HawkEye 360, Inc.

Notes to Condensed Consolidated Financial Statements

(dollars in tables in thousands, except as otherwise indicated and share and per share amounts)

(unaudited)

NOTE 1 –NATURE OF BUSINESS AND BASIS OF PRESENTATION

HawkEye 360, Inc. (the “Company”), formed in the State of Delaware in 2015, is a trusted signals intelligence (“SIGINT”) partner of the United States and its allies, committed to advancing national interests through the use of its innovative technology. The Company’s mission is to provide actionable, trusted, and valuable signals intelligence to the U.S. Government and allied international customers. On May 8, 2026, the Company's common stock began trading on the New York Stock Exchange (the "NYSE") under the ticker "HAWK."

The Company provides secure end-to-end signals solutions which are tightly integrated into the fabric of national security architectures. As a trusted signals intelligence partner to the U.S. Government and international allies, the Company is the first space-enabled defense technology company to disrupt electronic warfare at scale. The Company delivers shareable, battlefield-proven radio frequency (“RF”) intelligence that supports Warfighters during varied cycles of geopolitical volatility. The Company operates across the entire value chain from design and build, to data collection, to processing and analysis, delivering capabilities and insights to customers throughout our global allied defense landscape.

The Company is disrupting the defense technology industry through its transformational strategy focused on new on-orbit capabilities, signal processing enhancements, and optimization of its artificial intelligence/machine learning (“AI/ML”) analytics algorithms using its expansive RF emitter database. The Company’s algorithms are designed, improved, and validated on over one billion data points from its proprietary signals archive, uniquely collected by its sensor network. With over 30 satellites on orbit and additional clusters in development, the Company maintains a robust global operational footprint and is committed to expanding its reach, improving its revisit rate and latency, and accelerating product delivery and capability expansion to its customers. The Company is a key provider to the U.S. Government of signal processing algorithms, customized hardware, and commercial SIGINT data and information. The Company operates across classified and unclassified data, leveraging relationships with the U.S. Department of War (the “DoW”) and the U.S. intelligence community and the international equivalents of its allies around the globe.

The Company’s offerings span the SIGINT value chain, comprising hardware and software solutions, comprehensive training programs, embedded analysts for spectrum exploitation, and extensive data products. The Company’s offerings solve a breadth of mission requirements, including mission-critical defense and intelligence applications, humanitarian-oriented solutions, and sustainability-focused capabilities.

In December 2025, the Company completed its acquisition of Innovative Signal Analysis, Inc. (“ISA”). This acquisition enhances the Company’s existing offerings by providing multi-domain, real-time automated hosted payloads, expanded ground processing, and highly trusted development support for the signals intelligence community. ISA expands the Company’s processing capabilities and signal database into classified data, strengthening our relationship with the U.S. Government and the U.S. intelligence community. This acquisition allows the Company to combine unclassified satellite collectors with highly trusted classified algorithms, unlocking a larger national security augmentation market. Additionally, unclassified ISA algorithms and expertise enhance the Company’s signal processing platform, allowing the Company to offer improved, automated capabilities to an expanded set of customers.

Basis of presentation

The condensed consolidated financial statements and accompanying notes are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations applicable to interim financial reporting. The condensed consolidated financial statements were prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, contain all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of its financial position, results of operations and cash flows for the periods indicated. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in our final prospectus, dated May 6, 2026, filed with the U.S. Securities and Exchange Commission (the "SEC") pursuant to Rule 424(b) under the Securities Act of 1933 in connection with our initial public offering ("IPO"). The information as of December 31, 2025, included on the condensed consolidated balance sheets was derived from the Company’s audited consolidated financial statements. All intercompany accounts and transactions have been eliminated in consolidation.

Liquidity

The condensed consolidated financial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business. The Company held cash and cash equivalents of $503.4 million as of June 30, 2026, excluding restricted cash, compared to $92.7 million as of December 31, 2025. The Company maintains collateralized performance bonds in the form of letters of credit for international customers, reported as restricted cash on the condensed consolidated balance sheet.

The Company has incurred an accumulated deficit totaling $170.1 million and $145.8 million as of June 30, 2026 and December 31, 2025, respectively. The Company generated positive cash flows from operating activities of $8.4 million as compared to a net use of cash of $2.9 million for the six months ended June 30, 2025.

Initial Public Offering

On May 8, 2026, the Company's common stock began trading on the New York Stock Exchange (the "NYSE") under the ticker "HAWK". The Company closed on its IPO resulting in the sale of 18.4 million shares of its common stock, inclusive of the exercise in full of the underwriters' option to purchase 2.4 million additional shares, at a public offering price of $26.00 per share, resulting in $478.4 million before deducting underwriting discounts and commissions and offering expenses. The Company received net proceeds of $437.5 million, net of $33.5 million of underwriting discounts and commissions and $7.4 million of offering costs. As of June 30, 2026, the Company accrued approximately $3.1 million in offering costs related to its IPO that had not yet been paid. These costs were recorded as a reduction of additional paid-in capital upon consummation of the offering. Since the amounts had not been paid in cash as of June 30, 2026, they are excluded from the statement of cash flows and are presented as a noncash financing activity.

In connection with the closing of the IPO, all outstanding shares of the Company's preferred stock converted into 68,987,988 shares of common stock and all outstanding Preferred Stock Financing Warrants (as defined below) were automatically exercised into 3,719,010 shares of common stock. See Note 8 - Mezzanine Equity and Stock holders Equity/(Deficit).

