Firy Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except for number of shares and par value per share amounts)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited, in thousands, except for number of shares and per share amounts)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands, except for number of shares)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

1. Description of the Business and Basis of Presentation

Business

Firy Inc. (the “Company,” “Firy,” “we,” “us,” or “our”)is a global holding company and the parent of its operating businesses, including Skillz and RZR. Firy is built to fuel business potential and operates at the intersection of content, identity, commerce and performance marketing. The Company leverages first-party data, enterprise-scale infrastructure and scalable operating systems, with a disciplined focus on capital efficiency and long-term value creation.

Skillz operates a proprietary, online-hosted, multi-player platform that enables players worldwide to compete in games (“Competitions”). The platform hosts both games developed by third-party developers and games that Skillz itself owns and operates. Skillz provides third-party developers with a software development kit (“SDK”) that they download and integrate with their existing games. The SDK serves as a data interface between Skillz, developers and players that enables Skillz to provide monetization services, including end-user registration services, player matching, fraud and fair play monitoring, and billing and settlement services. In addition to enabling third-party developers, Skillz develops, publishes, and operates its own first-party games on the platform, which represents a meaningful portion of platform activity.

In March 2026, the Company’s Aarki business rebranded as RZR. The rebrand reflects expanded capabilities and market positioning; there was no change to the entity’s legal structure or control. RZR is an artificial-intelligence-powered demand-side platform that provides data-driven user acquisition, retargeting, and advertising optimization services across mobile and other digital channels. RZR applies proprietary machine learning models to improve advertising performance for its customers.

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The Company believes the disclosures made are adequate to make the information presented not misleading.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that are, in the opinion of the Company’s management, necessary for the fair presentation of the results of operations for the interim periods.

Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Reclassifications

Certain prior year amounts have been reclassified or changed to conform to the current-year presentation. Such reclassifications had no impact on previously reported net loss.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the amounts reported in these condensed consolidated financial statements and the accompanying notes. Estimates are used in several areas including, but not limited to, end-user incentives, including Bonus Cash and Ticketz accruals, indirect tax liabilities, the fair value of non-marketable securities, and the impairment of long-lived assets. The Company bases these estimates on historical experience and various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities. The actual results may materially differ from these estimates.

Revenue Recognition

The Company recognizes revenue for its services in accordance with the FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). For additional information, see Note 3, “Revenue”.

Cost of Revenue

Cost of revenue primarily consists of third-party payment processing fees, server costs, amortization of developed technology, personnel expenses, direct software costs, amortization of internal use software, hosting expenses, and allocation of shared facility and other costs.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash, commercial paper, money market funds and U.S. government agency securities with maturities of three months or less when purchased.

Restricted cash consists of cash maintained under an agreement that legally restricts the use of such funds.

The following table provides a reconciliation of the Company’s cash, cash equivalents and restricted cash reported on the condensed consolidated balance sheets that sum to the total of the same such amount shown on the condensed consolidated statements of cash flows for the six months ended June 30, 2026:

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash, cash equivalents, restricted cash, and marketable securities. Although the Company deposits its cash with multiple established financial institutions, the deposits, at times, may exceed federally insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents. The Company limits the amount of credit exposure to any one issuer and monitors the financial condition of the financial institutions on a regular basis.

Accounts Receivable, Net

Accounts receivable, net, primarily consist of amounts recorded for programmatic media campaigns, net of an allowance for credit losses from our advertising revenue customers of our RZR segment. The allowance for credit losses is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expense in the condensed consolidated statements of operations and comprehensive loss. The Company assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when there are specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status and makes judgments about the creditworthiness of customers based on ongoing credit evaluations. The Company also considers customer-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data.

The activity in our allowance for credit losses for the six months ended June 30, 2026 and 2025 is as follows:

Two customers of RZR accounted for approximately 29% of the accounts receivable balance as of June 30, 2026, with each customer accounting for at least 10% of the total.

Four customers of RZR accounted for approximately 46% of the accounts receivable balance as of December 31, 2025, with each customer accounting for at least 10% of the total.

Long-Lived Assets

Long-lived assets primarily consist of property and equipment with estimable useful lives subject to depreciation and amortization.

The Company owns its office building in Las Vegas, Nevada that serves as its headquarters with costs allocated to building and land components. The building is depreciated on a straight-line basis over its estimated useful life of 39 years and the land is not subject to depreciation.

Investments

The Company considers all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The fair values of these investments approximate their carrying values. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year are classified as non-current marketable securities. Dividend and interest income are recognized when earned.

Non-marketable equity securities are investments in privately held companies without readily determinable fair values. We have accounted for these investments using the measurement alternative. Under the measurement alternative, the equity investment is initially recorded as its allocated cost, but the carrying value may be adjusted through earnings upon an impairment or when there is an observable price change involving the same or a similar investment with the same issuer. The carrying value of the Company’s investments without readily determinable fair values was $52.8 million as of June 30, 2026 and December 31, 2025, respectively, and are classified as non-marketable equity securities on the condensed consolidated balance sheets.

The Company did not record any other adjustments to the carrying value of its non-marketable equity securities accounted for under the measurement alternative and did not recognize any gains or losses related to the sale of non-marketable equity securities for the three and six months ended June 30, 2026 and 2025, respectively.

