Note 12. Other Current Liabilities

Certain conversion features embedded within the Company’s convertible debt instruments contain variable settlement provisions and are accounted for as derivative liabilities in accordance with ASC 815, Derivatives and Hedging. As of June 30, 2026 and December 31, 2025, the Company had outstanding balances of $6.4 million and $9.1 million, respectively, related to derivative liabilities. During the six months ended June 30, 2026, changes in the derivative liabilities, including amounts associated with conversions of the underlying convertible debt, resulted in a net gain on conversion of debt of approximately $0.6 million, which is included in other income (expense) in the accompanying condensed consolidated statements of operations.

As of June 30, 2026 and December 31, 2025, the Company had outstanding balances of $5.2 and $7.1 million, respectively, under a line of credit arrangement with B1 Bank related to accounts receivable factoring. During the six months ended June 30, 2026, B1 Bank applied approximately $1.8 million of restricted cash maintained by the Company against the outstanding balance under the facility. The facility remained matured as of June 30, 2026.