What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-14 compared with 2026-05-18 · 186 added, 183 removed, 267 unchanged (58% of the section changed)

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if we pursue a strategic transaction, such as FLYTE acquisition, it may change the primary focus of our business, and our management team could be diverted from pursuing our present core business and from obtaining regulatory approval for our products in development;

we will be unable to develop the assets acquired in by KardioNav and Cardionomix unless we are able to obtain additional financing in sufficient amounts to fund our current business, any future businesses we may enter into and to fund our products in development, which financing may not be available on acceptable terms or at all, and could require significant changes in our management and business focus, the results of anticipated trials may not turn out as we currently expect and future trials may not occur on the time tables we expect or may be more costly than anticipated, or may be abandoned due to lack of financing or changes in our business focus, we will be required to raise additional funds to finance our operations and continue as a going concern , and we may not be able to do so when necessary, and/or the terms of any financings may not be advantageous to us or could require changes to governance or operations, and we may require additional funds sooner than our current expectations and we may be required to significantly dilute our existing stockholders in order to raise sufficient operating funds assuming that we are able to raise funds at all, which is uncertain;

we will be unable to develop the assets acquired by KardioNav and Cardionomix unless we are able to obtain additional financing in sufficient amounts to fund our current business, any future businesses we may enter into and to fund our products in development, which financing may not be available on acceptable terms or at all, and could require significant changes in our management and business focus;

the results of anticipated trials may not turn out as we currently expect and future trials may not occur on the time tables we expect or may be more costly than anticipated, or may be abandoned due to lack of financing or changes in our business focus;

we will be required to raise additional funds to finance our operations and continue as a going concern, and we may not be able to do so when necessary, and/or the terms of any financings may not be advantageous to us or could require changes to governance or operations, and we may require additional funds sooner than our current expectations and we may be required to significantly dilute our existing stockholders in order to raise sufficient operating funds assuming that we are able to raise funds at all, which is uncertain;

our stockholder equity is near the minimum level prescribed by the NYSE American and if we are unable to maintain minimum listing requirements, we are liable to be delisted from the NYSE American;

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if we are unable to obtain and maintain patent protection for our products, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize our existing products and any products we may develop, and our technology may be adversely affected;

and any short-term sale may produce proceeds that are less than the market or stated value of such assets and less than the proceeds that could have been obtained if they were liquidated in the ordinary course.

If we enter into a strategic transaction, such as a merger or acquisition, we may become subject to additional risks in addition to those described above, which risks would be identified and disclosed in conjunction with consummating any such transaction.

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("Old Catheter”), a privately held Delaware corporation (the "Merger”), which became our wholly owned subsidiary.

Historically, our activities primarily relate to Old Catheter’s historical business, which comprises the design, manufacture and sale of new and innovative medical technologies focused in the field of cardiac electrophysiology ("EP").

On February 17, 2025, we formed a new subsidiary, Cardionomix, Inc.

("Cardionomix"), to acquire certain assets previously held by Cardionomic, Inc.

("Cardionomic"), a third-party entity that had ceased operations.

We own 82% of Cardionomix’s issued and outstanding common stock.

Our Chief Executive Officer and Chairman of the Board and certain of his affiliates own 12%, while the remaining 6% of the outstanding common stock was issued to certain third parties as finder's fees for the asset acquisition (see Note 2, Summary of Significant Accounting Policies in the audited consolidated financial statements included elsewhere in this Annual Report).

On May 5, 2025, Cardionomix acquired certain assets primarily related to the Cardiac Pulmonary Nerve Stimulation ("CPNS") System previously held by Cardionomic (see Note 14, Asset Acquisition in the audited consolidated financial statements included elsewhere in this Annual Report).

The CPNS System is a novel technology for the late-stage treatment of acute decompensated heart failure by stimulating the autonomic cardiac nerves to restore autonomic balance.

Unless Cardionomix can obtain its own dedicated financing, the Company does not intend to allocate capital to fund the clinical development of the acquired assets.

On June 20, 2025, we formed a new subsidiary, KardioNav, Inc.

("KardioNav"), to pursue the advancement, development, and commercialization of certain intellectual property assigned to KardioNav.

We transferred certain intellectual property related to the View into Ventricular Onset System ("VIVO" or "VIVO System") to KardioNav, while Chelak iECG, Inc.

("Chelak"), an unrelated third party, transferred certain patents related to a medical device designed to interface with implanted cardiac devices to KardioNav.

KardioNav intends to integrate the VIVO mapping intellectual property with Chelak's assigned patents to develop a system that interfaces with implanted cardiac devices to enable improved pre-ablation mapping and more precise localization of arrhythmogenic tissue.

Research and development activities in animals and humans have begun.

We own 57% of the subsidiary's issued and outstanding common stock, while Chelak owns 33% of the subsidiary’s issued and outstanding common stock.

Our Chief Executive Officer and Chairman of the Board of Directors and certain of his affiliates own the remaining 10% of the subsidiary’s issued and outstanding common stock.

KardioNav obtained its own financing in 2025.

The Company does not intend to provide additional financial support to KardioNav.

See Note 2, Summary of Significant Accounting Policies in the audited consolidated financial statements included elsewhere in this Quarterly Report.

Our activities primarily relate to Old Catheter’s historical business, which comprises the design, manufacture and sale of new and innovative medical technologies focused in the field of cardiac electrophysiology ("EP").

On February 6 2026, we entered into an Acquisition Purchase Agreement with SEG Jets LLC ("SEG Jets"), whereby we agreed to acquire 19.98% of the issued and outstanding shares of common stock of Fly Flyte, Inc.

("FLYTE") held by SEG Jets in exchange for 5,250 shares of Series D Convertible Preferred Stock, par value of $0.0001 per share and stated value of $1,000 per share, for an aggregate stated value of $5.3 million.

On March 9, 2026, we entered into a Securities Purchase Agreement with Creatd, Inc.

("Creatd"), whereby we acquired the remaining 80.02% of the issued and outstanding shares of common stock of FLYTE and all of FLYTE’s wholly owned consolidated subsidiaries, which included 100% equity ownership interest in Ponderosa Air, LLC ("Ponderosa").

As consideration for the acquired equity interests in FLYTE and Ponderosa, we agreed to pay $11.6 million as follows:

(A) cash consideration of $0.8 million due at closing, (B) promissory note with a principal amount of $5.0 million, and (C) 5,778 shares of Series D Convertible Preferred Stock for an aggregate stated value of $5.8 million.

As a result of these transactions, we now own 100% of the issued and outstanding common stock of FLYTE and its wholly owned consolidated subsidiaries.

FLYTE and all of its wholly owned consolidated subsidiaries operate as a single business.

Following the acquisition of FLYTE, we now operate in two reportable segments:

(i) cardiac electrophysiology and (ii) private aviation charter services.

Cardiac Electrophysiology Segment

One of our two primary products is the VIVO System, which is a non-invasive imaging system that offers 3D cardiac mapping to help with localizing the sites of origin of idiopathic ventricular arrhythmias in patients with structurally normal hearts prior to EP procedures.

We have received FDA clearance to market and promote the VIVO System in the U.S.

as a pre-procedure planning tool for patients with structurally normal hearts undergoing ablation treatment for idiopathic ventricular arrhythmias.

VIVO allows for the acquisition, analysis, display and storage of cardiac electrophysiological data and maps for analysis by a physician.

