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Item 1. Financial Statements

2026-08-14 compared with 2026-05-15 · 380 added, 153 removed, 622 unchanged (46% of the section changed)

44 unchanged sentences

Series A Redeemable Convertible Preferred stock, $ 1,000 stated value, 50,000 shares authorized;

30 shares issued and outstanding as of March 31, 2026 and December 31, 2025

Liquidation preference of $ 30,623 and $ 30,232 as of March 31, 2026 and December 31 2025, respectively

30 shares issued and outstanding as of June 30, 2026 and December 31, 2025 Liquidation preference of $ 31,025 and $ 30,232 as of June 30, 2026 and December 31 2025, respectively

28,480 27,688

1 unchanged sentence

Common stock, $ 0.01 par value, 66,666 shares authorized;

10,567 and 10,519 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

13,098 and 10,519 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively

Additional paid-in capital

2 unchanged sentences

( 76,487 ) ( 65,130 )

Accumulated other comprehensive income

Accumulated other comprehensive (loss) income

( 304 ) 1,223

Total Shareholders ’ Equity

7 unchanged sentences

For the Three Months Ended

For the Six Months Ended

$ 7,475 $ 7,073 $ 12,032 $ 10,467

Services and other

14,030 5,957 25,821 12,297

21,505 13,030 37,853 22,764

Cost of sales:

6,197 5,298 10,116 7,602

Services and other

7,011 2,715 13,844 5,692

Total cost of sales

13,208 8,013 23,960 13,294

8,297 5,017 13,893 9,470

Operating expenses:

Sales and marketing expenses

2,024 1,156 4,921 2,403

General and administrative expenses

9,018 5,192 17,923 9,120

Total operating expenses

11,042 6,348 22,844 11,523

Operating loss

( 2,745 ) ( 1,331 ) ( 8,951 ) ( 2,053 )

Other expenses (income):

Interest expense, including amortization of debt discount

1,426 513 2,891 834

Gain on settlement of contingent consideration

Other expense, net

- - - ( 4,775 )

Other expense (income), net

40 ( 1 ) 360 264

Total other expenses (income), net

Loss before income taxes

Income tax benefit (expense)

1,466 512 3,251 ( 3,677 )

(Loss) income before income taxes

( 4,211 ) ( 1,843 ) ( 12,202 ) 1,624

Income tax (expense) benefit

315 26 845 ( 73 )

Net (loss) income

( 3,896 ) ( 1,817 ) ( 11,357 ) 1,551

Series A Redeemable Convertible Preferred Stock dividends

( 401 ) - ( 792 ) -

Net (loss) income attributable to common stockholders

Basic and diluted net (loss) income per common share

Weighted average shares outstanding - basic and diluted

$ ( 4,297 ) $ ( 1,817 ) $ ( 12,149 ) $ 1,551

Basic (loss) earning per common share

$ ( 0.41 ) $ ( 0.17 ) $ ( 1.15 ) $ 0.15

Diluted (loss) earning per common share

$ ( 0.41 ) $ ( 0.17 ) $ ( 1.15 ) $ 0.15

Weighted average shares outstanding - basic

10,568 10,496 10,560 10,471

Weighted average shares outstanding - diluted

10,568 10,496 10,560 10,568

See accompanying Notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Net (loss) income

$ ( 3,896 ) $ ( 1,817 ) $ ( 11,357 ) $ 1,551

Other comprehensive loss:

Foreign currency translation adjustments

( 816 ) - ( 1,527 ) -

Total comprehensive (loss) income

$ ( 4,712 ) $ ( 1,817 ) $ ( 12,884 ) $ 1,551

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands, except shares)

Additional Paid-

Comprehensive

Balance at January 1, 2025

Stock-based compensation

Issuance of warrants

Income (Loss)

Three Months Ended June 30, 2026

Balance at March 31, 2026

10,567,268 $ 105 $ 85,033 $ 512 $ ( 72,591 ) $ 13,059

Series A Redeemable Convertible Preferred Stock dividends

- - ( 401 ) - - ( 401 )

Stock-based compensation

- - 430 - - 430

Common stock issued upon cashless exercise of warrants

2,053 - - - - -

Registered offering of common stock and warrants [1]

2,528,571 26 10,758 - - 10,784

Other comprehensive loss

- - - ( 816 ) - ( 816 )

- - - - ( 3,896 ) ( 3,896 )

Balance at June 30, 2026

13,097,892 $ 131 $ 95,820 $ ( 304 ) $ ( 76,487 ) $ 19,160

Additional Paid-

Comprehensive

Income (Loss)

Six Months Ended June 30, 2026

Balance at January 1, 2026

1 unchanged sentence

Stock-based compensation

Common stock issued upon cashless exercise of warrants

Registered offering of common stock and warrants [1]

Repurchase of common stock warrants

Other comprehensive loss

Balance at June 30, 2026

Additional Paid-

Comprehensive

Three Months Ended June 30, 2025

Balance at March 31, 2025

Stock-based compensation

Shares issued to directors as compensation

Balance at June 30, 2025

Additional Paid-

Comprehensive Income

Six Months Ended June 30, 2025

Balance at January 1, 2025

Stock-based compensation

Shares issued to directors as compensation

Issuance of warrants

Balance at June 30, 2025

[1] Includes gross proceeds of $11,991 less issuance costs of $1,207.

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Operating Activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash used in operating activities

$ ( 11,357 ) $ 1,551

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization

10 unchanged sentences

Accounts payable

( 2 ) ( 207 )

Accrued expenses and other current liabilities

( 534 ) ( 816 )

Deferred revenue

( 3,113 ) 719

Customer deposits

Lease liabilities

( 291 ) ( 258 )

Other non-current liabilities

Net cash used in operating activities

Net cash provided by operating activities

Investing Activities:

Purchases of property and equipment

( 2,452 ) ( 109 )

Capitalization of costs for software development

( 768 ) ( 1,155 )

Net cash used in investing activities

( 3,220 ) ( 1,264 )

Financing Activities:

Repayment of term debt and promissory note

Proceeds from registered offering of common stock and warrants

Proceeds from borrowings under revolving credit facility

18,222 18,334

Repayment of borrowings under revolving credit facility

( 13,418 ) ( 15,285 )

Payment of contingent consideration

1 unchanged sentence

Repayment of finance lease obligations

( 1,862 ) ( 26 )

Net cash provided by financing activities

1 unchanged sentence

Net increase in cash and cash equivalents

9,144 ( 468 )

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

$ 10,703 $ 569

See accompanying Notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

NATURE OF ORGANIZATION AND OPERATIONS

Unless the context otherwise indicates, references in these Notes to the accompanying consolidated financial statements to “ we, ” “ us, ” “ our ” and “ the Company ” refer to Creative Realities, Inc.

Unless the context otherwise indicates, references in these Notes to the accompanying condensed consolidated financial statements to “ we, ” “ us, ” “ our ” and “ the Company ” refer to Creative Realities, Inc.

and its subsidiaries.

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Liquidity and Financial Condition

Going Concern

In accordance with Accounting Standards Update (“ASU”) No.

2014 - 15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205 - 40 ) (“ASU 205 - 40” ), the Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

On November 6, 2025, the Company completed a refinancing of its senior debt facilities, and on November 7, 2025, the Company completed the acquisition of DDC Group International, Inc., and related financing arrangements.

Management believes these actions are likely to significantly improve the Company’s liquidity, scale, and overall financial condition.

Its ability to generate positive net income and cash flows from operations is reliant on the successful integration and operation of this newly acquired business and therefore the financial impacts of this acquisition were not fully known at the time of the Company's going concern assessment.

Management believes the completion of these transactions and the planned integration and operating plan for the newly acquired business with expected realization of synergies present the opportunity to prospectively eliminate the conditions giving rise to substantial doubt regarding the Company’s ability to continue as a going concern in future periods.

However, there can be no assurance that these efforts will be successful.

As of March 31, 2026, the Company has an accumulated deficit of $ 72,591 and negative working capital of $ 9,528 .

For the three months ended March 31, 2026, the Company generated a net loss of $ 7,461 and used net cash in operations of $ 1,723 .

The Company remains dependent on improving cash flows from operations, securing additional sources of liquidity, or both, to fund ongoing operations to meet our financial obligations, including our debt obligations under our current Credit Agreement.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern for at least twelve months after the issuance date of these condensed consolidated financial statements.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

2014 - 15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205 - 40 ) (“ASU 205 - 40” ), the Company is required to evaluate whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

As disclosed in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2025 and Quarterly Report on Form 10 -Q for the quarter ended March 31, 2026, there was substantial doubt about the ability of the Company to continue as a going concern for at least one year from the date those respective financial statements were issued.

