RTB Digital, Inc.

Organization

Prior to the second quarter of 2026, the Company’s operations were substantially comprised of its Platform Operations business and, as such, it operated and reported financial information under single reportable segment. During the second quarter of 2026, following the acquisition of Ryvyl Inc., the Chief Operating Decision Maker (“CODM”) reevaluated the Company’s reportable segments, which resulted in the addition of Fintech Operations as a component of management’s internal financial information used for operational decision making. Accordingly, the Company now operates and reports financial information undertwo reportable segments: Platform Operations and Fintech Operations. The Platform Operations segment represents the Company’s core business and where management is focusing its strategy and the majority of its resources. The Fintech Operations segment represents the legacy payment processing business that the Company acquired through its merger with Ryvyl Inc., effective May 12, 2026. The Company’s long-term approach to this legacy business will continue to be informed by an ongoing assessment of business applicability to the Platform business, profitability, market conditions, and resource allocation priorities.

Business Operations - Platform

The Platform business unit known as “Roundtable” was developed and operates an Enterprise Media Platform which hosts an exclusive coalition of professionally managed online media channels. The platform integrates distribution, publishing, monetization, community, syndication and DeFi (Decentralized Finance) payments. Roundtable’s operations primarily consist of software development; advertising and sponsorship sales and identifying and signing a group of select “Platform Partners” to operate channels on its platform.

Each channel is operated by an invite only Platform Partner, drawn from major media companies, subject matter experts, reporters, and thought leaders. Platform Partners publish professional content and oversee an online community for their respective channels, leveraging Roundtable’s proprietary, Web3-based, mobile-enabled, video-focused technology platform (the “Platform”), engaging niche audiences within a single coalition.

Platform Partners incur the costs in content creation on their respective channels and receive a share of the revenue associated with their content. Platform Partners continually benefit from Roundtable’s ongoing technological advances, scale, and expertise in search engine optimization, user engagement, ad monetization and content distribution. Additionally, Platform Partners may also save substantial costs on technology, infrastructure, advertising sales, member marketing and management.

Roundtable’s growth strategy includes recruiting additional Platform Partners that management believes will expand the scale of unique users interacting on the RTB technology platform. We believe that with increased scale in unique users, Roundtable will be able to obtain improved advertising terms and grow advertising and sponsorship revenue.

Business Operations - Fintech

The Fintech business unit provides global payment acceptance and disbursement solutions. These solutions enable merchants to accept credit card payments through arrangements with third-party acquiring banks and payment processors.

Through our Bank Identification Number (“BIN”) sponsorship arrangement, we enable businesses to process credit card transactions, providing direct access to global card networks without the need for a traditional banking license. Although this unit is not itself a payment processor, it serves as an intermediary - similar in certain respects to an independent sales organization (“ISO”) - connecting merchants with acquiring partners. However, in contrast to traditional ISOs, the unit performs a broader set of functions that are typically carried out by processors, including:

In addition, we also facilitate equipment servicing or replacement, security verifications, and handle customer support inquiries. Performing these activities enables us to maintain direct control over the merchant experience and support processes. We focus on merchants operating in underserved and, in some cases, higher risk industry verticals, where we believe our operating structure and risk-management capabilities allow us to support customer segments that many acquiring banks and processors may not be able to serve directly.

Basis of Presentation

The accompanying interim condensed consolidated financial statements of the Company are unaudited. These interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") and the applicable rules and regulations of the United States ("U.S.") Securities and Exchange Commission ("SEC") for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The December 31, 2025, condensed consolidated balance sheet was derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

The accompanying interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company's consolidated financial position, results of operations, and cash flows for the interim periods. All intercompany transactions and balances have been eliminated in consolidation. The interim results for the three and six months ended June 30, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026, or for any other future annual or interim period.

The information included in this Quarterly Report on Form 10-Q (the “Report”) should be read in conjunction with the Consolidated Financial Statements and related notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on April 16, 2026 (the “2025 Annual Report”).

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, as well as related disclosure of contingent assets and liabilities. Actual results could differ from the Company’s estimates. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or operating results will be materially affected. The Company bases its estimates on current and past experience, to the extent that historical experience is predictive of future performance and other assumptions that the Company believes are reasonable under the circumstances. The Company evaluates these estimates on an ongoing basis.

Estimates, judgments, and assumptions in these condensed consolidated financial statements include, but are not limited to, those related to the capitalization of platform development costs and associated useful lives, acquired intangible assets and associated useful lives, goodwill, valuation allowances for deferred tax assets, valuation of stock options and warrants, credit losses, and assumptions used to calculate certain contingent liabilities.

Reclassification

Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported financial position, results of operations or cash flows of the Company.

Revenue Recognition

In accordance with Accounting Standards Codification 606,Revenue from Contracts with Customers(“ASC 606”), revenues are recognized when control of the promised goods or services are transferred to the customer in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.

Platform Operations

The Company generates revenue from digital advertising, sponsorship and other service arrangements, partner and publisher arrangements, syndication arrangements, and digital subscriptions. The Company evaluates each significant revenue stream and contractual arrangement to determine whether it is acting as principal or agent. When the Company controls the promised good or service before it is transferred to the customer, revenue is recognized on a gross basis. When the Company’s role is to arrange for another party to provide the good or service, revenue is recognized on a net basis.

Because the Company enters into multiple types of revenue arrangements, its principal versus agent conclusion is evaluated separately for each significant revenue stream and contractual arrangement. In making this determination, the Company considers the indicators of control under ASC 606, including primary responsibility for fulfillment, inventory risk, and discretion in establishing price. Accordingly, some arrangements are recognized on a gross basis and others on a net basis, depending on whether the Company controls the promised good or service before it is transferred to the customer. Significant costs of revenue are presented as a separate line item on the statements of operations.

Fintech Operations

For revenue generated from arranging for the delivery of payment processing services to merchants by a payment processor, the Company typically charges specified fees on a per transaction basis, a percentage share of the transaction amount, or a combination of both. Because the terms of the customer arrangements governing these revenue transactions are substantially the same across customers, revenue recognition is assessed for these arrangements as one group.

The Company satisfies the performance obligation related to these arrangements at a point in time, upon the authorization of the transaction in the payment processor’s platform. The Company has determined that it is the principal in these arrangements on the basis of the indicators of control that are relevant to the transactions, which primarily include inventory risk and discretion in establishing price. As such, revenue from these transactions is recognized on a gross basis.

