# EDGAR Filing Document

**Accession Number:** 0001787518
**File Stem:** 0001213900-25-111026
**Filing Date:** 2025-11
**Character Count:** 198128
**Document Hash:** b21fc8ee128218d2a20864f6a0a2bd90
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-25-111026.hdr.sgml**: 20251114

**ACCESSION NUMBER**: 0001213900-25-111026

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 72

**CONFORMED PERIOD OF REPORT**: 20250930

**FILED AS OF DATE**: 20251114

**DATE AS OF CHANGE**: 20251114

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Nukkleus Inc.
- **CENTRAL INDEX KEY:** 0001787518
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-MANAGEMENT CONSULTING SERVICES [8742]
- **ORGANIZATION NAME:** 07 Trade & Services
- **EIN:** 383912845
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-39341
- **FILM NUMBER:** 251488021

**BUSINESS ADDRESS:**
- **STREET 1:** 575 FIFTH AVENUE, 14TH FLOOR
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10017
- **BUSINESS PHONE:** 212-791-4663

**MAIL ADDRESS:**
- **STREET 1:** 575 FIFTH AVENUE, 14TH FLOOR
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10017

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Brilliant Acquisition Corp
- **DATE OF NAME CHANGE:** 20190909

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q**

☒ **QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the quarterly period ended September 30, 2025**

OR

☐ **TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from __________ to __________** 

**Commission file number: 001-39341**

**Nukkleus Inc.**

(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **Delaware** | **38-3912845** |
| (State or other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification No.) |

---

**<u>575 Fifth Ave, 14<sup>th</sup> Floor, New York, New York 10017</u>**

(Address of principal executive offices, including zip code)

**<u>646-257-4214</u>**

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| **Common Stock, $0.0001 par value per share** | **NUKK** | **The Nasdaq Stock Market LLC** |
| **Warrants, each warrant exercisable for one Share of Common Stock for $92.00 per share** | **NUKKW** | **The Nasdaq Stock Market LLC** |

---

**Securities registered under Section 12(g) of the Exchange Act: None**

Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ <br> Non-accelerated filer ☒ Smaller reporting company ☒ <br> Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.

---

| | |
|:---|:---|
| **Class** | **Outstanding November 14, 2025** |
| Common Stock, $0.0001 par value per share | 16,645,766 shares |

---

**NUKKLEUS INC.**

**FORM 10-Q**

**September 30, 2025**

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | **Page No.** |
| **[PART I - FINANCIAL INFORMATION](#a_001)** | **[PART I - FINANCIAL INFORMATION](#a_001)** |  |
| Item 1. | [Interim Financial Statements](#a_002) | 1 |
|  | [Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024](#a_003) | 1 |
|  | [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2025 and 2024](#a_004) | 2 |
|  | [Unaudited Condensed Consolidated Statements of Changes in Stockholders' Deficit for the Three and Nine Months Ended September 30, 2025 and 2024](#a_005) | 3 |
|  | [Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024](#a_006) | 5 |
|  | [Notes to Condensed Consolidated Financial Statements (Unaudited)](#a_007) | 6 |
| Item 2. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#a_008) | 29 |
| Item 3. | [Quantitative and Qualitative Disclosures About Market Risk](#a_009) | 39 |
| Item 4. | [Controls and Procedures](#a_010) | 39 |
| **[PART II - OTHER INFORMATION](#a_011)** | **[PART II - OTHER INFORMATION](#a_011)** |  |
| Item 1. | [Legal Proceedings](#a_012) | 41 |
| Item 1A. | [Risk Factors](#a_013) | 41 |
| Item 2. | [Recent Sales of Unregistered Securities](#a_014) | 41 |
| Item 3. | [Defaults Upon Senior Securities](#a_015) | 41 |
| Item 4. | [Mine Safety Disclosures](#a_016) | 41 |
| Item 5. | [Other Information](#a_017) | 41 |
| Item 6. | [Exhibits](#a_018) | 42 |
| [Signatures](#a_019) | [Signatures](#a_019) | 43 |

---

i

**FORWARD LOOKING STATEMENTS**

This report contains forward-looking statements that involve a number of risks and uncertainties which are made pursuant to the safe harbor provisions 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"). Although our forward-looking statements reflect the good faith judgment of our management, these statements can be based only on facts and factors of which we are currently aware. Consequently, forward-looking statements are inherently subject to risks and uncertainties. Actual results and outcomes may differ materially from results and outcomes discussed in the forward-looking statements.

Forward-looking statements can be identified by the use of forward-looking words such as "may," "will," "should," "anticipate," "believe," "expect," "plan," "future," "intend," "could," "estimate," "predict," "hope," "potential," "continue," or the negative of these terms or other similar expressions. These statements include, but are not limited to, statements under the captions "Risk Factors," "Management's Discussion and Analysis or Plan of Operation" and "Description of Business," as well as other sections in this report. Such forward-looking statements are based on our management's current plans and expectations and are subject to risks, uncertainties and changes in plans that may cause actual results to differ materially from those anticipated in the forward-looking statements. You should be aware that, as a result of any of these factors materializing, the trading price of our common stock may decline. These factors include, but are not limited to, the following:

● the availability and adequacy of capital to support and grow our business;

● economic, competitive, business and other conditions in our local and regional markets;

● actions taken or not taken by others, including competitors, as well as legislative, regulatory, judicial and other governmental authorities;

● competition in our industry;

● changes in our business and growth strategy, capital improvements or development plans;

● the availability of additional capital to support development; and

● other factors discussed elsewhere in this quarterly report.

The cautionary statements made in this quarterly report are intended to be applicable to all related forward-looking statements wherever they may appear in this report.

We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly update any forward looking-statements, whether as a result of new information, future events or otherwise.

All references in this Form 10-Q that refer to the "Company", "Nukkleus", "we," "us" or "our" refer to Nukkleus Inc. and its consolidated subsidiaries.

ii

**PART I - FINANCIAL INFORMATION**

**Item 1. Interim Financial Statements.**

NUKKLEUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **December 31,**<br>**2024** |
|  | (Unaudited) | (Audited) |
| ASSETS |  |  |
| CURRENT ASSETS: |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $7611465 | $6897697 |
| &nbsp;&nbsp;&nbsp;Digital assets | 32182 | - |
| &nbsp;&nbsp;&nbsp;Note receivable - related party | 4500000 | 1000000 |
| &nbsp;&nbsp;&nbsp;Due from affiliates | 243915 | - |
| &nbsp;&nbsp;&nbsp;Other current assets | 730894 | 107648 |
| &nbsp;&nbsp;&nbsp;Current assets from discontinued operations | - | 1089052 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL CURRENT ASSETS | 13118456 | 9094397 |
| NON-CURRENT ASSETS: |  |  |
| &nbsp;&nbsp;&nbsp;Right-of-use asset, operating lease | 153569 | - |
| &nbsp;&nbsp;&nbsp;Fixed assets, net | 15883 | - |
| &nbsp;&nbsp;&nbsp;Other assets from discontinued operations | - | 14887 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL NON-CURRENT ASSETS | 169452 | 14887 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL ASSETS | $13287908 | $9109284 |
| LIABILITIES AND STOCKHOLDERS' DEFICIT |  |  |
| CURRENT LIABILITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $87420 | $69600 |
| &nbsp;&nbsp;&nbsp;Operating lease liability, current portion | 78575 | - |
| &nbsp;&nbsp;&nbsp;Convertible notes payable, net | - | 706354 |
| &nbsp;&nbsp;&nbsp;Note payable, net | - | 64399 |
| &nbsp;&nbsp;&nbsp;Due to affiliates | 233068 | 42471 |
| &nbsp;&nbsp;&nbsp;Loans payable - related parties, current | 1566988 | 619440 |
| &nbsp;&nbsp;&nbsp;Interest payable - related parties, current | 108417 | - |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | 816224 | 1167315 |
| &nbsp;&nbsp;&nbsp;Stock purchase warrant liabilities | 40740193 | 164770525 |
| &nbsp;&nbsp;&nbsp;Derivative liability | - | 847753 |
| &nbsp;&nbsp;&nbsp;Current liabilities from discontinued operations | - | 3162509 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL CURRENT LIABILITIES | 43630885 | 171450366 |
| NON-CURRENT LIABILITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Operating lease liability, net of current portion | 74994 |  |
| &nbsp;&nbsp;&nbsp;Loan payable - related parties, net of current portion | - | 947548 |
| &nbsp;&nbsp;&nbsp;Interest payable - related parties, net of current portion | - | 44111 |
| &nbsp;&nbsp;&nbsp;Non-current liabilities from discontinued operations | - | 17368 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL NON-CURRENT LIABILITIES | 74994 | 1009027 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL LIABILITIES | 43705879 | 172459393 |
| COMMITMENTS AND CONTINGENCIES - (Note 12) |  |  |
| STOCKHOLDERS' DEFICIT: |  |  |
| &nbsp;&nbsp;&nbsp;Preferred stock ($0.0001 par value; 15,000,000 shares authorized; 200 and 0 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively) | - | - |
| &nbsp;&nbsp;&nbsp;Common stock ($0.0001 par value; 150,000,000 shares authorized; 11,096,264 and 4,930,531 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively) | 1110 | 493 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 81047703 | 37759589 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (111464507) | (201075743) |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive (loss) | (2277) | (34448) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL STOCKHOLDERS' DEFICIT | (30417971) | (163350109) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $13287908 | $9109284 |

---

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

NUKKLEUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended<br> September 30,** | **For the Three Months Ended<br> September 30,** | **For the Nine Months Ended<br> September 30,** | **For the Nine Months Ended<br> September 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| REVENUES |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Revenue - general support services - related party | $- | $- | $- | $- |
| &nbsp;&nbsp;&nbsp;Revenue - financial services | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | - | - | - | - |
| COSTS OF REVENUES |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Cost of revenue - general support services - related party | - | - | - | - |
| &nbsp;&nbsp;&nbsp;Cost of revenue - financial services | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total costs of revenues | - | - | - | - |
| GROSS PROFIT (LOSS) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Gross profit - general support services - related party | - | - | - | - |
| &nbsp;&nbsp;&nbsp;Gross profit (loss) - financial services | - | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total gross profit (loss) |  |  | - | - |
| OPERATING EXPENSES: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Professional fees | 4359640 | 552845 | 6051719 | 3266539 |
| &nbsp;&nbsp;&nbsp;Compensation and related benefits | 230988 | 53333 | 365988 | 108333 |
| &nbsp;&nbsp;&nbsp;Other general and administrative | 180947 | 191291 | 909275 | 537146 |
| &nbsp;&nbsp;&nbsp;Impairment loss | - | 391217 | - | 391217 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 4771575 | 1188686 | 7326982 | 4303235 |
| LOSS FROM OPERATIONS | (4771575) | (1188686) | (7326982) | (4303235) |
| OTHER (EXPENSE) INCOME: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense | (36346) | (303626) | (407971) | (343333) |
| &nbsp;&nbsp;&nbsp;Interest expense - related parties | (13545) | (15521) | (64306) | (38249) |
| &nbsp;&nbsp;&nbsp;Loss on settlement of vendor obligations | - | (112436) | - | (288835) |
| &nbsp;&nbsp;&nbsp;Gain on settlement of vendor obligations | - | 211200 | - | 211200 |
| &nbsp;&nbsp;&nbsp;Gain on settlement of due to affiliates | - | 192069 | - | 192069 |
| &nbsp;&nbsp;&nbsp;Loss on debt extinguishment | (7484152) | - | (7484152) | - |
| &nbsp;&nbsp;&nbsp;Penalty - late registration | - | - | (800000) | - |
| &nbsp;&nbsp;&nbsp;Change in fair value - convertible note embedded derivative | - | - | 587790 | - |
| &nbsp;&nbsp;&nbsp;Change in fair value - stock purchase warrant liabilities | 13963884 | - | 123369695 | - |
| &nbsp;&nbsp;&nbsp;Change in fair value – digital assets | (967818) | - | (967818) | - |
| &nbsp;&nbsp;&nbsp;Gain on deconsolidation | 2491485 | - | 2491485 | - |
| &nbsp;&nbsp;&nbsp;Day one loss on private placement | (19605956) | - | (19605956) | - |
| &nbsp;&nbsp;&nbsp;Other income (expense) | 118795 | 14 | 280422 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other income (expense), net | (11533653) | (28300) | 97399189 | (267148) |
| INCOME (LOSS) BEFORE INCOME TAXES | (16305228) | (1216986) | 90072207 | (4570383) |
| INCOME TAXES | - | - | - | - |
| NET INCOME (LOSS) FROM CONTINUING OPERATIONS | (16305228) | (1216986) | 90072207 | (4570383) |
| NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS | (60264) | 5672219 | (460971) | 4979958 |
| NET INCOME (LOSS) | $(16365492) | $4455233 | $89611236 | $409575 |
| COMPREHENSIVE INCOME (LOSS): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;NET INCOME (LOSS) | $(16365492) | $4455233 | $89611236 | $409575 |
| &nbsp;&nbsp;&nbsp;OTHER COMPREHENSIVE (LOSS) INCOME |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unrealized foreign currency translation (loss) gain | 214149 | (134503) | 32171 | (113529) |
| &nbsp;&nbsp;&nbsp;COMPREHENSIVE INCOME (LOSS) | $(16151343) | $4320730 | $89643407 | $296046 |
| NET INCOME (LOSS) PER COMMON SHARE: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Continuing operations, basic | (2.01) | (0.60) | 14.74 | $(2.45) |
| &nbsp;&nbsp;&nbsp;Discontinued operations, basic | (0.01) | 2.78 | (0.08) | 2.67 |
| &nbsp;&nbsp;&nbsp;Basic | $(2.02) | $2.18 | $14.66 | $0.22 |
| &nbsp;&nbsp;&nbsp;Continuing operations, diluted | (2.01) | (0.60) | 11.53 | $(2.45) |
| &nbsp;&nbsp;&nbsp;Discontinued operations, diluted | (0.01) | 2.78 | (0.06) | 2.67) |
| &nbsp;&nbsp;&nbsp;Diluted | $(2.02) | $2.18 | $11.47 | $0.22) |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic | 8124786 | 2043928 | 6111279 | 1864566 |
| &nbsp;&nbsp;&nbsp;Diluted | 8124786 | 2043928 | 7813592 | 1864566 |

---

The accompanying notes to consolidated financial statements are an integral part of these statements.

NUKKLEUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

For the Three and Nine Months Ended September 30, 2025

(Unaudited)

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Series A** | **Series A** | | | | | | |
|  | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | | | | |
|  | **Number of**<br>**Shares** |<br>**Amount** | **Number of**<br>**Shares** |<br>**Amount** |<br>**Additional**<br>**Paid-in**<br>**Capital** |<br>**Accumulated**<br>**Deficit** | **Accumulated**<br>**Other**<br>**Comprehensive**<br>**Income (Loss)** |<br>**Total**<br>**Stockholders'**<br>**Deficit** |
| Balance as of December 31, 2024 | &nbsp;&nbsp;&nbsp;&nbsp; - | $&nbsp;&nbsp;&nbsp;&nbsp; - | 4930531 | $493 | 37759589 | (201075743) | (34448) | (163350109) |
| Issuance of common stock from exercise of pre-funded warrants |  |  | 83332 | 8 | 3055806 |  |  | 3055814 |
| Stock-based compensation |  |  |  |  | 177905 |  |  | 177905 |
| Net income for the three months ending March 31, 2025 |  |  |  |  |  | 102958139 |  | 102958139 |
| Foreign currency translation adjustment | - | - | - | - | - | - | (58765) | (58765) |
| Balance as of March 31, 2025 | - | - | 5013863 | 501 | 40993300 | (98117604) | (93213) | (57217016) |
| Issuance of common stock in relation to settlement agreement |  |  | 12500 | 1 | 157499 |  |  | 157500 |
| Issuance of common stock in relation to conversion of note |  |  | 260300 | 26 | 780540 |  |  | 780566 |
| Issuance of common stock from exercise of options |  |  | 84276 | 9 | (9) |  |  |  |
| Net income for the three months ending June 30, 2025 |  |  |  |  |  | 3018589 |  | 3018589 |
| Foreign currency translation adjustment | - | - | - | - | - | - | (123213) | (123213) |
| Balance as of June 30, 2025 | - | - | 5370939 | 537 | 41931330 | (95099015) | (216426) | (53383574) |
| Issuance of common stock from exercise of warrants |  |  | 5023026 | 502 | 28882963 |  |  | 28883465 |
| Issuance of common stock in relation to conversion of note |  |  | 243155 | 24 | 1011500 |  |  | 1011524 |
| Issuance of common stock from exercise of options |  |  | 1434 | 1 |  |  |  | 1 |
| Issuance of common stock for services performed |  |  | 310000 | 31 | 1143869 |  |  | 1143900 |
| Issuance of common stock in exchange for digital assets |  |  | 147710 | 15 | 999860 |  |  | 999875 |
| Issuance of preferred stock in relation to private placement | 200 |  |  |  |  |  |  |  |
| Issuance of equity-classified warrants |  |  |  |  | 7080516 |  |  | 7080516 |
| Adjustments in relation to deconsolidation of subsidiary |  |  |  |  | (2335) |  | 213716 | 211381 |
| Net loss for the three months ending September 30, 2025 |  |  |  |  |  | (16365492) |  | (16365492) |
| Foreign currency translation adjustment | - | - | - | - | - | - | 433 | 433 |
| Balance as of September 30, 2025 | 200 | - | 11096264 | 1110 | 81047703 | (111464507) | (2277) | (30417971) |

---

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

NUKKLEUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

For the Three and Nine Months Ended September 30, 2024

(Unaudited)

