v3.26.1
Related Party Transactions and Balances
 6 Months Ended
Jun. 30, 2026
Related Party Transactions [Abstract]  
Related Party Transactions and Balances
Note 9. Related Party Transactions and Balances

Transactions with the Sponsor and its affiliates

Sales Partner Referral Agreement

On June 30, 2025, the Company entered into a Sales Partner Referral Agreement (the “Referral Agreement”) with Burkhan LLC (the “Sales Partner”), an affiliate of BurTech LP, LLC (the “Sponsor”). The Referral Agreement designated BurTech Systems Tech LLC (“BST”), an affiliate of the Sales Partner, as the initial approved customer. The Referral Agreement provided for the purchase of the Company’s products by BST on behalf of a certain unaffiliated end user, subject to BST’s issuance of purchase orders. The Company received a single hardware purchase order in the second quarter of 2025 from BST for $6.3 million. A portion of the hardware purchase order was fulfilled in the second and third quarters of 2025, remaining unpaid as of December 31, 2025, resulting in a gross accounts receivable - related party as of December 31, 2025 of $3.4 million. The remainder of the hardware purchase order was fulfilled in the first quarter of 2026. BST paid the purchase order amount in full in the first quarter of 2026, relieving the accounts receivable balance and resulting in immediate hardware revenue recognition for the first quarter of 2026 (on transfer of control), with an immaterial amount of support revenue being recognized over time, including for the three and six months ended June 30, 2026. The Company has not received any further purchase orders from BST.

The Sales Partner is entitled to receive a commission from the Company of up to 10%, depending on the Company’s gross margins under the associated purchase orders. The sales commission is payable in cash, or, partially, at the Company’s discretion, in shares of the Company’s common stock. The commission became payable to the Sales Partner upon the Company’s receipt of cash from these sales. The Company paid the sales commissions due to the Sales Partner in cash in the first quarter of 2026.

During the six months ended June 30, 2026, the Company recognized $2.6 million in revenue from the Referral Agreement, which was substantially recognized in the first quarter of 2026. Sales commissions of $0.3 million were reported as a reduction of revenue in the period.

During the three and six months ended June 30, 2025, the Company recognized $1.6 million in revenue from the Referral Agreement. Sales commissions of $0.2 million were reported as a reduction of revenue in the period.

Earnout shares - related party

A portion of the earnout shares were issued to an affiliate of the Sponsor at the time of the Merger. See Note 6 — Common Stock and Contingently Issuable Common Stock and Preferred Stock. The fair value of these earnout shares - related party as of June 30, 2026 and December 31, 2025 was $1.7 million and $2.2 million, respectively, as set forth on the Company’s condensed consolidated balance sheets as of each period.

Transactions arising from the Merger having been repaid or deemed to have been repaid by the Company and release of shareholder note receivable

The following table sets forth a summary of activity regarding the Company’s liabilities due to the Sponsor resulting from the Merger, and the release of those activities during the quarter ended June 30, 2026:
(Amounts in thousands)
Activity recorded at the Merger:
Working capital loan - related party (1)
$1,500 
Advances from related party (2)
2,857 
Accounts payable - related party (3)
180 
Balance as of December 31, 20254,537 
Activity during the period ended March 31, 2026— 
Balance as of March 31, 20264,537 
Activity during the period ended June 30, 2026:
Cash payment to related party(357)
Release of accounts payable - related party (4)
(180)
Release of related party liabilities(4,000)
Balance as of June 30, 2026$— 
(1) Simultaneous with the Merger, the Company issued an unsecured promissory note (the “working capital loan”) to the Sponsor, regarding a borrowing for general corporate purposes.
(2) Simultaneous with the Merger, the Sponsor provided the Company with certain working capital advances (the “advances from related party”), which were non-interest bearing and payable on demand.
(3) The Company recorded the management fees due to the Sponsor as an assumed liability at the Merger of “accounts payable - related party”.
(4) The release of “accounts payable - related party” was recorded as an addition to “additional paid-in capital” on the Company’s condensed consolidated balance sheet as of June 30, 2026.

The Company has received no further demands from the Sponsor regarding the release of liabilities, and considers the matter closed.

Immediately prior to the consummation of the Merger, the Sponsor issued a secured promissory note and pledge agreement (the “shareholder note receivable”) to the Company, which was set to decrease when the Sponsor repaid the Company for certain transaction costs that the Company assumed from the Sponsor during the Merger. Immediately after the Merger, the Company recorded the shareholder note receivable as a deduction from additional paid-in capital.

The following table sets forth a summary of activity regarding the Company’s receivables from the Sponsor resulting from the Merger, and the net release of the shareholder note receivable during the quarter ended June 30, 2026:

(Amounts in thousands)
Activity recorded during the year ended December 31, 2025:
Shareholder note receivable from Sponsor recorded at the Merger$8,753 
Payment made by Sponsor(200)
Payment made by Company to third party for Merger transaction costs (1)
(3,000)
Balance as of December 31, 20255,553 
Activity during the period ended March 31, 2026— 
Balance as of March 31, 20265,553 
Activity during the period ended June 30, 2026:
Payment made by Company to third party for Merger transaction costs (1)
(1,000)
Release of shareholder note receivable (2)
(4,553)
Balance as of June 30, 2026$— 

(1) Payments made by the Company to third parties were recorded as reductions of cash with an offsetting charge to the income statement on the Company’s condensed consolidated statements of operations and comprehensive loss in the periods in which the payments were made, and did not offset the shareholder note receivable, as the payments were made by the Company and not the Sponsor.
(2) The release of the shareholder note receivable resulted in a transfer between “additional paid-in capital” accounts within the Company’s subledger of additional paid-in capital accounts.

The shareholder note receivable was secured by collateral of 2,000,000 shares of the Company’s common stock owned by the Sponsor. During the quarter ended June 30, 2026, the Company released the restrictive legend on these shares, which allowed the shares to be released directly to the Sponsor. No new shares of common stock were issued to the Sponsor as a result of the release of the shareholder note receivable.

Liability to issue stock to related party, and subsequent settlement

During the quarter ended and as of June 30, 2026, the Company’s disinterested directors resolved to issue 2,000,000 shares of the Company’s common stock to Bess Ventures and Advisory LLC, an entity whose owner-manager is Lane M. Bess, Chair of the Company’s Board of Directors, in order to resolve a potential disagreement with Mr. Bess by means of a future settlement agreement. The liability recorded on the Company’s condensed consolidated balance sheet as of June 30, 2026 of $2.8 million and the corresponding expense recorded on the Company’s condensed consolidated statement of operations and comprehensive loss for the three and six months ended June 30, 2026 included within “selling, general, and administrative - related party” expense represents the fair value of 2,000,000 shares of the Company’s common stock expected to be issued but not yet issued as of June 30, 2026. The shares were subsequently issued on July 7, 2026, and this liability settled in full.

Transactions with other related parties

Transactions with other related parties for marketing services and a related party employed by the Company are set forth in the table below:

Three Months Ended June 30,Six Months Ended June 30,
(Amounts in thousands)2026202520262025
Expenses incurred with other related parties:
Marketing services (1)
$— $— $— $205 
Compensation received by related party employee (2)
34 27 71 62 
Total expenses incurred with related parties (3)
$34 $27 $71 $267 

(1) A company owned by a direct family member of Mr. Lane M. Bess, chair of the Company’s Board, provided marketing services to the Company.
(2) A relative of one of the Company’s named executive officers is employed by the Company.
(3) Included in “selling, general and administrative - related party” expense on the Company’s condensed consolidated statements of operations.