Investment Components

Investments consisted of the following as of June 30, 2026 and December 31, 2025:

Advertising and Promotional Expense

Advertising and promotional expenses are included in sales and marketing expenses within the condensed consolidated statements of operations and comprehensive loss and are expensed when incurred. Advertising expenses, excluding marketing promotions related to the Company’s end-user incentive programs, were $1.5 million and $3.9 million for the three months ended June 30, 2026 and 2025, respectively and $5.1 million and $8.9 million for the six months ended June 30, 2026 and 2025, respectively.

User Acquisition

User acquisition (“UA”) marketing costs to acquire new paying users to the platform are included in sales and marketing expenses in the consolidated statements of operations and comprehensive loss. UA marketing costs were $1.3 million and $3.6 million for the three months ended June 30, 2026 and 2025, respectively, and $4.4 million and $8.1 million for the six months ended June 30, 2026 and 2025, respectively.

Interest Expense, Net of Interest Income

Interest expense, net of interest income, consisted of the following for the three and six months ended June 30, 2026 and 2025:

Indirect Tax Liabilities

The Company is subject to indirect taxes such as sales and use tax in the United States and value-added tax in certain foreign jurisdictions, respectively. Indirect tax liabilities are adjusted considering changing facts and circumstances, such as the closing of a tax examination, further interpretation of existing tax law, or new tax law. The Company recognizes changes to its estimate if it is estimable and probable that its position would not be sustainable upon examination by tax authorities. Although management believes the Company’s recorded liabilities are reasonable, no assurance can be given that the final tax outcomes of these matters will not be different from those which its liabilities are based on. To the extent that final tax outcomes of these matters are different than the amounts recorded, such differences could have a material impact on the Company’s condensed consolidated financial statements as the Company records related tax reserves as a reduction in revenue, and penalties and interest in general and administrative expenses. Indirect tax liabilities, recorded in other current liabilities, totaled $8.4 million and $12.6 million at June 30, 2026 and December 31, 2025, respectively. See Note 8, “Commitments and Contingencies” for additional information.

401(k) Plan

The Company has a 401(k) Plan that qualifies as a deferred salary arrangement under Section 401 of the Internal Revenue Code. Under the 401(k) Plan, participating employees may defer a portion of their pretax earnings and receive a matching employer contribution of up to 3% of compensation not to exceed the maximum amount allowable. The Company recognized expense under this plan of $0.1 million and $0.4 million for the three months ended June 30, 2026 and 2025, respectively and $0.2 million and $0.5 million for the six months ended June 30, 2026 and 2025, respectively.

Recently Adopted Accounting Standards and Updates

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires public entities to disclose specific tax rate reconciliation categories, as well as income taxes paid disaggregated by jurisdiction, amongst other disclosure enhancements. ASU 2023-09 is effective for financial statements issued for annual periods beginning after December 15, 2024. The amendments in ASU 2023-09 should be applied on a prospective basis and retrospective application is permitted. The Company adopted this update in the fourth quarter of 2025 and has prospectively applied the disclosure requirement in its consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires public entities to disclose disaggregated information about certain costs and expenses in the notes to their financial statements in both annual and interim filings. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The amendments in ASU 2024-03 can be applied either prospectively or retrospectively. The Company is currently evaluating the disclosure requirements related to this accounting standard update.

In September 2025, the FASB issued ASU 2025-06,“Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which modernizes the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introduces a more judgment-based approach. ASU 2025-06 is effective for financial statements issued for annual periods beginning after December 15, 2027 and interim periods within those fiscal years. The amendments in ASU 2025-06 can be early adopted and should be applied using either the prospective, modified, or retrospective transition approach. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

3. Revenue

The following tables present the Company’s revenues, disaggregated by offering, geographical region, and reportable segment for the three and six months ended June 30, 2026 and 2025. Revenue by geographical region is based on the location where the game developer or advertising customer is headquartered. Revenue is recognized net of any taxes from customers (e.g., sales and other indirect taxes), which are subsequently remitted to governmental entities. For more information on revenues presented by reportable segment, see Note 12, “Segment Reporting”.

Revenues from Entry Fees

The Company generates revenues through its competition-based Skillz segment by providing a service to game developers for monetization of their game content. The monetization service provided by Skillz allows developers to offer multi-player competition to their end-users for the purpose of end-user retention and engagement. Skillz provides developers with a software development kit (“SDK”) they can download and integrate with their existing games. The SDK serves as a data interface between Skillz and the game developers that enables Skillz to provide monetization services to the developer. In addition to services provided to game developers, Skillz develops, publishes, and operates its own first-party games on the platform. There have been no material changes from the revenue recognition accounting policies previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025 except for the revenue recognition accounting policies related to our owned and operated games, which now represent a meaningful portion of platform activity.

Games provided by two developer partners accounted for 63% and 68% of the Company’s consolidated revenue for the three and six months ended June 30, 2026, respectively, with each developer partner accounting for at least 10% of the total.

Games provided by three developer partners accounted for 69% and 70% of the Company’s consolidated revenue for the three and six months ended June 30, 2025, respectively, with each developer partner accounting for at least 10% of the total.

End-User Incentive Programs

To drive traffic to its platform, the Company provides promotions and incentives to end-users in various forms. Evaluating whether a promotion or incentive is a payment to a customer may require significant judgment. Certain promotions and incentives, which are consideration payable to customers, are recognized as a reduction of revenue at the later of when revenue is recognized or when the Company pays or promises to pay the incentive. The Company recognized a reduction of revenue related to these end-user incentives of $3.2 million and $4.2 million for the three and six months ended June 30, 2026, respectively, and $2.0 million and $4.8 million for the three and six months ended June 30, 2025, respectively.

