Basis of Presentation

The accompanying interim condensed consolidated financial statements of the Company are unaudited. These interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") and the applicable rules and regulations of the United States ("U.S.") Securities and Exchange Commission ("SEC") for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The December 31, 2025, condensed consolidated balance sheet was derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

The accompanying interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company's consolidated financial position, results of operations, and cash flows for the interim periods. All intercompany transactions and balances have been eliminated in consolidation. The interim results for the three and six months ended June 30, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026, or for any other future annual or interim period.

The information included in this Quarterly Report on Form 10-Q (the “Report”) should be read in conjunction with the Consolidated Financial Statements and related notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on April 16, 2026 (the “2025 Annual Report”).

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, as well as related disclosure of contingent assets and liabilities. Actual results could differ from the Company’s estimates. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or operating results will be materially affected. The Company bases its estimates on current and past experience, to the extent that historical experience is predictive of future performance and other assumptions that the Company believes are reasonable under the circumstances. The Company evaluates these estimates on an ongoing basis.

Estimates, judgments, and assumptions in these condensed consolidated financial statements include, but are not limited to, those related to the capitalization of platform development costs and associated useful lives, acquired intangible assets and associated useful lives, goodwill, valuation allowances for deferred tax assets, valuation of stock options and warrants, credit losses, and assumptions used to calculate certain contingent liabilities.

Reclassification

Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported financial position, results of operations or cash flows of the Company.

Revenue Recognition

In accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”), revenues are recognized when control of the promised goods or services are transferred to the customer in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.

Platform Operations

The Company generates revenue from digital advertising, sponsorship and other service arrangements, partner and publisher arrangements, syndication arrangements, and digital subscriptions. The Company evaluates each significant revenue stream and contractual arrangement to determine whether it is acting as principal or agent. When the Company controls the promised good or service before it is transferred to the customer, revenue is recognized on a gross basis. When the Company’s role is to arrange for another party to provide the good or service, revenue is recognized on a net basis.

Because the Company enters into multiple types of revenue arrangements, its principal versus agent conclusion is evaluated separately for each significant revenue stream and contractual arrangement. In making this determination, the Company considers the indicators of control under ASC 606, including primary responsibility for fulfillment, inventory risk, and discretion in establishing price. Accordingly, some arrangements are recognized on a gross basis and others on a net basis, depending on whether the Company controls the promised good or service before it is transferred to the customer. Significant costs of revenue are presented as a separate line item on the statements of operations.

Fintech Operations

For revenue generated from arranging for the delivery of payment processing services to merchants by a payment processor, the Company typically charges specified fees on a per transaction basis, a percentage share of the transaction amount, or a combination of both. Because the terms of the customer arrangements governing these revenue transactions are substantially the same across customers, revenue recognition is assessed for these arrangements as one group.

The Company satisfies the performance obligation related to these arrangements at a point in time, upon the authorization of the transaction in the payment processor’s platform. The Company has determined that it is the principal in these arrangements on the basis of the indicators of control that are relevant to the transactions, which primarily include inventory risk and discretion in establishing price. As such, revenue from these transactions is recognized on a gross basis.

Disaggregation of Revenue

The following table provides revenue disaggregated by category and timing of recognition (in thousands):

Cash and Cash Equivalents, and Restricted Cash

The Company maintains cash and cash equivalents at banks where amounts on deposit may exceed the Federal Deposit Insurance Corporation limit of $0.25 million during the year. Cash and cash equivalents represent cash and highly liquid investments with an original contractual maturity at the date of purchase of three months or less. As of June 30, 2026, and December 31, 2025, cash and cash equivalents of $0.49 million and $0.53 million, respectively, consisted primarily of checking and money market balances. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk regarding its cash and cash equivalents.

Restricted cash primarily consists of reserves required by third-party acquiring bank partners in connection with services they provided to our merchant customers.