These conclusions resulted from a combination of factors, including recurring net losses and cash used in operating activities, the ongoing integration of the Cineplex Digital Media business that the Company acquired on November 7, 2025 ( see Note 4 ), which expected synergies and financial impacts were not yet fully known, and the dependence on improving cash flows from operations or securing additional sources of liquidity (or both), to fund ongoing operations to meet the Company’s financial obligations.

As of June 30, 2026, the Company has an accumulated deficit of $ 76,487 , cash and cash equivalents of $ 10,703 and negative working capital of $ 3,716 .

During the three months ended June 30, 2026 the Company began realizing synergies and cost savings from the acquisition of the Cineplex Digital Media business.

Accordingly, the Company was able to improve its operating results (net loss of $ 3,896 , which was reduced from a net loss of $ 7,461 during the prior quarter) and generated positive cash flows from operating activities of $ 1,003 for the six months ended June 30, 2026.

In addition, on June 30, 2026, the Company completed an underwritten public offering and received net proceeds of $ 10,784 .

These actions have alleviated the substantial doubt about the Company’s ability to continue as a going concern that previously existed, and accordingly, there no longer exists substantial doubt about the Company’s ability to continue as a going concern for at least twelve months after these condensed consolidated financial statements are issued.

The Company expects that its cash and cash equivalents on hand, cash to be generated from operations and availability under its revolving credit facility will be sufficient to fund its operations for at least twelve months from the date the condensed consolidated financial statements are issued.

The Company continues to monitor ongoing compliance with its credit facilities and will continue to monitor its ability to meet its obligations as they become due.

The Company may need to seek additional forms of debt or equity financing in the future.

If the Company is unable to obtain adequate financing on terms that are satisfactory to the Company, when the Company requires it, the Company’s ability to continue to grow or support the business and to respond to business challenges could be significantly limited, which may adversely affect the Company’s business plans.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

5 unchanged sentences

GAAP for complete financial statements.

In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of March 31, 2026 and for the three months then ended.

The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the operating results for the full year ending December 31, 2026 or any other period.

In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of June 30, 2026 and for the three and six months then ended.

The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the operating results for the full year ending December 31, 2026 or any other period.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company and related footnotes for the year ended December 31, 2025, included in the Company’s Annual Report on Form 10 -K filed with the Securities and Exchange Commission on April 15, 2026.

2 unchanged sentences

Measurement of Credit Losses for Accounts Receivable and Contract Assets .

The amendments introduce a practical expedient that permits entities to assume current conditions as of the balance sheet date do not change for the remaining life of current accounts receivable and current contract assets within the scope of ASC 606 when developing reasonable and supportable forecasts of expected credit losses, thereby removing the requirement to incorporate macroeconomic forecasts for those assets.

The amendments introduce a practical expedient that permits entities to assume current conditions as of the balance sheet date do not change for the remaining life of current accounts receivable and current contract assets within the scope of Accounting Standards Codification (“ASC 606” ), Revenue from Contracts with Customers when developing reasonable and supportable forecasts of expected credit losses, thereby removing the requirement to incorporate macroeconomic forecasts for those assets.

The ASU also provides an accounting policy election to consider post-balance-sheet collection activity in estimating expected credit losses;

10 unchanged sentences

Cash consists of cash on deposit in financial institutions in both the United States and Canada.

The Company does not hold any investments that qualify as cash equivalents as of March 31, 2026 or December 31, 2025.

The Company does not hold any investments that qualify as cash equivalents as of June 30, 2026 or December 31, 2025.

Balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) limit of $250 USD in the United States and may exceed the Canada Deposit Insurance Corporation (“CDIC”) limit of $100 CAD in Canada.

As of March 31, 2026 and December 31, 2025, the Company did not have USD cash in excess of FDIC insurance limits.

As of March 31, 2026 and December 31, 2025, the Company had CAD cash in excess of CDIC insurance limits of $ 1,925 and $ 1,037 , respectively.

As of June 30, 2026 and December 31, 2025, the Company had USD cash in excess of FDIC limits of $ 9,349 and $ 0 , respectively.

As of June 30, 2026 and December 31, 2025, the Company had CAD cash in excess of CDIC insurance limits of $ 938 and $ 1,037 , respectively.

The Company does not believe the balances present a material credit risk, as the cash is held with reputable financial institutions and the Company has never experienced any losses related to these balances, although no assurance can be provided that it will not experience any losses in the future.

Revenue Recognition

We recognize revenue in accordance with Accounting Standards Codification (“ASC 606” ), Revenue from Contracts with Customers , applying the five -step model.

We recognize revenue in accordance with ASC 606 applying the five -step model.

The Company evaluates each customer contract to identify the distinct performance obligations promised therein.

25 unchanged sentences

The allowance for credit losses is included in accounts receivable, net in the accompanying condensed consolidated balance sheets.

The Company had the following activity for its allowance for credit losses for the three months ended March 31, 2026 and 2025:

For the Three Months Ended

The Company had the following activity for its allowance for credit losses for the six months ended June 30, 2026 and 2025:

For the Six Months Ended

Balance as of beginning of period

Amounts accrued

Provision for credit losses

9 unchanged sentences

Basic and Diluted Net (Loss) Income per Common Share

The Company’s net (loss) income per common share is calculated using the two -class method in accordance with ASC Topic 260, Earnings Per Share.

The Company’s net (loss) income per common share is calculated using the two -class method in accordance with ASC 260, Earnings Per Share .

The two -class method allocates net income between common stockholders and holders of participating securities.

The Company’s Series A Convertible Preferred Stock are deemed to be participating securities due to their rights to participate in dividends with common stock.

The Company’s Series A Redeemable Convertible Preferred Stock are deemed to be participating securities due to their rights to participate in dividends with common stock.

However, the two -class method has no impact on the calculation of net loss per common share during periods when the Company has a net loss, because the holders of participating securities are not required to absorb losses.

Basic net (loss) income per common share is computed by dividing net (loss) income attributable to common stockholders by the weighted average number of common shares outstanding during the period.

Diluted net (loss) income per common share is computed by dividing net (loss) income attributable to common stockholders by the weighted average number of common shares outstanding, plus the number of additional common shares that would have been outstanding if the potential common shares had been issued (computed using the more dilutive of the treasury stock or the if converted method, as applicable, and the two -class method).

Shares reserved for outstanding stock options, including stock options with performance restricted vesting, and warrants totaling 6,634,533 and 30,000 shares of the Series A Preferred Stock, convertible into 10,000,000 shares of common stock as of March 31, 2026 were excluded from the computation of diluted net loss per common share for the three months ended March 31, 2026 as the Company was in a net loss position and their inclusion would have been anti-dilutive.

Shares reserved for outstanding stock options, including stock options with performance restricted vesting, and warrants totaling 6,913,928 at March 31, 2025 were excluded from the computation of diluted net income per common share for the three months ended March 31, 2025 as the strike price on the options and warrants were higher than the Company’s average market price of its common stock during the period and therefore anti-dilutive.

Diluted net (loss) income per common share is computed by dividing net (loss) income attributable to common stockholders by the weighted average number of common shares outstanding, plus fully vested shares that are subject to issuance for little or no monetary consideration and the number of additional common shares that would have been outstanding if the potential common shares had been issued (computed using the more dilutive of the treasury stock or the if converted method, as applicable, and the two -class method).

Shares reserved for outstanding stock options, including stock options with performance restricted vesting, and warrants totaling 7,932,750 and 30,000 shares of the Series A Redeemable Convertible Preferred Stock, convertible into 10,000,000 shares of common stock as of June 30, 2026 were excluded from the computation of diluted net loss per common share for the three and six months ended June 30, 2026 as the Company was in a net loss position and their inclusion would have been anti-dilutive.

Shares reserved for outstanding stock options, including stock options with performance restricted vesting, and warrants totaling 7,290,816 at June 30, 2025 were excluded from the computation of diluted net loss per common share for the three months ended June 30, 2025 as the Company was in a net loss position and their inclusion would have been anti-dilutive, and also excluded from the computation of diluted net income per common share for the six months ended June 30, 2025 as the strike prices on the options and warrants were higher than the Company’s average market price of its common stock during the period and therefore anti-dilutive.

