions, including injunctive relief or consent decrees, or other consequences, which could have a material adverse effect on our financial condition or results of operations. Any such failure, including the failure of our contract manufacturers, to achieve and maintain the required high manufacturing standards could result in delays or failures in product testing or delivery, cost overruns, increased warranty costs or other problems that could harm our business and prospects.
Our current or future product candidates, products and technologies may be subject to product recalls even after receiving marketing authorization from the FDA. A recall of the Vicarious Surgical System, either voluntarily or at the direction of the FDA, or the discovery of serious safety issues with our future products, could have a significant adverse impact on us.
The FDA and similar governmental bodies in other countries have the authority to require the recall of the Vicarious Surgical System and any accessory devices if we or our third-party manufacturers fail to comply with relevant regulations pertaining to, among other things, manufacturing practices, labeling or if new information is obtained concerning deficiencies in the safety or effectiveness of the Vicarious Surgical System. For example, under the FDA’s MDR regulations, if and when the Vicarious Surgical System receives marketing authorization, we are required to report to the FDA any incident in which the system may have caused or contributed to a death or serious injury or in which the Vicarious Surgical System malfunctioned in a manner likely to cause or contribute to death or serious injury if that malfunction were to recur. Repeated incidents of the same or similar adverse events or product malfunctions may result in a voluntary or mandatory product recall, or administrative or judicial seizure or injunction, when warranted. A government-mandated recall may be ordered if the FDA finds that there is a reasonable probability that the device would cause serious, adverse health consequences or death. A voluntary recall by us could occur as a result of a discovery of any material deficiency in a device, such as manufacturing defects, labeling deficiencies, packaging defects or other failures to comply with applicable regulations. It is possible that the FDA could disagree with our initial classification for a voluntary recall. The FDA requires that reports of device corrections or removals intended to reduce a risk to health posed by the device or remedy a violation of the FDCA caused by the device be submitted to the FDA within 10 working days after the correction or removal is initiated. If a change to a device addresses a violation of the FDCA, that change would generally constitute a medical device recall and require submission of a recall report to the FDA.
Recalls of the Vicarious Surgical System would divert managerial and financial resources and have an adverse effect on our reputation, results of operations and financial condition, which could impair our ability to produce the Vicarious Surgical System in a cost-effective and timely manner in order to meet our customers’ demands. We may also be subject to product liability claims, be required to bear other costs, or be required to take other actions that may have a negative impact on our future sales and our ability to generate profits. Companies are required to maintain certain records of product withdrawals or removals, even if they are not reportable to the FDA. We may initiate voluntary field actions involving the Vicarious Surgical System in the future that we determine do not require notification to the FDA. If the FDA disagrees with our determinations, the FDA could require us to report those actions as recalls. A future recall, withdrawal, or seizure of any product could materially and adversely affect consumer confidence in our brand, lead to decreased demand for the Vicarious Surgical System and negatively affect our sales. In addition, the FDA could take enforcement action for failing to report recalls when they were conducted by us or one of our agents.
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We may be subject to enforcement action if we engage in improper or off-label marketing or promotion of the Vicarious Surgical System, including fines, penalties and injunctions.
The FDA regulates the promotional labeling for our products to ensure that the claims we make are consistent with the relevant marketing authorizations, that there is scientific data to substantiate the claims and that our promotion and advertising is neither false nor misleading. The off-label marketing or false or misleading labeling of our products may harm our image in the marketplace, result in injuries that lead to product liability suits, which could be costly to our business, or result in costly investigations and sanctions from the FDA and other regulatory bodies if we are deemed to have engaged in off-label promotion or false or misleading labeling. In addition to the FDA, depending on the form of marketing authorization that the Vicarious Surgical System and future product candidates and technologies receive, the FTC may have overlapping authority to oversee the advertising of our products and any related services offered by us. The FTC’s focus would be on ensuring such advertising is truthful, adequately substantiated, and not deceptive under the FTC Act rather than enforcing any of the regulatory requirements in the FDCA and FDA’s implementing regulations.
In August 2021, the FDA issued a final rule revising its regulation governing the types of evidence relevant to determining the “intended use” of a drug or device under the FDCA. The final rule makes clear that intended use is based on the manufacturer’s “objective intent” and the manufacturer’s knowledge of off-label use does not change a device’s intended use.
We are subject to federal, state and foreign laws prohibiting “kickbacks” and false or fraudulent claims, and other fraud and abuse laws, transparency laws, and other health-care laws and regulations, which, if violated, could subject us to substantial penalties. Additionally, any challenge to or investigation into our practices under these laws could cause adverse publicity and be costly to respond to, and thus could harm our business.
If we obtain FDA marketing authorization for our Vicarious Surgical System, we will be subject to broadly applicable fraud and abuse and other health-care laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute the device system and any authorized accessories. Restrictions under applicable federal and state health-care laws and regulations include the following:
| ● | the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal health-care program such as Medicare and Medicaid; |
| ● | the federal False Claims Act imposes criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment by a federal government program, or making a false statement or record that is material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government; |
| ● | HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, imposes criminal and civil liability for executing a scheme to defraud any health-care benefit program and also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; |
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| ● | the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for health-care benefits, items or services; |
| ● | the federal transparency requirements under the Physician Payments Sunshine Act require manufacturers of FDA-authorized, approved or cleared drugs, devices, biologics and medical supplies covered by Medicare or Medicaid to report, on an annual basis, to the Centers for Medicare and Medicaid Services information related to payments and other transfers of value to physicians, teaching hospitals and certain advanced non-physician health-care practitioners as well as physician ownership and investment interests; and |
| ● | analogous state laws and regulations such as state anti-kickback and false claims laws, as well as analogous non-U.S. fraud and abuse laws and regulations, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and some state laws require medical device companies to comply with the device industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring device manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures. State and non-U.S. laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. |
Efforts to ensure that our business arrangements with third parties comply with applicable health-care laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other health-care laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion of products from government funded health-care programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If any of the physicians or other health-care providers or entities with whom we expect to do business is found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded health-care programs.
Our employees, independent contractors, principal investigators, contract research organizations, consultants or vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
We are exposed to the risk that our employees, independent contractors, principal investigators, contract research organizations, consultants or vendors may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: FDA regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA; manufacturing standards; federal and state healthcare fraud and abuse laws and regulations; or laws that require the true, complete and accurate reporting of financial information or data. In addition, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Activities subject to these laws also involve the improper use or misrepresentation of information obtained in the course of clinical trials or creating fraudulent data in our nonclinical studies or clinical trials, which could result in regulatory sanctions and serious harm to our reputation.
It is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. Additionally, we are subject to the risk that a person could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished potential profits and future earnings, and curtailment of our operations, any of which could adversely affect our business, financial condition, results of operations or prospects.
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Health-care policy and payment changes may have a material adverse effect on our financial condition and results of operations.
We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. In the United States and in some other jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the health-care system that could prevent or delay marketing authorization of our product candidates and technologies or any of our potential future product candidates and technologies, restrict or regulate post-authorization activities, or affect our ability to profitably sell any product candidates and technologies for which we obtain marketing authorization. Increased scrutiny by the U.S. Congress of the FDA’s medical device authorization process may significantly delay or prevent marketing authorization, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. Congress also must reauthorize the FDA’s user fee programs every five years and often makes changes to those programs, in addition to policy or procedural changes that may be negotiated between the FDA and industry stakeholders as part of this periodic reauthorization process.
Furthermore, there have been and continue to be a number of legislative initiatives in the U.S. Congress and state legislatures to contain healthcare costs. Federal and state lawmakers regularly propose and, at times, enact legislation that would result in significant changes to the healthcare system, some of which are intended to contain or reduce the costs of medical products and services. Future legislative and regulatory proposals to further reform healthcare or reduce healthcare costs may prevent, limit or delay regulatory authorization of our product candidates or coverage or reimbursement for such product candidates, if approved, or even lower reimbursement for the procedures associated with the use of such product candidates. More broadly, such future legislation or regulation may materially impact the ability of the FDA and other regulatory agencies to operate as they have historically operated. The cost containment measures that payors and providers are instituting and the effect of any healthcare reform initiative implemented in the future could impact our revenue from the sale of our products. We cannot be sure whether additional legislative changes will be enacted, or whether any of the FDA’s regulations, guidances or interpretations will be changed, or what the impact of such changes on the agency and its scientific review staff, if any, may be.
The growth of overall healthcare costs as a percentage of gross domestic product in many countries means that governments and payers are under intense pressure to control healthcare spending even more tightly. As a result, our businesses and the healthcare industry in general are operating in an ever more challenging environment with very significant pricing pressures. In recent years, national, federal, provincial, state and local officials and legislators have proposed, or are reportedly considering proposing, a variety of price-based reforms to the healthcare systems in the United States, the European Union and other countries. Some proposals include measures that would limit or eliminate payments for certain medical procedures and treatments or subject pricing to government control. In addition, proposed legislation may limit access to healthcare insurance coverage, which could reduce the volume of medical procedures involving our authorized device products. Furthermore, in certain foreign markets, the pricing or profitability of healthcare products is subject to government controls and other measures that have been prepared by legislators and government officials. While we cannot predict whether any such legislative or regulatory proposals or reforms will be adopted, the adoption of any such proposals or reforms could adversely affect the commercial viability of our existing and potential products. In addition, any changes of, or uncertainty with respect to, coverage or reimbursement rates relating to our authorized products, or procedures involving such products, could affect demand for our products, which in turn could impact our ability to successfully commercialize our authorized products and have a material adverse effect on our business, financial condition and results of operations.
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Inadequate funding for the FDA and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new products and technologies from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.
The ability of the FDA to review and approve, authorize, or clear new medical device products and technologies can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the FDA can fluctuate as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies may also increase the time necessary for new products and technologies to be reviewed and/or authorized by necessary government agencies, which would adversely affect our business. For example, political disputes in Congress have in the past resulted in, and may in the future result in, shutdowns of the U.S. government, and in such cases, certain regulatory agencies, such as the FDA and the SEC, would have to furlough critical employees and stop critical activities. In addition, starting in January 2025, the U.S. government has reduced the number of federal employees, including at the FDA, which could result in delays in the FDA’s responsiveness or in its ability to review submissions or applications.
If a prolonged government shutdown or slowdown occurs, or if reductions in force or global health concerns prevent the FDA or other regulatory authorities from conducting their regular premarket review, inspections, or other regulatory activities, it could significantly impact the ability of the FDA to timely review and clear, authorize, or approve regulatory submissions, which could have a material adverse effect on our future business. Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.
Risks Related to Our Intellectual Property
If we are unable to protect our intellectual property, our ability to maintain any technological or competitive advantage over our competitors and potential competitors would be adversely impacted, and our business may be harmed.
We rely on patent protection as well as trademark, copyright, trade secret and other intellectual property rights protection and contractual restrictions to protect our proprietary technologies, all of which provide limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage. If we fail to obtain, maintain, and protect our intellectual property, third parties may be able to compete more effectively against us, and we may lose our technological or competitive advantage. We may also incur substantial litigation costs in our attempts to defend, enforce, recover or restrict the use of our intellectual property.
We cannot assure investors that any of our currently pending or future patent applications will result in granted patents, and we cannot predict how long it will take for such patents to be granted or whether the scope of such patents, if granted, will adequately protect the Vicarious Surgical System from competitors. It is possible that, for any of our patents that have been granted or that may be granted in the future, other parties will design alternatives that do not infringe our patents. Further, we cannot assure investors that other parties will not challenge any patents granted to us or that courts or regulatory agencies will hold our patents to be valid or enforceable. We cannot guarantee investors that we will be successful in defending challenges made against our patents. Any successful third-party challenge to our patents could result in the unenforceability or invalidity of such patents, or to such patents being interpreted narrowly or otherwise in a manner adverse to our interests. Our ability to establish or maintain a technological or competitive advantage over our competitors may be diminished because of these uncertainties. For these and other reasons, our intellectual property may not provide us with any competitive advantage. For example:
| ● | we or our licensors (should we in-license IP in the future) might not have been the first to make the inventions covered by our pending patent applications or granted patents; |
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| ● | we or our licensors might not have been the first to file patent applications for our inventions. To determine the priority of these inventions, we may have to participate in interference proceedings or derivation proceedings declared by the U.S. Patent and Trademark Office, or USPTO, that could result in substantial cost to us and may be unsuccessful. No assurance can be given that our patent applications or granted patents (or those of our licensors) will have priority over any other patent or patent application involved in such a proceeding; |
| ● | other parties may independently develop similar or alternative products and technologies or duplicate any of our product candidates and technologies; |
| ● | it is possible that our owned or licensed pending patent applications will not result in granted patents in the United States or foreign jurisdictions, and even if such pending patent applications grant as patents, they may not provide a basis for intellectual property protection of commercially viable products and technologies, may not provide us with any competitive advantages, or may be challenged and invalidated by third parties; |
| ● | we may not develop additional proprietary products and technologies and technologies that are patentable; |
| ● | the patents of other parties may block us from practicing our technology and thereby have an adverse effect on our business; and |
| ● | while we apply for patents covering our product candidates and technologies and uses thereof, as we deem appropriate, we may fail to apply for or obtain patents on important product candidates and technologies and uses thereof in a timely fashion or at all, or we may fail to apply for or obtain patents in potentially relevant jurisdictions. |
The strength of patents involves complex legal questions and can be uncertain. Even if one or more patents do successfully issue, third parties may challenge the validity, enforceability, inventorship or scope thereof. Such a challenge may result in such patents being narrowed, invalidated or held unenforceable. If the breadth or strength of protection provided by our patents is threatened, it could dissuade companies from collaborating with us to develop, and threaten our ability to commercialize, our technology. Further, if we encounter delays in clinical trials, the period of time during which we could market our product candidates under patent protection would be reduced. Since patent applications in the United States and most other countries are confidential for a period of time after filing, we cannot be certain that we are the first to file any patent application related to our product candidates.
Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner. The issuance of a patent is not conclusive as to its scope, validity or enforceability, and our patents may be challenged in the courts or patent offices in the United States and abroad. For example, we may become involved in opposition, interference, derivation, inter partes review or other proceedings challenging our patent rights, and the outcome of any proceedings are highly uncertain. Such challenges may result in the patent claims of our patents being narrowed, invalidated or held unenforceable, which could limit our ability to stop or prevent us from stopping others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and product candidates. Given the amount of time required for the development, testing and regulatory review of new technology, patents protecting such technology might expire before or shortly after such technology is commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to our product candidates or otherwise provide us with a competitive advantage.
To the extent our intellectual property offers inadequate protection, or is found to be invalid or unenforceable, we would be exposed to a greater risk of direct competition. If our intellectual property does not provide adequate coverage over our product candidates and technologies and protection against our competitors’ products and technologies, our competitive position could be adversely affected, as could our business.
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The measures that we use to protect the security of our intellectual property and other proprietary rights may not be adequate, which could result in the loss of legal protection for, and thereby diminish the value of, such intellectual property and other rights.
The patenting process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. In addition, we may not pursue or obtain patent protection in all relevant markets. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Our pending and future patent applications may not result in issued patents that protect our technology or product candidates, in whole or in part. In addition, our existing patents and any future patents we obtain may not be sufficiently broad to prevent others from using our technology or from developing competing products and technologies.
If we delay in filing a patent application, and a competitor files a patent application on the same or a similar technology before we do, we may face a limited ability to secure patent rights. We may not be able to patent the technology at all. Even if we can patent the technology, we may be able to patent only a limited scope of the technology, and the limited scope may be inadequate to protect our product candidates, or to block competitor products that are similar or adjacent to ours. Our earliest patent filings have been published. A competitor may review our published patents and arrive at the same or similar technology advances for our product candidates as we developed. If the competitor files a patent application on such an advance before we do, then we may no longer be able to protect the technology. We may require a license from the competitor, and if the license is not available on commercially-viable terms, then we may not be able to launch our product candidates.
In addition to pursuing patents on our technology, we also rely upon trademarks, trade secrets, copyrights and unfair competition laws and other contractual provisions, to protect our intellectual property and other proprietary rights. Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented or misappropriated. In addition, we take steps to protect our intellectual property and proprietary technology by entering into confidentiality agreements and intellectual property assignment agreements with our employees, consultants, corporate partners and, when needed, our advisors. Our suppliers may also have access to the patented technology owned or used by us as well as other proprietary information, and these suppliers are subject to confidentiality provisions under their agreements with us.
Such agreements or provisions may not be enforceable or may not provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements, and we may not be able to prevent such unauthorized disclosure. Notwithstanding any such agreements, there is no assurance that our current or former manufacturers or suppliers will not use and/or supply our competitors with our trade secrets, know-how or other proprietary information to which these parties gained access or generated from their relationship with us. This could lead to our competitors gaining access to patented or other proprietary information. Moreover, if a party to an agreement with us has an overlapping or conflicting obligation to a third party, our rights in and to certain intellectual property could be undermined. Monitoring unauthorized disclosure is difficult, and we do not know whether the steps we have taken to prevent such disclosure are, or will be, adequate. If we were to enforce a claim that a third party had illegally obtained and was using our trade secrets, it would be expensive and time-consuming, the outcome would be unpredictable, and any remedy may be inadequate. Courts outside the United States may be less willing to protect trade secrets.
In addition, competitors could purchase our product candidates and technologies and attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe our intellectual property rights, design around our protected technology or develop their own competitive technologies that fall outside of our intellectual property rights. If our intellectual property does not adequately protect our market share against competitors’ products and technologies and methods, our competitive position could be adversely affected, as could our business.
We may need or may choose to obtain licenses from third parties to advance our research or allow commercialization of our current or future product candidates and technologies, and we cannot provide any assurances that we would be able to obtain such licenses.
We may need or may choose to obtain licenses from third parties to advance our research or allow commercialization of our current or future product candidates and technologies, and we cannot provide any assurances that third-party patents do not exist that might be enforced against our current or future product candidates and technologies in the absence of such a license. We may fail to obtain any of these licenses on commercially reasonable terms, if at all. Even if we are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. If we could not obtain a license, we may be required to expend significant time and resources to develop or license replacement technology. If we are unable to do so, we may be unable to develop or commercialize the affected product candidates and technologies, which could materially harm our business and the third parties owning such intellectual property rights could seek either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties, damages and/or other forms of compensation.
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Licensing intellectual property involves complex legal, business and scientific issues. Disputes may arise between us and our licensors regarding intellectual property subject to a license agreement, including:
| ● | the scope of rights granted under the license agreement and other interpretation-related issues; |
| ● | whether and the extent to which our technology and processes infringe intellectual property of the licensor that is not subject to the licensing agreement; |
| ● | our right to sublicense patent and other rights to third parties under collaborative development relationships; |
| ● | our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates and technologies, and what activities satisfy those diligence obligations; and |
| ● | the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and our partners. |
If disputes over licensed intellectual property prevent or impair our ability to maintain the licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product, or the dispute may have an adverse effect on our results of operations.
In addition to agreements pursuant to which we in-license intellectual property, we may in the future grant licenses under our intellectual property. Like in-licenses, out-licenses are complex, and disputes may arise between us and our licensees, such as the types of disputes described above. Moreover, our licensees may breach their obligations, or we may be exposed to liability due to our failure or alleged failure to satisfy our obligations. Any such occurrence could have an adverse effect on our business.
The licensing and acquisition of third-party intellectual property rights is a competitive practice, and companies that may be more established, or have greater resources than we do, may also be pursuing strategies to license or acquire third-party intellectual property rights that we may consider necessary or attractive for commercializing our technology. More established companies may have a competitive advantage over us due to their larger size, cash resources, or commercialization capabilities. There can be no assurance that we will be able to successfully complete such negotiations and ultimately acquire the rights to the intellectual property that we may seek to acquire.
We and our partners may be sued for infringing the intellectual property rights of third parties. If that happens, such litigation would be costly and time consuming, and an unfavorable outcome in any such litigation could have a material adverse effect on our business.
Our success also depends on our ability to develop, manufacture, market and sell the Vicarious Surgical System without infringing the proprietary rights of third parties. Numerous U.S. and foreign-issued patents and pending patent applications owned by third parties exist in the fields in which we are developing the Vicarious Surgical System. As part of a business strategy to impede our successful commercialization and entry into new markets, competitors may claim that the Vicarious Surgical System infringes their intellectual property rights and may suggest that we enter into license agreements. Such competitors may bring litigation against us or our partners to enforce such claims.