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | | | | |
|  | **Number of**<br>**Shares** |<br>**Amount** | **Number of**<br>**Shares** |<br>**Amount** |<br>**Additional**<br>**Paid-in**<br>**Capital** |<br>**Accumulated**<br>**Deficit** | **Accumulated**<br>**Other**<br>**Comprehensive**<br>**Income (Loss)** |<br>**Total**<br>**Stockholders'**<br>**Deficit** |
| Balance as of December 31, 2023 |  | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;- | 1737464 | $174 | 30781934 | (40697339) | (31354) | (9946585) |
| Stock-based compensation |  |  |  |  | 74668 |  |  | 74668 |
| Issuance of common stock as compensation for services |  |  | 25338 | 3 | 749997 |  |  | 750000 |
| Net loss for the three months ending March 31, 2024 |  |  |  |  |  | (2429417) |  | (2429417) |
| Foreign currency translation adjustment |  | - | - | - | - | - | 26582 | 26582 |
| Balance as of March 31, 2024 |  | $- | 1762802 | $177 | 31606599 | (43126756) | (4772) | (11524752) |
| Allocated value of warrants related to issuance of convertible debt |  |  |  |  | 300000 |  |  | 300000 |
| Allocated value of warrants related to debt issuance |  |  |  |  | 40804 |  |  | 40804 |
| Issuance of common stock to settle debt |  |  | 87500 | 9 | 500991 |  |  | 501000 |
| Stock-based compensation |  |  |  |  | 74667 |  |  | 74667 |
| Net loss for the three months ending June 30, 2024 |  |  |  |  |  | (1616241) |  | (1616241) |
| Foreign currency translation adjustment |  | - | - | - | - | - | (5608) | (5608) |
| Balance as of June 30, 2024 |  | $- | 1850302 | $186 | 32523061 | (44742997) | (10380) | (12230130) |
| Issuance of stock purchase warrants |  |  |  |  | 176898 |  |  | 176898 |
| Issuance of common stock to settle accrued expenses and other current liabilities |  |  | 248697 | 23 | 629164 |  |  | 629187 |
| Stock-based compensation |  |  |  |  | 5602 |  |  | 5602 |
| Net income for the three months ending September 30, 2024 |  |  |  |  |  | 4455233 |  | 4455233 |
| Foreign currency translation adjustment |  | - | - | - | - | - | (134503) | (134503) |
| Balance as of September 30, 2024 |  | $- | 2098999 | $209 | 33334725 | (40287764) | (144883) | (7097713) |

---

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

NUKKLEUS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

---

| | |
|:---|:---|
|  | **Nine months ended**<br>**September 30,** |
|  | **2024** |
| CASH FLOWS FROM OPERATING ACTIVITIES: |  |
| &nbsp;&nbsp;&nbsp;Net income | 409575 |
| &nbsp;&nbsp;&nbsp;Net income (loss) from discontinued operations | 4979958 |
| &nbsp;&nbsp;&nbsp;Net income from continuing operations | $(4570383) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;used in operating activities: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discount | 315834 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation expense | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 154938 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on deconsolidation | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on extinguishment of convertible notes payable | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on settlement of due to affiliates | (192069) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on settlement of vendor obligations | 288835 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on settlement of vendor obligations | (211200) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment loss | 391217 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Day one loss on private placement | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value - convertible note embedded derivative | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value - stock purchase warrant liabilities | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value - digital assets | - |
| Changes in operating assets and liabilities: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current assets | (81181) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due from affiliates | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to affiliates | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest payable - related parties | 38248 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities and other payables | 2229486 |
| Net cash used in operating activities from continuing operations | (1636275) |
| Net cash used in operating activities from discontinued operations | (1576016) |
| NET CASH USED IN OPERATING ACTIVITIES | (3212291) |
| CASH FLOWS FROM INVESTING ACTIVITIES: |  |
| &nbsp;&nbsp;&nbsp;Purchase of computer equipment | - |
| &nbsp;&nbsp;&nbsp;Advance to target of planned acquisition | - |
| Net cash (used in) provided by operating activities from continuing operations | - |
| Net cash (used in) provided by operating activities from discontinued operations | - |
| NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES | - |
| CASH FLOWS FROM FINANCING ACTIVITIES |  |
| &nbsp;&nbsp;&nbsp;Proceeds from loan payable - related parties | 730639 |
| &nbsp;&nbsp;&nbsp;Repayment of note payable | - |
| &nbsp;&nbsp;&nbsp;Payments of penalty - late registration | - |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of private placement, net of issuance costs | - |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of convertible debt and warrants, net of issuance costs | 996075 |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of note payable and warrants | 78000 |
| Net cash provided by financing activities from continuing operations | 1804714 |
| Net cash provided by financing activities from discontinued operations | 582233 |
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 2386947 |
| EFFECT OF EXCHANGE RATE ON CASH FROM CONTINUING OPERATIONS | - |
| EFFECT OF EXCHANGE RATE ON CASH FROM DISCONTINUED OPERATIONS | (2617) |
| Net change in cash, including cash from discontinued operations | (827961) |
| Cash, including cash from discontinued operations - beginning of period | 863610 |
| Cash, including cash from discontinued operations - end of period | 35649 |
| Less cash from discontinued operations | 35276 |
| Cash from continuing operations, end of period | $373 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |  |
| &nbsp;&nbsp;&nbsp;Cash paid for: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest | $18 |
| NON-CASH INVESTING AND FINANCING ACTIVITIES: |  |
| &nbsp;&nbsp;&nbsp;Fair value of warrants exercised | $- |
| Fair value of the stock purchase warrants issued in connection with the private placement agreement | $- |
| &nbsp;&nbsp;&nbsp;Fair value of the stock purchase warrants issued in connection with joint venture agreement | $- |
| &nbsp;&nbsp;&nbsp;Fair value of the derivative liability extinguished from conversion of convertible note | $- |
| &nbsp;&nbsp;&nbsp;Fair value of common stock issued in connection with settlement agreement | $- |
| &nbsp;&nbsp;&nbsp;Fair value of common stock issued in connection with conversion of convertible note | $- |
| &nbsp;&nbsp;&nbsp;Fair value of common stock issued in exchange for digital assets | $- |
| &nbsp;&nbsp;&nbsp;Issuance of common stock to settle accrued expenses and other current liabilities | $750000 |
| &nbsp;&nbsp;&nbsp;Fair value of warrants issued | $40804 |
| &nbsp;&nbsp;&nbsp;Settlement of accrued expenses and other current liabilities through issuance of common stock | $324601 |
| &nbsp;&nbsp;&nbsp;Issuance of Old Nukk common stock to Brilliant vendors in exchange for receivable from Brilliant | $- |
| &nbsp;&nbsp;&nbsp;Settlement of loans payable – related parties through exchange of notes receivable – related parties and accrued and unpaid interest | $0 |
| &nbsp;&nbsp;&nbsp;Settlement of loans payable – related parties through exchange of due from affiliates | $0 |

---

The accompanying notes to consolidated financial statements are an integral part of these statements.

NUKKLEUS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

**NOTE 1 – <u>DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION</u>**

Nukkleus Inc. and its wholly owned subsidiaries, were financial technology companies that were previously focused on providing software, technology solutions, customer sales and marketing, and risk management technology hardware and software solutions packages for the worldwide retail foreign exchange ("FX") trading industry and payment services from one fiat currency to another or to digital assets.

In January 2024, Nukkleus Inc and its wholly owned subsidiaries ceased its general support service operations, terminating the existing customer and supplier contracts with a related party, and shifted its focus to the payment services operations. In November 2024, Nukkleus Inc. entered into a Settlement Agreement and Release (the "Settlement Agreement") with a shareholder and one of our subsidiaries to sell DRFQ, the subsidiary that operates the payment services operations, to the shareholder in consideration of GBP 1,000. In August 2025, the Company was notified that on July 29, 2025, Match Financial was placed into administration in the United Kingdom pursuant to the Insolvency Act 1986 resulting in the appointment of two administrators (the "Administrators"). The administration was initiated by the sole director of Match Financial. According to the notice sent to the Company, on July 29, 2025, the Administrators completed a pre-packaged sale of Match Financial's entire shareholding in DRFQ to Match Financial Holdings Limited, a newly formed entity. The transaction results in the divestiture of DRFQ.

In December 2024, Nukkleus Inc. entered into a Securities Purchase Agreement and Call Option (the "Star Agreement") with Star 26 Capital Inc. ("Star"), the shareholders of Star ("Star Equity Holders") and an officer of Nukkleus, acting in his capacity as the representative of the Star Equity Holders, to acquire a controlling 51% interest in Star, an Israeli corporation engaged as a supplier of generators for "iron dome" launchers and other defense products. In September 2025, the Star Agreement was amended and restated ("Amended Star Agreement"). Pursuant to the Amended Star Agreement, Nukkleus will acquire 100% controlling interest in Star. As a result of the Settlement Agreement and subject to the closing of the acquisition of Star, Nukkleus Inc.'s business will be focused on the defense sector.

On February 14, 2025, the Board of Directors of Nukkleus Inc. and its wholly owned subsidiaries approved a change in the Company's fiscal year end from September 30 to December 31, effective for the fiscal year beginning January 1, 2024. This change results in a transition period from October 1, 2024, to December 31, 2024.

The decision to change the fiscal year end was made to align the Company's financial reporting with the calendar year, which is expected to enhance operational efficiency, improve comparability with industry peers, and better serve the needs of shareholders. Further, the Company intends to align its fiscal year with Star.

***Basis of Presentation and Principles of Consolidation:*** On December 22, 2023 (the "Closing Date"), Brilliant Acquisition Corp ("Brilliant") entered into a business combination agreement (the "Business Combination") with each of the shareholders of Nukkleus Inc. ("Old Nukk"). Pursuant to the Business Combination, Brilliant acquired all of the issued and outstanding shares of common stock from the Old Nukk shareholders.

 ****

On the Closing Date, and in connection with the closing of the Business Combination, Brilliant changed its name to Nukkleus Inc (the "Company") and the Company's common stock began trading on the NASDAQ under the ticker symbol NUKK. Old Nukk was deemed the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification ("ASC") 805, *Business Combinations* ("ASC 805"). The determination was primarily based on Old Nukk's shareholders prior to the Business Combination having a majority of the voting interests in the combined company, Old Nukk's ability to exert control over the majority of the board of directors of the combined company, and given the board of directors election and retention provisions, Old Nukk's ability to maintain control of the board of directors on a go-forward basis, Old Nukk's senior management comprising the senior management of the combined company; and old Nukk's operations prior to the Business Combination comprise the ongoing operations of the combined company. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Old Nukk issuing stock for the net assets of Brilliant, accompanied by a recapitalization. The net assets of Brilliant were stated at historical cost, with no goodwill or other intangible assets recorded.

While Brilliant was the legal acquirer in the Business Combination, because Old Nukk was deemed the accounting acquirer, the historical financial statements of Old Nukk became the historical financial statements of the combined company, upon consummation of the Business Combination. As a result, the financial statements included in this report reflect (i) the historical operating results of Old Nukk prior to the Business Combination; (ii) the combined results of Brilliant and Old Nukk following the closing of the Business Combination; (iii) the assets and liabilities of Old Nukk at their historical cost; and (iv) the Company's equity structure for all periods presented.

Effective October 24, 2024, the Company amended its amended and restated certificate of incorporation to implement a one-for-eight reverse stock split of its common stock (the "2024 Reverse Stock Split") and increased the number of authorized shares of the Company's common stock from 40,000,000 to 150,000,000 (see Note 9).

In accordance with guidance applicable to these circumstances, the equity structure has been restated in all comparative periods to give effect to the number of shares of the Company's common stock, $0.0001 par value per share, issued to Old Nukk shareholders during the Business Combination and the 2024 Reverse Stock Split. Accordingly, the disclosure of common shares and per common share data in the accompanying consolidated financial statements and related notes reflect the Business Combination and 2024 Reverse Stock Split for all periods presented.

The accompanying consolidated financial statements include the accounts of Nukkleus Inc, and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation. The consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") and in accordance with the rules and regulations of the United States Securities and Exchange Commission ("SEC"). Any reference in these footnotes to the applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the ASC and Accounting Standards Updates ("ASU") of the Financial Accounting Standards Board ("FASB").

The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. Due to the Company's inability to access complete financial data from a subsidiary classified as discontinued operations, estimates were used to present this entity's financial results for the period of April 1, 2025 through July 29, 2025 (see Note 4).

The accompanying condensed consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

**NOTE 2 – <u>LIQUIDITY AND CAPITAL RESOURCES</u>**

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business. As of September 30, 2025, the Company had cash of approximately $7,611,000, a working capital deficit of approximately $30,512,000 and incurred cash flow used in operating activities from continuing operations of approximately $4,944,000 for the nine months ended September 30, 2025. These are indicators of substantial doubt as to the Company's ability to continue as a going concern for at least one year from issuance of these consolidated financial statements. The Company's ability to continue as a going concern is dependent upon the management of expenses and ability to obtain necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due, and upon profitable operations.

If additional equity or debt financing is required from outside sources, the Company may not be able to raise it on terms acceptable to it or at all. If the Company is unable to raise additional capital on acceptable terms when needed, its results of operations and financial condition would be materially and adversely affected. Any such financing likely would be dilutive to existing stockholders and could result in significant financial operating covenants that would negatively impact the Company business.

As a result of the above, in connection with the Company's assessment of going concern considerations in accordance with Accounting Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about an Entity's Ability to Continue as a Going Concern," management has determined that the Company's liquidity condition raises substantial doubt about the Company's ability to continue as a going concern through twelve months from the date these financial statements are available to be issued. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

**NOTE 3 – <u>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</u>**

***Emerging growth company*:** The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups ("JOBS") Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as to those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

***Use of estimates:*** The preparation of the financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. Such estimates may be subject to change as more current information becomes available and accordingly the actual results could differ significantly from those estimates. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. The Company's most significant estimates and judgments involve valuation of share-based compensation, valuation of equity-classified stock purchase warrants, valuation of liability-classified stock purchase warrants, valuation of derivative liability, classification of gains and losses on settlement of related party liabilities, the useful lives of long-lived assets, assumptions used in assessing impairment of long-lived assets, valuation of deferred tax assets and the associated valuation allowances, and estimates of financial results for a subsidiary classified as discontinued operations. For the period beginning April 1, 2025 and ending July 29, 2025, the Company used estimates to report the financial results of this subsidiary.

***Segment reporting:*** ASC 280, *Segment Reporting* ("ASC 280"), defines operating segments as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision-maker ("CODM") in deciding how to allocate resources and in assessing performance. The Company's CODM is the chief executive officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The CODM uses operating results as the primary measure to manage the business. As a result of transactions entered into during the three months ended December 31, 2024 (see Note 4), the CODM determined it has one operating segment as of September 30, 2025. Accordingly, the Company has recast the presentation of its reportable segments for the periods presented in these consolidated financial statements. The CODM assesses performance on consolidated operating expenses as the CODM is focused on managing cash flow until a pending acquisition (see Note 13) is completed during the fourth quarter of fiscal year 2025.

***Cash and cash equivalents:*** The Company considers all highly liquid instruments with a maturity date of three months or less at the time of purchase and money market accounts to be cash equivalents. The Company had cash equivalents of approximately $5,307,000 and $0 at September 30, 2025 and December 31, 2024, respectively.

The Company's cash and cash equivalents are potentially subject to concentration of credit risk. Cash and cash equivalents are primarily placed with financial institutions which are of high credit quality. The Company invests cash and cash equivalents primarily in highly liquid, highly rated instruments which are uninsured. The Company may also have corporate deposit balances with financial institutions which exceed the Federal Deposit Insurance Corporation insurance limit of $250,000. The Company has not experienced losses on these accounts and does not believe it is exposed to any significant credit risk with respect to these accounts.

***Fair value measurements:*** ASC 820, *Fair Value Measurements* ("ASC 820"), clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows

● Level 1 – Inputs based on unadjusted quoted market prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

● Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active or for which all significant inputs are observable or can be corroborated by observable market data.

● Level 3 – Inputs reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are both unobservable for the asset and liability in the market and significant to the overall fair value measurement.

An asset's or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Assets and liabilities measured at fair value are based on one or more of the following techniques noted in ASC 820:

● *Market approach:* Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

● *Cost approach:* Amount that would be required to replace the service capacity of an asset (replacement cost).

● *Income approach:* Techniques to convert future amounts to a single present value amount based upon market expectations (including present value techniques, option pricing, and excess earnings models).

The Company believes its valuation methods are appropriate and consistent with other market participants, however the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The Company's financial instruments with a carrying value that approximates fair value consist of cash, advances, other current assets, accounts payable, due to affiliates, accrued expenses and other current liabilities, interest payable – related parties, and short-term borrowings due to their liquid or short-term nature or expected settlement dates of these instruments. If these financial instruments were recorded at fair value, they would be based on Level 1 inputs, except for short-term borrowings which would be based on Level 2 and Level 3 inputs, respectively.

The Company's non-financial assets, such as intangible assets, and financial assets are adjusted to fair value when an impairment charge is recognized. The impairment charge recognized on non-financial assets that consist of acquired intangible assets is based on Level 3 inputs, including a comparison of the Company's results with expectations and expectation for future profits. The impairment charge recognized for financial assets that consist of investment in privately held equity securities is based on Level 3 inputs, including the global economic environment, adjustments for investment-specific developments and the rights and obligations of the securities the Company holds.

The Company's financial instruments that are measured at fair value on a recurring basis consist of liability-classified stock purchase warrants and liability-classified derivative financial instruments (see Note 11).

***Related parties:*** The Company considers parties to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant influence of the same party, such as a family member or relative, shareholder, or a related corporation. The Company reviews the relationships of its vendors, customers, shareholders, and board members to determine whether there are any parties meet the criteria to be considered related. Any party that is deemed to be related to the Company is referred to as an "affiliate" or "related party" in these consolidated financial statements.

***Due from affiliates and notes receivable – related parties, net:*** Due from affiliates and notes receivable – related parties, net are contractual rights to receive cash on demand or on fixed or determinable dates and are recognized as an asset on the consolidated balance sheets. Due from affiliates consist of amounts owed from affiliates of the Company for either services provided to the affiliate or expenses paid by the Company on behalf of the affiliate (see Note 12). Notes receivable – related parties, net consist of advances made to affiliates in exchange for a promissory note from the affiliate (see Note 12).

