RDEV Rothe Development, Inc. S-1/A amended IPO prospectus section summaries

Rothe Development, Inc. — Form S-1 cover

Rothe Development filed Amendment No. 3 to its Form S-1 on November 12, 2026, for a proposed initial public offering of Class B common stock. The offering’s share count, price range, underwriting discounts, gross proceeds, and proceeds to the company remain placeholders in this preliminary filing.

The company has applied to list its Class B common stock on Nasdaq under the symbol RDEV. The offering is conditional on obtaining the listing; Nasdaq approval and satisfaction of its initial listing requirements are not assured. No public market existed for the shares before the offering.

Offering terms and control

• The underwriter has a 30-day option to purchase additional shares to cover over-allotments; the number of shares is unspecified.
• Underwriter compensation includes warrants covering 6% of the Class B shares issued in the offering, including any over-allotment shares, exercisable at 120% of the IPO price.
• Founder Karen Wheeler-Hall is expected to retain beneficial ownership representing more than 50% of the combined voting power eligible to elect directors after the offering. Rothe will therefore qualify as a Nasdaq controlled company, with the associated governance implications.

Rothe identifies as both an emerging growth company and a smaller reporting company. It has elected, and may continue to elect, reduced public-company reporting requirements.

About This Prospectus

Rothe Development, Inc. is referred to as the “Company,” and the “offering” refers to the offering contemplated by the prospectus. The Company’s fiscal year ends December 31; fiscal 2026 runs from January 1 through December 31, 2026, and the comparison periods are fiscal 2025 and fiscal 2024. Dollar amounts are in U.S. dollars.

“Articles of Incorporation” means the Company’s Second Amended and Restated Articles of Incorporation, filed in Texas on October 23, 2026. This section provides prospectus terminology and fiscal-period context; it contains no financial results, business developments, or risks.

Market and industry data

The prospectus’s market and industry information draws on internal surveys, market research, consultants, public sources, government agencies, and industry publications. The company considers these sources and its own estimates reliable, but does not guarantee their accuracy or completeness. Internal estimates reflect management’s industry knowledge and depend on assumptions; they have inherent limitations and uncertainty.

Forecasts may differ materially from actual results. Statements about the company’s market position reflect the most currently available information and the company’s analysis. Estimates may change for various reasons, including factors described under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” Investors should not place undue reliance on the market data, forecasts, or estimates.

Forward-Looking Statements and Principal Risks

Forward-looking statements are subject to substantial uncertainty, and actual results may differ materially from those expressed or implied. The company generally undertakes no obligation to update these statements except as required by law. This section provides no historical financial results or quantitative financial metrics.

Business and operating risks

• Government-customer and contract concentration: The substantial majority of revenue comes from U.S. government contracts, principally NASA. Nonrenewal, termination, modification, delays in government funding, or shifts in federal spending priorities could materially reduce revenue.
• Limited and pressured profitability: Profitability is described as thin and declining. Cost-plus-fee contracts offer limited margin potential, while unfavorable contract-estimate adjustments or changes in indirect-cost rates could add pressure.
• Federal contracting and compliance: The company must comply with extensive requirements, including FAR, CAS and ITAR, and is subject to audits and possible penalties, suspension, contract termination or debarment.
• Workforce and execution: Union labor and negotiations, difficulty recruiting and retaining personnel with active security clearances, and dependence on senior leaders pose risks. The company also faces cybersecurity and IT-system threats, potential joint-venture partner disputes, and possible loss of small-business certifications.
• Controls and growth initiatives: A material weakness in internal control over financial reporting may not be remediated, and effective controls may not be maintained. Expansion into commercial markets, revenue diversification, acquisition integration and new partnerships also present execution challenges.

Capital, ownership and public-company risks

Indebtedness and restrictive security-agreement covenants may limit additional borrowing, dividends, liens and operating flexibility. The company may not generate enough cash to service its obligations or obtain future capital on favorable terms. The IPO is expected to substantially dilute pro forma net tangible book value per share; future equity issuances, including under evergreen equity plans, could cause further dilution. Management will have broad discretion in using offering proceeds.

There was no prior public market for the shares, so their trading liquidity and market price are uncertain. CEO Karen Wheeler-Hall holds all Class A shares, which carry five votes per share, and is expected to control approximately [●]% of combined voting power after the offering. The company is therefore expected to qualify as a Nasdaq “controlled company,” limiting Class B holders’ influence. Class A shares may transfer without automatically converting to Class B, potentially shifting control.

Woman-owned-business status may help the company compete for government contracts, but policy changes or loss of certification could diminish that advantage. Texas law and the company’s governing documents may impede a change of control or restrict certain shareholder actions. Public-company costs are expected to increase, and management has limited public-company experience. Emerging-growth-company and smaller-reporting-company disclosure exemptions may also make the stock less attractive to investors.

Company and business

Rothe Development (RDEV) is a Texas-based, woman-owned engineering and technical-services contractor founded in 1967. It primarily operates near NASA’s Johnson Space Center and serves NASA, the Department of Defense and other federal agencies, commercial space operators, and regulated commercial industries. Its capabilities include engineering and mission operations and ground systems; IT modernization, cybersecurity and mission systems; enterprise multimedia and mission communications; and accredited calibration and metrology.

Rothe’s principal differentiator is its more than 50-year NASA relationship. It operates the Neutral Buoyancy Laboratory, a major astronaut extravehicular-activity training and mission-simulation facility supporting the International Space Station and Artemis. Other cited strengths include specialized facilities and personnel, experience with secure and mission-critical work, and established relationships with government customers and prime contractors. As of September 30, 2026, Rothe had approximately 385 employees and used approximately 53 subcontractors.

Growth strategy and risks

Management sees opportunities in government space, defense and national security; commercial space; digital infrastructure and data-center modernization; cybersecurity, AI and mission systems; advanced communications; and calibration and metrology. Its plans include expanding commercial calibration and metrology, pursuing digital infrastructure and data-center work, extending its NASA and mission-operations expertise to commercial-space and national-security customers, developing repeatable technical offerings, growing through partnerships, and considering selective acquisitions. These are stated opportunities and plans, not reported results. The aim is to build on the government customer base while expanding higher-margin commercial offerings and diversifying customers.

Execution depends in part on government and mission-critical programs, with NASA prominent in the company’s positioning. Expansion also requires winning and performing new contracts, while demand and competition in newer markets are uncertain. Although Rothe describes a range of service lines, the prospectus summary does not quantify customer or contract concentration.

Recent financing and IPO conditions

From December 2025 through September 30, 2026, Rothe sold 2.074 million shares of Class B common stock to accredited investors at $1.00 per share, raising approximately $2.1 million in gross proceeds. In the nine months ended September 30, 2026, it also issued 544,450 Class B shares for services related to the offering.