Disaggregation of Revenue

The following table provides revenue disaggregated by category and timing of recognition (in thousands):

Cash and Cash Equivalents, and Restricted Cash

The Company maintains cash and cash equivalents at banks where amounts on deposit may exceed the Federal Deposit Insurance Corporation limit of $0.25 million during the year. Cash and cash equivalents represent cash and highly liquid investments with an original contractual maturity at the date of purchase of three months or less. As of June 30, 2026, and December 31, 2025, cash and cash equivalents of $0.49 million and $0.53 million, respectively, consisted primarily of checking and money market balances. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk regarding its cash and cash equivalents.

Restricted cash primarily consists of reserves required by third-party acquiring bank partners in connection with services they provided to our merchant customers.

USDC

USDC is a stablecoin redeemable on a one-to-one basis for U.S. dollars and is accounted for as a financial instrument in the Company’s balance sheets. Circle Internet Financial, LLC (“Circle”) and its affiliate, Circle Internet Financial Europe SAS is the issuer of USDC, a crypto-asset stablecoin with a conversion rate of 1:1 pegged to the U.S. Dollar. The Company records USDC at cost, which approximates fair value, and subsequently measures it at fair value each reporting period.

Changes in the fair value of USDC, if any, are recognized in other income (expense), net in the unaudited condensed consolidated statements of operations. From time to time, the Company utilizes USDC to pay vendors and accepts USDC as payment from customers or investors in lieu of cash and cash equivalents.

There are volatility risks related to stablecoins, which are designed to have a relatively stable price relative to an underlying physical asset, most commonly a fiat currency, such as U.S. dollars, or an exchange-traded commodity. The stability of a stablecoin results from the underlying assets backing the stablecoin that are held by the stablecoin issuer in reserve accounts, among other factors, such as the ability of a holder to redeem the stablecoin from its issuer at par. The issuers of certain stablecoins currently retain broad discretion to determine the composition and amounts of assets held in the issuers’ accounts backing those stablecoins, and to substitute assets other than the fiat currency that is initially deposited. The composition of backing assets varies considerably across popular stablecoins, with some stablecoins backed entirely by off-chain assets including cash or short-term, highly liquid assets, and others backed by assets significantly less liquid than cash or cash equivalents. In the case of USDC, Circle reported that, as of December 31, 2025, underlying reserves were held in cash, short-duration U.S. Treasuries, and overnight U.S. Treasury repurchase agreements within segregated accounts for the benefit of USDC holders.

Crypto Assets

The Company holds crypto assets, including BTC, for investment and operational purposes. Crypto assets are digital assets recorded on blockchain-based distributed ledger networks and traded on digital asset exchanges. The Company measures its crypto assets at fair value at each reporting date based on quoted market prices in active markets. Changes in the fair value of crypto assets are recognized in earnings in the period in which they occur. The Company determines the cost basis of its BTC using the first-in, first-out (FIFO) method. Realized gains and losses on dispositions are calculated based on this cost-based methodology.

As of June 30, 2026, the Company had the following crypto assets (in thousands):

As of December 31, 2025, the Company had the following crypto assets:

Gains and losses related to the Company’s crypto assets primarily reflect the remeasurement of these assets to fair value during the reporting period. The fair value of BTC is determined using quoted prices in active markets and is classified within Level 1 of the fair value hierarchy.

Accounts Receivable and Allowance for Credit Losses

For our Platform Operations, accounts receivable primarily consist of amounts due from advertising partners. Accounts receivable is recorded when the right to consideration becomes unconditional and are generally collected within the contractual payment terms. The Company generally receives payments from advertising and non-advertising service customers at the time of contract sign-up, and in advance of providing services.

For our Fintech Operations, accounts receivable primarily consist of amounts due from our payment processing partners for our payment processing services and amounts due from merchants in connection with our sale of payment processing terminals and related accessories. Accounts receivable are recorded at invoiced amounts, net of an allowance for credit losses, and do not bear interest.

For all receivables, the Company performs an ongoing evaluation of collectability, customer creditworthiness, historical levels of credit losses, and future expectations. The Company records an allowance for credit losses at the amount that it believes will approximate anticipated losses. Accounts receivable are written-off when deemed uncollectible and collection of the receivable is no longer being actively pursued.

In determining the amount of an allowance, the Company considers its historical level of credit losses. The Company also makes judgments about the creditworthiness of significant customers based on ongoing credit evaluations, and the Company assesses current economic trends that might impact the level of credit losses in the future. Historically, the Company has had no significant write-offs of accounts receivable. As of June 30, 2026, and December 31, 2025, the Company’s allowance for credit losses was immaterial. Accounts receivable as of June 30, 2026, and December 31, 2025 were $1.09 million and $0.14 million, respectively.

Prepayments and Other Current Assets

Prepayments and other current assets primarily consist of prepaid insurance, inventory, and other vendor prepayments.

Research and Development Costs

Research and development costs primarily consist of salaries and benefits for research and development personnel and outsourced contracted services, as well as associated supplies and materials. These costs are expensed as incurred.

Platform Development

The Company capitalizes the costs related to outsourced consultants who are directly associated with and who devote time to creating and enhancing internally developed software for the Company’s platforms. The Company capitalizes platform development costs for internal use when planning and design efforts are successfully completed, and development is ready to commence. The Company places capitalized platform development assets into service and commences amortization when the applicable project or asset is substantially complete and ready for its intended use. Once placed into service, the Company capitalizes the qualifying costs of specified upgrades or enhancements to capitalized platform development assets when the upgrade or enhancement will result in new or additional functionality. Costs associated with platform maintenance and training are expensed as incurred.

Platform development costs are amortized on a straight-line basis over three years, which is the estimated useful life of the related asset and is recorded as an expense on the statements of operations. The amortization period may be accelerated if the useful life of the related asset is shortened.

As of June 30, 2026, and December 31, 2025, the Company had capitalized platform development costs of $0.67 million and $0.62 million, respectively, as recorded within acquired and other intangible assets, net in the Company’s interim condensed consolidated balance sheets.

