Our Bond, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

**NOTE 1 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES **

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission, or SEC, Regulation S-X.

The December 31, 2025 consolidated balance sheet was derived from our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the SEC, but does not include all disclosures required by U.S. GAAP for annual financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation of results of operations and financial position, have been included. The results for the interim periods presented are not necessarily indicative of the results expected for any future period. The following information should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

The accompanying financial statements have been prepared on a going concern basis. However, the Company has incurred recurring losses and negative operating cash flows, and its current liabilities exceed its current assets as of June 30, 2026. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management is pursuing several strategies to mitigate these conditions, including capital raising, and believes that these actions will provide the necessary liquidity for at least the next twelve months. Nevertheless, there can be no assurance that such plans will be successfully implemented or yield the intended financial benefits.

Accordingly, there is a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern, and therefore it may be unable to realize its assets and discharge its liabilities in the normal course of business. The financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

Reclassification

Certain prior period amounts in the statements of operations have been reclassified to conform to the current period presentation. Such reclassifications relate to floor plan interest and commissions.

These reclassifications had no impact on previously reported total assets, total liabilities, net loss or accumulated deficit in the previously reported consolidated financial statements for the six months ended June 30,2025.

Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies disclosed in Note 4 - Significant Accounting Policies, to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

On an on-going basis, we evaluate our estimates, including those related to accounts receivable, cash equivalents and marketable securities, income taxes, litigation, non-marketable equity securities, other contingencies, property, plant, and equipment, revenue recognition, and stock-based compensation. 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 when there are changes in circumstances, facts, and experience. Changes in estimates are recorded prospectively in the period in which they become known. Actual results could significantly differ from those estimates.

Recently Issued Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The ASU is effective for public business entities for annual periods beginning after December 15, 2024. For all other entities, the standard is effective for annual periods beginning after December 15, 2025. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

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”) a new accounting standard requiring disclosures of certain additional expense information on an annual and interim basis, including, among other items, the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each income statement expense caption, as applicable. We expect to adopt this standard in our fiscal year 2027 annual report. We do not expect the adoption of this standard to have a material impact on our Consolidated Financial Statements other than additional disclosures.

Note 2 –Revenue

Disaggregation of Revenue

The Company recognizes revenue classified in services and other either at a point in time or over time. Revenue by point in time and over time was as follows (in thousands):

The deferred revenue balance represents payments received for performance obligations not yet satisfied. The following table shows the changes in deferred revenue during the six months ended June 30, 2026, and 2025 respectively (in thousands):

Revenue recognized during the six months ended June 30, 2026 that was included in deferred revenue as of December 31, 2025 was $476. Revenue recognized during the six months ended June 30, 2025 that was included in deferred revenue as of December 31, 2024 was $587.

Revenue allocated to remaining performance obligations that are unsatisfied (or partially unsatisfied), which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods, will be recognized within one year or less.

Note 3 –Segment and Geographical Information

The Company’s security solutions are substantially similar in nature and as a result the Company operates as one operating and reportable segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the chief operating decision maker (“CODM”), which is the Company’s Chief Executive Officer, in deciding how to allocate resources and assess performance. The Company’s CODM evaluates the financial information presented on a consolidated basis for the purposes of making operating decisions, assessing financial performance and allocating resources. The CODM evaluates performance based on income (loss) from operations, which is calculated as revenues less cost of sales and operating expenses. This measure excludes interest income (expense), other income (expense) and income taxes. The CODM reviews income (loss) from operations on a monthly basis to assess the Company’s ability to generate earnings from its core activities and to monitor operating efficiency. This analysis includes comparisons of current results to budgeted amounts, prior periods and internal forecasts. Based on these evaluations, the CODM determines whether to adjust operating plans, modify pricing strategies, implement cost-control initiatives or adjust resource levels in specific functional areas. In addition, the CODM uses income (loss) from operations to make decisions about the allocation of resources, including approving capital expenditures, prioritizing research and development initiatives, adjusting headcount in specific departments and determining marketing spend. The CODM also considers this measure when evaluating the performance of the management team and establishing annual incentive compensation targets. Income/loss from operations is the Company’s primary measure of profit or loss, and all costs and expenses categories on the Company’s consolidated statement of operations, as well as stock-based compensation, depreciation and amortization expenses, are significant. Refer to Note 9 for additional information about the Company’s stock-based compensation expense.

