Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the "Risk Factors" section of this Annual Report on Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. Unless the context otherwise requires, references to "we", "us", "our", and "the Company" are intended to mean the business and operations of Vicarious Surgical Inc. and its consolidated subsidiaries.

Overview

We are combining advanced miniaturized robotics, computer science, sensing and 3D visualization to build a new category of intelligent and affordable single-port surgical robots that virtually transport surgeons inside the patient to perform minimally invasive surgery. With our next-generation robotics technology, which is being designed with proprietary human-like motion, we are seeking to improve surgical precision, ergonomics, and procedural efficiency, with the goal of improving patient outcomes and the cost and efficacy of surgical procedures over time. Led by a visionary team of engineers from MIT, we intend to deliver the next generation in robotic surgery, designed to solve the shortcomings of both open surgery, as well as current manual and robot-assisted minimally invasive surgery.

We estimate that there are 45 million soft tissue abdominal and gynecological surgical procedures performed annually worldwide that could potentially be addressed with the Vicarious Surgical System, including use for ventral hernia, other types of hernia, hysterectomy, cholecystectomy (gall bladder) and certain other gastrointestinal procedures. We intend for use in ventral hernia procedures to be the first clinical application for the Vicarious Surgical System, of which there are estimated to be 3.9 million cases worldwide and 0.9 million in the U.S. annually. We then intend to seek FDA authorization to enable the expansion into the other applications addressable by the Vicarious Surgical System.

The dollar amounts set forth in this section are presented in thousands, except for per share amounts.

Financial Highlights

We incurred net losses of $50,182 and $63,223 for the years ended December 31, 2025 and 2024, respectively. The 2025 net loss is inclusive of a gain of $787 related to the change in valuation of our warrant obligations. The 2024 net loss is inclusive of a gain of $43 related to the change in valuation of our warrant obligations. Our loss from operations prior to the warrant gain and other income and expense items was $50,027 and $66,555 for the years ended December 31, 2025 and 2024, respectively, representing a period-over-period decrease in expenses of 25%, which was primarily due to decreases of $8,973 in personnel-related expenses and $6,394 in professional fees. The decrease in personnel-related expenses was due to a 23% decrease in average headcount, from an average of 127 people in 2024 to an average of 98 people in 2025, as well as a decrease in bonus expense of $2,676.

Factors Affecting Results of Operations

The following factors have been important to our business and we expect them to impact our results of operations and financial condition in future periods:

Revenue

To date, we have not generated any revenue. We do not expect to generate revenue unless and until we receive FDA authorization of our product candidate. The amount of revenue, if any, from initial sales of a new product is difficult to predict and, even if we successfully commercialize our product candidate upon approval and begin generating revenue, such revenues will initially only modestly reduce our continued net losses resulting from our research and development and marketing activities, which we expect to continue to increase even after market authorization is received.

Research and Development ("R&D") Expenses

Research and development ("R&D") expenses consist primarily of engineering, product development, regulatory expenses, medical affairs, and other costs associated with product candidates and technologies that are in development. These expenses include employee compensation, including stock-based compensation, supplies, consulting, prototyping, testing, materials, travel expenses, depreciation and an allocation of facility overhead expenses. Additionally, R&D expenses include internal and external costs associated with our regulatory compliance and quality assurance functions and overhead costs. While R&D expenses may vary over time depending on the level and timing of our product development efforts, as well as our clinical development, clinical trial and other related activities, we currently expect such expenses to decrease in absolute dollars as we implement cost control measures and operational efficiencies.

General and Administrative Expenses

General and administrative ("G&A") expenses consist primarily of compensation for personnel, including stock-based compensation, related to executive, finance and accounting, information technology and human resource functions. Other G&A expenses include travel expenses, professional services fees (including legal, audit and tax fees), insurance costs, general corporate expenses and allocated facilities-related expenses. We expect G&A expenses to decrease in absolute dollars as we continue to streamline operations and realize cost efficiencies.