***Digital assets:*** The Company holds certain digital assets, which primarily consist of tokens that are recorded as intangible assets in accordance with ASC 350-60, Intangibles-Goodwill and Other (Crypto Assets). In accordance with ASU 2023-08, effective January 1, 2025, the Company elected to apply the fair value measurement option for its crypto assets.

Under this standard, digital assets are measured at fair value at each reporting date, with changes in fair value recognized in earnings as a component of other income (expense). The Company determines fair value based on quoted market prices from active exchanges as of the balance sheet date.

Digital assets are classified as either current or non-current assets based on the Company's intent and ability to sell or hold the assets beyond one year. The Company does not account for its digital assets as securities or cash equivalents.

***Other current assets:*** Other current assets primarily consist of escrow cash and prepaid miscellaneous items. The Company expects all current assets to be collected and/or realized within the next 12 months.

***Leases:*** The Company determines if an arrangement is a lease at inception of the contract. Operating leases are included in operating lease right-of-use ("ROU") assets, current portion of operating lease liabilities, and operating lease liabilities, net of current portion in the accompanying consolidated balance sheets.

ROU assets represent the Company's right to use underlying assets for the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the contracts. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

The Company's vehicle leases may include transfer rights or options to purchase at the end of the lease that the Company is reasonably certain to exercise. Interest expense is recognized using the effective interest rate method, and the ROU asset is amortized over the useful life of the underlying asset.

 ****

***Impairment of long-lived assets:*** In accordance with ASC 360, *Impairment or Disposal of Long-Lived Assets* ("ASC 360"), the Company reviews the carrying values of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. Based on the existence of one or more indicators of impairment, the Company measures any impairment of long-lived assets using the projected discounted cash flow method at the asset group level. The estimation of future cash flows requires significant management judgment based on the Company's historical results and anticipated results and is subject to many factors. The discount rate that is commensurate with the risk inherent in the Company's business model is determined by its management. An impairment loss would be recorded if the Company determined that the carrying value of long-lived assets may not be recoverable. The impairment to be recognized is measured by the amount by which the carrying values of the assets exceed the fair value of the assets.

***Note payable, loans payable – related parties, convertible notes payable:*** Debt issuance costs, including original issue discounts, will be recorded to debt discount, reducing the face amount of the note. Debt issuance costs will be amortized to interest expense over the contractual term of the respective debt obligation using the effective interest method. If a conversion of the underlying debt occurs, a proportionate share of the unamortized discount is immediately expensed.

The Company evaluates convertible notes payable in accordance with ASC 470, "*Debt with Conversion and Other Options*" ("ASC 470") to determine if embedded conversion features present in the convertible instrument shall be recognized separately at issuance by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. Debt issuance costs are allocated proportionately to the debt host and conversion feature.

***Derivative financial instruments:*** The Company accounts for derivative instruments in accordance with ASC 815, *Derivatives and Hedging* ("ASC 815"). The Company's objectives and strategies for using derivative instruments, and how the derivative instruments and related hedged items are accounted for affect the consolidated financial statements. The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risk.

The Company evaluates all of its financial instruments, including notes payable and warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company applies significant judgment to identify and evaluate complex terms and conditions in its contracts and agreements to determine whether embedded derivatives exist. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the statement of operations each period. Bifurcated embedded derivatives are classified with the related host contract on the Company's balance sheet.

An evaluation of specifically identified conditions is made to determine whether the fair value of the derivative issued is required to be classified as equity or as a derivative liability. Changes in the estimated fair value of the liability-classified derivative financial instruments are recognized as a non-cash gain or loss on the accompanying consolidated statements of operations and comprehensive loss.

***Stock purchase warrants:*** The Company accounts for stock purchase warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance in ASC 480, *Distinguishing liabilities from equity* ("ASC 480"), and ASC 815. The assessment considers whether the stock purchase warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the stock purchase warrants meet all of the requirements for equity classification under ASC 815, including whether the stock purchase warrants are indexed to the Company's own common shares and whether the holders could potentially require "net cash settlement" in a circumstance outside of the Company's control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance, modification, and as of each subsequent quarterly period end date while the stock purchase warrants are outstanding.

For issued or modified stock purchase warrants that meet all of the criteria for equity classification, the stock purchase warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.

For issued or modified stock purchase warrants that do not meet all the criteria for equity classification, the stock purchase warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the liability classified stock purchase warrants are recognized as a non-cash gain or loss on the accompanying consolidated statements of operations and comprehensive loss.

The Company assesses the classification of its common stock purchase warrants at each reporting date to determine whether a change in classification between equity and liability is required. For modified stock purchase warrants that result in a change of classification from equity to liability, a liability is recognized equal to the fair value on the date of modification, additional paid-in capital is adjusted by the fair value of the warrant on the date of issuance, and the difference is recognized as a non-cash gain or loss on the accompanying consolidated statements of operations and comprehensive loss.

***Assets held for sale:*** Assets held for sale represent property, equipment, and leasehold improvements less accumulated depreciation as well as any other assets that are held for sale in conjunction with the sale of a business. The Company records assets held for sale in accordance with ASC 360 at the lower of carrying value or fair value less costs to sell. Fair value is the amount obtainable from the sale of the asset in an arm's length transaction. The reclassification takes place when the assets are available for immediate sale and the sale is highly probable. These conditions are usually met from the date on which a letter of intent or agreement to sell is ready for signing.

 ****

***Discontinued operations:*** A component of an entity is identified as operations and cash flows that can be clearly distinguished, operationally and financially, from the rest of the entity. Under ASC 205-20, "*Presentation of Financial Statements - Discontinued Operations*" ("ASC 205-20"), a discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale and represents a strategic shift that has or will have a major effect on the entity's operations and financial results, or a newly acquired business or nonprofit activity that upon acquisition is classified as held for sale. Discontinued operations are presented separately from continuing operations in the consolidated statements of Operations and the consolidated statements of cash flows (see Note 4). For long-lived assets or disposals groups that are classified as held for sale but do not meet the criteria for discontinued operations, the assets and liabilities are presented separately on the balance sheet of the initial period in which it is classified as held for sale.

***Advertising:*** Costs related to advertising are expensed as incurred.

***Stock-based compensation:*** The Company accounts for stock-based compensation by measuring and recognizing compensation expense for all share-based awards, including stock options and stock grants, based on estimated grant-date fair values. The Company measures employee, director and nonemployee awards at the date of grant, which generally is the date at which the Company and the nonemployee reach a mutual understanding of the key terms and conditions of a share-based payment award.

The Company estimates the grant date fair value of each stock option award using the Black-Scholes option-pricing model. The model requires management to make a number of assumptions, including the fair value and expected volatility of the Company's underlying common stock price on the date of grant, expected live of the option, risk-free interest rate and expected dividend yield. The Company sets the grant date fair value of each stock grant equal to the fair value of the Company's common stock on the date of grant.

The Company uses the straight-line attribution method to allocate compensation cost to reporting periods over the requisite service period during which the employee, board member, director, or advisor is required to provide services in exchange for the award. The Company has elected to account for forfeitures of awards as they occur, with previously recognized compensation reversed in the period that the awards are forfeited.

***Income taxes:*** The Company accounts for income taxes using the asset and liability method whereby deferred tax assets and liabilities are determined based on temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is established when management estimates that it is more likely than not that deferred tax assets will not be realized. Realization of deferred tax assets is dependent upon future pre-tax earnings, the reversal of temporary differences between book and tax income, and the expected rates in future periods.

The Company is required to evaluate the tax positions taken in the course of preparing its tax returns to determine whether tax positions are more likely than not of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the "more-likely-than-not" threshold would be recorded as a tax expense in the current year. The amount recognized is subject to estimate and management judgment with respect to the likely outcome of each uncertain tax position. The amount that is ultimately sustained for an individual uncertain tax position or for all uncertain tax positions in the aggregate could differ from the amount that is initially recognized. The Company recognizes interest and penalties related to income tax matters in general and administrative expense.

For U.S. federal tax purposes, digital asset transactions are treated on the same tax principles as property transactions. The Company recognizes a gain or loss when digital assets are exchanged for other property, in the amount of the difference between the fair market value of the property received and the tax basis of the exchanged digital assets. Receipts of digital assets in exchange for goods or services are included in taxable income at the fair market value on the date of receipt.

***Foreign currency translation:*** The Company's consolidated financial statements are presented in the reporting currency of the U.S. dollar. Functional currencies of the Company and its wholly-owned subsidiaries is the local currency used in each entities primary economic environment, some of which are different than the reporting currency. Assets and liabilities of the Company are translated into the reporting currency using the exchange rate in effect at the balance sheet dates. Equity transactions are translated using the historical exchange rate in effect on the date of the transaction, except for the change in accumulated deficit during the year, which is the results of the operations translation process. Results of operations and cash flows are translated using the weighted average exchange rates in effect during the period. As a result, amounts relating to the assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the accompanying consolidated balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into the reporting currency are recorded as a component of comprehensive income (loss). The unrealized foreign currency exchange gain (loss) for the three and nine months ended September 30, 2025 and 2024 is included as a component of other comprehensive income (loss) on the accompanying consolidated statements of operations and comprehensive loss.

Remeasurement gains and losses from transactions that are not denominated in the functional currency are recorded as a component of other income in the consolidated statements of operations and comprehensive loss. Most of the Company's revenue transactions are transacted in the functional currency of the Company. The Company does not enter into any material transaction in foreign currencies. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.

***Comprehensive loss:*** Comprehensive loss is comprised of net loss and all changes to the statements of equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. For the Company, comprehensive loss for the three and nine months ended September 30, 2025 and 2024 consisted of net loss and unrealized loss from foreign currency translation adjustment.

***Net loss per share:*** Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period, excluding the effects of any potential dilutive securities. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common share equivalents had been issued and if the additional common shares were dilutive. Earnings per share excludes all potential dilutive shares of common shares if their effect is anti-dilutive.

 ****

For the three and nine months ended September 30, 2025 and 2024, potentially dilutive common shares consist of the common shares issuable upon the exercise of common stock options and warrants (using the treasury stock method) and the conversion of convertible notes payable. In a period in which the Company has a net loss, all potentially dilutive securities are excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact.

The following table summarizes the potentially dilutive securities excluded from the computation of diluted shares outstanding because the effect of including these potential shares was anti-dilutive:

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended<br> September 30,** | **Nine Months Ended<br> September 30,** |
|  | **2025** | **2024** |
| Options to purchase common stock | 4823 | 15538 |
| Convertible notes payable that convert into common stock |  |  |
| Stock purchase warrants to acquire common stock | 4780449 | 987625 |
| &nbsp;&nbsp;&nbsp;Total potentially dilutive securities | 4785272 | 1003163 |

---

<u>Recently issued accounting pronouncements, adopted</u>

ASU 2023-07, *Segment Reporting – Improvements to Reportable Segment Disclosures* ("ASU 2023-07"), requires enhanced disclosures related to significant segment expenses and a description of how the chief operating decision maker utilizes segment operating profit or loss to assess segment performance. ASC 2023-07 is effective for fiscal years beginning after December 15, 2023 and for interim reporting periods starting after December 15, 2024, and is to be applied retrospectively. The Company adopted ASU 2023-07 for the nine months ended September 30, 2025 and its adoption did not have a material impact on the consolidated financial statements.

<u>Recently issued accounting pronouncements, not yet adopted</u>

ASU 2023-06, *Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative* ("ASU 2023-06") incorporates several disclosure and presentation requirements currently residing in SEC Regulation S-X and S-K into the ASC. The amendments are applied prospectively and are effective when the SEC removes the related requirements from Regulation S-X and S-K. Any amendments the SEC does not remove by June 30, 2027 will not be effective. Early adoption is prohibited. The Company is currently evaluating the potential impact of this guidance on its disclosures.

ASU 2023-09, *Income Taxes* ("ASU 2023-09"), requires disclosure of specific categories and disaggregation of information in the rate reconciliation table and expands disclosures related to income taxes paid. The new standard is effective for fiscal years beginning after December 15, 2024 and is to be applied prospectively. The Company is currently evaluating the impact, if any, adoption will have on its consolidated financial statements and disclosures.

ASU 2024-02, *Codification Improvements-Amendments to Remove References to the Concepts Statements* ("ASU 2024-02") updates accounting standards for revenue recognition (ASC 606), lease accounting (ASC 842), and impairment of long-lived assets (ASC 360). ASU 2024-02 provides enhanced guidance for estimating variable consideration, accounting for contract modifications, determining lease terms, and simplifying impairment testing for long-lived assets. It also introduces increased disclosure requirements for financial instruments and derivatives. ASU 2024-02 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact, if any, adoption will have on its consolidated financial statements and disclosures.

ASU 2024-03, *Disaggregation of Income Statement Expenses* ("ASU 2024-03"), requires public companies to disaggregate key expense categories, such as inventory purchases, employee compensation and depreciation in their financial statements. This aims to improve investor insight into company performance. ASU 2024-03 was originally effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025, with early adoption permitted.

ASU 2025-01, *Income Statement – Expense Disaggregation Disclosures – Clarifying the Effective Date* ("ASU 2025-01"), clarifies the effective date of ASU 2024-03. This amendment states that ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact, if any, adoption will have on its consolidated financial statements and disclosures.

ASU 2025-03, *Business Combinations and Consolidation: Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (VIE)* ("ASU 2025-03"), updates accounting standards for business combinations (ASC 805) on identifying the accounting acquirer in a business combination when the legal acquiree is a VIE and the transaction is effected primarily by the exchange of equity interests. This new guidance requires an entity to consider the factors in ASC 805-10-55-12 through 55-15 in such cases, thereby enhancing comparability between business combinations involving VIEs and voting-interest entities. ASU 2025-03 is effective for fiscal years beginning after December 15, 2026, and interim reporting periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact, if any, adoption will have on its consolidated financial statements and disclosures.

ASU 2025-05, *Financial Instruments-Credit Losses: Measurement of Credit Losses for Accounts Receivable and Contract Assets for Private Companies and Certain Not-for-profit Entities (PCC)* ("ASU 2025-05"), updates accounting standards for revenue from contracts with customers (ASC 606). ASU 2025-05 permits an entity to assume that current conditions as of the balance sheet date will not change for the remaining life of the asset when estimated expected credit losses, and an accounting policy election to consider subsequent cash-collection activity after the balance sheet date. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact, if any, adoption will have on its consolidated financial statements and disclosures.

**NOTE 4 – <u>DISCONTINUED OPERATIONS AND DECONSOLIDATION</u>**

In accordance with ASC 205-20 Presentation of Financial Statements: Discontinued Operations, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major impact on an entity's operations and financial results when the components of an entity meets the criteria in ASC paragraph *205*-*20*-*45*-*10.* In the period in which the component meets the held for sale or discontinued operations criteria the major assets, other assets, current liabilities and non-current liabilities shall be reported as a component of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the income (loss) of continuing operations.

***Disposition of a Subsidiary:*** On November 8, 2024, the Company entered into a Settlement Agreement and Release (the "Settlement Agreement") with a shareholder of the Company and a subsidiary of the Company to sell the subsidiary to the shareholder or his nominee subject to the Company obtaining shareholder approval. As required by the Settlement Agreement, a Share Purchase Agreement was entered into between the same parties dated December 23, 2024 providing that the Company, subject to it obtaining shareholder approval, will sell the subsidiary to the officer of the Company in consideration of GBP 1,000. On August 5, 2025, the Company was notified that on July 29, 2025, Match Financial, the subsidiary's direct parent, was placed into administration in the United Kingdom pursuant to the Insolvency Act 1986 resulting in the appointment of two administrators (the "Administrators"). The administration was initiated by the shareholder. According to the notice sent to the Company, on July 29, 2025, the Administrators completed a pre-packaged sale of Match Financial's entire shareholding of the subsidiary to a newly formed entity owned by Mr. Khurshid. The transaction results in the divestiture of the subsidiary effective as of July 29, 2025.

The subsidiary comprises our financial services operating segment. As a result of the planned disposition of the subsidiary, the financial services operating segment meets the held for sale criteria of ASC 205-20. Accordingly, the historical results of operations of the financial services operating segment has been reflected as discontinued operations in our consolidated financial statement for all periods prior to the Settlement Agreement on November 8, 2024.

During the preparation of the consolidated financial statements for the quarter ended June 30, 2025, management was unable to obtain complete financial data from the subsidiary due to the subsidiary's personnel being uncooperative, not providing the information needed and loss of direct access to the subsidiary's systems. As a result, the financial results of the discontinued operations for the period beginning April 1, 2025 and ending July 29, 2025 are based on reasonable estimates derived from historical operating trends and partial information available to the Company. Management believes the estimates used are reasonable under the circumstances. Furthermore, as a result of the sale of the subsidiary completed during the administration, the Company deconsolidated the subsidiary as of July 29, 2025. Therefore, the Company reported no assets or liabilities of the subsidiary as of September 30, 2025 and recognized a net gain on deconsolidation of approximately $2,491,000, which has been reflected as a component of other (expense) income on the accompanying consolidated statements of operations and comprehensive loss.

