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NATURE OF THE BUSINESS AND PRESENTATION</span></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Overview</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p><p style="text-align: left; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">Spectral AI, Inc., a Delaware corporation (the “Company”) is an Artificial Intelligence (“AI”) company focused on predictive medical diagnostics. Our DeepView^® System uses proprietary AI algorithms to distinguish between healthy, partially damaged and fully damaged human tissue characteristics invisible to the naked eye, at the initial time of wound presentation. The DeepView System delivers a binary prediction on the wound’s capacity to heal or not-heal by a specified time in the future. Our DeepView System’s output is specifically engineered to assist the physician in making a more accurate, timely and informed diagnostic decision regarding the treatment of the patient’s wounds. Our focus is on our burn indication.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="text-align: left; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">In February 2024, our DeepView System, comprised of the multispectral imaging component integrated with the predictive AI-Burn^®software component, received United Kingdom Conformity Assessed (“UKCA”) marking for use in the United Kingdom for burn indications. In June 2025, we filed a De Novo application for the DeepView System with the United States Food and Drug Administration (“FDA”) so that it may achieve Class II medical device designation. On May 26, 2026, the FDA granted De Novo Classification for the DeepView System allowing the Company to commence commercial distribution activities in the United States.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="text-align: left; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"><span style="background-color: white;">The Company has not generated any product revenue to date. The Company currently generates revenue from contract development and research services by providing such services to governmental agencies, primarily to the Biomedical Advanced Research and Development Authority (“BARDA”) and under a contract with the Medical Technology Enterprise Consortium (“MTEC”). </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="text-align: left; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> We have received substantial support from the U.S. government for our DeepView System’s application for burn wounds from BARDA. On September 27, 2023, the Company executed a new contract with BARDA, providing the Company with additional funding of up to approximately $150.0 million. This includes an initial award of approximately $54.9 million to support the clinical validation study and the distribution of up to <span>30</span> DeepView Systems in various burn centers and emergency departments to support the study and approximately another $95.1 million for further follow-on development and procurement activities related to the DeepView System. The funding also supported the Company’s FDA De Novo submission of our DeepView AI – Burn software, which was completed on June 30, 2025. In March 2026, BARDA exercised a portion of its contractual options under the contract, providing the Company with (i) a no-cost extension of the base phase of the contract from March 2026 to June 2026 and (ii) accelerated funding of approximately $31.7 million for further follow-on development and procurement activities related to the DeepView System. The contract continues to provide additional options, similar to our prior BARDA contracts, with an additional $63.4 million which can be exercised for additional product development, and the expanded procurement and deployment of DeepView Systems at emergency rooms, trauma and burn centers. As part of this funding advance, the Company has committed to fund $9.7 million of the total overall development costs associated with these feature advancements.  </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Basis of Presentation</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The Company’s condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) or an Accounting Standards Update (“ASU”). </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">These condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company’s audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024. The condensed consolidated balance sheet as of December 31, 2025 included herein was derived from the audited consolidated financial statements as of that date.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods. The results for the six months ended June 30, 2026 are not necessarily indicative of the results to be expected for any subsequent quarter, the year ending December 31, 2026, or any other period.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">Beginning on April 1, 2026, the Company changed the presentation of certain costs on its condensed consolidated statement of operations. This voluntary change in classification of certain research and development and selling and marketing costs, resulted in a decrease in general and administrative expenses and offsetting increases in research and development and selling and marketing costs. Selling and marketing expense consists primarily of personnel-related costs associated with the Company’s commercial organization, allocated facilities costs, and commercialization readiness activities, including external consulting services, market access initiatives, and pricing studies. Refer to Note <span>4</span> for details of the composition of research and development expense. The Company believes this presentation is preferable as it will provide greater transparency regarding its operating expenses and aligns with how the business is managed.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">In addition, the Company reclassified the amortization of debt issuance costs from financing related costs to net interest expense on its condensed consolidated statement of operations. The reclassification increased net interest expense and decreased financing related costs by $120 thousand for both the three and six months ended June 30, 2025.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">These changes in classification have been applied retrospectively to all periods presented. These changes in presentation had no impact to revenue, cost of revenue, loss from operations, income (loss) before income taxes, income tax provision (benefit), net income (loss), earnings (loss) per common share, or other components of equity or cash flows. In addition, other expense information disclosed in Note <span>12</span> – Segment Information was adjusted for these changes.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">Except as described elsewhere in Note <span>2</span> under the heading “Recently adopted accounting pronouncements,” there have been no material changes to the Company’s significant accounting policies as described in the audited consolidated financial statements as of December 31, 2025.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Principles of Consolidation</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Spectral MD Holdings LLC, Spectral MD, Inc., Spectral MD UK Limited, and Spectral IP, Inc. (“Spectral IP”). Inter-company transactions and balances have been eliminated in consolidation.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Use of Estimates</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company bases its estimates and judgments on historical experience and on various other assumptions that it believes are reasonable under the circumstances. The amounts of assets and liabilities reported in the Company’s balance sheets and the amounts of expenses reported for each of the periods presented are affected by estimates and assumptions, which are used for, but not limited to, revenue recognition (including the measure of progress of completion), warrant liabilities, the fair value of certain debt, stock-based compensation expense, stock issued for transaction costs, the net realizable value of inventory, right-of-use assets, and income tax valuation allowances. Actual results could differ from these estimates.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> </p><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Concentrations of Credit Risk</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">Financial instruments which potentially subject the Company to credit risk consist principally of cash and cash equivalents and accounts receivable. Primarily all cash and cash equivalents is held in US financial institutions which, at times, exceed federally insured limits. The Company has not recognized any losses from credit risks on such accounts. The Company believes it is not exposed to significant credit risk on cash and cash equivalents.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> Additional credit risk is related to the Company’s concentration of accounts receivable. As of June 30, 2026 and December 31, 2025, accounts receivable were concentrated from one customer (which is a U.S. government agency) representing approximately 96% and 100%, respectively, of the total accounts receivable. <span style="-sec-ix-hidden:fc_56480484;"><span style="-sec-ix-hidden:fc_1433198831;">No</span></span> allowance for expected credit losses was recorded as of June 30, 2026 and December 31, 2025. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">One customer (which is a U.S. government agency) accounted for 93% and 88% for the three and six months ended June 30, 2026 and 92% and 94% for the three and six months ended June 30, 2025 of the recognized research and development revenue.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Risks and Uncertainties</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The Company is subject to a number of risks common to development stage companies in the medical technology industry, including, but not limited to, risks of failure of preclinical studies and clinical trials, dependence on key personnel, protection of proprietary technology, reliance on third party organizations, risks of obtaining regulatory approval for any products that it may develop, development by competitors of technological innovations, compliance with government regulations and the need to obtain additional financing.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Liquidity</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> As of June 30, 2026 and December 31, 2025, the Company had approximately $14.0 million and $15.4 million, respectively, in cash and cash equivalents, and an accumulated deficit of $63.4 million and $55.8 million, respectively. As of June 30, 2026 and December 31, 2025, the Company had approximately $14.9 million and $8.4 million, respectively, of debt outstanding of which $11.1 million and $5.5 million represented long-term debt as of such periods. The Company also had approximately $1.4 million of remaining undiscounted operating lease payments as of June 30, 2026, extending through February 2028. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> On March 18, 2026, the Company received a contract modification from BARDA for the acceleration of $31.7 million from its existing contract with BARDA which included (i) a no-cost extension of the base phase of the contract, and (ii) the acceleration of certain parts of the next phase of such contract.  As part of this funding advance, the Company has committed to fund $9.7 million of the total overall development costs associated with these feature advancements.  This funding comes as part of an ongoing partnership with BARDA, which has committed $86.6 million to date under the contract with an overall value of approximately $150 million. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;">As of June 30, 2026, based on our current operating plan, our cash and cash equivalents, together with commitments under the PBS BARDA Contract, and availability under the Yorkville SEPA, provide sufficient working capital to fund operations for at least one year beyond the release date of the condensed consolidated financial statements. Refer to Note 5 for the terms of the Company’s outstanding debt and Note 6 for details on the Company’s warrants.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;">We have based this determination on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. Changing circumstances could also cause us to consume capital significantly faster than we currently anticipate, and we may need to raise capital sooner or in greater amounts than currently expected because of circumstances beyond our control. To the extent additional capital is necessary, there are no assurances that we will be able to raise additional capital on favorable terms or at all, and therefore we may not be able to execute our business plans and the continued work on indications beyond expanding our burn indication.  </p> 150000000 54900000 95100000 (i) a no-cost extension of the base phase of the contract from March 2026 to June 2026 and (ii) accelerated funding of approximately $31.7 million for further follow-on development and procurement activities related to the DeepView System 63400000 9700000 <p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Basis of Presentation</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The Company’s condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) or an Accounting Standards Update (“ASU”). </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">These condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company’s audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024. The condensed consolidated balance sheet as of December 31, 2025 included herein was derived from the audited consolidated financial statements as of that date.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods. The results for the six months ended June 30, 2026 are not necessarily indicative of the results to be expected for any subsequent quarter, the year ending December 31, 2026, or any other period.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">Beginning on April 1, 2026, the Company changed the presentation of certain costs on its condensed consolidated statement of operations. This voluntary change in classification of certain research and development and selling and marketing costs, resulted in a decrease in general and administrative expenses and offsetting increases in research and development and selling and marketing costs. Selling and marketing expense consists primarily of personnel-related costs associated with the Company’s commercial organization, allocated facilities costs, and commercialization readiness activities, including external consulting services, market access initiatives, and pricing studies. Refer to Note <span>4</span> for details of the composition of research and development expense. The Company believes this presentation is preferable as it will provide greater transparency regarding its operating expenses and aligns with how the business is managed.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">In addition, the Company reclassified the amortization of debt issuance costs from financing related costs to net interest expense on its condensed consolidated statement of operations. The reclassification increased net interest expense and decreased financing related costs by $120 thousand for both the three and six months ended June 30, 2025.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">These changes in classification have been applied retrospectively to all periods presented. These changes in presentation had no impact to revenue, cost of revenue, loss from operations, income (loss) before income taxes, income tax provision (benefit), net income (loss), earnings (loss) per common share, or other components of equity or cash flows. In addition, other expense information disclosed in Note <span>12</span> – Segment Information was adjusted for these changes.