What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-14 compared with 2026-05-15 · 124 added, 78 removed, 114 unchanged (64% of the section changed)

7 unchanged sentences

Our actual results will vary, and may vary materially, from those projected or assumed in the forward-looking statements.

Future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not anticipate, including, without limitation, descriptions of our review of strategic alternatives and the timing and impact of any potential strategic transactions, the proposed development, manufacturing, and sale of our products;

statements that describe expectations regarding pricing trends, our ability to collect accounts receivable and recover prepaid assets, our ability to regain compliance with the continued listing standards of the Nasdaq Capital Market;

statements with respect to the anticipated sources of and need for future financing;

and statements with respect to future strategic plans, goals, and objectives and forecasts of future growth and value;

Future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not anticipate, including, without limitation, statements regarding the Merger and the Financing described below, including the timing and likelihood of their completion;

the effectiveness of a registration statement on Form S-1;

the Company's ability to satisfy Nasdaq's initial listing requirements in connection with the change of control resulting from the Merger and to maintain compliance with Nasdaq's continued listing standards;

the receipt of required stockholder approvals;

the possibility that the Merger Agreement may be terminated;

substantial doubt about the Company's ability to continue as a going concern;

the Company's liquidity and its sources of and need for future financing;

the fulfillment of legacy product warranty obligations and collection of remaining receivables;

and other factors referred to in our reports filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2025 .

7 unchanged sentences

Following the October 24, 2025 disposition of substantially all operating assets and intellectual property to Biamp Systems, LLC (the “Asset Sale”), the Company no longer manufactures or sells products.

Our continuing operations are now limited to (i) fulfilling warranty and technical support obligations for legacy products, (ii) maintaining public-company compliance and governance, (iii) collecting accounts receivable and recovering prepaid assets and (iv) evaluating and pursuing strategic alternatives, including a potential mergers or other transaction intended to maximize stockholder value.

Our continuing operations are now limited to (i) fulfilling warranty and technical support obligations for legacy products, (ii) maintaining public-company compliance and governance, (iii) collecting accounts receivable and recovering prepaid assets and (iv) evaluating and pursuing strategic alternatives to maximize stockholder value, which resulted in the Agreement and Plan of Merger Agreement described below.

On July 1, 2026, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among the Company, CLRO Merger Sub, Inc., a wholly owned subsidiary of the Company ("Merger Sub"), Cortigent, Inc.

("Cortigent"), and Vivani Medical, Inc.

("Vivani"), pursuant to which, subject to satisfaction or waiver of certain conditions, Merger Sub will merge with and into Cortigent, with Cortigent surviving as a wholly owned subsidiary of the Company (the "Merger").

The transaction is expected to be accounted for as a reverse recapitalization, with Cortigent treated as the accounting acquirer.

Consummation is subject to the Financing as described, effectiveness of a registration statement on Form S-1, Nasdaq approval of an initial listing application resulting from the change-of-control determination described below, stockholder approvals, and other customary conditions.

See Note 14 — Subsequent Events.

The following discussion of the Company's historical results of operations should be read in that context, as the Company's continuing operations are expected to change substantially upon completion of the Merger.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

6 unchanged sentences

July 2025 – Issuance of Class A Redeemable Preferred Stock as a special stock dividend and automatic conversion of the $ 3.0 million convertible note into Class B Convertible Preferred Stock (see Notes 3 and 4 ).

September 2025 – Repurchase and cancellation of all then-outstanding warrants (see Note 5).

September 2025 – Repurchase and cancellation of certain then-outstanding warrants (see Note 5 ).

October 24, 2025 – Completion of the Asset Sale to Biamp Systems, LLC for $ 3.0 million in cash.

2 unchanged sentences

March 2, 2026 – Private placement with First Finance Ltd.

(largest stockholder) for 437,500 shares and a warrant to purchase 437,500 additional shares (see Note 11).

(“First Finance”), the Company's largest stockholder, for 437,500 shares and a warrant to purchase 437,500 additional shares (see Note 10 ).

March 9, 2026 – Repurchase of 24,155 warrants from CVI Investments, Inc.