If the IPO is not completed by January 31, 2027, Rothe is required to repurchase all shares sold in the private placement for $1.10 per share, creating a contingent cash obligation. The related stockholders’ agreement—including transfer provisions and the CEO’s rights of first refusal, drag-along and tag-along rights—terminates upon completion of the offering.

Rothe has applied to list its Class B common stock on Nasdaq under the symbol “RDEV.” The offering is conditional on listing, and Nasdaq approval and satisfaction of initial listing requirements are not assured.

Reporting status and disclosure

Rothe qualifies as both an emerging growth company and a smaller reporting company and has elected scaled disclosure and the extended transition period for adopting certain accounting standards. Its prospectus uses reduced financial-statement, MD&A and executive-compensation disclosure; it is also exempt from Item 305 quantitative and qualitative market-risk disclosures and from auditor attestation of internal control over financial reporting. The company may retain smaller-reporting-company status until the fiscal year following the applicable threshold determination: non-affiliate public float of at least $250 million as of the last business day of the second quarter, or annual revenue of at least $100 million in the most recently completed fiscal year together with non-affiliate public float of at least $700 million as of that date. These scaled disclosures mean investors may receive less information than is provided by other public companies.

Offering and control

The offering assumes a price at the midpoint of the prospectus range, with no over-allotment exercise or underwriter-warrant exercise. The excerpt leaves the offering price, shares offered, post-offering share counts, over-allotment shares, and net proceeds as placeholders. Rothe has applied to list its Class B common stock on the Nasdaq Capital Market under RDEV; Nasdaq approval is a closing condition, but approval is not assured.

CEO and chair Karen Wheeler-Hall owns all Class A shares. Each Class A share carries five votes, compared with one vote per Class B share. After the offering, she is expected to control approximately [●]% of combined voting power, making Rothe a Nasdaq “controlled company” eligible for certain governance exemptions. Class A shares may be converted into Class B shares one-for-one at the holder’s election; Class B shares are not convertible.

Proceeds, warrants, lockups, and share overhang

Approximately $2.4 million of proceeds are intended for a one-time distribution solely to Wheeler-Hall, to enable her to repay in full the seller note used to acquire the company in February 2021 and pay related taxes. Class B holders, including IPO purchasers, will not participate in the distribution. Remaining proceeds are intended for working capital and general corporate purposes.

Underwriter warrants will cover 6% of Class B shares issued, including any over-allotment shares. They will be exercisable at 120% of the IPO price, expire five years after the prospectus date, and permit cashless exercise. The company, its officers and directors, and existing stockholders are generally subject to 180-day lockups.

Financial performance

Nine-month revenue declined 5.6% year over year, while gross profit declined 4.6%. For FY 2025, revenue increased 7.7%, but higher cost of revenue reduced gross profit; the company moved from operating income in FY 2024 to an operating loss in FY 2025.

Balance sheet and liquidity

Cash declined as receivables and current liabilities increased; the balance sheet also reflects a substantial reduction in long-term notes and lines of credit.

Cash flows

Cash decreased $3.835M during 9M 2026, from $7.525M to $3.690M, compared with an increase of $4.163M in 9M 2025, from $3.145M to $7.308M. Interim results include normal recurring adjustments and are not necessarily indicative of full-year results.

Risk factors

Financial performance, contract economics and concentration

Rothe’s thin profitability leaves results exposed to contract mix, execution and cost-estimate changes. Cost-plus-fee work limits cost-recovery risk but also constrains fee upside; fixed-price contracts, by contrast, expose the company to cost overruns without automatic recovery. Labor utilization, indirect-cost rates, inflation, supplier costs, schedule delays and inaccurate estimates can all pressure margins. Contract-estimate adjustments depend on significant judgment, and actual outcomes may require material financial-statement adjustments. Advance billings can also make cash flows fluctuate independently of underlying performance.

The five largest customers generated more than 93% of FY2025 revenue and represented approximately 98% of backlog at December 31, 2025. A small number of government contracts and IDIQ awards also account for substantial business. Reduced scope, delayed or canceled programs, missed options, customer defaults, lower renewal volumes or less favorable pricing could weaken revenue, cash flow and the ability to win new work. Backlog is not assured revenue: awards may be partially funded, delayed, modified or canceled, and winning a multi-award contract does not guarantee task orders. Pre-award materials purchases can tie up working capital or become unusable if authorization or requirements change.

Government funding and procurement decisions are central risks. Appropriations uncertainty, shutdowns, continuing resolutions, changing priorities, reduced federal spending and government in-sourcing could delay payments or awards, reduce demand, or shift work and employees in-house. The government and prime contractors may terminate work for convenience or default; convenience termination generally permits recovery of incurred or committed costs and settlement expenses, with profit only on completed work. Competitive procurements and protests consume resources, can delay starts and payments, and may result in cancellation or another award. Compliance failures, investigations, misconduct or mishandling classified information can lead to withheld payments, repayment, fines, False Claims Act liability including treble damages, contract loss, loss of clearances, suspension or debarment. Some contracts lack liability caps.

Joint ventures are a substantial part of operations and bring partner-performance, governance and staffing risks. Rothe has limited control over some ventures, including its 49% minority interests in QTS Rothe JV and Pabulum-Rothe JV; disputes, weak execution or restrictions on exiting or assigning interests could affect results. The six-year RDI/ARES SBA All Small Mentor-Protégé relationship expired in 2026, potentially limiting access to future set-aside opportunities without a new qualifying relationship. Failure to maintain certifications or meet SBA work, documentation or recordkeeping rules could jeopardize eligibility. The December 2025 transfer of OASIS+ to QTS Rothe JV for nominal consideration makes anticipated value dependent on government novation and the JV winning task orders.

Execution, workforce, technology and compliance

Scaling revenue and developing higher-margin commercial services require hiring and training, systems and controls, investment and capabilities in markets where Rothe has less experience. Labor shortages, wage inflation, union negotiations and strikes can raise costs, disrupt performance or reduce bid competitiveness; NASA-site collective bargaining agreements expire on various dates through February 28, 2030. The company also depends heavily on CEO and Chair Karen Wheeler-Hall and President/COO Thomas H. Hall III, whose relationships and institutional knowledge could be difficult to replace.

Supplier concentration, limited or nonbinding supply commitments, semiconductor shortages, tariffs and trade restrictions—including China’s rare-earth export ban—could raise costs and delay delivery. Substitutes may require redesign and added development, quality-control and inventory costs; fixed-price work may be particularly exposed. Cyberattacks, outages, disasters, third-party system failures and inadequate continuity plans could disrupt operations or compromise sensitive data and intellectual property. Open-source software and intellectual-property disputes may lead to litigation, damages, restrictions, re-engineering or disclosure of proprietary code. Export controls, CFIUS review, privacy rules and CMMC requirements create additional costs and could restrict foreign investment or prevent bidding on, receiving or continuing contracts.