Foreign Currency Translation

23 unchanged sentences

REVENUE RECOGNITION

The Company applies ASC 606, Revenue from Contracts with Customers, for revenue recognition.

The Company applies ASC 606 for revenue recognition.

The table below disaggregates the Company’s revenue by major source as follows:

For the Three Months Ended

Recognition Policy:

Point in time

$ 7,475 $ 7,073 $ 12,032 $ 10,467

Managed Services

4,991 4,484 8,368 8,731

Digital Media Advertising

3,786 - 6,803 -

Installation Services

Point in time

3,693 1,239 7,742 2,834

Other Services

Point in time

1,560 234 2,908 732

Total Services

14,030 5,957 25,821 12,297

Total Hardware and Services

The following table presents the activities in deferred revenue for the three months ended March 31, 2026:

$ 21,505 $ 13,030 $ 37,853 $ 22,764

The following table presents the activities in deferred revenue for the six months ended June 30, 2026:

Balance, January 1

3 unchanged sentences

Foreign currency translation adjustment on Canadian deferred revenue

Balance, March 31

There were no significant revenues recognized during the three months ended March 31, 2026 and 2025 from performance obligations that were satisfied (or partially satisfied) in prior periods as a result of contract price changes, changes in estimates or variable consideration true-ups.

As of March 31, 2026, the aggregate amount of the transaction price allocated to remaining performance obligations (i.e., unsatisfied or partially unsatisfied performance obligations) was $ 10,362 .

Balance, June 30

There were no significant revenues recognized during the six months ended June 30, 2026 and 2025 from performance obligations that were satisfied (or partially satisfied) in prior periods as a result of contract price changes, changes in estimates or variable consideration true-ups.

As of June 30, 2026, the aggregate amount of the transaction price allocated to remaining performance obligations (i.e., unsatisfied or partially unsatisfied performance obligations) was $ 8,645 .

The following table presents the expected timing of recognition of that amount:

1 unchanged sentence

Within 1 year

Between 1 and 2 years

Between 2 and 3 years

The remaining performance obligations in the table above primarily consist of non-cancellable multi-year SaaS and maintenance agreements, under which the Company recognizes SaaS and maintenance revenue ratably over the contract term.

5 unchanged sentences

(collectively, “CDM”), from Cineplex Entertainment Limited Partnership for cash consideration of approximately CAD $ 60,263 (approximately USD $ 42,761 ).

The acquisition was accounted for as a business combination under ASC 805, with November 7, 2025 as the acquisition date.

The acquisition was accounted for as a business combination under ASC 805, Business Combinations with November 7, 2025 as the acquisition date.

The Company’s preliminary purchase price allocation, including the related deferred tax assets and liabilities, remains subject to change during the one -year measurement period in accordance with ASC 805 - 10 - 25 - 13 through 25 - 19, which extends through November 6, 2026.

The initial accounting for the CDM acquisition is incomplete as of March 31, 2026 because the Company is continuing to obtain and evaluate information about facts and circumstances that existed as of the acquisition date.

The initial accounting for the CDM acquisition is incomplete as of June 30, 2026 because the Company is continuing to obtain and evaluate information about facts and circumstances that existed as of the acquisition date.

The items for which the initial accounting remains incomplete include the valuation of acquired identifiable intangible assets, the assessment of acquired deferred tax assets and liabilities, the resolution of post-closing working capital adjustments, and the resulting goodwill.

During the three months ended March 31, 2026, the Company recorded measurement period adjustments to the preliminary purchase price allocation related to the acquired net deferred tax liability.

During the six months ended June 30, 2026, the Company recorded measurement period adjustments to the preliminary purchase price allocation related to the acquired net deferred tax liability.

At the acquisition date, certain amounts in the preliminary purchase price allocation, including the acquired net deferred tax liability, were recorded on a provisional basis pending the receipt of additional information.

During the first quarter of 2026, the Company obtained additional information about facts and circumstances that existed as of the acquisition date, which resulted in a measurement period adjustment that decreased the acquired net deferred tax liability by $ 661 , with a corresponding decrease to goodwill.

After giving effect to this adjustment, the acquired net deferred tax liability and goodwill recognized in connection with the CDM acquisition were $ 1,554 and $ 25,353 , respectively, as of March 31, 2026 ( compared to $ 2,215 and $ 26,013 , respectively, as initially reported as of the acquisition date).

During the six months ended June 30, 2026, the Company obtained additional information about facts and circumstances that existed as of the acquisition date, which resulted in a measurement period adjustment that decreased the acquired net deferred tax liability by $ 1,986 , with a corresponding decrease to goodwill.

After giving effect to this adjustment, the acquired net deferred tax liability and goodwill recognized in connection with the CDM acquisition were $ 229 and $ 24,027 , respectively, as of June 30, 2026 ( compared to $ 2,215 and $ 26,013 , respectively, as initially reported as of the acquisition date).

The following table summarizes the measurement period activity.

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Fair Value of Identified Net Assets

$ 11,970 $ 1,986 $ 13,956

Remaining Goodwill Value

$ 26,013 $ ( 1,986 ) $ 24,027

Fair Value of Net Assets Acquired

The measurement period adjustment recorded during the three months ended March 31, 2026 reflects new information obtained about facts and circumstances that existed as of the acquisition date and did not have a material impact on the Company’s results of operations in any prior period.

$ 37,983 $ - $ 37,983

The measurement period adjustment recorded during the six months ended June 30, 2026 reflects new information obtained about facts and circumstances that existed as of the acquisition date and did not have a material impact on the Company’s results of operations in any prior period.

The preliminary purchase price allocation, including the items identified above, remains subject to further adjustment during the remainder of the measurement period as additional information is obtained, and any such adjustments will be recognized in the reporting period in which they are determined.

SUPPLEMENTAL CASH FLOW STATEMENT INFORMATION

For the Three Months Ended

For the Six Months Ended

Supplemental non-cash investing and financing activities:

Issuance costs related to common stock and warrants sold in registered offering

Effect of measurement period adjustments to goodwill

Capitalized software in accounts payable

2 unchanged sentences

Issuance of warrants as partial settlement of contingent consideration

Effect of measurement period adjustments to goodwill

Right-of-use assets obtained in exchange for new operating lease liabilities

Tenant allowance receivable recognized under lease incentive

Supplemental disclosure information for cash flow

Cash paid during the period for:

$ 1,862 $ 748

Operating leases

PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of March 31, 2026 and December 31, 2025, prepaid expenses and other current assets consisted of the following:

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

Vendor, project and hardware prepayments

$ 213 $ 1,431

Severance receivable

6 unchanged sentences

Prepaid insurance

$ 2,686 $ 5,347

SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK

Dividend Rights

The Series A Preferred ranks senior to the Company’s common stock with respect to dividend rights and rights upon liquidation.

The Series A Redeemable Convertible Preferred Stock (“Series A Preferred”) ranks senior to the Company’s common stock with respect to dividend rights and rights upon liquidation.

Each share has a liquidation preference equal to $ 1,000 per share plus accrued and unpaid dividends.

The liquidation preference of the Series A Preferred totaled $ 30,623 as of March 31, 2026.

The liquidation preference of the Series A Preferred totaled $ 31,025 as of June 30, 2026.

The Series A Preferred bears cumulative dividends at a rate of 5.25 % per annum on the stated value.

3 unchanged sentences

Dividends are recorded as an increase to the carrying value of the Series A Preferred and as an adjustment to net loss attributable to common shareholders in the calculation of basic and diluted net (loss) income per common share.

The Company recorded $ 391 in preferred dividends during the three months ended March 31, 2026.

The Series A Preferred stock was issued on November 6, 2025, therefore there were no preferred dividends during the three months ended March 31, 2025.

The Company recorded $ 401 and $ 792 in preferred dividends during the three and six months ended June 30, 2026, respectively.

The Series A Preferred was issued on November 6, 2025, therefore there were no preferred dividends during the three and six months ended June 30, 2025.

Conversion Rights

Each share of Series A Preferred is convertible at the holder’s option into shares of common stock at a conversion price of $ 3.00 per share, subject to adjustment.

The Series A Preferred was convertible into 10,342 and 10,077 shares of common stock as of June 30, 2026 and December 31, 2025, respectively, subject to a limitation preventing any holder from beneficially owning more than 19.99 % of the outstanding common stock.

The Company may require the conversion of all outstanding shares of Series A Preferred on or after the third anniversary of issuance if specified operating results and common stock price conditions are met.