**Summary Reconciliation of Discontinued Operations**

The following tables present the balance sheets and the results of operations of the Company classified as discontinued operations for the periods presented:

NUKKLEUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **December 31,**<br>**2024** |
|  | (Unaudited) | (Audited) |
| ASSETS |  |  |
| CURRENT ASSETS: |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $&nbsp;&nbsp;&nbsp;&nbsp;- | $148679 |
| &nbsp;&nbsp;&nbsp;Customer custodial funds | - | 811265 |
| &nbsp;&nbsp;&nbsp;Customer digital currency assets | - | 22930 |
| &nbsp;&nbsp;&nbsp;Digital assets | - | 550 |
| &nbsp;&nbsp;&nbsp;Due from affiliates | - | 50768 |
| &nbsp;&nbsp;&nbsp;Other current assets | - | 54860 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL CURRENT ASSETS | - | 1089052 |
| NON-CURRENT ASSETS: |  |  |
| &nbsp;&nbsp;&nbsp;Intangible assets, net | - | 14887 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL NON-CURRENT ASSETS | - | 14887 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL ASSETS | $- | $1103939 |
| &nbsp;&nbsp;LIABILITIES AND STOCKHOLDERS' DEFICIT |  |  |
| CURRENT LIABILITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $- | $504249 |
| &nbsp;&nbsp;&nbsp;Customer custodial cash liabilities | - | 972941 |
| &nbsp;&nbsp;&nbsp;Customer digital currency liabilities | - | 10514 |
| &nbsp;&nbsp;&nbsp;Due to affiliates | - | 479608 |
| &nbsp;&nbsp;&nbsp;Loans payable - related parties, current | - | 682875 |
| &nbsp;&nbsp;&nbsp;Interest payable - related parties, current | - | 203755 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | - | 308567 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL CURRENT LIABILITIES | - | 3162509 |
| NON-CURRENT LIABILITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Loan payable - related parties, net of current portion | - | 17368 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL NON-CURRENT LIABILITIES | - | 17368 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL LIABILITIES | - | 3179877 |

---

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

NUKKLEUS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended <br> September 30,** | **For the Three Months Ended <br> September 30,** | **For the Nine Months Ended<br> September 30,** | **For the Nine Months Ended<br> September 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| REVENUES |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Revenue - financial services | 83309 | 226960 | 568860 | 661931 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 83309 | 226960 | 568860 | 661931 |
| COSTS OF REVENUES |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Cost of revenue - financial services | 16371 | 15558 | 95929 | 128492 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total costs of revenues | 16371 | 15558 | 95929 | 128492 |
| GROSS PROFIT (LOSS) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Gross profit (loss) - financial services | 66938 | 211402 | 472931 | 533439 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total gross profit (loss) | 66938 | 211402 | 472931 | 533439 |
| OPERATING EXPENSES: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Advertising | 2260 | 113 | 9950 | 23036 |
| &nbsp;&nbsp;&nbsp;Professional fees | 36480 | 165950 | 273835 | 599978 |
| &nbsp;&nbsp;&nbsp;Compensation and related benefits | 42327 | 157419 | 331057 | 591856 |
| &nbsp;&nbsp;&nbsp;Amortization of intangible assets | 1030 | 3445 | 7727 | 10360 |
| &nbsp;&nbsp;&nbsp;Other general and administrative | 20343 | 114559 | 169187 | 235241 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 102440 | 441486 | 791756 | 1460471 |
| LOSS FROM OPERATIONS | (35502) | (230084) | (318825) | (927032) |
| OTHER (EXPENSE) INCOME: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense - related parties | (23318) | (149523) | (189664) | (161029) |
| &nbsp;&nbsp;&nbsp;Gain on termination of GSS GSA – related party | - | 6082962 | - | 6082962 |
| &nbsp;&nbsp;&nbsp;Other income (expense) | (1444) | (31136) | 47518 | (14943) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other income (expense), net | (24762) | 5902303 | (142146) | 5906990 |
| LOSS BEFORE INCOME TAXES | (60264) | 5672219 | (460971) | 4979958 |
| INCOME TAXES | - | - | - | - |
| NET LOSS FROM DISCONTINUED OPERATIONS | $(60264) | 5672219 | (460971) | $4979958 |

---

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

**NOTE 5 – <u>DIGITAL ASSETS</u>**

The Company holds certain digital assets that consist of cryptocurrencies and **tokens**. These assets are not financial instruments, cash equivalents, or securities. The Company maintains custody of its digital assets in secured digital wallets under its sole control and does not engage in staking, lending, or other yield-generating activities.

At the time of initial acquisition in July 2025, the Company exercised a warrant to acquire 50 million DARWIN tokens for a total exercise price of $1,000,000, representing the cost basis of the Company's digital asset holdings. These DARWIN tokens are the sole holding of digital assets for the Company as of September 30, 2025.

The fair value of the DARWIN tokens as of September 30, 2025, based on their quoted market price of $0.0006436 per token, was $32,182, resulting in a loss from change in fair value of $967,818 for the three and nine months ended September 30, 2025, which has been included as a component of other income (loss) on the accompanying consolidated statements of operations and comprehensive loss.

**NOTE 6 – <u>LOANS PAYABLE – RELATED PARTIES</u>**

The Company's loans payable – related parties consisted of the following:

During the twelve months ended September 30, 2024, the Company issued promissory notes in the aggregate principal of $1,105,639 and $248,000 to a shareholder and to an entity managed by that shareholder, respectively, (collectively, the "Shareholder 2024 Loans"), in consideration of cash proceeds in the same amount in the following tranches:

---

| | |
|:---|:---|
| October 2023 | $199000 |
| December 2023 | 424000 |
| January 2024 | 25000 |
| February 2024 | 188000 |
| March 2024 | 80000 |
| April 2024 | 31000 |
| May 2024 | 100000 |
| June 2024 | 120500 |
| July 2024 | 59000 |
| August 2024 | 58000 |
| September 2024 | 69139 |
| Total Shareholder 2024 Loans | $1353639 |

---

The 2024 Shareholder Loans bear interest of 5.0% per annum and each individual loan will be due and payable three years from the date of issuance. As of September 30, 2025, the outstanding principal balance and accrued and unpaid interest of the Shareholder 2024 Loans was $1,353,639 and $108,417, respectively.

In July 2024, a shareholder of the Company made payments on the Company's behalf to settle an obligation with an affiliate in which the shareholder has a controlling interest. The shareholder entered into an assignment of debt agreement with the affiliate whereby the affiliate assigned its right, title obligation and interest in the obligation by the Company to the shareholder (the "July 2024 Loan"). The July 2024 Loan is noninterest bearing and was due and payable at issuance. In December 2024, the Company repaid approximately $1,000,000 of the July 2024 loan. As of September 30, 2025, the outstanding principal balance of the July 2024 Loan was $213,349.

Consisting of the above-mentioned loans, the Company's loans payable – related parties is summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **December 31,**<br>**2024** |
| Shareholder 2024 Loans | $1353639 | $1353639 |
| July 2024 Loan | 1213349 | 1213349 |
|  | 2566988 | 2566988 |
| &nbsp;&nbsp;&nbsp;Less: repayments to date | (1000000) | (1000000) |
| &nbsp;&nbsp;&nbsp;Loans payable – related parties, current and noncurrent | $1566988 | $1566988 |

---

In June 2024, as part of the terms of a note payable entered into, 30.0% of the loans payable with the shareholder of the 2024 Shareholder Loans and July 2024 Loan was due and payable on demand.

For the three and nine months ended September 30, 2025, the interest expense related to above loans payable – related parties amounted to $13,545 and $64,306, respectively, and has been reflected as a component of other (expense) income on the accompanying consolidated statements of operations and comprehensive loss.

For the three and nine months ended September 30, 2024, the interest expense related to above loans payable – related parties amounted to $15,521 and $38,249, respectively, and has been reflected as a component of other (expense) income on the accompanying consolidated statements of operations and comprehensive loss.

As of September 30, 2025 and December 31, 2024, the related accrued and unpaid interest for above loans was $108,417 and $44,111, respectively, which was reflected as interest payable – related parties, net of current portion on the accompanying consolidated balance sheets.

The loans payable – related parties mature as follows:

---

| | |
|:---|:---|
| **For the Period Ending:** | |
| June 30, 2024 | $619440 |
| June 30, 2026 | 947548 |
|  | $1566988 |

---

**NOTE 7 – <u>NOTE PAYABLE, NET</u>**

In April 2024, the Company issued a promissory note in the principal amount of $78,000 to an investor in consideration of cash proceeds in the same amount (the "April 2024 Loan"). In addition, the Company issued a stock purchase warrant for the purchase of 14,535 shares of the Company's common stock (the "April 2024 Warrant") that is exercisable for three years at an exercise price of $0.86 per warrant. The April 2024 Loan bears interest of 8.0% per annum and is due and payable on April 30, 2025. The April 2024 Warrant was determined to be an equity classified warrant and fair value of $40,804 determined using the Black-Scholes option-pricing model with the following assumptions: volatility of 174.03%, risk-free rate of 4.87%, annual dividend yield of 0.0% and expected life of 3 years. The principal amount of the April 2024 Loan was allocated to the April 2024 Loan and April 2024 Warrant in the amount of $37,196 and $40,804, respectively. The amount allocated to the April 2024 Warrant was recorded as a discount on the April 2024 Loan. In April 2025, the April 2024 Loan was repaid in full.

Amortization of the debt discount and interest expense related to the April 2024 Loan amounted to $0 and $0, and $13,601 and $2,035, respectively, for the three and nine months ended September 30, 2025 and $10,201 and $1,590, and $17,002 and $2,633 respectively, for the three and nine months ended September 30, 2024, which are both included as a component of interest expense on the accompanying consolidated statements of operations and comprehensive loss.

The balance of the April 2024 Loan, net of unamortized discount, was $0 and $64,399 as of September 30, 2025 and December 31, 2024, respectively and reflected as note payable, net on the accompanying consolidated balance sheets.

**NOTE 8 – <u>CONVERTIBLE NOTES PAYABLE, NET</u>**

The Company's convertible notes payable consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2025** | **December 31,**<br>**2024** |
| August 2024 Note | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; - | $515000 |
| December 2024 Note | - | 500000 |
|  | - | 1015000 |
| &nbsp;&nbsp;&nbsp;Less: debt issuance costs | - | (308646) |
| &nbsp;&nbsp;&nbsp;Convertible notes payable, net | $- | $706354 |

---

<u>August 2024 Note:</u> In August 2024, the Company issued a senior unsecured promissory note (the "August 2024 Note") in the principal amount of $515,000 to a new lender in consideration of cash proceeds in the amount of $412,075. The August 2024 Note bears interest of 12.0% per annum and is due and payable six months after issuance. The lender shall have the right to convert the principal and interest payable under the August 2024 Note into shares of common stock of the Company. In addition, the Company issued the lender a stock purchase warrant (the "August 2024 Warrant") to acquire 175,000 shares of common stock at a per share price of $2.00 for a term of five years that may be exercised for cash. The number of shares and exercise prices for the August 2024 Note and August 2024 Warrant reflect the October 2024 reverse stock split.

The August 2024 Warrant was determined to be an equity classified warrant and fair value was calculated as $447,316 using the Black-Scholes option-pricing model with the following assumptions: volatility of 183.31%, risk-free rate of 3.84%, annual dividend yield of 0.0% and expected life of five years. The Company recorded a total debt discount of $342,314 related to the original issue discount and August 2024 Warrant, which will be amortized over the term of the August 2024 Note. The principal amount of the August 2024 Note was allocated to the August 2024 Note and the August 2024 Warrant in the amount of $275,611 and $239,389, respectively. The amount allocated to the original issue discount and the August 2024 Warrant were recorded as a discount on the August 2024 Note, which will be amortized to interest expense using the effective interest rate method over the term of the August 2024 Note.

In June 2025, the lender sold August 2024 Note and the August 2024 Warrant to an unaffiliated third party. In August 2025, the Company entered into a settlement agreement with the new holder (the "Holder") of the August 2024 Note and August 2024 Warrant. Pursuant to the terms of the settlement agreement, the Holder agreed to waive all events of default in relation to the August 2024 Note. Additionally, the Holder agreed to convert the August 2024 Note into 243,155 shares of common stock based on the post-reverse stock split conversion price of $2.50 per share. In consideration of such waiver and conversion, the Company agreed to issue to the Holder a pre-funded warrant to purchase 1,702,088 shares of the Company's common stock. Furthermore, on August 11, 2025, the Company agreed to exchange the August 2024 Warrant for a new warrant (the "Exchange Warrant") in form and substance similar to the August 2024 Warrant, provided that such Exchange Warrant permitted the Holder to exercise such Exchange Warrant on a cashless basis. The Holder then exercised the Exchange Warrant on a cashless basis, resulting in an issuance of 123,860 shares of the Company's common stock.

<u>December 2024 Note:</u> On December 3, 2024, the Company issued a convertible promissory note (the "December 2024 Note") in the principal amount of $500,000 to a lender, in consideration of cash proceeds in the amount of $450,000 after an original issue discount of $25,000 and issuance costs of $25,000 in connection with the standby equity purchase agreement executed with the lender (the "SEPA"). The December 2024 Note matures on December 3, 2025. The SEPA was subsequently terminated in December 2024. The December 2024 Note has the following features:

*Conversion rights* – The December 2024 Note and accrued and unpaid interest is convertible at the option of the lender (the "Conversion Option") into shares of the Company's common stock at a per share conversion price of the lower of (i) $2.00 per share (the "Fixed Price") and (ii) 90% of the lowest daily volume weighted average price (the "VWAP") during the ten consecutive trailing days immediately preceding the conversion, with a floor of $0.33 (the "Floor Price").

*Interest* – The December 2024 Note bears interest of 10.0% per annum. Upon an event of default, the December 2024 Note becomes immediately due and payable, with the interest increasing to 18.0%.

 

*Optional redemption* – The December 2024 Note is redeemable by the Company in the event that the VWAP of the Company's common stock was less than the Fixed Price on the date the Company provides the redemption notice to the lender. The redemption price will be equal to the outstanding principal amount of the December 2024 Note plus the 10% of the principal amount being redeemed (the "Redemption Premium") plus all accrued and unpaid interest, if any. The lender has ten days from the date the redemption notice is received to elect to convert all or a portion of the December 2024 Note.

*Event of Default –* If any event of default as defined in the December 2024 Note occurs, the full unpaid principal amount of the December 2024 Note, accrued and unpaid interest, and other amounts owed become at the lender's election immediately due and payable in cash. The lender has the right, but not the obligation, to convert all or part of the December 2024 Note in accordance with the terms of the December 2024 Note.

*Exchange Cap* – The lender shall not have the right to convert any portion of the December 2024 Note to the extent that after giving effect to such conversion, the lender, along with its affiliates, would beneficially own in excess of 4.99% of the outstanding common stock immediately after giving effect to such conversion (the "Exchange Cap"), unless the Company has obtained shareholder approval for conversion.

*Amortization Event* – In no event shall the lender be allowed to effect a conversion if such conversion, along with all other shares of common stock then beneficially owned by the lender and its affiliates would exceed 4.99% of the then outstanding shares of the common stock of the Company. If at any time (i) the daily VWAP is less than the Floor Price for three trading days during a period of five consecutive trading days (a "Floor Price Event"), (ii) the Company has issued in excess of 99.0% of the shares of common stock available under the Exchange Cap (an "Exchange Cap Event"), or (iii) at any time after the effectiveness deadline set forth in the Registration Rights Agreement, dated as of December 3, 2024, by and between the Company and the lender (the "Registration Rights Agreement"), the lender is unable to utilize a registration statement to resell the shares of the Company's common stock receivable by the lender for a period of ten consecutive trading days (a "Registration Event," and collectively with a Floor Price Event and an Exchange Cap Event, each an "Amortization Event"), then the Company shall make monthly payments to the lender beginning on the seventh trading day after the Amortization Event and continuing monthly in the amount of $150,000 plus a 10.0% premium and accrued and unpaid interest. The Exchange Cap Event will not apply in the event the Company has obtained the approval from its stockholders for the issuance of shares of common stock pursuant to the conversion of the December 2024 Note in excess of the Exchange Cap.

*Embedded Derivatives* – The optional redemption and event of default include an exercise contingency, which requires the Company to obtain shareholder approved for conversions subject to the Exchange Cap, which fails the equity classification guidance in ASC 815 and is thus precluded from being classified in equity. Therefore, the embedded derivatives are required to be bifurcated from the December 2024 Note and accounted for at fair value at each reporting date. A fair value of $222,865 was determined for the embedded derivative liabilities using a Monte Carlo Simulation model. The embedded derivative liabilities will be re-measured to fair value each reporting period until settlement (see Note 11).

During the three months ended June 30, 2025, the lender exercised conversion of the December 2024 Note and 260,300 shares of common stock were issued to the lender.

For the three and nine months ended September 30, 2025, amortization of debt discount and interest expense related to convertible promissory notes amounted to $0 and $36,337, and $308,646 and $83,613, respectively, which are both included as a component of interest expense on the accompanying condensed consolidated statements of operations and comprehensive loss.

**NOTE 9 – <u>STOCKHOLDERS' DEFICIT</u>**

As a result of the 2024 Reverse Stock Split, each eight pre-split shares of common stock outstanding automatically combined and converted to one issued and outstanding share of common stock without any action on the part of stockholders. No fractional shares of common stock were issued to any stockholders in connection with the 2024 Reverse Stock Split. Each stockholder was entitled to receive one share of common stock in lieu of the fractional share that would have resulted from the 2024 Reverse Stock Split. The number of the Company's authorized common stock remain unchanged, and the par value of the common stock following the 2024 Reverse Stock Split remained at $0.0001 per share.

<u>Preferred Stock:</u> The Company is authorized to issue 15,000,000 shares of preferred stock with a par value of $0.0001 per share. The Company's board of directors is authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, option or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. As of September 30, 2025 and December 31, 2024, there were 200 and 0 shares of preferred stock issued and outstanding, respectively.

<u>Common stock:</u> The Company is authorized to issue 150,000,000 shares of common stock with a par value of $0.0001 per shares, of which 11,096,264 and 4,930,531 shares were issued and outstanding as of September 30, 2025 and December 31, 2024, respectively. The following shares of common stock are reserved for future issuance:

Stock options issued and outstanding 4,823 <br> Stock purchase warrants   <u>6,497,072</u> <br>   <u>6,501,895</u>

*Dividend rights:* the holders of common stock are entitled to receive dividends and other distributions, as and if declared by the Board out of assets or funds of the Company legally available and shall share equally on a per share basis.

*Voting rights:* the common stock possesses all voting power of the Company. Each share of common stock is entitled to one vote.

 

*Liquidation:* In the event of any liquidation, dissolution or winding up of the Company, after payment or provision of payment of the debts and other liabilities of the Company, the holders of common stock are entitled to receive the remaining assets of the Company available for distribution ratably in proportion to the number of shares of common stock held by them.

