8. Standby Equity Purchase Agreement

On December 20, 2024, the Company entered into the Standby Equity Purchase Agreement (the "SEPA"). Pursuant to the SEPA, the Company may require the investor to purchase up to $10.0 million of shares of Common Stock by delivering written notice to the investor.

The SEPA was accounted for as a liability under ASC 815 because it includes an embedded put option and an embedded forward option. The put option was recognized at inception and the forward option will be recognized upon the issuance of a notice for the sale of the Company’s Common Stock. The fair value of the derivative liability related to the embedded put option was estimated at $0.1 million at December 31, 2025. The SEPA put option liability is recognized as a current liability on the condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025, respectively. The change in estimated issuance date fair value is presented as a single line item within other income/(expense) in the accompanying condensed consolidated statements of operations under the caption, Change in fair value of SEPA put option liability. The embedded forward option was deemed to have no value at June 30, 2026 and December 31, 2025 because there were no notices for the sale of the Company’s Common Stock as of June 30, 2026 and December 31, 2025.