Revenue by geographic area is designated based upon the billing location of the customer as follows (in thousands):

Property and equipment by geographic areas was as follows (in thousands):

Note 4 –Earnings Per Share

Basic net loss per share is computed by dividing reported net loss by the weighted-average number of common shares outstanding for the reported period. In computing diluted earnings per share, common share equivalents are not considered in periods in which a net loss is reported, as the inclusion of the common share equivalents would be antidilutive. Since the Company was in a net loss for all periods presented in these consolidated financial statements, diluted net loss per share was the same as basic net loss per share.

The following potential common share equivalents were excluded from the calculation of diluted net income per share because their effect would have been anti-dilutive in the period presented (in thousands):

Note 5 –Balance Sheet Detail

Prepaid expenses and other current assets consisted of the following (in thousands):

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

Depreciation expenses for the three months ended June 30, 2026 and 2025 amounted to $11 and $13, respectively. Depreciation expenses for the six months ended June 30, 2026 and 2025 amounted to $21 and $25, respectively.

Accrued and other current liabilities was composed of the following (in thousands):

Note 6 –Loan and Promissory Note

In June 2019 the Company entered into Loan and Security agreement (the “Loan Facility”) in the amount of $9,999. The principal amount outstanding under each Advance shall accrue at the following rate per annum rate equal to the greater of six and one-half percentage points (6.50%) above the Prime Rate of 12.00%, which interest shall be payable monthly. Immediately upon the occurrence and during the continuance of an event of default as defined in the contract, the Obligations shall bear interest at a rate per annum which is four percentage points (4.0%) above the rate that is otherwise applicable thereto. Additionality, concurrently with the grant of the loan, the Company issued warrants to 1,872,993 shares of preference Series A, per value 0.0001$ per share, and exercise price of 0.2803$ per share. The Warrants expiration date was settled as the earlier of (1) the date that is ten (10) years after the original Issue Date, (2) the Initial Public Offering and (3) a Liquid Acquisition.

Between 2021 and 2024, the Loan Facility was amended multiple times to defer and restructure principal and interest payments and extend the applicable forbearance period through the earlier of December 31, 2025 or the closing of a qualifying equity financing.

In November 2023, a total of $3,152 from the loan were converted into 6,466,194 Series B-1 Preferred Stock of $0.0001 par value as part of Series B Preferred Stock Purchase Agreement. Additionally, the warrants mentioned above were cancelled and replaced by a new 741,435 Series B-1 warrant, per value 0.0001$ per share, and exercise price of 0.4875$ per share. The Series B-1 Warrants shall be convertible, at the option of the holder, at any time after the date on which such warrant was issued by the Company, into such number of fully paid and non-assessable Common Stock as is determined by dividing the value of the warrant.

On August 6, 2025, the Company entered into a Securities Purchase and Conversion Agreement. Pursuant to the Agreement, the Company converted 50% of its outstanding loan obligations, totaling approximately $6.8 million, into 682,770 shares of its Series E Convertible Preferred Stock (“Series E Preferred”), stated value $10.00 per share. As the fair value of the Series E Preferred Stock issued approximated the carrying value of the debt extinguished, no gain or loss was recognized. The Series E Preferred is convertible into shares of the Company’s common stock and accrues dividends on the stated value thereof at the same rate as the original loan. Dividends are payable, at the Company’s election, in cash or shares of common stock. The initial conversion price for the Series E Preferred is $4.62 per share. Upon the holder of the Company’s Series C Preferred Stock receiving a return of capital in the minimum amount of $8,000,000, the conversion price for the Series E Preferred will adjust to $3.75 per share. Concurrently with the Securities Purchase and Conversion Agreement, the Company entered into a Waiver and Twenty-seventh Amendment to Loan and Security Agreement (the “Amendment”) with the holder of its senior secured debt. Under the Amendment, the remaining approximately $6.8 million in loan obligations are subject to a modified repayment schedule. Upon the earlier of:(i) the Company closing one or more equity financings yielding an aggregate amount of net cash proceeds of at least $20,000,000; or (ii) June 30, 2026, the Company shall make twenty-four (24) consecutive equal monthly installments of principal and interest based on a thirty-six (36) month amortization period, with the balance of the obligation due and payable on the 25th month.