Sales and Marketing Expenses

Sales and marketing ("S&M") expenses consist primarily of compensation for personnel, including stock-based compensation, related to sales and marketing functions and physician education programs. Other S&M expenses include training, travel expenses, promotional activities, marketing initiatives, market research and analysis, conferences and trade shows, professional services fees and allocated facilities-related expenses. We expect S&M expenses to continue to decrease in absolute dollars as we prioritize capital preservation and limit marketing activities until closer to commercialization.

Change in Fair Value of Warrant Liabilities

The change in fair value of warrant liability represents the mark-to-market fair value adjustments to the outstanding Public Warrants and Private Placement Warrants assumed as part of the consummation of the Business Combination on September 17, 2021. The change in fair value of our Private Placement Warrants is primarily the result of the change in the underlying stock price of our stock used in the Black-Scholes option pricing model while the Public Warrants are marked-to-market based on their historical price on the NYSE. As of December 17, 2025, the Public Warrants have been removed from the NYSE. The warrant liability was measured at fair value initially on September 17, 2021 and is remeasured at exercise, and for warrants that remain outstanding at the end of each subsequent reporting period.

Interest Income

Interest income consists primarily of interest income earned on our cash and cash equivalents and short-term investments.

Interest Expense

Interest expense consists of interest incurred on our D&O insurance financing.

Results of Operations

The following table sets forth our historical operating results for the years ended December 31, 2025 and 2024:

		Year ended December 31,
(in thousands, except for per share amounts)		2025				2024				Change				% Change
Operating expenses:
Research and development		$	33,601			$	40,155			$	(6,554	)			(16	)%
Sales and marketing			2,171				4,525				(2,354	)			(52	)%
General and administrative			15,196				21,875				(6,679	)			(31	)%
Gain on lease modification, net			(941	)			-				(941	)			(100	)%
Total operating expenses			50,027				66,555				(16,528	)			(25	)%
Loss from operations			(50,027	)			(66,555	)			(16,528	)			(25	)%
Other (expense) income, net:
Loss on disposal of leasehold improvements			(1,915	)			-				(1,915	)			(100	)%
Change in fair value of warrant liabilities			787				43				744				1,730	%
Interest and other income, net			973				3,289				(2,316	)			(70	)%
Total other (expense) income, net			(155	)			3,332				(3,487	)			(105	)%
Net loss		$	(50,182	)		$	(63,223	)		$	(13,041	)			(21	)%
Net loss per common share, basic and diluted		$	(8.19	)		$	(10.74	)		$	(2.55	)			(24	)%
Other comprehensive (loss) gain:
Net unrealized (loss) gain on investments			(46	)			40				(86	)			(215	)%
Other comprehensive (loss) gain			(46	)			40				(86	)			(215	)%
Comprehensive loss		$	(50,228	)		$	(63,183	)		$	(12,955	)			(21	)%

Comparison of the years ended December 31, 2025 and 2024

Research and Development Expenses. R&D expenses decreased $6,554, or 16%, to $33,601 during the year ended December 31, 2025, compared to $40,155 during the year ended December 31, 2024. This decrease was primarily due to decreases of $5,258 in contractor fees, $1,417 of personnel-related expenses, and $623 in depreciation expense; and was partially offset by increases of $531 in pre-clinical testing expense and $247 in materials and supplies. The decrease in personnel-related expenses was due primarily to a decrease in average headcount of 23%, consisting of an average of 79 R&D employees in 2025 compared to an average of 103 R&D employees in 2024.

Sales and Marketing Expenses. S&M expenses decreased $2,354, or 52%, from $4,525 in the year ended 2024 to $2,171 during the year ended December 31, 2025. This decrease was primarily due to decreases of $2,368 in personnel-related expenses. The decrease in personnel-related expenses was primarily due to a decrease in average headcount of 33%, consisting of an average of 6 employees in 2025 compared to an average of 9 employees in 2024.