VIVO has FDA clearance and is also available in Europe as a Class 1 device.

To date, VIVO has been utilized in more than 2,000 procedures in the U.S.

and EU by over 30 physicians, with no reported device-related complications.

We have been cleared to label the VIVO System with the CE Mark in the EU and certain other countries.

The CE Mark designation, which affirms the product’s conformity with European health, safety, and environmental protection standards, allows us to market that product in countries that are members of the EU and the European Free Trade Association.

Catheter has commenced limited sales of the VIVO System in Europe and the UK through independent distributors.

Catheter’s international distributors are supported by two EU-based full-time consultants.

Our second and newest primary product, LockeT® ("LockeT”), is a suture retention device indicated for wound healing by distributing suture tension over a larger area in the patient in conjunction with a figure of eight suture closure.

Catheter Precision has one full time employee in Europe and sales are conducted through distributors in most countries.

Our second product is LockeT ("LockeT”), which is a suture retention device indicated for wound healing by distributing suture tension over a larger area in the patient in conjunction with a figure of eight suture closure.

LockeT is intended to temporarily secure sutures and aid clinicians in locating and removing sutures efficiently.

LockeT is a sterile Class I product that was registered with the FDA in the U.S.

We recognized our first sale of LockeT in May 2024.

In September 2024, we received notification of the issuance of our first LockeT patent in the country of China and we also completed a Middle East distribution agreement for LockeT.

In April 2025, we received notification of the issuance of our first LockeT patent in the U.S.

by the United States Patent and Trademark Office.

We also obtained the CE Mark approval for LockeT, permitting the marketing and sale of LockeT in the European Union, Switzerland and Turkey.

Since receipt of the CE Mark, we have signed agreements with new distributors in the United Kingdom, Italy, Spain, Portugal, Switzerland, the Middle East, South Africa and Brunei.

In February 2026, we entered into an Acquisition Purchase Agreement with SEG Jets LLC ("SEG Jets"), whereby we agreed to acquire 19.98% of the issued and outstanding shares of common stock of Fly Flyte, Inc.

("FLYTE") held by SEG Jets in exchange for 5,250 shares of our newly designated Series D Convertible Preferred Stock, with a par value of $0.0001 per share and a stated value of $1,000 per share, for an aggregate stated value of $5.3 million, subject to customary closing conditions and stockholder approval.

In March 2026, we entered into a Securities Purchase Agreement with Creatd, Inc.

("Creatd"), whereby we acquired 80.02% of the remaining issued and outstanding shares of common stock of FLYTE and 100% of the membership interests of Ponderosa Air, LLC ("Ponderosa"), subject to closing conditions.

As consideration for the acquired equity interests in FLYTE and Ponderosa, we agreed to pay $11.6 million as follows:

(A) cash consideration $0.8 million due at closing, (B) $5.0 million in principal amount of a promissory note, and (C) 5,778 shares of Series D Convertible Preferred Stock for an aggregate stated value of $5.8 million.

As a result of these transactions, we now own 100% of the issued and outstanding common stock of FLYTE common stock and 100% of the membership interests of Ponderosa.

With respect to our historical business, our strategy is to become a leading medical device company in the field of cardiac electrophysiology developing and selling electrophysiology products to provide patients, hospitals, and physicians with novel technologies and solutions to improve the lives of patients with cardiac arrhythmias and reduce cost per procedure.

We aim to establish VIVO as an integral tool used by cardiac electrophysiologists during ablation treatment of ventricular arrhythmias by reducing procedure time and patient complications and increasing procedural success.

Following the March 2026 acquisition of FLYTE, we now operate in two reporting segments:

(i) cardiac electrophysiology and (ii) private aviation charter services.

Our business strategy is to become a leading medical device company in the field of cardiac electrophysiology, and we are dedicated to developing and delivering electrophysiology products to provide patients, hospitals, and physicians with novel technologies and solutions to improve the lives of patients with cardiac arrhythmias.

LockeT has been commercially available since 2024 in the US, received CE Mark in April 2025 and is currently available in 16 countries.

Both products have a number of granted patents and patents pending in the US and Worldwide.

Private Aviation Segment

Through our wholly owned subsidiary, we operate a private aviation platform supported by a mobile application that facilitates access to private air travel at competitive price points.

We offer regional and long-range private jet charter services throughout the United States through a combination of leased aircraft and third-party operator relationships.

Customers book flights directly or place bids on available empty-leg flights in real time.

We are also developing a local and regional air-taxi service intended to expand access to private aviation for middle-market travelers by offering shorter-distance flights at lower price points relative to traditional charter services and have begun the regulatory approval process to operate in Canada, Mexico and the Caribbean.

Business Strategy

Our business strategy is to become a leading medical device company in the field of cardiac electrophysiology.

We are dedicated to developing and delivering electrophysiology products to provide patients, hospitals, and physicians with novel technologies and solutions to improve the lives of patients with cardiac arrhythmias.

We aim to establish VIVO as an integral tool used by cardiac electrophysiologists during ablation treatment of ventricular arrhythmias by reducing procedure time, patient complications and increasing procedural success.

However, in order to attract capital to fund our operating losses while we pursue this strategy, we have also adopted a holding company structure within which we house and operate our FLYTE private aviation charter business which has the potential to quickly grow into a profitable subsidiary.

However, to attract capital to fund our operating losses while we pursue this strategy, we have also adopted a holding company structure within which we house and operate our FLYTE private aviation charter business, which has the potential to quickly grow into a profitable subsidiary.

FLYTE is a technology-enabled regional air mobility company operating a growing fleet of Cirrus Vision Jets.

Focused on high frequency, short haul markets, FLYTE is providing a faster, safer, and more efficient alternative to commercial and existing private charter air travel.

Focused on high frequency, short haul markets, FLYTE provides a faster, safer, and more efficient alternative to commercial and existing private charter air travel.

Flight operations are conducted through FLYTE’s wholly owned subsidiary, Ponderosa Air, LLC, an FAA certified Part 135 air carrier.

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Recent Developments

Convertible Notes Payable

On December 26, 2025, we issued an unsecured convertible notes payable with a principal amount of $102 thousand and a discount of $2 thousand to Boot Capital LLC for cash proceeds of $100 thousand.

We further issued an unsecured convertible note payable with a principal amount of $204 thousand and a discount of $4 thousand to Vanquish Funding Group Inc.

for cash proceeds of $200 thousand.

The convertible notes payable have a maturity date of September 30, 2026 and stated interest rate of 10% per annum, which shall be payable when the principal amount is due.

Any principal amount or interest that is not paid when due shall bear the default interest of 22% per annum.

In accordance with the fair value option, the convertible notes payable were recorded at fair value in the accompanying condensed consolidated balance sheets included elsewhere in this Quarterly Report.

Changes in fair value of convertible notes payable along with interest expense are recorded under change in fair value of convertible notes payable in the accompanying condensed consolidated statements of operations included elsewhere in this Quarterly Report.

See Note 8, Notes Payable in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information.

Modification of Related Party Notes

On December 31, 2025, we entered into the second amendment of the Related Party Notes, which extended the maturity date of the notes payable to the Jenkins Family Charitable Institute to January 31, 2028, and the notes payable to FatBoy Capital, L.P.

("FatBoy") and Mr.

Jenkins to January 31, 2029.

As part of the second amendment, we issued 170,000 Series M Warrants to FatBoy and Mr.