USDC

USDC is a stablecoin redeemable on a one-to-one basis for U.S. dollars and is accounted for as a financial instrument in the Company’s balance sheets. Circle Internet Financial, LLC (“Circle”) and its affiliate, Circle Internet Financial Europe SAS is the issuer of USDC, a crypto-asset stablecoin with a conversion rate of 1:1 pegged to the U.S. Dollar. The Company records USDC at cost, which approximates fair value, and subsequently measures it at fair value each reporting period.

Changes in the fair value of USDC, if any, are recognized in other income (expense), net in the unaudited condensed consolidated statements of operations. From time to time, the Company utilizes USDC to pay vendors and accepts USDC as payment from customers or investors in lieu of cash and cash equivalents.

There are volatility risks related to stablecoins, which are designed to have a relatively stable price relative to an underlying physical asset, most commonly a fiat currency, such as U.S. dollars, or an exchange-traded commodity. The stability of a stablecoin results from the underlying assets backing the stablecoin that are held by the stablecoin issuer in reserve accounts, among other factors, such as the ability of a holder to redeem the stablecoin from its issuer at par. The issuers of certain stablecoins currently retain broad discretion to determine the composition and amounts of assets held in the issuers’ accounts backing those stablecoins, and to substitute assets other than the fiat currency that is initially deposited. The composition of backing assets varies considerably across popular stablecoins, with some stablecoins backed entirely by off-chain assets including cash or short-term, highly liquid assets, and others backed by assets significantly less liquid than cash or cash equivalents. In the case of USDC, Circle reported that, as of December 31, 2025, underlying reserves were held in cash, short-duration U.S. Treasuries, and overnight U.S. Treasury repurchase agreements within segregated accounts for the benefit of USDC holders.

Crypto Assets

The Company holds crypto assets, including BTC, for investment and operational purposes. Crypto assets are digital assets recorded on blockchain-based distributed ledger networks and traded on digital asset exchanges. The Company measures its crypto assets at fair value at each reporting date based on quoted market prices in active markets. Changes in the fair value of crypto assets are recognized in earnings in the period in which they occur. The Company determines the cost basis of its BTC using the first-in, first-out (FIFO) method. Realized gains and losses on dispositions are calculated based on this cost-based methodology.

As of June 30, 2026, the Company had the following crypto assets (in thousands):

As of December 31, 2025, the Company had the following crypto assets:

Gains and losses related to the Company’s crypto assets primarily reflect the remeasurement of these assets to fair value during the reporting period. The fair value of BTC is determined using quoted prices in active markets and is classified within Level 1 of the fair value hierarchy.

Accounts Receivable and Allowance for Credit Losses

For our Platform Operations, accounts receivable primarily consist of amounts due from advertising partners. Accounts receivable is recorded when the right to consideration becomes unconditional and are generally collected within the contractual payment terms. The Company generally receives payments from advertising and non-advertising service customers at the time of contract sign-up, and in advance of providing services.

For our Fintech Operations, accounts receivable primarily consist of amounts due from our payment processing partners for our payment processing services and amounts due from merchants in connection with our sale of payment processing terminals and related accessories. Accounts receivable are recorded at invoiced amounts, net of an allowance for credit losses, and do not bear interest.

For all receivables, the Company performs an ongoing evaluation of collectability, customer creditworthiness, historical levels of credit losses, and future expectations. The Company records an allowance for credit losses at the amount that it believes will approximate anticipated losses. Accounts receivable are written-off when deemed uncollectible and collection of the receivable is no longer being actively pursued.

In determining the amount of an allowance, the Company considers its historical level of credit losses. The Company also makes judgments about the creditworthiness of significant customers based on ongoing credit evaluations, and the Company assesses current economic trends that might impact the level of credit losses in the future. Historically, the Company has had no significant write-offs of accounts receivable. As of June 30, 2026, and December 31, 2025, the Company’s allowance for credit losses was immaterial. Accounts receivable as of June 30, 2026, and December 31, 2025 were $1.09 million and $0.14 million, respectively.

Prepayments and Other Current Assets

Prepayments and other current assets primarily consist of prepaid insurance, inventory, and other vendor prepayments.