The proceeds from the IPO were used to repay $49.5 million of outstanding borrowings and associated fees pursuant to the 2025 Term Loan (as defined below) and the 2025 Mezzanine Loan (as defined below), and to fund a deferred payment of $7.5 million related to the acquisition of ISA, with the remaining balance being used for general corporate and working capital purposes.

2026 Credit Agreement

On May 19, 2026, the Company entered into a new senior secured revolving credit agreement (the “2026 Credit Agreement”) with Bank of America, N.A. The 2026 Credit Agreement provides for a revolving credit facility in an aggregate principal amount of $125.0 million (the “Revolving Credit Facility”), maturing on May 19, 2031. As of June 30, 2026, no amounts were drawn on the Revolving Credit Facility. See Note 7 - Debt for further details.

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses in the condensed consolidated financial statements and accompanying notes.

The Company’s most significant estimates and judgments involve the valuation of share-based compensation, including the fair value of common stock, the allocation of stand-alone selling price and estimated costs to complete long-term contracts used in revenue recognition, and the fair value of certain equity instruments, including warrants. These estimates also include the assumptions used in accounting for business combinations, including the valuation of assets acquired and liabilities assumed in connection with the ISA acquisition. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates, and such differences could be material to the Company’s condensed consolidated financial statements.

Inventory

The following table summarizes the components of inventory:

Concentration of Credit Risk and Revenue

The Company had the following customers whose accounts receivable or revenue balances individually represented 10% or more of the Company’s total accounts receivable or total revenue:

Customers that contributed in excess of 10% of accounts receivable in any period presented have been included in all periods presented for comparability. Customer reference remains the same for all periods presented.

Customers that contributed in excess of 10% of consolidated revenues in any period presented have been included in all periods presented for comparability. Customer reference remains the same for all periods presented.

Recently Adopted Authoritative Guidance:

Recently Adopted

In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets ("Update 2025-05"), which allows public business entities to elect a practical expedient for current accounts receivables and contract assets to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. The standard is effective for annual periods beginning after December 15, 2025, including interim periods within those annual periods. The Company adopted the new standard, effective January 1, 2026, on a prospective basis, and the accounting requirements of this ASU have been reflected in the Company’s evaluation of the allowance for accounts receivable in the condensed consolidated financial statements.

Not Yet Adopted

On December 8, 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The amendments are intended to improve the navigability of the interim reporting guidance in ASC 270 and clarify when it applies. The guidance addresses the form and content of financial statements, adds lists of the interim disclosures required by all other Codification topics, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. This guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this update can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company expects to adopt this standard for its first quarter ending March 31, 2028. The Company expects adoption of this standard to expand its disclosures and is currently evaluating the impact of adoption on its interim reporting.

On September 18, 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments remove all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when both of the following occur: (1) management has authorized and committed to funding the software project, and (2) it is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”). This guidance is effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The amendments in this update permit an entity to apply the new guidance using any of the following transition approaches: (1) a prospective transition approach; (2) a modified transition approach that is based on the status of the project and whether software costs were capitalized before the date of adoption; or (3) a retrospective transition approach. The Company is currently in the process of evaluating the potential impact the adoption of this standard may have and expects to adopt this standard in its first quarter of 2028.

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”), and in January 2025, the FASB issued Accounting Standards Update No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for the Company for its annual reporting for fiscal 2028 and for interim period reporting beginning in fiscal 2029 on a prospective basis. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact that the adoption of these standards will have on its condensed consolidated financial statements and disclosures.

NOTE 3 – BUSINESS ACQUISITION

Innovative Signal Analysis, Inc.

Pursuant to the Agreement and Plan of Merger (the “Merger Agreement”) dated December 18, 2025, the Company completed the acquisition of Innovative Signal Analysis, Inc. (“ISA”) through a statutory merger involving Forrestal Merger Sub, Inc. (the “Merger Sub”), a wholly owned subsidiary of the Company (the “Merger”). Under the terms of the Merger, Merger Sub was merged with and into ISA. At the effective time of the Merger, Merger Sub ceased to exist as a separate entity, and ISA continued as the surviving corporation under Texas law. As a result, ISA became a wholly owned subsidiary of the Company, with the acquisition of 100% equity interest in ISA completed for a fair value consideration of $166.5 million consisting of cash considerations of $117.7 million which includes:

•$110.4 million in cash (subject to customary adjustments for ISA cash on hand, net working capital, unpaid transaction costs, and debt),

•$3.9 million of transaction costs incurred by ISA and paid by the Company on ISA’s behalf, and

•$3.4 million of cash placed into escrow to be released shortly after close.

Total consideration as of the acquisition date was increased by $0.7 million as a result of working capital adjustments in the three months ended June 30, 2026.

`In addition to these cash amounts, the consideration also includes:

•Issuance of fair value of $25.0 million of Series E preferred stock;

•$10.0 million of cash holdbacks retained by the Company at closing to support a special indemnity addressing a specified matter in the Merger Agreement .

•a deferred cash payment of $15.0 million (fair valued at $13.3 million as of the acquisition date).50% of the payment was due upon closing of the IPO, as it was due upon the earlier of (i) a "Liquidity Event" (as defined in the Merger Agreement), or (ii) the third anniversary of the closing date. The remaining 50% of the payment will be held to support the same specified matter associated with the $10.0 million holdback noted above, bringing the total holdback to $17.5 million.

•a contingent earnout payment of up to $10.0 million (fair valued at $0.3 million as of the acquisition date) if ISA exceeds specified 2026 revenue targets.

The deferred cash payment of $7.5 million that was due upon closing of the IPO was paid in the third quarter, subsequent to June 30, 2026.