Jenkins, respectively, and transferred the Perikard membership interests to Mr.

Jenkins for de minimis proceeds.

All other terms and conditions remained unchanged.

The second amendment was accounted for as a debt extinguishment since the amended terms and conditions were substantially different from prior terms and conditions.

We derecognized the net carrying amount of the original Related Party Notes and recorded the amended Related Party Notes at fair value.

Since the fair value of the amended Related Party Notes of $1.7 million was greater than the principal balance of $1.5 million, we recognized a premium of $0.2 million as of December 31, 2025.

The difference between the reacquisition price, which is the sum of the fair values of the amended Related Party Notes, Perikard membership interests, and Series M Warrants, and the net carrying amount of the original Related Party Notes of $0.6 million was recorded as loss on debt extinguishment consolidated statements of operations for the year ended December 31, 2025.

See Note 8, Notes Payable in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information.

Each Series M Warrant is exercisable for shares of the Company’s common stock at an exercise price of $1.56 per share.

The Series M Warrants are not exercisable until Stockholder Approval is obtained, and expire 5.5 years thereafter.

Each Series M Warrant is exercisable into one share of the Company's common stock and may be exercised on a cashless basis under certain circumstances.

The exercise price of the Series M Warrants is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company's common stock.

The Series M Warrants are callable by the Company for $0.01 per share if the volume-weighted average price of the Company's common stock for 20 consecutive trading days exceeds $1.50 per share and the Series M Warrants have not been exercised.

Stockholder approval has not been obtained.

The Company assessed the Series M Warrants and determined that they do not require liability classification pursuant to ASC Topic 480.

Furthermore, the Series M Warrants do not have any net cash settlement provisions that would preclude equity classification under ASC Topic 815-40.

See Note 12, Equity Offerings in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information on the provisions for the Series M Warrants.

Royalty Payable Exchange

On December 31, 2025, we entered into the Series J Exchange Agreement ("Royalty Right Exchange") with Mr.

Jenkins and FatBoy to exchange future and accrued royalty rights of $2.7 million for an aggregate of 9,490 shares of the Company's newly designated Series J Convertible Preferred Stock, par value $0.0001 per share and stated value of $1,000 per share.

We derecognized $2.7 million of royalties payable due to related parties and recognized the fair value of the Series J Convertible Preferred Stock of $5.3 million in additional paid-in capital for the year ended December 31, 2025.

The difference between the fair value of the Series J Convertible Preferred Stock and the fair value of the royalties payable due to related parties of $2.6 million was recorded as loss on debt extinguishment in the consolidated statement of operations for the year ended December 31, 2025.

See Note 13, Preferred Stock, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information on the Series J Convertible Preferred Stock issued in connection with the Royalty Right Exchange.

One of the third-party Noteholders remained a party to the royalty agreement and associated payable as of March 31, 2026.

February 2026 Private Placement

On February 6, 2026, we entered into a Securities Purchase Agreement with certain accredited investors for a private placement financing and issued an aggregate of (i) 392,608 shares of our common stock, par value $0.0001 per share, at a per share purchase price of $1.43 and (ii) 1,617 shares of newly designated Series C-1 Convertible Preferred Stock par value $0.0001 per share, with a stated value of $1,000 per share for gross proceeds of $2.2 million.

The investors agreed to purchase newly designated Series C-2 and Series C-3 Convertible Preferred Stock, par value $0.0001 per share, with stated values of $1,000 per share, under additional closings for aggregate gross proceeds of $1.6 million per closing.

The additional closings are subject to certain closing conditions, including stockholder approval to issue shares of common stock in excess of 19.99% of our issued and outstanding shares of common stock and to effect a reverse stock split ("Stockholder Approval”) and, solely with respect to the closing of the Series C-3 Convertible Preferred Stock, declaration of the effectiveness of the Registration Statement filed for the resale of the common stock underlying the Series C-1, C-2, and C-3 Convertible Preferred Stock.

The investors also have the right, but not the obligation, to purchase up to an aggregate of $39.2 million of Series C-4 Convertible Preferred Stock, par value $0.0001 per share, with stated value of $1,000 per share in one or more closings.

February 2026 Warrant Exercise and Series B Convertible Preferred Stock Conversion Inducement

In February 2026, the Company agreed to lower the exercise price of existing warrants and the conversion price of the Series B Convertible Preferred Stock to $1.78 per share for certain holders as consideration for exercising the existing warrants and converting the Series B Convertible Preferred Stock, resulting in aggregate proceeds of $0.4 million.

March 2026 Private Placement

On March 9, 2026, we entered into an additional Securities Purchase Agreement with certain accredited investors for a private placement financing pursuant to which the investors agreed to purchase 1,853 shares of Series C-1 Convertible Preferred Stock, par value of $0.0001 per share and stated value of $1,000 per share, for aggregate gross proceeds of $1.9 million.

The additional closings are subject to closing conditions, including approval from our stockholders to issue shares of common stock in excess of 19.99% of our issued and outstanding shares of common stock and, solely with respect to the closing for the Series C-3 Convertible Preferred Stock, effectiveness of the Registration Statement filed to register the resale of common stock underlying the Series C-1, C-2, and C-3 Convertible Preferred Stock.

February and March 2026 Private Placement

On February 6, 2026, we entered into a Securities Purchase Agreement (the "February 2026 SPA") with certain accredited investors for a private placement financing and issued an aggregate of (i) 392,608 shares of our common stock, par value $0.0001 per share, at a per share purchase price of $1.43 and (ii) 1,617 shares of newly designated Series C-1 Convertible Preferred Stock par value $0.0001 per share and a stated value of $1,000 per share, for gross proceeds of $2.2 million before deducting direct and incremental offering expenses of $0.2 million.

The investors agreed to purchase newly designated Series C-2 and Series C-3 Convertible Preferred Stock, par value $0.0001 per share and stated values of $1,000 per share, under additional closings for aggregate gross proceeds of $1.6 million (the "Second Tranche" and "Third Tranche").

On March 9, 2026, we entered into an additional Securities Purchase Agreement (the “March 2026 SPA”) with certain accredited investors for a private placement financing pursuant to which the investors agreed to purchase 1,853 shares of Series C-1 Convertible Preferred Stock for aggregate gross proceeds of $1.9 million before deducting $0.1 million in issuance costs.

The investors agreed to purchase newly designated Series C-2 and Series C-3 Convertible Preferred Stock under additional closings for aggregate gross proceeds of $1.9 million (the "Second Tranche" and "Third Tranche").

Pursuant to the February and March 2026 SPAs, the additional closings are subject to certain closing conditions, including stockholder approval to issue shares of common stock in excess of 19.99% of our issued and outstanding shares of common stock and to effect a reverse stock split ("Stockholder Approval”) and, solely with respect to the closing of the Series C-3 Convertible Preferred Stock, declaration of the effectiveness of the Registration Statement filed for the resale of the common stock underlying the Series C-1, C-2, and C-3 Convertible Preferred Stock.

The investors also have the right, but not the obligation, to purchase up to an aggregate of $39.2 million of Series C-4 Convertible Preferred Stock (collectively with the Series C-1, Series C-2, and Series C-3 Convertible Preferred Stock, the “Series C Convertible Preferred Stock”), par value $0.0001 per share and stated value of $1,000 per share, in one or more closings (the "Fourth Tranche").

