Filed 2026-03-09 · Period ending 2025-12-31 · 86,765 words · SEC EDGAR
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# Vicarious Surgical Inc. (RBOT) — 10-K
**Filed:** 2026-03-09
**Period ending:** 2025-12-31
**Accession:** 0001213900-26-025189
**Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/1812173/000121390026025189/)
**Origin leaf:** 83a24df19b7fd4f58d826a9e198f12380a6d928469c2c62a5dc3c5352494e274
**Words:** 86,765
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**
UNITED STATES**
**SECURITIES AND EXCHANGE COMMISSION**
**Washington, D.C. 20549**
****
**FORM 10-K**
** ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
**For the fiscal year ended December 31, 2025**
****
**OR**
** TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
**For the transition period from
to **
**Commission File Number: 001-39384**
****
**VICARIOUS SURGICAL INC.**
(Exact name of registrant as specified in its charter)
****
| Delaware | | 87-2678169 | |
| (State or other jurisdiction of
incorporation or organization) | | (I.R.S. Employer
Identification No.) | |
| | | | |
| 78 Fourth Avenue | | | |
| Waltham, Massachusetts | | 02451 | |
| (Address of principal executive offices) | | (Zip Code) | |
**617-868-1700**
(Registrants telephone number, including
area code)
Securities registered pursuant to Section 12(b)
of the Act:
| Title of Each Class | | Trading Symbol | | Name of Each Exchange on Which Registered | |
| Class A common stock, $0.0001 par value per share | | RBOT | | The New York Stock Exchange* | |
*On March 3, 2026, the New York Stock Exchange determined to commence
proceedings to delist and immediately suspend trading in the Class A common stock, par value $0.0001 per share, of Vicarious Surgical
Inc. The registrants Class A common stock is currently quoted on the OTCID market tier operated by The OTC Markets Group, Inc.
under the symbol RBOT.
Securities registered pursuant to Section 12(g)
of the Act: None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Indicate by check mark whether the registrant
(1)has filed all reports required to be filed by Section13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12months (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 90days. Yes No
Indicate by check mark whether the registrant
(1) has submitted electronically every Interactive Data File required to be submitted pursuant to Rule405 of RegulationS-T
(232.405 of this chapter) during the preceding 12months (or for such shorter period that the registrant was required to submit
such files) and (2) has been subject to such filing requirements for the past 90 days. 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 Rule12b-2 of the Exchange Act.
| Largeacceleratedfiler | | Accelerated filer | | |
| Non-accelerated filer | | Smallerreportingcompany | | |
| | 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
has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants
executive officers during the relevant recovery period pursuant to 240.10D-1(b).
Indicate by check mark whether the registrant
is a shell company (as defined in Rule12b-2 of the Act). Yes No
The aggregate market value of the registrants
voting and non-voting equity held by non-affiliates of the registrant (without admitting that any person whose securities are not included
in such calculation is an affiliate) computed by reference to the price at which the Class A common stock was last sold as of June 30,
2025, the last business day of the registrants most recently completed second fiscal quarter, was approximately $38.8 million.
As of February 25, 2026, the registrant had 6,468,185
shares of Class A common stock outstanding and 653,990 shares of Class B common stock outstanding.
****
**TABLE OF CONTENTS**
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS |
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PART I |
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ITEM 1. BUSINESS. |
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ITEM 1A. RISK FACTORS. |
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ITEM 1B. UNRESOLVED STAFF COMMENTS. |
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ITEM 1C. CYBERSECURITY. |
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ITEM 2. PROPERTIES. |
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ITEM 3. LEGAL PROCEEDINGS. |
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ITEM 4. MINE SAFETY DISCLOSURES. |
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PART II |
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ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
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ITEM 6. [RESERVED] |
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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. |
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
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ITEM 9A. CONTROLS AND PROCEDURES. |
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ITEM 9B. OTHER INFORMATION. |
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ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. |
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PART III |
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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. |
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ITEM 11. EXECUTIVE COMPENSATION. |
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
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PART IV |
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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. |
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ITEM 16. FORM 10-K SUMMARY. |
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SIGNATURES |
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i
**EXPLANATORY NOTE**
In this Annual Report on Form 10-K, the terms we, us,
our, the Company and Vicarious Surgical mean Vicarious Surgical Inc. (formerly D8 Holdings Corp.
(D8)) and our subsidiaries. We were incorporated in the Cayman Islands on May 6, 2020. The Companys legal name became
Vicarious Surgical Inc. following a business combination between the Company and Vicarious Surgical Inc. (Legacy Vicarious)
on September 17, 2021 (the Business Combination).
On June 12, 2024, we effected a 1-for-30 reverse stock split (Reverse
Split) of our issued and outstanding shares of Class A and Class B common stock. The Reverse Split did not change the number of
authorized shares of Class A and Class B common stock. No fractional shares were issued in connection with the Reverse Split. Each stockholder
who would have otherwise been entitled to receive a fraction of a share of our common stock was entitled to receive cash. All references
in this Annual Report on Form 10-K to shares, share prices, exercise prices, and other per share information in all periods have been
adjusted, on a retroactive basis, to reflect the Reverse Split (see Note 11, Stockholders Equity and Stock-Based Compensation
Reverse Stock Split in our financial statements contained in this Annual Report on Form 10-K).
**CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS**
This Annual Report on Form 10-K includes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the
Securities Exchange Act of 1934, as amended (the Exchange Act), that relate to future events, our future operations or financial
performance, or our plans, strategies and prospects. These statements are based on the beliefs and assumptions of our management team.
Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable,
we cannot assure that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject
to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible
or assumed future actions, business strategies, events or performance, are forward-looking statements. These statements may be preceded
by, followed by or include the words believes, estimates, expects, projects, forecasts,
may, will, should, seeks, plans, scheduled, anticipates
or intends or the negative of these terms, or other comparable terminology intended to identify statements about the future,
although not all forward-looking statements contain these identifying words. The forward-looking statements are based on projections prepared
by, and are the responsibility of, our management team. Forward-looking statements contained in this Annual Report on Form 10-K include,
but are not limited to, statements about:
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| our ability to maintain the quotation of our Class A common stock on
the OTCID market tier (OTCID) operated by The OTC Markets Group, Inc. (OTC Markets); |
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| plans
and expectations that depend on our ability to continue as a going concern; |
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success, cost and timing of our product and service development activities; |
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approval, commercialization and adoption of our initial product candidates and the success of our single-port surgical robot, called
the Vicarious Surgical System, and any of our future product candidates and service offerings; |
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potential attributes and benefits of the Vicarious Surgical System and any of our other product and service offerings once commercialized; |
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ability to obtain and maintain regulatory authorization for the Vicarious Surgical System and our product and service offerings on the
timeline we expect, and without unexpected restrictions and limitations of any authorized product or service offering; |
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in U.S. and foreign laws; |
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ii
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our ability to identify, in-license or acquire additional technology; | |
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our ability to maintain our existing license agreements and manufacturing arrangements and scale manufacturing of the Vicarious Surgical System and any future product candidates to commercial quantities; | |
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our ability to compete with other companies currently marketing or engaged in the development of products and services for use in ventral hernia repair procedures and additional surgical applications, as well as with the use of open surgeries; | |
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the size and growth potential of the markets for the Vicarious Surgical System and any of our future product and service offerings, and the ability of each to serve those markets once commercialized, either alone or in partnership with others; | |
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our estimates regarding expenses, future revenue, capital requirements, cash runway and needs for additional financing; | |
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our ability to raise financing in the future; | |
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our financial performance; | |
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the ongoing effect of the reverse stock split of our Class A common stock on the price or trading of our Class A common stock, including potential continued adverse impacts on the liquidity of our Class A common stock; | |
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our intellectual property rights and our ability to protect or enforce these rights, and the impact on our business, results and financial condition if we are unsuccessful in doing so; | |
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our ability to address economic downturns and political and market conditions beyond our control and their potential to adversely affect our business, financial condition and results of operations, including, but not limited to, increasing our expenses and cost of capital and adversely impacting our supply chain; and | |
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other factors detailed under the section titled Risk Factors. | |
These forward-looking statements are based on information available
as of the date of this report, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties.
Important factors could cause actual results, performance or achievements to differ materially from those indicated or implied by forward-looking
statements such as those described under the caption Risk Factors in Item 1A of Part I of this Annual Report on Form 10-K,
elsewhere herein and in other filings that we make from time to time with the Securities and Exchange Commission. The risks described
under the heading Risk Factors are not exhaustive. New risk factors emerge from time to time, and it is not possible to
predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor
or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking
statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the date hereof.
All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing
cautionary statements. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by law.
iii
**SUMMARY OF RISK FACTORS**
We are providing the following summary of the risk factors contained
in this Annual Report on Form 10-K to enhance the readability and accessibility of our risk factor disclosures. The risk factors described
below are a summary of the principal risk factors associated with an investment in us. These are not the only risks we face. You should
carefully review the full risk factors contained in this Annual Report on Form 10-K in their entirety for additional information regarding
the material factors that make an investment in our securities speculative or risky. These risks and uncertainties include, but are not
limited to, the following:
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we are unable to raise additional funds in the near term, we will be unable to continue to operate our business and remain a going concern. |
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Our suspension from the New York Stock Exchange in connection with its decision to commence delisting proceedings and transition to OTCID market tier may adversely affect the liquidity and market price of our Class A common stock. | |
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We have a limited operating history on which to assess the prospects for our business, we have not generated any revenue from sales of our product candidates, and we have incurred losses since inception. We anticipate that we will continue to incur significant losses for at least the next severalyears as we develop and commercialize our product candidates and applications. | |
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We will need to raise additional funding to develop and commercialize the Vicarious Surgical System and to expand our research and development efforts. This additional financing may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product commercialization or development efforts or cease our operations. | |
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We are a development stage company with a limited history of operations and no product candidates with marketing authorization in any jurisdiction, and we cannot assure you that we will ever have a commercialized product. | |
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Our success depends upon market acceptance of our product candidates, our ability to develop and commercialize our product candidates and additional applications and generate revenues, and our ability to identify new markets for our technology. | |
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We are highly dependent upon the continued contributions of our key personnel. The loss of their services could harm our business, and if we are unable to attract, recruit, train, retain, motivate and integrate key personnel, we may not achieve our goals. | |
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We have no experience in marketing and selling our product candidates and if we are unable to successfully commercialize our product candidates, our business and operating results will be adversely affected. | |
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We expect to generate an increasing portion of our revenue internationally in the future and may become subject to various additional risks relating to our international activities, which could adversely affect our business, operating results and financial condition. | |
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We rely on limited or sole suppliers for some of the materials and components used in our product candidates, and we may not be able to find replacements or immediately transition to alternative suppliers, which could have a material adverse effect on our business, financial condition, results of operations, and reputation. | |
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If we do not successfully develop, optimize, and operate our sales and distribution channels or we do not effectively expand and update infrastructure, our operating results and customer experience may be negatively impacted. | |
iv
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If we are unable to establish and maintain adequate sales and marketing capabilities or enter into and maintain arrangements with third parties to sell and market our product candidates, our business may be harmed. | |
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We have identified a material weakness in our internal control over financial reporting. If we are unable to successfully remediate this material weakness in our internal control over financial reporting, we may not be able to report our financial condition or results of operations accurately or in a timely manner, which may adversely affect investor confidence in us and, as a result, materially and adversely affect our business and the value of our Class A common stock. | |
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We are subject to extensive government regulation, which could restrict the development, marketing, sale and distribution of our product candidates and technologies and could cause us to incur significant costs. | |
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There is no guarantee that the U.S. Food and Drug Administration (the FDA) will grant marketing authorization for our product candidates or any of our future product candidates and technologies, and failure to obtain necessary marketing authorization for our current product candidates and our future product candidates and technologies would adversely affect our ability to grow our business. | |
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If we are unable to protect our intellectual property, our ability to maintain any technological or competitive advantage over our competitors and potential competitors would be adversely impacted, and our business may be harmed. | |
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We may need or may choose to obtain licenses from third parties to advance our research or allow commercialization of our current or future product candidates and technologies, and we cannot provide any assurances that we would be able to obtain such licenses. | |
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We and our partners may be sued for infringing the intellectual property rights of third parties. If that happens, such litigation would be costly and time consuming, and an unfavorable outcome in any such litigation could have a material adverse effect on our business. | |
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We face the risk of product liability claims and may be subject to damages, fines, penalties and injunctions, among other things. | |
v
**PART
I**
****
**ITEM 1. BUSINESS.**
**
*The following discussion reflects the business
of Vicarious Surgical, as currently embodied by Vicarious Surgical. Unless the context otherwise requires, all references in this section
to the Company, we, us and our generally refer to Vicarious Surgical in the present
tense or Vicarious Surgical from and after the Business Combination.*
****
**Overview**
We are combining advanced miniaturized robotics,
computer science, sensing and 3D visualization to build a new category of intelligent and affordable single-port surgical robots that
virtually transport surgeons inside the patient to perform minimally invasive surgery. With our next-generation robotics technology, which
is being designed with proprietary human-like motion, we are seeking to improve surgical precision, ergonomics, and procedural efficiency,
with the goal of improving patient outcomes and the cost and efficacy of surgical procedures over time. Led by a visionary team of engineers
from MIT, we intend to deliver the next generation in robotic surgery, designed to solve the shortcomings of both open surgery, as well
as current manual and robot-assisted minimally invasive surgery.
Our single-port surgical robot, called the
Vicarious Surgical System, is designed to address certain deficiencies that have limited broad adoption of robot-assisted minimally invasive
surgery to date. By fundamentally engineering a better solution, we believe we have designed a surgical robot with capabilities intended
to address limitations of systems currently available on the market, and if authorized by the FDA, the Vicarious Surgical System will
offer surgeons the ability to perform surgical procedures with greater dexterity and greater access across the abdomen, with better visibility
and sensor-based feedback, through a small single incision in the abdomen. The Vicarious Surgical System features proprietary de-coupled
actuators, which are intended to enable a cascade of benefits, including improved robotic mobility, reduced size, improved functionality
and lower materials costs. If authorized by the FDA, the Vicarious Surgical System is designed to enable surgeons to perform procedures
inside the abdomen with human-equivalent motion, with a full nine degrees of freedom per robotic arm, providing an experience that is
more natural, and more akin to the surgeons own upper body movements. In surgical procedures conducted on cadavers, the Vicarious
Surgical System has demonstrated expanded reach within the abdomen, and if authorized by the FDA, it will enable the surgeon to enter
the abdomen from a wide range of angles and directions, without having to triangulate to the surgical area from multiple incisions or
to operate only within the limited area directly in front of a single incision. The Vicarious Surgical System is designed to provide exceptional
visualization, with a high-performance, stereoscopic camera that rotates in three degrees of freedom (yaw, pitch, and roll) to provide
the surgeon with stereoscopic imaging of a broad range of surfaces in the abdomen. The Vicarious Surgical System also contains 28 sensors
per instrument arm, which allows the system to provide real-time feedback to the surgeon on force, motion and other data that are intended
to enhance surgical procedures and patient outcomes.
The Vicarious Surgical System is being
developed to provide attractive advantages to hospitals and ambulatory surgical centers, or ASCs, which we believe will drive rapid
and widespread adoption. Unlike many legacy surgical robotic systems with larger physical footprints that may require dedicated
operating room configurations, the Vicarious Surgical System is designed to be smaller and mobile, supporting flexibility of use
across multiple operating rooms within a medical facility. We anticipate that, if authorized by the FDA, the smaller size and
advanced engineering of the Vicarious Surgical System and related disposable instruments is expected to be offered at a
cost-effective price point compared to existing legacy robotic systems. Hospitals and ASCs would not be required to dedicate
permanent space and would reduce expenses relating to sterilization and operating room turnover. We believe that, if authorized by
the FDA, adoption of the Vicarious Surgical System could be facilitated by a streamlined training regimen, where surgeons may be
able to develop proficiency much more quickly than for legacy robotic systems. This is due to the design features of the Vicarious
Surgical System, such as the ease of use and more natural, human-equivalent motion of the Vicarious Surgical System, the reduced
surgeon burden during setup, and the fact that the Vicarious Surgical System would not be confined to a dedicated operating suite
and therefore could have more availability for training purposes. In addition, with its increased capability and dexterity, the
Vicarious Surgical System is designed to enable many procedures to be performed more efficiently and effectively, with the potential
to reduce procedural burden and overall healthcare costs. Because the Vicarious Surgical System has not yet been authorized by the
FDA or commercialized, the intended advantages of the Vicarious Surgical System have not yet been realized and are dependent upon
the successful development of the Vicarious Surgical System and a timely authorization by the FDA.
1
We estimate that there are 45million
soft tissue abdominal and gynecological surgical procedures performed annually worldwide that could potentially be addressed with the
Vicarious Surgical System, including use for ventral hernia, other types of hernia, hysterectomy, cholecystectomy (gall bladder) and certain
other gastrointestinal procedures. We intend for use in ventral hernia procedures to be the first clinical application for the Vicarious
Surgical System, of which there are estimated to be 3.9million cases worldwide and 0.9million in the U.S.annually. We
then intend to seek FDA clearance or authorization to enable the expansion into the other applications addressable by the Vicarious Surgical
System.
****
**Industry Background**
Despite the advancements in manual and robot-assisted
minimally invasive surgery over the last 40years, of the estimated 45million annual worldwide procedures addressable by the
Vicarious Surgical System, it is estimated that a significant portion are currently performed by open surgery and a relatively small percentage
are performed by existing robot-assisted minimally invasive surgery technologies. The large incisions required for open surgery, while
allowing the surgeon to see with their own eyes and operate with their own hands, create significant trauma to the patient, resulting
in long hospitalization and recovery times, high hospitalization costs, as well as pain and suffering. Open surgical procedures are associated
with a meaningful risk of post-operative complications, including incisional hernias, which in some cases may require additional corrective
surgery. Although there have been significant improvements in minimally invasive surgery procedures over open surgery, the following limitations
associated with minimally invasive surgery still exist:
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| Laparoscopic surgery results in improved patient outcomes,
but it presents significant challenges for surgeons, primarily associated with using long, rigid instruments through multiple incisions
across the abdominal wall, which introduces the fulcrum effect requiring the surgeon to adjust for the inversion and scaling
of movements. These laparoscopic instruments can be difficult to manipulate, have limited degrees of freedom, limited reach and reduced
depth-perception and visibility, which can require significant coordination among the surgical team to perform the procedure. |
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| Multi-port robotic systems introduced in the early 2000s have
managed to overcome some of the challenges associated with laparoscopy, but they require multiple incisions. While the wristed robotic
instruments provide more dexterity than the long, rigid instruments used in laparoscopy, these robotic systems still require multiple
system components and place responsibility on the surgeon to define the workspace and kinematic motion profile of the robotic system
for every procedure, based on where they create the incisions and where they intend to operate. Additionally, these systems are expensive
and often involve a steep learning-curve for surgeons. In addition, these systems are often underutilized because they have large footprints,
limited portability and require extensive setup and longer operating room turnover time. |
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| More recently, single-port surgical robots have been developed,
but these systems are limited in that they rely on legacy robotic architecture, and thus require a much larger incision than multi-port
robotic systems, have limited motion, strength, and visualization, and can only operate in a small procedural area. Given the relatively
large size of the trocar incision required to be made by the surgeon to accommodate existing single-port robotic systems, among other
limitations, these existing single-port robots have faced adoption challenges due to these architectural and functional limitations,
which may constrain surgeon performance in certain procedures. For all these reasons, legacy single-port robotic solutions, much like
multi-port manual and robotic minimally invasive surgery, have received limited adoption to date. |
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We believe this slow adoption of robot-assisted
surgery has occurred because of several factors, including the following:
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| Significant Capital Investment.Legacy
robotic systems require high upfront acquisition costs and burdensome annual service contracts that are often prohibitively expensive,
especially in outpatient settings. Based on discussion with industry sources, we estimate these capital costs to be up to $2.0 million
or more per system upfront, plus an additional 10% to 20% annually for maintenance and service contracts. |
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| Low Utilization.In addition to the significant
acquisition costs, existing robotic systems create inefficiencies and increase costs to medical facilities considering adoption. Due
to their large size and limited portability, existing robotic systems often require dedicated operating room configurations, occupying
valuable real estate within the hospital. Once in place, these robotic systems require extensive set-up and operating room turnover times,
which limits the number of procedures that can be performed with the robotic system. |
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2
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| Limited Capabilities.Existing robotic
systems have limited capabilities and are ill-suited for many outpatient procedures. Due to their limited degrees of freedom inside the
abdomen, they depend on significant, complicated, robotic motion outside the body, and they have limited ability to operate in multiple
quadrants, difficulty operating on the ceiling of the abdomen, create collisions inside and outside of the patients
abdomen, and restrict overall access of the operating team to the patient. |
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| Difficult to Use.Existing robotic systems
require the surgeon to develop an extensive procedure plan in advance to determine appropriate incision sites and angles for each procedure,
in order to avoid collisions inside and outside of the patients abdomen. Surgeons must develop this plan with fewer degrees of
freedom than they would employ using open surgery, restricting their natural movements. Becoming proficient at manipulating these legacy
robotic systems to perform the procedures they otherwise were trained to perform via open surgery requires extensive training and several
dozen procedures on live patients. As these systems are maintained in dedicated, expensive, operating rooms, obtaining access to train
on the system becomes a significant impediment to adoption, which may contribute to continued reliance on open surgeries. |
|
**The Vicarious Surgical System**
The single-port Vicarious Surgical System
with advanced, miniaturized robotics and exceptional visualization is designed to address certain limitations of open surgery and existing
single- and multi-port robotic surgical approaches, with the goal of improving surgical workflow and supporting adoption by hospitals
and other medical facilities. The Vicarious Surgical System is designed with a fundamentally different architecture, and proprietary de-coupled
actuators, intended to address limitations of open surgery and existing robot-assisted surgical procedures with a minimally invasive
robotic system. This architecture is designed to enable a high degree of dexterity inside the abdomen through an ultra-thin support tube,
which we believe may offer advantages relative to existing robotic systems and support minimally invasive surgical approaches. The Vicarious
Surgical System has not yet been authorized by the FDA.We have conducted pre-submission meetings with the FDA to align on our regulatory
strategy and plan to file a De Novo classification request for use in ventral hernia procedures as our first indication.
*
|
(1) | The Vicarious Surgical System is capable of incision sizes
as low as 1.8cm. |
|
3
The Vicarious Surgical System consists of
the following components:
|
| Camera and Instrument Arms.The Vicarious
Surgical System incorporates a high-performance stereoscopic camera that, when combined with robotic motion, is designed to provide a
broad range of viewing angles and is being developed to continuously map the depth of the abdominal cavity. Based on cadaver studies,
the camera and instrument arms are designed to support operation across a wide range of direction within the abdomen, including the ability
to rotate and operate around the trocar incision point. Each surgical instrument arm is designed with nine degrees of movement, intended
to approximate the range of motion of the surgeons wrists, elbows and shoulders, and to support a more natural range of motion
during surgical procedures. While existing robotic systems are often constrained to operating primarily in front of the rigid instrument,
the Vicarious Surgical System is designed to support operation across a broader working envelope within the abdomen, which we believe
may enhance surgical flexibility while supporting minimally invasive approaches. The camera and both instrument arms are being developed
to enter the abdomen through a single, 1.8 centimeter trocar, which is within the size range of conventional minimally invasive surgery
trocars. If authorized by the FDA, the Vicarious Surgical System is designed to provide enhanced sensing capability relative to existing
systems due to its increased number of joints and sensors. The system features 28 sensors per instrument arm, to provide real-time feedback
to the surgeon on force, motion and other data, and to generate intraoperative data intended to support continued refinement of system
performance and surgeon capabilities over time. |
|
|
| Surgeon Console.The Vicarious Surgical
System surgeon console is designed for an immersive operating environment that allows the surgeon to visualize the surgical field and
control robotic motion. If authorized by the FDA, the surgeon console is intended to support precise control and situational awareness
during procedures. The console includes a peer-in stereoscopic vision screen that enables surgeons to operate in a three-dimensional
environment without the use of 3D glasses, while maintaining awareness and line of sight to the operating room. |
|
|
| Patient Cart.The Vicarious Surgical System
patient cart is designed to support maneuverability within hospitals, outpatient clinics, and ambulatory surgical centers, including
the ability to pass through standard doorways. Unlike many existing robotic systems, the Vicarious Surgical System, if authorized by
the FDA, is designed to support use across multiple operating rooms without requiring permanent room dedication. The system is intended
to be wheeled into and out of operating rooms and stored when not in use, similar to other mobile medical devices. |
|
Because the majority of the robotic
motion occurs inside the abdomen through a single port, the Vicarious Surgical System is designed without multiple large robotic
arms operating outside the patients body. We believe that architectural approach, together with the potential use of advanced
manufacturing processes, may enable the Vicarious Surgical System to be manufactured at a lower cost than certain existing robotic
systems, based on publicly available information.
4
****
**Vicarious Surgical System Advantages**
We believe that addressing the factors that
have limited broad adoption of robot-assisted minimally invasive surgery to date including cost, system size, capability, ease of use,
setup time, throughput, and training requirements, requires a solution that considers these challenges. The Vicarious Surgical System
incorporates advanced engineering and proprietary de-coupled actuators, which are designed to support a differentiated approach
to surgical robotic system architecture and may help address certain factors that have historically limited broader adoption of robot-assisted
minimally invasive surgery. Based on this design, the Vicarious Surgical System is intended to provide increased degrees of freedom and
dexterity to support more natural surgical motion, as well as enhanced visibility, sensing and functionality for the surgeon, all through
a small, single port minimally invasive approach. We believe these design features may address certain limitations associated with existing
single- and multi-port surgical modalities and support improved surgical workflow and system utilization.
|
| Decoupled Actuators.Robotic arms are controlled
by actuators located at each joint. In many existing robotic systems, these actuators are mechanically coupled, such that
movement at one joint results in corresponding movement at subsequent or prior joints. In legacy robotic systems, software is used to
coordinate joint motion and compensate for this coupling in order to reduce unintended movement. However, this approach does not eliminate
the accumulation of forces across multiple joints that can arise from coupled mechanical architectures. As a result, such systems often
require larger and more robust cables, pulleys, and structural components, which can increase system size and cost and constrain overall
mobility. |
|
The Vicarious Surgical System is designed with a decoupled
actuator architecture intended to reduce mechanical interdependence between joints. We believe this approach may enable greater integration
of components and materials, and support improvements in system flexibility, strength, and form factor. These design features are intended
to provide benefits for surgeons, hospitals, and ambulatory surgical centers by supporting enhanced system capability and more efficient
use within the operating environment. Because the Vicarious Surgical System has not yet been authorized by the FDA or commercialized,
the intended benefits of this architecture have not yet been realized and are dependent on successful development and regulatory authorization.
Because the Vicarious Surgical System has
not yet been authorized by the FDA or commercialized, the intended advantages of the Vicarious Surgical System have not yet been realized
and are dependent upon the successful development of the Vicarious Surgical System and timely authorization by the FDA.
**Surgeon Experience**
|
| Human Equivalent MotionNine Degrees
of Freedom.The Vicarious Surgical System is designed to provide nine degrees of freedom per instrument arm, intended to
approximate the range of motion of a surgeons wrists, elbows and shoulders. Based on data from cadaver studies, this design is
intended to support a broader range of motion than that available with many existing single- or multi-port robotic systems, which often
require surgeons to adapt their movements to the constraints of the robotic architecture. We believe this approach may provide a more
natural operating experience by allowing surgeons to work in a manner that is more consistent with their training in open surgery, while
performing procedures through a minimally invasive approach. |
|
5
|
| Expanded Reach Inside the Abdomen.With
nine degrees of freedom per instrument arm, the Vicarious Surgical System is designed to support operation across a wide range of angles
and directions within the abdomen through a single incision. This design is intended to reduce the need for triangulation and the limitations
associated with operating only within a narrow working area directly in front of the incision, which is common in manual and robotic
minimally invasive surgery. The system architecture is designed to allow the surgeon to reposition and pivot the instruments within the
abdominal cavity, including operating in proximity to the incisionsite, in order to support procedural flexibility. |
|
|
| Sensing, Visualization and Future AI.The
surgeon utilizes a peer-in stereoscopic display on the console for visualization of the surgical field. The Vicarious Surgical System
incorporates a high-performance stereoscopic camera that is designed to support a broad range of viewing operations and is being developed
to provide three-dimensional spatial mapping of the surgical environment. The system includes more than two dozen sensors per instrument
arm that are designed to provide real-time feedback to the surgeon on force, motion and other data. These data are also intended for
to support future software and analytics development, including potential artificial intelligence-enabled capabilities, which may be
used to enhance surgical workflow and to explore relationships between intraoperative data and procedural outcomes over time. |
|
**Hospital and Ambulatory Surgical
Center (ASC) Advantages**
|
| System Size and Mobility.Unlike many legacy
robotic systems that often require dedicated operating room configurations or physical modifications to accommodate their size, the Vicarious
Surgical System is designed with a smaller footprint intended to allow it to pass through standard hospital and operating room doorways.
This design is intended to support system mobility within a medical facility and may help reduce set-up and break-down time, enabling
use across multiple operating rooms rather than permanent room dedication. |
|
|
| Training and Accessibility.The Vicarious
Surgical System is designed to support more natural surgical motion and, due to its mobility, is not intended to be confined to a dedicated
operating suite. We believe this design may increase system availability for surgeon training and practice. As a result, surgeons may
be able to develop proficiency more efficiently compared to certain existing robotic systems, which could support surgeon adoption and
improve utilization for hospitals and ASCs. |
|
|
| Economics and System Cost.If authorized
by the FDA, we intend to offer the Vicarious Surgical System, along with maintenance and service support, at more pricing we believe
may be more attractive relative to certain existing robotic systems. In addition, the systems design is intended to support efficient
procedural workflow, which may enable procedures to be performed more efficiently and could contribute to reductions in overall operating
room time and associated costs. |
|
|
| Disposable Instruments and Accessories.The
Vicarious Surgical Systems instruments and accessories are designed for single use and are intended to be offered at pricing that
supports disposability. We believe this approach may reduce the need for hospitals and ASCs to dedicate space, equipment, and personnel
to instrument reprocessing and sterilization, potentially simplifying logistics and reducing associated operational costs. |
|
**Patient Outcomes**
|
| Enhanced Surgical Capability.The Vicarious
Surgical System is designed to provide enhanced visualization, dexterity, and access within the abdomen to support precise surgical technique.
If authorized by the FDA, these design features are intended to allow surgeons to perform advanced minimally advanced techniques that
are already established in clinical practice. We believe that supporting such techniques may contribute to improved procedural
execution and patient outcomes when compared to open surgical approaches. |
|
6
|
| Minimally Invasive Access and Trocar Size Considerations.Clinical
experience with minimally invasive surgery has demonstrated that smaller incisions are generally associated with reduced tissue disruption
and lower rates of incision-related complications when compared to open surgical procedures. Existing minimally invasive approaches typically
utilize smaller trocar sizes than those required for open surgery, which may reduce the risk of wound-related complications. |
|
****
**Our Strategy**
We seek to expand access to robot-assisted
minimally invasive surgery through the development of a surgical robotic platform designed to be capable, flexible, and accessible across
a range of care settings. Our objective is to establish the Vicarious Surgical System as a differentiated robotic platforms for soft tissue
surgery. The execution of our strategy is dependent upon the successful development of the Vicarious Surgical System and receipt of FDA
authorization:
|
| Initial Focus on Ventral Hernia Procedures.We
plan to initially focus commercialization efforts on ventral hernia procedures, targeting surgeons, hospitals and ambulatory surgical
centers that perform general surgery procedures which may benefit from a single-incision robotic approach. We believe ventral hernia
repair represents an attractive initial indication due to procedure volume, clinical need, and the opportunity to apply minimally invasive
techniques. As part of this strategy, we intend to engage with experienced surgeons and clinical advisors to gather feedback that may
inform product development, clinical protocols, and surgeon training. |
|
|
| Expansion of Indications.The Vicarious Surgical
System is designed to provide broad access within the abdomen, which we believe may support use across additional surgical procedures
over time. Subject to regulatory authorization, we plan to pursue expanded indications that may include inguinal and hiatal hernia repair,
hysterectomy, cholecystectomy (gallbladder), colorectal and other gastrointestinal procedures. We estimate that 39million of these
procedures are performed annually worldwide today. |
|
|
| Recurring Revenue Model.Following initial system
placement, we intend to focus on increasing system utilization by supporting efficient procedural workflow and repeat use. Increased
utilization may enable hospitals and ASCs to perform a greater number of procedures using the Vicarious Surgical System, which could
drive recurring revenue through the sale of single-use and disposable components, including robotic arms, camera and instrument tips. |
|
|
| Demonstration of Clinical and Economic Value.A
significant portion of ventral hernia procedures are currently performed as open surgical procedures in hospital settings. We believe
there is an ongoing trend toward shifting appropriate procedures from hospitals to ASCs, driven by cost, efficiency, and patient preference.
Subject to regulatory authorization, we believe the Vicarious Surgical System may support the performance of more complex minimally invasive
hernia procedures in ASC settings. Because ASCs often have limited capital and infrastructure budgets, our value proposition is designed
to address considerations related to system cost, footprint, and operating room flexibility. |
|
|
| Expansion of Product Capabilities.We believe
that advancements in software, data analytics, and automation may further enhance robotic-assisted surgery over time. We plan to evaluate
and develop additional features for future generations of the Vicarious Surgical System, which may include enhanced visualization, data-driven
insights, and automation-enabled functionality, subject to technical feasibility and regulatory requirements. |
|
|
| International Commercialization.If the Vicarious
Surgical System receives FDA authorization for commercialization in the U.S., we intend to pursue applicable regulatory clearances or
approvals in additional markets, including Asia, Europe and other international regions, in order to support global commercialization
of the system. |
|
7
****
**Historical Development of the Vicarious
Surgical System**
The foundational technology underlying the
Vicarious Surgical System was developed by the Vicarious Legacy founders Adam Sachs, Sammy Khalifa, and Barry Greene. The founding team
conducted extensive prototyping and experimentation focused on robotic arm architecture and motion control. Through this work, they developed
and patented a cable pathway design intended to de-couple motion within the robotic arm, reducing mechanical interdependence between joints.
This approach supported the development of an early robotic arm prototype designed to approximate aspects of natural human arm motion.
Following the development of this initial
prototype, the founding team expanded the design into a more complete robotic system. Early versions of the device were constructed using
internally machined components and were funded by the founders. The system was subsequently integrated with internally developed software
and a surgeon input tracking system to support coordinated robotic motion. After achieving a fully functioning prototype, the company
raised outside capital and expanded the engineering and development team to continue advancing the system.
We have conducted, and continue to conduct,
synthetic cadaver and cadaver studies with the Vicarious Surgical System being developed, as part of our iterative development process.
The primary objective of these studies has been to evaluate system design, refine performance characteristics, and inform ongoing product
development. In these studies, surgeons have used the system to perform a range of procedures, including ventral hernia repair, hysterectomy,
and cholecystectomy. Surgeons have also evaluated multiple ventral hernia repair techniques, including robotic transabdominal preperitoneal
(rTAPP), retrorectus, and intraperitoneal onlay mesh repair (IPOM) plus. Insights gathered from these cadaver studies have informed design
considerations across multiple aspects of the system, including:
|
| Instrument length requirements for ventral hernia repair procedures; |
|
|
| Camera field of view and depth perception; |
|
|
| User interface elements, including foot pedals and digital
controls; |
|
|
| Responsiveness and quality of robotic end-effector motion
relative to surgeon input; |
|
|
| Instrument and camera insertion and extraction workflow; and |
|
|
| Reliability and durability of the robotic instruments and
camera. |
|
These development activities have been conducted
to support the continued refinement of the Vicarious Surgical System and to inform our regulatory strategy. The system has not yet been
authorized by the FDA, and further development, testing, and regulatory review and authorization will be required prior to any potential
commercialization.
8
**Regulatory History and Pathway**
In November2019, the FDA granted Breakthrough
Device designation to a prior prototype version of the Vicarious Surgical System for a proposed indication for use in ventral hernia repair
procedures. We anticipate that after FDA authorization, the Vicarious Surgical System will be classified as a ClassII medical device.
We have held multiple pre-submission meetings with the FDA to align on our regulatory strategy and currently plan to pursue a De Novo
classification request with the FDA for use in ventral hernia procedures as our initial indication.
In December 2021, we conducted a
preliminary meeting with the FDA to discuss two technology changes made to the Vicarious Surgical System design that had received
Breakthrough Device designation in November 2019. Based on these changes, the FDA determined that the current Vicarious Surgical
System design planned for our initial limited launch differs from the prior design that received Breakthrough Device designation. As
a result, the FDA stated that the Breakthrough Device designation remains applicable only to the prior device design. In the future,
we may seek to reincorporate elements of the prior design to potentially leverage the previously granted Breakthrough Device
designation. However, medical device development is inherently uncertain and there can be no assurance that Breakthrough Device
designation would be granted to a different device design, and if granted, that such designation would accelerate the timeline for
authorization or increase the likelihood of FDA authorization.
In February 2022, we held an additional pre-submission
meeting with the FDA focused on the current Vicarious Surgical System design. During this meeting, the FDA emphasized that each robotic-assisted
surgical system is highly complex and that differences in system architecture, kinetics, software, data transmission, interfaces, and
user interaction create unique safety and effectiveness considerations. The FDA indicated that these system-level differences may raise
questions of safety or effectiveness that are not applicable to predicate devices and that robotic-assisted surgical systems are generally
not sufficiently similar to permit meaningful comparison for purposes of a traditional 510(k) submission. Based on FDA feedback, the evaluation
of the Vicarious Surgical System is expected to require a holistic assessment incorporating software verification and validation, bench
testing, animal studies, human factors and usability testing, and clinical data, among other verification and validation data. The FDA
indicated that, due to the unique technological characteristics and clinical implementation of the system, an independent evaluation of
safety and effectiveness would be required. As a result, the FDA advised that a 510(k) submission would likely be found not substantially
equivalent to a predicate robotic-assisted surgical system. In accordance with this FDA feedback, we revised our regulatory pathway to
pursue a De Novo classification.
In February 2024, we submitted an application
to the FDA seeking acceptance into its Safer Technologies Program (the STeP Program). The FDA accepted our robotic system,
intended to assist in visualization and control of endoscopic instruments during ventral hernia repair procedures in adults, into the
STeP Program. This acceptance means the device meets STeP eligibility criteria, but it does not change requirements for granting Investigational
Device Exemption (IDE) or marketing authorization, nor does it guarantee future authorization. Through the STeP Program,
we can utilize available feedback mechanisms that prioritize interactive and timely communications with the FDA, as resources permit.
The goal of the STeP Program is to expedite the development of devices and offers program-specific feedback mechanisms, including early
engagement on Data Development Plans (DDPs) for aligning on necessary safety evidence, sprint discussions
with FDA experts to address development challenges, and potential senior management engagement for discussing high-level strategic issues.
In addition, general FDA feedback mechanisms like the Q-Submission Program (including Pre-Submissions and Informational Meetings) continue
to be available to us.
****
9
****
**Regulatory Roadmap forMarket Authorization**
Based on the outcome of the pre-submission
meeting with the FDA in February 2022, the FDA determined that there is no legally marketed predicate device. Therefore, we will plan
to file a De Novo classification request for the proposed initial indication for use in ventral hernia repair procedures as a regulatory
pathway to classify the Vicarious Surgical System. Devices that are classified into Class I or Class II through a De Novo classification
request may be marketed and used as predicates for future premarket notification (or 510(k)) submissions, when applicable. Accordingly,
we believe that the 510(k) pathway will be available as a regulatory pathway for the Vicarious Surgical System with respect to future
indications or other significant modifications to the device system.
We plan to conduct a prospective human pivotal
clinical investigation under an FDA IDE to evaluate the safety, effectiveness, and performance of the Vicarious Surgical System to support
a De Novo classification request and obtain U.S. marketing authorization for the proposed indication for use in ventral hernia repair
procedures. In addition to conducting a human pivotal clinical investigation, we plan to conduct non-clinical testing activities to verify
and validate the safety, performance, effectiveness, functionality, usability and reliability characteristics of the Vicarious Surgical
System with respect to the intended use and defined requirements. A verification and validation process is expected to provide the necessary
data to submit to the FDA for IDE approval.
We expect that non-clinical verification
and validation testing will be conducted to verify and validate that the Vicarious Surgical System meets all design specifications
for its intended use. These tests will include in vitro, simulated clinical bench testing and cadaver studies, as well as in vivo
animal studies to support and demonstrate the safety, performance, effectiveness, functionality, usability, and reliability
characteristics of the Vicarious Surgical System with respect to the intended use and defined requirements. Cadaver studies,
representing realistic dimensions and contours of the human abdominal space, will be used primarily to verify and validate system
functionality, performance, and safety relevant to patient anatomy and contexts of use with respect to insertion, access and
movement within the abdominal cavity, visualization, manipulating tissue, cutting, and suturing as needed during a simulated ventral
hernia repair procedure. Animal studies will be used primarily to demonstrate performance, safety, effectiveness, and usability of
the system as relevant to a live model with respect to insertion, access and movement within the abdominal cavity, visualization,
manipulating tissue, cutting, coagulating, and suturing, during a simulated ventral hernia repair procedure. This testing may also
be used to demonstrate that applicable risk mitigation features, including software alarms, alerts, extraction of multi-jointed
instrumentation in case of system failure, misuse, or other errors are adequate and perform to specifications. Summative usability
testing will be conducted by surgeons, nurses and technicians in a simulated operating room environment to provide objective
evidence that the Vicarious Surgical System can be used safely and effectively by end users for its intended uses, the device
functions as expected and intended, and all risk mitigations implemented are safe and effective. In addition, we plan to conduct
simulated bench-top testing on transparent anatomical models to evaluate, among other things, how the Vicarious Surgical System
performs in worst case scenarios to verify and validate safe anatomical access, instrument/camera angulation and
movement at the extremes of various surgical procedures with respect to patient anatomy and dimensions that cannot be readily
controlled for when using live animal and human cadaver models.
****
**Future Indications**
We plan to expand upon our claims and/or indication
for use to address additional unmet clinical needs in different anatomical areas as well as therapeutic procedures. Following the initial
authorization for use in ventral hernia repair procedures under a De Novo classification, if obtained by the FDA, we plan to submit 510(k)
premarket notifications for other indications for use, using the Vicarious Surgical Systems first De Novo authorization as a predicate,
along with other predicate devices with similar cleared indications for use. We may also include a predetermined change control plan in
our De Novo classification, or future premarket notification submissions, which if authorized by the FDA, would allow us to implement
the modifications to the Vicarious Surgical System described in the plan without submitting a new application for marketing authorization.
We have identified several potential future indications and procedures that align well with the Vicarious Surgical Systems ability
to access and visualize the abdominal cavity. Possible future indications may include but not be limited to inguinal and hiatal hernias,
hysterectomy, cholecystectomy (gallbladder), colorectal and other gastrointestinal procedures. We will perform an assessment to determine
the appropriate regulatory strategy required to expand claims and obtain applicable regulatory clearances in the United States and in
other global markets.
10
****
**Intellectual Property**
****
We strive to protect and enhance the proprietary
technology, inventions and improvements that are important to our business by seeking, maintaining and defending our intellectual property,
all of which has been developed internally and not in-licensed from third parties. We also rely on trade secrets, know-how, continuing
technological innovation and in-licensing opportunities to develop, strengthen and maintain our proprietary position in the field of surgical
robotics. Additionally, we intend to rely on regulatory protection afforded through data exclusivity and market exclusivity as well as
patent term extensions, where available.
We currently do not rely heavily on technologies
from third parties. However, in the future, we may need to rely or be dependent on patented or proprietary technologies that we may license
from third parties.
We maintain a patent portfolio that includes
issued U.S.and foreign patents as well as pending U.S.and foreign patent applications, which include claims directed towards
our proprietary technology. We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial
and cost-effective. As of February 9, 2026, we owned approximately twenty (20)issued U.S.utility patents, one (1) issues U.S.
design patent and approximately thirty-one (31)issued utility patents in foreign jurisdictions, including one (1) in Canada, five
(5)in China, eleven (11)in Japan, and thirteen (13) in European jurisdictions, and three (3) Hong Kong patents. We also had
approximately 115 pending utility patent applications in the U.S.and foreign jurisdictions, including in Canada, China, Europe,
Japan, and Hong Kong. These issued utility patents and pending utility patent applications (if they were to issue as patents) have expected
expiration dates ranging between 2039 and 2045. Our patents and patent applications are directed to, among other things, our core technology.
This includes the surgical robotic and camera system; sensing capabilities, controls and visualization interfaces; the surgical tools
suite; and related technologies.
The term of individual patents may vary based
on the countries in which they are obtained. Generally, patents issued for applications filed in the UnitedStates are effective
for 20years from the earliest effective non-provisional filing date. In addition, in certain instances, a patent term can be extended
to recapture a portion of the term effectively lost as a result of the FDA regulatory review period. The restoration period cannot be
longer than fiveyears and the total patent term, including the restoration period, must not exceed 14years following FDA approval.
The duration of patents outside of the UnitedStates varies in accordance with provisions of applicable local law, but typically
is also 20years from the earliest effective filing date.
In addition to patents and patent applications,
we rely on trade secrets and know-how to develop and maintain our competitive position. However, trade secrets can be difficult to protect.
We seek to protect our proprietary technology and processes, and obtain and maintain ownership of certain technologies, in part, through
confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors, contractors and commercial
partners. We also seek to preserve the integrity and confidentiality of our data, trade secrets and know-how, including by implementing
measures intended to maintain the physical security of our premises and the physical and electronic security of our information technology
systems.
Our future commercial success depends, in
part, on our ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions
and know-how related to our business; defend and enforce our patents; preserve the confidentiality of our trade secrets; and operate without
infringing the valid enforceable patents and proprietary rights of third parties. Our ability to stop third parties from making, using,
selling, offering to sell or importing our product candidates will depend on the extent to which we have rights under valid and enforceable
patents or trade secrets that cover these activities. Moreover, we may be unable to obtain patent protection for the Vicarious Surgical
System generally, as well as with respect to certain surgical indications. See the section entitled Risk FactorsRisks
Related to Our Intellectual Property* for a more comprehensive description of risks related to our intellectual property.
11
**Research and Development**
Our research and development programs are
generally pursued by our engineering, scientific and technical personnel employed by us in our offices in Massachusetts on a full-time
basis or as consultants, or through partnerships with industry leaders in manufacturing and design and with researchers in academia. We
are also working with subcontractors in developing specific components of our technologies.
The primary objectives of our research and
development efforts are to continue to introduce incremental enhancements to the capabilities of the Vicarious Surgical System and to
advance development.
For the fiscal years ended December31,
2025 and 2024, we incurred research and development expenses of $33.6 million and $40.2 million, respectively.
****
**Manufacturing**
We have manufacturing capabilities within
our headquarters in Waltham, Massachusetts. We currently rely and expect to expand on third parties for the manufacturing of certain products
for preclinical and clinical testing, as well as for commercial manufacturing.
We purchase both custom and off-the-shelf
components from a large number of suppliers and subject them to stringent quality specifications and processes. Some of the components
necessary for the assembly of the Vicarious Surgical System are currently provided to us by sole-sourced suppliers or single-sourced suppliers.
We are committed to developing an ethical,
safe and sustainable supply chain. This extends to our supplier base as well, so we are seeking partnerships with suppliers who share
our commitment to strong ethics and full compliance with all applicable laws.
We promote the following basic principles
in our supply chain:
|
| Business practices that respect human rights that align with
international standards of responsible business conduct; |
|
|
| Compliance with conflict mineral laws; |
|
|
| Business integrity; |
|
|
| Environmental responsibility and sustainability; |
|
|
| Protection of confidential information. |
|
****
12
****
**Competition**
We face competition in the forms of existing
open surgery, conventional minimally invasive surgery, drug therapies, radiation treatment, and emerging interventional surgical approaches.