*<u>Common Stock Issuances:</u>*

On December 18, 2024, the Company entered into a securities purchase agreement for a private placement (the "Private Placement") pursuant to which an investor purchased from the Company 1,666,666 units for an aggregate purchase price of $9,999,996 or a per unit price of $6.00 with each unit consisting of (i) one share of the Company's common stock and (ii) a stock purchase warrant to purchase up to one and one half shares of the Company's common stock (the "Private Placement Warrant"). The investor may elect to acquire one pre-funded common stock purchase warrant in lieu of one share (the "Pre-Funded Warrant"). The Units were priced in excess of the average Nasdaq Official Closing Price of the Company's common stock for the five trading days immediately preceding the signing of the Private Placement. The Private Placement closed on December 20, 2024. Issuance costs totaled $865,143 and were recorded as a reduction to additional paid-in capital. On December 19, 2024, 230,000 shares of common stock were issued in connection with the Private Placement.

The Pre-funded Warrant and the Private Placement Warrant permit the investor to acquire a fixed amount of shares of the Company's common stock at a per share price of $0.0001 and $6.00, respectively, that may be exercised on a cash or cashless basis. The Pre-Funded Warrant is immediately exercisable, at a nominal exercise price of $0.0001 per share, and may be exercised at any time until the Pre-Funded Warrant is fully exercised. The Private Placement Warrant has an exercise price of $6.00 per share, is immediately exercisable on a cash or cashless basis and will expire five years from the date of issuance. The Pre-funded Warrant and the Private Placement Warrant were determined to be liability-classified at the time of issuance.

In February 2025, the investor sold 83,333 and 125,000 units of the Pre-funded Warrant and Private Placement Warrant, respectively, to a third party. In February 2025, the third party submitted a cashless exercise of their 83,333 units in relation to the Pre-Funded Warrant, which resulted in an issuance of 83,332 shares of common stock. During the three months ended September 30, 2025, the remaining 1,353,333 Pre-funded Warrant units and the 2,499,999 Private Placement Warrant units were exercised on a cashless basis, resulting in the issuance of 4,899,166 total shares of common stock.

In April 2025, the Company issued 12,500 shares of common stock in connection with a settlement agreement with a former consultant.

In May 2025, the Company issued 84,276 shares of common stock to a consultant in connection with a cashless exercise of an option.

In May and June 2025, the Company issued a total of 260,300 shares of common stock to a lender in connection with the full conversion of the December 2024 Note (see Note 8).

In July 2025, the Company issued 1,434 shares of common stock to a former officer and director of the Company in connection with a cashless exercise of an option.

In August 2025, the Company issued 123,860 and 243,155 shares of common stock in connection with the cashless exercise of the August 2024 Warrant and the conversion of the August 2024 Note, respectively (see Note 8).

In September 2025, the Company issued 310,000 shares of common stock in connection with a new joint venture agreement.

During the nine months ending September 30, 2024, the Company issued a total of 361,531 shares of common stock to settle obligations to vendors.

<u>Warrants:</u>

 

*Public Warrants:* On June 26, 2020, Brilliant completed an initial public offering that included warrants for shares of common stock (the "Public Warrants'). Each Public Warrant entitles the holder the right to purchase one share of common stock at an exercise price of $11.50 per share. No fractional shares will be issued upon exercise of the Public Warrants. The Company may elect to redeem the Public Warrants, in whole and not in part, at a price of $0.01 per Public Warrant if (i) 30 days' prior written notice of redemption is provided to the holders, and (ii) the last reported sale price of the Company's common stock equals or exceeds $16.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third business day prior to the date on which the Company sends the notice of redemption to the warrant holders. Upon issuance of a redemption notice by the Company, the warrant holders have a period of 30 days to exercise for cash, or on a cashless basis. On the Closing Date, there were 805,000 Public Warrants issued and outstanding.

 

*Private Warrants:* Simultaneous with Brilliant's initial public offering in June 2020, Brilliant sold warrants to its sponsor and certain of its directors and advisors in a private placement (the "Private Warrants"). The Private Warrants may not be redeemed by the Company so long as the Private Warrants are held by the initial purchasers, or such purchasers' permitted transferees. The Private Warrants have terms and provisions identical to the Public Warrants, including as to exercise price, exercisability and exercise period, except if the Private Warrants are held by someone other than the initial purchasers' permitted transferees, then the Private Warrants are redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. On the Closing Date, there were 32,625 Private Warrants issued and outstanding.

As a result of the Business Combination which was completed on December 22, 2023, Public Warrants and Private Warrants totaling 837,625 were converted into 837,625 warrants of the Company.

*Stock Purchase Warrants:* In connection with certain note payable agreements (see Note 7) certain convertible notes payable (see Note 8), and private placement transactions (see Note 9) the Company issued stock purchase warrants to certain lenders and investors that permit the lender or investor to acquire a fixed amount of shares of the Company's common stock at a per share price that ranges between $.0001 and $6.88 for a term that ranges between three and five years that may be exercised on a cash or cashless basis.

Certain warrants were determined to be equity-classified at issuance, and as such, were recorded to additional-paid-in capital at the time of issuance. Certain warrants were determined to be liability-classified at issuance, and as such, were recorded at fair value as a liability on the accompanying consolidated balance sheets and re-measured to fair value each reporting period with the change in fair value recorded as a component of other income (expense) on the accompanying consolidated statements of operations and comprehensive loss. Certain warrants were modified during the three months ended December 31, 2024 at which time the warrant's classification was re-assessed and the classification changed from equity to liability.

The following table summarizes the shares of the Company's common stock issuable upon exercise of warrants outstanding at September 30, 2025:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Warrants Outstanding** | **Warrants Outstanding** | **Warrants Outstanding** | **Warrants Outstanding** |
|  | **Range of<br> Exercise<br> Price** | **Number<br> Outstanding at<br> September 30,<br> 2025** | **Weighted<br> Average<br> Remaining<br> Contractual<br> Life (Years)** | **Weighted<br> Average<br> Exercise<br> Price** |
| Public and Private Warrants | $92.00 | 837625 | 0.42 | $11.86 |
| April 2024 Warrants | 6.88 | 14535 | 0.00 | 0.02 |
| June 2024 Warrants | 2.00 | 150000 | 0.09 | 0.05 |
| November 2024 Warrant | 2.41 | 351424 | 0.22 | 0.13 |
| August 2025 Pre-funded Warrants | 0.0001 | 1702088 | 1.27 | 0.00 |
| August 2025 Warrant | 4.40 | 250000 | 0.19 | 0.17 |
| September 2025 Private Placement Warrant | 5.405 | 3191400 | 2.42 | 2.65 |
|  | $0.0001 – 92.00 | 6497072 | 4.62 | $14.88 |

---

The following table summarizes the shares of the Company's common stock issuable upon exercise of warrants outstanding at December 31, 2024:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Warrants Outstanding** | **Warrants Outstanding** | **Warrants Outstanding** | **Warrants Outstanding** |
|  | **Range of<br> Exercise<br> Price** | **Number<br> Outstanding at<br> December 31,<br> 2024** | **Weighted<br> Average<br> Remaining<br> Contractual<br> Life (Years)** | **Weighted<br> Average<br> Exercise<br> Price** |
| Public and Private Warrants | $92.00 | 837625 | 0.61 | $14.10 |
| April 2024 Warrants | 6.88 | 14535 | 0.01 | 0.02 |
| June 2024 Warrants | 2.00 | 150000 | 0.12 | 0.05 |
| August 2024 Warrants | 2.00 | 175000 | 0.15 | 0.06 |
| November 2024 Warrant | 2.41 | 351424 | 0.31 | 0.15 |
| Pre-funded Warrants | 0.0001 | 1436666 | 1.30 | 0.00 |
| Private Placement Warrant | 6.00 | 2499999 | 2.27 | 2.74 |
|  | $0.0001 – 92.00 | 5465249 | 4.77 | $17.12 |

---

Warrant activities for the nine months ended September 30, 2025 were as follows:

---

| | | |
|:---|:---|:---|
|  | **Number of <br> Options** | **Weighted <br> Average <br> Exercise<br> Price** |
| Outstanding at December 31, 2024 | 5465249 | 17.12 |
| Granted | 5143488 | 3.57 |
| Exercised | (4111665) | 3.73 |
| Outstanding at September 30, 2025 | 6497072 | $14.88 |

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**NOTE 10 – <u>STOCK-BASED COMPENSATION</u>**

*<u>Old Nukk Equity Incentive Plan</u>*

 

For periods prior to the reverse recapitalization, the Old Nukk Equity Incentive Plan (the "Old Nukk Plan") permitted the granting of various awards including stock options (including both nonqualified options and incentive options), stock appreciate rights ("SARs"), stock awards, phantom stock units, performance awards and other share-based awards to employees, outside directors and consultants, and advisors to the Company. Only stock options have been awarded to consultants and advisors under the Old Nukk Plan.

Assumed Options converted into an option to purchase a number of shares of the Company's common stock equal to the product of the number of shares of Old Nukk common stock and the Exchange Ratio at an exercise price per share equal to the exercise price of the Assumed Options divided by the Exchange Ratio. Each Assumed Option is governed by the same terms and conditions applicable to the Assumed Options prior to the Business Combination. No further grants can be made under the Old Nukk Plan.

*2024 Equity Incentive Plan*

On October 11, 2024, the Company's shareholders approved a new long-term incentive award plan (the "2024 Plan"). The 2024 Plan is administered by the Board. The selection of participants, allotment of shares, determination of price and other conditions are approved by the Board at its sole discretion to attract and retain personnel instrumental to the success of the Company.

On November 13, 2024, the Company issued 100,000 stock options to a consultant of the Company at an exercise price of $2.39 per share. In May 2025, the consultant exercised these options via a cashless exercise, resulting in an issuance of 84,276 shares of common stock.

*2025 Equity Incentive Plan*

In February 2025, the Company established the Nukkleus Inc 2025 Equity Incentive Plan (the "2025 Plan") to attract, retain and motivate employees, officers, directors, consultants, agents, advisors and independent contractors of the Company by providing them the opportunity to acquire a proprietary interest in the Company and to align their interest and efforts to the long-term interest of the Company's stockholders. The 2025 Plan will be administered by the Board of Directors and has 3,950,000 shares of the Company's common stock reserved for issuance. The 2025 Plan is subject to shareholder approval at a meeting scheduled to occur during the fourth quarter of calendar year 2025.

Stock options generally vest over one to three years, with a maximum term of ten years from the date of grant. These awards become available to the recipient upon the satisfaction a vesting condition based on a period of service. Total stock options activity for the nine months ended September 30, 2025 is summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **Number of <br> Options** | **Weighted <br> Average <br> Exercise<br> Price** |
| Outstanding at December 31, 2024 | 104823 | $27.61 |
| Exercised | (100000) | - |
| Outstanding at September 30, 2025 | 4823 | 550.60 |
| Options exercisable at September 30, 2025 | 4823 | $550.60 |
| Options expected to vest |  | $— |

---

Share-based compensation expense for three and nine months ended September 30, 2025 was $0 and $177,905, respectively. Share-based compensation expense for the three and nine months ended September 30, 2024 was $5,602 and $154,937, respectively, which was recorded as professional fees on the accompanying consolidated statements of operations and comprehensive loss. There was no unrecognized share-based compensation at September 30, 2025.

**NOTE 11 – <u>FAIR VALUE MEASUREMENT</u>**

Customer digital currency assets and liabilities represent the Company's obligation to safeguard customer digital currencies. Accordingly, the Company has valued the assets and liabilities using quoted market prices for the underlying digital currencies which is based on Level 2 inputs.

The Black-Scholes option pricing model is used to estimate fair value of liability-classified stock purchase warrants issued in connection with convertible notes (see Note 8) and the liability-classified pre-funded stock purchase warrants issued in connection with the December 2024 Private Placement (see Note 9). A Monte Carlo simulation model is used to estimate the fair value of liability-classified stock purchase warrants issued in connection with the December 2024 Private Placement and the September 2025 Private Placement (see Note 9). Both models utilize the following assumptions:

● Risk-free interest rates are derived from the yield on U.S. Treasury debt securities in effect on the date of measurement.

● Dividend yields are based on our historical dividend payments, which have been zero to date.

● Volatility is estimated from historical volatility of a peer group over a similar period.

● The expected term is based on the time to expiration of the warrants from the date of measurement.

The Monte Carlo simulation model also incorporates management's judgments for the occurrence or non-occurrence of certain events as well as the probability of certain scenarios impactful to the valuation of the liability-classified stock purchase warrants issued in connection with the December 2024 Private Placement and the September 2025 Private Placement.

The assumptions used for the Black-Scholes option pricing model for liability-classified stock purchase warrants are as follows:

---

| | | |
|:---|:---|:---|
| **June 2024 Warrants** | **September 30, <br> 2025** | **November 2024<br> Modification** |
| Expected term (years) | 3.7 years | 4.6 years |
| Risk-free interest rate | 3.74% | 4.4% |
| Expected volatility | 110.0% | 113.8% |
| Expected dividend yield | 0.0% | 0.0% |

---

---

| | | |
|:---|:---|:---|
| **November 2024 Warrants** | **September 30, <br> 2025** | **November 2024<br> Issuance** |
| Expected term (years) | 4.1 years | 5.0 years |
| Risk-free interest rate | 3.74% | 4.2% |
| Expected volatility | 110.0% | 113.8% |
| Expected dividend yield | 0.0% | 0.0% |

---

The assumptions used for the Monte Carlo simulation model for liability-classified stock purchase warrants are as follows:

---

| | | |
|:---|:---|:---|
| **August 2025 Warrants** | **September 30, <br> 2025** | **August 2025<br> Issuance** |
| Expected term (years) | 4.9 years | 5.0 years |
| Risk-free interest rate | 3.73% | 3.65% |
| Expected volatility | 108.3% | 110.1% |
| Expected dividend yield | 0.0% | 0.0% |
| Probability of a fundamental event | 10.0% | 10.0% |

---

---

| | | |
|:---|:---|:---|
| **September 2025 Private Placement Warrants** | **September 30, <br> 2025** | **September 2025<br> Issuance** |
| Expected term (years) | 4.9 years | 5.0 years |
| Risk-free interest rate | 3.74% | 3.65% |
| Expected volatility | 158.4% | 156.9% |
| Expected dividend yield | 0.0% | 0.0% |
| Probability of a fundamental event | 10.0% | 10.0% |

---

The following table sets forth by level, within the fair value hierarchy, the Company's assets and liabilities measured and recorded at fair value on a recurring basis as of September 30, 2025:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Quoted<br> Price in<br> Active Markets**<br>**(Level 1)** | **Significant <br> Other <br> Observable <br> Inputs**<br>**(Level 2)** | **Significant <br> Unobservable <br> Inputs**<br>**(Level 3)** | **Balance at <br> September 30,**<br>**2025** |
| **Liabilities** |  |  |  |  |
| June 2024 Warrant | &nbsp;&nbsp;&nbsp;&nbsp; — | &nbsp;&nbsp;&nbsp;&nbsp;— | 914583 | 914583 |
| November 2024 Warrant |  |  | 2133949 | 2133949 |
| August 2025 Warrant |  |  | 2210729 | 2210729 |
| Private Placement Warrants |  |  | 35480932 | 35480932 |
| Embedded derivative liability |  |  | - | - |
| &nbsp;&nbsp;&nbsp;Total liabilities | $— | $— | $40740193 | $40740193 |

---

The Company did not make any transfers into or out of Level 3 of the fair value hierarchy during the nine months ended September 30, 2025.

The following table provides a reconciliation of the warrants measured at fair value using Level 3 inputs:

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Embedded<br> Derivative**<br>**Liability** | **June 2024**<br>**Warrant** | **November 2024**<br>**Warrant** | **Pre-funded**<br>**Warrant** | **Common<br> Stock**<br>**Warrant** | **August 2025**<br>**Warrant** | **September 2025**<br>**Warrant** |
| Balance at January 1, 2025 | $847753 | $5333794 | $12467515 | $52682426 | $94286790 | $- | $- |
| Additions | - | - | - | - | - | 1672686 | 29605956 |
| Subtractions | (259963) | - | - | (12421864) | (19517415) | - | - |
| Change in fair value | (587790) | (4419211) | (10333566) | (40260562) | (74769375) | 538043 | 5874976 |
| Ending balance, September 30, 2025 | $- | $914583 | $2133949 | $- | $- | $2210729 | $35480932 |

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**NOTE 12 – <u>RELATED PARTY TRANSACTIONS</u>**

*Note receivable – related party:* In December 2024, the Company advanced $1,000,000 to Star pursuant to the terms of the Star Agreement (see Note 1). During the nine months ended September 30, 2025, the Company advanced an additional $3,500,000 to Star pursuant to the first and second amendments of the Star Agreement, bringing the total amount of the advance made to Star to $4,500,000 as of September 30, 2025.

*Due from affiliates:* Amounts due from affiliates totaled $243,915 and $0 as of September 30, 2025 and December 31, 2024, respectively. Amounts due from these affiliates are short-term in nature, non-interest bearing, unsecured and repayable on demand.

 

*Due to affiliates:* Amounts owed to affiliates totaled $233,068 and $42,471 as of September 30, 2025 and December 31, 2024, respectively. Amounts due to these affiliates are short-term in nature, non-interest bearing, unsecured and repayable on demand.

*Loans payable – related parties:* The Company has entered into several promissory notes, and made repayments thereon, with shareholders and affiliates (see Note 6).

**NOTE 13 – <u>COMMITMENTS AND CONTINGENCIES</u>**

<u>Indemnifications:</u> The Company has indemnity agreements with certain officers and directors of the Company pursuant to which the Company must indemnify the officer or director against all expenses, judgments, fines, and amounts paid in settlement reasonably incurred in connection with a third party proceeding, if the indemnitee acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Company, and in the case of a criminal proceeding, had no reasonable cause to believe the indemnitee's conduct was unlawful. It is not possible to determine the maximum potential exposure under these indemnification agreements: (i) because the facts and circumstances involved in each claim are unique and the Company cannot predict the number or nature of claims that may be made; (ii) due to the unique facts and circumstances involved in each particular agreement; and (iii) due to the requirement for a registration of the Company's securities before any of the indemnification obligations contemplated in the IRA become effective.