Intangible Assets

Definite-lived intangible assets primarily consist of acquired and in-house developed technology, and web domains, and are amortized using the straight-line method over the estimated economic life of the assets, in accordance with ASC 350-30,Intangibles—Goodwill and Other—General Intangibles Other than Goodwill (“ASC 350-30”). In accordance with ASC 360-10,Property, plant, and equipment – Overall(“ASC 360-10”)*,*intangible assets amortized under ASC 350-30 must be tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The amortization of these assets is provided using the straight-line method over the following estimated useful lives:

Leases

The Company leases office space under non-cancellable operating leases with various expiration dates. The Company determines whether an arrangement is a lease for accounting purposes at contract inception. Operating leases are recorded as right-of-use (“ROU”) assets, which are included within noncurrent assets, and lease liabilities, which are included within current and noncurrent liabilities on our condensed consolidated balance sheets.

As of the date of this Report, the Company is past due on rent payments under its office lease for its San Diego facility. The Company is currently in negotiations with the landlord to restructure the lease. The Company will continue to evaluate all options, including modifications or termination. However, there can be no assurance that the matter will be resolved on favorable terms.

Operating lease ROU assets and operating lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. ROU assets are based on the lease liability and are increased by prepaid lease payments and decreased by lease incentives received, where applicable. The interest rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate because the interest rate implicit in the Company’s leases is not readily determinable. The Company’s incremental borrowing rate is estimated to approximate the interest rate that the Company would pay to borrow on a collateralized basis with similar terms and payments as the lease, and in economic environments where the leased asset is located. Certain leases require the Company to pay taxes, maintenance, and other operating expenses associated with the leased asset. Such amounts are not included in the measurement of the ROU assets and lease liabilities. These lease costs are recognized as lease expenses when incurred.

The Company evaluates ROU assets related to leases for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount of those assets may not be recoverable. When a decision has been made to exit a lease prior to the contractual term or to sublease that space, the Company evaluates the asset for impairment and recognizes the associated impact to the ROU asset and related expense, if applicable. The evaluation is performed at the asset group level initially and when appropriate, at the lowest level of identifiable cash flows, which is at the individual lease level. Undiscounted cash flows expected to be generated by the related ROU asset are estimated over the ROU asset’s useful life. If the evaluation indicates that the carrying amount of the ROU asset may not be recoverable, any potential impairment is measured based upon the fair value of the related ROU asset or asset group as determined by appropriate valuation techniques. During the quarter ended June 30, 2026, the Company did not identify any impairment indicators for its ROU assets.

Fair Value of Financial Instruments

The authoritative guidance with respect to fair value established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels and requires that assets and liabilities carried at fair value be classified and disclosed in one of three categories, as presented below. Disclosure as to transfers in and out of Levels 1 and 2, and activity in Level 3 fair value measurements, is also required.

Level 1. Observable inputs such as quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active-exchange traded securities and exchange-based derivatives.

Level 2. Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities.

Level 3. Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions. Financial assets and liabilities utilizing Level 3 inputs include infrequently traded non-exchange-based derivatives and commingled investment funds and are measured using present value pricing models.

The Company determines the level in the fair value hierarchy within which each fair value measurement falls in its entirety, based on the lowest level input that is significant to the fair value measurement in its entirety. In determining the appropriate levels, the Company performs an analysis of the assets and liabilities at each reporting period end.

The carrying amount of the Company’s financial instruments comprised of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, accounts payable, USDC, and accrued expenses approximate fair value because of the short-term maturity of these instruments. USDC is contractually redeemable for fiat currency on demand. As any changes in the fair value are reported in earnings as they occur, the derecognition of USDC does not necessarily give rise to a gain or loss. The Company also holds BTC, a digital asset that is measured at fair value at each reporting period based on quoted prices in active markets, with changes in fair value recognized in earnings. Additionally, the instruments associated with the March 2026 Convertible Note and March 2026 Warrants (“March 2026 Convertible Note and Warrants”), further discussed below, are classified as level 2 on the fair value hierarchy as the valuation inputs include the price of similar, but not identical, instruments.

March 2026 Convertible Note and Warrants

On March 6, 2026, the Company completed a private financing and raised $2.0 million. As part of this financing, the Company issued a non-interest-bearing convertible note and warrants, referred to as the “March 2026 Convertible Note” and the “March 2026 Warrants,” respectively. Per the terms of the agreement, the March 2026 Convertible Note converted into shares of the post-merger Company upon the close of the merger with Ryvyl Inc. The number of shares received upon the conversion of the March 2026 Convertible Note and at the close of the merger was calculated as approximately one percent of the fully diluted number of shares outstanding as of the merger date. Refer to Note 10, Subsequent Events, for more information on the merger.

The March 2026 Convertible Note had a maturity date of June 1, 2026. At maturity, if the merger had not yet occurred, the March 2026 Convertible Note would have converted into class B shares of the Company at an exercise price of $2.55 per share. There were no cash payments due on the March 2026 Convertible Note. The March 2026 Warrants were exercisable into shares of the post-merger Company for a one-year period beginning on the close date of the merger. The exercise price and number of underlying shares was determined upon the closing of the merger and was based on the number of shares received by the investor upon conversion of the March 2026 Convertible Note.

Upon conversion of the March 2026 Convertible Note and exercise of the March 2026 Warrants, the investor received restricted shares which it cannot sell or pledge for a period of time. These restrictions lapse and the shares become freely transferrable in equivalent tranches of twenty-five percent after 12 months, 15 months, 18 months, and 21 months following the close of the merger. As part of this issuance, the Company promised to provide the investor with additional shares if the Company’s market capitalization falls below certain thresholds as of the date the shares become freely transferrable. The issuance of additional shares, referred to as a “Price Protection Feature” is capped at $15.0 million.

The Company elected to account for the March 2026 Convertible Note under the fair value option whereby the Company recognized the March 2026 Convertible Note at fair value with changes in fair value recognized in earnings except for changes in fair value due to the instrument specific credit risk, which is recognized in other comprehensive income. The March 2026 Warrants were accounted for at fair value with changes in fair value recognized in earnings as it met the definition of a derivative. At inception, the March 2026 Warrants did not qualify for a scope exception to derivative accounting since the March 2026 Warrants were exercisable into an unknown number of shares. The Price Protection Feature was also accounted for at fair value with changes in fair value recognized in earnings as it represented an obligation to issue additional shares when the value of the Company’s shares decreases.