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Such claims may or may not be meritorious, but even if such claims are without merit, we could incur substantial costs and the attention of our management and technical personnel could be diverted in defending us against or settling such claims. Any adverse ruling by a court or administrative body, or perception of an adverse ruling, may have a material adverse effect on our ability to conduct our business and on our finances. Moreover, third parties making claims against us may be able to obtain injunctive relief against us, which could block our ability to offer the Vicarious Surgical System and could result in a substantial award of damages against us. In addition, since we could sometimes agree to indemnify customers, collaborators or licensees, we may have additional liability in connection with any infringement or alleged infringement of third-party intellectual property. Because patent applications can take many years to issue, there may be pending applications, some of which are unknown to us, that may result in issued patents that the Vicarious Surgical System or proprietary technologies infringe. Moreover, we may fail to identify issued patents of relevance or incorrectly conclude that an issued patent is invalid or not infringed by our technology or the Vicarious Surgical System. There is a substantial amount of litigation involving patent and other intellectual property rights in the medical device space in general and in the robotic surgery field in particular. As we face increasing competition and as our business grows, we will likely face claims of infringement. If a third-party claims that we or any of our licensors, customers or collaboration partners infringe a third party’s intellectual property rights, we may have to do any or all of the following:
| ● | seek licenses that may not be available on commercially reasonable terms, if at all; |
| ● | cease commercializing any infringing product or redesign the Vicarious Surgical System or processes to avoid infringement where in some cases redesign may not be possible or may require substantial monetary expenditures and time; |
| ● | pay substantial damages, including treble damages and attorneys’ fees, which we may have to pay if a court decides that the product or proprietary technology at issue infringes upon or violates the third-party’s rights; |
| ● | pay substantial royalties or fees or grant cross-licenses to our technology; and |
| ● | defend litigation or administrative proceedings that may be costly whether we win or lose, and which could result in a substantial diversion of our financial and management resources. |
Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can, because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations or could otherwise have a material adverse effect on our business, results of operations, financial condition and prospects.
We may choose to challenge the patentability of claims in a third party’s U.S. patent by requesting that the USPTO review the patent claims in an ex-parte re-exam, inter partes review or post-grant review proceedings. These proceedings are expensive and may consume time or other resources. We may choose to challenge a third party’s patent in patent opposition proceedings in the European Patent Office, or EPO, or other foreign patent office. The costs of these opposition proceedings could be substantial, and may consume time or other resources. If we fail to obtain a favorable result at the USPTO, EPO or other patent office, then we may be exposed to litigation by a third party alleging that the patent is infringed by our product candidates or proprietary technologies.
During the course of any intellectual property litigation, there could be public announcements of the initiation of the litigation, as well as results of hearings, rulings on motions and other interim proceedings in the litigation. If securities analysts or investors regard these announcements as negative, the perceived value of our product candidates, programs or intellectual property could be diminished. Accordingly, the market price of shares of our common stock may decline. Such announcements could also harm our reputation or the market for our future product candidates, which could have a material adverse effect on our business.
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We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful.
Competitors may infringe our patents or the patents that we license. In the event of infringement or unauthorized use, we may file one or more infringement lawsuits, which can be expensive and time-consuming. An adverse result in any such litigation proceedings could put one or more of our patents at risk of being invalidated, being found to be unenforceable or being interpreted narrowly and could put our patent applications at risk of not issuing. An adverse result could also require us to pay the legal fees of the opposing party. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.
Many of our competitors are larger than us and have substantially greater resources. They are, therefore, likely to be able to sustain the costs of complex patent litigation longer than we could. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise any funds necessary to continue our operations, continue our internal research programs, in-license needed technology, or enter into development partnerships that would help us bring the Vicarious Surgical System to market.
In addition, patent litigation can be very costly and time-consuming. An adverse outcome in any such litigation or proceedings may expose us or any of our future development partners to loss of our proprietary position, expose us to significant liabilities, or require us to seek licenses that may not be available on commercially acceptable terms, if at all.
If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on the technology or process claimed by the patent. In addition, if the breadth or strength of protection provided by our patents or those of our future licensors is threatened, it could dissuade other companies from collaborating with us to license, develop or commercialize current or future product candidates. Such a loss of patent protection could have a material adverse effect on our business.
We may be required to protect our patents through procedures created to attack the validity of a patent at the USPTO. The USPTO hears post-grant proceedings, including post-grant reviews (PGRs), inter partes reviews (IPRs) and derivation proceedings. An adverse determination in any such submission or proceeding could reduce the scope or enforceability of, or invalidate, our patent rights, which could adversely affect our competitive position. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action. Thus, the America Invents Act (the “AIA”) and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
Our issued patents could be found invalid or unenforceable if challenged in court, which could have a material adverse effect on our business.
Any of our intellectual property rights could be challenged or invalidated despite measures we take to obtain patent and other intellectual property protection with respect to our product candidates and proprietary technology. For example, if we or any of our partners were to initiate legal proceedings against a third party to enforce a patent covering the Vicarious Surgical System, the defendant in such litigation could counterclaim that our patent is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement, or failure to claim patent eligible subject matter. Grounds for an unenforceability assertion could be an allegation that someone connected with the prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement during prosecution either in the U.S. or abroad. Third parties may also raise similar claims before the USPTO or foreign patent offices, even outside the context of litigation. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art of which we and the patent examiner were unaware or was otherwise not considered during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the challenged patent. Such a loss of patent protection could have a material adverse effect on our business.
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We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed alleged trade secrets of their other clients or former employers to us, which could subject us to costly litigation.
As is common in the medical device industry, we engage the services of consultants and independent contractors to assist us in the development of the Vicarious Surgical System. Many of these consultants and independent contractors were previously employed at, or may have previously provided or may be currently providing consulting or other services to, universities or other technology or medical device companies, including our competitors or potential competitors. We may become subject to claims that we, a consultant or an independent contractor, inadvertently or otherwise, used or disclosed trade secrets or other information proprietary to their former employers or their former or current clients. We may similarly be subject to claims stemming from similar actions of an employee, such as one who was previously employed by another company, including a competitor or potential competitor. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to our management team. If we were not successful, we could lose access or exclusive access to valuable intellectual property.
In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and, if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. This type of litigation or proceeding could substantially increase our operating losses and reduce our resources available for development activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other intellectual property related proceedings could adversely affect our ability to compete in the marketplace.
We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.
We generally enter into confidentiality and intellectual property assignment agreements with our employees, consultants, and contractors. These agreements generally provide that inventions conceived by the party in the course of rendering services to us will be our exclusive property. However, those agreements may not be honored and may not effectively assign intellectual property rights to us. For example, even if we have a consulting agreement in place with an academic advisor pursuant to which such academic advisor is required to assign any inventions developed in connection with providing services to us, such academic advisor may not have the right to assign such inventions to us, as it may conflict with his or her obligations to assign all such intellectual property to his or her employing institution.
We may be subject to claims that former employees, collaborators or other third parties have an interest in our patents, trade secrets, or other intellectual property as an inventor or co-inventor. Also, former employees may become employed by competitors who develop similar technology, and could assist the competitor in designing around our patents. While it is our policy to require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own. The assignment agreements entered into by us may not be self-executing or may be breached, and litigation may be necessary to defend against these and other claims challenging inventorship or our ownership of our patents, trade secrets or other intellectual property. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that is important to our product candidates. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.
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We may not be able to protect our intellectual property rights throughout the world, which could materially, negatively affect our business.
Filing, prosecuting and defending patents on current and future product candidates and technologies in all countries throughout the world would be prohibitively expensive, and many markets outside the United States will likely be smaller than the United States for commercializing the Vicarious Surgical System. We may therefore choose to pursue a more limited set of patent filings outside the United States, such that our intellectual property rights in some countries outside the United States may be less extensive than those in the United States, or may not be pursued at all in such countries. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, regardless of whether we are able to prevent third parties from practicing our inventions in the United States, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products and technologies made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not pursued and obtained patent protection to develop their own product candidates and technologies, and further, may export otherwise infringing products and technologies to territories where we have patent protection, but enforcement is not as strong as it is in the United States. These products and technologies may compete with our product candidates and technologies, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Even if we pursue and obtain issued patents in particular jurisdictions, our patent claims or other intellectual property rights may not be effective or sufficient to prevent third parties from competing in such jurisdictions. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents or marketing of competing products and technologies in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business. These proceedings could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing. Additionally, these proceedings could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license and may adversely impact our business.
In addition, we also face the risk that the Vicarious Surgical System will be imported or reimported into markets with relatively higher prices from markets with relatively lower prices, which would result in a decrease of sales and any payments we receive from the affected market. Recent developments in U.S. patent law have made it more difficult to stop these and related practices based on theories of patent infringement.
Patent terms may be inadequate to protect our competitive position on technology for an adequate amount of time.
Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering our product candidates are obtained, once the patent life has expired for a product, we may be open to competition. Given the amount of time required for the development, testing and regulatory review of new products, patents protecting such products might expire before or shortly after such products are commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to our product candidates for a meaningful amount of time, or at all.
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Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process. There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlier than would otherwise have been the case.
Periodic maintenance fees on any issued patent are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent agencies also require compliance with a number of procedural, documentary, fee payment (such as annuities) and other similar provisions during the patent application process and beyond. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. In some cases, our licensors may be responsible for these payments or filings, thereby decreasing our control over compliance with these requirements.
If we fail to comply with such procedural, documentary, payment and other provisions for any item of intellectual property, such intellectual property may become abandoned or may lapse.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.
Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition by potential partners or customers in our markets of interest. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected.
In addition, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. We may license our trademarks and trade names to third parties, such as distributors. Though these license agreements may provide guidelines for how our trademarks and trade names may be used, a breach of these agreements or misuse of our trademarks and tradenames by our licensees may jeopardize our rights in, or diminish the goodwill associated with, our trademarks and trade names. Our efforts to enforce or protect our proprietary rights related to trademarks, trade names, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely affect our financial condition or results of operations.
Numerous factors may limit any potential competitive advantage provided by our intellectual property rights.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, provide a barrier to entry against our competitors or potential competitors, or permit us to maintain our competitive advantage. Moreover, if a third party has intellectual property rights that cover the practice of our technology, we may not be able to fully exercise or extract value from our intellectual property rights. The following examples are illustrative:
| ● | others may be able to develop and/or practice technology that is similar to our technology or aspects of our technology that are not covered by the claims of any patents that have issued, or may issue, from our owned or in-licensed patent applications; |
| ● | we might not have been the first to make the inventions covered by a pending patent application that we own or license; |
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| ● | we might not have been the first to file patent applications covering an invention and therefore may not be able to obtain or maintain patent protection for the invention; |
| ● | others may independently develop similar or alternative technologies without infringing our intellectual property rights; |
| ● | pending patent applications that we own or license may not lead to issued patents; |
| ● | patents, if issued, that we own or license may not provide us with any competitive advantages, or may be interpreted narrowly or held invalid or unenforceable, as a result of legal challenges by our competitors; |
| ● | third parties may compete with us in jurisdictions where we do not pursue and obtain patent protection; |
| ● | we may not be able to obtain and/or maintain necessary or useful licenses on reasonable terms or at all; |
| ● | third parties may be able to also license the intellectual property that we have licensed nonexclusively; |
| ● | third parties may assert an ownership interest in our intellectual property and, if successful, such disputes may preclude us from exercising exclusive rights over that intellectual property; |
| ● | we may not be able to maintain the confidentiality of our trade secrets or other proprietary information; |
| ● | we may not develop or in-license additional proprietary technologies that are patentable; and |
| ● | one or more third parties may pursue continuation patent applications with claims directed to our product offerings, and if issued such patents may have an adverse effect on our business. |
Should any of these events occur, they could significantly harm our business and results of operations.
Litigation Risks
We face the risk of product liability claims and may be subject to damages, fines, penalties and injunctions, among other things.
Our business exposes us to the risk of product liability claims that are inherent in the testing, manufacturing and marketing of medical devices, including those which may arise from the misuse (including system hacking or other unauthorized access by third parties to our systems) or malfunction of, or design flaws in, our product candidates, when or if authorized for marketing. This liability may vary based on the FDA classification associated with our devices and with state law governing product liability standards applied to specification developers and/or manufacturers in a given negligence or strict liability lawsuit. We may be subject to product liability claims if the Vicarious Surgical System causes, or merely appears to have caused, an injury. Claims may be made by patients, healthcare providers or others selling the Vicarious Surgical System. The risk of product liability claims may also increase if our product candidates are subject to a recall or seizure. Product liability claims may be brought by individuals or by groups seeking to represent a class.
Although we have insurance at levels that we believe to be appropriate, this insurance is subject to deductibles and coverage limitations. Our current product liability insurance may not continue to be available to us on acceptable terms, if at all, and, if available, the coverage may not be adequate to protect us against any future product liability claims. If we are unable to maintain insurance at an acceptable cost or on acceptable terms with adequate coverage or otherwise protect against potential product liability claims, we may be exposed to significant liabilities, which may harm our business. A product liability claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could result in significant costs and significant harm to our business.
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We may be subject to claims against us even if the apparent injury is due to the actions of others or misuse of the device or a partner device. Healthcare providers may use the Vicarious Surgical System in a manner inconsistent with the labeling and that differs from the manner in which it was used in clinical studies and authorization for use by the FDA. Off-label use of medical products by healthcare providers is common, and any such off-label use of the Vicarious Surgical System could subject us to additional liability, or require design changes to limit this potential off-label use once discovered. Defending a suit, regardless of merit, could be costly, could divert management attention and might result in adverse publicity, which could result in the withdrawal of, or result in reduced acceptance of, the Vicarious Surgical System in the market.
Additionally, we may enter into various agreements where we indemnify third parties for certain claims relating to the Vicarious Surgical System. These indemnification obligations may require us to pay significant sums of money for claims that are covered by these indemnification obligations. We are not currently subject to any product liability claims; however, any future product liability claims against it, regardless of their merit, may result in negative publicity about us that could ultimately harm our reputation and could have a material adverse effect on our business, financial condition, or results of operations.
We may face litigation and other risks as a result of the material weakness in our internal controls over financial reporting.
We have previously identified a material weakness in our internal controls over financial reporting. See “We have identified a material weakness in our internal control over financial reporting. If we are unable to successfully remediate this material weakness in our internal control over financial reporting, we may not be able to report our financial condition or results of operations accurately or in a timely manner, which may adversely affect investor confidence in us and, as a result, materially and adversely affect our business and the value of our Class A common stock.”
As a result of such material weakness, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the Restatement and material weaknesses in our internal control over financial reporting and the preparation of our financial statements. We can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition.
Risks Related to Our Securities and to Being a Public Company
Our outstanding warrants increase the number of shares eligible for future resale in the public market and, if exercised, will result in significant dilution to our stockholders.
Our outstanding warrants include warrants to purchase shares of our Class A common stock issued in connection with D8’s initial public offering (“Public Warrants”) that were formerly listed on the NYSE and private placement warrants sold in a private placement to D8’s sponsor in connection with the closing of the initial public offering and in connection with the conversion of D8 working capital loans (the “Private Placement Warrants”). As of December 31, 2025, we had 17,248,601 Public Warrants exercisable for 574,953 shares of Class A common stock, and 10,400,000 Private Placement Warrants exercisable for 346,666 shares of Class A common stock outstanding. Thirty (30) whole warrants are exercisable for one share of Class A common stock at an exercise price of $345.00 per share. The warrants became exercisable 30 days after the closing of our Business Combination, which occurred on September 17, 2021. In certain circumstances, the warrants may be exercised on a cashless basis. To the extent such warrants are exercised, additional shares of our Class A common stock will be issued, which will result in dilution to the holders of our Class A common stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of our Class A common stock, the impact of which is increased as the value of our stock price increases. However, there is no guarantee that the warrants will remain in the money prior to their expiration, and as such, the warrants may expire worthless.
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The valuation of our warrants could increase the volatility in our net income (loss) in our consolidated statements of operations.
The change in fair value of our warrants is the result of changes in stock price and warrants outstanding at each reporting period. The change in fair value of warrant liabilities represents the mark-to-market fair value adjustments to the outstanding warrants issued in connection with the initial public offering of D8. Significant changes in our stock price or number of warrants outstanding may adversely affect our net income (loss) in our consolidated statements of operations.
We are a smaller reporting company within the meaning of the Securities Act, and we take advantage of certain exemptions from disclosure requirements available to “smaller reporting companies,” which could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common stock held by non-affiliates is greater than or equal to $250 million as of the end of that fiscal year’s second fiscal quarter, and (ii) our annual revenues are greater than or equal to $100 million during the last completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the end of that fiscal year’s second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
We cannot predict the impact our dual class structure may have on the stock price of our Class A common stock.
We cannot predict whether our dual class structure will result in a lower or more volatile market price of our Class A common stock or in adverse publicity or other adverse consequences. For example, certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indexes. Under these policies, our dual class capital structure would make us ineligible for inclusion in certain indices, and as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track those indices will not be investing in our stock. It is unclear what effect, if any, these policies will have on the valuations of publicly traded companies excluded from such indices, but it is possible that they may depress valuations, as compared to similar companies that are included. As a result, the market price of shares of our Class A common stock could be adversely affected.
If securities or industry analysts do not publish research or reports about our business or if they issue an adverse or misleading opinion regarding our securities, our stock price and trading volume could decline.
The trading market for our securities is influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in the financial markets, which could cause the price and trading volume of our securities to decline. Further, if any of these analysts issues an adverse or misleading opinion regarding us, our business model, our industry or our stock performance or if our operating results fail to meet analyst expectations, the price of our securities could also decline.
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Delaware law and our organizational documents contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.
The provisions of the General Corporation Law of the State of Delaware (“DGCL”) and our organizational documents contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, and therefore depress the trading price of our common stock. Additionally, these provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of our board of directors or taking other corporate actions, including effecting changes in our management. Among other things, our organizational documents include provisions regarding:
| ● | the ability of our board of directors to issue one or more series of preferred stock; |
| ● | the ability of our board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; |
| ● | limitations on the liability of, and the indemnification of, our directors and officers; |
| ● | the right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; |
| ● | the requirement that directors may only be removed from our board of directors for cause and upon the affirmative vote of the holders of at least 66 2/3% of the total voting power of then outstanding shares of our common stock; |
| ● | a prohibition on stockholder action by written consent (except for actions by the holders of our Class B common stock or as required for holders of future series of our preferred stock), which forces stockholder action to be taken at an annual or special meeting of stockholders and could delay the ability of stockholders to force consideration of a stockholder proposal or to take action, including the removal of directors; |
| ● | the requirement that a special meeting of stockholders may be called only by our board of directors, the chairman of our board of directors, or our chief executive officer, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; |
| ● | controlling the procedures for the conduct and scheduling of our board of directors and stockholder meetings; |
| ● | the requirement for the affirmative vote of holders of at least 66 2/3% of the total voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend, alter, change or repeal certain provisions in our certificate of incorporation (the “Charter”) which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt; |
| ● | the ability of our board of directors to amend our amended and restated bylaws (the “Bylaws”), which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Bylaws to facilitate an unsolicited takeover attempt; and |
| ● | advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company. |
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These anti-takeover provisions as well as certain provisions of Delaware law could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares. If prospective takeovers are not consummated for any reason, we may experience negative reactions from the financial markets, including negative impacts on the price of our common stock. These provisions could also discourage proxy contests and make it more difficult for our stockholders to elect directors of their choosing and to cause us to take other corporate actions that our stockholders desire.
The provisions of our Charter requiring exclusive forum in the Court of Chancery of the State of Delaware and the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging certain lawsuits, including derivative lawsuits and lawsuits against us or our directors, officers or other employees, by limiting plaintiffs’ ability to bring a claim in a judicial forum that they find favorable.
