Aptera Motors Corp

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—ORGANIZATION AND BUSINESS

Aptera Motors Corp. (“Aptera,” the “Company,” “we,” “us” or “our” and similar terms refers to Aptera Motors Corp. and its subsidiaries unless the context otherwise requires) was incorporated on March 4, 2019 (“Inception”) in the State of Delaware. The Company is developing a solar electric vehicle focused on efficiency. In September 2023, the Company established the subsidiary company Aptera Motors Italia Srl, based in Modena, Italy.

Risks and Uncertainties

Our business is highly sensitive to domestic and global economic and business conditions as well as local, state, and federal government policy decisions. Several factors beyond our control could cause material fluctuations in our business and financial condition. In addition, we require a significant amount of capital to fund vehicle manufacturing, have a limited operating history and operate with small management and development teams that contain key employees. We also face significant barriers to market entry and competing technologies. At times, we have experienced constraints and volatility in our supply chain that resulted in increased costs to us. Furthermore, we are affected by uncertain regulatory conditions, fluctuations in demand, and inflation in production and shipping costs. These conditions could affect the volatility of our business, our financial condition and our results of operations.

Going Concern and Our Plans

We have incurred losses from operations since inception and have not generated any revenue to date. We expect to incur significant costs associated with vehicle development, testing, and the commencement of production before generating revenue. As of June 30, 2026, our existing cash and cash equivalents were not sufficient to fund our current operations for the next twelve months. These factors, among others, raise substantial doubt about our ability to continue as a going concern. After considering the plans described above, we have concluded that substantial doubt about our ability to continue as a going concern has not been alleviated because our plans are dependent on events and conditions that are not within our control, including our ability to raise additional capital on acceptable terms and in amounts sufficient to fund our operating and capital needs.

The Company is executing a multi-phased financial strategy to address our liquidity needs and fund our path to production. Significant milestones achieved include:

Our ability to continue as a going concern is dependent on our ability to obtain sufficient funding by accessing the remaining capacity under our $75 million ELOC and raising additional capital through public or private markets. Following the successful capital raises in early 2026, the Company estimates that an additional $40 million to $45 million is required to fund the initial low-volume production phase of our Carlsbad facility.

While the Company believes its access to the public markets and the ELOC provide a viable path to necessary liquidity, there is no guarantee that we will be able to draw down sufficient amounts or secure additional financing on favorable terms. If the Company is unable to obtain adequate financing, it may be required to implement significant cost-cutting measures or significantly curtail our operations. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 2 –BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, the Company believes the disclosures are adequate to make the information presented not misleading.

The interim financial information is unaudited, but reflects all normal recurring adjustments that are necessary in the Company’s opinion to fairly present the information set forth herein. The interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2025 included in Form 10-K filed with the SEC on March 30, 2026. Interim results are not necessarily indicative of the results expected for the full year.

The Company operates as a single reportable segment focused on the development of solar electric vehicles. The Co-Chief Executive Officers review consolidated financial information to assess performance and allocate resources. The Co-Chief Executive Officers function collectively as our chief operating decision maker.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting periods. We use historical and other pertinent information to determine those estimates. Actual results could materially differ from these estimates.

Reclassification

Certain amounts in the condensed consolidated financial statements have been reclassified to conform to the current period presentation.

Correction of Immaterial Error and Out of Period Adjustments

During the quarter ended June 30, 2026, management identified an error related to the accounting for contingent considerations within its technology licensing agreement (“TLA”) entered into in 2022. Specifically, that the recording of amounts related to those stock-based contingent consideration as expenses and paid-in capital prior to such liabilities being incurred was not appropriate under GAAP.

The error resulted in an overstatement of additional paid-in capital and an overstatement of accumulated deficit in previously issued interim and annual financial statements beginning with the year ended December 31, 2022. The error had no effect on the statement of cash flows previously reported due to its non-cash operating nature and has zero effect on total stockholders’ equity.

