Note 2. Basis of Presentation and Principles of Consolidation

The accompanying Condensed Consolidated Financial Statements of the Company are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), consistent in all material respects with those applied in the 2025 Annual Report on Form 10-K, for interim financial information and in accordance with the rules and regulations of the SEC. Accordingly, they do not include all information and footnotes normally included in annual consolidated financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 2025 Form 10-K. In the opinion of management, the Condensed Consolidated Financial Statements contain all adjustments (consisting principally of normal recurring accruals) necessary for a fair presentation of the condensed consolidated statements of comprehensive loss, balance sheets, statements of equity, and statements of cash flows for such interim periods presented. Additionally, operating results for interim periods are not necessarily indicative of the results that can be expected for a full year. The year-end balance sheet data for comparative purposes was derived from audited consolidated financial statements.

The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.  

Correction of Immaterial Misstatement

As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, the Company recorded an adjustment to correct an error related to performance bonus revenue in the amount of approximately $0.6 million. Based on an analysis of Accounting Standards Codification (“ASC”) 250, Staff Accounting Bulletin (“SAB”) 99, and SAB 108, the Company has determined that this error was not material to the previously issued interim financial statements for the six months ended June 30, 2025. Accordingly, the prior period amounts have been revised in the accompanying Condensed Consolidated Statements of Comprehensive Loss for the six months ended June 30, 2025.

Reverse Stock Split

On April 13, 2026, the Company effected a 1-for-10 reverse stock split (the “Reverse Stock Split”). The Reverse Stock Split did not change the par value of the Company’s common stock. Unless the context otherwise requires, all share and per share amounts presented in these unaudited Condensed Consolidated Financial Statements and accompanying notes, including weighted average shares outstanding and equity instruments, have been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented.

Use of Estimates

In preparing the Condensed Consolidated Financial Statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition, and revenues and expenses for the periods then ended. Actual results may differ significantly from those estimates. Significant estimates made by management include, but are not limited to, assumptions used to calculate stock-based compensation, fair value of net assets acquired in business combinations, valuation of common stock warrants and options issued for services, net realizable value and credit loss reserves of accounts receivables and other receivables, the useful lives of property and equipment and intangible assets, assumptions used in determining the potential impairment of long-lived assets, including intangible assets and goodwill, the estimate of the fair value of the lease liability and related right-of-use assets, inventory reserve estimates, and the estimates of the valuation allowance on deferred tax assets and corporate income taxes.