Our Charter provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, in the event that such court does not have subject matter jurisdiction, any other court located in the State of Delaware with subject matter jurisdiction), will be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of us, (b) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of ours to us or our stockholders, (c) any action asserting a claim against us or our officers or directors arising pursuant to any provision of the DGCL or the Charter or Bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, (d) any action to interpret, apply, enforce or determine the validity of the Charter or the Bylaws or any provision thereof, (e) any action asserting a claim against us or any current or former director, officer, employee, stockholder or agent of ours governed by the internal affairs doctrine of the law of the State of Delaware or (f) any action asserting an “internal corporate claim” as defined in Section 115 of the DGCL. The Charter also provides that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States will be the exclusive forum for the resolutions of any complaint asserting a cause of action arising under the Securities Act. This provision in the Charter does not address or apply to claims that arise under the Exchange Act. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder; to the extent these provisions could be construed to apply to such claims, there is uncertainty as to whether a court would enforce such provisions in connection with such claims, and our stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
Any person or entity purchasing or otherwise acquiring any interest in any of our securities will be deemed to have notice of and consented to the provisions of the Charter described in the preceding paragraph. These provisions may have the effect of discouraging certain lawsuits, including derivative lawsuits and lawsuits against us and our directors and officers, by limiting plaintiffs’ ability to bring a claim in a judicial forum that they find favorable. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation or bylaws has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in the Charter to be inapplicable or unenforceable in such action. Furthermore, if a court were to find these provisions of our certificate of incorporation inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
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Changes in laws or regulations, or a failure to comply with any laws and regulations, or any litigation that we may be subject to or involved in may adversely affect our business, investments and results of operations.
We are subject to laws, regulations and rules enacted by national, regional and local governments and the principal exchange on which our securities are listed or quoted. In particular, we are required to comply with certain SEC, Delaware, stock exchange and other legal and regulatory requirements. Compliance with, and monitoring of, applicable laws, regulations and rules may be difficult, time-consuming and costly.
Those laws, regulations and rules and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. For example, it is difficult to predict what impact, if any, changes in federal laws and policies, including those relating to tax, environmental, labor and employment, will have on our business and industry, the economy as a whole, consumer confidence and discretionary spending. Further, a recent ruling by the Court of Chancery in Delaware introduced uncertainty as to whether Section 242(b)(2) of the DGCL required a separate vote in favor of at least a majority of the outstanding shares of Class A common stock, in addition to a vote in favor of at least a majority of the outstanding shares of Class A and Class B common stock, voting together as a single class, to properly authorize shares of Class A common stock. In connection with the Business Combination, our stockholders authorized an increase in the number of shares of Class A common stock under Cayman Islands law, our jurisdiction at the time of the stockholder vote. Accordingly, we do not believe that the Delaware ruling applies to us. However, any failure to comply with applicable laws, regulations or rules, as interpreted and applied, could have a material adverse effect on our business and results of operations. Claims alleging that a portion of our Class A common stock was not authorized could lead to shares of our Class A common stock being voidable and have a material adverse effect on us and our prospects. In addition, uncertainty with respect to our capitalization resulting from the Court of Chancery’s ruling referenced above could have a material adverse impact on us, including on our ability to complete equity financing transactions or issue stock-based compensation to our employees, directors, and officers until the underlying issues are definitively resolved. This uncertainty could impair our ability to execute our business plan, attract and retain employees, management, and directors and adversely affect our commercial relationships.
Our principal stockholders and management will exert significant influence over us and their interests may conflict with yours in the future.
Each share of Class A common stock initially entitles its holders to one vote on all matters presented to stockholders generally and each share of Class B common stock initially entitles its holders to twenty votes on all matters presented to stockholders generally. Accordingly, Messrs. Sachs, Khalifa and Greene, by virtue of their Class B common stock, hold approximately 67.2% of the voting power of our outstanding capital stock. Accordingly, those owners, if voting in the same manner, will be able to control the election and removal of the directors of our board of directors and thereby determine corporate and management policies, including potential mergers or acquisitions, payment of dividends, asset sales, amendment of the Charter and Bylaws and other significant corporate transactions of ours for so long as they retain significant ownership of Class B common stock. This concentration of ownership may delay or deter possible changes in control of us, which may adversely affect the market price of shares of our Class A common stock.
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ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 1C. CYBERSECURITY.
We recognize the critical importance of maintaining the trust and confidence of business partners and employees toward our business and are committed to protecting the confidentiality, integrity and availability of our business operations and systems. Our board of directors is actively involved in oversight of our risk management activities, and cybersecurity represents an important element of our overall approach to risk management. Our cybersecurity policies, standards, processes and practices are based on recognized frameworks established by the National Institute of Standards and Technology, or NIST and other applicable industry standards. In general, we seek to address cybersecurity risks through a comprehensive, cross-functional approach that is focused on preserving the confidentiality, security and availability of the information that we collect and store by identifying, preventing and mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur.
Cybersecurity Risk Management and Strategy; Effect of Risk
We face risks related to cybersecurity such as unauthorized access, cybersecurity attacks and other security incidents, including as perpetrated by hackers and unintentional damage or disruption to hardware and software systems, loss of data, and misappropriation of confidential information. To identify and assess material risks from cybersecurity threats, we maintain a comprehensive cybersecurity program to ensure our systems are effective and prepared for information security risks, including regular oversight of our programs for security monitoring for internal and external threats to ensure the confidentiality and integrity of our information assets. We consider risks from cybersecurity threats alongside other company risks as part of our overall risk assessment process. We employ a range of tools and services, including regular network and endpoint monitoring, internal audits, vulnerability assessments, threat modeling and tabletop exercises to inform our risk identification and assessment. As discussed in more detail under “Cybersecurity Governance” below, our Nominating and Corporate Governance Committee provides oversight of our cybersecurity risk management and strategy processes, which are led by our IT Department.
We also identify our cybersecurity threat risks by comparing our processes to standards set by the National Institute of Standards and Technology, or NIST. To provide for the availability of critical data and systems, maintain regulatory compliance, manage our material risks from cybersecurity threats, and protect against and respond to cybersecurity incidents, we undertake the following activities:
| ● | monitor emerging data protection laws and implement changes to our processes that are designed to comply with such laws; |
| ● | through our policies, practices and contracts (as applicable), require employees, as well as third parties that provide services on our behalf, to treat confidential information and data with care; |
| ● | employ technical safeguards that are designed to protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence; |
| ● | provide regular, mandatory training for our employees regarding cybersecurity threats as a means to equip them with effective tools to address cybersecurity threats, and to communicate our evolving information security policies, standards, processes and practices; |
| ● | conduct regular phishing email simulations for all employees with access to our email systems to enhance awareness and responsiveness to possible threats; |
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| ● | conduct annual cybersecurity management and incident training for employees involved in our systems and processes that handle sensitive data; |
| ● | run tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our processes and technologies; |
| ● | leverage the NIST incident handling framework to help us identify, protect, detect, respond and recover when there is an actual or potential cybersecurity incident; and |
| ● | carry information security risk insurance that provides protection against the potential losses arising from a cybersecurity incident. |
Our incident response plan coordinates the activities we take to prepare for, detect, respond to and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain, investigate and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate damage to our business and reputation.
As part of the above processes, we regularly engage with consultants,
auditors and other
Our processes also address cybersecurity threat risks associated with
our use of third-party service providers, including our vendors who have access to employee data or our systems. Cybersecurity considerations
affect the selection and
We describe whether and how risks from identified cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, under the heading “Disruptions to Information Technology Systems and Cybersecurity Incidents,” which disclosures are incorporated by reference herein.
In the last two fiscal years, we have
Cybersecurity Governance; Management
Cybersecurity is an important part of our risk management processes
and an area of focus for our board of directors and management. The Nominating and Corporate Governance Committee of our
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Members of the Nominating and Corporate Governance Committee are also encouraged to regularly engage in conversations with management on cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs. Material cybersecurity threat risks are also considered during separate board meeting discussions of important matters like enterprise risk management, operational budgeting, business continuity planning, mergers and acquisitions, brand management, and other relevant matters.
Our cybersecurity risk management and strategy processes, which are
discussed in greater detail above, are led by our IT Department and are overseen by our Nominating and Corporate Governance Committee
of our Board of Directors.
ITEM 2. PROPERTIES.
We currently maintain all of our operations, including executive offices and manufacturing and laboratory space at 78 Fourth Avenue, Waltham, Massachusetts 02451. We lease office space under operating leases. On October 17, 2025, we entered into a lease amendment which eliminates the second space at 62 Fourth Avenue, commencing on December 23, 2025. We consider our current office space adequate for our current operations.
ITEM 3. LEGAL PROCEEDINGS.
As of the date of this Annual Report on Form 10-K, to our knowledge, we are not party to and our property is not subject to any material pending legal proceedings. However, from time to time, we may become involved in legal proceedings or subject to claims that arise in the ordinary course of our business activities. Regardless of the outcome, such legal proceedings or claims could have an adverse impact on us because of defense and settlement costs, diversion of management resources, negative publicity and reputational harm, and other factors.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
On March 3, 2026, the NYSE notified us that the NYSE had determined to (A) immediately suspend trading in our Class A common stock, where it had traded under the symbol “RBOT”, due to a determination that we had fallen below the NYSE’s continued listing standard requiring listed companies to maintain an average global market capitalization over a consecutive 30 trading day period of at least $15,000,000 pursuant to Section 802.01B of the NYSE Listed Company Manual, and (B) commence proceedings to delist the Class A common stock. We will not appeal the delisting determination. The NYSE has indicated that it will apply to the Securities and Exchange Commission to delist the Class A common stock by filing a Form 25.
We received approval of our application to have the Class A common stock quoted on the OTCID market tier operated by OTC Markets. The Class A common stock commenced quotation on the OTCID at the open of business on March 4, 2026 under the trading symbol of “RBOT.”
Our Public Warrants were suspended from trading on the NYSE, where they had traded under the symbol “RBOT.WS”, on December 15, 2025 and were subsequently delisted due to an “abnormally low” trading price level pursuant to Section 802.01D of the NYSE Listed Company Manual. The suspension and delisting of our Public Warrants did not affect the listing of the Company’s Class A common stock
Holders
As of February 9, 2026, there were approximately 27 holders of record of our Class A common stock, three holders of record of our Class B common stock, one holder of record of the Public Warrants and two holders of record of the Private Placement Warrants.
Such numbers do not include beneficial owners holding our securities through nominee names. There is no public market for our Class B common stock.
Dividends
We have not paid any cash dividends on our Class A common stock or Class B common stock to date. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition. The payment of any cash dividends will be within the discretion of our board of directors at such time.
Unregistered Sales of Securities
Not applicable.
Issuer Purchases of Equity Securities
We did not repurchase any of our equity securities during the twelve months ended December 31, 2025.
ITEM 6. [RESERVED]
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this Annual Report on Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. Unless the context otherwise requires, references to “we”, “us”, “our”, and “the Company” are intended to mean the business and operations of Vicarious Surgical Inc. and its consolidated subsidiaries.
Overview
We are combining advanced miniaturized robotics, computer science, sensing and 3D visualization to build a new category of intelligent and affordable single-port surgical robots that virtually transport surgeons inside the patient to perform minimally invasive surgery. With our next-generation robotics technology, which is being designed with proprietary human-like motion, we are seeking to improve surgical precision, ergonomics, and procedural efficiency, with the goal of improving patient outcomes and the cost and efficacy of surgical procedures over time. Led by a visionary team of engineers from MIT, we intend to deliver the next generation in robotic surgery, designed to solve the shortcomings of both open surgery, as well as current manual and robot-assisted minimally invasive surgery.
We estimate that there are 45 million soft tissue abdominal and gynecological surgical procedures performed annually worldwide that could potentially be addressed with the Vicarious Surgical System, including use for ventral hernia, other types of hernia, hysterectomy, cholecystectomy (gall bladder) and certain other gastrointestinal procedures. We intend for use in ventral hernia procedures to be the first clinical application for the Vicarious Surgical System, of which there are estimated to be 3.9 million cases worldwide and 0.9 million in the U.S. annually. We then intend to seek FDA authorization to enable the expansion into the other applications addressable by the Vicarious Surgical System.
The dollar amounts set forth in this section are presented in thousands, except for per share amounts.
Financial Highlights
We incurred net losses of $50,182 and $63,223 for the years ended December 31, 2025 and 2024, respectively. The 2025 net loss is inclusive of a gain of $787 related to the change in valuation of our warrant obligations. The 2024 net loss is inclusive of a gain of $43 related to the change in valuation of our warrant obligations. Our loss from operations prior to the warrant gain and other income and expense items was $50,027 and $66,555 for the years ended December 31, 2025 and 2024, respectively, representing a period-over-period decrease in expenses of 25%, which was primarily due to decreases of $8,973 in personnel-related expenses and $6,394 in professional fees. The decrease in personnel-related expenses was due to a 23% decrease in average headcount, from an average of 127 people in 2024 to an average of 98 people in 2025, as well as a decrease in bonus expense of $2,676.
Factors Affecting Results of Operations
The following factors have been important to our business and we expect them to impact our results of operations and financial condition in future periods:
Revenue
To date, we have not generated any revenue. We do not expect to generate revenue unless and until we receive FDA authorization of our product candidate. The amount of revenue, if any, from initial sales of a new product is difficult to predict and, even if we successfully commercialize our product candidate upon approval and begin generating revenue, such revenues will initially only modestly reduce our continued net losses resulting from our research and development and marketing activities, which we expect to continue to increase even after market authorization is received.
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Research and Development (“R&D”) Expenses
Research and development (“R&D”) expenses consist primarily of engineering, product development, regulatory expenses, medical affairs, and other costs associated with product candidates and technologies that are in development. These expenses include employee compensation, including stock-based compensation, supplies, consulting, prototyping, testing, materials, travel expenses, depreciation and an allocation of facility overhead expenses. Additionally, R&D expenses include internal and external costs associated with our regulatory compliance and quality assurance functions and overhead costs. While R&D expenses may vary over time depending on the level and timing of our product development efforts, as well as our clinical development, clinical trial and other related activities, we currently expect such expenses to decrease in absolute dollars as we implement cost control measures and operational efficiencies.
General and Administrative Expenses
General and administrative (“G&A”) expenses consist primarily of compensation for personnel, including stock-based compensation, related to executive, finance and accounting, information technology and human resource functions. Other G&A expenses include travel expenses, professional services fees (including legal, audit and tax fees), insurance costs, general corporate expenses and allocated facilities-related expenses. We expect G&A expenses to decrease in absolute dollars as we continue to streamline operations and realize cost efficiencies.
Sales and Marketing Expenses
Sales and marketing (“S&M”) expenses consist primarily of compensation for personnel, including stock-based compensation, related to sales and marketing functions and physician education programs. Other S&M expenses include training, travel expenses, promotional activities, marketing initiatives, market research and analysis, conferences and trade shows, professional services fees and allocated facilities-related expenses. We expect S&M expenses to continue to decrease in absolute dollars as we prioritize capital preservation and limit marketing activities until closer to commercialization.
Change in Fair Value of Warrant Liabilities
The change in fair value of warrant liability represents the mark-to-market fair value adjustments to the outstanding Public Warrants and Private Placement Warrants assumed as part of the consummation of the Business Combination on September 17, 2021. The change in fair value of our Private Placement Warrants is primarily the result of the change in the underlying stock price of our stock used in the Black-Scholes option pricing model while the Public Warrants are marked-to-market based on their historical price on the NYSE. As of December 17, 2025, the Public Warrants have been removed from the NYSE. The warrant liability was measured at fair value initially on September 17, 2021 and is remeasured at exercise, and for warrants that remain outstanding at the end of each subsequent reporting period.
Interest Income
Interest income consists primarily of interest income earned on our cash and cash equivalents and short-term investments.
Interest Expense
Interest expense consists of interest incurred on our D&O insurance financing.
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Results of Operations
The following table sets forth our historical operating results for the years ended December 31, 2025 and 2024:
| Year ended December 31, | ||||||||||||||||
| (in thousands, except for per share amounts) | 2025 | 2024 | Change | % Change | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | 33,601 | $ | 40,155 | $ | (6,554 | ) | (16 | )% | |||||||
| Sales and marketing | 2,171 | 4,525 | (2,354 | ) | (52 | )% | ||||||||||
| General and administrative | 15,196 | 21,875 | (6,679 | ) | (31 | )% | ||||||||||
| Gain on lease modification, net | (941 | ) | — | (941 | ) | (100 | )% | |||||||||
| Total operating expenses | 50,027 | 66,555 | (16,528 | ) | (25 | )% | ||||||||||
| Loss from operations | (50,027 | ) | (66,555 | ) | (16,528 | ) | (25 | )% | ||||||||
| Other (expense) income, net: | ||||||||||||||||
| Loss on disposal of leasehold improvements | (1,915 | ) | — | (1,915 | ) | (100 | )% | |||||||||
| Change in fair value of warrant liabilities | 787 | 43 | 744 | 1,730 | % | |||||||||||
| Interest and other income, net | 973 | 3,289 | (2,316 | ) | (70 | )% | ||||||||||
| Total other (expense) income, net | (155 | ) | 3,332 | (3,487 | ) | (105 | )% | |||||||||
| Net loss | $ | (50,182 | ) | $ | (63,223 | ) | $ | (13,041 | ) | (21 | )% | |||||
| Net loss per common share, basic and diluted | $ | (8.19 | ) | $ | (10.74 | ) | $ | (2.55 | ) | (24 | )% | |||||
| Other comprehensive (loss) gain: | ||||||||||||||||
| Net unrealized (loss) gain on investments | (46 | ) | 40 | (86 | ) | (215 | )% | |||||||||
| Other comprehensive (loss) gain | (46 | ) | 40 | (86 | ) | (215 | )% | |||||||||
| Comprehensive loss | $ | (50,228 | ) | $ | (63,183 | ) | $ | (12,955 | ) | (21 | )% | |||||
Comparison of the years ended December 31, 2025 and 2024
Research and Development Expenses. R&D expenses decreased $6,554, or 16%, to $33,601 during the year ended December 31, 2025, compared to $40,155 during the year ended December 31, 2024. This decrease was primarily due to decreases of $5,258 in contractor fees, $1,417 of personnel-related expenses, and $623 in depreciation expense; and was partially offset by increases of $531 in pre-clinical testing expense and $247 in materials and supplies. The decrease in personnel-related expenses was due primarily to a decrease in average headcount of 23%, consisting of an average of 79 R&D employees in 2025 compared to an average of 103 R&D employees in 2024.
Sales and Marketing Expenses. S&M expenses decreased $2,354, or 52%, from $4,525 in the year ended 2024 to $2,171 during the year ended December 31, 2025. This decrease was primarily due to decreases of $2,368 in personnel-related expenses. The decrease in personnel-related expenses was primarily due to a decrease in average headcount of 33%, consisting of an average of 6 employees in 2025 compared to an average of 9 employees in 2024.
General and Administrative Expenses. G&A expenses decreased $6,679, or 31%, to $15,196 during the year ended December 31, 2025, compared to $21,875 during the year ended December 31, 2024. This decrease was primarily due to decreases of $5,189 in personnel-related expenses, $1,101 in professional fees, and $365 in insurance expense. The decrease in personnel-related expenses was primarily due to a decrease in average headcount of 19%, consisting of an average of 13 employees in 2025 compared to an average of 16 employees in 2024.
Gain on lease modification, net. The gain on lease modification of $941 as of December 31, 2025, is related to the second amendment to our leased office space which eliminates the second building at 62 Fourth Avenue.
Other (expense) income, net. Other (expense) income decreased by $3,487 to net expense of $155 during the year ended December 31, 2025, compared to net income of $3,332 during the year ended December 31, 2024. The decrease was primarily due to a decrease in interest income from short-term investments of $2,318 and an increase of $1,948 in expense related to the disposal of leasehold improvements; partially offset by an increase in change in fair value of warrant liability of $744 resulting from the remeasurement of the Public Warrant and Private Placement Warrant liabilities between December 31, 2024, and the end of the reporting period, December 31, 2025.
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Income Taxes. Our income tax provision consists of an estimate for U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities and changes in tax law. Due to historical cumulative losses and expected future losses, we maintain a full valuation allowance against our U.S. and state deferred tax assets.