The total interest expenses for the three and six months ended June 30, 2026 were $226 and $456, respectively, and for the three and six months ended June 30, 2025, were $350 and $704, respectively. Accrued interest on June 30 2026 and 2025, were $839 and $3,512, respectively. Any unpaid interest was accrued as part of the loan.

On March 1, 2026, the Company issued a Promissory Note in the principal amount of $2,500,000. The Promissory Note bears interest at a rate of 10% per annum and matures on September 1, 2026. The Company is required to apply 25% of the net proceeds from any future offerings or issuances of the Company’s securities toward repayment of the Promissory Note until it is paid in full. In the event of default, the Promissory Note will bear interest at a rate of 24% per annum, and any late payments will be subject to a late fee equal to 10% of the overdue amount.

On May 5, 2026, the Company issued an additional Promissory Note in the principal amount of $1,000,000. The Promissory Note bears interest at a rate of 10% per annum and matures on November 5, 2026. The terms of the Promissory Note are identical to those of the Company’s previously issued Promissory Note dated March 1, 2026, including the requirement that the Company apply 25% of the net proceeds from any future offerings or issuances of the Company’s securities toward repayment of the Promissory Note until paid in full.

On June 11, 2026, the Company entered into an Exchange Agreement with the holder of the March 1, 2026 and May 5, 2026 Promissory Notes. Under the Exchange Agreement, the holder exchanged all outstanding principal and accrued but unpaid interest under the promissory notes, with an aggregate value of approximately $3.3 million, for an aggregate of 336,941 shares of the Company’s Series G Convertible Preferred Stock, consisting of 254,687 shares issued in exchange for the March 1, 2026 Promissory Note and 112,254 shares issued in exchange for the May 5, 2026 Promissory Note. Following the exchange, the promissory notes were cancelled and deemed paid in full.

Pursuant to the terms of the Exchange Agreement, the Company is required to use 25% of the net proceeds from future offerings or issuances of the Company’s securities to redeem the outstanding shares of Series G Convertible Preferred Stock until such shares are redeemed in full. During June 2026, the Company redeemed 123,096 shares of Series G Convertible Preferred Stock for aggregate cash consideration of approximately $1.2 million, using proceeds received from the Company’s securities offerings.

The total interest expenses for the three and six months ended June 30, 2026 were $55 and $76, respectively.

Note 7 –Related Party

Since the company’s establishment, the company’s founder and CEO has also been the largest investor who participated - either directly or through entities under his control - in all funding rounds in a total amount of approximately $44.67 million.

In 2023, the Company entered into Unsecured Convertible Revolving Promissory Note (the “Note”) with its main shareholder in the amount of up to $3,000. At any time, the Noteholder may, in its sole discretion, lend to the Company from time to time until the first-year anniversary of the Effective Date such amounts as may be requested by the Company in accordance with the terms and conditions of this Note. The principal amount outstanding under this Note from time to time shall bear interest at a rate per annum equal to the Applicable Federal Rate.

During the six months ended June 30, 2026 and 2025, the Company repaid $765 and $319, respectively, of the outstanding balance under the Revolving Promissory Note. As of June 30, 2026 and December 31, 2025, the outstanding balance under the Revolving Promissory Note was $0 and $765, respectively.

The total interest expenses recorded in the three months ended June 30, 2026 and 2025 were $0 and $14, respectively. The total interest expenses recorded in the six months ended June 30, 2026 and 2025 were $2 and $30, respectively.

Note 8 –Preferred Stock and Common Stock

Stock reverse split

On September 19, 2025, the Company effected a 1-for-3 reverse stock split (the “Reverse Stock Split”), pursuant to which every three shares of the Company’s issued and outstanding common stock were combined into one share of common stock. The par value per share of the common stock remained unchanged at $0.0001. The total number of issued and outstanding shares of common stock was reduced proportionately, and the number of issued preferred shares, warrants, and stock options were adjusted on the same basis. The Reverse Stock Split did not affect the Company’s total stockholders’ deficit and the number of authorized shares remained unchanged. All share amounts have been retroactively adjusted, as if the Reverse Stock Split had occurred at the beginning of all periods presented.

Composition of stock capital

The stock capital of the Company as of June 30, 2026 and December 31, 2025 is comprised of stock of $0.0001 par value each, as follows:

Common Stock

Common Stock confer upon their holders the right, among others, to participate and vote in the Company’s stockholders meeting, participation in the Company’s distributable earnings and participation in the distribution of the Company’s assets upon its liquidation. The stockholders’ liability is limited to the redemption of the par value of their stock.

