As filed with the U.S. Securities and Exchange Commission on February 4, 2026.

Registration Statement No. 333-      ​

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM F-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

LIBERTY DEFENSE HOLDINGS, LTD.

(Exact name of registrant as specified in its charter)​

187 Ballardvale Street, Suite 110
Wilmington, Massachusetts 01887
(888) 617-7226

(Address, including zip code and telephone number, including area code, of registrant’s principal executive offices)

William Frain
187 Ballardvale Street, Suite 110
Wilmington, Massachusetts 01887
(888) 617-7226

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act.

Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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 7(a)(2)(B) of the Securities Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the United States Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information contained in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED FEBRUARY 4, 2026

PRELIMINARY PROSPECTUS

      Common Shares

LIBERTY DEFENSE HOLDINGS, LTD.

This is the initial public offering in the United States of        common shares, no par value (each, a “Common Share” and collectively, “Common Shares”), of Liberty Defense Holdings, Ltd., a British Columbia corporation (the “Company”), in a firm commitment underwritten offering. It is estimated that the initial public offering price will be between US$      and US$      per Common Share.

Our Common Shares are currently listed on the TSX Venture Exchange (the “TSXV”) under the symbol “SCAN,” quoted on the OTCQB® Venture Market (the “OTCQB”) under the symbol of “LDDFF” and listed on the Frankfurt Stock Exchange (the “FSE”) under the symbol of “E30.” We have applied to list the Common Shares being offered hereby on the Nasdaq Capital Market (“Nasdaq”) under the symbol “LDHL.” No assurance can be given that our application will be approved. It is a condition precedent to the underwriter’s obligation to purchase the Common Shares being offered in this offering that Nasdaq approve the listing of our Common Shares. Accordingly, if Nasdaq does not approve the listing of our Common Shares, we will not proceed with this offering.

In connection with our application to list our Common Shares on Nasdaq, we intend to effect a one for        (1-for-  ) reverse share split of our Common Shares (the “Reverse Split”) prior to the effective date of the registration statement of which this prospectus forms a part. Accordingly, at the effective time of the Reverse Split, each         of our outstanding Common Shares will be converted into and thereafter represent one issued and outstanding Common Share. No fractional shares will be issued in connection with the Reverse Split. All fractional shares created by the Reverse Split will be rounded to the nearest whole number of Common Shares, with any fractional interest entitling holders thereof to receive one whole Common Share. Unless otherwise noted, the historical share and per share information in this prospectus does not reflect the Reverse Split.

On January 30, 2026, the closing price of our Common Shares was C$0.155 on the TSXV, US$0.1131 on the OTCQB and €0.0660 on the FSE.

We have assumed an initial public offering price of US$      per Common Share, the midpoint of the range set forth above. The actual initial public offering price per Common Share will not be determined by any particular formula but will rather be determined through negotiations between us and the underwriter at the time of pricing. Therefore, the assumed initial public offering price used throughout this prospectus may not be indicative of the actual initial public offering price.

We are an “emerging growth company” and a “foreign private issuer” as defined under United States federal securities laws and may elect to comply with reduced public company reporting requirements. See “Implications of Being an Emerging Growth Company” beginning on page 8 and “Foreign Private Issuer Status” beginning on page 9 of this prospectus for more information.

Investing in our securities involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors” beginning on page 17 to read about factors you should consider before buying our securities.

Neither the United States Securities and Exchange Commission nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

(1)

See “Underwriting” on page 116 for additional information regarding underwriting compensation.

​

We have granted a 30-day option to the underwriter, exercisable one or more times in whole or in part, to purchase up to an additional        Common Shares, representing 15% of the Common Shares sold in this offering, at the initial public offering price, less the underwriting discounts payable by us, solely to cover over-allotments, if any.

The underwriter expects to deliver the Common Shares to the investors through the facilities of the Depository Trust Company on or about       , 2026.

Benchmark, a StoneX Company

The date of this prospectus is       , 2026.

 

TABLE OF CONTENTS

 

3

 

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement on Form F-1 that we filed with the United States Securities and Exchange Commission (the “SEC”). You should read this prospectus carefully. This prospectus contains important information you should consider when making your investment decision.

Neither we nor the underwriter has authorized anyone to provide any information or to make any representations other than the information contained in this prospectus, any amendment or supplement to this prospectus or in any free writing prospectus prepared by or on our behalf or to which we may have referred you. We and the underwriter take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the underwriter have not authorized any other person to provide you with different or additional information. Neither we nor the underwriter is making an offer to sell the Common Shares in any jurisdiction where the offer or sale is not permitted. This offering is being made in the United States and elsewhere solely on the basis of the information contained in this prospectus. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of the Common Shares. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus. This prospectus is not an offer to sell or the solicitation of an offer to buy the Common Shares in any circumstances under which such offer or solicitation is unlawful.

For investors outside the United States: Neither we nor the underwriter has done anything that would permit this offering or the possession or distribution of this prospectus in any jurisdiction where action for those purposes is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, this offering of Common Shares and the distribution of this prospectus outside the United States.

We further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to the registration statement of which this prospectus is a part were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants may have been accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.

Except as otherwise indicated, references in this prospectus to the “Company,” “we,” “us” and “our” refer to Liberty Defense Holdings, Ltd. and its consolidated subsidiaries.

Enforceability of Civil Liabilities

We are incorporated under the laws of British Columbia. Some of our directors and officers, and the experts named in this prospectus, reside outside the United States, and all or a substantial portion of their assets and a portion of our assets are located outside of the United States. We have appointed an agent for service of process in the United States, but it may be difficult for shareholders who reside in the United States to effect service within the United States upon those directors, officers and experts who are not residents of the United States. It may also be difficult for shareholders who reside in the United States to realize in the United States upon judgments of courts of the United States predicated upon our civil liability and the civil liability of our directors, officers and experts under the United States federal securities laws. Furthermore, because some of our directors and officers reside outside the United States and all or a substantial portion of their assets and a portion of our assets are located outside the United States, any judgment obtained in the United States against us or any of our directors and officers may not be collectible within the United States. There can be no assurance that United States investors will be able to enforce against us, our directors and officers or certain experts named herein who are residents of Canada or other countries outside the United States, any judgments in civil and commercial matters, including judgments under the federal securities laws.

Market, Industry and Other Data

This prospectus contains estimates, projections and other information concerning our industry, our business, and the markets for our products. Information that is based on estimates, forecasts, projections,

 

4

 

market research or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from our own internal estimates and research as well as from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry and general publications, government data, and similar sources.

In addition, assumptions and estimates of our and our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Forward-Looking Statements.”

Trademarks

We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus also contains additional trademarks, trade names and service marks belonging to other companies. Solely for convenience, trademarks, trade names and service marks referred to in this prospectus may appear without the ®, ™ or SM symbols, but such references are not intended to indicate, in any way, that we or the applicable licensor to these trademarks, trade names and service marks will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

Presentation of Financial Information

Unless otherwise indicated, the audited consolidated financial statements and related notes included in this prospectus have been prepared in accordance with the International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). None of the audited consolidated financial statements in this prospectus were prepared in accordance with U.S. generally accepted accounting principles. Our functional currency is the Canadian dollar, which is the currency of the primary economic environment in which we operate. However, our consolidated financial statements are presented in U.S. dollars.

Exchange Rates

In this prospectus, all dollar amounts referenced, unless otherwise indicated, are expressed in U.S. dollars and are referred to as “US$.” Canadian dollars are referred to as “C$.” The following table sets out, for the periods indicated, the high, low, and period end indicative rates of exchange for US$1.00 expressed in Canadian dollars as published by the Bank of Canada.

On January 30, 2026, the daily average exchange rate for Canadian dollars in terms of the U.S. dollar, as quoted by the Bank of Canada, was US$1.00 = C$1.3562.

 

5

 

FORWARD-LOOKING STATEMENTS

Certain statements contained in this prospectus constitute forward-looking information or forward-looking statements under applicable securities laws. These statements relate to future events or to our future performance, business prospects or opportunities. All statements other than statements of historical fact may be forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “seek,” “anticipate,” “plan,” “continue,” “estimate,” “expect,” “may,” “will,” “project,” “predict,” “forecast,” “potential,” “targeting,” “intend,” “could,” “might,” “should,” “believe” and similar expressions) are not statements of historical fact and may be “forward-looking statements.”

Examples of forward-looking information in this prospectus include, but are not limited to, statements in respect of: the acceptance by our customers and the marketplace of new technologies and solutions; our ability to attract new customers; our ability to attract and retain personnel; our competitive position and our expectations regarding competition; our ability to comply with our debt service obligations and related covenants; anticipated trends and challenges in our business and the markets in which we operate; development, production, commercialization and sales of our HEXWAVE™ product; maintenance, development and commercialization of existing third party partner relationships; regulatory changes; and our ability to achieve the various development and commercial milestones within our estimated timeframe or at all.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. These forward-looking statements involve risks and uncertainties relating to, among others: limited operating history; history of losses; negative cash flow for the foreseeable future; interruptions to or failures of our infrastructure; uncertainties and assumptions in our revenue forecasts; changes in technology and evolving standards of the security industries; defects or disruptions in our proposed products and services; risks related to loss or infringement of our intellectual property or our infringement of intellectual property belonging to third parties; our dependence on key personnel and the risk of conflicts of interest; competition in our industry; market price volatility of the Common Shares; global economic, political and financial market conditions; failure to manage our growth successfully; our ability to pay dividends; third‑party credit risks; currency exchange rate fluctuations; risks related to future dilution and liquidity of the Common Shares; reliance on third parties; reliance on a limited number of products, reliance on development of a prototype; failure to raise additional capital; reliance on permits, certifications and licenses; and failure to meet timelines.

We believe that the expectations reflected in any forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this prospectus should not be unduly relied upon. These statements speak only as of the date of this prospectus and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law. Actual results may differ materially from those expressed or implied by such forward-looking statements.

 

6

 

7

 

8

 

9

 

​

10

 

​

11

 

​

12

 

​

13

 

14

 

​

​

​

Years ended December 31, (Audited)

​

Consolidated Statements of Loss and Comprehensive Loss:

​

​

2024 US$

​

​

2023 US$

​

Revenue

​

​

​

​

​

​

​

​

​

​

​

​

​

HEXWAVE™ revenue

​

​

​

​

1,013,546

​

​

​

​

​

120,000

​

​

Contract revenue

​

​

​

​

1,425,000

​

​

​

​

​

1,372,557

​

​

Total revenue

​

​

​

​

2,438,546

​

​

​

​

​

1,492,557

​

​

Cost of revenue

​

​

​

​

​

​

​

​

​

​

​

​

​

HEXWAVE™ cost of revenue

​

​

​

​

2,033,498

​

​

​

​

​

1,546,040

​

​

Contract cost of revenue

​

​

​

​

2,081,971

​

​

​

​

​

1,163,211

​

​

Total cost of revenue

​

​

​

​

4,115,469

​

​

​

​

​

2,709,251

​

​

Gross loss

​

​

​

​

(1,676,923)

​

​

​

​

​

(1,216,694)

​

​

Engineering, Research and Development and General and Administrative Expenses

​

​

​

​

5,756,941

​

​

​

​

​

7,890,649

​

​

Other expenses (income)

​

​

​

​

1,411,299

​

​

​

​

​

261,700

​

​

Net loss

​

​

​

​

(8,845,163)

​

​

​

​

​

(9,369,043)

​

​

Other comprehensive loss

​

​

​

​

192,175

​

​

​

​

​

31,598

​

​

Total loss and comprehensive loss

​

​

​

​

(8,652,988)

​

​

​

​

​

(9,337,445)

​

​

Weighted average number of Common Shares outstanding – basic and diluted

​

​

​

​

17,160,752

​

​

​

​

​

12,816,531

​

​

Basic and diluted loss per share

​

​

​

​

(0.52)

​

​

​

​

​

(0.73)

​

​

​

​

​

Nine Months Ended September 30, (Unaudited)

​

Consolidated Statements of Loss and Comprehensive Loss:

​

​

2025 US$

​

​

2024 US$

​

Revenue

​

​

​

​

​

​

​

​

​

​

​

​

​

HEXWAVE™ revenue

​

​

​

​

909,407

​

​

​

​

​

1,447,532

​

​

Contract revenue

​

​

​

​

854,849

​

​

​

​

​

1,250,000

​

​

Total revenue

​

​

​

​

1,764,256

​

​

​

​

​

2,697,532

​

​

Cost of revenue

​

​

​

​

​

​

​

​

​

​

​

​

​

HEXWAVE™ cost of revenue

​

​

​

​

2,112,884

​

​

​

​

​

2,408,789

​

​

Contract cost of revenue

​

​

​

​

1,493,636

​

​

​

​

​

1,796,912

​

​

Total cost of revenue

​

​

​

​

3,606,520

​

​

​

​

​

4,205,701

​

​

Gross loss

​

​

​

​

(1,842,264)

​

​

​

​

​

(1,508,169)

​

​

Development and General and Administrative Expenses

​

​

​

​

8,160,104

​

​

​

​

​

4,343,864

​

​

Other expenses

​

​

​

​

507,838

​

​

​

​

​

577,694

​

​

15

 

​

​

​

Nine Months Ended September 30, (Unaudited)

​

Consolidated Statements of Loss and Comprehensive Loss:

​

​

2025 US$

​

​

2024 US$

​

Net loss

​

​

​

​

(10,510,206)

​

​

​

​

​

(6,429,727)

​

​

Other comprehensive loss

​

​

​

​

112,660

​

​

​

​

​

113,547

​

​

Total comprehensive loss

​

​

​

​

(10,397,546)

​

​

​

​

​

(6,316,180)

​

​

Weighted average number of Common Shares outstanding – basic and diluted

​

​

​

​

55,564,003

​

​

​

​

​

16,037,061

​

​

Basic and diluted loss per share

​

​

​

​

(0.19)

​

​

​

​

​

(0.40)

​

​

​

​

​

​

Years Ended December 31, (Audited)

​

Consolidated Statements of Cash Flows:

​

​

2024 US$

​

​

2023 US$

​

Cash used in operating activities

​

​

​

​

(6,469,264)

​

​

​

​

​

(5,537,021)

​

​

Cash used in investing activities

​

​

​

​

(121,217)

​

​

​

​

​

(221,095)

​

​

Cash provided by financing activities

​

​

​

​

7,781,755

​

​

​

​

​

5,069,546

​

​

Effect of foreign exchange rate changes on cash

​

​

​

​

(39,008)

​

​

​

​

​

12,060

​

​

​

​

​

Nine months Ended September 30, (Unaudited)

​

Consolidated Statements of Cash Flows:

​

​

2025 US$

​

​

2024 US$

​

Cash used in operating activities

​

​

​

​

(8,379,896)

​

​

​

​

​

(3,072,818)

​

​

Cash used in investing activities

​

​

​

​

(176,498)

​

​

​

​

​

(125,206)

​

​

Cash provided by financing activities

​

​

​

​

7,931,412

​

​

​

​

​

3,474,239

​

​

Effect of foreign exchange rate changes on cash

​

​

​

​

112,660

​

​

​

​

​

113,338

​

​

​	​	​	As of September 30, 2025 (Unaudited)							​
Consolidated Statements of Financial Position:	​	​	Actual US$				​	​	As adjusted(1) US$	​
Cash	​	​	​	​	640,907	​	​	​	​	​
Total assets	​	​	​	​	6,754,164	​	​	​	​	​
Total liabilities	​	​	​	​	8,584,552	​	​	​	​	​
Deficit	​	​	​	​	(56,835,418)	​	​	​		​
Total shareholders’ deficiency	​	​	​	​	(1,830,388)	​	​	​		​

​

16

 

RISK FACTORS

You should carefully consider the risks described below and all other information contained in this prospectus before making an investment decision. If any of the following risks actually occur, our business, financial condition and results of operations could be materially and adversely affected. In that event, the trading price of our securities could decline, and you may lose all or part of your investment. This prospectus also contains forward-looking information that involves risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors, including the risks described below and elsewhere in this prospectus. See “Forward Looking Statements.”

Risks Relating to Our Business

We are an early-stage company with a limited operating history.

We are an early-stage company with a limited operating history. We have generated limited revenue from contract awards and sales of our products. As such, we are subject to many risks, including under-capitalization, cash shortages, and limitations with respect to personnel, financial and other resources and the lack of revenue. There is no assurance that we will be successful in achieving a return on shareholders’ investment and the likelihood of success must be considered in light of our early stage of operations. Our prospects must be considered speculative in light of the risks, expenses, and difficulties frequently encountered by companies in their early stages of operations, particularly in the highly competitive and rapidly evolving markets in which we operate. To attempt to address these risks, we must, among other things, successfully implement our business plan, marketing, and commercialization strategies, respond to competitive developments, and attract, retain, and motivate qualified personnel. A substantial risk is involved in investing in us because, as a smaller commercial enterprise that has fewer resources than an established company, our management may be more likely to make mistakes and may be more vulnerable operationally and financially to any mistakes that may be made, as well as to external factors beyond our control.

We have a history of losses and may not achieve or maintain profitability in the future.

We have a history of losses. We are not certain whether or when we will obtain a high enough volume of sales of our products to sustain or increase our growth or achieve or maintain profitability in the future and may continue to incur significant losses in the future. There is no guarantee that we will ever become profitable. Our ability to become profitable will depend largely on the timely productization of our products, coupled with securing timely, cost-effective outsourced manufacturing arrangements and marketing our products. There can be no assurance that any such events will occur or that we will ever become profitable. Even if we achieve profitability, we cannot predict the level of such profitability. If we sustain losses over an extended period of time, we may be unable to continue our business.

We currently have negative operating cash flows, a working capital deficit, and a history of losses, and these conditions raise substantial doubt about our ability to continue as a going concern.

We have incurred recurring losses and negative cash flows from operating activities since inception, and we expect to continue to incur significant operating losses for the foreseeable future as we seek to scale production of HEXWAVE™ and advance the development and commercialization of the HD-AIT Upgrade Kit. As of September 30, 2025 and December 31, 2024, we maintained a cash balance of approximately US$0.64 million and approximately US$1.2 million, respectively, and experienced a working capital deficiency of approximately US$4.5 million and approximately US$2.7 million, respectively. These conditions raise substantial doubt about our ability to continue as a going concern and as a result the audit report covering the December 31, 2024 consolidated financial statements contains an explanatory paragraph that states that our significant losses and negative operating cash flows raise substantial doubt about the entity’s ability to continue as a going concern. Our ability to continue operations depends on our ability to raise additional capital and generate sufficient revenue in future periods. There is no assurance that additional financing will be available on acceptable terms or at all. If we are unable to raise the capital required to fund our operations or achieve positive cash flows, we may need to delay product development, reduce our operating plans, scale back commercialization activities, or take other actions that could materially and adversely

 

17

 

affect our business, financial condition, and results of operations. For example, in early 2023, we instituted a company-wide furlough as a result of financial restraints.

We may not be able to achieve milestones on the expected timeframe or at all, which may impair our ability to execute our business plan.

The execution of our business plan poses many challenges and is based on a number of assumptions. There can be no assurance that milestones will be achieved by us within the expected timeframe or at all, which may impair our ability to execute our business plan. If we experience significant cost overruns, or if our business plan is more costly than we anticipate, certain activities may be delayed or eliminated, resulting in changes or delays to our current plans. Also, we may be compelled to secure additional funding (which may or may not be available or available at conditions unfavorable to us) to execute our business plan. We cannot predict with certainty our future revenues or results from our operations. If the assumptions on which our revenues or expenditures forecasts are based change, it may have a material adverse effect on our business, financial condition, results of operations, cash flows or prospects.

Our independent registered public accountants have identified material weaknesses in our internal control over financial reporting. If we fail to remediate such material weaknesses, identify additional material weaknesses in the future or otherwise fail to continue to design, implement and maintain effective internal control over financial reporting, we may not be able to report our financial results accurately.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with IFRS. A “material weakness” is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected by the company’s internal controls on a timely basis.

Our independent registered public accountants have identified material weaknesses in our internal control over financial reporting in connection with the audit of our fiscal year 2024 consolidated financial statements. The material weaknesses primarily relate to (i) not preparing a formal assessment with references to relevant IFRS for impairment of inventory to net realizable values, rights of returns, allocation of deferred contract revenue costs and warranty provisions, (ii) not performing a timely and detailed review of standard costs implemented in the accounting system including overhead allocation to support the accuracy and completeness of standard costs, (iii) not having an effective process in place to ensure that account reconciliations and reviews were performed, and (iv) only requiring single approval for check disbursements.

We have taken steps to remediate these material weaknesses and the underlying causes of such material weaknesses, including (i) establishing quarterly reviews following IFRS guidance on net realizable value calculations, deferred contract revenue costs, warranty provisions and a formal assessment of impaired inventory, (ii) following detailed procedures to review standard costing in a timely manner, (iii) improving our process to review and reconcile all asset and liability accounts with supporting reconciliation working papers, and (iv) implementing a two-signature requirement for all checks written.

While we are working to remediate our material weaknesses as quickly and efficiently as possible, we cannot at this time provide an estimate of the costs we expect to incur or the expected timeline in connection with implementing our remediation plan. These remediation measures may be time-consuming and costly, and might place significant demands on our financial and operational resources. If we are unable to successfully remediate our material weaknesses, identify additional material weaknesses in the future or otherwise fail to continue to design, implement and maintain effective internal control over financial reporting, our financial statements could contain material misstatements, which could result in a failure to meet our future reporting obligations, reduce the market’s confidence in our consolidated financial statements, materially adversely affect the trading price of the Common Shares and restrict our future access to the capital markets.

 

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We may not maintain adequate internal controls over financial processes and reporting.

Effective internal controls are necessary for us to provide reliable financial reports and to help prevent fraud. Although we will undertake a number of procedures and will implement a number of safeguards, in each case, in order to help ensure the reliability of our financial reports, including those imposed on us under

Canadian and U.S. securities law, we cannot be certain that such measures will ensure that we will maintain adequate control over financial processes and reporting. For example, we amended and restated our interim condensed consolidated financial statements for the three and nine months ended September 30, 2025 in accordance with section 4.4 of the National Instrument 51-102 Continuous Disclosure Obligations to incorporate certain changes following a review of such financial statements performed by our auditors in accordance with applicable standards. Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our results of operations or cause us to fail to meet our reporting obligations.

A significant portion of our business depends on sales to government agencies, which is subject to a number of challenges and risks.

We derive a significant portion of our revenue from contracts with government agencies, and we believe that the success and growth of our business will continue to depend on our successful procurement of government contracts. Sales to government agencies are subject to a number of challenges and risks. Selling to government agencies can be highly competitive, expensive, and time-consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale. Government demand and payment for our solutions may also be impacted by changes in fiscal or contracting policies, changes in government programs or applicable requirements, the adoption of new laws or regulations or changes to existing laws or regulations, public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our solutions. Accordingly, increasing sales of our products to government entities may be more challenging than selling to commercial organizations, especially given extensive certification, compliance, clearance, and security requirements. In addition, we have experienced delays in TSA contract revenue projects, as well as in additional contract line items that the TSA had planned to exercise in 2025 and 2026. Further delays could have an adverse effect on our business, results of operations, financial condition, and growth prospects.

For example, in 2023, the TSA issued a mandate called “TSA-NA-23-02,” which required airports to begin conducting random physical screenings of aviation workers entering certain terminal access points, starting in late September 2023. This presented us with an opportunity to provide advanced security screening solutions in the U.S. aviation worker screening market. However, a group of municipalities and airports challenged the 2023 TSA mandate (City of Billings, et al. v. Transportation Security Administration et al.), arguing that the U.S. federal government lacked authority to command state and local governments to enforce federal regulations, that the TSA was required to provide public notice of the new rule and allow for public comment under the Administrative Procedure Act (the “APA”), and that the rule unlawfully compelled local officials to implement a federal scheme. In August 2025, the U.S. Court of Appeals for the D.C. Circuit found that the TSA failed to comply with the notice and comment requirements in accordance with the APA. The court stayed issuance of its order until the TSA either completes an appropriate rulemaking process or decides to forgo the rule. As of the date of this prospectus, it is uncertain whether the TSA will decide to follow proper rulemaking procedures or will determine that the requirements are not necessary. If the court determines that the TSA has not taken acceptable steps to remediate the rulemaking or if the TSA’s mandate is abandoned, or if other similar events or activities impact our successful procurement of government contracts, it could have an adverse effect on our business, results of operations, financial condition, and growth prospects.

Our ability to generate future revenue and profits largely relies on increased production and cost reduction of HEXWAVE™.

Our ability to generate future revenue or achieve or sustain profitable operations is largely dependent on our ability to increase production and reduce costs of HEXWAVE™. Successfully mass producing HEXWAVE™ in a cost-efficient manner may take several years and significant financial resources, and we may not achieve this objective. If we experience difficulties in the production process, such as capacity

 

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constraints, quality control problems or other disruptions, we may not be able to mass produce HEXWAVE™ at acceptable costs, which would adversely affect our ability to effectively compete in the market. A failure by us to achieve a low-cost structure through economies of scale or improvements in manufacturing processes would have a material adverse effect on our business, prospects, results of operations and financial condition.

The HD-AIT Upgrade Kit may not achieve TSA certification within our expected timeline, or at all, which could delay commercialization and expected revenue.

We expect to gain a second stream of revenue through commercialization of the HD-AIT Upgrade Kit. Commercialization of the HD-AIT Upgrade Kit depends on obtaining certification from the TSA. Although we delivered a unit to the TSA for evaluation in August 2025, the evaluation, testing, and certification processes are complex, iterative, and inherently uncertain. Certification may take longer than we anticipate, may require design or software modifications, or may not be granted at all. Initial commercial sales are anticipated in 2026, subject to successful completion of the TSA’s certification process. Any delay or failure to obtain TSA certification could materially delay or prevent commercialization of the HD-AIT Upgrade Kit, limit our ability to compete for airport security opportunities, and adversely affect our projected revenue and growth strategy.

The addressable markets for our HEXWAVE™ system and HD-AIT Upgrade Kit may be materially smaller than we currently estimate, and regulatory, technical, adoption and procurement uncertainties could adversely affect our revenue potential and ability to achieve profitability.

Our market opportunity estimates for our HEXWAVE™ system and our HD-AIT Upgrade Kit are based on assumptions from industry knowledge, public sources and internal analyses, including expected regulatory requirements, the number and type of systems customers may procure, adoption rates in largely unregulated venues, interoperability with legacy infrastructure and anticipated performance. These assumptions may prove inaccurate or change. Regulatory mandates may be delayed, modified or invalidated, customers may adopt alternative technologies or purchase fewer systems than we expect, certifications may take longer or require additional capabilities, funding and procurement cycles may be constrained, and performance, integration or throughput requirements may differ from our expectations. If the actual addressable markets for our solutions are smaller than we anticipate or our assumptions prove incorrect, our revenues could be materially limited and we may be unable to achieve or maintain profitability, which could cause the value of our securities to decline significantly.

Our reliance on a limited number of products may subject us to greater risk with regard to changes in customer preference.

We are currently substantially dependent on HEXWAVE™ as our primary product. In addition, we anticipate that sales of the HD-AIT Upgrade Kit will commence in 2026, subject to successful completion of the TSA’s certification process, which will supplement the revenue of HEXWAVE™ for 2026 and beyond. As a result of our reliance on a limited number of products, factors such as changes in customer preferences may have a disproportionately greater impact on us than if we derived significant revenue from multiple lines of products. There can be no assurance that our products will attain or maintain long-term customer appeal. If customer interest in our technology in general declines, or if there is increased competition in the market for active millimeter wave imaging technology, we may experience a significant loss of sales, cancellation of orders from customers, loss of customers, excess inventories, inventory markdowns and deterioration of our brand image, and lower revenues and gross and operating margins as a result of price reductions and may be forced to liquidate excess inventories at a discount, any or all of which would have a material adverse impact on our operating results and growth prospects.

The sales potential of HEXWAVE™ is still at an early commercial stage and we have yet to commence commercial sales of the HD-AIT Upgrade Kit. The ongoing and future demand for our products and solutions, in existing and target industries, is yet to be fully established and is uncertain. There is a risk that we may not be able to obtain and maintain market share or that there is insufficient demand for our products for revenue to be sustainable. Our future performance will be dependent on our ability to design, develop, manufacture, assemble, test, market and support our current products, as well as to continue developing new products and enhancing our current products, in a timely and cost effect manner on behalf of our customers.

 

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Rapid technological change could result in obsolescence or short product life cycles of our products.