Promotions and incentives recorded as sales and marketing expenses are recognized when we incur the related cost. The Company recognized sales and marketing expense related to end-user incentives of $5.9 million and $13.5 million for the three and six months ended June 30, 2026, respectively, and $8.1 million and $17.6 million for the three and six months ended June 30, 2025, respectively.

From time to time, the Company issues credits or refunds to end-users who are dissatisfied with the level of service provided by the game developer. There is no contractual obligation for the Company to refund such end-users nor is there a valid expectation by game developers for the Company to issue such credits or refunds to end-users on their behalf. The Company accounts for credits or refunds, which are not recoverable from the game developer, as sales and marketing expenses when incurred.

Advertising Revenue

The Company offers a technology platform (i.e., demand-side platform, “DSP”) to source available advertising space from its network of vendors / suppliers (aka, advertising exchange partners / publishers), which uses a real-time auction process, to provide user acquisition and retargeting solutions for its customers. Revenue from advertising is recognized based on the number of impressions delivered on behalf of the customer as the performance obligation is satisfied. The Company considers itself the agent of its customer(s) based on the Company’s role in programmatically sourcing and placing advertisements on behalf of customers via a network of third-party publishers. The Company does not, at any time, take ownership of the advertising inventory being sourced and placed. Via the DSP, if the Company wins the auction and an impression is served, the customer’s advertisement is displayed on the publisher / supplier’s mobile application. There have been no material changes from the revenue recognition accounting policies previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

For performance obligations related to advertising revenue, customers are typically extended 30 day payment terms from completion of each month’s insertion order and no advertising revenue customers accounted for more than 10% of the Company’s revenue for the three and six months ended June 30, 2026 and 2025, respectively.

The Company recognizes an asset for incremental costs of obtaining a contract with the customer as long as management expects to recover these costs. Incremental costs are those that would have not been incurred if the contract did not exist. Examples of incremental costs often capitalized are sales commissions, whereas examples of costs that would not be included are internal employee salaries, standard benefits, travel costs, and other / general legal costs. Sales commissions are the only incremental contract costs the Company incurs and are paid based on collected revenue based on the recipient’s assigned accounts. As commissions are typically satisfied within one year after an executed contract, the Company applies the practical expedient to expense these costs as incurred.

Subscription Service Revenue

The Company offers a modern backend and live operations platform, which is purpose-built for scalable, live-service games. Revenue from subscription services is recognized over the term of the contract.

Maintenance Fee Revenue

When a player becomes inactive on the platform by not participating in a tournament for six consecutive months, the Company imposes a monthly maintenance fee. This fee is charged to the player and recognized as revenue by the Company beginning in the seventh month of inactivity.

4. Leases

The Company is a party to various non-cancelable operating lease agreements for certain of its offices. The leases have original lease periods expiring between 2026 to 2031. Some leases include one or more options to renew. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. The lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.

The Company has elected the short-term lease recognition exemption for all leases that qualify. For leases with an initial term of 12 months or less that do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise, the Company does not recognize ROU assets or lease liabilities. Instead, lease payments for short-term leases are recognized as expense on a straight-line basis over the lease term.

The components of lease costs, lease term and the discount rate were as follows for the three and six months ended June 30, 2026 and 2025, respectively:

Supplemental cash flow information related to leases for the three and six months ended June 30, 2026 and 2025, respectively:

The following table outlines future minimum lease payments under the Company’s non-cancellable leases as of June 30, 2026:

As of June 30, 2026, the Company does not have any operating or finance leases which have not yet commenced.

5. Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following as of June 30, 2026 and December 31, 2025:

Property and Equipment, Net

Property and equipment consisted of the following as of June 30, 2026 and December 31, 2025:

Property and equipment, net by geography was as follows:

Asset Acquisitions

Asset acquisitions are included in other non-current assets on our condensed consolidated balance sheets and consisted of the following as of June 30, 2026 and December 31, 2025:

Other Current Liabilities

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

6. Fair Value Measurements

As of June 30, 2026 and December 31, 2025, the recorded values of cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate their respective fair values due to the short-term nature of the instruments.

Cash and money market funds are classified within Level 1 of the fair value hierarchy.

Assets measured at fair value on a recurring basis consisted of the following as of June 30, 2026 and December 31, 2025:

7. Long-Term Debt

Long-term debt consisted of the following as of June 30, 2026 and December 31, 2025:

2021 Senior Secured Notes

On December 20, 2021, the Company issued $300 million of 10.25% secured notes (the “2021 Senior Secured Notes”) in a private placement to certain institutional buyers. The 2021 Senior Secured Notes are guaranteed by the Company’s domestic restricted subsidiaries. Interest on the 2021 Senior Secured Notes is payable semiannually on June 15 and December 15 of each year, beginning on June 15, 2022. At issuance, the effective interest rate on the 2021 Senior Secured Notes was 12.14%, and maturity will be on December 15, 2026, unless repurchased or redeemed earlier.

On April 13, 2023, the Company repurchased approximately $159.8 million of its 2021 Senior Secured Notes. After giving effect to the 2023 and other previous open market repurchases, the effective interest rate on the 2021 Senior Secured Notes was 12.09%.

The 2021 Senior Secured Notes contain customary covenants restricting the Company’s ability to incur debt, incur liens, make distributions to stockholders, make certain transactions with the Company’s affiliates, together with other financial covenants and public filings of the Company’s financial statements. We were in compliance with all covenants applicable to the 2021 Senior Secured Notes as of June 30, 2026 and December 31, 2025, respectively.