Research and Development Costs

Research and development costs primarily consist of salaries and benefits for research and development personnel and outsourced contracted services, as well as associated supplies and materials. These costs are expensed as incurred.

Platform Development 

The Company capitalizes the costs related to outsourced consultants who are directly associated with and who devote time to creating and enhancing internally developed software for the Company’s platforms. The Company capitalizes platform development costs for internal use when planning and design efforts are successfully completed, and development is ready to commence. The Company places capitalized platform development assets into service and commences amortization when the applicable project or asset is substantially complete and ready for its intended use. Once placed into service, the Company capitalizes the qualifying costs of specified upgrades or enhancements to capitalized platform development assets when the upgrade or enhancement will result in new or additional functionality. Costs associated with platform maintenance and training are expensed as incurred.

Platform development costs are amortized on a straight-line basis over three years, which is the estimated useful life of the related asset and is recorded as an expense on the statements of operations. The amortization period may be accelerated if the useful life of the related asset is shortened.

As of June 30, 2026, and December 31, 2025, the Company had capitalized platform development costs of $0.67 million and $0.62 million, respectively, as recorded within acquired and other intangible assets, net in the Company’s interim condensed consolidated balance sheets.

Intangible Assets 

Definite-lived intangible assets primarily consist of acquired and in-house developed technology, and web domains, and are amortized using the straight-line method over the estimated economic life of the assets, in accordance with ASC 350-30, Intangibles—Goodwill and Other—General Intangibles Other than Goodwill (“ASC 350-30”). In accordance with ASC 360-10, Property, plant, and equipment – Overall (“ASC 360-10”), intangible assets amortized under ASC 350-30 must be tested for recoverability whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The amortization of these assets is provided using the straight-line method over the following estimated useful lives:

Leases

The Company leases office space under non-cancellable operating leases with various expiration dates. The Company determines whether an arrangement is a lease for accounting purposes at contract inception. Operating leases are recorded as right-of-use (“ROU”) assets, which are included within noncurrent assets, and lease liabilities, which are included within current and noncurrent liabilities on our condensed consolidated balance sheets.

As of the date of this Report, the Company is past due on rent payments under its office lease for its San Diego facility. The Company is currently in negotiations with the landlord to restructure the lease. The Company will continue to evaluate all options, including modifications or termination. However, there can be no assurance that the matter will be resolved on favorable terms.

Operating lease ROU assets and operating lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. ROU assets are based on the lease liability and are increased by prepaid lease payments and decreased by lease incentives received, where applicable. The interest rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate because the interest rate implicit in the Company’s leases is not readily determinable. The Company’s incremental borrowing rate is estimated to approximate the interest rate that the Company would pay to borrow on a collateralized basis with similar terms and payments as the lease, and in economic environments where the leased asset is located. Certain leases require the Company to pay taxes, maintenance, and other operating expenses associated with the leased asset. Such amounts are not included in the measurement of the ROU assets and lease liabilities. These lease costs are recognized as lease expenses when incurred.

The Company evaluates ROU assets related to leases for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount of those assets may not be recoverable. When a decision has been made to exit a lease prior to the contractual term or to sublease that space, the Company evaluates the asset for impairment and recognizes the associated impact to the ROU asset and related expense, if applicable. The evaluation is performed at the asset group level initially and when appropriate, at the lowest level of identifiable cash flows, which is at the individual lease level. Undiscounted cash flows expected to be generated by the related ROU asset are estimated over the ROU asset’s useful life. If the evaluation indicates that the carrying amount of the ROU asset may not be recoverable, any potential impairment is measured based upon the fair value of the related ROU asset or asset group as determined by appropriate valuation techniques. During the quarter ended June 30, 2026, the Company did not identify any impairment indicators for its ROU assets.

Fair Value of Financial Instruments

The authoritative guidance with respect to fair value established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels and requires that assets and liabilities carried at fair value be classified and disclosed in one of three categories, as presented below. Disclosure as to transfers in and out of Levels 1 and 2, and activity in Level 3 fair value measurements, is also required.