Our business is subject to rapid technological changes and evolving industry standards, which could result in product obsolescence or short product life cycles. Failure to keep up with such changes may adversely affect our business. Accordingly, our success is dependent upon our ability to anticipate technological changes in the industries we serve and to successfully identify, obtain, develop and market new products that satisfy evolving industry requirements. Our business depends on the success of HEXWAVE™, which is our primary product. There can be no assurance that we will successfully develop new products or enhance and improve our existing products or that any new products and enhanced and improved existing products will achieve market acceptance. Further, there can be no assurance that competitors will not market products that have perceived advantages over our products, or which render the products currently sold by us obsolete or less marketable. We are subject to the risks of companies operating in the active threat detection business. The market in which we compete is characterized by rapidly changing technology, evolving industry standards, frequent new service and product announcements, introductions and enhancements and changing customer demands. As a result, an investment in our shares is highly speculative and only suitable for investors who recognize the high risks involved and can afford a total loss of investment.

If the weapons detection technology market fails to grow or grows more slowly than we currently anticipate, our business would be negatively affected.

We believe our future success will depend in large part on the growth, if any, in the market for weapons detection technology utilizing artificial intelligence. This market is new and rapidly evolving, and as such, it is difficult to predict important market trends, including our potential growth, if any. If this market fails to grow or grows more slowly than we currently anticipate, our business would be negatively affected. While we believe our products address customer needs, the acceptance of our products may be delayed or not materialize. Our revenues and possible profits will depend upon, among other things, our ability to successfully market our products to customers. To date, we have focused on markets that we believe are most likely to adopt our technology. However, there is no assurance that we will be successful in these markets or will be able to expand beyond these markets in the long term.

To date, enterprise and corporate security budgets have allocated a majority of dollars to conventional security solutions, such as walk-through metal detectors. Organizations that use these security products may be satisfied with them or slow to adapt to technical advances and, as a result, these organizations may not adopt their solutions in addition to, or in lieu of, security products they currently use. Further, sophisticated attackers are skilled at adapting to new technologies and developing new methods of breaching organizations’ security systems, and changes in the nature of security threats could result in a shift in budgets away from products such as ours. In addition, while recent high visibility attacks at publicly and privately-owned venues have increased market awareness of mass shootings, terrorist or other attacks, if such attacks were to decline, or enterprises or governments perceived that the general level of attacks has declined, our ability to attract new customers and expand our sales to existing customers could be materially and adversely affected. If products such as ours are not viewed by organizations as necessary, or if customers do not recognize the benefit of our products as a critical element of an effective security strategy, our revenue may not grow as quickly as expected, or may decline, and the trading price of our shares could suffer. In addition, it is difficult to predict customer adoption and retention rates, customer demand for our products, the size and growth rate of the market for AI-based contactless security screening, the entry of competitive products or the success of existing competitive products. Any expansion in our market depends on a number of factors, including the cost, performance and perceived value associated with our products and those of our competitors. If these products do not achieve widespread adoption or there is a reduction in demand for products in our market caused by a lack of customer acceptance, technological challenges, competing technologies or products, decreases in corporate spending, weakening economic conditions or otherwise, it could result in reduced customer orders, early terminations, reduced customer retention rates or decreased revenue, any of which would adversely affect our business operations and financial results. You should consider our business and prospects in light of the risks and difficulties we may encounter in this new and evolving market.

If we are unable to attract a sufficient number of new customers, we may be unable to generate revenue growth at the desired rates. The security solutions market is competitive and many of our competitors have

 

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substantial financial, personnel and other resources that they utilize to develop solutions and attract customers. As a result, it may be difficult for us to add new customers to our customer base. Competition in the marketplace may also lead us to win fewer new customers or result in us providing discounts and other commercial incentives. Additional factors that impact our ability to acquire new customers include the perceived need for AI-based contactless security solutions, the size of our prospective customers’ security budgets, the utility and efficacy of our existing and new products, whether proven or perceived, and general economic conditions. These factors may have a meaningful negative impact on future revenues and operating results.

Failure to achieve forecasted revenue may affect our operating results.

To commence commercialization of our technology, we may be required to make significant investments in operations. If our product trials are unsuccessful or our business does not develop as quickly as anticipated, or if there is a lack of demand for our products, we may be unable to offset these costs, and our operating results may be adversely affected as a result of high operating expenses, reduced margins, underutilization of capacity and asset impairment charges. Moreover, we must rely largely on our own market research to forecast sales as detailed forecasts are not generally obtainable from other sources at this early stage of the industry.

If our products fail or are perceived to fail to detect threats such as a firearm or other potential weapon or explosive device, or if our products contain undetected errors or defects, these failures or errors could result in injury or loss of life, which could harm our brand and reputation and have an adverse effect on our business and results of operations.

If our products fail or are perceived to fail to detect and prevent attacks or if our products fail to identify and respond to new and increasingly complex and unpredictable methods of attacks, our business and reputation may suffer. There is no guarantee that our products will detect and prevent all attacks, especially in light of the rapidly changing security landscape to which we must respond, as well as unique factors that may be present in our customers’ operating environments. Additionally, our products may falsely detect items that do not actually represent threats. These false positives may impair the perceived reliability of our products and may therefore adversely impact market acceptance of our products, and could result in negative publicity, loss of customers and sales and increased costs to remedy any problem.

Our products, which are complex, may also contain undetected errors or defects when first introduced or as new versions are released. These errors or defects may be found from time to time in the future in new or enhanced products after commercial release. Defects may result in increased vulnerability to attacks, cause our products to fail to detect security threats, or temporarily interrupt our products’ ability to screen visitors in a customer’s location. Any errors, defects, disruptions in service or other performance problems with our products may damage our customers’ business and could harm our reputation. If our products fail to detect security threats for any reason, we may incur significant costs, the attention of our key personnel could be diverted, our customers may delay or withhold payment to us or elect not to renew or cause other significant customer relations problems to arise. We may also be subject to liability claims for damages related to errors or defects in our products. For example, if our products fail to detect weapons or explosive devices that are subsequently used by terrorists to cause casualties at a high profile, public venue, our reputation could be significantly harmed. A material liability claim or other occurrence that harms our reputation or decreases market acceptance of our products may harm our business and operating results. In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation, divert management’s time and other resources, and harm our business and reputation.

If our customers are unable to implement our products successfully, or if we fail to effectively assist our customers in installing our products and provide effective ongoing support and training, customer perceptions of our products may be impaired, or our reputation and brand may suffer.

Our products are to be deployed in a wide variety of indoor and outdoor environments, including large venues with multiple entry points. If customers are unable to implement our products successfully, customer perceptions of our products may be impaired or our reputation and brand may suffer. Any failure by our customers to appropriately implement our products or any failure of our products to effectively integrate and

 

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operate within our customers’ operating environments could result in customer dissatisfaction, impact the perceived reliability of our products, result in negative press coverage, negatively affect our reputation and harm our financial results.

Successful deployment and operation of our products depends on the knowledge and skill of the customer security personnel charged with setting up, configuring, monitoring, and troubleshooting the equipment in their own environment. Many of our customers experience relatively high turnover in their security personnel, creating opportunities for knowledge and skill gaps that can result, and have resulted, in configuration or operational errors that allow prohibited threats into customer facilities. In these situations, customers can perceive, and have perceived, that our products have failed to perform as designed until and unless they have been able to demonstrate otherwise. There can be no assurance that we will successfully isolate and identify failures due to customer error in the future, and this could result in customer dissatisfaction, impact the perceived reliability of our products, result in negative press coverage, negatively affect our reputation and harm our financial results. The failure of our customers to correctly use our products, or our failure to effectively assist customers in installing our products and provide effective ongoing support and training, may result in an increase in the vulnerability of our customers’ facilities and visitors to security threats.

We may need to expand our customer success and support organizations. It can take significant time and resources to recruit, hire and train qualified technical support and service employees. We may not be able to keep up with demand, particularly if the sales of our products exceed our internal forecasts. To the extent that we are unsuccessful in hiring, training and retaining adequate support resources, our ability to provide adequate and timely support to our customers may be negatively impacted, and our customers’ satisfaction with our products may be adversely affected. Additionally, in unusual circumstances, if we were to need to rely on our sales engineers to provide post-sales support while we are growing our service organization, our sales productivity may be negatively impacted. Accordingly, our failure to provide satisfactory maintenance and technical support services could have a material and adverse effect on our business and results of operations.

We rely on certain license agreements for key technology incorporated into our products, which contain termination and other provisions that could materially and adversely affect our business.

Our products system incorporates technology licensed under license agreements with the Massachusetts Institute of Technology (“MIT” and such agreement, the “MIT License Agreement”) and Battelle Memorial Institute (“Battelle” and such agreement, the “Battelle License Agreement”). The agreements require us to meet certain development and commercial milestones and to comply with other ongoing obligations. MIT and Battelle have the right to terminate the applicable license agreement if we fail to meet those requirements or otherwise breach the terms of the license. For example, under the MIT License Agreement, MIT may terminate if any of our sublicensees challenges the licensed patent rights. If either license agreement is terminated, we could lose access to core technology that underpins our products system. This would likely result in significant delays in commercialization, increase our development costs, and harm our competitive position. We may also be unable to find a suitable replacement technology or enter into a new license agreement on commercially reasonable terms. Any such termination could materially adversely affect our business, results of operations, and financial condition.

Our licenses under the Battelle License Agreement are non-exclusive and Battelle is reserved significant rights, including the right to practice the licensed patents for research, development, teaching and educational purposes, to non-exclusively license the patents to nonprofit institutions for research, teaching and educational purposes, to grant exclusive licenses in fields and territories not licensed to us and to publish scientific and technical articles related to the patents. These retained rights could enable others to access or develop technology relevant to our products, reduce our competitive advantages or limit the scope of our exclusivity.

We are also subject to certain indemnification obligations under these licenses. These obligations could expose us to substantial defense costs and liabilities, including in connection with third-party claims. Further, our license agreements with MIT and Battelle do not include warranties from the applicable licensor regarding the validity, enforceability or non-infringement of the licensed patent rights or other assurances. If the licensed patent rights are found to be invalid, unenforceable or otherwise insufficient to protect our

 

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products, we would have limited or no recourse against the applicable licensor and may need to redesign our products, seek alternative technologies or incur additional costs, any of which could materially adversely affect our business, results of operations, and financial condition.

We may enter into license agreements from time to time in addition to the MIT License Agreement and the Battelle License Agreement, in which case similar or additional obligations, limitations and risks as those described above could apply.

Our products and services may be affected from time to time by design and manufacturing defects that could adversely affect our business and result in harm to our reputation.

Our contactless security screening systems are complex and may contain undetected defects or errors when first introduced or as enhancements are released that, despite testing, are not discovered until after a product has been used. This could result in delayed market acceptance of those products or claims from customers or others, which may result in litigation, increased end user warranty, support and repair or replacement costs, damage to our reputation and business, or significant costs and diversion of support and engineering personnel to correct the defect or error.

Further, our software is not designed to deliver, and TSA certification does not require, 100% detection of any and all concealed weapons or explosive devices. For this reason, or if our products malfunction, it is possible that weapons or explosive material could pass undetected through our screening systems, which could lead to product liability claims. There are also many other factors beyond our control that could lead to liability claims, such as the reliability and competence of the customer’s operators and the training of the operators. Such liability claims are likely to exceed any product liability insurance that we may have obtained.

The sale and support of our products entails the risk of product liability claims. Any product liability claim brought against us, regardless of its merit, could result in material expense, diversion of management time and attention, damage to our business and reputation and brand, and cause us to fail to retain existing customers or to fail to attract new customers.

If we do not successfully anticipate market needs and enhance our existing products or develop new products that meet those needs on a timely basis, we may not be able to compete effectively and our ability to generate revenues will suffer.

Our customers face evolving security risks, which require them to adapt to increasingly complex infrastructures that incorporate a variety of security solutions. We face significant challenges in ensuring that our products effectively identify and respond to these security risks without disrupting the performance of our customers’ infrastructures. As a result, we must continually modify and improve our products in response to changes in our customers’ infrastructures.

We cannot guarantee that we will be able to anticipate future market needs and opportunities or be able to develop product enhancements or new products to meet such needs or opportunities in a timely manner, if at all. Even if we are able to anticipate, develop and commercially introduce enhancements and new products, there can be no assurance that enhancements or new products will achieve widespread market acceptance.

New products, as well as enhancements to our existing products, could fail to attain sufficient market acceptance for many reasons, including:

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delays in releasing new products, or product enhancements;

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failure to accurately predict market demand and to supply products that meet this demand in a timely fashion;

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inability to protect against new types of attacks or techniques used by terrorists or other sources of threats;

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defects in our products, errors or failures of our products;

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negative publicity or perceptions about the performance or effectiveness of our products;

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introduction or anticipated introduction of competing products by our competitors;

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installation, configuration or usage errors by our customers; and

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easing or changing of regulatory requirements related to security.

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If we fail to anticipate market requirements or fail to develop and introduce product enhancements or new products to meet those needs in a timely manner, it could cause us to lose existing customers and prevent the gain of new customers, which would significantly harm our business, financial condition and results of operations.

While we continue to invest significant resources in research and development to ensure that our products continue to address the security risks that our customers face, the introduction of products embodying new technologies could also render our existing products or services obsolete or less attractive to customers. If we spend significant time and effort on research and development and are unable to generate an adequate return on our investment, our business and results of operations may be materially and adversely affected.

We may experience delays in product sales due to limitations in our internal marketing, sales and distribution capabilities.

In order to successfully commercialize our products, we must continue to develop our internal marketing, sales and distribution team. The continued development of our marketing, sales and distribution infrastructure will require substantial resources, which may divert the attention of our management and key personnel and defer our product development and commercialization efforts.

Additionally, in marketing, selling and distributing our products, we would likely compete with companies that currently have extensive and well-funded marketing, sales and distribution operations. Despite our marketing, sales and distribution efforts, we may be unable to compete successfully against these companies.

In the event we fail to develop substantial internal marketing, sales and distribution channels, we will experience delays in product sales, which could have a material adverse effect on our prospects, results of operations, financial condition and cash flows.

We rely on distributors as a channel to market and sell our products. Termination of a substantial number of our distributor relationships or an increase in a distributor's sales of our competitors’ products could have a material adverse effect on our business, financial condition, results of operations or cash flows.

We depend on the services of a global distribution network based on certain exclusive and non-exclusive distributor relationships. Our distributors resell our products to our customers, for whom they are also responsible for installation, maintenance, and repair services, among others. While the use of distributors expands the reach and customer base for our products, the maintenance and administration of distributor relationships is costly and time-consuming. In addition, many of the agreements with our distributors are terminable by such distributors without cause. The loss of a substantial number of our distributors for any reason could have a material adverse effect on our business, financial condition, results of operations or cash flows. In certain international jurisdictions, distributors are conferred certain legal rights that could limit our ability to modify or terminate distribution relationships.

Many of the distributors with whom we transact business also offer competitors’ products and services to our customers. An increase in the distributors’ sales of our competitors’ products to our customers, or a decrease in the number of our products the distributor makes available for purchase, could have a material adverse effect on our business, financial condition, results of operations or cash flows.

We rely upon a limited number of third parties for manufacturing, shipping, transportation, logistics, marketing and sales of our products.

If the third parties on whom we rely do not properly, successfully or timely carry out their obligations, we may not be able to develop, obtain regulatory approval for, or commercialize our products, which in turn

 

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may adversely affect our financial performance. Our dependence on a limited number of third parties for services leaves we vulnerable due to our need to secure these parties’ services on favorable terms. Loss of, or an adverse effect on, any of our relationships or failure of any of the third parties to perform as expected could have a material and adverse effect on our business, sales, results of operations, financial condition, and reputation.

Our success depends on management and key personnel.

Our success will be dependent upon the ability, expertise, judgment, discretion and good faith of our senior management. While employment agreements are customarily used as the primary method of retaining the services of key employees, these agreements cannot assure the continued services of such employees. Any loss of the services of such individuals could have a material adverse effect on business, operating results or financial condition. Our success further depends on the continued ability to identify, attract, retain, and motivate highly qualified management, clinical, and scientific personnel and to develop and maintain important relationships with leading academic institutions, companies, and thought leaders. Competition for highly skilled executives and other employees is high in this industry, especially from larger and better capitalized defense and security companies. We may not be successful in attracting and retaining such personnel. Failure to attract and retain qualified executive officers and other key employees could have a material adverse effect on our business, prospects, financial condition, results of operations, and cash flows, and could impair our ability to perform our contractual obligations efficiently and timely meet our customers’ needs and win new business, which could adversely affect our future results. Even if we are able to identify and recruit a sufficient number of new hires, these new hires will require significant training before they achieve full productivity and they may not become productive as quickly as we would like, or at all.

Growth may cause pressure on our management and resources.

We expect to experience substantial growth in our business, which comes with growth-related risks including capacity constraints and pressure on our internal systems and controls. The anticipated growth may place significant demands on our management and operational and financial resources. We may not be able to provide the scale of operation necessary to meet the demands associated with our growth. As we grow, we will need to implement new systems and software to help run our operations. As our operations grow in size, scope and complexity, we will need to continue to improve and upgrade our systems and infrastructure to offer an increasing number of customers enhanced services, solutions and features. We may choose to commit significant financial, operational and technical resources in advance of an expected increase in the volume of business, with no assurance that the volume of business will increase. Continued growth could also strain our ability to maintain reliable service levels for existing and new customers, which could adversely affect our reputation and business. Our inability to deal with this growth may have a material adverse effect on our business, financial condition, results of operations and prospects.

We may acquire or invest in other companies or technologies in the future, which could divert management’s attention, fail to meet our expectations, result in additional dilution to our shareholders, increase expenses, disrupt our operations, or otherwise harm our operating results.

Our success will depend, in part, on our ability to expand our markets and grow our business in response to changing technologies, customer needs and competitive pressures. We may seek to grow our business by acquiring complementary businesses, solutions or technologies. The identification of suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to successfully complete identified acquisitions. There can be no assurance that we will be able to identify, negotiate or finance future acquisitions successfully, or to integrate such acquisitions with our current business. In addition, we may not be able to successfully assimilate and integrate the business, technologies, solutions, personnel or operations of any company we acquire. The process of integrating an acquired business, technology, service or product into our company may result in unforeseen operating difficulties and expenditures and may absorb significant management attention that would otherwise be available for ongoing development of our business. Acquisitions may also involve the entry into geographic or business markets in which we have little or no prior experience. Moreover, the anticipated benefits of any acquisition, investment or business relationship may not be realized or we may be exposed to unknown liabilities. For one or more of those transactions, we may, among other things:

 

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issue additional equity securities that would dilute the holders of the Common Shares;

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use cash that we may need in the future to operate our business;

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incur debt on terms unfavorable to us or that we are unable to repay;

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incur large charges or expenses or assume substantial liabilities;

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incur unanticipated costs or liabilities associated with the acquisition;

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amortize expenses related to goodwill and other intangible assets;

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suffer inability to generate sufficient revenue to offset acquisition or investment costs;

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suffer inability to maintain relationships with customers and partners of the acquired business;

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experience a significant loss of management personnel during the transition period after a significant acquisition;

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experience delays in customer purchases due to uncertainty related to any acquisition;

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encounter difficulties retaining key employees of the acquired companies or integrating diverse software codes, accounting systems, personnel, operations or business cultures;

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encounter difficulties managing product development and commercialization following a technology acquisition or licensing; and

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become subject to adverse tax consequences, substantial depreciation or deferred compensation charges.

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Acquisitions also increase the risk of unforeseen legal liability, including potential shareholder suits or potential violations of applicable law or industry rules and regulations, arising from prior or ongoing acts or omissions by the acquired businesses that are not discovered by due diligence during the acquisition process or new regulatory restrictions at the federal, state, or local levels. Generally, if an acquired business fails to meet our expectations, our operating results, business, and financial condition may suffer. Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt. Any of these risks could materially adversely affect our business, results of operation and financial condition.

We currently have no understandings, commitments or agreements with respect to any material acquisition and no material acquisition is currently being pursued.

Diverting resources from product development to efforts associated with brand development of our company may adversely affect our financial condition.

We believe that continuing to strengthen our brand is critical to achieving widespread acceptance of our company, particularly in light of the competitive nature of our company’s market. Promoting and positioning our brand will depend largely on the success of our marketing efforts and our ability to provide high quality services. In order to promote our brand, we will need to increase our marketing budget and otherwise increase our financial commitment to creating and maintaining brand loyalty among users. There can be no assurance that brand promotion activities will yield increased revenues or that any such revenues would offset the expenses incurred by us in building our brand. If we fail to promote and maintain our brand or incur substantial expenses in an attempt to promote and maintain our brand or if our existing or future strategic relationships fail to promote our brand or increase brand awareness, our business, results of operations and financial condition would be materially adversely affected.

We are dependent on our suppliers for the maintenance and growth of our business.

We incorporate technology and components from third parties into our products. Our ability to compete and grow will be dependent on having access, at a reasonable cost and in a timely manner, to equipment, parts and components. No assurance can be given that we will be successful in maintaining our required supply of equipment, parts and components.

In particular, we rely on a single-source supplier, Analog Devices Inc. (“ADI”), for certain component parts used in HEXWAVE™. These components account for approximately 22% of our cost of goods sold

 

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for HEXWAVE™ and are considered safety-critical. We do not maintain a long-term purchase contract with ADI and currently procure these components through standard purchase orders. As a result, any delay, allocation, quality issue, shortage, or termination by ADI could require design modifications, re-testing, recertification, or alternative sourcing, any of which could materially disrupt our manufacturing process, delay production schedules, increase our costs, and adversely affect our and ability to fulfill orders in a timely manner.

We have initiated efforts to evaluate potential design changes intended to reduce our dependency on ADI; however, these efforts are in early stages and due to the technical complexity of the components, a redesign and recertification of our hardware and software systems would be required, and we do not expect any alternate supply path to be commercially implemented before late 2026.

If we are unable to obtain necessary technology and components from third parties, including certain sole suppliers, we may be forced to acquire or develop alternative technology or components, which may require significant time, cost, and effort and may be of lower quality or performance standards. This would limit or delay our ability to offer new or competitive products and increase our costs of production. If alternative technology or components cannot be obtained or developed, we may not be able to offer certain functionality as part of our products, subscriptions, and services. As a result, our margins, market share and results of operations could be significantly harmed.

In addition, we cannot be certain that our suppliers and licensors are not infringing the intellectual property rights of third parties or that our suppliers and licensors have sufficient rights to the technology in all jurisdictions in which we may sell our products. We may not be able to rely on indemnification obligations of third parties if some of our agreements with our suppliers and licensors may be terminated for convenience by them. If we are unable to obtain or maintain rights to any of this technology because of intellectual property infringement claims brought by third parties against our suppliers and licensors or against us, or if we are unable to continue to obtain such technology or enter into new agreements on commercially reasonable terms, our ability to develop and sell products, subscriptions, and services containing such technology could be severely limited, and our business could be harmed. Disputes with suppliers and licensors over uses or terms could result in the payment of additional royalties or penalties by us, cancellation or non-renewal of the underlying license or litigation. In the event that we cannot renew and/or expand existing licenses, we may be required to discontinue or limit our use of the operations, products, or offerings that include or incorporate the licensed intellectual property. Any such discontinuation or limitation could have a material and adverse impact on our business, financial condition, and results of operation.

Our directors, officers or members of management may have conflicts of interest.

There are potential conflicts of interest to which some of our directors, officers and/or insiders may be subject in connection with our operations. Some of the individuals who will be appointed as our directors or officers are also directors and/or officers of other reporting and non-reporting issuers. In addition, certain of our directors and officers have, in the past, entered into working capital loans with us, of which an aggregate of US$0 and US$74,657 was outstanding as of September 30, 2025 and December 31, 2024, respectively. As of the date of this prospectus, and to the knowledge of our directors and officers, there are no additional existing conflicts of interest between us and any of our directors or officers.

Our insurance policies may be inadequate to fully protect us from material judgments and expenses.

Our business is subject to a number of risks, hazards and liabilities, which could result in damage to assets, personal injury or death, delays in operations, monetary losses and possible legal liability.

Although we maintain insurance to protect against certain risks in such amounts as we consider reasonable, our insurance will not cover all the potential risks associated with our operations and is inadequate to protect us from all material judgments and expenses related to potential future claims and other risks such as cybersecurity risks and natural hazards, including earthquakes, fires, and extreme weather conditions, some of which can be worsened by climate change and pandemics. A successful product liability claim could result in substantial cost to us. If insurance coverage is unavailable or insufficient to cover any such claims, our financial resources, results of operations and prospects could be adversely affected. We may also be unable to maintain insurance to cover these risks at economically feasible premiums.

 

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Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability. Even if we are fully insured as it relates to a claim, the claim could nevertheless diminish our brand and divert management’s attention and resources, which could have a negative impact on our business, prospects, financial condition and results of operations.

Unavailability of adequate director and officer insurance could make it difficult for us to retain and attract qualified directors and could also impact our liquidity.

Although we have directors’ and officers’ liability insurance (“D&O insurance”) we believe to be adequate to cover risk exposure for us and our directors and officers, who we indemnify to the full extent permitted by law, there is no guaranty that such coverage will be adequate in the event of litigation.

Our coverage needs for D&O insurance may change or increase in the future for various reasons including changes in our market capitalization, changes in trading volume or changes in the listing rules of exchanges or marketplaces on which our securities may trade from time to time. Further, we intend to seek new D&O insurance before listing on Nasdaq. There can be no assurance that we will be able to do so at reasonable rates or at all, or in amounts adequate to cover expenses and liability should litigation occur. Without adequate D&O insurance, the costs of litigation, including amounts we would pay to indemnify our officers and directors should they be subject to legal action based on their service to us, could have a material adverse effect on our financial condition, results of operations and liquidity. Further, if we are unable to obtain adequate D&O insurance in the future for any reason, we may have difficultly retaining and attracting talented and skilled directors and officers, which could adversely affect our business.

Our internal computer systems are vulnerable to damage and failure.

Despite the implementation of security measures and backup storage, our internal computer systems are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war, and telecommunication and electrical failure. Any system failure, accident or security breach that causes interruption in our operations could result in a material disruption of our business. To the extent that any disruption or security breach results in a loss or damage our data or applications, or inappropriate disclosure of confidential or proprietary information, we may incur liability as a result. In addition, our technology program may be adversely affected and the further development of our technology may be delayed. We may also incur additional costs to remedy the damages caused by these disruptions or security breaches.

If the general level of security threats declines or is perceived by our current or potential customers to have declined, our business could be harmed.

Our business is substantially dependent on enterprises and governments recognizing that mass shootings, terrorist attacks and similar security threats are not necessarily effectively prevented by conventional security products such as walk-through metal detectors. High visibility attacks on prominent enterprises and governments have increased market awareness of the problem of security threats and help to provide an impetus for enterprises and governments to devote resources to protect against security threats, such as testing our products, purchasing them and broadly deploying them within their organizations. If security threats were to decline, or enterprises or governments perceived that the general level of security threats has declined, our ability to attract new customers and expand sales of our products to existing customers could be materially and adversely affected. A reduction in the security threat landscape could harm our business, results of operations, and financial condition.

Breaches of security may adversely affect the reputation of our brand.

Our system stores, processes and transmits certain confidential information of our customers. Any compromise of our security or the security of our third-party service providers could damage our reputation and brand and expose us to risk of loss, costly litigation and liability that would substantially harm our business and operating results. We may not adequately assess the internal and external risks posed to the security of our systems and information and may not implement adequate preventative safeguards or take adequate reactionary measures in the event of a security incident. In addition, many jurisdictions have enacted laws requiring companies to notify individuals and often state authorities of data security breaches involving their personal data. These mandatory disclosures regarding a security breach often lead to

 

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widespread negative publicity, which may cause our prospective customers to lose confidence in the effectiveness of our data security measures. Any security breach, whether successful or not, would harm our reputation and brand, and may result in the loss of customers.

We will be reliant on information technology systems and may be subject to damaging cyber-attacks.

Although we have not experienced any material cybersecurity incidents to date, our systems and those of our third-party providers may be vulnerable to evolving cybersecurity threats, which could materially disrupt our operations, compromise data, or result in significant financial or reputational harm.

We use third parties for certain hardware, software, telecommunications and other information technology (“IT”) services in connection with our operations. Our operations depend, in part, on how well we and our suppliers protect networks, equipment, IT systems and software against damage from a number of threats, including, but not limited to, cable cuts, damage to physical plants, natural disasters, intentional damage and destruction, fire, power loss, hacking, computer viruses, vandalism and theft. While we generally perform cybersecurity diligence on our key service providers, we do not control our service providers and our ability to monitor their cybersecurity is limited, so we cannot ensure the cybersecurity measures they take will be sufficient to protect any information we share with them. Due to applicable laws and regulations or contractual obligations, we may be held accountable for cybersecurity breaches or other information security incidents attributed to our service providers as they relate to the information we share with them.