General and Administrative Expenses. G&A expenses decreased $6,679, or 31%, to $15,196 during the year ended December 31, 2025, compared to $21,875 during the year ended December 31, 2024. This decrease was primarily due to decreases of $5,189 in personnel-related expenses, $1,101 in professional fees, and $365 in insurance expense. The decrease in personnel-related expenses was primarily due to a decrease in average headcount of 19%, consisting of an average of 13 employees in 2025 compared to an average of 16 employees in 2024.

Gain on lease modification, net. The gain on lease modification of $941 as of December 31, 2025, is related to the second amendment to our leased office space which eliminates the second building at 62 Fourth Avenue.

Other (expense) income, net. Other (expense) income decreased by $3,487 to net expense of $155 during the year ended December 31, 2025, compared to net income of $3,332 during the year ended December 31, 2024. The decrease was primarily due to a decrease in interest income from short-term investments of $2,318 and an increase of $1,948 in expense related to the disposal of leasehold improvements; partially offset by an increase in change in fair value of warrant liability of $744 resulting from the remeasurement of the Public Warrant and Private Placement Warrant liabilities between December 31, 2024, and the end of the reporting period, December 31, 2025.

Income Taxes. Our income tax provision consists of an estimate for U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities and changes in tax law. Due to historical cumulative losses and expected future losses, we maintain a full valuation allowance against our U.S. and state deferred tax assets.

Liquidity and Capital Resources

To date, our primary sources of capital have been private placements of preferred stock prior to the Business Combination, public and private sales of securities and the issuance of common stock. Net cash used in our operating activities for the years ended December 31, 2025 and 2024 was $45,076 and $49,956, respectively. As of December 31, 2025, we held cash and cash equivalents of $2,569, short-term investments of $7,223 and had an accumulated deficit of $246,117.

Excluding the non-cash impact of potential changes in the fair value of warrant liabilities, we expect net losses to continue in connection with our ongoing activities, particularly as we continue to invest in our product development and clinical pathway. Based on our current planned operations, we do not believe that our current cash, cash equivalents and short-term investments balance of $9,792 as of December 31, 2025 will be sufficient to support our operations beyond the next twelve months from the date of issuance of these financial statements. Due to a reduction in headcount effective March 6, 2026, we currently expect that our cash, cash equivalents and short-term investments will be sufficient to support our operations through the second quarter of 2026. As such, there is substantial doubt about the Company's ability to continue as a going concern. We may consider raising additional capital to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons.

Our future capital requirements will depend on many factors, including, but not limited to, any changes in the size, number and scope of clinical trials we may be required to conduct, the timing and conditions of market authorization (if any) for the Vicarious Surgical System, whether we are able to successfully commercialize the Vicarious Surgical System, if approved, additional product candidates we may choose to develop, fluctuations in the cost and timing of our business activities, including manufacturing, hiring and protection of our intellectual property portfolio, and the other risks and uncertainties described herein, under the caption "Risk Factors" in Part I, Item 1A and in other filings that we make with the Securities and Exchange Commission from time to time.

We expect that we will need to obtain substantial additional funding in order to complete our clinical trials, obtain market authorization for the Vicarious Surgical System, and commercialize it, if approved. Until such time, if ever, as we can generate sufficient revenues to support our expenses, we may seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing. The sale of equity and convertible debt securities may result in dilution to our stockholders. Preferred equity securities or convertible debt could provide for rights, preferences or privileges senior to those of our common stock, including liquidation or other preferences that could adversely affect the rights of our existing stockholders. The terms of debt securities issued or borrowings pursuant to a credit agreement could impose significant restrictions on our operations. If we raise funds through collaborations and licensing arrangements, we might be required to relinquish significant rights to our platform technologies or product candidates or grant licenses on terms that are not favorable to us, or that we would otherwise seek to develop or commercialize ourselves. Additional capital may not be available on reasonable terms, or at all, particularly given the current macroeconomic environment, including diminished liquidity and credit availability, declines in consumer confidence and economic growth, rising interest rates, inflation, uncertainty about economic stability and potential for economic recession. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and more dilutive. If we are unable to raise capital when needed or on attractive terms, we could be forced to significantly delay, scale back or discontinue the development, market authorization or commercialization of the Vicarious Surgical System or future product candidates, or seek collaborators at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available.

