Stockholders’ Deficit |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Equity [Abstract] | |
| Stockholders’ Deficit | 7. Stockholders’ Deficit
2024 SEPA Draws
As further described in the Form 10-K, the Company entered into a Standby Equity Purchase Agreement (“2024 SEPA”) with YA II PN, LTD, a Cayman Islands exempt limited company (“Yorkville”), on June 17, 2024. Under the 2024 SEPA, the Company has the right to sell to Yorkville up to $25.0 million of its Common Stock, subject to certain limitations and conditions set forth in the 2024 SEPA, from time to time, over a 24-month period. The 2024 SEPA was accounted for as a liability under ASC 815 as it includes an embedded put option and an embedded forward option. The put option is recognized at inception and the forward option is recognized upon issuance of notice for the sale of the Company’s Common Stock.
The commitment period under the 2024 SEPA expired in June 2026 and, therefore, the derivative liability was $0 at June 30, 2026. The fair value of the derivative liability related to the embedded put option was estimated at $0.2 million at December 31, 2025, which was classified within short-term liabilities on the condensed consolidated balance sheets because the commitment period expired in less than one year.
During the six months ended June 30, 2026, the Company delivered four advance notices for the sale of shares of its Common Stock, resulting in cumulative gross proceeds of $1.0 million. A derivative asset for each embedded forward option was initially recorded at fair value upon delivery of each advance notice, which was subsequently remeasured with changes in fair value recorded in the condensed consolidated statements of operations until settlement. The Company recognized a gain of $0.1 million related to embedded forward options during the six months ended June 30, 2026. The embedded forward option was deemed to have no value at December 31, 2025 as there were no outstanding notices for the sale of the Company’s Common Stock. During the six months ended June 30, 2025, the Company did not deliver any advance notices under the 2024 SEPA.
The estimated issuance date fair value and remeasurement adjustment for the embedded put option and embedded forward option are presented as a single line within other (income) expense, net in the accompanying consolidated statements of operations under the caption change in fair value of 2024 SEPA derivative liabilities. The embedded put option fair value adjustment was a gain of $0.1 million and $0.2 million for the three and six months ended June 30, 2026, respectively, and a gain of $0.1 million and $0.4 million for the three and six months ended June 30, 2025, respectively. The embedded forward option fair value adjustment was a gain of $0.01 million and $0.1 million for the three and six months ended June 30, 2026, respectively, and $0 for the three and six months ended June 30, 2025, respectively.
Subscription Agreements – Related Parties
Between February and June 2026, the Company entered into subscription agreements with two related party investors pursuant to which the Company agreed to issue and sell an aggregate of shares of its Common Stock at prices between $ and $ per share. The Company received gross proceeds of approximately $2.1 million from the related party subscription agreements.
ARC Forward Contract
As of June 30, 2026 and December 31, 2025, the Company had an outstanding forward contract to issue shares of its Common Stock to ARC Group Limited for success fees earned from Data Knights in connection with the Business Combination. The forward contract was included in additional paid-in-capital in stockholders’ deficit in the consolidated balance sheets as it met the criteria for equity accounting under ASC 815.
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