Our success depends on continued clinical and technical innovation, quality and reliability, as well as educating hospitals, surgeons,
and patients on the results associated with robotic-assisted surgery using the Vicarious Surgical System and our value proposition relative
to other techniques. We also face competition from several companies that have introduced or are developing new approaches and products
for the minimally invasive surgery market. We believe that the entrance or emergence of competition validates robotic-assisted surgery.
We face competition from larger and well-established
companies. The companies that have introduced products in the field of robotic-assisted surgery or have made explicit statements about
their efforts to enter the field, include, but are not limited to: Intuitive Surgical, Inc.; Johnson& Johnson (including their
wholly-owned subsidiaries Ethicon Endo-Surgery, Inc., Auris Health, Inc. and Verb Surgical Inc.); Medtronic plc (including their wholly-owned
subsidiary Covidien LP); Virtual Incision Corporation; Stryker Corporation; and CMRSurgical Ltd. Other companies with substantial
experience in industrial robotics could potentially expand into the field of surgical robotics and become a competitor. In addition, research
efforts utilizing computers and robotics in surgery are underway at various companies and research institutions. Our ability to generate
future revenue may be adversely impacted as competitors announce their intent to enter these markets and as our potential customers anticipate
the availability of competing products.
****
**Commercialization**
We have not yet established a sales or product
distribution infrastructure for the Vicarious Surgical System. We plan to access the U.S.market with the Vicarious Surgical System
through strategic partnerships and also develop our own focused, specialized sales force or distribution channels once we have commercialized
the Vicarious Surgical System.
****
**Government Regulation**
Our operations are subject to comprehensive
federal, state, and local laws and regulations in the jurisdictions in which we or our research and development partners or affiliates
do business. The laws and regulations governing our business and interpretations of those laws and regulations are subject to frequent
change. Our ability to operate profitably will depend in part upon our ability, and that of our research and development partners and
affiliates, to operate in compliance with applicable laws and regulations. The laws and regulations relating to medical products and healthcare
services that apply to our business and that of our partners and affiliates continue to evolve, and we must, therefore, devote significant
resources to monitoring developments in legislation, enforcement, and regulation in such areas. As the applicable laws and regulations
change, we are likely to make conforming modifications in our business processes from time to time. We cannot provide assurance that a
review of our business by courts or regulatory authorities will not result in determinations that could adversely affect our operations
or that the regulatory environment will not change in a way that restricts our operations.
****
**FDA Regulation**
Medical devices are strictly regulated
by the FDA in the United States. Under the Federal Food, Drug, and Cosmetic Act (FDCA), a medical device is defined as
an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article,
including a component, part or accessory which is, among other things: intended for use in the diagnosis of disease or other
conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals; or intended to affect the
structure or any function of the body of man or other animals, and which does not achieve its primary intended purposes through
chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement
of any of its primary intended purposes. This definition provides a clear distinction between a medical device and other FDA
regulated products such as drugs. If the primary intended use of a medical product is achieved through chemical action or by being
metabolized by the body, the product is usually a drug or biologic. If not, it is generally a medical device.
13
We are currently developing a robotic-assisted
surgical system, which is regulated by the FDA as a medical device under the FDCA, as implemented and enforced by the FDA. The FDA regulates,
among other things, the development, testing, manufacturing, labeling, packaging, storage, installation, servicing, advertising, promotion,
marketing, distribution, import, export, and post-market surveillance of medical devices. The Vicarious Surgical System is not yet authorized
for commercialization in the United States.
**
*Device Premarket Regulatory Requirements*
Before being introduced into the U.S. market,
each medical device must obtain marketing clearance, authorization, or approval from the FDA through the premarket notification (510(k))
process, the De Novo classification process, or the premarket approval (PMA) process, unless they are determined to be exempt
from premarket review by the FDA. Under the FDCA, medical devices are classified into one of three classes Class I, Class II or
Class III depending on the degree of risk associated with each medical device and the extent of control needed to provide reasonable
assurance of safety and effectiveness. Classification of a device is important because the class to which a device is assigned determines,
in part, among other things, the necessity and type of FDA review required prior to marketing the device. Class I devices are those for
which reasonable assurance of safety and effectiveness can be maintained through adherence to general controls that include compliance
with the applicable portions of the FDAs Quality Management System Regulation (QMSR), as well as regulations requiring
establishment registration and device listing, reporting of adverse medical events, and appropriate, truthful and non-misleading labeling
and promotional materials.
Class II devices are those for which general
controls alone are insufficient to provide reasonable assurance of safety and effectiveness and there is sufficient information to establish
special controls. These special controls can include performance standards, post-market surveillance requirements, patient
registries and FDA guidance documents describing device-specific special controls. While most Class I devices are exempt from the 510(k)
premarket notification requirement, most Class II devices require a clearance of a 510(k) premarket notification prior to commercialization
in the United States; however, the FDA has the authority to exempt Class II devices from the premarket notification requirement under
certain circumstances. As a result, manufacturers of most Class II devices must submit 510(k) premarket notifications to the FDA in order
to obtain the necessary clearance to market or commercially distribute such devices. To obtain 510(k) clearance, manufacturers must submit
to the FDA adequate information demonstrating that the proposed device is substantially equivalent to a predicate
device that is already on the market. A predicate device is a legally marketed device that is not subject to PMA, meaning, (i)
a device that was legally marketed prior to May 28, 1976 (preamendments device) and for which a PMA is not required, (ii)
a device that has been reclassified from Class III to Class II or I, or (iii) a device that was found substantially equivalent through
the 510(k) process. If the FDA agrees that the device is substantially equivalent to the predicate device identified by the applicant
in a premarket notification submission, the FDA will grant 510(k) clearance for the new device, permitting the applicant to commercialize
the device. Premarket notifications are subject to user fees, unless a specific exemption applies.
After a medical device receives 510(k) clearance,
any modification that could significantly affect the devices safety or effectiveness, or that would constitute a major change in
its intended use, requires a new 510(k) submission or could require a De Novo classification request or PMA application. The FDA requires
each manufacturer to make the determination of whether a device modification requires a new 510(k), De Novo, or PMA in the first instance,
but the FDA may review any such decision. If the FDA disagrees with a manufacturers decision not to seek a new 510(k) clearance,
De Novo authorization, or PMA for a particular change, the FDA may retroactively require the manufacturer to submit a 510(k), De Novo,
or PMA application. The FDA may also require the manufacturer to cease its marketing activities for the modified device in the United
States and/or recall the device until the appropriate marketing authorization for the modification is obtained.
14
If there is no adequate predicate to which
a manufacturer can compare its proposed device, the proposed device is automatically classified as a Class III device. In such cases,
a device manufacturer must then fulfill the more rigorous PMA requirements or can request a risk-based classification determination for
its device in accordance with the De Novo classification process.
Devices that are intended to be life sustaining
or life supporting, devices that are implantable, devices that present a potential unreasonable risk of harm or are of substantial importance
in preventing impairment of health, and devices that are not substantially equivalent to a predicate device and for which safety and effectiveness
cannot be assured solely by the general controls and special controls are placed in Class III. Such devices generally require FDA approval
through the PMA process, unless the device is a novel or preamendments device not yet subject to a regulation requiring premarket approval.
The PMA process is more demanding than the 510(k) process. For a PMA, the manufacturer must demonstrate through extensive data, including
data from preclinical studies and one or more clinical trials, that there is a reasonable assurance that the device is safe and effective
for its proposed indication. The PMA application must also contain a full description of the device and its components, a full description
of the methods, facilities and controls used for manufacturing, and proposed labeling. Following receipt of a PMA submission, the FDA
determines whether the application is sufficiently complete to permit a substantive review. If the FDA accepts the application for review,
it has 180 days under the FDCA to complete its review and determine whether the proposed device can be approved for commercialization,
although in practice, PMA submission reviews often take significantly longer, and it can take up to several years for the FDA to issue
a final decision. Before granting a PMA, the FDA generally also performs an on-site inspection of manufacturing facilities for the product
to ensure compliance with the QMSR.
The FDA may refer any PMA application, including
applications for novel device candidates or device candidates that present difficult questions of safety or effectiveness, to an advisory
committee for review. Typically, an advisory committee is a panel of independent experts, including clinicians and other scientific experts,
that reviews, evaluates and provides a recommendation as to whether the application should be approved and, if so, under what conditions.
The FDA is not bound by the recommendation of an advisory committee, but it considers such recommendations when making final decisions
on approval.
If the FDAs evaluation of the PMA application
and inspection of the manufacturing facility is favorable, the FDA may issue an approval order authorizing commercial marketing of the
device, or an approvable letter, which usually contains a number of conditions that must be met in order to secure final
approval of the PMA. When and if those conditions have been met to the satisfaction of the FDA, the agency will issue a PMA approval order,
subject to the conditions of approval and the limitations established in the approval order. If the FDAs evaluation of a PMA application
or manufacturing facility is not favorable, the FDA will deny approval of the PMA or issue a not approvable letter. The
FDA may also determine that additional studies are necessary, in which case the PMA may be delayed for several months or years while such
additional studies are conducted and data is submitted in an amendment to the PMA. The PMA process can be expensive, uncertain and lengthy,
and each PMA submission is subject to a substantial user fee unless a specific exemption applies. The FDA may also grant a PMA subject
to post-approval requirements, such as the need for additional patient follow-up or requirements to conduct additional clinical trials.
New PMA applications or PMA supplements may
be required for any modifications to the manufacturing process, labeling, device specifications, materials or design of a device that
is approved through the PMA process. PMA supplements often require submission of the same type of information as an initial PMA application,
except that the supplements are limited to information needed to support any changes from the device covered by the approved PMA application
and may or may not require as extensive clinical data or the convening of an advisory committee.
The De Novo classification process
allows a manufacturer whose novel device is automatically classified into Class III to request down-classification of its device to
Class I or Class II, on the basis that the device presents low or moderate risk, as an alternative to following the typical Class
III device pathway requiring the submission and approval of a PMA application. Under the Food and Drug Administration Safety and
Innovation Act of 2012, the FDA is required to classify a device within 120 days following receipt of the De Novo classification
request from an applicant; however, the most recent FDA premarket review goals state that the agency will attempt to issue a
decision within 150 days of receipt on 70% of all De Novo classification requests received during each fiscal year. If the
manufacturer seeks reclassification into Class II, the classification request must include a draft proposal for special controls
that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device. The FDA may reject the
classification request if it identifies a legally marketed predicate device that would be appropriate for a 510(k) notification or
determines that the device is not low to moderate risk or that general controls would be inadequate to control the risks and special
controls cannot be developed. If a De Novo classification request results in the classification of the novel device into Class II,
the device may be used as a predicate for future 510(k) premarket notifications for other similar devices with the same intended
uses. De Novo classification requests are subject to user fees, unless a specific exemption applies.
15
As with the 510(k) premarket notification
process described above, any modification to a device authorized through the De Novo process that could significantly affect the safety
or effectiveness of such device, or that would constitute a major change in its intended use, requires a new 510(k) clearance or could
require the submission of a new De Novo classification request or PMA application.
*Predetermined Change Control Plans for
Medical Devices*
As part of the Consolidated Appropriations
Act for 2023, Congress amended the FDCA to give FDA the authority to authorize certain potential, future changes to a medical device in
a predetermined change control plan (PCCP) as part of a PMA application or 510(k) premarket notification for a medical device,
including a device that incorporates artificial intelligence or machine learning technology. In practice, FDA will also allow for inclusion
of a PCCP in a De Novo. A PCCP must describe the specific proposed modifications and provide sufficient information to demonstrate that
the device will remain safe and effective for its intended use, and in the case of a 510(k) cleared device that the device will remain
substantially equivalent to the predicate device, if the applicant implements the proposed modifications to the device as described in
the PCCP. If FDA authorizes a PCCP for a device, any modification to the device within the authorized scope of the PCCP will not require
the submission and authorization of a new PMA application, PMA supplement, or new 510(k) premarket notification. However, modifications
to a previously authorized PCCP will generally require submission of a PMA supplement or new 510(k) premarket notification, depending
on the original authorization pathway for the device, with the modified PCCP.
*Medical Device Clinical Studies*
Clinical trials are almost always required
to support PMAs and are sometimes required to support 510(k) and De Novo classification submissions. All clinical investigations of devices
to determine safety and effectiveness must be conducted in accordance with the FDAs IDE regulations that govern investigational
device labeling, prohibit promotion of investigational devices, and specify recordkeeping, reporting and monitoring responsibilities of
study sponsors and study investigators. If the device presents a significant risk, as defined by the FDA, the FDA requires
the device sponsor to submit an IDE application to the FDA, which must become effective prior to commencing human clinical trials. The
IDE will automatically become effective 30 days after receipt by the FDA, unless the FDA denies the application or notifies us that the
investigation is on hold and may not begin until the sponsor provides supplemental information about the investigation that satisfies
the FDAs concerns. If the FDA determines that there are deficiencies or other concerns with an IDE that require modification of
the study, the FDA may permit a clinical trial to proceed under a conditional approval. In addition, the study must be approved by, and
conducted under the oversight of, an institutional review board (or IRB) for each clinical site. If the device presents a non-significant
risk to the patient according to criteria established by the FDA as part of the IDE regulations, a sponsor may begin the clinical trial
after obtaining approval for the trial by one or more IRBs without separate authorization from the FDA, but must still comply with abbreviated
IDE requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping
requirements.
As part of its clinical trial oversight
responsibilities, an IRB must review and approve, among other things, the trial protocol and informed consent information to be
provided to clinical trial subjects. An IRB must operate in compliance with FDA regulations. Information about certain clinical
studies, including details of the protocol and eventually trial results, also must be submitted within specific timeframes to the
National Institutes of Health (NIH) for public dissemination on the clinicaltrials.gov data registry. Information
related to the product, patient population, phase of investigation, trial sites and other aspects of the clinical trial are made
public as part of the trial registration. Sponsors are also obligated to disclose the results of their clinical studies after
completion. Disclosure of the results of these studies can be delayed in some cases for up to two years after the date of completion
of the trial. Failure to timely register a covered clinical study or to submit study results as provided for in the law can give
rise to civil monetary penalties and also prevent the non-compliant party from receiving future grant funds from the federal
government. The NIH Final Rule on clinicaltrials.gov registration and reporting requirements became effective in 2017, and the
government has brought enforcement actions against non-compliant clinical trial sponsors.
16
Progress reports detailing the results of
the clinical studies must be submitted at least annually to the FDA and more frequently if unanticipated serious adverse events (SAEs)
occur. The FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research
subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical
trial at its institution if the clinical trial is not being conducted in accordance with the clinical protocol, GCP, or other IRB requirements
or if the investigational product has been associated with unexpected serious harm to patients.
In the Consolidated Appropriations Act for
2023, Congress amended the FDCA to require the sponsor of any pivotal clinical trial that will be used to demonstrate the safety and effectiveness
of a medical device marketing authorization submission to develop a diversity action plan for such trial, and if submission of an IDE
application is required, to submit such diversity action plan to the FDA. The action plan must include the sponsors diversity goals
for enrollment, as well as a rationale for the goals and a description of how the sponsor will meet them. The FDA may grant a waiver for
some or all of the requirements for a diversity action plan. It is unknown at this time how the diversity action plan may affect device
pivotal clinical trial planning and timing, but if FDA objects to a sponsors diversity action plan and requires the sponsor to
amend the plan or take other actions, it may delay trial initiation.
*Post-Marketing Restrictions and Enforcement*
After a device is placed on the market, numerous
regulatory requirements apply. These include, but are not limited to:
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| submitting and updating establishment registration and device
listings with the FDA; |
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| compliance with the QMSR, which requires manufacturers to
follow stringent design, testing, risk management, control, documentation, record maintenance, including maintenance of complaint and
related investigation files, and other quality assurance controls during the manufacturing process; |
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| unannounced routine or for-cause device facility inspections
by the FDA, which may include our suppliers facilities; |
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| labeling regulations, which, among other things, prohibit
the promotion of products for uncleared, unauthorized, or unapproved (or off-label) uses and impose other restrictions
relating to promotional activities; |
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| corrections and removal reporting regulations, which require
that manufacturers report to the FDA field corrections or removals if undertaken to reduce a risk to health posed by a device or to remedy
a violation of the FDCA that may present a risk to health; and |
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| post-market surveillance regulations, which apply to certain
ClassII orIII devices when necessary to protect the public health or to provide additional safety and effectiveness data
for the device. |
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In addition, under the FDA medical device
reporting (MDR) regulations, medical device manufacturers and importers are required to report to the FDA and/or the manufacturer
information that a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would
likely cause or contribute to death or serious injury if the malfunction of the device or a similar device of such manufacturer were to
recur. The decision to file an MDR involves a judgment by the manufacturer or importer. If the FDA disagrees with the manufacturer or
importers determination, the FDA can take enforcement action.
The medical device reporting requirements
also extend to health-care facilities that use medical devices in providing care to patients, or device user facilities,
which include hospitals, ambulatory surgical facilities, nursing homes, outpatient diagnostic facilities, or outpatient treatment facilities,
but not physician offices. A device user facility must report any death caused or contributed to by a device to both the FDA and the device
manufacturer, or any serious injury caused or contributed to by a device to the manufacturer (or, if the manufacturer is unknown, to the
FDA) within 10 days of the event. Device user facilities are not required to report device malfunctions that would likely cause or contribute
to death or serious injury if the malfunction were to recur but may voluntarily report such malfunctions through MedWatch, the FDAs
Safety Information and Adverse Event Reporting Program.
17
The FDA also has the authority to require
the recall of commercialized medical device products. The authority to require a recall must be based on an FDA finding that there is
a reasonable probability that the device would cause serious adverse health consequences or death. Manufacturers may, under their own
initiative, recall a product if any distributed devices fail to meet established specifications, are otherwise misbranded or adulterated
under the FDCA, or if any other material deficiency is found. The FDA requires that certain classifications of recalls be reported to
the FDA within ten working days after the recall is initiated.
The failure to comply with applicable regulatory
requirements can result in enforcement action by the FDA, which may include any of the following sanctions:
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| warning letters, fines, injunctions or civil penalties; |
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| recalls, detentions or seizures of products; |
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| operating restrictions; |
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| delays in the introduction of products into the market; |
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| total or partial suspension of production; |
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| delay or refusal of the FDA or other regulators to grant 510(k)
clearance, De Novo authorization, PMA approvals, or other marketing authorization to new products; |
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| withdrawals of marketing authorizations, clearances, or approvals;
or |
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| in the most serious cases, criminal prosecution. |
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To ensure compliance with regulatory requirements,
medical device manufacturers are subject to market surveillance and periodic, announced and unannounced inspections by the FDA, and these
inspections may include the manufacturing facilities of subcontractors.
****
**Breakthrough Device Designation and
the Safer Technologies Program**
The 21stCentury Cures Act,
which was signed into law on December13, 2016, established and directed FDA to implement the Breakthrough Devices Program. Under
the program, device manufacturers may voluntarily request breakthrough designation for devices that provide for more effective treatment
or diagnosis of life-threatening or irreversibly debilitating human disease or conditions over currently available technology and that
meet at least one of the following criteria:
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| The device represents breakthrough technology; |
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| There are no approved or cleared alternatives for the device; |
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| The device offers significant advantages over existing approved
or cleared alternatives; or |
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| Availability of the device is in the best interest of patients. |
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The goal of the Breakthrough Devices Program
is to accelerate the timeline to market for novel devices that will likely provide a benefit to patients. A Breakthrough Device designation
offers multiple benefits to the device manufacturer, including priority review of the pre-market submission for the device, opportunities
to interact directly with FDAs experts throughout the process, and engagement of FDA senior management, to the extent permitted
by the FDAs resources.
In November2019, the FDA granted Breakthrough
Device designation to a prior prototype version of the Vicarious Surgical System for a proposed indication for use in ventral hernia repair
procedures. We anticipate that after FDA authorization, the Vicarious Surgical System will be classified as a ClassII medical device.
We have held multiple pre-submission meetings with the FDA to align on our regulatory strategy and currently plan to pursue a De Novo
classification request with the FDA for use in ventral hernia procedures as our initial indication.
18
A preliminary meeting with the FDA was
conducted in December 2021 to discuss with the FDA our decision to make two technology changes to the Vicarious Surgical System
design that was granted Breakthrough Device designation in November 2019. Based on these changes, the FDA has determined that the
current Vicarious Surgical System design that is planned for the initial limited launch and was submitted to the FDA in the November
2021 FDA pre-submission meeting request is different from the device that was granted Breakthrough Device designation for the device
design filed in November 2019. The FDA stated that the Breakthrough Device designation remains active for the prior device design
granted Breakthrough Device designation in November 2019. In the future, we may attempt to reincorporate the technologies from such
prior device design to leverage the previously granted Breakthrough Device designation. The process of medical device development is
inherently uncertain and there is no guarantee that a Breakthrough Device designation will be granted to a different device design,
and if it were granted, there is no guarantee that such designation will accelerate the timeline for authorization or make it more
likely that the Vicarious Surgical System will be authorized.
****
Devices that may significantly improve the
safety of currently available medical products that target a disease or condition, butthe morbidities or mortalities associated
with the disease or condition are less serious than those eligible for Breakthrough Device designation, may be eligible for the STeP Program.
The goal of acceptance into the STeP Program is to provide opportunities to interact with FDA experts, as resources permit, through various
program options to address design and development issues efficiently. In February 2024, we submitted a STeP Program application to the
FDA, and the agency subsequently accepted Vicarious Surgicals robotic system into the program.
****
**Federal Trade Commission Regulatory
Oversight**
Our advertising for our products and services
is subject to federal truth-in-advertising laws enforced by the Federal Trade Commission (FTC), as well as comparable state
consumer protection laws. Under the Federal Trade Commission Act (the FTC Act), the FTC is empowered, among other things,
to (a) prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce; (b) seek monetary redress
and other relief for conduct injurious to consumers; and (c) gather and compile information and conduct investigations relating to the
organization, business, practices, and management of entities engaged in commerce. The FTC has very broad enforcement authority, and failure
to abide by the substantive requirements of the FTC Act and other consumer protection laws can result in administrative or judicial penalties,
including civil penalties, injunctions affecting the manner in which we would be able to market services or products in the future, or
criminal prosecution.
****
**Healthcare Law and Regulation**
If the Vicarious Surgical System or our other
product candidates are authorized in the UnitedStates, we will have to comply with various U.S.federal and state laws, rules
and regulations pertaining to healthcare fraud and abuse, including anti-kickback laws and physician self-referral laws, rules and regulations.
Violations of the fraud and abuse laws are punishable by criminal and civil sanctions, including, in some instances, exclusion from participation
in federal and state healthcare programs, including Medicare and Medicaid. These laws include the following:
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| the federal Anti-Kickback Statute prohibits, among other things,
persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in
kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service,
for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid; |
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| the federal False Claims Act imposes civil penalties, and
provides for civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented,
to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal
an obligation to pay money to the federal government; |
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| the federal Health Insurance Portability and Accountability
Actof1996 (HIPAA), imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit
program or making false statements relating to healthcare matters; |
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19
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| HIPAA, as amended by the Health Information Technology for
Economic and Clinical Health Act and its implementing regulations, also imposes obligations, including mandatory contractual terms, with
respect to safeguarding the privacy, security and transmission of individually identifiable health information; |
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| the federal false statements statute prohibits knowingly and
willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery
of or payment for healthcare benefits, items or services; |
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| the federal transparency requirements under the Physician
Payments Sunshine Act require manufacturers of FDA-cleared, authorized, or approved drugs, devices, biologics and medical supplies covered
by Medicare or Medicaid to report, on an annual basis, to the Department of Health and Human Services information related to payments
and other transfers of value to physicians, teaching hospitals, and certain advanced non-physician health-care practitioners and physician
ownership and investment interests; and |
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| analogous state and foreign laws and regulations, such as
state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services
reimbursed by nongovernmental third-party payors, including private insurers. |
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Some state laws require pharmaceutical or
medical device companies to comply with the relevant industrys voluntary compliance guidelines and the relevant compliance guidance
promulgated by the federal government in addition to requiring drug and device manufacturers to report information related to payments
to physicians and other health-care providers or marketing expenditures.
State and foreign laws also govern the privacy
and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted
by HIPAA, thus complicating compliance efforts. We also may be subject to, or may in the future become subject to, U.S.federal and
state, and foreign laws and regulations imposing obligations on how we collect, use, disclose, store and process personal information.
Our actual or perceived failure to comply with such obligations could result in liability or reputational harm and could harm our business.
Ensuring compliance with such laws could also impair our efforts to maintain and expand our customer base and thereby decrease our future
revenues.
**Third-Party Coverage and Reimbursement**
In the UnitedStates, third-party payors,
including government health programs such as Medicare and Medicaid, commercial health insurers and managed care organizations, are responsible
for hospital and surgeon reimbursement for covered surgical procedures. Third-party payors generally reimburse hospitals and physicians
for surgery when the procedure is considered medically necessary. The Centers for Medicare and Medicaid Services, or CMS, manages the
Medicare program and administers the Medicaid program in conjunction with applicable state governments. Many commercial health insurers
model their reimbursement methodologies after the Medicare program. As the single largest payor, the Medicare program has a significant
impact on other third-party payors payment systems.
Generally, reimbursement for professional
services performed at a facility by physicians is reported under billing codes issued by the American Medical Association, or AMA, known
as Current Procedural Terminology, or CPT, codes. Physician reimbursement under Medicare generally is based on a fee schedule and determined
by the relative value of the professional service rendered. In addition, CMS and the National Center for Health Statistics are jointly
responsible for overseeing changes and modifications to billing codes used by hospitals to report inpatient procedures, known as ICD-10-PCS
codes. Under the Medicare program, CMS generally reimburses hospitals for services provided during an inpatient stay based on a prospective
payment system that is determined by a classification system known as Medicare-Severity Diagnostic Related Groupings, or MS-DRGs. MS-DRGs
are assigned using a number of factors, including the principal diagnosis, major procedures, discharged status, patient age, and complicating
secondary diagnoses, among other things. Hospital outpatient services, reported by CPT codes, are assigned to clinically relevant Ambulatory
Payment Classifications used to determine the payment amount for services provided.
Since October1, 2015, a new family of
ICD-10-PCS codes can be used, in conjunction with other applicable procedure codes, to describe various robotic-assisted procedures. An
inpatient surgical procedure, completed with or without robotic assistance, continues to be assigned to the clinically relevant MS-DRG.
Third-party payors carefully review and increasingly
challenge the prices charged for medical products and surgical services. Reimbursement rates from commercial health insurers vary depending
on the procedure performed, the specific payors reimbursement policies, contract terms, and other factors. Because both hospitals
and physicians may receive the same reimbursement for a surgical procedure, whether it is performed with robotic assistance or not and
regardless of actual costs incurred in furnishing the patient care, including for the specific medical products or supplies used during
that procedure, hospitals and physicians may decide not to use our products if reimbursement amounts are insufficient to cover any additional
costs incurred when purchasing and using our products.
20
For procedures that would involve assistance
from our robotic-assisted surgical system, U.S.health-care institutions typically bill various third-party payors, such as government
health programs (e.g., Medicare and Medicaid) and commercial health insurance plans, for the primary surgical procedure only. If our robotic-assisted
surgical system receives marketing authorization from the FDA, coverage and reimbursement by third-party payors will generally be determined
by the medical necessity of the primary surgical procedure. Government health programs and other third-party payors may also consider
additional factors when determining coverage and reimbursement, including the designation of the surgical procedure as a covered benefit,
the appropriateness of the procedure for the specific patient, guidelines for the procedure established by the relevant professional college
or medical society, and a payor determination that the procedure is neither experimental nor investigational. We believe that the procedures
we intend to pursue as indications for use for our robotic-assisted surgical system are established surgical procedures that are generally
already reimbursable by government health programs, commercial health insurers, and managed care organizations for appropriately selected
patients. If hospitals do not obtain sufficient reimbursement from third-party payors for procedures performed with our products, or if
government and commercial payors policies do not cover surgical procedures performed using our products, we may not be able to
generate the revenues necessary to support our business.
The process for determining whether a third-party
payor will provide coverage for a product or procedure may be separate from the process for establishing the reimbursement rate that such
a payor will pay for the product or procedure. A payors decision to provide coverage for a product or procedure does not imply
that an adequate reimbursement rate will be approved. Further, one payors determination to provide coverage for a product or procedure
does not assure that other payors will also provide coverage. Adequate third-party reimbursement may not be available to enable us to
maintain price levels sufficient to ensure profitability.
*Healthcare Reform*
The FDAs and other regulatory authorities
policies may change and future legislative and regulatory proposals may prevent, limit or delay regulatory authorization of our product
candidates or, more broadly, may materially impact the ability of the FDA and other regulatory agencies to operate as they have historically
operated. We cannot be sure whether additional legislative changes will be enacted, or whether any of the FDAs regulations, guidances
or interpretations will be changed, or what the impact of such changes on the agency and its scientific review staff, if any, may be.
For example, the next FDA user fee reauthorization package entered stakeholder negotiations beginning in mid-2025, with any agreement
expected to be sent to Congress in early 2027 for purposes of initiating the legislative process. Reauthorization of the prescription
drug user fee program would need to be finalized by Congress by the end of September 2027 in order to avoid a disruption in FDAs
review goals for 510(k), De Novo classification and PMA submissions and other activities supported by user fees assessed against industry.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not
able to maintain regulatory compliance, we may lose any marketing authorization that we otherwise may have obtained, and we may not achieve
or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.
In December 2022, the U.S. Congress enacted
the Consolidated Appropriations Act for 2023, an omnibus appropriations bill, which included amendments to the FDCA under the Food and
Drug Omnibus Reform Act of 2022 (FDORA). In addition to the requirement that sponsors of pivotal trials submit diversity
action plans for pivotal trials (see *Government Regulation-Regulatory Landscape in the United States-Device Clinical
Studies*), FDORA included new requirements for cyber devices, defined as any medical device that is or includes software that
is validated, installed, or authorized by the manufacturer; can connect to the internet; and may be vulnerable to cybersecurity threats.
Under the FDORA amendments to the FDCA, any application for marketing authorization of a cyber device must include a software bill of
materials and a cybersecurity plan describing the methods by which the manufacturer will monitor, identify and address cybersecurity vulnerabilities.
Any failure by a cyber device manufacturer to comply with applicable cybersecurity requirements is considered a violation of the FDCA
and will subject the manufacturer to enforcement actions and possibly legal sanctions.
21
In the United States, there have been,
and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system. In March 2010, the
Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, (collectively,
the ACA) was signed into law and substantially changed the way healthcare is financed by both governmental and private
insurers in the United States. The ACA contains a number of provisions, including those governing enrollment in federal healthcare
programs, reimbursement adjustments and fraud and abuse changes. Additionally, the ACA provided incentives to programs that increase
the federal governments comparative effectiveness research and implemented payment system reforms including a national pilot
program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and
efficiency of certain healthcare services through bundled payment models.
Legislative and regulatory changes under the
ACA remain possible, although it is unknown what form any such changes or any law would take, and how or whether it may affect the medical
device industry as a whole or our business in the future. We expect that changes or additions to the ACA, the Medicare and Medicaid programs
and changes stemming from other healthcare reform measures, especially with regard to healthcare access, financing or other legislation
in individual states, could have a material adverse effect on the healthcare industry in the United States.
Moreover, there has recently been heightened
governmental scrutiny, including increasing legislative and enforcement interest, over the manner in which manufacturers set prices for
their marketed healthcare products, which has resulted in several Congressional inquiries and proposed and enacted legislation designed,
among other things, to bring more transparency to healthcare product pricing, review the relationship between pricing and manufacturer
patient programs and reform government program reimbursement methodologies for healthcare products. Individual states in the United States
have also become increasingly active in implementing regulations designed to control healthcare product pricing, including price or patient
reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures.
We cannot predict the likelihood, nature or
extent of government regulation that may arise from future legislation or administrative or executive action, either in the UnitedStates
or abroad. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit
the amounts that federal and state governments will pay for healthcare products and services. Moreover, if we are slow or unable to adapt
to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance,
our medical devices may lose any marketing authorization that may have been obtained and we may not achieve or sustain profitability,
which would adversely affect our business.
**U.S. and Foreign Data Security and Data
Privacy Laws**
****
HIPAA, as well as a number of other federal
and state privacy-related laws, extensively regulate the use and disclosure of individually identifiable health information, known as
protected health information or PHI.
HIPAA applies to health plans, healthcare
providers who engage in certain standard healthcare transactions electronically, such as electronic billing, and healthcare clearinghouses,
all of which are referred to as covered entities under HIPAA. State imposed health information privacy and security laws
typically apply based on licensure, for example, licensed providers or licensed entities are limited in their ability to use and share
health information.
22
****
Additionally, all U.S. states have
enacted legislation protecting the privacy and security of personal information, such as identifiable financial or
health information, social security numbers, credit card information and other personally identifiable information. These laws
overlap and apply simultaneously with federal privacy and security requirements and regulated entities must comply with all of them.
The California Consumer Privacy Act (CCPA) went into effect January 1, 2020, and is one of the most restrictive state
privacy laws, protecting a wide variety of personal information and granting significant rights to California residents with respect
to their personal information. Regulations under CCPA have been modified several times, and continue to be modified. Additionally, a
new privacy law, the California Privacy Rights Act, (CPRA) was approved by California voters in the election of
November 3, 2020 and went into effect in January of 2023. The CPRA modified the CCPA significantly, and may result in further
uncertainty, additional costs and expenses stemming from efforts to comply with this law, and increases the potential for harm and
liability for failure to comply. Among other things, the CPRA established a new regulatory authority, the California Privacy
Protection Agency, which is enacting new regulations and has expanded enforcement authority. Other states in the U.S. are
considering privacy laws similar to CCPA. Colorado, Connecticut, Delaware, Florida, Indiana, Iowa, Montana, New Jersey, Oregon,
Tennessee, Texas Virginia, and Utah have enacted similar data protection laws to California and other U.S. states have proposals
under consideration, increasing our regulatory compliance risk. In dealing with health information for the development of our
technology or for commercial purposes, we will be indirectly affected by HIPAA and state-imposed health information privacy and
cybersecurity laws because these laws regulate the ability of our potential customers and research collaborators to share health
information with us. Additionally, we must identify and comply with all applicable state laws for the protection of personal
information with respect to personal information that we collect.
****
In the event we market outside of the United
States, we will be subject to foreign privacy and data security laws that vary by jurisdiction, differ from those in the United States,
and may require us to implement additional compliance measures or change our business practices related to the collection and use of personal
and patient data. For example, in the European Union (EU), we will be subject to the EU General Data Protection Regulation
(GDPR) that significantly regulates the possession, use, and disclosure of personal information. In particular, medical
or health data, genetic data and biometric data where the latter is used to uniquely identify an individual are all classified as special
category data under the GDPR and are afforded greater protection and require additional compliance obligations. Noncompliance could
result in the imposition of fines, penalties, or orders to stop noncompliant activities. We may be subject to GDPR if we undertake operations
or transact business in the EU, offer products or services to individuals in the EU or monitor the behavior of individuals within the
EU.
****
**Disruptions to Information Technology
Systems and Cybersecurity Incidents**
****
We rely, and will continue to rely on, information
technology systems to keep financial and employment records, facilitate our research and development initiatives, manage our operations,
maintain quality control, maintain corporate records, communicate with staff, provide our services and operate other critical functions.
Our information technology systems, and those of our vendors and partners, are potentially vulnerable to disruption due to breakdown,
malicious intrusion and computer viruses or other disruptive events, including, but not limited to, natural disasters and catastrophes.
Cyberattacks and other malicious internet-based activity continue to increase, and cloud-based platform providers of services have been
and are expected to continue to be targeted, especially in the health-care industry. Methods of attacks on information technology systems
and data security breaches change frequently, are increasingly complex and sophisticated, including deployment of harmful malware and
key loggers, ransomware, a malicious website, social engineering and phishing scams, and other means to affect the confidentiality, integrity
and availability of our technology systems and data, and can originate from a wide variety of sources. In addition to traditional computer
hackers, malicious code, such as viruses and worms, denial-of-service attacks and sophisticated nation-state and nation-state
supported actors present a constant threat, including advanced persistent threat intrusions. Cyberattacks may also be due to employee
error or malfeasance, power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events,
and our system redundancy and other disaster recovery planning may be ineffective or inadequate in preventing or responding to any of
these circumstances. Techniques used in cybersecurity attacks to obtain unauthorized access, disable or sabotage information technology
systems are evolving rapidly with data breaches and other cybersecurity incidents becoming commonplace. We recognize the risk of cybersecurity
incidents and work to constantly evolve our incident response plans as the known threat vectors emerge. We vet and verify the cybersecurity
practices and compliance of our vendors to ensure they follow established guidelines, compliance requirements, and best practices related
to their industry. Internally, we utilize a cybersecurity maturity model based on the National Institute of Standards and Technology,
or NIST, standards to track and report on the current and future compliance and progress within the multiple areas of compliance and concern.
We intend to make steady measured improvements to our cybersecurity maturity along with investments in tools, and services that are aligned
with our growth and maturity. We intend to adhere to a baseline of best practices that include proper use of encryption of data and communications,
policies and procedures, and mitigation/validation practices that seek to ensure the approach is meeting or exceeding our commitment to
our plan. Despite our current or future efforts to protect against cybersecurity attacks and data security incidents, there is no guarantee
that our efforts are adequate to safeguard against all such attacks and incidents. Moreover, it is possible that we may not be able to
anticipate, detect, appropriately react and respond to, or implement effective preventative measures against, all cybersecurity incidents.
23
****
**Human Capital**
As of March 9, 2026, we had 26 employees,
11 of whom were engaged directly in research, development, regulatory and clinical activities, 8 in manufacturing and quality assurance
and 7 in marketing, sales, and administrative activities.
****
**Facilities**
Our principal executive offices are currently
located at 78 Fourth Avenue, Waltham, Massachusetts 02451, consisting of approximately 42,000 square feet. On October 14, 2021, we entered
into a lease amendment pursuant to which we agreed to lease additional space consisting of approximately 30,000 square feet located at
62 Fourth Avenue Waltham, MA 02451. On October 17, 2025, we entered into a second lease amendment which eliminates the second building
at 62 Fourth Avenue commencing on December 23, 2025. The leased space at 78 Fourth Avenue will expire on March 31, 2032. We consider our
current office space adequate for our current operations.
**Legal Proceedings**
As of the date of this Annual Report on Form
10-K, to our knowledge, we are not party to and our property is not subject to any material pending legal proceedings. However, from time
to time, we may become involved in legal proceedings or subject to claims that arise in the ordinary course of our business activities.
Regardless of the outcome, such legal proceedings or claims could have an adverse impact on us because of defense and settlement costs,
diversion of management resources, negative publicity and reputational harm, and other factors.
**NYSE Delisting Proceedings**
****
On March 3, 2026, the NYSE notified us that
it had determined to (A) immediately suspend trading in our Class A common stock due to a determination that we had fallen below the NYSEs
continued listing standard requiring listed companies to maintain an average global market capitalization over a consecutive 30 trading
day period of at least $15,000,000 pursuant to Section 802.01B of the NYSE Listed Company Manual, and (B) commence proceedings to delist
the Class A common stock. We will not appeal the delisting determination. The NYSE has indicated that it will apply to the Securities
and Exchange Commission to delist the Class A common stock by filing a Form 25.
We received approval of our application to
have the Class A common stock quoted on the OTCID market tier operated by OTC Markets. The Class A common stock commenced quotation on
the OTCID at the open of business on March 4, 2026 under the trading symbol of RBOT.
The OTCID is a significantly more limited
market than the NYSE, and quotation on any OTC market will result in a less liquid market for existing and potential holders of Class
A common stock to trade their shares and could further depress the trading price of the Class A common stock. We can provide no assurance
that the Class A common stock will continue to trade on this market, whether broker-dealers will provide and continue to provide public
quotes of the Class A common stock on this market, or whether the trading volume of the Class A common stock will be sufficient to provide
for an efficient trading market.
****
**Information Available on the Internet**
****
Our internet address is*https://www.vicarioussurgical.com*,
to which we regularly post copies of our press releases as well as additional information about us. We also maintain an Investor Relations
website as a routine channel for distribution of important information, including news releases, presentations, and financial statements
(*https://investor.vicarioussurgical.com*). We intend to use our Investor Relations website as a means of complying with our disclosure
obligations under Regulation FD. Accordingly, investors should monitor our Investor Relations website in addition to press releases, Securities
and Exchange Commission (the SEC) filings, and public conference calls and webcasts. Our annual reports on Form10-K,
quarterly reports on Form10-Q, current reports on Form8-K, and all amendments to those reports, will be available to you free
of charge through the Investor Relations section of our website as soon as reasonably practicable after such materials have been electronically
filed with, or furnished to, the SEC. The SEC maintains an internet site (*http://www.sec.gov*) that contains reports, proxy and
information statements, and other information regarding issuers that file electronically with the SEC. We include our web site address
in this Annual Report on Form 10-K only as an inactive textual reference. Information contained in our website does not constitute a part
of this report or our other filings with the SEC.
24
****
**ITEM 1A. RISK FACTORS.**
**
*Careful consideration should be given to the following risk factors,
in addition to the other information set forth in this Annual Report on Form 10-K, including the section of titled Managements
Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related
notes, and in other documents that we file with the SEC, in evaluating our company and our business. Investing in our securities involves
a high degree of risk. If any of the events described in the following risk factors actually occur, our business, financial condition,
results of operations and future growth prospects could be materially and adversely affected and the trading price of our securities could
decline. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of factors that
are described below and elsewhere in this Annual Report on Form 10-K.*
**
**Risks Related to Our Financial Condition and Capital Requirements**
**There is substantial doubt about whether we can continue as
agoing concern.**
****
To date, we have earned no revenues and have incurred an accumulated
deficit of $246.1 million. In addition, we have limited financial resources. As of December 31, 2025, we held cash and cash equivalents
of $2.6 million and short-term investments of $7.2 million, which, due to a reduction in headcount effective March 6, 2026, we believe
will provide funding for our operations through the second quarter of 2026. Accordingly, there is substantial doubt as to whether existing
cash resources are sufficient to enable us to continue our operations for the next 12 months after the date financial statements are issued
as agoing concern. Our management is evaluating and pursuing multiple strategies to obtain the required funding for our operations.
These strategies may include but are not limited to public offerings and private placements of equity and/or debt securities, licensing
and/or collaboration arrangements and strategic alternatives with third parties, or other funding from the government or third parties.
There can be no assurance that these funding efforts will be successful. If we are unable to obtain funds when needed or on acceptable
terms, we may be required to curtail our current development programs, cut operating costs, forego future development and other opportunities
or even liquidate our business interests, and investors may lose their investment.
**Our suspension from the New York Stock Exchange in connection
with its decision to commence delisting proceedings and our transition to OTCID market tier may adversely affect the liquidity and market
price of our Class A common stock.**
****
On March 3, 2026, the NYSE notified us that it had determined to (A)
immediately suspend trading in our Class A common stock due to a determination that we had fallen below the NYSEs continued listing
standard requiring listed companies to maintain an average global market capitalization over a consecutive 30 trading day period of at
least $15,000,000 pursuant to Section 802.01B of the NYSE Listed Company Manual, and (B) commence proceedings to delist the Class A common
stock. We will not appeal the delisting determination. The NYSE has indicated that it will apply to the Securities and Exchange Commission
to delist the Class A common stock by filing a Form 25. The Class A common stock commenced quotation on the OTCID at the open of business
on March 4, 2026 under the trading symbol of RBOT.
The OTCID is a significantly more limited market than the NYSE, and
quotation on any OTC market will result in a less liquid market for existing and potential holders of Class A common stock to trade their
shares and could further depress the trading price of the Class A common stock. We can provide no assurance that the Class A common stock
will continue to trade on this market, whether broker-dealers will provide and continue to provide public quotes of the Class A common
stock on this market, or whether the trading volume of the Class A common stock will be sufficient to provide for an efficient trading
market. The suspension and/or delisting of the Class A common stock from the
NYSE could negatively impact us by:
|
| reducing
the liquidity and market price of the Class A common stock as a result of the loss of market
efficiencies associated with the NYSE and the loss of federal preemption of state securities
laws; | |
|
| reducing
the number of investors willing to hold or acquire the Class A common stock, which could
negatively impact our ability to raise equity financing; | |
|
| impacting
our ability to use a registration statement to offer and sell freely tradable securities,
thereby preventing us from accessing the public capital markets; | |
|
| impairing
our ability to provide equity incentives to our employees; | |
|
| result
in the potential loss of confidence by investors, suppliers, partners and employees and fewer
business development opportunities; and | |
|
| result
in limited news and analyst coverage. | |
Additionally,
the market price of our Class A common stock may decline further, and stockholders may lose some or all of their investment.
****
25
**We have a limited operating history on which to assess the prospects
for our business, we have not generated any revenue from sales of the Vicarious Surgical System, and have incurred losses since inception.
We anticipate that we will continue to incur significant losses for at least the next several years as we develop and commercialize the
Vicarious Surgical System for use in ventral hernia repair procedures and future indications.**
Since inception, we have devoted substantially all of our financial
resources to developing our surgical robot. We have financed our operations primarily through the issuance of equity securities. We have
not generated revenue from the sale of the Vicarious Surgical System to date and have incurred significant losses. We incurred net losses
of $50.2 million and $63.2 million for the years ended December 31, 2025 and 2024, respectively. The amount of our future net losses will
depend, in part, on future sales and on-going development of the Vicarious Surgical System, the rate of our future expenditures and our
ability to obtain funding through the issuance of our securities, strategic collaborations or grants. We expect to continue to incur significant
losses for at least the next several years as we commercialize the Vicarious Surgical System for use in ventral hernia repair procedures
and seeks to develop and commercialize new surgical applications for the Vicarious Surgical System, such as gynecological, urological
or other general surgical applications. We anticipate that our expenses will increase substantially if and as we:
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continue to build our sales, marketing and distribution infrastructure to commercialize our Vicarious Surgical System for use in ventral hernia repair procedures; | |
|
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continue to develop the Vicarious Surgical System; | |
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seek to identify, assess, acquire, license and/or develop other product candidates and technologies or components thereof and subsequent generations of our current product candidates and technologies; | |
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seek to maintain, protect and expand our intellectual property portfolio; | |
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seek to attract and retain skilled personnel; and | |
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|
support our operations as a public company. | |
Our ability to generate future revenue from the Vicarious Surgical
System sales depends heavily on our success in many areas, including but not limited to:
|
|
|
launching and commercializing current and future uses for the Vicarious Surgical System, either directly or in conjunction with one or more collaborators or distributors; | |
|
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obtaining and maintaining regulatory authorization and/or clearance with respect to each application for the Vicarious Surgical System and maintaining regulatory compliance throughout relevant jurisdictions; | |
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maintaining clinical and economical value for end-users and customers in changing environments; | |
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addressing any competing technological and market developments; | |
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negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; | |
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establishing and maintaining distribution relationships with third parties that can provide adequate (in amount and quality) infrastructure to support market demand for the Vicarious Surgical System; and | |
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maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how. | |
**We have incurred significant losses since inception. As such,
you cannot rely upon our historical operating performance to make an investment or voting decision regarding us.**
Since inception, we have engaged in research and development activities.
We have financed our operations primarily through the issuance of equity securities. Our accumulated deficit as of December 31, 2025 was
$246.1 million. We do not know whether or when we will become profitable. Our ability to generate revenue and achieve profitability depends
upon our ability to accelerate the commercialization of the Vicarious Surgical System in line with the demand from new partnerships and
our aggressive business strategy. We may be unable to achieve any or all of these goals.
**We will need to raise additional funding to develop and commercialize
the Vicarious Surgical System and to expand our research and development efforts. This additional financing may not be available on acceptable
terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product commercialization
or development efforts or cease our operations.**
Our operations have consumed substantial amounts of cash since inception.