The Company evaluated the error qualitatively and quantitatively in accordance with SEC Staff Accounting Bulletin Nos. 99 and 108 and determined it was immaterial to each previously issued reporting period. Because correcting the cumulative amount solely through a catch-up adjustment in the current period would materially affect the comparability of the current period financial statements, management revised prior period comparative financial information for periods ended on or prior to December 31, 2024 and recorded an out-of-period adjustment of $0.4 million in the three months ended June 30, 2026 to reduce stock-based compensation expense and additional paid-in capital for amounts previously recorded in the year ended December 31, 2025 and the three months ended March 31, 2026. The net loss for the three months ended June 30, 2026 includes this adjustment.

The following table presents the impact of the correction on the Company’s consolidated balance sheet as of December 31, 2024:

The following table presents the impact of the correction on the Company’s consolidated balance sheet as of March 31, 2025:

The following table presents the impact of the correction on the Company’s consolidated balance sheet as of June 30, 2025:

The following table presents the impact of the correction on the Company’s consolidated balance sheet as of September 30, 2025:

The following table presents the impact of the correction on the Company’s consolidated balance sheet as of December 31, 2025:

The following table presents the impact of the correction on the Company’s consolidated balance sheet as of March 31, 2026:

Additionally, during the quarter ended June 30, 2026, management identified an error in the presentation of financed arrangements for certain prepaid insurance policies and software licenses which were incorrectly presented on a net basis within prepaid assets, resulting in an understatement of financed arrangements and understatement of prepaids and other assets. Management evaluated the correction and determined that the effect of the correction was not material on previously reported financial statements and recorded the correction as of the current period. The out-of-period adjustment related to the balances of the financed arrangements as of December 31, 2025 was $0.7 million with a corresponding offset to prepaid assets. There was no impact on the statements of operations.

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:

Level 1—Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

Level 2—Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Fair-value estimates discussed herein are based upon certain market assumptions and pertinent information available to the Company as of the balance sheet dates.

The following are the classes of assets and liabilities measured at fair value (amounts in thousands):

As of June 30, 2026 and December 31, 2025, the respective carrying value of cash and cash equivalents, receivables, other current assets, accounts payable, unearned reservation fees and financing arrangements approximated their fair values.

Cash and Cash Equivalents

The Company considers all highly liquid cash instruments purchased with an original maturity of three months or less to be cash equivalents. As of June 30, 2026 and December 31, 2025, cash and cash equivalents contained $4.1 million and $4.1 million, respectively, of unearned refundable customer reservation fees.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the following estimated useful lives:

Long-Lived Assets

Long-lived assets, such as property, plant and equipment and operating lease assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for potential impairment, we first compare undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent the carrying amount of the underlying asset exceeds its fair value.

Unearned Reservation Fees

Unearned reservation fee liabilities are recorded based on all funds we expect to collect on each transaction, including merchant processor fees charged. We maintain a separate money market account for all customer reservation fees collected.

Leases

The Company recognizes all operating leases on the condensed consolidated balance sheets at the commencement date. This includes:

Lease expense is recognized on a straight-line basis over the lease term, reflecting the benefit of using the leased asset. Our assessed lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

We recognize a ROU asset at the commencement of an operating lease, representing the right to use the leased asset. The ROU asset is initially measured at the present value of the non-cancellable lease payments, including any initial direct payments. The ROU asset is depreciated over the lease term, using the same depreciation method and useful life as the underlying leased asset, or if not readily determinable, using a straight-line method over the lease term.

We recognize a lease liability at the commencement of an operating lease, representing the obligation to make lease payments. The lease liability is initially measured at the present value of the non-cancellable lease payments, less any initial direct payments. The lease liability is subsequently remeasured to reflect the present value of the remaining lease payments using the lessee’s incremental borrowing rate at the initial recognition date or the subsequent remeasurement date, if applicable. Interest expense is recognized on the lease liability using the effective interest method.

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount within a range of loss can be reasonably estimated. When no amount within the range is a better estimate than any other amount, we accrue for the minimum amount within the range. Legal costs incurred in connection with loss contingencies are expensed as incurred.