Our operations also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as pre-emptive expenses to mitigate the risks of failures. Any of these and other events could result in information system failures, delays and/or increase in capital expenses. The failure of information systems or a component of information systems could, depending on the nature of any such failure, adversely impact our reputation and results of operations. To date, we have not experienced any material losses relating to cyber-attacks or other information security breaches, but there can be no assurance that we will not incur such losses in the future. Our risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving nature of these threats. Techniques used by others to gain unauthorized access to personal, confidential, proprietary, or sensitive information or disrupt systems and networks for economic or strategic gain are constantly evolving, increasingly sophisticated, increasingly difficult to detect and successfully defend against and may see their frequency increased, and effectiveness enhanced, by the use of AI. Further, cybersecurity risks maybe heightened as a result of ongoing global conflicts such as the military conflict between Russia and Ukraine and the related sanctions imposed by the United States and other countries, or the ongoing conflicts in the Middle East and their regional effects. As a result, cybersecurity and the continued development and enhancement of controls, processes and practices designed to protect systems, computers, software, data and networks from attack, damage or unauthorized access is a priority. As cyber threats continue to evolve, we may be required to expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.

The occurrence of any unauthorized access to, attacks on cybersecurity breaches of other information security threats to us or our service providers’, suppliers’ or subcontractors’ information technology infrastructure, systems or networks or data, or our failure to make adequate or timely disclosure to the public, regulators, or law enforcement agencies following any such event, could disrupt our infrastructure, systems, or networks or those of our customers, impair our ability to provide services to our customers and may jeopardize the security of data collected, stored, transmitted or otherwise processed through our information technology infrastructure, systems and networks. As a result, we could be exposed to claims, fines, penalties, loss of revenues, product development delays, compromise, corruption, or loss of confidential, proprietary, or sensitive information (including personal information or technical business information), contract terminations and damages, remediation costs and other costs and expenses, regulatory investigations or sanctions, indemnity obligations, and other potential liabilities. Any of the foregoing could adversely affect our reputation, ability to win work on sensitive contracts or loss of current and future contracts (including sensitive U.S. government contracts), business operations and financial results. We have insurance coverage against some cyber-risks and attacks; however, our insurer may deny coverage as to any future claim, our insurance coverage may not be sufficient to offset the impact of a material loss event, and such insurance may increase in cost or cease to be available on commercial terms in the future.

 

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We maintain information in digital form as necessary to conduct our business, including confidential and proprietary information and personal information regarding our employees.

Data maintained in digital form is subject to the risk of intrusion, tampering, and theft. We develop and maintain systems to prevent this from occurring, but it is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. Moreover, despite our efforts, the possibility of intrusion, tampering, and theft cannot be eliminated entirely, and risks associated with each of these acts remain. In addition, we provide confidential information, digital content and personal information to third parties when it is necessary to pursue business objectives. While we obtain assurances that these third parties will protect this information and, where appropriate, monitor the protection employed by these third parties, there is a risk that data systems of these third parties may be compromised. We, and the service providers, suppliers and subcontractors on which we rely, are also subject to systems failures, including network, software or hardware failures, whether caused by us, third-party service providers, cybersecurity threats, malicious insiders, natural disasters, power shortages, terrorist attacks, pandemics or other events, which could cause loss of data and interruptions or delays in our business, cause us to incur remediation costs or subject us to claims and damage our reputation. If our data systems or data systems of these third parties are compromised, our ability to conduct our business may be impaired, we may lose profitable opportunities, or the value of those opportunities may be diminished, and we may lose revenue as a result of unlicensed use of our intellectual property. A breach of our network security or other theft or misuse of confidential and proprietary information, digital content or personal employee information could subject our to business, regulatory, litigation, and reputation risk, which could have a materially adverse effect on our business, financial condition, and results of operations. In addition, the failure or disruption of our communications, or those of our service providers, suppliers or subcontractors, could cause us to interrupt or suspend our operations or otherwise adversely affect our business. Our property and business interruption insurance may be inadequate to compensate us for all losses resulting from any system or operational failure or disruption.

We utilize AI, which could expose us to liability or adversely affect our business, especially if we are unable to compete effectively with others in adopting AI.

We utilize AI, including generative artificial intelligence, machine learning, and similar tools and technologies that collect, aggregate, analyze, or generate data or other materials or content, in connection with our business. There are significant risks involved in using AI and no assurance can be provided that our use of AI will enhance our products or services, produce the intended results, or keep pace with our competitors. For example, AI systems may be flawed, insufficient, of poor quality, rely upon incorrect or inaccurate data, reflect unwanted forms of bias, or contain other errors or inadequacies, any of which may not be easily detectable; AI has been known to produce false or “hallucinatory” inferences or outputs; our use of AI can present ethical issues and may subject us to new or heightened legal, regulatory, ethical, or other challenges; and inappropriate or controversial data practices by developers and end-users, or other factors adversely affecting public opinion of AI, could impair the acceptance of AI solutions, including those incorporated in our products and services. If the AI tools that we use are deficient, inaccurate, or controversial, we could incur operational inefficiencies, competitive harm, legal liability, brand or reputational harm, or other adverse impacts on our business and financial results. If we do not have sufficient rights to use the data or other material or content on which the AI tools we use rely (or if the AI tool itself was developed without sufficient rights to materials on which the AI tool was trained), we also may incur liability through the violation of applicable laws and regulations, third-party intellectual property, data privacy, or other rights, or contracts to which we are a party. Further, because intellectual property issues surrounding copyrighted content used to develop and train AI systems, including issues of whether the output of AI systems violates intellectual property rights in such copyrighted content, are the subject of active litigation in courts in the U.S. and other jurisdictions, the outcomes of such cases could limit our ability to continue using certain AI systems and tools, or otherwise expose us to liability relating to intellectual property infringement or other intellectual property violations.

In addition, AI regulation is rapidly evolving worldwide as legislators and regulators increasingly focus on these powerful emerging technologies. The technologies underlying AI and its uses are subject to a variety of laws and regulations, including intellectual property, data privacy and security, consumer protection, competition, and equal opportunity laws, and are expected to be subject to increased regulation and new

 

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laws or new applications of existing laws and regulations. AI is the subject of ongoing review by various U.S. governmental and regulatory agencies, and various U.S. states and other foreign jurisdictions are applying, or are considering applying, their own regulations and frameworks, including those addressing platform moderation, data privacy, and security laws and regulations to AI. We may not be able to anticipate how to respond to these rapidly evolving regulations and frameworks, and may need to expend resources to adjust our operations or offerings in certain jurisdictions if the regulations or frameworks are inconsistent across jurisdictions. Furthermore, because AI technology itself is highly complex and rapidly developing, it is not possible to predict all of the legal, operational, or technological risks that may arise relating to the use of AI.

Low barriers to entry and high competition in the industry could impact our ability to obtain contracts and, therefore, affect our future revenues and growth prospects.

There is high potential that we will face intense competition from other companies, some of which can be expected to have longer operating histories and more financial resources, manufacturing, regulatory and marketing experience than us, along with established customer relationships. Increased competition by larger and better financed competitors could materially and adversely affect our business, financial condition and results of operations. Larger competitors with more diverse product and service offerings may reduce the price of products that compete with theirs or may bundle them with other products and services. Competitive pressures created by any one of our competitors could have a material adverse effect on our business, results of operations and financial condition. New technologies and the expansion of existing technologies may increase the competitive pressures on us by enabling our competitors to offer a lower-cost product. To remain competitive, we must consistently provide superior service, technology, and performance to our customers on a cost-effective basis while understanding customer priorities and maintaining customer relationships. Our competitors may be able to provide their customers with different or greater capabilities or technologies or better contract terms than we can provide, including technical qualifications, past contract experience, geographic presence, price and the availability of qualified professional personnel, or be willing to accept more risk or lower profitability in competing for contracts. In addition, we believe that some of our competitors have products undergoing TSA certification. Our failure to compete successfully could result in lost sales and could hamper our financial results. Our management is aware of several companies in the security industry that are developing competing technologies that can detect weapons, such as guns, via imaging, metal detection and millimeter wave technology. See “Business — Competition” for additional information about our competitors.

We face risks associated with our international business.

A component of our strategy is to expand internationally. Expansion into international markets will require management’s attention and resources. We have limited experience in localizing our service, and we believe that many of our competitors are also undertaking expansion into foreign markets. There can be no assurance that we will be successful in expanding into international markets or generating revenues from foreign operations. In addition, there are certain risks inherent in doing business on an international basis.

These risks may include:

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legal uncertainty regarding liability, tariffs and other trade barriers and related trade tensions;

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laws and policies affecting trade, investment and taxes, including laws and policies relating to the repatriation of funds and withholding taxes, and changes in these laws;

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failure to comply with U.S. government and foreign laws and regulations applicable to international business, including, without limitation, those related to employment, data privacy and security, taxes, technology transfer, information security, environment, data transfer, import and export controls (including the International Traffic in Arms Regulations administered by the U.S. Department of State and the anti-boycott provisions of the Export Administration Regulations administered by the U.S. Department of Commerce’s Bureau of Industry and Security), sanctions, and other administrative, legislative or regulatory actions that could materially interfere with our ability to offer our products or services in certain countries or have an adverse impact on our business with the U.S. government, and expose us to risks and costs of noncompliance with such laws and regulations, in addition to administrative, civil or criminal penalties;

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difficulties in staffing and managing foreign operations;

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longer payment cycles, different accounting practices, problems in collecting accounts receivable;

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changes in local regulatory requirements, including restrictions on content and differing cultural tastes and attitudes;

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international jurisdictions where laws are less protective of intellectual property and varying attitudes towards the piracy of intellectual property;

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financial instability and increased market concentration of buyers in foreign markets;

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the instability of foreign economies and governments;

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fluctuating foreign exchange rates;

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seasonal reductions in business activity;

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the spread of communicable diseases in such jurisdictions, which may impact business in such jurisdictions;

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the ongoing conflict between Russia and Ukraine, which has resulted in the imposition by the U.S. and other nations of restrictive actions against Russia, Belarus and certain banks, companies and individuals;

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the ongoing conflicts in the Middle East and their regional effects; and

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war and acts of terrorism.

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We are also subject to the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act of 2010 (the “U.K. Bribery Act”) and other anti-corruption and anti-bribery laws and regulations in jurisdictions where we do business. These laws and regulations generally prohibit improper payments or offers of improper payments to government officials, political parties, or commercial partners to obtain or retain business or secure an improper business advantage. We have operations, and deal with and make sales to governmental or quasi-governmental entities in non-U.S. countries, including those known to experience corruption, and further expansion of our non-U.S. sales efforts may involve additional regions. Our activities in these countries pose a heightened risk of unauthorized payments or offers of payments by one of our employees or third-party business partners, representatives, and agents that could violate various laws, including the FCPA. The FCPA, U.K. Bribery Act and other applicable anti-bribery and anti-corruption laws may also hold us liable for acts of corruption and bribery committed by our third-party business partners, representatives and agents even if we do not explicitly authorize such activities. We cannot assure you that our employees or other third parties working on our behalf have not engaged or will not engage in conduct in violation of our policies or applicable law for which we might ultimately be held responsible.

We are also required to comply with applicable export controls and economic and trade sanctions laws and regulations, such as those administered and enforced by OFAC, the U.S. Department of State, and the U.S. Department of Commerce. Our global operations expose us to the risk of violating or being accused of violating these laws.

Violations of any of these laws or regulations, including the FCPA and the U.K. Bribery Act, may result in whistleblower complaints, negative media coverage, investigations, imposition of significant legal fees, loss of export privileges, as well as severe criminal or civil sanctions, including suspension or debarment from U.S. government contracting. We may also be subject to other liabilities and adverse effects on our reputation, which could negatively affect our business, results of operations, financial condition, and growth prospects. In addition, responding to any enforcement action may result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees. Although our international operations have historically generated a small proportion of our revenues, we are seeking to grow our international business. Our exposure for violating these laws will increase as our non-U.S. presence expands and as we increase sales and operations in foreign jurisdictions. Although we have adopted policies and procedures reasonably designed to promote compliance with such laws, there can be no assurance that such policies or procedures will be effective at all times or protect us against liability under these or other laws for actions taken by our employees and other third parties who are acting on our behalf

 

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with respect to our business. If we are not in compliance with anti-corruption laws and other laws governing the conduct of business with government entities and/or officials (including local laws) or export controls and economic and trade sanction laws and regulations, we may be subject to criminal and civil penalties and other remedial measures, which could harm our business, financial condition, results of operations, cash flows, and prospects. In addition, investigations of any actual or alleged violations of such laws or policies related to us could harm our business, financial condition, results of operations, cash flows, and prospects.

Any of the above could adversely affect the success of our international operations. To the extent that we expand our international operations and have additional portions of our international revenues denominated in foreign currencies, we could become subject to increased risks relating to foreign currency exchange rate fluctuations. There can be no assurance that one or more of the factors discussed above will not have a material adverse effect on our future international operations and, consequently, on our business, results of operations and financial condition.

Risks Relating to Market Conditions

Our business is impacted by worldwide economic conditions.

Our anticipated performance will be subject to worldwide economic conditions, such as unemployment levels, interest rates or inflation rates, each of which influence, among other things, consumer trends and the levels of government and private sector security spending.

We expect a number of factors to cause our operating results to fluctuate on a quarterly basis, which may make it difficult to predict our future performance.

Our revenues and operating results could vary significantly from quarter to quarter because of a variety of factors, many of which are outside of our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful. In addition to other risk factors discussed in this section, factors that may contribute to the variability of our quarterly results include:

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the impact of worldwide economic conditions and their impact on levels of security and defense spending;

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certain fixed costs inherent in our business, which limit our ability to adjust for period-to-period changes in demand;

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system interruptions that impair access to our customers, key vendors or communication with our technology and any related impact on our reputation;

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our ability to forecast revenues accurately and appropriately plan our expenses; and

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the impact of fluctuations in currency exchange rates, to the extent that we source material or labor from outside of United States, sell our products outside of United States or operate outside of United States.

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In addition, our operating results may not meet the expectations of investors or public market analysts who follow us.

Managing our growth will require significant expenditures and allocation of valuable management resources, and the failure to do so appropriately may harm our business, operating results and financial condition.

Deterioration of economic conditions or weakening in credit or capital markets may have a material adverse effect on our business, results of operations and financial condition.

Volatile, negative, or uncertain economic conditions, an increase in the likelihood of a recession, or concerns about these or other similar risks may negatively impact our customers’ ability and willingness to fund their projects. For example, declines in state and local tax revenues, as well as other economic declines, may result in lower government spending, which could impact the amount of future revenue we receive from governmental entities. Our customers reducing, postponing, or canceling spending on projects in respect

 

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of which we provide services may reduce demand for our products quickly and with little warning, which could have a material adverse effect on our business, results of operations, and financial condition.

Moreover, instability in the credit or capital markets in the U.S., including as a result of failures of financial institutions and any related market-wide reduction in liquidity, or concerns or rumors about events of these kinds or similar risks, could affect the availability of credit or our credit ratings, making it relatively difficult or expensive to obtain additional capital at competitive rates, on commercially reasonable terms or in sufficient amounts, or at all, thus making it more difficult or expensive for us to access funds or refinance our existing indebtedness, or obtain financing for acquisitions. Such instability could also cause counterparties, including vendors, suppliers, and subcontractors, to be unable to perform their obligations or to breach their obligations to us under our contracts with them.

We cannot predict the consequences of current or future geopolitical events, but they may adversely affect the markets in which we operate and our results of operations.

Ongoing instability and current conflicts in global markets, including in Eastern Europe, the Middle East, and Asia, and the potential for other conflicts and future terrorist activities and other recent geopolitical events throughout the world, including the ongoing conflict between Russia and Ukraine, the ongoing conflicts in the Middle East and their regional effects, and increased tensions in Asia, have created and may continue to create economic and political uncertainties and impacts that could have a material adverse effect on our business, operations, and profitability. These types of matters cause uncertainty in financial markets and may significantly increase the political, economic and social instability in the geographic areas in which we operate.

In addition, in connection with the current status of international relations with Russia, particularly in light of the conflict between Russia and Ukraine, the U.S. government has imposed enhanced export controls on certain products and sanctions on certain industry sectors and parties in Russia. The governments of other jurisdictions in which we operate may also implement sanctions or other restrictive measures. These potential sanctions and export controls, as well as any responses from Russia, could adversely affect us and/or our supply chain, business partners, or customers.

Tariffs and related retaliatory tariffs may impact trade between the United States and foreign countries and could increase our manufacturing costs, adversely affect our margins and delivery timelines and impact our ability to compete in applicable markets.

The current U.S. administration has recently made statements and taken actions that has led to significant changes to U.S. and international trade policies, including the imposition of tariffs and export control and sanctions restrictions affecting certain products manufactured abroad. These tariffs have resulted in, and may continue to trigger, retaliatory actions by affected countries, including the imposition of tariffs on the United States by other countries, which has created significant uncertainty about the future relationship between the United States and other countries with respect to trade policies, treaties and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the United States.

We expect to be impacted by increases in tariffs, in particular for components used in HEXWAVE™ and the HD-AIT Upgrade Kit originating from foreign jurisdictions, including China. We anticipate further general economic disruption and uncertainty surrounding trade stability during the near term, which may increase our component costs. Although we evaluate alternative sourcing strategies, we may not be able to fully mitigate the impact of tariff-related cost increases or pass those increased costs through to customers due to competitive pressures or fixed-price contracts. Any increase in tariffs, imposition of new trade restrictions, or interruption in global supply chains could adversely affect our cost structure, reduce margins, delay product deliveries, or negatively impact our ability to scale production. In addition, retaliatory tariffs on United States goods that apply to our products could affect our competitiveness in applicable markets.

Currency fluctuations may have a material effect on us.

Fluctuations in the exchange rate between the United States dollar, other currencies and the Canadian dollar may have a material effect on our results of operations. To date, we have not engaged in currency

 

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hedging activities. To the extent that we may seek to implement hedging techniques in the future with respect to our foreign currency transactions, there can be no assurance that we will be successful in such hedging activities.

Any disruption at our places of business due to natural and manmade disasters could delay revenues and increase our expenses.

Our systems and operations are vulnerable to damage or interruption from earthquakes, volcanoes, fires, floods, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins and similar events. For example, a significant natural disaster, such as an earthquake, fire or flood, could have a material adverse impact on our business, operating results and financial condition, and our insurance coverage may be insufficient to compensate us for losses that may occur. Our servers may also be vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering with our computer systems, which could lead to interruptions, delays, loss of critical data or the unauthorized disclosure of confidential data. We may not have sufficient protection or recovery plans in certain circumstances and our business interruption insurance (as and if carried by us) may be insufficient to compensate us for losses that may occur. As we expect to rely heavily on our servers, computer and communications systems and the internet to conduct our business and provide a high-quality customer experience, such disruptions could negatively impact our ability to run our business, which could have an adverse effect on our operating results.

Further, our business may not be insurable or the insurance may not be purchased due to high cost. Should such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of our company.

The effects of an epidemic, pandemic or similar outbreak have negatively impacted and could in the future negatively impact our business and financial results.

Any epidemics, pandemics or similar outbreaks could create economic uncertainty and disruptions to the global economy that could adversely affect our business and financial results, or could significantly curtail the movement of people, goods and services worldwide. For example, the COVID-19 pandemic disrupted our supply chain and limited our ability to conduct research and product development, manufacturing, and other important business activities, which forced us to pay for expedited processing and shipping, resulted in cost markups and adversely affected our business and financial results. Furthermore, if any future epidemics, pandemics or similar outbreaks occur, customer events where our products are used, including concerts, festival and sporting events, may be canceled, postponed or moved to virtual-only experiences. In addition, traffic at transportation hubs where our products are used, such as airports, railways, cruise lines and bus stations, may become more limited. This would have a negative impact on our operations. Additionally, any epidemics, pandemics, or similar outbreaks may cause extreme volatility in financial and other capital markets. This volatility may adversely impact the fair value of our securities which may hamper our ability to raise additional capital to maintain operations.

Risks Relating to Legal Proceedings and Regulatory Compliance

Our operating results may be harmed if we are not in compliance with various local, provincial and federal tax laws.

Our business will be subject to various local, provincial and federal tax payment and collection requirements. Amounts that we are expected to be required to pay or collect may change as our business develops and expands. As a result, we will need to continually ensure proper taxes are paid or collected and remitted to the appropriate tax agencies. If we do not collect the appropriate taxes from our customers, we may need to pay more than what we have collected. In addition, we may be audited by various agencies to ensure compliance with tax collection requirements. Such audits could result in additional sales or other tax collection obligations, which we may not be able to recover from our customers. Such obligations could have a material adverse impact on our future operating results.

Our business and operations expose us to numerous legal and regulatory requirements, and any violation of these requirements could harm our business.

We are subject to numerous state, federal and foreign laws and directives and regulations in the U.S. and abroad that involve matters central to our business, including data privacy and security, employment

 

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and labor relations, immigration, taxation, anti-corruption, anti-bribery, import-export controls, trade restrictions, internal and disclosure control obligations, securities regulation and anti-competition. Compliance with legal requirements is costly, time-consuming and requires significant resources. Violations of one or more of these legal requirements in the conduct of our business could result in significant fines and other damages, criminal sanctions against us or our officers, prohibitions on doing business and damage to our reputation. Violations of these regulations or contractual obligations related to regulatory compliance in connection with the performance of customer contracts could also result in liability for significant monetary damages, fines and criminal prosecution, unfavorable publicity, and other reputational damage, restrictions on our ability to compete for certain work and allegations by our customers that we have not performed our contractual obligations.

Investigations, audits, claims, disputes, enforcement actions, litigation, arbitration, or other legal proceedings could require us to pay potentially large damage awards or penalties and could be costly to defend, which would adversely affect our cash balances and profitability, and could damage our reputation.

We may be subject to litigation, claims, investigations, audits, enforcement actions, arbitrations, or other legal proceedings that could negatively affect our business operations and financial position. We may be subject to consumer class action lawsuits. Adverse judgments or settlements in some or all of these legal disputes may result in significant monetary damages, penalties, or injunctive relief against us. Any claims or litigation could be costly to defend, and even if we are successful or fully indemnified or insured, they could damage our reputation and make it more difficult to compete effectively or obtain adequate insurance in the future, and responding to any action may result in a significant diversion of management’s attention and resources. Litigation and other claims are subject to inherent uncertainties and management’s view of these matters may change in the future. Litigation disputes could cause us to incur unforeseen expenses, occupy a significant amount of management’s time and attention, and negatively affect our business operations and financial position.

Environmental matters, including unforeseen costs associated with compliance and remediation efforts and government and third-party claims, could have a material adverse effect on our reputation and our financial position, results of operations, and cash flows.

Our operations are subject to and affected by various federal, state, local, and foreign environmental laws and regulations, as they may be expanded, changed, or enforced differently over time. Compliance with these existing and evolving environmental laws and regulations requires and is expected to continue to require significant operating and capital costs. We may be subject to substantial administrative, civil, or criminal fines, penalties, or other sanctions (including suspension and debarment) for violations. If we are found to be in violation of the Federal Clean Air Act or the Clean Water Act, the facility or facilities involved in the violation could be placed by the Environmental Protection Agency on a list of facilities that generally cannot be used in performing on U.S. government contracts until the violation is corrected.

Stricter or different remediation standards or enforcement of existing laws and regulations; new requirements, including regulation of new substances; discovery of previously unknown contamination or new contaminants; imposition of fines, penalties, or damages (including natural resource damages); a determination that certain remediation or other costs are unallowable; rulings on allocation or insurance coverage; and/or the insolvency, inability or unwillingness of other parties to pay their share, could require us to incur material additional costs in excess of those anticipated.

We may become a party to legal proceedings and disputes involving government and private parties (including individual and class actions) relating to alleged impacts from pollutants released into the environment, including bodily injury and property damage. These matters could result in material compensatory or other damages, remediation costs, penalties, non-monetary relief, and adverse allowability or insurance coverage determinations. The impact of these factors is difficult to predict, but one or more of them could harm our reputation and business and have a material adverse effect on our financial position, results of operations and cash flow.

Protecting and defending against intellectual property claims may have a material adverse effect on our business.

As our business depends substantially on our intellectual property, we could be adversely affected if we do not adequately protect our intellectual property rights. We regard our marks, rights, and trade secrets

 

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and other intellectual property rights as critical to the success of our business. To protect our investments and our rights in these various intellectual properties, we may rely on a combination of patents, trademark and copyright law, trade secret protection and confidentiality agreements and other contractual arrangements with our employees, clients, strategic partners, acquisition targets and others to protect proprietary rights. These afford only limited protection. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our technology’s features, software and functionality or obtain and use information that we consider proprietary. There can be no assurance that the steps taken by us to protect proprietary rights will be adequate or that third parties will not infringe or misappropriate our copyrights, trademarks and similar proprietary rights, or that we will be able to detect unauthorized use and take appropriate steps to enforce rights. Moreover, policing our proprietary rights is difficult and may not always be effective. In particular, we may need to enforce our rights under the laws of countries that do not protect proprietary rights to as great an extent as do the laws of Canada. In addition, although we believe that our proprietary rights do not infringe on the intellectual property rights of others, there can be no assurance that other parties will not assert infringement claims against us. Such claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources.

Litigation or proceedings before governmental authorities and administrative bodies in the United States, Canada and abroad may be necessary in the future to enforce our intellectual property rights, to protect our patent rights, trade secrets, trademarks and domain names and to determine the validity and scope of the proprietary rights of others. Our efforts to enforce or protect our proprietary rights may be ineffective and could result in substantial costs and diversion of resources and could substantially harm our operating results. Additionally, 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. Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation, could delay further sales or the implementation of our products and offerings, impair the functionality of our products and offerings, delay introductions of new features or enhancements, result in our substituting inferior or more costly technologies into our products and offerings, or injure our reputation.

We will rely on trade secrets to protect technology where we do not believe patent protection is appropriate or obtainable. Trade secrets are difficult to protect. While commercially reasonable efforts to protect trade secrets will be used, strategic partners, employees, consultants, contractors or scientific and other advisors may unintentionally or willfully disclose information to competitors. If we are not able to defend patents or trade secrets, then we will not be able to exclude competitors from developing or marketing competing products, and we may not generate enough revenue from product sales to justify the development cost of products or achieve or maintain profitability.

Our exposure to risks associated with the use of intellectual property may increase as a result of acquisitions, as we have a lower level of visibility into the development process with respect to acquired technology or the care taken to safeguard against infringement risks.

Assertions by third parties of infringement or other violations by us of their intellectual property rights, whether or not correct, could result in significant costs and harm to our business and operating results.

Third parties may make infringement and similar or related claims after we have acquired technology that had not been asserted prior to such acquisition. We are not currently aware of any litigation or other proceedings or claims by third parties that our technologies or methods infringe upon their intellectual property. While it is our practice to undertake pre-filing searches and analyses of developing technologies, we cannot guarantee that we have identified every patent or patent application that may be relevant to the research, development, or commercialization of our products. Moreover, we cannot assure that third parties will not assert valid, erroneous or frivolous patent infringement claims. If we do infringe a third party’s rights and are unable to provide a sufficient workaround, we may need to negotiate with holders of those rights to obtain a license to those rights or otherwise settle any infringement claim as a party that makes a claim of infringement against us may obtain an injunction preventing us from shipping products containing the allegedly infringing technology. As the number of products and competitors in the market increase and overlaps occur, claims of infringement, misappropriation, and other violations of intellectual property rights may increase. Any claim of infringement, misappropriation, or other violation of intellectual property

 

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rights by a third party, even those without merit, could cause us to incur substantial costs defending against the claim and could distract management from the business. Future assertions of patent rights by third parties, and any resulting litigation, may involve patent holding companies or other adverse patent owners who have no relevant product revenues and against whom our own patents may therefore provide little or no deterrence or protection. There can be no assurance that we will not be found to infringe or otherwise violate any third-party intellectual property rights or to have done so in the past.

An adverse outcome of a dispute may require us to:

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pay substantial damages, including treble damages, if we are found to have willfully infringed a third party’s patents or copyrights;

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make substantial payments for legal fees, settlement payments or other costs or damages;

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cease selling, making, licensing, or using products that are alleged to infringe or misappropriate the intellectual property of others;

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expend additional development resources to attempt to redesign our products or otherwise develop non-infringing technology, which may not be successful;

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enter into potentially unfavorable royalty or license agreements to obtain the right to use necessary technologies or intellectual property rights;

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take legal action or initiate administrative proceedings to challenge the validity and scope of the third-party rights or to defend against any allegations of infringement; and

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indemnify other third parties.

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In addition, royalty or licensing agreements, if required or desirable, may be unavailable on terms acceptable to us, or at all, and may require significant royalty payments and other expenditures. Some licenses may also be non-exclusive, and therefore our competitors may have access to the same technology licensed to it. Any of the foregoing events could seriously harm our business, financial condition, and results of operations.

Even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of management and harm our business and operating results. Moreover, 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 shares. We expect that the occurrence of infringement claims is likely to grow as the market for our products and solutions grows. Accordingly, our exposure to damages resulting from infringement claims could increase and this could further exhaust our financial and management resources.