On May 12, 2026, when the merger between the Company and Ryvyl Inc. closed, the March 2026 Convertible Note converted into 179,732 shares of common stock of the Company. Prior to the conversion, the March 2026 Convertible Note was marked to its fair value of $1.40 million resulting in a gain of less than $0.01 million, recognized in other income, during the quarter ending June 30, 2026. During the quarter ending June 30, 2026, the Company did not recognize any changes in fair value in the unaudited interim condensed statement of operations or other comprehensive income for any changes in instrument specific credit risk for the March 2026 Convertible Note.

Additionally, upon close of the merger, the number of shares underlying the March 2026 Warrants became fixed at 35,947 shares. The number of shares was determined by the (a) the product of (i) March 2026 Convertible Note and (ii) twenty percent divided by the (b) the March 2026 Convertible Note’s conversion price of $11.13 per share. Due to the number of shares underlying the March 2026 Warrants becoming fixed, the March 2026 Warrants were deemed to no longer meet liability classification as the 2026 Warrants became indexed to the Company’s own stock and met the criteria for equity classification. Prior to reclassifying the March 2026 Warrants to additional paid-in capital within equity, the March 2026 Warrants were marked to fair value of $0.1 million, resulting in a gain of $0.03 million, recognized in other income, during the quarter ending June 30, 2026.

The Price Protection Feature was marked to a fair value of $0.9 million as of June 30, 2026, resulting in a loss of $0.4 million, recognized in other income during the quarter ending June 30, 2026.

Stock Based Compensation

Stock-based compensation expense relates to restricted stock units (“RSUs”) and stock options granted to employees, non-employee directors, and certain Platform Operations partners under the Company’s equity incentive plans, which are measured based on the grant-date fair value. The fair value of RSUs is determined by the closing price of the Company’s common stock on the grant date. The fair value of stock options is estimated on the date of grant using the Black-Scholes-Merton option valuation model. Generally, stock-based compensation expense is recorded on a straight-line basis over the requisite service period. The Company accounts for forfeitures as they occur.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported amounts in the interim condensed consolidated financial statements, net of operating loss carry forwards and credits, by applying enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is not more likely than not that some portion of or all the deferred tax assets will not be realized. Judgment is required in determining and evaluating income tax provisions and valuation allowances for deferred income tax assets. We recognize an income tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by tax authorities, based on the technical merits of the position.

Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. As of June 30, 2026, and December 31, 2025, the Company has a full valuation allowance on its deferred tax assets.

Net Loss Per Share

The Company’s basic net loss per share is computed by dividing the loss available to common stockholders by the weighted average number of common stock outstanding during the period without consideration of potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss available to common stockholders by the weighted-average number of shares of common stock outstanding, adjusted for the dilutive effect of all potential shares of common stock. In periods in which the Company reports a net loss, all potential common shares are excluded from the calculation of diluted loss per share, as their effect would be anti-dilutive. As such, for the quarters ended June 30, 2026, and 2025, the Company’s diluted net loss per share was the same as the basic net loss per share, as there were no common stock equivalents outstanding that would have a dilutive effect.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In July 2025, the FASB issued ASU No. 2025-05,Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). The amendments allow an entity to apply a practical expedient when estimating expected credit losses, which assumes that the current conditions as of the balance sheet date will not change for the remaining life of the accounts receivable and contract assets arising from contracts with customers. The amendments are effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those fiscal years, with early adoption permitted. If the practical expedient is elected, the amendments should be applied prospectively. The Company adopted the amendments effective for the current fiscal year and the adoption did not have a material impact on the Company’s financial statements and related disclosures.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03,Disaggregation of Income Statement Expenses ("ASU 2024-03"), and in January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date ("ASU 2025-01"). The amendments are intended to enhance disclosures regarding an entity’s costs and expenses by requiring additional disaggregated information disclosures about certain income statement expense line items. The amendments, as clarified by ASU 2025-01, are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the effect of adopting the new disclosure requirements.

In September 2025, the FASB issued ASU No. 2025-06,Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). The amendments are intended to clarify and modernize the accounting for costs related to internal-use software. The guidance removes all references to project stages and clarifies the threshold entities apply to begin capitalizing costs. The amendments are effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. The Company does not expect the adoption of ASU 2025-06 to have a material impact on the Company’s financial statements.

On May 12, 2026, the Company closed its previously announced merger with Ryvyl Inc. The transaction was accounted for as a reverse acquisition using the acquisition method in accordance with ASC 805,Business Combinations(“ASC 805”). ASC 805 requires that one of the combining entities be designated as the accounting acquiror for accounting purposes. For this transaction, the Company has been determined to be the accounting acquiror. In making this determination, management considered the structure of the merger, including the relative voting rights and the corporate governance structure of the combined company post-merger, the composition of post-merger board of directors, and the designation of key senior management positions. The purchase consideration has been preliminarily allocated to the fair value of the historical Ryvyl Inc.’s identifiable assets and liabilities as of the closing date of the merger, with the excess purchase consideration recorded as goodwill.

Consideration Transferred

The fair value of the consideration transferred on the closing date of the merger was $14.573 million, which consisted of 1,291,088 shares common stock valued at $10.083 million plus the cancellation of the Company’s pre-existing preferred stock investment in Ryvyl with a fair valueof $6.50 million, less the settlement of a pre-existing note payable plus accrued interest that the Company owed to Ryvyl valued at $2.01 million.

Preliminary Allocation of Purchase Price

The purchase price is allocated to the legacy Ryvyl assets acquired and liabilities assumed based on their estimated fair values on the merger closing date, with any excess purchase price recorded as goodwill. The purchase price allocation shown in the following table reflects the preliminary fair value estimates based on management’s analysis, including preliminary work performed by third-party valuation specialists (in thousands):

The fair values of the identifiable intangible assets acquired were determined using the income and cost approaches. The fair value measurements were primarily based on inputs that are not observable in the market and thus represent Level 3 measurements as defined in ASC 820,Fair Value Measurements and Disclosures. The multi-period excess earnings method was used to value customer relationships. This method is an application of the income approach that estimates the present value of cash flows attributable to the asset after deducting contributory asset charges for the other assets that contribute to those cash flows. To value the BIN sponsorship agreement, the cost to recreate (replacement cost) method was used, which estimates the fair value of an intangible asset based on the current cost to reconstruct or replace it with a comparable asset, adjusted for any obsolescence.