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">Except as described elsewhere in Note <span>2</span> under the heading “Recently adopted accounting pronouncements,” there have been no material changes to the Company’s significant accounting policies as described in the audited consolidated financial statements as of December 31, 2025.</p> 120000 120000 120000 120000 <p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Principles of Consolidation</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Spectral MD Holdings LLC, Spectral MD, Inc., Spectral MD UK Limited, and Spectral IP, Inc. (“Spectral IP”). Inter-company transactions and balances have been eliminated in consolidation.</p> <p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Use of Estimates</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company bases its estimates and judgments on historical experience and on various other assumptions that it believes are reasonable under the circumstances. The amounts of assets and liabilities reported in the Company’s balance sheets and the amounts of expenses reported for each of the periods presented are affected by estimates and assumptions, which are used for, but not limited to, revenue recognition (including the measure of progress of completion), warrant liabilities, the fair value of certain debt, stock-based compensation expense, stock issued for transaction costs, the net realizable value of inventory, right-of-use assets, and income tax valuation allowances. Actual results could differ from these estimates.</p> <p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Concentrations of Credit Risk</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">Financial instruments which potentially subject the Company to credit risk consist principally of cash and cash equivalents and accounts receivable. Primarily all cash and cash equivalents is held in US financial institutions which, at times, exceed federally insured limits. The Company has not recognized any losses from credit risks on such accounts. The Company believes it is not exposed to significant credit risk on cash and cash equivalents.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> Additional credit risk is related to the Company’s concentration of accounts receivable. As of June 30, 2026 and December 31, 2025, accounts receivable were concentrated from one customer (which is a U.S. government agency) representing approximately 96% and 100%, respectively, of the total accounts receivable. <span style="-sec-ix-hidden:fc_56480484;"><span style="-sec-ix-hidden:fc_1433198831;">No</span></span> allowance for expected credit losses was recorded as of June 30, 2026 and December 31, 2025. </p>One customer (which is a U.S. government agency) accounted for 93% and 88% for the three and six months ended June 30, 2026 and 92% and 94% for the three and six months ended June 30, 2025 of the recognized research and development revenue. 0.96 1 0.93 0.88 0.92 0.94 <p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Risks and Uncertainties</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The Company is subject to a number of risks common to development stage companies in the medical technology industry, including, but not limited to, risks of failure of preclinical studies and clinical trials, dependence on key personnel, protection of proprietary technology, reliance on third party organizations, risks of obtaining regulatory approval for any products that it may develop, development by competitors of technological innovations, compliance with government regulations and the need to obtain additional financing.</p> <p style="font: italic 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Liquidity</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> As of June 30, 2026 and December 31, 2025, the Company had approximately $14.0 million and $15.4 million, respectively, in cash and cash equivalents, and an accumulated deficit of $63.4 million and $55.8 million, respectively. As of June 30, 2026 and December 31, 2025, the Company had approximately $14.9 million and $8.4 million, respectively, of debt outstanding of which $11.1 million and $5.5 million represented long-term debt as of such periods. The Company also had approximately $1.4 million of remaining undiscounted operating lease payments as of June 30, 2026, extending through February 2028. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> On March 18, 2026, the Company received a contract modification from BARDA for the acceleration of $31.7 million from its existing contract with BARDA which included (i) a no-cost extension of the base phase of the contract, and (ii) the acceleration of certain parts of the next phase of such contract.  As part of this funding advance, the Company has committed to fund $9.7 million of the total overall development costs associated with these feature advancements.  This funding comes as part of an ongoing partnership with BARDA, which has committed $86.6 million to date under the contract with an overall value of approximately $150 million. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;">As of June 30, 2026, based on our current operating plan, our cash and cash equivalents, together with commitments under the PBS BARDA Contract, and availability under the Yorkville SEPA, provide sufficient working capital to fund operations for at least one year beyond the release date of the condensed consolidated financial statements. Refer to Note 5 for the terms of the Company’s outstanding debt and Note 6 for details on the Company’s warrants.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;">We have based this determination on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. Changing circumstances could also cause us to consume capital significantly faster than we currently anticipate, and we may need to raise capital sooner or in greater amounts than currently expected because of circumstances beyond our control. To the extent additional capital is necessary, there are no assurances that we will be able to raise additional capital on favorable terms or at all, and therefore we may not be able to execute our business plans and the continued work on indications beyond expanding our burn indication.  </p> 14000000 15400000 -63400000 -55800000 14900000 8400000 11100000 5500000 1400000 31700000 9700000 86600000 150000000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="background-color: white;"><span style="font-weight: bold;">2. RECENT ACCOUNTING PRONOUNCEMENTS</span></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;"><i> </i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;"><i>Recently Adopted Accounting Standards </i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"><span style="font-size: 10pt;">In July 2025, the FASB issued ASU No. 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets, (“ASU 2025-05”) which provides a practical expedient to measure credit losses on accounts receivable and contract assets. The Company adopted this guidance prospectively in the three months ended March 31, 2026. The adoption of ASU 2025-05 did not have a material impact on the consolidated financial statements and related disclosures.</span> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;"><i>Recently Issued Accounting Standards </i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> In October 2023, the FASB issued ASU 2023-06 Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”), which modifies certain disclosure and presentation requirements of a variety of Topics in the Codification and is intended to both clarify or improve such requirements and align the requirements with the SEC’s regulations. The effective date for each amendment is the effective date of the removal of the related disclosure from Regulation S-X or Regulation S-K, with early adoption prohibited. The Company will apply the provisions prospectively as such provisions become effective and does not expect ASU 2023-06 to have a material impact on the consolidated financial statements. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">In November 2024, the FASB issued ASU No. 2024-03, Income Statement- Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40), requiring public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods.  ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The disclosures required under the guidance can be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all periods presented in the financial statements. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements and disclosures.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;"><i>Recently Adopted Accounting Standards </i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"><span style="font-size: 10pt;">In July 2025, the FASB issued ASU No. 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets, (“ASU 2025-05”) which provides a practical expedient to measure credit losses on accounts receivable and contract assets. The Company adopted this guidance prospectively in the three months ended March 31, 2026. The adoption of ASU 2025-05 did not have a material impact on the consolidated financial statements and related disclosures.</span> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;"><i>Recently Issued Accounting Standards </i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> In October 2023, the FASB issued ASU 2023-06 Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”), which modifies certain disclosure and presentation requirements of a variety of Topics in the Codification and is intended to both clarify or improve such requirements and align the requirements with the SEC’s regulations. The effective date for each amendment is the effective date of the removal of the related disclosure from Regulation S-X or Regulation S-K, with early adoption prohibited. The Company will apply the provisions prospectively as such provisions become effective and does not expect ASU 2023-06 to have a material impact on the consolidated financial statements. </p>In November 2024, the FASB issued ASU No. 2024-03, Income Statement- Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40), requiring public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods.  ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The disclosures required under the guidance can be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all periods presented in the financial statements. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements and disclosures. <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;"><span>3</span>. RESEARCH AND DEVELOPMENT REVENUE</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;">For the three and six months ended June 30, 2026 and 2025, the Company’s revenues disaggregated by the major sources were as follows (in thousands):</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">Three Months Ended <br/> June 30,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">Six Months Ended <br/> June 30,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="width: 52%;">BARDA</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">3,279</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">4,649</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">6,589</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">11,030</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td style="text-align: left; padding-bottom: 1.5pt;">Other U.S. governmental authorities</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">245</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">416</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">926</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">742</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="text-align: left; padding-bottom: 2.5pt;">Total revenue</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">3,524</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">5,065</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">7,515</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">11,772</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr></tbody></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;">The following table presents the activity in the Company’s contract liabilities during the six months ended June 30, 2026:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">December 31,<br/> 2025<br/> Balance</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Additions</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Reductions</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026<br/> Balance</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="14" style="font-weight: bold; text-align: center;">(in thousands)</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td>Contract liabilities:</td> <td> </td> <td colspan="2" style="text-align: right;"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: right;"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: right;"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: right;"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 52%; text-align: left; padding-bottom: 1.5pt;">Deferred revenue</td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right;">154</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">80</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">(213</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;">)</td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">21</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt;">Total contract liabilities</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">154</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">80</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">(213</td> <td style="padding-bottom: 2.5pt; text-align: left;">)</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">21</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr></tbody></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;">Unbilled revenue is included in other current assets in the condensed consolidated balance sheets. The following table presents the activity in the Company’s contract assets during the six months ended June 30, 2026:</p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"><tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">December 31, <br/> 2025<br/> Balance</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Additions</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Reductions</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026<br/> Balance</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="14" style="font-weight: bold; text-align: center;">(in thousands)</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td>Contract assets:</td> <td> </td> <td colspan="2" style="text-align: right;"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: right;"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 52%; text-align: left; padding-bottom: 1.5pt;">Unbilled revenue</td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right;">849</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">722</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">(496</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;">)</td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">1,075</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt;">Total contract assets</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">849</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">722</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">(496</td> <td style="padding-bottom: 2.5pt; text-align: left;">)</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">1,075</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> On March 18, 2026, the Company announced that it has received a contract modification from the Biomedical Advanced Research and Development Authority (BARDA) for the advancement of $31.7 million from its existing contract with BARDA which included (i) a no-cost extension of the base phase of the contract, and (ii) the acceleration of certain parts of the next phase of such contract. As part of this funding advance, the Company has committed to fund $9.7 million of the total overall development costs associated with these feature advancements. This funding comes as part of an ongoing partnership with BARDA, which has committed $86.6 million to date under the contract with an overall value of approximately $150 million. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white;"><span style="font-weight: bold;"><i>Research and Development Expense</i></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><i> </i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The Company expenses research and development costs as incurred. These expenses include salaries for research and development personnel, consulting fees, product development, pre-clinical studies, clinical trial costs, and other fees and costs related to the development of our technology.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">For the three and six months ended June 30, 2026, research and development expense was $4.1 million and $7.6 million, respectively, of which $2.4 million and $4.4 million, respectively, is related to the combined BARDA contract and contracts with other U.S. governmental authorities and included in cost of revenue and $1.7 million and $3.2 million, respectively, is included in research and development expenses. For the three and six months ended June 30, 2025, research and development expense was $4.2 million and $9.1 million, respectively, of which $2.7 million and $6.3 million, respectively, is related to the combined BARDA contract and contracts with other U.S. governmental authorities and included in cost of revenue and $1.5 million and $2.8 million, respectively, is included in research and development expenses.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;">For the three and six months ended June 30, 2026 and 2025, the Company’s revenues disaggregated by the major sources were as follows (in thousands):</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">Three Months Ended <br/> June 30,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">Six Months Ended <br/> June 30,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="width: 52%;">BARDA</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">3,279</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">4,649</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">6,589</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">11,030</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td style="text-align: left; padding-bottom: 1.5pt;">Other U.S. governmental authorities</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">245</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">416</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">926</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">742</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="text-align: left; padding-bottom: 2.5pt;">Total revenue</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">3,524</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">5,065</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">7,515</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">11,772</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr></tbody></table> 3279000 4649000 6589000 11030000 245000 416000 926000 742000 3524000 5065000 7515000 11772000 154000 80000 213000 21000 154000 80000 213000 21000 The following table presents the activity in the Company’s contract assets during the six months ended June 30, 2026:<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"><tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">December 31, <br/> 2025<br/> Balance</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Additions</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Reductions</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026<br/> Balance</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="14" style="font-weight: bold; text-align: center;">(in thousands)</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td>Contract assets:</td> <td> </td> <td colspan="2" style="text-align: right;"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: right;"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 52%; text-align: left; padding-bottom: 1.5pt;">Unbilled revenue</td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right;">849</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">722</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">(496</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;">)</td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">1,075</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt;">Total contract assets</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">849</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">722</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">(496</td> <td style="padding-bottom: 2.5pt; text-align: left;">)</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">1,075</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr></tbody></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;">The following table presents the activity in the Company’s contract liabilities during the six months ended June 30, 2026:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">December 31,<br/> 2025<br/> Balance</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Additions</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Reductions</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">June 30,<br/> 2026<br/> Balance</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="14" style="font-weight: bold; text-align: center;">(in thousands)</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td>Contract liabilities:</td> <td> </td> <td colspan="2" style="text-align: right;"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: right;"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: right;"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: right;"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 52%; text-align: left; padding-bottom: 1.5pt;">Deferred revenue</td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right;">154</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">80</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">(213</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;">)</td> <td style="width: 1%; padding-bottom: 1.5pt;"> </td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left;">$</td> <td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right;">21</td> <td style="width: 1%; padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt;">Total contract liabilities</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">154</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">80</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">(213</td> <td style="padding-bottom: 2.5pt; text-align: left;">)</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">21</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr></tbody></table> 849000 722000 496000 1075000 849000 722000 496000 1075000 31700000 9700000 86600000 150000000 4100000 7600000 2400000 4400000 1700000 3200000 4200000 9100000 2700000 6300000 1500000 2800000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">4. ACCRUED EXPENSES</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;">Accrued expenses consist of the following as of June 30, 2026 and December 31, 2025 (in thousands):</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">June 30,</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">December 31,</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left;">Salary and wages</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">1,082</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">1,762</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Operating expenses</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">92</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">81</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td>Benefits</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">446</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">340</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Non-operating expenses</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1946705908;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">60</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-bottom: 1.5pt;">Taxes</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">88</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">98</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt;">Total accrued expenses</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">1,708</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">2,341</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;">Accrued expenses consist of the following as of June 30, 2026 and December 31, 2025 (in thousands):</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">June 30,</td> <td style="font-weight: bold;"> </td> <td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">December 31,</td> <td style="font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%; text-align: left;">Salary and wages</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">1,082</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">1,762</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Operating expenses</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">92</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">81</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td>Benefits</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">446</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">340</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Non-operating expenses</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1946705908;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">60</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-bottom: 1.5pt;">Taxes</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">88</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">98</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt;">Total accrued expenses</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">1,708</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">2,341</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr></tbody></table> 1082000 1762000 92000 81000 446000 340000 60000 88000 98000 1708000 2341000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;"><span>5</span>. NOTES PAYABLE</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><p style="text-align: left; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The Company entered into the Avenue Financing (defined below) and financing arrangements for a portion of its Directors and Officers insurance premiums, as follows (in thousands):</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td colspan="2" style="text-align: center;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td colspan="2" style="text-align: center;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">Principal Repayments</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">Outstanding Balance</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">Amount</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td colspan="2" style="text-align: center;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Six Months Ended<br/> June 30,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">June 30</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">December 31,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Financed</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Interest Rate</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="vertical-align: top; width: 46%; text-align: left; text-indent: -0.125in; padding-left: 0.125in;">Avenue Capital Note Principal and Final Payment Fee</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 6%; text-align: right;">15,000</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 6%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Prime + 5.25</span></td> <td style="width: 1%; text-align: left;">%</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 6%; text-align: right;"><span style="-sec-ix-hidden:fc_2095153070;">-</span></td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 6%; text-align: right;"><span style="-sec-ix-hidden:fc_466841303;">-</span></td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 6%; text-align: right;">15,750</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 6%; text-align: right;">9,250</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in;">Yorkville Convertible Notes, at fair value</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">    11,500</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">0.0</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1582675870;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,365</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1124361352;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_952830725;">-</span></td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in;">2025 Insurance Note</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">580</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">8.0</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">317</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1601471742;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">109</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">426</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in;">2024 Insurance Note</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;">596</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;">8.4</td> <td style="padding-bottom: 1.5pt; text-align: left;">%</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_163412579;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">360</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_1125812837;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_2008835535;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-bottom: 4pt; text-indent: -0.125in; padding-left: 0.125in;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt; text-align: right;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt; text-align: right;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">317</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">2,725</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">15,859</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">9,676</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.25in;">Less: current portion of notes payable</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(3,859</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(2,854</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in;">Unamortized debt discounts and debt issuance costs</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(945</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(1,284</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 4pt; text-indent: -0.125in; padding-left: 0.125in;">Notes payable. long term</td> <td style="padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt; text-align: right;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt; text-align: right;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt; text-align: right;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt; text-align: right;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">11,055</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">5,538</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> </tr></tbody></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><span style="font-weight: bold;">Avenue Capital Financing</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"><span style="font-weight: bold;"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> On March 24, 2025, the Company completed the Avenue Financing, with an initial draw-down of $8.5 million. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> The term of the financing with Avenue Capital Group (the “Avenue Financing”) is for three years, with an interest-only payment period of no less than <span>15</span> months, which was extended to <span>24</span> months upon the Company’s achievement of the milestones for the second financing tranche during the three months ended June 30, 2026. The second financing tranche, which includes an additional $6.5 million in debt financing from Avenue Capital Group is contingent upon; (i) FDA clearance of the DeepView System and (ii) the Company completing a $7.0 million equity raise. The borrowings under the Avenue Financing accrue interest at a variable amount per annum equal to the greater of (i) the sum of (A) the Prime Rate plus (B) 5.25%, and (ii) 12.75%, and they mature on March 1, 2028 (the “Maturity Date”). In addition, on the Maturity Date a final payment of $0.8 million is due to Avenue Capital Group and is accrued as debt as of June 30, 2026. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> Up to $2.0 million of the borrowings under the Avenue Financing are convertible at the lender’s option, into a number of shares of common stock at a price per share equal to 120% of the exercise price of the Avenue Warrants discussed below. Pursuant to the guidance in ASC <span>815</span>-<span>40</span>, Contracts in Entity’s Own Equity, the Company evaluated whether the conversion feature needed to be bifurcated from the host instrument as a freestanding financial instrument. Under ASC <span>815</span>-<span>40</span>, to qualify for equity classification (or non-bifurcation, if embedded) the instrument (or embedded feature) must be both <span>(1</span>) indexed to the issuer’s own stock and <span>(2</span>) meet the requirements of the equity classification guidance. Based upon the Company’s analysis, it was determined the conversion option is indexed to its own stock and also met all the criteria for equity classification. Accordingly, the conversion option is not required to be bifurcated from the host instrument as a derivative. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> <span style="font-size: 10pt;">As part of the Avenue Financing the Company issued 768,072 warrants to Avenue Capital Group which was equal to 8.5% of the total funding commitment. The Avenue Warrants have an exercise price equal to $1.66 per share, see Note <span>6</span>.</span>  </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">On June 18, 2026, the Company drew down the second financing tranche under the Avenue Financing following the achievement of the required funding conditions. The Company received net proceeds of approximately $6.5 million.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Repayment of Yorkville Convertible Notes</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> During the six months ended June 30, 2025, the Company paid the remaining $2.4 million of the Yorkville Convertible Notes of which $1.2 million was settled in cash and $1.2 million was settled in shares of common stock. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Insurance Notes</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The Company determined that the carrying amounts of all of the insurance notes approximate fair value due to the short-term nature of borrowings and current market rates of interest.</p> <p style="text-align: left; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The Company entered into the Avenue Financing (defined below) and financing arrangements for a portion of its Directors and Officers insurance premiums, as follows (in thousands):</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td colspan="2" style="text-align: center;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td colspan="2" style="text-align: center;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">Principal Repayments</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">Outstanding Balance</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">Amount</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td colspan="2" style="text-align: center;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Six Months Ended<br/> June 30,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">June 30</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">December 31,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Financed</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Interest Rate</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="vertical-align: top; width: 46%; text-align: left; text-indent: -0.125in; padding-left: 0.125in;">Avenue Capital Note Principal and Final Payment Fee</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 6%; text-align: right;">15,000</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 6%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Prime + 5.25</span></td> <td style="width: 1%; text-align: left;">%</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 6%; text-align: right;"><span style="-sec-ix-hidden:fc_2095153070;">-</span></td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 6%; text-align: right;"><span style="-sec-ix-hidden:fc_466841303;">-</span></td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 6%; text-align: right;">15,750</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 6%; text-align: right;">9,250</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in;">Yorkville Convertible Notes, at fair value</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">    11,500</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">0.0</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1582675870;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">2,365</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1124361352;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_952830725;">-</span></td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; text-indent: -0.125in; padding-left: 0.125in;">2025 Insurance Note</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">580</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">8.0</td> <td style="text-align: left;">%</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">317</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"><span style="-sec-ix-hidden:fc_1601471742;">-</span></td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">109</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">426</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in;">2024 Insurance Note</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;">596</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;">8.4</td> <td style="padding-bottom: 1.5pt; text-align: left;">%</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_163412579;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">360</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_1125812837;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_2008835535;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-bottom: 4pt; text-indent: -0.125in; padding-left: 0.125in;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt; text-align: right;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt; text-align: right;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">317</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">2,725</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">15,859</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">9,676</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.25in;">Less: current portion of notes payable</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(3,859</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(2,854</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in;">Unamortized debt discounts and debt issuance costs</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(945</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(1,284</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 4pt; text-indent: -0.125in; padding-left: 0.125in;">Notes payable. long term</td> <td style="padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt; text-align: right;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt; text-align: right;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt; text-align: right;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt; text-align: right;"> </td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">11,055</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> <td style="padding-bottom: 4pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">5,538</td> <td style="padding-bottom: 4pt; text-align: left;"> </td> </tr></tbody></table> 15000000 0.0525 15750000 9250000 11500000 0 2365000 580000 0.08 317000 109000 426000 596000 0.084 360000 317000 2725000 15859000 9676000 3859000 2854000 -945000 -1284000 11055000 5538000 8500000 6500000 7000000 0.0525 0.1275 2028-03-01 800000 2000000 1.20 768072 0.085 1.66 6500000 2400000 1200000 1200000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;"><span>6</span>. WARRANT LIABILITIES</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;">In September 2023, in conjunction with the business combination with Rosecliff Acquisition Corp I (the “Business Combination”), the Company assumed the public warrants which had an exercise price of $11.50 per share, are exercisable <span>30</span> days after the Business Combination and expire <span style="-sec-ix-hidden:fc_1680599246;">five</span> years after the Business Combination or upon redemption (the “Public Warrants”). In November 2024, the Company amended the Public Warrants to have an exercise price of $2.75 per share. As of June 30, 2026, there are 8,433,333 Public Warrants outstanding. Each warrant entitles the registered holder to purchase one share of Common Stock at an exercise price of $2.75 per full share. The Company maintains a redemption right with respect to the Public Warrants in that the Company can redeem some or all of the Public Warrants for $0.10 per Public Warrant based on certain market conditions and the market price of the Company Common Stock.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;">In September 2021, the Company issued 73,978 warrants, with a strike price of $7.32 and a five-year life, to SP Angel Corporate Finance LLP (“SP Angel”), who acted as nominated adviser and broker to the Company for the purposes of the AIM Rules relating to the London Stock Market (the “Angel Warrants”). In conjunction with the Business Combination, the Angel Warrants were converted into warrants to purchase Common Stock based on the exchange ratio as set forth in the Business Combination agreements. As of June 30, 2026, there are 77,017 Angel Warrants to purchase Common Stock outstanding. In December 2025, SP Angel was issued 3,039 additional Angel Warrants due to an anti-dilution right that was implicated in a Qualifying Financing (as defined in the warrant agreement). The Hudson Bay transaction, which closed in October 2025, qualified as a Qualifying Financing. Following the adjustment, 77,017 Angel Warrants were outstanding.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"><i>Investor Warrants:</i> On March 21, 2025, the Company entered into the purchase agreements with certain stockholders for the sale of an aggregate of 2,068,846 shares of Common Stock, at an offering price of $1.30 per Share (the “Purchase Agreements”). In a concurrent private placement pursuant to the Purchase Agreements, the Company agreed to sell to the investors an aggregate of 2,068,846 warrants to purchase shares of Common Stock at an exercise price of $1.80 per share (the “Investor Warrants”). The Investor Warrants, along with the shares of Common Stock issuable upon the exercise of the Investor Warrants, were offered pursuant to the exemptions provided in Section <span>4</span>(a)<span>(2</span>) under the Securities Act of 1933, as amended (the “Securities Act”). No consideration was received by the Company for the issuance of the Investor Warrants.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;">During the year ended December 31, 2025, 1,403,846 Investor Warrants were exercised. The warrants were remeasured to fair value immediately prior to exercise and the carrying amount of the warrant liability was derecognized and reclassified to additional paid-in-capital. Any proceeds received from exercise were recognized in stockholders’ equity. The exercise of warrants resulted in an increase to stockholders’ equity of $4.7 million. For the six months ended June 30, 2026, 30,000 Investor Warrants were exercised. As of June 30, 2026, there were 635,000 Investor Warrants to purchase Common Stock outstanding.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"><i>Avenue Warrants:</i> On March 24, 2025, the Company completed the Avenue Financing, with an initial draw-down of $8.5 million. As part of the Avenue Financing, the Company issued 768,072 warrants to Avenue Capital Group which was equal to 8.5% of the total funding commitment (the “Avenue Warrants”). As of June 30, 2026, the Avenue Warrants have an exercise price equal to $1.66 per share. The Avenue Warrants were determined to be classified as a liability instrument as certain terms preclude them from being considered indexed to the Company’s Common Stock.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;">As of June 30, 2026, there were 768,072 Avenue Warrants to purchase Common Stock outstanding.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> </p><p style="text-align: left; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"><i>Hudson Warrants</i>: On October 22, 2025, the Company entered into a securities purchase agreement with a certain investor for the sale of 3,065,000 shares of Common Stock, at an offering price of $1.90 per Share. In a concurrent private placement pursuant to the purchase agreement, the Company agreed to sell to the investor (i) warrants (the “Hudson Warrants”) to purchase up to 4,000,000 shares of Common Stock, and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 935,000 shares of Common Stock. Each Hudson Warrant has an exercise price per share of $2.51 and became exercisable on May 29, 2026, as the Company obtained stockholder approval at its annual meeting for the issuance of shares of Common Stock underlying the Hudon Warrants and Pre-Funded Warrants. Each Pre-Funded Warrant has a purchase price of $1.8999, an exercise price per share of $0.0001, is exercisable immediately and may be exercised at any time until such Pre-Funded Warrant is exercised in full. The Hudson Warrants and the Pre-Funded Warrants, along with the shares of Common Stock issuable upon the exercise of the warrants, are being offered pursuant to the exemptions provided in Section <span>4</span>(a)<span>(2</span>) under the Securities Act of 1933, as amended.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;">During the six months ended June 30, 2026, 935,000 Pre-Funded Warrants were exercised, at an exercise price per share of $0.0001. As of June 30, 2026, there were no Pre-Funded Warrants outstanding and 4,000,000 Hudson Warrants to purchase Common Stock outstanding.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;">The Company accounts for its Public Warrants, Angel Warrants, Investor Warrants, Avenue Warrants and Hudson Warrants as derivative liabilities. Accordingly, the Company recognizes the instruments as liabilities at fair value, and adjusts the instruments to fair value at the end of each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, redeemed or expired, and any change in fair value is recognized in the Company’s consolidated statements of operations within other income (expense).