American Well Corp

NOTES TO CONDENSED CONSOLID ATED FINANCIAL STATEMENTS

1. Organization and Description of Business

American Well Corporation (the “Company”) was incorporated under the laws of the State of Delaware in June 2006. The Company is headquartered in Boston, Massachusetts. The Company is a leading enterprise software company enabling digital delivery of care for healthcare’s key stakeholders. The Company empowers our clients with the core technology and services necessary to successfully develop and distribute virtual care programs that meet their strategic, operational, financial and clinical objectives under their own brands.

2. Summary of Significant Accounting Policies

There have been no material changes to the significant accounting policies described in the Company’s Form 10-K for the fiscal year ended December 31, 2025, that have had a material impact on the consolidated financial statements and related notes.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring accruals and adjustments) necessary for the fair statement of the Company’s financial position, results of operations and cash flows at the dates and for the periods indicated. The interim results for the three and nine months ended September 30, 2026 are not necessarily indicative of results for the full 2026 calendar year or any other future interim periods. The information included in the interim financial statements should be read in conjunction with the annual consolidated financial statements and accompanying notes included in the Form 10-K.

The unaudited condensed consolidated financial statements include the accounts of American Well Corporation, its wholly-owned subsidiaries, those of professional corporations, which represent variable interest entities in which American Well has an interest and is the primary beneficiary (“PC”), and National Telehealth Network (“NTN”), an entity in which American Well controls fifty percent or more of the voting shares. Intercompany accounts and transactions have been eliminated in consolidation.

The Company’s reporting currency is the U.S. dollar. The Company determines the functional currency of each subsidiary based on the currency of the primary economic environment in which each subsidiary operates. Items included in the financial statements of such subsidiaries are measured using that functional currency. Foreign currency denominated monetary assets and liabilities are remeasured into U.S. dollars at current exchange rates and foreign currency denominated nonmonetary assets and liabilities are remeasured into U.S. dollars at historical exchange rates. Gains or losses from foreign currency remeasurement and settlements are included in interest income and other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.

For consolidated entities where American Well owns or is exposed to less than 100% of the economics, the net loss attributable to noncontrolling interests is recorded in the condensed consolidated statements of operations and comprehensive loss equal to the percentage of the economic or ownership interest retained in each entity by the respective non-controlling party. The noncontrolling interests are presented as a separate component of stockholders’ equity in the condensed consolidated balance sheets.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reported periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, revenue recognition, the useful lives of intangible assets and the valuation of common stock awards. The Company bases its estimates on historical experience, known trends, and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates, as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ from those estimates or assumptions.

Segment Information

The Company’s chief operating decision maker (CODM), its Chief Executive Officer, is provided financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. The Company operates and manages its business asone reportable and operating segment. In addition, substantially all of the Company’s revenue and long-lived assets are attributable to operations in the United States for all periods presented.

Variable Interest Entities

The Company evaluates its ownership, contractual and other interests in entities to determine if it has any variable interest in a variable interest entity (“VIE”). These evaluations are complex and involve judgment. If the Company determines that an entity in which it holds a contractual or ownership interest is a VIE and that the Company is the primary beneficiary, the Company consolidates such entity in its condensed consolidated financial statements. The primary beneficiary of a VIE is the party that meets both of the following criteria: (i) has the power to make decisions that most significantly affect the economic performance of the VIE; and (ii) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. Management performs ongoing reassessments of whether changes in the facts and circumstances regarding the Company’s involvement with a VIE will cause the consolidation conclusion to change. Changes in consolidation status are applied prospectively.

The aggregate carrying value of total assets and total liabilities included on the condensed consolidated balance sheets for the PCs after elimination of intercompany transactions were$26,652 and$1,384, respectively, as of September 30, 2026 and $16,810 and $246, respectively as of December 31, 2025.

Total revenue included on the condensed consolidated statements of operations and comprehensive loss for the PCs after elimination of intercompany transactions was$6,955 and $6,599 for the three months ended September 30, 2026 and 2025, respectively. Net loss included on the condensed consolidated statements of operations and comprehensive loss was not material for the three months ended September 30, 2026 and 2025. Total revenue included on the condensed consolidated statements of operations and comprehensive loss for the PCs after elimination of intercompany transactions was$22,365 and $24,153 for thenine months ended September 30, 2026 and 2025, respectively. Net loss included on the condensed consolidated statements of operations and comprehensive loss was not material for the nine months ended September 30, 2026 and 2025.