The Company’s acquisition of ISA enhances its existing offerings by providing multi-domain, real-time automated hosted payloads, expanded ground processing, and highly trusted service support for the signals intelligence community. ISA expands our processing capabilities into classified data, enhancing its relationship with the U.S. Government and the U.S. intelligence community. The upgraded platform integrates HawkEye 360 data with third-party sources including national systems, AIS feeds, and optical imagery. This creates a unified environment for correlation, geolocation, and our unique signal recognition. In parallel to this acquisition, the Company is also developing automated analytics software to fuse multiple data streams for real-time alerts, cueing, and mission orchestration, while expanding third-party integrations to deliver richer mission insights and operational advantages to a broader base of U.S. Government customers.

The acquisition was accounted for as a business combination under ASC 805, Business Combinations, with the Company identified as the acquirer. In connection with the ISA acquisition, the Company spent approximately $2.1 million in costs related to the acquisition which was expensed in the consolidated statements of operations for the year ended December 31, 2025. The purchase price allocation as of the date of acquisition was based on a preliminary valuation and is subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed become available. All values remain preliminary including, but not limited to, intangible assets, including the preliminary assumptions used in their estimates of fair values and their respective estimated useful lives, property and equipment, inventory, right-of-use assets, income taxes, and residual goodwill. The final determination of the fair values, purchase consideration, related income tax impacts and residual goodwill will be completed as soon as practicable, and within the measurement period of up to one year from the acquisition date as permitted under GAAP.

The table below sets forth the consideration paid, and the preliminary fair value of the assets acquired, and liabilities assumed at the acquisition date:

During the three months ended June 30, 2026, we adjusted the fair value of certain assets acquired by $0.4 million based on information we learned that existed as of the acquisition date. When combined with the increase in the purchase price by $0.7 million noted above, goodwill increased by $1.1 million. See Note 6 - Intangible Asset and Goodwill for further details.

The fair value of the working capital items, including accounts receivable, other current assets, accounts payable, accrued liabilities, and other current liabilities approximate their respective carrying values at the date of the acquisition.

See Note 17 - Fair Value Measurements for subsequent adjustments to the acquisition date "Other consideration," all of which have been reflected in operating results.

The following table summarizes the fair value of acquired identifiable intangible assets:

(1)As part of the Merger Agreement, the Company issued 1,325,316 shares of Series E preferred shares at $18.86 per share, all of which were converted at the IPO to common shares. See Note 8 – Mezzanine Equity and Stock holders' Equity for more details.

(2)The amortization period for the trade name, customer relationships follow-on, customer relationships existing backlog, and developed technology arefour years, ten years, one year, andfive years, respectively.

Goodwill generated from this business combination is primarily attributable to expected synergies from the transaction and incremental revenue and profit to be derived from the Company’s expansion into full-service hardware and software for its space and defense customers. The goodwill is not expected to be deductible for U.S. income tax purposes.

The following tables shows revenue and earnings for ISA:

Unaudited Pro Forma Information

The following unaudited pro forma financial information presents combined results of operations as if ISA had been acquired as of the beginning of fiscal year 2024. The unaudited pro forma results include certain pro forma adjustments to revenue and net loss that were directly attributable to the acquisition, including transaction costs. The unaudited pro forma information presented below is for informational purposes only and is not necessarily indicative of the condensed consolidated results of operations of the combined business had the acquisition actually occurred at the beginning of 2024, or of the results of future operations of the combined business.

NOTE 4 – REVENUE

Disaggregation of Revenue

The Company disaggregates revenue from customers into categories that depict the type of revenue by customer base. All revenue is contracted via either fixed-price arrangements, cost plus margin arrangements or time and material arrangements. The following chart details the disaggregation:

Reported related party revenue, contract accounts receivable and contract assets was associated with a specific customer that, effective with the IPO, was no longer considered to be a related party. As of June 30, 2026, the Company no longer has related party revenue, contract accounts receivable or contract assets.

Contract Assets and Contract Liabilities

Contract assets primarily consist of unbilled accounts receivable related to the Company’s right to consideration for performance obligations satisfied or partially satisfied but not yet billed to customers, including fixed-price contracts recognized over time and amounts pending customer acceptance. The Company’s contract liabilities consist of deferred revenue, which represents customer payments received prior to the completion of performance. Revenue recognized from the beginning contract liability balance was $0.7 million and $1.7 million, for the three and six months ended June 30, 2026, respectively, and $0.3 million and $0.3 million, for the three and six months ended June 30, 2025, respectively.

The table below presents the Company’s contract accounts receivable, contract assets, and contract liabilities as of June 30, 2026, December 31, 2025 and December 31, 2024, respectively:

Remaining Performance Obligations

The Company’s arrangements with its customers often have terms that span over multiple years. However, substantially all of the Company’s arrangements allow its customers to terminate contracts for convenience prior to the end of the stated term with less than twelve months’ notice. Remaining performance obligations do not include contracts which provide the customer with a right to terminate for convenience without incurring a substantive termination penalty, written orders where funding has not been appropriated and unexercised contract options. The Company has elected the optional exemption allowing the Company to not disclose remaining performance obligations for contracts with original terms of twelve months or less, and has also elected the right-to-invoice practical expedient for certain contracts in which the invoiced amount reflects the value provided to the customer; such contracts are excluded from the remaining performance obligation disclosure. Revenue recognized in the current period from performance obligations satisfied (or partially satisfied) in prior periods was not material for any of the periods presented.