Contracts Containing Share-Based Considerations

Contracts that must be settled in a variable number of the Company’s equity securities based on a fixed dollar amount are classified as liabilities and remeasured to fair value at each reporting date. When such a contract is settled through the issuance of stock, or when the number of shares to be issued becomes fixed, the liability is reclassified to additional paid-in capital. No such liabilities existed as of June 30, 2026. Accrued liabilities related to such contracts were $0.2 million as of December 31, 2025.

During the three months ended June 30, 2026, the Company settled previously accrued liabilities of $0.8 million through issuance of equity classified instruments.

Revenue Recognition

To date, the Company has not generated any revenue from operations. The Company is currently in the pre-production development, testing and validation stage.

The Company expects to recognize revenue upon the delivery of its product to customers.

The Company’s ability to generate revenue is subject to various risks and uncertainties, including successful product development, market acceptance and regulatory approvals. These factors could materially impact the timing and amount of future revenue recognized by the Company.

Key Considerations for Future Revenue Recognition:

The Company will continue to evaluate its revenue recognition policies and procedures as its business evolves and will make any necessary disclosures in future financial statements.

Advertising Costs

The Company expenses advertising and promotional costs as incurred. Advertising costs are included within general, selling, and administrative expenses in the accompanying consolidated statements of operations. Advertising expenses were $0.1 million and $0.4 million for the three months ended June 30, 2026 and 2025, respectively, and $0.2 million and $0.8 million for the six months ended June 30, 2026 and 2025, respectively.

Income Taxes

The Company provides for income taxes using the asset and liability approach. As of June 30, 2026, the Company continues to maintain a full valuation allowance against its net deferred tax assets, as the Company believes it remains more likely than not that they will not be realized. There have been no material changes to the Company’s liability for uncertain tax positions since December 31, 2025.

Stock-Based Compensation

The Company measures and recognizes compensation expense for all stock-based awards, including stock options and restricted stock units (“RSUs”), granted to employees, directors, and non-employees based on their estimated grant-date fair value. Equity instruments issued in connection with financing transactions or settlements of liabilities are not classified as stock-based compensation.

The Company accounts for forfeitures as they occur. Accordingly, compensation expense is recognized only for awards that ultimately vest. Forfeitures are recognized in the period in which they occur, and no estimations or adjustments are made for anticipated forfeitures.

Research and Development

Research and development costs are expensed as incurred and represent costs incurred to further new technologies, product design and technical capabilities.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentration of credit risk are cash, cash equivalents, and restricted cash. We hold cash in domestic financial institutions that are federally insured within statutory limits. At times, deposits exceed federally insured limits.

Concentration of Supply Risk

The Company is dependent on a few suppliers for capital equipment, the majority of which are single-source suppliers, and the inability of these suppliers to deliver necessary equipment and components of its products according to the schedule and at prices, quality levels and volumes acceptable to the Company, or its inability to efficiently manage these components, could have a material adverse effect on the Company’s results of operations and financial condition.

Loss Per Share

We compute net loss per share of Class A and Class B Common Stock using the two-class method. Basic net loss per share is computed using the weighted-average number of shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of shares and the effect of potentially dilutive securities outstanding during the period. For periods in which we incur a net loss, the effects of potentially dilutive securities would be antidilutive and would be excluded from diluted calculations. Dilutive securities consist of Preferred Stock, restricted stock units, stock options and warrants issued under the Company’s Equity Incentive Plans.

Potentially dilutive securities outstanding were as follows:

For the three and six months ended June 30, 2026 and 2025, we incurred a net loss for which the effects of our potentially dilutive securities would be antidilutive and are therefore excluded from diluted net loss per share calculations.

The following table sets forth the computation of basic net loss per share of Class A and Class B stock (in thousands, except share and per share amounts):

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03,Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires public business entities to disclose specific natural expense categories within relevant expense captions. The standard is effective for annual reporting periods beginning after December 15, 2026. The Company is currently evaluating the impact of this standard on its financial statement disclosures.