<u>Legal and regulatory proceedings:</u> The Company is subject to various litigation, regulatory investigations, and other legal proceedings that arise in the ordinary course of its business. The Company is also subject to regulatory oversight by numerous regulatory and other governmental agencies. The Company reviews its lawsuits, regulatory investigations, and other legal proceedings on an ongoing basis and provides disclosure and records loss contingencies in accordance with the loss contingencies accounting guidance. In accordance with such guidance, the Company establishes accruals for such matters when potential losses become probable and can be reasonably estimated. If the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, the Company discloses the possible loss in the consolidated financial statements.

<u>White lion stock purchase agreement:</u> On May 17, 2022, the Company entered into a Stock Purchase Agreement (the "White Lion Agreement") with White Lion Capital Partners, LLC a California-based investment fund ("White Lion"). Under the terms of the White Lion Agreement, the Company had the right, but not the obligation, to require White Lion to purchase shares of its common stock up to a maximum amount of $75,000,000. In January 2024, the Company issued 202,702 shares of the Company's common stock with a fair value of $750,000 to settle its obligation owed under the White Lion Agreement (see Note 9). On February 21, 2024, the Company terminated the White Lion Agreement.

<u>December 2024 Private Placement:</u> On December 18, 2024, the Company entered into a securities purchase agreement for a private placement offering (the "Private Placement") pursuant to which an investor purchased from the Company 1,666,666 units for an aggregate purchase price of $9,999,996 or a per unit price of $6.00 with each unit consisting of (i) one share of the Company's common stock and (ii) a stock purchase warrant to purchase up to one share of the Company's common stock. Pursuant to the terms of the Private Placement, the Company was obligated to file a resale registration statement related to the securities purchased in the Private Placement and to ensure that such resale registration statement was declared effective within 75 days from the closing date of the Private Placement. The Company did not meet this obligation and as a result, the investor was entitled to penalties payable in cash until the registration statement becomes effective. During the nine months ended September 30, 2025, the Company made cash payments to the investor totaling $800,000 to satisfy these penalties. On September 15, 2025, the Company requested a withdrawal of the registration statement.

<u>Securities Purchase Agreement:</u> On December 15, 2024, the Company entered into a Securities Purchase Agreement and Call Option, as amended by Amendment No. 1 dated February 11, 2025, Amendment No. 2 dated May 13, 2025, and Amendment No. 3 dated June 15, 2025 (the "Star Agreement") with Star 26 Capital Inc. ("Star"), the shareholders of Star ("Star Equity Holders") and an officer of the Company acting in his capacity as the representative of the Star Equity Holders, to acquire a controlling 51% interest in Star, an Israeli corporation engaged as a supplier of generators for "iron dome" launchers and other defense products. On September 15, 2025, the Company entered into an Amended and Restated Securities Purchase Agreement and Call Option ("Amended Star Agreement"), which amended and restated in its entirety the Star Agreement. Pursuant to the Amended Star Agreement, the Company shall acquire 100% controlling interest in Star in exchange for:

● A minimum amount of $5,000,000 in cash

● a promissory note in the principal amount of $16,000,000, less (i) the amounts outstanding under Seller Notes, which shall be forgiven and cancelled as of the closing of the transaction, and (ii) any portion of the cash payment to the Sellers in excess of $5,000,000 (the "Investment Note"). The Investment Note matures 12 months following the closing.

● 4,770,340 shares of the Company's common stock issued to the Star Equity Holders

● 12,017,648 stock purchase warrants with a five year term and an exercise price of $1.50 per share

● $3,000,000 in cash,

● a promissory note in the principal amount of $3,000,000, which accrues interest at 8.0% per annum and is due and payable six months after the issuance thereof,

If, for a period of 12 months after the closing of the Star Agreement, the Company's shares of common stock are delisted from Nasdaq, Star shall have the right, at its own discretion, to require the Company to exchange the Investment Note for all the shares of Star then held by the Company, provided, however, the Option shall be automatically cancelled and Star shall retain any cash payments made by the Company to Star and the Company shall retain an equity interest in Star equivalent to all cash payments. The closing of the Transaction is subject to customary closing conditions, including regulatory approvals, third-party consents, fairness opinion, and approval by the Company's shareholders as required under applicable Nasdaq listing rules.

If the Star Agreement is canceled because stockholder approval was not obtained within 90-days after the date of the Star Agreement and the failure was a result of the Company failing to perform or observe the covenants or agreements of the Company provided for in the terms of the Star Agreement, the Seller is entitled to damages of $3,000,000 from the Company.

As a result of the Settlement Agreement and subject to the closing of the acquisition of Star, the Company's business will be focused on the defense sector.

<u>September 2025 Private Placement:</u> On September 4, 2025, Nukkleus Inc. (the "Company") entered into a Securities Purchase Agreement with certain accredited investors (the "Securities Purchase Agreement") for a private placement (the "2025 Private Placement") pursuant to which the investors (the "Purchasers") agreed to purchase from the Company 200 units for an aggregate purchase price of $10,000,000 or a per unit price of $50,000, with each unit consisting of (i) one restricted share (each a "Share" and collectively, the "Shares") of Series A Convertible Preferred Stock, par value $0.0001 per share (the "Series A Preferred Stock"), and (ii) restricted common stock purchase warrants to initially purchase up to 15,957 shares of common stock, par value $0.0001 per share (the "Common Stock"), of the Company, subject to adjustment and exchange as described herein (the "Common Warrants" and the shares of Common Stock issuable upon exercise or exchange of the Common Warrants, the "Warrant Shares"). The Shares of Series A Preferred Stock will be issued at closing of the 2025 Private Placement pursuant to the Certificate to be filed with the Secretary of State of the State of Delaware prior to closing of the 2025 Private Placement. Each Share of Series A Preferred Stock has a stated value of $50,000 (the "Stated Value") and will initially be convertible into 10,224 shares of Common Stock (the "Conversion Shares") (or pre-funded warrants in lieu thereof (the "Pre-Funded Warrants")), calculated by dividing the Stated Value by the initial conversion price equal to $4.89 per Share (the "Initial Conversion Price").

The Series A Preferred Stock is convertible at the option of the holder at any time and will be automatically converted into Common Stock or Pre-Funded Warrants in lieu thereof on the effective date of the Initial Registration Statement whether or not Stockholder Approval has been obtained. If at any time after the one-year anniversary of the closing of the 2025 Private Placement, the Series A Preferred Stock is then outstanding and the Company has not received Stockholder Approval, the Series A Preferred Stock is redeemable at the option of the holder at a price per Share equal to 105% of the Stated Value. The conversion of the Series A Preferred Stock is subject to a 9.9% beneficial ownership limitation blocker.

Pursuant to the Securities Purchase Agreement, the Company is required to seek stockholder approval (the "Stockholder Approval") related to certain provisions contained in the Certificate. In furtherance thereof, the Company is required to file a preliminary proxy statement for a special or annual meeting of the Company's stockholders within six months of the closing of the 2025 Private Placement and hold a meeting as soon as practicable thereafter to seek Stockholder Approval. The Company's directors and officers have agreed to execute voting agreements to vote in favor of the applicable proposals. If the Company does not obtain Stockholder Approval at the first such meeting, the Company is required to call a meeting every four (4) months thereafter to seek Stockholder Approval until the earlier of the date on which Stockholder Approval is obtained or the securities are no longer outstanding. The Company has also granted the Purchasers a right of participation in subsequent financings of the Company for a period of time following closing, subject to certain exempt issuances, and the Company has agreed not to issue securities for a period of time following the closing of the 2025 Private Placement, subject to certain exempt issuances, including issuances pursuant to strategic transactions.

Pursuant to the terms of the 2025 Private Placement, the Company was obligated to file a resale registration statement related to the securities purchased in the Private Placement and to ensure that such resale registration statement was declared effective within 75 days from the closing date of the 2025 Private Placement. If the registration statement is not declared effective by the Effectiveness Deadline, the Company will be required to pay to the Purchasers an amount in shares of common stock or cash, at the Company's discretion, as partial liquidated damages and not as a penalty, equal to the product of 1.5% multiplied by the aggregate purchase price paid by such Purchasers.

<u>Equity Line of Credit:</u> On September 19, 2025, Nukkleus Inc., a Delaware company (the "Company") and Esousa Group Holdings, LLC, a New York limited liability company (the "<u>Investor</u>"), entered into a common stock purchase agreement (the "<u>ELOC Purchase Agreement</u>"), which provides that subject to the terms and conditions set forth therein, the Company may sell to the Investor up to the lesser of (i) $250,000,000 of the Company's common shares, par value $0.0001 per share (the "<u>Common Shares</u>") and (ii) the Exchange Cap (as defined below) (subject to certain exceptions provided in the ELOC Purchase Agreement) (the "<u>Total Commitment</u>"), from time to time during the term of the ELOC Purchase Agreement. Upon entering into the ELOC Purchase Agreement, the Company agreed to issue to the Investor $1,250,000 worth of the Company's Common Stock (the "<u>Commitment Shares</u>"), determined by the lower of the (i) the VWAP on the effective date of the registration statement covering the Common Shares and the Commitment Shares and (ii) the closing sale price on the effective date of said registration statement; provided, however, that if the Company elects to terminate the ELOC Purchase Agreement, the Commitment Shares' calculation shall be based on the date of termination rather than the effective date of the registration statement.

Additionally, on September 19, 2025, the Company and the Investor entered into a registration rights agreement (the "<u>ELOC RRA</u>"), pursuant to which the Company agreed to file a registration statement with the United States Securities and Exchange Commission ("<u>SEC</u>") covering the resale of Common Shares that are issued to the Investor under the ELOC Purchase Agreement, including the Commitment Shares.

**NOTE 14– SUBSEQUENT EVENTS**

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

On October 9, 2025, the Company issued an aggregate of 377,432 restricted shares of common stock to an affiliated entity upon the full cashless exercise of the 150,000 June 2024 Warrant units and the 351,424 November 2024 Warrant units.

On October 9, 2025, the Company issued an aggregate of 1,702,070 restricted shares of common stock in connection with the full cashless exercise of the August 2025 Pre-funded Warrants.

On October 9, 2025, the Company issued 375,000 shares to Synthetic Darwin LLC upon the Company's exercise of the second tranche of 50 million Darwin tokens.

On October 17, 2025, the Company issued a press release regarding the proposed initial public offering of units of SC II Acquisition Corp. I ("SCII"), a newly formed special purpose acquisition company and indirect subsidiary of the Company.

On November 6, 2025, the Company held its 2025 annual meeting of stockholders. At the meeting, the Company's stockholders approved all proposals presented, including:

&nbsp;&nbsp;&nbsp;&nbsp;1. The re-election of five directors to serve until the next annual meeting or until their successors are
duly elected and qualified,

&nbsp;&nbsp;&nbsp;&nbsp;2. The ratification of the appointment of Somekh Chaikin, a member firm of KPMG International as the Company's
independent registered public accounting firm for the fiscal year ending December 31, 2025, and

&nbsp;&nbsp;&nbsp;&nbsp;3. The approval of the Company's 2025 Equity Incentive Plan

The results of the annual meeting were reported on Form 8-K filed with the SEC on November 10, 2025.

On November 13, 2025, the Company issued an aggregate of 3,095,000 shares of common stock pursuant to the 2025 Equity Incentive Plan. The issuance to employees and consultants of the Company was made pursuant to Rule 701 adopted pursuant to Section 3(b) of the Securities Act of 1933, as amended. Included in such issuance was 750,000 shares issued to Menachem Shalom, our CEO and director, 10,000 shares to Reuven Yeganeh, a director, and 5,000 shares to each of David Rokach, Aviya Volodarsky, and Tomer Nagar, directors of the Company.

**Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.**

This Quarterly Report on Form 10-Q includes forward-looking statements that reflect management's current views with respect to future events and financial performance. Forward-looking statements are statements in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other comparable terminology. These statements include statements regarding the intent, belief or current expectations of our management team, as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks set forth in the section entitled "Risk Factors" in our Annual Report on Form 10-K for the transition period from September 30, 2024 to December 31, 2024, as filed with the Securities and Exchange Commission (the "SEC") on May 8, 2025, any of which may cause our company's or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in our forward-looking statements. These risks and factors include, by way of example and without limitation:

● the availability and adequacy of capital to support and grow our business;

● economic, competitive, business and other conditions in our local and regional markets;

● actions taken or not taken by others, including competitors, as well as legislative, regulatory, judicial and other governmental authorities;

● competition in our industry;

● the availability of additional capital to support development;

● the retention and availability of key personnel;

● our ability to successfully implement our business plan; and

● other factors discussed elsewhere in this quarterly report.

We undertake no obligation to update or revise forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report, except as required by law.

As used in this Quarterly Report and unless otherwise indicated, the terms "Company," "we," "us," and "our," refer to Nukkleus Inc. and its consolidated subsidiaries.

 

*The following discussion and analysis summarizes the significant factors affecting our financial condition, operating results, liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes thereto included elsewhere in this report. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly in the sections titled "Risk Factors" and "Special Note Regarding Forward-Looking Statements."*

**Overview**

Currently, Nukkleus Inc., through its US-based subsidiary, is engaged in the distribution of drones' payloads in the defense and homeland security markets within the US. In addition, through its Israeli subsidiary, we are engaged in providing services to support civil and defense aviation needs, including maintenance and repair (MRO) services, aircraft modernization, resale, and leasing, which includes the deployment of the de-icing technology for commercial aircrafts.

Previously we were a financial technology company that was focused on providing software, technology solutions, customer sales and marketing, and risk management technology hardware and software solutions packages for the worldwide retail foreign exchange ("FX") trading industry and payment services from one fiat currency to another or to digital assets.

On September 15, 2025, Nukkleus Inc. (the "Company") entered into an Amended and Restated Securities Purchase Agreement and Call Option (the "Star Agreement") which amended and restated in its entirety the Securities Purchase Agreement and Call Option dated December 15, 2024 ("Purchase Agreement") between the Company, Star 26 Capital Inc., a Nevada corporation ("Star"), the shareholders of Star (the "Star Equity Holders") and Menachem Shalom, the representative of such shareholders, as amended by Amendment No. 1, dated as of February 11, 2025, Amendment No. 2 dated May 13, 2025, Amendment No. 3, dated as of June 15, 2025 and Amendment No. 4 dated June 21, 2025. Pursuant to the Star Agreement, the Company is to acquire a controlling 100% interest in Star, a defense acquisition company (the "Transaction"). Star currently holds (1) 100% of B. Rimon Agencies Ltd. ("Rimon"), an Israeli corporation engaged as distributor of military-grade generators, masts and lighting systems and that is, among other clients, a supplier of generators for "Iron Dome" launchers, (2) 67% of Water.IO Ltd., an Israeli corporation engaged in smart hydration technology, and (3) a convertible loan issued by I.T.S. Industrial Techno-logic Solutions Ltd., an Israeli corporation which designs, develops and manufactures fully integrated electro-mechanical machines, assembly lines and custom motion systems. Pursuant to the Star Agreement, at closing the Company will acquire 100% of the issued and outstanding capital of Star in consideration of (i) $21,000,000, to be paid by a 12-month $16,000,000 promissory note and the balance in $5,000,000 cash, less any amounts lent to Star from the Company since the Purchase Agreement signed among the parties, (ii) 4,770,340 shares of common stock of the Company, (iii) a five-year warrant to purchase an aggregate of 12,017,648 shares of the Company's common stock for an exercise price of $1.50 per share, (iv) $3,000,000 in cash and (v) a 6-month promissory note in the principal amount of $3,000,000, which shall accrue interest at the rate of 8%.The shares, warrants, cash and the 6-month note will be assigned by Star to the Star Equity Holders pro ratably.

If, for a period of 12 months after the closing, the Company's shares of common stock are delisted from Nasdaq, Star shall have the right, at its own discretion, to require the Company to exchange the Investment Note for all the shares of Star then held by the Company, provided, however, Star shall retain any cash payments made by the Company to Star and the Company shall retain an equity interest in Star equivalent to all cash payments.

Subject to the closing of the acquisition of Star, our business will be focused on the defense sector.

**Recent Developments**

 

*Darwin Labs Warrants*

On July 30, 2025 the Company entered into a warrant agreement with Synthetic Darwin LLC ("Darwin"), enabling the Company to acquire up to 200 million Darwin tokens, a new class of self-evolving AI network tokens developed by Darwin. Darwin is a self-training and evolving AI that can be used to test and simulate multiple scenarios in finance, healthcare and defense. This software aims to allow companies to run scenarios and find the best configuration for financial services, drugs, defense-related software and more. The Company has identified the potential in such AI software and decided to enter into this warrant agreement for Darwin tokens, which will allow the Company and the Company's future subsidiaries to use this platform. The Company currently owns 100 million Darwin tokens.

*Blade Ranger Distribution Agreement*

 

On August 20, 2025, the Company obtained exclusive distribution rights for BladeRanger Ltd.'s drone payload systems within the U.S. defense and homeland security markets. BladeRanger, founded in 1968 and reporting 237% revenue growth in 2024, develops advanced hardware and software drone payloads with patent-pending autonomous drone navigation technology. The agreement requires minimum purchase commitments of 5 payloads in Year 1, 10 in Year 2, and 15 in Year 3, with automatic five-year extension upon meeting commitments. As of the date of this report, the Company has not purchased any payloads.