As of June 30, 2026, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) was approximately $105.3 million. The Company has entered into an agreement through 2032 under which a customer has contracted for dedicated access to the Company's data collection and analytics services, with revenue to be recognized ratably at $5.0 million per quarter from the second quarter of 2027 until contract completion in 2032. This agreement accounts for $100.0 million of the $105.3 million estimated revenue expected to be recognized related to performance obligations that are unsatisfied (or partially unsatisfied) as of June 30, 2026. As of June 30, 2026 the estimated revenue expected to be recognized in the future related to remaining performance obligations is as follows:

NOTE 5 –SATELLITES, PROPERTY AND EQUIPMENT

Satellites, property and equipment, net, consists of the following as of June 30, 2026, and December 31, 2025:

The following table presents depreciation expense recognized on the condensed consolidated statements of operations:

NOTE 6 –INTANGIBLE ASSETS AND GOODWILL

The Company's intangible assets relate to intellectual property that has been amortized over five years. The carrying amount of intangible assets is as follows:

The following table presents amortization expense recognized on the condensed consolidated statements of operations:

Future amortization expense related to intangibles assets, as of June 30, 2026, is expected to be as follows:

The following table summarizes the changes in the carrying amount of goodwill:

The carrying amount of the Company’s goodwill was $118.0 million as of June 30, 2026 and $116.9 million as of December 31, 2025. During the three months ended June 30, 2026, we adjusted the fair value of certain assets acquired of $0.4 million based on information that existed as of the acquisition date. Total consideration as of the acquisition date also increased by $0.7 million as a result of working capital adjustments, resulting in a goodwill increase of $1.1 million.

NOTE 7 – DEBT

As of June 30, 2026, the Company did not have any long-term debt. As of December 31, 2025, the Company's long-term debt consisted of the following:

Prior Loan and Security Agreement

The Company borrowed the $14.6 million senior term loan (the “2025 Term Loan”) and the $34.0 million mezzanine term loan (the “2025 Mezzanine Loan” and together with the 2025 Term Loan, the "2025 Loans"), under its Third Amended and Restated Loan and Security Agreement and Mezzanine Loan and Security Agreement issued in connection with the acquisition of ISA. The Company’s borrowings were secured by substantially all of the Company’s assets and subjected to customary covenants and reporting requirements.

The Company paid interest on both the 2025 Term Loan and the 2025 Mezzanine Loan on the first of each month with the first payment made on January 1, 2026.

In connection with the issuance of the 2025 Mezzanine Loan, the Company executed new warrant agreements to issue certain new warrants (the “2025 Bank Warrants”) to the lenders of the Mezzanine Loan (see Note 9 -Bank Warrants).

The Third Amended and Restated Loan and Security Agreement and Mezzanine Loan and Security Agreement contained a number of customary representations, warranties, and covenants that, among other things, limited the ability of the Company and its subsidiaries to (subject to certain qualifications and exceptions): create liens and encumbrances; incur additional indebtedness; merge, dissolve, liquidate, or consolidate; make acquisitions, investments, advances, or loans; dispose of or transfer assets; pay dividends or make other payments in respect of its capital stock; amend certain material documents; redeem or repurchase certain debt; make payments on subordinated debt; and engage in certain transactions with affiliates. The 2025 Loan Agreements also contained customary events of default, including, but not limited to: nonpayment of principal, interest, fees, or other amounts; material inaccuracy of a representation or warranty; failure to perform or observe covenants; cross-defaults with certain other indebtedness; bankruptcy and insolvency events; material monetary judgment defaults; and the occurrence of a material adverse change. Upon the occurrence of an event of default (subject, in certain cases, to notice and grace periods), the obligations under the 2025 Loan Agreements could be accelerated. As of June 30, 2026, the covenants were extinguished upon the repayment of the loans discussed below.

Debt issuance costs and discounts related to the 2025 Loans were recorded as a reduction of the related debt and were amortized to interest expense using the effective interest method over the expected term of the 2025 Loans. Debt issuance costs consist of direct costs incurred to obtain financings under the Loan Agreements. Amortization of debt discounts and issuance costs was $0.1 million for three months ended June 30, 2026, on the 2025 Loans and is included in interest expense in the accompanying condensed consolidated statement of operations. Amortization of debt discounts and issuance costs was $0.3 million for the six months ended June 30, 2026, on the 2025 Loans and is also included in interest expense in the accompanying condensed consolidated statement of operations. The 2025 Loans were entered in December 2025 and, as such, there wasno amortization of debt discounts and issuance costs on the 2025 Loans for both the three and six months ended June 30, 2025. The effective interest rates were 7.18% and 12.34% for 2025 Senior Term Loan and 2025 Mezzanine Loan, respectively.

The Company incurred total interest expense on the 2025 Loans of $0.6 million for the three months ended June 30, 2026, which consisted of $0.4 million for 2025 Mezzanine Loan and $0.2 million for 2025 Term Loan. The 2025 Loans were entered in December 2025 and, as such, there wasno interest expense for three months ended June 30, 2025.

The Company incurred total interest expense on the 2025 Loans of $1.9 million for the six months ended June 30, 2026, which consisted of $1.5 million for 2025 Mezzanine Loan and $0.4 million for 2025 Term Loan. The 2025 Loans were entered in December 2025 and, as such, there wasno interest expense for the six months ended June 30, 2025.

In connection with the IPO noted in Note 1 - Nature of Business and Basis of Presentation, the Company used $49.5 million of the net proceeds to repay all outstanding borrowings and associated fees under the Loan and Security Agreement, including interest. The repayment of the 2025 Term Loan and the 2025 Mezzanine Loan resulted in a loss of debt extinguishment of $2.7 million, comprising of the remaining unamortized carrying value of the Bank Warrants, debt issuance costs and lender fees, and the contractual final cash payment.