Preferred Stock

Preferred stock has been designated into several classes, consisting of Series B-1 Preferred Stock, Series B-2 Preferred Stock, Series B-3 Preferred Stock, Series CF-1 Preferred Stock, Series CF-2 Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Series G Preferred Stock.

The Series C Preferred Stock, Series D Preferred Stock and the Series G Preferred Stock are not mandatorily redeemable; however, they are contingently redeemable upon the occurrence of certain events that are not solely within the control of the Company. Accordingly, they are classified as temporary equity (mezzanine equity) in the Company’s consolidated balance sheets.

All issued and outstanding shares of the Series CF-1 Preferred Stock, Series CF-2 Preferred Stock and Series E Preferred Stock were converted into shares of the Company’s common stock. As a result, no shares of such series remained issued or outstanding as of June 30, 2026, and the Company withdrew the related Certificates of Designation.

Series B-1, B-2, and B-3 Preferred Stock

The holders of Series B Preferred Stock are entitled to one vote for each share of Common stock on an as-converted basis and shall vote together, along with holders of other Preferred Stock entitled to vote thereon with the holders of Common Stock as a single class. The holders of the Series B Preferred stock shall be entitled to vote on all matters on which holders of Common stock are entitled to vote.

Each share of Series B Preferred Stock shall be convertible, at the option of the holder, at any time after the date on which such stock was issued by the Company, into such number of fully paid and non-assessable Common Stock as is determined by dividing the applicable original issuance price by the applicable conversion price in effect at the time of conversion. Each share of Series B Preferred Stock shall automatically be converted into Common Stock immediately upon the earlier of (i) the closing of a Qualified IPO (as such term is defined in the applicable certificate of designation), as such or (ii) written consent or agreement of the majority of the outstanding shares of Preferred Stock voting together on an as-converted to Common Stock basis that are entitled to vote on such matter. In the event that the Company issues any new securities, for a consideration per share lower than the applicable conversion price of the applicable Series B Preferred Stock, the applicable conversion price for the applicable Series B Preferred Stock shall be readjusted to reflect the lower consideration paid for the applicable Series B Preferred Stock as set forth in the applicable certificate of designation.

The Company’s Series B Preferred Stock is entitled to a non-participating liquidation preference. In the event of any liquidation, dissolution or winding up of the Company, assets or proceeds shall be distributed as follows: (i) the holders of Series B-1 Preferred Stock and Series B-2 Preferred Stock (along with holders of Series CF Preferred Stock on a pari passu basis) shall be paid before any payment is paid to the remaining stockholders (other than holders of Series C Preferred Stock), of an amount per share equal to two (2) times their original issue price and any unpaid dividend and subsequently (ii) the holders of Series B-3 Preferred Stock shall be paid before any payment is paid to holders of Common Stock and Series F Preferred Stock, of an amount per share equal to two (2) times their original issue price and any unpaid dividend.

Series C Preferred Stock

The holders of Series C Preferred Stock shall have no voting rights, except as required by law and as expressly provided in the certificate of designation.

Shares of Series C Preferred Stock have a stated value of $10.00 per shares and are convertible to the common stock at a price of $2.0265 per share of common stock. Conversions of Series C Preferred Stock are limited such that no conversion will be allowed to the extent that, immediately following the conversion, the holder, its affiliates or any other person acting as a group, would beneficially own in excess of 9.99% of the Company’s issued and outstanding common stock

The holders of Series C Preferred Stock are entitled to a non-participating liquidation preference. In the event of any liquidation, dissolution or winding up of the Company, assets or proceeds shall be distributed to the holders of Series C Preferred Stock first who shall be paid before any payment is paid to the remaining stockholders, of an amount per share equal to the greater of (i) 200% of stated value (as defined therein) or (ii) the amount the holder would receive if such holder converted such Series C Preferred Stock into Common Stock immediately prior to the date of such payment.

Dividends:

Holders of Series C Preferred Stock are entitled to dividends payable on the stated value thereof, commencing from on the issuance date, at an annual rate of 8%, payable monthly in arrears on the stated value.

Series D Preferred Stock

The holders of Series D Preferred Stock shall have no voting rights, except as required by law and as expressly provided in the certificate of designation.