In December 2025, the FASB issued ASU 2025-11,Interim Reporting (Topic 270): Narrow-Scope Improvements, which is intended to improve the guidance in Topic 270 by enhancing the navigability of required interim disclosures and clarifying the applicability of the guidance. The update also introduces a disclosure principle requiring the disclosure of events occurring since the end of the most recent annual reporting period that have a material impact on the entity. For the Company, the standard is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this standard on its financial statement disclosures.

In May 2026, the FASB issued ASU No. 2026-02,Environmental Credits and Environmental Credit Obligations (Topic 818). The ASU establishes authoritative guidance for the accounting of environmental credits and environmental credit obligations, including recognition, measurement, presentation, and disclosure requirements, in an effort to reduce diversity in practice and increase consistency of application across reporting entities. The ASU is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Adoption of this ASU should be applied on a retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets on the balance sheet) as of the beginning of the annual reporting period of adoption, without recasting for any financial statement information before the period of adoption. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the provisions of this ASU.

NOTE 3 –COMMITMENTS AND CONTINGENCIES

Litigation and Regulation

Various aspects of our business and service areas are subject to U.S. federal, state, and local regulation, as well as regulation outside the United States. The Company is also subject to legal proceedings which arise in the ordinary course of business.

In August 2024, Zaptera USA, Inc. (“Zaptera”) filed a complaint against Aptera Motors Corp. in the U.S. District Court for the Southern District of California alleging design patent infringement, misappropriation of trade secrets, and declaratory judgment of patent ownership, among other claims.

In April 2026, the Company entered into a settlement agreement with Zaptera. Pursuant to the terms of the settlement, the Company agreed to issue 105,000 shares of Class B Common Stock and warrants to purchase up to 210,000 shares of Class B Common Stock at an exercise price of $2.78 expiring on April 8, 2029. As a result of the settlement, the Company accrued liability and recognized litigation expense equivalent to the estimated fair value of the settlement of approximately $0.6 million during the three months ended March 31, 2026, which was included in “General, selling, and administrative” expenses in the condensed consolidated statements of operations. On April 9, 2026, all claims related to the action were dismissed with prejudice. The fair value of the 105,000 shares was measured based on the closing price of Class B Common Stock on April 8, 2026 of $2.78 per share, resulting in a fair value of $0.3 million. The fair value of the 210,000 warrants was measured using the Black-Scholes option-pricing model with a unit fair value of $1.69, based on a stock price of $2.78, an exercise price of $2.78, athree-year term, expected volatility of 93.68% based on a peer-group daily volatility average, a risk-free rate of 3.78%, andno expected dividend yield, resulting in a fair value of $0.4 million. Under the settlement, the Company committed to issue a fixed number of shares and warrants; the related accrued liability was reclassified from accrued liabilities to additional paid-in capital during the three months ended June 30, 2026. As of June 30, 2026, the warrants have been issued and the 105,000 shares of Class B Common Stock are pending issuance.

In January 2025, the Company received a subpoena for documents from the staff of the Securities and Exchange Commission (SEC) related to its securities offerings and the production, design, and manufacture of our vehicles. This subpoena is part of an ongoing SEC investigation. The Company continues to cooperate fully with the investigation and is continuing to produce documents in response to the subpoena and subsequent requests.

The SEC has informed us that the investigation does not mean that it has concluded that anyone has violated the law and that the receipt of the subpoena does not mean that the SEC has a negative opinion of any person, entity, or security. However, the Company can offer no assurances as to the timing, outcome or potential effect, if any, of this ongoing investigation. Responding to the subpoena and related requests continues to require the dedication of management time and attention and has resulted, and may continue to result, in the incurrence of significant expenses, including legal and other professional services fees.