(see Note 5 ).

April 1, 2026 – Transition of CEO Derek Graham to a consulting arrangement (see Note 15).

April 7, 2026 – Termination of the Edgewater Corporate Park lease and receipt of Nasdaq continued listing deficiency notice (see Notes 9 and 15).

April 10, 2026 – Board approval of Class A Preferred Stock redemption at par (April 21, 2026) (see Notes 3 and 15).

April 1, 2026 – Transition of CEO Derek Graham to a consulting arrangement (as reported on our Current Report on Form 8-K filed April 3, 2026).

April 7, 2026 – Termination of the Edgewater Corporate Park lease and receipt of Nasdaq continued listing deficiency notice (see Note 9 and Part II, Item 1A).

April 10, 2026 – Board of Directors' approval of Class A Preferred Stock redemption at par (April 21, 2026) (see Note 3 ).

April 22, 2026 – Completion of reincorporation from Delaware to Nevada (see Note 1 ).

June 30, 2026 – Entry into a $1.0 million related party loan facility with First Finance (see Note 4).

July 1, 2026 – Entry into Merger Agreement (see Note 14).

July 8, 2026 – Receipt of Nasdaq determination that the Merger constitutes a change of control under Listing Rule 5110(a) (see Note 14).

July 17, 2026 – Adoption of the 2026 Omnibus Incentive Plan and filing of a preliminary information statement on Schedule 14C (see Note 14).

July 31, 2026 – Entry into an employment agreement with the

Company's Chief Financial Officer, effective upon completion of the Merger (see

August 3, 2026 – Approval by written consent of holders of approximately 61.3% of the voting power of the issuance of the Consideration Shares and the adoption of the 2026 Omnibus Incentive Plan (see Note 14).

August 4, 2026 – Cancellation of the March 2, 2026 warrant to purchase 437,500 shares in connection with the Merger (see Notes 5 and 14).

August 10, 2026 – Filing of a registration statement on Form S-1 for the concurrent Merger financing of between $10.0 million and $15.0 million (see Note 14).

Operating context

Following the Asset Sale, our continuing operations generate minimal revenue and consist primarily of warranty support, collecting accounts receivable and recovering prepaid assets, public-company compliance costs, and restructuring activities.

Management’s primary focus is preserving liquidity, and evaluating strategic alternatives (including a potential reverse merger or other transaction) to maximize stockholder value.

Following the Asset Sale, our continuing operations generate no revenue and consist primarily of warranty support, collecting accounts receivable and recovering prepaid assets, public-company compliance costs, and restructuring activities.

Management's primary focus is preserving liquidity and completing the Merger described above and in Note 14 — Subsequent Events.

The Company has incurred net losses and used cash in operations, and substantial doubt exists about its ability to continue as a going concern (see Note 1 – Going Concern).

Continuing operations and post-disposition plan

Following the Asset Sale on October 24, 2025, our continuing operations are limited to (i) fulfilling warranty and technical support obligations for legacy products, (ii) maintaining public-company compliance and governance, (iii) collecting accounts receivable and recovering prepaid assets and (iv) evaluating and pursuing strategic alternatives.

We do not expect to generate material revenue from continuing operations in the foreseeable future.

We do not expect to generate revenue from continuing operations in the foreseeable future.

Warranty support activities

1 unchanged sentence

The Company maintains a small technical support function and limited service inventory to honor these obligations.

Any immaterial service or parts revenue, if recognized, is reported within continuing operations.

No service or parts revenue was recognized, in continuing operations

during the periods

We evaluate warranty accruals each period and adjust estimates based on observed claim rates and resolution costs.

1 unchanged sentence

We maintain a lean corporate staff, including accounting/finance, IT, and senior management (CEO/CFO).

Ongoing costs include audit and tax services, legal and advisory fees, SEC reporting, D&O insurance, IT/licensing, and Board and compliance expenses.

Ongoing costs include audit and tax services, legal and advisory fees, SEC reporting, D&O insurance, IT/licensing, and Board of Directors' and compliance expenses.