We expect to expend substantial additional amounts to commercialize the Vicarious Surgical System for use in ventral hernia repair procedures
and to develop new surgical applications for the Vicarious Surgical System. We will require additional capital to develop and commercialize
the Vicarious Surgical System for abdominal surgeries and to develop the Vicarious Surgical System for new surgical applications. As of
December 31, 2025, we held cash and cash equivalents of $2.6 million and short-term investments of $7.2 million. Due to a reduction in
headcount effective March 6, 2026, we estimate that our cash resources will be sufficient to fund operations and meet our obligations
through the second quarter of 2026. We follow the guidance of ASC Topic 205-40, *Presentation of Financial Statements-Going Concern*,
in order to determine whether there is substantial doubt about our ability to continue as a going concern for one year after the date
our financial statements are issued. Based on our current cash forecast, we expect that our present capital resources will not be sufficient
to fund our planned operations for that period of time, which raises substantial doubt as to our ability to continue as a going concern.
In addition, our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional
funds sooner than planned.
26
We cannot guarantee that future financing will be available in sufficient
amounts or on terms acceptable to us, if at all. Moreover, the terms of any future financing may adversely affect the holdings or the
rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance,
may cause the market price of our common stock to decline. The incurrence of indebtedness could result in increased fixed payment obligations,
and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations
on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our
ability to conduct our business. We could also be required to seek funds through arrangements with collaborative partners or otherwise
at an earlier stage than otherwise would be desirable, and we may be required to relinquish rights to some of our technologies or otherwise
agree to terms that are unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.
In addition, raising additional capital through the issuance of equity or convertible debt securities would cause dilution to holders
of our equity securities, and may affect the rights of then-existing holders of our equity securities. Even if we believe that we have
sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we
have specific strategic considerations.
**Risks Related to Our Business and Operations**
**We are a development stage company with a limited history of
operations and no products with marketing authorization in any jurisdiction, and we cannot assure you that we will ever have a commercialized
product.**
We are a development stage medical device company with a limited operating
history, and we currently do not have any products authorized for commercialization in any country or jurisdiction or any source of revenue.
We have been engaged in research and product development since our inception in 2014 and have invested all of our time and resources in
developing our technology and the Vicarious Surgical System, which we intend to commercialize initially for use in ventral hernia repair
procedures, followed by subsequent indications. The future success of our business will depend on our ability to obtain regulatory authorization
to market our Vicarious Surgical System, drive adoption, successfully introduce new surgical applications for the Vicarious Surgical System,
establish our sales force and distribution network, and control costs, all of which we may be unable to do. We have a limited history
of operations upon which you can evaluate our business and our operating expenses may increase significantly. Our lack of a significant
operating history also limits your ability to make a comparative evaluation of us, the Vicarious Surgical System and our prospects.
**If we do not successfully manage the development and launch of
the Vicarious Surgical System, our business, operating and financial results and condition could be adversely affected.**
We aim to launch the Vicarious Surgical System initially for use in
ventral hernia repair procedures, but to later expand the product to other abdominal surgical applications, including gynecological, urological
and general surgery uses. We face risks associated with developing and launching the Vicarious Surgical System for the first indication
specific use and other surgical applications. We are in the process of developing the Vicarious Surgical System, and will need to complete
beta testing, verification and validation prior to filing De Novo authorization with FDA. If we encounter development or manufacturing
challenges or discover errors during our development cycle, the launch dates of the initial and new surgical applications may be delayed,
which will cause delays in our ability to achieve our forecasted results. The expenses or losses associated with unsuccessful product
development or launch activities or lack of market acceptance of the Vicarious Surgical System could adversely affect our business or
financial condition.
**The market for the Vicarious Surgical System and the use of robotic-assisted
surgical technology is rapidly evolving, and increasingly competitive, as the healthcare industry is undergoing significant structural
change, which makes it difficult to forecast demand for our product candidates and technologies.**
The market for the Vicarious Surgical System and the use of
robotic-assisted surgical technology is rapidly evolving, and it is uncertain whether we will achieve and sustain high levels of
demand and market adoption. Our future financial performance will depend in part on growth in this market and on our ability to
adapt to the changing demands of customers. It is difficult to predict the future growth rate and size of our target market.
Negative publicity concerning the Vicarious Surgical System could limit market acceptance of the Vicarious Surgical System. If our
customers do not perceive the benefits of the Vicarious Surgical System, when or if it is authorized for marketing, or if the
Vicarious Surgical System does not attract new customers, then our market may not develop at all, or it may develop more slowly than
we expect. Our success will depend to a substantial extent on the willingness of healthcare organizations to increase their use of
our technology and our ability to demonstrate the value of our technology relative to competing products to existing and potential
customers. If healthcare organizations do not recognize or acknowledge the benefits of the Vicarious Surgical System or if we are
unable to reduce healthcare costs or drive positive health outcomes, then the market for our solutions might not develop at all, or
it might develop more slowly than we expect.
27
**Because our markets are highly competitive, customers may choose
to purchase our competitors products or services or may not accept the Vicarious Surgical System for use in ventral hernia repair
procedures, which would result in a reduced ability to generate future revenue.**
Robotic-assisted surgery using the Vicarious Surgical System is a technology
that competes with established and emerging treatment options in both disease management and reconstructive medical procedures. These
competitive treatment options include conventional open surgery and minimally invasive approaches. Some of these procedures are widely
accepted in the medical community and, in many cases, have a long history of use. Studies could be published that show that other treatment
options are more beneficial and/or cost-effective than robotic-assisted surgery. We cannot be certain that physicians will use our product
candidates to replace or supplement established treatments or that our product candidates will be competitive with current or future technologies,
when or if those product candidates are authorized for marketing.
Additionally, we face or expect to face competition from companies
that develop or have developed robotic-assisted surgical systems and products. Companies have introduced products in the field of robotic
surgery or have made explicit statements about their efforts to enter the field including, but not limited to, the following companies:
Intuitive Surgical, Inc.; Johnson & Johnson (including their wholly-owned subsidiaries Ethicon Endo-Surgery, Inc., Auris Health, Inc.
and Verb Surgical Inc.); Medtronic plc (including their wholly-owned subsidiary Covidien LP); Virtual Incision Corporation; CMR Surgical
Ltd.; and Stryker Corporation. Other companies with substantial experience in industrial robotics could potentially expand into the field
of surgical robotics and become competitors. Our ability to generate future revenue may be reduced due to pricing pressure if our competitors
develop and market products that are more effective or less expensive than our future commercial product candidates. If we are unable
to compete successfully, our ability to generate future revenue will suffer, which could have a material adverse effect on our business,
financial condition, result of operations, or cash flows.
**Our success depends upon market acceptance of the Vicarious Surgical
System for use in ventral hernia repair procedures, our ability to develop and commercialize the Vicarious Surgical System for use in
ventral hernia repair procedures and additional surgical applications and generate revenues, and our ability to identify new markets for
our technology.**
We have developed and are engaged in the development of the Vicarious
Surgical System initially for use in ventral hernia repair procedures. Achieving physician, patient, and third-party payor acceptance
of robotic-assisted surgery as a preferred method of performing surgery is crucial to our success. Our success will depend on the acceptance
of the Vicarious Surgical System in the United States and global health-care markets, when or if it is authorized for marketing in those
jurisdictions. We are faced with the risk that the marketplace will not be receptive to the Vicarious Surgical System over competing products,
including traditional and existing robotic-assisted surgical procedures used in hospitals and ASCs, and that we will be unable to compete
effectively. Factors that could affect our ability to successfully commercialize the Vicarious Surgical System for use in ventral hernia
repair procedures and to commercialize any potential future product candidates and technologies include:
|
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challenges of developing or acquiring externally-developed technology solutions that are adequate and competitive in meeting the requirements of next-generation design challenges; and | |
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|
dependence upon hospitals, ASCs, surgeons and other healthcare practitioners acceptance of the Vicarious Surgical System. | |
Even if we can prove the safety and effectiveness of the
Vicarious Surgical System and it receives marketing authorization, hospitals, ASCs, or surgeons may elect not to use it. In
addition, hospitals, ASCs and surgeons may be slow to adopt the Vicarious Surgical System because of the perceived liability risks
arising from the use of new products and the uncertainty of reimbursement from third-party payors, particularly in light of ongoing
healthcare reform initiatives and the evolving healthcare environment.
28
Broad use of the Vicarious Surgical System will require training of
surgical teams. We expect that there will be a learning process involved for surgical teams to become proficient in the use of the Vicarious
Surgical System. Market acceptance could be delayed due to the time required to complete this training. We may not be able to rapidly
train surgical teams in numbers sufficient to generate adequate demand for our product candidates. We cannot assure investors that the
Vicarious Surgical System or any future product candidates and technologies will gain broad market acceptance. If the market for the Vicarious
Surgical System or any future product candidates and technologies fail to develop or develops more slowly than expected, or do not achieve
or sustain market acceptance, our business and operating results would be materially and adversely affected.
**Surgeons, hospitals, ASCs and distributors may have existing
relationships with other medical device companies that make it difficult for us to establish new relationships with them, and as a result,
we may not be able to sell and market the Vicarious Surgical System effectively.**
We believe that to sell and market the Vicarious Surgical System effectively,
when or if the product receives marketing authorization, we must establish relationships with key surgeons, hospitals and ASCs in the
field of abdominal surgery. Many of these key surgeons, hospitals and ASCs already have long-standing relationships with large, well-known
companies that dominate the medical device industry through collaborative research programs and other relationships. Because of these
existing relationships, some of which may be contractually enforced, surgeons, hospitals and ASCs may be reluctant to adopt the Vicarious
Surgical System, particularly if it competes with or has the potential to compete with products and technologies supported by these existing
relationships or through their own collaborative research programs. Even if these surgeons, hospitals and ASCs purchase the Vicarious
Surgical System, they may be unwilling to enter into collaborative relationships with us to promote joint marketing programs or to provide
us with clinical and financial data.
**Any failure in our efforts to train surgeons, hospital or ASC
staff could result in lower than expected product sales and potential liabilities.**
A critical component of our future sales and marketing efforts is the
training of a sufficient number of surgeons and hospital staff to properly use the Vicarious Surgical System, when or if it is authorized
for marketing. We rely on surgeons and hospital staff to devote adequate time to learn to use our future product candidates and technologies.
Convincing surgeons, hospital and ASC staff to dedicate the time and resources necessary for adequate training in the use of the Vicarious
Surgical System will be challenging, and we cannot assure you we will be successful in these efforts. If surgeons, hospital or ASC staff
are not properly trained, they may misuse or ineffectively use the Vicarious Surgical System. If nurses or other members of the hospital
or ASC staff are not adequately trained to assist in using the Vicarious Surgical System, surgeons may be unable to use the Vicarious
Surgical System. Insufficient training may result in unsatisfactory patient outcomes, patient injury and related liability or negative
publicity, which could have an adverse effect on our product sales or create substantial potential liabilities.
**Robotic-assisted surgical device development is costly and involves
continual technological change, which may render the Vicarious Surgical System obsolete.**
The market for robotic-assisted surgical devices is characterized by
rapid technological change, medical advances and evolving industry standards. Any one of these factors could reduce the demand for the
Vicarious Surgical System, when or if it is authorized for marketing, or require substantial resources and expenditures for research,
design and development to avoid technological or market obsolescence.
Our success will depend on our ability to enhance our current technology,
services and systems and develop or acquire and market new technologies to keep pace with technological developments and evolving industry
standards, while responding to changes in customer needs. A failure to adequately develop or acquire device enhancements or new devices
that will address changing technologies and customer requirements adequately, or to introduce such devices on a timely basis, may have
a material adverse effect on our business, financial condition and results of operations.
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We might have insufficient financial resources to improve existing
devices, advance technologies and develop new devices at competitive prices. Technological advances by one or more competitors or future
entrants into the field may result in the Vicarious Surgical System becoming non-competitive or obsolete, which may decrease revenues
and profits and adversely affect our business and results of operations.
We may encounter significant competition across our existing and future
planned product candidates and technologies and in each market in which we sell or plan to sell the Vicarious Surgical System from various
companies, many of which have greater financial and marketing resources than us. Our primary competitors include Intuitive Surgical, Johnson
& Johnson (including their wholly-owned subsidiaries Ethicon Endo-Surgery, Inc., Auris Health, Inc. and Verb Surgical Inc.), and Medtronic,
which are currently the top manufacturers of robotic-assisted surgical devices.
In addition, our primary competitors, which are well-established medical
device manufacturers with significant resources, may engage in aggressive marketing tactics. Competitors may also possess the ability
to commercialize additional lines of products, bundle products or offer higher discounts and incentives to customers in order to gain
a competitive advantage. If the prices of competing products are lowered as a result, we may not be able to compete effectively.
**We are highly dependent upon the continued contributions of our
management team. The loss of their services could harm our business, and if we are unable to attract, recruit, train, retain, motivate
and integrate key personnel, we may not achieve our goals.**
Our future success depends on our ability to attract, recruit, train,
retain, motivate and integrate key personnel, including our Chief Executive Officer, Stephen From, our co-founder and President, Adam
Sachs, our Chief Financial Officer, Sarah Romano, and our co-founder and Chief Technology Officer, Sammy Khalifa, as well as our management
team and our research and development, manufacturing, sales and marketing personnel. Our future business and results of operations depend
in significant part upon the continued contributions of Messrs. From, Sachs, and Khalifa, and Ms. Romano. If we were to lose their services
or if they fail to perform in their current positions, or if we are not able to attract and retain skilled employees in addition to Messrs.
From, Sachs, and Khalifa and Ms. Romano, this could adversely affect the development and implementation of our business plan and substantially
harm our business. Competition for qualified personnel is intense.
In addition, we rely upon technical and scientific employees or third-party
contractors to effectively establish, manage and grow our business. Consequently, we believe that our future viability will depend largely
on our ability to attract and retain highly skilled robotics engineers, artificial intelligence engineers, software engineers, hardware
engineers and optical engineers, as well as other managerial, sales, scientific and technical personnel. In order to effectively recruit
these personnel, we may need to pay higher compensation or fees to our employees or consultants than we currently expect, and such higher
compensation payments may have a negative effect on our operating results. Competition for experienced, high-quality personnel is intense,
and we cannot assure investors that we will be able to recruit and retain such personnel. Our growth depends, in particular, on attracting
and retaining highly trained sales personnel with the necessary technical background and ability to understand the Vicarious Surgical
System at a technical level to effectively identify and sell to potential new customers and develop new uses for the Vicarious Surgical
System. Because of the technical and complex nature of the Vicarious Surgical System and the dynamic market in which we compete in, any
failure to attract, recruit, train, retain, motivate and integrate qualified personnel could materially delay development of the Vicarious
Surgical System and harm our operating results and growth prospects.
**We will need to expand our organization, and we may experience
difficulties in recruiting needed additional employees and consultants, which could disrupt our operations.**
As our development and commercialization plans and strategies develop,
we will need additional managerial, operational, sales, marketing, financial, legal and other resources. The competition for qualified
personnel in the medical device industry is intense. Due to this intense competition, we may be unable to attract and retain the qualified
personnel necessary for the development of our business or to recruit suitable replacement personnel.
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Our management may need to divert a disproportionate amount of our
attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities. We may not
be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, operational mistakes,
loss of business opportunities, loss of employees and reduced productivity among remaining employees. Our expected growth could require
significant capital expenditures and may divert financial resources from other projects, such as the development of additional surgical
applications for the Vicarious Surgical System. If our management is unable to effectively manage our growth, our expenses may increase
more than expected, our ability to generate and/or grow revenue could be reduced and we may not be able to implement our business strategy.
Our future financial performance and our ability to commercialize the Vicarious Surgical System and compete effectively will depend, in
part, on our ability to effectively manage any future growth.
**We face significant risks to our business when we engage in the
outsourcing of engineering work, including outsourcing of software work overseas, which, if not properly managed, could result in the
loss of valuable intellectual property, increased costs due to inefficient and poor work product, and subject us to export control restrictions
which could impede or prevent us from working with partners internationally, which could harm our business, including our financial results,
reputation and brand.**
****
We have outsourced engineering work related to the design and development
of software. We have worked, and expect to in the future work, with companies located in jurisdictions outside of the United States. We
have limited experience in the outsourcing of engineering and software development to third parties located internationally that operate
under different laws and regulations than those in the United States. If we are unable to properly manage and oversee the outsourcing
of this engineering and other work related to our products, we could suffer the loss of valuable intellectual property, or the loss of
the ability to claim such intellectual property, including patents, trademarks, trade secrets and copyrights. We could also be subjected
to increased regulatory and other scrutiny related to export control restrictions which could impede or prevent us from working with international
partners. Additionally, instead of saving money, we could incur significant additional costs as a result of inefficient or delayed engineering
services or poor work product. If this were to occur, our business would be harmed, including our financial results, reputation and brand.
****
**We have no experience in marketing and selling the Vicarious
Surgical System and if we are unable to successfully commercialize the Vicarious Surgical System, our business and operating results will
be adversely affected.**
We have no experience marketing and selling the Vicarious Surgical
System, should we receive marketing authorization from the FDA and other regulatory authorities. We currently intend to sell the Vicarious
Surgical System to hospitals and ASCs. Future sales of the Vicarious Surgical System will depend in large part on our ability to effectively
market and sell the Vicarious Surgical System, successfully manage and expand our sales force, and increase the scope of our marketing
efforts. We may also enter into distribution arrangements in the future. Because we have limited experience in marketing and selling the
Vicarious Surgical System, our ability to forecast demand, the infrastructure required to support such demand and the sales cycle to customers
is unproven. If we do not build an efficient and effective marketing and sales force, our business and operating results will be adversely
affected.
**We expect to generate a portion of our revenue internationally
in the future and may become subject to various additional risks relating to our international activities, including any clinical trials
or product studies conducted outside of the United States, which could adversely affect our business, operating results and financial
condition.**
We intend to generate revenues from international sources as we expand
our sales and marketing opportunities internationally. We have limited experience operating internationally and engaging in international
business involves a number of difficulties and risks, including:
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the challenges associated with building local brand awareness, obtaining local key opinion leader support and clinical support, implementing reimbursement strategies and building local marketing and sales teams; | |
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required compliance with foreign regulatory requirements and laws, including regulations and laws relating to patient data and medical devices; | |
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trade relations among the United States and those foreign countries in which our future customers, distributors, manufacturers and suppliers have operations, including protectionist measures such as tariffs and import or export licensing requirements, whether imposed by the United States or such foreign countries; | |
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difficulties and costs of staffing and managing foreign operations; | |
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difficulties protecting, procuring or enforcing intellectual property rights internationally; | |
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required compliance with anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act, data privacy requirements, labor laws and anti-competition regulations; | |
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laws and business practices that may favor local companies; | |
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longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; | |
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political and economic instability and war or other military conflict, which could have a material adverse impact on our sales; and | |
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potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements and other trade barriers | |
We dedicate significant resources to our international operations and
are unable to manage these risks effectively, our business, operating results and financial condition may be adversely affected.
**If we experience decreasing prices for our product candidates
and technologies and are unable to reduce our expenses, including the per unit cost of producing our product candidates and technologies,
there may be a material adverse effect on our business, results of operations, financial condition and cash flows.**
We may experience decreasing prices for the Vicarious Surgical System
upon regulatory authorization due to pricing pressure from managed care organizations and other third-party payors and suppliers, increased
market power of our payors as the medical device industry consolidates, and increased competition among suppliers, including manufacturing
services providers. If the prices for the Vicarious Surgical System decrease and we are unable to reduce our expenses, including the cost
of sourcing materials, logistics and the cost to manufacture the Vicarious Surgical System, our business, results of operations, financial
condition and cash flows may be adversely affected. To the extent that we engage in sales to large hospital networks, we may be subject
to procurement discounts, which could have a negative impact on the prices of our product candidates and technologies.
**We may experience manufacturing problems or delays that could
limit the growth of our revenue or increase our losses.**
We may encounter unforeseen situations that would result in delays
or shortfalls in our production as well as delays or shortfalls caused by our outsourced manufacturing suppliers and by other third-party
suppliers who manufacture components for the Vicarious Surgical System. The FDA has established comprehensive and prescriptive regulations
for manufacturers of finished medical devices and device components, which require them to establish and maintain processes and procedures
to adequately control device manufacturing operations and environmental conditions that could adversely affect product quality and impact
patient safety. Clean room standards are an example of these requirements. The failure of us or our third-party component manufacturers
or suppliers to comply with applicable standards and regulatory requirements could delay the production of the Vicarious Surgical System.
We or our third-party component manufacturers or suppliers may encounter
difficulties in scaling up or maintaining production relating to the Vicarious Surgical System, including:
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problems involving production yields; | |
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quality control and assurance; | |
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component or material supply shortages; | |
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import or export restrictions on components, materials or technology; | |
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shortages of qualified personnel; and | |
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compliance with state and federal regulations. | |
If we are unable to keep up with demand for the Vicarious Surgical
System, our future revenue could be impaired, market acceptance for the Vicarious Surgical System could be adversely affected and our
customers might instead purchase our competitors products. Our inability to successfully manufacture the Vicarious Surgical System
would have a material adverse effect on our operating results.
**We rely on limited or sole suppliers for some of the materials
and components used in the Vicarious Surgical System, and may not be able to find replacements or immediately transition to alternative
suppliers, which could require us to redesign aspects of the Vicarious Surgical System and which would have a material adverse effect
on our business, financial condition, results of operations and reputation.**
We rely on limited or sole suppliers for certain materials and components
that are used in the Vicarious Surgical System. While we periodically forecast our needs for such materials and enters into standard purchase
orders with them, we do not have long-term contracts with some of these suppliers. If we were to lose such suppliers, or if such suppliers
were unable to fulfill our orders or to meet our manufacturing specifications, there can be no assurance that we will be able to identify
or enter into agreements with alternative suppliers on a timely basis or on acceptable terms, if at all. Furthermore, if we are required
to change the manufacturer of a key component of the Vicarious Surgical System, we would be required to verify that the new manufacturer
maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines, and we may
be required to redesign aspects of the Vicarious Surgical System to accommodate the new component, which would result in significant delays
and additional costs. An interruption in our operations could occur if we encounter delays or difficulties in redesigning the Vicarious
Surgical System, or securing these materials and components, or if the quality of the materials and components supplied do not meet our
requirements, or if we cannot then obtain an acceptable substitute. The time and effort required to redesign the Vicarious Surgical System,
or to qualify a new supplier and ensure that the new materials and components provide the same or better quality results could result
in significant additional costs. Any such interruption could significantly affect our business, financial condition, results of operations
and reputation. While we believe that our supplies of components and materials are currently sufficient for us to continue the development
of our product candidates and technologies without a disruption to our business, in the event that we must replace one of our suppliers,
there can be no assurance that we can maintain this level of inventory in the future.
**Acquisitions, joint ventures or strategic alliances could disrupt
our business, cause dilution to our stockholders and otherwise harm our business.**
We may acquire other businesses or product candidates and technologies,
as well as pursue strategic alliances, joint ventures, technology licenses or investments in complementary businesses. We have not engaged
in any of these strategic transactions to date, except for our Center of Excellence partners, and our ability to do so successfully is
unproven. Any of these strategic transactions could be material to our financial condition and operating results and expose us to many
risks, including:
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disruption in our relationships with customers, distributors, manufacturers or suppliers as a result of such a transaction; | |
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unanticipated liabilities related to acquired companies; | |
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difficulties integrating acquired personnel, technologies and operations into our existing business; | |
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diversion of managements time and focus away from operating our business to acquisition integration challenges; | |
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increases in our expenses and reductions in our cash available for operations and other uses; and | |
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possible write-offs or impairment charges relating to acquired businesses. | |
Foreign acquisitions involve unique risks in addition to those mentioned
above, including those related to the integration of operations across different cultures and languages, currency risks and the particular
economic, political and regulatory risks associated with specific countries.
In addition, the anticipated benefit of any acquisition may not materialize.
Future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent
liabilities or amortization expenses or write-offs of goodwill, any of which could harm our financial condition. We cannot predict the
number, timing or size of future joint ventures, strategic alliances or acquisitions, if any, or the effect that any such transactions
might have on our operating results.
**If we do not successfully develop, optimize and operate our sales
and distribution channels or we do not effectively expand and update infrastructure, our operating results and customer experience may
be negatively impacted.**
If we do not adequately predict market demand or otherwise develop,
optimize and operate our sales and distribution channels successfully, it could result in excess or insufficient inventory or fulfillment
capacity, increased costs, or immediate shortages in product or component supply, or harm our business in other ways. In addition, if
we do not maintain adequate infrastructure to enable us to, among other things, manage our purchasing and inventory, it could negatively
impact our operating results.
**If we are unable to continue the development of an adequate sales
and marketing organization and/or if our direct sales organization is not successful, we may have difficulty achieving market awareness
and selling our product and technologies in the future.**
We must develop and grow our sales and marketing organization and enter
into partnerships or other arrangements to market and sell our product candidates and technologies and/or collaborate with third parties,
including distributors and others, to market and sell our product candidates and technologies to develop and maintain the commercial success
of the Vicarious Surgical System, when or if we are authorized for marketing, and to achieve commercial success for any of our future
product candidates and technologies. Developing and managing a direct sales organization is a difficult, expensive and time-consuming
process.
To develop our sales and marketing organization to successfully achieve
market awareness and sell our product candidates and technologies after they receive appropriate marketing authorization, we must:
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continue to recruit and retain adequate numbers of effective and experienced sales and marketing personnel; | |
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effectively train our sales and marketing personnel in the benefits and risks of the Vicarious Surgical System; | |
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establish and maintain successful sales, marketing, training and education programs that educate healthcare professionals so they can appropriately inform their patients about the Vicarious Surgical System; | |
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manage geographically dispersed sales and marketing operations; and | |
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effectively train our sales and marketing personnel on the applicable fraud and abuse laws that govern interactions with health-care practitioners as well as current and prospective patients and maintain active oversight and auditing measures to ensure continued compliance. | |
We may not be able to successfully manage our sales force or increase
our product sales at acceptable rates.
**If we are unable to establish and maintain adequate sales and
marketing capabilities or enter into and maintain arrangements with third parties to sell and market the Vicarious Surgical System, our
business may be harmed.**
We cannot guarantee that we will be able to establish and maintain
an adequate volume of sales in the future. A substantial reduction in sales could have a material adverse effect on our operating performance.
To the extent that we enter into additional arrangements with third parties to perform sales or marketing services in the United States,
Europe or other countries, our product margins could be lower than if we directly marketed and sold the Vicarious Surgical System. To
the extent that we enter into co-promotion or other marketing and sales arrangements with other companies, any revenue received will depend
on the skills and efforts of others, and we cannot predict whether these efforts will be successful. In addition, the growth of market
acceptance of the Vicarious Surgical System by healthcare practitioners outside of the United States will largely depend on our ability
to continue to demonstrate the relative safety, effectiveness, reliability, cost-effectiveness and ease of use of the Vicarious Surgical
System. If we are unable to do so, we may not be able to increase product revenue from our sales efforts in other countries. If we are
unable to establish and maintain adequate sales, marketing and distribution capabilities, independently or with others, our future revenue
may be reduced and our business may be harmed.
**Quality problems could lead to recalls or safety alerts and/or
reputational harm and could have a material adverse effect on our business, results of operations, financial condition and cash flows.**
The quality of our product candidates and technologies and future commercial
product candidates and technologies is very important to us and our customers due to the serious and costly consequences of product failure.
Our success depends on the quality and reliability of the Vicarious Surgical System. Our business exposes us to potential product liability
risks that are inherent in the design, manufacture, and marketing of medical devices. While we take measures to ensure that components,
product candidates and technologies are manufactured to stringent quality specifications, the Vicarious Surgical System incorporates mechanical
parts, electrical components, optical components, packaging and computer software, any of which may contain errors or exhibit failures,
especially when the finished system is first introduced. In addition, new product candidates or modifications may contain undetected errors
or performance problems that, despite testing, are discovered only after marketing authorization and commercial shipment. Because the
Vicarious Surgical System is being designed to perform complex surgical procedures, due to the serious and costly consequences of product
failure, we and our future customers have an increased sensitivity to such defects.
Although the Vicarious Surgical System is subject to stringent quality
processes and controls, we cannot provide assurance that our system will not experience component aging, errors, performance problems,
manufacturing nonconformities, or design defects or that unexpected risks to users or patients will not be discovered during commercial
use. If we experience product flaws or performance problems, any or all of the following could occur:
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delays in shipments; | |
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loss of revenue; | |
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delay in market acceptance; | |
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diversion of resources; | |
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damage to reputation; | |
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product recalls; | |
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regulatory actions; | |
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increased service or warranty costs; or | |
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product liability claims. | |
Additionally, the manufacture and production of the Vicarious Surgical
System requires a highly controlled and clean environment to minimize particles and other yield- and quality-limiting contaminants. Weaknesses
in process control or minute impurities in materials may result in defective products. If we are not able to maintain stringent quality
controls, or if contamination problems arise, we may experience delays in development and commercialization efforts and may be subject
to regulatory enforcement actions, which would harm our business and results of operations.
If we or our third-party component manufacturers or suppliers fail
to meet any applicable product quality standards and the Vicarious Surgical System is the subject of recalls, safety alerts or other regulatory
enforcement actions, our reputation could be damaged, we could lose customers, and our revenue and results of operations could decline.
**If we are not able to develop and release new surgical applications
for the Vicarious Surgical System, or successful enhancements, new features and modifications to the Vicarious Surgical System or to achieve
adequate clinical utility, our business, financial condition and results of operations could be adversely affected.**
The markets in which we operate are characterized by rapid technological
change, frequent new product and service introductions and enhancements, changing customer demands, and evolving industry standards. The
introduction of products embodying new technologies can quickly make existing products obsolete and unmarketable. Additionally, changes
in laws and regulations could impact the usefulness of the Vicarious Surgical System and could necessitate changes or modifications to
the Vicarious Surgical System to accommodate such changes. We invest substantial resources in researching and developing new developments
to the Vicarious Surgical System and enhancing the Vicarious Surgical System by incorporating additional features, improving functionality,
and adding other improvements to meet customers evolving needs. The success of any enhancements, improvements or any new features
to the Vicarious Surgical System, when or if authorized for marketing by the FDA, depends on several factors, including timely completion,
competitive pricing, adequate quality testing, integration with new and existing technologies and third-party partners technologies
and overall market acceptance. We may not succeed in developing, marketing and delivering on a timely and cost-effective basis enhancements
or improvements to the Vicarious Surgical System or any new product candidates and technologies that respond to continued changes in market
demands or new customer requirements, and any enhancements or improvements to the Vicarious Surgical System or any new solutions may not
achieve market acceptance or authorization. Since developing the Vicarious Surgical System is complex, the timetable for the release of
new enhancements is difficult to predict, and we may not offer new updates as rapidly as our customers require or expect. Any new product
candidates and technologies that we develop may not be introduced in a timely or cost-effective manner, may contain errors or defects,
or may not achieve the broad market acceptance necessary to generate sufficient revenue. Moreover, even if we introduce new product candidates
and technologies, we may experience a decline in revenue from the Vicarious Surgical System that is not offset by revenue from the new
product candidates and technologies. For example, customers may delay making purchases of new product candidates and technologies to permit
them to make a more thorough evaluation of these product candidates and technologies or until industry and marketplace reviews become
widely available. Customers may also delay purchasing a new product because their existing Vicarious Surgical System or other devices
continues to meet their needs. Some customers may hesitate to migrate to a new product due to concerns regarding the performance of the
new product. In addition, we may lose existing customers who choose a competitors products. This could result in a temporary or
permanent revenue shortfall and adversely affect our business, financial condition and results of operations.
The introduction of new products and solutions by competitors,
the development of entirely new technologies to replace existing offerings or shifts in healthcare benefits trends could make our
future commercial products and technologies obsolete or adversely affect our business, financial condition and results of
operations. We may experience difficulties with industry standards, design or marketing that could delay or prevent our development,
introduction or implementation of new product candidates and technologies, enhancements, additional features or capabilities. If
customers do not widely purchase and adopt our future product candidates and technologies, we may not be able to realize a return on
our investment. If we do not accurately anticipate customer demand or if we are unable to develop, license or acquire new features
and capabilities on a timely and cost-effective basis, or if such enhancements do not achieve market acceptance, it could result in
adverse publicity, loss of revenue or market acceptance or claims by customers brought against us, each of which could have a
material and adverse effect on our reputation, business, results of operations and financial condition.
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**Unfavorable global economic conditions could adversely affect
our business, financial condition or results of operations.**
Our results of operations could be adversely affected by general conditions
in the global economy and in the global financial markets, including changes in inflation, interest rates and overall economic conditions
and uncertainties. To the extent inflation or other factors increase our business costs, it may not be feasible to offset higher costs
through manufacturing efficiencies. An economic downturn could result in a variety of risks to our business, including weakened demand
for our future product candidates and technologies and our inability to raise additional capital when needed on acceptable terms, if at
all. A weak or declining economy could also result in further constraints on our third-party component manufacturers and suppliers or
cause future customers to delay making payments for our product candidates and technologies. Any of the foregoing could harm our business
and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely affect
our business.
**Geopolitical conflicts could potentially affect our sales and
disrupt our operations and could have a material adverse impact on us.**
Geopolitical conflicts could adversely impact our operations or those
of our suppliers, manufacturers or customers. The extent to which these events impact our operations will depend on future developments,
which are highly uncertain and cannot be predicted with confidence. If the uncertainty surrounding geopolitical conflicts and in the global
marketplace continues, or if we, or any of our suppliers, manufacturers or customers encounter any disruptions to our or their respective
operations or facilities, then we or they may be prevented or delayed from effectively operating our or their business, respectively,
and the marketing and sale of our product candidates and our financial results could be adversely affected.
**The requirements of being a public company may strain our resources
and divert managements attention, which could adversely affect our business, results of operations, and financial condition.**
We have incurred and will continue to incur significant legal, accounting
and other expenses that we did not incur as a private company, including costs associated with public company reporting requirements.
We will also continue to incur costs associated with corporate governance requirements, including requirements under the Sarbanes-Oxley
Act, as well as rules implemented by the SEC and the applicable stock exchanges or quotation services. We expect that the requirements
of these rules and regulations will continue to increase our legal, accounting, and financial compliance costs, make some activities more
difficult, time-consuming, and costly, and place significant strain on our personnel, systems, and resources. For example, our management
team will need to devote substantial time regarding operations as a public company and compliance with applicable laws and regulations.
As a result of the complexity involved in complying with the rules and regulations applicable to public companies, our managements
attention may be diverted from other business concerns, which could harm our business, results of operations, and financial condition.
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**We have identified a material weakness in our internal control
over financial reporting. If we are unable to successfully remediate this material weakness in our internal control over financial reporting,
we may not be able to report our financial condition or results of operations accurately or in a timely manner, which may adversely affect
investor confidence in us and, as a result, materially and adversely affect our business and the value of our Class A common stock.**
We have identified material weaknesses in our internal control over
financial reporting for the years ended December 31, 2025, and 2024. The material weaknesses we identified were as follows:
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we did not maintain an effective control environment as we did not maintain a sufficient complement of accounting and financial reporting resources commensurate with our financial reporting requirements. | |
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we did not maintain an effective risk assessment process, which led to improperly designed controls. | |
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we did not maintain appropriate control activities to support the appropriate segregation of duties over the review of account reconciliations and manual journal entries, and safeguarding of assets. | |
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we did not design and implement controls related to information technology, including access and change management. | |
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we did not document, thoroughly communicate and monitor controls processes and relevant accounting policies and procedures. | |
These material weaknesses could result in a misstatement of account
balances or disclosures that would result in a material misstatement to our annual or interim financial statements that would not be prevented
or detected. Had we performed an evaluation of our internal control over financial reporting in accordance with Section 404, additional
control deficiencies may have been identified by management, and those control deficiencies could have also represented one or more material
weaknesses.
While we have taken steps to remediate the material weaknesses,
we cannot assure you that these measures will significantly improve or remediate the material weaknesses described above. We also
cannot assure you that we have identified all or that we will not have additional material weaknesses in the future. Accordingly, a
material weakness may still exist when we report on the effectiveness of our internal control over financial reporting for purposes
of our attestation when required by reporting requirements under the Exchange Act or Section 404 of the Sarbanes-Oxley Act. Further,
while we remain a non-accelerated filer and smaller reporting company, we will not be required to include an attestation report on
internal control over financial reporting issued by our independent registered public accounting firm.
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We expect to incur additional costs to remediate these control deficiencies,
though there can be no assurance that our efforts will be successful or avoid potential future material weaknesses. If we are unable to
successfully remediate our existing or any future material weaknesses in our internal control over financial reporting, or if we identify
any additional material weaknesses, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to
maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange
listing requirements, investors may lose confidence in our financial reporting, and our stock price may decline as a result. We also could
become subject to investigations by FINRA, the SEC or other regulatory authorities.
**Our ability to use net operating losses to offset future income
may be subject to certain limitations.**
As of December 31, 2025, we had federal net operating loss carry forwards
(NOLs) to offset future taxable income of approximately $209.9 million, of which approximately $2.8 million will expire
at various dates from 2034 through 2037, if not utilized. A lack of future taxable income would adversely affect our ability to utilize
these NOLs. In addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the Code), a corporation that
undergoes an ownership change is subject to limitations on its ability to utilize its pre-change NOLs and other pre-change
tax attributes (such as research tax credits) to offset post-change taxable income. For these purposes, an ownership change generally
occurs where the equity ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporations
stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a three-year period (calculated
on a rolling basis). Our existing NOLs may be subject to limitations arising out of previous ownership changes and we may be limited as
to the amount that can be utilized each year as a result of such previous ownership changes. In addition, future changes in our stock
ownership, including future offerings, as well as other changes that may be outside of our control, could result in additional ownership
changes under Section 382 of the Code. Our NOLs may also be impaired under similar provisions of state law. We have not conducted a study
to assess whether an ownership change has occurred, whether there have been multiple ownership changes since inception or whether there
has been an ownership change as the result of the Business Combination due to the significant complexity and costs associated with such
a study. We have recorded a full valuation allowance related to our NOLs and other deferred tax assets due to the uncertainty of the ultimate
realization of the future benefits of those assets.
In addition to the limitations discussed above under Sections 382 of
the Code, the utilization of NOLs incurred in taxable years beginning after December 31, 2017, are subject to limitations, as modified
by the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act). In general, NOLs generated in taxable years beginning
after December 31, 2017 may offset no more than 80 percent of such years taxable income and there is no ability for such NOLs to
be carried back to a prior taxable year. The CARES Act modifies this limitation on the deduction of NOLs and provides that NOLs arising
in taxable years beginning after December 31, 2017 and before January 1, 2021, may be carried back to each of the five taxable years preceding
the tax year of such loss, but NOLs arising in taxable years beginning after December 31, 2020 may not be carried back. In addition, the
CARES Act eliminates the limitation on the deduction of NOLs to 80 percent of current year taxable income for taxable years beginning
before January 1, 2021. As a result of such limitation, we may be required to pay federal income tax in some future year notwithstanding
that we have a net loss for all years in the aggregate.
**Changes in our effective tax rate or disallowance of our tax
positions may adversely affect our financial position and results of operations.**
We are subject to income and other taxes in the United States and foreign
jurisdictions. The amount of income taxes we pay is subject to our interpretation and application of tax laws in jurisdictions in which
we file. Changes in current or future laws or regulations, the imposition of new or changed tax laws or regulations or new interpretations
by taxing authorities or courts could affect our results of operations and lead to volatility with respect to tax expenses and liabilities
from period to period. For example, limitations on the ability of taxpayers to claim and utilize foreign tax credits and the deferral
of certain tax deductions until earnings outside of the United States are repatriated to the United States could impact the tax treatment
of future foreign earnings. In addition, on August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the Inflation
Reduction Act), into law, which includes a new corporate alternative minimum tax beginning in fiscal 2024 and an excise tax of
1% tax on the fair market value of net stock repurchases made after December 31, 2022. We have assessed the provisions of the Inflation
Reduction Act and concluded that the Act did not have a material impact on its consolidated financial statements for the year ended December
31, 2025.
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**We could be adversely affected by violations of the U.S. Foreign
Corrupt Practices Act and other worldwide anti-bribery laws by us or our agents.**
We are subject to the U.S. Foreign Corrupt Practices Act (FCPA),
which prohibits companies and their intermediaries from making payments in violation of law to non-U.S. government officials for the purpose
of obtaining or retaining business or securing any other improper advantage. Our possible future reliance on independent distributors
or strategic partners to sell the Vicarious Surgical System internationally demands a high degree of vigilance in enforcing our policy
against participation in corrupt activity, because these distributors or strategic partners could be deemed to be our agents, and we could
be held responsible for their actions. Other U.S. companies in the medical device and pharmaceutical fields have faced criminal penalties
under the FCPA for allowing their agents to deviate from appropriate practices in doing business with such non-U.S. government officials.
We are also subject to similar anti-bribery laws in the jurisdictions in which we plan to operate, including the United Kingdoms
Bribery Act of 2010, which also prohibits commercial bribery and makes it a crime for companies to fail to prevent bribery. We have limited
experience in complying with these laws and in developing procedures to monitor compliance with these laws by our agents. These laws are
complex and far-reaching in nature, and, as a result, we cannot assure investors that we would not be required in the future to alter
one or more of our practices to be in compliance with these laws or any changes in these laws or the interpretation thereof.
Any violations of these laws, or allegations of such violations, could
disrupt our operations, involve significant management distraction, involve significant costs and expenses, including legal fees, and
could result in a material adverse effect on our business, prospects, financial condition, or results of operations. We could also incur
severe penalties, including criminal and civil penalties, disgorgement, and other remedial measures.
**Risks Related to Healthcare Industry Shifts and Changing Regulations**
**We are subject to extensive government regulation, which could
restrict the development, marketing, sale and distribution of our product candidates and technologies and could cause us to incur significant
costs.**
We and the Vicarious Surgical System are subject to extensive pre-market
and post-market regulation by the FDA and various other federal, state, local and foreign government authorities. Government regulation
of medical devices is meant to assure their safety and effectiveness, and includes requirements for, among other things:
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design, development and manufacturing processes; | |
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labeling, content and language of instructions for use and storage; | |
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product testing, pre-clinical studies and clinical trials (if applicable); | |
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regulatory authorization, including but not limited to pre-market clearance, authorization or approval; | |
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establishment registration, device listing and ongoing compliance with the QMSR requirements; | |
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advertising and promotion; | |
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marketing, sales and distribution; | |
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conformity assessment procedures; | |
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product traceability and record-keeping procedures; | |
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review of product complaints, complaint reporting, recalls and field safety corrective actions; | |
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post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; | |
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post-market studies (if applicable); and | |
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product import and export. | |
The laws and regulations to which we and our product candidates, technologies
and future commercial product candidates will be subject are complex and subject to periodic changes. Regulatory changes could result
in restrictions on our ability to carry on or expand our operations, and may result in higher than anticipated costs or lower than anticipated
sales.
Before a new medical device, or a significant modification of a medical
device, including a new use of, or claim for, an existing product, can be marketed in the United States, it must first receive either
510(k) clearance, De Novo authorization, or PMA from the FDA, unless an exemption applies. In the 510(k) clearance process, the FDA must
determine that a proposed device is substantially equivalent to a device legally on the market, known as a predicate
device, with respect to intended use, technology and safety and effectiveness, in order to clear the proposed device for marketing. Clinical
data is sometimes required to support substantial equivalence.
Obtaining marketing authorization for a medical device through the
510(k) premarket notification process, the PMA process, or the De Novo classification process can be expensive and time-consuming, and
entails significant user fees to the FDA, unless an exemption is available. The FDAs review of premarket notifications for 510(k)
clearance usually takes 90 to 270 days, and review of De Novo classification applications usually takes 120 to 330 days, but both review
processes can last longer. In addition, after a device is cleared or authorized under a reclassification order, any modification that
could significantly affect the devices safety or effectiveness, or that would constitute a major change in its intended use, will
require a new 510(k) clearance, or possibly another De Novo authorization or a PMA, depending on the extent of the modification and the
associated risks.
The De Novo classification process allows a manufacturer whose novel
device is automatically classified into ClassIII to request down-classification of its device to ClassI or ClassII,
on the basis that the device presents low or moderate risk, as an alternative to following the typical ClassIII device pathway requiring
the submission and approval of a PMA application. Under the FDCA, the FDA is required to classify a device within 120days following
receipt of the De Novo classification request from an applicant; however, the most recent FDA premarket review goals state that the agency
will attempt to issue a decision within 150days of receipt on of all De Novo classification requests received during the year. If
the manufacturer seeks reclassification into ClassII, the classification request must include a draft proposal for special controls
that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device. The FDA may reject the classification
request if it identifies a legally marketed predicate device that would be appropriate for a 510(k)notification or determines that
the device is not low to moderate risk or that general controls would be inadequate to control the risks and special controls cannot be
developed. De Novo classification requests are subject to user fees, unless a specific exemption applies.
In the PMA approval process, the FDA must determine that a proposed
device is safe and effective for its intended use based, in part, on extensive data, including but not limited to, technical, pre-clinical,
clinical trial, manufacturing and labeling data. The process for obtaining a PMA is more costly and uncertain and approval can take anywhere
from 180 days to, in some cases, a year or more from the time the application is initially filed with the FDA. Modifications to devices
that are approved through a PMA application generally require FDA approval of a supplemental PMA application. The Vicarious Surgical System
and some of our future product candidates and technologies may require obtaining a PMA. In addition, the FDA may require that we obtain
a PMA prior to marketing future changes of the Vicarious Surgical System. Further, we may not be able to obtain additional 510(k) clearances,
De Novo authorizations, or PMAs for new product candidates and technologies or for modifications to, or additional indications for, the
Vicarious Surgical System in a timely fashion or at all. Delays in obtaining future clearances, authorizations, or approvals could adversely
affect our ability to introduce new or enhanced product candidates and technologies in a timely manner, which in turn could harm our revenue
and future profitability.
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In order to conduct a clinical investigation involving human subjects
for the purpose of demonstrating the safety and effectiveness of a medical device, if necessary, for a PMA application, 510(k) premarket
notification or De Novo classification request, a company must, among other things, apply for and obtain institutional review board (IRB)
approval of the proposed investigation. In addition, if the clinical study involves a significant risk (as defined by the
FDA) to human health, the sponsor of the investigation must also submit and obtain FDA approval of an investigational device exemption
(IDE) application and follow applicable IDE regulations. Unless IDE-exempt, nonsignificant risk devices are still subject
to certain abbreviated IDE requirements; however, an IDE application is not required if such abbreviated requirements are met. We may
not be able to obtain any necessary FDA and/or IRB approval to undertake clinical trials in the United States for the Vicarious Surgical
System or future devices we develop and intend to market in the United States. If we do obtain such approvals, the FDA may find that our
studies do not comply with the IDE or other regulations governing clinical investigations or the data from any such trials may not support
marketing authorization of the investigational device. Moreover, certainty that clinical trials will meet desired endpoints, produce meaningful
or useful data and be free of unexpected adverse effects, or that the FDA will accept the validity of foreign clinical study data (if
applicable) cannot be assured, and such uncertainty could preclude or delay marketing authorization resulting in significant financial
costs and reduced revenue.
To ensure compliance with regulatory requirements, medical device manufacturers
are subject to post-market surveillance and periodic, pre-scheduled and unannounced inspections by the FDA or other regulatory authorities,
and these inspections may include the manufacturing facilities of our subcontractors.
If any of our product candidates receive marketing authorization in
the United States, we, as well as our third-party manufacturers or suppliers that are regulated by the FDA, will also be subject to numerous
post-marketing regulatory requirements, which include QSMR related to the manufacture of the Vicarious Surgical System, labeling regulations
and MDR regulations. The last of these regulations requires us to report to the FDA if any of our commercial devices, when and if authorized
for commercialization, causes or contributes to a death or serious injury, or malfunctions in a way that would likely cause or contribute
to a death or serious injury if the malfunction recurred. The failure to comply with applicable regulatory requirements can result in
enforcement actions by the FDA, which may include any of the following sanctions:
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untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; | |
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customer notifications, or orders for repair, replacement or refunds; | |
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voluntary or mandatory recalls, detentions or seizures of product candidates; | |
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operating restrictions, including total or partial suspension of production; | |
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delays in the introduction of product candidates into the market; | |
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delay or refusal of for the FDA to grant 510(k) clearances, PMA approvals or De Novo classification orders for new product candidates or new intended uses or modifications to authorized products; | |
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rescission of 510(k) clearance, De Novo authorizations, or suspension or withdrawal of PMAs that have already been granted; or | |
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in the most serious cases, criminal prosecution. | |
The occurrence of any of these events may have a material adverse effect
on our business, financial condition and results of operations.