We may become party to litigation that adversely affects our business.

We may become party to litigation from time to time in the ordinary course of business which could adversely affect our business. Should any litigation in which we become involved be determined against us, such a decision could adversely affect our ability to continue operating and the market price for the Common Shares. Even if we are involved in litigation and win, litigation can redirect significant company resources.

Our commercial success will depend in part on not infringing upon the patents and proprietary rights of other parties and enforcing our own patents and proprietary rights against others. Our research and development programs will be in highly competitive fields in which numerous third parties have issued patents and pending patent applications with claims closely related to the subject matter of our programs. We are not currently aware of any litigation or other proceedings or claims by third parties that our technologies or methods infringe on their intellectual property.

While it is our practice to undertake pre-filing searches and analyses of developing technologies, we cannot guarantee that we have identified every patent or patent application that may be relevant to the research, development, or commercialization of our products. Moreover, we cannot assure that third parties will not assert valid, erroneous, or frivolous patent infringement claims.

 

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Claims against us relating to any acquisition, licensing or business combination may necessitate seeking claims against the seller for which the seller may not indemnify us or that may exceed the seller’s or licensor’s indemnification obligations.

There may be liabilities assumed in any technology acquisition or licensing or business combination that we did not discover or that we underestimated in the course of performing our due diligence. Although a seller or licensor generally will have indemnification obligations to us under a licensing, acquisition or merger agreement, these obligations usually will be subject to financial limitations, such as general deductibles and maximum recovery amounts, as well as time limitations. There is no assurance that our right to indemnification from any seller or licensors will be enforceable, collectible or sufficient in amount, scope or duration to fully offset the amount of any undiscovered or underestimated liabilities that we may incur. Any such liabilities could have a material adverse effect on our business, financial condition, operating results, liquidity, and prospects.

Confidentiality arrangements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information.

We have devoted substantial resources to the development of our technology, business operations, and business plans. In order to protect our trade secrets and proprietary information, we rely in significant part on confidentiality arrangements with our employees, licensees, independent contractors, advisors, suppliers and customers. However, we cannot guarantee that we have entered into such agreements with each party that may have or has had access to our trade secrets or proprietary technology and processes. Additionally, although our employees and contractors are subject to confidentiality obligations and use restrictions, this protection may be inadequate to deter or prevent them from infringing, misappropriating, or otherwise violating our confidential information, technology, or other intellectual property or proprietary rights, and can be difficult to enforce. Further, despite these efforts, these arrangements may not be effective to prevent disclosure of confidential information, including trade secrets, and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. Unauthorized parties may also attempt to copy or reverse engineer certain aspects of our technologies that we consider proprietary. In addition, if others independently develop equivalent knowledge, methods, and know-how, we would not be able to assert trade secret rights against such parties. Monitoring unauthorized uses and disclosures is difficult, and we do not know whether the steps we have taken to protect our proprietary information will be effective.

Moreover, policing unauthorized use of our technologies, trade secrets and intellectual property and enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, time-consuming, and the outcome is unpredictable. In addition, effective trade secret protection may not be available in every country in which our products are available or where we have employees or independent contractors as some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be disclosed to or independently developed by a competitor or other third party, our competitive position would be materially and adversely harmed. The loss of trade secret protection could make it easier for third parties to compete with our products by copying functionality. In addition, any changes in, or unexpected interpretations of, the trade secret and employment laws in any country in which we operate may compromise our ability to enforce our trade secret and intellectual property rights. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

We rely on permits, certifications and licenses to operate our business and produce our products.

Our operations and our products require licenses, certifications and permits from various governmental and regulatory authorities. There can be no assurance that such licenses and permits will be granted, maintained or renewed. Any failure to obtain, maintain or renew any of the licenses and permits required could have a material adverse effect on our business, operating results or financial condition.

Like many other electronic devices, systems such as HEXWAVE™ are subject to environmental standards, FCC compatibility regulations, and electrical safety requirements. Millimeter wavelength scanners used in airports, for example, which generate images of the human subjects raise privacy concerns and regulatory issues associated with the capture of personal data.

 

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The deployment of HEXWAVE™ to sports and other public venues may require certifications by authorities who are working to apply new performance standards across the urban security marketplace. These certifications may be required by customers as part of their qualifying standards for procurement. This includes, but is not limited to, the National Center for Spectator Sports Safety and Security and the Qualified Anti-Terrorism Technology under the Department of Homeland Security Safety Act. Other standards that are also required is the Underwriters Laboratory Certification. The development activities are accounting for these certifications within the deployment timelines.

Our business is subject to complex and evolving laws and regulations regarding data privacy and security, which could subject us to investigations, claims, or monetary penalties against us, require us to change our business practices, or otherwise adversely affect our revenues and profitability.

We are subject to various laws and regulations in the U.S. and globally relating to data privacy and security. These laws and regulations are complex, constantly evolving, and may be subject to significant change in the future. In addition, the application, interpretation and enforcement of these laws and regulations are often uncertain, particularly in new and rapidly evolving areas of technology, and may differ in material respects among jurisdictions, interpreted and applied inconsistently among jurisdictions or in a manner that is inconsistent with our current policies and practices, all of which can make compliance challenging and costly, and expose us to relate risks and liabilities.

In the United States, numerous federal, state, and local data privacy and security laws and regulations govern the collection, sharing, use, retention, disclosure, security, storage, transfer, and other processing of personal information. As a contractor supporting defense and national security customers, we are also subject to additional, specific regulatory compliance requirements relating to data privacy and security. Under the U.S Department of Defense Federal Acquisition Regulation Supplement and other federal regulations, we are required to implement the security and privacy controls in the National Institute of Standards and Technology Special Publications on certain of our networks and information technology systems. To the extent that we do not comply with applicable security and control requirements, and there is unauthorized access or disclosure of sensitive information (including personal information), this could potentially result in a contract termination or loss of intellectual property, which could materially and adversely affect our business and financial results and lead to reputational harm. We will also be subject to numerous emerging and currently unspecified cybersecurity requirements under the Federal Acquisition Regulation and through federal regulation, to include the U.S Department of Defense Cybersecurity Maturity Model Certification program, which, once implemented, will require successful assessment by a third party against specified cyber controls. Should we or our supply chain fail to implement these new requirements, this may adversely affect our ability to receive awards or execute on relevant government programs. We are in the process of evaluating our readiness against these new requirements and while we have confidence we will meet or exceed requirements, to the extent we do not, we will be unable to bid on such contract awards, which could adversely impact our revenue and profitability.

The overarching complexity of data privacy and security laws and regulations around the world poses a compliance challenge that could manifest in costs, damages, or liability in other forms as a result of failure to implement proper programmatic controls, failure to adhere to those controls, or the breach of applicable data privacy and security requirements by us, our employees, our business partners (including our service providers, suppliers or subcontractors) or our customers. We also expect that there will continue to be new proposed laws, regulations, and industry standards concerning data privacy and security, and we cannot yet determine the impact such future laws, regulations and standards, or amendments to or re-interpretations of existing laws, regulations or standards, may have on our business. Any failure or perceived failure by us, our service providers, suppliers, subcontractors, or other business partners to comply with applicable laws, regulations, our public privacy policies and other public statements about data privacy and security and other obligations in these areas could result in regulatory or government actions lawsuits against us (including civil claims, such as representative actions and other class action-type litigation), legal liability, monetary penalties, fines, sanctions, damages and other costs, orders to cease or change our processing of data, changes to our business practices, diversion of internal resources, and harm to our reputation, all of which could adversely affect our business, financial condition and results of operations. We may also incur substantial expenses in implementing and maintaining compliance with such laws, regulations, and other obligations.

 

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Risks Relating to Our Financial Condition

We face substantial capital requirements and may fail to raise additional capital.

We may require additional capital in the future to support ongoing operations, undertake capital expenditures or commence acquisitions or other business combination transactions. Due to the early stage of the industry in which we operate, we expect to face additional competition from new entrants. To become and remain competitive, we require research and development, marketing, sales and client support. We may not have sufficient resources to maintain research and development, marketing, sales and client support efforts on a competitive basis which could materially and adversely affect our business, financial condition and results of operations. We may not be able to obtain additional debt or equity financing on favorable terms, if at all. If we raise additional equity financing, our shareholders may experience significant dilution of their ownership interests, and the per-share value of the Common Shares could decline. Moreover, any new equity securities that we issue could have rights, preferences and privileges senior to those of the holders of Common Shares. If we engage in debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness and force us to maintain specified liquidity or other ratios. If we need additional capital and cannot raise or otherwise obtain it on acceptable terms, we may not be able to, among other things:

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develop or introduce service enhancements to customers;

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continue to expand our development, sales and marketing and general and administrative functions;

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acquire complementary technologies or businesses;

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expand our operations;

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hire, train and retain employees; or

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respond to competitive pressures or unanticipated working capital requirements.

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The issuance of debt could impair our ability to obtain additional financing.

From time to time, we may enter into transactions to acquire assets or the shares of other companies. These transactions may be financed partially or wholly with debt, which may increase our debt levels above industry standards. Our constating documents do not limit the amount of indebtedness that we may incur. The level of our indebtedness from time to time could impair our ability to obtain additional financing in the future on a timely basis, or at all, take advantage of business opportunities that may arise. Our ability to service our debt obligations will depend on our future operations, which are subject to prevailing industry conditions and other factors, many of which are beyond our control.

We are dependent on the Parabilis Credit Facilities, which are short-term, contain restrictive covenants, and include lender remedies that could materially harm us if triggered.

On August 19, 2024, we entered into a loan and security agreement with PFF, LLC (“Parabilis”) providing for a US$1,800,000 secured term loan (the “Parabilis Term Loan”) and a secured revolving credit facility with up to US$2,500,000 of capacity (the “Parabilis Revolving Credit Facility,” and together with the Parabilis Term Loan, the “Parabilis Credit Facilities”). On August 14, 2025, we amended the Parabilis Term Loan by updating the repayment schedule and providing for additional advances between August 2025 and October 2025 in an aggregate amount of US$0.65 million, which evidenced by a replacement promissory note reflecting a principal balance of approximately US$2.45 million. The promissory includes a confession-of-judgment provision under Virginia law. On September 1, 2025, we amended the Parabilis Revolving Credit Facility by extending the maturity date to May 31, 2026 with automatic one-year renewals, unless Parabilis provides 90-days’ notice, and agreeing to pay a 0.083% monthly commitment fee. The Parabilis Credit Facilities are secured and guaranteed and include affirmative and negative covenants, customary events of default, and lender remedies.

If we fail to comply with any covenants, if any events of default occur for which no waiver or amendment is obtained, if Parabilis elects not to renew the Parabilis Revolving Credit Facility or if we are unable to timely refinance the debt obligations subject to such covenants or take other mitigating actions, the holders of

 

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our indebtedness could, among other things, declare outstanding amounts immediately due and payable and, subject to the terms of relevant financing agreements, repossess or foreclose on collateral. In addition, the confession-of-judgment clause could allow Parabilis to obtain an immediate judgment against us in Virginia without advance notice or hearing, and to accelerate remedies against our assets. Any acceleration or actions to repossess or foreclose on collateral could also result in a downgrade of any credit ratings then applicable to us, which could result in additional events of default or limit our ability to obtain additional financing. Any acceleration or enforcement action could materially and adversely affect our liquidity, business, financial condition, and results of operations.

Because we have no history of dividends and do not intend to pay any cash dividends for the foreseeable future, capital appreciation, if any, would be your sole source of gain.

To date, we have not paid any dividends on our outstanding Common Shares. At this time, we do not expect to pay any cash dividends in the future in favor of utilizing cash to support the development of our business. Any future determination relating to our dividend policy will be made at the discretion of our board of directors (our “Board”) and will depend on a number of factors, including future operating results, capital requirements, financial condition and the terms of any credit facility or other financing arrangements we may obtain or enter into, future prospects and other factors our Board may deem relevant at the time such payment is considered. As a result, shareholders will have to rely on capital appreciation, if any, to earn a return on their investment in the Common Shares in the foreseeable future. See “Dividend Policy.”

We may need to divest assets if there is insufficient capital.

If sufficient capital is not available, we may be required to delay, reduce the scope of, eliminate or divest one or more of our assets or products, any of which could have a material adverse effect on our business, financial condition, prospects, or results of operations.

We are subject to liquidity risk due to the slowdown of the global economy.

The ongoing economic slowdown and downturn of global capital markets has generally made the raising of capital by equity or debt financing more difficult. Access to financing has been negatively impacted by the ongoing global economic risks. As such, we are subject to liquidity risks in meeting our development and future operating cost requirements in instances where cash positions are unable to be maintained, or appropriate financing is unavailable. These factors may impact our ability to raise equity or obtain loans and other credit facilities in the future and on terms favorable to us. If uncertain market conditions persist, our ability to raise capital could be jeopardized, which could have an adverse impact on our operations and the trading price of the Common Shares on Nasdaq.

Risks Relating to this Offering and Ownership of Our Securities

You will experience immediate and substantial dilution if you purchase Common Shares in this offering.

You will incur immediate and substantial dilution if you purchase Common Shares in this offering. After giving effect to the assumed sale by us of        Common Shares at an assumed initial public offering price of US$      per Common Share, the midpoint of the range set forth on the cover of this prospectus (excluding the exercise of the Over-Allotment Option to purchase additional Common Shares and after deducting underwriting discounts, commissions and estimated offering expenses payable by us), investors in this offering can expect an immediate dilution of US$      per Common Share. In addition, you may experience further dilution upon subsequent issuances of our securities, the exercise of outstanding options and warrants or if the underwriter exercises the Over-Allotment Option. See “— We will need to raise additional financing in the future which may dilute our share capital.”

There is no liquid public market for our Common Shares in the United States and we do not know whether one will develop to provide you with adequate liquidity. If our share price fluctuates after this offering, you could lose a significant part of your investment.

The Common Shares are listed on the TSXV, quoted on the OTCQB and listed on the FSE. Following our planned listing of our Common Shares sold in this offering on Nasdaq, our Common Shares will no

 

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longer be quoted on the OTCQB. Prior to this offering, there has not been a liquid public market for our Common Shares in the United States. If an active trading market does not develop, you may have difficulty selling any of the Common Shares that you buy. We cannot predict the extent to which investor interest in our company will lead to the development of an active trading market on Nasdaq or otherwise or how liquid that market might become. The initial public offering price for the Common Shares will be determined by negotiations between us and the underwriter and may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell our Common Shares at prices equal to or greater than the price paid by you in this offering. In addition to the risks described above, the market price of our Common Shares may be influenced by many factors, some of which are beyond our control, including actual or anticipated variations in our operating results; the failure of financial analysts to cover our Common Shares after this offering or changes in financial estimates by financial analysts, or any failure by us to meet or exceed any of these estimates or changes in the recommendations of any financial analysts that elect to follow our Common Shares or the shares of our competitors; announcements by us or our competitors of significant contracts or acquisitions; technological innovations by us or our competitors; future sales of our Common Shares; and investor perceptions of us and the market in which we operate.

The liquidity of our Common Shares may be decreased as a result of the Reverse Split.

The liquidity of our Common Shares may be affected adversely by the Reverse Split given the reduced number of shares that will be outstanding, especially if the market price of our Common Shares does not increase as a result of the Reverse Split. In addition, the Reverse Split may increase the number of shareholders who own odd lots (less than 100 shares) of our Common Shares, creating the potential for such shareholders to experience an increase in the cost of selling their shares and greater difficulty effecting such sales.

Although we believe that a higher market price of our Common Shares may help generate greater or broader investor interest, there can be no assurance that our increased share price following the Reverse Split will actually attract new investors, including institutional investors. In addition, there can be no assurance that the market price of our Common Shares will satisfy the investing requirements of those investors. As a result, the trading liquidity of our Common Shares may not necessarily improve.

U.S. Holders of our Common Shares may suffer adverse tax consequences if we are characterized as a passive foreign investment company.

The rules governing “passive foreign investment companies” ​(“PFICs”) can have adverse effects on U.S. Holders (as defined below in “Certain United States Federal Income Tax Considerations”) for U.S. federal income tax purposes. Generally, if, for any taxable year, at least 75% of our gross income is passive income, or at least 50% of the value of our assets (generally, using a quarterly average) is attributable to assets that produce passive income or are held for the production of passive income (including cash), we would be characterized as a PFIC for U.S. federal income tax purposes. The determination of whether we are a PFIC, which must be made annually after the close of each taxable year, depends on the particular facts and circumstances and may also be affected by the application of the PFIC rules, which are subject to differing interpretations. Our status as a PFIC will depend on the composition of our income and the composition and value of our assets (including goodwill and other intangible assets), which will be affected by how, and how quickly, we spend any cash that is raised in this offering or in any other subsequent financing transaction.

If we are a PFIC, a U.S. Holder would be subject to adverse U.S. federal income tax consequences, such as ineligibility for certain preferred tax rates on capital gains or on actual or deemed dividends, interest charges on certain taxes treated as deferred, and additional reporting requirements under U.S. federal income tax laws and regulations. A U.S. Holder may in certain circumstances mitigate adverse tax consequences of the PFIC rules by filing an election to treat the PFIC as a qualified electing fund, or QEF, or, if shares of the PFIC are “marketable stock,” which such term includes the Common Shares, for purposes of the PFIC rules, by making a mark-to-market election with respect to the shares of the PFIC. U.S. Holders should be aware that, for each tax year, if any, that we are a PFIC, we can provide no assurances that we will satisfy the record keeping requirements of a PFIC, or that we will make available to U.S. Holders the information such U.S. Holders require to make a QEF election with respect to us, and as a result, a QEF election may not be available to U.S. Holders. For more information, see the discussion below under “Certain United States Federal Income Tax Considerations — Passive Foreign Investment Company (“PFIC”)

 

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Rules.” You should consult your own tax advisors regarding the potential consequences to you if we were or were to become a PFIC, including the availability, and advisability, of, and procedure for making, QEF elections, and mark-to-market elections.

Management will have broad discretion as to the use of the proceeds from this offering and may not use the proceeds effectively.

Our management will have broad discretion as to the use of the net proceeds from any offering by us and could use them for purposes other than those contemplated at the time of this offering. Accordingly, you will be relying on the judgment of our management with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. It is possible that the proceeds will be invested in a way that does not yield a favorable, or any, return for our company.

We have no operating experience as a publicly traded company in the United States.

We have no operating experience as a publicly traded company in the United States. Although the individuals who now constitute our management team have experience managing a publicly traded company, there is no assurance that the past experience of our management team will be sufficient to operate our company as a publicly traded company in the United States, including timely compliance with the disclosure requirements of the SEC. Following the completion of this offering, we will be required to develop and implement internal control systems and procedures in order to satisfy the periodic and current reporting requirements under applicable SEC regulations and comply with the Nasdaq listing standards. These requirements will place significant strain on our management team, infrastructure and other resources. In addition, our management team may not be able to successfully or efficiently manage our company as a United States public reporting company that is subject to significant regulatory oversight and reporting obligations.

As a foreign private issuer, it may be difficult for U.S. investors to enforce civil liabilities against us or our directors, officers and experts.

We are incorporated under the laws of British Columbia, Canada. Some of our directors and officers, and the experts named in this prospectus, reside outside the United States, and all or a substantial portion of their assets and a portion of our assets are located outside the United States. As a result, it may be difficult or impossible for investors in the United States to effect service of process within the United States upon such persons or to enforce against us or them judgments of United States courts predicated upon civil liability provisions of the United States federal securities laws. There is doubt as to the enforceability in Canada of civil liabilities under the Securities Act or the Exchange Act. Consequently, investors may be unable to enforce judgments against us or those persons in Canadian courts, which may limit the remedies available to our shareholders.

We will incur significantly increased costs and devote substantial management time as a result of operating as a United States public company.

As a United States public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company or as a Canadian public company. For example, we will be subject to the reporting requirements of the Exchange Act, and will be required to comply with the applicable requirements of Sarbanes-Oxley and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC and including the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. We expect that compliance with these requirements will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. In addition, we expect that management and other personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. In particular, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404, which involve annual assessments of a company’s internal controls over financial reporting. We plan to hire additional accounting and financial staff with appropriate public company experience and technical accounting

 

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knowledge and may need to establish an internal audit function. Furthermore, we expect the premium for director & officer insurance will increase significantly due to a more litigious environment in the United States. At this time, we cannot reasonably predict or estimate the amount of additional costs that we may incur as a result of becoming a United States public company or the timing of such costs.

We cannot assure you that we will be able to comply with the minimum bid price requirement of Nasdaq.

The Reverse Split is intended, among other reasons, to allow us to achieve the requisite increase in the market price of our Common Shares to be in compliance with Nasdaq’s minimum bid price requirement of US$4.00 per share for initial listing. Although we expect our share price will meet such minimum bid price requirement prior to the effective date of the registration statement of which this prospectus forms a part, there is no guarantee that we will be able to meet Nasdaq’s minimum bid price requirement for initial listing or remain above Nasdaq’s minimum bid price requirement of US$1.00 for continued listing. If a company’s share price falls below $1.00 for 30 consecutive business days, Nasdaq will issue a deficiency notice and provide a compliance period of 180 days to regain compliance. It is not uncommon for the market price of a company’s shares to decline in the period following a reverse share split. If the market price of our Common Shares declines, the percentage decline may be greater than would have occurred in the absence of the Reverse Split. In addition, if other factors unrelated to the number of shares of our Common Shares outstanding, such as unfavorable financial or operational results, adversely affect the market price of our Common Shares, that may jeopardize our ability to meet or maintain the minimum bid price requirement with Nasdaq’s continued listing standards. If we fail to maintain such compliance, our Common Shares may be subject to delisting, which could materially reduce the liquidity of our shares and impair our access to capital markets.

Our inability to comply with Nasdaq’s continued listing requirements could result in our Common Shares being delisted, which could affect the market price and liquidity of our securities and reduce our ability to raise capital.

We have applied to list our Common Shares on Nasdaq under the symbol “LDHL.” No assurance can be given that our application will be approved. However, if such listing is approved, upon completion of this offering, we will be required to meet certain qualitative and financial tests to maintain the listing of our Common Shares on Nasdaq. If we do not maintain compliance with Nasdaq’s continued listing requirements within specified periods and subject to permitted extensions, our Common Shares may be recommended for delisting (subject to any appeal we would file). No assurance can be provided that we will comply with these continued listing requirements. Nasdaq has broad discretionary authority over the continued listing of securities, which it could exercise with respect to the listing of our Common Shares. If our Common Shares were delisted, it could be more difficult to buy or sell our Common Shares and to obtain accurate quotations, and the price of our securities could suffer a material decline. Delisting would also impair our ability to raise capital. The delisting of our Common Shares from any other exchange on which they are listed could similarly reduce liquidity, adversely affect the market price of our securities, limit the availability of market quotations and impair our ability to raise capital.

An investment in our securities involves significant risks.

Additional risks and uncertainties not presently known to us or that we currently consider immaterial may also impair our business and operations and cause the trading price of our securities to decline. If any of the following or other risks occur, our business, prospects, financial condition, results of operations and cash flows could be materially adversely impacted. In that event, the trading price of our securities could decline and security holders could lose all or part of their investment. There is no assurance that risk management steps taken will avoid future loss due to the occurrence of the risks described below or other unforeseen risks.

Our Common Shares have in the past and may in the future experience extreme share price volatility unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Common Shares.

Recently, there have been instances of extreme share price run-ups followed by rapid price declines and strong share price volatility with a number of recent initial public offerings, especially among companies

 

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with relatively smaller public floats. As a relatively small-capitalization company with relatively small public float, we have experienced and may continue to experience greater share price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. Our Common Shares are currently listed on the TSXV and the FSE, and the trading price and volume of our Common Shares on those markets have exhibited volatility in the past, including periods of rapid appreciation and decline, wide bid-ask spreads and low trading volumes. Our Common Shares could continue to be subject to similar instances of volatility following our anticipated listing on Nasdaq in connection with this offering. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Common Shares.

In addition, if the trading volumes of our Common Shares are low, persons buying or selling in relatively small quantities may easily influence prices of our Common Shares. This low volume of trades could also cause the price of our Common Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Common Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. If high spreads between the bid and ask prices of our Common Shares exist at the time of a purchase, the stock would have to appreciate substantially on a relative percentage basis for an investor to recoup their investment. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Common Shares.

As a result of this volatility, investors may experience losses on their investment in our Common Shares. A volatile market price of our Common Shares also could adversely affect our ability to issue additional Common Shares or other securities and our ability to obtain additional financing in the future.

We cannot assure you that the market price of our Common Shares will not continue to fluctuate or decline, and past trading volatility on the TSXV and FSE should not be considered indicative of future performance on any market, including Nasdaq.

Our Common Shares will be traded on different markets and this may result in price variations.

Our Common Shares are listed on the TSXV and the FSE and quoted on the OTCQB and are also anticipated to be listed on Nasdaq following this offering. Trading in our Common Shares on these markets will be made in different currencies and at different times (due to differences in trading days and public holidays). The trading prices of our Common Shares on these markets may differ due to these and other factors. Any decrease in the price of our Common Shares on one of these markets could cause a decrease in the trading price of our Common Shares on the other market. In addition, market conditions in either market may affect the price of our Common Shares on the other. Investors could seek to sell or buy our Common Shares to take advantage of any price differences between the markets through a practice referred to as arbitrage. Any arbitrage activity could create unexpected volatility in the trading price of our Common Shares.

We are selling a substantial number of Common Shares in this offering, which could cause the price of our Common Shares to decline.

In this offering, we will sell up to        Common Shares (assuming no exercise by the underwriter of the Over-Allotment option). The existence of the potential additional Common Shares in the public market, or the perception that such additional shares may be in the market, could adversely affect the price of our Common Shares. We cannot predict the effect, if any, that market sales of those Common Shares or the availability of those Common Shares for sale will have on the market price of our Common Shares.

We will need to raise additional financing in the future which may dilute our share capital.

Our Notice of Articles permit the issuance of an unlimited number of our Common Shares. Future issuance of our Common Shares will result in dilution to the existing shareholders. Additionally, future sales of our Common Shares into the public market may lower the market price for our Common Shares, which may result in losses to our shareholders. Sales of substantial amounts of our Common Shares into the

 

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public market, or even the perception by the market that such sales may occur, may lower the market price of our Common Shares.

If we are unable to satisfy the requirements of Sarbanes-Oxley or our internal controls over financial reporting are not effective, the reliability of our financial statements may be questioned.

We will become subject to the requirements of Sarbanes-Oxley if the registration statement of which this prospectus is a part is declared effective by the SEC. Section 404 of Sarbanes-Oxley (“Section 404”) requires companies subject to the reporting requirements of United States securities laws to complete a comprehensive evaluation of their internal controls over financial reporting. To comply with this statute, we will be required to document and test our internal control procedures, and our management will be required to assess and issue a report concerning our internal controls over financial reporting in our future annual reports on Form 20-F following this offering, beginning with our second such annual report. Pursuant to the JOBS Act, we will be classified as an “emerging growth company.” Under the JOBS Act, emerging growth companies are exempt from certain reporting requirements, including the independent auditor attestation requirements of Section 404(b) of Sarbanes-Oxley. Under this exemption, our independent auditor will not be required to attest to and report on management’s assessment of our internal controls over financial reporting during a five-year transition period, except in the event this is accelerated if we lose our status as an “emerging growth company.” We will need to prepare for compliance with Section 404 by strengthening, assessing and testing our system of internal controls to provide the basis for our report. However, the continuous process of strengthening our internal controls and complying with Section 404 is complicated and time-consuming. Furthermore, we believe that our business will grow both domestically and internationally, organically and through acquisitions, in which case our internal controls will become more complex and will require significantly more resources and attention to ensure our internal controls remain effective overall. During the course of our testing, management may identify material weaknesses or significant deficiencies, which may not be remedied in a timely manner to meet the deadline imposed by Sarbanes-Oxley. If management cannot favorably assess the effectiveness of our internal controls over financial reporting, or our independent registered public accounting firm identifies material weaknesses in our internal controls, investor confidence in our financial results may weaken, and the market price of our securities may suffer.

We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements applicable to other public companies that are not emerging growth companies.

We will be an “emerging growth company” as defined in section 3(a) of the Exchange Act (as amended by the JOBS Act), and will continue to qualify as an emerging growth company until the earliest of: (a) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.235 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which would occur if the market value of our Common Shares that are held by non-affiliates exceeds US$700 million.

For so long as we remain an emerging growth company, we are permitted to, and intend to, rely upon exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include not being required to comply with the auditor attestation requirements of Section 404. We cannot predict whether investors will find our securities less attractive because we rely upon certain of these exemptions. If some investors find the securities less attractive as a result, there may be a less active trading market for our securities and the price of our securities may be more volatile. On the other hand, if we no longer qualify as an emerging growth company, we would be required to divert additional management time and attention from development and other business activities and incur increased legal and financial costs to comply with the additional associated reporting requirements, which could negatively impact our business, financial condition and results of operations.