Voluntary prepayments are permitted in whole, or in part, in minimum amounts as set forth in the indenture governing the 2021 Senior Secured Notes, with prior notice. Voluntary prepayments made on, or during, the twelve-month period beginning December 15, 2025 are not subject to a prepayment premium.

Debt issuance costs incurred in connection with the 2021 Senior Secured Notes are capitalized and amortized to interest expense over thefive-year term using the straight-line method, which approximates the effective interest method. Debt issuance costs are included as contra-liabilities in long-term debt.

Amortization of debt issuance costs and accretion of debt discounts included in interest expense totaled $1.1 million and $0.9 million for the six months ended June 30, 2026 and 2025, respectively.

The 2021 Senior Secured Notes are classified as Level 2 financial instruments and the Company determined the fair value of the notes was $130.0 million as of June 30, 2026 based on secondary market quotes.

The following table outlines maturities of the principal related to the Company’s long-term debt as of June 30, 2026:

On August 14, 2026, the Company redeemed $80.0 million in aggregate principal amount of the Company’s outstanding 2021 Senior Secured Notes. Refer to Note 14, “Subsequent Events” for further discussion.

8. Commitments and Contingencies

Legal Matters

The Company is a party to certain claims, suits, and proceedings which arise in the ordinary course and conduct of its business and has certain unresolved claims pending, the outcomes of which are not determinable at this time. The Company records a liability when it believes that it is probable that a loss will be incurred and the amount can be reasonably estimated. If the

Company determines that a loss is reasonably possible and the loss or range of loss can be reasonably estimated, the Company discloses the possible loss or range of loss. Given the unpredictable nature of legal proceedings, there is a reasonable possibility that an unfavorable resolution of one or more such proceedings could in the future materially affect the results of operations, cash flows, or financial position in a particular period. The Company records legal fee expenses associated with such matters when the relevant services are provided.

Skillz v. AviaGames

On February 9, 2024, a federal jury in San Jose, California issued a verdict in favor of Skillz in a patent infringement action Skillz brought against a privately-held mobile gaming company, AviaGames, on April 5, 2021 (“Patent Case”). The jury found in favor of Skillz on all issues, determining AviaGames willfully infringed Skillz’s U.S. Patent No. 9,649,564, entitled “Peer-to-Peer Wagering Platform” (the “‘564 patent”) and awarding Skillz its full damages request of $42.9 million. After the jury verdict was issued, Skillz requested certain post-trial relief, including that the Court permanently enjoin AviaGames from continuing to infringe the ‘564 patent, award Skillz its attorneys’ fees due to the exceptional nature of the case, and treble the damages awarded by the jury. In addition, Skillz, along with game developer Big Run Studios, Inc. (“Big Run”), brought a separate case against AviaGames for false advertising, copyright infringement, and violations of California’s state unfair competition law in federal court in San Francisco, California (“Unfair Competition Case”). On April 13, 2024, Skillz, Big Run, and AviaGames entered into a settlement agreement with respect to both the Patent Case and Unfair Competition Case pending against AviaGames (the “Litigation Settlement”). In exchange for dismissal of both actions and other settlement terms, AviaGames agreed to pay Skillz and Big Run a total of $80.0 million. On April 12, 2024, the Company and Big Run Studio entered into a Side Letter Agreement providing that a portion of the AviaGames settlement funds allocated to Big Run Studio be utilized to repay the outstanding principal and accrued interest under a loan and security agreement totaling $2.0 million.

During the year ended December 31, 2024, the Company and Big Run collectively received $50.0 million from AviaGames pursuant to the settlement agreement. Of the $50.0 million received, Skillz received $48.0 million, $2.0 million of which was for settlement of the amount outstanding under the loan and security agreement with Big Run. Of the $4.0 million allocated to Big Run under the Side Letter Agreement, Big Run received $2.0 million net of the settlement of the loan and security agreement. Beginning in March of 2025, AviaGames is required to pay Skillz an additional $7.5 million annually over afour-year period as royalty payments for AviaGames’ license of the ‘564 patent and its patent family; no portion of these payments are due to Big Run.

During thethree months ended March 31, 2026 and 2025, the Company recorded a gain from the Litigation Settlement of $7.5 million when payment was received. Under the terms of the settlement agreement, the Company is scheduled to receive annual payments of $7.5 million each year through March 2028. Since gain contingencies are not recognized until realized, the Company recognizes amounts under the settlement as a gain when payment is received. The remaining scheduled payments of $15.0 million, consisting of $7.5 million payable in each of March 2027 and March 2028, have not been recognized in the accompanying condensed consolidated financial statements.

Skillz v. Tether Studios, et al.

On August 29, 2025, the Company received a notice (“Notice”) from Tether Studios, LLC (“Tether”) indicating that Tether is terminating all of its agreements with the Company (“Tether Agreements”), including the Company’s Developer Terms and Conditions of Service, as amended, effective as of September 1, 2025. The Company believes the termination notice for cause is invalid and that Tether breached its obligations under the Tether Agreements. Certain of the Tether Agreements restrict the removal oftwo games covered thereby, Solitaire Cube and 21 Blitz, from the Company’s platform for at least 18 months following termination.

