Form 8-K/A

8-K/A — T3 Defense Inc.

Accession: 0001213900-26-038056

Filed: 2026-04-01

Period: 2026-02-16

CIK: 0001787518

SIC: 8742 (SERVICES-MANAGEMENT CONSULTING SERVICES)

Item: Financial Statements and Exhibits

Documents

8-K/A — ea0284292-8ka1_t3defense.htm (Primary)

EX-99.1 — AUDITED COMBINED FINANCIAL STATEMENTS OF ITS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 AND THE RELATED NOTES THERETO (ea028429201ex99-1.htm)

EX-99.2 — UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION (ea028429201ex99-2.htm)

GRAPHIC (ea028429201_ex99-1img1.jpg)

XML — IDEA: XBRL DOCUMENT (R1.htm)

8-K/A — AMENDMENT NO. 1 TO FORM 8-K

8-K/A (Primary)

Filename: ea0284292-8ka1_t3defense.htm · Sequence: 1

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0001787518

2026-02-16

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2026-02-16

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DFNS:WarrantsEachWarrantExercisableForOneShareOfCommonStockFor92.00PerShareMember

2026-02-16

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xbrli:shares

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or Section 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

February 16, 2026

T3 DEFENSE INC.

(Exact name of registrant as specified in its charter)

Delaware

001-39341

38-3912845

(State or other jurisdiction of

incorporation or organization)

(Commission File Number)

(IRS Employer

Identification Number)

575 Fifth Avenue, 14th Floor

New York, New York 10017

(Address of principal executive offices)

212-791-4663

(Registrant’s telephone number, including

area code)

Not Applicable

(Former name or former address, if changed since

last report)

Check the appropriate box below if the Form 8-K

filing is intended to simultaneously satisfy the filing obligation to the registrant under any of the following provisions:

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

DFNS

The Nasdaq Stock Market LLC

Warrants, each warrant exercisable for one Share of Common Stock for $92.00 per share

DFNSW

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant

is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check

mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting

standards provided pursuant to Section 13(a) of the Exchange Act. ☐

EXPLANATORY NOTE

On February 17, 2026, T3 Defense Inc., a Delaware

corporation (the “Company”), filed a Current Report on Form 8-K (the “Initial 8-K”) with the Securities and Exchange

Commission (the “SEC”) to disclose that it had completed its acquisition of 51% of the outstanding equity capital of I.T.S.

Industrial Tecno-logic Solutions Ltd. (“ITS”) on a fully diluted basis, pursuant to the previously disclosed Agreement, dated

June 8, 2025, among Star Twenty Six Ltd., ITS and its controlling shareholder Gera Eron. This amendment to the Initial 8-K (this “Amendment”)

amends the Initial 8-K to include the historical audited financial statements of ITS and the pro forma combined financial information

required by Items 9.01(a) and 9.01(b) of Form 8-K that were excluded from the Initial 8-K in reliance on the instructions to such items.

This Amendment No. 1 should be read in conjunction

with the Initial 8-K. Except as set forth herein, no modifications have been made to information contained in the Initial 8-K, and the

Company has not updated any information contained therein to reflect events that have occurred since the date of the Initial 8-K. The

pro forma financial information included as Exhibit 99.2 to this Amendment No. 1 has been presented for informational purposes only, as

required by Form 8-K, and is not necessarily indicative of the financial position or results of operations that would have been realized

if the Acquisition had been completed on the dates set forth therein, nor is it indicative of the future results or financial position

of the combined company.

Forward-Looking Statements

This Amendment No. 1 may include

forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section

27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of

1934, as amended (the “Exchange Act”), and other related laws, which relate to future events and are subject to risks

and uncertainties. The forward-looking statements, which address the Company’s expected business and financial performance and

financial condition, among other matters, may contain words and terms such as: “believe,” “could,”

“estimate,” “expect,” “may,” “potential,” “predict,”

“project,” “seek,” “should,” “target,” “will,” or “would”

and other words and terms of similar meaning. Forward-looking statements by their nature address matters that are, to different

degrees, uncertain, such as statements about expected earnings, revenues, growth, liquidity, and other matters. A further

description of these uncertainties and other risks can be found in the Company’s filings with the Securities and Exchange Commission. These or other uncertainties could cause the Company’s actual future results to be materially different

from those expressed in any forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking

statements except as required by law.

Item 9.01. Financial Statements and Exhibits.

(a)

Financial statements of businesses or funds acquired

The audited combined financial statements of ITS

as of and for the years ended December 31, 2024 and 2023 and the related notes thereto, and the interim unaudited condensed consolidated financial statements

as of September 30, 2025, are filed as Exhibit 99.1 hereto and incorporated

herein by reference.

(b)

Pro forma financial information

The unaudited pro forma condensed combined financial

information of T3 Defense Inc. giving effect to the acquisition of 51% of ITS, which includes the unaudited pro forma condensed combined

balance sheet as of September 30, 2025 and the unaudited pro forma condensed combined statement of income for the nine month period ended September 30, 2025,

is filed as Exhibit 99.2 hereto and incorporated herein by reference.

(d) Exhibits

Exhibit No.

Document Description

99.1

Audited combined financial statements of ITS as of and for the years ended December 31, 2024 and 2023 and the related notes thereto and interim unaudited condensed consolidated financial statements as of September 30, 2025.

99.2

Unaudited pro forma condensed combined financial information.

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

SIGNATURE

Pursuant to the requirements

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

duly authorized.

T3 DEFENSE INC.

Date: April 1, 2026

By:

/s/ Menachem Shalom

Name:

Menachem Shalom

Title:

Chief Executive Officer

EX-99.1 — AUDITED COMBINED FINANCIAL STATEMENTS OF ITS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 AND THE RELATED NOTES THERETO

EX-99.1

Filename: ea028429201ex99-1.htm · Sequence: 2

Exhibit 99.1

I.T.S.

Industrial Techno-Logic Solutions Ltd.

CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2024

F-1

I.T.S.

Industrial Techno-Logic Solutions Ltd.

CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2024

TABLE OF CONTENTS

Page

INDEPENDENT AUDITORS’ REPORT

F-3

FINANCIAL STATEMENTS:

Consolidated Balance Sheets as of December 31, 2024 and 2023

F-5

Consolidated Statements of Comprehensive Loss for the years ended December 31, 2024 and 2023

F-6

Consolidated Statements of Changes in Shareholders’ Deficit for the years ended December 31, 2024 and 2023

F-7

Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023

F-8

Notes to Consolidated Financial Statements

F-9 – F-23

F-2

Somekh Chaikin

17 Ha’arba’a Street, PO Box 609

KPMG Millennium Tower

Tel Aviv 6100601, Israel

+972 3 684 8000

Independent Auditors’ Report

To the Shareholders and the Board of Directors

I.T.S.

Industrial Techno-Logic Solutions Ltd.

Report on the Audit of the Consolidated Financial

Statements

Opinion

We have audited the consolidated financial statements

of I.T.S. Industrial Techno-Logic Solutions Ltd. and its subsidiary (the Company), which comprise the consolidated balance sheets as of

December 31, 2024 and 2023, and the related consolidated statements of comprehensive loss, changes in shareholders’ deficit and cash flows

for the years then ended, and the related notes to the consolidated financial statements.

In our opinion, the accompanying consolidated financial

statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results

of its operations and its cash flows for the years then ended in accordance with U.S. generally accepted accounting principles.

Basis for Opinion

We conducted our audits in accordance with auditing

standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described

in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required

to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements

relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit

opinion.

Substantial Doubt About the Entity’s Ability

to Continue as a Going Concern

The accompanying financial statements have been

prepared assuming that the Company will continue as a going concern. As discussed in Note 1C to the financial statements, the Company

has incurred significant losses and negative cash flows from operations and has an accumulated deficit that raise substantial doubt about

its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1C. The financial

statements do not include any adjustments that might result from the outcome of this uncertainty.