Redemption Rights

A fundamental transaction includes, among other events, a merger, consolidation, sale of substantially all assets, tender offer resulting in a change of control, recapitalization or similar transaction (a “Fundamental Transaction”).

Upon the occurrence of a Fundamental Transaction, holders are entitled to receive the greater of (i) the liquidation preference, including accrued dividends, or (ii) the amount they would have received on an as-converted basis.

Upon the occurrence of a Fundamental Transaction, holders are entitled to receive the greater of (i) the liquidation preference, including accrued dividends and the make-whole amount, or (ii) the amount they would have received on an as-converted basis, based on the consideration paid per common share in the Fundamental Transaction or, if that consideration is not cash, the market price of the common stock.

The redemption amounts of the Series A Preferred, measured as if the balance sheet dates were the redemption dates, were $ 53,392 as of June 30, 2026 ( estimate using 1 -day VWAP of $ 4.11 subject to clause ii), and $ 38,940 as of December 31, 2025 ( estimate using conversion price of $ 3.00 subject to clause i).

The redemption amount will change in future periods as the market price of the common stock changes.

Since the redemption of the Series A Preferred is contingently or optionally redeemable and therefore not certain to occur, the Series A Preferred is not required to be classified as a liability under ASC 480, Distinguishing Liabilities from Equity .

As the Series A Preferred is redeemable in certain circumstances at the option of the holder and is redeemable in certain circumstances upon the occurrence of an event that is not solely within the Company’s control, the Company has classified the Series A Preferred in temporary equity in the condensed consolidated balance sheets.

Because redemption is contingent and not currently probable, the Company has not accreted the carrying value to the redemption amount as of March 31, 2026 and December 31, 2025.

As the Series A Preferred is redeemable in certain circumstances upon the occurrence of an event that is not solely within the Company’s control, the Company has classified the Series A Preferred in temporary equity in the condensed consolidated balance sheets.

Because redemption is contingent and not currently probable, the Company has not accreted the carrying value to the redemption amount as of June 30, 2026 and December 31, 2025.

Registration Rights

1 unchanged sentence

The Registration Rights Agreement provides for liquidated damages of up to 6 % of the aggregate purchase price in the event of certain registration failures.

As of March 31, 2026 and December 31, 2025, no liability has been recorded related to these provisions.

As of June 30, 2026 and December 31, 2025, no liability has been recorded related to these provisions because the Company has maintained an effective registration statement and does not consider the payment of liquidated damages to be probable.

The Company accounts for the Registration Rights Agreement as a separate unit of account in accordance with ASC 825 - 20, Registration Payment Arrangements , and recognizes a liability when payment becomes probable and the amount is reasonably estimable.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

As of March 31, 2026 and December 31, 2025, accrued expenses and other current liabilities consisted of the following:

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

Accrued compensation

$ 1,102 $ 1,753

Sales and use taxes payable

2 unchanged sentences

Other accrued expenses

As of March 31, 2026, and December 31, 2025 debt consisted of the following:

$ 3,273 $ 3,837

As of June 30, 2026 and December 31, 2025, debt consisted of the following:

Amended and Restated Credit Agreement:

New Revolving Credit Facility

Revolving Credit Facility

$ 9,744 $ 4,940 See below

Term Loan Facility

33,900 35,700 See below

Promissory Note

3,409 3,810 14%

47,053 44,450

debt issuance costs

Total debt, net

46,644 43,953

current portion of debt, net

Total non-current portion of debt, net

Deferred financing costs related to the New Revolving Credit Facility of $ 397 and $ 435 as of March 31, 2026 and December 31, 2025, respectively, are included in other non-current assets on the condensed consolidated balance sheets.

$ 41,154 $ 39,523

Deferred financing costs related to the Revolving Credit Facility of $ 359 and $ 435 as of June 30, 2026 and December 31, 2025, respectively, are included in other non-current assets on the condensed consolidated balance sheets.

Amended and Restated Credit Agreement

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together with NWB, the “New Lenders”).

The Amended Credit Agreement provides the Company, CDMI and CDMUS (collectively, “Borrowers”) with two debt facilities, including a three -year term loan of $ 36,000 (the “Term Loan”) and a three -year revolving debt arrangement of up to $ 22,500 (the “New Revolving Credit Facility”).

The Term Loan and New Revolving Credit Facility in the Amended Credit Agreement both have maturity dates of November 6, 2028 ( the “Maturity Date”) and are secured by all the assets of the Borrowers.

The Term Loan and Revolving Credit Facility have maturity dates of November 6, 2028 ( the “Maturity Date”) and are secured by all the assets of the Borrowers.

Additionally, monthly interest payments for both facilities of the Amended Credit Agreement are due and payable on the first day of each successive calendar month following the Refinancing Date, which commenced on December 1, 2025, at a rate equal to the sums of (a) the one -month Term SOFR, (b) base rate of 0.11%;

and (c) a floating margin ranging between (i) 2.75 % to 3.25 % for the New Revolving Credit Facility, or (ii) 3.00 % to 3.50 % for the Term Loan, in each case adjusted quarterly based upon the Company’s Senior Funded Debt to EBITDA Ratio (as defined in the Amended Credit Agreement).

and (c) a floating margin ranging between (i) 2.75 % to 3.25 % for the Revolving Credit Facility, or (ii) 3.00 % to 3.50 % for the Term Loan, in each case adjusted quarterly based upon the Company’s Senior Funded Debt to EBITDA Ratio (as defined in the Amended Credit Agreement).

The floating margin is computed as follows:

On February 16, 2026, and in conjunction with the Warrant Repurchase Agreement (see Note 12 ), the Company and certain of its subsidiaries entered into a First Amendment to Amended and Restated Credit Agreement (the “Amendment”) with the other loan parties signatory thereto (the “Loan Parties”), the financial institutions or other entities from time to time parties thereto (the “Lenders”), and FMB, as Agent for the Lenders.

The Amendment amended the Company’s Amended Credit Agreement.

On February 16, 2026, and in conjunction with the Warrant Repurchase Agreement (see Note 13 ), the Company and certain of its subsidiaries entered into a First Amendment to Amended and Restated Credit Agreement (the “Amendment”) with the Lenders and FMB as Agent for the Lenders.

Pursuant to the Amendment, the Agent and Lenders provided requisite consent to the Company for the Warrant Repurchase and the parties agreed that payment of the Warrant Repurchase price would not reduce the amount of “Excess Cash Flow” of the Company for purposes of determining certain Company prepayment obligations.

During the three months ended March 31, 2026, the Company recorded amortization of debt discount on the Term Loan of $ 44 , and amortization of deferred financing costs on the New Revolving Credit Facility of $ 38 , in the Company's condensed consolidated statements of operations.

During the three months ended March 31, 2025, the Company recorded amortization of deferred financing costs on its prior revolving credit facility of $ 26 .

As of March 31, 2026 and December 31, 2025, the Company had remaining unamortized debt discount on the Term Loan of $ 452 and $ 497 , respectively, and deferred financing costs on the New Revolving Credit Facility of $ 397 and $ 435 , respectively.

During the three months ended March 31, 2026, the Company repaid $ 900 in principal related to the Term Loan.

During the three months ended March 31, 2026, the Company had borrowed $ 11,037 and repaid $ 6,472 , respectively, under the New Revolving Credit Facility.

During the three months ended March 31, 2025, the Company had borrowed $ 12,111 and repaid $ 5,917 , respectively, under the prior revolving credit facility.

At March 31, 2026, the remaining available amount under the New Revolving Credit Facility was $ 12,995 .

On June 26, 2026, the Agent and the Lenders provided the requisite consent under the Amended Credit Agreement for the Company to complete its underwritten public offering of common stock (see Note 12 ) and pre-funded warrants (see Note 13 ).

The consent did not amend or waive any other provision of the Amended Credit Agreement, and the net proceeds of the offering were used to prepay borrowings of debt under the Amended Credit Agreement on July 1, 2026 in accordance with the existing terms thereof (see Note 17 ).

During the six months ended June 30, 2026, the Company recorded amortization of debt discount on the Term Loan of $ 87 , and amortization of deferred financing costs on the Revolving Credit Facility of $ 76 , recorded as interest expense in the Company's condensed consolidated statements of operations.

During the six months ended June 30, 2025, the Company recorded amortization of deferred financing costs on its prior revolving credit facility of $ 51 .

During the six months ended June 30, 2026, the Company repaid $ 1,800 in principal related to the Term Loan.

During the six months ended June 30, 2026, the Company borrowed $ 18,222 and repaid $ 13,418 under the Revolving Credit Facility.