Investment in Minority Owned Joint Venture

In 2019, the Company and Cleveland Clinic partnered to form a joint venture, under the name CCAW, JV LLC, to provide broad access to comprehensive and high acuity care services via digital care delivery. During 2025, the companies entered into an agreement for the complete liquidation and dissolution of the joint venture. As part of this agreement the Company will continue to support virtual second opinion services that were previously provided by CCAW, JV LLC, though our existing relationship with Cleveland Clinic. Certain business activities will continue through the transition period which will conclude in 2026.

For the three and nine months ended September 30, 2026 and the three months ended September 30, 2025 the Company didnot recognize any loss or income as its proportionate share of the joint venture’s results of operations, as the investment balance was written down to zero. For the nine months ended September 30, 2025, the Company recognized a loss of $1,500, as its proportionate share of the joint venture’s results of operations. Accordingly, the carrying value of the equity method investment as of September 30, 2026 and December 31, 2025 waszero.

Concentrations of Credit Risk and Significant Clients

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, investments and accounts receivable. The Company invests its excess cash with large financial institutions. Cash and cash equivalents are invested in highly rated money market funds. At times, the Company’s cash balances with individual banking institutions are in excess of federally insured limits. The Company’s investments are invested in U.S. government agency bonds. The Company has not experienced any losses on its deposits of cash, cash equivalents or investments. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

The Company performs ongoing assessments and credit evaluations of its clients to assess the collectability of the accounts based on a number of factors, including past transaction experience, age of the accounts receivable, review of the invoicing terms of the contracts, and recent communication with clients. The Company has not experienced significant credit losses from its accounts receivable. As of September 30, 2026, two clients accounted for 62% and 11% of outstanding accounts receivable, and as of December 31, 2025, one client accounted for 53% of outstanding accounts receivable.

During the three months ended September 30, 2026, sales to two clients represented 40% and 17% of the Company’s total revenue. During the nine months ended September 30, 2026, sales to two clients represented 40% and 17% of the Company's total revenue. During the three months ended September 30, 2025, sales to two clients represented 32% and 21%of the Company's total revenue. During the nine months ended September 30, 2025, sales to two clients represented 29% and 24% of the Company's total revenue.

Intangible Assets

Intangible assets acquired in a business combination are recognized at fair value using generally accepted valuation methods deemed appropriate for the type of intangible asset acquired and reported net of accumulated amortization, separately from goodwill. Definite-lived intangible assets, which primarily consist of customer relationships, contractor relationships, technology and trade name, are stated at historical cost and amortized over the assets’ estimated useful lives. Intangible assets are re-evaluated whenever events or changes in circumstances indicate that their estimated useful lives may require revision and/or the carrying value of the related asset group may not be recoverable by its projected undiscounted cash flows. If the carrying value of the asset group is determined to be unrecoverable, an impairment charge would be recognized in an amount equal to the amount by which the carrying value of the asset group exceeds its fair value. The Company did not identify a triggering event in the nine months ended September 30, 2026 and 2025. No impairments were identified during thenine months ended September 30, 2026 and 2025.

Impairment of Long-Lived Assets

Long-lived assets consist primarily of property and equipment and intangible assets. Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets, among others. When testing for asset impairment, the Company groups assets and liabilities at the lowest level for which cash flows are separately identifiable. If an impairment review is performed to evaluate a long-lived asset group for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset group to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset group are less than the asset’s carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset group over its fair value. The Company did not identify a triggering event in the nine months ended September 30, 2025 andno impairments were identified during thenine months ended September 30, 2025. In the nine months ended September 30, 2026 the Company abandoned its corporate headquarters and as part of this fully impaired the right of use asset related to the lease. An impairment charge of $3,424 was recorded in operating expenses in the statement of operations, the lease was not terminated and rent payments will be made over the remaining lease term.

Recently Issued Accounting Pronouncements and Disclosure Rules

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of income statement expenses(“ASU 2024-03”), which requires disaggregated information about certain income statement expense line items on an annual and interim basis. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted and can be applied prospectively or retrospectively. We are evaluating the effect that this guidance will have on our consolidated financial statement disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Improvements to the Accounting for and Disclosure of Software Costs. The new guidance eliminates the prior stage-based model (e.g., preliminary, development, post-implementation) and introduces a principles-based approach. Software costs may be capitalized once (1) management commits to funding the project and (2) it is probable the software will be completed and used for its intended function. Entities must assess whether significant development uncertainty exists. The standard is effective for annual periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods, with early adoption permitted. Transition options include prospective, modified prospective, or retrospective application. The Company is currently evaluating the impact of ASU 2025-06 on its financial statements and related disclosures.