Level 1. Observable inputs such as quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active-exchange traded securities and exchange-based derivatives.

Level 2. Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities.

Level 3. Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions. Financial assets and liabilities utilizing Level 3 inputs include infrequently traded non-exchange-based derivatives and commingled investment funds and are measured using present value pricing models.

The Company determines the level in the fair value hierarchy within which each fair value measurement falls in its entirety, based on the lowest level input that is significant to the fair value measurement in its entirety. In determining the appropriate levels, the Company performs an analysis of the assets and liabilities at each reporting period end.

The carrying amount of the Company’s financial instruments comprised of cash and cash equivalents, restricted cash, accounts receivable, notes receivable, accounts payable, USDC, and accrued expenses approximate fair value because of the short-term maturity of these instruments. USDC is contractually redeemable for fiat currency on demand. As any changes in the fair value are reported in earnings as they occur, the derecognition of USDC does not necessarily give rise to a gain or loss. The Company also holds BTC, a digital asset that is measured at fair value at each reporting period based on quoted prices in active markets, with changes in fair value recognized in earnings. Additionally, the instruments associated with the March 2026 Convertible Note and March 2026 Warrants (“March 2026 Convertible Note and Warrants”), further discussed below, are classified as level 2 on the fair value hierarchy as the valuation inputs include the price of similar, but not identical, instruments.

March 2026 Convertible Note and Warrants

On March 6, 2026, the Company completed a private financing and raised $2.0 million. As part of this financing, the Company issued a non-interest-bearing convertible note and warrants, referred to as the “March 2026 Convertible Note” and the “March 2026 Warrants,” respectively. Per the terms of the agreement, the March 2026 Convertible Note converted into shares of the post-merger Company upon the close of the merger with Ryvyl Inc. The number of shares received upon the conversion of the March 2026 Convertible Note and at the close of the merger was calculated as approximately one percent of the fully diluted number of shares outstanding as of the merger date. Refer to Note 10, Subsequent Events, for more information on the merger.

The March 2026 Convertible Note had a maturity date of June 1, 2026. At maturity, if the merger had not yet occurred, the March 2026 Convertible Note would have converted into class B shares of the Company at an exercise price of $2.55 per share. There were no cash payments due on the March 2026 Convertible Note. The March 2026 Warrants were exercisable into shares of the post-merger Company for a one-year period beginning on the close date of the merger. The exercise price and number of underlying shares was determined upon the closing of the merger and was based on the number of shares received by the investor upon conversion of the March 2026 Convertible Note.

Upon conversion of the March 2026 Convertible Note and exercise of the March 2026 Warrants, the investor received restricted shares which it cannot sell or pledge for a period of time. These restrictions lapse and the shares become freely transferrable in equivalent tranches of twenty-five percent after 12 months, 15 months, 18 months, and 21 months following the close of the merger. As part of this issuance, the Company promised to provide the investor with additional shares if the Company’s market capitalization falls below certain thresholds as of the date the shares become freely transferrable. The issuance of additional shares, referred to as a “Price Protection Feature” is capped at $15.0 million.

The Company elected to account for the March 2026 Convertible Note under the fair value option whereby the Company recognized the March 2026 Convertible Note at fair value with changes in fair value recognized in earnings except for changes in fair value due to the instrument specific credit risk, which is recognized in other comprehensive income. The March 2026 Warrants were accounted for at fair value with changes in fair value recognized in earnings as it met the definition of a derivative. At inception, the March 2026 Warrants did not qualify for a scope exception to derivative accounting since the March 2026 Warrants were exercisable into an unknown number of shares. The Price Protection Feature was also accounted for at fair value with changes in fair value recognized in earnings as it represented an obligation to issue additional shares when the value of the Company’s shares decreases.