Supplemental Pro Forma Financial Information

The following unaudited pro forma financial information presents the Company’s financial results as if the merger with Ryvyl had occurred as of January 1, 2025. The unaudited pro forma financial information is not necessarily indicative of what the financial results actually would have been had the acquisitions been completed on this date. In addition, the unaudited pro forma financial information is not indicative of, nor does it purport to project, the Company’s future financial results. The pro forma information does not give effect to any estimated and potential cost savings or other operating efficiencies that could result from the acquisition.

On April 3, 2026, the Company entered into a loan agreement with Lagodivilla, Ltd. (“Lagodivilla”), pursuant to which the Company advanced a loan in the principal amount of $1.8 million. The loan bears simple interest at a rate of 5.0% per annum and had an original maturity date of June 3, 2026. Pursuant to the agreement, Lagodivilla may satisfy its repayment obligation at maturity either in USDC or, subject to specified conditions, by delivering 102,995 shares of common stock of the Company held by Lagodivilla.

As of June 30, 2026, the principal balance outstanding under the loan was $1.8 million (excluding accrued interest), which is recorded within Notes receivable, current on the Company’s unaudited condensed consolidated balance sheet. Although the original maturity date passed prior to June 30, 2026, the Company and Lagodivilla subsequently agreed to an extension of the loan term. See Note 17,Subsequent Events, for additional information. Management evaluated the collectability of the loan in accordance with ASC 326 and determined that no allowance for credit losses was required as of June 30, 2026.

Prepayments and other current assets are summarized as follows (in thousands):

The following table details intangible assets (in thousands):

Amortization expense was $0.43 million and $0.12 million for the six months ended June 30, 2026, and 2025, respectively.

The estimated future amortization expense related to intangible assets as of June 30, 2026, is as follows:

The following table details the balance in accrued liabilities (in thousands):

The following table summarizes the Company’s debt (in thousands):

Small Business Association CARES Act Loans

In connection with its merger with Ryvyl Inc., effective May 12, 2026, the Company assumed a 30-year loan with a principal balance of $149,900 (plus deferred interest of 1,748) on the acquisition date and a 27-year loan with a principal balance of $471,640 on the acquisition date. Both loans were originally secured through the Small Business Association (“SBA”). The 30-year loan bears interest at 3.75% per annum and requires principal and interest payments of $731 per month. The monthly payments are first applied against any outstanding deferred interest. The 27-year loan bears interest at 3.75% per annum and requires principal and interest payments of $2,477 per month. As of June 30, 2026, both loans were in good standing.

As described in Note 3,Business Combination, on May 12, 2026, the Company closed its merger with Ryvyl Inc., which was accounted for as a reverse acquisition. Under ASC 805, RTB Digital, Inc. was determined to be the accounting acquiror, and Ryvyl Inc. was the legal acquiror. Accordingly, the historical condensed consolidated financial statements presented prior to the merger date reflect the historical financial position and results of operations of RTB Digital, Inc. However, the capital structure (including the number of shares of common stock, preferred stock, and par value) for all prior periods presented has been retroactively restated to reflect the capital structure of Ryvyl Inc. based on the exchange ratio established in the merger agreement. The historical accumulated deficit of RTB Digital, Inc. has been carried forward.

Common Stock

As of June 30, 2026, the Company was authorized to issue a total of 500,000,000 shares of common stock, par value $0.001 per share.

As of June 30, 2026, and December 31, 2025, there were 13,301,694 and 4,165,106 shares of common stock issued and outstanding, respectively (retroactively adjusted to reflect the reverse acquisition).

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders. Common stockholders are entitled to receive dividends when, as, and if declared by the Board of Directors out of funds legally available therefore, subject to the prior rights of any preferred stock that may be outstanding.

In connection with the merger on May 12, 2026, the Company issued 1,291,088 shares of common stock with an acquisition-date fair value of $10.083 million as part of the total merger consideration.

Warrants liabilities assumed upon business combination

In July 2025, Ryvyl Inc. issued common warrants in connection with a public offering. Per the warrant agreements, upon the consummation of the merger, the warrant holders had the option to settle the warrants in cash based on the Black-Scholes calculation. The Black-Scholes value associated with the warrants was included in the liabilities assumed by the Company in connection with the merger on May 12, 2026. As further described in Note 17,*Subsequent Events,*subsequent to the closing of the merger, the warrant holders and the Company agreed to enter into modification agreements to amend and settle the original warrants.

The Company evaluated the accounting implications of the warrant amendments under ASC 815-40 and determined that they met the criteria for equity classification. As such, immediately prior to reclassification to equity on June 30, 2026, the warrant liabilities were remeasured to their aggregate fair value of $4.90 million, with the resulting change in fair value of $2.72 million recognized in the interim condensed consolidated statements of operations. The remeasured fair value of $4.90 million was subsequently reclassified from warrant liabilities to Additional Paid-in Capital at June 30, 2026. Following the reclassification and subsequent cashless exercise, no residual warrant liability remained outstanding as of June 30, 2026.

September 2025 Convertible Notes and Warrants

During September 2025, the Company received proceeds of $30.15 million in exchange for certain convertible notes (the “September 2025 Convertible Notes”) and warrants with certain investors. The proceeds consisted of cash of $15.0 million, USDC of $15.0 million, and the conversion of an existing accounts payable balance in the amount of $0.15 million. The total proceeds of $30.15 million were allocated as $30.145 million to the convertible notes and $0.005 million to the warrants.

Per the agreements, the September 2025 Convertible Notes bore interest at a rate of 12% per annum, with interest accruing in full beginning on the issuance date. However, the principal and interest accrued on the September 2025 Convertible Notes was not to be repaid in cash. All outstanding principal and accrued interest were to automatically convert into shares of the pre-merger Company’s Class B common stock upon the earliest occurrence of (i) the respective maturity date, (ii) the closing of a qualifying equity financing resulting in aggregate proceeds of at least $20.0 million, or (iii) the occurrence of a qualifying corporate transaction, as defined in the agreements. The conversion price was fixed at $2.55 per share of the pre-merger Company, subject to customary adjustments for stock splits and similar transactions.

The number of warrants issued was equal to 20% of the respective principal of the notes divided by the exercise price, which was equal to $2.55 per share of the pre-merger Company. The warrants expired one year from the issuance date and were legally detachable and separately exercisable from the September 2025 Convertible Notes.