Following receipt of the Notice, on September 1, 2025, the Company filed suit in the Court of Chancery of the State of Delaware, seeking injunctive and declaratory relief in relation to Tether’s breach of the Tether Agreements. On October 3, 2025, the Company filed a first amended complaint in the Court of Chancery of the State of Delaware alleging additional breaches of contract and damages. On October 10, 2025, Tether filed its answer to Skillz’s first amended complaint and also asserted counterclaims against Skillz for breach of contract, breach of the implied covenant of good faith trademark infringement, and under Delaware’s deceptive trade practices act. On March 3, 2026, Skillz filed a second amended complaint, adding Aim Games, LLC (“Aim Games”) to the complaint, which Skillz alleges is an alter ego or controlled affiliate of Tether. Skillz alleges that Aim Games impermissibly hosted monetization services for Tether’s games in violation of the Tether Agreements. Skillz asserted breach of contract claims against both Tether and Aim Games, and tortious interference claims against Aim Games. Skillz seeks equitable relief and damages arising out of its claims. The deadline to serve written discovery requests was June 17, 2026, with document production due July 30, 2026. Fact discovery is scheduled to conclude on

September 2, 2026, and expert discovery is due October 28, 2026. Trial is currently scheduled for December 2-4, 2026, but is likely to be delayed until 2027, as the parties have scheduled a court-ordered mediation for September 9, 2026. Based on the information known by the Company, any such estimated loss range is not possible to determine.

Hanna v. Paradise, et al.

In March 2024, an alleged stockholder filed a putative derivative complaint, Hanna v. Paradise, et al., No. 2024-0228-KSJM, in the Delaware Court of Chancery, purportedly on behalf of Skillz against certain of Skillz’s current and former officers, directors, and certain stockholders. The complaint alleges breaches of fiduciary duties, aiding and abetting breaches of fiduciary duties, and unjust enrichment arising out of Skillz’s March 2021 underwritten secondary public offering. The complaint asserts that certain of the director and officer defendants breached fiduciary duties to Skillz by allegedly inappropriately selling stock as part of the public offering while in possession of material, non-public information, that the stockholder defendants aided and abetted these alleged breaches of fiduciary duties, and that all defendants were unjustly enriched by their sales in the public offering. The complaint seeks unspecified damages and restitution for Skillz from the defendants and the payment of costs and attorneys’ fees. Defendants moved to dismiss the complaint on June 6, 2024. Plaintiffs responded by voluntarily dismissing 55 of the stockholder defendants but opposing the motion as to all remaining defendants. Briefing on the motion to dismiss was completed at the end of August 2024. The court heard oral arguments on the motion to dismiss on January 7, 2025. On July 3, 2025, the court issued a ruling converting defendants’ motion to dismiss on demand futility grounds to a motion for summary judgment and ordered limited discovery on the independence of a former Skillz director. The court stayed consideration of defendants’ other dismissal arguments given its ultimate ruling on the demand futility issue could moot these other dismissal arguments. On June 24, 2026, the plaintiff filed a Stipulation and Order of Voluntary Dismissal, with prejudice, dismissing the lawsuit in its entirety.

Skillz vs. Voodoo SAS, et al.

On July 1, 2024, Skillz filed suit against Voodoo SAS andtwo affiliate entities, Esport Newco SAS and Esport Newco US Corp. (collectively, "Voodoo") in the United States District Court for the Southern District of New York. In its complaint, Skillz asserts violations of the Lanham Act's prohibition of false advertising and New York's General Business Law § 349 based on, inter alia, Skillz’s allegations that Voodoo advertises its mobile games offered through the “Blitz Win Cash” application as “fair,” “skill-based,” and for “real players only” when in reality Voodoo is fixing the outcome of its tournaments through the use of computer algorithms or “bots.” On August 22, 2024, Skillz brought a motion for a preliminary injunction, and on September 18, 2024, Voodoo moved to dismiss the complaint or, in the alternative, to strike certain allegations. Skillz’s and Voodoo’s motions were both mooted when Skillz amended its complaint on October 2, 2024. On October 8, 2024, Skillz renewed its motion for a preliminary injunction and expedited discovery based on the amended complaint, and Voodoo moved to dismiss the amended complaint on October 16, 2024. Voodoo’s motion to dismiss is fully briefed and awaiting a decision by the court. The court denied Skillz’s motion for preliminary injunction. On July 23, 2025, the court denied Voodoo’s motion to stay discovery pending a decision on the motion to dismiss and to bifurcate proceedings to focus on damages only. The court entered an order on April 9, 2026 extending fact discovery to close on August 14, 2026 and depositions to be completed by November 20, 2026. Both parties have served written discovery requests and are proceeding with fact discovery.

Skillz vs. Papaya Gaming, Ltd., et al.

In March 2024, Skillz sued Papaya Gaming, Ltd. and Papaya Gaming, Inc. (collectively, “Papaya”) in the United States District Court for the Southern District of New York alleging false advertising under the Lanham Act and unfair business practices in connection with Papaya’s marketing of its mobile games as “fair” and “skill-based” despite Papaya’s deployment of algorithmic competitors (“bots”) in its games that win cash prizes for Papaya’s benefit. In June 2024, the court denied Papaya’s motion to dismiss Skillz’s complaint in its entirety.

In September 2024, Papaya filed amended counterclaims against Skillz alleging that Skillz also engaged in false advertising and unfair business practices for purportedly allowing bots in games on Skillz’s platform, defamation for Skillz’s alleged involvement in a non-profit organization that collected and published data related to customer complaints to state attorney generals related to Papaya’s and other companies’ alleged fraudulent bot use, and purported trademark and copyright infringement of design elements of certain games, among other things.

