Business Combination and Acquisitions - The Business Combination was completed on December 22, 2023, resulting in the formation of Nukkleus Inc., a financial technology company focused on blockchain-enabled technology solutions [20]. - The Company entered into a Securities Purchase Agreement to acquire a controlling 51% interest in Star 26 Capital Inc., a defense acquisition company [22]. - The Company will acquire 51% of Star for a total consideration of 5,000,000 in cash and a promissory note for the remaining balance [38]. - The acquisition includes the issuance of 2,385,170 shares of common stock and a five-year warrant to purchase 6,907,859 shares at an exercise price of 16,084,250, which consists of 1.0 million if not completed [90]. Financial Performance and Revenue Generation - The Company has historically generated substantial revenue through a General Services Agreement with Triton Capital Markets Ltd., which has been terminated effective January 1, 2024, due to non-payment [23]. - Nukkleus has historically generated most of its revenue through services rendered under the General Service Agreement [81]. - The largest customer, TCM, represented 81.1% of revenue for the year ended September 30, 2024, and the agreement with TCM has been terminated, potentially adversely affecting operations [127]. - The company has approximately 12 employees, with 11 working for Digital RFQ [85]. Financing and Capital Structure - The Company issued a Senior Unsecured Promissory Note to X Group in the principal amount of 2.00 per share [25]. - The Company issued an additional Senior Unsecured Promissory Note to East Asia Technology Investments Limited in the principal amount of 10 million of shares to YA II PN, LTD, at its discretion [36]. - The Company entered into a Securities Purchase Agreement for a private placement of 1,666,666 units at a total price of 6.00 per unit [42]. - The company has primarily funded operations through equity financings, convertible notes, and revenue, and may require additional capital for business growth [181]. Market and Competitive Landscape - Star's acquisition strategy focuses on small and medium businesses with an enterprise value of less than 76.1 billion in 2022 and is estimated to grow to $184.7 billion by 2027, with a compound annual growth rate of approximately 15.9% from 2022 to 2027 [74]. - Star recognizes the competitive landscape, facing challenges from well-established entities with greater financial resources in the acquisition space [65]. Risk Management and Compliance - The company is subject to credit risks from counterparties, including financial institutions, which could lead to significant liquidity problems and adversely affect financial condition and operations [124]. - The company has established a risk management and compliance framework to address Anti Money Laundering (AML) and Counter Terrorist Financing (CTF) considerations, which includes regular assessments of ML/TF risks [135]. - Enhanced due diligence is required for high-risk customers, involving a thorough review and ongoing monitoring [138]. - The company is working to diversify its banking relationships to mitigate risks associated with reliance on a small number of partners [126]. - The company is subject to various anti-money laundering laws, including the Bank Secrecy Act, which requires the implementation of risk-based programs and could result in significant fines if compliance gaps are identified [208]. Technology and Innovation - Digital RFQ aims to provide cross-border payment solutions and plans to develop a white-labelled digital bank for international business in the future [75]. - The company introduced fund transfer and payment processing using blockchain technologies in 2019, which remains in early development stages and is subject to unpredictable factors [155]. - The company acknowledges that negative publicity surrounding blockchain technology may lead to a loss of customer confidence in its products and services [157]. - The company intends to continue developing its blockchain-enabled payment processing technology, which may require significant expenditures before generating substantial revenue [95]. Operational Challenges - The company operates as a remote-first organization, facing heightened operational and cybersecurity risks due to employees working from home, which may lead to increased data or financial loss risks [153]. - The company faces intense competition for qualified personnel, particularly in executive talent and financial regulatory expertise, which could impact its ability to grow [189]. - The company is refining its revenue and business model, focusing on the development and commercialization of its platforms, but there is no assurance of achieving profitability [164]. Regulatory Environment - The financial services industry is subject to intensive regulation, and major changes could adversely affect the company's business model and profitability [203]. - The company may need to modify its business practices or exit certain activities due to new regulatory requirements, impacting its operational strategies [204]. - Non-compliance with laws and regulations could result in fines, revocation of licenses, and reputational harm, adversely affecting the company's financial condition [198]. - The company must adapt its operations to comply with diverse international laws as it expands, which may create conflicting obligations and increase compliance costs [207].
Brilliant Acquisition (BRLI) - 2024 Q4 - Annual Report