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**There is no guarantee that the FDA will grant marketing authorization
for the Vicarious Surgical System or any of our future product candidates and technologies, and failure to obtain necessary marketing
authorization for the Vicarious Surgical System and our future product candidates and technologies would adversely affect our ability
to grow our business.**
The Vicarious Surgical System and our new or modified product candidates
and technologies will require FDA marketing authorization before they may be marketed in the United States. The FDA may refuse our requests
for pre-market review of new product candidates and technologies or may not grant marketing authorization for these product candidates
and technologies for the indications that are necessary or desirable for successful commercialization. Early-stage review may also result
in delays or other issues.
The FDA may delay, limit or deny marketing authorization of a device
for many reasons, including:
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our inability to demonstrate to the satisfaction of the FDA that our product candidates are safe and effective for their intended uses; | |
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the disagreement of the FDA with the design or implementation of our clinical trials or the interpretation of data from non- clinical studies or clinical trials; | |
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serious and unexpected adverse device effects experienced by subjects enrolled in our clinical trials; | |
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the data from our nonclinical studies and clinical trials may be insufficient to support marketing authorization or clearance, where required; | |
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our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; and | |
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the manufacturing process or facilities we use may not meet applicable requirements. | |
The FDA may also change its marketing authorization policies, adopt
additional regulations or revise existing regulations, or take other actions that may prevent or delay authorization of our product candidates
and technologies under development or impact our ability to obtain marketing authorization for modifications to our authorized products
in a timely manner. Significant delays in receiving or failure to receive FDA marketing authorization for our new product candidates and
technologies would have an adverse effect on our ability to expand our business.
**Unsuccessful animal studies, clinical trials or procedures relating
to product candidates and technologies under development could have a material adverse effect on our prospects.**
The regulatory clearance, authorization, or approval process for new
device product candidates, technologies and new indications for existing device product candidates and technologies requires extensive
data and procedures, including the development of regulatory and quality standards and, potentially, studies involving animals or human
subjects. Based on pre-submission communications with the FDA, we intend to file a De Novo classification request for the Vicarious Surgical
System with respect to use in ventral hernia procedures, which would require human clinical studies to ensure that the product candidate
is safe and effective. Unfavorable or inconsistent data from future animal studies, clinical trials or other studies conducted by us or
third parties, or perceptions regarding such data, could adversely affect our ability to obtain necessary device regulatory authorization
and the markets view of our future prospects.
Failure to successfully complete any required studies in a timely
and cost-effective manner could have a material adverse effect on our prospects with respect to the Vicarious Surgical System or
other product candidates and technologies. Because animal studies, clinical trials and other types of scientific studies are
inherently uncertain, there can be no assurance that these trials or studies will be completed in a timely or cost-effective manner,
be suitable to support marketing authorization or result in a commercially viable product. Clinical trials or other studies may
experience significant setbacks even if earlier preclinical or animal studies have shown promising results. Furthermore, preliminary
results from animal studies or clinical trials may be contradicted by subsequent clinical analysis. Results from animal studies or
clinical trials may also not be supported by actual long-term studies or clinical experience. If preliminary study results are later
contradicted, or if initial results cannot be supported by actual long-term studies or clinical experience, our business could be
adversely affected. Clinical trials also may be suspended or terminated by us, the FDA, the responsible IRB or other regulatory
authorities at any time if it is believed that the trial participants face unacceptable health risks. The FDA may disagree with our
interpretation of the data from the animal studies or clinical trials, or may find the design, conduct or results of such studies or
trials inadequate to demonstrate safety and effectiveness of the product candidate. The FDA may also require additional non-clinical
studies or clinical trials for use in ventral hernia procedures or other indications, which could further delay authorization of our
product candidates and technologies.
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**Attracting patients to perform clinical trials and meeting clinical
trial objectives can be more costly and time-consuming than expected and could be adversely affected by another health crisis.**
In order conduct our clinical trials, we must recruit, screen and enroll
eligible patients. Patients may be identified from the investigators own clinical practice or hospital or may be referred by another
physician. Potential clinical trial participants must provide informed consent before undergoing certain clinical tests that are used
to determine patient eligibility based on inclusion/exclusion criteria. As a result, at the time of informed consent, we do not know if
a patient will be eligible to participate in the trial, so we will need to screen many more patients than we intend to enroll in order
to meet our enrollment criteria. Not all patients who undergo screening will ultimately be eligible for enrollment in our clinical trials.
Moreover, some of the enrolled participants may not comply with the requirements of the trial, thereby leading to poor or unusable data,
or some may withdraw from the trial, which may compromise the results of the clinical trial.
We may not be able to initiate, continue and/or complete in a timely
manner clinical trials if we are unable to locate and enroll a sufficient number of eligible patients within the planned recruitment period
to participate in these trials as required by the applicable regulatory authorities in the United States, Europe and any other applicable
jurisdictions.
Delays in subject enrollment or failure of trial subjects to continue
to participate in a clinical trial may delay commencement or completion of the clinical trial, cause an increase in the costs of the clinical
trial and delays, or result in the failure of the clinical trial. The trial enrollment process may be affected by many factors including:
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the use of the investigational device and the nature of the procedures being performed under the clinical trial protocol; | |
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the existence of a competing device with FDA marketing authorization and long-term data supporting its safety and efficacy; | |
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clinicians and patients perceptions as to the potential advantages and risks of our investigational devices in relation to other available therapies, including any new product candidates that may be approved for the indications we are investigating; | |
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the size and nature of the patient population; | |
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the severity of the disease under investigation; | |
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the eligibility criteria for the trial in question; | |
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subject compliance with the trial protocol; | |
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the design of the clinical trial; | |
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the referral practices of physicians; | |
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limitations placed on enrollment by regulatory authorities or other bodies; | |
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the ability to monitor trial subjects adequately during and after treatment; | |
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the proximity and availability of clinical trial sites for prospective subjects; | |
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efforts to facilitate timely enrollment; and | |
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other clinical trials competing for the same target patients as those of our clinical trials. | |
Any difficulties in enrolling a sufficient number of subjects for any
of our clinical trials, or any subjects withdrawing from the clinical trials or not complying with the trial protocols, could result in
significant delays and could require us to abandon one or more clinical trials altogether. If our trial sites are restricted or delayed
in performing the required procedures or following up with their trial subjects, this may lead to missing information and may potentially
impact clinical trial data quality and integrity. Enrollment delays and other issues with our clinical trials may result in increased
research and development costs that may exceed the resources available to us and may lead to delays in obtaining marketing authorization
in target markets.
**If allowed to proceed with our clinical development programs,
we may conduct clinical trials for certain of our product candidates at sites outside of the United States, and the U.S. regulatory agencies
may not accept data from trials conducted in such locations.**
The acceptance of data from clinical trials conducted outside the United
States by the FDA may be subject to certain conditions or may not be accepted at all, and other comparable non-U.S. regulatory authorities
may have similar restrictions and conditions with respect to clinical trials conducted outside of their respective jurisdictions. In cases
where data from clinical trials conducted wholly outside of the United States are intended to serve as the basis for marketing approval
in the United States, the FDA will generally not accept such foreign trial data unless (i) the data are determined to be applicable to
the U.S. population and U.S. medical practice; (ii) the trials were performed by clinical investigators of recognized competence and pursuant
to GCP or equivalent regulations; and (iii) the FDA is able to validate the data through an onsite inspection, if necessary. Additionally,
the FDAs clinical trial requirements, including sufficient size of patient populations and statistical powering, must be met. Many
comparable non-U.S. regulatory authorities have similar approval requirements.
In addition, while these clinical trials are subject to the applicable
local laws, the FDA acceptance of the data will be dependent upon its determination that the trials also complied with all applicable
U.S. laws and regulations. There can be no assurance that the FDA will accept data from trials conducted outside of the U.S. If the FDA
does not accept the data from any of our clinical trials that we determine to conduct outside the U.S., it would likely result in the
need for additional trials that would be costly and time-consuming and delay or permanently halt the development of our product candidate.
In addition, the conduct of clinical trials outside the U.S. could
have a significant impact on us. Risks inherent in conducting international clinical trials include:
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Foreign regulatory requirements that could restrict or limit our ability to conduct our clinical trials; | |
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Administrative burdens of conducting clinical trials under multiple foreign regulatory schemes; | |
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Foreign exchange fluctuations; and | |
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Diminished protection of intellectual property in some countries. | |
**We may rely on third parties to perform clinical trial planning,
provide critical advice, conduct our clinical trials and facilitate obtaining regulatory approvals, authorizations, or clearances for
our product candidates. Such third parties may not perform satisfactorily, including failing to meet deadlines for the completion of clinical
trials.**
We may rely on third parties to provide clinical trial planning,
conduct certain clinical trials, perform data collection and analysis and provide marketing, manufacturing, regulatory advice and
other services that are crucial to our business. We may be unable to find suitable partners, external consultants or service
providers to provide such services or such arrangements may not be available on commercially reasonable terms. Further, we may
engage third parties that may cease to be able to provide these services or may not provide these services in a timely or
professional manner. In particular, our technology and product development activities or clinical trials conducted in reliance on
third parties may be delayed, suspended, or terminated if the third parties do not devote a sufficient amount of time or effort to
our activities or otherwise fail to successfully carry out their contractual duties or to meet regulatory obligations or expected
deadlines; if we replace a third party; if the quality or accuracy of the data obtained by third parties is compromised due to their
failure to adhere to clinical protocols, regulatory requirements, or for other reasons including the loss of data; or if the third
party becomes bankrupt or enters into liquidation.
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We may not always have the ability to control the performance of third
parties in their conduct of their activities. If these third parties do not successfully carry out their contractual duties or regulatory
obligations or meet expected deadlines, or agreements with such third parties are terminated for any reason, we would be required to find
a replacement third party to conduct the required activities. We may be unable to enter into a new agreement with another third party
on commercially acceptable terms, if at all. Furthermore, if the quality or accuracy of the data obtained by the third party is compromised,
or if data are otherwise lost, we would be required to repeat the affected trial. Third-party performance failures may therefore increase
our development costs, delay our ability to obtain regulatory authorization, and delay or prevent the commercialization of our products
in target markets. In addition, our third-party agreements usually contain a clause limiting such third partys liability, such
that we may not be able to obtain full compensation for any losses that we may incur in connection with the third partys performance
failures.
Our reliance on these third parties for research and development activities
will reduce our control over these activities but will not relieve us of our responsibilities. For example, we will remain responsible
for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial.
Moreover, the FDA and other regulatory authorities require us to comply with good clinical practice regulations and international standards
relating to the conduct, recording and reporting the results of clinical trials to assure that data and reported results are credible
and accurate and that the rights, integrity and confidentiality of trial participants are protected. Our reliance on third parties, over
which we have limited control, to manage those operations does not relieve us of these responsibilities and requirements. Our failure
or any failure by these third parties to comply with these regulations or to recruit a sufficient number of patients may require us to
repeat clinical trials, which would delay the marketing authorization process. Moreover, our business may be implicated if any of these
third parties violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws.
We also are required to register ongoing clinical trials and post the results of certain completed clinical trials on certain government-sponsored
databases, such as clinicaltrials.gov in the United States, within specified timeframes. Failure to do so can result in fines, adverse
publicity and civil and criminal sanctions.
Furthermore, these third parties may also have relationships with other
entities, some of which may be our competitors. If these third parties do not successfully carry out their contractual duties for any
reason, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we
will not be able to obtain, or may be delayed in obtaining, regulatory authorizations for our product candidates and will not be able
to, or may be delayed in our efforts to, successfully commercialize our product candidates.
If we are unable to establish such arrangements when, and as necessary,
we could be required to undertake these activities at our own expense, which would significantly increase capital requirements and may
delay the development, approval and future commercialization of our product candidates, which could have a material adverse effect on
our business, financial condition and operating results.
**The FDA may propose new guidance and/or regulations, or Congress
may propose new legislation, to enhance and modernize the agencys regulatory approach to device products and technologies, which
may significantly affect product development costs, requirements, and other factors and additional uncertainty for our product candidates,
technologies and business.**
Regulatory requirements may change in the future in a way that adversely
affects us. Any change in the laws or regulations that govern pre-market authorization processes or the post-market compliance requirements
relating to our current and future product candidates could make it more difficult and costly to obtain marketing authorization for new
product candidates, or to produce, market and distribute existing product candidates that receive such authorization.
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For example, the FDA and other government agencies have been focusing
on the cybersecurity risks associated with certain medical devices and encouraging device manufacturers to take a more proactive approach
to assessing the cybersecurity risks of their devices both during development and on a periodic basis after the devices are in commercial
distribution. These regulatory efforts could lead to new FDA requirements in the future or additional product liability or other litigation
risks if the Vicarious Surgical System is considered to be susceptible to third-party tampering.
More recently, in December 2022, Congress enacted the Consolidated
Appropriations Act for 2023, an omnibus appropriations bill, which included amendments to the FDCA under FDORA. The legislation included
new requirements for cyber devices, defined as any medical device that is or includes software that is validated, installed, or authorized
by the manufacturer; can connect to the internet; and may be vulnerable to cybersecurity threats. Under the FDORA amendments to the FDCA,
any application for marketing authorization of the cyber device must include a software bill of materials and a cybersecurity plan describing
the methods by which the manufacturer will monitor, identify and address cybersecurity vulnerabilities. Any failure by a cyber device
manufacturer to comply with applicable cybersecurity requirements is considered a violation of the FDCA and will subject the manufacturer
to enforcement actions and possibly legal sanctions.
In addition, changes in the FDAs marketing authorization pathways
for medical devices could make authorization more difficult to obtain, increase delay, add uncertainty and have other significant adverse
effects on our ability to obtain and maintain authorization for our product candidates.
Future legislative and regulatory proposals may prevent, limit or delay
regulatory authorization of our product candidates or, more broadly, may materially impact the ability of the FDA and other regulatory
agencies to operate as they have historically operated. We cannot be sure whether additional legislative changes will be enacted, or whether
any of the FDAs regulations, guidances or interpretations will be changed, or what the impact of such changes on the agency and
its scientific review staff, if any, may be. For example, the next FDA user fee reauthorization package entered stakeholder negotiations
in mid-2025, with any agreement sent to Congress in early 2027 for purposes of initiating the legislative process. Reauthorization of
the medical device user fee program would need to be finalized by Congress by the end of September 2027 in order to avoid a disruption
in FDAs review goals for 510(k), De Novo classification and PMA submissions, as well as other activities supported by user fees
assessed against industry. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or
policies, or if we are not able to maintain regulatory compliance, we may lose any marketing authorization that we otherwise may have
obtained, and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and
results of operations.
**If we fail to obtain regulatory authorizations in other countries
for existing or future product candidates, we will not be able to commercialize these product candidates and technologies in those countries.**
In order for us to market the Vicarious Surgical System in countries
outside of the United States, we must comply with extensive safety and quality regulations in other countries regarding the quality, safety
and efficacy of the Vicarious Surgical System. These regulations, such as the requirements for obtaining marketing authorization, including
CE mark grant in the European Union, as well as regulatory authorization in the Asia-Pacific region and the time required for regulatory
review, vary from country to country. Failure to obtain marketing authorization in any foreign country in which we plan to market the
Vicarious Surgical System may harm our ability to generate revenue and harm our business. Marketing authorization requirements and processes
vary between countries and can involve additional product testing and additional administrative review periods. The time required to obtain
marketing authorization in other countries might differ from that required to obtain FDA authorization. The pre-market review and authorization
process in other countries may include all of the risks detailed above regarding FDA clearance, authorization, and approval in the United
States, as well as other potential risks relating to delays, refusals, or uncertainties in the application preparation, submission, and
review procedures specific to the regulatory processes in such countries. Regulatory authorization of a product in one country does not
ensure regulatory authorization in another, but a failure or delay in obtaining marketing authorization in one country may negatively
impact the regulatory process in others. Failure to obtain regulatory authorization in other countries or any delay or setback in obtaining
such authorization could have the same adverse effects described above regarding FDA authorization in the United States.
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**If we, our contract manufacturers or our component suppliers
are unable to manufacture the Vicarious Surgical System in sufficient quantities, on a timely basis, at acceptable costs and in compliance
with regulatory and quality requirements, the manufacturing and distribution of our devices could be interrupted, and our product sales
and operating results could suffer.**
We and our contract manufacturers and our component suppliers are required
to comply with the FDA Quality Management System Regulation (QMSR), which is a complex regulatory framework that covers
the procedures and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage,
distribution and servicing of our devices. We are required to implement an adequate, compliant quality system at our manufacturing facilities
and verify that our suppliers maintain facilities, procedures and operations that comply with our quality standards and applicable regulatory
requirements. If we obtain marketing authorization for any of our product candidates, we and our contract manufacturers and regulated
component suppliers will be subject to periodic unannounced inspections by the FDA and other regulatory authorities to monitor and ensure
compliance with post-market regulatory requirements. We cannot assure investors that the FDA or other regulatory authorities will not
discover evidence of noncompliance at our facilities or the facilities of our third-party manufacturers or suppliers during a future quality
system inspection.
Accordingly, assuming we receive marketing authorization for one or
more product candidates, we and our contract manufacturers will continue to expend time, money and effort in all areas of regulatory compliance,
including manufacturing, production, product surveillance, and quality control. Failure of us or our third-party manufacturers and component
suppliers to adhere to QMSR requirements or take adequate and timely corrective action in response to an adverse regulatory inspection
finding could delay production of the Vicarious Surgical System and lead to fines, difficulties in obtaining regulatory authorizations,
recalls, enforcement actions, including injunctive relief or consent decrees, or other consequences, which could have a material adverse
effect on our financial condition or results of operations. Any such failure, including the failure of our contract manufacturers, to
achieve and maintain the required high manufacturing standards could result in delays or failures in product testing or delivery, cost
overruns, increased warranty costs or other problems that could harm our business and prospects.
**Our current or future product candidates, products and technologies
may be subject to product recalls even after receiving marketing authorization from the FDA. A recall of the Vicarious Surgical System,
either voluntarily or at the direction of the FDA, or the discovery of serious safety issues with our future products, could have a significant
adverse impact on us.**
The FDA and similar governmental bodies in other countries have the
authority to require the recall of the Vicarious Surgical System and any accessory devices if we or our third-party manufacturers fail
to comply with relevant regulations pertaining to, among other things, manufacturing practices, labeling or if new information is obtained
concerning deficiencies in the safety or effectiveness of the Vicarious Surgical System. For example, under the FDAs MDR regulations,
if and when the Vicarious Surgical System receives marketing authorization, we are required to report to the FDA any incident in which
the system may have caused or contributed to a death or serious injury or in which the Vicarious Surgical System malfunctioned in a manner
likely to cause or contribute to death or serious injury if that malfunction were to recur. Repeated incidents of the same or similar
adverse events or product malfunctions may result in a voluntary or mandatory product recall, or administrative or judicial seizure or
injunction, when warranted. A government-mandated recall may be ordered if the FDA finds that there is a reasonable probability that the
device would cause serious, adverse health consequences or death. A voluntary recall by us could occur as a result of a discovery of any
material deficiency in a device, such as manufacturing defects, labeling deficiencies, packaging defects or other failures to comply with
applicable regulations. It is possible that the FDA could disagree with our initial classification for a voluntary recall. The FDA requires
that reports of device corrections or removals intended to reduce a risk to health posed by the device or remedy a violation of the FDCA
caused by the device be submitted to the FDA within 10 working days after the correction or removal is initiated. If a change to a device
addresses a violation of the FDCA, that change would generally constitute a medical device recall and require submission of a recall report
to the FDA.
Recalls of the Vicarious Surgical System would divert managerial
and financial resources and have an adverse effect on our reputation, results of operations and financial condition, which could
impair our ability to produce the Vicarious Surgical System in a cost-effective and timely manner in order to meet our
customers demands. We may also be subject to product liability claims, be required to bear other costs, or be required to
take other actions that may have a negative impact on our future sales and our ability to generate profits. Companies are required
to maintain certain records of product withdrawals or removals, even if they are not reportable to the FDA. We may initiate
voluntary field actions involving the Vicarious Surgical System in the future that we determine do not require notification to the
FDA. If the FDA disagrees with our determinations, the FDA could require us to report those actions as recalls. A future recall,
withdrawal, or seizure of any product could materially and adversely affect consumer confidence in our brand, lead to decreased
demand for the Vicarious Surgical System and negatively affect our sales. In addition, the FDA could take enforcement action for
failing to report recalls when they were conducted by us or one of our agents.
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**We may be subject to enforcement action if we engage in improper
or off-label marketing or promotion of the Vicarious Surgical System, including fines, penalties and injunctions.**
The FDA regulates the promotional labeling for our products to ensure
that the claims we make are consistent with the relevant marketing authorizations, that there is scientific data to substantiate the claims
and that our promotion and advertising is neither false nor misleading. The off-label marketing or false or misleading labeling of our
products may harm our image in the marketplace, result in injuries that lead to product liability suits, which could be costly to our
business, or result in costly investigations and sanctions from the FDA and other regulatory bodies if we are deemed to have engaged in
off-label promotion or false or misleading labeling. In addition to the FDA, depending on the form of marketing authorization that the
Vicarious Surgical System and future product candidates and technologies receive, the FTC may have overlapping authority to oversee the
advertising of our products and any related services offered by us. The FTCs focus would be on ensuring such advertising is truthful,
adequately substantiated, and not deceptive under the FTC Act rather than enforcing any of the regulatory requirements in the FDCA and
FDAs implementing regulations.
In August 2021, the FDA issued a final rule revising its regulation
governing the types of evidence relevant to determining the intended use of a drug or device under the FDCA. The final rule
makes clear that intended use is based on the manufacturers objective intent and the manufacturers knowledge
of off-label use does not change a devices intended use.
**We are subject to federal, state and foreign laws prohibiting
kickbacks and false or fraudulent claims, and other fraud and abuse laws, transparency laws, and other health-care laws
and regulations, which, if violated, could subject us to substantial penalties. Additionally, any challenge to or investigation into our
practices under these laws could cause adverse publicity and be costly to respond to, and thus could harm our business.**
If we obtain FDA marketing authorization for our Vicarious Surgical
System, we will be subject to broadly applicable fraud and abuse and other health-care laws and regulations that may constrain the business
or financial arrangements and relationships through which we market, sell and distribute the device system and any authorized accessories.
Restrictions under applicable federal and state health-care laws and regulations include the following:
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the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under a federal health-care program such as Medicare and Medicaid; | |
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the federal False Claims Act imposes criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment by a federal government program, or making a false statement or record that is material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government; | |
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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, imposes criminal and civil liability for executing a scheme to defraud any health-care benefit program and also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; | |
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the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for health-care benefits, items or services; | |
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the federal transparency requirements under the Physician Payments Sunshine Act require manufacturers of FDA-authorized, approved or cleared drugs, devices, biologics and medical supplies covered by Medicare or Medicaid to report, on an annual basis, to the Centers for Medicare and Medicaid Services information related to payments and other transfers of value to physicians, teaching hospitals and certain advanced non-physician health-care practitioners as well as physician ownership and investment interests; and | |
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analogous state laws and regulations such as state anti-kickback and false claims laws, as well as analogous non-U.S. fraud and abuse laws and regulations, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and some state laws require medical device companies to comply with the device industrys voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring device manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures. State and non-U.S. laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. | |
Efforts to ensure that our business arrangements with third parties
comply with applicable health-care laws and regulations will involve substantial costs. It is possible that governmental authorities will
conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud
and abuse or other health-care laws and regulations. If our operations are found to be in violation of any of these laws or any other
governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages,
fines, imprisonment, exclusion of products from government funded health-care programs, such as Medicare and Medicaid, and the curtailment
or restructuring of our operations. If any of the physicians or other health-care providers or entities with whom we expect to do business
is found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions
from government funded health-care programs.
**Our employees, independent contractors, principal investigators,
contract research organizations, consultants or vendors may engage in misconduct or other improper activities, including noncompliance
with regulatory standards and requirements.**
We are exposed to the risk that our employees, independent contractors,
principal investigators, contract research organizations, consultants or vendors may engage in fraudulent or other illegal activity. Misconduct
by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates:
FDA regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA; manufacturing standards;
federal and state healthcare fraud and abuse laws and regulations; or laws that require the true, complete and accurate reporting of financial
information or data. In addition, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws
and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict
or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business
arrangements. Activities subject to these laws also involve the improper use or misrepresentation of information obtained in the course
of clinical trials or creating fraudulent data in our nonclinical studies or clinical trials, which could result in regulatory sanctions
and serious harm to our reputation.
It is not always possible to identify and deter misconduct by our
employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in
controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits
stemming from a failure to be in compliance with such laws or regulations. Additionally, we are subject to the risk that a person
could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not
successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including
the imposition of civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in
Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished potential profits and
future earnings, and curtailment of our operations, any of which could adversely affect our business, financial condition, results
of operations or prospects.
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**Health-care policy and payment changes may have a material adverse
effect on our financial condition and results of operations.**
We cannot predict the likelihood, nature or extent of government regulation
that may arise from future legislation or administrative or executive action, either in the United States or abroad. In the United States
and in some other jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the health-care
system that could prevent or delay marketing authorization of our product candidates and technologies or any of our potential future product
candidates and technologies, restrict or regulate post-authorization activities, or affect our ability to profitably sell any product
candidates and technologies for which we obtain marketing authorization. Increased scrutiny by the U.S. Congress of the FDAs medical
device authorization process may significantly delay or prevent marketing authorization, as well as subject us to more stringent product
labeling and post-marketing testing and other requirements. Congress also must reauthorize the FDAs user fee programs every five
years and often makes changes to those programs, in addition to policy or procedural changes that may be negotiated between the FDA and
industry stakeholders as part of this periodic reauthorization process.
Furthermore, there have been and continue to be a number of legislative
initiatives in the U.S. Congress and state legislatures to contain healthcare costs. Federal and state lawmakers regularly propose and,
at times, enact legislation that would result in significant changes to the healthcare system, some of which are intended to contain or
reduce the costs of medical products and services. Future legislative and regulatory proposals to further reform healthcare or reduce
healthcare costs may prevent, limit or delay regulatory authorization of our product candidates or coverage or reimbursement for such
product candidates, if approved, or even lower reimbursement for the procedures associated with the use of such product candidates. More
broadly, such future legislation or regulation may materially impact the ability of the FDA and other regulatory agencies to operate as
they have historically operated. The cost containment measures that payors and providers are instituting and the effect of any healthcare
reform initiative implemented in the future could impact our revenue from the sale of our products. We cannot be sure whether additional
legislative changes will be enacted, or whether any of the FDAs regulations, guidances or interpretations will be changed, or what
the impact of such changes on the agency and its scientific review staff, if any, may be.
The growth of overall healthcare costs as a percentage of gross domestic
product in many countries means that governments and payers are under intense pressure to control healthcare spending even more tightly.
As a result, our businesses and the healthcare industry in general are operating in an ever more challenging environment with very significant
pricing pressures. In recent years, national, federal, provincial, state and local officials and legislators have proposed, or are reportedly
considering proposing, a variety of price-based reforms to the healthcare systems in the United States, the European Union and other countries.
Some proposals include measures that would limit or eliminate payments for certain medical procedures and treatments or subject pricing
to government control. In addition, proposed legislation may limit access to healthcare insurance coverage, which could reduce the volume
of medical procedures involving our authorized device products. Furthermore, in certain foreign markets, the pricing or profitability
of healthcare products is subject to government controls and other measures that have been prepared by legislators and government officials.
While we cannot predict whether any such legislative or regulatory proposals or reforms will be adopted, the adoption of any such proposals
or reforms could adversely affect the commercial viability of our existing and potential products. In addition, any changes of, or uncertainty
with respect to, coverage or reimbursement rates relating to our authorized products, or procedures involving such products, could affect
demand for our products, which in turn could impact our ability to successfully commercialize our authorized products and have a material
adverse effect on our business, financial condition and results of operations.
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**Inadequate funding for the FDA and other government agencies
could hinder their ability to hire and retain key leadership and other personnel, prevent new products and technologies from being developed
or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation
of our business may rely, which could negatively impact our business.**
The ability of the FDA to review and approve, authorize, or clear new
medical device products and technologies can be affected by a variety of factors, including government budget and funding levels, ability
to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times
at the FDA can fluctuate as a result. In addition, government funding of the SEC and other government agencies on which our operations
may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid
and unpredictable.
Disruptions at the FDA and other agencies may also increase the time
necessary for new products and technologies to be reviewed and/or authorized by necessary government agencies, which would adversely affect
our business. For example, political disputes in Congress have in the past resulted in, and may in the future result in, shutdowns of
the U.S. government, and in such cases, certain regulatory agencies, such as the FDA and the SEC, would have to furlough critical employees
and stop critical activities. In addition, starting in January 2025, the U.S. government has reduced the number of federal employees,
including at the FDA, which could result in delays in the FDAs responsiveness or in its ability to review submissions or applications.
If a prolonged government shutdown or slowdown occurs, or if reductions
in force or global health concerns prevent the FDA or other regulatory authorities from conducting their regular premarket review, inspections,
or other regulatory activities, it could significantly impact the ability of the FDA to timely review and clear, authorize, or approve
regulatory submissions, which could have a material adverse effect on our future business. Further, future government shutdowns could
impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.
**Risks Related to Our Intellectual Property**
**If we are unable to protect our intellectual property, our ability
to maintain any technological or competitive advantage over our competitors and potential competitors would be adversely impacted, and
our business may be harmed.**
We rely on patent protection as well as trademark, copyright, trade
secret and other intellectual property rights protection and contractual restrictions to protect our proprietary technologies, all of
which provide limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage. If
we fail to obtain, maintain, and protect our intellectual property, third parties may be able to compete more effectively against us,
and we may lose our technological or competitive advantage. We may also incur substantial litigation costs in our attempts to defend,
enforce, recover or restrict the use of our intellectual property.
We cannot assure investors that any of our currently pending or future
patent applications will result in granted patents, and we cannot predict how long it will take for such patents to be granted or whether
the scope of such patents, if granted, will adequately protect the Vicarious Surgical System from competitors. It is possible that, for
any of our patents that have been granted or that may be granted in the future, other parties will design alternatives that do not infringe
our patents. Further, we cannot assure investors that other parties will not challenge any patents granted to us or that courts or regulatory
agencies will hold our patents to be valid or enforceable. We cannot guarantee investors that we will be successful in defending challenges
made against our patents. Any successful third-party challenge to our patents could result in the unenforceability or invalidity of such
patents, or to such patents being interpreted narrowly or otherwise in a manner adverse to our interests. Our ability to establish or
maintain a technological or competitive advantage over our competitors may be diminished because of these uncertainties. For these and
other reasons, our intellectual property may not provide us with any competitive advantage. For example:
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we or our licensors (should we in-license IP in the future) might not have been the first to make the inventions covered by our pending patent applications or granted patents; | |
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we or our licensors might not have been the first to file patent applications for our inventions. To determine the priority of these inventions, we may have to participate in interference proceedings or derivation proceedings declared by the U.S. Patent and Trademark Office, or USPTO, that could result in substantial cost to us and may be unsuccessful. No assurance can be given that our patent applications or granted patents (or those of our licensors) will have priority over any other patent or patent application involved in such a proceeding; | |
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other parties may independently develop similar or alternative products and technologies or duplicate any of our product candidates and technologies; | |
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it is possible that our owned or licensed pending patent applications will not result in granted patents in the United States or foreign jurisdictions, and even if such pending patent applications grant as patents, they may not provide a basis for intellectual property protection of commercially viable products and technologies, may not provide us with any competitive advantages, or may be challenged and invalidated by third parties; | |
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we may not develop additional proprietary products and technologies and technologies that are patentable; | |
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the patents of other parties may block us from practicing our technology and thereby have an adverse effect on our business; and | |
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while we apply for patents covering our product candidates and technologies and uses thereof, as we deem appropriate, we may fail to apply for or obtain patents on important product candidates and technologies and uses thereof in a timely fashion or at all, or we may fail to apply for or obtain patents in potentially relevant jurisdictions. | |
The strength of patents involves complex legal questions and can be
uncertain. Even if one or more patents do successfully issue, third parties may challenge the validity, enforceability, inventorship or
scope thereof. Such a challenge may result in such patents being narrowed, invalidated or held unenforceable. If the breadth or strength
of protection provided by our patents is threatened, it could dissuade companies from collaborating with us to develop, and threaten our
ability to commercialize, our technology. Further, if we encounter delays in clinical trials, the period of time during which we could
market our product candidates under patent protection would be reduced. Since patent applications in the United States and most other
countries are confidential for a period of time after filing, we cannot be certain that we are the first to file any patent application
related to our product candidates.
Even if our patent applications issue as patents, they may not issue
in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with
any competitive advantage. Our competitors may be able to circumvent our patents by developing similar or alternative technologies or
products in a non-infringing manner. The issuance of a patent is not conclusive as to its scope, validity or enforceability, and our patents
may be challenged in the courts or patent offices in the United States and abroad. For example, we may become involved in opposition,
interference, derivation, inter partes review or other proceedings challenging our patent rights, and the outcome of any proceedings are
highly uncertain. Such challenges may result in the patent claims of our patents being narrowed, invalidated or held unenforceable, which
could limit our ability to stop or prevent us from stopping others from using or commercializing similar or identical technology and products,
or limit the duration of the patent protection of our technology and product candidates. Given the amount of time required for the development,
testing and regulatory review of new technology, patents protecting such technology might expire before or shortly after such technology
is commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing
products similar or identical to our product candidates or otherwise provide us with a competitive advantage.
To the extent our intellectual property offers inadequate protection,
or is found to be invalid or unenforceable, we would be exposed to a greater risk of direct competition. If our intellectual property
does not provide adequate coverage over our product candidates and technologies and protection against our competitors products
and technologies, our competitive position could be adversely affected, as could our business.
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**The measures that we use to protect the security of our intellectual
property and other proprietary rights may not be adequate, which could result in the loss of legal protection for, and thereby diminish
the value of, such intellectual property and other rights.**
The patenting process is expensive and time-consuming, and we may not
be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. In addition,
we may not pursue or obtain patent protection in all relevant markets. It is also possible that we will fail to identify patentable aspects
of our research and development output before it is too late to obtain patent protection. Our pending and future patent applications may
not result in issued patents that protect our technology or product candidates, in whole or in part. In addition, our existing patents
and any future patents we obtain may not be sufficiently broad to prevent others from using our technology or from developing competing
products and technologies.
If we delay in filing a patent application, and a competitor files
a patent application on the same or a similar technology before we do, we may face a limited ability to secure patent rights. We may not
be able to patent the technology at all. Even if we can patent the technology, we may be able to patent only a limited scope of the technology,
and the limited scope may be inadequate to protect our product candidates, or to block competitor products that are similar or adjacent
to ours. Our earliest patent filings have been published. A competitor may review our published patents and arrive at the same or similar
technology advances for our product candidates as we developed. If the competitor files a patent application on such an advance before
we do, then we may no longer be able to protect the technology. We may require a license from the competitor, and if the license is not
available on commercially-viable terms, then we may not be able to launch our product candidates.
In addition to pursuing patents on our technology, we also rely upon
trademarks, trade secrets, copyrights and unfair competition laws and other contractual provisions, to protect our intellectual property
and other proprietary rights. Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented
or misappropriated. In addition, we take steps to protect our intellectual property and proprietary technology by entering into confidentiality
agreements and intellectual property assignment agreements with our employees, consultants, corporate partners and, when needed, our advisors.
Our suppliers may also have access to the patented technology owned or used by us as well as other proprietary information, and these
suppliers are subject to confidentiality provisions under their agreements with us.
Such agreements or provisions may not be enforceable or may not provide
meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches
of the agreements, and we may not be able to prevent such unauthorized disclosure. Notwithstanding any such agreements, there is no assurance
that our current or former manufacturers or suppliers will not use and/or supply our competitors with our trade secrets, know-how or other
proprietary information to which these parties gained access or generated from their relationship with us. This could lead to our competitors
gaining access to patented or other proprietary information. Moreover, if a party to an agreement with us has an overlapping or conflicting
obligation to a third party, our rights in and to certain intellectual property could be undermined. Monitoring unauthorized disclosure
is difficult, and we do not know whether the steps we have taken to prevent such disclosure are, or will be, adequate. If we were to enforce
a claim that a third party had illegally obtained and was using our trade secrets, it would be expensive and time-consuming, the outcome
would be unpredictable, and any remedy may be inadequate. Courts outside the United States may be less willing to protect trade secrets.
In addition, competitors could purchase our product candidates and
technologies and attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe
our intellectual property rights, design around our protected technology or develop their own competitive technologies that fall outside
of our intellectual property rights. If our intellectual property does not adequately protect our market share against competitors
products and technologies and methods, our competitive position could be adversely affected, as could our business.
**We may need or may choose to obtain licenses from third parties
to advance our research or allow commercialization of our current or future product candidates and technologies, and we cannot provide
any assurances that we would be able to obtain such licenses.**
We may need or may choose to obtain licenses from third parties
to advance our research or allow commercialization of our current or future product candidates and technologies, and we cannot
provide any assurances that third-party patents do not exist that might be enforced against our current or future product candidates
and technologies in the absence of such a license. We may fail to obtain any of these licenses on commercially reasonable terms, if
at all. Even if we are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same
technologies licensed to us. If we could not obtain a license, we may be required to expend significant time and resources to
develop or license replacement technology. If we are unable to do so, we may be unable to develop or commercialize the affected
product candidates and technologies, which could materially harm our business and the third parties owning such intellectual
property rights could seek either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to
pay royalties, damages and/or other forms of compensation.
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Licensing intellectual property involves complex legal, business and
scientific issues. Disputes may arise between us and our licensors regarding intellectual property subject to a license agreement, including:
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the scope of rights granted under the license agreement and other interpretation-related issues; | |
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whether and the extent to which our technology and processes infringe intellectual property of the licensor that is not subject to the licensing agreement; | |
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our right to sublicense patent and other rights to third parties under collaborative development relationships; | |
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our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates and technologies, and what activities satisfy those diligence obligations; and | |
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the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and our partners. | |
If disputes over licensed intellectual property prevent or impair our
ability to maintain the licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected
product, or the dispute may have an adverse effect on our results of operations.
In addition to agreements pursuant to which we in-license intellectual
property, we may in the future grant licenses under our intellectual property. Like in-licenses, out-licenses are complex, and disputes
may arise between us and our licensees, such as the types of disputes described above. Moreover, our licensees may breach their obligations,
or we may be exposed to liability due to our failure or alleged failure to satisfy our obligations. Any such occurrence could have an
adverse effect on our business.
The licensing and acquisition of third-party intellectual property
rights is a competitive practice, and companies that may be more established, or have greater resources than we do, may also be pursuing
strategies to license or acquire third-party intellectual property rights that we may consider necessary or attractive for commercializing
our technology. More established companies may have a competitive advantage over us due to their larger size, cash resources, or commercialization
capabilities. There can be no assurance that we will be able to successfully complete such negotiations and ultimately acquire the rights
to the intellectual property that we may seek to acquire.
**We and our partners may be sued for infringing the intellectual
property rights of third parties. If that happens, such litigation would be costly and time consuming, and an unfavorable outcome in any
such litigation could have a material adverse effect on our business.**
Our success also depends on our ability to develop, manufacture, market
and sell the Vicarious Surgical System without infringing the proprietary rights of third parties. Numerous U.S. and foreign-issued patents
and pending patent applications owned by third parties exist in the fields in which we are developing the Vicarious Surgical System. As
part of a business strategy to impede our successful commercialization and entry into new markets, competitors may claim that the Vicarious
Surgical System infringes their intellectual property rights and may suggest that we enter into license agreements. Such competitors may
bring litigation against us or our partners to enforce such claims.
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Such claims may or may not be meritorious, but even if such
claims are without merit, we could incur substantial costs and the attention of our management and technical personnel could be
diverted in defending us against or settling such claims. Any adverse ruling by a court or administrative body, or perception of an
adverse ruling, may have a material adverse effect on our ability to conduct our business and on our finances. Moreover, third
parties making claims against us may be able to obtain injunctive relief against us, which could block our ability to offer the
Vicarious Surgical System and could result in a substantial award of damages against us. In addition, since we could sometimes agree
to indemnify customers, collaborators or licensees, we may have additional liability in connection with any infringement or alleged
infringement of third-party intellectual property. Because patent applications can take many years to issue, there may be pending
applications, some of which are unknown to us, that may result in issued patents that the Vicarious Surgical System or proprietary
technologies infringe. Moreover, we may fail to identify issued patents of relevance or incorrectly conclude that an issued patent
is invalid or not infringed by our technology or the Vicarious Surgical System. There is a substantial amount of litigation
involving patent and other intellectual property rights in the medical device space in general and in the robotic surgery field in
particular. As we face increasing competition and as our business grows, we will likely face claims of infringement. If a
third-party claims that we or any of our licensors, customers or collaboration partners infringe a third partys intellectual
property rights, we may have to do any or all of the following:
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seek licenses that may not be available on commercially reasonable terms, if at all; | |
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cease commercializing any infringing product or redesign the Vicarious Surgical System or processes to avoid infringement where in some cases redesign may not be possible or may require substantial monetary expenditures and time; | |
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pay substantial damages, including treble damages and attorneys fees, which we may have to pay if a court decides that the product or proprietary technology at issue infringes upon or violates the third-partys rights; | |
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pay substantial royalties or fees or grant cross-licenses to our technology; and | |
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defend litigation or administrative proceedings that may be costly whether we win or lose, and which could result in a substantial diversion of our financial and management resources. | |
Some of our competitors may be able to sustain the costs of complex
patent litigation more effectively than we can, because they have substantially greater resources. In addition, any uncertainties resulting
from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary
to continue our operations or could otherwise have a material adverse effect on our business, results of operations, financial condition
and prospects.
We may choose to challenge the patentability of claims in a third partys
U.S. patent by requesting that the USPTO review the patent claims in an ex-parte re-exam, inter partes review or post-grant review proceedings.
These proceedings are expensive and may consume time or other resources. We may choose to challenge a third partys patent in patent
opposition proceedings in the European Patent Office, or EPO, or other foreign patent office. The costs of these opposition proceedings
could be substantial, and may consume time or other resources. If we fail to obtain a favorable result at the USPTO, EPO or other patent
office, then we may be exposed to litigation by a third party alleging that the patent is infringed by our product candidates or proprietary
technologies.
During the course of any intellectual property litigation, there could
be public announcements of the initiation of the litigation, as well as results of hearings, rulings on motions and other interim proceedings
in the litigation. If securities analysts or investors regard these announcements as negative, the perceived value of our product candidates,
programs or intellectual property could be diminished. Accordingly, the market price of shares of our common stock may decline. Such announcements
could also harm our reputation or the market for our future product candidates, which could have a material adverse effect on our business.
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**We may be involved in lawsuits to protect or enforce our patents
or the patents of our licensors, which could be expensive, time-consuming and unsuccessful.**
Competitors may infringe our patents or the patents that we
license. In the event of infringement or unauthorized use, we may file one or more infringement lawsuits, which can be expensive and
time-consuming. An adverse result in any such litigation proceedings could put one or more of our patents at risk of being
invalidated, being found to be unenforceable or being interpreted narrowly and could put our patent applications at risk of not
issuing. An adverse result could also require us to pay the legal fees of the opposing party. Furthermore, because of the
substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our
confidential information could be compromised by disclosure during this type of litigation.
Many of our competitors are larger than us and have substantially greater
resources. They are, therefore, likely to be able to sustain the costs of complex patent litigation longer than we could. In addition,
the uncertainties associated with litigation could have a material adverse effect on our ability to raise any funds necessary to continue
our operations, continue our internal research programs, in-license needed technology, or enter into development partnerships that would
help us bring the Vicarious Surgical System to market.
In addition, patent litigation can be very costly and time-consuming.
An adverse outcome in any such litigation or proceedings may expose us or any of our future development partners to loss of our proprietary
position, expose us to significant liabilities, or require us to seek licenses that may not be available on commercially acceptable terms,
if at all.
If a defendant were to prevail on a legal assertion of invalidity and/or
unenforceability, we would lose at least part, and perhaps all, of the patent protection on the technology or process claimed by the patent.
In addition, if the breadth or strength of protection provided by our patents or those of our future licensors is threatened, it could
dissuade other companies from collaborating with us to license, develop or commercialize current or future product candidates. Such a
loss of patent protection could have a material adverse effect on our business.
We may be required to protect our patents through procedures created
to attack the validity of a patent at the USPTO. The USPTO hears post-grant proceedings, including post-grant reviews (PGRs), inter partes
reviews (IPRs) and derivation proceedings. An adverse determination in any such submission or proceeding could reduce the scope or enforceability
of, or invalidate, our patent rights, which could adversely affect our competitive position. Because of a lower evidentiary standard in
USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third
party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence
would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to
use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as
a defendant in a district court action. Thus, the America Invents Act (the AIA) and its implementation could increase the
uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all
of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
**Our issued patents could be found invalid or unenforceable if
challenged in court, which could have a material adverse effect on our business.**
Any of our intellectual property rights could be challenged or invalidated
despite measures we take to obtain patent and other intellectual property protection with respect to our product candidates and proprietary
technology. For example, if we or any of our partners were to initiate legal proceedings against a third party to enforce a patent covering
the Vicarious Surgical System, the defendant in such litigation could counterclaim that our patent is invalid and/or unenforceable. In
patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for
a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness
or non-enablement, or failure to claim patent eligible subject matter. Grounds for an unenforceability assertion could be an allegation
that someone connected with the prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement
during prosecution either in the U.S. or abroad. Third parties may also raise similar claims before the USPTO or foreign patent offices,
even outside the context of litigation. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With
respect to the validity question, for example, we cannot be certain that there is no invalidating prior art of which we and the patent
examiner were unaware or was otherwise not considered during prosecution. If a defendant were to prevail on a legal assertion of invalidity
and/or unenforceability, we would lose at least part, and perhaps all, of the challenged patent. Such a loss of patent protection could
have a material adverse effect on our business.
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**We may be subject to claims that our employees, consultants or
independent contractors have wrongfully used or disclosed alleged trade secrets of their other clients or former employers to us, which
could subject us to costly litigation.**
As is common in the medical device industry, we engage the services
of consultants and independent contractors to assist us in the development of the Vicarious Surgical System. Many of these consultants
and independent contractors were previously employed at, or may have previously provided or may be currently providing consulting or other
services to, universities or other technology or medical device companies, including our competitors or potential competitors. We may
become subject to claims that we, a consultant or an independent contractor, inadvertently or otherwise, used or disclosed trade secrets
or other information proprietary to their former employers or their former or current clients. We may similarly be subject to claims stemming
from similar actions of an employee, such as one who was previously employed by another company, including a competitor or potential competitor.
Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could
result in substantial costs and be a distraction to our management team. If we were not successful, we could lose access or exclusive
access to valuable intellectual property.
In addition, there could be public announcements of the results of
hearings, motions or other interim proceedings or developments, and, if securities analysts or investors perceive these results to be
negative, it could have a substantial adverse effect on the price of our common stock. This type of litigation or proceeding could substantially
increase our operating losses and reduce our resources available for development activities. We may not have sufficient financial or other
resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation
or proceedings more effectively than we can because of their substantially greater financial resources. Uncertainties resulting from the
initiation and continuation of patent litigation or other intellectual property related proceedings could adversely affect our ability
to compete in the marketplace.
**We may be subject to claims challenging the inventorship or ownership
of our patents and other intellectual property.**
We generally enter into confidentiality and intellectual property assignment
agreements with our employees, consultants, and contractors. These agreements generally provide that inventions conceived by the party
in the course of rendering services to us will be our exclusive property. However, those agreements may not be honored and may not effectively
assign intellectual property rights to us. For example, even if we have a consulting agreement in place with an academic advisor pursuant
to which such academic advisor is required to assign any inventions developed in connection with providing services to us, such academic
advisor may not have the right to assign such inventions to us, as it may conflict with his or her obligations to assign all such intellectual
property to his or her employing institution.