In March 2025, the court dismissed Papaya’s defamation counterclaims and severed Papaya’s intellectual property claims. Following the court’s rulings, Papaya voluntarily dismissed its intellectual property claims against Skillz. On October 27, 2025, the court denied Papaya’s motion for summary judgment on Skillz’s claims. The court also denied Papaya’s motion to exclude Skillz’s damages and survey experts. On November 21, 2025, the court granted Skillz’s motion for summary judgment of all of

Papaya’s remaining counterclaims and affirmative defenses. On February 12, 2026, the court granted in part and denied in part Skillz’s motion to exclude Papaya’s damages and technical experts. The court also granted in part and denied in part Papaya’s motion to exclude Skillz’s technical expert.

On April 23, 2026, a jury in the U.S. District Court for the Southern District of New York found Papaya liable for false advertising and returned awards of $420 million in actual damages, $719 million in advisory profits-based disgorgement, and $652 million in advisory cost-savings disgorgement, with the court to determine which recovery theory will apply. Post-trial motions, oppositions, and replies were filed by the court’s June 19, 2026 deadline. The court issued an opinion and order awarding $719 million in disgorgement of unjust profits, plus approximately $10.1 million in fees and costs to Skillz on July 27, 2026. A final judgment in the matter was entered on July 31, 2026. The Company intends to vigorously pursue full collection of the judgment; however, no assurance can be given as to the timing or amount of any ultimate recovery, including in light of any appeal or further proceedings.

Mitchell, et al. v. Skillz Platform Inc.

On January 21, 2026, a putative class action was filed in the Northern District of California, Kel Mitchell et al., v. Skillz Platform Inc., Case No. 4:26-cv-00674-AMO. Plaintiffs individually and on behalf of all others similarly situated, alleges that Skillz violated California’s Unfair Competition Law, New York law for Deceptive Acts and Practices, Texas’s Deceptive Trade Practices Act, made negligent misrepresentations, and is liable for unjust enrichment. Plaintiffs’ claims arise out of allegations that Skillz purportedly made misrepresentations about not using bots in competitions on Skillz’s platform, misrepresented the evenness of Skillz’s matchmaking, and made misrepresentations about a user’s ability to withdraw cash. Plaintiffs seek declaratory relief that Skillz’s conduct violates applicable state law, compensatory and economic damages, damages for mental anguish, statutory, treble, and punitive damages, restitution of the money lost by the class, interest, costs, and attorneys’ fees, and injunctive relief. Plaintiff filed a First Amended Complaint on March 31, 2026. Skillz filed a motion to dismiss the First Amended Complaint on May 12, with the matter to be heard on August 6, 2026. Based on the information known by the Company, any such estimated loss is immaterial.

Indirect Taxes

The Company is subject to indirect taxes, including sales and use tax in the United States and value-added tax in certain foreign jurisdictions. The Company had indirect tax liabilities totaling $8.4 million and $12.6 million as of June 30, 2026 and December 31, 2025, respectively, associated with indirect taxes based on currently available information and assumptions that the Company believes are reasonable based on an evaluation of relevant factors. Indirect tax liabilities are adjusted considering changing facts and circumstances, such as the closing of a tax examination, further interpretation of existing tax law, or new tax law. The Company recognizes changes to estimates if they are estimable and probable that our positions would not be sustainable upon examination by tax authorities. Although management believes our recorded liabilities are reasonable, no assurance can be given that the final tax outcomes of these matters will not be different from those which our liabilities are based on. The Company’s application of the revenue code for indirect taxes in certain jurisdictions, including those within the United States, may be challenged by tax authorities in those jurisdictions. The Company is in the process of filing self-disclosure returns in unregistered jurisdictions. Any associated assessments may result in additional tax liabilities. The Company does not currently anticipate that any such assessments will result in a material increase in the liabilities.

The Company is currently undergoing an examination in the State of Washington regarding its indirect tax liability.

9. Share Repurchase Program

On August 18, 2023, the Company’s Board of Directors (the “Board”) authorized a share repurchase program (the “Share Repurchase Program”) pursuant to which the Company was authorized to repurchase, at any time or from time to time, but for a period no longer than one year from the date of authorization, shares of the Company’s Class A common stock up to an aggregate purchase price of $65.0 million. Such purchases may be made on the New York Stock Exchange or any other national securities exchange on which the common stock is then traded. The Share Repurchase Program is pursuant to a plan pursuant to Rule 10b5-1 promulgated under the Exchange Act and/or pursuant to accelerated share repurchase arrangements, tender offers, privately negotiated transactions or otherwise. On December 5, 2024, the Board re-approved the Share Repurchase Program and extended the expiration date until otherwise suspended, terminated or modified at any time for any reason by the Board. The remaining availability under the Share Repurchase Program was $23.4 million as of June 30, 2026.

There wereno shares repurchased during the three and six months ended June 30, 2026, respectively, and 0.6 million and 1.4 million shares repurchased at a weighted average price of $5.08 and $5.39 per share for an aggregate value of $3.0 million and $7.7 million during the three and six months ended June 30, 2025, respectively.

10. Stock-Based Compensation

The following table summarizes stock-based compensation expense recognized for the three and six months ended June 30, 2026 and 2025:

During the three and six months ended June 30, 2026, no stock-based compensation expense was capitalized as internally developed software and included in property and equipment, net. During the three and six months ended June 30, 2025 animmaterial amount and $0.1 million of stock-based compensation expense was capitalized as internally developed software and included in property and equipment, net, respectively.

