{"url_path":"/sec/devs/10-q/2026/item-1a","section_key":"item-1a","section_title":"Item 1A Risk Factors","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-06-15","source_url":"https://www.sec.gov/Archives/edgar/data/1854480/0001140361-26-025221-index.html","accession_number":"0001140361-26-025221","cik":"0001854480","ticker":"DEVS","issuer_name":"DevvStream Corp.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1854480/0001140361-26-025221-index.html","primary_entity_key":"0001854480","primary_entity_name":"DevvStream Corp."},"word_count":1998,"has_tables":true,"body_markdown":"Item 1A.\n\nRisk Factors\n\n \n\nFactors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our Annual Report on Form 10-K filed with the SEC on November 6, 2025. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. Except as set forth below, there have been no material changes to the risk factors previously disclosed under the caption “Risk Factors” in our Annual Report on Form 10-K.\n\n \n\nRisks related to the Business Combination Agreement\n\n \n\nThe pending Mergers with XCF, Southern, DevvStream Merger Sub, and Southern Merger Sub may be delayed or may not be completed, and the applicable Business Combination Agreement may be terminated in accordance with its terms.\n\n \n\nOn April 13, 2026, the Company entered into the BCA with XCF, Southern, DevvStream Merger Sub, and Southern Merger Sub. The Transactions contemplate (i) a domestication of the Company into a Delaware corporation, (ii) a merger of Southern Merger Sub with and into Southern, with Southern surviving as a wholly-owned subsidiary of XCF, pursuant to which existing equity in Southern will be exchanged for XCF Common Shares, and (iii) a merger of DevvStream Merger Sub with and into the Company, with the Company surviving as a wholly-owned subsidiary of XCF, pursuant to which each Company share will be cancelled and converted into the right to receive XCF Common Shares.\n\n \n\n68\n\n*Table of Contents*\n\nThe completion of the Mergers remains subject to the satisfaction or waiver of a number of conditions as specified in the BCA, including, among others, stockholder approvals of XCF and the Company, the absence of any law or order prohibiting the Mergers or the Domestication, receipt of requisite regulatory approvals, applicable stock exchange listing approvals, the effectiveness of the registration statement, completion of the Domestication, certain financial and operational milestones (including annualized blended fuel product revenues in excess of $1.0 billion and minimum annualized EBITDA of $100 million), the approval by the State of Louisiana for Southern to issue bonds in an aggregate principal amount of at least $400,000,000, and dissent rights not having been exercised with respect to more than 3% of the issued and outstanding XCF Common Stock or Company Shares. No assurance can be given as to the timing of the satisfaction or waiver of these conditions or that these conditions will be satisfied or waived at all. Accordingly, there can be no assurance as to whether or when the Mergers will be completed.\n\n \n\nIn addition, any of Southern, XCF, or the Company may terminate the BCA under certain circumstances, including if the Mergers are not completed by the ten (10) month anniversary of the date of the BCA (subject to a one-time thirty (30)-day extension upon mutual written agreement). XCF may also terminate if it enters into a Superior Proposal, and the Company may also terminate if it enters into a Superior Proposal. Certain termination events may result in the payment of termination fees.\n\n \n\nLitigation relating to the Mergers, if any, could delay or prevent the completion of the Mergers and result in substantial costs to the Company.\n\n \n\nGovernmental authorities or other third parties with appropriate standing may file litigation challenging the Mergers and seeking an order enjoining or otherwise delaying or prohibiting the completion of the Mergers. If any such litigation is successful, then such order may prevent the Mergers from being completed, or from being completed within the expected time frame. There can be no assurance that the Company or any other defendants would be successful in the outcome of any potential future lawsuits. Even if a lawsuit is without merit, it could result in substantial costs to the Company and divert management time and resources.\n\n \n\nFailure to complete the Mergers could negatively impact the Company.\n\n \n\nIf the Mergers are not completed for any reason, the ongoing business and financial condition of the Company may be adversely affected, including in the following ways:\n\n \n\n●\n\nthe Company may experience negative reactions from the financial markets, including negative impacts on the market price of its common shares;\n\n●\n\nthe Company may experience negative reactions from its suppliers, distributors, vendors, customers or other third parties with whom it does business;\n\n●\n\nthe Company may experience negative reactions from employees;\n\n●\n\nthe Company will have incurred, and may continue to incur, significant costs relating to the Mergers, such as investment banking, legal, accounting and financial advisor fees and expenses, that it may not be able to recover;\n\n●\n\nthe Company will have expended significant time and resources that could otherwise have been spent on its existing business or the pursuit of other opportunities without realizing any of the potential benefits associated with the Mergers; and\n\n●\n\nthe Company may face litigation related to the failure to complete the Mergers or an enforcement proceeding with respect to its obligations under the BCA.\n\n \n\nIn addition, if the BCA is terminated and the Company seeks an alternative transaction, there can be no guarantee that it will be able to find or complete an alternative transaction on more attractive terms than the Mergers or at all.\n\n \n\nThe BCA restricts the Company’s business activities prior to the completion of the Mergers.\n\n \n\n69\n\n*Table of Contents*\n\nThe BCA places certain restrictions on the operations of the Company and restricts the Company from taking certain other specified actions without the consent of XCF and Southern until the completion of the Mergers or the termination of the BCA. These restrictions, which could be in place for an extended period of time if the completion of the Mergers is delayed, could prevent the Company from pursuing attractive business opportunities that may arise prior to completion of the Mergers or from making appropriate changes to business or organizational structure. This could in turn adversely impact the Company’s results of operations, financial condition and cash flows.