2026 Credit Facility

On May 19, 2026, the Company entered into a new senior secured revolving credit agreement (the “2026 Credit Agreement”) with Bank of America, N.A. The 2026 Credit Agreement provides for a revolving credit facility in an aggregate principal amount of $125.0 million (the “Revolving Credit Facility”), maturing on May 19, 2031. Borrowings under the Revolving Credit Facility bear interest at a variable rate equal to, at the Company’s option, either (i) Term SOFR ("Secured Overnight Financing Rate") plus an applicable margin of 2.25% to 3.00% per annum, or (ii) an alternative base rate plus an applicable margin of 1.25% to 2.00% per annum, in each case based on our Total Net Leverage Ratio. A commitment fee ranging from 0.250% to 0.500% per annum applies to unused commitments under the Revolving Credit Facility.

The Revolving Credit Facility is guaranteed by each of our existing and future material domestic subsidiaries and is secured by first-priority liens on substantially all of our and the guarantors’ personal property assets and certain equity interests, subject to customary exceptions. The Credit Agreement contains customary affirmative and negative covenants and requires us to maintain compliance with the following financial covenants, each tested quarterly on a trailing four fiscal quarter basis: (i) a maximum Total Net Leverage Ratio as defined by the 2026 Credit Agreement, commencing at 3.5 to 1.00, and (ii) a minimum Interest Coverage Ratio as defined by the 2026 Credit Agreement of 3.00 to 1.00.

As of both June 30, 2026, and as of the date of this filing, we have no borrowings outstanding under the Revolving Credit Facility and the entire $125.0 million is available. The Company has recognized commitment fees of $36.5 thousand for the three and six months ended June 30, 2026, related to the Revolving Credit Facility which is included in interest expense in the accompanying condensed consolidated statement of operations. We incurred $1.1 million for the three and six months ended June 30, 2026 of debt issuance costs related to the Revolving Credit Facility, which is included in other long term assets in the accompanying condensed consolidated balance sheet. Amortization of debt discounts and issuance costs was $24.1 thousand for the three and six months ended June 30, 2026 on the Revolving Credit Facility and is included in interest expense in the accompanying condensed consolidated statement of operations.

Debt covenants on Revolving Credit Facility

The Company's debt instruments contain certain customary affirmative and negative covenants that among other things, limit the Company's ability to incur additional indebtedness, create liens, dispose of assets, distributions or other restricted payments. The Company's credit facilities include financial covenants that requires the borrower to maintain a specified Net Leverage Ratio and Interest Coverage Ratio, as of a specified date in the respective agreement. As of June 30, 2026, the company was in compliance with all covenants related to their respective debt obligations.

Letters of Credit

The Company maintains collateralized performance bonds in the form of letters of credit for international customers, reported as restricted cash on the condensed consolidated balance sheet. As of June 30, 2026, the Company hadfour standby letters of credit from Silicon Valley Bank (the "Bank") outstanding, totaling approximately $5.0 million.

NOTE 8 – MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

Common Stock

In connection with the Company's IPO on May 8, 2026, the Company amended and restated its existing certificate of incorporation. The amended and restated certificate of incorporation authorized the issuance of 2,000,000,000 shares of common stock with a par value of $0.0001 per share. As of June 30, 2026, a total of 97,960,719 shares of common stock were issued and outstanding. As of December 31, 2025, under the Company's prior amended and restated certificate of incorporation, the Company was authorized to issue 111,000,000 shares of common stock with a par value of $0.0001 per share, of which 4,168,374 shares had been issued and were outstanding as of that date.

The holders of the common stock are entitled toone vote for each share of common stock held at all meetings of stockholders (and written actions in lieu of meetings); provided, however, that, except as otherwise required by law, holders of common stock, as such, shall not be entitled to vote on any amendment to the Seventh Amended and Restated Certificate of Incorporation that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to the Seventh Amended and Restated Certificate of Incorporation or pursuant to the General Corporation Law of Delaware.

The following shares of common stock are reserved for future issuance (in whole shares):

(1)The December 31, 2025 balance has been adjusted from previously reported amounts to reflect an immaterial reduction of 377,671 options. This adjustment did not have a material impact on the Company's previously issued consolidated financial statements, share-based compensation expense, or earnings per share.

Post IPO Convertible Preferred Stock

The Company's amended and restated certificate of incorporation entered into in connection with the IPO authorized the issuance of 20,000,000 shares of preferred stock par value $0.0001 per share. As of June 30, 2026, no shares were issued and outstanding.

Pre-IPO Convertible Preferred Stock

Prior to the completion of the IPO, as of December 31, 2025, the Company's existing amended and restated certificate of incorporation authorized the issuance of 77,003,772 shares of preferred stock par value$0.0001 per share, the details of which are presented below (in whole shares):

In January 2026, the Company issued 809,766 shares of our Series E Preferred Stockto five accredited investors at a purchase price of $18.86 per share, for aggregate consideration of $15.3 million.

In February 2026, the Company issued 185,543 shares of our Series E Preferred Stock tothree accredited investors at a purchase price of $18.86 per share, for aggregate consideration of $3.5 million.

In connection with the IPO, all 68,987,988 shares of preferred stock outstanding immediately prior to the IPO were converted into 68,987,988 shares of common stock.

Preferred Stock Financing Warrants

In addition, as of December 31, 2025, there were a total of 4,664,088 of warrants related to preferred stock financings, (the “Preferred Stock Financing Warrants”).

In March 2026, an investor exercised 6,521 Preferred Stock Financing Warrants for a total of $0.1 million in cash. In May 2026, prior to the IPO, investors exercised 783,924 Preferred Stock Financing Warrants for $0.1 million in cash.