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Fair Value Measurements</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> The following table presents information about the Company’s financial liabilities that are measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025, by level within the fair value hierarchy (in thousands):</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="14" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Fair value measured as of June 30, 2026</td></tr> <tr style="vertical-align: bottom;"> <td> </td><td> </td> <td colspan="2"> </td><td> </td><td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">Quoted<br/> prices</td><td style="font-weight: bold;"> </td><td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">Significant<br/> other</td><td style="font-weight: bold;"> </td><td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">Significant</td></tr> <tr style="vertical-align: bottom;"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Fair value at<br/> June 30,<br/> 2026</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">in active<br/> markets<br/> (Level 1)</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">observable <br/> inputs<br/> (Level 2)</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">unobservable<br/> inputs<br/> (Level 3)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 53%; text-align: left; padding-bottom: 4pt;">Warrant liabilities</td><td style="width: 1%; padding-bottom: 4pt;"> </td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left;">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right;">11,780</td><td style="width: 1%; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 1%; padding-bottom: 4pt;"> </td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left;"> </td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right;">4,680</td><td style="width: 1%; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 1%; padding-bottom: 4pt;"> </td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left;"> </td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right;"><span style="-sec-ix-hidden:fc_822908027;">     -</span></td><td style="width: 1%; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 1%; padding-bottom: 4pt;"> </td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left;"> </td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right;">7,100</td></tr> </tbody></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="14" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Fair value measured as of December 31, 2025</td></tr> <tr style="vertical-align: bottom;"> <td> </td><td> </td> <td colspan="2"> </td><td> </td><td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">Quoted<br/> prices</td><td style="font-weight: bold;"> </td><td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">Significant <br/> other</td><td style="font-weight: bold;"> </td><td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">Significant</td></tr> <tr style="vertical-align: bottom;"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Fair value at<br/> December 31, <br/> 2025</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">in active<br/> markets<br/> (Level 1)</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">observable<br/> inputs<br/> (Level 2)</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">unobservable<br/> inputs<br/> (Level 3)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 53%; text-align: left; padding-bottom: 4pt;">Warrant liabilities</td><td style="width: 1%; padding-bottom: 4pt;"> </td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left;">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right;">11,533</td><td style="width: 1%; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 1%; padding-bottom: 4pt;"> </td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left;">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right;">3,795</td><td style="width: 1%; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 1%; padding-bottom: 4pt;"> </td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left;">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right;"><span style="-sec-ix-hidden:fc_1909995836;">                -</span></td><td style="width: 1%; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 1%; padding-bottom: 4pt;"> </td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left;">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right;">   7,738</td></tr> </tbody></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in; background-color: white;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">There were no transfers between Level <span>1</span>, <span>2</span> or <span>3</span> during the six months ended June 30, 2026.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">Fair values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and short-term debt are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The fair value of the Public Warrants, which trade in active markets, is based on quoted market prices and classified in Level <span>1</span> of the fair value hierarchy. The Angel Warrants, Avenue Warrants, Investor Warrants, and Hudson Warrants are classified within Level <span>3</span> of the fair value hierarchy because their fair values are based on significant inputs that are unobservable in the market.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The fair value of the Angel Warrants and Avenue Warrants at June 30, 2026 were estimated using a Black-Scholes option pricing model. The fair value of the Investor Warrants and Hudson Warrants were estimated using a simulation model.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The following table presents changes in Level <span>3</span> liabilities measured at fair value for the six months ended June 30, 2026 and 2025 (in thousands):</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 88%;">Balance - January 1, 2025</td><td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td><td style="width: 9%; text-align: right;">41</td><td style="width: 1%; text-align: left;"> </td></tr> <tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Fair value at issuance</td><td> </td> <td style="text-align: left;"> </td><td style="text-align: right;">2,908</td><td style="text-align: left;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt;">Change in fair value</td><td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right;">(37</td><td style="padding-bottom: 1.5pt; text-align: left;">)</td></tr> <tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold;">Balance - March 31, 2025</td><td> </td> <td style="text-align: left;">$</td><td style="text-align: right;">2,912</td><td style="text-align: left;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt;">Change in fair value</td><td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right;">1,739</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td></tr> <tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold;">Balance - June 30, 2025</td><td> </td> <td style="text-align: left;">$</td><td style="text-align: right;">4,651</td><td style="text-align: left;"> </td></tr> </tbody></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"></p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 88%;">Balance - January 1, 2026</td><td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td><td style="width: 9%; text-align: right;">7,738</td><td style="width: 1%; text-align: left;"> </td></tr> <tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt;">Change in fair value</td><td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right;">74</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="font-weight: bold;">Balance - March 31, 2026</td><td> </td> <td style="text-align: left;">$</td><td style="text-align: right;">7,812</td><td style="text-align: left;"> </td></tr> <tr style="vertical-align: bottom; background-color: White;"> <td>Exercise of warrants</td><td> </td> <td style="text-align: left;"> </td><td style="text-align: right;">(43</td><td style="text-align: left;">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt;">Change in fair value</td><td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right;">(669</td><td style="padding-bottom: 1.5pt; text-align: left;">)</td></tr> <tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold;">Balance - June 30, 2026</td><td> </td> <td style="text-align: left;">$</td><td style="text-align: right;">7,100</td><td style="text-align: left;"> </td></tr> </tbody></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">Both observable and unobservable inputs were used to determine the fair value of warrants that the Company has classified within the Level <span>3</span> category. Unrealized gains and losses associated with liabilities within the Level <span>3</span> category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The following table provides quantitative information regarding Level <span>3</span> fair value measurements inputs at their measurement:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: bottom;"> <td style="text-align: center;"> </td> <td> </td> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">June 30, 2026</span></span></td> <td> </td> </tr> <tr style="vertical-align: bottom;"> <td style="text-align: center;"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Angel</span></span><br/> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrants</span></span></td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;"> Investor</span></span><br/> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrants</span></span></td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Avenue</span></span><br/> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrants</span></span></td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Hudson</span></span><br/> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrants</span></span></td> <td> </td> </tr> <tr style="vertical-align: bottom;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Valuation Method</span></td> <td> </td> <td colspan="2" style="text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Black Scholes</span></td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Monte Carlo</span></td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Black Scholes</span></td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Monte Carlo</span></td> <td> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 40%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Strike price (per share)</span></td> <td style="width: 1%;"> </td> <td style="width: 1%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">$</span></td> <td style="width: 11%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">7.32</span></td> <td style="width: 2%;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">$</span></td> <td style="width: 11%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">1.80</span></td> <td style="width: 2%;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">$</span></td> <td style="width: 11%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">1.66</span></td> <td style="width: 2%;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">$</span></td> <td style="width: 11%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">2.51</span></td> <td style="width: 2%;"> </td> </tr> <tr style="vertical-align: bottom; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Contractual term (years)</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">1.0</span></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3.8</span></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3.8</span></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.3</span></td> <td> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Volatility (annual)</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">78.7</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">70.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">69.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">70.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> </tr> <tr style="vertical-align: bottom; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Risk-free rate</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.1</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.1</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.1</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Dividend yield (per share)</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> </tr> <tr style="vertical-align: bottom; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Probability assessment ⁽¹⁾</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="-sec-ix-hidden:fc_750871550;">N/A</span></span></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">10%-30</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">10%-30</span></td> <td>%</td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">10%-30</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> </tr> </tbody></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse;"> <tbody><tr style="vertical-align: bottom;"> <td style="text-align: center;"> </td> <td> </td> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">December 31, 2025</span></span></td> <td> </td> </tr> <tr style="vertical-align: bottom;"> <td style="text-align: center;"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Angel</span></span><br/> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrants</span></span></td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;"> Investor</span></span><br/> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrants</span></span></td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Avenue</span></span><br/> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrants</span></span></td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Hudson</span></span><br/> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrants</span></span></td> <td> </td> </tr> <tr style="vertical-align: bottom;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Valuation Method</span></td> <td> </td> <td colspan="2" style="text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Black Scholes</span></td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Monte Carlo</span></td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Black Scholes</span></td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Monte Carlo</span></td> <td> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 40%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Strike price (per share)</span></td> <td style="width: 1%;"> </td> <td style="width: 1%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">$</span></td> <td style="width: 11%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">7.32</span></td> <td style="width: 2%;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">$</span></td> <td style="width: 11%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">1.80</span></td> <td style="width: 2%;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">$</span></td> <td style="width: 11%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">1.66</span></td> <td style="width: 2%;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">$</span></td> <td style="width: 11%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">2.51</span></td> <td style="width: 2%;"> </td> </tr> <tr style="vertical-align: bottom; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Contractual term (years)</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">1.5</span></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.2</span></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.2</span></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.8</span></td> <td> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Volatility (annual)</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">92.1</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">80.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">79.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">70.