Stock Options and Restricted Stock Units

Stock option and restricted stock activity during the six months ended June 30, 2026 is as follows (in thousands, except for share, per share, and contractual term data):

During the three months ended June 30, 2026, the Compensation Committee of the Board (the “Compensation Committee”) approved performance stock unit awards to the Company's Chief Executive Officer under the Skillz Inc. 2020 Omnibus Incentive Plan, with the number of Performance Stock Units equal to $3.0 million divided by the 90-calendar day volume-weighted average price (“VWAP”) for the Company’s Class A Common Stock as of the trading day prior to January 1, 2025 (the “Target Award”). From 0% to a maximum of 200% of the Target Award (the “Maximum Award”) may be earned based on the achievement of stock price milestones. Each Performance Stock Unit is a notional amount that represents the right to receiveone (1) share of Class A Common Stock of the Company (a “Share”), subject to the terms and conditions of the Skillz Inc. 2020 Omnibus Plan and applicable award agreement, if and when the Performance Stock Unit vests. The awards vest, if at all, ineight tranches upon the 30-trading-day VWAP for the Class A Common Stock share price equaling or exceeding specified milestones ranging from $9.00 to $19.00, subject to continued service and Compensation Committee certification.

During the three months ended June 30, 2026, the Compensation Committee also approved a long-term incentive award to the Company's Chief Executive Officer with (i) the number of Restricted Stock Units equal to $1.5 million divided by the 90-calendar day volume-weighted average price for the Company’s Class A Common Stock as of the trading day prior to January 1, 2025 (the “90-day VWAP”) and (ii) the number of Performance Stock Units equal to $1.5 million divided by the 90-day VWAP (collectively, the “Stock Units”). Each Stock Unit is a notional amount that represents the right to receiveone (1) Share of Class A Common Stock of the Company, subject to the terms and conditions of the Omnibus Plan and this Agreement, if and when the Stock Unit vests. The Restricted Stock Units vest in twelve substantially equal quarterly installments measured from January 1, 2025. The Performance Stock Units are earned based on Net Gaming Revenue (50% weighting) and Adjusted EBITDA (50% weighting) measured against goals established by the Compensation Committee for each year of the performance periods ending December 31, 2026 and 2027, respectively, with payout ranging from 0% to 200% of target. In light of the performance goals being established separately for each year, each year's goals establish a separate grant date and measurement date for the related portion of the award.

11. Income Taxes

The Company’s provision for income taxes was $0.1 million for the three months ended June 30, 2026. The Company’s benefit from income taxes was animmaterial amount for the same period in the prior year. Our effective tax rate was negative 0.39% for the three months ended June 30, 2026, as compared to 0.11% for the same period in the prior year. The effective tax rates were less than the federal statutory rate of 21% primarily due to book losses, state and foreign taxes and equity award activities, mostly offset by a full valuation allowance on our deferred tax assets.

The Company’s provision for income taxes was $0.2 million for the six months ended June 30, 2026, and animmaterial amount for the same period in the prior year. Our effective tax rate was negative 0.48% for the six months ended June 30, 2026, as compared to negative 0.06% for the same period in the prior year. The effective tax rates were less than the federal statutory rate of 21% primarily due to book losses, state and foreign taxes and equity award activities, mostly offset by a full valuation allowance on our deferred tax assets.

12. Segment Reporting

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-making group (the “CODM”). Our CODM consists of the Chief Executive Officer who allocates resources and measures profitability based on our operating segments, which are managed and reviewed separately, as each represents products and services that can be sold separately to our customers. To monitor performance, the CODM regularly receives and reviews Adjusted EBITDA information for each operating segment, together with consolidated expense information. Additionally, the CODM receives estimated and forecasted expense information by operating segment. The CODM uses this information to monitor the operating efficiencies of segments and trends to monitor the overall health of each segment. The CODM evaluates operating performance and allocates resources based on Adjusted EBITDA. In particular, the CODM utilizes Adjusted EBITDA to evaluate total company performance and individual operating segment performance. In addition, the CODM utilizes Adjusted EBITDA in the evaluation of incentive compensation and the annual budget process. The CODM measures segment performance against annual budgets, forecasts and actual results. The CODM does not review information regarding total assets on a reportable segment basis.

We believe Adjusted EBITDA, a non-GAAP performance measure, is useful in evaluating the performance of its operating segments and is a similar measure reported by publicly-listed U.S. competitors, and regularly used by securities analysts, institutional investors, and other interested parties in analyzing operating performance and prospects. By providing this non-GAAP measure, the Company’s management intends to provide investors with a meaningful, consistent comparison of the Company’s profitability for the periods presented. As required by the rules of the SEC, the Company has provided herein a reconciliation of Adjusted EBITDA to the most directly comparable measures under GAAP. Adjusted EBITDA is not intended to be a substitute for any U.S. GAAP financial measures and, as calculated, may not be comparable to other similarly titled financial measures of other companies in other industries or within the same industry.

A description of the Company’stwo reportable segments, as determined by our CODM, is as follows:

•Skillz: Our platform enables game developers to monetize their content through multi-player competition by integrating real-money tournaments, virtual prizes, and social competition features directly into their games. The platform provides a managed backend that supports key competitive functionality, including player matching, leaderboards, anti-cheat integrity systems, and payment processing. Our scalable multi-player platform allows for real-world prizes that go beyond one-off competitive implementations and provides for a repeatable, developer-accessible system. In exchange for access to our multi-player platform and monetization services, Skillz and its developers share in the aggregate entry fees paid by end users.

•RZR: RZR is a performance marketing platform that enables advertisers to acquire, retain, and monetize users across mobile, connected television (CTV), and other digital channels. The platform utilizes proprietary machine learning and neural network-based architecture to optimize campaigns across user acquisition, retargeting, and brand performance objectives within a unified system. The platform processes large-scale data inputs in real time and applies predictive models to optimize bidding, targeting, and campaign performance across channels. While historically focused on mobile gaming, RZR now serves a broader set of industries, including consumer applications, retail, food and beverage, and entertainment.