*Mandragola Joint Venture*

 

On August 28, 2025, the Company, Nukk Picolo and Mandragola Ltd., an Israeli company ("Mandragola") entered into a Joint Venture Agreement (the "JV Agreement"). Pursuant to the terms of the JV Agreement, the parties will establish a joint venture company in Israel (the "JV Company") which is intended to establish advanced manufacturing zones in both the Baltics and Israel, designed to support civil and defense aviation needs. Plans also include the development of a NATO-compliant logistics hub in Riga in cooperation with additional regional partners, as well as facilities dedicated to licensed MRO services, aircraft modernization, resale, and leasing, including the deployment of the de-icing technology for commercial aircrafts which Nukkleus recently licensed (on an exclusive basis) from Blade Ranger Ltd. Pursuant to the JV Agreement, Nukk Picolo will hold 51% equity interest in the JV Company. The JV Agreement provides that, under certain specified conditions, Nukkleus can require Mandragola sell to Nukkleus its participating interest in the JV Company in consideration for the issuance of Nukkleus' common stock based on the then specified valuation of JV Company as set forth in the JV Agreement. Under the JV Agreement, Mandragola has undertaken to provide to the JV Company a 24 month committed credit line of up to $1.5 million on an as needed basis. Nukk Picolo has the right to designate three of the five member board of the JV Company with Mandragola designating the remaining two directors. Under the JV Agreement, Nukkleus will issue to Mandragola 310,000 restricted shares of Nukkleus common stock. In addition, Nukkleus will issue to Mandragola (i) five year warrants to purchase 250,000 shares of Nukkleus' common stock at a per share exercise price of $4.00 (the "Warrants") and (ii) five year warrants for an additional 350,000 shares at a per share exercise price of $6.50 (the "Performance Warrants"). The Performance Warrants only vest upon the JV Company achieving $25 million cumulative revenue. If the revenues targets are not achieved by the JV Company within the five-year period, the Performance Warrants expire.

*Tiltan Acquisition*

 

On September 1, 2025, the Company and Nukk Picolo Ltd., a wholly-owned Israeli subsidiary of the Company ("Nukk Picolo") entered into a Stock Purchase Agreement (the "Agreement") with Tiltan Software Engineering Ltd. ("Tiltan"), an Israeli corporation specializing in AI software solutions for the defense and aerospace industry, and Arie Shafir, the sole shareholder of Tiltan (the "Shareholder"). Tiltan is an Israeli company established in 2015 that specializes in AI solutions used for Geographic Information Systems (GIS), mapping, modeling, and simulation technologies for defense and commercial applications. Pursuant to the Agreement, Nukk Picolo will acquire 100% of the issued and outstanding share capital of Tiltan for a total purchase price of NIS 47,600,000 (approximately $14 million at current exchange rates) (the "Purchase Price"). The Purchase Price will be paid through a combination of cash and equity consideration as follows:

Cash Component: NIS 35,700,000 (approximately $10.5 million), representing 75% of the Purchase Price, will be paid in six equal installments of NIS 5,950,000 (approximately $1.75 million) each. The first installment is payable at closing, with subsequent payments due every 36 days thereafter over a 180-day period. In connection with the cash component, upon execution and delivery of the Agreement the Company issued a secured promissory note (the "Note") to the Shareholder in the principal amount of NIS 29,750,000 (approximately $8.75 million), representing five-sixths of the cash component. The Note is non-interest bearing unless an event of default occurs, in which case interest accrues at 10% per annum. The Note is payable in five equal installments of NIS 5,950,000 each, payable over the 180-day payment period. The Company may prepay the Note at any time without penalty. Additionally, NIS 666,667 from each of the first three cash payments (totaling NIS 2,000,000) will be retained by Tiltan as working capital rather than distributed to the Shareholder. The Note is secured by a first-priority lien on the Tiltan shares to be transferred to the Company.

Equity Component: At closing, the Company will deposit into escrow shares of Nukkleus common stock to secure the payment due on the 180th day after closing (the "Settlement Date"). On the Settlement Date, the Shareholder will receive from escrow the number of shares equal to 25% of the Purchase Price, with the number of shares to be based on the market price on the Settlement Date. If the value of the shares in escrow are more than 25% of the Purchase Price, the Shareholder shall receive only that number of shares to which he is entitled to and the excess shares shall be returned to the Company. If the value of the escrowed shares are less than 25% of the Purchase Price, or NIS 11,900,000 (approximately $3.5 million), the Company will issue additional shares to the Shareholder or pay the differential in cash.

The transaction is subject to customary closing conditions, including, the receipt of regulatory approvals, including the Israel Ministry of Defense and the delivery of PCAOB-compliant audited financial statements of Tiltan for fiscal years 2023 and 2024 and quarterly statements. The Company has provided information requested by the Israel Ministry of Defense and hopes to close the transaction before the end of 2025.

In connection with the transaction, the parties have agreed to establish an employee retention and incentive program consisting of (i) NIS 500,000 to be allocated by the Shareholder from the Purchase Price, (ii) NIS 1,000,000 in cash to be contributed by Nukkleus, and (iii) NIS 1,000,000 in Nukkleus stock options to be granted to Tiltan employees. Tiltan's CEO will determine individual allocations under this program.

**Components of Results of Operations**

<u>Operating expenses</u> consist of professional fees, compensation and related benefits, and other general and administrative expenses.

<u>Professional fees</u> consists of professional services, such as audit fees, legal service fees, advisory fees, and consulting fees.

<u>Compensation and related benefits</u> consists of personnel related expenses incurred in operating our business, including cash compensation and our benefit programs.

<u>Other general and administrative</u> consists of personnel-related expenses incurred to support our business, including executive, customer support, compliance, finance, human resources, legal, and other support operations, and include rent, filing fee, platform fee, travel and entertainment, miscellaneous taxes, and other miscellaneous items.

<u>Impairment loss</u> consists of impairment losses recognized on long-lived assets where there was a triggering event that indicated a long-lived assets carrying amount may not be recoverable. The impairment loss represents the amount the carrying value exceeds the fair value. Because these components fluctuate with market conditions, impairment loss can vary widely between periods.

<u>Other (expense) income, net</u> consists of interest expense, gain (loss) on extinguishment of liabilities, day one loss on issuance of liability-classified stock purchase warrants and embedded derivatives within convertible notes, change in fair value of liability-classified stock purchase warrants and derivative assets and liabilities, and gain on deconsolidation.

Because these components fluctuate with market conditions, other (expense) income, net can vary widely between periods.

**Results of Operations**

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ending<br> September 30,** | **Three Months Ending<br> September 30,** | **Changes in** | **Changes in** |
|  | **2025** | **2024** | **Amount** | **Percentage** |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Professional fees | $4359640 | $552845 | $3806795 | 688.6% |
| &nbsp;&nbsp;&nbsp;Compensation and benefits | 230988 | 53333 | 177655 | 333.1% |
| &nbsp;&nbsp;&nbsp;Other general and administrative | 180947 | 191291 | (10344) | (5.4)% |
| &nbsp;&nbsp;&nbsp;Impairment loss | - | 391217 | (391217) | (100.0)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 4771575 | 1188686 | 3582889 | 301.4% |
| Other (expense) income, net |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense | (36346) | (303626) | 267280 | (88.0)% |
| &nbsp;&nbsp;&nbsp;Interest expense – related parties | (13545) | (15521) | 1976 | (12.7)% |
| &nbsp;&nbsp;&nbsp;Loss on settlement of vendor obligations |  | (112436) | 112436 | (100.0)% |
| &nbsp;&nbsp;&nbsp;Gain on settlement of vendor obligations |  | 211200 | (211200) | (100.0)% |
| &nbsp;&nbsp;&nbsp;Gain on settlement of due to affiliates |  | 192069 | (192069) | (100.0)% |
| &nbsp;&nbsp;&nbsp;Loss on debt extinguishment | (7484152) |  | (7484152) | 100.0% |
| &nbsp;&nbsp;&nbsp;Change in fair value – stock purchase warrant liabilities | 13963884 |  | 13963884 | 100.0% |
| &nbsp;&nbsp;&nbsp;Change in fair value – digital assets | (967818) |  | (967818) | 100.0% |
| &nbsp;&nbsp;&nbsp;Gain on deconsolidation | 2491485 |  | 2491485 | 100.0% |
| &nbsp;&nbsp;&nbsp;Day one loss on private placement | (19605956) |  | (19605956) | 100.0% |
| &nbsp;&nbsp;&nbsp;Other income (expense) | 118795 | 14 | 118781 | 848436% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other (expense) income, net | (11533653) | (28300) | (11505353) | 40655.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) from continuing operations | (16305228) | $(1216986) | (15088242) | 1239.8% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) from discontinued operations | (60264) | 5672219 | (5732483) | (101.1)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) | $(16365492) | $4455233 | $(20820725) | (467.3)% |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ending<br> September 30,** | **Nine Months Ending<br> September 30,** | **Changes in** | **Changes in** |
|  | **2025** | **2024** | **Amount** | **Percentage** |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Professional fees | $6051719 | $3266539 | $2785180 | 85.3% |
| &nbsp;&nbsp;&nbsp;Compensation and benefits | 365988 | 108333 | 257655 | 237.8% |
| &nbsp;&nbsp;&nbsp;Other general and administrative | 909275 | 537146 | 372129 | 69.3% |
| &nbsp;&nbsp;&nbsp;Impairment loss | - | 391217 | (391217) | (100.0)% |
| &nbsp;&nbsp;&nbsp;Total operating expenses | 7326982 | 4303235 | 3023747 | 70.3% |
| Other (expense) income, net |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense | (407971) | (343333) | (64638) | 18.8% |
| &nbsp;&nbsp;&nbsp;Interest expense – related parties | (64306) | (38249) | (26057) | 68.1% |
| &nbsp;&nbsp;&nbsp;Loss on settlement of vendor obligations |  | (288835) | 288835 | (100.0)% |
| &nbsp;&nbsp;&nbsp;Gain on settlement of vendor obligations |  | 211200 | (211200) | (100.0)% |
| &nbsp;&nbsp;&nbsp;Gain on settlement of due to affiliates |  | 192069 | (192069) | (100.0)% |
| &nbsp;&nbsp;&nbsp;Loss on debt extinguishment | (7484152) |  | (7484152) | 100.0% |
| &nbsp;&nbsp;&nbsp;Penalty – late registration | (800000) |  | (800000) | 100.0% |
| &nbsp;&nbsp;&nbsp;Change in fair value – convertible note embedded derivative | 587790 |  | 587790 | 100.0% |
| &nbsp;&nbsp;&nbsp;Change in fair value – stock purchase warrant liabilities | 123369695 |  | 123369695 | 100.0% |
| &nbsp;&nbsp;&nbsp;Change in fair value – digital assets | (967818) |  | (967818) | 100.0% |
| &nbsp;&nbsp;&nbsp;Gain on deconsolidation | 2491485 |  | 2491485 | 100.0% |
| &nbsp;&nbsp;&nbsp;Day one loss on private placement | (19605956) |  | (19605956) | 100.0% |
| &nbsp;&nbsp;&nbsp;Other income (expense) | 280422 |  | 280422 | 100.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other (expense) income, net | 97399189 | (267148) | 97666337 | (36558.9)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) from continuing operations | 90072207 | $(4570383) | 94642590 | (2070.8)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) from discontinued operations | (460971) | 4979958 | (5440929) | (109.3)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income (loss) | $89611236 | $409575 | $89201661 | 21779.1% |

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***Comparison For the Three and Nine Months Ended September 30, 2025 Versus the Three and Nine Months Ended September 30, 2024***

 ****

<u>Revenue</u>

We had no revenue from continuing operations during the three and nine months ended September 30, 2025 and 2024, due to the discontinuation of subsidiary DRFQ's operations and the subsequent sale and deconsolidation of DRFQ in July 2025. We expect to report revenue upon the closing of the Star and Tiltan acquisitions, which we expect to be complete by and near the end of the fourth quarter of this year. At this time, the Company does not expect to generate revenue from other sources prior to the closing of these acquisitions.

 ****

<u>Operating Expenses</u>

*Professional fees*

For the three months ended September 30, 2025, professional fees increased by approximately $3,807,000, or 688.6%, as compared to the three months ended September 30, 2024. For the nine months ended September 30, 2025, professional fees increased by approximately $2,785,000, or 85.3%. This increase was primarily attributable to increases in consulting fees of approximately $3,758,000, and audit fees of approximately $196,000, offset by decreases in advisory fees of approximately $1,055,000 and legal fees of approximately $114,000. This net increase in professional fees is mainly attributable to the consulting fees expense recognized from the fair value of the shares of common stock and the August 2025 Warrant both issued to Mandragola in connection with the new joint venture agreement entered into in August 2025. We expect that our professional fees will decrease in the near future as this report is reflecting inflated costs due to the aforementioned issuance of shares and warrants. Also, subsequent to the closing of the Star acquisition, we expect professional fees to decrease as we anticipate the frequency of one-time costs of professional fees to decrease.

*Compensation and related benefits*

For the three months ended September 30, 2025, our compensation and related benefits increased by approximately $178,000, or 333.1%, as compared to the three months ended September 30, 2024. For the nine months ended September 30, 2025, our compensation and related benefits increased by approximately $258,000, or 237.8%, as compared to the nine months ended September 30, 2024. We expect that our compensation and related benefits will increase in the near future if the pending acquisition of Star completes during fiscal year 2025, as the Company expects to employ several individuals immediately following the closing of the acquisition. Our compensation and related benefits have been significantly lower than our professional fees due to the engagement of several professionals working for the Company on a consulting basis.

*Other general and administrative expenses*

For the three months ended September 30, 2025, total other general and administrative expenses decreased by approximately $10,000, or 5.4%, as compared to the three months ended September 30, 2024. For the nine months ended September 30, 2025, total other general and administrative expenses increased by approximately $372,000, or 69.3%, as compared to the nine months ended September 30, 2024. The increase was mainly attributable to additional costs associated with operating as a public company, including an increase in D&O insurance of approximately $138,000, marketing fees of approximately $113,000, rent expenses of approximately $101,000 attributable to new offices established in Israel and New York, entertainment and travel of approximately $121,000 attributable to the travel by our CEO and other business expenses of approximately $95,000, offset by a decrease in filing fees of approximately $198,000. We expect that other general and administrative expenses will continue to increase in the near future if the pending acquisition of Star completes during fiscal year 2025, as the Company expects to incur higher costs such as insurance, rent, advertising, and travel expenses.

<u>Other Income (Expense)</u>

For the three months ended September 30, 2025, other income (expense), net, decreased approximately $11,505,000, or 40,634.8%, as compared to the three months ended September 30, 2024. For the nine months ended September 30, 2025, other income (expense), net, increased approximately $97,666,000, or 36,558.9%, as compared to the nine months ended September 30, 2024. The increase was attributable to, an increase in gain from change in fair value – stock purchase warrant liabilities of approximately $123,370,000 (see Note 11), a gain on deconsolidation of approximately $2,491,000 (see Note 4), a gain from change in fair value – convertible note embedded derivative of approximately $588,000, realized and unrealized gains of approximately $280,000, and a decrease in loss on debt settlement of approximately $289,000, offset by a decrease in gains on settlement of vendor obligations and due to affiliates of approximately $403,000, and increases in day one loss on private placement of approximately $19,606,000 (see Note 13), loss on debt extinguishment of approximately $7,484,000, a loss from change in fair value – digital assets of approximately $968,000, penalties – late registration, payable to the investor in connection with the December 2024 Private Placement, of $800,000, interest expense due to amortization of debt discounts of approximately $65,000, and interest expense on debt of approximately $26,000. The significant changes in fair value recognized on the Company's stock purchase warrant liabilities are directly related to several warrants granted during fiscal year 2024. For the duration of the life of these warrants, the Company expects to continue to recognize significant gains or losses heavily driven by any changes in the Company's stock price at each quarterly and annual report date.

<u>Discontinued Operations</u>

Net loss from discontinued operations was estimated to be $60,264 for the three months ended September 30, 2025 compared to net income of $5,672,219 for the three months ended September 30, 2024. Net loss from discontinued operations was estimated to be $460,971 for the nine months ended September 30, 2025 compared to net income of $4,979,958 for the nine months ended September 30, 2024. These decreases were due to a decrease in net loss from the operations of the Company's wholly owned subsidiary DRFQ, which was the sole driver of the Company's former financial services segment. The Company deconsolidated DRFQ as of July 29, 2025, and reported a net gain on deconsolidation of $2,491,485 during the three months ended September 30, 2025 (see Note 4).

**Liquidity and Capital Resources**

We generated a pre-tax net income from continuing operations of $90,072,207 for the nine months ended September 30, 2025 and incurred a pre-tax net loss from continuing operations of $4,570,383 for the nine months ended September 30, 2024, and have an accumulated deficit of $111,464,507 as of September 30, 2025 and $201,075,743 at December 31, 2024. As of September 30, 2025, we had a working capital deficit of $30,512,429, including $7,611,465 of cash and cash equivalents. The pre-tax net income from continuing operations of approximately $90,000,000 for the nine months ended September 30, 2025 is primarily due to the applicable accounting treatment used to recognize gains from changes in fair value of liability-classified warrants which does not impact our cash position. During the nine months ended September 30, 2025 the most significant use of the Company's cash was for the purpose of advance cash payments to Star of $3,500,000 pursuant to the amended terms of the Star transaction. The Company intends to make an additional final advance payment of $500,000 subsequent to September 30, 2025.

We have not been able to generate sufficient cash from operating activities to fund our ongoing operations. However, we expect to generate revenue beginning immediately after the closing of the Star acquisition, which we expect to be completed near the end of the fourth quarter of 2025. Since our inception, we have raised capital through private sales of common stock and debt securities. Most recently, we raised $10,000,000 in gross proceeds from a private placement entered into on September 4, 2025. Our future success is dependent upon our ability to achieve profitable operations and generate cash from operating activities. There is no guarantee that we will be able to generate enough revenue and/or raise capital to support our operations.

To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and cash and other requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders. The incurrence of additional debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. Even if debt financing is available, the cost of additional financing may be significantly higher than our current debt.

The risks and uncertainties surrounding the Company's ability to continue to raise capital and its limited capital resources raise substantial doubt as to the Company's ability to continue as a going concern for twelve months from the issuance of these consolidated financial statements. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which contemplate our continuation as a going concern.