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> </tr> <tr style="vertical-align: bottom; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Risk-free rate</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3.5</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3.6</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3.6</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3.6</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Dividend yield (per share)</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> </tr> <tr style="vertical-align: bottom; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Probability assessment ⁽¹⁾</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="-sec-ix-hidden:fc_923629825;">N/A</span></span></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">10%-30</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">10%-30</span></td> <td>%</td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">10%-30</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> </tr> </tbody></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt;"><tbody><tr style="vertical-align: top;"> <td style="width: 0.25in;">⁽¹⁾</td><td>Probability assessment reflects management’s estimate of the likelihood of an event that could accelerate exercisability or modify settlement mechanics under the warrant agreements</td></tr></tbody></table> 11.5 2.75 8433333 2.75 0.1 73978 7.32 77017 3039 77017 2068846 1.3 2068846 1.8 1403846 4700000 30000 635000 8500000 768072 0.085 1.66 768072 3065000 1.9 4000000 935000 2.51 1.8999 0.0001 935000000 0.0001 4000000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> The following table presents information about the Company’s financial liabilities that are measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025, by level within the fair value hierarchy (in thousands):</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="14" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Fair value measured as of June 30, 2026</td></tr> <tr style="vertical-align: bottom;"> <td> </td><td> </td> <td colspan="2"> </td><td> </td><td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">Quoted<br/> prices</td><td style="font-weight: bold;"> </td><td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">Significant<br/> other</td><td style="font-weight: bold;"> </td><td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">Significant</td></tr> <tr style="vertical-align: bottom;"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Fair value at<br/> June 30,<br/> 2026</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">in active<br/> markets<br/> (Level 1)</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">observable <br/> inputs<br/> (Level 2)</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">unobservable<br/> inputs<br/> (Level 3)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 53%; text-align: left; padding-bottom: 4pt;">Warrant liabilities</td><td style="width: 1%; padding-bottom: 4pt;"> </td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left;">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right;">11,780</td><td style="width: 1%; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 1%; padding-bottom: 4pt;"> </td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left;"> </td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right;">4,680</td><td style="width: 1%; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 1%; padding-bottom: 4pt;"> </td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left;"> </td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right;"><span style="-sec-ix-hidden:fc_822908027;">     -</span></td><td style="width: 1%; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 1%; padding-bottom: 4pt;"> </td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left;"> </td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right;">7,100</td></tr> </tbody></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="14" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Fair value measured as of December 31, 2025</td></tr> <tr style="vertical-align: bottom;"> <td> </td><td> </td> <td colspan="2"> </td><td> </td><td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">Quoted<br/> prices</td><td style="font-weight: bold;"> </td><td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">Significant <br/> other</td><td style="font-weight: bold;"> </td><td style="font-weight: bold;"> </td> <td colspan="2" style="font-weight: bold; text-align: center;">Significant</td></tr> <tr style="vertical-align: bottom;"> <td> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Fair value at<br/> December 31, <br/> 2025</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">in active<br/> markets<br/> (Level 1)</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">observable<br/> inputs<br/> (Level 2)</td><td style="padding-bottom: 1.5pt; font-weight: bold;"> </td><td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">unobservable<br/> inputs<br/> (Level 3)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 53%; text-align: left; padding-bottom: 4pt;">Warrant liabilities</td><td style="width: 1%; padding-bottom: 4pt;"> </td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left;">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right;">11,533</td><td style="width: 1%; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 1%; padding-bottom: 4pt;"> </td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left;">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right;">3,795</td><td style="width: 1%; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 1%; padding-bottom: 4pt;"> </td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left;">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right;"><span style="-sec-ix-hidden:fc_1909995836;">                -</span></td><td style="width: 1%; padding-bottom: 4pt; text-align: left;"> </td><td style="width: 1%; padding-bottom: 4pt;"> </td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left;">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right;">   7,738</td></tr> </tbody></table> 11780000 4680000 7100000 11533000 3795000 7738000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The following table presents changes in Level <span>3</span> liabilities measured at fair value for the six months ended June 30, 2026 and 2025 (in thousands):</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 88%;">Balance - January 1, 2025</td><td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td><td style="width: 9%; text-align: right;">41</td><td style="width: 1%; text-align: left;"> </td></tr> <tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Fair value at issuance</td><td> </td> <td style="text-align: left;"> </td><td style="text-align: right;">2,908</td><td style="text-align: left;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt;">Change in fair value</td><td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right;">(37</td><td style="padding-bottom: 1.5pt; text-align: left;">)</td></tr> <tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold;">Balance - March 31, 2025</td><td> </td> <td style="text-align: left;">$</td><td style="text-align: right;">2,912</td><td style="text-align: left;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt;">Change in fair value</td><td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right;">1,739</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td></tr> <tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold;">Balance - June 30, 2025</td><td> </td> <td style="text-align: left;">$</td><td style="text-align: right;">4,651</td><td style="text-align: left;"> </td></tr> </tbody></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify;"></p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 88%;">Balance - January 1, 2026</td><td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td><td style="width: 9%; text-align: right;">7,738</td><td style="width: 1%; text-align: left;"> </td></tr> <tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left; padding-bottom: 1.5pt;">Change in fair value</td><td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right;">74</td><td style="padding-bottom: 1.5pt; text-align: left;"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="font-weight: bold;">Balance - March 31, 2026</td><td> </td> <td style="text-align: left;">$</td><td style="text-align: right;">7,812</td><td style="text-align: left;"> </td></tr> <tr style="vertical-align: bottom; background-color: White;"> <td>Exercise of warrants</td><td> </td> <td style="text-align: left;"> </td><td style="text-align: right;">(43</td><td style="text-align: left;">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt;">Change in fair value</td><td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right;">(669</td><td style="padding-bottom: 1.5pt; text-align: left;">)</td></tr> <tr style="vertical-align: bottom; background-color: White;"> <td style="font-weight: bold;">Balance - June 30, 2026</td><td> </td> <td style="text-align: left;">$</td><td style="text-align: right;">7,100</td><td style="text-align: left;"> </td></tr> </tbody></table> 41000 2908000 37000 2912000 -1739000 4651000 7738000 -74000 7812000 43000 669000 7100000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The following table provides quantitative information regarding Level <span>3</span> fair value measurements inputs at their measurement:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse;"> <tbody><tr style="vertical-align: bottom;"> <td style="text-align: center;"> </td> <td> </td> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">June 30, 2026</span></span></td> <td> </td> </tr> <tr style="vertical-align: bottom;"> <td style="text-align: center;"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Angel</span></span><br/> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrants</span></span></td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;"> Investor</span></span><br/> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrants</span></span></td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Avenue</span></span><br/> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrants</span></span></td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Hudson</span></span><br/> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrants</span></span></td> <td> </td> </tr> <tr style="vertical-align: bottom;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Valuation Method</span></td> <td> </td> <td colspan="2" style="text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Black Scholes</span></td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Monte Carlo</span></td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Black Scholes</span></td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Monte Carlo</span></td> <td> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 40%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Strike price (per share)</span></td> <td style="width: 1%;"> </td> <td style="width: 1%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">$</span></td> <td style="width: 11%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">7.32</span></td> <td style="width: 2%;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">$</span></td> <td style="width: 11%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">1.80</span></td> <td style="width: 2%;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">$</span></td> <td style="width: 11%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">1.66</span></td> <td style="width: 2%;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">$</span></td> <td style="width: 11%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">2.51</span></td> <td style="width: 2%;"> </td> </tr> <tr style="vertical-align: bottom; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Contractual term (years)</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">1.0</span></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3.8</span></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3.8</span></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.3</span></td> <td> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Volatility (annual)</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">78.7</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">70.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">69.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">70.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> </tr> <tr style="vertical-align: bottom; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Risk-free rate</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.1</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.1</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.1</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Dividend yield (per share)</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> </tr> <tr style="vertical-align: bottom; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Probability assessment ⁽¹⁾</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="-sec-ix-hidden:fc_750871550;">N/A</span></span></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">10%-30</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">10%-30</span></td> <td>%</td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">10%-30</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> </tr> </tbody></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse;"> <tbody><tr style="vertical-align: bottom;"> <td style="text-align: center;"> </td> <td> </td> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">December 31, 2025</span></span></td> <td> </td> </tr> <tr style="vertical-align: bottom;"> <td style="text-align: center;"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Angel</span></span><br/> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrants</span></span></td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;"> Investor</span></span><br/> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrants</span></span></td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Avenue</span></span><br/> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrants</span></span></td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Hudson</span></span><br/> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="font-weight: bold;">Warrants</span></span></td> <td> </td> </tr> <tr style="vertical-align: bottom;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Valuation Method</span></td> <td> </td> <td colspan="2" style="text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Black Scholes</span></td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Monte Carlo</span></td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Black Scholes</span></td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Monte Carlo</span></td> <td> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 40%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Strike price (per share)</span></td> <td style="width: 1%;"> </td> <td style="width: 1%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">$</span></td> <td style="width: 11%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">7.32</span></td> <td style="width: 2%;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">$</span></td> <td style="width: 11%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">1.80</span></td> <td style="width: 2%;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">$</span></td> <td style="width: 11%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">1.66</span></td> <td style="width: 2%;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">$</span></td> <td style="width: 11%; text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">2.51</span></td> <td style="width: 2%;"> </td> </tr> <tr style="vertical-align: bottom; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Contractual term (years)</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">1.5</span></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.2</span></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.2</span></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">4.8</span></td> <td> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Volatility (annual)</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">92.1</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">80.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">79.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">70.