 

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We are a foreign private issuer within the meaning of the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.

Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

•

we are not required to provide as many Exchange Act reports, or as frequently, as a domestic public company;

​

•

for interim reporting, we are permitted to comply solely with our home country requirements, which may be less rigorous than the rules that apply to domestic public companies;

​

•

we are not required to provide the same level of disclosure on certain issues, such as executive compensation;

​

•

we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information;

​

•

we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; and

​

•

we are not required to comply with Section 16(b) of the Exchange Act establishing insider liability for profits realized from any “short-swing” trading transaction.

​

We will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our financial results on a quarterly basis through press releases distributed pursuant to the rules and regulations of Nasdaq. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you if you were investing in a U.S. domestic issuer.

As a foreign private issuer, we are permitted to follow certain home country corporate governance practices that differ significantly from Nasdaq corporate governance listing standards applicable to U.S. domestic issuers, which may afford less protection to shareholders.

As a foreign private issuer, we are permitted and intend to follow certain home country corporate governance practices instead of those required under the Nasdaq corporate governance listing standards applicable to U.S. domestic issuers. These home country corporate governance practices may differ in significant respects and could provide less protection to shareholders than they would have under the Nasdaq rules applicable to domestic issuers.

Specifically, we do not intend to adhere to the following Nasdaq corporate governance requirements and will instead follow the corporate and securities laws, rules, and regulations of the Province of British Columbia, Canada:

•

Regularly Scheduled Independent Director Meetings: We are not required to hold regularly scheduled meetings exclusively attended by independent directors. However, we are subject to certain corporate governance disclosure requirements under Canadian securities laws and must disclose whether the independent directors hold executive sessions and, if such executive sessions are held, how many of these meetings have been held since the beginning of our most recently completed financial year. If we do not hold executive sessions, we must describe what our Board does to facilitate open and candid discussion among our independent directors.

​

•

Proxy Delivery Requirements: As a “foreign private issuer”, we are exempt from the proxy rules set forth in Sections 14(a), 14(b), 14(c) and 14(f) of the Exchange Act. We will solicit proxies in accordance with applicable rules and regulations in Canada.

​

•

Shareholder Approval for Certain Transactions: We do not require shareholder approval for certain issuances of securities, including, but not limited to, the acquisition of another company’s stock or asset and certain private placements.

​

 

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•

Quorum Requirement for Shareholders Meetings: Under Canadian law and pursuant to our Notice of Articles, a quorum shall be present at a shareholders meeting if two or more holders of Common Shares representing at least 5% of the total number of voting rights attaching to the said Common Shares entitled to be voted at the meeting are present or represented by proxy.

​

•

Distribution of Annual and Interim Reports: We intend to comply with Nasdaq Listing Rules 5250(d)(1) and 5250(d)(4)(A), but we may not do so or on a consistent basis. We are required to file annual and interim financial statements with the SEC and on SEDAR+, a secure web-based system maintained on behalf of the Canadian Securities Administrators and accessible at www.sedarplus.ca, and to send annually a request form to the registered holders and beneficial owners of our Common Shares that can be used to request a paper copy of our audited annual financial statements and related management discussion and analysis, and a copy of our unaudited interim financial statements and related management discussion and analysis, in each case free of charge.

​

As a result, shareholders will not have the same rights and protections as they would if we complied with Nasdaq’s corporate governance requirements for U.S. domestic issuers.

We may lose foreign private issuer status in the future, which could result in significant additional costs and expenses.

While we currently qualify as a foreign private issuer, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on June 30, 2026. We may in the future lose foreign private issuer status if a majority of the Common Shares are directly or indirectly owned of record by residents of the United States and if we fail to meet the additional requirements necessary to avoid loss of foreign private issuer status, such as if: (i) a majority of the directors or executive officers are United States citizens or residents; (ii) a majority of assets are located in the United States; or (iii) the business is administered principally in the United States. The regulatory and compliance costs to us under United States securities laws as a United States domestic issuer will be significantly more than the costs incurred as an SEC foreign private issuer. If we are not a foreign private issuer, we would be required to file periodic and current reports and registration statements on United States domestic issuer forms with the SEC, which are generally more detailed and extensive than the forms available to foreign private issuers. In addition, we may lose the ability to rely upon exemptions from corporate governance requirements that are available to foreign private issuers.

 

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DIVIDEND POLICY

We have not paid dividends to our shareholders to date. We do not anticipate that we will declare or pay cash dividends on the Common Shares in the foreseeable future. Our current policy is to retain cash flows to finance development and to otherwise reinvest in our business. The declaration and payment of dividends on the Common Shares is at the discretion of our Board. Our dividend policy will be reviewed from time to time by our Board in the context of earnings, financial conditions and other relevant factors.

 

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MARKET FOR OUR COMMON SHARES

Our Common Shares are listed on the TSXV under the symbol “SCAN,” quoted on the OTCQB under the symbol of “LDDFF” and listed on the FSE under the symbol of “E30.” We have applied to list the Common Shares being offered on Nasdaq under the symbol “LDHL.” No assurance can be given that our application will be approved. It is a condition precedent to the underwriter’s obligation to purchase the Common Shares being offered in this offering that Nasdaq approve the listing of our Common Shares. Accordingly, if Nasdaq does not approve the listing of our Common Shares, we will not proceed with this offering.

We are authorized to issue an unlimited number of Common Shares. As of January 28, 2026, there were 89,293,651 Common Shares issued and outstanding, and there were approximately 88 record holders of our Common Shares. The transfer agent and registrar of the Common Shares is Computershare Investor Services Inc., located in Vancouver, British Columbia, Canada. For additional details regarding our Common Shares see “Description of Share Capital.”

Normal Course Issuer Bid

On June 2, 2025, we announced that the TSXV had conditionally approved our notice of intention to conduct a normal course issuer bid (“NCIB”). The NCIB permits us to repurchase for cancellation up to 5,142,844 of our outstanding Common Shares, representing approximately 9.9% of the public float as of May 30, 2025.

The NCIB commenced on June 5, 2025, and will remain open until June 4, 2026, unless earlier completed or terminated. Purchases may be made in open market transactions through the facilities of the TSXV, subject to a maximum of 2% of our issued and outstanding Common Shares in any 30-day period. All shares repurchased under the NCIB will be canceled.

We initiated the NCIB because we believe that, from time to time, the market price of our Common Shares does not fully reflect the underlying value of our business. Accordingly, we view opportunistic share repurchases as a prudent use of corporate funds. We have engaged Research Capital Corporation to act as our broker for the NCIB.

We are not obligated to repurchase any shares under the NCIB and may suspend or terminate the program at any time. As of the date of this prospectus, we have not repurchased any Common Shares under the NCIB. We do not intend to conduct any repurchases during the pendency of this offering.

 

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CAPITALIZATION

The following table sets forth our consolidated capitalization as of September 30, 2025:

•

on an actual basis, as determined in accordance with IFRS; and

​

•

on an adjusted basis to reflect the net proceeds from the assumed sale of         Common Shares in this offering (excluding the Over-Allotment Option) at the assumed initial public offering price of US$      per Common Share, the midpoint of the range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

​

This table should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Use of Proceeds” sections, as well as our audited and unaudited financial statements, included elsewhere in this prospectus.

(1)

Each US$      increase (decrease) in the assumed initial public offering price of US$     per Common Share would increase (decrease) our as adjusted cash, total shareholders’ equity (deficit) and total capitalization by approximately US$        million, assuming the number of Common Shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of Common Shares offered by us would increase (decrease) our as adjusted cash, total shareholders’ equity (deficit) and total capitalization by approximately US$     million, assuming the assumed initial public offering price of US$      per Common Share remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. This as adjusted information is illustrative only and will depend on the actual initial public offering price and other terms of this offering determined at pricing.

​

The above discussion is based on 71,984,222 Common Shares issued and outstanding as of September 30, 2025, and excludes, as of that date, the following:

•

5,207,500 Common Shares issuable upon exercise of outstanding stock options, with a weighted average exercise price of C$0.79 per share, under our Omnibus Long-Term Incentive Plan, as amended;

​

•

29,461,363 Common Shares issuable upon exercise of outstanding warrants, with a weighted average exercise price of C$0.87 per share; and

​

•

382,225 Common Shares issuable upon exercise of outstanding RSUs.

​

 

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USE OF PROCEEDS

We estimate that the net proceeds from this offering will be approximately US$      million (or US$      million if the underwriter exercises the Over-Allotment Option in full), after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, based on the assumed initial public offering price of US$      per Common Share, the midpoint of the range set forth on the cover page of this prospectus.

We intend to use the net proceeds from this offering for working capital and other general corporate purposes, including for commercialization of our HD-AIT Upgrade Kit, business development activities associated with the sale of HEXWAVE™ and recurring engineering and cost reduction efforts for next generation HEXWAVE™. We have not allocated specific amounts of net proceeds for any of these purposes.

The amounts and timing of our actual expenditures will depend on numerous factors, including the timing and success of our manufacturing and production cycle time, the status of our marketing and business development efforts, and the amount of cash generated by our operations. Our management will have broad discretion to allocate the net proceeds from this offering.

Each US$      increase (decrease) in the assumed initial public offering price of US$      per Common Share, the midpoint of the range set forth on the cover page of this prospectus, would increase (decrease) net proceeds to us by approximately US$      million (or US$      million if the underwriter exercises the Over-Allotment Option in full), assuming the number of Common Shares we sell, as set forth on the cover page of this prospectus, remains the same, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of           Common Shares offered by us would increase (decrease) the net proceeds to us by US$      million (or US$     million if the underwriter exercises the Over-Allotment Option in full), assuming the assumed initial public offering price remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

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DILUTION

If you invest in our Common Shares in this offering, the book value of the Common Shares you purchase will be immediately diluted to the extent of the difference between the initial public offering price per Common Share in this offering and the adjusted net tangible book value per Common Share after giving effect to this offering. Dilution results from the fact that the initial public offering price per Common Share is substantially in excess of the net tangible book value per Common Share. As of September 30, 2025, our net tangible book value (deficit) was US$(0.06) per Common Share. Our net tangible book value per share represents total tangible assets less total liabilities, divided by the number of Common Shares outstanding as of September 30, 2025.

After giving effect to the assumed sale of          Common Shares in this offering at an assumed initial public offering price of US$      per Common Share, the midpoint of the range set forth on the cover page of this prospectus after deducting estimated underwriting discounts and commissions and estimated offering expenses, our as adjusted net tangible book value as of September 30, 2025 would have been US$      per Common Share. This represents an immediate increase in as adjusted net tangible book value of US$      per Common Share to existing shareholders and immediate dilution of US$      per Common Share to new investors.

The following table illustrates this dilution per Common Share:

If the Over-Allotment Option is exercised in full, the as adjusted net tangible book value will increase to US$      per Common Share, representing an immediate increase in as adjusted net tangible book value to existing shareholders of US$      per Common Share and an immediate dilution of US$      per Common Share to new investors participating in this offering.

A US$1.00 increase in the assumed initial public offering price per Common Share would increase our as adjusted net tangible book value after this offering by US$      per Common Share, and would increase dilution to new investors by US$      per Common Share. An increase of           in the number of Common Shares we are offering would increase our as adjusted net tangible book value after this offering by US$      per share, and would decrease dilution to new investors by US$      per Common Share, assuming the assumed initial public offering price per share remains the same.

A US$1.00 decrease in the assumed initial public offering price per Common Share would decrease our as adjusted net tangible book value after this offering by US$      per Common Share, and would decrease dilution to new investors by US$      per Common Share. A decrease of           in the number of Common Shares we are offering would decrease our as adjusted net tangible book value after this offering by US$      per share, and would increase dilution to new investors by US$      per Common Share, assuming the assumed initial public offering price per share remains the same.

The following table summarizes, on the as adjusted basis described above as of September 30, 2025, the differences between the existing shareholders and the new investors in this offering with respect to the number of Common Shares purchased from us, the total consideration paid to us and the average price per share that our existing shareholders and the new purchasers in this offering paid. The calculation is based on an assumed initial public offering price of US$         per share, the midpoint of the range set forth on the cover page of this prospectus before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. As the following table shows, new investors purchasing Common Shares in this offering will pay a price per Common Share substantially higher than the weighted average price per Common Share paid by our existing shareholders.

 

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Assuming the exercise of all of our outstanding options and warrants and settlement of all RSUs, the percentage of Common Shares held by existing shareholders will increase to      , or      %, of the total number of Common Shares outstanding after this offering, and the number of Common Shares held by new investors in this offering will decrease to      , or      %, of the total number of Common Shares outstanding after this offering.

The above discussion is based on 71,984,222 Common Shares issued and outstanding as of September 30, 2025, and excludes, as of that date, the following:

•

5,207,500 Common Shares issuable upon exercise of outstanding stock options, with a weighted average exercise price of C$0.79 per share, under our Omnibus Long-Term Incentive Plan, as amended;

​

•

29,461,363 Common Shares issuable upon exercise of outstanding warrants, with a weighted average exercise price of C$0.87 per share; and

​

•

382,225 Common Shares issuable upon exercise of outstanding RSUs.

​

 

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BUSINESS

Company Overview

We are an emerging leader in AI-based contactless security technology for detecting concealed metallic and non-metallic weapons and threats. Our mission is protecting communities and preserving peace of mind through superior security detection solutions, while simultaneously increasing ease of travel and convenience for security at major checkpoints. In furtherance of this mission, we offer two separate security screening solutions: our HEXWAVE™ system and our HD-AIT Upgrade Kit.

HEXWAVE™

Our flagship HEXWAVE™ system uses MMW, advanced 3D imaging, and AI to detect concealed metallic and non-metallic weapons, including traditional metallic guns and knives as well as more novel threats such as liquid, plastic, and powder explosives, 3D printed guns, and other prohibited items — without having to remove common items like cell phones or keys. The system allows for rapid, automated screening using a high throughput, contactless, walkthrough portal, alleviating many of the shortcomings of legacy metal detector-based screening processes. We believe HEXWAVE™ can empower gathering spaces to address the chronic epidemic of mass shootings and terrorist attacks, as well as emerging risks such as 3D printed weapons, in a cost-effective manner while improving the visitor experience. We believe the most promising market opportunities for HEXWAVE™ are certain verticals in the urban security market and in aviation employee screening.

HEXWAVE™’s contactless, 3D-imaging and AI-enabled screening technology represents a new generation of technology for our target urban security and aviation employee screening markets which, according to our estimates, is currently a US$10 billion market opportunity. These markets are based primarily on legacy metal detectors and inefficient processes. This legacy approach presents numerous operational problems and hidden costs, including frequent false alarms caused by the inability to distinguish between dangerous weapons and harmless items. Persistent false alarms often require visitors to undergo a cumbersome resolution process, including emptying of pockets and pat downs that are error-prone, labor and cost-intensive, intrusive, and unpleasant. This also creates long wait times, dangerous crowding, and numerous opportunities for weapons to slip through undetected. The net result is less effective security, unhappy visitors, and stressful working conditions for employees, many of whom may be hire-for-the-day contractors. As a result, venues and facilities in the urban security market generally have faced a choice between operating largely unprotected against random acts of violence (i.e., without security screening) or using systems that significantly impede the flow of customers into and within business facilities.

Unlike traditional walk-through metal detectors, HEXWAVE™ uses advanced sensors, 3D image reconstruction and AI software to reliably detect dangerous weapons while ignoring harmless items like keys, wallets, cell phones and jackets. This means that visitors can walk through HEXWAVE™ without stopping, without removing items from their pockets. HEXWAVE™ significantly reduces the number of false alarms, allowing security staff to focus their attention on high probability threats and increase customer throughput.

We believe that the increasing frequency and severity of violent incidents in public venues is prompting both businesses and governments to adopt more proactive and scalable security screening solutions. This shift is creating a growing, market-driven need for effective, efficient and non-invasive detection technologies that can be broadly deployed across both public and private settings. As a result, we believe that we are well-positioned to become a market leader in the rapidly growing market for next-generation urban security screening technologies.

HEXWAVE™ is currently in early commercial deployment. For the nine months ended September 30, 2025 and the year ended December 31, 2024, we have generated approximately US$0.91 million and US$1.01 million, respectively, in revenue from sales of HEXWAVE™ to early-adopter customers mainly in North America. These include deliveries to customers in the stadium, transportation, and government facility sectors. HEXWAVE™ is not yet in full-scale mass production, and we continue to focus on optimizing unit economics, reducing production costs, and enhancing system performance through ongoing engineering and supply chain improvements.

 

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Our marketing and sales activities to date have included participation in major security and public safety trade shows, targeted pilot programs at customer venues, and direct sales outreach to key sectors. We are actively expanding our commercial team and building channel partnerships to support broader market rollout in 2026.

For a description of the HEXWAVE™ system, including the AI technology it incorporates, see “— Our Products — HEXWAVE™.”

HD-AIT Upgrade Kit

Our HD-AIT Upgrade Kit is being developed pursuant to contracts awarded by the TSA to create a solution to aging HD-AIT systems currently in use in airports throughout North America. The TSA has announced plans to upgrade over 1,000 body scanners installed at U.S. airports over the next five years, which we believe creates a near-term market opportunity representing approximately US$100 million of potential revenue. In addition, we believe there is global demand for similar upgrades to installed base systems internationally.

As of the date of this prospectus, the HD-AIT Upgrade Kit remains in the product development and TSA certification phase and has not yet been commercialized. In August 2025, we delivered our first unit to the TSA for formal evaluation. Initial commercial sales are anticipated in 2026, subject to successful completion of the TSA’s certification process.

For a description of the HD- AIT Upgrade Kit, see “— Our Products — HD-AIT Upgrade Kit.”

Industry Background

Urban Security Market and Aviation Worker Screening (HEXWAVE™ Product)

Legacy Security Screening Systems

We believe that legacy security screening systems generally have been designed based on a limited number of use cases — for example, airports, courthouses and prisons — using antiquated technology and based on the assumption that weapons will be made of or contain metal. The specialized facilities in which security screening has predominantly been deployed often are required by law to meet specific screening regulations using products built to meet technical standards designed for these environments. Many of these standards and regulations have not been updated to account for rapid changes in technology.

The legacy security screening systems developed in this environment have not rapidly advanced to meet an evolving threat landscape that includes, for example, 3D printed guns and knives produced from plastics and non-metal composites, as well as non-metallic explosives. In addition, because the regulated facilities in which legacy security screening systems have been deployed, such as airports and prisons, usually have a local monopoly on the services they provide, they often have not been incentivized to prioritize visitor experience. As a result, we believe that legacy security screening systems are not well-suited to the current threat landscape or to environments where visitor experience is highly valued, such as schools, places of worship, shopping malls or sports and entertainment venues (where security screening often is not deployed). They also generally cannot be adapted for applications other than violence prevention, such as the detection of drugs, liquids, money, stolen goods or other non-metallic contraband.

Security screening at most venues and facilities has historically been designed around metal detectors that require visitors to enter in single-file lines after submitting their pocket contents to manual inspection. This process is usually supported by multiple security guards who perform manual inspections, hand wand scans, and hands-on body “pat downs” to resolve the large numbers of alarms, frequently false positives, generated by the metal detectors. This complex process has numerous shortcomings:

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Unadaptable and Limited to Metallic Threats.   Legacy metal detectors are not able to detect the growing array non-metallic threats, including 3D printed guns and knives produced from plastics and non-metal composites, as well as liquid, powder and plastic explosives/IEDs. These threats are becoming increasingly prevalent in today’s environment. More generally, legacy metal detectors cannot be adapted or customized to detect new types of physical threats or other contraband.

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False Alarm Fatigue.   Legacy metal detectors are not able to differentiate between weapons and harmless metallic items like cellular phones, keys, wallets and steel-toed boots. These items generate large numbers of false alarms. This problem can only be partially mitigated by emptying pockets and separately screening bags. High numbers of false alarms make it difficult for even experienced, well-trained security guards to stay vigilant with every visitor.

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Ambiguous Alarms.   When alarms occur, security guards may be confused about which visitor triggered the alarm. Even if guards correctly identify the visitor, they have no indication of where the potential threat is located on the visitor’s person. This ambiguity extends the duration, error potential, and risk level associated with manual searches to locate the threat.

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Frequent Human Error.   Legacy screening technology requires careful people flow orchestration and manual processes to avoid and/or resolve false alarms. There are many opportunities for even well-trained, highly motivated guards to become fatigued, or distracted, allowing weapons to slip through. Additionally, guards may be affected by unconscious bias that causes them to manually search some visitors more thoroughly than others, allowing weapons to enter undetected.

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Frustrating Delays.   Taking time to form single-file lines, wait their turn to enter, empty pockets, and resolve frequent false alarms creates frustrating delays for visitors at the precise moment when they should be feeling the exhilaration of arrival.

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Invasive Contact.   Waiting in large crowds, placing one’s personal items in communal bowls and having bags and bodies touched by strangers has never been something visitors want or expect during their arrival experience.

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High Labor Costs.   The intensively manual processes of legacy screening technology require large numbers of security staff. The only way to reduce wait times during peak arrival periods is to deploy equipment and guards up to the limit of what the physical space can accommodate, generating substantial variable labor expenses.

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Transient Security Staff.   Many venues have a core set of security professionals and managers on staff. For those venues which are event-based, they may hire security staff for each event. Recruiting and hiring security staff for each event can result in a wide variance in the skills and experience of staff conducting the screening.

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In addition to the broader urban security market, the limitations of legacy security screening solutions combined with a lack of comprehensive regulations or legal requirements have led to inadequate screening of aviation workers (for example, airport vendor employees and maintenance technicians). Although aviation workers have broad access to security restricted areas, they generally are not subjected to the same level of screening as airline passengers. We estimate that approximately one million U.S. airline and cargo screening employees have unescorted access to security restricted areas, in addition to significant numbers of other aviation vendor employees such as workers at restaurants and convenience and gift shops. This creates significant “insider threat” — i.e., risk that aviation workers may bring contraband, especially non-metallic contraband such as explosives or drugs, into security restricted areas. Such contraband could be used by aviation workers to carry out an attack or passed to an airline passenger within the restricted area. However, in light of the number of workers who need to be screened and the limitations of legacy security screening systems, as well as modern HD-AIT screening systems (i.e., low throughput), regularly screening these workers with such systems could cause a significant burden. We believe that airports need modern equipment to address insider threats in an affordable and effective manner.

The historical emphasis on technical detection performance using outdated standards tested in isolation has drawn attention away from performance of the screening process as a whole system. As noted above, legacy screening technologies effectively detect metal, but they also generate numerous false alarms for harmless items. To bring down the false alarm rate, security teams proactively divert metal items away from the metal detectors into manual checking processes that are vulnerable to human error and may be defeated by a determined attacker. The result is a slow, frustrating process that introduces numerous potential points of failure. The root causes are outdated technical standards, antiquated technology, and the inability of humans to fully compensate for these deficiencies.

 

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Recent Market Entrants

In addition to legacy metal detector-based security screening systems, a number of companies have brought to market new security screening solutions that address a number of the shortcomings associated with legacy systems. Certain of these new solutions include systems that utilize AI in order to reduce false alarms and increase throughput. For a discussion of certain of these competitors and their security screening systems, see “— Competition.”

HD-AIT Upgrade Kit

Since 2010, the TSA has deployed more than 1,000 full-body HD-AIT security screening scanners in U.S. airports. These systems require airline passengers to step briefly into a transparent, upright cylinder, where two vertical antenna masts rapidly rotate around the passengers. The system utilizes a transceiver to scan over a two-dimensional aperture and mathematically reconstruct the data into a 3D image of the person being screened. A computer processor then uses ATD algorithms to evaluate the resulting image and identify suspected threats for manual evaluation by TSA staff. The U.S. Department of Homeland Security’s (“DHS”) Science and Technology Directorate (“DHS S&T”) has announced a “Screening at Speed” program in order to develop the next generation of passenger screening to upgrade or replace the existing HD-AIT security screening scanners. DHS S&T has stated that it believes the benefits of these upgrades will include better threat detection, reduced false alarms, fewer pat-downs and decreased secondary screening. In addition, the higher-resolution data obtained from upgraded systems may allow passengers to keep on their light outerwear without having to remove these items of clothing. The S&T Screening at Speed program partnered with the Department of Energy Pacific Northwest National Laboratory (“PNNL”) to develop MMW, HD-AIT technology to implement desired upgrades, resulting in the development of a new stand-alone screening portal that may be used to replace existing checkpoint systems and an HD-AIT retrofit kit that can be used to quickly update existing passenger screening systems with the improved technology. We obtained a license from PNNL to commercialize this technology, the only such license granted to date. For more information on this license, see “— Our Products — Our Licenses — Battelle Memorial Institute / PNNL — Intellectual Property used in HD-AIT Upgrade Kit” below. We are currently in development of a HD-AIT Upgrade Kit that has been funded by the TSA for approximately US$6 million and was the only company to receive an award for the S&T Screening at Speed Program. The capability is based on Open Architecture Platform integrating TSA identified “best in class” partners for optimal performance targeted to meet the new classified detection standards issued by DHS.

Our Market Opportunity

HEXWAVE™

Urban Security Market

We believe that the current macro trends in firearms ownership, mass shootings and the proliferation of emerging risks such as 3D printed weapons suggest that the need for effective security screening processes is significant and will continue to grow for the foreseeable future.

The aggregate markets associated with the explosives and weapon detection market, according to our estimates, currently total US$10 billion. The complexity of the urban security threat environment has dramatically changed over the last decade, requiring a more proactive approach to preventing violent attacks against communities. Since the September 11, 2001 terrorist attacks in the U.S., the air transportation community has effectively deployed a combination of detection technologies that are being consistently upgraded in an attempt produce products capable of detecting an array of rapidly evolving threats. Resulting detection solutions have focused largely on protecting access to aircraft systems in the form of gated or “point” solutions. In the commercial aviation context, the public is forced to tolerate the delays associated with such inspections due to the extreme risks that explosives or weapons can have on an aircraft and its passengers.

In contrast, venues and facilities in the urban security market generally have faced a choice between operating largely unprotected against random acts of violence (i.e., without security screening) or using systems that significantly impede the flow of customers into and within business facilities. However, we

 

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believe that the frequency and magnitude of violent attacks in urban security market venues is forcing both businesses and governments to rethink how to implement more proactive measures. According to the Gun Violence Archive, there were more than 500 mass shootings in the U.S. in 2024, up from 271 in 2014. In June 2024, the U.S. Federal Bureau of Investigation (“FBI”) released its report “2023 Active Shooter Incidents in the United States.” In its report, the FBI designated 48 shootings as active shooter incidents. Although incidents decreased by 4% from 2022 (50 incidents), the number of active shooter incidents increased 60% since 2019 (30 incidents). The 48 active shooter incidents in 2023 occurred in 26 states and represent five categories, including open space, commerce, education, health care, and residence. The FBI designated 229 active shooter incidents from 2019 to 2023. This represents an 89% increase in active shooter incidents (121) from the previous five-year period (2014-2018). The 229 active shooter incidents from 2019 to 2023 occurred in 44 states and the District of Columbia and represent seven location categories including commerce, open space, education, government, residence, health care, and house of worship. We believe the market for countermeasures is growing as a result of these trends, creating a market-driven need for security detection that can be broadly deployed across nearly all public and private facilities. The base requirements for such systems are that they be both highly accurate and nonintrusive to our daily lives.

The current alternatives in the U.S. security screening market are typically restricted to:

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Solutions principally focusing on metal threats, therefore non-metal threats can potentially go undetected;

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Airport solutions which are not well suited to be used across other verticals because they do not enable the requisite throughput;

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Solutions that offer limited outdoor application and therefore hinder the capability of providing a layered defense for proactive threat detection;

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Solutions requiring large, dedicated areas or space versus integration into existing infrastructure; and/or

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Solutions with limited capability for integration into existing security systems command and control.

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We believe that our current primary market opportunity is for threat detection screening in the following four vertical urban security markets (listed in order of priority):

1.

Correctional Facilities/Prisons — Screening for non-metallics including weapons, drugs, money, cigarettes, contraband;

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2.

Areas necessitating secured perimeters and secured buildings, such as corporate campuses, national laboratories or government buildings;

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3.

Public venues, such as stadiums (focused on employee and VIP screening), malls and outdoor events/​festivals; and

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4.

Transportation hubs, such as airports (curb to passenger gate), rail, cruise lines and bus stations.

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Most venues and facilities in our target segments do not fall under regulations or mandates that require the adoption of security screening systems that conform to specific standards. We estimate that, of the US$10 billion market described above, such unregulated facilities represent over 60% of the total worldwide market opportunity for security screening technology and represent a large opportunity for rapid adoption of our innovative weapon screening products.