Management evaluated the September 2025 Convertible Notes and the related warrants in accordance with applicable accounting guidance, including ASC 470, ASC 480, and ASC 815. Based on this evaluation, the Company concluded that (i) the automatic conversion feature embedded in the September 2025 Convertible Notes does not require bifurcation as a derivative, (ii) the warrants qualify as freestanding financial instruments that are indexed to the Company’s own stock and meet the criteria for equity classification, and (iii) settlement of the September 2025 Convertible Notes and warrants does not require or permit unilateral cash settlement by the holders. Accordingly, the Convertible Notes and warrants were classified within stockholders’ equity as additional paid-in capital.

The merger between Company and Ryvyl Inc., effective May 12, 2026, was deemed to represent a qualifying corporate transaction, as defined in the agreements, resulting in the automatic conversion of the entire principal and all interest accrued on the September 2025 Convertible Notes and related warrants, into shares of common stock and warrants of the post-merger Company. In connection with the conversions, the Company issued a total of 7,688,755 shares of common stock and 1,537,752 warrants during the quarter ended June 30, 2026.

Equity Incentive Plans

The Company has one equity incentive plan, the 2023 Equity Incentive Plan (“2023 Plan”), which provides employees, directors, and consultants with opportunities to acquire the Company’s shares, or to receive monetary payments based on the value of such shares. Under the 2023 Plan, Company is able to grant stock option awards, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The 2023 Plan provides for up to 145,665 shares of common stock. Grants made under the 2023 Plan will generally vest and become exercisable at various times from the grant dates. These awards will have such vesting or other provisions as may be established by the Board of Directors at the time of each award.

In addition, all pre-merger equity plans of the Company and outstanding equity awards under those plans, which include the 2024 Equity Incentive Plan and the 2025 Equity Incentive Plan, were assumed by Ryvyl, effective May 12, 2026, the merger closing date.

Equity Plans Activity

The following table provides a summary of stock option activity for the six months ended June 30, 2026:

As of June 30, 2026, total compensation cost not yet recognized related to unvested options was $1.0 million, which is expected to be recognized over a weighted-average period of 2.5 years.

In connection with its merger with Ryvyl Inc., effective May 12, 2026, the Company assumed operating leases atthree locations in the United States (California, Illinois, and Massachusetts). The Company had no finance lease obligations as of June 30, 2026.

The Company’s operating lease expense totaled $0.1 million for the six-month period ended June 30, 2026. As of June 30, 2026, the weighted-average remaining lease term was 2.4 years and the weighted average discount rate was 12.0%.

Future minimum lease payments under our operating leases and reconciliation to lease liability as of June 30, 2026, are as follows (in thousands):

The Company recorded income tax expense of approximately $0.01 million and $0.00 million for the six months ended June 30, 2026 and 2025, respectively. The Company’s effective income tax rate was approximately (0.12%) and 0.00% for the corresponding periods, respectively. The Company’s effective income tax rate differs from the U.S. federal statutory income tax rate primarily as a result of the valuation allowance maintained against the Company’s net deferred tax assets, as well as state income taxes and other permanent differences.

The Company evaluates the realizability of its deferred tax assets on a quarterly basis and records a valuation allowance when, based on the weight of available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. In making this assessment, the Company considers, among other factors, its historical operating results, cumulative losses in recent years, forecasts of future taxable income, the expected reversal of existing temporary differences, and available tax-planning strategies.

As of June 30, 2026, the Company continued to maintain a full valuation allowance against its net deferred tax assets. The Company has incurred cumulative losses and currently does not have sufficient objective positive evidence to conclude that realization of its net deferred tax assets is more likely than not. Accordingly, the Company did not recognize a material income tax benefit associated with its current-period losses or other increases in deferred tax assets. The Company will continue to evaluate the realizability of its deferred tax assets in future reporting periods, and the valuation allowance may be adjusted if sufficient positive evidence becomes available to support realization.

Merger with Ryvyl Inc. and Acquired Tax Attributes

On May 12, 2026, the Company completed its merger transaction pursuant to which RTB merged with a wholly owned merger subsidiary of Ryvyl Inc., with RTB surviving the merger as a wholly owned subsidiary of Ryvyl Inc. Following completion of the transaction, Ryvyl Inc. changed its name to RTB Digital, Inc. For financial reporting purposes, the transaction was accounted for as a reverse acquisition, with RTB treated as the accounting acquirer. For Federal Income Tax purposes, the acquirer in the transaction is Ryvyl Inc. and it is continuing tax reporting entity following the merger.

In connection with the merger and the related preliminary purchase accounting, the Company recognized deferred tax assets and liabilities associated with the differences between the financial reporting and tax bases of the acquired assets and liabilities, as applicable. Significant deferred tax assets include amounts associated with federal and state net operating loss carryforwards, intangible assets and goodwill, capitalized research and development expenditures, interest expense carryforwards, unrealized losses on digital assets and investments, and other deductible temporary differences.

As of June 30, 2026, the Company estimates that Ryvyl and RTB had approximately $128.0 million and $7.7 million, respectively, of federal net operating loss carryforwards, before consideration of any applicable limitations on their utilization. The availability and ultimate utilization of these net operating loss carryforwards and certain other tax attributes are subject to the requirements and limitations of the Internal Revenue Code and applicable state tax laws.

The merger resulted in, or is expected to result in, an ownership change for purposes of Section 382 of the Internal Revenue Code. Accordingly, the utilization of certain pre-merger net operating loss carryforwards and other tax attributes may be subject to significant annual limitations. The Company has not yet completed a formal Section 382 analysis to determine the amount of the annual limitation or whether any portion of its tax attributes may expire before they can be utilized. If the Company determines that certain tax attributes will not be available as a result of these limitations and the related deferred tax assets may be reduced in a future period. Because the Company currently maintains a full valuation allowance against its net deferred tax assets, such an adjustment is not presently expected to have a material impact on the Company's income tax expense, although the ultimate impact will depend on the results of the Company's analysis.

The income tax accounting associated with the merger remains subject to further analysis, including the determination of the tax bases of certain acquired assets and liabilities, the availability and limitation of acquired tax attributes, and the completion of the Company's Section 382 analysis. Accordingly, the amounts recorded as of June 30, 2026 may be adjusted as additional information becomes available and the Company's analysis is completed.

