Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

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 unaudited condensed consolidated results of operations and financial condition. The discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto contained in this Quarterly Report on Form 10-Q and the consolidated financial statements and notes thereto for the year ended December 31, 2025 contained in our Annual Report on Form 10-K filed with the SEC on March 9, 2026, and our other public reports filed with the SEC. This discussion contains forward looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the "Risk Factors" section in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 and Part II, Item 1A of this Quarterly Report on Form 10-Q. 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. The condensed consolidated financial statements for the three months ended March 31, 2026 and 2025, respectively, present the financial position and results of operations of Vicarious Surgical Inc. and its consolidated subsidiaries. In preparing this MD&A, the Company presumes that readers have access to and have read the MD&A in our Annual Report on Form 10-K, pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K.

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.

Recent Developments

On March 3, 2026, the NYSE notified us that it had determined to (A) immediately suspend trading in our Class A common stock due to a determination that we had fallen below the 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 subsequently applied to the Securities and Exchange Commission to delist the Class A common stock by filing a Form 25.

We received approval of our application to have the Class A common stock quoted on the OTCID market tier operated by OTC Markets. The Class A common stock commenced quotation on the OTCID at the open of business on March 4, 2026 under the trading symbol of "RBOT." The quotation of our Class A common stock was upgraded to the OTCQB Venture Market ("OTCQB") operated by OTC Markets on March 24, 2026.

The OTCQB 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.

We have also applied to list our Class A common stock on the Nasdaq Capital Market. We have not yet been approved to list our Class A common stock by Nasdaq and do not currently meet all of the requirements for initial listing, and may not meet all of the requirements for uplisting in the future. We hope to list our Class A common stock on Nasdaq in the future and expect that a reverse stock split will be necessary for us to meet the minimum bid price and/or minimum closing stock price requirements of Nasdaq. We may not be able to meet the initial listing standards of Nasdaq, even after a reverse stock split, may meet such listing standards without having to affect a reverse stock split, and/or may have our application to Nasdaq rejected.

Financial Highlights

We incurred net losses of $7,329 and $15,394 for the three months ended March 31, 2026 and March 31, 2025, respectively. These losses include losses of $0 and $93 related to the change in valuation of our warrant obligations for the three months ended March 31, 2026 and March 31, 2025, respectively. Our loss from operations prior to the warrant loss and other income and expense items was $7,502 and $15,747 for the three months ended March 31, 2026 and March 31, 2025, respectively, representing a period-over-period decrease in expenses of 52%, which was primarily due to decreases of $5,727 in personnel-related expenses, $1,034 of inventory, supplies and materials, $616 of facilities-related expenses, $527 of professional fees, and $186 of depreciation and amortization. The decrease in personnel-related expense was due primarily to a decrease in average headcount of 61%, from an average of 123 people in the three months ended March 31, 2025 to an average of 48 people in the three months ended March 31, 2026.

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 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, including outsourcing, 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. On December 15, 2025, the NYSE suspended trading of the Public Warrants and subsequently delisted the Public Warrants. 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 three months ended March 31, 2026 and 2025:

		Three months ended March 31,
(in thousands, except for per share amounts)		2026				2025				Change				% Change
Operating expenses:
Research and development		$	5,039			$	9,415			$	(4,376	)			(46	)%
Sales and marketing			343				1,041				(698	)			(67	)%
General and administrative			2,120				5,291				(3,171	)			(60	)%
Total operating expenses			7,502				15,747				(8,245	)			(52	)%
Loss from operations			(7,502	)			(15,747	)			8,245				(52	)%
Other income (expense), net:
Change in fair value of warrant liabilities			-				(93	)			93				(100	)%
Gain on sale of equipment			133				-				133				100	%
Interest and other income, net			40				446				(406	)			(91	)%
Total other income, net			173				353				(180	)			(51	)%
Net loss		$	(7,329	)		$	(15,394	)		$	8,065				(52	)%
Net loss per common share, basic and diluted		$	(1.03	)		$	(2.60	)		$	1.57				(60	)%
Other comprehensive loss:
Net unrealized loss on investments			(6	)			(32	)			26				(81	)%
Other comprehensive loss			(6	)			(32	)			26				(81	)%
Comprehensive loss		$	(7,335	)		$	(15,426	)		$	8,091				(52	)%

Comparison of the Three Months ended March 31, 2026 and 2025

Research and Development Expenses. R&D expenses decreased $4,376, or 46%, to $5,039 during the three months ended March 31, 2026, compared to $9,415 during the three months ended March 31, 2025. This decrease was primarily due to decreases of $2,136 in personnel-related expenses, $1,034 in supplies and direct materials, $564 in consulting and contractor fees, $281 in facilities and other office-related expenses, and $217 in software costs. The decrease in personnel-related expense was due primarily to a decrease in average headcount of 61%, from an average of 99 people in the three months ended March 31, 2025 to an average of 39 people in the three months ended March 31, 2026.