Shares of Series D Preferred Stock have a stated value of $10.00 per shares and are convertible to the common stock at a price of $12.35 per share of common stock. Conversions of Series C Preferred Stock are limited such that no conversion will be allowed to the extent that, immediately following the conversion, the holder, its affiliates or any other person acting as a group, would beneficially own in excess of 9.99% of the Company’s issued and outstanding common stock. See also note 12.

The holders of Series D Preferred Stock are entitled to a non-participating liquidation preference. In the event of any liquidation, dissolution or winding up of the Company, assets or proceeds shall be distributed to the holders of Series D Preferred Stock first who shall be paid before any payment is paid to the remaining stockholders, of an amount per share equal to the greater of (i) 200% of stated value (as defined therein) or (ii) the amount the holder would receive if such holder converted such Series D Preferred Stock into Common Stock immediately prior to the date of such payment.

Dividends:

Holders of Series D Preferred Stock are entitled to dividends payable on the stated value thereof, commencing from on the issuance date, at an annual rate of 8%, payable monthly in arrears on the stated value.

Series F Preferred Stock

The holders of Series F Preferred Stock are entitled to cast 40,000 votes for each one (1) share of Series F Preferred Stock and shall vote together, along with holders of other Preferred Stock entitled to vote thereon, with the holders of Common Stock as a single class. The holders of the Series F Preferred stock shall be entitled to vote on all matters on which holders of Common stock are entitled to vote.

Each share of Series F Preferred Stock shall be convertible, at the option of the holder, at any time after the date on which such stock was issued by the Company, into one (1) share of fully paid and non-assessable Common Stock.

The Company’s Series F Preferred Stock are entitled to participate in any distribution out of the assets of the Company on an equal basis per share with the holders of the Common Stock. For the purposes of such distribution, holders of Series F Preferred Stock shall be treated as if all shares of Series F Preferred Stock had been converted to Common Stock immediately prior to the distribution.

Series G Preferred Stock

The holders of Series G Preferred Stock shall have no voting rights, except as required by law and as expressly provided in the certificate of designation.

Shares of Series G Preferred Stock have a stated value of $10.00 per shares and are convertible to the common stock at a price of $2.0265 per share of common stock. Conversions of Series G Preferred Stock are limited such that no conversion will be allowed to the extent that, immediately following the conversion, the holder, its affiliates or any other person acting as a group, would beneficially own in excess of 9.99% of the Company’s issued and outstanding common stock.

The holders of Series G Preferred Stock are entitled to a non-participating liquidation preference. In the event of any liquidation, dissolution or winding up of the Company, assets or proceeds shall be distributed to the holders of Series G Preferred Stock first who shall be paid before any payment is paid to the remaining stockholders, of an amount per share equal to the greater of (i) 200% of stated value (as defined therein) or (ii) the amount the holder would receive if such holder converted such Series G Preferred Stock into Common Stock immediately prior to the date of such payment.

Dividends

During the three and six months ended June 30, 2026, the Company recorded total dividends of $131 and $267, respectively. As of June 30, 2026, accrued dividends payable were $325.

Issuance of Common Stock, Preferred Stock and Warrants

On June 2025, the Company designated a new class of Series F Preferred Stock consisting of 10,000 authorized shares (the “Series F Preferred Stock”). The Series F Preferred Stock were issued through the conversion of an equivalent number of shares of the Company’s founder and CEO Common Stock on a pre–reverse stock split basis (was not affected by the subsequent reverse stock split) and is entirely held by him. Each share of Series F Preferred Stock entitles the holder to cast 40,000 votes on all matters submitted to the Company’s shareholders or acted upon by written consent. In addition, each three shares is convertible, at the option of the holder, into one share of the Company’s Common Stock. The conversion of the founder and CEO’s Common Stock into Series F Preferred Stock was accounted for as an equity reclassification, as it did not result in a change in control or economic ownership. Accordingly, no gain or loss was recognized.

On June 2025, the Company entered into a Series C Preferred Stock Purchase Agreement (the “Series C SPA”) with a new investor. According to the Series C SPA, Company issued an aggregate of 329,671 shares of Series C Preferred Stock, par value $0.0001 per share, together with warrants to purchase 4,000,000 shares of common stock, for an aggregate consideration of $3,000. Series C Preferred Stock features a stated value of $10.00 per share and is convertible to common stock at a price of $2.0265 per share. The warrants are exercisable at a price of $3.2475 per share, with expiration dates as follows:1,000,000 warrants have an expiration date of eight (8) months, 1,000,000 warrants have an expiration date of sixteen (16) months, and 2,000,000 warrants have an expiration date of two (2) years from the issuance date.