During the six months ended June 30, 2025, the Company borrowed $ 18,334 and repaid $ 15,285 under the prior revolving credit facility.

At June 30, 2026, the remaining available amount under the Revolving Credit Facility was $ 12,756 .

Promissory Note

The Promissory Note was issued on March 14, 2025 as part of the Settlement Agreement to resolve the contingent consideration liability.

The Promissory Note was issued on March 14, 2025 as part of the Settlement Agreement to resolve a contingent consideration liability.

It is an unsecured obligation of the Company.

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On the maturity date, the Company is required to make a final balloon payment of $ 2,386 , representing the remaining principal and accrued but unpaid interest outstanding at maturity.

During the three months ended March 31, 2026, the Company made principal repayments of $ 197 on the Promissory Note.

The Stockholders' Representative's rights under the Promissory Note are subject to a Subordination Agreement dated March 14, 2025, by and among the Company, First Merchants Bank and the Stockholders' Representative (the "Subordination Agreement").

Under the terms of the Subordination Agreement, during any period in which an event of default exists under the Amended Credit Agreement, the Company is prohibited from making any payments on the Promissory Note unless FMB provided prior written consent, and the Stockholders' Representative is prohibited from accepting or enforcing any payments during the subordination period.

As of March 31, 2026, the Company is in compliance with the monthly required payments and there have been no events of default.

During the six months ended June 30, 2026, the Company made principal repayments of $ 401 on the Promissory Note.

The Stockholders' Representative's rights under the Promissory Note are subject to a Subordination Agreement dated March 14, 2025, by and among the Company, FMB and the Stockholders' Representative (the “Subordination Agreement”).

Under the terms of the Subordination Agreement, during any period in which an event of default exists under the Amended Credit Agreement, the Company is prohibited from making any payments on the Promissory Note unless FMB provides prior written consent, and the Stockholders' Representative is prohibited from accepting or enforcing any payments during the subordination period.

As of June 30, 2026, the Company is in compliance with the monthly required payments of the Promissory Note and there have been no events of default.

COMMITMENTS AND CONTINGENCIES

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For interim periods, the Company has historically utilized the estimated annual effective tax rate method under which the Company determined its provision for income taxes based on the current estimate of its annual effective tax rate.

For the three months ended March 31, 2026, the Company utilized the discrete effective tax rate method, as allowed under ASC Topic 740, Income Taxes—Interim Reporting, when the application of the estimated annual tax rate method is impractical and does not provide a reliable estimate of the annual effective tax rate.

For the six months ended June 30, 2026, the Company utilized the discrete effective tax rate method, as allowed under ASC 740, Income Taxes — Interim Reporting when the application of the estimated annual tax rate method is impractical and does not provide a reliable estimate of the annual effective tax rate.

The discrete method treats the year-to-date period as if it were the annual period and determines the interim income taxes on that basis.

The Company determined that since small changes in estimated annual pre-tax (loss) income would result in significant changes in the estimated annual effective tax rate and significant variations in the customary relationship between the benefit (expense) from income taxes and pre-tax accounting (loss) income, the historical method would not provide a reliable estimate of the effective tax rate for the three months ended March 31, 2026.

The Company will reevaluate the use of this method until the Company believes a return to the estimated annual effective tax rate method is deemed appropriate.

For the three months ended March 31, 2026 and 2025, the Company recorded income tax benefit (expense) of $ 530 and ($ 99 ), respectively.

At March 31, 2026, the net deferred tax liabilities were $ 2,190 after valuation allowance, compared to net tax liabilities of $ 3,541 at December 31, 2025.

The Company had outstanding warrants accounted for as equity instruments in the Company’s condensed consolidated financial statements totaling 3,633,303 shares and 5,364,802 shares at March 31, 2026 and December 31, 2025, respectively.

The weighted average exercise price of the outstanding warrants was $ 4.02 and $ 4.66 at March 31, 2026 and December 31, 2025, respectively.

The weighted average remaining contractual life of the outstanding warrants was 2.52 and 2.55 years at March 31, 2026 and December 31, 2025, respectively.

For the three months ended June 30, 2026 and 2025, the Company recorded income tax benefit of $ 315 and $ 26 , respectively.

For the six months ended June 30, 2026 and 2025, the Company recorded income tax benefit (expense) of $ 845 and ($ 73 ), respectively.

At June 30, 2026, the net deferred tax liabilities were $ 627 after valuation allowance, compared to net tax liabilities of $ 3,541 at December 31, 2025.

June 2026 Public Offering

On June 30, 2026, the Company completed an underwritten public offering of 2,528,571 shares of common stock at a public offering price of $ 3.50 per share and pre-funded warrants to purchase 900,000 shares of common stock at a public offering price of $ 3.49 per pre-funded warrant (see Note 13 ).

The offering was made pursuant to the Company’s shelf registration statement on Form S- 3 (SEC File No.

333 - 296498 ), which was declared effective on June 16, 2026, and a related prospectus supplement dated June 29, 2026.

The Company received net proceeds from the offering of $ 10,784 , after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

In connection with the offering, the Company granted the underwriter a 30 -day option to purchase up to 428,614 additional shares of common stock at the public offering price, less underwriting discounts and commissions.

The option was unexercised as of June 30, 2026 ( see Note 17 ).

Warrant Exercises

During the six months ended June 30, 2026, holders of 19,004 warrants with an exercise price of $ 3.25 per share exercised their rights to purchase shares of the Company’s common stock, par value $ 0.01 per share, on a cashless basis, resulting in the issuances of 2,656 shares.

The Company received no cash proceeds from these exercises.

The Company had outstanding warrants classified as equity instruments in the Company’s condensed consolidated financial statements totaling 3,614,299 shares and 5,364,802 shares at June 30, 2026 and December 31, 2025, respectively, in each case excluding the Pre-Funded Warrants described below.

The weighted average exercise price of the outstanding warrants was $ 4.02 and $ 4.66 at June 30, 2026 and December 31, 2025, respectively.

The weighted average remaining contractual life of the outstanding warrants was 2.25 and 2.55 years at June 30, 2026 and December 31, 2025, respectively.

The decrease in outstanding warrants during the six months ended June 30, 2026 is attributable to the repurchase and cancellation of the Warrant exercisable for 1,731,499 shares described below and the cashless exercises of 19,004 warrants (see Note 12 ).

On February 16, 2026, the Company entered into a Warrant Repurchase Agreement (the “Warrant Repurchase Agreement”) with Slipstream Communications, LLC (the “Warrant Holder”).

Under the Warrant Repurchase Agreement, the Company agreed to repurchase from the Warrant Holder a warrant (the “Warrant”) to purchase shares of the Company’s common stock, par value $ 0.01 per share (the “Common Stock”), for an aggregate repurchase price of $ 200 .

There was no repurchase feature in the original warrant agreement that would have impacted the equity classification of these warrants while they were outstanding.

There was no repurchase feature in the Warrant that would have impacted the equity classification of the Warrant while outstanding.

The repurchase was negotiated between the parties in a separate transaction.

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Upon settlement of the transaction, the Warrant was cancelled and is of no further force or effect.

Pre-Funded Warrants

On June 30, 2026, in connection with the public offering described in Note 12 , the Company issued pre-funded warrants to purchase 900,000 shares of common stock (the “Pre-Funded Warrants”) at an exercise price of $ 0.01 per share.

The Pre-Funded Warrants are exercisable immediately, have no expiration date, and may be exercised at the holder’s election on a cashless basis.

Exercise of the Pre-Funded Warrants is subject to a 4.99 % beneficial ownership limitation, which a holder may increase to 9.99 % upon 61 days’ notice to the Company.

The Pre-Funded Warrants do not contain any other provisions except for certain standard anti-dilution provisions subject to adjustments as a result of stock dividends, stock splits, stock combinations, or stock recapitalizations, and meet the criteria for equity classification.

Accordingly, the Company recorded additional paid-in capital in an amount equal to net proceeds of $ 2,811 , which was comprised of gross proceeds of $ 3,141 and issuance costs of $ 330 , and is included in the total net proceeds from the offering of $ 10,784 disclosed in Note 12 .

There were no exercises of the Pre-Funded Warrants from issuance through June 30, 2026, and 900,000 remained outstanding as of June 30, 2026.

STOCK-BASED COMPENSATION

A summary of outstanding options is included below:

Time Vesting Options

On April 1, 2025, the Company granted stock options to purchase an aggregate of 567,500 shares of common stock to employees pursuant to the Company’s 2023 Plan, which was previously approved by shareholders.