We may be subject to claims that former employees, collaborators or
other third parties have an interest in our patents, trade secrets, or other intellectual property as an inventor or co-inventor. Also,
former employees may become employed by competitors who develop similar technology, and could assist the competitor in designing around
our patents. While it is our policy to require our employees and contractors who may be involved in the development of intellectual property
to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party
who in fact develops intellectual property that we regard as our own. The assignment agreements entered into by us may not be self-executing
or may be breached, and litigation may be necessary to defend against these and other claims challenging inventorship or our ownership
of our patents, trade secrets or other intellectual property. If we fail in defending any such claims, in addition to paying monetary
damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that
is important to our product candidates. Even if we are successful in defending against such claims, litigation could result in substantial
costs and be a distraction to management and other employees. Any of the foregoing could have a material adverse effect on our business,
financial condition, results of operations and prospects.
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**We may not be able to protect our intellectual property rights
throughout the world, which could materially, negatively affect our business.**
Filing, prosecuting and defending patents on current and future product
candidates and technologies in all countries throughout the world would be prohibitively expensive, and many markets outside the United
States will likely be smaller than the United States for commercializing the Vicarious Surgical System. We may therefore choose to pursue
a more limited set of patent filings outside the United States, such that our intellectual property rights in some countries outside the
United States may be less extensive than those in the United States, or may not be pursued at all in such countries. In addition, the
laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United
States. Consequently, regardless of whether we are able to prevent third parties from practicing our inventions in the United States,
we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling
or importing products and technologies made using our inventions in and into the United States or other jurisdictions. Competitors may
use our technologies in jurisdictions where we have not pursued and obtained patent protection to develop their own product candidates
and technologies, and further, may export otherwise infringing products and technologies to territories where we have patent protection,
but enforcement is not as strong as it is in the United States. These products and technologies may compete with our product candidates
and technologies, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Even if we pursue and obtain issued patents in particular jurisdictions, our patent claims or other intellectual property rights may not
be effective or sufficient to prevent third parties from competing in such jurisdictions. Patent protection must ultimately be sought
on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not
to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.
Many companies have encountered significant problems in protecting
and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing
countries, do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to
stop the infringement of our patents or marketing of competing products and technologies in violation of our proprietary rights generally.
Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention
from other aspects of our business. These proceedings could put our patents at risk of being invalidated or interpreted narrowly and our
patent applications at risk of not issuing. Additionally, these proceedings could provoke third parties to assert claims against us. We
may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful.
Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial
advantage from the intellectual property that we develop or license and may adversely impact our business.
In addition, we also face the risk that the Vicarious Surgical System
will be imported or reimported into markets with relatively higher prices from markets with relatively lower prices, which would result
in a decrease of sales and any payments we receive from the affected market. Recent developments in U.S. patent law have made it more
difficult to stop these and related practices based on theories of patent infringement.
**Patent terms may be inadequate to protect our competitive position
on technology for an adequate amount of time.**
Patents have a limited lifespan. In the United States, if all maintenance
fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various
extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering our product
candidates are obtained, once the patent life has expired for a product, we may be open to competition. Given the amount of time required
for the development, testing and regulatory review of new products, patents protecting such products might expire before or shortly after
such products are commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing
products similar or identical to our product candidates for a meaningful amount of time, or at all.
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**Obtaining and maintaining our patent protection depends on compliance
with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent
protection could be reduced or eliminated for non-compliance with these requirements.**
The USPTO and various foreign governmental patent agencies require
compliance with a number of procedural, documentary, fee payment and other provisions during the patent process. There are situations
in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of
patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlier than would otherwise
have been the case.
Periodic maintenance fees on any issued patent are due to be paid to
the USPTO and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent
agencies also require compliance with a number of procedural, documentary, fee payment (such as annuities) and other similar provisions
during the patent application process and beyond. While an inadvertent lapse can in many cases be cured by payment of a late fee or by
other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of
the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance
events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond
to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. In
some cases, our licensors may be responsible for these payments or filings, thereby decreasing our control over compliance with these
requirements.
If we fail to comply with such procedural, documentary, payment and
other provisions for any item of intellectual property, such intellectual property may become abandoned or may lapse.
**If our trademarks and trade names are not adequately protected,
then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.**
Our registered or unregistered trademarks or trade names may be challenged,
infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to
these trademarks and trade names, which we need to build name recognition by potential partners or customers in our markets of interest.
At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly
leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other
registered trademarks. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then
we may not be able to compete effectively and our business may be adversely affected.
In addition, if we are unable to establish name recognition based on
our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. We may license
our trademarks and trade names to third parties, such as distributors. Though these license agreements may provide guidelines for how
our trademarks and trade names may be used, a breach of these agreements or misuse of our trademarks and tradenames by our licensees may
jeopardize our rights in, or diminish the goodwill associated with, our trademarks and trade names. Our efforts to enforce or protect
our proprietary rights related to trademarks, trade names, trade secrets, domain names, copyrights or other intellectual property may
be ineffective and could result in substantial costs and diversion of resources and could adversely affect our financial condition or
results of operations.
**Numerous factors may limit any potential competitive advantage
provided by our intellectual property rights.**
The degree of future protection afforded by our intellectual property
rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, provide a barrier
to entry against our competitors or potential competitors, or permit us to maintain our competitive advantage. Moreover, if a third party
has intellectual property rights that cover the practice of our technology, we may not be able to fully exercise or extract value from
our intellectual property rights. The following examples are illustrative:
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others may be able to develop and/or practice technology that is similar to our technology or aspects of our technology that are not covered by the claims of any patents that have issued, or may issue, from our owned or in-licensed patent applications; | |
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we might not have been the first to make the inventions covered by a pending patent application that we own or license; | |
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we might not have been the first to file patent applications covering an invention and therefore may not be able to obtain or maintain patent protection for the invention; | |
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others may independently develop similar or alternative technologies without infringing our intellectual property rights; | |
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pending patent applications that we own or license may not lead to issued patents; | |
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if issued, that we own or license may not provide us with any competitive advantages, or may be interpreted narrowly or held invalid
or unenforceable, as a result of legal challenges by our competitors; |
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third parties may compete with us in jurisdictions where we do not pursue and obtain patent protection; | |
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we may not be able to obtain and/or maintain necessary or useful licenses on reasonable terms or at all; | |
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third parties may be able to also license the intellectual property that we have licensed nonexclusively; | |
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third parties may assert an ownership interest in our intellectual property and, if successful, such disputes may preclude us from exercising exclusive rights over that intellectual property; | |
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we may not be able to maintain the confidentiality of our trade secrets or other proprietary information; | |
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we may not develop or in-license additional proprietary technologies that are patentable; and | |
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one or more third parties may pursue continuation patent applications with claims directed to our product offerings, and if issued such patents may have an adverse effect on our business. | |
Should any of these events occur, they could significantly harm our
business and results of operations.
**Litigation Risks**
**We face the risk of product liability claims and may be subject
to damages, fines, penalties and injunctions, among other things.**
****
Our business exposes us to the risk of product liability claims that
are inherent in the testing, manufacturing and marketing of medical devices, including those which may arise from the misuse (including
system hacking or other unauthorized access by third parties to our systems) or malfunction of, or design flaws in, our product candidates,
when or if authorized for marketing. This liability may vary based on the FDA classification associated with our devices and with state
law governing product liability standards applied to specification developers and/or manufacturers in a given negligence or strict liability
lawsuit. We may be subject to product liability claims if the Vicarious Surgical System causes, or merely appears to have caused, an injury.
Claims may be made by patients, healthcare providers or others selling the Vicarious Surgical System. The risk of product liability claims
may also increase if our product candidates are subject to a recall or seizure. Product liability claims may be brought by individuals
or by groups seeking to represent a class.
Although we have insurance at levels that we believe to be appropriate,
this insurance is subject to deductibles and coverage limitations. Our current product liability insurance may not continue to be available
to us on acceptable terms, if at all, and, if available, the coverage may not be adequate to protect us against any future product liability
claims. If we are unable to maintain insurance at an acceptable cost or on acceptable terms with adequate coverage or otherwise protect
against potential product liability claims, we may be exposed to significant liabilities, which may harm our business. A product liability
claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could result in significant
costs and significant harm to our business.
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We may be subject to claims against us even if the apparent injury
is due to the actions of others or misuse of the device or a partner device. Healthcare providers may use the Vicarious Surgical System
in a manner inconsistent with the labeling and that differs from the manner in which it was used in clinical studies and authorization
for use by the FDA. Off-label use of medical products by healthcare providers is common, and any such off-label use of the Vicarious Surgical
System could subject us to additional liability, or require design changes to limit this potential off-label use once discovered. Defending
a suit, regardless of merit, could be costly, could divert management attention and might result in adverse publicity, which could result
in the withdrawal of, or result in reduced acceptance of, the Vicarious Surgical System in the market.
Additionally, we may enter into various agreements where we indemnify
third parties for certain claims relating to the Vicarious Surgical System. These indemnification obligations may require us to pay significant
sums of money for claims that are covered by these indemnification obligations. We are not currently subject to any product liability
claims; however, any future product liability claims against it, regardless of their merit, may result in negative publicity about us
that could ultimately harm our reputation and could have a material adverse effect on our business, financial condition, or results of
operations.
**We may face litigation and other risks as a result of the material
weakness in our internal controls over financial reporting.**
We have previously identified a material weakness in our internal controls
over financial reporting. See *We have identified a material weakness in our internal control over financial reporting. If we
are unable to successfully remediate this material weakness in our internal control over financial reporting, we may not be able to report
our financial condition or results of operations accurately or in a timely manner, which may adversely affect investor confidence in us
and, as a result, materially and adversely affect our business and the value of our Class A common stock.*
**
As a result of such material weakness, we face potential for litigation
or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other
claims arising from the Restatement and material weaknesses in our internal control over financial reporting and the preparation of our
financial statements. We can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or
dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition.
**Risks Related to Our Securities and to Being a Public Company**
**Our outstanding warrants increase the number of shares eligible
for future resale in the public market and, if exercised, will result in significant dilution to our stockholders.**
Our outstanding warrants include warrants to purchase shares of our
Class A common stock issued in connection with D8s initial public offering (Public Warrants) that were formerly listed
on the NYSE and private placement warrants sold in a private placement to D8s sponsor in connection with the closing of the initial
public offering and in connection with the conversion of D8 working capital loans (the Private Placement Warrants). As of
December 31, 2025, we had 17,248,601 Public Warrants exercisable for 574,953 shares of Class A common stock, and 10,400,000 Private Placement
Warrants exercisable for 346,666 shares of Class A common stock outstanding. Thirty (30) whole warrants are exercisable for one share
of Class A common stock at an exercise price of $345.00 per share. The warrants became exercisable 30 days after the closing of our Business
Combination, which occurred on September 17, 2021. In certain circumstances, the warrants may be exercised on a cashless basis. To the
extent such warrants are exercised, additional shares of our Class A common stock will be issued, which will result in dilution to the
holders of our Class A common stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers
of such shares in the public market could adversely affect the market price of our Class A common stock, the impact of which is increased
as the value of our stock price increases. However, there is no guarantee that the warrants will remain in the money prior to their expiration,
and as such, the warrants may expire worthless.
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**The valuation of our warrants could increase the volatility in
our net income (loss) in our consolidated statements of operations.**
The change in fair value of our warrants is the result of changes in
stock price and warrants outstanding at each reporting period. The change in fair value of warrant liabilities represents the mark-to-market
fair value adjustments to the outstanding warrants issued in connection with the initial public offering of D8. Significant changes in
our stock price or number of warrants outstanding may adversely affect our net income (loss) in our consolidated statements of operations.
**We are a smaller reporting company within the meaning of the
Securities Act, and we take advantage of certain exemptions from disclosure requirements available to smaller reporting companies,
which could make our securities less attractive to investors and may make it more difficult to compare our performance with other public
companies.**
We are a smaller reporting company as defined in Item
10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among
other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day
of the fiscal year in which (i) the market value of our common stock held by non-affiliates is greater than or equal to $250 million as
of the end of that fiscal years second fiscal quarter, and (ii) our annual revenues are greater than or equal to $100 million during
the last completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the end of that
fiscal years second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison
of our financial statements with other public companies difficult or impossible.
**We cannot predict the impact our dual class structure may have
on the stock price of our Class A common stock.**
We cannot predict whether our dual class structure will result in a
lower or more volatile market price of our Class A common stock or in adverse publicity or other adverse consequences. For example, certain
index providers have announced restrictions on including companies with multiple-class share structures in certain of their indexes. Under
these policies, our dual class capital structure would make us ineligible for inclusion in certain indices, and as a result, mutual funds,
exchange-traded funds and other investment vehicles that attempt to passively track those indices will not be investing in our stock.
It is unclear what effect, if any, these policies will have on the valuations of publicly traded companies excluded from such indices,
but it is possible that they may depress valuations, as compared to similar companies that are included. As a result, the market price
of shares of our Class A common stock could be adversely affected.
**If securities or industry analysts do not publish research or
reports about our business or if they issue an adverse or misleading opinion regarding our securities, our stock price and trading volume
could decline.**
The trading market for our securities is influenced by the research
and reports that industry or securities analysts publish about us or our business. If one or more of these analysts ceases coverage of
us or fails to publish reports on us regularly, we could lose visibility in the financial markets, which could cause the price and trading
volume of our securities to decline. Further, if any of these analysts issues an adverse or misleading opinion regarding us, our business
model, our industry or our stock performance or if our operating results fail to meet analyst expectations, the price of our securities
could also decline.
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**Delaware law and our organizational documents contain certain
provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage
takeover attempts that stockholders may consider favorable.**
The provisions of the General Corporation Law of the State of
Delaware (DGCL) and our organizational documents contain provisions that could have the effect of rendering more
difficult, delaying, or preventing an acquisition that stockholders may consider favorable, including transactions in which
stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be
willing to pay in the future for shares of our common stock, and therefore depress the trading price of our common stock.
Additionally, these provisions could also make it difficult for stockholders to take certain actions, including electing directors
who are not nominated by the current members of our board of directors or taking other corporate actions, including effecting
changes in our management. Among other things, our organizational documents include provisions regarding:
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the ability of our board of directors to issue one or more series of preferred stock; | |
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the ability of our board of directors to issue shares of preferred stock, including blank check preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; | |
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limitations on the liability of, and the indemnification of, our directors and officers; | |
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the right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; | |
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the requirement that directors may only be removed from our board of directors for cause and upon the affirmative vote of the holders of at least 66 2/3% of the total voting power of then outstanding shares of our common stock; | |
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a prohibition on stockholder action by written consent (except for actions by the holders of our ClassB common stock or as required for holders of future series of our preferred stock), which forces stockholder action to be taken at an annual or special meeting of stockholders and could delay the ability of stockholders to force consideration of a stockholder proposal or to take action, including the removal of directors; | |
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the requirement that a special meeting of stockholders may be called only by our board of directors, the chairman of our board of directors, or our chief executive officer, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; | |
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controlling the procedures for the conduct and scheduling of our board of directors and stockholder meetings; | |
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the requirement for the affirmative vote of holders of at least 66 2/3% of the total voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend, alter, change or repeal certain provisions in our certificate of incorporation (the Charter) which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt; | |
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the ability of our board of directors to amend our amended and restated bylaws (the Bylaws), which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Bylaws to facilitate an unsolicited takeover attempt; and | |
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advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirers own slate of directors or otherwise attempting to obtain control of our company. | |
64
These anti-takeover provisions as well as certain provisions of
Delaware law could make it more difficult for a third party to acquire us, even if the third partys offer may be considered
beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their
shares. If prospective takeovers are not consummated for any reason, we may experience negative reactions from the financial
markets, including negative impacts on the price of our common stock. These provisions could also discourage proxy contests and make
it more difficult for our stockholders to elect directors of their choosing and to cause us to take other corporate actions that our
stockholders desire.
**The provisions of our Charter requiring exclusive forum in the
Court of Chancery of the State of Delaware and the federal district courts of the United States for certain types of lawsuits may have
the effect of discouraging certain lawsuits, including derivative lawsuits and lawsuits against us or our directors, officers or other
employees, by limiting plaintiffs ability to bring a claim in a judicial forum that they find favorable.**
Our Charter provides that, unless we consent in writing to the selection
of an alternative forum, the Court of Chancery of the State of Delaware (or, in the event that such court does not have subject matter
jurisdiction, any other court located in the State of Delaware with subject matter jurisdiction), will be the sole and exclusive forum
for (a) any derivative action or proceeding brought on behalf of us, (b) any action asserting a claim of breach of a fiduciary duty owed
by any current or former director, officer, other employee or stockholder of ours to us or our stockholders, (c) any action asserting
a claim against us or our officers or directors arising pursuant to any provision of the DGCL or the Charter or Bylaws or as to which
the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, (d) any action to interpret, apply, enforce or determine
the validity of the Charter or the Bylaws or any provision thereof, (e) any action asserting a claim against us or any current or former
director, officer, employee, stockholder or agent of ours governed by the internal affairs doctrine of the law of the State of Delaware
or (f) any action asserting an internal corporate claim as defined in Section 115 of the DGCL. The Charter also provides
that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district
courts of the United States will be the exclusive forum for the resolutions of any complaint asserting a cause of action arising under
the Securities Act. This provision in the Charter does not address or apply to claims that arise under the Exchange Act. Section 27 of
the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange
Act or the rules and regulations thereunder; to the extent these provisions could be construed to apply to such claims, there is uncertainty
as to whether a court would enforce such provisions in connection with such claims, and our stockholders cannot waive compliance with
the federal securities laws and the rules and regulations thereunder.
Any person or entity purchasing or otherwise acquiring any interest
in any of our securities will be deemed to have notice of and consented to the provisions of the Charter described in the preceding paragraph.
These provisions may have the effect of discouraging certain lawsuits, including derivative lawsuits and lawsuits against us and our directors
and officers, by limiting plaintiffs ability to bring a claim in a judicial forum that they find favorable. The enforceability
of similar choice of forum provisions in other companies certificates of incorporation or bylaws has been challenged in legal proceedings,
and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions
contained in the Charter to be inapplicable or unenforceable in such action. Furthermore, if a court were to find these provisions of
our certificate of incorporation inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings,
we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect our
business, financial condition and results of operations and result in a diversion of the time and resources of our management and board
of directors.
65
**Changes in laws or regulations, or a failure to comply with any
laws and regulations, or any litigation that we may be subject to or involved in may adversely affect our business, investments and results
of operations.**
****
We are subject to laws, regulations and rules enacted by national,
regional and local governments and the principal exchange on which our securities are listed or quoted. In particular, we are required
to comply with certain SEC, Delaware, stock exchange and other legal and regulatory requirements. Compliance with, and monitoring of,
applicable laws, regulations and rules may be difficult, time-consuming and costly.
Those laws, regulations and rules and their interpretation and
application may also change from time to time and those changes could have a material adverse effect on our business, investments
and results of operations. For example, it is difficult to predict what impact, if any, changes in federal laws and policies,
including those relating to tax, environmental, labor and employment, will have on our business and industry, the economy as a
whole, consumer confidence and discretionary spending. Further, a recent ruling by the Court of Chancery in Delaware introduced
uncertainty as to whether Section 242(b)(2) of the DGCL required a separate vote in favor of at least a majority of the outstanding
shares of Class A common stock, in addition to a vote in favor of at least a majority of the outstanding shares of Class A and Class
B common stock, voting together as a single class, to properly authorize shares of Class A common stock. In connection with the
Business Combination, our stockholders authorized an increase in the number of shares of Class A common stock under Cayman Islands
law, our jurisdiction at the time of the stockholder vote. Accordingly, we do not believe that the Delaware ruling applies to us.
However, any failure to comply with applicable laws, regulations or rules, as interpreted and applied, could have a material adverse
effect on our business and results of operations. Claims alleging that a portion of our Class A common stock was not authorized
could lead to shares of our Class A common stock being voidable and have a material adverse effect on us and our prospects. In
addition, uncertainty with respect to our capitalization resulting from the Court of Chancerys ruling referenced above could
have a material adverse impact on us, including on our ability to complete equity financing transactions or issue stock-based
compensation to our employees, directors, and officers until the underlying issues are definitively resolved. This uncertainty could
impair our ability to execute our business plan, attract and retain employees, management, and directors and adversely affect our
commercial relationships.
**Our principal stockholders and management will exert significant
influence over us and their interests may conflict with yours in the future.**
Each share of Class A common stock initially entitles its holders
to one vote on all matters presented to stockholders generally and each share of Class B common stock initially entitles its holders
to twenty votes on all matters presented to stockholders generally. Accordingly, Messrs. Sachs, Khalifa and Greene, by virtue of
their Class B common stock, hold approximately 67.2% of the voting power of our outstanding capital stock. Accordingly, those
owners, if voting in the same manner, will be able to control the election and removal of the directors of our board of directors
and thereby determine corporate and management policies, including potential mergers or acquisitions, payment of dividends, asset
sales, amendment of the Charter and Bylaws and other significant corporate transactions of ours for so long as they retain
significant ownership of Class B common stock. This concentration of ownership may delay or deter possible changes in control of us,
which may adversely affect the market price of shares of our Class A common stock.
66
**ITEM 1B. UNRESOLVED STAFF COMMENTS.**
None.
****
**ITEM 1C. CYBERSECURITY.**
We recognize the critical importance of maintaining the trust and confidence
of business partners and employees toward our business and are committed to protecting the confidentiality, integrity and availability
of our business operations and systems. Our board of directors is actively involved in oversight of our risk management activities, and
cybersecurity represents an important element of our overall approach to risk management. Our cybersecurity policies, standards, processes
and practices are based on recognized frameworks established by the National Institute of Standards and Technology, or NIST and other
applicable industry standards. In general, we seek to address cybersecurity risks through a comprehensive, cross-functional approach that
is focused on preserving the confidentiality, security and availability of the information that we collect and store by identifying, preventing
and mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur.
**Cybersecurity Risk Management and Strategy; Effect of Risk**
We face risks related to cybersecurity such as unauthorized access,
cybersecurity attacks and other security incidents, including as perpetrated by hackers and unintentional damage or disruption to hardware
and software systems, loss of data, and misappropriation of confidential information. To identify and assess material risks from cybersecurity
threats, we maintain a comprehensive cybersecurity program to ensure our systems are effective and prepared for information security risks,
including regular oversight of our programs for security monitoring for internal and external threats to ensure the confidentiality and
integrity of our information assets. We consider risks from cybersecurity threats alongside other company risks as part of our overall
risk assessment process. We employ a range of tools and services, including regular network and endpoint monitoring, internal audits,
vulnerability assessments, threat modeling and tabletop exercises to inform our risk identification and assessment. As discussed in more
detail under Cybersecurity Governance below, our Nominating and Corporate Governance Committee provides oversight of our
cybersecurity risk management and strategy processes, which are led by our IT Department.
We also identify our cybersecurity threat risks by comparing our processes
to standards set by the National Institute of Standards and Technology, or NIST. To provide for the availability of critical data and
systems, maintain regulatory compliance, manage our material risks from cybersecurity threats, and protect against and respond to cybersecurity
incidents, we undertake the following activities:
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monitor emerging data protection laws and implement changes to our processes that are designed to comply with such laws; | |
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through our policies, practices and contracts (as applicable), require employees, as well as third parties that provide services on our behalf, to treat confidential information and data with care; | |
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employ technical safeguards that are designed to protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence; | |
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provide regular, mandatory training for our employees regarding cybersecurity threats as a means to equip them with effective tools to address cybersecurity threats, and to communicate our evolving information security policies, standards, processes and practices; | |
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conduct regular phishing email simulations for all employees with access to our email systems to enhance awareness and responsiveness to possible threats; | |
67
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conduct annual cybersecurity management and incident training for employees involved in our systems and processes that handle sensitive data; | |
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run tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our processes and technologies; | |
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leverage the NIST incident handling framework to help us identify, protect, detect, respond and recover when there is an actual or potential cybersecurity incident; and | |
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carry information security risk insurance that provides protection against the potential losses arising from a cybersecurity incident. | |
Our incident response plan coordinates the activities we take to prepare
for, detect, respond to and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain,
investigate and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate damage to our
business and reputation.
As part of the above processes, we regularly engage with consultants,
auditors and other third parties to review our cybersecurity program to help identify areas for continued focus, improvement and compliance.
Our processes also address cybersecurity threat risks associated with
our use of third-party service providers, including our vendors who have access to employee data or our systems. Cybersecurity considerations
affect the selection and oversight of our third-party service providers. We perform diligence on third parties that have access to our
systems, data or facilities that house such systems or data, and continually monitor cybersecurity threat risks identified through such
diligence. Our IT Department is part of our vendor selection process and we review the security policies, procedures, and certifications
of all third-party service providers prior to engagement. Additionally, we generally require those third parties that could introduce
significant cybersecurity risk to us to agree by contract to manage their cybersecurity risks in specified ways.
We describe whether and how risks from identified cybersecurity threats,
including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect
us, including our business strategy, results of operations, or financial condition, under the heading *Disruptions to Information
Technology Systems and Cybersecurity Incidents*, which disclosures are incorporated by reference herein.
In the last two fiscal years, we have not experienced any material
cybersecurity incidents and the expenses we have incurred from cybersecurity incidents were immaterial. This includes penalties and settlements,
of which there were none.
**Cybersecurity Governance; Management**
Cybersecurity is an important part of our risk management processes
and an area of focus for our board of directors and management. The Nominating and Corporate Governance Committee of our Board of Directors
is responsible for the oversight of risks from cybersecurity threats.
At least annually, our Nominating and Corporate Governance Committee
receives an update from management of our cybersecurity threat risk management and strategy processes covering topics such as data security
posture, progress towards pre-determined risk-mitigation-related goals, our incident response plan, and material cybersecurity threat
risks or incidents and developments, as well as the steps management has taken to respond to such risks. In such sessions, our Nominating
and Corporate Governance Committee generally receives materials that include a cybersecurity scorecard and other materials discussing
current and emerging material cybersecurity threat risks, and describing our ability to mitigate those risks, as well as recent developments,
evolving standards, technological developments and information security considerations arising with respect to our peers and third parties,
and discusses such matters with our IT Department. Our Nominating and Corporate Governance Committee also receive prompt and timely information
regarding any cybersecurity incident that meets establishing reporting thresholds, as well as ongoing updates regarding any such incident
until it has been addressed.
68
Members of the Nominating and Corporate Governance Committee are also
encouraged to regularly engage in conversations with management on cybersecurity-related news events and discuss any updates to our cybersecurity
risk management and strategy programs. Material cybersecurity threat risks are also considered during separate board meeting discussions
of important matters like enterprise risk management, operational budgeting, business continuity planning, mergers and acquisitions, brand
management, and other relevant matters.
Our cybersecurity risk management and strategy processes, which are
discussed in greater detail above, are led by our IT Department and are overseen by our Nominating and Corporate Governance Committee
of our Board of Directors. Our IT Department consists of over 30 years of work experience in various roles involving managing information
security, developing cybersecurity strategy, and implementing effective information and cybersecurity programs. Our IT Department is informed
about and monitors the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of, and
participation in, the cybersecurity risk management and strategy processes described above, including the operation of our incident response
plan. As discussed above, our IT Department reports to the Nominating and Corporate Governance Committee about cybersecurity threat risks,
among other cybersecurity related matters, at least annually.
****
**ITEM 2. PROPERTIES.**
We currently maintain all of our operations, including executive offices
and manufacturing and laboratory space at 78 Fourth Avenue, Waltham, Massachusetts 02451. We lease office space under operating leases.
On October 17, 2025, we entered into a lease amendment which eliminates the second space at 62 Fourth Avenue, commencing on December 23,
2025. We consider our current office space adequate for our current operations.
**ITEM 3. LEGAL PROCEEDINGS.**
As of the date of this Annual Report on Form 10-K, to our knowledge,
we are not party to and our property is not subject to any material pending legal proceedings. However, from time to time, we may become
involved in legal proceedings or subject to claims that arise in the ordinary course of our business activities. Regardless of the outcome,
such legal proceedings or claims could have an adverse impact on us because of defense and settlement costs, diversion of management resources,
negative publicity and reputational harm, and other factors.
****
**ITEM 4. MINE SAFETY DISCLOSURES.**
Not applicable.
**
69
**
**PART
II**
****
**ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.**
**Market Information**
On March 3, 2026, the NYSE notified us that the NYSE had determined
to (A) immediately suspend trading in our Class A common stock, where it had traded under the symbol RBOT, due to a determination
that we had fallen below the NYSEs continued listing standard requiring listed companies to maintain an average global market capitalization
over a consecutive 30 trading day period of at least $15,000,000 pursuant to Section 802.01B of the NYSE Listed Company Manual, and (B)
commence proceedings to delist the Class A common stock. We will not appeal the delisting determination. The NYSE has indicated that it
will apply to the Securities and Exchange Commission to delist the Class A common stock by filing a Form 25.
We received approval of our application to have the Class A common
stock quoted on the OTCID market tier operated by OTC Markets. The Class A common stock commenced quotation on the OTCID at the open of
business on March 4, 2026 under the trading symbol of RBOT.
Our Public Warrants were suspended from trading on the NYSE, where
they had traded under the symbol RBOT.WS, on December 15, 2025 and were subsequently delisted due to an abnormally
low trading price level pursuant to Section 802.01D of the NYSE Listed Company Manual. The suspension and delisting of our Public
Warrants did not affect the listing of the Companys Class A common stock
****
**Holders**
As of February 9, 2026, there were approximately 27 holders of record
of our ClassA common stock, three holders of record of our ClassB common stock, one holder of record of the Public Warrants
and two holders of record of the Private Placement Warrants.
Such numbers do not include beneficial owners holding our securities
through nominee names. There is no public market for our ClassB common stock.
****
**Dividends**
We have not paid any cash dividends on our ClassA common stock
or ClassB common stock to date. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if
any, capital requirements and general financial condition. The payment of any cash dividends will be within the discretion of our board
of directors at such time.
****
**Unregistered Sales of Securities**
Not applicable.
**Issuer Purchases of Equity Securities**
We did not repurchase any of our equity securities during the twelve
months ended December 31, 2025.
**ITEM 6. [RESERVED]**
****
70
****
**ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.**
**
*The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition.
This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those
described in the Risk Factors section of this Annual Report on Form 10-K. Actual results may differ materially from those
contained in any forward-looking statements. Unless the context otherwise requires, references to we, us,
our, and the Company are intended to mean the business and operations of Vicarious Surgical Inc. and its consolidated
subsidiaries.*
****
**Overview**
We are combining advanced miniaturized robotics, computer science,
sensing and 3D visualization to build a new category of intelligent and affordable single-port surgical robots that virtually transport
surgeons inside the patient to perform minimally invasive surgery. With our next-generation robotics technology, which is being designed
with proprietary human-like motion, we are seeking to improve surgical precision, ergonomics, and procedural efficiency, with the goal
of improving patient outcomes and the cost and efficacy of surgical procedures over time. Led by a visionary team of engineers from MIT,
we intend to deliver the next generation in robotic surgery, designed to solve the shortcomings of both open surgery, as well as current
manual and robot-assisted minimally invasive surgery.
We estimate that there are 45million
soft tissue abdominal and gynecological surgical procedures performed annually worldwide that could potentially be addressed with the
Vicarious Surgical System, including use for ventral hernia, other types of hernia, hysterectomy, cholecystectomy (gall bladder) and certain
other gastrointestinal procedures. We intend for use in ventral hernia procedures to be the first clinical application for the Vicarious
Surgical System, of which there are estimated to be 3.9million cases worldwide and 0.9million in the U.S.annually. We
then intend to seek FDA authorization to enable the expansion into the other applications addressable by the Vicarious Surgical System.
The dollar amounts set forth in this section are presented in thousands,
except for per share amounts.
**Financial Highlights**
****
We incurred net losses of $50,182 and $63,223 for the years ended December
31, 2025 and 2024, respectively. The 2025 net loss is inclusive of a gain of $787 related to the change in valuation of our warrant obligations.
The 2024 net loss is inclusive of a gain of $43 related to the change in valuation of our warrant obligations. Our loss from operations
prior to the warrant gain and other income and expense items was $50,027 and $66,555 for the years ended December 31, 2025 and 2024, respectively,
representing a period-over-period decrease in expenses of 25%, which was primarily due to decreases of $8,973 in personnel-related expenses
and $6,394 in professional fees. The decrease in personnel-related expenses was due to a 23% decrease in average headcount, from an average
of 127 people in 2024 to an average of 98 people in 2025, as well as a decrease in bonus expense of $2,676.
**Factors Affecting Results of Operations**
The following factors have been important to our business and we expect
them to impact our results of operations and financial condition in future periods:
**Revenue**
To date, we have not generated any revenue. We do not expect to
generate revenue unless and until we receive FDA authorization of our product candidate. The amount of revenue, if any, from initial
sales of a new product is difficult to predict and, even if we successfully commercialize our product candidate upon approval and
begin generating revenue, such revenues will initially only modestly reduce our continued net losses resulting from our research and
development and marketing activities, which we expect to continue to increase even after market authorization is received.
71
**Research and Development (R&D) Expenses**
Research and development (R&D) expenses consist primarily
of engineering, product development, regulatory expenses, medical affairs, and other costs associated with product candidates and technologies
that are in development. These expenses include employee compensation, including stock-based compensation, supplies, consulting, prototyping,
testing, materials, travel expenses, depreciation and an allocation of facility overhead expenses. Additionally, R&D expenses include
internal and external costs associated with our regulatory compliance and quality assurance functions and overhead costs. While R&D
expenses may vary over time depending on the level and timing of our product development efforts, as well as our clinical development,
clinical trial and other related activities, we currently expect such expenses to decrease in absolute dollars as we implement cost control
measures and operational efficiencies.
**General and Administrative Expenses**
General and administrative (G&A) expenses consist
primarily of compensation for personnel, including stock-based compensation, related to executive, finance and accounting, information
technology and human resource functions. Other G&A expenses include travel expenses, professional services fees (including legal,
audit and tax fees), insurance costs, general corporate expenses and allocated facilities-related expenses. We expect G&A expenses
to decrease in absolute dollars as we continue to streamline operations and realize cost efficiencies.
**Sales and Marketing Expenses**
Sales and marketing (S&M) expenses consist primarily
of compensation for personnel, including stock-based compensation, related to sales and marketing functions and physician education programs.
Other S&M expenses include training, travel expenses, promotional activities, marketing initiatives, market research and analysis,
conferences and trade shows, professional services fees and allocated facilities-related expenses. We expect S&M expenses to continue
to decrease in absolute dollars as we prioritize capital preservation and limit marketing activities until closer to commercialization.
**Change in Fair Value of Warrant Liabilities**
The change in fair value of warrant liability represents the mark-to-market
fair value adjustments to the outstanding Public Warrants and Private Placement Warrants assumed as part of the consummation of the Business
Combination on September 17, 2021. The change in fair value of our Private Placement Warrants is primarily the result of the change in
the underlying stock price of our stock used in the Black-Scholes option pricing model while the Public Warrants are marked-to-market
based on their historical price on the NYSE. As of December 17, 2025, the Public Warrants have been removed from the NYSE. The warrant
liability was measured at fair value initially on September 17, 2021 and is remeasured at exercise, and for warrants that remain outstanding
at the end of each subsequent reporting period.
**Interest Income**
Interest income consists primarily of interest income earned on our
cash and cash equivalents and short-term investments.
**Interest Expense**
Interest expense consists of interest incurred on our D&O insurance
financing.
72
**Results of Operations**
The following table sets forth our historical operating results for
the years ended December 31, 2025 and 2024:
|
| |
Year ended December 31, | | |
| | |
| | |
|
(in thousands, except for per share amounts) | |
2025 | | |
2024 | | |
Change | | |
%Change | | |
|
| |
| | |
| | |
| | |
| | |
|
Operating expenses: | |
| | |
| | |
| | |
| | |
|
Research and development | |
$ | 33,601 | | |
$ | 40,155 | | |
$ | (6,554 | ) | |
| (16 | )% | |
|
Sales and marketing | |
| 2,171 | | |
| 4,525 | | |
| (2,354 | ) | |
| (52 | )% | |
|
General and administrative | |
| 15,196 | | |
| 21,875 | | |
| (6,679 | ) | |
| (31 | )% | |
|
Gain on lease modification, net | |
| (941 | ) | |
| | | |
| (941 | ) | |
| (100 | )% | |
|
Total operating expenses | |
| 50,027 | | |
| 66,555 | | |
| (16,528 | ) | |
| (25 | )% | |
|
Loss from operations | |
| (50,027 | ) | |
| (66,555 | ) | |
| (16,528 | ) | |
| (25 | )% | |
|
Other (expense) income, net: | |
| | | |
| | | |
| | | |
| | | |
|
Loss on disposal of leasehold improvements | |
| (1,915 | ) | |
| | | |
| (1,915 | ) | |
| (100 | )% | |
|
Change in fair value of warrant liabilities | |
| 787 | | |
| 43 | | |
| 744 | | |
| 1,730 | % | |
|
Interest and other income, net | |
| 973 | | |
| 3,289 | | |
| (2,316 | ) | |
| (70 | )% | |
|
Total other (expense) income, net | |
| (155 | ) | |
| 3,332 | | |
| (3,487 | ) | |
| (105 | )% | |
|
Net loss | |
$ | (50,182 | ) | |
$ | (63,223 | ) | |
$ | (13,041 | ) | |
| (21 | )% | |
|
Net loss per common share, basic and diluted | |
$ | (8.19 | ) | |
$ | (10.74 | ) | |
$ | (2.55 | ) | |
| (24 | )% | |
|
| |
| | | |
| | | |
| | | |
| | | |
|
Other comprehensive (loss) gain: | |
| | | |
| | | |
| | | |
| | | |
|
Net unrealized (loss) gain on investments | |
| (46 | ) | |
| 40 | | |
| (86 | ) | |
| (215 | )% | |
|
Other comprehensive (loss) gain | |
| (46 | ) | |
| 40 | | |
| (86 | ) | |
| (215 | )% | |
|
Comprehensive loss | |
$ | (50,228 | ) | |
$ | (63,183 | ) | |
$ | (12,955 | ) | |
| (21 | )% | |
****
**Comparison of the years ended December 31, 2025 and 2024**
*Research and Development Expenses*. R&D expenses decreased
$6,554, or 16%, to $33,601 during the year ended December 31, 2025, compared to $40,155 during the year ended December 31, 2024. This
decrease was primarily due to decreases of $5,258 in contractor fees, $1,417 of personnel-related expenses, and $623 in depreciation expense;
and was partially offset by increases of $531 in pre-clinical testing expense and $247 in materials and supplies. The decrease in personnel-related
expenses was due primarily to a decrease in average headcount of 23%, consisting of an average of 79 R&D employees in 2025 compared
to an average of 103 R&D employees in 2024.
*Sales and Marketing Expenses*. S&M expenses decreased $2,354,
or 52%, from $4,525 in the year ended 2024 to $2,171 during the year ended December 31, 2025. This decrease was primarily due to decreases
of $2,368 in personnel-related expenses. The decrease in personnel-related expenses was primarily due to a decrease in average headcount
of 33%, consisting of an average of 6 employees in 2025 compared to an average of 9 employees in 2024.
*General and Administrative Expenses*. G&A expenses decreased
$6,679, or 31%, to $15,196 during the year ended December 31, 2025, compared to $21,875 during the year ended December 31, 2024. This
decrease was primarily due to decreases of $5,189 in personnel-related expenses, $1,101 in professional fees, and $365 in insurance expense.
The decrease in personnel-related expenses was primarily due to a decrease in average headcount of 19%, consisting of an average of 13
employees in 2025 compared to an average of 16 employees in 2024.
*Gain on lease modification, net.*The gain on lease modification
of $941 as of December 31, 2025, is related to the second amendment to our leased office space which eliminates the second building at
62 Fourth Avenue.
*Other (expense) income, net*. Other (expense) income
decreased by $3,487 to net expense of $155 during the year ended December 31, 2025, compared to net income of $3,332 during the year
ended December 31, 2024. The decrease was primarily due to a decrease in interest income from short-term investments of $2,318 and
an increase of $1,948 in expense related to the disposal of leasehold improvements; partially offset by an increase in change in
fair value of warrant liability of $744 resulting from the remeasurement of the Public Warrant and Private Placement Warrant
liabilities between December 31, 2024, and the end of the reporting period, December 31, 2025.
73
*Income Taxes*. Our income tax provision consists of an estimate
for U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions,
changes in deferred tax assets and liabilities and changes in tax law. Due to historical cumulative losses and expected future losses,
we maintain a full valuation allowance against our U.S. and state deferred tax assets.
**Liquidity and Capital Resources**
To date, our primary sources of capital have been private placements
of preferred stock prior to the Business Combination, public and private sales of securities and the issuance of common stock. Net cash
used in our operating activities for the years ended December 31, 2025 and 2024 was $45,076 and $49,956, respectively. As of December
31, 2025, we held cash and cash equivalents of $2,569, short-term investments of $7,223 and had an accumulated deficit of $246,117.
Excluding the non-cash impact of potential changes in the fair value
of warrant liabilities, we expect net losses to continue in connection with our ongoing activities, particularly as we continue to invest
in our product development and clinical pathway. Based on our current planned operations, we do not believe that our current cash, cash
equivalents and short-term investments balance of $9,792 as of December 31, 2025 will be sufficient to support our operations beyond the
next twelve months from the date of issuance of these financial statements. Due to a reduction in headcount effective March 6, 2026, we
currently expect that our cash, cash equivalents and short-term investments will be sufficient to support our operations through the second
quarter of 2026. As such, there is substantial doubt about the Companys ability to continue as a going concern. We may consider
raising additional capital to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for
other reasons.
Our future capital requirements will depend on many factors, including,
but not limited to, any changes in the size, number and scope of clinical trials we may be required to conduct, the timing and conditions
of market authorization (if any) for the Vicarious Surgical System, whether we are able to successfully commercialize the Vicarious Surgical
System, if approved, additional product candidates we may choose to develop, fluctuations in the cost and timing of our business activities,
including manufacturing, hiring and protection of our intellectual property portfolio, and the other risks and uncertainties described
herein, under the caption Risk Factors in Part I, Item 1A and in other filings that we make with the Securities and Exchange
Commission from time to time.
We expect that we will need to obtain substantial additional funding
in order to complete our clinical trials, obtain market authorization for the Vicarious Surgical System, and commercialize it, if approved.
Until such time, if ever, as we can generate sufficient revenues to support our expenses, we may seek to sell additional common or preferred
equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt
financing. The sale of equity and convertible debt securities may result in dilution to our stockholders. Preferred equity securities
or convertible debt could provide for rights, preferences or privileges senior to those of our common stock, including liquidation or
other preferences that could adversely affect the rights of our existing stockholders. The terms of debt securities issued or borrowings
pursuant to a credit agreement could impose significant restrictions on our operations. If we raise funds through collaborations and licensing
arrangements, we might be required to relinquish significant rights to our platform technologies or product candidates or grant licenses
on terms that are not favorable to us, or that we would otherwise seek to develop or commercialize ourselves. Additional capital may not
be available on reasonable terms, or at all, particularly given the current macroeconomic environment, including diminished liquidity
and credit availability, declines in consumer confidence and economic growth, rising interest rates, inflation, uncertainty about economic
stability and potential for economic recession. If the equity and credit markets deteriorate, it may make any necessary debt or equity
financing more difficult to obtain, more costly and more dilutive. If we are unable to raise capital when needed or on attractive terms,
we could be forced to significantly delay, scale back or discontinue the development, market authorization or commercialization of the
Vicarious Surgical System or future product candidates, or seek collaborators at an earlier stage than otherwise would be desirable or
on terms that are less favorable than might otherwise be available.
74
On October 7, 2022, we filed a universal shelf registration
statement on Form S-3 (the Form S-3), which was declared effective by the SEC on October 27, 2022, on which we
registered for sale up to $400 million of any combination of our Class A common stock, preferred stock, debt securities, warrants,
rights and/or units from time to time and at prices and on terms that we may determine, which includes up to $100 million of Class A
common stock that we may issue and sell from time to time, through Cowen and Company, LLC acting as our sales agent, pursuant to the
sales agreement that we entered into with Cowen and Company, LLC on October 7, 2022 for our at-the-market equity
program. We did not sell any shares of our Class A common stock under our sales agreement with Cowen and Company, LLC for the years
ended December 31, 2025 and 2024. This Form S-3 expired on October 27, 2025.
On December 12, 2025, we filed a new universal shelf registration statement
on Form S-3 (the new Form S-3), which was declared effective by the SEC on December 22, 2025, on which we registered for
sale up to $100 million of any combination of our Class A common stock, preferred stock, debt securities, warrants, rights and/or units
from time to time and at prices and on terms that we may determine, which includes up to $3 million of Class A common stock that we may
issue and sell from time to time, through H.C. Wainwright and Company, LLC acting as our sales agent, pursuant to the sales agreement
that we entered into with H.C. Wainwright and Company, LLC on December 12, 2025 for our at-the-market equity program. We
did not sell any shares of our Class A common stock under our sales agreement with H.C. Wainwright and Company, LLC for the year ended
December 31, 2025.
On October 7, 2025, we entered into a securities purchase agreement
with an institutional investor pursuant to which we agreed to issue in a registered direct offering 588,300 shares of our Class A common
stock and pre-funded warrants to purchase up to 561,700 shares of our Common Stock, as well as in a concurrent private placement, Series
A common warrants to purchase an aggregate of 1,150,000 shares of our Common Stock and Series B common warrants to purchase an aggregate
of 1,150,000 shares of our Common Stock, in each case with an exercise price of $5.10. The gross proceeds from the offering were $5.9
million and net proceeds of $5.2 million, after deducting underwriting discounts and commissions and other offering expenses payable by
us.
On March 3, 2026, the NYSE notified us that the NYSE had determined
to (A) immediately suspend trading in our Class A common stock due to a determination that we had fallen below the NYSEs continued
listing standard requiring listed companies to maintain an average global market capitalization over a consecutive 30 trading day period
of at least $15,000,000 pursuant to Section 802.01B of the NYSE Listed Company Manual, and (B) commence proceedings to delist the Class
A common stock. We will not appeal the delisting determination. The NYSE has indicated that it will apply to the Securities and Exchange
Commission to delist the Class A common stock by filing a Form 25. The Class A common stock commenced quotation on the OTCID at the open
of business on March 4, 2026 under the trading symbol of RBOT. The OTCID is a significantly more limited market than the
NYSE, and quotation on any OTC market will result in a less liquid market for existing and potential holders of Class A common stock to
trade their shares and could further depress the trading price of the Class A common stock. We can provide no assurance that the Class
A common stock will continue to trade on this market, whether broker-dealers will provide and continue to provide public quotes of the
Class A common stock on this market, or whether the trading volume of the Class A common stock will be sufficient to provide for an efficient
trading market. The suspension and/or delisting of the Class A common stock from the NYSE could materially limited the number of investors
willing to hold or acquire the Class A common stock, which could negatively impact our ability to raise equity financing; and negatively
impact our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing us from accessing
the public capital markets.
**Cash**
Our cash and cash equivalents and short-term investments balance as
of December 31, 2025 was $2,569 and $7,223 respectively. Our future capital requirements may vary from those currently planned and will
depend on various factors, including the timing and extent of R&D spending and spending on other strategic business initiatives.