Subject to certain limitations described below, the Series C-1 Convertible Preferred Stock was convertible into shares of our common stock at the option of the holder at an initial conversion price of $1.43 per share, subject to adjustment in certain circumstances as set forth in the Certificate of Designations.

Following the date that the registration statement filed pursuant to the related registration rights agreement is first declared effective by the Securities and Exchange Commission (the “Effective Date”) and the Stockholder Approval Date, the conversion price is reduced to the lower of (i) the conversion price in effect immediately prior to the Effective Date and (ii) 80% of the Applicable Price on such date.

In each case, the conversion price is subject to a floor price of $0.35, unless waived by us in our sole discretion.

In the event of a stock dividend, reverse stock split, stock combination, reclassification or similar event affecting our common stock, the conversion price shall be adjusted based on the number of shares of common stock outstanding immediately before and after such event.

The conversion of the Series C-1 Convertible Preferred Stock is subject to stockholder approval and certain beneficial ownership limitations.

Prior to the Stockholder Approval Date, the Series C-1 Convertible Preferred Stock may only be converted into shares of common stock up to the maximum amount permitted under applicable exchange rules.

The initial conversion price of the Series C-1 Convertible Preferred Stock was automatically lowered to $0.883 per share on April 15, 2025, the Stockholder Approval Date, and to $0.632 on July 10, 2026, the Effective Date, in accordance with the terms and conditions set forth in the Certificate of Designation.

See Note 13, Equity Offerings and Note 14, Preferred Stock in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information on the Series C Convertible Preferred Stock issued in connection with the February and March 2026 SPAs.

Modification of Existing Warrants and Series B Convertible Preferred Stock

On February 6, 2026, the Company agreed to lower the exercise price of existing warrants and the conversion price of the Series B Convertible Preferred Stock to $1.78 per share as consideration for exercising the existing warrants and converting the Series B Convertible Preferred Stock, resulting in aggregate proceeds of $0.4 million.

On June 23, 2026, the Company agreed to further lower the conversion price of the Series B Convertible Preferred Stock to $1.43.

This led to the conversion of 1,311 shares of Series B Convertible Preferred Stock into 916,998 shares of common stock through June 30, 2026.

On July 29, 2026 the Company entered into a letter agreement with the holders of the Series B Convertible Preferred Stock to repurchase the remaining 321 shares of Series B Convertible Preferred Stock for a total of $321 thousand.

The repurchase was finalized on July 30, 2026 and the outstanding Series B Convertible Preferred Stock was cancelled.

See Note 13, Equity Offerings and Note 20, Subsequent Events in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information on the February 2026 Letter Agreement.

FLYTE Acquisition

In February 6, 2026, we entered into an Acquisition Purchase Agreement with SEG Jets LLC ("SEG Jets"), whereby we agreed to acquire 19.98% of the issued and outstanding shares of common stock of Fly Flyte, Inc.

("FLYTE") held by SEG Jets in exchange for 5,250 shares of our newly designated Series D Convertible Preferred Stock, with a par value of $0.0001 per share and a stated value of $1,000 per share, for an aggregate stated value of $5.2 million, subject to customary closing conditions and stockholder approval.

In March 9, 2026, we entered into a Securities Purchase Agreement with Creatd, whereby we acquired 80.02% of the remaining issued and outstanding shares of common stock of FLYTE and 100% of the membership interests of Ponderosa Air, LLC ("Ponderosa"), subject to closing conditions.

As consideration for the acquired equity interests in FLYTE and Ponderosa, we agreed to pay $11.6 million as follows:

As a result of these transactions, we owned 100% of the issued and outstanding common stock of FLYTE common stock and 100% of the membership interests of Ponderosa as of March 9, 2026.

Additional information regarding the FLYTE acquisition is set forth in our Current Report on Form 8-K filed with the SEC on February 6, 2026 and March 9, 2026 and in Note 3 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

As discussed above, we own 100% of the issued and outstanding common stock of FLYTE common stock and 100% of the membership interests of Ponderosa as of March 9, 2026.

FLYTE is a technology-powered, private air transportation company.

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FLYTE provides two distinct air travel services:

Flyte Hops and Luxe.

Flyte Hops operates short-haul charter routes using its own fleet of leased Cirrus Vision jets flown by pilots that are full-time employees of Flyte.

Flyte manages marketing, customer booking, flight scheduling, pricing, collects payment, purchases jet fuel, files the flight plan, uses its own aircraft flown by its own pilots to fly the customers, maintains all necessary FAA certifications.

Flyte manages marketing, customer booking, flight scheduling, and pricing, collects payment, purchases jet fuel, files the flight plan, uses its own aircraft flown by its own pilots to fly the customers, and maintains all necessary FAA certifications.

Flyte Luxe matches passengers seeking airplanes larger than the Cirrus Vision or with longer range with appropriate 3rd party aircraft and crews, providing private aviation coordination and bespoke travel experiences.

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The financial results of FLYTE are included in our unaudited condensed consolidated financial statements from March 10, 2026 through March 31, 2026.

As a result, the consolidated results of operations for the three months ended March 31, 2026 reflect approximately twenty-two days of contribution from FLYTE, and the comparative results for the three months ended March 31, 2025 do not include any results of FLYTE.

As a result, the consolidated results of operations for the three and six months ended June 30, 2026 reflect a full quarter and approximately four months of contribution from FLYTE, respectively.

The comparative consolidated results of operations for the three and six months ended June 30, 2025 do not include any results of FLYTE.

Investors are cautioned that period-over-period comparisons of our consolidated results of operations are not directly comparable as a result of the Acquisition.

Issuance of Series D Convertible Preferred Stock

On April 20, 2026, in connection with the Company’s acquisition of FLYTE, we issued 5,250 and 5,778 shares of our newly designated Series D Convertible Preferred Stock, par value $0.0001 per share and stated value of $1,000 per share to SEG Jets and Creatd, respectively.

Subject to certain limitations described below, the Series D Preferred Stock are convertible into shares of our common stock at the option of a holder at an initial conversion price of $1.1038 per share, subject to adjustment in certain circumstances as set forth in the Certificate of Designations.

Following the date on which the registration statement filed pursuant to the related registration rights agreement is first declared effective by the Securities and Exchange Commission (the "Effective Date”), the conversion price shall be reduced to equal the lower of (i) the conversion price in effect immediately prior to the Effective Date and (ii) the Applicable Price on the Effective Date.

In each case, the conversion price if subject to a floor price of $0.35, unless waived by us in our sole discretion.

The conversion of the Series D Convertible Preferred Stock is also subject to stockholder approval and certain beneficial ownership limitations.

Prior to the Stockholder Approval Date, the Series D Convertible Preferred Stock may only be converted into shares of common stock up to the maximum amount permitted under applicable exchange rules.

See Note 19, Subsequent Events in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information on the Series D Convertible Preferred Stock issued in connection with the FLYTE acquisition.

Issuance of Series C-2 Convertible Preferred Stock

On April 21, 2026, pursuant to the Securities Purchase Ag reement dated February 6, 2026 and March 9, 2026, we issued an aggregate of 3,470 shares of our newly designated Series C-2 Convertible Preferred Stock, par value $0.0001 per share and stated value of $1,000 per share.

Subject to certain limitations described below, the Series C-2 Convertible Preferred Stock is convertible into shares of our common stock at the option of the holder at an initial conversion price of $0.883 per share, subject to adjustment in certain circumstances as set forth in the Certificate of Designations.