Financial, reporting and capital risks

Management identified a material weakness in internal control over financial reporting involving complex transactions, including government-contract revenue recognition and joint-venture interests. Deficiencies included review of contract-estimate adjustments, timely JV intercompany reconciliations and balance-sheet classifications. Remediation includes a CFO hired in February 2026, external accounting support, added personnel and enhanced review procedures, but success is not assured; unresolved weaknesses could cause misstatements or restatements, regulatory scrutiny and impaired capital-market access.

Debt is secured by company assets and restricts borrowing, distributions and other actions. The Truist facility bears variable interest at Term SOFR + 1.75%; failure to refinance or extend it before maturity could harm liquidity. Lease obligations and growth investments may constrain cash available for operations, capital spending and acquisitions. Future financing may be unavailable or costly; equity could dilute holders, while debt could add restrictive covenants.

IPO, ownership and shareholder risks

Rothe intends to use approximately $2.4M of offering proceeds for a one-time distribution to Class A holders, enabling the CEO to repay a seller note and related taxes; Class B investors receive none, and company cash is reduced. Before the offering, 67.38155M of 70M authorized Class B shares were unissued; 30M authorized Class A shares were issued and held by the CEO. The company reserved 10M Class B shares for its 2026 Equity Incentive Plan and 5M for its 2026 Employee Stock Purchase Plan. Through 2036, annual increases may add up to 5% of fully diluted shares or 5M shares to the incentive plan, and 1.5% of outstanding shares or 1.5M shares to the purchase plan. Awards, future issuances and sales after lock-up expiration could dilute investors or pressure the share price.

The CEO holds all Class A shares, each with five votes versus one per Class B share, and is expected to retain more than 50% of combined voting power after the offering. Rothe expects controlled-company exemptions that may reduce governance protections. There may be no liquid public market; listing approval is uncertain, and volatility, limited analyst coverage, future share sales, litigation or missed expectations could affect the stock and access to capital. The company does not expect Class B dividends for the foreseeable future, and debt restrictions further limit distributions.

The company’s Texas governing documents include anti-takeover provisions, specified Texas courts as the forum for internal-affairs claims, federal courts for Securities Act claims, and a jury-trial waiver for internal entity claims (not federal securities-law claims). These provisions may limit venue choices or discourage shareholder litigation. Other risks include tax and regulatory changes, environmental and climate-related costs, insurance limitations, acquisition integration, and higher public-company reporting and compliance expenses.

Use of proceeds

The offering is intended to strengthen capitalization and financial flexibility, increase market visibility, and establish a public market for the company’s securities. The company plans to use approximately $2.4 million of the proceeds for a one-time cash distribution to CEO Karen Wheeler-Hall, the sole holder of Class A common stock. She intends to use the distribution to repay in full the seller note used to acquire the company in February 2021 and to pay related tax liabilities.

Class B shares sold in the offering will not be entitled to receive or participate in this distribution under the company’s articles of incorporation. The relevant charter amendment was approved by the board and shareholders, including holders of at least two-thirds of the Class B shares voting as a separate class.

Repaying the seller note is intended to address restrictions the company considers inconsistent with operating as a public company. The note restricts transfers or encumbrances of pledged stock, requires the secured party’s consent for a sale of a material part of the business, and could trigger default in connection with certain business sales or a liquidation. The pledged shares will carry voting control after the offering.

The remaining proceeds are intended for working capital and general corporate purposes. Pending their use, the company expects to hold them in a money-market or other interest-bearing account. The company may reallocate proceeds and retains broad discretion over their use; it cautions that the proceeds may not improve operating results or increase the value of its securities.

Estimated net proceeds, the assumed IPO price, any proceeds from the over-allotment option, and the effect of a $1-per-share change in the offering price are presented only as redacted placeholders. The amounts allocated to working capital and general corporate purposes, and total proceeds, are likewise unspecified.

Dividend and Distribution Policy

The company made approximately $1.1 million of shareholder distributions in FY2025 and $0.5 million in 9M2026 to help stockholders service the seller note used to finance their purchase of the company.

In connection with the IPO, the company intends to use approximately $2.4 million of net proceeds for a one-time IPO Class A Distribution. The distribution is intended to enable Karen Wheeler-Hall to repay the seller note in full and pay related tax liabilities. It would be payable only to holders of Class A common stock; the company’s charter excludes Class B holders.

The distribution may be paid only in connection with the offering, requires board authorization, and is subject to statutory distribution and solvency limits. If the offering is abandoned or the distribution is not paid, the authorization expires unless reapproved.

After the IPO distribution, Class A and Class B shares will participate equally and ratably in future distributions on common stock, subject to the rights of any preferred stock. The company does not anticipate paying cash dividends after the IPO distribution for the foreseeable future, intending instead to retain earnings to fund business growth and repay outstanding debt.

Capitalization as of September 30, 2026

Cash was approximately $1.476M below total indebtedness. The pro forma capitalization table does not assume repayment or refinancing of the Truist revolving line.

The company recorded a $2.618M Class B stock subscription liability. Upon consummation of the offering, the pro forma adjustments reclassify that liability to stockholders’ equity, along with $1.892M of deferred offering costs. The adjustments also include a one-time distribution of approximately $2.4M to Karen Wheeler-Hall to enable her to repay in full the seller note used to finance her 2021 acquisition of the company and pay related tax liabilities.

Shares and potential dilution

The offering share issuance and assumed IPO price are redacted as [●], so post-offering shares, dilution, proceeds, and pro forma capitalization cannot be determined from the disclosed figures. The filing states that a $1.00 change in the assumed IPO price would affect pro forma additional paid-in capital, total equity, and total capitalization, but the sensitivity amounts are also redacted.

Dilution and potential share issuance

As of September 30, 2026, RDEV had 2.61845 million Class B shares outstanding and no preferred shares or securities convertible into preferred stock. The company had no recorded goodwill or intangible assets, so historical net tangible book value equaled stockholders’ equity. The excerpt’s IPO price, offering share count, underwriting costs, pro forma net tangible book value, and per-share dilution figures are redacted; therefore, immediate dilution to new investors and the increase in book value per share for existing holders cannot be quantified.

The potential conversion shares and plan reserves are substantial relative to current Class B shares outstanding. Because the offering share count is not provided, a fully diluted total cannot be calculated from the excerpt.

Pro forma adjustments and further dilution

Pro forma adjustments include an approximately $2.4 million one-time distribution to Karen Wheeler-Hall to repay in full the seller note used to acquire the company in February 2021 and to pay related taxes. At the offering, $1.892489 million of deferred offering costs and a $2.61845 million stock subscription liability are to be reclassified to stockholders’ equity.