Responsibilities of Management for the Consolidated

Financial Statements

Management is responsible for the preparation and

fair presentation of the consolidated financial statements in accordance with U.S. generally accepted accounting principles, and for the

design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial

statements that are free from material misstatement, whether due to fraud or error.

KPMG Somekh Chaikin, an Israeli partnership

and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private

English company limited by guarantee

F-3

Somekh Chaikin

17 Ha’arba’a Street, PO Box 609

KPMG Millennium Tower

Tel Aviv 6100601, Israel

+972 3 684 8000

In preparing the consolidated financial statements,

management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about

the Company’s ability to continue as a going concern for one year after the date that the consolidated financial statements are

available to be issued.

Auditors’ Responsibilities for the Audit

of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance

about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and

to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance

and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material

if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user

based on the consolidated financial statements.

In performing an audit in accordance with GAAS, we:

● Exercise professional judgment and maintain professional skepticism throughout the audit.

● Identify and assess the risks of material misstatement of the consolidated financial statements, whether

due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test

basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal

control. Accordingly, no such opinion is expressed.

● Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting

estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

● Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise

substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged

with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal

control related matters that we identified during the audit.

Somekh Chaikin

Member Firm of KPMG International

Tel Aviv, Israel

March 30, 2026

KPMG Somekh Chaikin, an Israeli partnership and

a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private

English company limited by guarantee

F-4

I.T.S.

Industrial Techno-Logic Solutions Ltd.

CONSOLIDATED

BALANCE SHEETS

(USD in thousands except share and per share data)

December 31,

2024

2023

Assets

Current Assets

Cash and cash equivalents

1,229

1,788

Short term bank deposits

Restricted cash

Accounts receivable

340

1,015

Inventory (Note 3)

2,796

4,981

Other current assets (Note 4)

324

491

Total Current Assets

4,742

8,318

Operating lease right-of-use asset and lease deposit (Note 5)

2,898

3,352

Property and equipment, net

120

214

Total Assets

7,760

11,884

Liabilities and Shareholders’ Deficit

Current Liabilities

Short term loans (Note 6)

2,142

2,432

Accounts payable (Note 7)

1,507

1,958

Operating lease liability (Note 5)

738

769

Other current liabilities (Note 8)

3,919

3,300

Total current liabilities

8,306

8,459

Long term loans from Banks (Note

917

722

Long term loans from Related Party

(Note 9)

987

993

Operating lease liability (Note

2,205

2,620

Total Liabilities

12,415

12,794

Shareholders’ Deficit (Note 10)

Common stock of NIS 1 par value each (“Common Stock”):

38,000 shares authorized as of December 31, 2024 and 2023; issued and outstanding 200 shares as of December 31, 2024 and 2023.

(*)

Additional paid-in capital

740

Other comprehensive loss

(355 )

(274 )

Accumulated deficit

(5,040 )

(1,379 )

Total Shareholders’ Deficit

(4,655 )

(910 )

Total liabilities and Shareholders’ Deficit

7,760

11,884

(*) represents amount less than $1.

March 30, 2026

Date of approval

The accompanying notes are an integral

part of the consolidated financial statements.

F-5

I.T.S.

Industrial Techno-Logic Solutions Ltd.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(USD in thousands, except share and per share data)

Year ended

December 31

2024

2023

Revenues

8,867

15,953

Cost of revenues (Note 11)

(10,384 )

(16,435 )

Gross loss

(1,517 )

(482 )

Selling, general and administrative expenses (Note 12)

(1,729 )

(1,988 )

Operating loss

(3,245 )

(2,470 )

Other Income (Note 13)

440

Financial expenses, net

(412 )

(286 )

Net Loss

(3,664 )

(2,316 )

Translation to presentation currency

(81 )

(59 )

Total comprehensive loss

(3,746 )

(2,257 )

The accompanying notes are an integral part

of the consolidated financial statements.

F-6

I.T.S.

Industrial Techno-Logic Solutions Ltd.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’

DEFICIT

(USD in thousands, except share and per share data)

Number of

Amount

Additional

paid-in

capital

Other

Comprehensive

Loss

Accumulated

deficit

Total

stockholders’

deficit

BALANCE AT DECEMBER 31, 2022

200

-(*)

740

(215 )

940

1,465

Other comprehensive loss

(59 )

Loss for the year

(2,316 )

BALANCE AT DECEMBER 31, 2023

200

-(*)

740

(274 )

(1,376 )

(910 )

Other comprehensive loss

(81 )

Loss for the year

(3,664 )

BALANCE AT DECEMBER 31, 2024

200

-(*)

740

(355 )

(5,040 )

(4,655 )

(*) represents amount less than $1.

The accompanying notes are an integral part

of the consolidated financial statements.

F-7

I.T.S.

Industrial Techno-Logic Solutions Ltd.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(USD in thousands,

except share and per share data)

Year ended

December 31

2024

2023

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss for the year

(3,664 )

(2,316 )

Adjustments required to reconcile net loss for the year to net cash used in operating activities:

Depreciation

Interest expenses

Change in liability for employee rights upon retirement

(35 )

Change in right of use asset

808

774

Change in lease liability

(809 )

(764 )

Decrease in accounts receivable

654

2,592

Decrease in inventory

2,141

636

Decrease (increase) in other current assets

150

(136 )

Decrease in accounts payable

(444 )

(1,996 )

Increase in other liabilities

612

1,578

Net cash provided by (used in) operating activities

(489 )

409

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

(27 )

(61 )

Proceeds from sale property and equipment

Increase in short term bank deposit

(10 )

Net cash provided by (used in) investment activities

(61 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Long-term loans from banking institutions

752

550

Repayment of loans from banking institutions

(502 )

(481 )

Short-term credit from banking institutions, net

(335 )

328

Net cash provided by (used in) financing activities

(85 )

396

Exchange Rate Changes on Cash and Cash Equivalents

(10 )

(35 )

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(559 )

710

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR

1,802

1,092

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR

1,243

1,802

Supplemental disclosure of cash flow information:

Non cash transactions:

Initial recognition of operating lease right-of-use assets and liabilities

213

264

Cash transactions:

Interest

228

191

Taxes

The accompanying notes are an integral part

of the consolidated financial statements.

F-8

I.T.S.

Industrial Techno-Logic Solutions Ltd.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

NOTE 1 –

GENERAL

A. I.T.S. Industrial Techno-Logic Solutions Ltd. (the “Company”) is an Israeli-based company engaged

in the design, development, and serial production of fully integrated electro-mechanical systems and sophisticated assembly lines.

The Group’s

operations are conducted by the Company and its wholly-owned subsidiary, Positech, which specializes in the design and manufacture of

high-performance motion control systems for both defense and commercial applications.

The Group

provides a comprehensive “One-Stop-Shop” engineering and manufacturing solution, ranging from advanced R&D to the production

of custom-made prototypes and OEM systems in small to medium-sized series. Its capabilities encompass a multi-disciplinary approach, integrating

Mechanical, Electrical, Hardware (HW), Software (SW), and Firmware (FW) engineering. These services are delivered through both “Build

to Spec” (development based on customer requirements) and “Build to Print” (manufacturing based on existing customer designs)

models.

B. On October 7, 2023, Hamas launched a series of attacks on civilian and military targets in Southern Israel

and Central Israel, to which the Israel Defense Forces have responded. In addition, both Hezbollah and the Houthi movement have attacked

military and civilian targets in Israel, to which Israel has responded, including through increased air and ground operations in Lebanon.

In addition, the Houthi movement has attacked international shipping lanes in the Red Sea, to which both Israel and the United States

have responded. Further, on April 13, 2024 and October 1, 2024, Iran launched a series of drone and missile strikes against Israel, to

which Israel has responded. Most recently, on June 13, 2025, Israel launched a preemptive attack on Iran, to which Iran responded with

ballistic missile and drone attacks.

On June 23,

2025, Israel and Iran agreed to a ceasefire, although there is no assurance that the ceasefire will continue.