The options have an exercise price of $ 1.95 per share, equal to the closing market price of the Company’s common stock on the grant date.

The options vest in equal annual installments over a three -year period, subject to continued service through each vesting date, and expire ten years from the date of grant.

The Company determined the grant-date fair value using the Black-Scholes option pricing model with key assumptions including expected volatility of 96 %, expected term of 6.5 years, risk-free interest rate of 4.00 %, dividend yield of 0 %, and the Company’s stock price of $ 1.95 as of the valuation date.

The awards are recognized as stock-based compensation expense on a straight-line basis over the requisite service period in accordance with ASC 718, Compensation - Stock Compensation based on the grant-date fair value of the options.

On June 2, 2025, the Company granted stock options to purchase an aggregate of 378,000 shares of common stock to employees under the 2023 Plan.

The options have an exercise price of $ 3.05 per share, equal to the closing market price of the Company’s common stock on the grant date.

The options vest in equal annual installments over a three -year period, subject to continued service through each vesting date, and expire ten years from the date of grant.

The Company determined the grant-date fair value using the Black-Scholes option pricing model with key assumptions including expected volatility of 94 %, expected term of 6.5 years, risk-free interest rate of 4.17 %, dividend yield of 0 %, and the Company’s stock price of $ 3.05 as of the valuation date.

The awards are recognized as stock-based compensation expense on a straight-line basis over the requisite service period in accordance with ASC 718 based on the grant-date fair value of the options.

On April 17, 2026, the Company granted stock options to purchase 150,000 shares of common stock to an employee under the 2023 Plan.

The options have an exercise price of $ 3.84 per share, equal to the closing market price of the Company’s common stock on the grant date.

The options vest in equal annual installments over a three -year period, subject to continued service through each vesting date, and expire ten years from the date of grant.

The Company determined the grant-date fair value using the Black-Scholes option pricing model with key assumptions including expected volatility of 94 %, expected term of 6.5 years, risk-free interest rate of 3.99 %, dividend yield of 0 %, and the Company’s stock price of $ 3.84 as of the valuation date.

The awards are recognized as stock-based compensation expense on a straight-line basis over the requisite service period in accordance with ASC 718 based on the grant-date fair value of the options.

On May 27, 2026, the Company granted stock options to purchase an aggregate of 373,500 shares of common stock to employees under the 2023 Plan.

The options have an exercise price of $ 3.69 per share, equal to the closing market price of the Company’s common stock on the grant date.

The options vest in equal annual installments over a three -year period, subject to continued service through each vesting date, and expire ten years from the date of grant.

The Company determined the grant-date fair value using the Black-Scholes option pricing model with key assumptions including expected volatility of 93 %, expected term of 6.5 years, risk-free interest rate of 4.28 %, dividend yield of 0 %, and the Company’s stock price of $ 3.69 as of the valuation date.

The awards are recognized as stock-based compensation expense on a straight-line basis over the requisite service period in accordance with ASC 718 based on the grant-date fair value of the options.

A summary of time vesting options is included below:

Range of Exercise

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Performance Vesting Options

A summary of performance vesting options is included below:

160,000 3.92 $ 7.59 160,000 $ 7.59

Market Vesting Options

On June 2, 2025, the Company accelerated the vesting of the market-vesting options to purchase 733,334 shares of common stock.

Prior to such acceleration, the vesting of these options depended on the Company’s share price meeting various price targets.

One such share price target was an amount equal to the “Guaranteed Price,” as such term is defined in the Merger Agreement by and among the Company, Reflect, CRI Acquisition Corporation, a Delaware corporation, and RSI Exit Corporation, a Texas corporation and representative of the former stockholders of Reflect (“RSI”).

On March 14, 2025, the Company and RSI settled and resolved a dispute related to the Guaranteed Consideration.

On June 2, 2025, in consideration of the efforts in resolving and settling such dispute, the Compensation Committee of the Company fully vested the 733,334 options.

As a result of the amendment and corresponding vesting, the Company recognized stock compensation expense of $ 1,149 during the six months ended June 30, 2025.

A summary of market vesting options is included below:

733,334 5.96 $ 3.00 733,334 $ 3.00

A summary of total outstanding options is included below:

Market Vesting Options

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Date/Activity

Balance, December 31, 2025

Balance, January 1, 2026

733,334 $ 3.00 1,635,230 $ 4.24 240,000 $ 7.59

- $ - 523,500 $ 3.73 - $ -

Forfeited or expired

Balance, March 31, 2026

The weighted average remaining contractual life for options exercisable is 5.24 years as of March 31, 2026.

- $ - ( 158,613 ) $ 7.28 ( 80,000 ) $ 7.59

Balance, June 30, 2026

733,334 $ 3.00 2,000,117 $ 3.83 160,000 $ 7.59

The weighted average remaining contractual life for total exercisable options is 5.83 years as of June 30, 2026.

Employee Awards

Stock-based compensation expense recognized related to stock options and restricted stock units to employees for the three months ended March 31, 2026 and 2025 was $ 270 and $2, respectively, and is included in general and administrative expenses in the condensed consolidated financial statements.

As of March 31, 2026, there was $ 2,601 of total unrecognized compensation expense related to unvested share-based awards, which is expected to be recognized over a weighted average period of approximately 2.03 years.

Stock-based compensation expense recognized related to stock options and restricted stock units to employees for the three months ended June 30, 2026 and 2025 was $ 376 and $ 1,249 , respectively, and is included in general and administrative expenses in the condensed consolidated financial statements.

Stock-based compensation expense recognized related to stock options and restricted stock units to employees for the six months ended June 30, 2026 and 2025 was $ 646 and $ 1,251 , respectively, and is included in general and administrative expenses in the condensed consolidated financial statements.

As of June 30, 2026, there was $ 3,913 of total unrecognized compensation expense related to unvested share-based awards, which is expected to be recognized over a weighted average period of approximately 2.34 years.

Director Awards

Compensation expense recognized for the issuance of stock options awarded to our Board of Directors for the three months ended March 31, 2026 and 2025 was $ 54 and $ 0 , respectively, and was included in general and administrative expenses in the condensed consolidated financial statements.

As of March 31, 2026 there was $ 162 unrecognized compensation expense related to share-based awards to directors, which is expected to be recognized over a weighted average period of approximately 0.75 years.

Compensation expense recognized for the issuance of stock options awarded to our Board of Directors for the three months ended June 30, 2026 and 2025 was $ 54 and $ 141 , respectively, and was included in general and administrative expenses in the condensed consolidated financial statements.

Compensation expense recognized for the issuance of stock options awarded to our Board of Directors for the six months ended June 30, 2026 and 2025 was $ 108 and $ 141 , respectively, and was included in general and administrative expenses in the condensed consolidated financial statements.

As of June 30, 2026 there was $ 108 unrecognized compensation expense related to share-based awards to directors, which is expected to be recognized over a weighted average period of approximately 0.5 years.

SEGMENT REPORTING

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Significant Customers

We had one customer that accounted for 11 % of revenue for the three months ended March 31, 2026, compared to three customers that accounted for 20 %, 11 % and 10 % of revenue for the three months ended March 31, 2025.

We had one customer that accounted for 10 % of accounts receivable as of March 31, 2026 and one customer that accounted for 12 % of accounts receivable as of December 31, 2025.

We had one customer that accounted for 17 % of revenue for the three months ended June 30, 2026, compared to one customer that accounted for 20 % of revenue for the three months ended June 30, 2025.

We had two customers that accounted for 10 % and 12 % of revenue for the six months ended June 30, 2026, compared to two customers that accounted for 13 % and 12 % of revenue for the six months ended June 30, 2025.

We had one customer that accounted for 12 % of accounts receivable as of June 30, 2026 and one customer that accounted for 12 % of accounts receivable as of December 31, 2025.

Revenues by Geographical Area

The following table summarizes our revenue recognized in the condensed consolidated statements of operations by geographical area:

Three Months Ended

For the Three Months Ended

For the Six Months Ended

Revenues by Geographical Area:

United States

$ 15,345 $ 13,030 $ 25,988 $ 22,764

6,160 - 11,865 -

Total Revenues

$ 21,505 $ 13,030 $ 37,853 $ 22,764

Significant Vendors

No vendor accounted for more than 10% of outstanding accounts payable at March 31, 2026, and three vendors accounted for 30 %, 18 % and 10 % of outstanding accounts payable at December 31, 2025.