**Cash Flows Summary**
*Comparison of the year ended December 31, 2025 and December 31,
2024*
|
| |
Year Ended December 31, | | |
|
(in thousands) | |
2025 | | |
2024 | | |
|
Net cash used in operating activities | |
$ | (45,076 | ) | |
$ | (49,956 | ) | |
|
Net cash provided by investing activities | |
$ | 32,147 | | |
$ | 6,863 | | |
|
Net cash provided by financing activities | |
$ | 5,761 | | |
$ | 8 | | |
**Cash flows used in Operating Activities**
Net cash used in operating activities during the year ended December
31, 2025 was $45,076, attributable to a net loss of $50,182 and a net decrease in our operating assets and liabilities of $4,905; partially
offset by non-cash items of $10,011. Non-cash items consisted of $8,135 in stock-based compensation, a loss of $1,915 on the disposal
of leasehold improvements, and $1,425 of depreciation; partially offset by a $787 gain from our warrant liabilities, a $489 net gain from
our lease expense, and a change in accrued interest and net accretion of discounts on marketable securities of $188. The $4,905 net decrease
in our operating assets and liabilities was primarily due to decreases of $6,520 in lease liabilities and $4,499 in accrued expenses and
accounts payable; partially offset by decreases of $5,285 in our right-of-use assets and $809 in prepaid and other current assets.
Net cash used in operating activities during the year ended
December 31, 2024 was $49,956, attributable to a net loss of $63,223 less a net change in our net operating assets and liabilities
of $594 and plus non-cash items of $13,861. Non-cash items consisted of $11,904 in stock-based compensation, $2,107 of depreciation
and $899 for non-cash lease expenses, partially offset by a $43 gain from our warrant liabilities and a change in accrued interest
and net accretion of discounts on marketable securities of $1,008. The $594 change in our net operating assets and liabilities was
primarily due to decreases of $1,047 in lease liabilities, $96 in accounts payable, partially offset by an $175 decrease in prepaid
and other current assets, a $309 increase in accrued expenses, and a $65 decrease in other non-current assets.
75
**Cash flows provided by Investing Activities**
Net cash provided by investing activities for the year ended December
31, 2025 was $32,147 consisting of $53,619 in proceeds from sales and maturities of available-for-sale investments; partially offset by
$21,340 used for purchases of available-for-sale investments and $132 for fixed asset purchases.
Net cash provided by investing activities for the year ended December
31, 2024 was $6,863 consisting of $65,192 in proceeds from sales and maturities of available-for-sale investments and partially offset
by $58,149 used for purchases of available-for-sale investments and $180 for fixed asset purchases.
**Cash flows provided by Financing Activities**
Net cash provided by financing activities for the year ended December
31, 2025 was $5,169 in net proceeds received from the issuance of common stock and pre-funded warrants in connection with our registered
direct offering, $525 in net proceeds from our note payable related to financing our D&O insurance, and $67 that was received for
stock option exercises.
Net cash provided by financing activities for the year ended December
31, 2024 was $8 that was received for stock option exercises.
**Critical Accounting Policies and Estimates**
Our consolidated financial statements have been prepared in accordance
with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the consolidated balance sheet
date, as well as the reported expenses incurred during the reporting periods. Our management bases its estimates on historical experience
and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying
values of assets and liabilities. Actual results could differ from those estimates, and such differences could be material to our consolidated
financial statements.
While our significant accounting policies are described in the notes
to our historical financial statements (see Note 2, Summary of Significant Accounting Policies Recently Issued Accounting
Pronouncements in our financial statements contained in this Annual Report on Form 10-K), we believe the following critical accounting
policy requires significant judgment and estimates in the preparation of our financial statements:
**Warrant Liabilities**
We recognize our warrants as liabilities at fair value and adjust the
warrant liability to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until
exercised, and any change in fair value is recognized in the statement of operations. The fair value of Public Warrants is determined
from their trading value on public markets. The fair value of Private Placement Warrants is calculated using the Black-Scholes option
pricing model. The assumptions used in the model are the Companys stock price, exercise price, expected term, volatility, interest
rate, and dividend yield.
We estimate the volatility of our warrants based on implied volatility
from our Public Warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity
similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining
contractual term. The dividend rate is based on the historical rate, which we anticipate remaining at zero.
**Recently Adopted Accounting Pronouncements**
A description of recently issued accounting pronouncements that may
potentially impact our financial position and results of operations is disclosed in Note 2, Summary of Significant Accounting Policies
Recently Issued Accounting Pronouncements in our financial statements contained in this Annual Report on Form 10-K.
**ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**
****
We are a smaller reporting company as defined by Rule 12b-2 of the
Exchange Act and are not required to provide the information required under this item.
****
76
****
**ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.**
****
Audited Consolidated Financial Statements of Vicarious Surgical, Inc.
|
Index to Financial Statements |
|
Number | |
|
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 00677) |
|
F-2 | |
|
Report of Independent Registered Public Accounting Firm 2024 Opinion (PCAOB ID No. 34) |
|
F-3 | |
|
Consolidated Balance Sheets as of December 31, 2025 and 2024 |
|
F-4 | |
|
Consolidated Statements of Operations for the years ended December 31, 2025 and 2024 |
|
F-5 | |
|
Consolidated Statements of Stockholders Equity for the years ended December 31, 2025 and 2024 |
|
F-6 | |
|
Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 |
|
F-7 | |
|
Notes to Consolidated Financial Statements |
|
F-8 | |
77
**ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.**
On July 7, 2025, we dismissed Deloitte & Touche LLP (Deloitte)
as our independent registered public accounting firm. The dismissal of Deloitte was approved by our audit committee (the Audit
Committee) of the board of directors (the Board).
Deloittes audit report dated March 17, 2025 on our consolidated
financial statements as of and for the years ended December 31, 2024 and 2023 did not contain an adverse opinion or a disclaimer of opinion,
nor was it qualified or modified as to uncertainty, audit scope or accounting principles, other than the explanatory paragraph regarding
our ability to continue as a going concern.
During the fiscal years ended December 31, 2024 and 2023 and subsequent
interim periods through the date of dismissal, there have been no disagreements (as that term is defined in Item 304(a)(1)(iv)
of Regulation S-K and the related instructions) with Deloitte on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of Deloitte, would have caused them
to make reference thereto in their report on the financial statements. Additionally, during the fiscal years ended December 31, 2024 and
2023 and subsequent interim periods through the date of dismissal, there have been no reportable events (as that term is
defined in Item 304(a)(1)(v) of Regulation S-K), except for the disclosure of material weaknesses in our internal control over financial
reporting which existed during the fiscal year ended December 31, 2024, as disclosed in Part II, Item 9A of our Annual Report on Form
10-K for the year ended December 31, 2024, as filed with the Commission on March 17, 2025 and during the fiscal quarter ended March 31,
2025, as disclosed in Part I, Item 4 of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, as filed with
the Commission on May 12, 2025. The material weaknesses related to lacking the necessary business processes, personnel and related internal
controls to operate in a manner to satisfy the accounting and financial reporting requirements of a public company, and the material weaknesses
manifested themselves in ways that included the improper segregation of duties relating to review of the recording of journal entries
and the reconciliation of key accounts and safeguarding of assets, as well as the analysis of accounting for certain transactions and
accounts, improper controls related to information technology, ineffective risk assessment process and documentation and monitoring of
control processes, accounting policies and procedures. This reportable event was discussed among the our management, the Audit Committee,
and Deloitte.
Deloitte has been authorized by us to respond fully to the inquiries
of Cherry Bekaert LLP (Cherry Bekaert), our successor independent registered public accounting firm as further described
below, concerning this reportable event.
We provided Deloitte with a copy of the foregoing
disclosure and requested that Deloitte furnish us with a letter addressed to the SEC stating whether it agrees with the statements set
forth above. A copy of Deloittes letter, dated July 11, 2025, stating their agreement with the statements set forth in the second,
third and fourth paragraphs of this section, is filed as an exhibit to this Annual Report on Form 10-K.
On July 7, 2025, in connection with our dismissal of Deloitte, the
Audit Committee approved the engagement of Cherry Bekaert as its new independent registered public accounting firm to audit our financial
statements for the fiscal year ending December 31, 2025.
During the two most recent fiscal years and in the subsequent interim
period through July 7, 2025, we did not consult with Cherry Bekaert regarding either (i) the application of accounting principles to a
specific transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect to our financial
statements, and no written reports or oral advice were provided to us by Cherry Bekaert that was an important factor considered by us
in reaching a decision as to any accounting, auditing or financial reporting issue or (ii) any matter that was either the subject of (a)
a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K or (b) a reportable event within the meaning of Item 304(a)(1)(v)
of Regulation S-K.
78
**ITEM 9A. CONTROLS AND PROCEDURES.**
**Background and Remediation of Material Weakness**
****
In connection with our evaluation of disclosure controls and procedures
covering our consolidated financial statements as of December 31, 2025, we identified material weaknesses in our internal control over
financial reporting. We have concluded that material weaknesses exist in our disclosure controls and procedures, including internal control
over financial reporting, as we do not have the necessary business processes, personnel and related internal controls to operate in a
manner to satisfy the accounting and financial reporting requirements of a public company. These material weaknesses manifested themselves
in ways that included the improper segregation of duties relating to review of the recording of journal entries and the reconciliation
of key accounts and safeguarding of assets, as well as the analysis of accounting for certain transactions and accounts, improper controls
related to information technology, ineffective risk assessment process and documentation and monitoring of control processes, accounting
policies and procedures.
We are focused on designing and implementing effective internal controls
measures to improve our evaluation of disclosure controls and procedures, including internal control over financial reporting, and remediate
the material weaknesses. In order to remediate these material weaknesses, we have taken and plan to take the following actions:
|
|
|
the hiring and continued hiring of additional accounting, finance and legal resources with public company experience; and | |
|
|
|
implementation of additional review controls and processes requiring timely account reconciliation and analyses of certain transactions and accounts. | |
These actions and planned actions are subject to ongoing evaluation
by management and will require testing and validation of design and operating effectiveness of internal control over financial reporting
over future periods. We are committed to the continuous improvement of our internal control over financial reporting and will continue
to review the internal control over financial reporting.
****
**Evaluation of Disclosure Controls and Procedures**
Under the supervision and with the participation of our management,
including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness
of our disclosure controls and procedures as of the end of the fiscal year ended December 31, 2025, as such term is defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that
our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of December
31, 2025 to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Securities
and Exchange Act is recorded, processed, summarized and reported as and when required.
Disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified
in the SECs rules and forms, and that such information is accumulated and communicated to our management, including our principal
executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding
required disclosure.
**Changes in Internal Control over Financial Reporting**
There have been no changes in our internal control over financial reporting
identified in connection with the evaluation of such internal control required by Rules 13a-15(d) and 15d-15(d) under the Exchange Act
that occurred during the fiscal year ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
**ITEM 9B. OTHER INFORMATION.**
No director or officer adopted or terminated any Rule 10b5-1 plan or
any non-Rule 10b5-1 trading arrangement during the fiscal quarter ended December 31, 2025.
**ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS.**
Not applicable.
79
**PART
III**
**Item 10. DIRECTORS, EXECUTIVE
OFFICERS AND CORPORATE GOVERNANCE.**
**Introduction**
On September 17, 2021 (the Closing Date),
D8 Holdings Corp., a Delaware corporation that was previously a Cayman Islands exempted company (D8 and after the Business
Combination described herein, the Company) that migrated to and domesticated (the Domestication), consummated
the previously announced business combination (the Business Combination) pursuant to the terms of the Agreement and Plan
of Merger, dated as of April 15, 2021 (the Business Combination Agreement), by and among D8, Snowball Merger Sub, Inc.,
a Delaware corporation (Merger Sub), and Vicarious Surgical Inc., a Delaware corporation (Legacy Vicarious).
Immediately upon the consummation of the Business Combination, the Domestication and the other transactions contemplated by the Business
Combination Agreement (collectively, the Transactions, and such completion, the Closing), Merger Sub merged
with and into Legacy Vicarious, with Legacy Vicarious surviving the Business Combination as a wholly-owned subsidiary of D8 (the Merger).
In connection with the Transactions, D8 changed its name to Vicarious Surgical Inc. and Legacy Vicarious changed its name
to Vicarious Surgical US Inc. As a result of the Business Combination, the business of Legacy Vicarious became our business.
Unless the context requires otherwise, references in this Annual Report on Form 10-K to the Company, we, us,
and our refer to Vicarious Surgical Inc. and its wholly-owned subsidiaries, including Legacy Vicarious.
****
**Board of Directors and Management**
The following table sets forth certain information
concerning our executive officers and directors as of December 31, 2025:
|
Name |
|
Age |
|
Position | |
|
Executive Officers: |
|
|
|
| |
|
Stephen From |
|
62 |
|
Chief Executive Officer and Director | |
|
Adam Sachs |
|
34 |
|
President and Director | |
|
Sammy Khalifa |
|
35 |
|
Chief Technology Officer and Director | |
|
Sarah Romano |
|
45 |
|
Chief Financial Officer and Treasurer | |
|
|
|
|
|
| |
|
Non-Employee Directors: |
|
|
|
| |
|
Victoria Carr-Brendel |
|
61 |
|
Director | |
|
David Ho |
|
73 |
|
Director | |
|
Fuad Ahmad |
|
56 |
|
Director | |
|
Joseph Doherty |
|
60 |
|
Director | |
****
**Executive Officers**
****
**Stephen From**has served as our
Chief Executive Officer and as a member of our board of directors since August 2025. Prior to joining the Company, Mr. From served
as Chief Executive Officer of Aruna Bio from April 2022 through August 2025, guiding the companys strategic direction and
clinical advancement of its proprietary neural exosome platform. From October 2005 through February 2021, Mr. From served as
President and Chief Executive Officer, and from February 2021 through January 2022 served as Executive Chairman, of Kiora
Pharmaceuticals, Inc., formerly known as EyeGate Pharmaceuticals, Inc., leading the company through its initial public offering and
multiple acquisitions and licensing transactions in the ophthalmic therapeutics space. Prior to EyeGate, Mr. From served as the
Chief Financial Officer of Centelion SAS, then a biotech subsidiary of Sanofi-Aventis, and spent several years in investment
banking, focusing on the life sciences sector at Bank of America Securities and Robertson Stephens. Mr. From holds a Bachelor of
Science from the University of Western Ontario and earned his accounting designation from Wilfrid Laurier University. Mr.
Froms qualifications to serve on our board of directors include his previous experience leading public life science companies
and his extensive finance experience.
****
80
****
**Adam Sachs** has served as our President
and as a member of our board of directors since August 2025. Prior to this, Mr. Sachs served as our Chief Executive Officer and as a member
of our board of directors since the Closing of the Business Combination in September 2021, and had served as Legacy Vicarious Chief
Executive Officer and a member of Legacy Vicarious board of directors, or the Legacy Vicarious Board, since 2014. Mr. Sachs received
his B.S. in Engineering from the Massachusetts Institute of Technology in 2014. Prior to founding Legacy Vicarious in 2014, from June
2012 to January 2013, Mr. Sachs worked in Manufacturing Design at Apple, Inc. Mr. Sachs qualifications to serve on our board of
directors include his previous board experience serving on the Legacy Vicarious Board, his deep experience founding, managing and directing
all aspects of Legacy Vicarious operations for over eight years and his extensive experience in robotics, engineering, manufacturing and
product development.
****
**Sammy Khalifa** has served as our
Chief Technology Officer and as a member of our board of directors since the Closing of the Business Combination in September 2021, and
had served as Legacy Vicarious Chief Technology Officer since 2015 and as a member of the Legacy Vicarious Board since 2018. Prior
to working full time at Legacy Vicarious, Mr. Khalifa worked at Apple, Inc. as a Product Design Engineer from December 2013 to May 2015.
Prior to that, Mr. Khalifa worked as a Biomedical Design Engineer at Hemedex, Inc. Mr. Khalifa received his B.S. in Mechanical Engineering
from the Massachusetts Institute of Technology in 2012. Mr. Khalifas qualifications to serve on our board of directors include
his previous board experience serving on the Legacy Vicarious Board as well as his extensive experience in robotics, product development
and engineering.
****
**Sarah Romano** has served as our Chief
Financial Officer and Treasurer since April 2025. Prior to joining the Company, Ms. Romano served as the Chief Financial Officer of Entero
Therapeutics, Inc. (Nasdaq: ENTO) (formerly First Wave BioPharma), a clinical-stage biopharmaceutical company specializing in the development
of targeted, orally delivered therapies for gastrointestinal diseases, from March 2022 to March 2025. She previously served as Chief Financial
Officer of Kiora Pharmaceuticals, Inc. (Nasdaq: KPRX) (formerly EyeGate Pharmaceuticals, Inc.), a clinical-stage specialty pharmaceutical
company developing products for treating ophthalmic diseases, from February 2017 through February 2022, and as its Corporate Controller
from August 2016 to January 2017. Before that, Ms. Romano served as Assistant Controller at TechTarget, Inc. from June 2015 through August
2016. Ms. Romano holds a Bachelor of Arts in Accounting from College of the Holy Cross and a Master of Accounting from Boston College.
****
**Non-Employee Directors**
****
**Victoria Carr-Brendel** has served
as a member of our board of directors since January 2023. Dr. Carr-Brendel served as Group Vice Present of Cochlear Implants at Sonova
Group from 2019 through June 2024. Prior to that, she served as Chief Executive Officer of JenaValve Technology, Inc., a medical device
company focused on developing minimally invasive transcatheter aortic valve repair systems to treat patients suffering from severe aortic
valve disease. From 2004 through 2015, Dr. Carr-Brendel held various roles at Boston Scientific, with her last position overseeing the
acquisition of Bayers interventional radiology division in 2014. She started her career as a scientist in R&D, amassing over
forty patents and taking on increasingly larger business and management roles. She holds a B.A. in biology from Monmouth College, an M.S.
in microbiology from Iowa State University, and a Ph.D. in microbiology and immunology from the University of Illinois at Chicago. Dr.
Carr-Brendels qualifications to serve on our board include over thirty years of medical device development leadership and proven
expertise in R&D oversight, new product development, business development, commercial execution, and intellectual property portfolio
management.
81
****
**David Ho** has served as a member of our board of
directors since the Closing of the Business Combination in September 2021, and had served as a member of D8s board of
directors since April 2021. Dr. Ho has been employed by Columbia University since January 2020. Dr. Ho is the Founding Scientific
Director of the Aaron Diamond AIDS Research Center, where he previously served as the CEO, a director and professor at the ADARC
from 1990 to December 2019. Dr. Ho is the Clyde and Helen Wu Professor of Medicine at Columbia University Irving Medical Center. Dr.
Ho serves as a member of the Trustees of Caltech, and was previously a board member of the MIT Corporation for 12 years and Harvard
Board of Overseers for 6 years. Dr. Ho has been at the forefront of AIDS research for 40 years, publishing over 450 papers. Dr.
Hos studies unraveled the nature of HIV replication in vivo and revolutionized societys basic understanding of the
AIDS disease. This knowledge led Dr. Ho to champion combination antiretroviral therapy that resulted in unprecedented control of HIV
in patients. Dr. Hos research team is now devoting considerable efforts on vaccine and antibody research in order to halt or
slow the spread of the AIDS epidemic. Recently, Dr. Ho has been devoting a considerable effort to develop novel strategies to
diagnose, treat and prevent Covid-19 infection. Dr. Ho received his degrees from California Institute of Technology and Harvard
Medical School (Harvard-MIT Health Science and Technology program). Dr. Hos qualifications to serve on our board of directors
include his previous board experience serving as a member of D8s board of directors and his extensive research experience and
medical background.
**Fuad Ahmad** has served as a member
of our board of directors since June 2025. Mr. Ahmad has been a partner at FLG Partners, a CEO and CFO consulting practice and board advisory
services firm, since 2013. From November 2020 to March 2025, he served as CFO of Iridex Corporation (NASDAQ: IRIX), a medical device company.
Prior to that, Mr. Ahmad served as CFO at each of Mitek Systems (NASDAQ: MITK), Vaxart, Inc. (NASDAQ: VXRT), Cutera, Inc. and Telenav,
Inc. Prior to joining FLG Partners, he served as CFO of Sezmi Corporation, a Morgenthaler Ventures-backed cloud-based software platform.
Prior to his service with Sezmi Corporation, Mr. Ahmad served as Senior Vice President and CFO of Globalstar Inc. (NASDAQ: GSAT), a public
company that builds and operates low-earth orbit satellite-based digital telecommunications systems. In this role, Mr. Ahmad was involved
in the initial fundraising activities related to building and launching Globalstars satellite telecommunications system, including
its IPO and various public market and private financing initiatives totaling more than $1.5 billion. Mr. Ahmad graduated from Brigham
Young University with a Bachelor of Science in Finance. Mr. Ahmads qualifications to serve on our board of directors include his
prior executive officer experience at both private and public companies and his experience with building accounting and finance organizations
as well as his experience with capital raising activities.
****
**Joseph Doherty** has served as a member
of our board of directors since June 2025. Since January 2025, Mr. Doherty has served as CEO of the Worcester City Campus Corporation,
a not-for-profit corporation whose base corporate purpose is to foster, promote and support the University of Massachusetts. Since 2020,
Mr. Doherty has served as a teacher at Saint Johns High School, and since March 2022, Mr. Doherty has also served as a member of
the board of directors of Immertec, a software company that creates immersive and interactive experiences for training in healthcare.
From 2021 to 2025, he served as the Director for the BOLT initiative at the Massachusetts Biomedical Initiative (MBI), a nonprofit life
science startup incubator. From January 2019 to August 2020, he served as the President of Scapa Healthcare, and from January 2019 to
May 2020, he was a member of the board of directors of Scapa Group, a publicly traded company on AIM, a market of the London Stock Exchange
plc. There, he oversaw a B2B business focused on developing and manufacturing medical devices and consumer wellness products for global
market leaders. From 2015 to 2019, Mr. Doherty served in roles of increasing responsibility, including as President, of Olympus Surgical
Technologies America, a medical device subsidiary of Olympus Corporation of the Americas. He also spent over 24 years with Johnson &
Johnson (NYSE: JNJ) and held various roles with increasing responsibilities, ultimately serving as the Vice President of Integration and
Transformation. Mr. Doherty received a Bachelor of Science in Engineering from the United States Military Academy at West Point and a
Master of Business Administration from Nichols College. Mr. Dohertys qualifications to serve on our board of directors include
his extensive board and executive experience at public and private companies and his experience in the medical device field.
There are no family relationships, as such term
is defined in Item 401(d) of Regulation S-K, between or among any of our directors or executive officers.
82
****
**Audit Committee**
Our audit committee consists of Mr. Ahmad, who serves as the chairperson,
Mr. Doherty and Dr. Carr-Brendel. Beverly Huss served as a member of the audit committee through December 1, 2025, at which point Mr.
Doherty was appointed to the committee, and Ric Fulop served as a member of the audit committee through June 27, 2025, at which point
Mr. Ahmad was appointed to the committee. Our audit committee met four times during the fiscal year ended December 31, 2025. Each member
of the audit committee qualifies as an independent director under the NYSE corporate governance standards and the independence requirements
of Rule 10A-3 under the Exchange Act. Our board of directors has determined that Mr. Ahmad qualifies as an audit committee financial
expert as such term is defined in Item 407(d)(5) of Regulation S-K and possesses financial sophistication, as defined under the
rules of the NYSE.
The purpose of the audit committee is to
prepare the audit committee report required by the SEC to be included in our proxy statement and to assist our board of directors in
overseeing and monitoring (1) the quality and integrity of the financial statements, (2) compliance with legal and regulatory
requirements, (3) our independent registered public accounting firms qualifications and independence, (4) the performance of
our internal audit function and (5) the performance of our independent registered public accounting firm.
Our board of directors has adopted a written charter
for the audit committee, which is available on our website at *https://www.vicarioussurgical.com* under Investors - Governance -
Governance Documents.
**Insider Trading Policy**
We have an insider trading policy that, among other things, governs
the buying and selling of our securities by all of our personnel, including directors, officers, employees and consultants and certain
other covered persons. Our policy is designed to prevent violations of insider trading laws by our personnel and to avoid even the appearance
of improper conduct in this regard by our personnel. The policy prohibits covered persons from purchasing, selling, or otherwise disposing
of our securities while in possession of material non-public information (except in limited circumstances, such as pursuant to a previously
established trading plan). In addition, the policy prohibits all employees (including executives and directors) from engaging in any transaction
in which they may profit from short-term speculative swings in the value of our securities, including any of the following activities:
(1) short sales (selling borrowed securities that the seller hopes can be purchased at a lower price in the future) of our
securities; and (2) transactions in our securities involving straddles, collars or other similar risk reduction or hedging devices. The
policy includes quarterly and other trading blackouts and sets forth the procedures covered persons must follow before transacting in
our securities, including pre-clearance by our policy administrator of all transactions by executive officers, directors, employees and
certain other covered persons, as well as members of their households. Although we have not adopted an insider trading policy governing
the purchase, sale, and/or other disposition of our securities by the Company, as part of the oversight of risk, the board of directors,
or one or more of its committees, approves any transaction, plan or arrangement by or with the Company with respect to our securities
on a case-by-case basis, and as part of their procedures to review and approve any such transaction, plan or arrangement, the board of
directors or committee consults with legal counsel to ensure compliance with applicable insider trading laws, rules and regulations, and
listing standards.
**Code of Conduct and Ethics**
We have adopted a code of business conduct and ethics that applies
to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal
accounting officer, which is available on our website at*https://www.vicarioussurgical.com*under Investors - Governance
- Governance Documents. Our code of business conduct is a code of ethics, as defined in Item406(b) of Regulation S-K.
Our Internet website address is provided as an inactive textual reference
only. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of ethics on our Internet
website.
**Delinquent Section 16(a) Reports**
Our records reflect that all reports which were required to be filed
with the SEC pursuant to Section16(a) of the Securities Exchange Act of 1934, as amended, were filed on a timely basis.
**Stockholder Nomination
Procedures**
As of the date of this
Report, there have been no material changes to the procedures by which stockholders may recommend nominees to our board of directors.
****
83
****
**Item 11. EXECUTIVE COMPENSATION.**
This section provides an overview of our executive
compensation programs, including a narrative description of the material factors necessary to understand the information disclosed in
the summary compensation table below.
As of December 31, 2025, our named executive officers,
which we refer to as named executive officers (NEOs), were:
|
| Stephen
From, Chief Executive Officer, |
|
|
| Adam
Sachs, President, |
|
|
| Sammy
Khalifa, Chief Technology Officer, and |
|
|
| Randy
Clark, Former President |
|
The objective of our compensation program is to provide a total compensation
package to each NEO that will enable us to attract, motivate and retain outstanding individuals, align the interests of our executive
team with those of our equity holders, encourage individual and collective contributions to the successful execution of our short- and
long-term business strategies and reward NEOs for performance. Our board of directors has historically determined the compensation for
the NEOs.
****
**Summary Compensation Table**
The following table shows the total compensation
paid or accrued to our named executive officers during the last two fiscal years ended December 31, 2024 and December 31, 2025.
|
Name and Position | |
Year | | |
Salary ($) | | |
Bonus ($) | | |
Option Awards ($)(1) | | |
All Other Compensation ($)(2) | | |
Total ($) | | |
|
Stephen From | |
2025 | | |
| 201,370 | | |
| | | |
| 2,170,910 | | |
| 6,154 | | |
| 2,378,433 | | |
|
Chief Executive Officer | |
2024 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Adam Sachs | |
2025 | | |
| 541,620 | | |
| | | |
| 239,779 | | |
| 12,506 | | |
| 793,905 | | |
|
President | |
2024 | | |
| 541,620 | | |
| 284,351 | | |
| 214,848 | | |
| 10,765 | | |
| 1,051,584 | | |
|
Sammy Khalifa | |
2025 | | |
| 424,800 | | |
| | | |
| 155,150 | | |
| 12,392 | | |
| 592,341 | | |
|
Chief Technology Officer | |
2024 | | |
| 424,800 | | |
| 148,680 | | |
| 221,636 | | |
| 8,496 | | |
| 803,612 | | |
|
Randy Clark | |
2025 | | |
| 157,534 | | |
| | | |
| | | |
| 13,500 | | |
| 171,034 | | |
|
Former President (3) | |
2024 | | |
| 458,333 | | |
| 154,808 | | |
| 452,428 | | |
| 13,012 | | |
| 1,078,581 | | |
|
(1) |
The amounts represent the aggregate grant date fair value for option awards, computed in accordance with ASC 718. A discussion of our methodology for determining grant date fair value may be found in Note 11 Stockholders Equity and Stock-Based Compensation in our consolidated financial statements included in this Annual Report on Form 10-K. | |
|
(2) |
The amounts represent 401(k) matching contributions by us for the periods presented. | |
|
(3) |
Mr. Clark resigned from his position as President of the Company effective April 25, 2025. | |
84
**Outstanding Equity Awards at 2025 Fiscal Year-End**
The following table shows information regarding
outstanding equity awards held by the NEOs as of December 31, 2025.
|
| |
Option Awards | |
Stock Awards | | |
|
Name | |
Grant Date | |
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | | |
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#) | | |
Option
Exercise
Price | | |
Option
Expiration
Date | |
Numberof Sharesor Units That
Have Not
Vested | | |
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested | | |
|
Stephen From | |
| |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
|
Chief Executive Officer | |
8/07/2025 | |
| | | |
| 297,600 | | |
$ | 8.92 | | |
8/06/2035 | |
| | | |
| | | |
|
| |
| |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
|
Adam Sachs, | |
11/23/2021 | |
| 12,993 | | |
| | (1) | |
$ | 373.50 | | |
11/22/2031 | |
| | | |
| | | |
|
President | |
6/17/2024 | |
| 4,860 | | |
| 8,086 | (2) | |
$ | 6.86 | | |
6/16/2034 | |
| | | |
| | | |
|
| |
6/17/2024 | |
| | | |
| 12,946 | (3) | |
$ | 6.86 | | |
6/16/2034 | |
| | | |
| | | |
|
| |
6/27/2025 | |
| 4,836 | | |
| 33,839 | (4) | |
$ | 7.61 | | |
6/26/2035 | |
| | | |
| | | |
|
| |
5/19/2022 | |
| | | |
| | | |
| | | |
| |
| 4,754 | (5) | |
$ | 10,316 | | |
|
| |
6/02/2023 | |
| | | |
| | | |
| | | |
| |
| 8,088 | (6) | |
$ | 17,550 | | |
|
| |
| |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
|
Randy Clark, | |
6/17/2024 | |
| 3,009 | | |
| | (7) | |
$ | 6.86 | | |
3/1/2026 | |
| | | |
| | | |
|
Former President | |
2/13/2024 | |
| 14,592 | | |
| | (8) | |
$ | 12.00 | | |
3/1/2026 | |
| | | |
| | | |
|
| |
| |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
|
Sammy Khalifa, | |
11/23/2021 | |
| 10,395 | | |
| | (9) | |
$ | 373.50 | | |
11/22/2031 | |
| | | |
| | | |
|
Chief Technology Officer | |
6/17/2024 | |
| 5,015 | | |
| 8,340 | (10) | |
$ | 6.86 | | |
6/16/2034 | |
| | | |
| | | |
|
| |
6/17/2024 | |
| | | |
| 13,355 | (11) | |
$ | 6.86 | | |
6/16/2034 | |
| | | |
| | | |
|
| |
6/27/2025 | |
| 3,132 | | |
| 21,893 | (12) | |
$ | 7.61 | | |
6/26/2025 | |
| | | |
| | | |
|
| |
5/19/2022 | |
| | | |
| | | |
| | | |
| |
| 3,804 | (13) | |
$ | 8,254 | | |
|
| |
6/02/2023 | |
| | | |
| | | |
| | | |
| |
| 4,170 | (14) | |
$ | 9,048 | | |
|
(1) |
Represents an option to purchase 12,993 shares of Class A Common Stock granted on November 23, 2021. The shares underlying this option vested, subject to continued service,equal monthly installments over a 48-month period. | |
|
(2) |
Represents an option to purchase 12,946 shares of Class A Common Stock granted on June 17, 2024. The shares underlying this option vest subject to continued service a in equal monthly installments over a 48-month period. | |
|
(3) |
Represents a performance based option to purchase 12,946 shares of Class A Common Stock granted on June 17, 2024. The performance based option vests subject to completion of the relevant performance criteria. | |
|
(4) |
Represents an option to purchase 38,675 shares of Class A Common Stock granted on June 27, 2025.The shares underlying this option vest subject to continued service in equal monthly installments over a 48-month period. | |
|
(5) |
Represents 38,042 RSUs granted on May 19, 2022. The RSUs vest, subject to continued service, in equal quarterly installments over a four-year period beginning on May 19, 2022. | |
|
(6) |
Represents 21,576 RSUs granted on June 2, 2023. The RSUs vest, subject to continued service, in equal quarterly installments over a four-year period beginning on June 2, 2023. | |
|
(7) |
Represents an option to purchase 8,490 shares of Class A Common Stock granted on June 17, 2024. The shares underlying this option vest subject to continued service as follows: 177 shares vested on July 17, 2024, with the remainder vesting in equal monthly installments over the following 48-month period | |
|
(8) |
Represents an option to purchase 33,334 shares of Class A Common Stock granted on February 13, 2024. The shares underlying this option vest subject to continued service as follows: 8,337 shares vest on February 13, 2025 with the remainder vesting in equal monthly installments over the following 48-month period | |
|
(9) |
Represents an option to purchase 10,395 shares of Class A Common Stock granted on November 23, 2021. The shares underlying this option vested, subject to continued service, a in equal monthly installments over ta 48-month period. | |
|
(10) |
Represents an option to purchase 13,355 shares of Class A Common Stock granted on June 17, 2024. The shares underlying this option vest, subject to continued service, in equal monthly installments over a 48-month period. | |
|
(11) |
Represents a performance based option to purchase 13,355 shares of Class A Common Stock granted on June 17, 2024. The performance based option vests subject to completion of the relevant performance criteria. | |
|
(12) |
Represents an option to purchase 25,025 shares of Class A Common Stock granted on June 27, 2025.The shares underlying this option vest subject to continued service in equal monthly installments over a 48-month period | |
|
(13) |
Represents 30,434 RSUs granted on May 19, 2022. The RSUs vest, subject to continued service, in equal quarterly installments over a four-year period beginning on May 19, 2022. | |
|
(14) |
Represents 11,129 RSUs granted on June 2, 2023. The RSUs vest, subject to continued service, in equal quarterly installments over a four-year period beginning on June 2, 2023. | |
85
**Employment Arrangements**
In July 2021, Legacy Vicarious entered into employment
agreements with our executive officers, including Mr. Sachs and Mr. Khalifa, which was assumed by us effective as of the Closing of the
Business Combination.
****
**Stephen From**
****
We entered into an employment agreement with Mr.
From on July 30, 2025, pursuant to which Mr. From serves as our Chief Executive Officer. Under the employment agreement, Mr. From receives
an initial annual base salary of $500,000 and is eligible to receive an annual performance bonus of up to 50% of Mr. Froms annual
base salary. The actual amount of any such bonus is determined by reference to the attainment of applicable company and/or individual
performance objectives, as determined by our board of directors or a subcommittee thereof. Pursuant to the employment agreement, Mr. From
is also eligible to participate in customary welfare and fringe benefit plans, provided by us to our employees at the same level as Mr.
From.
We also granted Mr. From a non-qualified stock
option intended to qualify as an inducement grant for the purchase of an aggregate of 297,600 shares of our common stock.
In the event that Mr. From is terminated without cause, he is entitled to receive a severance payment equal to one year of his then in-effect
base salary.
On February 2, 2026, we entered into an amendment
to Mr. Froms employment agreement. Pursuant to the amendment, in the event that Mr.From is terminated without cause or resigns
from his position for good reason, he will be entitled to receive a severance payment equal to one year of his then in-effect base salary
plus the pro-rata portion of his target bonus, as well as an amount equal to COBRA premiums for 12months. In the event that Mr.From
is terminated without cause or resigns from his position for good reason within three months prior to or 12 months following a change
in control, he will be entitled to receive a severance payment equal to two times the sum of his then in-effect base salary for 12 months
plus the pro-rata portion of his target bonus, as well as an amount equal to COBRA premiums for 24 months. In addition, his outstanding
equity awards with time-based vesting will vest in full. Payment of any such severance amounts would be conditioned upon Mr. Froms
execution and non-revocation of a separation agreement in a form acceptable to us, which would include a customary release and certain
restrictive covenants.
Mr. From is also subject to our Non-Competition,
Non-Solicitation, Non-Disclosure, and Intellectual Property Agreement, which includes a one year post-employment covenant not to compete
with us subject to certain limitations, a one year post-employment covenant not to solicit, interfere with or service our customers, clients,
vendors or partners or prospective customers, clients, vendors or partners to or for a competing business, and a one year post-employment
covenant not to solicit or hire our employees or contractors.
****
**Adam Sachs**
Mr. Sachs serves as our President effective August
2025 and reports directly to our Chief Executive Officer. Legacy Vicarious entered into an employment agreement with Mr. Sachs on July
13, 2021, pursuant to which Mr. Sachs served as our Chief Executive Officer until August 2025 and reported directly to our board of directors
or our board of directors designee. Mr. Sachss service pursuant to the employment agreement will continue until terminated
in accordance with its terms.
Under the employment agreement, Mr. Sachs receives
an initial annual base salary of approximately $531,234, which is subject to increase at the discretion of our board of directors or a
subcommittee thereof, and is eligible to receive an annual performance bonus targeted at 75% of Mr. Sachss then-current annual
base salary. The actual amount of any such bonus will be determined by reference to the attainment of applicable company and/or individual
performance objectives, as determined by our board of directors or a subcommittee thereof. Pursuant to the employment agreement, Mr. Sachs
is also eligible to participate in customary welfare and fringe benefit plans, provided by us to our employees at the same level as Mr.
Sachs.
Effective March 9, 2026, Mr. Sachs voluntarily agreed to reduce his
salary to $270,810 for an indefinite period of time.
Pursuant to the terms of the 2021 Equity Incentive
Plan, and subject to the approval of our board of directors or a subcommittee thereof, in May of each calendar year that Mr. Sachs remains
employed by us, Mr. Sachs is eligible to receive an annual equity award. Provided that Mr. Sachs remains employed by us on the vesting
date (except as otherwise provided in such agreement or the 2021 Equity Incentive Plan), the RSUs subject to an annual equity award vest
in 16 equal quarterly installments.
86
In the event that Mr. Sachs is terminated without
cause or resigns from his position for good reason, he is entitled to receive a severance payment equal to one year of his then in-effect
base salary plus the pro-rata portion of his target bonus, as well as any earned but unpaid annual bonus and payment of an amount equal
to COBRA premiums for 12 months. In the event that Mr. Sachs is terminated without cause or resigns from his position for good reason
within three months prior to or 12 months following a change in control, he is entitled to receive a severance payment equal to two times
the sum of his then in-effect base salary for 12 months plus the pro-rata portion of his target bonus, as well as any earned but unpaid
annual bonus and payment of an amount equal to COBRA premiums for 24 months. In addition, his outstanding equity awards with time-based
vesting will vest in full.
We reimburse Mr. Sachs for all ordinary and reasonable
out-of-pocket business expenses incurred by Mr. Sachs in furtherance of our business in accordance with our policies with respect thereto
as in effect from time to time. Mr. Sachs is also subject to our Non-Competition, Non-Solicitation, Non-Disclosure, and Intellectual Property
Agreement, which includes a one year post-employment covenant not to compete with us subject to certain limitations, a one year post-employment
covenant not to solicit, interfere with or service our customers, clients, vendors or partners or prospective customers, clients, vendors
or partners to or for a competing business, and a one year post-employment covenant not to solicit or hire our employees or contractors.
****
**Randy Clark**
We entered into an offer letter with Mr. Clark
on January 18, 2024, pursuant to which Mr. Clark served as our President. Under the employment agreement, Mr. Clark received an initial
annual base salary of $500,000 and was eligible to receive an annual performance bonus of up to 50% of Mr. Clarks annual base salary.
The actual amount of any such bonus was determined by reference to the attainment of applicable company and/or individual performance
objectives, as determined by our board of directors or a subcommittee thereof. Pursuant to the offer letter, Mr. Clark was also eligible
to participate in customary welfare and fringe benefit plans, provided by us to our employees at the same level as Mr. Clark.
We also granted Mr. Clark an incentive stock option
for the purchase of an aggregate of 33,334 shares of our common stock. In the event that Mr. Clark was terminated without cause, he was
entitled to receive a severance payment equal to one year of his then in-effect base salary, as well as payment of an amount equal to
COBRA premiums for six months.
Mr. Clark is also subject to our Non-Competition,
Non-Solicitation, Non-Disclosure, and Intellectual Property Agreement, which includes a one year post-employment covenant not to compete
with us subject to certain limitations, a one year post-employment covenant not to solicit, interfere with or service our customers, clients,
vendors or partners or prospective customers, clients, vendors or partners to or for a competing business, and a one year post-employment
covenant not to solicit or hire our employees or contractors.
Mr. Clark resigned as President of our Company, effective as of April
25, 2025.
****
**Sammy Khalifa**
Legacy Vicarious entered into an employment agreement
with Mr. Khalifa on July 13, 2021, pursuant to which Mr. Khalifa serves as our Chief Technology Officer and reports directly to our Chief
Executive Officer. Mr. Khalifas service pursuant to the employment agreement will continue until terminated in accordance with
its terms.
Under the employment agreement, Mr. Khalifa receives
an initial annual base salary of approximately $425,000, which is subject to increase at the discretion of our board of directors or a
subcommittee thereof, and is eligible to receive an annual performance bonus targeted at 75% of Mr. Khalifas then-current annual
base salary. The actual amount of any such bonus will be determined by reference to the attainment of applicable company and/or individual
performance objectives, as determined by our board of directors or a subcommittee thereof. Pursuant to the employment agreement, Mr. Khalifa
is also eligible to participate in customary welfare and fringe benefit plans, provided by us to our employees at the same level as Mr.
Khalifa.
Effective March 9, 2026, Mr. Khalifa voluntarily agreed to reduce his
salary to $318,600 for an indefinite period of time.
87
Pursuant to the terms of the 2021 Equity Incentive
Plan, and subject to the approval of our board of directors or a subcommittee thereof, in May of each calendar year that Mr. Khalifa remains
employed by us, Mr. Khalifa is eligible to receive an annual equity award.
In the event that Mr. Khalifa is terminated without
cause or resigns from his position for good reason, he is entitled to receive a severance payment equal to 75% of his then in-effect base
salary for 12 months plus the pro-rata portion of his target bonus, as well as any earned but unpaid annual bonus and payment of an amount
equal to COBRA premiums for 9 months. In the event that Mr. Khalifa is terminated without cause or resigns from his position for good
reason within three months prior to or 12 months following a change in control, he is entitled to receive a severance payment equal to
the sum of his then in-effect base salary for 12 months plus the pro-rata portion of his target bonus, as well as any earned but unpaid
annual bonus and payment of an amount equal to COBRA premiums for 12 months. In addition, his outstanding equity awards with time-based
vesting will vest in full.
We reimburse Mr. Khalifa for all ordinary and
reasonable out-of-pocket business expenses incurred by Mr. Khalifa in furtherance of our business in accordance with our policies with
respect thereto as in effect from time to time. Mr. Khalifa is also subject to our Non-Competition, Non-Solicitation, Non-Disclosure,
and Intellectual Property Agreement, which includes a one year post-employment covenant not to compete with us subject to certain limitations,
a one year post-employment covenant not to solicit, interfere with or service our customers, clients, vendors or partners or prospective
customers, clients, vendors or partners to or for a competing business, and a one year post-employment covenant not to solicit or hire
our employees or contractors.
****
**Employee Benefits**
Our NEOs participate in employee benefit programs
available to our employees generally, including a tax-qualified 401(k) plan. We do not maintain any executive-specific benefit or perquisite
programs.
****
**Equity Grant Timing Practices**
Although we have not adopted a formal policy pertaining
to the timing of stock option grants, it is our practice not to time the grant of equity awards, including stock options, in relation
to the release of material non-public information that are likely to result in changes to the price of our common stock. Similarly, we
do not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. During
the fiscal year ended December 31, 2025, we did not grant any stock options within four business days before or one business day after
the filing of a 10-Q or 10-K, or the filing or furnishing of an 8-K that disclosed material nonpublic information.
**Clawback Policy**
We have adopted a clawback policy (the Clawback
Policy) in accordance with the listing standards and rules of the NYSE, that requires the Board to recoup excess compensation paid
to our executive officers as a result of a financial statement restatement, regardless of any misconduct, fault or illegal activity on
the part of the executive officer. The Clawback Policy applies in the case of an accounting restatement due to the material noncompliance
of the Company with any financial reporting requirement under federal securities laws. The Clawback Policy applies to all incentive-based
compensation, which is any compensation received by our executive officers that is granted, earned, or vested based wholly or in part
upon the attainment of a financial reporting measure that is determined and presented in accordance with the accounting principles used
in preparing our financial statements and any measures derived wholly or in part from such measures, as well as non-GAAP measures, stock
price, and total shareholder return.
88
**Director Compensation**
The following table shows the total compensation
paid or accrued during the fiscal year ended December 31, 2025 to each of our non-employee directors. Directors who are employed by us
are not compensated for their service on our board of directors:
|
Name | |
Fees Earnedor PaidinCash ($)(1) | | |
Options Awards ($)(2) | | |
Total ($) | | |
|
Joseph Doherty | |
| 38,612 | | |
| 48,342 | | |
| 86,954 | | |
|
Fuad Ahmad | |
| 29,926 | | |
| 48,342 | | |
| 78,268 | | |
|
Victoria Carr-Brendel | |
| 56,733 | | |
| 32,226 | | |
| 88,959 | | |
|
Randy Clark(3) | |
| 26,130 | | |
| 48,342 | | |
| 74,472 | | |
|
Ric Fulop(4) | |
| 25,055 | | |
| | | |
| 25,055 | | |
|
David Ho | |
| 54,288 | | |
| 32,226 | | |
| 86,514 | | |
|
Beverly Huss(5) | |
| 53,449 | | |
| 32,226 | | |
| 85,675 | | |
|
Donald Tang(6) | |
| 30,336 | | |
| 32,226 | | |
| 62,562 | | |
|
(1) |
The amounts represent fees earned during 2025 under our Non-Employee Director Compensation Policy. | |
|
(2) |
The amounts represent the aggregate grant date fair value for option awards, computed in accordance with ASC 718. A discussion of our methodology for determining grant date fair value may be found in Note 11 Stockholders Equity and Stock-Based Compensation in our consolidated financial statements. | |
|
(3) |
Mr. Clark resigned from his position as President of the Company effective April 25, 2025 and as director effective December 1, 2025. | |
|
(4) |
Mr. Fulops service on the Board ended at the annual meeting of stockholders held on June 26, 2025. | |
|
(5) |
Ms. Huss resigned from her position effective December 1, 2025. | |
|
(6) |
Mr. Tang resigned from his position effective September 11, 2025. | |
**Non-Employee Director Compensation Policy**
We have a non-employee director compensation policy,
which was adopted in September 2021 and amended in May 2022, June 2023 and June 2025. Pursuant to the policy, non-employee directors receive
annual retainers as follows:
|
Position | |
Retainer | | |
|
Chairperson of the Board | |
$ | 35,000 | | |
|
Member of the Board | |
$ | 40,000 | | |
|
Chairperson of the Audit Committee | |
$ | 18,000 | | |
|
Member of the Audit Committee | |
$ | 6,300 | | |
|
Chairperson of the Compensation Committee | |
$ | 14,250 | | |
|
Member of the Compensation Committee | |
$ | 5,500 | | |
|
Chairperson of the Nominating and Corporate Governance Committee | |
$ | 10,000 | | |
|
Member of the Nominating and Corporate Governance Committee | |
$ | 4,650 | | |
|
Chairperson of the Product and Technology Committee | |
$ | 14,250 | | |
|
Member of the Product and Technology Committee | |
$ | 5,500 | | |
These fees are payable in arrears in quarterly
installments no later than the fifteenth day following the end of each calendar quarter, provided that the amount of such payment will
be prorated for any portion of such quarter that a director is not serving on our board of directors, on such committee or in such position.
Non-employee directors may elect to receive a restricted stock unit award with a grant date fair value of the retainer amounts in lieu
of receiving cash in such amounts. Non-employee directors are also reimbursed for reasonable out-of-pocket business expenses incurred
in connection with attending meetings of our board of directors and any committee of the board on which they serve and in connection with
other business related to the board of directors. Directors may also be reimbursed for reasonable out-of-pocket business expenses in accordance
with our travel and other expense policies, as may be in effect from time to time.