Sales and Marketing Expenses. S&M expenses decreased $698, or 67%, to $343 during the three months ended March 31, 2026, compared to $1,041 during the three months ended March 31, 2025. This decrease was primarily due to a decrease of $711 in personnel-related expenses, partially offset by an increase of $41 in professional fees. The decrease in personnel-related expense was due to an average headcount decrease of 63%, from an average of 8 people in the three months ended March 31, 2025 to an average of 3 people for the three months ended March 31, 2026.

General and Administrative Expenses. G&A expenses decreased $3,171, or 60%, to $2,120 during the three months ended March 31, 2026, compared to $5,291 during the three months ended March 31, 2025. This decrease was primarily due to decreases of $2,880 in personnel-related expenses, $104 in software costs, and $92 in facilities and other office-related expenses. The decrease in personnel-related expense was due primarily to a decrease in average headcount of 56%, from an average of 16 people in the three months ended March 31, 2025 to an average of 7 people in the three months ended March 31, 2026.

Other income, net. Other income, net decreased by $180 to $173 during the three months ended March 31, 2026, compared to other income of $353 during the three months ended March 31, 2025. The decrease was primarily due to a decrease in interest income from short-term investments of $396, partially offset by a gain on sale of equipment of $133 and a decrease in expense related to the change in fair value of warrant liabilities of $93.

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 three months ended March 31, 2026 and the year ended December 31, 2025 was $6,325 and $45,076, respectively. As of March 31, 2026, we held cash and cash equivalents of $1,407, short-term investments of $2,275 and had an accumulated deficit of $253,446.

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 $3,682 as of March 31, 2026 will be sufficient to support our operations for the next 12 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 in the "Risk Factors" sections in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 9, 2026, and in other filings that we make with the SEC 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 three months ended March 31, 2026 or for the year ended December 31, 2025. 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 three months ended March 31, 2026 or 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.

The delisting of the Class A common stock from the NYSE as described above under "Recent Developments" 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 March 31, 2026 was $1,407 and $2,275, 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 three months ended March 31, 2026 and March 31, 2025

		Three months ended March 31,
(in thousands)		2026				2025
Net cash used in operating activities		$	(6,325	)		$	(11,768	)
Net cash provided by investing activities		$	5,060			$	4,613
Net cash (used in) provided by financing activities		$	(154	)		$	17

Cash flows used in Operating Activities

Net cash used in operating activities during the three months ended March 31, 2026 was $6,325, attributable to net loss of $7,329, non-cash items of $1,248, and a net change in our net operating assets and liabilities of $244. Non-cash items consisted of $1,064 in stock-based compensation, $183 of depreciation and amortization, $128 for non-cash lease expense, a $6 change in accrued interest and net accretion of discounts on marketable securities, partially offset by a $133 gain on sale of equipment. The $13 change in our net operating assets and liabilities was primarily due to a decrease of $320 in prepaid expenses and other current assets and an increase of $136 in accounts payable, partially offset by decreases of $441 in lease liabilities and $286 in accrued expenses.

Net cash used in operating activities during the three months ended March 31, 2025 was $11,768, attributable to net loss of $15,394 and a net change in our net operating assets and liabilities of $190 and non-cash items of $3,436. Non-cash items consisted of a loss of $93 due to the change in fair value of our warrant liabilities, $2,787 in stock-based compensation, $369 of depreciation and amortization, $239 for non-cash lease expense and partially offset by a $52 change in accrued interest and net accretion of discounts on marketable securities. The $190 change in our net operating assets and liabilities was primarily due to decreases of $311 in prepaid expenses, $145 in accounts payable, $281 in lease liabilities and $18 in other noncurrent assets and partially offset by a $287 increase in accrued expenses.

Cash flows provided by Investing Activities

Net cash provided by investing activities for the three months ended March 31, 2026 was $5,060 consisting of $6,152 in proceeds from sales and maturities of available-for-sale investments and $133 in proceeds from sales of equipment, partially offset by $1,216 used for purchases of available-for-sale investments and $9 used for fixed asset purchases.

Net cash provided by investing activities for the three months ended March 31, 2025 was $4,613 consisting of $13,550 in proceeds from sales and maturities of available-for-sale investments and partially offset by $8,932 used for purchases of available-for-sale investments and $5 used for fixed asset purchases.

Cash flows (used in) provided by Financing Activities

Net cash used in financing activities for the three months ended March 31, 2026 was $154 for repayment of notes payable.

Net cash provided by financing activities for the three months ended March 31, 2025 was $17 that was received for stock option exercises.

Off-Balance Sheet Arrangements

During the periods presented, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, which were established for the purpose of facilitating off-balance sheet arrangements.

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 condensed consolidated financial statements (see Note 2 of the accompanying unaudited condensed consolidated financial statements), we believe the following critical accounting policy requires significant judgment and estimates in the preparation of our condensed consolidated financial statements:

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 condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q.