Chery Technology License Agreement

In 2022, the Company entered into a Technology License Agreement (“TLA”) with Chery New Energy Automobile Co. Ltd. (“Chery”). The TLA provides the Company with access to Chery’s established supply chain, which helps streamline procurement and production processes. In addition, it provides the Company with access and option to incorporate certain Chery technologies and parts, such as components of their HVAC (Heating, Ventilation, and Air Conditioning) system, into Aptera’s vehicles. This collaboration aims to accelerate lead-up to production and drive the advancement of solar mobility.

The TLA, as amended in 2023, grants the Company a non-transferable license to use certain Chery automobile parts technology, know-how, and data. As consideration, the Company provided a total of $1.0 million in cash and issued common shares for a value equivalent to $4.0 million during 2022 for milestone 1 and 2 related to the transfer of technical documents for the technology. The TLA also contains contingent considerations to issue shares of class B common Stock to Chery for value equivalent to $5.0 million. This contingent obligation is triggered in two equal installments upon the Company entering into specific parts supply agreements with Chery and receiving the initial batches of parts under those agreements. The timing and ultimate issuance of these shares are dependent on the Company proceeding with these specific purchasing milestones. The Company also holds certain rights of first refusal regarding the shares held by Chery. The contract also calls for royalty per vehicle sold to be paid to Chery based on components or technology used in the final produced vehicles.

Purchase Obligations

The Company regularly enters into purchase obligations with vendors and service providers, which represent expected payments and commitments during the normal course of our business. These purchase obligations are generally cancellable with or without notice and without penalty, although certain vendor agreements provide for cancellation fees or penalties. As of June 30, 2026 and December 31, 2025, we had approximately $5.5 million and $2.1 million in open purchase orders, respectively.

NOTE 4 –PROPERTY AND EQUIPMENT

Property and equipment, net consisted of the following (amounts in thousands):

During the three months ended June 30, 2026, the Company placed production tooling and related equipment in service. As a result, $14.1 million was reclassified from construction in progress to machinery, tooling, and equipment. Depreciation of the production tooling is charged to research and development expense.

NOTE 5 –LEASES

Operating Lease

The Company leases approximately 77,000 rentable square feet of office, manufacturing, and assembly space at its principal facility in Carlsbad, California.

During the six months ended June 30, 2026, the Company executed an amendment to extend the lease term for this facility by an additional twelve months, establishing a new expiration date of March 31, 2028. The amendment established a revised monthly base rent of approximately $106,000 during the extension period and eliminated the Company’s previously existing options to extend the lease for two additional 60-month periods. Additionally, the amendment stipulates that $0.7 million of the Company’s existing security deposit will be applied toward monthly base rent payments commencing April 1, 2027, reducing the held deposit to $0.3 million over time.

As a result of this lease modification, the Company remeasured its lease liability and corresponding right-of-use (ROU) asset based on an updated incremental borrowing rate of 9.75%. This remeasurement resulted in an increase of $1.1 million to both the operating lease ROU asset and operating lease liability.

The following table presents supplemental information related to the Company’s operating lease:

Maturities of operating lease liabilities as of June 30, 2026, are as follows:

The following table summarizes the annual contractual maturities of operating lease liabilities (in thousands):

The Company recorded $0.3 million and $0.3 million as operating lease expense for the three months ended June 30, 2026 and 2025, respectively, and $0.5 million and $0.5 million for the six months ended June 30, 2026 and 2025, respectively. This expense is allocated to “General, selling, and administrative” and “Research and development” expenses in the condensed consolidated statements of operations.

NOTE 6 –FINANCING ARRANGEMENTS

From time to time the Company may enter into financing arrangements with its vendors or third party lenders to pay for certain expenditures for multiple annual insurance policies and multi-year software licenses. The Company presents such financing arrangements as liabilities when the right-of-setoff criteria are not met. As of June 30, 2026, the Company had outstanding $0.3 million related to such financing arrangements with annual interest rates ranging from 0% to 7.82% and remaining months to maturity ranging from 2 to 11 months.