On October 7, 2022, we filed a universal shelf registration statement on Form S-3 (the "Form S-3"), which was declared effective by the SEC on October 27, 2022, on which we registered for sale up to $400 million of any combination of our Class A common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine, which includes up to $100 million of Class A common stock that we may issue and sell from time to time, through Cowen and Company, LLC acting as our sales agent, pursuant to the sales agreement that we entered into with Cowen and Company, LLC on October 7, 2022 for our "at-the-market" equity program. We did not sell any shares of our Class A common stock under our sales agreement with Cowen and Company, LLC for the years ended December 31, 2025 and 2024. This Form S-3 expired on October 27, 2025.

On December 12, 2025, we filed a new universal shelf registration statement on Form S-3 (the " new Form S-3"), which was declared effective by the SEC on December 22, 2025, on which we registered for sale up to $100 million of any combination of our Class A common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine, which includes up to $3 million of Class A common stock that we may issue and sell from time to time, through H.C. Wainwright and Company, LLC acting as our sales agent, pursuant to the sales agreement that we entered into with H.C. Wainwright and Company, LLC on December 12, 2025 for our "at-the-market" equity program. We did not sell any shares of our Class A common stock under our sales agreement with H.C. Wainwright and Company, LLC for the year ended December 31, 2025.

On October 7, 2025, we entered into a securities purchase agreement with an institutional investor pursuant to which we agreed to issue in a registered direct offering 588,300 shares of our Class A common stock and pre-funded warrants to purchase up to 561,700 shares of our Common Stock, as well as in a concurrent private placement, Series A common warrants to purchase an aggregate of 1,150,000 shares of our Common Stock and Series B common warrants to purchase an aggregate of 1,150,000 shares of our Common Stock, in each case with an exercise price of $5.10. The gross proceeds from the offering were $5.9 million and net proceeds of $5.2 million, after deducting underwriting discounts and commissions and other offering expenses payable by us.

On March 3, 2026, the NYSE notified us that the NYSE had determined to (A) immediately suspend trading in our Class A common stock due to a determination that we had fallen below the NYSE's continued listing standard requiring listed companies to maintain an average global market capitalization over a consecutive 30 trading day period of at least $15,000,000 pursuant to Section 802.01B of the NYSE Listed Company Manual, and (B) commence proceedings to delist the Class A common stock. We will not appeal the delisting determination. The NYSE has indicated that it will apply to the Securities and Exchange Commission to delist the Class A common stock by filing a Form 25. The Class A common stock commenced quotation on the OTCID at the open of business on March 4, 2026 under the trading symbol of "RBOT." The OTCID is a significantly more limited market than the NYSE, and quotation on any OTC market will result in a less liquid market for existing and potential holders of Class A common stock to trade their shares and could further depress the trading price of the Class A common stock. We can provide no assurance that the Class A common stock will continue to trade on this market, whether broker-dealers will provide and continue to provide public quotes of the Class A common stock on this market, or whether the trading volume of the Class A common stock will be sufficient to provide for an efficient trading market. The suspension and/or delisting of the Class A common stock from the NYSE could materially limited the number of investors willing to hold or acquire the Class A common stock, which could negatively impact our ability to raise equity financing; and negatively impact our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing us from accessing the public capital markets.