Uncertain Tax Positions

The Company evaluates uncertain tax positions in accordance with applicable accounting guidance. As of June 30, 2026, the Company had no material unrecognized tax benefits. The Company does not currently anticipate that its unrecognized tax benefits will change materially during the next twelve months.

Roustan Media Partnership Agreement

On January 14, 2025, the Company entered into a Coalition Partner Agreement with Roustan Media Inc., an entity affiliated with a member of the Company’s board of directors. The director’s service ended on May 25, 2026. Under the agreement, effective January 1, 2025, the Company provides digital publishing, advertising operations, distribution, and related platform services for Roustan Media’s media properties, including The Hockey News and related websites.

Pursuant to the agreement and a related term sheet executed in June 2025, the Company collects advertising and distribution revenues and remits a contractually defined revenue share to Roustan Media. The revised economics include a minimum monthly revenue support arrangement applicable to certain months in 2025, under which the Company agreed to compensate Roustan Media for shortfalls between actual advertising collections and a specified monthly threshold of $90. The specified monthly threshold ended on November 4, 2025, following the execution of the Company’s Strategic Partnership with True Sports, ULC and Roustan Media, Inc. SeeRelated Party Note Receivablesection below for additional information.

September 2025 Convertible Notes and Warrants

In September 2025, the Company entered into Convertible Note Purchase Agreements (the “September 2025 Convertible Notes”) with investors, including multiple related parties. The Convertible Notes were issued in exchange for cash and digital asset consideration and are unsecured obligations of the Company. The Notes bore interest at the stated contractual rate and were to mature during September 2026, unless earlier converted in accordance with their terms. The Convertible Notes were convertible into equity of the Company upon the occurrence of certain events or at the option of the holders, as defined in the agreements.

The merger between Company and Ryvyl Inc., effective May 12, 2026, was deemed to represent a qualifying corporate transaction, as defined in the agreements, resulting in the automatic conversion of the entire principal and all interest accrued on the September 2025 Convertible Notes and related warrants, into shares of common stock and warrants of the post-merger Company. In connection with the conversions, the Company issued a total of 7,688,755 shares of common stock and 1,537,752 warrants during the quarter ended June 30, 2026. See Note 9,*Stockholders’ Equity,*for additional information.

Related Party Note Receivable

On November 4, 2025, the Company entered into a binding letter of intent for a long-term strategic partnership agreement (the “Strategic Partnership”) with True Sports, ULC and Roustan Media, Inc. (collectively, the “Customer”), all of which are owned by a related party of the Company. In connection with the Strategic Partnership, the Company entered into a $5.0 million zero-interest note receivable (the “Note Receivable” or the “Note”) to the Customer. The Note Receivable has a contractual term offive years and requires quarterly principal payments of $0.125 million, with the remaining balance due as a balloon payment at the Note Receivable’s maturity on November 3, 2030.

During the six months ended June 30, 2026, the Company received one Note payment totaling $0.04 million, which was recorded as a reduction of the Note principal. Including the aforementioned payment, the Company has received an aggregate of $0.08 million in Note payments from the Customer. The Company previously recorded a reserve of $0.75 million against the Note as of December 31, 2025. The Company determined that the previously recorded reserve of $0.75 million remains appropriate and sufficient, based on its assessment of collectability of the Note as of June 30, 2026.

Advisory and Support Services Agreement with BFF Ltd.

On April 13, 2026, RTB Digital, Inc. (“RTBDE”), a wholly owned subsidiary of the Company, entered into an Advisory and Support Services Agreement (the “BFF Agreement”) with BFF Ltd. (“BFF”), effective as of February 8, 2026. BFF is an entity affiliated with Alykhan Madhavji, who is Chief Financial Officer and Director of the Company.

Pursuant to the BFF Agreement, BFF will provide fundraising advisory and support services to RTBDE, including investor presentation and marketing material development, investor relationship management and KYC support, transaction documentation and execution support, investor and diligence coordination, financial modeling support, and fundraising strategy and project management services. The agreement has an initial minimum term of six months, subject to earlier termination on 30 days’ written notice by either party.

Under the BFF Agreement, RTBDE is obligated to pay BFF:(i) a one-time mobilization fee of $275,000, payable within three business days following receipt of the relevant approvals under applicable law with respect to RTB’s merger process; (ii) a monthly retainer of $50,000 during the term of the agreement; (iii) a $225,000 success fee upon the successful consummation of a fundraising by RTBDE, the Company, or an affiliate involving at least $143.0 million; and (iv) upon the successful consummation of such fundraising, a non-qualified option of the Company or a similar equity based instrument under the Company’s 2026 equity incentive plan on terms to be determined. Amounts paid or payable under the BFF Agreement are non-refundable, including in the event of termination.

The BFF Agreement also provides that the Company will indemnify BFF and certain related persons against specified losses arising from, among other things, breaches by the Company or RTBDE, noncompliance with applicable law by the Company or RTBDE, inaccuracies in Company provided information, and third-party claims relating to the Company’s business, subject to customary exclusions for BFF’s gross negligence, willful misconduct, or fraud.

The Company reports its segments to reflect the manner in which its CODM reviews and assesses performance. The Company’s CODM is its CEO. The primary financial measures used by the CODM to evaluate the performance of its segments and allocate resources to them are revenue and gross profit.

The Company hastwo reportable segments: Platform Operations and Fintech Operations. The CODM uses segment revenue and gross profit for each segment during the annual budgeting and forecasting process. Further, the CODM uses segment revenue and gross profit as the metrics to assess the business trajectory of each segment on a periodic basis, and to make investment decisions and allocate operating resources to each segment. The CODM does not evaluate performance or allocate resources based on segment asset information, as assets are reviewed on a consolidated basis. As such, segment asset data is not provided.

The following tables present revenue and gross profit information for each of our reportable segments (in thousands):

The following table provides a reconciliation of total segment gross profit to the Company’s loss before provision for income taxes (in thousands):

From time to time, the Company is a party to, or has a significant relationship to, legal proceedings, lawsuits, and other claims arising in the ordinary course of business. The Company’s management evaluates the Company’s exposure to these claims and proceedings individually and in the aggregate and provides for potential losses on such litigation if the amount of the loss is estimable and the loss is probable.

In accordance with ASC 450,Contingencies, the Company accrues anticipated costs of settlement, damages, losses for claims, and under certain conditions, costs of defense, based on historical experience or to the extent specific losses are probable and estimable. Otherwise, these costs are expensed as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, the Company accrues a minimum amount of the range.

On May 12, 2026, the Company merged with Ryvyl Inc. The Company assumed all commitments, legal and otherwise, related to Ryvyl upon the effective date of the merger. For additional information, please refer to the RTB Digital, Inc. Form 10-Q as of March 31, 2026, as filed with the SEC on May 14, 2026.

Note Receivable Litigation

During June 2026, the Company filed a breach of claim suit with the holder of the Company’s note receivable described in Note 13 under the section,Related Party Note Receivable. The claim was filed due to the related party’s late repayments on the principal of the Note. At this time, the Company believes that a material loss contingency related to the claim is reasonably possible, but not probable.

The Company has determined, in accordance with applicable accounting principles, that a loss or range of loss that it may incur is not probable at this time and have therefore not recorded a liability for this matter. Also, as noted in Note 5,Related Party Note Receivable, the Company previously recorded a reserve against the Note in the amount of $0.75 million, which it believes remains appropriate and sufficient as June 30, 2026.

Purchase Commitments

Aside from the Company’s operating lease commitments, which are disclosed in Note 11,Leases, the Company also has the following non-cancellable purchase commitments under services contracts with vendors for software products, as of June 30, 2026:

Employment Agreements

George Oliva Employment Agreement

In connection with its merger with Ryvyl Inc., the Company assumed the employment agreement of Ryvyl’s Chief Financial Officer, George Oliva, who now serves as the Company’s Chief Accounting Officer following the effective date of the merger. Pursuant to the Employment Agreement, Mr. Oliva will continue his employment on an “at-will” basis with compensation to be set by the Company’s management team on an annual basis, eligibility for bonuses in accordance with the Company’s applicable bonus programs, and eligibility for other benefits such as participation in any retirement plans and insurance plans. The Company may terminate the Employment Agreement for cause and Mr. Oliva may terminate the Employment Agreement for good reason, both as further described in the Employment Agreement, and both the Company and Mr. Oliva may also terminate without cause subject to fifteen prior days’ notice. Upon termination for cause (by the Company) or without cause (by Mr. Oliva), the Company will pay for any earned but unpaid base salary, bonus, and vested benefits through the date of termination. In addition to the foregoing, in the case of termination without cause (by the Company) or for good reason (by Mr. Oliva), the Company will also pay Mr. Oliva severance in the amount of twelve months salary to be paid in twelve equal instalments, all vested equity awards will be fully vested, and continue to cover Mr. Oliva’s group health plan premium for a period of twelve months. The Employment Agreement contains standard covenants by the Company and Mr. Oliva, including as it relates to confidentiality and indemnification, and defines the duties and responsibilities of Mr. Oliva’s continued employment with the Company.

Independent Contractor Chief Financial Officer Services Agreement

On November 1, 2025 (the "Effective Date"), the Company entered into an Independent Contractor Agreement (the "Agreement") with Aly Madhavji, pursuant to which Mr. Madhavji provides Chief Financial Officer services to the Company and serves as the Company's Chief Financial Officer. The Agreement has an initial term of 36 months from the Effective Date, unless sooner terminated. Either party may terminate the Agreement at any time, with or without cause and without liability, upon at least 60 days' prior written notice, provided that the Company remains obligated to pay Mr. Madhavji for services rendered and to reimburse authorized expenses incurred prior to the termination date.

Per the terms of the Agreement, the Company is obligated to pay Mr. Madhavji a fee of $15,000 per month. Mr. Madhavji is also entitled to a grant of stock options under the Company's 2025 Stock Option Plan, subject to Board approval and time-based vesting. As of June 30, 2026, the Company's remaining minimum cash commitment under the Agreement, assuming no early termination, was approximately $420,000.

From time to time, the Company is and may become involved in legal proceedings. The Company records a liability for those legal proceedings when it determines it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company also discloses when it is reasonably possible that a material loss may be incurred, however, the amount cannot be reasonably estimated. From time to time, the Company may enter into discussions regarding settlement of these matters, and may enter into settlement agreements, if it believes settlement is in the best interest of the Company and its shareholders. The following is a summary of our current outstanding litigation.

Warrant Modifications and Terminations

Funicular Funds, LP (“Funicular”) entered into a modification agreement, dated June 11, 2026, with the Company to modify the terms of the put option contained in the warrant for common stock issued to Funicular on July 15, 2025. The modification (i) extended the period during which Funicular could exercise the put option to require the Company to pay the Black Sholes value of the warrant on consummation of the merger on May 12, 2026, and (ii) Funicular further agreed not to exercise the put option until after August 5, 2026, exercisable for 30 days thereafter. On July 13, 2026, the Company issued 20,000 shares of common stock, as restricted stock, to Funicular in payment for the extension. Subsequently, the holder exercised the warrant on a cashless basis according to the cashless exercise provision in the warrant for 67,999 shares of common stock, calculated according to the formula set forth in the warrant, which exercise fully extinguished the warrant and the put option.

Armistice Capital Master Fund Ltd. (“Armistice”) entered into two modifications dated and June 11, 2026, and August 7, 2026, with the Company to modify the terms of the warrant for common stock issued to Armistice on July 15, 2025. The two modification agreements together (i) terminated the put option granted to Armistice to require the Company to pay the Black Sholes value of the warrant on consummation of the merger on May 12, 2026, (ii) revised the cashless exercise provision to be an automatic exercise for 350,000 shares of common stock on a non-formulaic basis, and (iii) permitted the Company, at its option, to extinguish the warrant in full, prior to it its automatic cashless exercise, for a fee of $1,750,000. The Company paid $300,000 to Armistice to modify its rights under the warrant. In a third modification dated August 11, 2026, Armistice paid the Company $1,400,000 to extinguish the Company’s right to extinguish the warrant, which would have prevented the automatic cashless exercise, and thus permitted the automatic cashless exercise on August 12, 2026. Under the automatic cashless exercise provision, the Company issued 350,000 shares on August 12, 2026, and the warrant was fully extinguished.

Amendment to Note Receivable Maturity Date

On August 12, 2026, the Company and Lagodivilla mutually agreed to extend the repayment date under the loan agreement dated April 3, 2026, to September 15, 2026, on which date the full principal of $1,800,000 plus accrued interest, will be repaid in full. All other terms of the loan agreement remain unchanged and in full force.