Liquidity and Capital Resources
To date, our primary sources of capital have been private placements of preferred stock prior to the Business Combination, public and private sales of securities and the issuance of common stock. Net cash used in our operating activities for the years ended December 31, 2025 and 2024 was $45,076 and $49,956, respectively. As of December 31, 2025, we held cash and cash equivalents of $2,569, short-term investments of $7,223 and had an accumulated deficit of $246,117.
Excluding the non-cash impact of potential changes in the fair value of warrant liabilities, we expect net losses to continue in connection with our ongoing activities, particularly as we continue to invest in our product development and clinical pathway. Based on our current planned operations, we do not believe that our current cash, cash equivalents and short-term investments balance of $9,792 as of December 31, 2025 will be sufficient to support our operations beyond the next twelve months from the date of issuance of these financial statements. Due to a reduction in headcount effective March 6, 2026, we currently expect that our cash, cash equivalents and short-term investments will be sufficient to support our operations through the second quarter of 2026. As such, there is substantial doubt about the Company’s ability to continue as a going concern. We may consider raising additional capital to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons.
Our future capital requirements will depend on many factors, including, but not limited to, any changes in the size, number and scope of clinical trials we may be required to conduct, the timing and conditions of market authorization (if any) for the Vicarious Surgical System, whether we are able to successfully commercialize the Vicarious Surgical System, if approved, additional product candidates we may choose to develop, fluctuations in the cost and timing of our business activities, including manufacturing, hiring and protection of our intellectual property portfolio, and the other risks and uncertainties described herein, under the caption “Risk Factors” in Part I, Item 1A and in other filings that we make with the Securities and Exchange Commission from time to time.
We expect that we will need to obtain substantial additional funding in order to complete our clinical trials, obtain market authorization for the Vicarious Surgical System, and commercialize it, if approved. Until such time, if ever, as we can generate sufficient revenues to support our expenses, we may seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing. The sale of equity and convertible debt securities may result in dilution to our stockholders. Preferred equity securities or convertible debt could provide for rights, preferences or privileges senior to those of our common stock, including liquidation or other preferences that could adversely affect the rights of our existing stockholders. The terms of debt securities issued or borrowings pursuant to a credit agreement could impose significant restrictions on our operations. If we raise funds through collaborations and licensing arrangements, we might be required to relinquish significant rights to our platform technologies or product candidates or grant licenses on terms that are not favorable to us, or that we would otherwise seek to develop or commercialize ourselves. Additional capital may not be available on reasonable terms, or at all, particularly given the current macroeconomic environment, including diminished liquidity and credit availability, declines in consumer confidence and economic growth, rising interest rates, inflation, uncertainty about economic stability and potential for economic recession. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and more dilutive. If we are unable to raise capital when needed or on attractive terms, we could be forced to significantly delay, scale back or discontinue the development, market authorization or commercialization of the Vicarious Surgical System or future product candidates, or seek collaborators at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available.
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On October 7, 2022, we filed a universal shelf registration statement on Form S-3 (the “Form S-3”), which was declared effective by the SEC on October 27, 2022, on which we registered for sale up to $400 million of any combination of our Class A common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine, which includes up to $100 million of Class A common stock that we may issue and sell from time to time, through Cowen and Company, LLC acting as our sales agent, pursuant to the sales agreement that we entered into with Cowen and Company, LLC on October 7, 2022 for our “at-the-market” equity program. We did not sell any shares of our Class A common stock under our sales agreement with Cowen and Company, LLC for the years ended December 31, 2025 and 2024. This Form S-3 expired on October 27, 2025.
On December 12, 2025, we filed a new universal shelf registration statement on Form S-3 (the “ new Form S-3”), which was declared effective by the SEC on December 22, 2025, on which we registered for sale up to $100 million of any combination of our Class A common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine, which includes up to $3 million of Class A common stock that we may issue and sell from time to time, through H.C. Wainwright and Company, LLC acting as our sales agent, pursuant to the sales agreement that we entered into with H.C. Wainwright and Company, LLC on December 12, 2025 for our “at-the-market” equity program. We did not sell any shares of our Class A common stock under our sales agreement with H.C. Wainwright and Company, LLC for the year ended December 31, 2025.
On October 7, 2025, we entered into a securities purchase agreement with an institutional investor pursuant to which we agreed to issue in a registered direct offering 588,300 shares of our Class A common stock and pre-funded warrants to purchase up to 561,700 shares of our Common Stock, as well as in a concurrent private placement, Series A common warrants to purchase an aggregate of 1,150,000 shares of our Common Stock and Series B common warrants to purchase an aggregate of 1,150,000 shares of our Common Stock, in each case with an exercise price of $5.10. The gross proceeds from the offering were $5.9 million and net proceeds of $5.2 million, after deducting underwriting discounts and commissions and other offering expenses payable by us.
On March 3, 2026, the NYSE notified us that the NYSE had determined to (A) immediately suspend trading in our Class A common stock due to a determination that we had fallen below the NYSE’s continued listing standard requiring listed companies to maintain an average global market capitalization over a consecutive 30 trading day period of at least $15,000,000 pursuant to Section 802.01B of the NYSE Listed Company Manual, and (B) commence proceedings to delist the Class A common stock. We will not appeal the delisting determination. The NYSE has indicated that it will apply to the Securities and Exchange Commission to delist the Class A common stock by filing a Form 25. The Class A common stock commenced quotation on the OTCID at the open of business on March 4, 2026 under the trading symbol of “RBOT.” The OTCID is a significantly more limited market than the NYSE, and quotation on any OTC market will result in a less liquid market for existing and potential holders of Class A common stock to trade their shares and could further depress the trading price of the Class A common stock. We can provide no assurance that the Class A common stock will continue to trade on this market, whether broker-dealers will provide and continue to provide public quotes of the Class A common stock on this market, or whether the trading volume of the Class A common stock will be sufficient to provide for an efficient trading market. The suspension and/or delisting of the Class A common stock from the NYSE could materially limited the number of investors willing to hold or acquire the Class A common stock, which could negatively impact our ability to raise equity financing; and negatively impact our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing us from accessing the public capital markets.
Cash
Our cash and cash equivalents and short-term investments balance as of December 31, 2025 was $2,569 and $7,223 respectively. Our future capital requirements may vary from those currently planned and will depend on various factors, including the timing and extent of R&D spending and spending on other strategic business initiatives.
Cash Flows Summary
Comparison of the year ended December 31, 2025 and December 31, 2024
| Year Ended December 31, | ||||||||
| (in thousands) | 2025 | 2024 | ||||||
| Net cash used in operating activities | $ | (45,076 | ) | $ | (49,956 | ) | ||
| Net cash provided by investing activities | $ | 32,147 | $ | 6,863 | ||||
| Net cash provided by financing activities | $ | 5,761 | $ | 8 | ||||
Cash flows used in Operating Activities
Net cash used in operating activities during the year ended December 31, 2025 was $45,076, attributable to a net loss of $50,182 and a net decrease in our operating assets and liabilities of $4,905; partially offset by non-cash items of $10,011. Non-cash items consisted of $8,135 in stock-based compensation, a loss of $1,915 on the disposal of leasehold improvements, and $1,425 of depreciation; partially offset by a $787 gain from our warrant liabilities, a $489 net gain from our lease expense, and a change in accrued interest and net accretion of discounts on marketable securities of $188. The $4,905 net decrease in our operating assets and liabilities was primarily due to decreases of $6,520 in lease liabilities and $4,499 in accrued expenses and accounts payable; partially offset by decreases of $5,285 in our right-of-use assets and $809 in prepaid and other current assets.
Net cash used in operating activities during the year ended December 31, 2024 was $49,956, attributable to a net loss of $63,223 less a net change in our net operating assets and liabilities of $594 and plus non-cash items of $13,861. Non-cash items consisted of $11,904 in stock-based compensation, $2,107 of depreciation and $899 for non-cash lease expenses, partially offset by a $43 gain from our warrant liabilities and a change in accrued interest and net accretion of discounts on marketable securities of $1,008. The $594 change in our net operating assets and liabilities was primarily due to decreases of $1,047 in lease liabilities, $96 in accounts payable, partially offset by an $175 decrease in prepaid and other current assets, a $309 increase in accrued expenses, and a $65 decrease in other non-current assets.
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Cash flows provided by Investing Activities
Net cash provided by investing activities for the year ended December 31, 2025 was $32,147 consisting of $53,619 in proceeds from sales and maturities of available-for-sale investments; partially offset by $21,340 used for purchases of available-for-sale investments and $132 for fixed asset purchases.
Net cash provided by investing activities for the year ended December 31, 2024 was $6,863 consisting of $65,192 in proceeds from sales and maturities of available-for-sale investments and partially offset by $58,149 used for purchases of available-for-sale investments and $180 for fixed asset purchases.
Cash flows provided by Financing Activities
Net cash provided by financing activities for the year ended December 31, 2025 was $5,169 in net proceeds received from the issuance of common stock and pre-funded warrants in connection with our registered direct offering, $525 in net proceeds from our note payable related to financing our D&O insurance, and $67 that was received for stock option exercises.
Net cash provided by financing activities for the year ended December 31, 2024 was $8 that was received for stock option exercises.
Critical Accounting Policies and Estimates
Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the consolidated balance sheet date, as well as the reported expenses incurred during the reporting periods. Our management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates, and such differences could be material to our consolidated financial statements.
While our significant accounting policies are described in the notes to our historical financial statements (see Note 2, “Summary of Significant Accounting Policies – Recently Issued Accounting Pronouncements” in our financial statements contained in this Annual Report on Form 10-K), we believe the following critical accounting policy requires significant judgment and estimates in the preparation of our financial statements:
Warrant Liabilities
We recognize our warrants as liabilities at fair value and adjust the warrant liability to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the statement of operations. The fair value of Public Warrants is determined from their trading value on public markets. The fair value of Private Placement Warrants is calculated using the Black-Scholes option pricing model. The assumptions used in the model are the Company’s stock price, exercise price, expected term, volatility, interest rate, and dividend yield.
We estimate the volatility of our warrants based on implied volatility from our Public Warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which we anticipate remaining at zero.
Recently Adopted Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, “Summary of Significant Accounting Policies – Recently Issued Accounting Pronouncements” in our financial statements contained in this Annual Report on Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Audited Consolidated Financial Statements of Vicarious Surgical, Inc.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
On July 7, 2025, we dismissed Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm. The dismissal of Deloitte was approved by our audit committee (the “Audit Committee”) of the board of directors (the “Board”).
Deloitte’s audit report dated March 17, 2025 on our consolidated financial statements as of and for the years ended December 31, 2024 and 2023 did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles, other than the explanatory paragraph regarding our ability to continue as a going concern.
During the fiscal years ended December 31, 2024 and 2023 and subsequent interim periods through the date of dismissal, there have been no “disagreements” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) with Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of Deloitte, would have caused them to make reference thereto in their report on the financial statements. Additionally, during the fiscal years ended December 31, 2024 and 2023 and subsequent interim periods through the date of dismissal, there have been no “reportable events” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K), except for the disclosure of material weaknesses in our internal control over financial reporting which existed during the fiscal year ended December 31, 2024, as disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Commission on March 17, 2025 and during the fiscal quarter ended March 31, 2025, as disclosed in Part I, Item 4 of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, as filed with the Commission on May 12, 2025. The material weaknesses related to lacking the necessary business processes, personnel and related internal controls to operate in a manner to satisfy the accounting and financial reporting requirements of a public company, and the material weaknesses manifested themselves in ways that included the improper segregation of duties relating to review of the recording of journal entries and the reconciliation of key accounts and safeguarding of assets, as well as the analysis of accounting for certain transactions and accounts, improper controls related to information technology, ineffective risk assessment process and documentation and monitoring of control processes, accounting policies and procedures. This reportable event was discussed among the our management, the Audit Committee, and Deloitte.
Deloitte has been authorized by us to respond fully to the inquiries of Cherry Bekaert LLP (“Cherry Bekaert”), our successor independent registered public accounting firm as further described below, concerning this reportable event.
We provided Deloitte with a copy of the foregoing disclosure and requested that Deloitte furnish us with a letter addressed to the SEC stating whether it agrees with the statements set forth above. A copy of Deloitte’s letter, dated July 11, 2025, stating their agreement with the statements set forth in the second, third and fourth paragraphs of this section, is filed as an exhibit to this Annual Report on Form 10-K.
On July 7, 2025, in connection with our dismissal of Deloitte, the Audit Committee approved the engagement of Cherry Bekaert as its new independent registered public accounting firm to audit our financial statements for the fiscal year ending December 31, 2025.
During the two most recent fiscal years and in the subsequent interim period through July 7, 2025, we did not consult with Cherry Bekaert regarding either (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect to our financial statements, and no written reports or oral advice were provided to us by Cherry Bekaert that was an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issue or (ii) any matter that was either the subject of (a) a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K or (b) a reportable event within the meaning of Item 304(a)(1)(v) of Regulation S-K.
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ITEM 9A. CONTROLS AND PROCEDURES.
Background and Remediation of Material Weakness
In connection with our evaluation of disclosure controls and procedures covering our consolidated financial statements as of December 31, 2025, we identified material weaknesses in our internal control over financial reporting. We have concluded that material weaknesses exist in our disclosure controls and procedures, including internal control over financial reporting, as we do not have the necessary business processes, personnel and related internal controls to operate in a manner to satisfy the accounting and financial reporting requirements of a public company. These material weaknesses manifested themselves in ways that included the improper segregation of duties relating to review of the recording of journal entries and the reconciliation of key accounts and safeguarding of assets, as well as the analysis of accounting for certain transactions and accounts, improper controls related to information technology, ineffective risk assessment process and documentation and monitoring of control processes, accounting policies and procedures.
We are focused on designing and implementing effective internal controls measures to improve our evaluation of disclosure controls and procedures, including internal control over financial reporting, and remediate the material weaknesses. In order to remediate these material weaknesses, we have taken and plan to take the following actions:
| ● | the hiring and continued hiring of additional accounting, finance and legal resources with public company experience; and |
| ● | implementation of additional review controls and processes requiring timely account reconciliation and analyses of certain transactions and accounts. |
These actions and planned actions are subject to ongoing evaluation by management and will require testing and validation of design and operating effectiveness of internal control over financial reporting over future periods. We are committed to the continuous improvement of our internal control over financial reporting and will continue to review the internal control over financial reporting.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal year ended December 31, 2025, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of December 31, 2025 to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Securities and Exchange Act is recorded, processed, summarized and reported as and when required.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation of such internal control required by Rules 13a-15(d) and 15d-15(d) under the Exchange Act that occurred during the fiscal year ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
No director or officer
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
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PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Introduction
On September 17, 2021 (the “Closing Date”), D8 Holdings Corp., a Delaware corporation that was previously a Cayman Islands exempted company (“D8” and after the Business Combination described herein, the “Company”) that migrated to and domesticated (the “Domestication”), consummated the previously announced business combination (the “Business Combination”) pursuant to the terms of the Agreement and Plan of Merger, dated as of April 15, 2021 (the “Business Combination Agreement”), by and among D8, Snowball Merger Sub, Inc., a Delaware corporation (“Merger Sub”), and Vicarious Surgical Inc., a Delaware corporation (“Legacy Vicarious”). Immediately upon the consummation of the Business Combination, the Domestication and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”, and such completion, the “Closing”), Merger Sub merged with and into Legacy Vicarious, with Legacy Vicarious surviving the Business Combination as a wholly-owned subsidiary of D8 (the “Merger”). In connection with the Transactions, D8 changed its name to “Vicarious Surgical Inc.” and Legacy Vicarious changed its name to “Vicarious Surgical US Inc.” As a result of the Business Combination, the business of Legacy Vicarious became our business. Unless the context requires otherwise, references in this Annual Report on Form 10-K to the “Company,” “we,” “us,” and “our” refer to Vicarious Surgical Inc. and its wholly-owned subsidiaries, including Legacy Vicarious.
Board of Directors and Management
The following table sets forth certain information concerning our executive officers and directors as of December 31, 2025:
| Name | Age | Position | ||
| Executive Officers: | ||||
| Stephen From | 62 | Chief Executive Officer and Director | ||
| Adam Sachs | 34 | President and Director | ||
| Sammy Khalifa | 35 | Chief Technology Officer and Director | ||
| Sarah Romano | 45 | Chief Financial Officer and Treasurer | ||
| Non-Employee Directors: | ||||
| Victoria Carr-Brendel | 61 | Director | ||
| David Ho | 73 | Director | ||
| Fuad Ahmad | 56 | Director | ||
| Joseph Doherty | 60 | Director |
Executive Officers
Stephen From has served as our Chief Executive Officer and as a member of our board of directors since August 2025. Prior to joining the Company, Mr. From served as Chief Executive Officer of Aruna Bio from April 2022 through August 2025, guiding the company’s strategic direction and clinical advancement of its proprietary neural exosome platform. From October 2005 through February 2021, Mr. From served as President and Chief Executive Officer, and from February 2021 through January 2022 served as Executive Chairman, of Kiora Pharmaceuticals, Inc., formerly known as EyeGate Pharmaceuticals, Inc., leading the company through its initial public offering and multiple acquisitions and licensing transactions in the ophthalmic therapeutics space. Prior to EyeGate, Mr. From served as the Chief Financial Officer of Centelion SAS, then a biotech subsidiary of Sanofi-Aventis, and spent several years in investment banking, focusing on the life sciences sector at Bank of America Securities and Robertson Stephens. Mr. From holds a Bachelor of Science from the University of Western Ontario and earned his accounting designation from Wilfrid Laurier University. Mr. From’s qualifications to serve on our board of directors include his previous experience leading public life science companies and his extensive finance experience.
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Adam Sachs has served as our President and as a member of our board of directors since August 2025. Prior to this, Mr. Sachs served as our Chief Executive Officer and as a member of our board of directors since the Closing of the Business Combination in September 2021, and had served as Legacy Vicarious’ Chief Executive Officer and a member of Legacy Vicarious’ board of directors, or the Legacy Vicarious Board, since 2014. Mr. Sachs received his B.S. in Engineering from the Massachusetts Institute of Technology in 2014. Prior to founding Legacy Vicarious in 2014, from June 2012 to January 2013, Mr. Sachs worked in Manufacturing Design at Apple, Inc. Mr. Sachs’ qualifications to serve on our board of directors include his previous board experience serving on the Legacy Vicarious Board, his deep experience founding, managing and directing all aspects of Legacy Vicarious operations for over eight years and his extensive experience in robotics, engineering, manufacturing and product development.
Sammy Khalifa has served as our Chief Technology Officer and as a member of our board of directors since the Closing of the Business Combination in September 2021, and had served as Legacy Vicarious’ Chief Technology Officer since 2015 and as a member of the Legacy Vicarious Board since 2018. Prior to working full time at Legacy Vicarious, Mr. Khalifa worked at Apple, Inc. as a Product Design Engineer from December 2013 to May 2015. Prior to that, Mr. Khalifa worked as a Biomedical Design Engineer at Hemedex, Inc. Mr. Khalifa received his B.S. in Mechanical Engineering from the Massachusetts Institute of Technology in 2012. Mr. Khalifa’s qualifications to serve on our board of directors include his previous board experience serving on the Legacy Vicarious Board as well as his extensive experience in robotics, product development and engineering.
Sarah Romano has served as our Chief Financial Officer and Treasurer since April 2025. Prior to joining the Company, Ms. Romano served as the Chief Financial Officer of Entero Therapeutics, Inc. (Nasdaq: ENTO) (formerly First Wave BioPharma), a clinical-stage biopharmaceutical company specializing in the development of targeted, orally delivered therapies for gastrointestinal diseases, from March 2022 to March 2025. She previously served as Chief Financial Officer of Kiora Pharmaceuticals, Inc. (Nasdaq: KPRX) (formerly EyeGate Pharmaceuticals, Inc.), a clinical-stage specialty pharmaceutical company developing products for treating ophthalmic diseases, from February 2017 through February 2022, and as its Corporate Controller from August 2016 to January 2017. Before that, Ms. Romano served as Assistant Controller at TechTarget, Inc. from June 2015 through August 2016. Ms. Romano holds a Bachelor of Arts in Accounting from College of the Holy Cross and a Master of Accounting from Boston College.