Cash

Our cash and cash equivalents and short-term investments balance as of December 31, 2025 was $2,569 and $7,223 respectively. Our future capital requirements may vary from those currently planned and will depend on various factors, including the timing and extent of R&D spending and spending on other strategic business initiatives.

Cash Flows Summary

Comparison of the year ended December 31, 2025 and December 31, 2024

		Year Ended December 31,
(in thousands)		2025				2024
Net cash used in operating activities		$	(45,076	)		$	(49,956	)
Net cash provided by investing activities		$	32,147			$	6,863
Net cash provided by financing activities		$	5,761			$	8

Cash flows used in Operating Activities

Net cash used in operating activities during the year ended December 31, 2025 was $45,076, attributable to a net loss of $50,182 and a net decrease in our operating assets and liabilities of $4,905; partially offset by non-cash items of $10,011. Non-cash items consisted of $8,135 in stock-based compensation, a loss of $1,915 on the disposal of leasehold improvements, and $1,425 of depreciation; partially offset by a $787 gain from our warrant liabilities, a $489 net gain from our lease expense, and a change in accrued interest and net accretion of discounts on marketable securities of $188. The $4,905 net decrease in our operating assets and liabilities was primarily due to decreases of $6,520 in lease liabilities and $4,499 in accrued expenses and accounts payable; partially offset by decreases of $5,285 in our right-of-use assets and $809 in prepaid and other current assets.

Net cash used in operating activities during the year ended December 31, 2024 was $49,956, attributable to a net loss of $63,223 less a net change in our net operating assets and liabilities of $594 and plus non-cash items of $13,861. Non-cash items consisted of $11,904 in stock-based compensation, $2,107 of depreciation and $899 for non-cash lease expenses, partially offset by a $43 gain from our warrant liabilities and a change in accrued interest and net accretion of discounts on marketable securities of $1,008. The $594 change in our net operating assets and liabilities was primarily due to decreases of $1,047 in lease liabilities, $96 in accounts payable, partially offset by an $175 decrease in prepaid and other current assets, a $309 increase in accrued expenses, and a $65 decrease in other non-current assets.

Cash flows provided by Investing Activities

Net cash provided by investing activities for the year ended December 31, 2025 was $32,147 consisting of $53,619 in proceeds from sales and maturities of available-for-sale investments; partially offset by $21,340 used for purchases of available-for-sale investments and $132 for fixed asset purchases.

Net cash provided by investing activities for the year ended December 31, 2024 was $6,863 consisting of $65,192 in proceeds from sales and maturities of available-for-sale investments and partially offset by $58,149 used for purchases of available-for-sale investments and $180 for fixed asset purchases.

Cash flows provided by Financing Activities

Net cash provided by financing activities for the year ended December 31, 2025 was $5,169 in net proceeds received from the issuance of common stock and pre-funded warrants in connection with our registered direct offering, $525 in net proceeds from our note payable related to financing our D&O insurance, and $67 that was received for stock option exercises.

Net cash provided by financing activities for the year ended December 31, 2024 was $8 that was received for stock option exercises.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the consolidated balance sheet date, as well as the reported expenses incurred during the reporting periods. Our management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates, and such differences could be material to our consolidated financial statements.

While our significant accounting policies are described in the notes to our historical financial statements (see Note 2, "Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements" in our financial statements contained in this Annual Report on Form 10-K), we believe the following critical accounting policy requires significant judgment and estimates in the preparation of our financial statements:

Warrant Liabilities

We recognize our warrants as liabilities at fair value and adjust the warrant liability to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the statement of operations. The fair value of Public Warrants is determined from their trading value on public markets. The fair value of Private Placement Warrants is calculated using the Black-Scholes option pricing model. The assumptions used in the model are the Company's stock price, exercise price, expected term, volatility, interest rate, and dividend yield.

We estimate the volatility of our warrants based on implied volatility from our Public Warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which we anticipate remaining at zero.

Recently Adopted Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, "Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements" in our financial statements contained in this Annual Report on Form 10-K.