The company cautions that future option or warrant issuance and exercise, share issuance under the equity plans, or additional capital raises could further dilute investors. It may raise equity or convertible debt even if it believes its current or future operating plans are sufficiently funded.

Business profile and revenue drivers

RDEV is a mission-critical infrastructure and engineering contractor serving federal agencies, commercial space, energy, and healthcare markets. Revenue is primarily generated under U.S. government contracts, principally NASA; cost-plus-fee contracts accounted for $117.2M, or 92.7%, of FY2025 revenue. Consolidated joint ventures generated $99.9M of FY2025 revenue. Awards, renewals, task-order funding, contract modifications, and option exercises can therefore materially affect results. Cost-plus-fee contracts reimburse allowable costs plus a fee, while fixed-price contracts expose the company to cost-estimate and execution risk.

Consolidated results

FY2025 revenue increased 7.7%, but cost of revenue grew faster, up 8.8%, reducing gross profit and margin. Higher G&A reflected IPO preparation, professional services, and corporate staffing. Other income included $1.7M of Employee Retention Credits (ERC), $0.2M of interest income, and $0.6M of interest expense. In 9M2026, revenue declined 5.6%; lower direct costs and a more efficient cost mix helped edge gross margin upward. G&A fell primarily because of reduced external accounting and finance support. The prior-year period included $1.2M of ERC and $0.2M of interest income; meanwhile, higher average credit-line borrowings increased interest expense to $0.7M from $0.5M.

The filing separately reports net income attributable to RDI of $658.2K in FY2025 versus $870.5K in FY2024, and $7.7K in 9M2026 versus $1.549M in 9M2025; these figures differ from consolidated net income above.

Segment results

Government Services’ FY2025 growth reflected expanded NASA program scope, including engineering, mission operations, ground systems, cybersecurity, and IT. However, unfavorable contract-estimate changes increased to $1.4M from $0.4M, and higher indirect allocations weighed on segment income. In 9M2026, reduced eMITS task-order funding and completion of FOMMS and SEAM drove lower revenue; cost control and cost recovery partly offset the impact. Commercial Services remained small. FY2025 profitability improved with better calibration-lab utilization, lower overhead allocations, and the absence of prior-year facility-transition costs; RSAA multimedia work for United Launch Alliance also contributed. In 9M2026, attrition constrained direct-labor capacity and an unfavorable direct-to-indirect labor mix pressured results.

Cash flows and liquidity

FY2025 operating cash flow improved mainly because receivables decreased $6.7M, compared with a $5.0M increase in FY2024, reflecting collection and billing timing. In 9M2026, operating cash flow reversed to an outflow, a $11.0607M deterioration, primarily due to a larger increase in receivables, a smaller favorable change in payables and accrued liabilities, and lower accrued wages versus an increase in the prior-year period. FY2025 investing outflow mainly reflected fixed-asset purchases. 9M2026 financing included $1.5M of common-stock proceeds and $0.7M of net credit-line borrowings, offset by $1.0M of deferred offering-cost payments and $0.5M of shareholder distributions.

Cash was $3.7M at September 30, 2026, compared with $7.5M at December 31, 2025 and $3.1M at December 31, 2024. Management expects cash, operating cash flow, and available revolving credit to fund working capital for at least 12 months, while noting that needs depend on growth, contract timing and renewals, and economic conditions. Anticipated IPO proceeds are also a potential liquidity source.

On June 10, 2026, RDEV replaced the RDI and REI credit lines with an asset-secured Truist revolver of up to $8.0M, maturing June 10, 2027, at Term SOFR plus 1.75%. Approximately $5.0M was drawn to repay the prior lines; approximately $5.0M was outstanding and $3.0M available at September 30, 2026 and the prospectus date. Total indebtedness at September 30, 2026 was approximately $5.2M, including $5.1M current and $0.03M non-current. At December 31, 2025, debt was approximately $4.3M, including $4.2M on the RDI line and approximately $18,000 on a Frost Bank equipment loan, repaid in April 2026. The company intends to use some IPO proceeds to reduce debt.

Risks, related-party obligations, and strategy

Profitability is sensitive to labor utilization, indirect-cost rates, allowable costs, joint-venture partners, and contract estimates. Net unfavorable contract-estimate adjustments were $1.5M in FY2025 versus $0.5M in FY2024, reducing margins despite revenue growth. NASA concentration creates material exposure to reductions or losses of major government contracts; fixed-price work carries greater financial risk because estimates depend on completion timing, labor productivity, overhead, and subcontractor performance. Commercial expansion targets calibration, engineering, IT, and multimedia, but remains constrained by customer demand, engagement timing, and labor capacity. RDEV also expects higher public-company costs for compliance, audits, insurance, investor relations, and legal services.

The company and its owners guarantee a $2.1M construction-permanent loan to related-party K&TH Properties, which owns RDEV’s headquarters; RDEV is not the borrower but could be liable upon default. The company makes distributions sufficient for CEO Karen Wheeler-Hall’s seller-note payments; approximately $2.4M of IPO proceeds is intended for a one-time distribution to repay the note and related taxes. From December 2025 through September 30, 2026, RDEV sold 2.074M Class B shares at $1.00 per share, raising approximately $2.1M gross, primarily for IPO costs and general corporate purposes, and issued 544,450 Class B shares for offering-related services. The company reports no material off-balance-sheet arrangements apart from the described guarantee.

Financial performance

FY2025 revenue increased 7.7% year over year, while revenue for the nine months ended September 30, 2026 fell 5.6%. Attributable net income declined approximately 24.4% in FY2025 and approximately 99.5% in 9M 2026.

Government Services accounted for nearly all FY2025 revenue. Cost-plus-fee contracts contributed $117.2M, or approximately 92.7% of FY2025 revenue; the remainder came from fixed-price and time-and-materials contracts. Joint ventures generated $99.9M of FY2025 revenue, described as a substantial majority of consolidated revenue.

Business, customers and backlog

Rothe provides mission-critical infrastructure and engineering services, primarily to U.S. government customers, particularly NASA. NASA represented the substantial majority of FY2025 revenue, and the top five customers together represented more than 93%. Work includes operating NASA’s Neutral Buoyancy Laboratory—the primary astronaut EVA training and mission-simulation facility supporting the ISS and Artemis—as well as mission operations, broadcast, ground systems, engineering, IT and cybersecurity. Commercial Services, principally precision calibration and metrology, remains small.

Backlog was approximately $635M as of September 30, 2026. It includes expected revenue under awarded contracts, including option years, after execution of a legally binding agreement, but is not assured of conversion: customers may terminate, amend or cancel contracts. Federal awards and programs are also exposed to annual appropriations, budget priorities and government audits, including DCAA reviews.