Non-Employee Directors
Victoria Carr-Brendel has served as a member of our board of directors since January 2023. Dr. Carr-Brendel served as Group Vice Present of Cochlear Implants at Sonova Group from 2019 through June 2024. Prior to that, she served as Chief Executive Officer of JenaValve Technology, Inc., a medical device company focused on developing minimally invasive transcatheter aortic valve repair systems to treat patients suffering from severe aortic valve disease. From 2004 through 2015, Dr. Carr-Brendel held various roles at Boston Scientific, with her last position overseeing the acquisition of Bayer’s interventional radiology division in 2014. She started her career as a scientist in R&D, amassing over forty patents and taking on increasingly larger business and management roles. She holds a B.A. in biology from Monmouth College, an M.S. in microbiology from Iowa State University, and a Ph.D. in microbiology and immunology from the University of Illinois at Chicago. Dr. Carr-Brendel’s qualifications to serve on our board include over thirty years of medical device development leadership and proven expertise in R&D oversight, new product development, business development, commercial execution, and intellectual property portfolio management.
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David Ho has served as a member of our board of directors since the Closing of the Business Combination in September 2021, and had served as a member of D8’s board of directors since April 2021. Dr. Ho has been employed by Columbia University since January 2020. Dr. Ho is the Founding Scientific Director of the Aaron Diamond AIDS Research Center, where he previously served as the CEO, a director and professor at the ADARC from 1990 to December 2019. Dr. Ho is the Clyde and Helen Wu Professor of Medicine at Columbia University Irving Medical Center. Dr. Ho serves as a member of the Trustees of Caltech, and was previously a board member of the MIT Corporation for 12 years and Harvard Board of Overseers for 6 years. Dr. Ho has been at the forefront of AIDS research for 40 years, publishing over 450 papers. Dr. Ho’s studies unraveled the nature of HIV replication in vivo and revolutionized society’s basic understanding of the AIDS disease. This knowledge led Dr. Ho to champion combination antiretroviral therapy that resulted in unprecedented control of HIV in patients. Dr. Ho’s research team is now devoting considerable efforts on vaccine and antibody research in order to halt or slow the spread of the AIDS epidemic. Recently, Dr. Ho has been devoting a considerable effort to develop novel strategies to diagnose, treat and prevent Covid-19 infection. Dr. Ho received his degrees from California Institute of Technology and Harvard Medical School (Harvard-MIT Health Science and Technology program). Dr. Ho’s qualifications to serve on our board of directors include his previous board experience serving as a member of D8’s board of directors and his extensive research experience and medical background.
Fuad Ahmad has served as a member of our board of directors since June 2025. Mr. Ahmad has been a partner at FLG Partners, a CEO and CFO consulting practice and board advisory services firm, since 2013. From November 2020 to March 2025, he served as CFO of Iridex Corporation (NASDAQ: IRIX), a medical device company. Prior to that, Mr. Ahmad served as CFO at each of Mitek Systems (NASDAQ: MITK), Vaxart, Inc. (NASDAQ: VXRT), Cutera, Inc. and Telenav, Inc. Prior to joining FLG Partners, he served as CFO of Sezmi Corporation, a Morgenthaler Ventures-backed cloud-based software platform. Prior to his service with Sezmi Corporation, Mr. Ahmad served as Senior Vice President and CFO of Globalstar Inc. (NASDAQ: GSAT), a public company that builds and operates low-earth orbit satellite-based digital telecommunications systems. In this role, Mr. Ahmad was involved in the initial fundraising activities related to building and launching Globalstar’s satellite telecommunications system, including its IPO and various public market and private financing initiatives totaling more than $1.5 billion. Mr. Ahmad graduated from Brigham Young University with a Bachelor of Science in Finance. Mr. Ahmad’s qualifications to serve on our board of directors include his prior executive officer experience at both private and public companies and his experience with building accounting and finance organizations as well as his experience with capital raising activities.
Joseph Doherty has served as a member of our board of directors since June 2025. Since January 2025, Mr. Doherty has served as CEO of the Worcester City Campus Corporation, a not-for-profit corporation whose base corporate purpose is to foster, promote and support the University of Massachusetts. Since 2020, Mr. Doherty has served as a teacher at Saint John’s High School, and since March 2022, Mr. Doherty has also served as a member of the board of directors of Immertec, a software company that creates immersive and interactive experiences for training in healthcare. From 2021 to 2025, he served as the Director for the BOLT initiative at the Massachusetts Biomedical Initiative (MBI), a nonprofit life science startup incubator. From January 2019 to August 2020, he served as the President of Scapa Healthcare, and from January 2019 to May 2020, he was a member of the board of directors of Scapa Group, a publicly traded company on AIM, a market of the London Stock Exchange plc. There, he oversaw a B2B business focused on developing and manufacturing medical devices and consumer wellness products for global market leaders. From 2015 to 2019, Mr. Doherty served in roles of increasing responsibility, including as President, of Olympus Surgical Technologies America, a medical device subsidiary of Olympus Corporation of the Americas. He also spent over 24 years with Johnson & Johnson (NYSE: JNJ) and held various roles with increasing responsibilities, ultimately serving as the Vice President of Integration and Transformation. Mr. Doherty received a Bachelor of Science in Engineering from the United States Military Academy at West Point and a Master of Business Administration from Nichols College. Mr. Doherty’s qualifications to serve on our board of directors include his extensive board and executive experience at public and private companies and his experience in the medical device field.
There are no family relationships, as such term is defined in Item 401(d) of Regulation S-K, between or among any of our directors or executive officers.
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Audit Committee
Our audit committee consists of Mr. Ahmad, who serves as the chairperson, Mr. Doherty and Dr. Carr-Brendel. Beverly Huss served as a member of the audit committee through December 1, 2025, at which point Mr. Doherty was appointed to the committee, and Ric Fulop served as a member of the audit committee through June 27, 2025, at which point Mr. Ahmad was appointed to the committee. Our audit committee met four times during the fiscal year ended December 31, 2025. Each member of the audit committee qualifies as an independent director under the NYSE corporate governance standards and the independence requirements of Rule 10A-3 under the Exchange Act. Our board of directors has determined that Mr. Ahmad qualifies as an “audit committee financial expert” as such term is defined in Item 407(d)(5) of Regulation S-K and possesses financial sophistication, as defined under the rules of the NYSE.
The purpose of the audit committee is to prepare the audit committee report required by the SEC to be included in our proxy statement and to assist our board of directors in overseeing and monitoring (1) the quality and integrity of the financial statements, (2) compliance with legal and regulatory requirements, (3) our independent registered public accounting firm’s qualifications and independence, (4) the performance of our internal audit function and (5) the performance of our independent registered public accounting firm.
Our board of directors has adopted a written charter for the audit committee, which is available on our website at https://www.vicarioussurgical.com under Investors - Governance - Governance Documents.
Insider Trading Policy
We have an insider trading policy that, among other things, governs the buying and selling of our securities by all of our personnel, including directors, officers, employees and consultants and certain other covered persons. Our policy is designed to prevent violations of insider trading laws by our personnel and to avoid even the appearance of improper conduct in this regard by our personnel. The policy prohibits covered persons from purchasing, selling, or otherwise disposing of our securities while in possession of material non-public information (except in limited circumstances, such as pursuant to a previously established trading plan). In addition, the policy prohibits all employees (including executives and directors) from engaging in any transaction in which they may profit from short-term speculative swings in the value of our securities, including any of the following activities: (1) “short sales” (selling borrowed securities that the seller hopes can be purchased at a lower price in the future) of our securities; and (2) transactions in our securities involving straddles, collars or other similar risk reduction or hedging devices. The policy includes quarterly and other trading blackouts and sets forth the procedures covered persons must follow before transacting in our securities, including pre-clearance by our policy administrator of all transactions by executive officers, directors, employees and certain other covered persons, as well as members of their households. Although we have not adopted an insider trading policy governing the purchase, sale, and/or other disposition of our securities by the Company, as part of the oversight of risk, the board of directors, or one or more of its committees, approves any transaction, plan or arrangement by or with the Company with respect to our securities on a case-by-case basis, and as part of their procedures to review and approve any such transaction, plan or arrangement, the board of directors or committee consults with legal counsel to ensure compliance with applicable insider trading laws, rules and regulations, and listing standards.
Code of Conduct and Ethics
We have adopted a code of business conduct and ethics that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer, which is available on our website at https://www.vicarioussurgical.com under Investors - Governance - Governance Documents. Our code of business conduct is a “code of ethics,” as defined in Item 406(b) of Regulation S-K.
Our Internet website address is provided as an inactive textual reference only. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of ethics on our Internet website.
Delinquent Section 16(a) Reports
Our records reflect that all reports which were required to be filed with the SEC pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, were filed on a timely basis.
Stockholder Nomination Procedures
As of the date of this Report, there have been no material changes to the procedures by which stockholders may recommend nominees to our board of directors.
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Item 11. EXECUTIVE COMPENSATION.
This section provides an overview of our executive compensation programs, including a narrative description of the material factors necessary to understand the information disclosed in the summary compensation table below.
As of December 31, 2025, our named executive officers, which we refer to as named executive officers (“NEOs”), were:
| ● | Stephen From, Chief Executive Officer, |
| ● | Adam Sachs, President, |
| ● | Sammy Khalifa, Chief Technology Officer, and |
| ● | Randy Clark, Former President |
The objective of our compensation program is to provide a total compensation package to each NEO that will enable us to attract, motivate and retain outstanding individuals, align the interests of our executive team with those of our equity holders, encourage individual and collective contributions to the successful execution of our short- and long-term business strategies and reward NEOs for performance. Our board of directors has historically determined the compensation for the NEOs.
Summary Compensation Table
The following table shows the total compensation paid or accrued to our named executive officers during the last two fiscal years ended December 31, 2024 and December 31, 2025.
| Name and Position | Year | Salary ($) | Bonus ($) | Option Awards ($)(1) | All Other Compensation ($)(2) | Total ($) | |||||||||||||||||
| Stephen From | 2025 | 201,370 | — | 2,170,910 | 6,154 | 2,378,433 | |||||||||||||||||
| Chief Executive Officer | 2024 | — | — | — | — | — | |||||||||||||||||
| Adam Sachs | 2025 | 541,620 | — | 239,779 | 12,506 | 793,905 | |||||||||||||||||
| President | 2024 | 541,620 | 284,351 | 214,848 | 10,765 | 1,051,584 | |||||||||||||||||
| Sammy Khalifa | 2025 | 424,800 | — | 155,150 | 12,392 | 592,341 | |||||||||||||||||
| Chief Technology Officer | 2024 | 424,800 | 148,680 | 221,636 | 8,496 | 803,612 | |||||||||||||||||
| Randy Clark | 2025 | 157,534 | — | — | 13,500 | 171,034 | |||||||||||||||||
| Former President (3) | 2024 | 458,333 | 154,808 | 452,428 | 13,012 | 1,078,581 | |||||||||||||||||
| (1) | The amounts represent the aggregate grant date fair value for option awards, computed in accordance with ASC 718. A discussion of our methodology for determining grant date fair value may be found in Note 11 “Stockholders’ Equity and Stock-Based Compensation” in our consolidated financial statements included in this Annual Report on Form 10-K. |
| (2) | The amounts represent 401(k) matching contributions by us for the periods presented. |
| (3) | Mr. Clark resigned from his position as President of the Company effective April 25, 2025. |
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Outstanding Equity Awards at 2025 Fiscal Year-End
The following table shows information regarding outstanding equity awards held by the NEOs as of December 31, 2025.
| Option Awards | Stock Awards | |||||||||||||||||||||||
| Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price | Option Expiration Date | Number of Shares or Units That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested | |||||||||||||||||
| Stephen From | ||||||||||||||||||||||||
| Chief Executive Officer | 8/07/2025 | — | 297,600 | $ | 8.92 | 8/06/2035 | ||||||||||||||||||
| Adam Sachs, | 11/23/2021 | 12,993 | — | (1) | $ | 373.50 | 11/22/2031 | — | — | |||||||||||||||
| President | 6/17/2024 | 4,860 | 8,086 | (2) | $ | 6.86 | 6/16/2034 | |||||||||||||||||
| 6/17/2024 | — | 12,946 | (3) | $ | 6.86 | 6/16/2034 | ||||||||||||||||||
| 6/27/2025 | 4,836 | 33,839 | (4) | $ | 7.61 | 6/26/2035 | ||||||||||||||||||
| 5/19/2022 | — | — | — | — | 4,754 | (5) | $ | 10,316 | ||||||||||||||||
| 6/02/2023 | — | — | — | — | 8,088 | (6) | $ | 17,550 | ||||||||||||||||
| Randy Clark, | 6/17/2024 | 3,009 | — | (7) | $ | 6.86 | 3/1/2026 | — | — | |||||||||||||||
| Former President | 2/13/2024 | 14,592 | — | (8) | $ | 12.00 | 3/1/2026 | |||||||||||||||||
| Sammy Khalifa, | 11/23/2021 | 10,395 | — | (9) | $ | 373.50 | 11/22/2031 | — | — | |||||||||||||||
| Chief Technology Officer | 6/17/2024 | 5,015 | 8,340 | (10) | $ | 6.86 | 6/16/2034 | |||||||||||||||||
| 6/17/2024 | — | 13,355 | (11) | $ | 6.86 | 6/16/2034 | ||||||||||||||||||
| 6/27/2025 | 3,132 | 21,893 | (12) | $ | 7.61 | 6/26/2025 | ||||||||||||||||||
| 5/19/2022 | — | — | — | — | 3,804 | (13) | $ | 8,254 | ||||||||||||||||
| 6/02/2023 | — | — | — | — | 4,170 | (14) | $ | 9,048 | ||||||||||||||||
| (1) | Represents an option to purchase 12,993 shares of Class A Common Stock granted on November 23, 2021. The shares underlying this option vested, subject to continued service, equal monthly installments over a 48-month period. |
| (2) | Represents an option to purchase 12,946 shares of Class A Common Stock granted on June 17, 2024. The shares underlying this option vest subject to continued service a in equal monthly installments over a 48-month period. |
| (3) | Represents a performance based option to purchase 12,946 shares of Class A Common Stock granted on June 17, 2024. The performance based option vests subject to completion of the relevant performance criteria. |
| (4) | Represents an option to purchase 38,675 shares of Class A Common Stock granted on June 27, 2025. The shares underlying this option vest subject to continued service in equal monthly installments over a 48-month period. |
| (5) | Represents 38,042 RSUs granted on May 19, 2022. The RSUs vest, subject to continued service, in equal quarterly installments over a four-year period beginning on May 19, 2022. |
| (6) | Represents 21,576 RSUs granted on June 2, 2023. The RSUs vest, subject to continued service, in equal quarterly installments over a four-year period beginning on June 2, 2023. |
| (7) | Represents an option to purchase 8,490 shares of Class A Common Stock granted on June 17, 2024. The shares underlying this option vest subject to continued service as follows: 177 shares vested on July 17, 2024, with the remainder vesting in equal monthly installments over the following 48-month period |
| (8) | Represents an option to purchase 33,334 shares of Class A Common Stock granted on February 13, 2024. The shares underlying this option vest subject to continued service as follows: 8,337 shares vest on February 13, 2025 with the remainder vesting in equal monthly installments over the following 48-month period |
| (9) | Represents an option to purchase 10,395 shares of Class A Common Stock granted on November 23, 2021. The shares underlying this option vested, subject to continued service, a in equal monthly installments over ta 48-month period. |
| (10) | Represents an option to purchase 13,355 shares of Class A Common Stock granted on June 17, 2024. The shares underlying this option vest, subject to continued service, in equal monthly installments over a 48-month period. |
| (11) | Represents a performance based option to purchase 13,355 shares of Class A Common Stock granted on June 17, 2024. The performance based option vests subject to completion of the relevant performance criteria. |
| (12) | Represents an option to purchase 25,025 shares of Class A Common Stock granted on June 27, 2025. The shares underlying this option vest subject to continued service in equal monthly installments over a 48-month period |
| (13) | Represents 30,434 RSUs granted on May 19, 2022. The RSUs vest, subject to continued service, in equal quarterly installments over a four-year period beginning on May 19, 2022. |
| (14) | Represents 11,129 RSUs granted on June 2, 2023. The RSUs vest, subject to continued service, in equal quarterly installments over a four-year period beginning on June 2, 2023. |
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Employment Arrangements
In July 2021, Legacy Vicarious entered into employment agreements with our executive officers, including Mr. Sachs and Mr. Khalifa, which was assumed by us effective as of the Closing of the Business Combination.
Stephen From
We entered into an employment agreement with Mr. From on July 30, 2025, pursuant to which Mr. From serves as our Chief Executive Officer. Under the employment agreement, Mr. From receives an initial annual base salary of $500,000 and is eligible to receive an annual performance bonus of up to 50% of Mr. From’s annual base salary. The actual amount of any such bonus is determined by reference to the attainment of applicable company and/or individual performance objectives, as determined by our board of directors or a subcommittee thereof. Pursuant to the employment agreement, Mr. From is also eligible to participate in customary welfare and fringe benefit plans, provided by us to our employees at the same level as Mr. From.
We also granted Mr. From a non-qualified stock option intended to qualify as an “inducement” grant for the purchase of an aggregate of 297,600 shares of our common stock. In the event that Mr. From is terminated without cause, he is entitled to receive a severance payment equal to one year of his then in-effect base salary.
On February 2, 2026, we entered into an amendment to Mr. From’s employment agreement. Pursuant to the amendment, in the event that Mr. From is terminated without cause or resigns from his position for good reason, he will be entitled to receive a severance payment equal to one year of his then in-effect base salary plus the pro-rata portion of his target bonus, as well as an amount equal to COBRA premiums for 12 months. In the event that Mr. From is terminated without cause or resigns from his position for good reason within three months prior to or 12 months following a change in control, he will be entitled to receive a severance payment equal to two times the sum of his then in-effect base salary for 12 months plus the pro-rata portion of his target bonus, as well as an amount equal to COBRA premiums for 24 months. In addition, his outstanding equity awards with time-based vesting will vest in full. Payment of any such severance amounts would be conditioned upon Mr. From’s execution and non-revocation of a separation agreement in a form acceptable to us, which would include a customary release and certain restrictive covenants.
Mr. From is also subject to our Non-Competition, Non-Solicitation, Non-Disclosure, and Intellectual Property Agreement, which includes a one year post-employment covenant not to compete with us subject to certain limitations, a one year post-employment covenant not to solicit, interfere with or service our customers, clients, vendors or partners or prospective customers, clients, vendors or partners to or for a competing business, and a one year post-employment covenant not to solicit or hire our employees or contractors.
Adam Sachs
Mr. Sachs serves as our President effective August 2025 and reports directly to our Chief Executive Officer. Legacy Vicarious entered into an employment agreement with Mr. Sachs on July 13, 2021, pursuant to which Mr. Sachs served as our Chief Executive Officer until August 2025 and reported directly to our board of directors or our board of directors’ designee. Mr. Sachs’s service pursuant to the employment agreement will continue until terminated in accordance with its terms.
Under the employment agreement, Mr. Sachs receives an initial annual base salary of approximately $531,234, which is subject to increase at the discretion of our board of directors or a subcommittee thereof, and is eligible to receive an annual performance bonus targeted at 75% of Mr. Sachs’s then-current annual base salary. The actual amount of any such bonus will be determined by reference to the attainment of applicable company and/or individual performance objectives, as determined by our board of directors or a subcommittee thereof. Pursuant to the employment agreement, Mr. Sachs is also eligible to participate in customary welfare and fringe benefit plans, provided by us to our employees at the same level as Mr. Sachs.
Effective March 9, 2026, Mr. Sachs voluntarily agreed to reduce his salary to $270,810 for an indefinite period of time.
Pursuant to the terms of the 2021 Equity Incentive Plan, and subject to the approval of our board of directors or a subcommittee thereof, in May of each calendar year that Mr. Sachs remains employed by us, Mr. Sachs is eligible to receive an annual equity award. Provided that Mr. Sachs remains employed by us on the vesting date (except as otherwise provided in such agreement or the 2021 Equity Incentive Plan), the RSUs subject to an annual equity award vest in 16 equal quarterly installments.