\n\n \n\nThe Mergers, including uncertainty regarding the Mergers, could disrupt the Company’s business relationships and adversely affect the Company’s ability to effectively manage its business.\n\n \n\nAs discussed above, the completion of the Mergers is subject to the satisfaction or waiver of several conditions. Many of these conditions are outside the Company’s control. Furthermore, each of the Company, XCF, and Southern have certain rights to terminate the BCA. Accordingly, there may be uncertainty regarding the completion of the Mergers. This uncertainty may cause customers, suppliers, vendors, strategic partners or other parties that have business relationships with the Company to delay or defer entering into contracts with, or making other decisions concerning, the Company or to seek to change or cancel existing business relationships with the Company, which could negatively affect the Company’s business regardless of whether the Mergers are ultimately completed. This could in turn adversely impact the Company’s results of operations, financial condition and cash flows.\n\n \n\nThe Mergers, regardless of whether they are completed, will continue to divert resources from ordinary operations, which could adversely affect the Company’s business.\n\n \n\nThe Company has diverted the attention of management and other resources to the Mergers. Whether or not the Mergers are completed, the pendency of the Mergers will continue to divert the attention of management and other resources from day-to-day operations to the completion of the Mergers. This diversion of management attention and other resources could adversely affect the Company’s ongoing business regardless of whether the Mergers are completed.\n\n \n\nThe Company has incurred and expects to continue to incur significant merger-related costs.\n\n \n\nThe Company has incurred and expects to continue to incur a number of non-recurring costs associated with negotiating and completing the Mergers. These costs and expenses have been, and will continue to be, significant. These costs and expenses include fees paid or payable to financial, legal and accounting advisors, potential employment-related costs, filing fees, printing expenses and other related charges. Some of these costs are payable by the Company regardless of whether the Mergers are completed. While the Company has assumed that a certain level of expenses would be incurred in connection with the Mergers, there are many factors beyond its control that could affect the total amount or the timing of these expenses. These costs and expenses could adversely impact the Company’s financial condition and liquidity.\n\n \n\nUncertainties associated with the Mergers could negatively impact the Company’s ability to attract, motivate and retain management personnel and other key employees.\n\n \n\nCompetition for qualified personnel can be intense. Current and prospective employees of the Company may experience uncertainty about their future role until strategies with regard to these employees are announced or executed, which may impair the Company’s ability to attract, retain and motivate key management, sales, marketing, and other personnel prior to completion of the Mergers. Employee retention may be particularly challenging as employees may experience uncertainty about their future roles with the combined company. If the Company is unable to retain personnel, including key management personnel, it could face disruptions in its operations, loss of existing customers, loss of key information, expertise or know-how, and unanticipated additional recruitment and training costs.\n\n \n\n70\n\n*Table of Contents*\n\nFailure to meet Nasdaq’s continued listing requirements could result in the delisting of our common shares, negatively impact the price of our common shares and negatively impact our ability to raise additional capital.\n\n \n\nOn November 18, 2025, DevvStream Corp. received a deficiency letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC notifying the Company that its net income from continuing operations had fallen below the minimum requirement for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(3) and that the Company does not meet the alternatives of market value of listed securities or stockholders’ equity. In accordance with Nasdaq Listing Rule 5810(c)(2)(C), the Company has until January 2, 2026, which is 45 calendar days from the date the Notice was received, to provide Nasdaq with a plan to regain compliance with the Continued Listing Standards (the “Compliance Plan”).\n\n \n\nOn February 23, 2026, the Company received a letter from Nasdaq notifying the Company that based on the Compliance Plan and materials the Company submitted to Nasdaq, the Nasdaq Staff had granted the Company an extension until May 18, 2026 to regain compliance with the Continued Listing Standards, which requires a minimum $2,500,000 stockholders’ equity, $35,000,000 market value of listed securities, or $500,000 net income from continuing operations. There can be no assurance that the Company will be successful in achieving its Compliance Plan, or that the Company will be able to regain or maintain compliance with the Continued Listing Standards.\n\n \n\nSubsequently, on May 19, 2026, the Company appeared before the Panel at a hearing regarding the Company’s continued listing on Nasdaq. On May 20, 2026, due to the expiration of the Net Income Compliance Extension, the Company received formal notification that it has not regained compliance with the Net Income Requirement and that, accordingly, the Panel will consider the Net Income Deficiency in their decision regarding the Company’s continued listing on Nasdaq, in addition to considering the Company’s lack of compliance with the Minimum Bid Price Rule. In connection with the Panel’s review, the Company provided supplemental written submissions to Nasdaq on May 22, 2026 and June 10, 2026. The Company is currently awaiting a decision from the Panel.\n\n \n\nIf our common shares are delisted, it could reduce the price of our common shares and the levels of liquidity available to our stockholders. In addition, the delisting of our common shares could materially adversely affect our access to the capital markets and any limitation on liquidity or reduction in the price of our common shares could materially adversely affect our ability to raise capital. Delisting from The Nasdaq Capital Market could also result in other negative consequences, including the potential loss of confidence by suppliers, customers and employees, the loss of institutional investor interest and fewer business development opportunities.\n\n \n\n71\n\n*Table of Contents*"}