The company competes for NASA and other federal awards against small and mid-sized contractors as well as large defense and aerospace firms. It cites a 57-year operating history, incumbent positions on mission-critical NASA programs, a cleared specialized workforce and execution record as strengths. Its competitive advantage rests primarily on operational expertise, institutional knowledge, workforce capabilities and customer relationships, rather than material patents or other registered intellectual property.

Joint ventures and strategic developments

ROAR, a consolidated 51%-owned RDI/ARES venture, performs NASA’s eMITS and MDA’s CCRM contracts. ROAR—not the separate ROAR2 venture—holds NASA SEWP VI Category B and C awards, each with a 10-year ordering period from November 1, 2026 through October 31, 2036; orders may be completed up to 60 months after the ordering period ends. ROAR2 was formed in September 2025 with the same 51%/49% ownership structure. Expiration of the RDI/ARES SBA mentor-protégé relationship, approved for six years from July 15, 2020, does not itself end existing JV awards; the company may seek another qualifying mentor relationship.

RX2JV (51% RDI) remained in business development without contract awards as of December 31, 2025. QTS Rothe JV received the company’s OASIS+ contract vehicle by transfer for nominal consideration in December 2025 and had no other awards; Pabulum-Rothe JV also remained in business development without awards. Rothe consolidates ROAR and RX2JV and uses the equity method for QTS Rothe and Pabulum-Rothe; it lacks unilateral control over its equity-method ventures, creating partner-dependence and governance risks.

Operations, strategy and risks

As of September 30, 2026, Rothe had approximately 385 employees and 53 subcontractors, including 159 in Government Multimedia, 75 in Government Engineering Services, 90 in Government IT Services, 33 in commercial Calibration and 28 in corporate G&A/overhead. Specialized expertise, clearances and certifications support work in mission-critical and classified settings. The workforce and JV workforce include unionized employees under agreements extending through 2027–2030; the company reported no strikes or organized work stoppages. Hiring and retaining qualified personnel with active clearances is important amid intense competition.

Rothe primarily provides technical services, while also performing customer-directed fabrication and manufacturing. Its calibration services are supported by ISO/IEC 17025 and ANSI/NCSL Z540 accreditations. Management aims to diversify customers and grow commercial and higher-margin offerings, including calibration and metrology, digital infrastructure and data-center operations, cybersecurity, commercial space and national-security work, advanced technical solutions, partnerships and selective acquisitions. Potential demand drivers include Artemis and other space programs, defense and national-security spending, data-center and IT modernization, AI and cloud adoption, cybersecurity, advanced communications and regulated-industry calibration needs.

The company leases rather than owns property and relies substantially on government-furnished NASA and MDA facilities; losing a contract could also affect facility access. Its 10,024-square-foot Webster, Texas headquarters and laboratory is leased under two 25-year leases expiring June 1, 2048, from a related party owned by members of the Hall family, including the President and COO. Combined monthly base rent is approximately $19,231 before triple-net expenses. A 1,053-square-foot San Antonio office lease began October 1, 2025, at approximately $2,106 monthly base rent.

Other risks include contract termination, pricing and cost rules, disclosure obligations, limited or sole-source suppliers, shortages, quality problems, price increases, tariffs and delivery delays. Government-funded technical data and software may carry government-use or disclosure rights, and the company also uses third-party and open-source software. Rothe reported no legal proceedings it believes would have a material adverse effect, while noting that future litigation outcomes are uncertain.

Board structure and control

After the offering, RDEV expects a five-member board with three independent directors: Stuart White, Jamie Adams, and Nick Lampson. The three independent nominees will serve on all board committees. White will chair Audit and is the audit committee financial expert; Adams will chair Compensation; and Lampson will chair Nominating and Corporate Governance. CEO and Chairman Karen Wheeler-Hall and President and COO Thomas H. Hall III are designated non-independent and will have no committee assignments.

Wheeler-Hall is the sole holder of Class A common stock, which carries five votes per share, and is expected to control approximately [●]% of combined voting power after the offering. RDEV will qualify as a Nasdaq “controlled company” and could use exemptions from requirements for a majority-independent board and fully independent Compensation and Nominating and Corporate Governance committees. The company currently does not intend to use those exemptions and expects a majority-independent board and committees composed entirely of independent directors, but says it will disclose annually whether it relies on any exemptions. Future reliance could reduce governance protections for Class B shareholders. Wheeler-Hall is married to Hall, concentrating the two top executive roles within the family alongside her voting control.

Management and director experience

Wheeler-Hall has served as CEO and chair for five years, leading strategy, government-customer relationships, and growth initiatives, including expansion into adjacent commercial markets. Hall has been President and COO for five years, overseeing operations, program execution, business development, contract management, and operating performance.

Walter Medsger became CFO in February 2026, reporting to Wheeler-Hall. He oversees financial reporting, internal controls, audits, SEC compliance, financial systems, and finance and accounting. His more than 34 years as CFO of government contractor Cimarron Software Services provides experience relevant to federal-contracting financial systems, audits, and compliance.

The independent nominees’ backgrounds align with RDEV’s government, aerospace, and space businesses: White brings government-contractor finance, SEC reporting, and audit experience; Adams brings aerospace engineering, space-systems, and commercial-space executive and board experience; and Lampson brings congressional and government-affairs experience, including space and aeronautics oversight.

Governance policies

RDEV has adopted or plans to implement committee charters before offering completion, a code of conduct effective upon offering completion, and an insider-trading policy effective upon Nasdaq listing. The trading policy provides for trading windows, blackout periods, and director and executive-officer pre-clearance; sets guidelines for Rule 10b5-1 trading arrangements; and prohibits short sales, hedging, and other speculative transactions in company securities. RDEV says it will provide disclosures and exhibit filings required by Regulation S-K Item 408(b) in subsequent Exchange Act reports.

The company also has a mandatory clawback policy for incentive compensation erroneously awarded following qualifying accounting restatements. No Compensation Committee member is or has been a company executive officer or employee, and no company executive officer currently serves—or served during the prior year—on the board or compensation committee of an entity with an executive officer serving on RDEV’s board or Compensation Committee.

Executive and director compensation

Named executive officer compensation in FY2025 consisted entirely of salary. Neither Karen Wheeler-Hall nor Thomas H. Hall III received reported bonuses, equity awards, incentive compensation, or other compensation in FY2024 or FY2025. Walter Medsger became CFO in February 2026 and received no Company compensation in those fiscal years.