Monetization of residual assets and settlement of obligations

Management’s near-term priorities include monetizing any remaining assets, collecting receivables, settling liabilities, and completing the Class A Preferred redemption.

All three facility leases were terminated by April 7, 2026 (see Note 9 and Note 15).

Management's near-term priorities include completing the Merger and the Financing described in Note 14, monetizing any remaining assets, collecting receivables, and settling liabilities.

The Class A Redeemable Preferred Stock was redeemed at par on April 21, 2026 (see Note 3), and all three facility leases had been terminated by April 7, 2026 (see Note 9).

Presentation and comparability

4 unchanged sentences

Critical accounting estimates

The classification of the disposal group of assets as held for sale and presentation as discontinued operations required management to make significant estimates, including the measurement of fair value less costs to selloff the disposal group of assets (ASC 360 ) and the warranty obligation retained by the Company (ASC 460 ).

The classification of the disposal group of assets as held for sale and presentation as discontinued operations required management to make significant estimates, including the measurement of fair value less the costs to sell, of the disposal group (ASC 360 ) and the warranty obligation retained by the Company (ASC 460 ).

These estimates use assumptions regarding market participant pricing, transaction costs, expected claim rates and unit repair costs.

2 unchanged sentences

We have incurred net losses and used cash in operations for the periods presented.

Our ability to meet obligations as they come due depends on the timing and magnitude of cash from residual asset monetization, collections, and access to additional financing or a Strategic Transaction.

These conditions raise substantial doubt about our ability to continue as a going concern within one year after the issuance of these financial statements.

Management’s plans include managing warranty exposure, collecting accounts receivable and recovering prepaid assets, and pursuing strategic alternatives.

Our ability to meet obligations as they come due depends on the $1.0 million related party loan facility with First Finance (see Note 4) and on completion of the Merger and the concurrent registered financing of between $10.0 million and $15.0 million pursuant to the Company’s registration statement on Form S-1 filed on August 10, 2026 for a best-efforts offering of a minimum of 2,857,142 units and a maximum of 4,285,714 units (the “Units) at $3.50 per Unit, to raise minimum aggregate gross proceeds of $10.0 million and maximum aggregate gross proceeds of $15.0 million (the "Financing").

Each Unit is comprised of one share of common stock and one warrant.

The Warrants will initially have an exercise price of $10.00 per share of common stock, will be exercisable immediately, and will expire six months from the date of issuance.

Completion of the Merger and the Financing is subject to conditions outside our control, including effectiveness of a registration statement on Form S-1, Nasdaq approval of an initial listing application, and stockholder approvals.

These conditions raise substantial doubt about our ability to continue as a going concern within one year after the date these financial statements are issued, and management has concluded that its plans do not alleviate that doubt.

See Note 1 — Going Concern for additional information.

Key risks and uncertainties

Execution of the restructuring and any Strategic Transaction involves risks, including warranty claim variability, timing of asset monetization, and the cost and availability of essential public-company services.

Execution of the Merger involves risks, including the possibility that the Merger or the Financing is not completed, that the post-transaction entity does not satisfy Nasdaq's initial listing requirements, warranty claim variability, and the cost and availability of essential public-company services.

Actual outcomes may differ materially from current expectations.

Off-balance sheet arrangements

We had no off-balance sheet arrangements as of March 31, 2026 .

We had no off-balance sheet arrangements as of June 30, 2026 .

Deferred Product Revenue

Deferred product revenue decreased to $ 0 at both March 31, 2026 and December 31, 2025 .

Deferred product revenue decreased to $ 0 at both June 30, 2026 and December 31, 2025 .

A detailed discussion of our results of operations follows below.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations for the three months ended March 31, 2026

Following the Asset Sale on October 24, 2025, the Company’s continuing operations generate minimal revenue and consist primarily of warranty support, public-company compliance, and restructuring costs.

Results of Operations for the three and six months ended June 30, 2026

Following the Asset Sale on October 24, 2025, the Company’s continuing operations generate no revenue and consist primarily of warranty support, public-company compliance, and restructuring costs.