On October

9, 2025, Israel, Hamas, the United States and other countries in the region agreed to a framework for a ceasefire in Gaza between Israel

and Hamas. How long and how severe the current conflicts in Gaza, Northern Israel, Lebanon, Iran or the broader region become is unknown

at this time and any continued clash among Israel, Hamas, Hezbollah, Iran or other countries or militant groups in the region may escalate

in the future into a greater regional conflict. To date, the Company’s operations have not been materially affected. the Company

expects that the current conflict in the Gaza Strip, Lebanon, Iran and the broader region, as well as the security escalation in Israel,

will not have a material impact on the Company’s business results in the short term. However, since these are events beyond the

Company’s control, their continuation or cessation may affect the Company’s expectations. The Company continues to monitor

political and military developments closely and examine the consequences for the Company’s operations and assets.

C. The accompanying financial statements have been prepared assuming that the Company will continue as a

going concern. As of December 31, 2024, the Company had $1,229 in cash and cash equivalents, $3,564 in negative working capital, shareholder’s

deficit of $4,655 and an accumulated deficit of $5,040. These conditions raise substantial doubt about the Company’s ability to

continue as a going concern. Company’s ability to continue as a going concern is dependent upon raising capital from financing transactions

and revenue from operations. Management anticipates their business will require substantial additional investments that have not yet been

secured. Management is continuing in the process of fund raising in the private equity and capital markets as the Company will need to

finance future activities. These financial statements do not include any adjustments that may be necessary should the Company be unable

to continue as a going concern. See also note 16.

F-9

I.T.S.

Industrial Techno-Logic Solutions Ltd.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

NOTE 2

– SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements

are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

A. Use of estimates in the preparation of financial statements

The preparation of financial statements

in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,

certain revenues and expenses, and disclosure of contingent assets and liabilities as of the date of the financial statements. As applicable

to these financial statements, the most significant estimates and assumptions relate to revenue recognition, valuation of accounts receivable

and inventories. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its

estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment,

which management believes to be reasonable under the circumstances. Actual results could differ from those estimates.

B. Functional currency

The functional currency of the Company

and its subsidiary is the New Israel Shekel (“NIS”). Most of the Company’s costs are denominated and determined in NIS.

Management believes that the NIS is the currency in the primary economic environment in which the Company operates. Thus, the functional

currency of the Company is the NIS.

The financial statements are presented

in US dollars.

The records of the operations were

maintained in NIS and translated to the US dollar as follows: assets and liabilities are translated using the balance sheet period-end

date exchange rate. Expenses and income are translated using the weighted average exchange rates for the reporting period. The net exchange

difference that arises from the translation as described above, is recorded as a foreign currency translation reserve and presented in

equity. The periodic changes in the foreign currency translation reserve are recorded as other accumulated comprehensive income (loss).

C. Cash and cash equivalents and Restricted cash

Cash equivalents are short-term highly

liquid investments which include short term bank deposits (up to three months from date of deposit), that are not restricted as to withdrawals

or use that are readily convertible to cash with maturities of three months or less as of the date acquired.

Restricted cash as of December 31,

2024 and 2023 included a $14 collateral account for guarantees issued by the bank in favor of the

Company towards vendors and tenders the Company participated in.

F-10

I.T.S.

Industrial Techno-Logic Solutions Ltd.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

NOTE 2 – SIGNIFICANT ACCOUNTING

POLICIES (continue)

D. Inventories

Substantially all of the Company’s

inventory consists of raw materials. The raw materials are valued at the lower of historic cost or net realizable value; where net realizable

value is considered to be the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion,

disposal and transportation. Historic inventory costs are calculated on a moving average inventory policy or specific cost. The Company

does not hold finished goods as inventory.

Inventory write-downs are recorded

at the end of each fiscal period for damaged, obsolete, excess and slow-moving inventory. These write-downs, to the lower of cost or net

realizable value, create a new cost basis that is not subsequently marked up based on changes in underlying facts and circumstances.

E. Accounts Receivable

The Company manages credit risk associated

with accounts receivable at the customer level.

Pursuant to ASC Topic 326, the Company

maintains an allowance for doubtful accounts that reflects the estimate of expected credit losses. The allowance is estimated using a

loss-rate model based on delinquency. The estimated loss rate is based on the Company’s historical experience with specific customers,

understanding of the current economic circumstances, reasonable and supportable forecasts, and the Company’s own judgment as to

the likelihood of ultimate payment based upon available data. The actual rate of future credit losses, however, may not be similar to

past experience. The estimate of doubtful accounts could change based on changing circumstances, including changes in the economy or in

the particular circumstances of individual customers. Accordingly, the Company may be required to increase or decrease its allowance for

doubtful accounts.

F. Property, plant and equipment, net

1. Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated

using the straight-line method over the estimated useful lives of the assets. When an asset is retired or otherwise disposed of, the related

cost and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition

is reflected in the Statements of Comprehensive Loss.

2. Rates of depreciation:

Furniture and office equipment

7-15

Computers

Vehicles

G. Impairment of long-lived assets

The Company’s long-lived assets

are reviewed for impairment in accordance with ASC Topic 360, “Property, Plant and Equipment”, whenever events or changes

in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used

is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of

the asset exceeds its fair value. No impairment expenses were recorded during the years ended December 31, 2024 and 2023.

F-11

i.T.S.

Industrial Techno-Logic Solutions Ltd.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

NOTE 2

– SIGNIFICANT ACCOUNTING POLICIES (continue)

H. Fair Value

Fair value of certain of the Company’s

financial instruments including cash, accounts payable, accrued expenses, and other accrued liabilities approximate cost because of their

short maturities. The Company measures and reports fair value in accordance with Accounting Standards Codification (“ASC”)

820, “Fair Value Measurements” which defines fair value, establishes a framework for measuring fair value in accordance with

generally accepted accounting principles and expands disclosures about fair value measurements.

Fair value, as defined by ASC 820,

is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants

at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most

advantageous) markets, and an in-use or an in-exchange valuation premise.

Valuation techniques are generally

classified into three categories: (i) the market approach; (ii) the income approach; and (iii) the cost approach. The selection and application

of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or

liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the

use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting

measurement as follows:

Level 1: Quoted prices (unadjusted)

in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2: Quoted prices for similar

assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active;

inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated

by observable market data for substantially the full term of the assets or liabilities; and

Level 3: Unobservable inputs for the

asset or liability that are supported by little or no market activity, and that are significant to the fair values.

Fair value measurements are required

to be disclosed by the level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements

using significant unobservable inputs (in level 3 measurements) are subject to expanded disclosure requirements including a reconciliation

of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or

losses for the period (realized and unrealized), (ii) segregating those gains or losses included in earnings, and (iii) a description

of where those gains or losses included in earning are reported in the statement of operations.

F-12

i.T.S.

Industrial Techno-Logic Solutions Ltd.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

NOTE 2

– SIGNIFICANT ACCOUNTING POLICIES (continue)

I. Concentrations of credit risk

Financial instruments that potentially

subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable, as well as

certain other current assets that do not amount to a significant amount. Cash and cash equivalents, which are primarily held in US Dollars

and NIS, are deposited with major banks in Israel. Management believes that such financial institutions are financially sound and, accordingly,

minimal credit risk exists with respect to these financial instruments.

The Company performs ongoing credit

evaluations of the financial condition of its customers. The risk of collection associated with trade receivables is reduced by the large

number of the Company’s customer base.

The Company does not have any significant

off-balance-sheet concentration of credit risk, such as foreign exchange contracts, option contracts or other foreign hedging arrangements.

J. Contingencies

The Company records accruals for loss

contingencies arising from claims, litigation and other sources when it is probable that a liability has been incurred and the amount

can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available.

Legal costs incurred in connection with loss contingencies are expensed as incurred.

K. Leases

The Company determines if an arrangement

is or contains a lease at contract inception.

Operating leases are included in operating

lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our balance sheets.