The CEO and COO’s employment agreements take effect at the offering’s closing and run for three years. They permit discretionary performance bonuses and salary increases, with annual base salaries shown as placeholders in the filing. In specified circumstances, each agreement provides for up to 12 months of base-salary severance, generally subject to a release, and includes two-year noncompetition, nonsolicitation, and nondisparagement provisions, subject to applicable law. Medsger’s February 2026 at-will offer letter sets a $200,000 annual base salary and makes him eligible for salary-based incentives, future equity programs, and performance-based cash incentives.

Before the offering, non-executive directors received no compensation other than expense reimbursements. Independent directors are to receive an $80,000 restricted stock unit grant under the 2026 Equity Plan and $60,000 in annual cash compensation. The filing also states that the exercise price per share of stock options will equal the IPO price.

Equity plans and potential dilution

The 2026 Equity Incentive Plan initially reserves 10.0 million Class B shares. From FY2027 through FY2036, its annual reserve increases by the lesser of 5% of prior-year-end fully diluted common shares, 5.0 million shares, or a lower amount set by the Board. Full-value awards use 1.5 reserve shares per share issued; options and SARs use a 1:1 ratio. Shares withheld for taxes, used to pay option exercise prices, or repurchased in the open market with option proceeds do not return to the reserve. No awards were outstanding under the plan as of September 30, 2026.

The plan permits options, SARs, restricted stock and RSUs, performance awards, and other stock- or cash-based awards. Most awards cannot vest before the first anniversary, subject to limited exceptions. Annual individual limits are 2.0 million shares for options/SARs and 1.0 million shares for full-value awards (or $5.0 million for cash-denominated full-value awards). For nonemployee directors, annual grant-date fair value plus cash fees is capped at $500,000. Change-of-control vesting is generally double-trigger when awards are assumed or replaced: acceleration requires a qualifying termination within 24 months. Awards not assumed or substituted vest immediately before the transaction; performance awards are treated as achieved at the greater of target or actual performance. Repricing options or SARs requires stockholder approval, and the plan expires on its tenth anniversary.

The separate 2026 ESPP initially reserves 5.0 million shares, with annual increases from FY2027 through FY2036 equal to the lesser of 1.5% of prior-year-end fully diluted common shares, 1.5 million shares, or a lower Board-set amount. This reserve is additional to the Equity Plan. Eligible employees may contribute 1%–15% of compensation, subject to a $25,000 annual purchase limit measured at grant-date fair value and a 2,500-share limit per purchase period. Approximately 24-month offering periods include four approximately six-month purchase periods; shares are purchased at 85% of the lower of enrollment-date or exercise-date fair market value and are subject to a one-year holding period. The Board may amend or terminate the ESPP, which otherwise expires after ten years. No options were granted or exercised, and none vested, for named executive officers or senior management in 2025 or 2024.

Related-party arrangements and transactions

The Company leases approximately 10,024 square feet of office and laboratory space in Webster, Texas, from K&TH Properties, which is owned by the CEO, COO, and their family members. The two leases run from June 2023 to June 2048 and carry combined base rent of approximately $19,231 per month plus triple-net expenses. The Company says an independent appraisal found the terms consistent with market rates.

The Company and its owners guarantee K&TH’s $2.08 million construction-permanent loan; the outstanding balance was approximately $2.0 million at December 31, 2025. A K&TH default could make the guarantee a direct Company liability. The Company also leases approximately 1,053 square feet in San Antonio from Rothe San Antonio Calibration, LLC, under a 24-month lease beginning October 1, 2025, at approximately $2,106 monthly base rent plus triple-net expenses. It no longer leases its former San Antonio office.

The Company made distributions to CEO and sole Class A holder Karen Wheeler-Hall to support her personal payments on a seller note related to her 2021 acquisition of the Company and Rothe Enterprises for $4.5648 million. The Company is not directly liable for the note but has historically made distributions sufficient to service it.

The seller note is secured by her Class A shares and imposes transfer and encumbrance, business-sale consent, and distribution restrictions. The Company intends to use approximately $2.4 million of IPO net proceeds for an IPO Class A Distribution to repay the remaining seller note and related taxes. The transaction was approved by the Board and shareholders, including Class B holders voting separately. Afterward, distributions must be equal per share across Class A and Class B; previously approved Class A-only distributions of approximately $70,000 per month will cease unless matched by ratable Class B distributions. The note restrictions could constrain corporate actions until repayment.

Separately, the CEO advanced the Company $150,000 in May 2023 for working capital. The unsecured, non-interest-bearing loan is payable on demand and remained $150,000 at September 30, 2026 and December 31, 2025; the Company intends to repay it from operating cash flow after the offering.

The pre-IPO Stockholders Agreement gives the CEO rights of first refusal, drag-along rights, and tag-along rights over minority-stockholder transfers; it terminates upon the IPO. A related-party transaction policy takes effect at offering completion, with the audit committee assessing relevant facts, including whether terms are comparable to arm’s-length terms.

Beneficial ownership and voting control

As of September 30, 2026, Rothe Development had 30.0 million Class A shares and 2.61845 million Class B shares outstanding. Class A shares carry five votes each, compared with one vote per Class B share, for 152.61845 million total votes before the offering.

Karen Wheeler-Hall held all 30.0 million Class A shares. She therefore controlled approximately 98.284% of pre-offering voting power while owning about 92% of outstanding common shares, reflecting a significant concentration of voting control.

The table reports no shares for the other named officers and directors. Wheeler-Hall is CEO and is married to Thomas H. Hall III, the company’s President and COO. The directors and executive officers group total includes Wheeler-Hall’s 30.0 million Class A shares and an unspecified amount of Class B shares.

The offering is a sale of Class B shares and assumes no exercise of the over-allotment option. Post-offering Class B holdings, total shares, and voting-power percentages are presented as placeholders, so the filing section does not allow post-offering dilution or voting control to be quantified. Class A shares may be converted into Class B shares one-for-one at the holder’s election; a transfer alone does not automatically trigger conversion.

Capital structure and voting control

The Company is authorized to issue 120.0 million shares, all with $0.001 par value: 30.0 million Class A common shares, 70.0 million Class B common shares, and 20.0 million preferred shares. Immediately before the offering, 30.0 million Class A and 2.61845 million Class B shares were outstanding; no preferred shares were outstanding.

Class A shares carry five votes per share, compared with one vote per Class B share. Karen Wheeler-Hall holds all outstanding Class A shares. The prospectus says she is expected to control approximately [●]% of combined voting power after the offering, but leaves the percentage blank. Class A holders may convert their shares into Class B shares one-for-one. A transfer does not automatically convert Class A shares, so voting control may transfer with them. Class B shares have no conversion rights. This dual-class structure can concentrate control and allow it to shift without Class B-holder approval or a control premium.

On January 7, 2026, 170 outstanding Voting Common shares were automatically recapitalized into 30.0 million Class A shares, all held by Wheeler-Hall. The October 23, 2026 Second Amended and Restated Articles replaced the prior charter without changing authorized or outstanding share counts.