The majority of the Company’s historical operations are now presented as discontinued operations (see Note 2 ):

Continuing Operations

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(dollars in thousands)

Change Favorable (Adverse) in %

Cost of goods sold

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Net loss from continuing operations

Continuing operations in Q1 2026 primarily comprise corporate activities (public-company reporting, governance, and compliance), warranty support for legacy products, and restructuring actions.

We recorded no product revenue in continuing operations for the three months ended March 31, 2026 .

Continuing operations primarily comprise corporate activities (public-company reporting, governance, and compliance) and warranty support for legacy products.

We recorded no revenue in continuing operations during the three or six months ended June 30, 2026 or the comparable 2025 periods.

Costs of Goods Sold and Gross Profit (Loss)

Cost of goods sold in continuing operations reflects warranty-related parts and labor and immaterial service inventory usage.

With no revenue in continuing operations for the periods presented, gross margin percentages are not meaningful;

the period-over-period dollar changes reflect timing and volume of warranty claims and repairs.

Cost of goods sold in continuing operations reflects warranty-related parts and labor.

Cost of goods sold was $ 70 and $ 140 for the three and six months ended June 30, 2026 , compared to $ 100 and $ 127 for the comparable 2025 periods.

Because continuing operations generated no revenue, gross margin percentages are not meaningful, and the period-over-period changes reflect the timing and volume of warranty claims and repairs.

Operating Expenses

General & administrative (G&A) - General & administrative (G&A) expenses in Q1 2026 were driven primarily by legal, advisory, and regulatory fees associated with the strategic review, disposition process, audit and tax fees, D&O insurance, and incremental accounting and compliance costs.

S&M and R&D expenses in continuing operations were immaterial following the classification of the product business as held for sale.

Sales & marketing (S&M) and research & development (R&D) - Following classification of the product business as held for sale, S&M and R&D expenses in continuing operations were immaterial for the periods presented.

To the extent severance or other exit costs were recognized in the quarter, such costs are reflected in the relevant operating expense caption in the period incurred.

Restructuring/exit costs - To the extent actions met ASC 420 recognition criteria, we recorded employee termination or contract termination costs;

otherwise, such costs will be recognized when probable and reasonably estimable.

General & administrative (G&A) - General and administrative (G&A) expenses were $ 849 and $ 1,629 for the three and six months ended June 30, 2026 , compared to $ 1,092 and $ 1,891 for the comparable 2025 periods, decreases of 22 % and 14 %, respectively.

The decreases reflect the substantial reduction in corporate infrastructure and headcount following the Asset Sale, partially offset by legal, advisory, and other professional fees associated with the Merger and related transactions.

G&A expenses consist primarily of audit and tax fees, legal and advisory fees, SEC reporting costs, D&O insurance, and other public-company compliance costs.

Sales & marketing (S&M) and research & development (R&D) - No sales and marketing or research and development expense was recognized in continuing operations during the periods presented;

all such costs relate to the disposed product business and are reported within discontinued operations.

Restructuring/exit costs - No material restructuring or exit costs were recognized in continuing operations during the periods presented.

Any such costs meeting the recognition criteria of ASC 420 are recorded in the period incurred.

Other income (expense), net

Other income (expense), net reflects interest income on cash equivalents, interest expense on the convertible note through its conversion on July 21, 2025, and immaterial gains/losses on asset disposals related to restructuring activities.

Other income (expense), net in continuing operations was $ 0 for the three and six months ended June 30, 2026 , compared to $( 5 ) and $ 7 for the comparable 2025 periods.

The 2025 amounts reflect interest expense on the convertible note through its conversion on July 21, 2025 and interest income on cash equivalents.

We maintained a full valuation allowance against US federal and state deferred tax assets in both periods due to cumulative losses and uncertainty of realization.

1 unchanged sentence

Discontinued Operations

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(dollars in thousands)

Change Favorable (Adverse) in %

Cost of goods sold

3 unchanged sentences

Income /(Loss) from discontinued operations, net of tax

Revenue in discontinued operations declined to $ 0 in Q1 2026 compared to $2,313 in Q1 2025 , reflecting the completion of the Asset Sale in October 2025.