In connection with the completion of the IPO in May 2026 discussed in Note 1 - Nature of Business and Basis of Presentation, all remaining 3,873,643, Preferred Stock Financing Warrants were net exercised resulting in the issuance of 3,719,010 common shares.

NOTE 9 –BANK WARRANTS

On December 18, 2025, in connection with the 2025 Loan and Security Agreement and the 2025 Mezzanine Loan and Security Agreement, the Company issued warrants (the “2025 Bank Warrants”) to the Bank and the other lenders party thereto to purchase a total of 173,591 shares of common stock at an exercise price of $4.65 per share, subject to adjustments. During 2026, the exercise price of the 2025 Bank Warrants was revised to $11.42. The 2025 Bank Warrants will expire on December 18, 2035. The 2025 Bank Warrants were originally recorded as a liability in the condensed consolidated balance sheets at their allocated proceeds based on a relative fair value allocation between the 2025 Bank Warrants and the debt with an offset recorded as additional debt discount to be amortized. For the year ended December 31, 2025, the 2025 Bank Warrants were classified as liability warrants because they were subject to adjustment. Once the Company exercised its right to the exercise price adjustment during 2026, the 2025 Bank Warrants were marked to fair value as of the adjustment date. This was recognized as a loss from changes in fair value of financial instruments in the condensed consolidated statements of operations, and then reclassified as equity warrants in the condensed consolidated balance sheets.

In conjunction with the 2024 Amendment, the Company issued warrants to the Bank to purchase 43,343 shares of common stock, at an exercise price of $2.31 per share (the “2024 Warrants”). The 2024 Warrants had an expiration date of March 27, 2034. The estimated initial fair value of the 2024 Warrants in aggregate was $0.1 million and was computed using an option pricing method with the following assumptions: a term to maturity of 10 years; a risk-free rate of 4.20%; a dividend yield ofzero; and expected volatility of 52.80%. The Company recorded the 2024 Warrants as a liability in the Company’s condensed consolidated balance sheet and capitalized the fair value of the warrants as a deferred asset related to the 2024 Amendment. The 2024 Warrants also provide for 65,015 additional shares of common stock to be made available for exercise to the Bank should the Company draw on the term loan commitment as provided for by the legacy Loan and Security Agreement. On December 18, 2025, in connection with the 2025 Amendment, the Company entered into an amendment to reduce the number of additional shares from 65,015 to 21,655 shares of common stock and also provided that the 2024 Warrants will be exercisable for all 21,655 additional shares of common stock. After such amendment, the 2024 Warrants are exercisable for a total of 64,998 shares of common stock. The 2024 Warrants were classified as a liability in the Company’s consolidated balance sheet as of December 31, 2025, and any changes in fair value from such liability were recorded as loss from changes in fair value of financial liabilities on the Company’s condensed consolidated statement of operations. On February 16, 2026, certain option rights expired which previously resulted in a liability classification of the 2024 Warrants. Following the expiration of these option rights, the 2024 Warrants were fair valued and reclassified as equity in the condensed consolidated balance sheets, with the change in fair value as of February 16, 2026 recognized in earnings. As of June 30, 2026, all 2024 Bank Warrants had been exercised, and no warrants remain outstanding.

On February 27, 2020, in connection with a mezzanine loan and security agreement between the Company and the Bank, the Company issued warrants to the Bank (and certain additional lenders) to purchase a total of 280,600 shares of common stock at an exercise price of $2.29 per share (the “Mezzanine Warrants”). The Mezzanine Warrants will expire on February 26, 2032. The Company recorded the Mezzanine Warrants as equity in the Company’s condensed consolidated balance sheets and capitalized the fair value of the warrants as a component of the debt discount.

On March 12, 2019, another amendment was made to the Original Bank Warrant in order to remove the provisions for further adjustments. On March 12, 2019, the Company issued a warrant (the “New Bank Warrant”) to the Bank to purchase 25,428 shares of common stock at an exercise price of $0.77 per share and will expire on March 11, 2029. The Company recorded the New Bank Warrant as equity in the Company’s condensed consolidated balance sheet and capitalized the fair value of the warrants as a component of the debt discount. In connection with the Company’s IPO, the New Bank Warrants were exercised and are no longer outstanding as of June 30, 2026.

On June 27, 2017, the Company entered into the Loan and Security Agreement to provide one or more loans or other extensions of credit as described in Note 7 - Debt. In conjunction with the Loan and Security Agreement, the Company issued a warrant (the “Original Bank Warrant”) to the Bank to purchase 47,700 shares of common stock, at an exercise price of $0.23 per share. The Original Bank Warrant will expire on June 26, 2027. In May 2018 the Company granted the lender an additional 15,900 warrants, at an exercise price of $0.23 per share, with the same expiration date as the Original Bank Warrant. As of June 30, 2026, all Original Bank Warrants had been exercised, and no warrants remain outstanding.

As of June 30, 2026, the following equity classified warrants to issue stock of the Company remain outstanding:

During the three and six months ended June 30, 2026, a total of 305,788 warrants were net settled for a total issuance of 291,042 shares of common stock.

NOTE 10 –EQUITY INCENTIVE PLANS

In September 2015, the Company adopted a stock incentive plan (the "2015 Plan"), and in May 2026, in connection with the IPO, the Company adopted an equity incentive plan (the "2026 Plan", and together with the 2015 Plan, the "Equity Plans"), both of which permit the grant of stock options, stock appreciation rights, restricted or unrestricted stock awards, phantom stock, restricted stock units, performance awards, other stock-based awards, or any combination of the foregoing. Upon the effectiveness of the 2026 Plan, no further grants may be made under the 2015 Plan. However, the 2015 Plan continues to govern the terms and conditions of the outstanding awards previously granted thereunder. All shares of common stock remaining available for issuance under the 2015 Plan when the 2026 Plan became effective, have become available for issuance under the 2026 Plan. In addition, shares subject to outstanding awards granted under the 2015 Plan that, on or after the 2026 Plan became effective, expire or otherwise terminate prior to exercise or settlement; are not issued because the stock award is settled in cash; are forfeited or repurchased because of the failure to vest; or are reacquired or withheld to satisfy a tax withholding obligation or the purchase or exercise price, if any, as such shares become available from time to time, shall be added to the number of shares then available for issuance under the 2026 Plan.

Share-based compensation expense is recognized on a straight-line basis, over the applicable vesting period. Total stock-based compensation expense recognized on the condensed consolidated statement of operations as follows:

Time vested and performance vested options

Presented below is a summary of the status of the time vested stock options under the Equity Plans for the six months ended June 30, 2026:

(1)The January 1, 2026 balance has been adjusted from previously reported amounts to reflect an immaterial reduction of 377,671 options. This adjustment did not have a material impact on the Company's previously issued consolidated financial statements or share-based compensation expense.

Presented below is a summary of the status of the performance vested stock options under the Equity Plans for the six months ended June 30, 2026:

As of June 30, 2026, there was $28.8 million of unrecognized compensation cost related to unvested stock options granted under the Equity Plans, expected to be recognized over a weighted-average remaining period of 2.8 years.

Restricted Stock Units

Certain RSU awards granted to employees contain a performance-based vesting condition that requires the completion of a qualifying liquidity event, including IPO, in addition to any applicable service-based vesting requirements.

Prior to the completion of the Company's IPO on May 8, 2026, the performance condition associated with these awards was not considered probable of being achieved and, accordingly, no compensation expense was recognized for such awards. Upon the consummation of the IPO, the performance condition was satisfied, and the awards became eligible to vest subject to the remaining service conditions.

As a result of the performance condition being achieved during the three months ended June 30, 2026, the Company began recognizing stock-based compensation expense related to these awards. The Company recognized cumulative compensation expense for the portion of the requisite service period rendered through the date the performance condition was satisfied and will continue to recognize the remaining unrecognized compensation cost over the applicable remaining service periods.

During the three months ended June 30, 2026, the Company recognized $4.5 million of stock-based compensation expense related to RSU awards for which the IPO performance condition was satisfied during the period.

Presented below is a summary of the status of the restricted stock units under the Plan for ended six months ended June 30, 2026:

The total unrecognized compensation related to these RSUs was $13.5 million as of June 30, 2026 which is expected to be recognized over a weighted-average remaining period of 3.6 years.

Employee Stock Purchase Plan

In April 2026, the Company adopted the Company's 2026 Employee Stock Purchase Plan (the "ESPP"), effective in May 2026, which authorizes the issuance of up to 1,861,585 shares of common stock (which may be adjusted annually according to the provisions of the ESPP). The ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code. Eligible employees may elect to purchase shares of the Company's common stock through payroll deductions during designated offering periods at a purchase price determined in accordance with the provisions of the ESPP.

During the period ended June 30, 2026, the Company had not commenced any offering periods under the ESPP and no shares had been purchased or issued pursuant to the plan. Accordingly, no stock-based compensation expense related to the ESPP was recognized during the three- or six-month periods ended June 30, 2026.

NOTE 11 – ACCRUED EXPENSES AND LIABILITIES

Accrued expenses and other current liabilities consisted of the following on June 30, 2026 and December 31, 2025:

Other liabilities consisted of the following on June 30, 2026 and December 31, 2025:

NOTE 12 –SEGMENT REPORTING

The Company operates as a single operating and reportable segment. The chief operating decision maker (“CODM”), the Company’s Chief Executive Officer, evaluates financial performance and allocates resources using consolidated net income.

The CODM reviews expenses on a consolidated and aggregated basis rather than by individual category. Significant expense categories considered in assessing performance include direct cost of sales (excluding depreciation and amortization), indirect labor and related costs, depreciation and amortization, indirect professional fees, stock-based compensation, other operating expenses, other non-operating income (net) and benefit for income tax, all of which are included within the Company’s condensed consolidated results and are consistent with the CODM’s measure of consolidated net income. There have been no changes in the Company’s operating segment structure, the CODM, or the measures used to assess segment performance during the interim period. Accordingly, the Company has not presented separate segment financial information for the interim period.

NOTE 13 –INCOME TAXES

The expense for income tax was $0.3 million (-2.0%) and $0.3 million (-1.1%) for the three and six months ended June 30, 2026, respectively. There wasno income tax expense for the three and six months ended June 30, 2025, respectively. The increase in income tax expense was primarily related to changes in state income taxes, valuation allowance and non-deductible stock-based compensation expenses. The Company’s effective tax rate for the three and six months ended June 30, 2026 differed from the U.S. statutory rate of 21% primarily due to changes in state income taxes, valuation allowance and non-deductible stock-based compensation expenses.. The Company’s effective tax rate for the three and six months ended June 30, 2025 differed from the U.S. statutory rate of 21% primarily due to changes in valuation allowance.

NOTE 14 – LEASES

The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to, and the agreement creates enforceable rights and obligations. Under ASC 842, a contract is or contains a lease when (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company also considers whether its service arrangements include the right to control the use of an asset.

The Company made an accounting policy election not to recognize right-of-use (ROU) assets and lease liabilities for leases with a term of twelve months or less. For all other leases, the Company recognizes ROU assets and lease liabilities based on the present value of lease payments over the lease term at the commencement date of the lease.

Future lease payments may include fixed rent escalation clauses or payments that depend on an index (such as the consumer price index). Subsequent changes in an index and other periodic market-rate adjustments to base rent are recorded in variable lease expense in the period incurred. Payments for terminating the lease are included in the lease payments only when it is probable they will be incurred. The Company’s leases may include a non-lease component representing additional services transferred to the Company, such as common area maintenance for real estate. The Company made an accounting policy election to account for each separate lease component and the non-lease components associated with that lease component as a single lease component. Non-lease components that are variable in nature are recorded in variable lease expense in the period incurred.

The Company leases premises for general office and administrative purposes from unrelated parties under operating lease agreements that have remaining terms of 0.8 to 9 years. Options to extend a lease are included in the lease terms when it is reasonably certain that the Company will exercise that option. The Company’s leases generally do not contain any material restrictive covenants.

Operating lease cost is recognized on a straight-line basis over the lease term. The components of lease expense are as follows:

NOTE 15 – COMMITMENTS AND CONTINGENCIES

Legal Matters

The Company is periodically involved in legal proceedings, legal actions and claims arising in the normal course of business. Management believes that the outcome of such legal proceedings, legal actions and claims will not have a significant adverse effect, individually or in the aggregate, on the Company’s financial position, results of operations or cash flows.

During the first quarter of 2026, the Company reached a settlement with a third-party vendor related to an ongoing commercial claim. The Company has recorded $0.5 million in selling, general and administrative expense related to this settlement.

NOTE 16 –NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the basic weighted-average number of shares of common stock outstanding during each period. Diluted net income per share is calculated by dividing net income available to common stockholders by the basic weighted average number of shares of common stock outstanding plus common stock equivalents during each period. All potentially dilutive securities were excluded from the computation of diluted net loss per share as their effect would have been anti-dilutive.

Prior to the completion of the Company's IPO discussed in Note 1- Nature of Business and Basis of Presentation, the Company had outstanding convertible preferred stock that were entitled to cumulative dividends that are payable upon redemption of the underlying shares. Historically, the Company reduced income available to common stockholders by cumulative preferred dividends in determining basic and diluted earnings per share.

In connection with the closing of the IPO in May 2026, all outstanding shares of preferred stock were converted into common stock pursuant to the terms of the Company's certificate of incorporation. Concurrent with such conversion, accumulated undeclared cumulative dividend rights of approximately $10.9 million were extinguished and no longer represented an obligation of the Company. Accordingly, such amounts are no longer deducted from net income in determining income available to common stockholders and the cumulative amount has been adjusted in the current period calculation.

For the six months ended June 30, 2026, the net adjustment to income available to common stockholders was $10.4 million, as the $10.9 million extinguishment of accumulated cumulative dividend rights was partially offset by $0.6 million of cumulative preferred dividends attributable to the three months ended March 31, 2026.

The following table provides a reconciliation of the numerators and denominators used to calculate basic and diluted net income (loss) per common share as disclosed on our unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2026 and 2025, respectively:

Dilutive shares which could exist pursuant to the exercise of outstanding stock instruments, and which were not included in the calculation because their effect would have been anti-dilutive are as follows:

NOTE 17 –FAIR VALUE MEASUREMENTS

The Company’s financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, debt, accounts payable, deferred consideration, contingent consideration, bank warrants and at-the-money warrants. The carrying value of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable approximate their fair value due to the relatively short maturity of these instruments. Due to the variable rate nature of the Company’s debt, the carrying value of debt approximates the fair value of debt.

The fair value of the contingent consideration, bank warrants and at-the-money warrants is based on significant inputs not observable in the market, such as volatility, risk-free rate, and expected term, which causes it to be classified as a Level 3 measurement within the fair value hierarchy. These valuations use assumptions and estimates the Company believes would be made by a market participant in making the same valuation. The Company assesses these assumptions and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained. The Company used a market approach based on the most recent arms-length transaction to estimate the enterprise value of the Company and then allocated the enterprise value to the liability-classified warrants using an option-pricing model. No warrants exist as of June 30, 2026, that require fair value treatment. The ISA contingent earnout liability is recorded at the fair value of the potential future payments to the sellers based on the achievement of specified revenue thresholds over the earnout period. Changes in the fair value of the contingent consideration and at-the-money warrants related to updated assumptions and estimates are recognized as loss from changes in fair value of financial liabilities as part of other income, net within the condensed consolidated statements of operations.

The ISA deferred consideration was recorded at the fair value of the future payments to the sellers of ISA, based on estimates of the probability of when the payments would be made, as half was due at the earlier of a Liquidity Event (i.e. IPO) orthree years. Subsequent to the IPO, the first half became due and the fair value was adjusted to equal the full value to be paid. No further probability assessments or fair value evaluations are required and the balance is no longer considered a financial instrument requiring fair value measurement. Adjustments to the fair value have been recorded as loss from changes in fair value of financial liabilities on the condensed consolidated statements of operations.

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025, respectively:

There were no transfers between levels during the three and six months June 30, 2026. Changes in the fair value of Level 3 financial liabilities were as follows:

(1) - Half of the reclassification was to other current liabilities and half went to other liabilities

NOTE 18 – SUBSEQUENT EVENTS

In accordance with FASB ASC Topic 855, Subsequent Events, the Company has evaluated all subsequent events through August 14, 2026 to ensure that this filing includes appropriate recognition of events occurring after the balance sheet date. The Company has determined that there have been no subsequent events that occurred which would require recognition in the condensed consolidated financial statements.