In addition, we grant to new non-employee
directors upon their initial election to our board of directors a number of restricted stock units or stock options (each restricted
stock unit relating to one share of Class A Common Stock) having an aggregate grant date fair market value equal to $301,800 (or such lesser amount as determined by the Compensation Committee in its discretion),
determined by dividing (A) $301,800 by (B) the Black Scholes value of Class A Common Stock on the NYSE on the date of the grant
(rounded down to the nearest whole share), on the date that the non-employee director is first appointed or elected to our board of
directors. Each of these grants shall vest in equal monthly installments over 36 months from the date of the grant, subject to the
non-employee directors continued service as a director on the applicable vesting dates.
89
Furthermore, each non-employee director, who
has been serving on our board of directors for six months as of the date of any annual meetings of stockholders, shall automatically
receive a restricted stock unit award or stock option having an aggregate grant date fair value of $145,000 (or such lesser amount as determined by the Compensation Committee in its discretion), each year on the date
of our annual meeting of stockholders. Each non-employee director who has been serving on our board of directors for less than six
months as of the date of any annual meetings of stockholders, shall automatically receive a restricted stock unit award or stock
option prorated for the portion of the year served on our board of directors. Each of these restricted stock unit awards or stock
options shall vest at the earlier of one day prior to the date of the next annual meeting or the 12 month anniversary of the date of
the grant, subject to the non-employee directors continued service as a director on the applicable vesting dates.
**Item 12. SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.**
The following table provides certain aggregate
information with respect to all of our equity compensation plans in effect as of December 31, 2025.
|
| |
(a) | | |
(b) | | |
(c) | | |
|
Plan category | |
Numberof
securities
to be issued
upon
exerciseof
outstanding
options,
warrants
and rights | | |
Weighted-
average
exercise priceof
outstanding
options,
warrants
and rights | | |
Number of
securities
remaining
available for
future issuance under equity compensation plans (excluding securities reflected in column (a)) | | |
|
Equity compensation plans approved by security holders | |
| 781,790 | (1) | |
$ | 38.16 | (2) | |
| 416,441 | (3) | |
|
Equity compensation plans not approved by security holders | |
| 297,600 | (4) | |
| 8.92 | | |
| | | |
|
Total | |
| 1,079,390 | | |
$ | 29.92 | | |
| 416,441 | | |
|
(1) |
Consists of shares of Class A Common Stock to be issued upon exercise of outstanding options and RSUs under the Vicarious Surgical Inc. 2021 Equity Incentive Plan. | |
|
(2) |
Consists of the weighted-average exercise price of the 758,149 stock options outstanding on December 31, 2025. | |
|
(3) |
Consists of shares that remained available for future issuance under the Vicarious Surgical Inc. 2021 Equity Incentive Plan as of December 31, 2025. | |
|
(4) |
Consists of a non-qualified stock option intended to qualify as an inducement grant under Rule 303A.08 of the NYSE Listed Company Manualwhich was granted in August 2025 upon the appointment by the Board of the Chief Executive Officer. | |
The following table sets forth information known
to us regarding the beneficial ownership of our common stock as of December 31, 2025 by:
|
| each
person known to us to be the beneficial owner of more than 5% of our outstanding common stock; |
|
|
| each
of our executive officers and directors; and |
|
|
| all
of our executive officers and directors as a group. |
|
90
Beneficial ownership is determined according to
the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or
shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within
60 days and restricted stock units that vest within 60 days. Shares of Class A Common Stock issuable upon exercise of options and warrants
currently exercisable within 60 days and restricted stock units that vest within 60 days are deemed outstanding solely for purposes of
calculating the percentage of total ownership and total voting power of the beneficial owner thereof.
The beneficial ownership of our common stock is
based on 6,463,351 shares of our Class A Common Stock and 653,990 shares of our Class B common stock issued and outstanding as of December
31, 2025.
Unless otherwise indicated, we believe that each
person named in the table below has sole voting and investment power with respect to all shares of our common stock beneficially owned
by them. Unless otherwise indicated, the business address of each of the following individuals or entities is c/o Vicarious Surgical,
Inc. 78 Fourth Avenue, Waltham, Massachusetts 02451.
|
Name and Address of Beneficial Owner | |
Number of Shares of Class A Common Stock | | |
% | | |
Number of shares of Class B Common stock | | |
% | | |
% of Total Voting Power** | | |
|
Directors and Executive Officers: | |
| | |
| | |
| | |
| | |
| | |
|
Stephen From | |
| | | |
| * | | |
| | | |
| | | |
| * | | |
|
Adam Sachs(1) | |
| 62,261 | | |
| * | | |
| 374,635 | | |
| 57.3 | % | |
| 38.7 | % | |
|
Sammy Khalifa(2) | |
| 47,693 | | |
| * | | |
| 150,508 | | |
| 23.0 | % | |
| 15.7 | % | |
|
Sarah Romano | |
| | | |
| * | | |
| | | |
| | | |
| * | | |
|
Victoria Carr-Brendel(3) | |
| 8,292 | | |
| * | | |
| | | |
| | | |
| * | | |
|
David Ho(4) | |
| 12,455 | | |
| * | | |
| | | |
| | | |
| * | | |
|
Fuad Ahmad | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Joseph Doherty | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
All Current Directors and Executive Officers as a Group (8 Individuals) | |
| 130,701 | | |
| 2.0 | % | |
| 525,143 | | |
| 80.3 | % | |
| 54.4 | % | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Other Five Percent Holders: | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Khosla Ventures, LLC(5) | |
| 965,204 | | |
| 14.9 | % | |
| | | |
| | | |
| 4.9 | % | |
|
Innovation Endeavors III LP(6) | |
| 459,004 | | |
| 7.1 | % | |
| | | |
| | | |
| 2.3 | % | |
|
Gates Frontier, LLC(7) | |
| 603,201 | | |
| 9.3 | % | |
| | | |
| | | |
| 3.1 | % | |
|
Barry Greene, MD(8) | |
| 6,946 | | |
| * | | |
| 128,847 | | |
| 19.7 | % | |
| 13.2 | % | |
|
* | Indicates
beneficial ownership of less than 1%. |
|
|
** | Percentage
of total voting power represents voting power with respect to all shares of our Class A Common Stock and our Class B Common Stock as
a single class. Each share of our Class B Common Stock is entitled to 20 votes per share and each share of our Class A Common Stock is
entitled to 1 vote per share. |
|
|
(1) |
Consists of (i) 35,043 shares directly owned by Mr. Sachs, (ii) options to purchase 24,841 shares of our Class A Common Stock exercisable within 60 days of December 31, 2025 held by Mr. Sachs, (iii) 2,377 shares of our Class A Common Stock issuable upon vesting of RSUs within 60 days of December 31, 2025 held by Mr. Sachs, and (iv) 374,635 shares of our Class B Common Stock held by Mr. Sachs. | |
|
(2) |
Consists of (i) 25,649 shares owned directly by Mr. Khalifa, (ii) options to purchase 20,142 shares of our Class A Common Stock exercisable within 60 days of December 31, 2025 held by Mr. Khalifa, (iii) 1,902 shares of our Class A Common Stock issuable upon vesting of RSUs within 60 days of December 31, 2025 held by Mr. Khalifa, and (iv) 150,508 shares of our Class B Common Stock held by Mr. Khalifa. | |
|
(3) |
Consists of (i) 8,192 shares owned directly and (ii) 100 shares of our Class A Common Stock issuable upon vesting of RSUs within 60 days of December 31, 2025 held by Dr. Carr-Brendel. | |
|
(4) |
Consists of 12,455 shares owned directly by Dr. Ho. | |
91
|
(5) |
Based on Schedule 13D/A filed by Khosla Ventures on August 9, 2023. On June 12, 2024, we effected a 1-for-30 reverse stock split on the Class A Common Stock. The number of shares reported as held has been adjusted accordingly. Consists of (i) 263,226 shares of our Class A Common Stock held by Khosla Ventures Seed C, LP (Khosla Ventures Seed C), (ii) 435,311 shares of our Class A Common Stock held by Khosla Ventures V, LP (Khosla Ventures V) and (iii) 266,667 shares of our Class A Common Stock held by Khosla Ventures Opportunity II, L.P (KVO II). Khosla Ventures Seed Associates C, LLC (KVA Seed C) is the general partner of Khosla Ventures Seed C. Khosla Ventures Associates V, LLC (KVA V) is the general partner of Khosla Ventures V. Khosla Ventures Opportunity Associates II, LLC (KVOA II) is the general partner of KVO II. Vinod Khosla is the managing member of VK Services, LLC (VK Services), which is the sole manager of KVA Seed C, KVA V and KVOA II. Each of KVA Seed C, VK Services and Vinod Khosla may be deemed to possess voting and investment control over such securities held by Khosla Ventures Seed C, and each of KVA Seed C, VK Services and Vinod Khosla may be deemed to have indirect beneficial ownership of such securities held by Khosla Ventures Seed C. Each of KVA V, VK Services and Vinod Khosla may be deemed to possess voting and investment control over such securities held by Khosla Ventures V, and each of KVA V, VK Services and Vinod Khosla may be deemed to have indirect beneficial ownership of such securities held by Khosla Ventures V. Each of KVOA II, VK Services and Vinod Khosla may be deemed to possess voting and investment control over such securities held by KVO II, and each of KVOA II, VK Services and Vinod Khosla may be deemed to have indirect beneficial ownership of such securities held by KVO II. Each of KVA Seed C, KVA V, KVOA II, VK Services and Vinod Khosla disclaims beneficial ownership of such shares except to the extent of his or its respective pecuniary interests therein. The business address of each of the reporting persons is 2121 Sand Hill Road, Menlo Park, CA 94025. | |
|
(6) |
Based on Schedule 13D filed by Innovation Endeavors III LP (Innovation Endeavors) on September 28, 2021. On June 12, 2024, we effected a 1-for-30 reverse stock split on the Class A Common Stock. The number of shares reported as held has been adjusted accordingly. Consists of 459,004 shares of our Class A Common Stock held by Innovation Endeavors. The business address of Innovation Endeavors is 1845 El Camino Real, Palo Alto, CA 94306. | |
|
(7) |
Based on Schedule 13G/A filed by Gates Frontier, LLC on February 13, 2024. On June 12, 2024, we effected a 1-for-30 reverse stock split on the Class A Common Stock. The number of shares reported as held has been adjusted accordingly. Consists of 603,201 shares of our Class A Common Stock held by Gates Frontier, LLC. William H. Gates III is the sole member of Gates Frontier, LLC, and as such may be deemed to have sole voting and dispositive power over the shares held by Gates Frontier, LLC. The business address of Gates Frontier, LLC is 2365 Carillon Point, Kirkland, WA 98033. | |
|
(8) |
Consists of (i) 1,152 shares owned directly, (ii) options to purchase 5,794 shares of our Class A Common Stock exercisable within 60 days of December 31, 2025, held by Dr. Greene, and (iii) 128,847 shares of our Class B Common Stock held by Dr. Greene. | |
**Item 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.**
**Independence of the Board of Directors**
NYSE rules generally require that independent
directors must comprise a majority of a listed companys board of directors. Based upon information requested from and provided
by each proposed director concerning his or her background, employment and affiliations, including family relationships, we have determined
that Messrs. Ahmad and Doherty, and Drs. Carr-Brendel and Ho, representing four of our directors , are independent as that
term is defined under the applicable rules and regulations of the SEC and the listing requirements and rules of the NYSE.
****
**Agreements with Vicarious Surgical Stockholders**
****
**Amended and Restated Registration Rights
Agreement**
At the Closing of
the Business Combination, we entered into an Amended and Restated Registration Rights Agreement with D8 Sponsor LLC (the
Sponsor), D8s independent directors and certain Legacy Vicarious stockholders, pursuant to which, among other
things, the parties to the Amended and Restated Registration Rights Agreement agreed, subject to certain exceptions, not to effect
any sale or distribution of any of our equity securities held by any of them (except with respect to shares of Class A Common Stock
acquired in open market transactions or by the Sponsor or D8s independent directors pursuant to a 2021 private placement)
during the lock-up period described therein and were granted certain registration rights with respect to their respective shares of
our common stock, in each case, on the terms and subject to the conditions therein.
92
**Director Nomination Agreement**
****
At the Closing of the
Business Combination, we entered into the Director Nomination Agreement with the Sponsor, pursuant to which, the Sponsor is entitled to
certain rights to nominate two members to serve on our board of directors effective as of the Closing Date, subject to the conditions
set forth in the Director Nomination Agreement. TheSponsors initial nominees to our board of directors were Donald Tang and
David Ho. The Sponsors right to nominate one such member to our board of directors expired at our 2022 annual meeting of stockholders
and the right to nominate the other member to our board of directors shall expire upon the earlier of (i) the first date on which the
Sponsor ceases to beneficially own at least 2.5% of our issued and outstanding common stock and (ii) the termination of the Director Nomination
Agreement as of the date that is 36 months after the Closing Date. This agreement terminated on September17, 2024.
**Indemnification Agreements with Officers
and Directors and Directors and Officers Liability Insurance**
****
We have entered into
indemnification agreements with each of our executive officers and directors. Theindemnification agreements, our charter and our
bylaws require us to indemnify our directors to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our
bylaws also require us to advance expenses incurred by our directors and officers. We will also maintain a general liability insurance
policy, which covers certain liabilities of our directors and officers arising out of claims based on acts or omissions in their capacities
as directors or officers.
**Policies and Procedures for Related
Party Transactions**
****
We have adopted a written
related person transaction policy that sets forth the following policies and procedures for the review and approval or ratification of
related person transactions.
A Related Person
Transaction is a transaction, arrangement or relationship in which we or any of our subsidiaries was, is or will be a participant,
the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest.
Transactions involving compensation for services provided to us or any of our subsidiaries as an employee, consultant or director will
not be considered related person transactions under this policy. A Related Person is:
|
| any
person who is or was an executive officer, director, or director nominee of ours at any time since the beginning of our last fiscal year; |
|
|
| a
person who is or was an Immediate Family Member (as defined below) of an executive officer, director, director nominee at any time since
the beginning of our last fiscal year; |
|
|
| any
person who, at the time of the occurrence or existence of the transaction, is the beneficial owner of more than 5% of any class of our
voting securities (a Significant Stockholder); or |
|
|
| any
person who, at the time of the occurrence or existence of the transaction, is an Immediate Family Member of a Significant Stockholder
of ours. |
|
An Immediate Family
Member of a person is any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law of such person, or any other person sharing the household of such person, other than a tenant or employee.
We have implemented policies
and procedures designed to minimize potential conflicts of interest arising from any dealings we may have with our affiliates and to provide
appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from time to time. Specifically,
pursuant to our charter, the audit committee has the responsibility to review related party transactions.
93
Under the related person
transaction policy, the related person in question or, in the case of transactions with a beneficial holder of more than 5% of our voting
stock, an officer with knowledge of a proposed transaction, will be required to present information regarding the proposed related person
transaction to the audit committee (or to another independent body of the board of directors) for review.
To identify related person
transactions in advance, we expect to rely on information supplied by our executive officers, directors and certain significant stockholders.
In considering related person transactions, our audit committee is expected to take into account the relevant available facts and circumstances,
which may include, but are not limited to:
|
| the
related persons interest in the transaction; |
|
|
| the
approximate dollar value of the amount involved in the transaction; |
|
|
| the
approximate dollar value of the amount of the related persons interest in the transaction without regard to the amount of any
profit or loss; |
|
|
| whether
the transaction was undertaken in the ordinary course of our business; |
|
|
| whether
the transaction with the related person is proposed to be, or was, entered into on terms no less favorable to us than terms that could
have been reached with an unrelated third party; |
|
|
| the
purpose of, and the potential benefits to us of, the transaction; and |
|
|
| any
other information regarding the transaction or the related person in the context of the proposed transaction that would be material to
investors in light of the circumstances of the particular transaction. |
|
The audit committee will
approve only those transactions that it determines are fair to us and in our best interests.
**Item 14. PRINCIPAL ACCOUNTANT
FEES AND SERVICES.**
Set forth below are fees billed or expected to be billed to us by our
independent registered public accounting firm Cherry Bekaert for the year ended December 31, 2025. Deloitte was engaged for the year ended
December 31, 2024 and the quarterly review of the period ended March 31, 2025. Cherry Bekaert was engaged for the quarterly review of
the periods ended June 30, 2025 and September 30, 2025.
**Independent Registered Public Accounting Firm Fees and Services**
****
The following is a summary of fees paid to Cherry Bekaert and Deloitte
for services rendered for the fiscal years ended December31, 2025 and December31, 2024.
|
| |
Year Ended December 31, | | |
|
| |
2025 | | |
2024 | | |
|
Audit fees | |
$ | 567,181 | | |
$ | 712,668 | | |
|
Audit-related fees | |
| | | |
| | | |
|
Tax fees | |
| | | |
| | | |
|
All other fees | |
| 1,895 | | |
| 1,895 | | |
|
Total | |
$ | 569,076 | | |
$ | 714,563 | | |
|
(1) | Audit
fees consisted of audit work performed in the preparation of consolidated financial statements, as well as work generally only the independent
registered public accounting firm can reasonably be expected to provide, such as quarterly review procedures and the provision of consents
in connection with the filing of registration statements and related amendments, as well as other filings. Cherry Bekaert billed fees
of $348,600 and Deloitte billed fees of $218,581. |
|
|
(2) | There
were no audit-related fees in 2025 or 2024. |
|
|
(3) | There
were no tax fees in 2025 or 2024. |
|
|
(4) | All
other fees consisted of fees paid to Deloitte for access to a research resource. |
|
94
**Policy on Audit Committee Pre-Approval of Audit and Permissible
Non-Audit Services of Independent Public Accountant**
Consistent with SEC policies regarding auditor independence, the audit
committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting
firm. In recognition of this responsibility, the audit committee has established a policy to pre-approve all audit and permissible non-audit
services provided by our independent registered public accounting firm.
Prior to engagement of an independent registered public accounting
firm for the next years audit, management will submit an aggregate of services expected to be rendered during that year for each
of four categories of services to the audit committee for approval.
**1. Audit**services include audit work performed in the
preparation of financial statements, as well as work that generally only an independent registered public accounting firm can reasonably
be expected to provide, including comfort letters, statutory audits, and attest services and consultation regarding financial accounting
or reporting standards.
**2. Audit-Related** services are for assurance and related
services that are traditionally performed by an independent registered public accounting firm, including due diligence related to mergers
and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatory requirements.
**3. Tax** services include all services performed by an
independent registered public accounting firms tax personnel except those services specifically related to the audit of the financial
statements, and includes fees in the areas of tax compliance, tax planning, and tax advice.
**4. Other Fees** are those associated with services not
captured in the other categories. The Company generally does not request such services from our independent registered public accounting
firm.
****
Prior to engagement, the audit committee pre-approves these services
by category of service. The fees are budgeted and the audit committee requires our independent registered public accounting firm and management
to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise
when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the
original pre-approval. In those instances, the audit committee requires specific pre-approval before engaging our independent registered
public accounting firm.
The audit committee may delegate pre-approval authority to one or more
of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions
to the audit committee at its next scheduled meeting.
In the event the stockholders do not ratify the appointment of Deloitte
as our independent registered public accounting firm, the audit committee will reconsider its appointment.
The affirmative vote of a majority of the votes cast affirmatively
or negatively for this proposal is required to ratify the appointment of the independent registered public accounting firm.
95
**PART
IV**
****
**ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.**
****
**Item 15(a).** The following documents are filed as part of this
annual report on Form 10-K:
**Item 15(a)(1) and (2)** See Index to Consolidated Financial
Statements and Financial Statement Schedules at Item 8 to this Annual Report on Form 10-K. Other financial statement schedules
have not been included because they are not applicable or the information is included in the financial statements or notes thereto.
**Item 15(a)(3)** Exhibits
The following is a list of exhibits filed as part of this Annual Report
on Form 10-K.
|
Exhibit
Number |
|
Exhibit Description |
|
Filed
Herewith |
|
Incorporated
by Reference
Herein from
Form or
Schedule |
|
Filing
Date |
|
SEC File/
Reg.
Number | |
|
2.1 |
|
Agreement and Plan of Merger, dated as of April15, 2021, by and among Vicarious Surgical Inc. (formerly D8 Holdings Corp.), Snowball Merger Sub, Inc., and Vicarious Surgical Operating Co. (formerly Vicarious Surgical Inc.). |
|
|
|
Form8-K
(Exhibit 2.1) |
|
4/15/2021 |
|
001-39384 | |
|
3.1 |
|
Amended and Restated Bylaws of Vicarious Surgical Inc. |
|
|
|
Form8-K
(Exhibit 3.2) |
|
9/23/2021 |
|
001-39384 | |
|
3.2 |
|
Certificate of Incorporation of Vicarious Surgical Inc., as amended |
|
|
|
Form10-Q
(Exhibit 3.1) |
|
8/13/2024 |
|
001-39384 | |
|
4.1 |
|
Description of Securities |
|
|
|
Form 10-K (Exhibit 4.1) |
|
3/17/2025 |
|
001-39384 | |
|
4.2 |
|
Warrant Agreement, dated as of July14, 2020, by and between Vicarious Surgical Inc. (formerly D8 Holdings Corp.) and Continental Stock Transfer& Trust Company. |
|
|
|
Form8-K
(Exhibit 4.1) |
|
7/17/2020 |
|
001-39384 | |
|
4.3 |
|
Specimen ClassA Common Stock Certificate |
|
|
|
FormS-8
(Exhibit 4.4) |
|
6/27/2024 |
|
333-280538 | |
|
4.4 |
|
Form of Pre-Funded Warrant |
|
|
|
Form 8-K (Exhibit 4.1) |
|
10/8/2025 |
|
001-39384 | |
|
4.5 |
|
Form of Series A Common Warrant |
|
|
|
Form 8-K (Exhibit 4.2) |
|
10/8/2025 |
|
001-39384 | |
|
4.6 |
|
Form of Series B Common Warrant |
|
|
|
Form 8-K (Exhibit 4.3) |
|
10/8/2025 |
|
001-39384 | |
|
10.1 |
|
Form of Subscription Agreement, by and between Vicarious Surgical Inc. (formerly D8 Holdings Corp.), and the subscriber parties thereto. |
|
|
|
Form8-K
(Exhibit 10.1) |
|
4/15/2021 |
|
001-39384 | |
96
|
10.2+ |
|
Executive
Employment Agreement, dated as of July13, 2021, by and between Vicarious Surgical Inc. and Adam Sachs. |
|
|
|
FormS-4/A
(Exhibit10.13) |
|
7/15/2021 |
|
333-257055 | |
|
10.3+ |
|
Executive
Employment Agreement, dated as of July13, 2021, by and between Vicarious Surgical Inc. and Sammy Khalifa. |
|
|
|
FormS-4/A
(Exhibit10.14) |
|
7/15/2021 |
|
333-257055 | |
|
10.4+ |
|
Executive
Employment Agreement, dated as of July 30, 2025, by and between Vicarious Surgical Inc. and Stephen From. |
|
|
|
Form
8-K (Exhibit 10.1) |
|
7/31/2025 |
|
001-39384 | |
|
10.4.1 |
|
Building
Lease for the premises located at 78 Fourth Avenue, Waltham, Massachusetts, dated as of January25, 2021, by and among Vicarious
Surgical Inc. and Fourth Avenue LLC. |
|
|
|
FormS-4/A
(Exhibit10.12) |
|
8/2/2021 |
|
333-257055 | |
|
10.4.2 |
|
Amendment
to Lease, dated as of October 14, 2021, by and between Vicarious Surgical US Inc. and Fourth Avenue LLC |
|
|
|
Form8-K
(Exhibit 10.1) |
|
10/20/2021 |
|
001-39384 | |
|
10.4.3 |
|
Guaranty
of Lease between Vicarious Surgical US Inc. and Fourth Avenue LLC dated as of October 14, 2021 |
|
|
|
Form8-K
(Exhibit 10.2) |
|
10/20/2021 |
|
001-39384 | |
|
10.4.4 |
|
Amendment to Building Lease for the premises located at 78 Fourth Avenue, Waltham, Massachusetts, dated as of January25, 2021, by and among Vicarious Surgical Inc. and Fourth Avenue LLC |
|
X |
|
|
|
|
|
| |
|
10.5+ |
|
Consulting Agreement, dated as of January 17, 2025, by and between Vicarious Surgical Inc. and William Kelly. |
|
|
|
Form
10-K (Exhibit 10.5) |
|
3/17/2025 |
|
001-39384 | |
|
10.6+ |
|
Offer
Letter, dated January 18, 2024, by and between Vicarious Surgical Inc. and Randy Clark. |
|
|
|
Form
10-K (Exhibit 10.6) |
|
3/4/2024 |
|
001-39384 | |
|
10.7+ |
|
Offer
Letter, dated March 3, 2025, by and between Vicarious Surgical Inc. and Sarah Romano. |
|
|
|
Form
8-K (Exhibit 10.1) |
|
3/13/2025 |
|
001-39384 | |
|
10.7+ |
|
Amended
and Restated Nonemployee Director Compensation Policy. |
|
|
|
Form10-Q
(Exhibit10.1) |
|
5/9/2022 |
|
001-39384 | |
|
10.8+ |
|
Second
Amended and Restated Nonemployee Director Compensation Policy. |
|
|
|
Form
8-K (Exhibit 10.2) |
|
6/30/2025 |
|
001-39384 | |
|
10.9+ |
|
Vicarious
Surgical Inc. 2014 Stock Incentive Plan, as amended. |
|
|
|
Form8-K
(Exhibit10.9) |
|
9/23/2021 |
|
001-39384 | |
|
10.10+ |
|
Vicarious
Surgical Inc. 2021 Equity Incentive Plan, as amended, and forms of agreement thereunder. |
|
|
|
Form
8-K (Exhibit 10.1) |
|
6/30/2025 |
|
001-39384 | |
|
10.11 |
|
Amended
and Restated Registration Rights Agreement, dated as of September17, 2021, by and among Vicarious Surgical Inc. (formerly D8
Holdings Corp.), Vicarious Surgical Operating Co. (formerly Vicarious Surgical Inc.) and certain of their securityholders. |
|
|
|
Form8-K
(Exhibit10.11) |
|
9/23/2021 |
|
001-39384 | |
97
|
10.12+ |
|
Form
of Indemnification Agreement. |
|
|
|
Form8-K
(Exhibit10.12) |
|
9/23/2021 |
|
001-39384 | |
|
10.13 |
|
Form
of Securities Purchase Agreement, dated as of October 7, 2025, by and between the Company and the purchaser listed on the signature
pages thereto. |
|
|
|
Form 8-K
(Exhibit 10.1) |
|
10/8/2025 |
|
001-39384 | |
|
10.14 |
|
At The Market Offering Agreement, dated December 12, 2025, by and between H.C. Wainwright & Co., LLC and Vicarious Surgical Inc. |
|
|
|
Form 8-K
(Exhibit 1.1) |
|
12/16/2025 |
|
001-39384 | |
|
10.15+ |
|
Amendment to Executive Employment Agreement, dated as of February 2, 2026, between Vicarious Surgical Inc. and Stephen From |
|
|
|
Form 8-K
(Exhibit 10.1) |
|
2/2/2026 |
|
001-39384 | |
|
10.16+ |
|
Executive Severance and Change in Control Agreement, dated as of February 1, 2026, between Vicarious Surgical Inc. and Sarah Romano |
|
|
|
Form 8-K
(Exhibit 10.2) |
|
2/2/2026 |
|
001-39384 | |
|
10.17+ |
|
Amendment to the Executive Employment Agreement, dated as of July 13, 2021, by and between Vicarious Surgical Inc. and Adam Sachs. |
|
|
|
Form 8-K
(Exhibit 10.1) |
|
3/6/2026 |
|
001-39384 | |
|
10.18+ |
|
Amendment to the Executive Employment Agreement, dated as of July 13, 2021, by and between Vicarious Surgical Inc. and Sammy Khalifa. |
|
|
|
Form 8-K (Exhibit 10.2) |
|
3/6/2026 |
|
001-39384 | |
|
16.1 |
|
Letter
from Deloitte & Touche LLP dated July 11, 2025 |
|
|
|
Form 8-K
(Exhibit 16.1) |
|
7/11/2025 |
|
001-39384 | |
|
19 |
|
Vicarious
Surgical Inc. Insider Trading Policy |
|
|
|
Form 10-K
(Exhibit
19) |
|
3/17/2025 |
|
001-39384 | |
|
21.1 |
|
List
of Subsidiaries |
|
|
|
FormS-1
(Exhibit 21.1) |
|
10/15/2021 |
|
333-260281 | |
|
23.1 |
|
Consent of Independent
Registered Public Accounting Firm (PCAOB ID No. 677) |
|
X |
|
|
|
|
|
| |
|
23.2 |
|
Consent of Independent
Registered Public Accounting Firm (PCAOB ID No. 34) |
|
X |
|
|
|
|
|
| |
|
31.1 |
|
Certification
of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
X |
|
|
|
|
|
| |
|
31.2 |
|
Certification
of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
X |
|
|
|
|
|
| |
|
32* |
|
Certification
of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
X |
|
|
|
|
|
| |
|
97 |
|
Vicarious
Surgical Inc. Clawback Policy |
|
|
|
Form 10-K
(Exhibit 97) |
|
3/17/2025 |
|
001-39384 | |
|
101.INS |
|
Inline XBRL Instance Document |
|
X |
|
|
|
|
|
| |
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
|
X |
|
|
|
|
|
| |
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase
Document |
|
X |
|
|
|
|
|
| |
|
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase
Document |
|
X |
|
|
|
|
|
| |
|
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
X |
|
|
|
|
|
| |
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase
Document |
|
X |
|
|
|
|
|
| |
|
104 |
|
Cover Page Interactive Data File (formatted as Inline
XBRL and contained in Exhibit 101) |
|
X |
|
|
|
|
|
| |
|
* |
The certifications furnished in Exhibit 32 attached hereto are deemed to accompany this Annual Report on Form 10-K and will not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference. | |
|
|
Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. | |
|
+ |
Management contract or compensatory plan or arrangement. | |
****
**ITEM 16. FORM 10-K SUMMARY**
Not applicable.
98
**SIGNATURES**
Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized**.**
|
|
VICARIOUS SURGICAL INC. | |
|
|
|
| |
|
Date:
March 9, 2026 |
By: |
/s/ Stephen
From | |
|
|
|
Stephen From | |
|
|
|
Chief Executive Officer | |
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated
below and on the dates indicated.
|
Signature |
|
Title |
|
Date | |
|
|
|
|
|
| |
|
/s/
Stephen From |
|
Chief Executive Officer
and Director |
|
March 9, 2026 | |
|
Stephen From |
|
(Principal Executive Officer) |
|
| |
|
|
|
|
|
| |
|
/s/
Sarah Romano |
|
Chief Financial Officer |
|
March 9, 2026 | |
|
Sarah Romano |
|
(Principal Financial and
Accounting Officer) |
|
| |
|
|
|
|
|
| |
|
/s/
Joseph Doherty |
|
Director |
|
March 9, 2026 | |
|
Joseph Doherty |
|
|
|
| |
|
|
|
|
|
| |
|
/s/
Adam Sachs |
|
Director |
|
March 9, 2026 | |
|
Adam Sachs |
|
|
|
| |
|
|
|
|
|
| |
|
/s/
Sammy Khalifa |
|
Director |
|
March 9, 2026 | |
|
Sammy Khalifa |
|
|
|
| |
|
|
|
|
|
| |
|
/s/
Victoria Carr-Brendel |
|
Director |
|
March 9, 2026 | |
|
Victoria Carr-Brendel |
|
|
|
| |
|
|
|
|
|
| |
|
/s/
Fuad Ahmad |
|
Director |
|
March 9, 2026 | |
|
Fuad Ahmad |
|
|
|
| |
|
|
|
|
|
| |
|
/s/
David Ho |
|
Director |
|
March 9, 2026 | |
|
David Ho |
|
|
|
| |
99
**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**
| Report of Independent Registered Public Accounting Firm (PCAOB ID No. 00677) | F-2 | |
| Report of Independent Registered Public Accounting Firm 2024 Opinion (PCAOB ID No. 34) | F-3 | |
| Consolidated Balance Sheets as of December 31, 2025 and 2024 | F-4 | |
| Consolidated Statements of Operations for the years ended December 31, 2025 and 2024 | F-5 | |
| Consolidated Statements of Stockholders Equity for the years ended December 31, 2025 and 2024 | F-6 | |
| Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 | F-7 | |
| Notes to Consolidated Financial Statements | F-8 | |
F-1
**REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
To the Board of Directors and
Stockholders of Vicarious Surgical, Inc.
Waltham, Massachusetts
****
**Opinion on the Consolidated Financial Statements**
We have audited the accompanying consolidated balance sheet of Vicarious
Surgical, Inc. (the Company) as of December 31, 2025, and the related consolidated statement of operations, stockholders
equity, and cash flows for the year then ended and the related notes (collectively referred to as the consolidated financial statements).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
as of December 31, 2025, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
****
**Explanatory Paragraph Going Concern**
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company
has suffered recurring losses from operations and negative cash flows from operations. These conditions raise substantial doubt about
the Companys ability to continue as a going concern. Managements plans concerning these matters are described in Note 1
to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
****
**Basis for Opinion**
****
These consolidated financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on the Companys consolidated financial statements based
on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
****
We conducted our audit in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal
control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal
control over financial reporting. Accordingly, we express no such opinion.
****
Our audit included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for
our opinion.
****
**Critical Audit Matters**
Critical audit matters are matters arising from the current period
audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex
judgements. We determined that there were no critical audit matters.
/s/ Cherry Bekaert LLP
We have served as the Companys auditor since 2025.
Raleigh, North Carolina
March 9, 2026
****
F-2
**REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
To the stockholders and the Board of Directors
of Vicarious Surgical Inc.
**Opinion on the Financial Statements**
****
We have audited the accompanying consolidated balance sheet of Vicarious
Surgical Inc. and subsidiaries (the "Company") as of December 31, 2024, the related consolidated statements of operations, stockholders'
equity, and cash flows, for the year ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles
generally accepted in the United States of America.
**Going Concern**
****
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has a history of losses and
negative cash flows from operations, has an accumulated deficit, and has concluded that the Companys cash, cash equivalents and
investments will not be sufficient to sustain operations for at least twelve months from the date the financials are available to be issued.
This raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also
described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
**Basis for Opinion**
****
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect
to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit
of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control
over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over
financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
March 17, 2025
We began serving as the Companys auditor in 2020. In 2025 we
became the predecessor auditor.
F-3
**VICARIOUS SURGICAL INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per sha**re **data)**
|
| |
December 31, | | |
|
| |
2025 | | |
2024 | | |
|
Assets | |
| | |
| | |
|
Current assets: | |
| | |
| | |
|
Cash and cash equivalents | |
$ | 2,569 | | |
$ | 9,737 | | |
|
Short-term investments | |
| 7,223 | | |
| 39,360 | | |
|
Prepaid expenses and other current assets | |
| 1,792 | | |
| 2,601 | | |
|
Total current assets | |
| 11,584 | | |
| 51,698 | | |
|
Restricted cash | |
| 936 | | |
| 936 | | |
|
Property and equipment, net | |
| 1,268 | | |
| 4,476 | | |
|
Right-of-use assets | |
| 5,764 | | |
| 10,560 | | |
|
Other long-term assets | |
| 29 | | |
| 49 | | |
|
Total assets | |
$ | 19,581 | | |
$ | 67,719 | | |
|
| |
| | | |
| | | |
|
Liabilities and Stockholders Equity | |
| | | |
| | | |
|
Current liabilities: | |
| | | |
| | | |
|
Accounts payable | |
$ | 894 | | |
$ | 1,166 | | |
|
Accrued expenses | |
| 1,056 | | |
| 5,283 | | |
|
Notes payable | |
| 525 | | |
| | | |
|
Lease liabilities, current portion | |
| 1,429 | | |
| 1,218 | | |
|
Total current liabilities | |
| 3,904 | | |
| 7,667 | | |
|
Lease liabilities, net of current portion | |
| 5,836 | | |
| 12,567 | | |
|
Warrant liabilities | |
| | | |
| 787 | | |
|
Total liabilities | |
| 9,740 | | |
| 21,021 | | |
|
| |
| | | |
| | | |
|
Commitments and Contingencies (Note 8) | |
| | | |
| | | |
|
| |
| | | |
| | | |
|
Stockholders equity: | |
| | | |
| | | |
|
Preferred stock, $0.0001par value;1,000,000shares authorized;noshares issued or outstanding at December 31, 2025 and 2024 | |
| | | |
| | | |
|
ClassA common stock, $0.0001 par value; 300,000,000 shares authorized at December 31, 2025 and 2024; 6,463,351 and 5,265,089 shares issued and outstanding at December 31, 2025 and2024, respectively | |
| 15 | | |
| 15 | | |
|
ClassB common stock, $0.0001 par value; 22,000,000 sharesauthorized at December 31, 2025 and 2024; 653,990 shares issued and outstanding at December 31, 2025 and2024 | |
| 2 | | |
| 2 | | |
|
Additional paid-in capital | |
| 255,937 | | |
| 242,566 | | |
|
Accumulated other comprehensive income | |
| 4 | | |
| 50 | | |
|
Accumulated deficit | |
| (246,117 | ) | |
| (195,935 | ) | |
|
Total stockholders equity | |
| 9,841 | | |
| 46,698 | | |
|
Total liabilities and stockholders equity | |
$ | 19,581 | | |
$ | 67,719 | | |
See accompanying notes to these consolidated financial
statements.
F-4
**VICARIOUS SURGICAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except, per share data)**
|
| |
Year Ended December 31, | | |
|
| |
2025 | | |
2024 | | |
|
Operating expenses: | |
| | |
| | |
|
Research and development | |
$ | 33,601 | | |
$ | 40,155 | | |
|
Sales and marketing | |
| 2,171 | | |
| 4,525 | | |
|
General and administrative | |
| 15,196 | | |
| 21,875 | | |
|
Gain on lease modification, net | |
| (941 | ) | |
| | | |
|
Total operating expenses | |
| 50,027 | | |
| 66,555 | | |
|
Loss from operations | |
| (50,027 | ) | |
| (66,555 | ) | |
|
Other (expense) income, net: | |
| | | |
| | | |
|
Loss on disposal of leasehold improvements | |
| (1,915 | ) | |
| | | |
|
Change in fair value of warrant liabilities | |
| 787 | | |
| 43 | | |
|
Interest and other income, net | |
| 973 | | |
| 3,289 | | |
|
Total other (expense) income, net | |
| (155 | ) | |
| 3,332 | | |
|
Net loss | |
$ | (50,182 | ) | |
$ | (63,223 | ) | |
|
Net loss per share of Class A and Class B common stock, basic and diluted | |
$ | (8.19 | ) | |
$ | (10.74 | ) | |
|
| |
| | | |
| | | |
|
Other comprehensive (loss) income: | |
| | | |
| | | |
|
Net unrealized (loss) income on investments | |
| (46 | ) | |
| 40 | | |
|
Other comprehensive (loss) income | |
| (46 | ) | |
| 40 | | |
|
Comprehensive net loss | |
$ | (50,228 | ) | |
$ | (63,183 | ) | |
See accompanying notes to these consolidated financial
statements.
F-5
**VICARIOUS SURGICAL INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(In thousands, except share data)**
|
| |
Year Ended December 31, 2025 | | |
|
| |
Class A &B | | |
Additional | | |
| | |
Accumulated Other | | |
Total | | |
|
| |
CommonStock | | |
Paid-In | | |
Accumulated | | |
Comprehensive | | |
Stockholders | | |
|
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Income | | |
Equity | | |
|
Balance, January 1, 2025 | |
| 5,919,079 | | |
$ | 17 | | |
$ | 242,566 | | |
$ | (195,935 | ) | |
$ | 50 | | |
$ | 46,698 | | |
|
Exercise of common stock options | |
| 11,721 | | |
| | | |
| 67 | | |
| | | |
| | | |
| 67 | | |
|
Vesting of restricted stock | |
| 36,541 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Issuance of class A common stock and pre-funded warrants in connection with registered direct offering, net of offering costs | |
| 588,300 | | |
| | | |
| 5,169 | | |
| | | |
| | | |
| 5,169 | | |
|
Exercise of pre-funded warrants | |
| 561,700 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Stock-based compensation | |
| | | |
| | | |
| 8,135 | | |
| | | |
| | | |
| 8,135 | | |
|
Net loss | |
| | | |
| | | |
| | | |
| (50,182 | ) | |
| | | |
| (50,182 | ) | |
|
Other comprehensive loss | |
| | | |
| | | |
| | | |
| | | |
| (46 | ) | |
| (46 | ) | |
|
Balance, December 31, 2025 | |
| 7,117,341 | | |
$ | 17 | | |
$ | 255,937 | | |
$ | (246,117 | ) | |
$ | 4 | | |
$ | 9,841 | | |
****
|
| |
Year Ended December 31, 2024 | | |
|
| |
Class A &B | | |
Additional | | |
| | |
Accumulated Other | | |
Total | | |
|
| |
CommonStock | | |
Paid-In | | |
Accumulated | | |
Comprehensive | | |
Stockholders | | |
|
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Income | | |
Equity | | |
|
Balance, January 1, 2024 | |
| 5,850,158 | | |
$ | 17 | | |
$ | 230,654 | | |
$ | (132,712 | ) | |
$ | 10 | | |
$ | 97,969 | | |
|
Exercise of common stock options | |
| 1,393 | | |
| | | |
| 8 | | |
| | | |
| | | |
| 8 | | |
|
Vesting of restricted stock | |
| 67,528 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Stock-based compensation | |
| | | |
| | | |
| 11,904 | | |
| | | |
| | | |
| 11,904 | | |
|
Net loss | |
| | | |
| | | |
| | | |
| (63,223 | ) | |
| | | |
| (63,223 | ) | |
|
Other comprehensive income | |
| | | |
| | | |
| | | |
| | | |
| 40 | | |
| 40 | | |
|
Balance, December 31, 2024 | |
| 5,919,079 | | |
$ | 17 | | |
$ | 242,566 | | |
$ | (195,935 | ) | |
$ | 50 | | |
$ | 46,698 | | |
****
See accompanying notes to these consolidated financial
statements.
F-6
**VICARIOUS SURGICAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)**
|
| |
Year Ended December 31, | | |
|
| |
2025 | | |
2024 | | |
|
Cash flows used in operating activities: | |
| | |
| | |
|
Net loss | |
$ | (50,182 | ) | |
$ | (63,223 | ) | |
|
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | | |
|
Depreciation | |
| 1,425 | | |
| 2,107 | | |
|
Loss on disposal of property and equipment | |
| 1,915 | | |
| 2 | | |
|
Stock-based compensation | |
| 8,135 | | |
| 11,904 | | |
|
Non-cash lease (gain) expense | |
| (489 | ) | |
| 899 | | |
|
Change in fair value of warrant liabilities | |
| (787 | ) | |
| (43 | ) | |
|
Change in accrued interest and net accretion of discounts on short-term investments | |
| (188 | ) | |
| (1,008 | ) | |
|
Changes in operating assets and liabilities: | |
| | | |
| | | |
|
Prepaid expenses and other current assets | |
| 809 | | |
| 175 | | |
|
Accounts payable | |
| (272 | ) | |
| (96 | ) | |
|
Accrued expenses | |
| (4,227 | ) | |
| 309 | | |
|
Right-of-use assets | |
| 5,285 | | |
| | | |
|
Lease liabilities | |
| (6,520 | ) | |
| (1,047 | ) | |
|
Other noncurrent assets | |
| 20 | | |
| 65 | | |
|
Net cash used in operating activities | |
| (45,076 | ) | |
| (49,956 | ) | |
|
Cash flows from investing activities: | |
| | | |
| | | |
|
Purchases of property and equipment | |
| (132 | ) | |
| (180 | ) | |
|
Purchases of available-for-sale investments | |
| (21,340 | ) | |
| (58,149 | ) | |
|
Proceeds from sales and maturities of available-for-sale investments | |
| 53,619 | | |
| 65,192 | | |
|
Net cash provided by investing activities | |
| 32,147 | | |
| 6,863 | | |
|
Cash flows from financing activities: | |
| | | |
| | | |
|
Proceeds from issuance of class A common stock and pre-funded warrants in connection with registered direct offering | |
| 5,865 | | |
| | | |
|
Issuance costs related to issuance of class A common stock and pre-funded warrants in connection with registered direct offering | |
| (696 | ) | |
| | | |
|
Proceeds from note payable | |
| 576 | | |
| | | |
|
Payments on note payable | |
| (51 | ) | |
| | | |
|
Proceeds from exercise of stock options | |
| 67 | | |
| 8 | | |
|
Net cash provided by financing activities | |
| 5,761 | | |
| 8 | | |
|
Change in cash, cash equivalents and restricted cash | |
| (7,168 | ) | |
| (43,085 | ) | |
|
Cash, cash equivalents and restricted cash, beginning of year | |
| 10,673 | | |
| 53,758 | | |
|
Cash, cash equivalents and restricted cash, end of year | |
$ | 3,505 | | |
$ | 10,673 | | |
|
| |
| | | |
| | | |
|
Reconciliation of restricted cash: | |
| | | |
| | | |
|
Cash and cash equivalents | |
| 2,569 | | |
| 9,737 | | |
|
Restricted cash | |
| 936 | | |
| 936 | | |
|
| |
$ | 3,505 | | |
$ | 10,673 | | |
|
Supplemental cash flow information: | |
| | | |
| | | |
|
Interest paid | |
$ | 3 | | |
$ | | | |
|
Cash paid in connection with lease amendment | |
$ | 338 | | |
$ | | | |
|
Decrease in right-of-use asset due to lease modification | |
$ | 3,973 | | |
$ | | | |
|
Decrease in lease liability due to lease modification | |
$ | 5,055 | | |
$ | | | |
See accompanying notes to these consolidated financial
statements.
F-7
**VICARIOUS SURGICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except for share and per share data)**
****
**1. NATURE
OF BUSINESS AND BASIS OF PRESENTATION**
****
**Nature of Business**
Vicarious Surgical Inc. (including its subsidiaries,
Vicarious or the Company) (formerly D8 Holdings Corp. (D8)) was incorporated in the Cayman Islands
on May 6, 2020. The Companys legal name became Vicarious Surgical Inc. following a business combination between the Company and
Vicarious Surgical Inc., a Delaware corporation, on September 17, 2021 (the Business Combination). The Company is headquartered
in Waltham, Massachusetts.
The Company is currently developing its differentiated
surgical robotic system using proprietary de-coupled actuators to virtually transport surgeons inside the patient to perform minimally
invasive surgical procedures.
**Going Concern**
Since inception, the Company has generated negative
cash flows from operations and has an accumulated deficit of $246,117. The Company has not yet generated any revenue from operations.
Additional risks to which the Company is exposed include uncertainties related to the ability to achieve a revenue-generating product;
current and potential competitors with greater financial, technological, production, and marketing resources; dependence on key management
personnel; and raising additional capital, as needed. The Companys ability to continue as a going concern is dependent upon the
ability to raise additional debt or equity capital. There can be no assurance that such capital will be available in sufficient amounts
or on terms acceptable to the Company.
Management does not believe that the Companys
cash, cash equivalents and short-term investments balance at December 31, 2025 of $9,792 will be sufficient to support our operations
for the next twelve months from the date of issuance of these financial statements, and accordingly, this raises substantial doubt about
our ability to continue as a going concern. To address the Companys capital needs, the Company must continue to actively pursue
additional equity or debt financing. The Company has been in ongoing discussions with potential investors with respect to such financing.
Adequate financing opportunities might not be available to the Company, when and if needed, on acceptable terms or at all. If the Company
is unable to obtain additional financing in sufficient amounts or on acceptable terms under such circumstances, the Companys operating
results and prospects will be adversely affected. The accompanying consolidated financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The consolidated
financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the
amounts and classification of liabilities that might result from the outcome of this uncertainty.