Following the date that the registration statement filed pursuant to the related registration rights agreement is first declared effective by the Securities and Exchange Commission (the “Effective Date”), the conversion price is reduced to the lower of (i) the conversion price in effect immediately prior to the Effective Date and (ii) 80% of the Applicable Price on the Effective Date.

In each case, the conversion price is subject to a floor price of $0.35, unless waived by us in our sole discretion.

The conversion of the Series C-2 Convertible Preferred Stock is subject to stockholder approval and certain beneficial ownership limitations.

Prior to the Stockholder Approval Date, the Series C-2 Convertible Preferred Stock may only be converted into shares of common stock up to the maximum amount permitted under applicable exchange rules.

See Note 19, Subsequent Events in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information on the Series C-2 Convertible Preferred Stock issued in connection with the February and March Private Placements.

Additional information regarding the FLYTE acquisition is set forth in our Current Report on Form 8-K filed with the SEC on February 6, 2026 and March 9, 2026 and in Note 3 of the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Trends and Uncertainties Relating to FLYTE

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Any such existing, future, new or potential laws and regulations, including any future regulation of greenhouse gas emissions from aviation activities, could have a material adverse impact on our business, results of operations and financial condition.

Components of our Results of Operations for the Three Months Ended March 31, 2026 and 2025

Issuance of Series D Convertible Preferred Stock

On April 20, 2026, in connection with the Company’s acquisition of FLYTE, we issued 5,250 and 5,778 shares of our newly designated Series D Convertible Preferred Stock to SEG Jets and Creatd, respectively.

In each case, the conversion price is subject to a floor price of $0.35, unless waived by us in our sole discretion.

The conversion of the Series D Convertible Preferred Stock is also subject to stockholder approval and certain beneficial ownership limitations.

Prior to the Stockholder Approval Date, the Series D Convertible Preferred Stock may only be converted into shares of common stock up to the maximum amount permitted under applicable exchange rules.

The initial conversion price of the Series D Convertible Preferred Stock was automatically lowered to $0.79 per share on July 10, 2026, the Effective Date, in accordance with the terms and conditions set forth in the Certificate of Designation.

See Note 14, Preferred Stock in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information over the Series D Convertible Preferred Stock issued in connection with the FLYTE acquisition.

Issuance of Series C-2, C-3 and C-4 Convertible Preferred Stock

On April 21, 2026 , pursuant to the February and March 2026 SPAs, we issued an aggregate of 3,470 shares of our newly designated Series C-2 Convertible Preferred Stock for aggregate gross proceeds of $3.5 million, and net proceeds of approximately $3.2 million after deducting transaction costs of approximately $0.3 million.

The Series C-2 Convertible Preferred Stock was convertible into shares of our common stock at the option of the holder at an initial conversion price of $0.883 per share.

Except for the initial conversion price and the automatic reduction in conversion price upon the Stockholder Approval Date, the Series C-2 Convertible Preferred Stock has the same conversion features as the Series C-1 Convertible Preferred Stock discussed above.

Accordingly, the initial conversion price for the Series C-2 Convertible Preferred Stock was automatically lowered to $0.632 per share on July 10, 2026, the Effective Date, in accordance with the terms and conditions set forth in the Certificate of Designation.

On July 15, 2026, pursuant to the February and March 2026 SPAs, we issued an aggregate of 3,470 shares of our newly designated Series C-3 Convertible Preferred Stock for aggregate gross proceeds of $3.5 million.

In connection with the issuance, we incurred direct offering costs of approximately $267 thousand.

The Series C-3 Convertible Preferred Stock is convertible into shares of the Company’s common stock at the option of the holder at an initial conversion price of $0.632 per share.

On July 30, 2026, pursuant to the March 2026 SPAs, we issued an aggregate of 2,821 shares of the Company’s newly designated Series C-4 Convertible Preferred Stock for aggregate gross proceeds of $2.8 million.

In connection with the issuance, we incurred direct offering costs of approximately $193 thousand.

The Series C-4 Convertible Preferred Stock is convertible into shares of the Company’s common stock at the option of the holder at an initial conversion price of $0.035 per share.

Except for the initial conversion price and the automatic reduction in conversion price upon Stockholder Approval Date and Effective Date, the Series C-3 and Series C-4 Convertible Preferred Stock have the same conversion features as the Series C-1 Convertible Preferred Stock discussed above.

See Note 14, Preferred Stock and Note 20, Subsequent Events in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information on the Series C Convertible Preferred Stock issued in connection with the February and March 2026 SPAs.

Settlement of Convertible Notes Payable

On June 22, 2026, we early settled the convertible notes payable with an outstanding balance of $0.3 million by paying $0.4 million in cash.

The Company recognized a loss on debt extinguishment of $0.1 million in the condensed consolidated statements of operations included elsewhere in this Quarterly Report.

See Note 9, Notes Payable in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information.

From January 12 through June 5, 2026, the Company issued several short-term promissory notes with an aggregate principal of $2.8 million (collectively, the “Bridge Notes”), of which $0.4 million was issued to FatBoy Capital, LP, a related party.

The Bridge Notes bear interest at 12% per annum, had original maturity dates ranging from February 10 through July 5, 2026, and are prepayable at any time without penalty or premium.

Amounts not paid when due bear interest at 18% per annum.

The $480 thousand Bridge Note issued to SEG Opportunity Fund, LLC on May 18, 2026 matured on June 18, 2026 and remained outstanding as of

June 30, 2026.

Accordingly, the note was in default and accrued interest at the default rate of 18% per annum following its maturity.

No other Bridge Notes were in default as of

June 30, 2026.

See Note 9, Notes Payable in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information.

Components of our Results of Operations for the Three and Six Months Ended June 30, 2026 and 2025

Product Revenues

Our current activities primarily relate to the design, manufacture and sale of new and innovative medical technologies in the field of cardiac electrophysiology and private aviation charter services.

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We recognize revenues for software upgrade services evenly over time over the term of the contract.

We did not recognize any revenues for software upgrade services for the three months ended March 31, 2026 and 2025.

We did not recognize any revenues for software upgrade services for the three and six months ended June 30, 2026 and 2025.

LockeT is a suture retention device indicated for wound healing by distributing suture tension over a larger area in the patient in conjunction with a figure of eight suture closure.

We recognize sales of LockeT at the point in time that the product is delivered to the customer.

We are a business that has operations within and outside of the United States.

During the three and six months ended June 30, 2026 , appr oximately 22% and 30% of our pr oduct sales were derived from customers outside of the United States, respectively.

During the three and six months ended June 30, 2025 , approximately 18% and 13% of our product sales were derived from customers outside of the United States, respectively.

Service Revenues

We generate service revenue through two primary private aviation charter services, (i) Hops and (ii) Luxe.

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For roundtrip flights, revenue is recognized upon arrival at the destination for each flight.

We are a business that has operations within and outside of the United States.

During the three months ended March 31, 2026 and 2025, approximately 62% and 6% of our product sales were derived from customers outside of the United States, respectively.

During the three months ended March 31, 2026, 100% of our service revenue was derived from customers inside of the United States.

During the three and six months ended June 30, 2026, 100% of our service revenue was derived from customers inside of the United States.

The Company did not recognize any service revenue during the three and six months ended June 30, 2025.

Cost of revenues

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Acquired IPR&D that has no alternative future use as of the acquisition date is recognized as research and development expense as of the acquisition date.