On July 2025, the Company entered into a listing agreement, under regulation Crowdfunding (also known as Reg CF), whereby the Company agrees to sell securities to eligible investors through the funding portal through special purpose vehicle. On September 2025 the Company closed the financing round, raising a total of $819 and issued 212,033 Series CF-2 Preferred Stock with par value of $0.0001 each, at a price per stock of $2.1234; The total fundraising fees recorded were $56.

On August 6, 2025, the Company entered into a Securities Purchase and Conversion Agreement. Pursuant to the Agreement, the Company converted 50% of its outstanding loan obligations, totaling approximately $6.8 million, into 682,770 shares of its Series E Convertible Preferred Stock (“Series E Preferred”), stated value $10.00 per share. The Series E Preferred is convertible into shares of the Company’s common stock and accrues dividends on the stated value thereof at the same rate as the original loan. Dividends are payable, at the Company’s election, in cash or shares of common stock. The initial conversion price for the Series E Preferred is $4.62 per share. On February 5, 2026, all 682,770 outstanding shares of the Company’s Series E Convertible Preferred Stock were converted into 1,477,857 shares of the Company’s common stock in accordance with the terms of the Series E Preferred. Following the conversion, no shares of Series E Preferred remained outstanding. During the three and six months ended June 30, 2026, the Company issued 22,109 and 22,109 shares, respectively of its common stock as stock dividends, and as of June 30, 2026, an aggregate of 121,457 shares of common stock had been issued as stock dividends. See also note 6.

On October 15, 2025, all outstanding shares of the Company’s Series CF-1 Preferred Stock and Series CF-2 Preferred Stock were converted into shares of non-voting common stock. Subsequently, on February 2, 2026, all outstanding shares of non-voting common stock were converted into shares of the Company’s voting common stock.

On October 27, 2025, the Company entered into a Securities Purchase Agreement (the “SPA”) for the issuance and sale of a total of 549,451 shares of Series D Preferred Stock and warrants to the purchase a total of 25,000,000 shares of common stock. At the initial closing under the SPA on October 27, 2025, the Company issued 109,891 shares of Series D Preferred Stock for consideration of $1,000, together with warrants to purchase a total of 25,000,000 shares of common stock exercisable at a price of $12.35 per share (the “Warrants”), with expiration dates as follows:16,000,000 warrants have an expiration date of nine (9) months, 3,000,000 warrants have an expiration date of sixteen (16) months, and 6,000,000 warrants have an expiration date of two (2) years from the issuance date. The Warrants may not be exercised on a cashless basis unless, upon the listing of the Company’s common stock on any recognized stock exchange pursuant to an effective registration statement, there is no effective registration statement covering, or no current prospectus available for, the free resale of the warrant exercise shares by the holder. On December 2025, the Company completed three additional closings under the SPA for an aggregate consideration of $1,050, pursuant to which the Company issued an additional 115,385 shares of Series D Preferred Stock. On January 12, 2026, at a fifth closing under the SPA, the Company issued 93,407 additional shares of Series D Preferred Stock for additional consideration of $850. On January 30, 2026, at a sixth closing under the SPA, we issued 131,867 additional shares of Series D Preferred Stock for consideration of $1,200. On February 4, at a final closing under the SPA, the Company issued 98,902 additional shares of Series D Preferred Stock for consideration of $900. Total issuance costs related to the Series D Preferred Stock were $506.

On November 3, 2025, an aggregate of 7,025,651 shares of Series B-2 Preferred Stock were converted into common stock in accordance with the original terms of the applicable agreements, and accordingly, no gain or loss was recognized upon conversion.

On February 4, 2026, pursuant to the terms of an engagement agreement entered into in connection with the Company’s direct listing, upon(i) the successful consummation of the direct listing and (ii) the closing of financings with aggregate gross proceeds of at least $5.0 million, the Company issued 418,219 shares of common stock to certain designees, representing 0.5% of the Company’s outstanding common stock on a fully diluted basis. The shares were issued as consideration for investment banking and advisory services and had an aggregate value of approximately $33,801,000, based on an implied value of $33.00 per share. The fair value of the shares issued was recorded as an increase to additional paid-in capital, with an offsetting reduction to additional paid-in capital as equity issuance costs related to the direct listing.