Discontinued operations generated no revenue in the three or six months ended June 30, 2026, compared to $1,916 in the second quarter of 2025 and $4,229 in the 2025 year-to-date period, reflecting the completion of the Asset Sale in October 2025.

See Note 2 — Discontinued Operations and Assets Held for Sale for additional details on the components of discontinued operations.

1 unchanged sentence

Cost of goods sold includes expenses associated with finished goods purchased from outsourced manufacturers, the repackaging of our products, our manufacturing and operations organization, property and equipment depreciation, warranty expense, freight expense, royalty payments, and the allocation of overhead expenses.

Our gross profit decreased from $ 148 during 2025 - Q1 to a loss of $ 88 during 2026 - Q1 .

Our gross loss decreased from $131 during 2025-Q2 to a loss of $107 during 2026-Q2.

The reduction in gross profit reflects the completion of the Asset Sale in October 2025.

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Total operating expenses in 2026-Q2 were $(92) compared to $3,236 in 2025-Q2.

The following contains a more detailed discussion of expenses related to sales and marketing, research and product development, general and administrative, and other items.

Total operating expenses thru 2026-YTD were $172 compared to $5,404 observing the same 6-month period in 2025.The following contains a more detailed discussion of expenses related to sales and marketing, research and product development, general and administrative, and other items.

Sales and Marketing - S&M expenses include selling, customer service, and marketing expenses such as employee-related costs, allocations of overhead expenses, trade shows, and other advertising and selling expenses.

S&M expenses were $ 33 in Q1 - 2026 , compared to $1, 116 in Q1 - 2025 .

Both comparisons are the result of decreased sales commissions on fewer sales as well as lowered marketing spend inclusive of the reduction in force completed in Q3 of 2025.

S&M expenses were $40 in Q2-2026, compared to $1,383 in Q2-2025 while the year-to-date results for the six months ended June 30, showed $73 in 2026 compared to $2,499 in 2025.

Both comparisons are the result of no sales commissions during 2026 due to no sales as well as lowered marketing spend inclusive of the reduction in force completed in Q3 of 2025.

Research and Product Development - R&D expenses include research and development, product line management, engineering services, and test and application expenses, including employee-related costs, outside services, expensed materials, depreciation, and an allocation of overhead expenses.

R&D expenses were $ 9 in Q1 - 2026 , compared to $ 691 in Q1 - 2025 .

The decrease in comparing the quarterly results was due to a decrease in headcount.

R&D expenses were $(26) in Q2-2026, compared to $1,359 in Q2-2025, while the year-to-date results for the six months ended June 30, showed $(17) in 2026 compared to $2,050 in 2025.

The change in the quarterly results reflect the reversal of previously accrued amounts following the wind-down of product development activities.

General and Administrative - G&A expenses include employee-related costs, allocations of overhead expenses, litigation costs, and corporate administrative costs, including costs related to operational teams.

G&A expenses were $ 222 in Q1 - 2026 , compared to $ 361 in Q1 - 2025 .

The decreases were due to decreased expenses related to the exploration of strategic alternatives and closing down facilities.

G&A expenses were $(106) in Q2-2026, compared to $494 in Q2-2025, while the year-to-date results for the six months ended June 30, showed $116 in 2026 compared to $855 in 2025 The credit in Q2 2026 is due to decreased allowance for doubtful accounts causing a credit to bad debt expense.

The overall changes from 2025 were due to decreased expenses related to the exploration of strategic alternatives and closing down facilities.

Other income (expense), net

Other income (expense), net includes gain or loss on disposal of assets and impairment charges related to assets being held for sale.

Other income for the three months ended March 31, 2026 included a $ 78 charge for expenses related to closure of foreign subsidiaries, compared to $ 0 for the three months ended March 2025 .

Other income (expense), net within discontinued operations was $50 for the three months ended June 30, 2026 and $(28) for the six months ended June 30, 2026.

The six-month amount reflects a $78 charge for costs associated with the closure of the Company's former foreign subsidiaries, partially offset by a $50 credit from the reversal of a liability accrued in a prior period in connection with the anticipated redemption of the Class A Redeemable Preferred Stock.