Results of Operations for the Three Months Ended March 31, 2026 and 2025

Results of Operations for the Three and Six Months Ended June 30, 2026 and 2025

The following table sets forth the results of the Company's operations for the periods presented (in thousands):

For the Three Months Ended March 31,

For the Three Months Ended June 30, 2026

For the Six Months Ended June 30,

Product revenue

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Research and development expenses

Change in fair value of minority equity interest

Change in fair value of deferred consideration

Acquired in-process research and development expenses

Change in fair value of royalties payable due to related parties

Other income (expense), net (1)

Change in fair value of minority equity interest

Change in fair value of deferred consideration

Loss on debt extinguishment

Unrealized gains and losses, net

Other expense, net (1)

Income tax benefit

The increase in product revenue of approximately $105 thousand for the three months ended March 31, 2026 as compared to the corresponding period in the prior year was due to an increase of $46 thousand and $59 in LockeT and VIVO System sales, respectively.

The increase in LockeT sales is primarily the result of our sales team's efforts to effectively prove the procedural efficiency, cost-effectiveness and improved patient experience resulting from the use of LockeT compared with incumbent or competing closure devices to prospective new hospital customers.

Accordingly, we have entered into long-term contracts with a number of those hospitals, which has resulted in receiving initial and repeat orders as the LockeT devices are used and consumed in clinical procedures.

The increase in VIVO System sales was primarily due to growth in international patch sales resulting from expanded European sales efforts

The increase in service revenue of approximately $184 thousand for the three months ended March 31, 2026 as compared to the corresponding period in the prior year was due to the acquisition of FLYTE during the period, which contributed to additional revenue stream from the private aviation charter services.

(1) Constitutes the operating activities within other income (expense), net in the condensed consolidated statements of operations, except for the change in fair value of royalties payable due to related parties, change in fair value of minority equity interest, change in fair value of deferred consideration, loss on debt extinguishment and unrealized gains and losses, net that are presented separately in the table above.

The increase in product revenue of appr oximately $58 thousand for the three months ended June 30, 2026 as compared to the corresponding period in the prior year was due to an increase of $75 thousand in LockeT sales, partially offset by a $17 thousand decrease in VIVO System sales due to fewer customers.

The increase in product revenue of approximately $163 thousand for the six months ended June 30, 2026 as compared to the corresponding period in the prior year was due to an increase of $121 thousand and $42 thousand in LockeT and VIVO System sales, respectively.

The increase in LockeT sales is primarily the result of additional domestic customers as well as an increase in international sales.

The increase in VIVO System sales was primarily due to growth in international sales resulting from expanded sales efforts.

The increase in service revenue of approximately $749 thousand and $933 thousand for the three and six months ended June 30, 2026 respectively, as compared to the corresponding periods in the prior year was due to the acquisition of FLYTE during the period, which contributed to an additional revenue stream from the private aviation charter services

Cost of revenues

The increase in cost of revenues of approximately $31 thousand for the three months ended March 31, 2026 as compared to the corresponding period in the prior year was primarily due to an increase in LockeT and VIVO System sales, which resulted in higher related cost of revenues of approximately $20 thousand and cost of revenues associated with the increase in private charter aviation services revenue of $11 thousand.

The increase in cost of revenues of approximately $1.0 million and $1.1 million for the three and six months ended June 30, 2026 , as compared to the corresponding periods in the prior year was primarily due to an increase in cost of service revenues of $1.0 million and $1.1 million associated with the increase in private charter aviation services, respectively.

Selling, general and administrative expenses

The decrease in selling, general and administrative expenses of approximately $0.9 million for the three months ended March 31, 2026 as compared to the corresponding period in the prior year was due to a decrease in salaries and benefits of $0.5 million, a decrease in investor relations and SEC fees of $0.2 million as well as a decrease in depreciation and amortization of $0.1 million, respectively.

The decrease in salaries and benefits was primarily due to a reduction in overall headcount and a restructuring of sales compensation.

The decrease in investor relations and SEC fees was driven by non-recurring expenses from the prior year period related to a shareholder meeting, consulting and advisory services, and stock-based compensation.

Finally, the decrease in professional fees was primarily attributable to lower legal expenses following a transition to new corporate counsel in the fall of 2025.

The increase in selling, general and administrative expenses of approximately $0.9 million for the three months ended June 30, 2026 as compared to the corresponding period in the prior year primarily relates to an increase of $0.8 million in professional fees, such as accounting, audit, and legal fees, and $0.1 million in investor relations and SEC fees incurred in connection with the FLYTE acquisition as well as other transactions completed in the period, such as the February and March 2026 SPAs.

In addition, there was an increase of $0.2 million in advertising and marketing expenses related to the newly acquired private charter aviation services.

The increase in selling, general and administrative expenses was partially offset by a decrease of $0.4 million in salaries and benefits due to a reduction in overall head count and a restructuring of sales compensation.

The decrease in selling, general and administrative expenses of approximately $0.1 million for the six months ended June 30, 2026 as compared to the corresponding period in the prior year was due to a decrease of $0.9 million in salaries and benefits due to a reduction in overall headcount and a restructuring of sales compensation.

The decrease is partially offset by an increase of $0.7 million in professional fees incurred in connection with the FLYTE acquisition and other transactions completed in the period and an increase of $0.2 million in advertising and marketing expenses related to the newly acquired private charter aviation services.

Research and development expenses

The increase in research and development expenses of approximately $0.1 thousand for the three months ended March 31, 2026 , as compared to the corresponding period in the prior year, was primarily due to an increase in professional fees of $0.1 million that relates to third-party consulting for VIVO software upgrades and the development of a system that interfaces with implanted cardiac devices to enable improved pre-ablation mapping and more precise localization of arrhythmogenic tissue.

The decrease in research and development expenses of approximately $13 thousand for the three months ended June 30, 2026 , as compared to the corresponding period in the prior year, was primarily due to a decrease in research grants partially offset by an increase in professional fees that related to third-party consulting for VIVO software upgrades and the development of a system that interfaces with implanted cardiac devices to enable improved pre-ablation mapping and more precise localization of arrhythmogenic tissue.

The increase in research and development expenses of approximately $33 thousand for the six months ended June 30, 2026 , as compared to the corresponding period in the prior year, was primarily due to an increase in professional fees of $92 thousand related to third-party consulting for VIVO software upgrades and the development of a system that interfaces with implanted cardiac devices to enable improved pre-ablation mapping and more precise localization of arrhythmogenic tissue, partially offset by a decrease of $66 thousands in research grants .

Acquired in-process research and development expenses

We did not incur any acquired in-process research and development expenses during the three months ended March 31, 2026.

The decrease in acquired in-process research and development expenses of approximately $0.1 million for the three months ended March 31, 2026 as compared the corresponding period in the prior year primarily relates the asset acquisitions completed in on January 24, 2025.

We acquired 100% of the membership interests of Perikard, LLC for $119 thousand, which was accounted for as an asset acquisition consisting primarily of a single patent for pericardial access technology.

The patent was determined to be IPR&D with no alternative future use, and accordingly, we recognized $119 thousand, consisting of $113 thousand of stock consideration and $6 thousand of direct transaction costs, as acquired in-process research and development in the condensed consolidated statements of operations for the three months ended March 31, 2025.

Change in fair value of equity investment

This represents the change in fair value of our initial minority equity interest of 19.98% in FLYTE from $5.2 million as of February 6, 2026 to $2.9 million as of March 9, 2026, the date we acquired a controlling equity interest in FLYTE.