On May 12, 2026, when the merger between the Company and Ryvyl Inc. closed, the March 2026 Convertible Note converted into 179,732 shares of common stock of the Company. Prior to the conversion, the March 2026 Convertible Note was marked to its fair value of $1.40 million resulting in a gain of less than $0.01 million, recognized in other income, during the quarter ending June 30, 2026. During the quarter ending June 30, 2026, the Company did not recognize any changes in fair value in the unaudited interim condensed statement of operations or other comprehensive income for any changes in instrument specific credit risk for the March 2026 Convertible Note.

Additionally, upon close of the merger, the number of shares underlying the March 2026 Warrants became fixed at 35,947 shares. The number of shares was determined by the (a) the product of (i) March 2026 Convertible Note and (ii) twenty percent divided by the (b) the March 2026 Convertible Note’s conversion price of $11.13 per share. Due to the number of shares underlying the March 2026 Warrants becoming fixed, the March 2026 Warrants were deemed to no longer meet liability classification as the 2026 Warrants became indexed to the Company’s own stock and met the criteria for equity classification. Prior to reclassifying the March 2026 Warrants to additional paid-in capital within equity, the March 2026 Warrants were marked to fair value of $0.1 million, resulting in a gain of $0.03 million, recognized in other income, during the quarter ending June 30, 2026.

The Price Protection Feature was marked to a fair value of $0.9 million as of June 30, 2026, resulting in a loss of $0.4 million, recognized in other income during the quarter ending June 30, 2026.

Stock Based Compensation

Stock-based compensation expense relates to restricted stock units (“RSUs”) and stock options granted to employees, non-employee directors, and certain Platform Operations partners under the Company’s equity incentive plans, which are measured based on the grant-date fair value. The fair value of RSUs is determined by the closing price of the Company’s common stock on the grant date. The fair value of stock options is estimated on the date of grant using the Black-Scholes-Merton option valuation model. Generally, stock-based compensation expense is recorded on a straight-line basis over the requisite service period. The Company accounts for forfeitures as they occur.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported amounts in the interim condensed consolidated financial statements, net of operating loss carry forwards and credits, by applying enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is not more likely than not that some portion of or all the deferred tax assets will not be realized. Judgment is required in determining and evaluating income tax provisions and valuation allowances for deferred income tax assets. We recognize an income tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by tax authorities, based on the technical merits of the position.

Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. As of June 30, 2026, and December 31, 2025, the Company has a full valuation allowance on its deferred tax assets.

Net Loss Per Share

The Company’s basic net loss per share is computed by dividing the loss available to common stockholders by the weighted average number of common stock outstanding during the period without consideration of potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss available to common stockholders by the weighted-average number of shares of common stock outstanding, adjusted for the dilutive effect of all potential shares of common stock. In periods in which the Company reports a net loss, all potential common shares are excluded from the calculation of diluted loss per share, as their effect would be anti-dilutive. As such, for the quarters ended June 30, 2026, and 2025, the Company’s diluted net loss per share was the same as the basic net loss per share, as there were no common stock equivalents outstanding that would have a dilutive effect.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In July 2025, the FASB issued ASU No. 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). The amendments allow an entity to apply a practical expedient when estimating expected credit losses, which assumes that the current conditions as of the balance sheet date will not change for the remaining life of the accounts receivable and contract assets arising from contracts with customers. The amendments are effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those fiscal years, with early adoption permitted. If the practical expedient is elected, the amendments should be applied prospectively. The Company adopted the amendments effective for the current fiscal year and the adoption did not have a material impact on the Company’s financial statements and related disclosures.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses ("ASU 2024-03"), and in January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date ("ASU 2025-01"). The amendments are intended to enhance disclosures regarding an entity’s costs and expenses by requiring additional disaggregated information disclosures about certain income statement expense line items. The amendments, as clarified by ASU 2025-01, are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the effect of adopting the new disclosure requirements.

In September 2025, the FASB issued ASU No. 2025-06, Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). The amendments are intended to clarify and modernize the accounting for costs related to internal-use software. The guidance removes all references to project stages and clarifies the threshold entities apply to begin capitalizing costs. The amendments are effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. The Company does not expect the adoption of ASU 2025-06 to have a material impact on the Company’s financial statements.