3. Segment Information

The Company operates and manages its business asone reportableand operating segment. The Company’s Amwell Platform enables hybrid care delivery for our customers. The measure of segment assets is reported on the balance sheet as total consolidated assets. In addition, the Company derives revenue primarily in the United States and manages the business activities on a consolidated basis.

The Company generates revenues from the use of the Amwell Platform in the form of recurring subscription fees for use. We also generate revenue from the performance of patient visits and other related professional services and hardware sales. The accounting policies are the same as those described in the summary of significant accounting policies.

The Company’s chief operating decision maker (CODM), its Chief Executive Officer, reviews financial information presented on a consolidated basis and decides how to allocate resources based on net loss. Consolidated net loss is used for evaluating financial performance. The monitoring of budgeted versus actual results are used in assessing performance of the Company and in establishing management’s compensation.

The significant expense categories and amounts align with information that is regularly provided to the CODM. Significant segment expenses, consist of the following:

(1)Other segment expense items primarily include hosting, hardware, corporate compliance, severance, strategic transformation costs, amortization, depreciation, bad debt and overhead expenses.

4. Revenue

The following table presents the Company’s revenues disaggregated by revenue source:

Accounts Receivable, Net

Changes in the allowance for credit losses were as follows:

The Company has rights to consideration for services completed but not billed at the reporting date. Unbilled receivables are recorded as receivables when the Company has the right to invoice the client. The amount of unbilled accounts receivable included within accounts receivable on the condensed consolidated balance sheet was$8,725 and $4,322 as of September 30, 2026 and December 31, 2025, respectively.

Deferred Revenue

Contract liabilities consist of deferred revenue and include collections in advance of performance under the contract. Such amounts are recognized as revenue over the contractual period. For the three months ended September 30, 2026 and 2025, the Company recognized revenue of$3,351 and $19,436, respectively, that was included in the corresponding contract liability balance at the beginning of the periods presented. For thenine months ended September 30, 2026 and 2025, the Company recognized revenue of$19,293 and $46,342, respectively, that was included in the corresponding contract liability balance at the beginning of the periods presented.

Changes in the Company’s deferred revenue balance for thenine months ended September 30, 2026 and year ended December 31, 2025 were as follows:

Transaction Price Allocated to Remaining Performance Obligations

As of September 30, 2026 and December 31, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was$71,512 and $85,200, respectively. The substantial majority of the unsatisfied performance obligations will be satisfied over the next three years.

As it pertains to the September 30, 2026 amount, the Company expects to recognize 58% of the transaction price in the 12 month period ended September 30, 2027, in its condensed consolidated statement of operations and comprehensive loss with the remainder recognized thereafter.

5. Fair Value Measurements

The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis and indicate the level within the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:

The Company’s cash equivalents were invested in money market funds and were valued based on Level 1 inputs. During the nine months ended September 30, 2026, there wereno transfers between fair value measurement levels. Interest income for the three months ended September 30, 2026 and 2025 was$935 and $1,175, respectively. Interest income for thenine months ended September 30, 2026 and 2025 was$2,931 and $4,113, respectively.

6. Divestiture

On January 8, 2025 (the "Closing Date"), the Company and the Company's wholly owned subsidiary, Aligned Telehealth, LLC ("Aligned") entered into an asset purchase agreement relating to the sale of all property and assets owned, leased or licensed by Aligned that are primarily used or held for use in connection with the Company’s business of providing telepsychiatry services to hospitals and correctional programs (the "APC Business"), subject to certain specified exclusions such as cash. In connection with such purchase and sale, the buyer assumed specified contracts and the related accounts receivable and all accounts payable and accrued expenses of the APC Business, and Dr. Cynthia Horner transferred the ownership of Asana Integrated Medical Group (“Asana” and together with Aligned, “APC”), the affiliated clinical partner of Aligned, to a doctor affiliated with the buyer.

The divestiture was completed on Closing Date, and the total consideration was comprised of (i) an upfront cash payment of $20,714, subject to customary adjustments and (ii) an additional cash payment (the “Additional Payment”) equal to 0.4x the buyer and its affiliates’ aggregate revenues arising from the provision of the APC Business to current customers and potential customers in the sales pipeline of APC during the twelve-month period immediately following the closing, subject to certain exclusions. The Additional Payment is considered seller contingent consideration and the Company has made an accounting policy election to account for the Additional Payment when realizable.

The divestiture of APC did not represent a strategic shift that would have a major effect on the Company's consolidated results of operations, and therefore, its results of operations were not reported as discontinued operations.