**Cash Flows**

The following summarizes the key components of our cash flows for the nine months ended September 30, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended<br> September 30,** | **Nine Months Ended<br> September 30,** |
|  | **2025** | **2024** |
| Net cash used in operating activities | $(5199446) | $(3212291) |
| Net cash used in investing activities | (3518690) |  |
| Net cash provided by (used in) financing activities | 8347000 | 2386947 |
| Effect of exchange rate on cash | 124960 | (2617) |
| &nbsp;&nbsp;&nbsp;Net change in cash | $(246176) | $(827961) |

---

*Operating activities*

 

Net cash flow used in operating activities for the nine months ended September 30, 2025 was approximately $5,199,000, which primarily reflected our consolidated net income of approximately $89,611,000, adjusted for changes in working capital accounts and certain non-cash income (expenses) of approximately $97,888,000 (including the change in fair value of our liability-classified stock purchase warrants and derivative liabilities of approximately $123,957,000, and gain on deconsolidation of approximately $2,491,000, offset by day one loss on private placement of approximately $19,606,000, loss on debt extinguishment of approximately $7,484,000, change in fair value of digital assets of approximately $968,000, amortization of debt discount of approximately $322,000, stock-based compensation of approximately $178,000, and depreciation expense of approximately $2,800).

Net cash flow used in operating activities for the nine months ended September 30, 2024 was $3,212,000, which primarily reflected our consolidated net income of approximately $407,000, adjusted for changes in working capital accounts and certain non-cash expense of approximately $748,000 (including loss on settlement of vendor obligations of approximately $289,000, stock-based compensation of approximately $155,000, and amortization of debt discount of approximately $316,000, offset by a gain on settlement of due to affiliates of approximately $192,000, and a gain on settlement of vendor obligations of approximately $211,000).

*Investing activities*

Net cash flow used in investing activities was approximately $3,519,000 for the nine months ended September 30, 2025, which consisted of additional advance payments to Star of $3,500,000 in connection with the planned acquisition of Star, and a purchase of computer equipment of approximately $19,000.

There were no cash flows provided by investing activities for the nine months ended September 30, 2024.

*Financing activities*

 

Net cash flow provided by in financing activities was approximately $8,347,000 for the nine months ended September 30, 2025, which consisted of net proceeds from issuance of private placement of approximately $9,225,000, offset by a repayment of note payable of $78,000 and payments of penalty – late registration of $800,000.

Net cash flow provided by financing activities was approximately $2,387,000 for the nine months ended September 30, 2024, which consisted of proceeds from loan payable – related parties of approximately $731,000, proceeds from issuance of convertible debt, net of issuance costs of approximately $996,000, proceeds from issuance of note payable of approximately $78,000, and cash provided by financing activities from discontinued operations of approximately $582,000.

In September 2025, we entered into a common stock purchase agreement with an investor in the form of an Equity Line of Credit ("ELOC"). Pursuant to the ELOC, we may sell to the investor up to $250 million of our common stock. The proceeds received in connection with the ELOC will be used to finance the Company's ongoing operations, working capital, and expected acquisitions.

**Off-Balance Sheet Arrangements**

We had no outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

**Critical Accounting Estimates**

Our consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, operating results, and cash flows will be affected.

See Note 3. Summary of Significant Accounting Policies of the Notes to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a summary of significant accounting policies and significant estimates and assumptions and their effects on our financial statements. Below are the significant estimates and assumptions that we consider critical because they involve a significant amount of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.

*Discontinued Operations*

 

As discussed in Note 4 to the unaudited financial statements in this Quarterly Report on Form 10-Q, the Company was unable to obtain complete financial information from a subsidiary for the period beginning April 1, 2025 and ending July 29, 2025. Consequently, management relied on historical trends and partial records to estimate the operating results of the discontinued operations for this period.

The inability to verify actual results introduces a level of uncertainty into the reported net loss from discontinued operations. Management continues to monitor the situation and may adjust its estimates in future filings should additional information become available.

 

*Stock-based Compensation*

We account for share-based payments that involve the issuance of shares of our common stock to employees and nonemployees and meet the criteria for share-based awards as stock-based compensation expense based on the grant-date fair value of the award. The Company has elected to recognize the adjustment to stock-based compensation expense in the period in which forfeitures occur. We recognize compensation expense for awards with only service conditions on a straight-line basis over the requisite service period for the entire award.

If factors change, and we utilize different assumptions including the probability of achieving performance conditions, share-based compensation cost on future award grants may differ significantly from share-based compensation cost recognized on past award grants. If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate any remaining unearned share-based compensation cost or incur incremental cost. Share-based compensation cost affects our compensation and benefits expenses.

*Warrants*

 

<u>Classification:</u> The Company determines the accounting classification of warrants it issues as either liability or equity classified by first assessing whether the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity ("ASC 480"), then in accordance with ASC 815-40 ("ASC 815"), Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock. Under ASC 480, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate the Company to settle the warrants or the underlying shares by paying cash or other assets, or warrants that must or may require settlement by issuing variable number of shares. If warrants do not meet liability classification under ASC 480, the Company assesses the requirements under ASC 815, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the warrants do not require liability classification under ASC 815, and in order to conclude equity classification, the Company also assesses whether the warrants are indexed to its Common Stock and whether the warrants are classified as equity under ASC 815 or other applicable GAAP. After all relevant assessments, the Company concludes whether the warrants are classified as liability or equity. Liability classified warrants require fair value accounting at issuance and subsequent to initial issuance with all changes in fair value after the issuance date recorded in the statements of operations. Equity classified warrants only require fair value accounting at issuance with no changes recognized subsequent to the issuance date.

We assess the classification of our stock purchase warrants at each reporting date to determine whether a change in classification between equity and liability is required. For modified stock purchase warrants that result in a change of classification from equity to liability, a liability is recognized equal to the fair value on the date of modification, additional paid-in capital is adjusted by the fair value of the warrant on the date of issuance, and the difference is recognized as a non-cash gain or loss on the consolidated statements of operations and comprehensive loss.

<u>Valuation:</u> The fair value of our equity-classified stock purchase warrants and liability-classified stock purchase warrants are determined utilizing Level 3 inputs using a Black-Scholes-Merton option valuation model and a Monte Carlo simulation model, respectively.

In both models, the fair value of an award is affected by our stock price on the date of measurement as well as other assumptions, including the estimated volatility of our stock price over the term of the stock purchase warrant as of the measurement date and the estimated period of time that we expect third parties to hold the stock purchase warrants at the measurement date. The risk-free interest rate assumption we use is based upon United States Treasury interest rates appropriate for the expected life of the stock purchase warrant.

As our stock has limited trading history on NASDAQ, we use the historical volatility of our peer companies in order to estimate future stock price trends. We expect third parties to hold their stock purchase warrants for the contractual term as we do not have any history to support a shorter term and do not anticipate stock purchase warrants to be exercised prior to the end of the term. Our expected dividend rate is zero since we do not currently pay cash dividends on our common stock and do not anticipate doing so in the foreseeable future.

We use the Monte Carlo simulation model for our liability-classified stock purchase warrants in order to incorporate other subjective assumptions based on the terms of the specific stock purchase warrant agreements or the related host contract. For our liability-classified stock purchase warrants as of September 30, 2025, we included the probability of a fundamental event, as defined in the relevant agreements, occurring in our assumptions.

The aforementioned inputs entered into the models we use to fair value our stock purchase warrants are subjective estimates and changes to these estimates will cause the fair value of our stock purchase warrants and related debt issuance discount we recognize to vary.

*Derivative Financial Instruments*

<u>Classification:</u> We evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815. Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations and comprehensive loss included in this Report under "Item 8. Financial Statements". 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. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. Bifurcated embedded derivatives are classified with the related host contract on the Company's balance sheet.

<u>Valuation:</u> We use the Monte Carlo simulation model for our bifurcated embedded derivatives in order to incorporate subjective assumptions based on the terms of the specific host contracts. For our bifurcated embedded derivatives issued in connection with our December 2024 convertible note payable, we included the probability of a fundamental event, as defined in the relevant agreements, occurring in our assumptions in addition to the estimated volatility of our stock price over the term of the bifurcated embedded derivative as of the measurement date, the remaining term of the host contract at the measurement date, the risk-free interest rate based upon United States Treasury interest rates appropriate for the expected term, the conversion discount, and the redemption premium.

*Legal and other contingencies* 

We are subject to various legal proceedings and claims that arise in the ordinary course of business, the outcomes of which are inherently uncertain, and such uncertainty may be enhanced due to the industry in which we operate. We record a liability when it is probable that a loss has been incurred and the amount is reasonably estimable, the determination of which requires significant judgment. In addition, we record recoveries of these losses when it is probable that they will be collected. These estimates are highly sensitive to change and involve variables that are not completely within our control nor practicable to model, including decisions made by regulators and settlement negotiations. Resolution of legal and other contingencies in a manner inconsistent with management's expectations could have a material impact on our financial condition and results of operations.

 ****

**Recently Issued Accounting Pronouncements**

For information about recently issued accounting standards, refer to Note 3 to our Consolidated Financial Statements appearing elsewhere in this report.

**Foreign Currency Risk**

*Foreign currency transaction risk*

 

Revenues, expenses, and financial results of our foreign subsidiaries are recorded in the functional currency of these subsidiaries. Our foreign currency exposure is primarily related to transactions denominated in British Pounds attributable to cash, customer custodial funds and customer custodial cash liabilities and intercompany transactions where the transaction currency is different from a subsidiary's functional currency. Changes in foreign exchange rates, and in particular a weakening of foreign currencies relative to the U.S. dollar may negatively affect our results of operations as expressed in U.S. dollars. We have experienced and will continue to experience fluctuations in our results of operations as a result of gains or losses on the settlement and the remeasurement of monetary assets and liabilities denominated in foreign currencies that are not the functional currency of the respective entity.

If an adverse 10% foreign currency exchange rate change was applied to the largest foreign currency exposure (e.g. British Pound) or to all foreign currency exposures in aggregate, of monetary assets, liabilities, and commitments denominated in currencies other than its functional currency as of September 30, 2025 and December 31, 2024, it would not have a material impact on our financial results.

From time to time, we may enter into derivatives or other financial instruments in an attempt to hedge our exposure to foreign currency exchange risk. It is difficult to predict the impact hedging activities would have on our results of operations. Additionally, the volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. Our international operations increase our exposure to exchange rate fluctuations and, as a result, such fluctuations could have a material impact on our future results of operations and cash flows.

Fluctuations in functional currencies from our net investment in international subsidiaries expose us to foreign currency translation risk, where changes in foreign currency exchange rates may adversely affect our results of operations upon translation into U.S. dollars. See the consolidated statements of comprehensive income (loss) in Part I, Item 1 of this Quarterly Report on Form 10-Q for translation adjustments for the three and nine months ended September 30, 2025 and 2024, a 10% increase or decrease in foreign currency exchange rates used in translating the financial statements of subsidiaries with functional currencies other than our reporting currency would not have a material impact on our financial results.

**Item 3. Quantitative and Qualitative Disclosures about Market Risk**

We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

**Item 4. Controls and Procedures**

**Evaluation of Disclosure Controls**

Our management conducted an evaluation, with the participation of its Chief Executive Officer, who is also its Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a—15(e) and 15d—15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the Chief Executive Officer concluded that our disclosure controls and procedures were not effective in reporting, on a timely basis, information required to be disclosed by us in the reports we file or submit under the Exchange Act, because of material weaknesses in internal control over financial reporting as of September 30, 2025, as described below.

*Plan of Remediation of Material Weaknesses in Internal Control Over Financial Reporting* 

Following the identification and communication of the material weakness described above, management commenced remediation actions relating to this material weakness beginning in the fourth quarter of fiscal year 2024, as follows:

● We are utilizing the services of external consultants for non-routine and/or technical accounting issues as they arise.

● We are expanding and improving our review process for complex accounting transactions. We plan to further improve this process by enhancing access to accounting literature, identification of third-party professionals with whom to consult regarding complex accounting applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.

● We are implementing enhancements and process improvements, including the design and implementation of well-defined controls and related control attributes.

The material weaknesses identified above will not be considered fully remediated until these additional controls and procedures have operated effectively for a sufficient period of time and management has concluded, through testing, that these controls are effective. Our management will monitor the effectiveness of our remediation plans and will make changes management determines to be appropriate. If not remediated, these material weaknesses could result in material misstatements to our annual or interim consolidated financial statements that may not be prevented or detected on a timely basis or result in a delayed filing of required periodic reports. If we are unable to assert that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected, and we could become subject to litigation or investigations by Nasdaq, the SEC, or other regulatory authorities, which could require additional financial and management resources.

Notwithstanding the above, management believes that the consolidated financial statements included in this Quarterly Report on Form 10-Q, fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in accordance with generally accepted accounting principles.

**Limitations on the Effectiveness of Controls**

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resources constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can only be reasonable assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

**Changes in Internal Control over Financial Reporting.**

There were no changes in our internal control over financial reporting, known to the Chief Executive Officer that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

**Part II - Other Information**

**Item 1. Legal Proceedings**

From time to time, we are subject to ordinary routine litigation incidental to our normal business operations. We are not currently a party to any material legal proceedings.

**Item 1A. Risk Factors**

Risk factors that affect our business and financial results are discussed in Part I, Item 1A "Risk Factors," in our Annual Report on Form 10-KT for the period ended December 31, 2024 as filed with the SEC on May 8, 2025, as amended July 9, 2025 ("Annual Report"). There have been no material changes in our risk factors from those previously disclosed in our Annual Report. You should carefully consider the risks described in our Annual Report which could materially affect our business, financial condition or future results. The risks described in our Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.**

Except as set forth below, there were no sales of equity securities sold during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Current Report on Form 8-K filed by the Company.

During the three months ended September 30, 2025, the remaining 1,353,333 Pre-funded Warrant units and the 2,499,999 Private Placement Warrant units were exercised on a cashless basis, resulting in the issuance of an aggregate 4,899,166 shares of common stock.

In August 2025, the Company issued 123,860 and 243,155 shares of common stock in connection with the cashless exercise of the August 2024 Warrant and the conversion of the August 2024 Note, respectively.

In September 2025, the Company issued 310,000 shares of common stock to Mandragola Ltd. in connection with a new joint venture agreement.

The above issuance[s] did not involve any underwriters, underwriting discounts or commissions, or any public offering and we believe are exempt from the registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(a)(2) thereof.

 

**Item 3. Defaults Upon Senior Securities**

None.

**Item 4. Mine Safety Disclosures**

Not Applicable.

**Item 5. Other Information**

During the quarter ended September 30, 2025, no director or officer adopted or terminated (i) any contract, instruction or written plan for the purchase or sale of securities of the Company intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or (ii) any "non-Rule 10b5-1 trading arrangement" as defined in paragraph (c) of item 408 of Regulation S-K.

On November 13, 2025, the Company issued an aggregate of 3,095,000 shares of common stock pursuant to the 2025 Equity Incentive Plan. The issuance to employees and consultants of the Company was made pursuant to Rule 701 adopted pursuant to Section 3(b) of the Securities Act of 1933, as amended. Included in such issuance was 750,000 shares issued to Menachem Shalom, our CEO and director, 10,000 shares to Reuven Yeganeh, a director, and 5,000 shares to each of David Rokach, Aviya Volodarsky, and Tomer Nagar, directors of the Company.

**Item 6. Exhibits**

The following exhibits are incorporated into this Form 10-Q Quarterly Report:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| <br>**Exhibit** | <br>**Description** | **Schedule/<br> Form** | **Exhibits** | **Filing Date** |
| 31.1 | [Rule 13a-14(a) Certification of the Chief Executive Officer and Principal Financial Officer](ea026355501ex31-1_nukkleus.htm) |  |  |  |
| 32.1 | [Section 1350 Certification of Chief Executive Officer and Principal Financial Officer](ea026355501ex32-1_nukkleus.htm) |  |  |  |
| 101.INS | Inline XBRL Instance Document. |  |  |  |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. |  |  |  |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |  |  |  |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. |  |  |  |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |  |  |  |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |  |  |  |
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |  |  |  |

---

\* Indicates management contract or compensatory plan or arrangement.

# Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601. The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | **NUKKLEUS INC.** | **NUKKLEUS INC.** |
|  | By: | /s/ Menachem Shalom |
| Dated: November 14, 2025 |  | Menachem Shalom |
|  |  | Chief Executive Officer<br> (Principal Executive Officer), and<br> Principal Financial and<br> Accounting Officer and Director |

---

## Exhibit 31.1

**Exhibit 31.1**

**RULE 13A-14(A) CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER**

I, Menachem Shalom, Chief Executive Officer and Principal Financial Officer of Nukkleus Inc., certify that:

1. I
 have reviewed this Form 10-Q Quarterly Report of Nukkleus Inc.;

2. Based
 on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
 to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
 the period covered by this report;

3. Based
 on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
 respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
 this report;

4. As
 sole executive officer of the Registrant, I am responsible for establishing and maintaining disclosure controls and procedures (as
 defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
 Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;**(a)** Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;**(b)** Designed
 such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my
 supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
 for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;**(c)** Evaluated
 the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about
 the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
 and

&nbsp;&nbsp;&nbsp;&nbsp;**(d)** Disclosed
 in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's
 most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected,
 or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. As
 sole executive officer of the Registrant, I have disclosed, based on my most recent evaluation of internal control over financial
 reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing
 the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;**(a)** All
 significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
 reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information;
 and

&nbsp;&nbsp;&nbsp;&nbsp;**(b)** Any
 fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
 internal control over financial reporting.

---

| | |
|:---|:---|
| Date: November 14, 2025 | /s/ Menachem Shalom |
|  | Menachem Shalom |
|  | Chief Executive Officer |
|  | (Principal Executive, Financial and Accounting Officer) |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

The undersigned, the Chief Executive Officer and Principal Financial Officer of Nukkleus Inc (the "Company"), certifies that, to his knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;1. The
report of the Company for the period ended September 30, 2025 as filed with the Securities and Exchange Commission on this date (the
"Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;2. The
information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the
Company.

---

| | |
|:---|:---|
| Date: November 14, 2025 | /s/ Menachem Shalom |
|  | Menachem Shalom |
|  | Chief Executive Officer |
|  | (Principal Executive, Financial and Accounting Officer |

---