NOTE 6. PROPERTY AND EQUIPMENT, NET

For the six months ended June 30, 2026, the Company capitalized an additional $2.1 million of costs related to internal‑use software development to incorporate the Company’s commercial products into the system. The Company expects the development and full integration of the system to be completed by the end of 2026. Upon being placed into service, capitalized internally developed software costs are amortized on a straight‑line basis over an estimated useful life of seven years.

Depreciation and amortization expense for property and equipment was approximately $1.4 million and $1.1 million for the three months ended June 30, 2026 and 2025, respectively. Depreciation and amortization expense for property and equipment was $3.0 and $2.4 million for the six months ended June 30, 2026 and 2025, respectively.

During the first quarter of 2026, the Company recorded a charge for the write‑off of the remaining net book value of leasehold improvements related to an operating lease that was early terminated effective January 31, 2026. In connection with the early termination, the Company reduced its occupied square footage and entered into a new lease with the existing landlord. Fully depreciated leasehold improvements totaling $3.6 million were written off during the period. In addition, the Company recognized a gain of $721,839 related to the derecognition of the associated operating lease right‑of‑use asset and lease liability, which is included in general and administrative expense in the Company's condensed statement of operations.