We did not incur any acquired in-process research and development expenses during the three and six months ended June 30, 2026.

The decrease in acquired in-process research and development expenses of approximately $1.9 million and $2.0 million for the three and six months ended June 30, 2026, respectively, as compared the corresponding periods in the prior year primarily relates to the two asset acquisitions completed in 2025.

On January 24, 2025, we acquired 100% of the membership interests of Perikard, LLC, which was accounted for as an asset acquisition consisting primarily of a single patent for pericardial access technology.

The patent was determined to be IPR&D with no alternative future use, and accordingly, we recognized $0.1 million as acquired in-process research and development in the condensed consolidated statements of operations for the three months ended March 31, 2025.

On May 5, 2025, we acquired certain assets primarily related to Cardionomic’s CPNS System, which were deemed to be IPR&D assets with no alternative future use.

Accordingly, we recognized $1.9 million, consisting of $0.3 million in stock consideration, $1.3 million in note payable, and $0.3 million in direct transaction costs, as acquired in-process research and development in the condensed consolidated statements of operations for the three and six months ended June 30, 2025.

Cha nge in fair value of royalties payable due to related parties

At each reporting period, the fair value of the royalties payable due to related parties is calculated using the discounted cash flow method.

six months ended June 30, 2026

, we did not record a change in fair value of royalties payable due to related parties as there was no triggering event.

As a result, the change in fair value of royalties payable due to related parties decreased approximately by $1.7

million and $2.8 million for the three and six months ended June 30, 2026

respectively, as compared to the corresponding period in the prior year.

Change in fair value of minority equity interest

The decrease of $2.3 million during the six months ended June 30, 2026 represents the change in fair value of our initial minority equity interest of 19.98% in FLYTE from $5.2 million as of February 6, 2026 to $2.9 million as of March 9, 2026, the date we acquired a controlling equity interest in FLYTE.

The fair value of the investment was determined based on the implied transaction value of FLYTE, which was derived from the purchase price paid to acquire the remaining 80.02% interest in FLYTE.

Change in fair value of deferred consideration

We remeasured the deferred consideration payable incurred for our controlling equity interest in FLYTE as of March 31, 2026, and recorded a gain of $2.9 million for the change in fair value of deferred consideration.

Change in fair value of royalties payable due to related parties

At each reporting period, the fair value of the royalties payable due to related parties is calculated using the discounted cash flow method.

During the three months ended March 31, 2026, we did not record a change in fair value of royalties payable due to related parties as there is no there was no triggering event.

As a result, the change in fair value of royalties payable due to related parties decreased approximately by $1.2 million for the three months ended March 31, 2026 as compared to the corresponding period in the prior year.

Other income (expense), net

The increase in other income (expense), net of $0.1 million for the three months ended March 31, 2026 as compared to the corresponding periods in the prior year, primarily relates to an increase in interest expense incurred in connection with the note payable issued by Cardionomix on May 5, 2025, the short-term note payables issued by KardioNav on July 11, 2025, and the assumed notes in relation to the FLYTE Acquisition.

We did not incur interest expense on these related party notes or the assumed notes for the three months ended March 31, 2025.

At each reporting period, the fair value of the deferred consideration payable incurred for our controlling equity interest in FLYTE is remeasured.

The increase of $0.3 million and $3.2 million in the change in fair value of deferred consideration for the three and six months ended June 30, 2026, respectively, as compared to the corresponding periods in the prior year, is due to the remeasurement and gain recorded in each respective period.

Loss on debt extinguishment

In June 22, 2026, we prepaid the outstanding balance of the convertible notes payable of $0.3 million by paying $0.4 million in cash.

As a result, we recognized a loss on debt extinguishment of $0.1 million for the three and six months ended June 30, 2026

Unrealized gains and losses, net

In June 2026, we invested $1.0 million in shares of common stock of Volato Group, Inc.

and flyExclusive, Inc., which had an estimated fair value of $1.5 million on the day of settlement.

We recognized gains of approximately $458 thousand on the day of settlement, which was subsequently partially offset by $0.1 million in unrealized and realized losses for the three and six months ended June 30, 2026

We did not have any similar investments in the three and six months ended June 30, 2025.

Other expenses, net

The increase in other income expense, net of $199 thousand and $290 thousand for the three and six months ended June 30, 2026 respectively, as compared to the corresponding periods in the prior year, primarily relates to an increase in interest expense of $139 thousand incurred in connection with the note payable issued by Cardionomix on May 5, 2025, the short-term note payables issued by KardioNav on July 11, 2025, and the assumed notes in relation to the FLYTE Acquisition as well as an increase in fair value of the deferred stock issuance payable of $46 thousand.

On June 28, 2026, we received advanced proceeds of $0.6 million from an investor in exchange for the future issuance of the Series C-3 Convertible Preferred Stock pursuant to the February and March 2026 SPAs.

The advanced proceeds were recorded as a deferred stock issuance payable that was subject to remeasurement as of June 30, 2026.

We did not incur interest expense on the above notes nor any changes in fair value of the deferred stock issuance payable for the three and six months ended June 30, 2026.

Income tax benefit

The decrease in income tax benefit of approximately $0.5 thousand for the three months ended March 31, 2026 , as compared to the corresponding periods in the prior year primarily relates to changes in the estimated amount of net operating losses that are not subject to limitations under Section 382 of the Internal Revenue Code.

The decrease in income tax benefit of appro ximately $0.6 million and $1.2 million for the three and six months ended June 30, 2026 , as compared to the corresponding periods in the prior year primarily relates to changes in the estimated amount of net operating losses that a re not subject to limitations under Section 382 of the Internal Revenue Code.

Liquidity and capital resources

As of March 31, 2026, we had cash and cash equivalents of $0.4 million and an accumulated deficit of $311.2 million.

For the three months ended March 31, 2026, net cash used in operating activities was $2.8 million.

As of June 30, 2026, we had cash and cash equivalents of $0.6 million and an accumulated deficit of $314.5 million.

For the six months ended June 30, 2026, net cash used in operating activities was $5.7 million.

We have incurred recurring net losses from operations and negative cash flows from operating activities since inception.

In February and March 2026, we raised gross proceeds of $3.5 in connection with the February 2026 and March 2026 Private Placements, respectively.

In February and March 2026, we raised gross proceeds of $3.8 million in connection with the February and March 2026 SPAs.

We also raised gross proceeds of $0.4 million through the induced exercise of certain existing warrants and conversion of the Series B Convertible Preferred Stock.

In addition, as a result of the FLYTE Acquisition, we paid $0.8 million in cash at closing to Creatd and issued a promissory note with a principal amount of $5.0 million and an interest rate of 0% per annum to Creatd.

In April 2026, we raised gross proceeds of $3.5 million in connection with the February 2026 and March 2026 under the Second Tranche.

In April 2026, we raised gross proceeds of $3.5 million in connection with the Second Tranche of the February 2026 and March 2026 SPAs.

In addition, in July 2026, we raised gross proceeds of $3.5 million in connection with the Third Tranche of the February and March 2026 SPAs and $2.8 million in connection with the Fourth Tranche of the March 2026 SPA.

As a result of the FLYTE Acquisition, we paid $0.8 million in cash at closing to Creatd and issued a promissory note with a principal amount of $5.0 million and an interest rate of 0% per annum to Creatd.