**Basis of Presentation**
The accompanying consolidated financial statements
of the Company are prepared in conformity with accounting principles generally accepted in the United States of America (USGAAP)
and pursuant to the regulations of the U.S Securities and Exchange Commission (SEC). Any reference in these notes to applicable
guidance is meant to refer to GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates
(ASU) promulgated by the Financial Accounting Standards Board (FASB).
****
**Principles of Consolidation**
The accompanying consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated
in consolidation.
F-8
**2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES**
The accompanying financial statements reflect
the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial
statements and notes.
****
**Reverse Stock Split**
****
On June 12, 2024, the Company effected a 1-for-30
reverse stock split (Reverse Split) of its issued and outstanding shares of Class A and Class B common stock. The Reverse
Split did not change the number of authorized shares of Class A and Class B common stock. All references in these consolidated financial
statements to shares, share prices, exercise prices, and other per share information in all periods have been adjusted, on a retroactive
basis, to reflect the Reverse Split (see Note 11, Stockholders Equity and Stock-Based Compensation Reverse Stock
Split).****
**Use of Estimates**
The preparation of financial statements in conformity
with US GAAP requires the Companys management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses
during the reporting periods presented.Estimates are used for, but are not limited to, the Companys ability to continue as
a going concern, depreciation of property and equipment, fair value of financial instruments, and contingencies. Actual results may differ
from those estimates.
**Fair Value of Financial Instruments**
US GAAP requires disclosure of fair value information
about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. The framework
provides a fair value hierarchy that prioritizes the inputs for the valuation techniques. The hierarchy gives the highest priority to
unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements) and minimizes the use of unobservable inputs. The most observable inputs are used, when available. The three
levels of the fair value hierarchy are described as follows:
****
**Level 1** Inputs to the valuation
methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
****
**Level 2** Inputs to the valuation
methodology include quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets
and liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs
that are derived from, or corroborated by, observable market data by correlation or other means.
****
**Level 3** Inputs to the valuation
methodology are unobservable and significant to the fair value measurement.
**Cash and Cash Equivalents**
Cash and cash equivalents consist of checking
accounts, money market funds, U.S. treasury securities and U.S. government agency securities. The Company considers all highly liquid
investments with an original maturity of 90 days or less at the date of purchase to be cash equivalents.
****
**Restricted Cash**
The Company has an agreement to maintain a cash
balance of $936 at December 31, 2025 and 2024, as collateral for a letter of credit related to the Companys lease. The balance
of $936 is classified as long-term on the Companys balance sheets as the lease period ends in March 2032. In connection with the
second amendment of its lease, the landlord made a draw on the letter of credit in January 2026 in the amount of $257.
****
F-9
**Short-Term Investments**
All of the Companys investments, which
consist of U.S. treasury securities and U.S. government agency securities, are classified as available-for-sale and are carried at fair
value. There were unrealized losses of $46 and unrealized gains of $40 for the years ended December 31, 2025 and 2024, respectively.
**Concentrations of Credit Risk and Off-Balance-Sheet
Risk**
The Company has no significant off-balance-sheet
risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially
expose the Company to concentrations of credit risk consist mainly of cash and cash equivalents. The Company maintains its cash and cash
equivalents principally with accredited financial institutions of high-credit standing. Periodically, there may be times when the deposits
exceed the FDIC insurance limits.
****
**Warrant Liabilities**
The Company does not use derivative instruments
to hedge its exposures to cash flow, market or foreign currency risks. Management evaluates all of the Companys financial instruments,
including issued warrants to purchase its Class A common stock, to determine if such instruments are derivatives or contain features that
qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such
instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
As part of the Business Combination, the Company
assumed 17,249,991 publicly traded warrants (the Public Warrants) and 10,400,000 warrants sold in a private placement (the
Private Placement Warrants), each exercisable to purchase shares of Class A common stock. Both the Public Warrants and the
Private Placement Warrants outstanding are recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, the Company
recognizes the warrants as liabilities at fair value and adjusts the warrant liability to fair value at each reporting period. The liabilities
are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the statement
of operations. The fair value of Public Warrants was determined from their trading value on public markets. The fair value of Private
Placement Warrants was calculated using the Black-Scholes option pricing model.
**Property and Equipment**
Property and equipment are recorded at cost. Expenditures
for repairs and maintenance are expensed as incurred. When assets are retired or disposed of, the assets and related accumulated depreciation
are eliminated from the accounts, and any resulting gain or loss is included in the determination of net loss. Depreciation is calculated
using the straight-line method over the estimated useful lives of the related assets.
**Impairment of Long-Lived Assets**
The Company continually evaluates whether events
or circumstances have occurred that indicate that the estimated remaining useful life of its long-lived assets may warrant revision or
that the carrying value of these assets may be impaired. The Company does not believe that any events have occurred through December 31,
2025, that would indicate its long-lived assets are impaired.
**Guarantees and Indemnifications**
As permitted under Delaware law, the Company indemnifies
its officers, directors, consultants and employees for certain events or occurrences that happen by reason of the relationship with, or
position held at, the Company. Through December 31, 2025, the Company had not experienced any losses related to these indemnification
obligations, and no claims were outstanding. The Company does not expect significant claims related to these indemnification obligations
and, consequently, concluded that the fair value of these obligations is negligible, and no related liabilities have been established.
F-10
****
**Research and Development**
Research and development costs are expensed in
the period incurred. Research and development costs include payroll and personnel expenses, consulting costs, software and web services,
legal, raw materials and allocated overhead such as depreciation and amortization, rent and utilities. Advance payments for goods and
services to be used in future research and development activities are recorded as prepaid expenses and are expensed over the service period
as the services are provided or when the goods are consumed.
****
**Stock-Based Compensation**
The Company accounts for all stock-based compensation,
including stock options, performance-based stock options (PSOs), restricted stock units (RSUs), performance-based
RSUs (PSUs), warrants and other forms of equity issued as compensation for services, at fair value and recognizes stock-based
compensation expense for those equity awards, net of actual forfeitures, over the requisite service period, which is generally the vesting
period of the respective award.
The fair value of the Companys stock options
and PSOs on the date of grant is determined by a Black-Scholes option pricing model utilizing key assumptions such as stock price, expected
volatility and expected term. The Companys estimates of these assumptions are primarily based on the fair value of the Companys
stock, historical data, peer company data used in combination with the Companys data for volatility, and judgment regarding future
trends. The Company uses its publicly traded stock price as the fair value of its common stock.
The fair value of RSUs and PSUs are based on the
closing stock price on the grant date.
**Income Taxes**
The Company accounts for income taxes under the
asset and liability method pursuant to ASC 740, Accounting for Income Taxes, which requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method,
the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases
of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect
of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company recognizes deferred tax assets to
the extent that management believes that these assets are more likely than not to be realized in the future. In making such a determination,
management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences,
projected future taxable income, tax-planning strategies, and results of recent operations.
The Company provides reserves for potential payments
of taxes to various tax authorities related to uncertain tax positions. Amounts recognized are based on a determination of whether a tax
benefit taken by the Company in its tax filings or positions is more likely than not to be sustained on audit. The amount
recognized is equal to the largest amount that is more than 50% likely to be sustained. Interest and penalties associated with uncertain
tax positions are recorded as a component of income tax expense.
**Net Loss Per Share**
Basic net loss per share attributable to
common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss
attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive
common stock. For the purpose of this calculation, outstanding stock options, PSOs, RSUs, PSUs and stock warrants are considered potential
dilutive common stock and are excluded from the computation of net loss per share as their effect is anti-dilutive.
F-11
Accordingly, in periods in which the Company reports
a net loss, such losses are not allocated to such participating securities. In periods in which the Company reports a net loss attributable
to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable
to common stockholders, since dilutive common shares are not assumed to be outstanding when their effect is anti-dilutive.
****
**Emerging Growth Company Status**
The Company was an emerging growth company,
as defined in the Jumpstart Our Business Startups Act (the JOBS Act). Pursuant to the JOBS Act, an emerging growth company
is provided the option to adopt new or revised accounting standards that may be issued by Financial Accounting Standards Board (FASB)
or the SEC either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time
periods as private companies. The Companys emerging growth company status expired on December 31, 2025.
****
**Recently Issued Accounting Standards**
In December 2023, the FASB issued ASU 2023-07,*Segment
Reporting (Topic 280): Improvements to Reportable Segment Disclosures*, which requires all public entities, including public entities
with a single reportable segment, to provide in interim and annual periods one or more measures of segment profit or loss used by the
chief operating decision maker to allocate resources and assess performance. Additionally, the standard requires disclosures of significant
segment expenses and other segment items as well as incremental qualitative disclosures. The guidance in this update is effective for
fiscal years beginning after December 15, 2023, and interim periods after December 15, 2024. The Company adopted ASU 2023-07 on January
1, 2024. The adoption did not have a material impact on the Companys consolidated financial statements as of and for the year ended
December 31, 2024.
In December 2023, the FASB issued ASU 2023-09,
*Income Taxes (Topic 740): Improvements to Income Tax Disclosures*, which focuses on the rate reconciliation and income taxes paid.
ASU No. 2023-09 requires a public business entity (PBE) to disclose, on an annual basis, a tabular rate reconciliation using
both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature
and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes
paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total
income tax payments, net of refunds received. For PBEs, the new standard is effective for annual periods beginning after December 15,
2024, with early adoption permitted. An entity may apply the amendments in this ASU prospectively by providing the revised disclosures
for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments
retrospectively by providing the revised disclosures for all period presented. As of December 31, 2025, the Company adopted this new ASU
prospectively and it only impacts the Company's income tax disclosures with no impact to its operations, cash flows, or financial condition.
In November 2024, the FASB issued ASU 2024-03,
*Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of
Income Statement Expenses*. The amendments in this ASU clarify and enhance certain presentation and reporting requirements related
to expense disclosures. The guidance in ASU 2024-03 is effective for public business entities, including smaller reporting companies,
for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. Early adoption is permitted.
As of December 31, 2025, the Company has not yet adopted ASU 2024-03. The Company is currently evaluating the impact of ASU 2024-03 and
does not expect that adoption will have a material impact on its consolidated financial statements and related disclosures.
****
**3. SHORT-TERM INVESTMENTS**
Short-term investments consist of U.S. treasury
and U.S. government agency securities and are classified as available-for-sale.
Available-for-sale investments are reported at
fair value, with unrealized gains or losses reported in accumulated other comprehensive income. The fair values of our available-for-sale
cash and cash equivalents securities are Level 1 measurements, based on quoted prices from active
markets for identical assets. The fair values of our available-for-sale short-term investments securities are Level 2 measurements, based
on quoted prices from inactive markets for identical assets.
F-12
The amortized cost, gross unrealized holding gains,
gross unrealized holding losses and fair value of our marketable securities by type of security as of December 31, 2025 and 2024 was as
follows:
|
| |
December 31, 2025 | | |
|
| |
Amortized Cost | | |
Gross Unrealized Gains | | |
Gross Unrealized Losses | | |
Fair Value | | |
|
Assets: | |
| | |
| | |
| | |
| | |
|
U.S. treasury and U.S. government securities | |
| 7,219 | | |
| 4 | | |
| | | |
| 7,223 | | |
|
Total assets | |
$ | 7,219 | | |
$ | 4 | | |
$ | | | |
$ | 7,223 | | |
|
| |
December 31, 2024 | | |
|
| |
Amortized Cost | | |
Gross Unrealized Gains | | |
Gross Unrealized Losses | | |
Fair Value | | |
|
Assets: | |
| | |
| | |
| | |
| | |
|
U.S. treasury and U.S. government securities | |
| 39,310 | | |
| 59 | | |
| (9 | ) | |
| 39,360 | | |
|
Total assets | |
$ | 39,310 | | |
$ | 59 | | |
$ | (9 | ) | |
$ | 39,360 | | |
The aggregate fair value of available-for-sale
debt securities in an unrealized loss position as of December 31, 2025 and December 31, 2024 was $0 and $4,528, respectively. We did not
have any investments in a continuous unrealized loss position for more than twelve months as of December 31, 2025 or 2024. No allowance
for credit losses was recorded as of December 31, 2025 or 2024.
**4. PROPERTY AND EQUIPMENT,
NET**
Property and equipment, net consist of the following:
| | | Estimated | | December31, | | | December31, | | |
| | | Useful Lives | | 2025 | | | 2024 | | |
| Machinery and equipment | | 3 to 5 years | | $ | 3,177 | | | $ | 3,155 | | |
| Furniture and fixtures | | 3 to 7 years | | | 1,031 | | | | 1,031 | | |
| Computer hardware and software | | 3 years | | | 1,370 | | | | 1,351 | | |
| Leasehold improvements | | Lesser of lease term or asset life | | | 1,498 | | | | 4,416 | | |
| Total property and equipment | | | | | 7,076 | | | | 9,953 | | |
| Less accumulated depreciation | | | | | (5,808 | ) | | | (5,477 | ) | |
| Property and equipment, net | | | | $ | 1,268 | | | $ | 4,476 | | |
Depreciation expense for the years ended December
31, 2025 and 2024 was $1,425 and $2,107, respectively. In connection with the second amendment to the Companys operating lease
(see Note 9, Leases - Office Facility Lease Amendment), for the year ended December 31, 2025, the Company wrote off leasehold
improvements with a cost basis of $3,009 and accumulated depreciation of $1,094.
****
F-13
****
**5. FAIR
VALUE MEASUREMENTS**
The following fair value hierarchy table presents
information about the Companys financial assets and liabilities measured at fair value on a recurring basis and indicates the fair
value hierarchy of the inputs the Company utilized to determine such fair value:
|
| |
December 31, 2025 | | |
|
| |
QuotedPrices | | |
| | |
| | |
| | |
|
| |
in Active Markets for Identical Items | | |
Significant Other Observable Inputs | | |
Significant Unobservable Inputs | | |
| | |
|
| |
(Level 1) | | |
(Level 2) | | |
(Level 3) | | |
Total | | |
|
Assets: | |
| | |
| | |
| | |
| | |
|
Money market funds | |
$ | 594 | | |
$ | | | |
$ | | | |
$ | 594 | | |
|
U.S. treasury securities | |
| | | |
| 7,223 | | |
| | | |
| 7,223 | | |
|
Total assets | |
$ | 594 | | |
$ | 7,223 | | |
$ | | | |
$ | 7,817 | | |
|
| |
December 31, 2024 | | |
|
| |
QuotedPrices | | |
| | |
| | |
| | |
|
| |
in Active Markets for Identical Items | | |
Significant Other Observable Inputs | | |
Significant Unobservable Inputs | | |
| | |
|
| |
(Level 1) | | |
(Level 2) | | |
(Level 3) | | |
Total | | |
|
Assets: | |
| | |
| | |
| | |
| | |
|
Money market funds | |
$ | 709 | | |
$ | | | |
$ | | | |
$ | 709 | | |
|
U.S. treasury securities | |
| | | |
| 39,360 | | |
| | | |
| 39,360 | | |
|
Total assets | |
$ | 709 | | |
$ | 39,360 | | |
$ | | | |
$ | 40,069 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
|
Liabilities: | |
| | | |
| | | |
| | | |
| | | |
|
Warrant liabilities - public warrants | |
$ | 423 | | |
$ | | | |
$ | | | |
$ | 423 | | |
|
Warrant liabilities - private warrants | |
| | | |
| | | |
| 364 | | |
| 364 | | |
|
Total liabilities | |
$ | 423 | | |
$ | | | |
$ | 364 | | |
$ | 787 | | |
Money market
funds are classified as cash and cash equivalents. U.S. treasury securities are classified as cash equivalents when the date from initial
purchase to maturity is less than 90 days. The remaining investments are classified as short-term investments.
The carrying values of prepaid expenses,
right of use assets, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of the instruments.
The fair values of our short-term investments are Level 2 measurements as the US government securities are not the most recent offerings
and are therefore not traded in an active market.
The fair value of the Public Warrants is determined
from their trading value on public markets. The Public Warrants were suspended from trading on the NYSE on December 15, 2025 and were
subsequently delisted. As such, the value of the Public Warrants is $0 as of December 31, 2025. The fair value of the Private Placement
Warrants was calculated using the Black-Scholes option pricing model. The assumptions used in the model were the Companys stock
price, exercise price, expected term, volatility, interest rate, and dividend yield.
For the year ended December 31, 2025, the Company
recognized a gain to the statement of operations resulting from a decrease in the fair value of liabilities of $787 presented as a change
in fair value of warrant liabilities on the accompanying statement of operations.
For the year ended December 31, 2024, the Company
recognized a gain to the statement of operations resulting from a decrease in the fair value of liabilities of $43 presented as a change
in fair value of warrant liabilities on the accompanying statement of operations.
The Company estimates the volatility of its warrants
based on implied volatility from the Companys Public Warrants and from historical volatility of select peer companies common
stock that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon
yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants
is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company
anticipates remaining at zero.
F-14
The following table provides quantitative information
regarding the inputs used in determining the fair value of the Companys Level 3 liabilities:
|
Private Placement Warrants | |
As of December31, 2025 | | |
As of December 31, 2024 | | |
|
Volatility | |
| 215.0 | % | |
| 130.0 | % | |
|
Stock price | |
$ | 2.17 | | |
$ | 13.16 | | |
|
Expected life of warrants | |
| 0.7 years | | |
| 1.7 years | | |
|
Risk-free rate | |
| 3.5 | % | |
| 4.2 | % | |
|
Dividend yield | |
| 0.0 | % | |
| 0.0 | % | |
The following table shows the change in number
and value of the warrants since December 31, 2024:
|
| |
Public | | |
Private | | |
Total | | |
|
| |
Shares | | |
Value | | |
Shares | | |
Value | | |
Shares | | |
Value | | |
|
December 31, 2024 | |
| 17,248,601 | | |
$ | 423 | | |
| 10,400,000 | | |
$ | 364 | | |
| 27,648,601 | | |
$ | 787 | | |
|
Change in value | |
| | | |
$ | (423 | ) | |
| | | |
$ | (364 | ) | |
| | | |
$ | (787 | ) | |
|
December 31, 2025 | |
| 17,248,601 | | |
$ | | | |
| 10,400,000 | | |
$ | | | |
| 27,648,601 | | |
$ | | | |
****
**6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES**
The following table summarizes the Companys
components of accrued expenses and other current liabilities:
|
| |
As of December 31, | | |
|
| |
2025 | | |
2024 | | |
|
Compensation and benefits related | |
$ | 501 | | |
$ | 3,970 | | |
|
Professional services and other | |
| 555 | | |
| 1,313 | | |
|
Accrued expenses | |
$ | 1,056 | | |
$ | 5,283 | | |
****
**7. NOTE PAYABLE**
**Directors and Officers Liability Insurance**
****
On November 12, 2025, the
Company entered into an 11-month financing agreement for its directors and officers liability insurance in the amount of approximately
$576 that bears interest at an annual rate of 6.9%. Monthly payments, including principal and interest, are approximately $54 per month.
The Company paid $3 in interest expense as of December 31, 2025. The balance due under the financing agreement was $525 as of December
31, 2025.
**8. COMMITMENTS
AND CONTINGENCIES**
From time to time, the Company may face legal
claims or actions in the normal course of business. At each reporting date, the Company evaluates whether a potential loss amount or a
potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting
for contingencies. The Company expenses as incurred the costs related to its legal proceedings.
**9. LEASES**
The Company leases its office facility under a
noncancelable operating lease agreement that expires in March 2032. The operating lease includes variable lease payments, which are primarily
related to common area maintenance and taxes. Lease expense for the years ended December 31, 2025 and 2024 was $2,014 and $2,137, respectively.
F-15
*Office Facility Lease Amendment*
On October 17, 2025, the Company entered into
a second amendment of its lease for office space in Waltham, Massachusetts. The amendment eliminates a second building consisting of approximately30,000square
feet. The Company will maintain the original building consisting of approximately42,000square feet and the lease will continue
to expire inMarch 2032. The amended lease commenced on December 23, 2025. The Company accounted for the second amendment as a lease
modification under ASC 842. The lease modification resulted in a decrease in right-of-use assets and a decrease in lease liabilities,
resulting in a net gain of $941 which is recorded in operating expenses.
A summary of the components of lease costs for
the Company under ASC 842 for the years ended December 31, 2025 and 2024 were as follows:
|
| |
December 31, | | |
|
Lease costs | |
2025 | | |
2024 | | |
|
Operating lease costs | |
$ | 2,014 | | |
$ | 2,137 | | |
|
Variable lease costs | |
| 530 | | |
| 532 | | |
|
Total lease costs | |
$ | 2,544 | | |
$ | 2,669 | | |
Supplemental disclosure of cash flow information
related to leases for the years ended December 31, 2025 and 2024 was as follows:
|
| |
December 31, | | |
|
| |
2025 | | |
2024 | | |
|
| |
| | | |
| | | |
|
Cash paid for amounts included in the measurement of operating lease liabilities (operating cash flows) | |
$ | 2,465 | | |
$ | 2,286 | | |
The weighted-average remaining lease term and
discount rate are as follows:
| | | December 31, | | |
| | | 2025 | | | 2024 | | |
| | | | | | | | |
| Weighted-average remaining lease term (in years) | | | 6.3 | | | | 7.3 | | |
| Weighted-average discount rate | | | 13.36 | % | | | 8.74 | % | |
The following table presents the maturity of the
Companys operating lease liabilities as of December 31, 2025:
|
Years Ended December 31, | |
| | |
|
2026 | |
| 2,280 | | |
|
2027 | |
| 1,460 | | |
|
2028 | |
| 1,502 | | |
|
2029 | |
| 1,544 | | |
|
2030 | |
| 1,585 | | |
|
Thereafter | |
| 2,036 | | |
|
Total future minimum lease payments | |
$ | 10,407 | | |
|
Less imputed interest | |
| (3,142 | ) | |
|
Carrying value of lease liabilities | |
$ | 7,265 | | |
F-16
**10. INCOME TAXES**
The Companys entire pretax loss for the
years ended December 31, 2025 and 2024 were from its U.S. domestic operations.
On July 4, 2025, the United States enacted budget
reconciliation bill H.R. 1, referred to as the One Big Beautiful Bill Act ("OBBBA"). The Act includes a broad range of tax reform
provisions, including extending and modifying various provisions of the Tax Cuts and Jobs Act and expanding certain incentives in the
Inflation Reduction Act while accelerating the phase-out of other incentives. The legislation has multiple effective dates, with certain
provisions effective in 2025 and other provisions effective in 2026 and subsequent years. OBBBA provisions include the restoration of
the current deductibility for domestic research expenditures beginning in 2025, with transition options for previously capitalized amounts.
OBBBAs changes to the deductibility of domestic research and experimental expenditures decreased our deferred tax asset position
as a change in tax law is accounted for in the period of enactment.
The Company recorded a tax loss for the years
ended December 31, 2025 and 2024. Therefore, the Company recorded no current or deferred income tax expense or benefit for the years ended
December 31, 2025 and 2024.
A reconciliation of the Companys statutory
income tax rate to the Companys effective income tax rate is as follows:
|
| |
Year Ended
December 31, 2025 | | |
|
| |
Amount | | |
Percent | | |
|
Pretax loss | |
$ | (50,228 | ) | |
| | % | |
|
| |
| | | |
| | | |
|
Income at US statutory rate | |
| (10,548 | ) | |
| 21.0 | % | |
|
Tax credits | |
| (1,662 | ) | |
| 3.3 | % | |
|
Change in valuation allowance | |
| 10,572 | | |
| (21.0 | )% | |
|
Stock-based compensation | |
| 531 | | |
| (1.1 | )% | |
|
Other | |
| (144 | ) | |
| 0.3 | % | |
|
Deferred tax asset | |
| 1,251 | | |
| (2.5 | )% | |
|
Total | |
$ | | | |
| | % | |
|
| |
Year Ended
December31,2024 | | |
|
Income at US statutory rate | |
| 21.0 | % | |
|
State taxes, net of federal benefit | |
| 6.0 | % | |
|
Change in fair value of warrants | |
| | % | |
|
Stock-based compensation | |
| (3.0 | )% | |
|
Tax credits | |
| 4.0 | % | |
|
Change in valuation allowance | |
| (28.0 | )% | |
|
| |
| | % | |
The Company's effective tax rate includes the effects
of state and local income taxes, net of the federal income tax benefit, which are primarily attributable to Massachusetts, where the Company
has significant business activities. These states have higher tax rates compared to other jurisdictions where the Company operates, and
together, they account for more than half of the Company's total state tax expense.
The Companys deferred tax assets and (liabilities)
are as follows:
|
| |
Year Ended December31, | | |
|
| |
2025 | | |
2024 | | |
|
Deferred Tax Assets: | |
| | |
| | |
|
Net operating loss carryforwards | |
$ | 56,377 | | |
$ | 44,436 | | |
|
Tax credits | |
| 17,416 | | |
| 14,919 | | |
|
Stock based compensation | |
| 2,670 | | |
| 2,868 | | |
|
Capitalized R&D expenses | |
| 26,809 | | |
| 26,273 | | |
|
Accruals and reserves | |
| 71 | | |
| 803 | | |
|
Depreciation and amortization | |
| 282 | | |
| 238 | | |
|
Lease liability | |
| 1,955 | | |
| 3,732 | | |
|
Total deferred tax assets before valuation allowance | |
| 105,580 | | |
| 93,269 | | |
|
Valuation allowance | |
| (104,029 | ) | |
| (90,410 | ) | |
|
Net deferred tax assets | |
$ | 1,551 | | |
$ | 2,859 | | |
|
Deferred Tax Liabilities: | |
| | | |
| | | |
|
Right of use asset | |
| (1,551 | ) | |
| (2,859 | ) | |
|
Total deferred tax liabilities | |
| (1,551 | ) | |
| (2,859 | ) | |
|
Net deferred tax liability | |
$ | | | |
$ | | | |
F-17
The deferred tax assets consist principally of
net operating loss carryforwards and research and development tax credits. The future realization of the tax benefits from existing temporary
differences and tax attributes ultimately depends on the existence of sufficient taxable income. In assessing the realization of the deferred
tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Management considers the scheduled reversal of projected future taxable income, and tax planning strategies in making this assessment.
After consideration of all available evidence, both positive and negative, the Company has determined that it was more likely than not
that the Company would not recognize the benefits of its federal and state net deferred tax assets. Accordingly, the Company has a full
valuation allowance against the deferred tax assets as of December 31, 2025 and 2024. The change in the valuation allowance for the years
ended December 31, 2025 and 2024 was an increase of $13.6 million and $17.5 million, respectively.
The Company has incurred losses since inception
that would generally be available to reduce future taxable income. As of December 31, 2025, the Company had U.S. federal net operating
loss carryforwards of $209.9 million which includes $2.8 million that expire at various dates from 2034 through 2037, and $207.1 million
that have an unlimited carryforward period. As of December 31, 2025, the Company had state net operating loss carryforwards of $195.1
million which expire at various dates from 2035 through 2045.
As of December 31, 2025, the Company had U.S.
federal research and development tax credits of $12.0 million, which begin to expire in 2035. As of December 31, 2025, the Company had
state research and development tax credits of $6.9 million, which begin to expire in 2035.
The future realization of the Companys
net operating loss carryforwards and other tax attributes may also be limited by the change in ownership rules under Code Section 382.
Under Section 382 of the Code, if a corporation undergoes an ownership change (as defined in Section 382 of the Code), the
corporations ability to utilize its net operating loss carryforwards and other tax attributes to offset income may be limited.
The Company has not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership
changes.
The Company files income tax returns in the U.S.
federal jurisdiction and in any state and local jurisdiction in which it operates. The Company is subject to tax examination by various
taxing authorities. The Company is not currently under examination and is not aware of any issues under review that could result in significant
payments, accruals or material deviation from its tax positions. To the extent the Company has tax attribute carryforwards, the tax years
in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service and state and local tax authorities
to the extent utilized in a future period. As of December 31, 2025, the tax years from 2019 to present remain open to examination by relevant
taxing jurisdictions to which the Company is subject. However, to the extent the Company utilizes net operating losses from years prior
to 2019, the statute remains open to the extent of the net operating losses or other credits that are utilized.
The calculation and assessment of the Companys
tax exposures generally involve the uncertainties in the application of complex tax laws and regulations for federal, state and local
jurisdictions. A tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be
sustained upon examination, including resolutions of any related appeals or litigation, on the basis of the technical merits. As of December
31, 2025, the Company has not recorded any liabilities related to uncertain tax positions in its financial statements. Similarly, the
Company has not accrued any interest and penalties related to uncertain tax positions as of December 31, 2025. The Company recognizes
accrued interest and penalties, if any, related to uncertain tax positions in tax expense in its financial statements.
F-18
**11. STOCKHOLDERS EQUITY AND STOCK-BASED
COMPENSATION**
****
**Reverse Stock Split**
At the Companys annual shareholder
meeting held on June 10, 2024, the Companys shareholders granted the Companys board of directors (the Board of
Directors) the discretion to effect a reverse stock split of the Companys issued and outstanding Class A and Class B
common stock through an amendment (the Certificate of Amendment) to the Companys Certificate of Incorporation.
The Board of Directors approved effecting a 1-for-30 reverse stock split and authorized the filing of the Certificate of Amendment
for the Reverse Split with the Secretary of State of the State of Delaware. The Reverse Split became effective in accordance with
the terms of the Certificate of Amendment on June 12, 2024. The Certificate of Amendment did not change the number of authorized
shares of common stock or the par value. All references in these financial statements to shares, share prices, exercise prices, and
other per share information in all periods have been adjusted, on a retroactive basis, to reflect the Reverse Split.
****
**Authorized Shares**
At December31, 2025, the Companys
authorized shares consisted of300,000,000shares of Class A common stock, $0.0001par value; 22,000,000shares of
Class B common stock, $0.0001par value; and1,000,000shares of preferred stock, par value of $0.0001per share.
****
**Preferred Stock**
Preferred stock shares authorized may be issued
from time to time in one or more series, with each series terms, voting, dividend, conversion, redemption, liquidation and other rights
to be determined by the Board of Directors at the time of issuance. As of December 31, 2025, there were no shares of preferred stock issued
and outstanding.
****
**Registered Direct Offering and Concurrent Private Placement**
****
On October 7, 2025, the Company entered into a
securities purchase agreement (the Purchase Agreement) with an institutional investor (the Purchaser), pursuant
to which the Company issued to the Purchaser (i) in a registered direct offering,588,300shares of the Companys Class
A common stock and pre-funded warrants (the Pre-Funded Warrants) to purchase up to561,700shares of Class A common
stock (the Pre-Funded Warrant Shares), and (ii) in a concurrent private placement, Series A common warrants to purchase
an aggregate of1,150,000shares of Class A common stock and Series B common warrants (collectively with the Series A common
warrants, the Common Warrants) to purchase an aggregate of1,150,000shares of Class A common stock, in each case
with an exercise price of $5.10.
The offerings closed on October 9, 2025 and the
Company received net proceeds of approximately $5.2million, excluding any proceeds that may be received upon the exercise of the
Common Warrants and after deducting placement agent fees and other offering expenses payable by the Company. The Pre-Funded Warrants became
exercisable immediately upon issuance, have an exercise price of $0.0001and will expire upon full exercise of all Pre-Funded Warrants.
As of December 31, 2025, all of the Pre-Funded Warrants have been exercised. The Common Warrants are exercisable commencing on January
9, 2026, the effective date of stockholder approval, for their exercise and will expire on the fifth anniversary of the date of the stockholder
approval.
F-19
****
**Warrants**
The Companys outstanding warrants include
Public Warrants, which were issued as one-half of a redeemable Public Warrant per unit issued in D8s initial public offering on
July 17, 2020, and Private Placement Warrants sold in a private placement to D8s sponsor (the Sponsor) in connection
with the closing of the initial public offering and in connection with the conversion of D8 working capital loans. As of December 17,
2025, the Public Warrants have been removed from the NYSE.
As of December31, 2025, the Company had
17,248,601 Public Warrants exercisable for 574,953 shares of Class A common stock, and 10,400,000 Private Placement Warrants exercisable
for 346,666 shares of Class A common stock outstanding.
Thirty (30) whole warrants are exercisable for
one share of Class A common stock at an exercise price of $345.00 per share. If and when the warrants become redeemable by the Company,
the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all
applicable state securities laws. The Company filed a registration statement with the SEC that was declared effective as of October 22,
2021 covering the shares of Class A common stock issuable upon exercise of the warrants and is maintaining a current prospectus relating
to those shares of Class A common stock until the warrants expire, are exercised or redeemed, as specified in the warrant agreement.
The warrants will expire on September 17, 2026
or earlier upon redemption or liquidation.
*Redemption of warrants when the price per share
of Class A common stock equals or exceeds $540.00.*The Company may call the Public Warrants for redemption:
**
| | | in whole and not in part; | |
| | | | |
| | | at a price of $0.30 per warrant; | |
| | | | |
| | | upon a minimum of 30 days prior written notice of redemption; and | |
| | | | |
| | | if, and only if, the last reported sale price of Class A common stock equals or exceeds $540.00 per share (as adjusted) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders. | |
*Redemption of warrants when the price per share
of Class A common stock equals or exceeds $300.00*. The Company may call the Public Warrants for redemption:
| | | in whole and not in part; | |
| | | | |
| | | at a price of $3.00 per warrant; | |
| | | | |
| | | upon a minimum of 30 days prior written notice of redemption;providedthat holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares based on the redemption date and the fair market value of the Companys Class A common stock; and | |
| | | | |
| | | if, and only if, the last reported sale price of Class A common stock shares equals or exceeds $300.00 per share (as adjusted) for any 20 trading days within a 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders. | |
The Private Placement Warrants are identical to
the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of the Private
Placement Warrants, so long as they are held by the Sponsor or its permitted transferees, (i) are not redeemable by the Company, (ii)
may be exercised by the holders on a cashless basis and (iii) are entitled to registration rights. If the Private Placement Warrants are
held by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company
and exercisable by the holders on the same basis as the Public Warrants.
F-20
****
**Common Stock**
****
*Classes of Common Stock*
Class A common stock receives one vote per share.
Subject to preferences that may be applicable to any outstanding preferred stock, the holders of shares of Class A common stock are entitled
to receive ratably such dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available
for such purposes. In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of
Class A common stock are entitled to share ratably in all assets remaining after payment of our debts and other liabilities, subject to
prior distribution rights of preferred stock or any class or series of stock having a preference over the Class A common stock, then outstanding,
if any.
Class B common stock receives 20 votes per
share and converts into Class A at a one-to-one conversion rate per share. Holders of Class B common stock will share ratably
together with each holder of Class A common stock, if and when any dividend is declared by the Board of Directors. Holders of Class
B common stock have the right to convert shares of their Class B common stock into fully paid and non-assessable shares of Class A
common stock, on a one-to-one basis, at the option of the holder at any time. Upon the occurrence of certain events, holders of
Class B common stock automatically convert into Class A common stock, on a one-to-one basis. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of our affairs, the holders of Class B common stock are entitled to share ratably
in all assets remaining after payment of our debts and other liabilities, subject to prior distribution rights of preferred stock or
any class or series of stock having a preference over the Class B common stock, then outstanding, if any.
**Stock Based Compensation**
*2021 Plan* In connection
with the closing of the Business Combination, the Companys stockholders approved the Vicarious Surgical Inc. 2021 Equity Incentive
Plan (the 2021 Plan), pursuant to which 219,667 shares of Class A common stock were reserved for future equity grants under
the 2021 Plan and 393,136 shares of Class A common stock were reserved for issuance under the 2021 Plan upon exercise of outstanding option
awards assumed by the Company in connection with the Business Combination. On June 1, 2022, the Companys stockholders approved
an amendment to the 2021 Plan, which provides for the granting of up to 219,667 additional shares of Class A common stock under the 2021
Plan as determined by the Board of Directors. On June 1, 2023, the Companys stockholders approved an amendment to the 2021 Plan,
which provides for the granting of up to 232,361 additional shares of Class A common stock under the 2021 Plan as determined by the Board
of Directors. On June 10, 2024, the Companys stockholders approved an amendment to the 2021 Plan, which provides for the granting
of up to 166,667 additional shares of Class A common stock under the 2021 Plan as determined by the Board of Directors. On June 27, 2025,
the Companys stockholders approved an amendment to the 2021 Plan, which provides for the granting of up to 311,046 additional shares
of Class A common stock under the 2021 Plan as determined by the Board of Directors.
The 2021 Plan provides for the granting of incentive
and nonqualified stock options, restricted stock, and other stock-based awards to employees, officers, directors, consultants, and advisors
of the Company. Under the 2021 Plan, incentive and nonqualified stock options may be granted at not less than 100% of the fair market
value of the Companys common stock on the date of grant. If an incentive stock option is granted to an individual who owns more
than 10% of the combined voting power of all classes of the Companys capital stock, the exercise price may not be less than 110%
of the fair market value of the Companys common stock on the date of grant and the term of the option may not be longer than five
years. PSOs include threshold, target, and maximum achievement levels based on the achievement of specific performance measures. PSOs
are subject to forfeiture if applicable performance measures are not attained. The expense is recognized over the vesting period, based
on the best available estimate of the number of share units expected to vest. Estimates are subsequently revised if there is any indication
that the number of share units expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognized
in the current period. In June 2024, 123,510 PSOs were granted and represent the maximum achievement levels based on the achievement of
specific performance measures relating to the Companys clinical trial advancement. As of December 31, 2025, there were 29,718 outstanding
PSOs.
The 2021 Plan authorizes the Company to issue
up to 1,542,544 shares of common stock (either Class A or Class B) pursuant to awards granted under the 2021 Plan. The Board of Directors
administers the 2021 Plan and determines the specific terms of the awards. The contractual term of options granted under the 2021 Plan
is not more than 10 years. The 2021 Plan will expire on April 13, 2031 or an earlier date approved by a vote of the Companys stockholders
or Board of Directors.
The Company periodically issues RSUs of Class
A common stock to certain employees and members of the Board of Directors. The RSUs generally vest over a four-year period. PSUs are issued
in the form of performance share units. PSUs include threshold, target, and maximum achievement levels based on the achievement of specific
performance measures. PSUs are subject to forfeiture if applicable performance measures are not attained. The expense is recognized over
the vesting period, based on the best available estimate of the number of share units expected to vest. Estimates are subsequently revised
if there is any indication that the number of share units expected to vest differs from previous estimates. Any cumulative adjustment
prior to vesting is recognized in the current period. As of December 31, 2025, there are no outstanding PSUs.
F-21
The activity for common stock subject to vesting
is as follows:
|
| |
Shares Subject to Vesting | | |
Weighted Average Grant Date Fair Value | | |
|
Balance of unvested shares - January 1, 2025 | |
| 73,922 | | |
$ | 97.32 | | |
|
Vested | |
| (36,541 | ) | |
$ | 114.65 | | |
|
Forfeited | |
| (13,740 | ) | |
$ | 80.56 | | |
|
Balance of unvested shares - December 31, 2025 | |
| 23,641 | | |
$ | 80.27 | | |
Total stock-based compensation related to RSUs
during the years ended December 31, 2025 and 2024, was $4,027 and $5,799, respectively. As of December 31, 2025, the total unrecognized
stock-based compensation expense related to unvested RSUs aggregated $1,603 and is expected to be recognized over a weighted average period
of 0.9 years. The aggregate intrinsic value of the RSUs vested during the year ended December 31, 2025 was $291. The aggregate intrinsic
value of RSUs outstanding at December 31, 2025 was $51.
The Company grants stock options to employees
at exercise prices deemed by the Board of Directors to be equal to the fair value of the Class A common stock at the time of grant. The
Company uses its publicly traded stock price as the fair value of its common stock. For options with a service condition, the fair value
of the Companys stock options on the date of grant is determined by a Black-Scholes pricing model utilizing key assumptions such
as common stock price, risk-free interest rate, dividend yield, expected volatility and expected life. The Companys estimates of
these assumptions are primarily based on the fair value of the Companys stock, historical data and judgement regarding future trends.
During the years ended December 31, 2025 and 2024,
the Company granted options to purchase 763,483 and 373,304 shares, respectively of Class A common stock, to employees and consultants
with a fair value of $4,922 and $2,236, respectively, calculated using the Black-Scholes option-pricing model with the following assumptions:
|
| |
Year Ended
December 31, |
| |
|
| |
2025 | |
2024 |
| |
|
Risk-free interest rate | |
3.61% - 4.32 | % |
3.71% - 4.46 |
% | |
|
Expected term (in years) | |
5.50 - 6.08 | |
5.81 - 6.31 |
| |
|
Dividend yield | |
| % |
|
% | |
|
Expected volatility | |
102.44% - 103.32 | % |
92.78% - 101.45 |
% | |
The risk-free interest rate assumption is based
upon observed interest rates appropriate for the term of the related stock options. The expected life of employee and non-employee stock
options was calculated using the average of the contractual term of the option and the weighted-average vesting period of the option.
The Company does not pay a dividend and is not expected to pay a dividend in the foreseeable future.
As of December 31, 2025, there was $4,818 of total
gross unrecognized stock-based compensation expense related to unvested stock options. The costs remaining as of December 31, 2025 are
expected to be recognized over a weighted-average period of 3.0 years.
Total stock-based compensation expense related
to all of the Companys stock-based awards granted is reported in the statements of operations as follows:
|
| |
Year Ended December 31, | | |
|
| |
2025 | | |
2024 | | |
|
Research and development | |
$ | 2,971 | | |
$ | 2,397 | | |
|
Sales and marketing | |
| 382 | | |
| 1,369 | | |
|
General and administrative | |
| 4,782 | | |
| 8,138 | | |
|
Total | |
$ | 8,135 | | |
$ | 11,904 | | |
F-22
The Company plans to generally
issue previously unissued shares of common stock for the exercise of stock options.
There were416,441shares available
for future equity grants under the 2021 Plan at December31, 2025.
The option activity for the year ended December31,
2025, is as follows:
| | | | | | Weighted Average Exercise | | | Weighted Average Remaining Contractual Life | | |
| | | Options | | | Price | | | (in years) | | |
| | | | | | | | | | | |
| Options outstanding at January 1, 2025 | | | 709,939 | | | $ | 54.49 | | | | 8.13 | | |
| Granted | | | 763,483 | | | | 7.91 | | | | | | |
| Exercised | | | (11,721 | ) | | | 5.71 | | | | | | |
| Forfeited, expired, or cancelled | | | (405,952 | ) | | | 32.19 | | | | | | |
| Options outstanding, vested and expected to vest at December 31, 2025 | | | 1,055,749 | | | $ | 29.92 | | | | 7.29 | | |
The weighted average grant date fair value of
options granted during the years ended December 31, 2025 and 2024 was $6.45 and $5.99, respectively. The aggregate intrinsic value of
options exercised during the years ended December 31, 2025 and 2024, was $42 and $10, respectively. The aggregate intrinsic value of options
outstanding at December 31, 2025 was $0.
**Common Stock Reserved for Future Issuance**
As of December 31, 2025 and 2024, the Company
has reserved the following shares of Class A Common Stock for future issuance (in thousands):
|
|
|
As of December 31, |
| |
|
|
|
2025 |
|
|
2024 |
| |
|
Common stock options outstanding |
|
|
1,056 |
|
|
|
710 |
| |
|
Restricted stock units outstanding |
|
|
24 |
|
|
|
74 |
| |
|
Shares available for issuance under the 2021 Plan |
|
|
416 |
|
|
|
152 |
| |
|
Public Warrants |
|
|
575 |
|
|
|
575 |
| |
|
Private Placement Warrants |
|
|
347 |
|
|
|
347 |
| |
|
Common Warrants |
|
|
2,300 |
|
|
|
|
| |
|
Total shares of authorized common stock reserved for future issuance |
|
|
4,718 |
|
|
|
1,858 |
| |
****
**12.
EMPLOYEE RETIREMENT PLAN**
The Company maintains the Vicarious Surgical Inc.
401(k)plan, under Section401(k)of the Internal Revenue Code of 1986, as amended, covering all eligible employees. Employees
of the Company may participate in the 401(k)plan after one month of service and must be 18 years of age or older. The Company offers
company-funded matching contributions which totaled $740 and $853 for the years ended December 31, 2025 and 2024, respectively.
****
**13.
NET LOSS PER SHARE**
The Company computes basic loss per share using
net loss attributable to Company common stockholders and the weighted-average number of common shares outstanding during each period.
Diluted loss per share includes shares issuable upon exercise of outstanding stock options and stock-based awards where the conversion
of such instruments would be dilutive.
|
| |
For the Years Ended
December 31, | | |
|
| |
2025 | | |
2024 | | |
|
Numerator for basic and diluted net loss per share: | |
| | |
| | |
|
Net loss | |
$ | (50,182 | ) | |
$ | (63,223 | ) | |
|
| |
| | | |
| | | |
|
Denominator for basic and diluted net loss per share: | |
| | | |
| | | |
|
Weighted average shares | |
| 6,130,652 | | |
| 5,885,589 | | |
|
| |
| | | |
| | | |
|
Net loss per share of Class A and Class B common stock basic and diluted | |
$ | (8.19 | ) | |
$ | (10.74 | ) | |
F-23
For the year ended December 31, 2025, 2,001,010
shares of the Companys common stock were excluded from the calculation of diluted earnings per share because the exercise prices
of the stock options and warrants were greater than or equal to the average price of the common shares and were therefore anti-dilutive.
For the year ended December 31, 2024, 1,705,481 shares of the Companys common stock were excluded from the calculation of diluted
earnings per share because the exercise prices of the stock options and warrants were greater than or equal to the average price of the
common shares and were therefore anti-dilutive.
**14.
SEGMENT REPORTING**
****
We operate as one operating segment, and therefore
one reportable segment. We manage business activities on a consolidated basis through the development of the surgical robotic system.
Our determination that we operate as a single operating segment is consistent with the financial information regularly reviewed by the
chief operating decision maker for purposes of evaluating performance, allocating resources, setting incentive compensation targets, and
planning and forecasting for future periods. Our chief operating decision maker (CODM) is the Chief Executive Officer.
For our segment, the CODM uses net loss, that
is reported on the consolidated statements of operations as consolidated net loss, to allocate resources (including employees, property,
and financial resources), predominantly during the annual budget and forecasting process. The CODM also uses consolidated net loss, along
with non-financial inputs and qualitative information, to evaluate our performance, establish compensation, monitor budget versus actual
results, and decide the level of investment in our various operating activities and other capital allocation activities. The measure of
segment assets is reported on the consolidated balance sheet as total consolidated assets. The accounting policies for our single operating
segment are the same as those described in the summary of significant accounting policies.
|
| |
Year Ended December 31, | | |
|
| |
2025 | | |
2024 | | |
|
Research and development | |
$ | 33,601 | | |
$ | 40,155 | | |
|
Sales and marketing | |
| 2,171 | | |
| 4,525 | | |
|
General and administrative | |
| 15,196 | | |
| 21,875 | | |
|
Other segment items | |
| (786 | ) | |
| (3,332 | ) | |
|
Loss before income taxes | |
$ | 50,182 | | |
$ | 63,223 | | |
**15.
SUBSEQUENT EVENTS**
Management has evaluated subsequent events occurring
through the date that these financial statements were issued and determined that except as set forth below, no subsequent events have
occurred that would require recognition or disclosure in these financial statements.
**NYSE Suspension and Delisting Proceedings**
****
On March 3, 2026, the NYSE notified the Company that the NYSE had determined
to (A) immediately suspend trading in the Companys Class A common stock due to a determination that the Company had fallen below
the NYSEs continued listing standard requiring listed companies to maintain an average global market capitalization over a consecutive
30 trading day period of at least $15,000,000 pursuant to Section 802.01B of the NYSE Listed Company Manual, and (B) commence proceedings
to delist the Class A common stock. The Company will not appeal the delisting determination.
The NYSE has indicated that it will apply to the Securities and Exchange
Commission to delist the Class A common stock by filing a Form 25.
The Company received approval of its application to have the Class
A common stock quoted on the OTCID market tier (OTCID) operated by the OTC Markets Group, Inc. The Class A common stock
commenced quotation on the OTCID at the open of business on March 4, 2026 under the trading symbol of RBOT.
F-24