Offering-related distribution and dilution

The charter authorizes a one-time $2.4 million cash distribution exclusively to Class A holders, payable only in connection with or promptly after the offering. The distribution is intended to repay Wheeler-Hall’s seller note, secured by a pledge of Company shares, and cover her related tax liabilities; Class B holders receive no portion. If the offering is abandoned or the distribution is not made in connection with closing, the authorization expires unless reapproved. After payment or expiration, the classes participate equally, share-for-share, in common-stock distributions, subject to preferred-stock rights and applicable law.

As of September 30, 2026, no warrants or options were outstanding. In connection with the offering, the underwriter will receive warrants for shares equal to 6% of the Class B shares issued in the offering, including any over-allotment shares. The warrants are exercisable at 120% of the IPO price for five years and could dilute common shareholders.

Governance provisions and shareholder rights

The Board may issue up to 20.0 million preferred shares in one or more series and set their rights without further shareholder action. Preferred shares could have voting or conversion rights adverse to common holders, impede a change of control, or weigh on the Class B market price.

Several provisions may limit shareholder influence or delay or prevent a change in control. The Company has no cumulative voting; the Board alone may fill vacancies and newly created directorships; and special meetings generally require demands by holders of at least 25% of voting power who have held shares continuously for one year. Advance-notice rules apply to director nominations and shareholder proposals. Shareholders need 66% of voting power to amend the bylaws, while the Board may amend them without shareholder approval. Eligible shareholders may use proxy access subject to ownership and procedural requirements.

The charter selects Texas courts for specified internal corporate claims, and the bylaws select federal courts for Securities Act claims, subject to jurisdictional limitations. The Company has elected into TBOC Section 21.419, whose statutory provisions may establish presumptions for directors and officers and constrain derivative proceedings and books-and-records demands; the filing notes a general 3% beneficial-ownership threshold for certain derivative proceedings, subject to the statutory framework. A jury-trial waiver applies to internal entity claims unless the Company consents otherwise, though its enforceability and application could be uncertain if challenged. The Company has not elected into TBOC Section 21.373, which could impose additional shareholder-proposal requirements if elected later.

Registration rights and listing

Pre-IPO private-placement investors permanently waived their piggyback registration rights, and no registration rights remained outstanding as of the prospectus date. Their shares remain subject to lock-up agreements.

The Company has applied to list its Class B common stock on Nasdaq under ticker RDEV. The offering is conditional on listing, but Nasdaq approval and satisfaction of initial listing requirements are not assured; the Company expects listing on or promptly after the registration statement becomes effective.

Shares Eligible for Future Sale

Before the offering, no public market existed for RDEV’s common stock. The number of Class B shares that will be outstanding after the offering, based on shares outstanding as of September 30, 2026, and the number of shares sold in the offering are undisclosed in the filing ([●]).

Shares sold in the offering generally may be resold immediately, except for shares held by affiliates or otherwise subject to lock-up restrictions. The remaining outstanding shares—including Class B shares issuable upon conversion of Class A common stock—are restricted securities and generally may be sold publicly only if registered or if an exemption from registration is available.

Lock-up restrictions and resale eligibility

The company, its officers and directors, and pre-IPO stockholders agreed, subject to exceptions, not to dispose of or hedge common stock or related securities for 180 days after the offering closes without the underwriter’s consent. The underwriter may release shares from the lock-up early. Existing-holder shares may become eligible for sale when the 180-day lock-up expires or is waived, subject to applicable resale limits.

• Rule 144: Eligible non-affiliates generally may sell restricted shares after six months if current public information is available, or after one year without that requirement. Affiliate resales are subject to public-information, manner-of-sale, notice, and volume limitations.
• Rule 701: Eligible shares issued under compensatory plans generally may be sold beginning 90 days after the prospectus date, subject to lock-ups. Qualifying non-affiliates are exempt from specified Rule 144 restrictions.

Potential future share supply

RDEV may issue additional shares to raise capital, upon warrant exercises, under equity awards and employee plans, or in connection with acquisitions, investments, and other strategic transactions. The filing warns that these issuances could be significant and dilute existing stockholders.

The company intends to register shares reserved under its 2026 Equity Incentive Plan and 2026 Employee Stock Purchase Plan on Form S-8 as soon as practicable after the offering. Registered shares generally may become freely saleable, subject to vesting requirements, lock-ups, and restrictions applicable to affiliates.

Material U.S. Federal Income Tax Consequences

The company does not anticipate paying cash dividends on its Class B common stock in the foreseeable future. If it makes distributions, they generally are treated as dividends only to the extent of current or accumulated earnings and profits. Any excess first reduces a holder’s tax basis; any remaining amount may be treated as gain.

U.S. holders

Qualifying dividends may be taxed at preferential rates for eligible individuals and may qualify for the dividends-received deduction for eligible corporate holders. Gains or losses on taxable dispositions generally are capital gains or losses; qualifying gains on shares held for more than one year may receive long-term capital-gain treatment. Certain higher-income individuals, estates, and trusts may also owe the 3.8% net investment income tax on dividends and disposition gains.

Non-U.S. holders

U.S.-source dividends generally are subject to 30% withholding, potentially reduced by treaty or excepted for effectively connected income. Effectively connected dividends are taxed on a net basis, and foreign corporate holders may also be subject to a 30% branch-profits tax, potentially reduced by treaty.

Non-U.S. holders generally are not subject to U.S. tax on gains from stock sales unless the gain is effectively connected with a U.S. trade or business, an individual holder meets the 183-day presence test and other conditions, or the company is or becomes a U.S. real property holding corporation (USRPHC). The company believes it is not, and does not expect to become, a USRPHC, but cannot assure this because the test depends on the fair market value of U.S. real property relative to other relevant assets.

Scope and compliance considerations

The discussion principally addresses holders who own shares as capital assets. It does not cover numerous special-status holders or non-U.S., state, or local tax consequences. It is based on current law and interpretations, which may change, potentially retroactively.

Dividend and sale-proceeds reporting or backup withholding may apply if holders do not provide appropriate tax forms or establish an exemption. FATCA may impose 30% withholding on dividends paid to certain non-U.S. financial institutions and entities that do not satisfy applicable reporting, certification, or exemption requirements. Proposed regulations eliminate FATCA withholding on gross sale proceeds, and taxpayers generally may rely on those regulations pending final regulations.

Underwriting and offering terms

Titan Partners Securities LLC is the sole book-running manager. The underwriting discount and commission is 7% of offering proceeds. The company will reimburse up to $150,000 of documented accountable expenses and pay a non-accountable allowance equal to 0.25% of gross proceeds. A $25,000 retainer already paid will be credited against accountable expenses; any unused balance is refundable if the engagement or offering ends. The filing text summarized here does not provide the IPO price, number of shares, total proceeds, per-share selling concession, or estimated offering expenses, so total proceeds and underwriting compensation cannot be determined.

