Note 16. Subsequent Events

On July 29, 2026, the Company entered into the Securities Purchase Agreement with certain existing investors pursuant to which the investors agreed to purchase an aggregate of 55,000 shares of Series A Convertible Preferred Stock for an aggregate purchase price of $55.0 million. The purchase price is payable as (i) $15.0 million in cash (the “Cash Investment”), paid on the signing date of the Securities Purchase Agreement, and (ii) the conversion of $40.0 million of existing indebtedness held by such investors under the Financing Agreement, with such indebtedness to be cancelled and extinguished in exchange for shares of Series A Convertible Preferred Stock at the closing of the Securities Purchase Agreement.

The issuance of the Series A Convertible Preferred Stock is subject to certain closing conditions, including stockholder approval and the implementation of a reverse stock split of the Company’s common stock, at a ratio ranging from any whole number between 1-for-15 and 1-for-40 (the “Reverse Stock Split”), or such other ratio as may be approved by the Board, including at least one Preferred Director (as defined below). Upon closing of the Securities Purchase Agreement, certain outstanding Warrants held by the investors party to the Securities Purchase Agreement to purchase approximately 27.6 million shares of common stock will be cancelled. In connection with entering into the Securities Purchase Agreement and Amendment No. 3 to the Financing Agreement described below, the Company issued to the investors under the Securities Purchase Agreement warrants to purchase up to an aggregate of approximately 15.3 million shares of common stock, at purchase price of $0.01 per share of common stock. Such warrants are exercisable for a period of 7 years after the date of issuance.

The Series A Convertible Preferred Stock will accrue dividends at 8% per annum and will be convertible at the option of the holders thereof at any time into shares of common stock at an initial conversion price of approximately $0.50 per share, as adjusted for any stock dividend, stock split, stock combination, or reclassification of the common stock, including the Reverse Stock Split. The Series A Convertible Preferred Stock will rank senior to the Company's common stock with respect to dividend and liquidation rights.

Pursuant to the Securities Purchase Agreement, the Company decreased the size of its Board to seven members, effective upon the execution of the Purchase Agreement. Under the terms of the Purchase Agreement, following the closing, TCW shall have the right to designate two members of the Board (the “Preferred Directors”). TCW has initially designated Chan W. Galbato and Steven F. Mayer, both of whom are currently serving as members of the Board, to serve as the Preferred Directors. In addition, for so long as TCW is entitled to designate at least one Preferred Director, (i) each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee of the Board shall include at least one Preferred Director (subject to applicable independence requirements and applicable law), and (ii) the Company shall not establish any executive committee, finance committee or other committee of the Board with material authority over any of the matters that require the approval of the holders of the Series A Convertible Preferred Stock under the Certificate of Designations unless a Preferred Director is a member of such committee (subject to certain exceptions).

Concurrently with entering into the Securities Purchase Agreement, the Company entered into Amendment No. 3 to the Financing Agreement. Amendment No. 3 amended the Financing Agreement to, among other things, (i) provide a covenant holiday with respect to certain financial covenants through December 31, 2027, (ii) modify the terms of the minimum liquidity requirement, (iii) increase certain fees applicable to prepayments, (iv) provide that if the Securities Purchase Agreement is terminated, the Cash Investment is deemed to be a secured obligation under the Financing Agreement and subject to repayment, together with a $15.0 million fee, upon repayment or satisfaction of the obligations (or earlier acceleration thereof), (v) provide for an additional $5.0 million delayed draw term loan commitment, subject to specified conditions, and (vi) converts the revolving credit facility into an asset-based lending facility.

If the Securities Purchase Agreement is terminated pursuant to its terms (including if stockholder approval is not obtained for the issuance of the Series A Convertible Preferred Stock), (i) the Cash Investment will automatically be deemed to be an Obligation (as defined in the Financing Agreement) under the Financing Agreement, and (ii) the Company will be required to pay a fee in an amount equal to $15.0 million to TCW, as administrative agent under the Financing Agreement, to be allocated among the investors under the Securities Purchase Agreement in accordance with the amounts funded by such investors. Such amount shall be fully earned, non-refundable, and due on such date of termination, and payable in full in cash on the earliest to occur of (i) the final maturity date under the Financing Agreement; (ii) the date on which all Obligations that are then due and payable are indefeasibly paid in full, in cash; (iii) the date on which all or any portion of the Obligations is accelerated; or (iv) the date on which any of the Obligations is satisfied, released, paid, restructured, reorganized, replaced, reinstated, defeased or compromised, including through foreclosure (whether by judicial proceeding or otherwise), a deed in lieu of foreclosure, or a distribution of any kind made to TCW, as administrative agent under the Financing Agreement, or the lenders in full or partial satisfaction of the Obligations.

The Company is evaluating the accounting impact of these transactions, including the classification and measurement of the Series A Convertible Preferred Stock, warrants, debt conversion and debt amendment. The Company is currently unable to reasonably estimate the financial effect of these transactions on its financial statements at this time.