Aviation Worker Screening Market

In addition to the broader urban security market described above, we have a tailored opportunity to provide advanced security screening solutions in the U.S. aviation worker screening market. As noted above, in U.S. airports, insider threat poses a real risk, with the potential for employees to exploit secure access and insider knowledge to smuggle contraband and weapons into secured locations. In 2023, the TSA issued a mandate called “TSA-NA-23-02,” which required airports to begin conducting random physical screenings of aviation workers entering certain terminal access points, starting in late September 2023. The mandate also required airports to issue an Aviation Workers Screening Assessment by June 2024 and an

 

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Explosive Detection Screening Equipment (“EDSE”) Plan due to be submitted to airports’ Federal Security Director for approval in October 2024. Under the TSA’s mandate, airports’ EDSEs must be capable of detecting the presence of explosives carried on the person, in outer coats and jackets and prevent the introduction of unauthorized weapons, explosives, and incendiaries into a secured area. The deadline for airports to implement their EDSE plan is April 2026. Under the mandate, airports themselves — rather than the TSA — are required to implement the requisite aviation worker screening protocols. However, a group of municipalities and airports challenged the 2023 TSA mandate (City of Billings, et al. v. Transportation Security Administration et al.), arguing that the U.S. federal government lacked authority to command state and local governments to enforce federal regulations, that the TSA was required to provide public notice of the new rule and allow for public comment under the APA, and that the rule unlawfully compelled local officials to implement a federal scheme. In August 2025, the U.S. Court of Appeals for the D.C. Circuit found that the TSA failed to comply with the notice and comment requirements in accordance with the APA. The court stayed issuance of its order until the TSA either completes an appropriate rulemaking process or decides to forgo the rule. As of the date of this prospectus, it is uncertain whether the TSA will decide to follow proper rulemaking procedures or will determine that the requirements are not necessary.

If the TSA’s mandate is upheld, based on certain assumptions regarding the number of airports covered by the TSA’s mandate, average operating time and average number of screening systems per airport, we estimate that airports will require over 500 new screening systems in order to comply with the TSA’s mandate. We believe that we would be positioned to capture a significant portion of this market, representing an opportunity for approximately US$50 million in revenue.

HD-AIT Upgrade Kit

As described above under “— Industry Background — HD-AIT Upgrade Kit,” the TSA is expected to upgrade over 1,000 existing HD-AIT security screening scanners over the next five years. As a result of our license from PNNL to commercialize the technology that PNNL developed in partnership with DHS, S&T, and our track record of receiving grants and collaborating successfully with the TSA, we believe that our HD-AIT Upgrade Kit is very well positioned to fill most or all of this demand, representing an opportunity for approximately US$100 million in revenue over the life of the upgrades.

In addition to legacy AIT security screening scanners that will be upgraded in the U.S., airports in other countries also have legacy AIT security screening scanners deployed. We believe that our HD-AIT Upgrade Kit is compatible and can be used with all of these systems, and we expect for there to be pressure to upgrade these systems. The applicable certification standards for HD-AIT security screening systems in the U.S. and Europe are classified but will require expanded threat detection capability, by size and region, lower false alarm rates, and certain minimum processing time and throughput requirements. Based on early testing, we believe that our HD-AIT Upgrade Kit will meet these standards and enable significantly higher throughput per system by lowering false alarm and passenger touch rates.

Outside of the aviation context, there are legacy AIT security screening scanners deployed at locations such as nuclear power plants, high-profile soft targets (for example, the 9/11 Ground Zero Museum) and government buildings (such as the U.S. Capitol, courthouses and other facilities). Although at present there is no regulatory mandate to update the security screening scanners at such facilities, we believe that there will be strong market demand from these facilities for our HD-AIT Upgrade Kit once approved and deployed at US airports.

Our Growth Strategy

The key elements of our growth strategy within our target market include the following:

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Develop Initial Customer Successes in Specific Target Metropolitan Areas

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Decision-makers at our prospective customers are often professionally connected to decision-makers at other prospective customers in different vertical industries within a specific target metropolitan area. We have established a successful pattern of targeting and winning first adopter customers in specific vertical industries and then leveraging that success to solicit referrals at other venues and facilities across the metropolitan area in other vertical industries. We have developed a playbook

 

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for executing this pattern through orchestration of our direct sales resources and channel partners in a manner that we believe will continue to scale as we develop the available market.

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Expand and Activate Our Distribution Channels

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We have a global distribution network based on certain exclusive and non-exclusive distributor relationships with Rapiscan Systems, Inc. (“Rapiscan”), Viken Detection Corp. (“Viken”), K2 Security Screening Group (“K2”), and Isotec Security Inc. (“Isotec”), among others, and we continue to seek additional distributors for our products. These distributors are actively seeking sales opportunities in approximately 20 U.S. states and more than five countries around the world. We also previously engaged The Chertoff Group to provide strategic advisory services in connection with our efforts to pursue growth opportunities in the U.S. government (including the TSA) and adjacent market. We intend to continue to develop our distribution network by adding further geographic coverage and sales capacity. We plan to continue to cultivate field level collaboration between our direct sales team and our distributors to develop the ability of the distributors to find, develop, close, and service customers independently.

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Concentrate Marketing and Sales Effort in Specific Target Accounts in Specific Vertical Industries

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Through our experience to date we have developed a proprietary list of target vertical industries, developed a list of target accounts within those industries, and identified target decision-makers in our target accounts. We believe that our target account list represents the best immediate growth opportunities for our business. Over time, we plan to adjust our target account list to reflect current market conditions and the capabilities of our products. We plan to continue to execute advertising, content marketing, lead generation, trade shows, in-house demonstrations and sales development activities to our target account list to create qualified sales opportunities.

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Promote Awareness by Gathering and Leveraging Our Customer Community

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We believe that we can successfully seek referrals from existing customers and partners to other prospective qualified customers, sell additional capacity to existing customers and sell new add-on software enhancements and services to existing customers. We are continuing to develop and expand our customer success function within the global revenue organization to focus on helping customers successfully deploy our products and cultivate referrals, expansion, and upsell opportunities. Our buyers are naturally collaborative on security best practices due to their vested interest in collective deterrence and the likelihood that any security event will have a negative collective impact at the metropolitan, regional or industry level.

Our Competitive Strengths

We are an innovator in the security screening industry with a mission of protecting communities and preserving peace of mind through superior security detection solutions. We believe our collective expertise coupled with the following competitive strengths will allow us to establish a leadership position in next-generation security screening and expand our market opportunity:

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Superior Detection Effectiveness of Metallic and Non-Metallic Threats Based on Artificial Intelligence Software

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We believe that real-world screening operations based on our products detect more actual weapon threats with fewer false alarms than similar screening operations based on old walk-through metal detectors. HEXWAVE™’s Automated Threat Detection using AI and deep learning interprets the high volume of data and 3D radar images produced by the antenna array and receiver to determine whether there is a threat item concealed on a person. Our AI and deep learning algorithm have been developed by our team of industry experts, who have previously and successfully brought to market industry-leading AI algorithms and products used in the aviation security screening market. we have acquired over 2.5 million individual image frames, captured from over 12,000 scans of live mock passengers using the HEXWAVE™ system, to create the existing data set enabling the training of large AI models and enhancing detection performance. This data set continues to grow as our products are deployed in more venues and facilities. As a result, HEXWAVE™ is able to accurately identify both metallic and non-metallic concealed weapons or threat objects on a person.

 

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This detection capability is critical in an environment of constantly evolving threats, which include liquid, powder, and plastic explosives, 3D printed guns, ceramic knives and ghost guns, among other threats, clearing the path to meet and exceed robust detection and screening performance requirements across multiple markets. The ability to detect both metallic and non-metallic threats is extremely limited in the urban security market today.

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Mobility and Flexibility Enabling a Layered Security Screening Approach.

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HEXWAVE™’s mobility and flexibility allow customers to rapidly deploy in multiple locations indoors and outdoors as needed for their security screening requirements and as a layered security screening approach. HEXWAVE™’s stand-alone 3D image capture and antenna array architecture enables a standard portal configuration to an arrayed kiosk arrangement for scanning pedestrians as they move through a pre-screening area. The mobile and indoors/outdoors features of HEXWAVE™ are central to its operational agility to be deployed across a security detection space. These capabilities provide the means for a “layered defense” across the full spectrum of urban security environments with a modular configuration that can be deployed across the full market space.

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Reliable Precision

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Our technology uses 3D radar imaging combined with artificial intelligence to identify both metallic and non-metallic threats, including explosives, liquids, and even 3D-printed weapons. We continually train and update algorithms through rigorous data collection in the factory and at customer locations to improve the detection capability for new and existing threats. This dramatically reduces the number of false alarms and allows visitors to walk through the system at normal pace, without emptying their pockets. The result is a visitor experience that is more similar to walking through a shoplifting prevention system at a department store than an airport security checkpoint.

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Increased Throughput

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Visitors pass through the HEXWAVE™ system at normal walking pace, in a continuous “S-curve” configuration. This configuration, combined with low false alarm rates, makes screening with our products up to twice as fast as old screening processes. In addition to improved visitor experience, faster throughput helps reduce the size of crowds in entry areas, which can be an attractive soft target for threat actors.

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Automated and Targeted

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As visitors pass through the HEXWAVE™ system, our technology provides security officers with an immediate and visible go/no-go decision for automatic threat detection. If a potential threat is detected, HEXWAVE™ alerts security officers to the specific location of the potential threat by means of a highlighted digital human avatar, so security guards know exactly where to look to resolve the alarm. This reduces the potential for human error and accelerates the resolution process.

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Significant Cost Savings

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Because our technology generates so few false alarms and scans visitors more quickly than legacy metal detector systems, far fewer security guards and equipment is required, allowing venues to reduce overall operational costs and making security screening financially feasible at more venues and events.

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Continuous Improvement

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Unlike analog alternatives, our products use artificial intelligence software to classify threats based on a large and growing digital data set that makes it possible to improve detection accuracy over time, adapt to new threats and customize detection capability for specific items.

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Key Strategic Global Partners

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We have signed global strategic partnership agreements with Rapiscan and Viken. Each of these strategic partners has a globally recognized brand, a large global distribution network, global systems integration and support capabilities, and global customer networks full of potential prospects for

 

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our contactless security screening solutions. We believe that these strategic partners will provide us with significant leverage and global reach that will allow us to rapidly scale our business and guide customers to success.

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Visionary and Experienced Management Team

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Our management team brings significant security industry relationships and expertise working with the development of security related technologies, specifically MMW applications which encompass HEXWAVE™ and HD-AIT Upgrade Kit. This includes industry experts on 3D imaging capability and algorithm development for the automatic detection of threats vs. non-threats, as well as experience leading the development of ground-breaking sensing products for the military, medical, industrial, and commercial markets, including body scanners that can be seen deployed across most United States and European Union airport checkpoints.

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Self-Reinforcing Adoption Cycle

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We believe that as we acquire more customers and deploy more of our products, we gather more digital data that helps us improve the detection accuracy and performance of our systems. As the accuracy of our systems increases, we believe more prospective customers will be attracted to our products and more engaged prospects will choose to purchase our products. We anticipate that this cycle will continue to operate in the future, creating ongoing competitive advantages for us and for our distributor partners.

Our Products

We provide security solutions for concealed threat detection in high volume foot traffic areas. We currently offer two next generation security technologies:

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Our flagship HEXWAVE™ product is a walk-through security portal designed to provide discrete, modular and scalable protection to provide layered, stand-off detection capability, providing a means to proactively counter evolving threats in aviation employee and urban security environments. The integrated active 3D imaging sensor using proven MMW technology and Automatic Threat Detection using AI is designed to detect both metallic and non-metallic firearms, knives, explosives and other threats and contraband.

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•

Our High-Definition Advanced Imaging Technology TSA Upgrade Kit is being developed pursuant to contracts awarded by the TSA to create a solution to aging HD-AIT systems currently in use in airports throughout North America and also can be implemented to upgrade HD-AIT systems around the globe. Both our flagship HEXWAVE™ product and our HD-AIT Upgrade Kit depend on critical patented technology and processes that we have licensed from third parties. See “— Our Licenses” below for more information.

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HEXWAVE™

HEXWAVE™

Our flagship product is HEXWAVE™, a walk-through security portal designed to provide discrete, modular and scalable protection to provide layered, stand-off detection capability, providing a means to proactively counter evolving threats in aviation employee and urban security environments. The integrated active 3D imaging sensor using proven MMW technology and Automatic Threat Detection using AI is designed to detect both metallic and non-metallic firearms, knives, explosives and other threats. In addition, HEXWAVE™’s AI algorithms can be customized and trained for specific items of interest like drugs, alcohol, stolen merchandise or other contraband and immediately sent to the customer. HEXWAVE™ supports a maximum screening throughput of 700 people per hour. HEXWAVE™ became commercially available in October 2023.

HEXWAVE™ sends low power signal to capture reflected data used to create real time 3D images which can detect weapons through clothing. Images are never stored or presented to an operator. If a threat is detected, the location of the threat is identified on a mannequin like image (see below) for improved alarm resolution. The active microwave imaging technology uses deep learning algorithms to identify metal and non-metal threats. The technology can be used in both indoor and outdoor applications in a modular form that enables it to be easily scalable to a stand-off, layered mode for virtually any facility that has defined entrances and controlled perimeters. Further, the architecture of the technology makes it suitable for deployment across ultra-wide band frequencies, enabling it to be adaptable to international regulatory environments. Because HEXWAVE™ emits radio frequency energy, FCC certification is required to market and sell HEXWAVE in the U.S. We received FCC certification for HEXWAVE™ in the U.S. and Canada in February and April 2024, respectively.

Security Personnel Interface Showing Threat Detected

A high-level overview of how HEXWAVE™ functions is described below in the figure below.

 

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HEXWAVE™ consists of four principal subsystems that work together to create its threat detection platform:

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First, the Antenna Array and Transceiver emits a form of safe low energy into a detection space and captures the reflection of that energy;

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Secondly, the 3D Radar Image Generation converts the captured data into 3D image of the target area in real time;

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The third subsystem is the Automated Threat Detection using AI and deep learning that interprets the high volume of data and 3D radar images determine whether there is a threat item within the detection space; and

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•

The fourth subsystem is Smart IoT Functionality, which communicates the decision produced in the third subsystem to existing security screening infrastructure and personnel.

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The AI and deep learning systems used in HEXWAVE™’s third subsystem are our proprietary are closed-source algorithm models, which are built on leading industry standard open-source libraries (i.e., transformers) used by AI product industry leaders. Our AI algorithms were customized to enable ultra-fast execution of ATD in “real time.” Our AI algorithms were developed by our team of industry experts, who have previously and successfully brought to market industry-leading AI algorithms used in the aviation security screening market. The AI algorithms have been trained on a data set comprising over 2.5 million individual image frames, captured from over 12,000 scans of live mock passengers using the HEXWAVE™ system. These mock passengers are chosen to produce a carefully selected distribution of body types and genders that represent the cross-section and variety of body types that are seen in actual screening environments. In these trials, each mock passenger conceals one of a large variety of simulated metallic and non-metallic threats (e.g. guns, knives, explosives, flares, etc.) over various parts of their bodies as required by a particular threat detection application (e.g., airports, court houses, etc.). Each millimeter wave scan generated by the passenger as he or she walks through the system (captured at 20 times per second) is marked over the location of the threat and input into the training model. After the model is trained with at least 10,000 scans, it is subjected to a threat detection validation process, in which a smaller test set is generated, typically with 300 to 600 unmarked image scans from a distribution of mock passengers with various threats concealed in different places on the body. Models used in the test set are not included in the training set in order to provide a more accurate prediction of performance in actual screening environments. These test scans are fed into the algorithm to provide threat detection prediction on locations of the body, and humans score the AI predicted detection and location as compared to the actual threat type and location, if any, for each test scan. The overall detection performance and false alarms are recorded. Our data set continues to grow as our products are deployed in more venues and facilities, and as we continue to conduct additional trials. The AI and deep learning systems analyze MMW images generated for people walking through the HEXWAVE™ system at a rate of

 

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20 times per second, similar to how a high-speed camera would track a walking person. This enables people to be screened at normal walking speeds. The AI algorithm predicts the presence and location of the threat by placing a rectangle representing the size and location of the detected threat over the location on the image where the algorithm determined the threat is concealed. This is an on-going process with trials occurring on a monthly basis and software updates issued on a quarterly basis (or sooner as may be required by customer installations).

The radar energy emitted by the Antenna Array and Transceiver is safe for use on humans. Further, HEXWAVE™ does not gather or use any personally identifiable information, as only the AI programming utilizes the images and 3D data.

HD-AIT Upgrade Kit
(Liberty upgrade integrates into existing TSA AIT screening devices)

HD-AIT Upgrade Kit

Our HD-AIT Upgrade Kit is being developed pursuant to contracts awarded by the TSA to create a solution to aging HD-AIT systems currently in use in airports throughout North America and also can be implemented to upgrade HD-AIT systems around the globe. The HD-AIT Upgrade Kit uses MMW, high-definition imaging and will incorporate AI to produce greater detection capabilities (including detection of new and emerging threats) and lower false alarm rates for a better passenger experience. The AI used in connection with the HD-AIT Upgrade Kit will be supplied by up to three TSA-approved vendors (not including our company) chosen by TSA as part of its Open Architecture program. These vendors do not produce any HD-AIT hardware systems. All AI vendor algorithms will be trained by threat example scans produced by legacy HD-AIT systems incorporating our HD-AIT Upgrade Kit prior to receipt of TSA certification.

The HD-AIT Upgrade Kit is designed to enhance the capabilities of existing TSA AIT screening devices using open architecture, allowing the use of third-party hardware and software components. According to the TSA, open architecture is a technology-design approach for software and hardware that uses widely accepted standards to ensure interoperability across tools and platforms regardless of the technology designer, manufacturer, or supplier. Out HD-AIT Upgrade kit meets new detection standards issued by the DHS. In January 2025, we received formal waiver authorization approval from the FCC. In June 2025, we submitted the system to provide the test data for the full authorization enabling us to market and deliver the HD-AIT Upgrade Kit in compliance with FCC rules and regulations applicable to the marketing of radio frequency devices. In August 2025, we delivered our first unit to the TSA for formal evaluation. Initial commercial sales are anticipated in 2026, subject to successful completion of the TSA’s certification process.

 

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The contracts awarded by the TSA include defined technical milestones, evaluation phases, and government acceptance criteria, and may require us to provide software, hardware, integration support, or technical data on specified timelines. The TSA may modify, delay, or terminate these contracts at its discretion, including for convenience, and payment is typically subject to successful completion of milestones or delivery of contract deliverables. Failure to achieve required performance standards, meet milestone schedules, or provide requested technical information could result in reduced payments, delays in TSA evaluation or certification, or termination of the contract. TSA funding and continued engagement do not guarantee certification or procurement, and TSA certification is not assured. Any delay, modification, or termination of our TSA contracts could adversely affect our development timelines, commercialization plans, and expected revenue for the HD-AIT Upgrade Kit.

Revenue Model

We sell our HEXWAVE™ products under a purchase agreement (product sale where title transfers to the customer) by which the customer agrees to pay a one-time upfront fee for the equipment, and we expect to sell our HD-AIT Upgrade Kit products primarily under this type of arrangement. In addition, purchasers of our HEXWAVE™ scanners may purchase a subscription for software operating system and standard AI algorithm updates. The subscription service is typically offered for a period of five years and may be paid in advance or on an annual basis. In addition, we offer an annual maintenance and support service plan to repair any faulty or damaged parts on the HEXWAVE™ following a one-year warranty on the product. To date, substantially all purchasers of HEXWAVE™ scanners also have purchased this maintenance and AI subscription. In addition, in partnership with Amsource Capital, we are now offering flexible leasing options for HEXWAVE™ of up to seven years with monthly payment options.

Our Licenses

Massachusetts Institute of Technology — Intellectual Property used in HEXWAVE™

We have entered into agreements with MIT and MIT’s Lincoln Laboratory (“MIT LL”), including the MIT License Agreement, a related Technology Transfer Agreement (the “Technology Transfer Agreement”), and a related Cooperative Research and Development Agreement (“CRADA”), pursuant to which we have obtained an exclusive license for patents, design assets and MIT LL technical expertise related to active 3D imaging technology that are the core technology behind our HEXWAVE™ product. The obligations under the Technology Transfer Agreement and the CRADA have now been completed. We may consider extending the CRADA (and therefore changing its scope) if we determine that additional MIT LL technical expertise related to active 3D imaging technology is required.

Pursuant to the MIT License Agreement, we were granted the exclusive rights to MIT’s patent in “multistatic sparse array topology for FFT-based field imaging” ​(MIT Case No. l 8409L) (the “MIT Patent”), which is utilized in the video rate millimeter wave image reconstruction process allowing for detection with continuous motion. Subject to our compliance with its terms and the satisfaction of certain conditions, the MIT License Agreement will remain in effect until the expiration of all licensed patents in December 2035. Pursuant to the MIT License, we have made the following license maintenance payments to MIT (in addition to patent filing costs an annual maintenance fee): US$20,000 in 2019; US$50,000 in 2020; US$60,000 in 2021; US$100,000 in 2022; US$nil in 2023; US$40,000 in 2024; and US$200,000 in 2025. Beginning in 2026 and each year thereafter, we will be required to pay MIT an annual maintenance fee of US$350,000. In addition, we are required to pay MIT a royalty of 5.7% of all “net sales” of HEXWAVE™ products and services (including sales of scanners, maintenance and AI subscriptions and implementation services). Annual maintenance fees are applied to royalty payments due from us to MIT in the respective calendar year. During the nine months ended September 30, 2025 and the year ended December 31, 2024, we accrued US$34,042 and US$105,993, respectively, of royalty payments to MIT. The royalties paid will offset the minimum maintenance fee due each year.

The MIT License Agreement also requires us to achieve certain milestones. As of the date of this prospectus, we had achieved all milestones that we are required to achieve, except that we must achieve annual “net sales” of HEXWAVE™ products and services as follows: US$5,000,000 in 2025; US$10,000,000 in 2026; US$15,000,000 in 2027; US$20,000,000 in 2028; and US$25,000,000 in 2029 and every calendar year thereafter.

 

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In addition, under the MIT License Agreement, in the event of an asset sale or a change of control (as defined in the MIT License Agreement), we would be required to pay to MIT 5% of the first US$5,000,000 of consideration in connection with such a transaction, plus 3.5% of the consideration received above US$5,000,000 up to US$25,000,000, plus 2.5% of any consideration in excess of US$25,000,000.

In the event MIT determines that we (or any of our affiliates) have not fulfilled our obligations under the MIT License Agreement, it will provide us written notice of such determination, upon which we and MIT will confer to attempt in good faith to resolve the issue. If, within 60 days of our receipt of such notice from MIT, we have not either fulfilled the relevant obligation or agreed with MIT upon a mutually acceptable schedule of revised obligations, MIT has the right to terminate the MIT License Agreement. As of the date of this prospectus, we are not in default of any obligations under the MIT License Agreement.

If the MIT License Agreement were to be terminated, we could lose access to proprietary technologies that are foundational to our HEXWAVE™ system, which could materially and adversely affect our ability to manufacture, commercialize, and improve the system. Such a termination could also impair our competitive position, harm our reputation, and require us to pursue costly alternatives, including the redevelopment of affected technology or entering into alternative license arrangements on less favorable terms. As a result, the termination of the MIT License Agreement could have a material adverse effect on our business, results of operations, and financial condition.

Battelle Memorial Institute / PNNL — Intellectual Property used in HD-AIT Upgrade Kit

In 2021, we entered into the Battelle License Agreement with Battelle (which operates the PNNL), to license the millimeter wave-based, HD-AIT body scanner technology that is the core technology behind our HD-AIT Upgrade Kit product. Subject to our compliance with its terms and the satisfaction of certain conditions, the Battelle License Agreement provides us with non-exclusive license for the life of the patents. The patents licensed to us pursuant to the Battelle License Agreement have expirations dates ranging from 2042-2043. As consideration for the Battelle License Agreement, we paid Battelle US$60,000 in initial licensing fees in 2021, in addition to US$50,000 for past patenting expenses. We also are required to reimburse Battelle for certain ongoing patenting expenses.

Under the Battelle License Agreement, we are required to pay Battelle a royalty of 5% of “net sales” of HD-AIT Upgrade Kit products and services and 25% of any sublicensing revenues (if sublicensing is permitted). As of the date of this prospectus, we have not entered into, and have no plans to enter into, any arrangements that would result in sublicensing revenues. No royalties are payable to Battelle for the use of any patents subject to the Battelle License Agreement on behalf of the U.S. government for which the U.S. government has a royalty-free right to use such patent. During the nine months ended September 30, 2025 and the year ended December 31, 2024, we did not record any additional accruals beyond the minimum royalty payable. Under the Battelle License Agreement, we are required to make annual minimum royalty payments, even if we do not have any sales of licensed products or services. For the years 2021 through 2024, we paid a combined minimum royalty payments of US$400,000. In 2024 and each year thereafter, we are required to pay a minimum annual royalty of US$200,000. These royalties have been accrued for 2025. If the actual royalties we pay to Battelle in a given year meet exceed US$200,000, then the minimum annual royalty requirement is satisfied; however, if such actual royalty payments in a given year are less than US$200,000, we are required to pay to Battelle an amount equal to US$200,000 minus the actual royalties paid.

The Battelle License Agreement also requires us to achieve certain milestones. We are currently in discussions with Batelle to update the timeline for milestone deadlines. As of the date of this prospectus, we have met all milestones required to date. We are in active discussions and planning for future development activities.

If we breach any of our remaining obligations under the Battelle License Agreement and do not remedy such breach in full within 60 days after receiving notice thereof from Battelle, then Battelle is entitled to terminate the Battelle License Agreement.

Our Customers

We began selling our HEXWAVE™ units in 2023. Since that time, our principal categories of customers have included regional airports, courthouses and correctional facilities, universities and research laboratories.

 

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As discussed under “— Our Market Opportunity” above, we believe that the HEXWAVE™ system will appeal to a wide array of customers and expect that our customer base will diversify as we continue to advance our marketing and sales efforts.

In August 2025, we delivered our first unit to the TSA for formal evaluation. Initial commercial sales are anticipated in 2026, subject to successful completion of the TSA’s certification process. After the HD-AIT Upgrade Kit is delivered in the U.S., we believe that, over time, we can successfully market this product to airports in the European Union and Asia, as well as non-aviation customers such as government building and high-profile soft targets that employ legacy HD-AIT security screening systems in the U.S. and abroad.

Research and Development

We believe that the urban security screening market is poised for rapid technological advancements across software, cloud services, and sensors. We invest significant resources into ongoing research and development programs because we believe our ability to grow our market position depends, in part, on breakthrough technologies that offer a unique value proposition for our customers and differentiation versus our competitors. Our research and development team, which is responsible for both the development of new products and improvements to our existing product portfolio, consists of talented and dedicated engineers, technicians, scientists, and other professionals. Our primary areas of focus in research and development include, but are not limited to:

1.

Continued improvement of the detection algorithm performance including assessing the ability to detect new threats;

​

2.

Integration of complementary technologies to broaden the performance capabilities for certain market verticals (e.g. biometrics, access control, and metal detection);

​

3.

New MMW architecture designed to achieve radical cost reduction and penetrate budget-constrained markets; and

​

4.

Development and integration of a shoe screener capability into existing body scanners at U.S. airports.

​

Sales and Marketing

We sell our security products and solutions through our own two-person direct sales force. We have also strategically partnered with industry leading companies to sell our HEXWAVE and HD-AIT Upgrade Kits on a global basis. These strategic partners include Rapiscan, Viken, K2 and Isotec, among others. Our international distribution network is run exclusively by Rapiscan. Our distributors resell our products to our customers, for whom they are also responsible for performing installation, systems integration, and local support and maintenance services, with backup technical support services provided by our internal support team. Many resellers have an existing customer base that offer third-party physical security products including x-ray machines, cameras, access control systems, and video monitoring systems in their respective territories and regions, which provides an opportunity to cross-sell our contactless security screening products. To augment the reach of our distribution network, we also intend to grow our direct sales efforts focused primarily on serving major vertical markets and expanding our footprint.

We also sell to local, state and federal government agencies and the sales cycle is similar to selling to commercial entities. In most cases, the potential customer identifies the need for screening technology of individuals, requests a presentation and virtual or on-site demonstration of the technology, and then a formal request for proposal. Depending on the agency, this process can take anywhere from three to nine months until an award is made.

Our sales and marketing team strategies are focused on helping to accelerate sales growth by (i) driving market awareness, (ii) developing comprehensive sales and marketing content, tools, and campaigns for each stage of the sales process and (iii) scaling those campaigns via our global distribution network. Our security screening products, and our customers’ successes are identified and exposed through key government contracts and relationships at the TSA and airports that were early adopters of the technology. We also utilize public relations and communications efforts that span mainstream, business, and trade press across

 

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the security sector generally, social media and in key verticals such as government facilities (federal, state and local), airports and aviation worker screening, correctional institutions, and national laboratories. Our internal marketing team develops content in multiple formats and delivery methods to facilitate marketing campaigns and sales enablement.