For 30 days after closing, the underwriter may purchase up to 15% of the shares sold to cover over-allotments, at the IPO price less underwriting discounts and commissions. The underwriter will also receive warrants for 6% of the Class B shares sold, including over-allotment shares. The warrants are exercisable at 120% of the IPO price, may be exercised on a cashless basis, expire five years after the prospectus date, and—along with the underlying shares—are subject to a 180-day FINRA lock-up.

For qualifying financing transactions within 12 months after the specified engagement or closing trigger, the underwriter may earn a 7% cash fee and warrants for 6% of securities issued, but only with respect to investors it introduced in writing and with whom it had substantive discussions, subject to stated exclusions. It also has a 12-month right of first refusal to act as sole bookrunner, underwriter, or placement agent for covered equity or equity-linked financings.

The company, its officers and directors, and existing stockholders are generally subject to 180-day lock-ups, with exceptions and underwriter-consent provisions. These restrictions may limit near-term sales or additional registered offerings. The offering is conditional on Nasdaq approving the Class B shares for listing under RDEV; if approval is not obtained, the offering will not close. With no prior public market, the negotiated offering price is not represented as fair value or as assurance that shares can be resold at or above that price. The underwriter may conduct stabilization, short-covering, and penalty-bid transactions that could temporarily support the trading price, but may discontinue them at any time.

Jurisdictional offering restrictions

• Israel: Distribution is limited to qualified investors, who must confirm eligibility in writing.
• Japan: The securities are unregistered and generally cannot be offered or sold to Japanese residents except under an applicable exemption and in compliance with local law.
• Singapore: Offers are limited to specified investor categories and qualifying transactions; six-month transfer restrictions apply to certain investment-holding corporations and trusts.
• Switzerland: There is no public offer, Swiss exchange listing, or regulatory approval, and Swiss collective-investment-scheme protections under CISA do not apply.
• United Kingdom: Offers are limited to specified exemptions, and the prospectus is directed only to relevant persons.

The prospectus includes the company’s combined financial statements as of and for the years ended December 31, 2025 and 2024, relying on the report of M&K CPAS PLLC, an independent registered public accounting firm named as an accounting and auditing expert.

Holland & Hart LLP of Salt Lake City, Utah, will provide the opinion on the validity of the securities offered under the prospectus. The underwriter is represented by McGuireWoods LLP of New York, New York.

Where to Find More Information

Rothe Development, Inc. has filed a registration statement on Form S-1. The prospectus directs investors to that registration statement and its exhibits for additional information about the company and the offering.

Following the offering, the company expects to become subject to the reporting requirements of the Securities Exchange Act of 1934 and to file annual, quarterly, and current reports, as well as proxy materials. SEC filings will be accessible through the SEC and the company’s investor-relations website. The prospectus expressly states that website content is not part of the prospectus and should not be relied on in making an investment decision.

This section contains no financial metrics, business developments, or company-specific operating risks.

Rothe Development, Inc. — financial statements and notes

Consolidated operating results

Revenue fell 5.6% in 9M 2026; gross margin was approximately 6.3%, versus 6.2%. FY2025 revenue grew 7.7%, but higher costs and G&A drove an operating loss. FY2025 included a $1.6935M employee retention credit; 9M 2025 included $1.174M of that income, compared with none in 9M 2026. FY2025 reported pretax income of $0.622M, a $0.168M tax benefit, and net income of $0.790M, which do not arithmetically reconcile as presented.

Segment results

About 97% of revenue in both annual and interim periods came from direct U.S. government agency contracts. Cost-plus-fee arrangements dominate Government Services; Commercial Services revenue is fixed-price. In FY2025, net contract-estimate revisions were $1.3520M unfavorable, versus $0.3589M unfavorable in FY2024. Cost-to-cost revenue recognition depends on estimates of contract costs and completion; revisions can affect recognized revenue and profit, and expected contract losses are accrued when identified. REI merged into Rothe effective January 1, 2026 under common control.

Cash flow and capital allocation

Interim operating cash flow deterioration included an $8.133M receivables-related cash use, versus $3.048M. FY2025 operating cash flow benefited from a $6.706M receivables cash source, compared with a $4.969M use in FY2024. Cash ended at $3.690M in September 2026, versus $7.308M in September 2025 and $7.525M at FY2025 year-end.

Balance sheet and financing

The first two columns compare September 2026 with year-end 2025; the last two show the annual comparison. Goodwill and intangible assets other than goodwill are not separately presented. Receivables growth—from $14.963M at year-end 2025 to $23.096M in September 2026—was chiefly billed receivables; the expected-credit-loss allowance was zero at September 2026, versus $38,636 at year-end 2025.

A June 2026 $8.0M Truist secured revolving facility, maturing June 10, 2027 at Term SOFR plus 1.75%, replaced the RDI and REI credit lines. September gross principal on the facility was $5.0142M, leaving $2.9858M available; total debt was $5.1959M. The facility is secured by all company assets. A $150,000 unsecured, non-interest-bearing shareholder loan is payable on demand. Management says continuation as a going concern depends on financing, but believes cash, operating cash flow and available borrowing can cover at least 12 months of anticipated needs.

Ownership, obligations and other risks

At September 30, 2026, 30.0M Class A and 2.61845M Class B shares were outstanding; Class A shares were 30.0M at both the start and end of the nine-month period. Class A shares, all held by the CEO, carry five votes each and convert one-for-one into Class B shares. Weighted-average shares for 9M 2026 were 32.291M, versus 30.000M; FY2025 shares outstanding were 30.0M at both year-end and the start of the year.

Class B subscriptions raised $2.074M gross by September 2026. Because Rothe must repurchase subscribed shares for $1.10 each if an IPO is not completed by January 31, 2027, proceeds are classified as a liability; potential repurchase on shares subscribed through September was $2.2814M. Rothe also issued 544,450 Class B shares for IPO-related services, valued at $544,450 and deferred as a cost of capital. Deferred offering costs were $1.8925M at September 2026.

The owner-related primary-office finance lease costs $19,230 monthly and runs through March 2047; its September 2026 liability was $2.0075M. Consolidated JVs had $75.606M of 9M 2026 revenue, a $39,372 operating loss, and $22.622M of assets against $21.949M of liabilities; the ROAR JV owed its other member $6.2842M. Government contract audits or adverse findings could lead to repayment, penalties, suspension/debarment or delayed payments, though management did not expect current matters to materially affect results. The FY2025/FY2024 audit opinion was unmodified; the auditor did not audit or opine on internal controls, and identified revenue recognition as a critical audit matter.