In addition, during the six-month period ended June 30, 2026, we also issued several Bridge Notes with an aggregate principal balance of approximately $2.8 million and interest rates of 12% per annum.

We settled $0.6 million of the Bridge Notes, such that $2.2 million of the Bridge Notes remain outstanding as of June 30, 2026.

We used some of the proceeds from the Bridge Notes to settle the convertible notes payable for $0.4 million and recorded a loss on debt extinguishment of $0.1 million for the three and six months ended June 30, 2026.

We further invested $1.0 million in shares of common stock of Volato Group, Inc.

and flyExclusive, Inc., which are publicly traded on the NYSE and had a value of $1.1 million as of June 30, 2026.

We expect operating losses and negative cash flows to continue for the foreseeable future unless our sales and gross profit increase sufficiently to cover our operating expenses.

We expect our current operating expenses to remain relatively fixed for the near term, absent entering into a transformative strategic transaction.

We believe that our current cash on hand of $1.1 million as of May 8, 2026 will not be sufficient to fund our current operations.

Further, we have outstanding short-term notes that will become due and payable within the next twelve months, including the March Bridge Note which come due in May 2026, the notes payable of variable interest entities due to related parties that will be due in July 2026, and Assumed Notes acquired in the Flyte Acquisition that are past due.

We believe that our cash on hand of $2.1 million as of August 11, 2026 will not be sufficient to fund our current operations.

Further, we have outstanding short-term notes that will become due and payable within the next twelve months, including the May Bridge Notes that are past due as of June 30, 2026 and the June Bridge Notes that are due in July 2026, the notes payable of variable interest entities due to related parties that are due in July 2026, the notes payable issued to Creatd with monthly installment payments due through December 2026, and Assumed Notes acquired in the Flyte Acquisition that are past due.

We estimate that we will require additional capital over the next twelve months to:

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Address general corporate purposes and working capital requirements.

As of March 31, 2026, we have debt obligations due within the next twelve months.

As noted above, as of June 30, 2026, we have debt obligations due within the next twelve months.

If we are unable to refinance or extend these obligations prior to maturity, we will be required to repay them from cash on hand or from proceeds of additional financing, which may not be available on acceptable terms or at all.

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However, there can be no assurance that any strategic transaction will be successfully completed, and any such transaction may not occur on terms favorable to us or our stockholders.

As a result of these factors, we have concluded that there is substantial doubt about the Company’s ability to continue as a going concern for a period of one year after the date the condensed consolidated financial statements for the quarter ended March 31, 2026 are issued.

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The 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 should we be unable to continue as a going concern and the outcome of this uncertainty.

Cash Flows for the Three Months Ended March 31, 2026 and 2025 (in thousands)

For the Three Months Ended March 31,

Cash Flows for the Six Months Ended June 30, 2026 and 2025 (in thousands)

For the Six Months Ended June 30,

Net cash provided by (used in):

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Net cash used in operating activities

During the three months ended March 31, 2026, net cash used in operating activities of $2.8 million primarily related to the net loss of $1.7 million and a decrease in operating assets and liabilities of $1.0 million.

During the six months ended June 30, 2026, net cash used in operating activities of $5.7 million primarily related to the net loss of $5.0 million, a decrease in change in fair value of deferred consideration of $3.2 million, an increase in change in fair value of minority equity interest of $2.3 million, and a decrease in operating assets and liabilities of $0.6 million.

This was partially offset by non-cash adjustments related to depreciation and amortization of $0.8 million.

During the three months ended March 31, 2025, net cash used in operating activities of $2.3 million primarily related to the net loss of $4.0 million and non-cash adjustments related to deferred income tax benefits of $0.7 million.

This was partially offset by an increase in operating assets and liabilities of $0.5 million and non-cash adjustments related to depreciation and amortization of $0.5 million and change in fair value of royalties payable due to related parties of $1.2 million.

During the six months ended June 30, 2025, net cash used in operating activities of $4.6 million primarily related to the net loss of $9.5 million.

This was partially offset by non-cash adjustments related change in fair value of royalties payable due to related parties of $2.8 million, acquired in-process research and development of $2.0 million, and depreciation and amortization of $1.0 million.

Net cash used in investing activities

During the three months ended March 31, 2026, net cash used in investing activities of $1.3 million primarily related to the FLYTE Acquisition of $1.2 million.

During the three months ended March 31, 2025, net cash used in investing activities of $10 thousand consisted of purchases of property and equipment.

During the six months ended June 30, 2026, net cash used in investing activities of $2.2 million primarily related to the FLYTE acquisition of $1.2 million and the purchase of $1.0 million of marketable securities from Volato.

During the six months ended June 30, 2025, net cash used in investing activities of $23 thousand consisted of purchases of property and equipment of $17 thousand, and purchases of acquired in-process research and development of $6 thousand.

Net cash provided by financing activities

During the three months ended March 31, 2026, net cash provided by financing activities of $4.5 million consisted of net proceeds from issuance of common stock and other equity-classified contracts of $3.7 million, proceeds from the exercise of warrants issuance of $0.4 million, and proceeds from notes payable of $0.8 million, partially offset by $0.5 million in payments on notes payable.

During the three months ended March 31, 2025, net cash provided by financing activities of $0.1 million primarily consisted of payments on notes payable.

During the six months ended June 30, 2026, net cash provided by financing activities of $8.4 million consisted of net proceeds from issuance of common stock and other equity-classified contracts of $6.9 million, proceeds from notes payable of $2.8 million, proceeds from deferred stock issuance payable of $0.6 million, and proceeds from the exercise of warrants of $0.4 million, partially offset by $2.4 million in payments on notes payable.

During the six months ended June 30, 2025, net cash provided by financing activities of $2.6 million primarily consisted of proceeds from issuance of common stock and other equity-classified contracts of $2.7 million, partially offset by $0.1 million in payments on notes payable.

Off-balance sheet arrangements

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We regularly evaluate estimates and assumptions related to asset acquisitions, including the provisions for legal contingencies, income taxes, deferred income tax asset valuation allowances, royalties payable due to related parties, share based compensation, evaluation of impairment of long-lived assets, valuation of long-lived assets and their associated estimated useful lives, and revenues.

In addition, we regularly evaluate estimates and assumptions related to business combinations, including the determination of the purchase price and related allocations to the fair value of assets acquired and liabilities assumed, provisions for legal contingencies, income taxes, deferred income tax asset valuation allowances, valuation of warranties liabilities, royalties payable due to related parties, share based compensation, evaluation of impairment of long-lived assets and goodwill, valuation of long-lived assets and their associated estimated useful lives, and revenues.

Our estimates are based on current facts, historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.

We believe the following discussion addresses our most critical accounting policies, which are those that are most important to our financial condition and results of operations and require our most difficult, subjective and complex judgments.

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All other inputs for the RADR and our WACC are the same.

The RADR was 19.5% as of March 31, 2026 and December 31, 2025.

The RADR was 19.5% as of Jun e 30, 2026 and December 31, 2025.

Convertible notes payable

5 unchanged sentences

Aside from the probability of the three potential settlement outcomes, the fair value measurement incorporates several significant unobservable inputs, including the recovery rate, implied equity volatility, expected term assumptions, simulated conversion price, and credit-risk adjusted discount rate.

The convertible notes payable were fully settled and paid off as of June 30, 2026.

Goodwill and Other Intangible Assets

10 unchanged sentences

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