Manufacturing and Suppliers

We currently source all components of HEXWAVE™ and our HD-AIT Upgrade Kit directly from third-party suppliers and assemble them at our facility in Wilmington, Massachusetts. To meet anticipated demand for our product lines, we are exploring options to use one or more domestic contract manufacturing partners to assemble sub-modules and assemblies, in which case final integration and testing of our products would continue to occur at our corporate headquarters.

We rely on several key third-party suppliers for critical components of our systems. Notably, we are dependent on ADI as the sole-source supplier of certain component parts used in our HEXWAVE™ product. These components are essential to the functionality of HEXWAVE™ and collectively represent approximately 22% of the total cost of goods sold per unit. We procure these components from ADI through standard purchase orders and do not have a long-term supply agreement in place. As a result, any delay, allocation, quality issue, shortage of raw materials, or termination by ADI could require design modifications, re-testing, recertification, or alternative sourcing, any of which could materially disrupt our manufacturing process, delay production schedules, increase our costs, and adversely affect our and ability to fulfill orders in a timely manner.

We have initiated efforts to evaluate potential design changes intended to reduce our dependency on ADI; however, these efforts are in early stages and due to the technical complexity of the components, a redesign and recertification of our hardware and software systems would be required, and we do not expect any alternate supply path to be commercially implemented before late 2026.

We maintain safety stock of critical components where feasible and closely monitor inventory levels to mitigate risk. However, disruptions in the supply chain could still materially affect production schedules and customer deliveries.

Intellectual Property

Our ability to drive innovation in the security screening market depends in part upon our ability to protect our core technology and intellectual property. We attempt to protect our intellectual property rights, both in the United States and abroad, through a combination of patent (through our MIT License Agreement and Battelle License Agreement), trademark, copyright and trade secret laws, as well as nondisclosure and invention assignment agreements with our consultants and employees and through non-disclosure agreements with our vendors and business partners. Certain critical aspects of the 3D imaging and high-definition imaging technology that is incorporated into our HEXWAVE™ and HD-AIT Upgrade Kit products are protected through the patents we have licensed via the MIT License Agreement and the Battelle License Agreement. Although our licenses under the Battelle License Agreement currently are non-exclusive, we believe that, in light of the current competitive landscape, the technological advancements we have made in our HD-AIT Upgrade Kit product over the past four years and our extensive collaboration with the TSA provide us with significant protection if these patents were to be licensed to a potential competitor. In addition, intellectual property comprising and underlying our advanced threat detection AI algorithms is unpatented. As of the date of this prospectus, we believe that we have adequate protection for this intellectual property through a combination of non-disclosure agreements, customization of our AI algorithms to our application and trade secret protection.

As of December 31, 2025, we had in-licensed three patents through the MIT License Agreement and the Battelle License Agreement. In addition, we have three issued United States trademarks.

 

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Employees

The following table sets forth the number of employees we had at the end of each fiscal year indicated below:

We believe that our employees are critical to our success. As of January 28, 2026, we had 21 full-time employees based primarily in our corporate office located in Wilmington, Massachusetts. We also engage numerous consultants and contractors to supplement our permanent workforce. A majority of our employees are engaged in research and development and go-to-market related functions. We consider our relations with our employees to be good. We view our employees as an important competitive advantage, and our management team has an in-depth knowledge of our target vertical markets and of the security industry in general.

Seasonality

The U.S. government’s fiscal year ends on September 30 of each year. While not certain, it is not uncommon for U.S. government agencies to award extra tasks or complete other contract actions in the timeframe leading up to the end of its fiscal year in order to avoid the loss of unexpended fiscal year funds, which may favorably impact our third fiscal quarter. Other than working with commercial customers on their fiscal budget timing, we do not see any seasonality in the security and detection business.

Property, Plants and Equipment

We do not own any real estate property.

In March 2021, we relocated our head office to Boston, MA, and entered into a lease agreement for its corporate office at 187 Ballardvale Street, Suite 110, Wilmington, MA 01887. The lease covers 5,814 square feet and extends until March 2028. In February 2023, we amended the lease to include an additional 4,106 rentable square feet on the second floor, extending the term for this space through March 2028.

Additionally, in February 2023, we entered into a lease agreement for a 1,042-square-foot office located at 4725 Peachtree Corners Circle, Suite 375, Peachtree Corners, GA 30092, originally expiring January 2026. In March 2025, the landlord advised that the property will be redeveloped and terminated the lease effective September 30, 2025, with rent waived from April through September.

Government Regulations

Our products and technologies are subject to various U.S. federal, state foreign laws, regulations, certifications, and standards, including those applicable to aviation security screening, public safety, electromagnetic emissions, data protection, the deployment of millimeter-wave and artificial intelligence-based technologies, health and safety, anti-corruption and export controls. We believe that we are in material compliance with all such laws, regulations, and permitting requirements.

Regulatory requirements applicable to security screening systems may change over time or vary across jurisdictions, and compliance may require additional testing, certification, or product modifications. In particular, HEXWAVE™ deployments may be subject to local permitting, privacy assessments, or other approvals depending on jurisdiction. Also, our HD-AIT Upgrade Kit is subject to evaluation and certification by the TSA before it may be deployed in TSA-regulated airport security operations. The TSA maintains detailed technical and Security Threat Detection performance standards that screening technologies must meet to be approved for procurement and operational use. The certification process includes secret-level laboratory evaluation of threat detection performance, on-site testing in airport environments, and formal review of system performance, reliability, and safety. There is no guarantee that our HD-AIT Upgrade Kit will be approved, and delays or failure to obtain TSA certification could adversely affect our ability to

 

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commercialize this product in the U.S. aviation security market. In addition, even after initial approval, future modifications to the system may require additional review or recertification. Because regulatory frameworks in our markets continue to evolve, we may be required to update, modify, or enhance our systems to maintain compliance.

Export and Trade Matters

We are subject to anti-corruption laws and regulations imposed by governments around the world with jurisdiction over our operations, including the FCPA, as well as the laws of the countries where we do business. We are also subject to various trade restrictions, including trade and economic sanctions and export controls, imposed by governments around the world with jurisdiction over our operations. For example, in accordance with trade sanctions administered by the Office of Foreign Assets Control of the Department of Treasury and the U.S. Department of Commerce, we are prohibited from engaging in transactions involving certain persons and certain designated countries or territories, including Cuba, Iran, Syria, North Korea and the Crimea, Donetsk and Luhansk Regions of Ukraine. In recent years, the United States government has a renewed focus on export matters. For example, there are increasing controls on our current and future products may be subject to these heightened regulations, which could increase our compliance costs. Although our current marketing strategy focuses primarily on federal and state government and urban security markets within the U.S., we have sold HEXWAVE™ systems in certain foreign countries, consisting of the Netherlands, Chile, Columbia, Canada and Malaysia, and we believe there is a significant market opportunity for our products in other foreign markets. To the extent we expand our sales efforts in markets outside the U.S., our compliance with applicable anti-corruption, sanctions and export control laws will become increasingly important.

Competition

HEXWAVE™

We have experienced, and expect to continue to experience, competition from a number of companies, including other vendors of security screening systems. A variety of security screening technologies compete with our proprietary technologies, including, but not limited to:

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Handheld or walk-through metal detectors, which are currently used in airports and also are the primary screening solution in the non-aviation checkpoint market.

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•

Passive screening systems based on passive infrared or terahertz technology, which demonstrate modest fidelity but good stand-off range (i.e., the distance at which the screening solution can be effectively placed from screened subjects). These systems have accuracy limitations and environmental limitations (such as temperature) which limit outdoor and indoor applications.

​

•

Active screening systems based on microwave resonance, MMW or microwave 3D imaging technology. Systems based on microwave resonance demonstrate limited range, can be used indoors only and are highly susceptible to environmental factors. MMW systems are widely used and recognized in the marketplace and generally demonstrate very good fidelity and utilize AI capabilities but are subject to low range and commercialization for outdoor applications is challenging. Systems based on microwave 3D imaging generally demonstrate moderate fidelity, utilize AI capabilities, have long range, are housed in modular, movable architecture and can be utilized in indoor and outdoor applications.

​

In addition to legacy handheld and walk-through metal detectors, there are a number of companies and products in the next-generation security screening space in the North American urban security market, which include, among others, Evolv Technologies Holdings, Inc. (product: Evolv Express), Xtract One Technologies, Inc. (product: SmartGateway), Thruvision Group plc (product: LPC71 Series), and Leidos (product: ProVision), Rohde & Schwartz (product: QPS 201 and QPS Walk). These companies, individually and between them, address a number of the key performance indicators for next-generation security screening systems and are constantly developing and improving their respective technologies. However, we believe that the HEXWAVE™ system’s features provide the most versatile detection solution on the market.

 

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HD-AIT Upgrade Kit

We compete with Leidos Wideband System, a solution being developed by Leidos, which developed and manufactured the original ProVision® and ProVision® 2 systems, which are the existing MMW HD-AIT scanners in place at most U.S. airports. We believe that both our HD-AIT Upgrade Kit and the Leidos Wideband System ultimately will be able to meet TSA’s enhanced detection standards, as well as enhanced standard expected to become effective in the European Union, which are the primary drivers of market demand to upgrade existing HD-AIT security scanning systems.

Although Leidos manufactured the existing HD-AIT security screening systems and has certain advantages as a larger company (including potentially better ability to support the national infrastructure of upgraded HD-AIT security screening systems), we believe that the HD-AIT Upgrade Kit will have a number of competitive advantages as compared to the Leidos Wideband System, including:

•

The HD-AIT Upgrade Kit is based on technology licensed from PNNL, which is DHS S&T’s partner for its Screening at Speed program, and TSA has spent in excess of US$6 million with PNNL to develop the underlying technology. As a result of our Battelle License, TSA has awarded us over US$2.2 million in contract support specifically to develop the HD-AIT Upgrade Kit.

​

•

The HD-AIT Upgrade Kit scans over a wider range of frequencies (10 to 40 GHz) as compared to the Leidos Wideband System (20 to 40 GHz), which translates to improved passenger MMW image details that we believe will translate to improved threat detection with lower false alarm and passenger touch rates than the Leidos Wideband System for the same algorithms used. In addition, we believe scanning over a wider range of frequencies will allow passengers to wear a wider range and more layers of clothing as compared to the Leidos Broadband System, without compromising threat detection capability. We expect this to result in significantly less divestiture of clothing and faster throughput compared to the Leidos Wideband System.

​

•

We have collaborated directly with TSA, pursuant to contracts awarded by TSA, to develop a standard process to host the software of all five TSA Open Architecture compliant vendors on our cloud-based system. As described in the TSA’s Open Architecture Roadmap (July 2023), implementing an Open Architecture approach to the aviation screening environment is a key priority for TSA. Based on our collaboration with TSA, on August 11, 2025, we demonstrated that the HD-AIT Upgrade Kit fully functions with all TSA’s selected Open Architecture third-party vendor software, however it is unknown what level of support the Leidos Wideband System will have for the Open Architecture.

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Legal Proceedings

We are from time to time subject to various claims, lawsuits, and other legal and administrative proceedings arising in the ordinary course of business. We are not currently engaged in any litigation or criminal proceedings.

Corporate History and Information

We were incorporated on June 8, 2012 pursuant to the Business Corporations Act (Ontario) under the name “Gulfstream Acquisition 1 Corp.” We were listed on the TSXV as a “capital pool company” under the TSXV’s Policy 2.4 — Capital Pool Companies on June 14, 2013.

Liberty Defense Holdings, Inc. (“LPC”) was incorporated on April 30, 2018 pursuant to the Business Corporations Act (Ontario) as “Trovec Holdings Inc.” On October 4, 2018, LPC changed its name from Trovec Holdings Inc. to “Liberty Defense Holdings, Inc.”

On April 4, 2019, in connection with the Qualifying Transaction (as defined below), LPC amalgamated with 2675553 Ontario Limited, a wholly-owned subsidiary of the Company, to form the LDH GS Amalco Corp. (“LDH GS Amalco”). Also on April 4, 2019, we completed the acquisition of all of the issued and outstanding shares of the LDH GS Amalco by way of a reverse take-over (the “Qualifying Transaction”) under the rules of the TSXV and concurrently changed its name to “Liberty Defense Holdings, Ltd.” At that time, the LDH GS Amalco became our wholly-owned subsidiary.

 

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On July 27, 2020, we continued our jurisdiction of incorporation from Ontario to British Columbia and are now governed by the BCBCA.

On March 17, 2021, we completed a business combination transaction with DrawDown Detection Inc. (“DrawDown”) by way of a three- cornered amalgamation, pursuant to which: (i) we effected a consolidation of its outstanding Common Shares on the basis of one (1) post-consolidation Common Share for each six and two tenth (6.2) pre-consolidation Common Shares; and (ii) the security holders of DrawDown became security holders of the Company and DrawDown amalgamated with 1246043 B.C. Ltd., a subsidiary of the Company, and became our wholly owned subsidiary (the “RTO Transaction”).

Intercorporate Relationships

As of the date of this prospectus, we have two wholly-owned direct subsidiaries, LDH GS Amalco and DrawDown, and two wholly-owned indirect subsidiaries, Liberty Defense Technologies, Inc., a Massachusetts corporation, and DrawDown Technologies Inc., a Delaware corporation.

Our corporate structure is set out below.

(1)

Formerly Gulfstream Acquisition 1 Corp.

​

(2)

Formed by the amalgamation of LPC and 2675553 Ontario Limited upon completion of the Qualifying Transaction.

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(3)

Formed by the amalgamation of DrawDown Detection Inc. and 1246043 B.C. Ltd. upon completion of the RTO Transaction.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are an emerging leader in AI-based contactless security technology for detecting concealed metallic and non-metallic weapons and threats. Our mission is protecting communities and preserving peace of mind through superior security detection solutions, while simultaneously increasing ease of travel and convenience for security at major checkpoints. In furtherance of this mission, we offer two separate security screening solutions: our HEXWAVE™ system and our HD-AIT Upgrade Kit.

Since our inception, we have generated limited revenue from contract awards from the TSA, PNNL and sales of HEXWAVE™ units, while we simultaneously have incurred substantial operating expenses. Accordingly, we have incurred significant operating losses and negative cash flows from operations, and we expect to continue to incur significant expenses and operating losses in the foreseeable future as we advance the commercialization of HEXWAVE™ and HD-AIT.

Key Factors Affecting Our Operating Results

We believe that our performance and future success depend on many factors that present significant opportunities for us but also pose risks and challenges.

Backlog Orders

As of September 30, 2025, we had a HEXWAVE™ order backlog of approximately $1.45 million comprised of signed purchase orders not subject to cancellation.

Production of the remaining units to fulfill the backlog is ongoing. We expect to complete fulfillment of the remaining backlog, including additional orders currently in production, during the first half of 2026. As demand continues to grow, additional purchase orders may increase the overall backlog in the near term.

Other Revenue Visibility and Timing Considerations

As of the date of this prospectus, we have completed the sale and delivery of thirty (30) HEXWAVE™ units. Although HEXWAVE™ is a new product with no historical sales data or comparable benchmarks, discussions with prospective customers support optimism in the growth potential for HEXWAVE™ sales in future periods. However, limited funding may impact our ability to follow up with clients, invest in marketing and promote the HEXWAVE™ product effectively, potentially delaying its visibility and adoption by potential customers.

We have experienced delays in TSA contract revenue projects, as well as in additional contract line items that the TSA had planned to exercise in 2025 and 2026, and may experience similar delays in the future. As a result of these delays, guaranteed revenue of $357,759 originally planned for early 2025 will fall into the first quarter of 2026, as the TSA HD-AIT Phase II B was awarded September 29, 2025.

General Economic and Market Conditions

We continue to operate in a challenging global economic environment, characterized by constrained capital markets and slower customer procurement cycles. These conditions, which began in 2024, have persisted through 2025 and continue to affect the timing of purchase orders for HEXWAVE™ units.

 

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We expect that our results of operations, including our revenue and cost of revenue, may fluctuate or continue to fluctuate based on, among other things, the impact of rising inflation and interest rates on business spending; supply chain issues and the impacts on our manufacturing capabilities; public health emergencies; geopolitical conflicts and war, including the conflicts in Europe and the Middle East; tariffs and recessionary trends. We remain committed to overcoming these challenges and have taken proactive measures to mitigate these challenges and position ourselves for growth. These measures include increasing product awareness through targeted marketing and investor relations activities; focusing on advancing customer pilots and demonstrations to strengthen the sales pipeline; and maintaining operational readiness to scale production as purchase commitments are secured.

Management also recognizes that current capital market conditions directly affect our liquidity and working capital position. As at September 30, 2025, we had a working capital deficiency of $4.5 million and contractual obligations of $8.6 million. Continued access to external financing will therefore be critical to support operations and growth initiatives until we are able to generate sustainable revenues from commercial sales.

Adoption of our Security Screening Products

We believe the world will continue to focus on the safety and security of people in the places where they gather. Many of these locations, such as schools, places of worship, shopping malls or sports and entertainment venues, are moving toward a more frictionless security screening experience. We believe we are well-positioned to take advantage of this opportunity due to our proprietary technologies and distribution capabilities. Our products are designed to empower venues and facilities to realize the full benefits of contactless security screening, including a rapid visitor throughput and minimal security staff to screened visitor physical contact. The degree to which potential and current customers recognize these benefits and invest in our products will affect our financial results.

Sales Mix, Pricing, Product Cost and Margins

We began selling our HEXWAVE™ units in 2023. Since that time, our principal categories of customers have included regional airports, courthouses and correctional facilities, universities and research laboratories. We sell our HEXWAVE™ products under a purchase agreement (product sale where title transfers to the customer) by which the customer agrees to pay a one-time upfront fee for the equipment. In addition, purchasers of our HEXWAVE™ scanners may purchase a subscription for our software operating system and standard AI algorithm updates. The subscription service is typically offered for a period of five years and may be paid in advance or on an annual basis. In addition, we offer an annual maintenance and support service plan to repair any faulty or damaged parts on the HEXWAVE™ following a one-year warranty on the product. To date, substantially all purchasers of HEXWAVE™ scanners also have purchased this maintenance and AI subscription. In addition, in partnership with Amsource Capital, we are now offering flexible leasing options for HEXWAVE™ of up to seven years with monthly payment options.

In August 2025, we delivered our first HD-AIT Upgrade Kit unit to the TSA for formal evaluation. Initial commercial sales are anticipated in 2026, subject to successful completion of the TSA’s certification process. After the HD-AIT Upgrade Kit is delivered in the U.S., we believe that, over time, we can successfully market this product to airports in the European Union and Asia, as well as non-aviation customers such as government building and high-profile soft targets that employ legacy HD-AIT security screening systems in the U.S. and abroad.

Going forward, we expect our products to be adopted in a variety of vertical industry markets and geographic regions, primarily within the United States. Pricing may vary by region or vertical market due to market-specific dynamics. As a result, our financial performance depends, in part, on the mix of sales, bookings, and business in different markets during a given period. In addition, we are subject to price competition, and our ability to compete in key markets will depend on the success of our investments in new technologies and cost improvements as well as our ability to efficiently and reliably introduce cost-effective contactless security screening products to our customers.

 

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Continued Investment and Innovation

Our performance is significantly dependent on the investment we make in our research and development efforts and on our ability to be at the forefront of the security screening industry. It is essential that we continually identify and respond to rapidly evolving customer requirements, develop, and introduce innovative new products, enhance existing products and generate customer demand for our products. We believe that investment in our security screening products will contribute to long-term revenue growth, but it may adversely affect our near-term profitability.

Segments

We operate through three distinct segments: Corporate, HEXWAVE™ and Contract. Our operating segments are based on the reports which are reviewed by the chief operating decision maker (“CODM”) in making strategic resource allocation decisions. We consider our CODM to be our CEO, who evaluates the operations of each reportable segment. The CODM reviews the net income (loss) of each of these segments in allocating resources and evaluating operating performance.

The Corporate reporting segment covers our non-allocated, general overhead expenses, such as legal, compliance, accounting, head-office staff, and other such items. This reporting segment is reviewed for cost control and budgetary considerations. The HEXWAVE™ segments covers revenues associated with the sale of our HEXWAVE™ product and related subscription services. The Contract segment covers revenues associated with contract awards with PNNL and TSA.

Our Contract segment and HEXWAVE™ segment contributed 48.0% and 52.0% of our revenue, respectively, for the nine months ended September 30, 2025, compared to 46.3% and 53.7% for the nine months ended September 30, 2024.

Our Contract segment and HEXWAVE™ segment contributed 58.4% and 41.6% of our revenue, respectively, for the year ended December 31, 2024, compared to 92.0% and 8.0% for the year ended December 31, 2023.

As at September 30, 2025, December 31, 2024 and 2023, all non-current assets are in the United States.

For the nine months ended September 30, 2025, revenues from four customers represented approximately 91% of HEXWAVE™ revenues. Of these customers, one accounted for approximately $390,000, or 43%, of HEXWAVE™ revenues; a second accounted for approximately $238,000, or 26%; a third accounted for approximately $109,959, or 12%; and a fourth accounted for approximately $108,500, or 12%. For the nine months ended September 30, 2024, revenues from two customers represented approximately 84% of HEXWAVE™ revenues. Of these customers, one accounted for approximately $1,080,000, or 75%, of HEXWAVE™ revenues; and a second accounted for approximately $142,032, or 10%.

All such customers were located in the United States for the nine months ended September 30, 2025. For the nine months ended September 30, 2024, all such customers were located in the United States, except for the customer generating $142,032 of revenue, which was located in Canada. No other individual customer accounted for 8% or more of total revenues during either of the nine months ended September 30, 2025 and 2024.

For the year ended December 31, 2024, revenues from five customers represented approximately 94% of HEXWAVE™ revenues. Of these customers, one accounted for approximately $470,736, or 46%, of HEXWAVE™ revenues; a second accounted for approximately $142,032, or 14%; a third accounted for approximately $130,000, or 13%; a fourth accounted for approximately $119,900, or 12%; and a fifth accounted for approximately $100,500, or 10%. For the year ended December 31, 2023, revenues from one customer accounted for $120,000, or 100%, of HEXWAVE™ revenues.

For the year ended December 31, 2024, all such customers were located in the United States, except for the customer generating $142,032 of revenue, which was located in Canada, the customer generating $50,378 of revenue, which was located in Netherlands and the customer generating $119,900 of revenue, which was located in Chile. For the year ended December 31, 2023, all such customers were located in the United States.

 

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For the nine months ended September 30, 2025 and 2024, all revenue from Contract segment was earned from one customer in the United States.

For the years ended December 31, 2024 and 2023, all revenue from Contract segment was earned from one customer in the United States.

Components of Our Results of Operations

Revenue

We derive our revenue primarily from HEXWAVE™ sales and subscription services and contract revenue from the TSA and PNNL. We expect to gain a second stream of HEXWAVE™ revenue through commercialization of the HD-AIT Upgrade Kit, subject to TSA certification. In August 2025, we delivered our first unit to the TSA for formal evaluation. Assuming TSA certification is obtained in early 2026, we expect initial commercial sales to commence during 2026.

HEXWAVE™ Revenue

Revenue in our HEXWAVE™ segment consists primarily of sales of our HEXWAVE™ product and related subscription services. At the point of sale, customers agree to pay a one-time upfront fee for the equipment. Revenue arising from the sale of HEXWAVE™ units is recognized as we fulfill our performance obligations upon delivery and successful commissioning of the product to the customer. Purchasers of our HEXWAVE™ scanners may purchase a subscription for software operating system and standard AI algorithm updates. The subscription service is typically offered for a period of five years and may be paid in advance or on an annual basis. Revenue from upfront sales of HEXWAVE™ units is initially recorded as deferred revenue until the obligation of shipment and delivery is fulfilled. Subsequently, upon meeting this obligation, the deferred revenue is recognized as earned revenue, net of provisions for estimated sales return.

Contract Revenue

Contract revenue consists primarily of contract revenue from the TSA and PNNL. Historically, we have received grant revenue from the TSA, but the composition of revenue is expected to change with a decrease or cessation in grant revenue and an increase in revenue from sales of HEXWAVE™ and our other products as we continue our commercialization efforts. We typically transfer control of goods and services, and satisfy performance obligations, over time. Therefore, we recognize revenue over time as these performance obligations are satisfied.

Cost of Revenue

HEXWAVE™ Cost of Revenue

HEXWAVE™ cost of revenue consists primarily of manufacturing expenses, including raw materials, components, and assembly, as well as labor costs for production and quality control. Additionally, it includes amortization of licensed technologies and intellectual property related to the technology, software integration, and depreciation of property and equipment. Shipping and logistics expenses, such as freight, air transportation, customs, and tariffs, also contribute to the cost. Lastly, warranty and customer support costs, including installation, training, maintenance and service obligations, are factored into the overall cost of revenue.

HEXWAVE™ cost of subscription services revenue consists primarily of technology infrastructure expenses, including cloud hosting, software maintenance, and data processing. It also includes customer support and service costs, such as technical assistance, system monitoring, and remote updates. Additionally, labor costs, cybersecurity measures, and ongoing software development contribute to the overall expenses. Lastly, depreciation and amortization of software and hardware used in the service delivery, along with administrative and compliance costs, are also key components. Under revenue arrangements for our HEXWAVE™ segment, we incur cost in advance of recognizing revenue. These are recorded as costs and carried forward until the related revenues are recognized, at which time it is expensed.

 

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Contract Cost of Revenue

Contract cost of revenue consists primarily of direct labor expenses, including wages and benefits for employees involved in contract fulfillment, as well as costs for materials, equipment, and specialized components required for project execution. It also encompasses any payments to subcontractors and third-party service providers, along with expenses for technology, software, and system integrations. Additionally, project management overheads, such as administrative support, facility costs, and compliance expenses, contribute to the overall cost. Lastly, amortization and depreciation of property and equipment and intellectual property are used in contract delivery. Under contract revenue arrangements, we incur costs in advance of recognizing revenue. These costs are recorded as contract costs and carried forward until the related revenues are recognized, at which time it is expensed.

Engineering and Research and Development Expenses

Engineering and research and development expenses consist primarily of costs incurred in connection with our research and engineering activities and include:

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product development and technology costs;

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•

personnel expenses, including salaries, benefits and stock-based compensation expenses;

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consulting fees;

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•

facility costs, including, rent and administration, depreciation, amortization and maintenance expense; and

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•

travel expenses

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We anticipate that our engineering and research and development expenses will increase in the future to support continued engineering and research and development activities, including our ongoing and planned research and development related to HEXWAVE™ production development, software development and advancing other technologies, such as HD-AIT.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel-related expenses such as salaries, benefits, and stock-based compensation, for our personnel in executive and other administrative functions. General and administrative expenses also include legal fees relating to patent and corporate matters and professional fees paid for accounting, auditing, consulting and tax services, as well as other costs such as consulting fees, insurance costs, investor and public relations, and travel expenses.

We anticipate that our general and administrative expenses will increase in the future to support continued engineering and research and development activities, including our ongoing and planned research and development related to HEXWAVE™ production development, software development and advancing other technologies, such as HD-AIT. We also anticipate we will incur increased accounting, audit, legal, regulatory, compliance, director and officer insurance, and investor and public relations expenses associated with operating as a public company in the U.S.

Other Expense (income)

Other expense (income) consists of interest expense, accretion expense and foreign exchange loss (gain) and other income consisting of small amounts of engineering material sold to a third party.

 

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Results of Operations

Comparison of Nine Months Ended September 30, 2025 and 2024

The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024:

Revenue

HEXWAVE™ Revenue

HEXWAVE™ revenue for the nine months ended September 30, 2025 was US$909,407, compared to US$1,447,532 for the nine months ended September 30, 2024, a decrease of US$538,125 (37.2%). The decrease primarily reflects lower HEXWAVE™ unit deliveries and lower subscription and service revenue recognized during the period, as several customer deployment schedules shifted into later periods. Deliveries of HEXWAVE™ units during the nine months ended September 30, 2025 decreased to 12 units at an average selling price per unit of approximately US$71,792, compared to 20 units at an average selling price per unit of approximately US$72,376 delivered during the comparable period in 2024. The lower volume of deliveries in the nine months ended September 30, 2025 was primarily attributable to timing-related factors, including customer site readiness, installation scheduling, and the deferral of certain customer deployments into subsequent periods, as well as management’s focus on manufacturing optimization and operational efficiency initiatives during the period.

Subsequent to September 30, 2024, and during the three months ended December 31, 2024, we recorded net negative revenue and net negative cost of revenue primarily as a result of the return of six HEXWAVE™ units by a customer. These units had been sold and recognized as revenue earlier in fiscal year 2024, and upon return, we reversed the previously recognized revenue and related cost of revenue in accordance with our accounting policy.