That accrual was separate from the redemption obligation described in Note 3, which was settled in cash in April 2026, and was reversed at June 30, 2026 upon confirmation that no further amounts were payable.

Provision for income taxes

During the three months ended March 31, 2026, the Company recorded an income tax benefit of $793 (recorded in discontinued operations) resulting from the reversal of unrecognized tax benefits (FIN 48 reserves).

During the six months ended June 30, 2026 the Company recorded an income tax benefit of $(763) (recorded in discontinued operations) resulting from the reversal of unrecognized tax benefits (FIN 48 reserves).

This reversal occurred because the statute of limitations expired for certain tax years, and the underlying tax positions were no longer subject to IRS review.

For the three months ended March 31, 2025, the Company did not recognize any tax benefit from its losses due to the establishment of a full valuation allowance on its net deferred tax assets.

For the six months ended June 30, 2025 , the Company did not recognize any tax benefit from its losses due to the establishment of a full valuation allowance on its net deferred tax assets.

Net Loss and Outlook

Net loss for the first quarter of 2026 was $487, compared to a net loss of $2,834 in the first quarter of 2025.

The improvement was primarily driven by a one-time income tax benefit of $793 (recorded in discontinued operations) from the release of uncertain tax positions, partially offset by the absence of revenue-generating operations following the October 2025 Asset Sale to Biamp Systems.

The Company's total net loss was $(914) for the second quarter of 2026, compared to $(4,572) for the second quarter of 2025, and $(1,401) for the 2026 year-to-date period, compared to $(7,406) for the comparable 2025 period.

The reduction in net loss primarily reflects the absence of the operating losses of the disposed product business, now presented within discontinued operations, together with a $763 income tax benefit recorded in discontinued operations from the release of uncertain tax positions.

Looking ahead, the Company’s continuing operations are expected to consist primarily of warranty servicing and technical support for legacy products, along with ongoing public company compliance and governance costs.

We will continue to evaluate warranty claims experience and adjust our reserves as appropriate.

In parallel, management is actively pursuing strategic alternatives, completed the redemption of the Class A Redeemable Preferred Stock on April 21, 2026, collecting accounts receivable and recovering prepaid assets, and continues to evaluate potential reverse merger or other value-enhancing transactions.

We expect these activities to remain the primary focus for the remainder of 2026.

In parallel, management is focused on completing the Merger with Cortigent and the Financing described in Note 14.

The Company completed the redemption of the Class A Redeemable Preferred Stock on April 21, 2026 and continues to collect remaining receivables and settle obligations.

We expect completion of the Merger to be the primary focus for the remainder of 2026.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2026 , cash and cash equivalents were $ 1,053 compared to $ 739 as of December 31, 2025 .

Working capital was minimal at both dates.

Cash used in opera ting activities was approximately $ 680 in the three months ended March 31, 2026 , compared to $ 2,644 in the three months ended March 31, 2025 .

The decrease in cash used was primarily due to the absence of operating activities following the Asset Sale.

Cash provided by (used in) investing activities was $ 0 for the three months ended March 31, 2026 , compared to $ 0 used in the prior-year period.

Cash provided by financing activities in the three months ended March 31, 2026 was $ 1,728 , compared to $ 1,000 in the three months ended March 31, 2025 .

Both provision to cash were the result of common stock sales.

For a detailed discussion of liquidity and going-concern considerations, including management’s plans and the substantial doubt about the Company’s ability to continue as a going concern, see Note 1 – Going Concern.

In furtherance of the Asset Sale pursuit, the Company completed a one-time special stock dividend of Class A Redeemable Preferred Stock, payable July 18, 2025 to holders of record of our common stock on July 11, 2025, which entitles holders of the Class A Redeemable Preferred Stock to 100% of net proceeds from any Asset Sale upon redemption (see Notes 3 and 15 – the redemption occurred on April 21, 2026 at par value of $2).

This structure aligns stockholder interests with the strategic process but depends on the successful completion of the Asset Sale for value realization.