On March 1, 2026, the Company entered into Amendment No. 1 (the “Amendment”) to a Warrant to Purchase Shares of Common Stock originally issued on October 27, 2025 (the “Warrant”). The Warrant provides for the purchase of up to 16,000,000 shares of the Company’s common stock at an exercise price of $12.35 per share and expires on July 27, 2026. Pursuant to the Amendment, the exercise price for 12,000,000 shares underlying the Warrant was temporarily reduced as follows:(i) $2.25 per share for 4,500,000 shares for a period of 60 days; (ii) $2.75 per share for 3,750,000 shares for a period of 60 days; and (iii) $3.25 per share for 3,750,000 shares for a period of 75 days. Upon expiration of the reduced exercise price periods, the exercise price for the applicable warrants will revert to the original exercise price of $12.35 per share. All other terms and conditions of the Warrant remain unchanged, and the Amendment was effected in accordance with the terms of the applicable agreements; accordingly, no gain or loss was recognized in connection with the transaction.

On April 9, 2026, the Securities and Exchange Commission declared effective the registration statement covering the resale of shares issuable under the Company’s equity line financing arrangement originally entered into on October 27, 2025 pursuant to a Securities Purchase Agreement. The facility provides the Company with the right, but not the obligation, to direct the purchaser to purchase shares of the Company’s common stock from time to time, subject to specified pricing, volume and other customary conditions, for aggregate gross proceeds of up to $300.0 million. Following the effectiveness of the registration statement, the Company became eligible to access the facility in accordance with its terms. In April and May 2026, the Company entered into amendments to the equity line financing arrangement that modified certain operational, pricing and settlement provisions and reduced the maximum aggregate purchase commitment under the facility from $300.0 million to $50.0 million.

During the three months ended June 30, 2026, the Company issued 6,438,184 shares of common stock under the equity line financing arrangement and received aggregate net proceeds of approximately $4,000,029 net of issuance costs.

On May 4, 2026, the Company entered into amendments to certain warrants originally issued in connection with the Company’s October 27, 2025 Series D financing transactions. Pursuant to the amendments, warrants to purchase an aggregate of 9,000,000 shares of common stock were repriced, including (i) three tranches of 1,000,000 warrants each expiring February 27, 2027 repriced to exercise prices of $1.25, $1.75 and $2.25 per share, respectively, and (ii) three tranches of 2,000,000 warrants each expiring October 27, 2027 repriced to exercise prices of $3.50, $4.00 and $4.50 per share, respectively. In addition, all remaining 15,991,902 Series D warrants, as well as 300,000 Series C warrants, were cancelled.

On May 4, 2026, the Company agreed to amend the Certificates of Designation relating to its Series C Preferred Stock and Series D Preferred Stock. Pursuant to the amendments, the conversion price of the Series D Preferred Stock was adjusted to $2.0265 per share. In addition, a “leak-out” provision was added to both the Series C Preferred Stock and Series D Preferred Stock, pursuant to which holders collectively may not sell, on any trading day, a number of conversion shares exceeding 10% of the total daily trading volume of the Company’s common stock, unless such sales are made at a price equal to or greater than 115% of the closing price of the Company’s common stock on the immediately preceding trading day.

During the three and six months ended June 30, 2026, holders of Series D preferred stock converted an aggregate of 24,000 and 24,000 shares, respectively, of Series D preferred stock with a stated value of $10.00 per share into 19,433 and 19,433 shares, respectively, of common stock at a conversion price of $12.35 per share. In addition, holders of Series C preferred stock converted an aggregate of 277,171 and 277,171 shares, respectively, of Series C preferred stock with a stated value of $10.00 per share into 1,367,742 and 1,367,742 shares, respectively, of common stock at a conversion price of $2.0265 per share.

During the three and six months ended June 30, 2026, the Company issued 8,098 and 1,434,098 shares, respectively, of common stock upon the exercise of warrants from the Series D financing, resulting in aggregate proceeds of approximately $100,010 and $1,882,000, respectively. In addition, the Company issued 1,033,335 and 1,033,335 shares, respectively, of common stock upon the exercise of Series C warrants at an exercise price of $3.2475 per share, resulting in aggregate proceeds of approximately $3.35 million and $3.35 million, respectively. The Company incurred issuance costs of approximately $367,000 related to the warrant exercises.