Contract Revenue

Contract revenue for the nine months ended September 30, 2025 was US$854,849, compared to US$1,250,000 in the same period of 2024, a decrease of US$395,151 (31.6%). The decrease reflects the completion of major milestones under the TSA contracts during 2024, resulting in lower milestone-based revenue recognized in 2025. This was partially offset by continued activity and remaining deliverables under these contracts, including software support and integration work recognized during the period.

 

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Total Revenue

Total revenue for the nine months ended September 30, 2025 was US$1,764,256, compared to US$2,697,532 in the prior year, a decrease of US$933,276 (34.6%). The decrease was primarily due to lower HEXWAVE™ unit deliveries and the completion of significant milestones under the TSA contracts in 2024, which resulted in reduced contract and milestone revenue recognized in 2025.

Cost of Revenue

HEXWAVE™ Cost of Revenue

HEXWAVE™ cost of revenue for the nine months ended September 30, 2025 was US$2,112,884, compared to US$2,408,789 for the comparable period in 2024, representing a decrease of US$295,905, or 12.3%. While HEXWAVE™ revenue declined more significantly during the period due to lower unit delivery volumes, cost of revenue did not decrease proportionately, primarily due to the presence of fixed and semi-fixed manufacturing and deployment costs. These costs include labor, facility and equipment costs, certain supplier commitments, and overhead required to maintain production capability and customer support, regardless of shipment volume.

As a result, the reduction in delivery volumes had a less pronounced impact on cost of revenue, reflecting limited short-term operating leverage in our current production scale. Management continues to focus on improving unit economics through manufacturing optimization, supplier cost reductions, and scale efficiencies, which are expected to improve gross margins as delivery volumes increase.

Contract Cost of Revenue

Contract cost of revenue for the nine months ended September 30, 2025 was US$1,493,636, compared to US$1,796,912 for the nine months ended September 30, 2024, a decrease of US$303,276 (16.9%). The decrease was driven by fewer milestone-based costs and lower engineering and contract activity under the TSA agreements, following the completion of major milestones in 2024.

Total Cost of Revenue

Total cost of revenue for the nine months ended September 30, 2025 was US$3,606,520, compared to US$4,205,701 for the same period in the prior year, a decrease of US$599,181 (14.2%). This reflects lower production and delivery activity for both HEXWAVE™ units and contract-related work, consistent with the decline in total revenues year-over-year. The reduction also reflects fewer milestone-based costs incurred on TSA contracts compared to 2024.

Operating Expenses

Engineering and Research and Development Expenses

Engineering and research and development expenses for the nine months ended September 30, 2025 were US$2,058,666, compared to US$1,744,426 for the nine months ended September 30, 2024, an increase of US$314,240, or 15.3%. The increase was primarily due to higher salaries and consulting expenses and increased product development and technology costs to support continued enhancements to HEXWAVE™ and related threat-detection technologies.

The increase in research and development expenses reflects our ongoing focus on advancing our licensed technologies, with a particular emphasis on refining HEXWAVE™ production, software enhancements, and threat detection capabilities, as well as furthering the development of HD-AIT.

General and Administration Expenses

General and administrative expenses for the nine months ended September 30, 2025 were US$6,101,438, compared to US$2,599,438 for the nine months ended September 30, 2024, an increase of US$3,502,000, or 134.7%. The increase was primarily due to higher stock-based compensation, increased legal and

 

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professional fees related to financing and regulatory activities, and higher office, administrative, and investor relations expenses as we expanded our commercialization and corporate initiatives.

During the nine months ended September 30, 2025, we incurred:

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US$1,287,457 in salaries and consulting fees, compared to US$1,375,216 in the prior year, a decrease of US$87,759, reflecting changes in staffing levels and consulting activity.

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US$769,076 in legal and professional fees, compared to US$239,513 in the prior year, an increase of US$529,563, primarily related to financing transactions, regulatory filings, uplisting preparation and corporate initiatives.

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US$1,099,231 in stock-based compensation, compared to US$296,406 in the prior year, an increase of US$802,825, reflecting the impact of new stock options and RSU grants issued in late 2024 and in 2025.

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US$2,945,674 in office, rent, administration, travel, and miscellaneous expenses, compared to US$688,303 in the prior year period, an increase of US$2,257,371, largely due to the amortization of prepaid marketing and consulting arrangements, higher facility and administrative costs, increased investor relations expenditures, and expanded corporate activities.

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The significant year-over-year increase in general and administrative expenses reflects our heightened financing, commercialization, corporate development, and investor relations activities the nine month period ended September 30, 2025.

Other Expense (Income)

Other expenses for the nine months ended September 30, 2025, were US$507,838, compared to US$577,694 for the same period in 2024, representing a decrease of US$69,856 or 12.1%. The decrease was primarily due to lower interest expense, which declined to US$483,898 from US$566,266 in the prior year period, reflecting reduced borrowings and lower related financing costs.

We also recorded a foreign exchange loss of US$28,611 during the nine months ended September 30, 2025, compared to a loss of US$11,428 in the prior year period, with the increase of US$17,183 reflecting fluctuations in exchange rates and transaction volumes. Our functional currency is the Canadian dollar, and holding financial assets and liabilities in other currencies, primarily the U.S. dollar, continues to result in foreign exchange gains or losses.

In addition, we recorded other income, net of expenses of US$(4,671) for the nine months ended September 30, 2025, compared to nil in the prior year period.

Overall, the year-over-year reduction in other expenses was driven by the decline in interest costs, partially offset by higher foreign exchange losses.

Net Loss

Corporate

Corporate net loss for the nine months ended September 30, 2025, was US$4,338,868, compared to US$1,696,754 for the same period in 2024, an increase of US$2,642,114 or 155.7%. The increase was primarily driven by higher general and administrative expenses, including increased salaries and consulting fees, legal and professional fees associated with financing and regulatory activities, expanded investor relations efforts, and higher stock-based compensation. These increases reflect our continued focus on financing transactions, SEC filing preparation, and uplisting activities during the period. The increase was partially offset by a US$69,856 decrease in other expenses, primarily due to lower interest expense.

HEXWAVE™

HEXWAVE™ net loss for the nine months ended September 30, 2025, was US$3,021,690, compared to US$1,987,849 for the same period in 2024, representing an increase of US$1,033,841, or 52%. The increase was driven primarily by higher salaries and consulting expenses supporting production and deployment

 

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activities, as well as higher general and administrative and legal expenses allocated to the segment. These increases occurred despite a US$295,905 decrease in HEXWAVE™ cost of revenue (from US$2,408,789 to US$2,112,884), reflecting lower production volumes and no unit shipments during the period. The impact of these factors was partially offset by lower stock-based compensation and modestly reduced depreciation and administrative expenses.

Contract

Contract net loss for the nine months ended September 30, 2025 was US$3,149,648, compared to a net loss of US$2,745,124 for the same period in 2024, representing an increase in segment net loss of US$404,524, or 14.7%. The increase was primarily driven by higher operating expenses related to TSA development activities, including increased engineering, administrative, and legal costs allocated to the segment. This occurred despite a US$303,276 decrease in contract cost of revenue (from US$1,796,912 to US$1,493,636), reflecting lower milestone activity as TSA contracts approached completion. The increase in segment net loss reflects slower milestone recognition, reduced contract revenue compared to 2024, and higher project-related expenses incurred during the period.

Total Net Loss

Total net loss for the nine months ended September 30, 2025 was US$10,510,206, compared to US$6,429,727 for the nine months ended September 30, 2024, an increase of US$4,080,479, or 63.5%. The increase was primarily driven by significantly higher corporate general and administrative expenses — including salaries and consulting, legal and professional fees, stock-based compensation, and investor relations costs — as well as increased operating expenses allocated to the HEXWAVE™ and Contract segments. These increases were incurred while revenue remained constrained due to lower HEXWAVE™ shipments and reduced recognition of TSA contract milestones. These impacts were partially offset by lower interest expense. The higher net loss reflects our continued investments in commercialization, regulatory compliance, and financing activities during the period.

Comparison of Years Ended December 31, 2024 and 2023

The following table summarizes our results of operations for the years ended December 31, 2024 and 2023:

 

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Revenue

HEXWAVE™ Revenue

HEXWAVE™ revenue for the year ended December 31, 2024 was US$1,013,546, compared to US$120,000 for the year ended December 31, 2023. This increase of US$893,546 was primarily due to the fulfillment of backlogged orders and an increase in new customer deployments. In 2024, we sold 15 HEXWAVE™ units at prices ranging from approximately US$60,000 to US$120,000 per unit, depending on configuration and customer requirements. In 2023, revenue of US$120,000 was generated from the sale of 2 HEXWAVE™ units.

Contract Revenue

Contract revenue for the year ended December 31, 2024 was US$1,425,000, compared to US$1,372,557 for the year ended December 31, 2023. This increase of US$52,443 was primarily due to the completion of HD-AIT milestones and Open Architecture completions.

Total Revenue

Total revenue for the year ended December 31, 2024 was US$2,438,546, compared to US$1,492,557 for the year ended December 31, 2023. This increase of US$945,989 was primarily due to increased contract revenue from the TSA as well as increased sales of HEXWAVE™ units.

Cost of Revenue

HEXWAVE™ Cost of Revenue

HEXWAVE™ cost of revenue for the year ended December 31, 2024 was US$2,033,498, compared to US$1,546,040 for the year ended December 31, 2023. The increase in HEXWAVE™ cost of revenue from $1,546,040 in 2023 to $2,033,498 in 2024, an increase of $487,458, or 31.5%, was primarily attributable to an increase in the number of units produced and delivered. However, the increase in cost of revenue was not directly proportional to the increase in HEXWAVE™ revenue, which rose by $893,546. This disproportionate change was due to several factors, including limited production scale, higher per-unit component costs during initial low-volume manufacturing, and underutilized fixed overhead related to facility and staffing expenses that did not scale with output during the period. We anticipate unit cost reductions and improved gross margins as volume increases and production matures.

Contract Cost of Revenue

Contract cost of revenue for the year ended December 31, 2024 was US$2,081,971, compared to US$1,163,211 for the year ended December 31, 2023. This increase in contract cost of revenue from $1,163,211 in 2023 to $2,081,971 in 2024, an increase of $918,760, or 78.9%, was largely driven by increased consulting, engineering, and development expenses incurred to complete key technical milestones under our TSA-funded HD-AIT and Open Architecture programs. The related contract revenue only increased by $52,443, due to the timing of revenue recognition, as certain milestones achieved in 2024 will result in revenue recognition in future periods. Additionally, some of the contract work in 2024 required subcontracting and external technical resources, which increased upfront costs relative to recognized revenue. We expect gross margins on contract revenue to improve as we transition from development to deployment stages and milestone billing aligns more closely with incurred expenses.

Total Cost of Revenue

Total cost of revenue for the year ended December 31, 2024 was US$4,115,469, compared to US$2,709,251 for the year ended December 31, 2023. This increase of US$1,406,218 was primarily due to the increase of HEXWAVE™ units produced, as well as the increase in contract milestones completed.

 

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Operating Expenses

Engineering and Research and Development Expenses

Engineering and research and development expenses for the year ended December 31, 2024 was US$2,267,739, compared to US$4,022,458 for the year ended December 31, 2023. This decrease of US$1,754,719 was primarily related to the manufacturing and contract costs expenses reclassed to cost of revenue. These expenses were attributed to the ongoing research and development of our licensed technologies, with a focus on advancing various potential technologies under review. During the year ended December 31, 2024, we incurred US$1,655,580 in salaries and consulting fees that relate to HEXWAVE™ enhanced production development, software development and advancing the technologies under review such as HD-AIT. It also includes US$148,675 in product development & technology costs, US$98,008 in stock-based compensation, and US$248,979 in depreciation. During the comparative period, year ended December 31, 2023, we incurred US$370,073 product development and technology costs, US$89,302 in stock-based compensation, and US$2,766,601 in salaries and consulting fees that relate to software development and general R&D activities in connection to activities undertaken with the prospect of gaining new scientific or technical knowledge and understanding of the licensed technologies. The significant variance in salaries and consulting fees primarily stems from reallocating decreasing consulting during the year and moving production salaries and costs to cost of revenue as we commenced production, albeit not at full scale. Shipments of production have continued to ship slowly with the intention to progressively increase production volumes in the near future.

General and Administration Expenses

General and administrative expenses for the year ended December 31, 2024 were US$3,489,202, compared to US $3,868,191 for the year ended December 31, 2023. This decrease of US$378,989 was primarily due to the following reasons: Total expenses of US$1,809,724 were incurred mainly in connection to consulting fees, salaries and payroll related benefits. The large increase from the previous year is due to consulting fees for the private placement that occurred in December 2024. Other expenses totaling US$1,424,258 were incurred from legal and professional fees and travel promotion and investor relations. Stock based compensation decreased from US$511,699 for the year ended December 31, 2023, to US$255,220 for the same period during the current year. This decrease year over year was in connection with the cancellation of stock-based compensation for employees and consultants who have left our company and were offset with employees and consultants who have being issued stock options and RSUs during 2024.

Consulting fees, salaries, and benefits for the year ended December 31, 2024, increased from US$1,482,860 in fiscal 2023 to US$1,809,724 in fiscal 2024, reflecting our increase of contractors to fill necessary roles within the organization, as well as a large amount of consulting fees paid in the fourth quarter of 2024 in relation to the private placement. Office, rent, administration, travel, and miscellaneous expenses decreased from US$1,574,621 in fiscal 2023 to US$965,868 in fiscal 2024. The decrease is mainly due to a portion of operating expenses such as rent and utilities having a portion reclassed to cost of sales for production allocation, as well as a reduction in the MIT License fees for 2024.

Other Expense (Income)

Other expense (income) for the year ended December 31, 2024 was US$1,411,299, compared to US$261,700 for the year ended December 31, 2023. This increase of US$1,149,599 was primarily due to the following: We incurred interest expense totaling US$808,989 compared to US$283,247 during the year ended December 31, 2023. The large increase relates to the increase of interest expense from the interest-bearing loans, as well as the factoring loan. A foreign exchange loss of US$12,760 was recorded for the year ended December 31, 2024, contrasting with a gain of US$18,469 for the same period in 2023. The increase in foreign exchange loss compared to the previous year can be attributed to lower volatility in foreign exchange rates and reduced transactions affected by foreign exchange, significantly fewer than the prior year. Our functional currency is the Canadian dollar, and holding financial assets and liabilities in other currencies, mainly the U.S. dollar, leads to foreign exchange gains or losses.

 

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Net Loss

Corporate

Corporate net loss for the year ended December 31, 2024, was US$2,865,188, compared to US$2,244,260 for the year ended December 31, 2023. This increase of US$620,928, or 27.7%, was primarily driven by: 1) A US$859,358 increase in other expenses (from US$81,424 to US$940,782), mainly related to interest and financing costs, 2) A US$184,906 increase in salaries and consulting (from US$697,946 to US$882,852), and 3) A US$84,173 increase in legal and professional fees (from US$234,393 to US$318,566). These were partially offset by: 1) A US$259,736 decrease in general and administrative expenses (from US$629,496 to US$369,760), and 2) A US$247,773 decrease in stock-based compensation (from US$601,001 to US$353,228).

HEXWAVE™

HEXWAVE™ net loss for the year ended December 31, 2024 was US$2,808,452, up from US$1,901,044 for the year ended December 31, 2023 — an increase of US$907,408, or 47.7%. Key contributors to the increase included: 1) A US$487,458 increase in cost of revenue (from US$1,546,040 to US$2,033,498), reflecting higher production volume, 2) A US$800,509 increase in salaries and consulting (from US$284,121 to US$1,084,630), 3) A US$255,657 increase in general and administrative + legal expenses (from US$102,363 to US$358,020), and 4) A US$416,292 swing in other expense, from income of US$323,688 in 2023 to expense of US$92,604 in 2024. These increases were partially offset by: 1) A US$158,962 decrease in combined product development and depreciation (from US$412,208 to US$253,246), and 2) A US$893,546 increase in revenue (from US$120,000 to US$1,013,546), as units sold increased from 2 in 2023 to 15 in 2024.

Contract

Contract net loss for the year ended December 31, 2024 was US$3,171,523, compared to a net loss of US$5,223,739 for the year ended December 31, 2023, representing a decrease in net loss of US$2,052,216, or 39.3%. The decrease in Contract net loss was primarily driven by lower operating expenses and reduced contract development activity, following the completion of certain major TSA-funded development milestones in 2023.

Specifically, the improvement in net loss reflects: 1) lower engineering and development activity as several development programs transitioned toward completion, 2) reduced use of external consultants and subcontractors compared to 2023, and 3) improved alignment of contract costs with recognized revenue, as fewer high-cost development activities were incurred in 2024. These factors were partially offset by continued cost of revenue associated with ongoing TSA contract obligations and support activities.

Total Net Loss

Total net loss for the year ended December 31, 2024 was US$8,845,163, compared to US$9,369,043 in 2023 a decrease of US$523,880, or 5.6%. This improvement occurred despite higher cost of revenue and operating expenses, due to a US$946,000 increase in total revenue (from US$1.49 million to US$2.44 million). The benefit of higher revenues was partially offset by a US$1,149,599 increase in other expenses (from US$261,700 to US$1,411,299), primarily within the corporate and HEXWAVE™ segments. The net result reflects revenue growth and partially contained expense growth across the business.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception, we have generated limited revenue from contract award revenues from the TSA, PNNL and sales of HEXWAVE™ units, while we simultaneously have incurred substantial operating expenses. Accordingly, we have incurred significant operating losses and negative cash flows from operations, and we expect to continue to incur significant expenses and operating losses in the foreseeable future as we advance the commercialization of HEXWAVE™ and HD-AIT.

 

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As of September 30, 2025 and December 31, 2024, we maintained a cash balance of US$640,907 and US$1,153,229, respectively, and experienced a working capital deficiency of US$4,452,151 and US$2,652,516, respectively. Current liabilities amounted to US $8,239,018 as of September 30, 2025, primarily attributed to loans and expenses associated with commencing production, ongoing development of our licensed technologies, and maintaining licenses and our public registry in good standing. Current liabilities amounted to US$6,607,387 as of December 31, 2024, primarily attributed to the Parabilis Credit Facilities, our factoring arrangement with Bengal Capital, Inc., working capital loans with certain of our directors and officers, and expenses associated with commencing production, ongoing development of our licensed technologies, maintaining licenses and our public registry in good standing.

During the nine months ended September 30, 2025, we generated net cash from financing activities of US$7,931,412. Financing inflows consisted primarily of US$6,120,797 from the issuance of units pursuant to private placements, net of share issuance costs; US$2,075,555 from the exercise of warrants; US$650,000 from the Parabilis term loan; and US$350,000 from factoring arrangements. These inflows were partially offset by repayments of factoring of US$840,250, repayments of the Parabilis term loan of US$183,017, repayments of related-party working capital loans of US$74,658, repayments of third-party working capital loans of US$26,250, and repayments of lease liabilities of US$140,765.

During the nine months ended September 30, 2024, we generated net cash from financing activities of US$3,474,239, primarily from US$1,983,567 from the issuance of units pursuant to private placements, net of share issuance costs; US$1,800,000 from the Parabilis term loan; US$1,551,166 from factoring arrangements; US$653,175 from third-party working capital loans; US$82,000 from related-party working capital loans; and US$87,367 from the exercise of warrants. These proceeds were partially offset by repayments of factoring of US$1,567,031, repayments of third-party working capital loans of US$687,570, repayments of related-party working capital loans of US$220,281, repayments of lease liabilities of US$185,081, and repayment of the CEBA loan of US$23,073.

Future Funding Requirements

We incurred a total loss during the nine months ended September 30, 2025 and the year ended December 31, 2024 of US$10,510,206 and US$8,652,988, respectively, and cash outflows from operating activities of US$8,379,896 and US$6,469,264, respectively. In order to fully commercialize HEXWAVE™, we will require additional funds to achieve our development timeline and bring HEXWAVE™ to market. We have certain committed development milestones over the next twelve months and based on our current forecasted operational and development spend, we will require additional funds to meet these milestones. While we have been successful in arranging financing in the past, the success of such initiatives cannot be assured. This material uncertainty casts significant doubt upon our ability to continue as a going concern.

Based upon our current operating plan, we estimate that our future revenues and existing cash and cash equivalents as of the date of this prospectus, together with the estimated net proceeds from this offering, will be sufficient to fund our projected operating expenses and capital expenditure requirements through June 30, 2026. However, we have based this estimate on assumptions that may prove to be wrong, and our operating plan may change as a result of many factors currently unknown to us.

The application of the going concern concept is dependent upon our ability to generate future profitable operations and receive continued financial support from our creditors and shareholders. If we cannot generate positive future cashflows, this will delay the production timeline and shipments to backlogged orders, in addition to delaying necessary product cost reductions and improvements caused by the lack of funds to hire, produce, and execute the necessary product updates and revisions. Continued equity and/or debt financing is critical in order to ramp production up in order to become profitable.

Subsequent to September 30, 2025, we received gross proceeds of C$2,614,674 for the issuance of Common Shares pursuant to private placements.

Management plans to continue to pursue equity and/or debt financing to support operations. There can be no assurance that these financing efforts will be successful. Failure to maintain the support of creditors and obtain additional external financing will cause us to curtail operations and our ability to continue as a going concern will be impaired. The outcome of these matters cannot be predicted at this time.

 

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Material Cash Requirements for Known Contractual Obligations

During the nine months ended September 30, 2025 and the year ended December 31, 2024, we had contractual obligations in the amount of US$8,584,552 and US$8,050,980, respectively. As of September 30, 2025, contractual obligations for less than one year were US$8,239,018, which included accounts payable and accrued liabilities of US$4,391,772, term-loan of US$2,642,526, credit line liabilities of US$797,975, and lease liabilities of US$236,707. As of September 30, 2025, contractual obligations for one to three years consisted of lease liabilities of US$345,534. As of September 30, 2025, there were no contractual obligations due beyond three years.

Other Capital Requirements and Additional Royalty Obligations

We enter into agreements in the normal course of business with various vendors, which are generally cancellable upon notice. Payments due upon cancellation typically consist only of payments for products or services provided or expenses incurred, including non-cancellable obligations of service providers, up to the date of cancellation.

In connection with our patent rights under the MIT License Agreement, we are obligated to pay MIT (in addition to patent filing costs and annual maintenance fees) as follows: (1) US$40,000 for 2024, US$200,000 for 2025, and US$350,000 for 2026 and thereafter; and (2) a royalty of 5.7% of our future net sales. During the nine months ended September 30, 2025 and the year ended December 31, 2024, we accrued royalty payments of US$34,042 and US$105,993, respectively.

Under the Battelle License Agreement, we are obligated to pay a 5% royalty on net sales and a 25% royalty on all sublicensing revenues if permitted under the contractual guidelines. During the nine months ended September 30, 2025 and the year ended December 31, 2024, we accrued no royalty payments. We are also required to pay a minimum royalty amount of US$200,000 per year unless the agreement is terminated.

Cash Flows

The following table provides information regarding our cash flows for the nine months ended September 30, 2025 and 2024 and the years ended December 31, 2024 and 2023:

Operating Activities

During the nine months ended September 30, 2025, we used net cash of US$8,379,896 in operating activities, compared to US$3,072,818 during the same period in 2024. The increase in cash used in operations primarily reflects a higher net loss in 2025, adjusted for non-cash items. Non-cash charges and credits during the period included stock-based compensation of US$1,135,285 (September 30, 2024 — US$396,091), amortization recorded in cost of revenues of US$381,711 (September 30, 2024 — US$871,023), depreciation of US$197,214 (September 30, 2024 — US$321,665), inventory impairment of US$233,676 (September 30, 2024 — US$143,488), lease liability interest of US$32,697 (September 30, 2024 — US$53,691), accrued interest of US$253,856 (September 30, 2024 — US$57,075), credit line fees of US$304,554 (September 30, 2024 — US$15,900), and a loss on disposal of lease assets of US$18,514 (September 30, 2024 — US$29,233).

Changes in non-cash working capital used US$390,169 of cash during the nine months ended September 30, 2025, compared to cash provided of US$1,179,059 during the same period in 2024. These changes included a decrease in receivables and prepaid expenses of US$525,024 (September 30, 2024 —

 

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US$217,729 decrease), a decrease in inventory of US$360,015 (September 30, 2024 — US$964,272 increase), and a decrease in deferred revenue of US$9,964 (September 30, 2024 — US$1,135,970 increase). These decreases were partially offset by an increase in accounts payable and accrued liabilities of US$235,882 (September 30, 2024 — US$703,454 decrease) and an increase in contract costs of US$268,952 (September 30, 2024 — nil).

The change in working capital during the 2025 period was primarily driven by lower production and shipment volumes, changes in the timing of customer deployments, and reduced contract activity compared to the prior year period. Specifically, the decrease in inventory of US$360,015 reflects lower manufacturing activity and the utilization of previously produced HEXWAVE™ units to support customer deployments during the period, compared to the US$964,272 increase in inventory in 2024 when production volumes were higher.

The decrease in receivables and prepaid expenses of US$525,024 was primarily attributable to lower sales volumes, improved collection timing, and reduced prepaid expenditures related to marketing, consulting, and operational activities compared to the prior year period. The decrease in deferred revenue of US$9,964 reflects the recognition of previously deferred revenue as contractual performance obligations were satisfied during the period, partially offset by fewer new advance customer payments compared to 2024. These changes were partially offset by an increase in contract costs of US$268,952, reflecting ongoing engineering, development, and support activities under TSA contracts for which revenue recognition is expected in future periods.

Overall, the changes in working capital reflect our lower level of production and contract activity during the nine months ended September 30, 2025 compared to the same period in 2024.

Operating cash flows for the nine months ended September 30, 2025 and 2024 reflect ongoing gross losses, research and development expenditures, and general and administrative expenses, including salaries, consulting fees, and promotional and investor relations activities.

During the year ended December 31, 2024, we used cash of US$6,469,264 in operating activities, primarily as a result of a net loss and comprehensive loss of US$8,845,163. This use of cash was partially offset by non-cash and other operating adjustments, including impaired inventory of US$233,568, impairment of contract costs of US$115,730, stock-based compensation of US$384,703 (of which US$31,475 was recorded in cost of sales), lease liability interest of US$69,652, accrued interest of US$294,304, depreciation of US$396,315 (including US$147,336 recorded in cost of sales), amortization of US$922,221 recorded in cost of sales, a loss on debt settlement of US$563,996, credit line fees of US$74,449, factoring fees of US$289,684, and foreign exchange loss of US$230,974. In addition, changes in non-cash working capital resulted in a net cash outflow of US$1,228,930, driven by: (1) an increase in accounts receivable, reflecting higher HEXWAVE™ shipments in the fourth quarter of 2024 and timing of milestone invoices under TSA contracts; (2) an increase in inventories, as we ramped up production to fulfill an expanded backlog of HEXWAVE™ orders; (3) a decrease in prepaid expenses, partially offsetting working capital outflows; and (4) an increase in accounts payable and accrued liabilities, related to raw materials procurement, engineering services, and development subcontractors.

These working capital shifts reflect our scaling of commercial operations, including initial deliveries of HEXWAVE™ and ongoing fulfillment of TSA contracts.

Investing Activities

During the nine months ended September 30, 2025, we incurred cash used in investing activities was US$176,498, relating to additions to property and equipment, compared to US$125,206 during the same period in 2024.

During the year ended December 31, 2024, we incurred US$121,217 in cash used for investing activities, consisting of US$94,106 for additions to property and equipment and US$27,111 for additions to intangible assets.

During the year ended December 31, 2023, we incurred US$221,095 in cash used for investing activities, which pertains to additions to intangible assets from the MIT & PNNL patents and additions to property and equipment regarding NPI 0.5 prototypes.

 

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Financing Activities

Net cash provided by financing activities during the nine months ended September 30, 2025 was US$7,931,412, compared to US$3,474,239 during the same period in 2024. Financing cash inflows in 2025 were primarily attributable to net proceeds of US$6,120,797 from the issuance of Common Shares through private placements (September 30, 2024 — US$1,983,567), proceeds of US$2,075,555 from the exercise of warrants (September 30, 2024 — US$87,367), proceeds of US$650,000 from the Parabilis Term Loan (September 30, 2024 — US$1,800,000), and proceeds of US$350,000 from factoring arrangements (September 30, 2024 — US$1,551,166). These inflows were partially offset by repayments of loans and factoring totaling US$840,250 (2024 — US$1,567,031), including repayments of related party working capital loans of US$74,658 (September 30, 2024 — US$220,281), third-party working capital loans of US$26,250 (September 30, 2024 — US$687,570), and repayments of the Parabilis Term Loan of US$183,017 (2024 — nil), as well as repayments of lease liabilities of US$140,765 (September 30, 2024 — US$185,081).