See Note 3 – Class A Redeemable Preferred Stock.

As of March 31, 2026 , First Finance Ltd.

beneficially owned approximately 61.34% of our common stock on an as-converted basis and has the right to nominate two directors to our Board.

This concentration may influence strategic decisions, including the ongoing restructuring and possible Strategic Transactions, and could affect our ability to attract alternative financing or partners.

As of March 31, 2026 , we had no open purchase orders.

As of March 31, 2026 , we had inventory totaling $333 .

As of June 30, 2026, cash, cash equivalents and restricted cash were $522, compared to $739 as of December 31, 2025.

Of the $522, $75 was unrestricted cash and cash equivalents and $447 was restricted cash representing undisbursed proceeds of the First Finance loan, the disbursement of which requires lender approval (see Note 1).

Working capital was $47 as of June 30, 2026 compared to $209 as of December 31, 2025.

Cash used in operating activities was $2,445 for the six months ended June 30, 2026 ($1,585 used in continuing operations and $860 used in discontinued operations), compared to $2,568 for the comparable 2025 period.

Investing activities used $0 in the 2026 period, compared to $21 used in the prior-year period (in discontinued operations).

Cash provided by financing activities was $2,228 for the six months ended June 30, 2026, consisting of $1,750 of proceeds from the March 2026 private placement and $500 from the First Finance loan, partially offset by $22 to repurchase warrants, compared to $4,000 in the prior-year period ($1,000 from common stock sales and $3,000 from the convertible note).

On June 30, 2026, the Company

entered into a Loan Agreement with First Finance providing for advances of

up to $1,000, of which $500 was received on June 30, 2026 and $500 was received

on July 16, 2026.

All amounts bear interest at 11% per annum and mature on

December 30, 2026, or such other date as the parties may mutually agree in writing.

The Company's near-term liquidity depends on the proceeds of

this facility and on completion of the Merger and the concurrent registered

financing of between $10,000 and $15,000 described in Note 14.

Completion of

the Financing is a condition to the Merger and is subject to effectiveness of a

registration statement on Form S-1 and market conditions.

There can be no

assurance the Financing or the Merger will be completed.

These conditions raise

substantial doubt about the Company's ability to continue as a going concern.

See Note 1 — Going Concern.

The Company had previously issued a one-time special stock dividend of Class A Redeemable Preferred Stock, which was mandatorily redeemable upon an Asset Sale.

The redemption was completed on April 21, 2026 at par value for aggregate consideration of $2, and holders received no distribution of Asset Sale proceeds (see Note 3).

As of June 30, 2026, First Finance beneficially owned approximately 61.34% of our common stock on an as-converted basis and has the right to nominate two directors to our Board.

This concentration may influence strategic decisions, including the Merger and related transactions described in Note 14, and could affect our ability to attract alternative financing or partners.

As of June 30, 2026 , we had no open purchase orders.

As of June 30, 2026 , we had inventory totaling $304.

This compares to total inventories of $ 353 as of December 31, 2025 .

Contractual Obligations and Commitments

The following table summarizes our contractual obligations as of March 31, 2026 (in thousands):

The following table summarizes our contractual obligations as of June 30, 2026 (in thousands):

Payment Due by Period

Operating lease obligations

Purchase obligations

party loan - principal

party loan - interest

OFF-BALANCE SHEET ARRANGEMENTS

2 unchanged sentences

Our critical accounting policies and estimates are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025 .

There have been no material changes to our critical accounting policies and estimates during the three months ended March 31, 2026, other than (i) the presentation of discontinued operations as described in Note 2 and (ii) the reclassification of Class A Redeemable Preferred Stock from temporary equity to a current liability (see Note 3).

There have been no material changes during the six months ended June 30, 2026 , other than (i) the presentation of discontinued operations as described in Note 2 and (ii) the reclassification of Class A Redeemable Preferred Stock from temporary equity to a current liability (see Note 3 ).

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1 — Significant Accounting Policies and Recent Accounting Pronouncements for a discussion of recently issued accounting standards and their expected impact on our financial statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information otherwise required under this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis