Related Parties |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Related Party Transactions [Abstract] | |
| Related Parties | Related Parties Nathaniel Bradley and EOS Holdings Nathaniel Bradley, the Chief Executive Officer (“CEO”) of the Company, is a control person of EOS Holdings which became a related party of the Company at the close of the EOS Asset Acquisition on December 31, 2024. In addition, Sonia Choi, the Company’s Chief Marketing Officer is the spouse of the Company’s CEO and holds the position of Chief Marketing Officer of EOS Holdings, a related party of the Company. EOS Holdings received 3,999,911 shares of common stock of the Company at the close of the transaction. As described in Note 5 Borrowings, the Company fully paid the EOS Convertible Note to EOS Holdings during the first quarter of 2026. In the third quarter of 2025, EOS Holdings exercised its conversion right under the EOS Convertible Note, converting approximately $3.2 million of the principal balance into shares of the Company’s common stock. In addition to the EOS Convertible Note, on January 16, 2025, the Company entered into a Transition Services Agreement (“Transition Services Agreement”) to receive from EOS Holdings, employees to provide transition services in connection with the EOS Acquired Assets for a period of up to three months. For the three and six months ended June 30, 2026, the Company has paid $0 and $11,431, respectively, to EOS Holdings and has a balance due to EOS as of June 30, 2026 of $0.5 million. $0.4 million and $0.5 million was paid to EOS Holdings for the three and six months ended June 30, 2025. Pursuant to the asset acquisition agreement with EOS Holdings, the Company is obligated to pay an earnout equal to 3% of Net Revenue (as defined in the agreement) generated from products and/or services utilizing the acquired Patent Rights. For the three and six months ended June 30, 2026, the Company recorded $4,050 earnout expense. There was no earnout expense or associated revenue for the three and six months ended June 30, 2025. As of June 30, 2026, the Company had accrued approximately $0.8 million in earnout payable to EOS Holdings which is included in the accrued liabilities section of the balance sheet. As of December 31, 2025, the Company had accrued approximately $0.8 million in earnout payable. This transaction is expected to be settled with the issuance of stock. No payments or stock issuances were made during the six months ended June 30, 2026. Helge Kristensen Mr. Kristensen has served as a member of the Company’s board of directors since 2010. Mr. Kristensen serves as vice president of Hansong Technology, an original device manufacturer of audio products based in China, president of Platin Gate Aps, a company with focus on service-branding in lifestyle products as well as pro line products based in Denmark and co-founder and director of Inizio Capital, an investment company based in the Cayman Islands. For the three months ended June 30, 2026 and 2025, Hansong Technology purchased modules from the Company and was assessed fees of approximately $316,000 and $26,000, respectively, and made no payments for the three months ended June 30, 2026 and 2025. At June 30, 2026 and 2025, Hansong Technology owed the Company $290,000 and $42,000, respectively. For the six months ended June 30, 2026 and 2025, Hansong Technology purchased modules from the Company and was assessed fees of approximately $457,000 and $37,000, respectively, and made no payments to the company for the six months ended June 30, 2026 and 2025. For the three months ended June 30, 2026 and 2025, Hansong Technology sold speaker products to the Company of approximately $4,000 and $1,000, respectively, and the Company made zero and $2,000 payments to Hansong Technology for the three months ended June 30, 2026 and 2025. At June 30, 2026 and 2025, the Company owed Hansong approximately zero and $42,000, respectively. For the six months ended June 30, 2026 and 2025, Hansong Technology sold speaker products to the Company of approximately $4,000 and $1,000, respectively, and the Company made no and $2,000 payments to Hansong Technology for the six months ended June 30, 2026 and 2025. As of June 30, 2026 and December 31, 2025, Mr. Kristensen owned less than 1.0% of the outstanding shares of the Company’s common stock. Scilex Advances and Bitcoin Transactions During the six months ended June 30, 2026, Scilex, a related party and significant shareholder of the Company, provided short-term cash advances to the Company to support working capital and operating needs. The advances bore interest at an annual rate of 15.42%. During the six months ended June 30, 2026, the Company received aggregate cash advances from Scilex of approximately $18.7 million and repaid approximately $18.1 million of principal and $0.1 million of accrued interest through transfers of Bitcoin. There were no advances or repayments during the three months ended June 30, 2026. As of June 30, 2026, amounts outstanding under the advances totaled approximately $0.7 million of principal and $28,000 of accrued interest. There were no Scilex advances for the three or six months ended June 30, 2025. Other Intangible Asset Acquisitions During the six months ended June 30, 2026, the Company acquired an additional patent from three inventors, including Dr. Henry Ji and Stephen Ma, both related parties, for an aggregate fair value of approximately $5.4 million. Dr. Ji is a related party of the Company, and Mr. Ma serves as Chief Financial Officer of Scilex, Inc., a significant shareholder and related party of the Company. The patent was assigned a useful life of 10 years based on the estimated period of expected future economic benefit. As consideration for the acquisition, the Company agreed to issue an aggregate of 7,500,000 shares of common stock, consisting of 2,500,000 initial closing shares and 5,000,000 contingent shares issuable upon achievement of specified milestones. The contingent shares were issued during the six months ended June 30, 2026. The Company recorded amortization expense related to the acquired patent of approximately $0.1 million and $0.2 million for the three and six months ended June 30, 2026, respectively. There was no amortization expense related to the acquired patent for the three and six months ended June 30, 2025. Investment in Vivasor, Inc. Vivasor, Inc. (“Vivasor”) is a related party of the Company. Dr. Henry Ji, a related party of the Company, serves as Chief Executive Officer of Vivasor. During the six months ended June 30, 2026, the Company acquired an approximately 2% ownership interest in Vivasor for aggregate consideration of approximately $56.2 million, which was paid in the Company's common stock. The investment is accounted for as an equity security without a readily determinable fair value under the measurement alternative in accordance with ASC 321, Investments—Equity Securities. During the three and six months ended June 30, 2026, the Company recognized an impairment loss of approximately $55.4 million related to its investment in Vivasor. As a result, the carrying value of the investment was approximately $0.8 million as of June 30, 2026. See Note 6, Investments, for additional information regarding the Company’s investment in Vivasor and the related impairment.
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