During the six months ended June 30, 2026, an aggregate of 2,235,181 shares of Series B-3 Preferred Stock and 607,775 shares of Series B-2 Preferred Stock were converted into Common Stock. All such conversions were completed in accordance with the original terms of the applicable agreements, and accordingly, no gain or loss was recognized upon conversion.

During the six months ended June 30, 2026, the Company issued 1,018,141 shares of common stock to certain service providers in exchange for services rendered, for aggregate non-cash consideration of $2,471,000, based on the market value of the common stock at the time of the agreement.

Note 9 –Stock-Based Compensation

The Equity Incentive Plan provides for the Company to grant ISOs, and NSOs to employees, advisers, and directors. As of June 30, 2026 there were 15,111,193 equity awards authorized including 208,135 awards that were exercised to common stock.

Stock Options

Stock options represent the right to purchase shares of common stock on the date of exercise at a stated exercise price. The exercise price of a stock option generally must be at least equal to the fair market value of the common stock on the date of grant. Options vest over a period of time not to exceed 10 years from the grant date.

The terms of the plan permit certain option holders to exercise options before their options are vested, subject to certain limitations. Upon early exercise, the awards become subject to a restricted stock agreement. The shares of restricted stock granted upon early exercise of the options are subject to the same vesting provisions in the original stock option awards. Shares issued as a result of early exercise that have not been vested are subject to repurchase by the Company upon termination of the purchaser’s employment, at the price paid by the purchaser. Such shares are not deemed to be issued for accounting purposes until they vest.

The following table summarizes the Company’s stock option activity and related information:

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s shares of common stock for those options that had exercise prices lower than the fair value of the Company’s shares of common stock.

As of June 30, 2026 and 2025, the total remaining unrecognized compensation expense related to non-vested stock options was $4,406 and $1,214, respectively, which will be amortized over the weighted-average period of 3.46 years and 3.80 years, respectively.

Total stock-based compensation expense for the three and six months ended June 30, 2026 and 2025 was as follows (in thousands):

Note 10 –Income Taxes

The Company’s quarterly tax provision and estimate of its annual effective tax rate is subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income (or loss) relates, changes in how the Company does business, and tax law developments. The Company’s estimated effective tax rate for the year differs from the U.S. statutory rate of 21% primarily as a result of not benefiting U.S. losses as those losses are not more likely than not to be realized, as well as its foreign operations, which are subject to tax rates that differ from those in the United States.

The Company recorded an income tax expense of $18 and $0 for the three months ended June 30, 2026 and 2025, respectively, and $49 and $0 for the six months ended June 30, 2026 and 2025, respectively

Note 11 –Commitments and Contingencies

In August 2018, The Israeli subsidiary entered into a lease agreement for a 60-month period beginning January 1, 2019. The subsidiary may terminate the lease agreement on December 31 of each year with 6-month advance written notice to the lessor. If the subsidiary to terminate the lease agreement at the first 48-month period, then an exit penalty of $241 will apply.

In May 2021, the lease agreement was amended where Subsidiary and lessor agreed to convert fifty percent from February-December 2021 monthly rent payments into fully vested warrants to purchase 56,325 shares of the Company’s common stock issuable upon exercise of this warrant and exercise price of 0.0001$ per share. On August 22, 2024 the warrants were exercised by the lessor and accordingly,119,340 common Stock were issued.

In August 2021, the lease agreement was further amended where the Subsidiary and lessor agreed to convert fifty percent from 2022 monthly rent payments into a warrants to purchase 63,015 shares of the Company’s common stock issuable upon exercise of this warrant and exercise price of 0.0001$ per share. The warrants will expire on September 30, 2026.

In July 2022, the Israeli Subsidiary gave the lessor advanced notice of its intention to exercise the exit point on December 31, 2022, while negotiating the fifth-year terms. The parties were unable to reach agreements and in July 2023 the subsidiary vacated the leased premises. In February 2025 a lawsuit was filed against the Company for a total of $1,600. Given the preliminary stage in which the lawsuit is at, the Israeli Subsidiary lawyers cannot reasonably assess the likelihood of the claims to be accepted. The company accounted for $1,600 and the amount is included in Accrued and other current liabilities.

Note 12 –Subsequent Events

The Company has evaluated all transactions through August 15, 2026, the date these consolidated financial statements were available to be issued and has determined that there are no other events, other than the following, that would require disclosure in or adjustment to these financial statements.