NOTE 7 –STOCKHOLDERS’ EQUITY

Common Stock

The Company’s authorized capital stock includes Class A Common Stock and Class B Common Stock. The rights of the holders of both classes are identical, including rights to dividends and distributions upon liquidation, except with respect to voting and conversion. Holders of Class A Common Stock are entitled to one vote per share on all matters submitted to a vote of stockholders, while holders of Class B Common Stock are not entitled to voting rights, except as required by applicable law. Additionally, each share of Class A Common Stock is convertible at any time, at the option of the holder, into one share of non-voting Class B Common Stock on a one-for-one basis.

January 2026 Public Offering

On January 26, 2026, the Company closed a registered public offering, issuing 4,500,000 shares of Class B Common Stock and accompanying common stock warrants to purchase up to 4,500,000 shares of Class B Common Stock (“Existing Warrants”). The combined public offering price was $2.00 per share and accompanying warrant, resulting in gross proceeds of approximately $9.0 million, before deducting placement agent fees and other offering expenses of approximately $0.8 million. The warrants were issued with an exercise price of $2.00 per share, became exercisable immediately, and expire five years from the issuance date.

In connection with the January 2026 registered public offering, the Company issued to A.G.P./Alliance Global Partners, as placement agent, warrants to purchase up to 135,000 shares of Class B Common Stock (the “Placement Agent Warrants”). The Placement Agent Warrants have an exercise price of $2.10 per share, become exercisable approximately 181 days after the issuance date, and expire five years from the issuance date.

March 2026 Warrant Inducement

On March 12, 2026, the Company entered into a warrant inducement agreement with certain holders of the warrants previously issued in the January 2026 public offering. Pursuant to the agreement, the holders exercised Existing Warrants to purchase 3,167,500 shares of Class B Common Stock for gross cash proceeds of approximately $6.3 million, before deducting placement agent fees and other offering expenses of approximately $0.4 million. As consideration for the immediate cash exercise of these warrants, the Company issued new, warrants to purchase up to 4,751,250 shares of Class B Common Stock (“New Warrants”). The New Warrants have an exercise price of $3.50 per share, are immediately exercisable, and expire five years from the date of issuance. The issuance of the New Warrants was accounted for as an equity issuance cost associated with the exercise of the Existing Warrants, which had no net impact on equity as the New Warrants conveyed were determined to be equity classified.

Warrant Activity

The following table summarizes the Company’s warrant activity for the six months ended June 30, 2026:

Equity Line of Credit (ELOC)

In October 2025, the Company entered into a Share Purchase Agreement with New Circle Principal Investments LLC, providing the Company with the right, but not the obligation, to sell up to $75.0 million of its Class B Common Stock over a 36-month period. Shares are sold at the Company’s discretion at a purchase price based on the Volume Weighted Average Price (VWAP) during a specified pricing period, less a negotiated discount.

The Company’s ability to access capital under the ELOC is subject to the following primary constraints:

In connection with the January 2026 Public Offering, the Company’s utilization of the ELOC became subject to a 45-day lock-up period, which expired on March 12, 2026. As of June 30, 2026, $70.7 million remained available for future utilization under the facility.

During the three months ended June 30, 2026, the Company sold 605,000 shares of Class B Common Stock under the ELOC facility for aggregate net proceeds of approximately $1.3 million, of which $0.2 million is outstanding as a subscription receivable. As of June 30, 2026, the Company had issued an aggregate of 1,170,000 shares of Class B Common Stock under the ELOC facility since inception. Aggregate issuances under the ELOC are limited to 5,471,846 shares (19.99% of the Company’s combined Class A and Class B outstanding as of October 13, 2025, the effective date of the facility). As of June 30, 2026, approximately 4,301,846 of the shares registered in connection with the ELOC remain available for issuance. Subsequent to June 30, 2026, the Company sold an additional 100,000 shares under the ELOC facility for aggregate net proceeds of approximately $0.2 million.

Contracts Containing Share-Based Considerations

During the three months ended June 30, 2026, the Company settled previously accrued liabilities of $0.2 million through issuance of Class B Common Stock. Additionally, the Company settled a previously accrued loss contingency for litigation of $0.6 million by executing a settlement agreement providing for the issuance of a fixed quantity of Class B Common Stock and warrants that was evaluated and determined to be an equity-classified contract.