As of the Closing Date, the carrying amounts of the following major assets were derecognized from our condensed consolidated balance sheet:

APC generatedno revenue and revenue of $459 during the three and nine months ended September 30, 2025, respectively. Given that we operate our business as a single reporting unit, we are unable to reasonably determine stand-alone costs and related earnings or loss before income taxes attributable to the APC business.

Upon completion of the divestiture of APC the Company recognized a gain of $8,713 during thenine months ended September 30, 2025. In relation to the Additional Payment, the Company recognized a gain of $7,027 during thenine months ended September 30, 2026. As the Company is in a loss position, no income tax expense related to the taxable gain was recognized during thenine months ended September 30, 2026 and 2025.

7. Intangible Assets

Identified intangible assets consist of the following:

The Company capitalized$2,964 and$8,594 in thethree and nine months ended September 30, 2026 and nothing in the three and nine months ended September 30, 2025, related to internally developed software to be sold as a service incurred during the application development stage. The Company is amortizing these costs over the expected lives of the related services. Amortization expense related to intangible assets for the three months ended September 30, 2026 and 2025 was$5,216 and $9,394, respectively. Amortization expense related to intangible assets for the nine months ended September 30, 2026 and 2025 was$19,749 and $25,320, respectively.

8. Accrued Expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following:

9. Stockholders’ Equity

Undesignated Preferred Stock

The Company’s Amended and Restated Certificate of Incorporation authorizes the issuance of 100,000,000 shares of undesignated preferred stock, par value of $0.01 per share, with rights and preferences, including voting rights, designated from time to time by the board of directors. No shares of preferred stock were issued or outstanding as of September 30, 2026 and December 31, 2025.

Common Stock

In thethree and nine months ended September 30, 2026 and 2025, no shares of Class B common stock were converted to Class A common stock. As of September 30, 2026, the par value of the Class A, Class B and Class C shares was$155,$14, and$3, respectively. As of December 31, 2025 the aggregate par value of the Class A, Class B and Class C shares was $148, $14 and $3, respectively.

As of September 30, 2026 and December 31, 2025, the Company had reserved 4,852,812 and 4,619,313 shares of common stock for the exercise of outstanding stock options, the vesting of restricted stock units, the vesting of performance-based market condition share awards, and the number of shares remaining available for future grant, respectively.

Stock Plans

The Company maintains the 2006 Employee, Director and Consultant Stock Plan as amended and restated (the “2006 Plan”), the 2020 Equity Incentive Plan (the “2020 Plan”) and 2024 Inducement Plan (the “2024 Plan”), together, the “Plans,” under which it has granted incentive stock options, non-qualified stock options, cash based awards, restricted stock units and performance stock units to employees, officers, and directors of the Company. In connection with the adoption of the 2020 Plan, the then-remaining shares of common stock reserved for grant or issuance under the 2006 Plan became available for issuance under the 2020 Plan, and no further grants will be made under the 2006 Plan.

Stock Options

Activity under the Plans is as follows:

No options were exercised or granted in thenine months ended September 30, 2026 and 2025.

Restricted Stock Units

Activity for the restricted stock units is as follows:

The total grant date fair value of RSU’s granted for the nine months ended September 30, 2026 and 2025 was$3,155 and $9,996, respectively. Restricted stock units vest over the service period ofone tofour years. The aggregate intrinsic value of restricted stock units vested for thenine months ended September 30, 2026 and 2025 was$4,766 and $4,846, respectively.

Restricted Stock Units with a Performance or Market Condition

Activity for the restricted stock units with a performance or market condition is as follows:

The total grant-date fair value of performance-based share units granted during the nine months ended September 30, 2026 and 2025 was$359 and $1,438, respectively.

2020 Employee Stock Purchase Plan

During the nine months ended September 30, 2025, the Company issued 127,675 shares under the ESPP. During thenine months ended September 30, 2026, the Company issued 111,216 shares under the ESPP. As of September 30, 2026,289,014 shares remained available for issuance.

Stock-Based Compensation

Stock-based compensation expense, related to all of the Company's stock-based awards, was classified in the condensed consolidated statements of operations and comprehensive loss as follows:

As of September 30, 2026, the unrecognized stock-based compensation expense related to unvested common stock-based awards was$8,133, which is expected to be recognized over a weighted-average period of 1.6 years.