ROU assets represent the Company’s

right to use an underlying asset for the lease term and lease liabilities represent the Group’s obligation to make lease payments

arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease

payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company generally uses the incremental

borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement

date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms

may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for

lease payments is recognized on a straight-line basis over the lease term.

The Company monitors for events or

changes in circumstances that require a reassessment of one of its leases. When a reassessment results in the remeasurement of a lease

liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying

amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset

balance is recorded in statement of comprehensive loss. For lease agreements, the Company has elected the practical expedient to account

for the lease and non-lease maintenance components as a single lease component. Therefore, for those leases, the lease payments used to

measure the lease liability include all of the fixed consideration in the contract.

F-13

I.T.S.

Industrial Techno-Logic Solutions Ltd.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

NOTE 2

– SIGNIFICANT ACCOUNTING POLICIES (continue)

L. Severance pay

All the Company’s employees, besides

one, have been signed on Section 14 of Israel’s Severance Compensation Law, 1963 (“Section 14”). Pursuant to Section 14, the

Company’s employees, covered by this section, are entitled only to monthly deposits, at a rate of 8.33% of their monthly salary, made

on their behalf by the Company. Payments in accordance with Section 14 release the Company from any future severance liabilities in respect

of those employees. Neither severance pay liability nor severance pay fund under Section 14 are recorded in the Company’s balance sheets.

As to the employee that has not signed

the Section 14 clause, the Company contributes the on-going contributions on monthly basis.

M. Revenue recognition

Significant management judgments and

estimates must be made and used in connection with the recognition of revenue in any accounting period. Material differences in the amount

of revenue in any given period may result if these judgments or estimates prove to be incorrect or if management’s estimates change

on the basis of development of business or market conditions.

The Company follows the provisions

of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The guidance provides a unified model

to determine how revenue is recognized.

Revenues

are recognized when control of the promised goods or services are transferred to the customers in an amount that reflects the consideration

that the Company expects to receive in exchange for those goods or services.

The Company

determines revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of

the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the

performance obligations in the contract; and (5) recognition of revenue when, or as, the Company satisfies

a performance obligation.

F-14

I.T.S.

Industrial Techno-Logic Solutions Ltd.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

NOTE 2

– SIGNIFICANT ACCOUNTING POLICIES (continue)

The Company provides services to customers

and has related performance obligations and recognizes revenue in accordance with ASC 606. Revenues are recognized when the

Company satisfies performance obligations under the terms of its contracts, and control of its services or products is transferred to

its customers in an amount that reflects the consideration the Company expects to receive from its customers in exchange for those products.

Control is transferred upon delivery of its services or products.

A typical contract with a customer

specifies that the Company would receive an advance payment once the contract is signed, an additional payment would be made to the Company

once the ordered product is manufactured and ready to be shipped to the customer and the remainder of the contract’s consideration

would be made once the system is installed in the customer’s factory and its accepted by the customer.

According to ASC-606-10-50, and given

the mentioned-above, once signed, the Company’s contracts are considered Contract Liability – as the Company has received

the amount prior to delivering the goods to the customer. Those amounts are not recognized as revenues. Once the goods are shipped to

the customer – the contract becomes Contract Asset – as the Company transferred the goods to the client prior to receiving

the full consideration for it. At the time the receipt of the consideration is conditional upon a successful installation of the product

by the Company at the customer’s location and the full acceptance of the product by the customer. Only after such installation and

acceptance the consideration owed to the Company is categorized as receivable. In all cases the time interval between the delivery of

the product and its installation and acceptance by the customer happens within days.

This process involves identifying the

customer contract, determining the performance obligations in the contract, determining the transaction price, allocating the transaction

price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied.

A performance obligation is considered distinct from other obligations in a contract when it (a) provides a benefit to the customer either

on its own or together with other resources that are readily available to the customer and (b) is separately identified in the contract.

The Company considers a performance obligation satisfied once it has transferred control of a good or product to a customer, meaning the

customer has the ability to direct the use and obtain the benefit of the product. The Company determined that the services and products

provided to its customers consist of one performance obligation that is satisfied upon delivery of the products. The Company grants assurance

type warranty to the products which is not considered a separate performance obligation.

N. Cost of Goods Sold

The Cost of Goods

Revenues represents the costs incurred in the production of goods sold by the Company. These costs include, but are not limited to:

- Raw Materials– Costs related to the procurement of raw materials and other direct inputs used in

the production process.

- Direct Labor – Wages and related expenses for employees directly involved in the manufacturing or

production process.

- Manufacturing Overhead – Indirect production costs, including factory utilities, depreciation of

production equipment, and maintenance expenses.

- Other Direct Costs – Any additional costs directly attributable to the production of goods, including

packaging and quality control.

F-15

I.T.S.

Industrial Techno-Logic Solutions Ltd.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

NOTE 2

– SIGNIFICANT ACCOUNTING POLICIES (continue)

O. Income taxes

Income taxes are accounted for under

the asset and liability method. The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes”. Accordingly,

deferred income taxes are determined based on the estimated future tax effects of differences between the financial accounting and the

tax bases of assets and liabilities under the applicable tax law. Deferred tax balances are computed using the enacted tax rates expected

to be in effect when these differences reverse. Valuation allowances in respect of deferred tax assets are provided for, if necessary,

to reduce deferred tax assets to amounts more likely than not to be realized.

The Company accounts for uncertain

tax positions in accordance with ASC Topic 740-10, which prescribes detailed guidance for the financial statement recognition, measurement

and disclosure of uncertain tax positions recognized in an enterprise’s financial statements. According to ASC Topic 740-10, tax

positions must meet a more-likely-than-not recognition threshold. The Company’s accounting policy is to classify interest and penalties

relating to uncertain tax positions under income taxes, however the Company did not recognize such items in its 2024 financial statements

and did not recognize any liability with respect to an unrecognized tax position in its balance sheets.

P. Government Grants

Government grants are recognized when

there is reasonable assurance that: (1) the Company will comply with the relevant conditions and (2) the grant disbursement will be received.

In 2023, the Company recognized other

income of $ 415 from government grants, which were granted to certain entities that were negatively affected from the war condition as

described in Note 1B.

Q. Accounting Standards Not Yet Adopted

In June 2022, the FASB issued ASU

2022-03 (“ASU 2022-03”), ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale

Restrictions” (“ASC 820”). ASU 2022-03 amends ASC 820 to clarify that a contractual sales restriction is not

considered in measuring an equity security at fair value and to introduce new disclosure requirements for equity securities subject to

contractual sale restrictions that are measured at fair value. ASU 2022-03 applies to both holders and issuers of equity and

Equity-Linked Securities measured at fair value. The amendments in ASU 2022-03 are effective for the Company in fiscal years

beginning after December 15, 2024, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual

financial statements that have not yet been issued or made available for issuance. The Company does not expect the ASU to have a material

impact on its financial statements.

Income Taxes: In December 2023, the

FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this ASU add specific requirements

for income tax disclosures to improve transparency and decision usefulness. The guidance in ASU 2023-09 requires that public business

entities disclose specific categories in the income tax rate reconciliation and provide additional qualitative information for reconciling

items that meet a quantitative threshold. In addition, the amendments in ASU 2023-09 require that all entities disclose the amount of

income taxes paid disaggregated by federal, state, and foreign taxes and disaggregated by individual jurisdictions. The ASU also includes

other disclosure amendments related to the disaggregation of income tax expense between federal, state and foreign taxes.

F-16

I.T.S.

Industrial Techno-Logic Solutions Ltd.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

NOTE 2

– SIGNIFICANT ACCOUNTING POLICIES (continue)

For public business entities, the amendments

in this update are effective for annual periods beginning after December 15, 2025. Early adoption is permitted for annual financial statements

that have not yet been issued or made available for issuance. The amendments in this update should be applied on a prospective basis and

retrospective application is permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures.