NOTE 8 –STOCK-BASED COMPENSATION

Equity Incentive Plans

The Company maintains the 2025 Omnibus Equity Incentive Plan (the “2025 Plan”), which allows for the grant of various equity-based awards to employees, officers, directors, and consultants. As of June 30, 2026,10,428,023 shares of Class B Common Stock remained available for future issuance under the 2025 Plan. Although the 2021 Stock Option and Incentive Plan was terminated in October 2025, outstanding awards under that plan remain in effect according to their original terms.

In April 2026,1,126,005 stock options awarded in December 2025 were modified to change the terms of vesting. There was no incremental compensation cost as a result of the modifications.

Stock Option Activity

A summary of stock option activity for the six months ended June 30, 2026, is as follows (aggregate intrinsic values in thousands):

There were 406,819 options granted during the six months ended June 30, 2026 with a total grant-date fair value of $1.0 million. During the six months ended June 30, 2025, the Company granted 746,847 options with a total grant-date fair value of $28.3 million. The total fair value of stock options vested during the six months ended June 30, 2026 and 2025 was approximately $5.4 million and $5.6 million, respectively.

The Company utilizes the Black-Scholes option-pricing model to estimate the fair value of stock options on the date of grant. The expected term is estimated using the simplified method, and expected volatility is based on the historical volatility of a peer group of publicly traded companies.

The following table presents the weighted-average assumptions used in the Black-Scholes option-pricing model:

Restricted Stock Unit Activity

A summary of restricted stock unit activity for the six months ended June 30, 2026 is as follows:

The total fair value of RSUs granted and vested during the six months ended June 30, 2026 was approximately $1.5 million and $0.8 million, respectively. There wereno RSUs granted or vested during the six months ended June 30, 2025.

Allocation of Stock-based Compensation

The allocation of stock-based compensation expense was as follows (in thousands):

As of June 30, 2026, the total unrecognized compensation cost related to outstanding time-based options was $30.0 million, which is expected to be recognized over a weighted-average period of 2.68 years.

NOTE 9 –SUBSEQUENT EVENTS

The Company evaluated subsequent events from the balance sheet date of June 30, 2026, through August 12, 2026, the date these condensed consolidated financial statements were issued. Material events include:

July 2026 Warrant Inducement Transaction

On July 10, 2026, the Company entered into an inducement offer letter agreement with an existing holder of the Company’s warrants (the “July 2026 Inducement Agreement”). Under the terms of the July 2026 Inducement Agreement, the holder agreed to exercise 2,880,000 warrants at a reduced exercise price of $2.07 per share, generating aggregate gross proceeds to the Company of approximately $6.0 million. As inducement consideration for the exercise, the Company agreed to issue to the holder new warrants (the “July 2026 New Warrants”) to purchase up to 4,320,000 shares of Class B Common Stock at an exercise price of $2.25 per share, subject to a six-month lock-up before becoming exercisable. The Company closed the transaction on July 13, 2026.

The Company evaluated the July 2026 New Warrants and determined that they meet the criteria for equity classification consistent with the equity classification analysis applied to warrants issued in the March 2026 warrant inducement transaction. The July 2026 Inducement Agreement was entered into after the balance sheet date and accordingly no amounts have been recognized with respect to the Inducement Agreement in the accompanying condensed consolidated financial statements.

Board Appointment

On August 11, 2026, the Board of Directors appointed Wellington "Duke" Reiter to serve as a director of the Company. In connection with his appointment, the Company approved compensation consisting of(i) an annual Board service retainer of $50,000 payable in fully-vested restricted stock units and (ii) a long-term incentive grant of restricted stock units with a grant-date value of $400,000, vesting in equal annual installments over four years, in each case with the number of restricted stock units determined by reference to the fair market value per share of the Company's Class B Common Stock on the applicable grant date.