No vendors accounted for more than 10% of outstanding accounts payable at June 30, 2026, and three vendors accounted for 30 %, 18 % and 10 % of outstanding accounts payable at December 31, 2025.

Long Lived Assets by Geographical Region

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United States

The Company's lease portfolio is primarily comprised of operating leases for office space and finance leases for computer equipment and DOOH media assets from the acquisition of CDM.

$ 1,732 $ 1,950

22,568 25,762

$ 24,300 $ 27,712

The Company's lease portfolio primarily comprises operating leases for office space and finance leases for computer equipment and DOOH media assets from the acquisition of CDM.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on whether the contract conveys the right to control the use of identified property or equipment for a period of time in exchange for consideration.

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If the implicit rate is not available, the Company uses its incremental borrowing rate, which is determined based on the rate at which the Company could borrow on a collateralized basis over a similar term and in a similar economic environment to the lease.

The following table summarizes the classification of operating and finance lease assets and liabilities in the Company's condensed consolidated balance sheet as follows:

The following table summarizes the classification of operating and finance lease assets and liabilities in the Company's condensed consolidated balance sheet:

Finance lease assets

$ 18,216 $ 22,658

Operating lease assets

Total lease assets

$ 20,055 $ 24,775

Operating lease liabilities:

4 unchanged sentences

Non-current portion of finance lease liabilities

13,592 17,844

Total lease liabilities

The following table summarizes the operating and financing lease expenses in the Company's condensed consolidated statements of operations as follows:

$ 21,033 $ 23,912

The following table summarizes the operating and financing lease expenses in the Company's condensed consolidated statements of operations:

For the Three Months Ended

For the Six Months Ended

Operating lease expense

$ 181 $ 197 $ 361 $ 315

Finance lease expense:

Amortization of right-of-use assets

1,867 12 3,752 23

Interest on lease liabilities

Total lease expense

The following table provides lease term and discount rate information related to operating and finance leases as follows:

For the Three Months Ended

$ 2,461 $ 210 $ 4,970 $ 341

The following table provides lease term and discount rate information related to operating and finance leases:

Weighted average remaining lease term (years):

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Finance leases

The following sets forth future minimum lease payments as follows:

The following sets forth future minimum lease payments:

Future minimum payments:

Remainder of 2026

$ 373 $ 4,395 $ 4,768

676 7,951 8,627

534 8,921 9,455

Total undiscounted cash flows

2,249 21,464 23,713

Less imputed interest

( 289 ) ( 2,391 ) ( 2,680 )

Present value of lease liabilities

$ 1,960 $ 19,073 $ 21,033

Supplemental cash flow information and non-cash activity related to leases include the following:

For the Three Months Ended

For the Six Months Ended

Cash paid for amounts included in the measurement of lease liabilities:

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SUBSEQUENT EVENTS

The Company has evaluated subsequent events occurring after the balance sheet date through the date the condensed consolidated financial statements were issued and has determined that there were no such events that would require recognition or disclosure in the financial statements.

The Company evaluated subsequent events occurring after the balance sheet date through the date these condensed consolidated financial statements were issued and identified the following:

Prepayments of Borrowings Under the Amended Credit Agreement from the Public Offering

On July 1, 2026, net proceeds of the June 2026 public offering (see Note 12 ) were applied to repay outstanding borrowings under the Amended Credit Agreement through normal operations, including a payment of $ 1,000 of remaining unpaid principal under the Term Loan and the remainder under the Revolving Credit Facility.

Amounts repaid under the Revolving Credit Facility remain available for future borrowing, subject to the terms and conditions of the Amended Credit Agreement (see Note 9 ).

Exercise of Underwriter Option to Purchase Common Stock

On July 7, 2026, the underwriter fully exercised its option to purchase additional shares of common stock granted in connection with the June 2026 public offering (see Note 12 ).

At the closing of the over-allotment option, which occurred on July 8, 2026, the Company issued 428,614 shares of common stock at the public offering price of $ 3.50 per share, less underwriting discounts and commissions, resulting in net proceeds to the Company of $ 1,410 .

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

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All dollar amounts reported in Results of Operations are in thousands, except per-share information.

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

The tables presented below compare our results of operations from one period to another and present the results for each period and the change in those results from one period to another in both dollars and percentage change.

For The Three Months

For The Three Months Ended

Services and other

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Interest expense, including amortization of debt discount

Other expense (income), net

Total other (income) expenses, net

Loss before income taxes

Income tax benefit (expense)

Sales increased by $8,475 or 65%, to $21,505 for the three months ended June 30, 2026 compared to the same period in 2025.

Hardware revenues during the second quarter of 2026 were $7,475, an increase of $402 as compared to the same period in 2025.

The increase was due to the inclusion of CDM, which contributed $380 during the period.

Services and other revenues were $14,030, an increase of $8,073 for the three months ended June 30, 2026, as compared to the same period in 2025, due to the acquisition of CDM.

Managed services revenue, which includes the Company’s SaaS subscription services, was $4,991, an increase of $507, or 11%, as compared to the same period in 2025, largely driven by the inclusion of CDM in 2026, which represented approximately $1,813.

This increase was offset by the expiration of certain customer contracts within the legacy operations of CRI.

Other services revenue also increased as a result of the acquisition of CDM, up $1,326 for the three months ended June 30, 2026 as compared to the same period in 2025.

Gross profit margin was 39% and 39% for the three months ended June 30, 2026 and 2025, respectively.

Hardware gross margin decreased 8 points, due to an unusually higher mix of lower margin QSR deployments during the 2026 period.

Services and other gross margin decreased 4 points in the quarter compared to the prior year period.

Sales and Marketing Expenses

Sales and marketing expenses generally include the salaries, taxes, and benefits of our sales and marketing personnel, as well as trade show activities, travel, and other related sales and marketing expenses.

Costs increased by $868, or 75% for the three months ended June 30, 2026 as compared to the same period in 2025 primarily due to the inclusion of CDM.

General and Administrative Expenses

General and administrative expenses increased by $3,826 or 74%, for the three months ended June 30, 2026 as compared to the same period in 2025.

The increase was primarily driven by the inclusion of CDM, which represented $4,241 of expense offset by lower stock compensation expense for the period.

Interest Expense

Interest expense increased by $913 or 178%, during the three months ended June 30, 2026 as compared to June 30, 2025 primarily as a result of the new Term Loan entered into during November 2025.

See Note 9 , Debt, to the condensed consolidated financial statements for a discussion of the Company’s debt and related interest expense obligations.

Other Expense (Income)

The Company recognized $40 in other expenses for the three months ended June 30, 2026 as compared to $(1) for the three months ended June 30, 2025.

The increase is a result of the inclusion of CDM in 2026.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

For The Six Months Ended

Services and other

Cost of sales:

Services and other

Total cost of sales

Operating expenses:

Sales and marketing expenses

General and administrative expenses

Total operating expenses

Operating loss

Other expenses (income):

Interest expense, including amortization of debt discount

Gain on settlement of contingent consideration

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Total other (income) expenses, net

Loss before income taxes

(Loss) income before income taxes

Income tax benefit (expense)

Net (loss) income

Sales increased by $6,614 or 68%, to $16,348 for the three months ended March 31, 2026 compared to the same period in 2025.

Hardware revenues during the first quarter 2026 were $4,557, an increase of $1,163 as compared to the same period in 2025.

Approximately sixty percent of the increase was due to the inclusion of CDM, while the remaining forty percent increase was driven by new customer deployments during the quarter.

Sales increased by $15,089 or 66%, to $37,853 for the six months ended June 30, 2026 compared to the same period in 2025.

Hardware revenues during the first half of 2026 were $12,032, an increase of $1,565 as compared to the same period in 2025.

Approximately 68% of the increase was due to the inclusion of CDM, with the remaining 32% driven by new customer deployments during the first half of 2026.

The number of new deployments was lower than expected due to adverse weather conditions that delayed planned installations in multiple regions.

Services and other revenues were $11,791, an increase of $5,451 for the three months ended March 31, 2026, as compared to the same period in 2025, due to the acquisition of CDM.

Managed services revenue, which includes the Company’s SaaS subscription services, were $5,106, an increase of $859, or 20%, as compared to the same period in 2025, largely driven by the inclusion of CDM in 2026, which represented approximately $2,118.

Other services revenue also increased as a result of the acquisition of CDM, up $851 for the three months ended March 31, 2026 as compared to the same period in 2025.