In November 2024, the FASB issued ASU

No. 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The ASU

improves the disclosures about a public business entity’s expense and provides more detailed information about the types of expenses

in commonly presented expense captions. The amendments require that at each interim and annual reporting period an entity will, inter

alia, disclose amounts of purchases of inventory, employee compensation, depreciation and amortization included in each relevant expense

caption (such as cost of sales, SG&A and research and development). Amounts remaining in relevant expense captions that are not separately

disclosed will be described qualitatively. Certain amounts that are already required to be disclosed under currently effective U.S GAAP

will be included in the same disclosure as the other disaggregation requirements. The amendments also require disclosing the total amount

of selling expenses and, in annual reporting periods, the definition of selling expenses. The ASU is effective for fiscal years beginning

after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company

is currently evaluating this ASU to determine its impact on the Company’s disclosures.

In July 2025, the FASB issued ASU 2025-05

“Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”.

The ASU introduces a practical expedient for all entities when estimating expected credit losses for current accounts receivable and current

contract assets arising from transactions accounted for under ASC 606. Under the practical expedient, when developing reasonable and supportable

forecast as part of estimating expected credit losses, an entity may assume that current conditions as of the balance sheet date do not

change for the remining life of the asset. The ASU is effective for annual reporting period beginning after December 15, 2025 and interim

reporting within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods. The Company

is evaluating the impact of ASU 2025-05 on its consolidated financial statements if it elects to apply the practical expedient.

NOTE 3 –

INVENTORIES

December 31,

2024

2023

Raw materials and Components

2,655

2,890

In process goods

1,162

2,957

3,817

5,847

Provision for inventory impairment

(1,021 )

(866 )

2,796

4,981

F-17

I.T.S.

Industrial Techno-Logic Solutions Ltd.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

NOTE 4 – OTHER

CURRENT ASSETS

December 31,

2024

2023

Prepaid expenses

Governmental institutions

178

354

Advances to suppliers

324

491

NOTE 5 –

LEASES

A. In January 2023, the Company exercised its final

extension option of a lease agreement for the office space and warehouse

in 5 Atir Yeda, Kefar Sava, Israel for a term of seven years. The monthly lease payments under the lease agreement are approximately NIS

166 (approximately $45). The annual discount rate as determined upon the business combination is 6%.

In April

2023, Positech exercised its final extension option of

a lease agreement for the office space and

warehouse in 4 HaPeles, Haifa, Israel for a term of two years. The monthly lease payments under the lease agreement are approximately

NIS 17 (approximately $5). The annual discount rate as determined upon the business combination is 6%.

B. The components of operating lease expense for the period ended December 31, 2024 and 2023 were as follows:

December 31,

2024

2023

Operating lease expense

795

774

C. Amounts reported in the balance sheets related to operating lease as of December 31, 2024 and 2023 are

as follows:

Year ended December 31,

2024

2023

Operating leases:

Operating leases right-of-use asset

2,898

3,352

Current operating lease liabilities

738

769

Non-current operating lease liabilities

2,205

2,620

Total operating lease liabilities

2,943

3,389

F-18

I.T.S.

Industrial Techno-Logic Solutions Ltd.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

NOTE 5 –

LEASES (continue)

D. Future minimum lease payments under non-cancellable leases as of December 31, 2024, are as follows:

2025

769

2026

673

2027

641

2028

628

2029

606

Total operating lease payments

3,319

Less: imputed interest

(376 )

Present value of lease liabilities

2,943

December 31,

2024

Weighted-average remaining lease term of operating leases

4.7 Years

Weighted average discount rate of operating leases

NOTE 6

– SHORT TERM LOANS

December 31,

2024

2023

Short term loans from Bank (1)

1,785

2,132

Long-term loan from Banks -current maturities (Note 9)

357

300

2,142

2,432

(1) Annual interest – Prime + 1.4%-2%

NOTE

7 – ACCOUNTS PAYABLE

December 31,

2024

2023

Open payables

1,455

1,928

Notes payable

1,507

1,958

F-19

I.T.S.

Industrial Techno-Logic Solutions Ltd.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

NOTE 8

– OTHER CURRENT LIABILITIES

December 31,

2024

2023

Deferred revenues

1,636

1,605

Advances received from customers

1,327

667

Employees and payroll accruals

569

614

Government Institutions

Related Party

200

166

Accrued expenses

185

223

3,919

3,300

Deferred revenues:

2024

2023

Opening balance

1,605

1,306

New advance payments

368

336

Amount recognized as revenue

(334 )

Foreign currency translation adjustment

(3 )

(37 )

Closing balance

1,636

1,605

NOTE 9 –

LONG TERM LOANS

December 31,

2024

2023

Long term from bank (1)

1,274

1,022

Long term from controlling shareholder (2)

987

993

Long-term loan from Banks -current maturities

(357 )

(300 )

1,904

1,715

(1)

Annual interest – Prime + 1.4%-2%.

(2)

A loan of NIS 3.6 million does not bear interest and has not yet been set for repayment.

Maturities of

the loan from banks as of December 31, 2024, were as follows:

Year ended December 31,

2025

362

2026

323

2027

233

2028 – 2030

370

Total

1,288

F-20

I.T.S.

Industrial Techno-Logic Solutions Ltd.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

NOTE 10 –

SHAREHOLDERS’ EQUITY

Description of the rights attached

to the Shares in the Company:

The Ordinary shares confer upon their

holders the right to participate and vote in the shareholders’ meetings of the Company and the right to participate in any distribution

of dividends.

NOTE 11 – COST

OF REVENUES

Year ended December 31

2024

2023

Materials

4,371

8,840

Salaries and related expenses

4,631

5,696

Rent

913

1,065

Depreciation

Other expenses

456

815

10,384

16,435

NOTE 12 – GENERAL

AND ADMINISTRATIVE EXPENSES

Year ended December 31

2024

2023

Salaries and related expenses

739

953

Management fee

120

Rent

192

272

Professional services

165

162

Depreciation

Other expenses

468

470

1,729

1,988

NOTE 13 –

OTHER INCOME

Year ended December 31

2024

2023

Government grants

415

Other expenses

440

F-21

I.T.S.

Industrial Techno-Logic Solutions Ltd.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(USD in thousands, except share and per share data)

NOTE 14 –

INCOME TAX

Income of the Company is taxable at

corporate tax rate of 23%.

The Company and a subsidiary have not

received final tax assessments since its inception although the tax reports of the Company for the years ended by December 31, 2019 are

deemed to be final.

As of December 31, 2024, the Company

and its subsidiary have carried forward losses for tax purposes of approximately $7,800 and $680, respectively, which can be offset against

future taxable income, if any.

The following is

reconciliation between the theoretical tax on pre-tax income, at the tax rate applicable to the Company (federal tax rate) and the tax

expense reported in the financial statements:

Year ended December 31

2024

2023

Pretax loss

3,664

2,316

Statutory tax rate in Israel

23 %

Income tax computed at the ordinary tax rate

843

533

Change in valuation allowance

(843 )

(533 )

Deferred income taxes:

Deferred income taxes reflect the

net tax effects of temporary differences between the carrying amounts of assets for financial reporting purposes and the amounts used

for income tax purposes. Significant components of the Company’s deferred tax assets are as follows:

Year ended

December 31,

2024

2023

Deferred tax assets

Carried forward losses

1,970

1,110

Employees accruals

Operating lease right-of-use asset

667

771

Provision for inventory impairment

171

199

Gross deferred tax assets

2,852

2,113

Deferred tax liabilities

Operating lease liabilities

(667 )

(771 )

Valuation allowance

(2,185 )

(1,342 )

Total deferred tax assets, net

F-22

I.T.S.

Industrial Techno-Logic Solutions Ltd.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(U.S. dollars, except share and per share data)

NOTE 15 –

RELATED PARTIES

Balances with related parties:

As of December 31,

2024

2023

Loans from related parties (Note 9)

987

993

NOTE 16 – SUBSEQUENT

EVENTS

On June 8, 2025, Star Twenty Six (“Star)

entered into an agreement with the Company and its controlling shareholder Mr. Gera Eron, pursuant to which Star will lend to tha Company

NIS 10,000,000 (approximately USD 3,000). In return Star would receive 51% of the share capital of the Company on a fully diluted basis.

Pursuant to the terms of the agreement, Star was also granted an option to purchase the remainder 49% of ITS for three years from the

controlling shareholder. Depending on whether the option is exercised in the first, second- or third-year hereafter, the agreed purchase

price for the 49% is 25 million NIS, 30 million NIS or 35 million NIS, respectively.

As of December 31, 2025, the Star lent

to the Cmpany NIS 10 million (approximately USD3,100).

February 16, 2026, Star acquired 51% of the outstanding equity capital of the Company on a fully diluted basis. Star has a 3- year option

to acquire the remainder 49% from the other shareholder of the Company.

F-23

EX-99.2 — UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

EX-99.2

Filename: ea028429201ex99-2.htm · Sequence: 3

Exhibit 99.2

T3 DEFENSE INC. AND

SUBSIDIARIES

UNAUDITED PRO FORMA

CONDENSED COMBINED BALANCE SHEET

AS OF SEPTEMBER 30,

2025

T3 Defense

Inc.

Acquisition of

Star26

(*)

Transaction

Adjustments

(*)

Acquisition of

ITS

Pro Forma

Combined

Assets

Current assets

Cash and cash equivalents

$ 7,611,465

924,000

$ (3,500,000 )

1,543,000

$ 7,299,865

721,400

Restricted Cash

60,000

Short term bank deposits

119,000

43,000

162,000

Marketable securities

289,000

Digital assets

32,182

(11,196 )

20,986

Accounts Receivable

478,000

482,000

960,000

Note receivable - related party

4,500,000

(4,500,000 )

Due from Affiliates

243,915

Current assets from discontinued operations

Inventory

1,544,000

2,871,000

4,415,000

Other current assets

730,894

412,000

(125 )

240,000

4,860,269

Other current assets

3,477,500

Total current assets

13,118,456

3,826,000

(3,812,421 )

5,179,000

18,311,035

Funds in respect of employee rights upon retirement

79,000

Long-term loan to other Company

2,432,000

(2,432,000 )

Deferred taxes

284,000

Intangible assets, net

134,000

200,435

334,435

Goodwill

66,416,272

90,859,272

24,443,000

Operating lease right-of-use assets

153,569

1,046,000

2,871,000

4,070,569

Other assets from discontinued operations

Property and equipment, net

15,883

172,000

125,000

312,883

Total assets

$ 13,287,908

7,973,000

$ 84,815,286

8,175,000

$ 114,251,194

Liabilities and stockholders’ equity (deficit)

Current liabilities

Short term loans

$ -

1,903,000

2,295,000

$ 4,198,000

Short term loans – related party

4,500,000

Intercompany

Accounts payable

87,420

865,000

1,689,000

2,641,420

Convertible notes payable, net

3,250,000

Note Payable, net

19,000,000

29,500,000

10,500,000

Due to affiliates

233,068

Loans payable – related parties, current

1,566,988

Interest payable – related parties, current

108,417

Accrued expenses and other current liabilities

816,224

1,630,000

42,091

2,488,315

Accrued expenses and other current liabilities – related party

548,000

3,396,000

3,944,000

Derivative liabilities

Stock purchase warrants, liability classified

40,740,193

203,000

(3,048,532 )

37,894,661

Current liabilities from discontinued operations

Operating lease liabilities, current portion

78,575

316,000

811,000

1,205,575

Total current liabilities

43,630,885

9,965,000

29,743,559

8,191,000

91,530,444

Liability for employees’ rights upon retirement

112,000

Loans payable - related parties, net of current portion

(2,432,000 )

4,279,000

1,847,000

Interest payable - related parties, net of current portion

Non-current liabilities from discontinued operations

Long-term loans from Banks

537,000

1,277,000

1,814,000

Operating lease liabilities

74,994

752,000

2,111,000

2,937,994

Total liabilities

43,705,879

11,366,000

27,311,559

15,858,000

98,241,438

Commitments and contingencies

Stockholders’ equity

Preferred stock ($0.0001 par value; 15,000,000 shares authorized; 200 shares issued and outstanding at September 30, 2025)

Common stock ($0.0001 par value; 150,000,000 shares authorized; 11,096,264 shares issued and outstanding at September 30, 2025; on a proforma basis 29,168,154 shares issued and outstanding)

1,110

477

2,917

640

386

251

Class A common stock, par value $0.0001 per share, 250,000,000 shares authorized and 5,075,000 shares issued and outstanding as of September 30, 2025

509

(509 )

Class B common stock, par value $0.0001 per share, 50,000,000 shares authorized and 6,250,000 shares issued and outstanding as of September 30, 2025

625

(625 )

Additional paid in capital

81,047,703

322,868

35,114,271

740,000

152,860,369

24,362,316

10,252,115

299,749

721,347

Other comprehensive income

(2,277 )

(74,000 )

1,035,000

(961,000 )

(2,277 )

Accumulated deficit

(111,464,507 )

(3,647,000 )

11,109,000

(7,462,000 )

(133,090,253 )

(21,325,746 )

(300,000 )

Total T3 Defense Inc. stockholders’ equity (deficit)

(30,417,971 )

(3,397,000 )

61,268,727

(7,683,000 )

19,770,756

Non-controlling interest

4,000

(3,765,000 )

(3,761,000 )

Total stockholders’ equity (deficit)

(30,417,971 )

(3,393,000 )

57,503,727

(7,683,000 )

16,009,756

Total liabilities and stockholders’ equity (deficit)

$ 13,287,908

7,973,000

$ 84,815,286

8,175,000

$ 114,251,194

T3 DEFENSE INC. AND

SUBSIDIARIES

UNAUDITED PRO FORMA

CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS

ENDED SEPTEMBER 30, 2025

T3 Defense

Inc.

Acquisition of

Star26

(*)

Disposition of

DRFQ

(*)

Adjustments

(*)

Acquisition of

ITS

Pro Forma

Combined

REVENUES

Revenue - other

$ -

2,711,000

4,475,000

7,186,000

Total revenues

2,711,000

4,475,000

7,186,000

COSTS OF REVENUES

Cost of revenue - other

2,355,000

5,377,000

7,732,000

Total costs of revenues

2,355,000

5,377,000

7,732,000

GROSS PROFIT (LOSS)

Gross Profit (loss) - other

356,000

(902,000 )

(546,000 )

Total Gross Profit (Loss)

356,000

(902,000 )

(546,000 )

OPERATING EXPENSES

Professional fees

6,051,719

14,570,800

20,622,519

Compensation and related benefits

365,988

4,243,750

4,609,738

Amortization of intangible assets

63,000

2,500

65,500

Disposal of intangible assets

1,812,000

Other general and administrative

909,275

1,867,000

1,412,000

4,188,275

Other general and administrative - related party

258,000

Total operating expenses

7,326,982

4,000,000

18,817,050

1,412,000

31,556,032

LOSS FROM OPERATIONS

(7,326,982 )

(3,644,000 )

(18,817,050 )

(2,314,000 )

(32,102,032 )

OTHER (EXPENSE) INCOME:

Interest expense

(407,971 )

423,000

(280,000 )

(264,971 )

Interest expense - related parties

(64,306 )

Penalty - late registration

(800,000 )

(300,000 )

(1,100,000 )

Loss on debt extinguishment

(7,484,152 )

Change in fair value of liability classified stock purchase warrants

123,369,695

Change in fair value of derivative liabilities

587,790

Change in fair value of digital assets

(967,818 )

(2,511,196 )

(3,479,014 )

Gain on disposition of subsdiary

2,491,485

Day one loss on private placement

(19,605,956 )

Other income (expense)

280,422

172,000

454,422

Total other income (expense), net

97,399,189

423,000

(2,811,196 )

(108,000 )

94,904,993

INCOME (LOSS) BEFORE INCOME TAXES

90,072,207

(3,221,000 )

(21,628,246 )

(2,422,000 )

62,802,961

Income tax expense

49,000

NET INCOME (LOSS) FROM CONTINUING OPERATIONS

90,072,207

(3,172,000 )

(21,628,246 )

(2,422,000 )

62,851,961

Net Income (loss) from discontinued operations

(460,971 )

460,971

Net Income (Loss)

89,611,236

(3,172,000 )

460,971

(21,628,246 )

(2,422,000 )

62,851,961

Net income (loss) attributable to noncontrolling interest

(82,000 )

Net income (loss) attributable to T3 Defense Inc.

89,611,236

(3,090,000 )

460,971

(21,628,246 )

62,767,961

Income (loss) per common share, basic:

Income (loss) from continuing operations, net of tax

14.74

(1.20 )

2.60

Income (loss) from discontinued operations, net of tax

(0.08 )

Net income (loss)

14.66

(1.20 )

2.60

Income (loss) per common share, diluted:

Income (loss) from continuing operations, net of tax

11.53

(1.20 )

2.42

Income (loss) from discontinued operations, net of tax

(0.06 )

Net income (loss)

11.47

(1.20 )

2.42

Weighted-average shares outstanding:

Basic

6,111,279

18,071,890

24,183,169

Diluted

7,813,592

18,071,890

25,885,482

T3 DEFENSE INC. AND

SUBSIDIARIES

UNAUDITED PRO FORMA

CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED

DECEMBER 31, 2024

T3 Defense

Inc.

Acquisition of

Star26

(*)

Disposition of

DRFQ

(*)

Transaction

Adjustments

(*)

Acquisition of

ITS

Pro Forma

Combined

REVENUES

Revenue - other

$ -

4,994,000

8,867,000

$ 13,861,000

Total revenues

4,994,000

13,861,000

COSTS OF REVENUES

Cost of revenue - other

3,808,000

10,384,000

14,192,000

Total costs of revenues

3,808,000

10,384,000

14,192,000

GROSS PROFIT (LOSS)

Gross Profit (loss) - other

1,186,000

(1,517,000 )

(331,000 )

Total Gross Profit (Loss)

1,186,000

(1,517,000 )

(331,000 )

OPERATING EXPENSES

Professional fees

7,596,190

Compensation and related benefits

1,270,799

Amortization of intangible assets

74,000

13,333

87,333

Other general and administrative

692,221

1,296,000

1,988,221

Other general and administrative

307,000

1,729,000

2,036,000

Impairment loss

293,413

Total operating expenses

9,852,622

1,677,000

13,333

1,729,000

13,271,955

LOSS FROM OPERATIONS

(9,852,622 )

(491,000 )

(13,333 )

(3,246,000 )

(13,602,955 )

OTHER (EXPENSE) INCOME:

Interest expense

(696,826 )

(105,000 )

(412,000 )

(1,213,826 )

Interest expense - related parties

(33,083 )

(38,000 )

(71,083 )

Loss on settlement of vendor obligations

(494,619 )

Gain on extinguishment of vendor obligations

158,400

Gain on extinguishment of due to affiliates

144,052

Gain on sale of investment

63,759

Day one loss on stock purchase warrants issued in connection with private placement

(13,533,404 )

Day one loss of stock purchase warrants issued in connection with conversion of convertible notes

(663,408 )

Change in fair value of liability classified stock purchase warrants

(140,584,780 )

Change in fair value of derivative liabilities

(624,888 )

Loss on reclassification of stock purchase warrants from equity-classified to liability-classified

(45,784 )

Gain on disposition of subsidiary

2,074,600

Other income (expense)

55,000

(7 )

48,000

Total other income (expense), net

(156,310,582 )

(88,000 )

2,074,600

(417,000 )

(154,740,982 )

LOSS BEFORE INCOME TAXES

(166,163,203 )

(579,000 )

2,061,267

(164,680,937 )

Income tax expense

24,000

NET LOSS FROM CONTINUING OPERATIONS

$ (166,163,203 )

(555,000 )

2,061,267

(3,665,000 )

(168,656,937 )

Net loss from discontinued operations

(1,013,666 )

1,013,666

NET LOSS

(167,176,869 )

(555,000 )

1,013,666

2,061,267

(3,665,000 )

$ (168,956,937 )

Net loss attributable to noncontrolling interest

271,950

1,835,000

2,106,950

Net loss attributable to T3 Defense Inc.

(167,176,869 )

(283,050 )

1,013,666

2,061,267

(1,830,000 )

(166,214,987 )

Income (loss) per common share, basic:

Income (loss) from continuing operations, net of tax

$ (33.70 )

0.43

$ (17.34 )

Income (loss) from discontinued operations, net of tax

$ (0.21 )

$ -

Net income (loss)

$ (33.91 )

0.43

$ (17.34 )

Income (loss) per common share, diluted:

Income (loss) from continuing operations, net of tax

$ (33.70 )

0.43

$ (17.34 )

Income (loss) from discontinued operations, net of tax

$ (0.21 )

$ -

Net income (loss)

$ (33.91 )

0.43

$ (17.34 )

Weighted-average shares outstanding:

Basic

4,930,531

4,770,340

9,700,871

Diluted

4,930,531

4,770,340

9,700,871

(*) See the description of the unaudited pro forma condensed combined

financial statements of the acquisition of Star in the Form S-1 filed with the Securities and Exchange Commission on February 11, 2026

(Registration No. 333-293384).

T3 DEFENSE INC. AND

SUBSIDIARIES

NOTES TO THE UNAUDITED

CONDENSED COMBINED FINANCIAL STATEMENTS

Note 1 - Description

of Transaction

On February 16, 2026,

T3 Defense Inc., a Delaware corporation (the “Company”), acquired 51% of the outstanding equity capital of I.T.S. Industrial

Tecno-logic Solutions Ltd. (“ITS”) on a fully diluted basis. The Company has a 3- year option to acquire the remainder 49%

from the other shareholder of ITS.

ITS is an Israeli company

providing design, development, production, and manufacturing of serial, fully integrated electro-mechanical machines and sophisticated

assembly lines. Positech Ltd., its wholly-owned subsidiary, designs and manufactures top-of-the-line, high-performance motion control

systems for military and civilian use. ITS and Positech provide small to middle-series one-stop shop “Build to Spec” &

“Build to print” custom-made prototypes and OEM systems in the mechanical, electrical, hardware, firmware and software engineering

fields.

The acquisition was consummated

pursuant to the terms of the Agreement dated June 8, 2025 (the “Agreement”) among Star Twenty Six Ltd., an Israeli company

which is indirectly wholly-owned by the Company (“Star”), ITS and its controlling shareholder Gera Eron. As of February 15,

2026, the Company has lent ITS an aggregate of NIS 10,000,000 (approximately $3,235,500), with interest accruing at the annual rate of

the Israeli Consumer Price Index plus 4%. Pursuant to the Agreement, the loans shall only be repaid after January 1, 2027 if (i) the aggregate

amount of the assets of ITS will be at least 150% higher than the liabilities for at least 6 continuous months and (ii) the total aggregate

amount of bank credit provided to ITS and Positech shall be lower than an aggregate of 3 months of income generated by ITS and Positech

for 6 continuous months.

In consideration for

the loan, Star received 51% of the share capital of ITS on a fully diluted basis. Neither Star nor the Company is required to provide

any additional consideration for the ITS shares.

Pursuant to the terms

of the Agreement, Star was also granted an exclusive option to purchase the remainder 49% of ITS for three years from the controlling

shareholder. Depending on whether the option is exercised in the first, second or third year hereafter, the agreed purchase price for

the 49% is 25 million NIS, 30 million NIS or 35 million NIS, respectively.

The

unaudited pro forma condensed combined financial information is presented to illustrate the effects of the acquisition of ITS, as if it

had occurred on January 1, 2024, the beginning of the most recently completed fiscal year preceding the ITS Acquisition. The unaudited

pro forma condensed combined financial statements were prepared in accordance with Article 11 of Regulation S-X, as amended by Securities

and Exchange Commission (the “SEC”) Final Rule Release No. 33-10786, Amendments to Financial Disclosures About Acquired

and Disposed Businesses and are presented to illustrate the estimated effects of the ITS Acquisition and Related Transactions.

The

unaudited pro forma condensed combined balance sheet as of September 30, 2025 and the unaudited pro forma condensed combined statements

of operations for the nine months ended September 30, 2025 and for the year ended December 31, 2024 are based upon, derived from and should

be read in conjunction with the Company’s historical unaudited condensed consolidated financial statements for the nine months ended

September 30, 2025 and the Company’s historical audited consolidated financial statements for the three months ended December 31,

2024 and for the year ended September 30, 2024 (which are available in the Company’s Annual Report on Form 10-K for the three months

ended December 31, 2024 and the year ended September 30, 2024, as filed with the SEC on May 8, 2025 and February 10, 2025, respectively),

as amended on each of July 9, 2025 and April 14, 2025 and the unaudited historical financial statements as of September 30, 2025 and for

the nine months ended September 30, 2025 of ITS and the audited historical financial statements of ITS as of and for the year ended December

31, 2024 included in this proxy statement.

The

historical combined financial information has been adjusted to give pro forma effect to reflect the accounting for the ITS Acquisition

in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion

of management, all adjustments necessary to present fairly the unaudited pro forma condensed combined financial information have been

made. The assumptions underlying the pro forma adjustments are described fully in the accompanying notes, which should be read in conjunction

with the unaudited pro forma condensed combined financial information.

The

ITS Acquisition is being accounted for as a business combination using the acquisition method of accounting under the provisions of Accounting

Standards Codification (“ASC”) Topic 805, “Business Combinations” (“ASC 805”). Under ASC 805, all

assets acquired and liabilities assumed are recorded at their acquisition date fair value. The allocation of the purchase price as reflected

in the unaudited pro forma condensed combined financial information is based upon management’s internally developed preliminary

estimates of the fair market value of the assets acquired and liabilities assumed, as if the ITS Acquisition had occurred on the aforementioned

dates. This allocation of the purchase price depends upon certain estimates and assumptions, all of which are preliminary and, in some

instances, are incomplete and have been made solely for the purpose of developing the unaudited pro forma condensed combined financial

information. Any adjustments to the preliminary estimated fair value amounts could have a significant impact on the unaudited pro forma

condensed combined financial information contained herein, and our future results of operations and financial position.

The

unaudited pro forma condensed combined financial information is not necessarily indicative of the combined financial position or results

of operations that would have been realized had the ITS Acquisition occurred as of the dates indicated, nor is it meant to be indicative

of any anticipated combined financial position or future results of operations that the Company will experience after the ITS Acquisition.

Note 2 - Basis of

Presentation

The

unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2025 was derived from the unaudited

consolidated financial statements included in the Company’s Quarterly Report on Form 10-Q (“the Q32025 Form 10-Q”) for

the three and nine months ended September 30, 2025, and the unaudited historical financial statements of ITS for the nine months ended

September 30, 2025, and has been prepared as if the ITS Acquisition had occurred on January 1, 2024.

The

unaudited pro forma condensed combined statement of operations for the year ended December 31, 2024 was derived from the audited consolidated

financial statements included in the Company’s Annual Report on Form 10-K (“the 2024 Form 10-K”) for the three months

ended December 31, 2024 and for the year ended September 30, 2024, and the audited historical financial statements of ITS for the year

ended December 31, 2024, and has been prepared as if the ITS Acquisition had occurred on January 1, 2024.

The

unaudited pro forma condensed combined balance sheet as of September 30, 2025 combines the consolidated balance sheet included in the

Q32025 Form 10-Q with the historical audited balance sheet for ITS as of September 30, 2025, and has been prepared as if the ITS Acquisition

had occurred on September 30, 2025. The unaudited pro forma combined financial information herein has been prepared to illustrate the

effects of the ITS Acquisition and Related Transaction in accordance with U.S. GAAP and pursuant to Article 11 of Regulation S-X.

The

ITS unaudited historical consolidated financial statements as of and for the nine months ended September 30, 2025 and the ITS audited

historical consolidated financial statements as of and for the year ended December 31, 2024 are included in this Proxy Statement. These

unaudited pro forma condensed combined statements should be read in conjunction with such historical financial statements. The historical

consolidated financial information has been adjusted to give pro forma effect to reflect the accounting for the ITS Acquisition in accordance

with U.S. GAAP.

The

Company has accounted for the ITS Acquisition under the acquisition method of accounting in accordance with the authoritative guidance

on business combinations under the provisions of ASC 805. The allocation of the purchase price as reflected in the unaudited pro forma

condensed combined financial information was based on a preliminary valuation of the assets acquired and liabilities assumed, and the

accounting is subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired

and liabilities assumed becomes available. The final purchase price allocation may include changes to the amount of intangible assets,

goodwill, and deferred taxes, as well as other items. Accordingly, the pro forma adjustments are preliminary and have been made solely

for the purpose of providing unaudited pro forma condensed combined financial information. Differences between these preliminary estimates

and the final purchase accounting may occur, and these differences could be material.

Assets

acquired and liabilities assumed in a business combination that arise from contingencies must be recognized at fair value if the fair

value can be reasonably estimated. If the fair value of an asset or liability that arises from a contingency cannot be determined, the

asset or liability would be recognized in accordance with ASC 450, “Disclosure of Certain Loss Contingencies” (“ASC

450”). If the fair value is not determinable and the ASC 450 criteria are not met, no asset or liability would be recognized. Management

is not aware of any material contingencies related to ITS.

The

unaudited pro forma condensed combined financial information is presented solely for informational purposes and is not necessarily indicative

of the combined results of operations or financial position that might have been achieved for the periods presented, nor is it necessarily

indicative of the future results of the combined company. The unaudited pro forma combined financial information does not reflect any

cost savings from future operating synergies or integration activities, if any, or any revenue, tax, or other synergies, if any, that

could result from the ITS Acquisition.

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v3.26.1

Cover

Feb. 16, 2026

Document Type

8-K/A

Amendment Flag

true

Amendment Description

On February 17, 2026, T3 Defense Inc., a Delaware

corporation (the “Company”), filed a Current Report on Form 8-K (the “Initial 8-K”) with the Securities and Exchange

Commission (the “SEC”) to disclose that it had completed its acquisition of 51% of the outstanding equity capital of I.T.S.

Industrial Tecno-logic Solutions Ltd. (“ITS”) on a fully diluted basis, pursuant to the previously disclosed Agreement, dated

June 8, 2025, among Star Twenty Six Ltd., ITS and its controlling shareholder Gera Eron. This amendment to the Initial 8-K (this “Amendment”)

amends the Initial 8-K to include the historical audited financial statements of ITS and the pro forma combined financial information

required by Items 9.01(a) and 9.01(b) of Form 8-K that were excluded from the Initial 8-K in reliance on the instructions to such items.

Document Period End Date

Feb. 16, 2026

Entity File Number

001-39341

Entity Registrant Name

T3 DEFENSE INC.

Entity Central Index Key

0001787518

Entity Tax Identification Number

38-3912845

Entity Incorporation, State or Country Code

Entity Address, Address Line One

575 Fifth Avenue

Entity Address, Address Line Two

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New York

Entity Address, State or Province

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City Area Code

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Local Phone Number

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Security Exchange Name

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Warrants, each warrant exercisable for one Share of Common Stock for $92.00 per share

Title of 12(b) Security

Warrants, each warrant exercisable for one Share of Common Stock for $92.00 per share

Trading Symbol

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Security Exchange Name

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- Definition

Name of the Exchange on which a security is registered.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Exchange Act

-Number 240

-Section 12

-Subsection d1-1

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Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

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-Name Exchange Act

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Trading symbol of an instrument as listed on an exchange.

+ References

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Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

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-Name Securities Act

-Number 230

-Section 425

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