Effective in the second quarter of 2026, the Company changed the composition of the information reviewed by the CODM to present unallocated corporate costs separately from the results of the Skillz reportable segment. The change reflects a change in the information regularly provided to and used by the CODM in assessing segment performance and allocating resources. Segment information for the prior-year periods presented has been recast to conform to the current period presentation. The change in segment presentation had no effect on the Company's condensed consolidated results of operations, financial condition or cash flows for any period presented.

The Company’s corporate operations primarily consist of executive, legal, finance and accounting, and support for our ongoing litigation matters, which are excluded from the results of our operating segments.

For the Skillz segment, end-user engagement marketing represents the cost of incentives provided to end users, such as Bonus Cash and Ticketz. Paid acquisition spend represents amounts paid to third parties to promote the Skillz platform. Headcount expenses include salaries, bonuses, contractors, travel, and burden such as employer taxes, benefits and insurance. Consulting fees represent expenses paid for professional fees. Vendor and software expenses represent fees paid for software and server costs and third-party technical support. Office and operations expenses represent rent and building maintenance. Other segment items include marketing expenses which, in turn, consists mostly of affiliate marketing and trade shows.

For the RZR segment, operating expenses include all operating expenses such as headcount, marketing, software, professional fees such as legal and rent.

For both the Skillz and RZR segments, stock-based compensation expenses are not included in operating expenses.

The following tables provide summarized information about the Company’s operations by reportable segment and a reconciliation of Adjusted EBITDA to loss before income taxes for the three and six months ended June 30, 2026 and 2025:

1. Amounts represent the RZR revenue earned from Skillz.

2. Amounts represent certain corporate executive, legal, finance and accounting, and litigation costs.

1. Amounts represent the RZR revenue earned from Skillz.

2. Amounts represent certain corporate executive, legal, finance and accounting, and litigation costs.

3. Amounts represent a gain on a legal settlement recorded in connection with proceeds under terms of a settlement agreement entered into with AviaGames.

The following tables provide summarized information about the Company’s operations by reportable segment for the three and six months ended June 30, 2026 and 2025, respectively:

1. Other segment items for each segment are comprised of creative and live event marketing costs, employee event expenses and various miscellaneous expenses.

1. Other segment items for each segment are comprised of creative and live event marketing costs, tax and license expenses, employee event expenses and various miscellaneous expenses.

1. Other segment items for each segment are comprised of creative and live event marketing costs, employee event expenses and various miscellaneous expenses.

1. Other segment items for each segment are comprised of creative and live event marketing costs, tax and license expenses, employee event expenses and various miscellaneous expenses.

Transactions Between Segments

Intercompany revenue was $0.1 million and $0.4 million for the three and six months ended June 30, 2026, respectively, and $0.1 million and $0.2 million for the three and six months ended June 30, 2025, respectively.

Capital Expenditures

Consolidated capital expenditures were $2.0 million and $3.4 million for the six months ended June 30, 2026 and 2025, respectively, which consisted primarily of costs related to internal-use software and costs to purchase property and equipment.

13. Loss Per Share

The Company computes loss per share of the Class A common stock and Class B common stock using the two-class method required for participating securities. Basic and diluted loss per share are the same for each class of common stock as they are entitled to the same liquidation and dividend rights. The effect of potentially dilutive common shares is reflected in diluted loss per share by application of the treasury stock method. There have been no material changes from the pertinent rights and privileges for participating securities previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

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

The following outstanding common stock equivalents were considered antidilutive, and therefore, excluded from the computation of diluted loss per share attributable to common stockholders for the periods presented (share numbers are not in thousands).

14. Subsequent Events

For purposes of the condensed consolidated financial statements as of June 30, 2026, the Company evaluated subsequent events for recognition and measurement purposes as of the filing date. The Company has concluded that no events or transactions have occurred that require disclosure except as follows:

Skillz v. Papaya Litigation

On July 27, 2026, a court issued an opinion and order awarding $719 million in disgorgement of unjust profits, plus approximately $10.1 million in fees and costs to the Company in respect of a false advertising lawsuit. A final judgment in the matter was entered on July 31, 2026. The Company intends to vigorously pursue full collection of the judgment; however, no assurance can be given as to the timing or amount of any ultimate recovery, including in light of any appeal or further proceedings. Refer to Note 8, “Commitments and Contingencies” for further discussion.

Partial Debt Redemption

On August 4, 2026, the Company delivered a notice of partial redemption of $80.0 million in aggregate principal amount of the Company’s outstanding 2021 Senior Secured Notes at a price of 100.00% of the principal amount of the 2021 Senior Secured Notes, plus accrued and unpaid interest, with such redemption occurring on August 14, 2026. As of August 4, 2026, there was $129.7 million aggregate principal amount of the 2021 Senior Secured Notes outstanding. UMB Bank, N.A. is serving as the trustee for the 2021 Senior Secured Notes and as the paying agent for the Redemption.

On August 14, 2026, the Company redeemed $80.0 million in aggregate principal amount of the Company’s outstanding 2021 Senior Secured Notes at a redemption price of 100.00% of the principal amount of the Senior Secured Notes, plus accrued and unpaid interest. As of August 14, 2026, after consummation of that redemption, there was $49.7 million aggregate principal amount of the Senior Secured Notes outstanding.