T3 Defense Inc.

Tiltan offices are located in 4 Granit, Petach Tikva under a lease agreement which expires in December 2026. The monthly lease payments are approximately NIS 34,000 (approximately $11,000).

ITS offices are located in 5 Atir Yeda, Kfar Saba under a lease agreement which expires in January 2027. The monthly lease payments under the lease agreement are approximately NIS 185,000 (approximately $60,000).

Positech offices are located in 4 Hapeles, Haifa under a lease agreement which expires in April 2034. The monthly lease payments under the lease agreement are approximately NIS 23,000 (approximately $7,400).

We currently own no real property. We believe our facilities are adequate for our current and planned business operations.

• Any significant disruption in our technology could adversely impact our brand and reputation and our business, operating results, and financial condition.
• We rely on third parties in critical aspects of our business, which creates additional risk. Our ability to offer our services depends on relationships with other financial services institutions and entities, and our inability to maintain existing relationships or to enter into new such relationships could impact our ability to offer services to customers.
• Risks Related to the Defense Industry
• We lack the facility security clearances and cleared personnel required for 90% of U.S. defense contracts.
• Fixed-price defense contracts expose us to unlimited losses without cost estimation experience.
• Export control violations could result in criminal prosecution and permanent debarment.
• We face overwhelming competition from established prime contractors.
• We must comply with complex defense regulations without any infrastructure.
• Our defense distribution business is subject to complex export control laws and regulations, including ITAR and EAR, and failure to comply could result in significant fines, loss of export privileges, and reputational damage.
• Dependence on government and homeland security customers exposes us to risks associated with budget constraints, procurement processes, and policy changes.
• The defense procurement process is lengthy, complex, and highly competitive, which may prevent us from achieving the revenue targets required under our distribution agreements.
• We face potential liability and indemnification obligations related to the defense products we distribute, which could expose us to significant financial losses.
• Risks Related to Geopolitical and Macroeconomic Conditions
• Risks Related to the Ongoing Conflict in Israel and Regional Instability
• The ongoing “Swords of Iron” war and the broader military conflict in the Middle East have had, and may continue to have, a material adverse effect on our Israeli operations, supply chains, personnel, and ability to execute our business strategy.
• Mandatory military reserve duty obligations have resulted in, and may continue to result in, significant personnel shortages that disrupt our operations, production schedules, and ability to fulfill contractual obligations.
• Escalating global conflicts, particularly the ongoing wars in the Middle East and Ukraine, create both heightened demand and severe operational risks for our business.
• We do not carry war risk insurance for our Israeli operations, and losses arising from military conflict would be entirely unrecovered.
• The conflict has resulted in limitations on exports to Israel, attacks on defense companies by anti-Israeli organizations, and reputational risks that may impair our ability to conduct international business.
• Our business partners, customers, and suppliers may invoke force majeure or otherwise fail to perform their contractual obligations as a result of the conflict, which could disrupt our operations and revenue.
• Rising global defense spending may not translate into revenue for our company, and shifts in government budget priorities could adversely affect demand for our products and services.
• U.S. trade policy, including tariffs and export restrictions, may increase our costs, disrupt our supply chains, and limit our market access.
• Intensifying great-power competition and the fragmentation of international trade and security frameworks create systemic risks to our business model.
• Our Israeli operations face active military conflict without war risk insurance.
• Operating across multiple jurisdictions creates irreconcilable legal conflicts.
• Our foreign ownership structure may permanently preclude classified U.S. defense programs.
• Geopolitical tensions, international conflicts, or changes in U.S.-Israel relations could disrupt our supply chain and restrict our ability to distribute defense technologies.
• We are subject to stringent U.S. and international regulations governing defense technologies, and non-compliance could result in fines, loss of licenses, or restrictions on our operations.
• Risks Related to Our Financial Condition
• We lack the financial infrastructure required for defense contracting.
• Risks Related to Our Existing Capital Structure
• The outstanding warrants, convertible preferred stock, and our equity line of credit facility may result in substantial dilution to existing stockholders and depress our stock price.
• The price-based anti-dilution provisions in our convertible preferred stock may create a self-reinforcing cycle of dilution if our stock price declines.
• The substantial overhang of shares issuable upon conversion of preferred stock and exercise of outstanding warrants may depress our stock price regardless of our operating performance.
• We expect to issue additional shares of Common Stock or other securities in the future to fund acquisitions and operations, which would further dilute existing stockholders.
• Our stock price has been and may continue to be highly volatile, and investors may not be able to resell their shares at or above the price at which they purchased them.
• We are currently at risk of failing to maintain the minimum bid price required by Nasdaq Listing Rules.
• We might not be able to consummate the second tranche of our recent financing.
• Star has the right to require the Company to exchange the Investment Note for all the shares of Star then held by the Company if the Common Stock is delisted.
• There is no assurance that we will achieve and maintain profitability or that our revenue and business models will be successful.
• Changes in U.S. and foreign tax laws, as well as the application of such laws, could adversely impact our financial position and operating results.
• If our estimates or judgment relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.
• The nature of our business requires the application of complex financial accounting rules, and there is limited guidance from accounting standard setting bodies. If financial accounting standards undergo significant changes, our operating results could be adversely affected.
• Business metrics and other estimates are subject to inherent challenges in measurement, and our business, operating results, and financial condition could be adversely affected by real or perceived inaccuracies in those metrics.
• We are subject to changes in financial reporting standards or policies, including as a result of choices made by us, which could materially adversely affect our reported results of operations and financial condition and may have a corresponding material adverse impact on capital ratios.
• As a public company, we are required to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our stock.
• We might require additional capital to support business growth, and this capital might not be available or may require stockholder approval to obtain.
• Risks Related to Our Employees and Other Service Providers
• In the event of employee or service provider misconduct or error, our business may be adversely impacted.
• The loss of our chief executive officer, or our failure to attract and retain other highly qualified personnel in the future, could adversely impact our business, operating results, and financial condition.
• Our culture emphasizes innovation, and if we cannot maintain this culture as we grow, our business and operating results could be adversely impacted.
• Additional Risk Factors
• Cybersecurity requirements exceed our current capabilities.
• Environmental liabilities could exceed our resources.
• Menachem Shalom, our Chief Executive Officer and a director, beneficially owns a substantial percentage of our outstanding Common Stock and, if he exercises his warrants, would control a majority of the voting power of our Common Stock. This will allow him to exert significant control over corporate decisions and may discourage transactions that other stockholders may favor.
• The holder of our Series B Convertible Preferred Stock has additional voting power as compared to the holders of our Common Stock.
• We may never achieve profitability.
• Cyberattacks and security breaches of our systems, or those impacting our customers or third parties, could adversely impact our brand and reputation and our business, operating results and financial condition.
• Adverse economic conditions may adversely affect our business.
• We may be adversely affected by natural disasters, pandemics, and other catastrophic events, and by man-made problems such as war or terrorism, that could disrupt our business operations, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.
• Acquisitions, joint ventures or other strategic transactions create certain risks and may adversely affect our business, financial condition or results of operations.
• Delaware law and our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws 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.