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In the event that Mr. Sachs is terminated without cause or resigns from his position for good reason, he is entitled to receive a severance payment equal to one year of his then in-effect base salary plus the pro-rata portion of his target bonus, as well as any earned but unpaid annual bonus and payment of an amount equal to COBRA premiums for 12 months. In the event that Mr. Sachs is terminated without cause or resigns from his position for good reason within three months prior to or 12 months following a change in control, he is entitled to receive a severance payment equal to two times the sum of his then in-effect base salary for 12 months plus the pro-rata portion of his target bonus, as well as any earned but unpaid annual bonus and payment of an amount equal to COBRA premiums for 24 months. In addition, his outstanding equity awards with time-based vesting will vest in full.
We reimburse Mr. Sachs for all ordinary and reasonable out-of-pocket business expenses incurred by Mr. Sachs in furtherance of our business in accordance with our policies with respect thereto as in effect from time to time. Mr. Sachs is also subject to our Non-Competition, Non-Solicitation, Non-Disclosure, and Intellectual Property Agreement, which includes a one year post-employment covenant not to compete with us subject to certain limitations, a one year post-employment covenant not to solicit, interfere with or service our customers, clients, vendors or partners or prospective customers, clients, vendors or partners to or for a competing business, and a one year post-employment covenant not to solicit or hire our employees or contractors.
Randy Clark
We entered into an offer letter with Mr. Clark on January 18, 2024, pursuant to which Mr. Clark served as our President. Under the employment agreement, Mr. Clark received an initial annual base salary of $500,000 and was eligible to receive an annual performance bonus of up to 50% of Mr. Clark’s annual base salary. The actual amount of any such bonus was determined by reference to the attainment of applicable company and/or individual performance objectives, as determined by our board of directors or a subcommittee thereof. Pursuant to the offer letter, Mr. Clark was also eligible to participate in customary welfare and fringe benefit plans, provided by us to our employees at the same level as Mr. Clark.
We also granted Mr. Clark an incentive stock option for the purchase of an aggregate of 33,334 shares of our common stock. In the event that Mr. Clark was terminated without cause, he was entitled to receive a severance payment equal to one year of his then in-effect base salary, as well as payment of an amount equal to COBRA premiums for six months.
Mr. Clark is also subject to our Non-Competition, Non-Solicitation, Non-Disclosure, and Intellectual Property Agreement, which includes a one year post-employment covenant not to compete with us subject to certain limitations, a one year post-employment covenant not to solicit, interfere with or service our customers, clients, vendors or partners or prospective customers, clients, vendors or partners to or for a competing business, and a one year post-employment covenant not to solicit or hire our employees or contractors.
Mr. Clark resigned as President of our Company, effective as of April 25, 2025.
Sammy Khalifa
Legacy Vicarious entered into an employment agreement with Mr. Khalifa on July 13, 2021, pursuant to which Mr. Khalifa serves as our Chief Technology Officer and reports directly to our Chief Executive Officer. Mr. Khalifa’s service pursuant to the employment agreement will continue until terminated in accordance with its terms.
Under the employment agreement, Mr. Khalifa receives an initial annual base salary of approximately $425,000, which is subject to increase at the discretion of our board of directors or a subcommittee thereof, and is eligible to receive an annual performance bonus targeted at 75% of Mr. Khalifa’s then-current annual base salary. The actual amount of any such bonus will be determined by reference to the attainment of applicable company and/or individual performance objectives, as determined by our board of directors or a subcommittee thereof. Pursuant to the employment agreement, Mr. Khalifa is also eligible to participate in customary welfare and fringe benefit plans, provided by us to our employees at the same level as Mr. Khalifa.
Effective March 9, 2026, Mr. Khalifa voluntarily agreed to reduce his salary to $318,600 for an indefinite period of time.
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Pursuant to the terms of the 2021 Equity Incentive Plan, and subject to the approval of our board of directors or a subcommittee thereof, in May of each calendar year that Mr. Khalifa remains employed by us, Mr. Khalifa is eligible to receive an annual equity award.
In the event that Mr. Khalifa is terminated without cause or resigns from his position for good reason, he is entitled to receive a severance payment equal to 75% of his then in-effect base salary for 12 months plus the pro-rata portion of his target bonus, as well as any earned but unpaid annual bonus and payment of an amount equal to COBRA premiums for 9 months. In the event that Mr. Khalifa is terminated without cause or resigns from his position for good reason within three months prior to or 12 months following a change in control, he is entitled to receive a severance payment equal to the sum of his then in-effect base salary for 12 months plus the pro-rata portion of his target bonus, as well as any earned but unpaid annual bonus and payment of an amount equal to COBRA premiums for 12 months. In addition, his outstanding equity awards with time-based vesting will vest in full.
We reimburse Mr. Khalifa for all ordinary and reasonable out-of-pocket business expenses incurred by Mr. Khalifa in furtherance of our business in accordance with our policies with respect thereto as in effect from time to time. Mr. Khalifa is also subject to our Non-Competition, Non-Solicitation, Non-Disclosure, and Intellectual Property Agreement, which includes a one year post-employment covenant not to compete with us subject to certain limitations, a one year post-employment covenant not to solicit, interfere with or service our customers, clients, vendors or partners or prospective customers, clients, vendors or partners to or for a competing business, and a one year post-employment covenant not to solicit or hire our employees or contractors.
Employee Benefits
Our NEOs participate in employee benefit programs available to our employees generally, including a tax-qualified 401(k) plan. We do not maintain any executive-specific benefit or perquisite programs.
Equity Grant Timing Practices
Although we have not adopted a formal policy pertaining to the timing of stock option grants, it is our practice not to time the grant of equity awards, including stock options, in relation to the release of material non-public information that are likely to result in changes to the price of our common stock. Similarly, we do not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. During the fiscal year ended December 31, 2025, we did not grant any stock options within four business days before or one business day after the filing of a 10-Q or 10-K, or the filing or furnishing of an 8-K that disclosed material nonpublic information.
Clawback Policy
We have adopted a clawback policy (the “Clawback Policy”) in accordance with the listing standards and rules of the NYSE, that requires the Board to recoup excess compensation paid to our executive officers as a result of a financial statement restatement, regardless of any misconduct, fault or illegal activity on the part of the executive officer. The Clawback Policy applies in the case of an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under federal securities laws. The Clawback Policy applies to all incentive-based compensation, which is any compensation received by our executive officers that is granted, earned, or vested based wholly or in part upon the attainment of a financial reporting measure that is determined and presented in accordance with the accounting principles used in preparing our financial statements and any measures derived wholly or in part from such measures, as well as non-GAAP measures, stock price, and total shareholder return.
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Director Compensation
The following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2025 to each of our non-employee directors. Directors who are employed by us are not compensated for their service on our board of directors:
| Name | Fees Earned or Paid in Cash ($)(1) | Options Awards ($)(2) | Total ($) | |||||||||
| Joseph Doherty | 38,612 | 48,342 | 86,954 | |||||||||
| Fuad Ahmad | 29,926 | 48,342 | 78,268 | |||||||||
| Victoria Carr-Brendel | 56,733 | 32,226 | 88,959 | |||||||||
| Randy Clark(3) | 26,130 | 48,342 | 74,472 | |||||||||
| Ric Fulop(4) | 25,055 | — | 25,055 | |||||||||
| David Ho | 54,288 | 32,226 | 86,514 | |||||||||
| Beverly Huss(5) | 53,449 | 32,226 | 85,675 | |||||||||
| Donald Tang(6) | 30,336 | 32,226 | 62,562 | |||||||||
| (1) | The amounts represent fees earned during 2025 under our Non-Employee Director Compensation Policy. |
| (2) | The amounts represent the aggregate grant date fair value for option awards, computed in accordance with ASC 718. A discussion of our methodology for determining grant date fair value may be found in Note 11 “Stockholders’ Equity and Stock-Based Compensation” in our consolidated financial statements. |
| (3) | Mr. Clark resigned from his position as President of the Company effective April 25, 2025 and as director effective December 1, 2025. |
| (4) | Mr. Fulop’s service on the Board ended at the annual meeting of stockholders held on June 26, 2025. |
| (5) | Ms. Huss resigned from her position effective December 1, 2025. |
| (6) | Mr. Tang resigned from his position effective September 11, 2025. |
Non-Employee Director Compensation Policy
We have a non-employee director compensation policy, which was adopted in September 2021 and amended in May 2022, June 2023 and June 2025. Pursuant to the policy, non-employee directors receive annual retainers as follows:
| Position | Retainer | |||
| Chairperson of the Board | $ | 35,000 | ||
| Member of the Board | $ | 40,000 | ||
| Chairperson of the Audit Committee | $ | 18,000 | ||
| Member of the Audit Committee | $ | 6,300 | ||
| Chairperson of the Compensation Committee | $ | 14,250 | ||
| Member of the Compensation Committee | $ | 5,500 | ||
| Chairperson of the Nominating and Corporate Governance Committee | $ | 10,000 | ||
| Member of the Nominating and Corporate Governance Committee | $ | 4,650 | ||
| Chairperson of the Product and Technology Committee | $ | 14,250 | ||
| Member of the Product and Technology Committee | $ | 5,500 | ||
These fees are payable in arrears in quarterly installments no later than the fifteenth day following the end of each calendar quarter, provided that the amount of such payment will be prorated for any portion of such quarter that a director is not serving on our board of directors, on such committee or in such position. Non-employee directors may elect to receive a restricted stock unit award with a grant date fair value of the retainer amounts in lieu of receiving cash in such amounts. Non-employee directors are also reimbursed for reasonable out-of-pocket business expenses incurred in connection with attending meetings of our board of directors and any committee of the board on which they serve and in connection with other business related to the board of directors. Directors may also be reimbursed for reasonable out-of-pocket business expenses in accordance with our travel and other expense policies, as may be in effect from time to time.
In addition, we grant to new non-employee directors upon their initial election to our board of directors a number of restricted stock units or stock options (each restricted stock unit relating to one share of Class A Common Stock) having an aggregate grant date fair market value equal to $301,800 (or such lesser amount as determined by the Compensation Committee in its discretion), determined by dividing (A) $301,800 by (B) the Black Scholes value of Class A Common Stock on the NYSE on the date of the grant (rounded down to the nearest whole share), on the date that the non-employee director is first appointed or elected to our board of directors. Each of these grants shall vest in equal monthly installments over 36 months from the date of the grant, subject to the non-employee director’s continued service as a director on the applicable vesting dates.
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Furthermore, each non-employee director, who has been serving on our board of directors for six months as of the date of any annual meetings of stockholders, shall automatically receive a restricted stock unit award or stock option having an aggregate grant date fair value of $145,000 (or such lesser amount as determined by the Compensation Committee in its discretion), each year on the date of our annual meeting of stockholders. Each non-employee director who has been serving on our board of directors for less than six months as of the date of any annual meetings of stockholders, shall automatically receive a restricted stock unit award or stock option prorated for the portion of the year served on our board of directors. Each of these restricted stock unit awards or stock options shall vest at the earlier of one day prior to the date of the next annual meeting or the 12 month anniversary of the date of the grant, subject to the non-employee director’s continued service as a director on the applicable vesting dates.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table provides certain aggregate information with respect to all of our equity compensation plans in effect as of December 31, 2025.
| (a) | (b) | (c) | ||||||||||
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted- average exercise price of outstanding options, warrants and rights | Number of future | |||||||||
| Equity compensation plans approved by security holders | 781,790 | (1) | $ | 38.16 | (2) | 416,441 | (3) | |||||
| Equity compensation plans not approved by security holders | 297,600 | (4) | 8.92 | — | ||||||||
| Total | 1,079,390 | $ | 29.92 | 416,441 | ||||||||
| (1) | Consists of shares of Class A Common Stock to be issued upon exercise of outstanding options and RSUs under the Vicarious Surgical Inc. 2021 Equity Incentive Plan. |
| (2) | Consists of the weighted-average exercise price of the 758,149 stock options outstanding on December 31, 2025. |
| (3) | Consists of shares that remained available for future issuance under the Vicarious Surgical Inc. 2021 Equity Incentive Plan as of December 31, 2025. |
| (4) | Consists of a non-qualified stock option intended to qualify as an “inducement” grant under Rule 303A.08 of the NYSE Listed Company Manual which was granted in August 2025 upon the appointment by the Board of the Chief Executive Officer. |
The following table sets forth information known to us regarding the beneficial ownership of our common stock as of December 31, 2025 by:
| ● | each person known to us to be the beneficial owner of more than 5% of our outstanding common stock; |
| ● | each of our executive officers and directors; and |
| ● | all of our executive officers and directors as a group. |
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Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days and restricted stock units that vest within 60 days. Shares of Class A Common Stock issuable upon exercise of options and warrants currently exercisable within 60 days and restricted stock units that vest within 60 days are deemed outstanding solely for purposes of calculating the percentage of total ownership and total voting power of the beneficial owner thereof.
The beneficial ownership of our common stock is based on 6,463,351 shares of our Class A Common Stock and 653,990 shares of our Class B common stock issued and outstanding as of December 31, 2025.
Unless otherwise indicated, we believe that each person named in the table below has sole voting and investment power with respect to all shares of our common stock beneficially owned by them. Unless otherwise indicated, the business address of each of the following individuals or entities is c/o Vicarious Surgical, Inc. 78 Fourth Avenue, Waltham, Massachusetts 02451.
| Name and Address of Beneficial Owner | Number of Shares of Class A Common Stock | % | Number of shares of Class B Common stock | % | % of Total Voting Power** | |||||||||||||||
| Directors and Executive Officers: | ||||||||||||||||||||
| Stephen From | — | * | — | — | * | |||||||||||||||
| Adam Sachs(1) | 62,261 | * | 374,635 | 57.3 | % | 38.7 | % | |||||||||||||
| Sammy Khalifa(2) | 47,693 | * | 150,508 | 23.0 | % | 15.7 | % | |||||||||||||
| Sarah Romano | — | * | — | — | * | |||||||||||||||
| Victoria Carr-Brendel(3) | 8,292 | * | — | — | * | |||||||||||||||
| David Ho(4) | 12,455 | * | — | — | * | |||||||||||||||
| Fuad Ahmad | — | — | — | — | — | |||||||||||||||
| Joseph Doherty | — | — | — | — | — | |||||||||||||||
| All Current Directors and Executive Officers as a Group (8 Individuals) | 130,701 | 2.0 | % | 525,143 | 80.3 | % | 54.4 | % | ||||||||||||
| Other Five Percent Holders: | ||||||||||||||||||||
| Khosla Ventures, LLC(5) | 965,204 | 14.9 | % | — | — | 4.9 | % | |||||||||||||
| Innovation Endeavors III LP(6) | 459,004 | 7.1 | % | — | — | 2.3 | % | |||||||||||||
| Gates Frontier, LLC(7) | 603,201 | 9.3 | % | — | — | 3.1 | % | |||||||||||||
| Barry Greene, MD(8) | 6,946 | * | 128,847 | 19.7 | % | 13.2 | % | |||||||||||||
| * | Indicates beneficial ownership of less than 1%. |
| ** | Percentage of total voting power represents voting power with respect to all shares of our Class A Common Stock and our Class B Common Stock as a single class. Each share of our Class B Common Stock is entitled to 20 votes per share and each share of our Class A Common Stock is entitled to 1 vote per share. |
| (1) | Consists of (i) 35,043 shares directly owned by Mr. Sachs, (ii) options to purchase 24,841 shares of our Class A Common Stock exercisable within 60 days of December 31, 2025 held by Mr. Sachs, (iii) 2,377 shares of our Class A Common Stock issuable upon vesting of RSUs within 60 days of December 31, 2025 held by Mr. Sachs, and (iv) 374,635 shares of our Class B Common Stock held by Mr. Sachs. |
| (2) | Consists of (i) 25,649 shares owned directly by Mr. Khalifa, (ii) options to purchase 20,142 shares of our Class A Common Stock exercisable within 60 days of December 31, 2025 held by Mr. Khalifa, (iii) 1,902 shares of our Class A Common Stock issuable upon vesting of RSUs within 60 days of December 31, 2025 held by Mr. Khalifa, and (iv) 150,508 shares of our Class B Common Stock held by Mr. Khalifa. |
| (3) | Consists of (i) 8,192 shares owned directly and (ii) 100 shares of our Class A Common Stock issuable upon vesting of RSUs within 60 days of December 31, 2025 held by Dr. Carr-Brendel. |
| (4) | Consists of 12,455 shares owned directly by Dr. Ho. |
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| (5) | Based on Schedule 13D/A filed by Khosla Ventures on August 9, 2023. On June 12, 2024, we effected a 1-for-30 reverse stock split on the Class A Common Stock. The number of shares reported as held has been adjusted accordingly. Consists of (i) 263,226 shares of our Class A Common Stock held by Khosla Ventures Seed C, LP (“Khosla Ventures Seed C”), (ii) 435,311 shares of our Class A Common Stock held by Khosla Ventures V, LP (“Khosla Ventures V”) and (iii) 266,667 shares of our Class A Common Stock held by Khosla Ventures Opportunity II, L.P (“KVO II”). Khosla Ventures Seed Associates C, LLC (“KVA Seed C”) is the general partner of Khosla Ventures Seed C. Khosla Ventures Associates V, LLC (“KVA V”) is the general partner of Khosla Ventures V. Khosla Ventures Opportunity Associates II, LLC (“KVOA II”) is the general partner of KVO II. Vinod Khosla is the managing member of VK Services, LLC (“VK Services”), which is the sole manager of KVA Seed C, KVA V and KVOA II. Each of KVA Seed C, VK Services and Vinod Khosla may be deemed to possess voting and investment control over such securities held by Khosla Ventures Seed C, and each of KVA Seed C, VK Services and Vinod Khosla may be deemed to have indirect beneficial ownership of such securities held by Khosla Ventures Seed C. Each of KVA V, VK Services and Vinod Khosla may be deemed to possess voting and investment control over such securities held by Khosla Ventures V, and each of KVA V, VK Services and Vinod Khosla may be deemed to have indirect beneficial ownership of such securities held by Khosla Ventures V. Each of KVOA II, VK Services and Vinod Khosla may be deemed to possess voting and investment control over such securities held by KVO II, and each of KVOA II, VK Services and Vinod Khosla may be deemed to have indirect beneficial ownership of such securities held by KVO II. Each of KVA Seed C, KVA V, KVOA II, VK Services and Vinod Khosla disclaims beneficial ownership of such shares except to the extent of his or its respective pecuniary interests therein. The business address of each of the reporting persons is 2121 Sand Hill Road, Menlo Park, CA 94025. |
| (6) | Based on Schedule 13D filed by Innovation Endeavors III LP (“Innovation Endeavors”) on September 28, 2021. On June 12, 2024, we effected a 1-for-30 reverse stock split on the Class A Common Stock. The number of shares reported as held has been adjusted accordingly. Consists of 459,004 shares of our Class A Common Stock held by Innovation Endeavors. The business address of Innovation Endeavors is 1845 El Camino Real, Palo Alto, CA 94306. |
| (7) | Based on Schedule 13G/A filed by Gates Frontier, LLC on February 13, 2024. On June 12, 2024, we effected a 1-for-30 reverse stock split on the Class A Common Stock. The number of shares reported as held has been adjusted accordingly. Consists of 603,201 shares of our Class A Common Stock held by Gates Frontier, LLC. William H. Gates III is the sole member of Gates Frontier, LLC, and as such may be deemed to have sole voting and dispositive power over the shares held by Gates Frontier, LLC. The business address of Gates Frontier, LLC is 2365 Carillon Point, Kirkland, WA 98033. |
| (8) | Consists of (i) 1,152 shares owned directly, (ii) options to purchase 5,794 shares of our Class A Common Stock exercisable within 60 days of December 31, 2025, held by Dr. Greene, and (iii) 128,847 shares of our Class B Common Stock held by Dr. Greene. |
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Independence of the Board of Directors
NYSE rules generally require that independent directors must comprise a majority of a listed company’s board of directors. Based upon information requested from and provided by each proposed director concerning his or her background, employment and affiliations, including family relationships, we have determined that Messrs. Ahmad and Doherty, and Drs. Carr-Brendel and Ho, representing four of our directors , are “independent” as that term is defined under the applicable rules and regulations of the SEC and the listing requirements and rules of the NYSE.
Agreements with Vicarious Surgical Stockholders
Amended and Restated Registration Rights Agreement
At the Closing of the Business Combination, we entered into an Amended and Restated Registration Rights Agreement with D8 Sponsor LLC (the “Sponsor”), D8’s independent directors and certain Legacy Vicarious stockholders, pursuant to which, among other things, the parties to the Amended and Restated Registration Rights Agreement agreed, subject to certain exceptions, not to effect any sale or distribution of any of our equity securities held by any of them (except with respect to shares of Class A Common Stock acquired in open market transactions or by the Sponsor or D8’s independent directors pursuant to a 2021 private placement) during the lock-up period described therein and were granted certain registration rights with respect to their respective shares of our common stock, in each case, on the terms and subject to the conditions therein.
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Director Nomination Agreement
At the Closing of the Business Combination, we entered into the Director Nomination Agreement with the Sponsor, pursuant to which, the Sponsor is entitled to certain rights to nominate two members to serve on our board of directors effective as of the Closing Date, subject to the conditions set forth in the Director Nomination Agreement. The Sponsor’s initial nominees to our board of directors were Donald Tang and David Ho. The Sponsor’s right to nominate one such member to our board of directors expired at our 2022 annual meeting of stockholders and the right to nominate the other member to our board of directors shall expire upon the earlier of (i) the first date on which the Sponsor ceases to beneficially own at least 2.5% of our issued and outstanding common stock and (ii) the termination of the Director Nomination Agreement as of the date that is 36 months after the Closing Date. This agreement terminated on September 17, 2024.
Indemnification Agreements with Officers and Directors and Directors’ and Officers’ Liability Insurance
We have entered into indemnification agreements with each of our executive officers and directors. The indemnification agreements, our charter and our bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our bylaws also require us to advance expenses incurred by our directors and officers. We will also maintain a general liability insurance policy, which covers certain liabilities of our directors and officers arising out of claims based on acts or omissions in their capacities as directors or officers.
Policies and Procedures for Related Party Transactions
We have adopted a written related person transaction policy that sets forth the following policies and procedures for the review and approval or ratification of related person transactions.
A “Related Person Transaction” is a transaction, arrangement or relationship in which we or any of our subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. Transactions involving compensation for services provided to us or any of our subsidiaries as an employee, consultant or director will not be considered related person transactions under this policy. A “Related Person” is:
| ● | any person who is or was an executive officer, director, or director nominee of ours at any time since the beginning of our last fiscal year; |
| ● | a person who is or was an Immediate Family Member (as defined below) of an executive officer, director, director nominee at any time since the beginning of our last fiscal year; |
| ● | any person who, at the time of the occurrence or existence of the transaction, is the beneficial owner of more than 5% of any class of our voting securities (a “Significant Stockholder”); or |
| ● | any person who, at the time of the occurrence or existence of the transaction, is an Immediate Family Member of a Significant Stockholder of ours. |
An “Immediate Family Member” of a person is any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of such person, or any other person sharing the household of such person, other than a tenant or employee.
We have implemented policies and procedures designed to minimize potential conflicts of interest arising from any dealings we may have with our affiliates and to provide appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from time to time. Specifically, pursuant to our charter, the audit committee has the responsibility to review related party transactions.
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Under the related person transaction policy, the related person in question or, in the case of transactions with a beneficial holder of more than 5% of our voting stock, an officer with knowledge of a proposed transaction, will be required to present information regarding the proposed related person transaction to the audit committee (or to another independent body of the board of directors) for review.
To identify related person transactions in advance, we expect to rely on information supplied by our executive officers, directors and certain significant stockholders. In considering related person transactions, our audit committee is expected to take into account the relevant available facts and circumstances, which may include, but are not limited to:
| ● | the related person’s interest in the transaction; |
| ● | the approximate dollar value of the amount involved in the transaction; |
| ● | the approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss; |
| ● | whether the transaction was undertaken in the ordinary course of our business; |
| ● | whether the transaction with the related person is proposed to be, or was, entered into on terms no less favorable to us than terms that could have been reached with an unrelated third party; |
| ● | the purpose of, and the potential benefits to us of, the transaction; and |
| ● | any other information regarding the transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction. |
The audit committee will approve only those transactions that it determines are fair to us and in our best interests.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Set forth below are fees billed or expected to be billed to us by our independent registered public accounting firm Cherry Bekaert for the year ended December 31, 2025. Deloitte was engaged for the year ended December 31, 2024 and the quarterly review of the period ended March 31, 2025. Cherry Bekaert was engaged for the quarterly review of the periods ended June 30, 2025 and September 30, 2025.
Independent Registered Public Accounting Firm Fees and Services
The following is a summary of fees paid to Cherry Bekaert and Deloitte for services rendered for the fiscal years ended December 31, 2025 and December 31, 2024.
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Audit fees | $ | 567,181 | $ | 712,668 | ||||
| Audit-related fees | — | — | ||||||
| Tax fees | — | — | ||||||
| All other fees | 1,895 | 1,895 | ||||||
| Total | $ | 569,076 | $ | 714,563 | ||||
| (1) | Audit fees consisted of audit work performed in the preparation of consolidated financial statements, as well as work generally only the independent registered public accounting firm can reasonably be expected to provide, such as quarterly review procedures and the provision of consents in connection with the filing of registration statements and related amendments, as well as other filings. Cherry Bekaert billed fees of $348,600 and Deloitte billed fees of $218,581. | |
| (2) | There were no audit-related fees in 2025 or 2024. | |
| (3) | There were no tax fees in 2025 or 2024. | |
| (4) | All other fees consisted of fees paid to Deloitte for access to a research resource. |
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Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Public Accountant
Consistent with SEC policies regarding auditor independence, the audit committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the audit committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm.
Prior to engagement of an independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the audit committee for approval.
1. Audit services include audit work performed in the preparation of financial statements, as well as work that generally only an independent registered public accounting firm can reasonably be expected to provide, including comfort letters, statutory audits, and attest services and consultation regarding financial accounting or reporting standards.
2. Audit-Related services are for assurance and related services that are traditionally performed by an independent registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatory requirements.
3. Tax services include all services performed by an independent registered public accounting firm’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning, and tax advice.
4. Other Fees are those associated with services not captured in the other categories. The Company generally does not request such services from our independent registered public accounting firm.
Prior to engagement, the audit committee pre-approves these services by category of service. The fees are budgeted and the audit committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the audit committee requires specific pre-approval before engaging our independent registered public accounting firm.
The audit committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the audit committee at its next scheduled meeting.
In the event the stockholders do not ratify the appointment of Deloitte as our independent registered public accounting firm, the audit committee will reconsider its appointment.
The affirmative vote of a majority of the votes cast affirmatively or negatively for this proposal is required to ratify the appointment of the independent registered public accounting firm.
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Item 15(a). The following documents are filed as part of this annual report on Form 10-K:
Item 15(a)(1) and (2) See “Index to Consolidated Financial Statements and Financial Statement Schedules” at Item 8 to this Annual Report on Form 10-K. Other financial statement schedules have not been included because they are not applicable or the information is included in the financial statements or notes thereto.
Item 15(a)(3) Exhibits
The following is a list of exhibits filed as part of this Annual Report on Form 10-K.
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| * | The certifications furnished in Exhibit 32 attached hereto are deemed to accompany this Annual Report on Form 10-K and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference. |
| † | Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. |
| + | Management contract or compensatory plan or arrangement. |
ITEM 16. FORM 10-K SUMMARY
Not applicable.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| VICARIOUS SURGICAL INC. | ||
Date: March 9, 2026 |
By: | /s/ Stephen From |
| Stephen From | ||
| Chief Executive Officer | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated below and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Stephen From | Chief Executive Officer and Director | March 9, 2026 | ||
| Stephen From | (Principal Executive Officer) | |||
| /s/ Sarah Romano | Chief Financial Officer | March 9, 2026 | ||
| Sarah Romano | (Principal Financial and
Accounting Officer) |
|||
| /s/ Joseph Doherty | Director | March 9, 2026 | ||
| Joseph Doherty | ||||
| /s/ Adam Sachs | Director | March 9, 2026 | ||
| Adam Sachs | ||||
| /s/ Sammy Khalifa | Director | March 9, 2026 | ||
| Sammy Khalifa | ||||
| /s/ Victoria Carr-Brendel | Director | March 9, 2026 | ||
| Victoria Carr-Brendel | ||||
| /s/ Fuad Ahmad | Director | March 9, 2026 | ||
| Fuad Ahmad | ||||
| /s/ David Ho | Director | March 9, 2026 | ||
| David Ho |
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Vicarious Surgical, Inc.
Waltham, Massachusetts
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Vicarious Surgical, Inc. (the “Company”) as of December 31, 2025, and the related consolidated statement of operations, stockholders’ equity, and cash flows for the year then ended and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and negative cash flows from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans concerning these matters are described in Note 1 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. We determined that there were no critical audit matters.
/s/
We have served as the Company’s auditor since 2025.
March 9, 2026
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Vicarious Surgical Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Vicarious Surgical Inc. and subsidiaries (the "Company") as of December 31, 2024, the related consolidated statements of operations, stockholders' equity, and cash flows, for the year ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has a history of losses and negative cash flows from operations, has an accumulated deficit, and has concluded that the Company’s cash, cash equivalents and investments will not be sufficient to sustain operations for at least twelve months from the date the financials are available to be issued. This raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
March 17, 2025
We began serving as the Company’s auditor in 2020. In 2025 we became the predecessor auditor.
F-3
VICARIOUS SURGICAL INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Short-term investments | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Restricted cash | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use assets | ||||||||
| Other long-term assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Notes payable | ||||||||
| Lease liabilities, current portion | ||||||||
| Total current liabilities | ||||||||
| Lease liabilities, net of current portion | ||||||||
| Warrant liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies (Note 8) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $ | ||||||||
| Class A common stock, $ | ||||||||
| Class B common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to these consolidated financial statements.
F-4
VICARIOUS SURGICAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except, per share data)
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating expenses: | ||||||||
| Research and development | $ | $ | ||||||
| Sales and marketing | ||||||||
| General and administrative | ||||||||
| Gain on lease modification, net | ( | ) | ||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other (expense) income, net: | ||||||||
| Loss on disposal of leasehold improvements | ( | ) | ||||||
| Change in fair value of warrant liabilities | ||||||||
| Interest and other income, net | ||||||||
| Total other (expense) income, net | ( | ) | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per share of Class A and Class B common stock, basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive (loss) income: | ||||||||
| Net unrealized (loss) income on investments | ( | ) | ||||||
| Other comprehensive (loss) income | ( | ) | ||||||
| Comprehensive net loss | $ | ( | ) | $ | ( | ) | ||
See accompanying notes to these consolidated financial statements.
F-5
VICARIOUS SURGICAL INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
| Year Ended December 31, 2025 | ||||||||||||||||||||||||
| Class A & B | Additional | Accumulated Other | Total | |||||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income | Equity | |||||||||||||||||||
| Balance, January 1, 2025 | $ | | $ | $ | ( | ) | $ | | $ | | ||||||||||||||
| Exercise of common stock options | ||||||||||||||||||||||||
| Vesting of restricted stock | ||||||||||||||||||||||||
| Issuance of class A common stock and pre-funded warrants in connection with registered direct offering, net of offering costs | ||||||||||||||||||||||||
| Exercise of pre-funded warrants | ||||||||||||||||||||||||
| Stock-based compensation | — | |||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Year Ended December 31, 2024 | ||||||||||||||||||||||||
| Class A & B | Additional | Accumulated Other | Total | |||||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income | Equity | |||||||||||||||||||
| Balance, January 1, 2024 | $ | | $ | $ | ( | ) | $ | | $ | | ||||||||||||||
| Exercise of common stock options | ||||||||||||||||||||||||
| Vesting of restricted stock | ||||||||||||||||||||||||
| Stock-based compensation | — | |||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive income | — | |||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
See accompanying notes to these consolidated financial statements.
F-6
VICARIOUS SURGICAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows used in operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Loss on disposal of property and equipment | ||||||||
| Stock-based compensation | ||||||||
| Non-cash lease (gain) expense | ( | ) | ||||||
| Change in fair value of warrant liabilities | ( | ) | ( | ) | ||||
| Change in accrued interest and net accretion of discounts on short-term investments | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued expenses | ( | ) | ||||||
| Right-of-use assets | ||||||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Other noncurrent assets | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Purchases of available-for-sale investments | ( | ) | ( | ) | ||||
| Proceeds from sales and maturities of available-for-sale investments | ||||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of class A common stock and pre-funded warrants in connection with registered direct offering | ||||||||
| Issuance costs related to issuance of class A common stock and pre-funded warrants in connection with registered direct offering | ( | ) | ||||||
| Proceeds from note payable | ||||||||
| Payments on note payable | ( | ) | ||||||
| Proceeds from exercise of stock options | ||||||||
| Net cash provided by financing activities | ||||||||
| Change in cash, cash equivalents and restricted cash | ( | ) | ( | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of year | ||||||||
| Cash, cash equivalents and restricted cash, end of year | $ | $ | ||||||
| Reconciliation of restricted cash: | ||||||||
| Cash and cash equivalents | ||||||||
| Restricted cash | ||||||||
| $ | $ | |||||||
| Supplemental cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Cash paid in connection with lease amendment | $ | $ | ||||||
| Decrease in right-of-use asset due to lease modification | $ | $ | ||||||
| Decrease in lease liability due to lease modification | $ | $ | ||||||
See accompanying notes to these consolidated financial statements.
F-7
VICARIOUS SURGICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except for share and per share data)
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business
Vicarious Surgical Inc. (including its subsidiaries,
“Vicarious” or the “Company”) (formerly D8 Holdings Corp. (“D8”)) was incorporated in the Cayman Islands
on
The Company is currently developing its differentiated surgical robotic system using proprietary de-coupled actuators to virtually transport surgeons inside the patient to perform minimally invasive surgical procedures.
Going Concern
Since inception, the Company has generated negative
cash flows from operations and has an accumulated deficit of $
Management does not believe that the Company’s
cash, cash equivalents and short-term investments balance at December 31, 2025 of $
Basis of Presentation
The accompanying consolidated financial statements of the Company are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the regulations of the U.S Securities and Exchange Commission (“SEC”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”).
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
F-8
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements and notes.
Reverse Stock Split
On June 12, 2024, the Company effected a
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods presented. Estimates are used for, but are not limited to, the Company’s ability to continue as a going concern, depreciation of property and equipment, fair value of financial instruments, and contingencies. Actual results may differ from those estimates.
Fair Value of Financial Instruments
US GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. The framework provides a fair value hierarchy that prioritizes the inputs for the valuation techniques. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements) and minimizes the use of unobservable inputs. The most observable inputs are used, when available. The three levels of the fair value hierarchy are described as follows:
Level 1 — Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
Level 2 — Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived from, or corroborated by, observable market data by correlation or other means.
Level 3 — Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
Cash and Cash Equivalents
Cash and cash equivalents consist of checking accounts, money market funds, U.S. treasury securities and U.S. government agency securities. The Company considers all highly liquid investments with an original maturity of 90 days or less at the date of purchase to be cash equivalents.
Restricted Cash
The Company has an agreement to maintain a cash
balance of $
F-9
Short-Term Investments
All of the Company’s investments, which
consist of U.S. treasury securities and U.S. government agency securities, are classified as available-for-sale and are carried at fair
value. There were unrealized losses of $
Concentrations of Credit Risk and Off-Balance-Sheet Risk
The Company has no significant off-balance-sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially expose the Company to concentrations of credit risk consist mainly of cash and cash equivalents. The Company maintains its cash and cash equivalents principally with accredited financial institutions of high-credit standing. Periodically, there may be times when the deposits exceed the FDIC insurance limits.
Warrant Liabilities
The Company does not use derivative instruments to hedge its exposures to cash flow, market or foreign currency risks. Management evaluates all of the Company’s financial instruments, including issued warrants to purchase its Class A common stock, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
As part of the Business Combination, the Company
assumed
Property and Equipment
Property and equipment are recorded at cost. Expenditures for repairs and maintenance are expensed as incurred. When assets are retired or disposed of, the assets and related accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in the determination of net loss. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets.
Impairment of Long-Lived Assets
The Company continually evaluates whether events or circumstances have occurred that indicate that the estimated remaining useful life of its long-lived assets may warrant revision or that the carrying value of these assets may be impaired. The Company does not believe that any events have occurred through December 31, 2025, that would indicate its long-lived assets are impaired.
Guarantees and Indemnifications
As permitted under Delaware law, the Company indemnifies its officers, directors, consultants and employees for certain events or occurrences that happen by reason of the relationship with, or position held at, the Company. Through December 31, 2025, the Company had not experienced any losses related to these indemnification obligations, and no claims were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related liabilities have been established.
F-10
Research and Development
Research and development costs are expensed in the period incurred. Research and development costs include payroll and personnel expenses, consulting costs, software and web services, legal, raw materials and allocated overhead such as depreciation and amortization, rent and utilities. Advance payments for goods and services to be used in future research and development activities are recorded as prepaid expenses and are expensed over the service period as the services are provided or when the goods are consumed.
Stock-Based Compensation
The Company accounts for all stock-based compensation, including stock options, performance-based stock options (“PSOs”), restricted stock units (“RSUs”), performance-based RSUs (“PSUs”), warrants and other forms of equity issued as compensation for services, at fair value and recognizes stock-based compensation expense for those equity awards, net of actual forfeitures, over the requisite service period, which is generally the vesting period of the respective award.
The fair value of the Company’s stock options and PSOs on the date of grant is determined by a Black-Scholes option pricing model utilizing key assumptions such as stock price, expected volatility and expected term. The Company’s estimates of these assumptions are primarily based on the fair value of the Company’s stock, historical data, peer company data used in combination with the Company’s data for volatility, and judgment regarding future trends. The Company uses its publicly traded stock price as the fair value of its common stock.
The fair value of RSUs and PSUs are based on the closing stock price on the grant date.
Income Taxes
The Company accounts for income taxes under the asset and liability method pursuant to ASC 740, Accounting for Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company recognizes deferred tax assets to the extent that management believes that these assets are more likely than not to be realized in the future. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.
The Company provides reserves for potential payments
of taxes to various tax authorities related to uncertain tax positions. Amounts recognized are based on a determination of whether a tax
benefit taken by the Company in its tax filings or positions is “more likely than not” to be sustained on audit. The amount
recognized is equal to the largest amount that is more than
Net Loss Per Share
Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common stock. For the purpose of this calculation, outstanding stock options, PSOs, RSUs, PSUs and stock warrants are considered potential dilutive common stock and are excluded from the computation of net loss per share as their effect is anti-dilutive.
F-11
Accordingly, in periods in which the Company reports a net loss, such losses are not allocated to such participating securities. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to be outstanding when their effect is anti-dilutive.
Emerging Growth Company Status
The Company was an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). Pursuant to the JOBS Act, an emerging growth company is provided the option to adopt new or revised accounting standards that may be issued by Financial Accounting Standards Board (“FASB”) or the SEC either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. The Company’s emerging growth company status expired on December 31, 2025.
Recently Issued Accounting Standards
In December 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires all public entities, including public entities with a single reportable segment, to provide in interim and annual periods one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and assess performance. Additionally, the standard requires disclosures of significant segment expenses and other segment items as well as incremental qualitative disclosures. The guidance in this update is effective for fiscal years beginning after December 15, 2023, and interim periods after December 15, 2024. The Company adopted ASU 2023-07 on January 1, 2024. The adoption did not have a material impact on the Company’s consolidated financial statements as of and for the year ended December 31, 2024.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. ASU No. 2023-09 requires a public business entity (“PBE”) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. For PBEs, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented. As of December 31, 2025, the Company adopted this new ASU prospectively and it only impacts the Company's income tax disclosures with no impact to its operations, cash flows, or financial condition.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in this ASU clarify and enhance certain presentation and reporting requirements related to expense disclosures. The guidance in ASU 2024-03 is effective for public business entities, including smaller reporting companies, for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. Early adoption is permitted. As of December 31, 2025, the Company has not yet adopted ASU 2024-03. The Company is currently evaluating the impact of ASU 2024-03 and does not expect that adoption will have a material impact on its consolidated financial statements and related disclosures.
3. SHORT-TERM INVESTMENTS
Short-term investments consist of U.S. treasury and U.S. government agency securities and are classified as available-for-sale.
Available-for-sale investments are reported at fair value, with unrealized gains or losses reported in accumulated other comprehensive income. The fair values of our available-for-sale cash and cash equivalents securities are Level 1 measurements, based on quoted prices from active markets for identical assets. The fair values of our available-for-sale short-term investments securities are Level 2 measurements, based on quoted prices from inactive markets for identical assets.
F-12
The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of our marketable securities by type of security as of December 31, 2025 and 2024 was as follows:
| December 31, 2025 | ||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
| Assets: | ||||||||||||||||
| U.S. treasury and U.S. government securities | | | ||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
| December 31, 2024 | ||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
| Assets: | ||||||||||||||||
| U.S. treasury and U.S. government securities | | | ( | ) | ||||||||||||
| Total assets | $ | $ | $ | ( | ) | $ | ||||||||||
The aggregate fair value of available-for-sale
debt securities in an unrealized loss position as of December 31, 2025 and December 31, 2024 was $
4. PROPERTY AND EQUIPMENT, NET
Property and equipment, net consist of the following:
| Estimated | December 31, | December 31, | ||||||||
| Useful Lives | 2025 | 2024 | ||||||||
| Machinery and equipment | $ | $ | ||||||||
| Furniture and fixtures | ||||||||||
| Computer hardware and software | ||||||||||
| Leasehold improvements | term or asset life | |||||||||
| Total property and equipment | ||||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||||
| Property and equipment, net | $ | $ | ||||||||
Depreciation expense for the years ended December
31, 2025 and 2024 was $
F-13
5. FAIR VALUE MEASUREMENTS
The following fair value hierarchy table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicates the fair value hierarchy of the inputs the Company utilized to determine such fair value:
| December 31, 2025 | ||||||||||||||||
| Quoted Prices | ||||||||||||||||
| in Active Markets for Identical Items | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||
| (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Money market funds | $ | | $ | $ | $ | |||||||||||
| U.S. treasury securities | ||||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
| December 31, 2024 | ||||||||||||||||
| Quoted Prices | ||||||||||||||||
| in Active Markets for Identical Items | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||
| (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Money market funds | $ | | $ | $ | $ | |||||||||||
| U.S. treasury securities | ||||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Warrant liabilities - public warrants | $ | $ | $ | $ | ||||||||||||
| Warrant liabilities - private warrants | ||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
Money market funds are classified as cash and cash equivalents. U.S. treasury securities are classified as cash equivalents when the date from initial purchase to maturity is less than 90 days. The remaining investments are classified as short-term investments.
The carrying values of prepaid expenses, right of use assets, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of the instruments. The fair values of our short-term investments are Level 2 measurements as the US government securities are not the most recent offerings and are therefore not traded in an active market.
The fair value of the Public Warrants is determined from their trading value on public markets. The Public Warrants were suspended from trading on the NYSE on December 15, 2025 and were subsequently delisted. As such, the value of the Public Warrants is as of December 31, 2025. The fair value of the Private Placement Warrants was calculated using the Black-Scholes option pricing model. The assumptions used in the model were the Company’s stock price, exercise price, expected term, volatility, interest rate, and dividend yield.
For the year ended December 31, 2025, the Company
recognized a gain to the statement of operations resulting from a decrease in the fair value of liabilities of $
For the year ended December 31, 2024, the Company
recognized a gain to the statement of operations resulting from a decrease in the fair value of liabilities of $
The Company estimates the volatility of its warrants based on implied volatility from the Company’s Public Warrants and from historical volatility of select peer companies’ common stock that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.
F-14
The following table provides quantitative information regarding the inputs used in determining the fair value of the Company’s Level 3 liabilities:
| Private Placement Warrants | As of December 31, 2025 | As of December 31, 2024 | ||||||
| Volatility | | % | | % | ||||
| Stock price | $ | $ | ||||||
| Expected life of warrants | ||||||||
| Risk-free rate | % | % | ||||||
| Dividend yield | % | % | ||||||
The following table shows the change in number and value of the warrants since December 31, 2024:
| Public | Private | Total | ||||||||||||||||||||||
| Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||
| December 31, 2024 | $ | $ | $ | |||||||||||||||||||||
| Change in value | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||
| December 31, 2025 | $ | $ | $ | |||||||||||||||||||||
6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
The following table summarizes the Company’s components of accrued expenses and other current liabilities:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Compensation and benefits related | $ | $ | ||||||
| Professional services and other | ||||||||
| Accrued expenses | $ | $ | ||||||
7. NOTE PAYABLE
Directors and Officers Liability Insurance
On November 12, 2025, the
Company entered into an
8. COMMITMENTS AND CONTINGENCIES
From time to time, the Company may face legal claims or actions in the normal course of business. At each reporting date, the Company evaluates whether a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses as incurred the costs related to its legal proceedings.
9. LEASES
The Company leases its office facility under a
noncancelable operating lease agreement that expires in
F-15
Office Facility Lease Amendment
On October 17, 2025, the Company entered into
a second amendment of its lease for office space in Waltham, Massachusetts. The amendment eliminates a second building consisting of approximately
A summary of the components of lease costs for the Company under ASC 842 for the years ended December 31, 2025 and 2024 were as follows:
| December 31, | ||||||||
| Lease costs | 2025 | 2024 | ||||||
| Operating lease costs | $ | $ | ||||||
| Variable lease costs | ||||||||
| Total lease costs | $ | $ | ||||||
Supplemental disclosure of cash flow information related to leases for the years ended December 31, 2025 and 2024 was as follows:
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash paid for amounts included in the measurement of operating lease liabilities (operating cash flows) | $ | $ | ||||||
The weighted-average remaining lease term and discount rate are as follows:
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Weighted-average remaining lease term (in years) | | |||||||
| Weighted-average discount rate | % | % | ||||||
The following table presents the maturity of the Company’s operating lease liabilities as of December 31, 2025:
| Years Ended December 31, | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total future minimum lease payments | $ | |||
| Less imputed interest | ( | ) | ||
| Carrying value of lease liabilities | $ | |||
F-16
10. INCOME TAXES
The Company’s entire pretax loss for the years ended December 31, 2025 and 2024 were from its U.S. domestic operations.
On July 4, 2025, the United States enacted budget reconciliation bill H.R. 1, referred to as the One Big Beautiful Bill Act ("OBBBA"). The Act includes a broad range of tax reform provisions, including extending and modifying various provisions of the Tax Cuts and Jobs Act and expanding certain incentives in the Inflation Reduction Act while accelerating the phase-out of other incentives. The legislation has multiple effective dates, with certain provisions effective in 2025 and other provisions effective in 2026 and subsequent years. OBBBA provisions include the restoration of the current deductibility for domestic research expenditures beginning in 2025, with transition options for previously capitalized amounts. OBBBA’s changes to the deductibility of domestic research and experimental expenditures decreased our deferred tax asset position as a change in tax law is accounted for in the period of enactment.
The Company recorded a tax loss for the years ended December 31, 2025 and 2024. Therefore, the Company recorded no current or deferred income tax expense or benefit for the years ended December 31, 2025 and 2024.
A reconciliation of the Company’s to the Company’s effective income tax rate is as follows:
| Year Ended December 31, 2025 | ||||||||
| Amount | Percent | |||||||
| Pretax loss | $ | ( | ) | % | ||||
| Income at US statutory rate | ( | ) | % | |||||
| Tax credits | ( | ) | % | |||||
| Change in valuation allowance | ( | )% | ||||||
| Stock-based compensation | ( | )% | ||||||
| Other | ( | ) | % | |||||
| Deferred tax asset | ( | )% | ||||||
| Total | $ | % | ||||||
| Year Ended December 31, 2024 | ||||
| Income at US statutory rate | % | |||
| State taxes, net of federal benefit | % | |||
| Change in fair value of warrants | % | |||
| Stock-based compensation | ( | )% | ||
| Tax credits | % | |||
| Change in valuation allowance | ( | )% | ||
| % | ||||
The Company's effective tax rate includes the effects of state and local income taxes, net of the federal income tax benefit, which are primarily attributable to Massachusetts, where the Company has significant business activities. These states have higher tax rates compared to other jurisdictions where the Company operates, and together, they account for more than half of the Company's total state tax expense.
The Company’s deferred tax assets and (liabilities) are as follows:
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Deferred Tax Assets: | ||||||||
| Net operating loss carryforwards | $ | $ | ||||||
| Tax credits | ||||||||
| Stock based compensation | ||||||||
| Capitalized R&D expenses | ||||||||
| Accruals and reserves | ||||||||
| Depreciation and amortization | ||||||||
| Lease liability | ||||||||
| Total deferred tax assets before valuation allowance | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets | $ | $ | ||||||
| Deferred Tax Liabilities: | ||||||||
| Right of use asset | ( | ) | ( | ) | ||||
| Total deferred tax liabilities | ( | ) | ( | ) | ||||
| Net deferred tax liability | $ | $ | ||||||
F-17
The deferred tax assets consist principally of
net operating loss carryforwards and research and development tax credits. The future realization of the tax benefits from existing temporary
differences and tax attributes ultimately depends on the existence of sufficient taxable income. In assessing the realization of the deferred
tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Management considers the scheduled reversal of projected future taxable income, and tax planning strategies in making this assessment.
After consideration of all available evidence, both positive and negative, the Company has determined that it was more likely than not
that the Company would not recognize the benefits of its federal and state net deferred tax assets. Accordingly, the Company has a full
valuation allowance against the deferred tax assets as of December 31, 2025 and 2024. The change in the valuation allowance for the years
ended December 31, 2025 and 2024 was an increase of $
The Company has incurred losses since inception
that would generally be available to reduce future taxable income. As of December 31, 2025, the Company had U.S. federal net operating
loss carryforwards of $
As of December 31, 2025, the Company had U.S.
federal research and development tax credits of $
The future realization of the Company’s net operating loss carryforwards and other tax attributes may also be limited by the change in ownership rules under Code Section 382. Under Section 382 of the Code, if a corporation undergoes an “ownership change” (as defined in Section 382 of the Code), the corporation’s ability to utilize its net operating loss carryforwards and other tax attributes to offset income may be limited. The Company has not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes.
The Company files income tax returns in the U.S. federal jurisdiction and in any state and local jurisdiction in which it operates. The Company is subject to tax examination by various taxing authorities. The Company is not currently under examination and is not aware of any issues under review that could result in significant payments, accruals or material deviation from its tax positions. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service and state and local tax authorities to the extent utilized in a future period. As of December 31, 2025, the tax years from 2019 to present remain open to examination by relevant taxing jurisdictions to which the Company is subject. However, to the extent the Company utilizes net operating losses from years prior to 2019, the statute remains open to the extent of the net operating losses or other credits that are utilized.
The calculation and assessment of the Company’s tax exposures generally involve the uncertainties in the application of complex tax laws and regulations for federal, state and local jurisdictions. A tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation, on the basis of the technical merits. As of December 31, 2025, the Company has not recorded any liabilities related to uncertain tax positions in its financial statements. Similarly, the Company has not accrued any interest and penalties related to uncertain tax positions as of December 31, 2025. The Company recognizes accrued interest and penalties, if any, related to uncertain tax positions in tax expense in its financial statements.
F-18
11. STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION
Reverse Stock Split
At the Company’s annual shareholder
meeting held on June 10, 2024, the Company’s shareholders granted the Company’s board of directors (the “Board of
Directors”) the discretion to effect a reverse stock split of the Company’s issued and outstanding Class A and Class B
common stock through an amendment (the “Certificate of Amendment”) to the Company’s Certificate of Incorporation.
The Board of Directors approved effecting a
Authorized Shares
At December 31, 2025, the Company’s
authorized shares consisted of
Preferred Stock
Preferred stock shares authorized may be issued from time to time in one or more series, with each series terms, voting, dividend, conversion, redemption, liquidation and other rights to be determined by the Board of Directors at the time of issuance. As of December 31, 2025, there were shares of preferred stock issued and outstanding.
Registered Direct Offering and Concurrent Private Placement
On October 7, 2025, the Company entered into a
securities purchase agreement (the “Purchase Agreement”) with an institutional investor (the “Purchaser”), pursuant
to which the Company issued to the Purchaser (i) in a registered direct offering,
The offerings closed on October 9, 2025 and the
Company received net proceeds of approximately $
F-19
Warrants
The Company’s outstanding warrants include Public Warrants, which were issued as one-half of a redeemable Public Warrant per unit issued in D8’s initial public offering on July 17, 2020, and Private Placement Warrants sold in a private placement to D8’s sponsor (the “Sponsor”) in connection with the closing of the initial public offering and in connection with the conversion of D8 working capital loans. As of December 17, 2025, the Public Warrants have been removed from the NYSE.
As of December 31, 2025, the Company had
Thirty (
The warrants will expire on September 17, 2026 or earlier upon redemption or liquidation.
Redemption of warrants when the price per share
of Class A common stock equals or exceeds $
| ● | in whole and not in part; | |
| ● | at a price of $ | |
| ● | upon a minimum of | |
| ● | if, and only if, the last reported sale price of Class A common stock equals or exceeds $ |
Redemption of warrants when the price per share
of Class A common stock equals or exceeds $
| ● | in whole and not in part; | |
| ● | at a price of $ | |
| ● | upon a minimum of | |
| ● | if, and only if, the last reported sale price of Class A common stock shares equals or exceeds $ |
The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of the Private Placement Warrants, so long as they are held by the Sponsor or its permitted transferees, (i) are not redeemable by the Company, (ii) may be exercised by the holders on a cashless basis and (iii) are entitled to registration rights. If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the Public Warrants.
F-20
Common Stock
Classes of Common Stock
Class A common stock receives
Class B common stock receives
Stock Based Compensation
2021 Plan — In connection
with the closing of the Business Combination, the Company’s stockholders approved the Vicarious Surgical Inc. 2021 Equity Incentive
Plan (the “2021 Plan”), pursuant to which
The 2021 Plan provides for the granting of incentive
and nonqualified stock options, restricted stock, and other stock-based awards to employees, officers, directors, consultants, and advisors
of the Company. Under the 2021 Plan, incentive and nonqualified stock options may be granted at not less than
The 2021 Plan authorizes the Company to issue
up to
The Company periodically issues RSUs of Class A common stock to certain employees and members of the Board of Directors. The RSUs generally vest over a four-year period. PSUs are issued in the form of performance share units. PSUs include threshold, target, and maximum achievement levels based on the achievement of specific performance measures. PSUs are subject to forfeiture if applicable performance measures are not attained. The expense is recognized over the vesting period, based on the best available estimate of the number of share units expected to vest. Estimates are subsequently revised if there is any indication that the number of share units expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognized in the current period. As of December 31, 2025, there are no outstanding PSUs.
F-21
The activity for common stock subject to vesting is as follows:
| Shares Subject to Vesting | Weighted Average Grant Date Fair Value | |||||||
| Balance of unvested shares - January 1, 2025 | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | ( | ) | $ | |||||
| Balance of unvested shares - December 31, 2025 | $ | |||||||
Total stock-based compensation related to RSUs
during the years ended December 31, 2025 and 2024, was $
The Company grants stock options to employees at exercise prices deemed by the Board of Directors to be equal to the fair value of the Class A common stock at the time of grant. The Company uses its publicly traded stock price as the fair value of its common stock. For options with a service condition, the fair value of the Company’s stock options on the date of grant is determined by a Black-Scholes pricing model utilizing key assumptions such as common stock price, risk-free interest rate, dividend yield, expected volatility and expected life. The Company’s estimates of these assumptions are primarily based on the fair value of the Company’s stock, historical data and judgement regarding future trends.
During the years ended December 31, 2025 and 2024,
the Company granted options to purchase
| Year Ended December 31, |
|||||
| 2025 | 2024 | ||||
| Risk-free interest rate | % | % | |||
| Expected term (in years) | |||||
| Dividend yield | % | % | |||
| Expected volatility | % | % | |||
The risk-free interest rate assumption is based upon observed interest rates appropriate for the term of the related stock options. The expected life of employee and non-employee stock options was calculated using the average of the contractual term of the option and the weighted-average vesting period of the option. The Company does not pay a dividend and is not expected to pay a dividend in the foreseeable future.
As of December 31, 2025, there was $
Total stock-based compensation expense related to all of the Company’s stock-based awards granted is reported in the statements of operations as follows:
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Research and development | $ | $ | ||||||
| Sales and marketing | ||||||||
| General and administrative | ||||||||
| Total | $ | $ | ||||||
F-22
The Company plans to generally issue previously unissued shares of common stock for the exercise of stock options.
There were
The option activity for the year ended December 31, 2025, is as follows:
| Weighted Average Exercise | Weighted Average Remaining Contractual Life | |||||||||||
| Options | Price | (in years) | ||||||||||
| Options outstanding at January 1, 2025 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ( | ) | ||||||||||
| Forfeited, expired, or cancelled | ( | ) | ||||||||||
| Options outstanding, vested and expected to vest at December 31, 2025 | $ | |||||||||||
The weighted average grant date fair value of
options granted during the years ended December 31, 2025 and 2024 was $
Common Stock Reserved for Future Issuance
As of December 31, 2025 and 2024, the Company has reserved the following shares of Class A Common Stock for future issuance (in thousands):
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Common stock options outstanding | ||||||||
| Restricted stock units outstanding | ||||||||
| Shares available for issuance under the 2021 Plan | ||||||||
| Public Warrants | ||||||||
| Private Placement Warrants | ||||||||
| Common Warrants | ||||||||
| Total shares of authorized common stock reserved for future issuance | ||||||||
12. EMPLOYEE RETIREMENT PLAN
The Company maintains the Vicarious Surgical Inc.
401(k) plan, under Section 401(k) of the Internal Revenue Code of 1986, as amended, covering all eligible employees. Employees
of the Company may participate in the 401(k) plan after one month of service and must be 18 years of age or older. The Company offers
company-funded matching contributions which totaled $
13. NET LOSS PER SHARE
The Company computes basic loss per share using
net loss attributable to Company common stockholders and the weighted-average number of common shares outstanding during each period.
| For the Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Numerator for basic and diluted net loss per share: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Denominator for basic and diluted net loss per share: | ||||||||
| Weighted average shares | ||||||||
| Net loss per share of Class A and Class B common stock – basic and diluted | $ | ( | ) | $ | ( | ) | ||
F-23
For the year ended December 31, 2025,
14. SEGMENT REPORTING
We operate as
For our segment, the CODM uses net loss, that
is reported on the consolidated statements of operations as consolidated net loss, to allocate resources (including employees, property,
and financial resources), predominantly during the annual budget and forecasting process. The CODM also uses consolidated net loss, along
with non-financial inputs and qualitative information, to evaluate our performance, establish compensation, monitor budget versus actual
results, and decide the level of investment in our various operating activities and other capital allocation activities. The measure of
segment assets is reported on the consolidated balance sheet as total consolidated assets.
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Research and development | $ | $ | ||||||
| Sales and marketing | ||||||||
| General and administrative | ||||||||
| Other segment items | ( | ) | ( | ) | ||||
| Loss before income taxes | $ | $ | ||||||
15. SUBSEQUENT EVENTS
Management has evaluated subsequent events occurring through the date that these financial statements were issued and determined that except as set forth below, no subsequent events have occurred that would require recognition or disclosure in these financial statements.
NYSE Suspension and Delisting Proceedings
On March 3, 2026, the NYSE notified the Company that the NYSE had determined
to (A) immediately suspend trading in the Company’s Class A common stock due to a determination that the Company had fallen below
the NYSE’s continued listing standard requiring listed companies to maintain an average global market capitalization over a consecutive
The NYSE has indicated that it will apply to the Securities and Exchange Commission to delist the Class A common stock by filing a Form 25.
The Company received approval of its application to have the Class A common stock quoted on the OTCID market tier (“OTCID”) operated by the OTC Markets Group, Inc. The Class A common stock commenced quotation on the OTCID at the open of business on March 4, 2026 under the trading symbol of “RBOT.”
F-24