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> </tr> <tr style="vertical-align: bottom; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Risk-free rate</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3.5</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3.6</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3.6</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3.6</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Dividend yield (per share)</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">0.0</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> </tr> <tr style="vertical-align: bottom; background-color: White;"> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Probability assessment ⁽¹⁾</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><span style="-sec-ix-hidden:fc_923629825;">N/A</span></span></td> <td> </td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">10%-30</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">10%-30</span></td> <td>%</td> <td> </td> <td> </td> <td style="text-align: right;"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">10%-30</span></td> <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">%</span></td> </tr> </tbody></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt;"><tbody><tr style="vertical-align: top;"> <td style="width: 0.25in;">⁽¹⁾</td><td>Probability assessment reflects management’s estimate of the likelihood of an event that could accelerate exercisability or modify settlement mechanics under the warrant agreements</td></tr></tbody></table> 7.32 1.8 1.66 2.51 1 3.8 3.8 4.3 78.7 70 69 70 4 4.1 4.1 4.1 0 0 0 0 0.10 30 0.10 30 0.10 30 7.32 1.8 1.66 2.51 1.5 4.2 4.2 4.8 92.1 80 79 70 3.5 3.6 3.6 3.6 0 0 0 0 0.10 30 0.10 30 0.10 30 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="text-transform: uppercase;"><span style="font-weight: bold;">7. COMMITMENTS AND CONTINGENCIES</span></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Leases</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The Company leases office space for its corporate headquarters in Dallas, Texas under a single operating lease that expires in February 2028. As of June 30, 2026, remaining undiscounted lease payments were approximately $1.4 million and the related operating lease liability was $1.3 million, of which $0.8 million was classified as short-term. There have been <span style="-sec-ix-hidden:fc_98133419;">no</span> material changes to the Company’s lease obligations since December 31, 2025.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">Legal Matters</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The Company is not a party to any material legal proceedings or pending claims. From time to time, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities, none of which we believe are material or would be expected to have, individually or in the aggregate, a material adverse effect on our business, financial condition, cash flows or results of operations. </p> 1400000 1300000 800000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;"><span>8</span>. INCOME TAXES</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 16.2pt;">  </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 16.2pt;">The Company is subject to taxation in the United States, in various state and local jurisdictions, and in the United Kingdom. The current income tax expense recorded in each period presented relates principally to the Texas franchise tax, which is assessed on gross margin rather than on taxable income.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 16.2pt;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 16.2pt;">The Company recorded income tax expense of approximately $0.2 million for each of the three and six months ended June 30, 2026, and an income tax benefit of less than $0.1 million and income tax expense of approximately $0.1 million for the three and six months ended June 30, 2025, respectively. The effective tax rate was (4.2)% and (2.2)% for the three and six months ended June 30, 2026, and 0.2% and (1.0)% for the three and six months ended June 30, 2025.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 16.2pt;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 16.2pt;">The provision for income taxes for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items arising in the period. The Company’s effective tax rate differs from the U.S. federal statutory rate of 21% primarily because the Company maintains a full valuation allowance against its net deferred tax assets. As a result of cumulative losses in both the United States and the United Kingdom, management has concluded that it is not more likely than not that those deferred tax assets will be realized, and accordingly no tax benefit has been recognized for losses incurred in the periods presented.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 16.2pt;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 16.2pt;">There have been no material changes to the Company’s deferred tax assets, valuation allowance or unrecognized tax benefits since December 31, 2025. The Company evaluates its tax positions on a quarterly basis and revises its estimates as appropriate.</p> 200000 200000 100000 100000 -0.042 -0.022 0.002 -0.01 0.21 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="text-transform: uppercase;"><span style="font-weight: bold;"><span>9</span>. STOCKHOLDERS’ DEFICIT</span></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> The Company’s certificate of incorporation, as amended and restated, authorizes the issuance of 80,000,000 shares of Common Stock, $0.0001 par value and 1,000,000 shares of preferred stock, $0.0001 par value. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> During the six months ended June 30, 2026, 935,000 Pre-Funded Warrants were exercised, at an exercise price per share of $0.0001 and 30,000 Investor Warrants were exercised, at an exercise price per share of $1.80. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">During the six months ended June 30, 2026, 3,000 shares of Common Stock were sold under the Yorkville SEPA for approximately $5,000.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The Company is party to a standby equity purchase agreement with YA II PN, Ltd., an affiliate of Yorkville Advisors Global, LP (the “Yorkville SEPA”), under which the Company may, at its option and subject to the conditions and limitations of that agreement, sell shares of Common Stock to Yorkville from time to time. The Yorkville SEPA expires in March 2027. Shares sold under the Yorkville SEPA are issued at a discount to prevailing market prices, and the Company’s ability to draw on the facility is limited by the number of shares registered for resale, by ownership limitations applicable to Yorkville and by the Company’s ability to satisfy the conditions to each advance.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">As of June 30, 2026, 2,791,113 of the 6,369,937 shares registered for resale in connection with the Yorkville SEPA remained available for issuance. Because shares are issued at a discount to prevailing market prices, the amount of cash that may be realized from the remaining registered shares is not fixed and will vary with the Company’s share price. In addition, as of August 7, 2026, the Company had approximately $10.9 million available under its effective shelf registration on Form S-<span>3</span>, which may be used to sell shares under the Yorkville SEPA. The amount available is not fixed and will increase or decrease with the Company’s share price and public float, and is described more fully under <i>Sources of Liquidity</i> below.</p> 80000000 0.0001 1000000 0.0001 935000 0.0001 30000000 1.8 3000 5000000 2791113 6369937 10900000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;"><span>10</span>. STOCK-BASED COMPENSATION</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> As of June 30, 2026, there were 2,791,063 shares available for the grant of awards under the Company’s 2023 Long Term Incentive Plan (the “2023 Plan”). </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"><span style="font-weight: bold;">Restricted Stock Units</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"><span style="font-weight: bold;"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">In April 2026, the Company granted 600,000 shares of restricted stock units to the Company’s non-employee directors and CEO of which 300,000 vested in April 2026 and the remaining 300,000 will vest in April 2027. The grant date fair value of these awards was $1.1 million.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">A summary of RSU activities for the six months ended June 30, 2026 are presented below:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">Number of <br/> Shares</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">Weighted <br/> Average <br/> Grant Date <br/> Fair Value <br/> per Share</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%;">Nonvested as of January 1, 2026</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">9,700</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">0.45</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td>Granted</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">600,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">1.89</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td>Vested</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(309,700</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">1.84</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-bottom: 1.5pt;">Forfeited</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_932298979;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;">$</td> <td style="padding-bottom: 1.5pt; text-align: right;"><span style="-sec-ix-hidden:fc_1722626113;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-bottom: 2.5pt;">Nonvested as of June 30, 2026</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;"> </td> <td style="border-bottom: Black 4pt double; text-align: right;">300,000</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt; text-align: left;">$</td> <td style="padding-bottom: 2.5pt; text-align: right;">1.89</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr></tbody></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> As of June 30, 2026, total unrecognized compensation expense related to restricted stock units was $0.5 million, which is expected to be recognized over a weighted-average period of 0.75 years. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"><span style="font-weight: bold;">Stock Options</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">A summary of stock options activity for the six months ended June 30, 2026 is presented below:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; font-style: italic; text-align: center;">Stock<br/> Options</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; font-style: italic; text-align: center;">Weighted <br/> Average<br/> Exercise <br/> Price</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; font-style: italic; text-align: center;">Weighted<br/> Average <br/> Remaining<br/> Contractual<br/> Life <br/> (in years)</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; font-style: italic; text-align: center;">Aggregate<br/> Intrinsic Value <br/> (in thousands)</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 52%;">Outstanding at January 1, 2026</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">3,857,138</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">1.84</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">6.1</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">544</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Options granted</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">431,570</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">1.99</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Options forfeited</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(64,810</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">1.83</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Options cancelled</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(26,102</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">2.36</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt;">Options exercised</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(168,333</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;">$</td> <td style="padding-bottom: 1.5pt; text-align: right;">1.07</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-bottom: 2.5pt;">Outstanding as of June 30, 2026</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;"> </td> <td style="border-bottom: Black 4pt double; text-align: right;">4,029,463</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt; text-align: left;">$</td> <td style="padding-bottom: 2.5pt; text-align: right;">1.88</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt; text-align: right;">6.1</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt; text-align: left;">$</td> <td style="padding-bottom: 2.5pt; text-align: right;">1,053</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-bottom: 2.5pt;">Options vested and exercisable as of June 30, 2026</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;"> </td> <td style="border-bottom: Black 4pt double; text-align: right;">3,020,194</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt; text-align: left;">$</td> <td style="padding-bottom: 2.5pt; text-align: right;">1.98</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt; text-align: right;">5.0</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt; text-align: left;">$</td> <td style="padding-bottom: 2.5pt; text-align: right;">784</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr></tbody></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> As of June 30, 2026, total unrecognized compensation expense related to stock options was $0.8 million, which is expected to be recognized over a weighted-average period of 1.2 years. </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"><span style="font-size: 10pt;">Stock-based compensation expense, by expense category, during the three and six months ended June 30, 2026 and 2025 consisted of the following (in thousands):</span> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">Three Months Ended <br/> June 30,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">Six Months Ended<br/> June 30,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="width: 52%; text-align: left;">Research and development</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">16</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">2</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">32</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">32</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td style="text-align: left;">General and administrative</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">789</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">394</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">974</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">544</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="text-align: left; padding-bottom: 1.5pt;">Selling and marketing</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">2</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">15</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(16</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">35</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td style="text-align: left; padding-bottom: 2.5pt;">Total stock-based compensation expense</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">807</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">411</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">990</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">611</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr></tbody></table> 2791063 600000 300000 300000 1100000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">A summary of RSU activities for the six months ended June 30, 2026 are presented below:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">Number of <br/> Shares</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; font-style: italic; text-align: center; border-bottom: Black 1.5pt solid;">Weighted <br/> Average <br/> Grant Date <br/> Fair Value <br/> per Share</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 76%;">Nonvested as of January 1, 2026</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">9,700</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">0.45</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td>Granted</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">600,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">1.89</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td>Vested</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(309,700</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">1.84</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-bottom: 1.5pt;">Forfeited</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;"><span style="-sec-ix-hidden:fc_932298979;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;">$</td> <td style="padding-bottom: 1.5pt; text-align: right;"><span style="-sec-ix-hidden:fc_1722626113;">-</span></td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-bottom: 2.5pt;">Nonvested as of June 30, 2026</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;"> </td> <td style="border-bottom: Black 4pt double; text-align: right;">300,000</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt; text-align: left;">$</td> <td style="padding-bottom: 2.5pt; text-align: right;">1.89</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr></tbody></table> 9700 0.45 600000 1.89 309700 1.84 300000 1.89 500 P0Y9M <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">A summary of stock options activity for the six months ended June 30, 2026 is presented below:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="text-align: center;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; font-style: italic; text-align: center;">Stock<br/> Options</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; font-style: italic; text-align: center;">Weighted <br/> Average<br/> Exercise <br/> Price</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; font-style: italic; text-align: center;">Weighted<br/> Average <br/> Remaining<br/> Contractual<br/> Life <br/> (in years)</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> <td style="font-weight: bold; font-style: italic; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; font-style: italic; text-align: center;">Aggregate<br/> Intrinsic Value <br/> (in thousands)</td> <td style="padding-bottom: 1.5pt; font-weight: bold; font-style: italic;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="width: 52%;">Outstanding at January 1, 2026</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">3,857,138</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">1.84</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">6.1</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">544</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Options granted</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">431,570</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">1.99</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left;">Options forfeited</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(64,810</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">1.83</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="text-align: left;">Options cancelled</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">(26,102</td> <td style="text-align: left;">)</td> <td> </td> <td style="text-align: left;">$</td> <td style="text-align: right;">2.36</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;"> </td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="text-align: left; padding-bottom: 1.5pt;">Options exercised</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(168,333</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;">$</td> <td style="padding-bottom: 1.5pt; text-align: right;">1.07</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt; text-align: right;"> </td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"> <td style="padding-bottom: 2.5pt;">Outstanding as of June 30, 2026</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;"> </td> <td style="border-bottom: Black 4pt double; text-align: right;">4,029,463</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt; text-align: left;">$</td> <td style="padding-bottom: 2.5pt; text-align: right;">1.88</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt; text-align: right;">6.1</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt; text-align: left;">$</td> <td style="padding-bottom: 2.5pt; text-align: right;">1,053</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"> <td style="padding-bottom: 2.5pt;">Options vested and exercisable as of June 30, 2026</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;"> </td> <td style="border-bottom: Black 4pt double; text-align: right;">3,020,194</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt; text-align: left;">$</td> <td style="padding-bottom: 2.5pt; text-align: right;">1.98</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt; text-align: right;">5.0</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="padding-bottom: 2.5pt; text-align: left;">$</td> <td style="padding-bottom: 2.5pt; text-align: right;">784</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr></tbody></table> 3857138 1.84 P6Y1M6D 544000 431570 1.99 64810 1.83 -26102 2.36 168333 1.07 4029463 1.88 P6Y1M6D 1053000 3020194 1.98 P5Y 784000 800000 P1Y2M12D <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"><span style="font-size: 10pt;">Stock-based compensation expense, by expense category, during the three and six months ended June 30, 2026 and 2025 consisted of the following (in thousands):</span> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td style="padding-bottom: 1.5pt;"> </td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">Three Months Ended <br/> June 30,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center;">Six Months Ended<br/> June 30,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="width: 52%; text-align: left;">Research and development</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">16</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">2</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">32</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;">$</td> <td style="width: 9%; text-align: right;">32</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td style="text-align: left;">General and administrative</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">789</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">394</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">974</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">544</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="text-align: left; padding-bottom: 1.5pt;">Selling and marketing</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">2</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">15</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">(16</td> <td style="padding-bottom: 1.5pt; text-align: left;">)</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">35</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td style="text-align: left; padding-bottom: 2.5pt;">Total stock-based compensation expense</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">807</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">411</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">990</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;">$</td> <td style="border-bottom: Black 4pt double; text-align: right;">611</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr></tbody></table> 16000 2000 32000 32000 789000 394000 974000 544000 2000 15000 -16000 35000 807000 411000 990000 611000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">11. NET (LOSS) INCOME PER COMMON SHARE</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The table below summarizes potentially dilutive securities that were excluded from the above computation of net loss per common share as of the periods presented because including them would be anti-dilutive.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Six Months Ended<br/> June,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td> </td> <td colspan="2" style="text-align: center;"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="width: 76%; text-align: left;">Common stock options</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">4,029,463</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">4,407,870</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td style="text-align: left;">Common stock warrants</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">13,913,422</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">11,344,230</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="text-align: left;">Unvested restricted stock units</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">300,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">59,700</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td style="text-align: left; padding-bottom: 1.5pt;">Convertible notes payable</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">1,004,016</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">1,004,016</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="padding-bottom: 2.5pt;">Total</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;"> </td> <td style="border-bottom: Black 4pt double; text-align: right;">19,246,901</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;"> </td> <td style="border-bottom: Black 4pt double; text-align: right;">16,815,816</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr></tbody></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;">The table below summarizes potentially dilutive securities that were excluded from the above computation of net loss per common share as of the periods presented because including them would be anti-dilutive.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in;"> </p><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;"> <tbody><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">Six Months Ended<br/> June,</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2026</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> <td style="font-weight: bold; padding-bottom: 1.5pt;"> </td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid;">2025</td> <td style="padding-bottom: 1.5pt; font-weight: bold;"> </td> </tr><tr style="vertical-align: bottom;"><td> </td> <td> </td> <td colspan="2" style="text-align: center;"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center;"> </td> <td> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="width: 76%; text-align: left;">Common stock options</td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">4,029,463</td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 1%;"> </td> <td style="width: 1%; text-align: left;"> </td> <td style="width: 9%; text-align: right;">4,407,870</td> <td style="width: 1%; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td style="text-align: left;">Common stock warrants</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">13,913,422</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">11,344,230</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="text-align: left;">Unvested restricted stock units</td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">300,000</td> <td style="text-align: left;"> </td> <td> </td> <td style="text-align: left;"> </td> <td style="text-align: right;">59,700</td> <td style="text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: White;"><td style="text-align: left; padding-bottom: 1.5pt;">Convertible notes payable</td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">1,004,016</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> <td style="padding-bottom: 1.5pt;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left;"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: right;">1,004,016</td> <td style="padding-bottom: 1.5pt; text-align: left;"> </td> </tr><tr style="vertical-align: bottom; background-color: rgb(204,238,255);"><td style="padding-bottom: 2.5pt;">Total</td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;"> </td> <td style="border-bottom: Black 4pt double; text-align: right;">19,246,901</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> <td style="padding-bottom: 2.5pt;"> </td> <td style="border-bottom: Black 4pt double; text-align: left;"> </td> <td style="border-bottom: Black 4pt double; text-align: right;">16,815,816</td> <td style="padding-bottom: 2.5pt; text-align: left;"> </td> </tr></tbody></table> 4029463 4407870 13913422 11344230 300000 59700 1004016 1004016 19246901 16815816 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;"><span>12</span>. SEGMENT INFORMATION</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 16.2pt;"><span style="font-weight: bold;"> </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 16.2pt;">Operating segments are defined as components of an enterprise for which separate and discrete information is available for evaluation by the chief operating decision-maker (the “CODM”) in deciding how to allocate resources and assess performance. Through March 31, 2026 the CODM was the Chairman of the Board in conjunction with the Company’s executive management team as they managed the Company’s operations on an aggregate basis for the purpose of allocating resources. Beginning April 1, 2026, in connection with the appointment of a new <span style="-sec-ix-hidden:fc_378541508;">Chief Executive Officer</span> (“CEO”), the Company determined that its CEO is the CODM as he has ultimate decision-making authority over the Company’s operations, regulatory affairs, commercial strategy, and back-office (finance, accounting, and administrative) functions, which are the Company’s key operating departments. He is the individual who regularly reviews the Company’s consolidated operating results, assesses performance against budget, and determines how the Company’s capital and personnel resources are allocated across these functions.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 16.2pt;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 16.2pt;">The Company continues to have <span style="-sec-ix-hidden:fc_1486832182;">one</span> operating segment. The accounting policies of the Company’s single operating and reportable segment are the same as those described in the summary of significant accounting policies.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 16.2pt;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 16.2pt;">The Company’s method for measuring profitability includes net loss, which the CODM uses to assess performance and make decisions for resource allocation, consistent with the measurement principles for net income (loss) as reported on the Company’s consolidated statement of operations. Significant expense categories regularly reviewed by the CODM and included in the measure of segment profit or loss consist of cost of revenue, research and development expense, selling and marketing expense, and general and administrative expense consistent with that reported on the Company’s consolidated statement of operations. Other segment items include interest income (expense), financing-related costs, amortization of debt discount, changes in the fair value of warrant liabilities and notes payable, foreign currency gains and losses, and income tax benefit or expense consistent with that reported on the Company’s consolidated statement of operations. The amounts of each of the significant expense categories regularly reviewed by the CODM are presented on the face of the condensed consolidated statements of operations and comprehensive loss. The measure of segment assets is reported on the consolidated balance sheets as total assets.</p> the CODM uses to assess performance and make decisions for resource allocation, consistent with the measurement principles for net income (loss) as reported on the Company’s consolidated statement of operations. <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"><span style="font-weight: bold;">13. SUBSEQUENT EVENTS</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0;"> </p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 16.2pt;">On July 24, 2026, Spectral IP, a wholly-owned subsidiary of the Company, requested the withdrawal of its registration statement on Form S-1 (File No. 333-285935), which had been filed with the Securities and Exchange Commission on March 20, 2025 in connection with a proposed initial public offering of its common stock. No securities were sold under the registration statement. Spectral IP remains a wholly-owned subsidiary of the Company and continues to be consolidated in the Company’s condensed consolidated financial statements. The withdrawal did not result in any adjustment to the condensed consolidated financial statements as of and for the six months ended June 30, 2026.</p> false false false false Probability assessment reflects management’s estimate of the likelihood of an event that could accelerate exercisability or modify settlement mechanics under the warrant agreements