Gross profit margin was 34% compared to 46% for the three months ended March 31, 2026 and 2025, respectively.

Services and other revenues were $25,821, an increase of $13,524 for the six months ended June 30, 2026, as compared to the same period in 2025, due to the acquisition of CDM.

Installation services revenue was $7,742, an increase of $4,908 for the six months ended June 30, 2026, as compared to the same period in 2025, driven by the inclusion of CDM in 2026 along with the continued roll-outs of QSR and lottery customers.

Digital marketing advertising and other services revenues also increased as a result of the acquisition of CDM, up $8,979 for the six months ended June 30, 2026 as compared to the same period in 2025.

Managed services revenue, which includes the Company’s SaaS subscription services, was $8,368, a decrease of $363, or 4%, as compared to the same period in 2025, due to the expiration of certain customer contracts in 2025.

Gross profit margin was 37% and 42% for the six months ended June 30, 2026 and 2025, respectively.

Hardware gross margin decreased 11 points, due to an unusually higher mix of lower margin QSR deployments during the 2026 period and $486 in costs associated with transitioning away from an outsourced installer of a large CDM customer.

Services and other gross margin decreased 11 points in the quarter compared to prior year driven by the expiration of certain customer contracts in 2025.

Services and other gross margin decreased 7 points in the period compared to the prior year period driven by the expiration of certain customer contracts in 2025.

Sales and Marketing Expenses

Costs increased by $1,650, or 132% for the three months ended March 31, 2026 as compared to the same period in 2025, driven primarily by the inclusion of CDM which contributed $1,398 of expenses for the period.

Costs increased by $2,518, or 105% for the six months ended June 30, 2026 as compared to the same period in 2025, driven primarily by the inclusion of CDM which contributed $1,874 of expenses for the period.

General and Administrative Expenses

General and administrative expenses increased by $4,977 or 127%, for the three months ended March 31, 2026 as compared to the same period in 2025.

General and administrative expenses increased by $8,803 or 97%, for the six months ended June 30, 2026 as compared to the same period in 2025.

The increase was primarily driven by the inclusion of CDM, which represented $8,020 of expense, and additional accounting, compliance, legal and other one-time fees and severance costs in connection with the integration of CDM.

Interest Expense

Interest expense increased by $1,144 or 356%, during the three months ended March 31, 2026 as compared to March 31, 2025 primarily as a result of the new Term Loan entered into during November 2025.

Interest expense increased by $2,057 or 247%, during the six months ended June 30, 2026 as compared to June 30, 2025 primarily as a result of the Amended Credit Agreement entered into during November 2025.

See Note 9 , Debt, to the condensed consolidated financial statements for a discussion of the Company’s debt and related interest expense obligations.

Other Expense (Income)

The Company recognized $320 in other expenses for the three months ended March 31, 2026 as compared to $265 for the three months ended March 31, 2025.

The increase is a result of legal costs with respect to patent infringement and the inclusion of CDM in 2026.

The Company recognized $360 in other expenses for the six months ended June 30, 2026 as compared to $264 for the six months ended June 30, 2025.

The increase is a result of the inclusion of CDM in 2026.

Summary Unaudited Quarterly Financial Information (Non-GAAP)

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We also strongly urge you not to rely on any single financial performance measure to evaluate our business.

The table below shows the reconciliation of the Company's net (loss) income to EBITDA and Adjusted EBITDA:

September 30,

The table below shows the reconciliation of the Company's net loss to EBITDA and Adjusted EBITDA:

Quarters Ended

GAAP net (loss) income

September 30,

GAAP net loss

Interest expense:

5 unchanged sentences

Income tax expense (benefit)

Gain on settlement of contingent consideration

Stock-based compensation

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Operating Activities

Net cash used in operating activities was $1,723 for the three months ended March 31, 2026 compared to net cash used in operating activities of $2,449 for the three months ended March 31, 2025.

Cash used in 2026 was primarily attributable to a net loss of $7,461, adjusted for net non-cash charges of $3,882, partially offset by a $1,856 net source of cash from changes in operating assets and liabilities.

Cash used in 2025 was primarily attributable to net income of $3,368 reduced by net non-cash charges of $(3,398) (including a $4,775 gain on settlement of contingent consideration) and a net use of cash from changes in operating assets and liabilities of $2,419.

Net cash provided by operating activities was $1,003 for the six months ended June 30, 2026 compared to net cash provided by operating activities of $773 for the six months ended June 30, 2025.

Cash provided in 2026 was primarily attributable to a net loss of $11,357, offset by net non-cash charges of $8,461 and a $3,899 net source of cash from changes in operating assets and liabilities.

Cash provided in 2025 was primarily attributable to net income of $1,551 reduced by net non-cash gain of $(591) (including a $4,775 gain on settlement of contingent consideration), in addition to a decrease in operating assets and liabilities of $187.

Investing Activities

Net cash used in investing activities was $552 for the three months ended March 31, 2026 compared to $621 for the three months ended March 31, 2025.

Capitalization of internally developed software costs was $369 for the three months ended March 31, 2026 compared to $613 for the three months ended March 31, 2025.

Purchases of property and equipment were $183 for the three months ended March 31, 2026 compared to $8 for the three months ended March 31, 2025.

The Company did not have any material commitments for capital expenditures as of March 31, 2026.

Net cash used in investing activities was $3,220 for the six months ended June 30, 2026 compared to $1,264 for the six months ended June 30, 2025.

Capitalization of internally developed software costs was $768 for the six months ended June 30, 2026 compared to $1,155 for the six months ended June 30, 2025.

Purchases of property and equipment were $2,452 for the six months ended June 30, 2026 compared to $109 for the six months ended June 30, 2025.

The Company did not have any material commitments for capital expenditures as of June 30, 2026.

Financing Activities

Net cash provided by financing activities was $2,515 for the three months ended March 31, 2026 compared to $3,182 for the three months ended March 31, 2025.

Cash provided in 2026 was primarily attributable to net borrowings of $4,565 under the New Revolving Credit Facility ($11,037 in proceeds and $6,472 in repayments), partially offset by $1,097 of scheduled principal payments comprised of $900 on the Term Loan and $197 on the Promissory Note, $753 in repayments of finance lease obligations (which increased relative to the prior-year period as a result of finance leases assumed in the CDM Acquisition), and $200 used to repurchase Common Stock warrants pursuant to the Warrant Repurchase Agreement entered into on February 16, 2026.

Remaining available amounts under the New Revolving Credit Facility were $12,995 as of March 31, 2026.

Net cash provided by financing activities was $11,325 for the six months ended June 30, 2026 compared to $23 for the six months ended June 30, 2025.

Cash provided in 2026 was primarily attributable to $10,784 of net proceeds from the 2026 public offering of common stock and pre-funded warrants and net borrowings of $4,804 under the Revolving Credit Facility ($18,222 in proceeds and $13,418 in repayments), partially offset by $2,201 of scheduled principal payments on the Term Loan and the Promissory Note, $1,862 in repayments of finance lease obligations (which increased relative to the prior-year period as a result of finance leases assumed in the CDM Acquisition), and $200 used to repurchase Common Stock warrants pursuant to the Warrant Repurchase Agreement entered into on February 16, 2026.

Remaining available amounts under the Revolving Credit Facility were $12,756 as of June 30, 2026.

Cash provided in 2025 was primarily attributable to net borrowings of $3,049 under the Revolving Credit Facility under the Prior Credit Agreement ($18,334 in proceeds and $15,285 in repayments), partially offset by a $3,000 cash payment in connection with the partial settlement of the contingent consideration liability and $26 in repayments of finance lease obligations.

See Note 9, Debt , and Note 12, Warrants , to the condensed consolidated financial statements for further discussion.

See Note 9 , Debt, and Note 12 , Common Stock, to the condensed consolidated financial statements for further discussion.

Contractual Obligations and Commitments

As of March 31, 2026, we had operating and finance lease obligations of approximately $22,658 payable over the next five years.

As of June 30, 2026, we had operating and finance lease obligations of approximately $21,033 payable over the next five years.

These obligations relate primarily to corporate office space, warehousing and light-assembly facilities used to stage and deploy digital signage hardware and leased equipment supporting our operations.

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Off-Balance Sheet Arrangements

During the three months ended March 31, 2026, we did not engage in any off-balance sheet arrangements set forth in Item 303(a)(4) of Regulation S-K.

During the six months ended June 30, 2026, we had no off-balance sheet arrangements, as defined in Item 303(a)(4) of Regulation S-K.

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 1. Financial Statements