10. Commitments and Contingencies

Indemnification

The Company’s arrangements generally include certain provisions for indemnifying clients against third-party claims asserting infringement of certain intellectual property rights in the ordinary course of business. The Company also regularly indemnifies clients against third-party claims that the company’s products or services breach applicable law or regulation or from claims resulting from a breach of the business associate agreement in place with the client. In addition, the Company indemnifies its officers, directors and certain key employees while they are serving in good faith in their capacities. Through September 30, 2026 and December 31, 2025, there have beenno claims under any indemnification provisions.

Litigation

From time to time, and in the ordinary course of business, the Company may be subject to various claims, charges, and litigation. As of September 30, 2026 and December 31, 2025, the Company didnot have any pending claims, charges or litigation that it expects would have a material adverse effect on its consolidated financial position, results of opera tions or cash flows. We have $6,290 of legal exposure accrued related to potential settlements and legal costs, of which $5,018 relates to one specific case.

11. Income Taxes

As a result of the Company’s history of net operating losses (“NOL”), the Company continues to maintain a full valuation allowance against its domestic net deferred tax assets. For the three and nine months ended September 30, 2026, the Company recognized an income tax expense of$769 and$438, primarily due to federal, state and foreign income taxes. During the three and nine months ended September 30, 2025, the Company recognized an income tax expense of $1,217 and $1,060, primarily due to federal, state and foreign income tax expense.

12. Related-Party Transactions

Cleveland Clinic

Cleveland Clinic is a related party because a member of the Company’s board of directors is an executive advisor to Cleveland Clinic. As of September 30, 2026 and December 31, 2025, the Company held current deferred revenue of$1 and $113, respectively from contracts with this client. As of September 30, 2026 and December 31, 2025, amounts due from Cleveland Clinic were zero and $441, respectively.

During the three months ended September 30, 2026 and 2025, the Company recognized revenue of$19 and $177, respectively, from contracts with this client. During the nine months ended September 30, 2026 and 2025, the Company recognized revenue of$312 and $306, respectively, from contracts with this client.

CCAW, JV LLC

CCAW, JV LLC is a related party because it is a joint venture formed between the Company and Cleveland Clinic for which the Company has a minority owned interest in. During 2025, the companies determined that these care services could be provided through partnering between the two entities and that the joint venture was no longer necessary to achieve care delivery. During the year ended December 31, 2025, the companies entered into an agreement for the complete liquidation and dissolution of the joint venture. As part of this agreement the Company will continue to support virtual second opinion services that were previously provided by CCAW, JV LLC, though our existing relationship with Cleveland Clinic. Certain business activities will continue through the transition period which will conclude in 2026.

During the nine months ended September 30, 2026 and 2025, the Company madeno capital contributions.

As of September 30, 2026 and December 31, 2025, the Company heldno deferred revenue, from contracts with this client. As of September 30, 2026 and December 31, 2025, there wasno amount and $514 due from CCAW, JV LLC, respectively.

During the three months ended September 30, 2026 and 2025, the Company recognized approximately$9 and $567 from contracts with this client, respectively. During thenine months ended September 30, 2026 and 2025, the Company recognized revenue of$330 and $1,703, respectively, from contracts with this client

13. Net Loss per Share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows:

The Company’s potential dilutive securities, which include stock options, unvested restricted stock units and unvested performance market-based stock units, have been excluded from the computation of diluted net loss per share as the effect would be anti-dilutive. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares equivalents presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

14. Severance and strategic transformation costs

The Company has executed a series of individual actions, referred to as strategic transformation actions. Strategic transformation costs include one-time employee termination benefits, strategic transformation consulting expenses, as well as other incremental costs resulting from these actions. Employee termination benefits are recorded in accordance with standard Company policy. Charges are recorded when such actions are approved, communicated, and/or implemented. Amounts remaining to be paid for any strategic transformation costs are$5,056 and included in accrued expenses and operating lease liability on the condensed consolidated balance sheet as of September 30, 2026.

In the three months ended September 30, 2026 and 2025, the Company recorded charges of$483 and $3,193, respectively, in connection with individual strategic transformation actions. For thethree months ended September 30, 2026 and 2025, these charges consist of$66 and $262 recorded ascost of sales,$266 and $2,594 recorded asresearch and development expense,$127 and $330 assales and marketing expense, and$24 and $7 asgeneral and administrative expenses, respectively. In thenine months ended September 30, 2026 and 2025, the Company recorded charges of$4,317 and $9,199, respectively, in connection with individual strategic transformation actions. For thenine months ended September 30, 2026 and 2025, these charges consist of$1,245 and $1,149 recorded ascost of sales,$1,744 and $4,517 recorded asresearch and development expenses,$1,008 and $1,655 assales and marketing expense, and$320 and $1,878 asgeneral and administrative expenses, respectively.