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The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. As discussed in the section titled "Special Note Regarding Forward-Looking Statements," the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors, risks and uncertainties that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the sections titled "Risk Factors" included under Part II, Item 1A below and"Risk Factors" included in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Overview
Smartbird, Inc. ("Smartbird" or the "Company") delivers dedicated AI infrastructure, giving organizations the performance, control, and security of a private AI cluster without requiring them to build, operate, or maintain the underlying infrastructure (the "AI Infrastructure Business"). Smartbird manages the entire lifecycle, from procurement and deployment to operations and hardware refreshes, so customers can focus on AI workloads, not AI infrastructure. The Company addresses the needs of a growing segment of customers looking for more control over their own AI infrastructure, including enterprises in healthcare, pharma, financial services and public-sector agencies.
The Company, doing business as Allbirds, Inc., historically operated a lifestyle footwear and apparel brand (the "historical footwear business"). During the second quarter, the Company sold certain assets and liabilities used to operate the historical footwear business (the "Asset Sale") to a third party, and as of June 30, 2026, the Company no longer operated the historical footwear business. Current period and historical operating results related to the historical footwear business are presented as discontinued operations.
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Components of Results of Operations
Net Revenue
During the six months ended June 30, 2026, our revenue was generated through the lease of AI Infrastructure. Revenue, under our current sales-type lease, is recognized when we satisfy our performance obligation by transferring control of the assets to the customer.
In future periods, we expect net revenue to be primarily generated from selling and leasing access to our AI infrastructure platforms, by providing infrastructure services and managed services.
Our business model focuses on delivering high-performance, dedicated AI infrastructure platforms tailored to the specific technical and compliance requirements of customers that require high performance and reliable infrastructure to run specialized AI workloads securely, including enterprises in sectors such as healthcare, pharma, and defense.
Our infrastructure platforms are designed as comprehensive environments that integrate compute, storage, and networking to support the full AI lifecycle, from training and fine-tuning to production-scale inference. Customers have the flexibility to customize their deployed environments to maximize performance, cost, and efficiency. In addition to the infrastructure services, managed services and software services are available to customers to help them manage and monitor their infrastructure environments.
Unlike cloud providers that build ahead of demand, our strategy is demand-led; infrastructure deployments are tied to customer orders, which minimizes capital expenditure risk and eliminates speculative infrastructure build-out.
We do not intend to offer on-demand "pay-as-you-go" pricing. Instead, customers rent or lease the entire dedicated cluster, providing them with predictable economics, and control over their AI workloads. We expect our customers to purchase our services primarily through committed contracts, ranging from several months to 5 years, where the customer is provided with reserved capacity access over the contract term at a fixed price regardless of utilization. Revenue will be recognized as services are provided under these dedicated capacity contracts.
Operating costs and expenses
Costs of Net Revenue
As of June 30, 2026, costs of net revenue consisted of the cost of AI Infrastructure leased in the period. In future periods, we expect costs of net revenue to primarily consist of expenses associated with building dedicated AI Infrastructure platforms and providing related services. These costs include the procurement and hosting of high-performance computing, networking, and storage hardware and the leasing of specialized data center footprint necessary to host our infrastructure platforms. Additionally, cost of net revenues will include personnel-related expenses for our engineering and operations teams who are responsible for the build out and ongoing management, security, and optimization of these environments for our customers.
Selling, General, and Administrative Expense
Selling, general, and administrative expense ("SG&A expense") consists of personnel and related costs including salaries, benefits, bonuses, and stock-based compensation, third-party professional fees, information technology, advertising and marketing expenses, software costs, legal fees, and other administrative costs associated with operating the business.
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Interest Income
As of June 30, 2026, interest income is generated based on a customer lease of AI Infrastructure.
Interest Expense
Interest expense consists of contractual interest costs associated with our outstanding Convertible Notes.
Loss on Fair Market Value of Debt
Loss on fair market value of debt consists of the fair valuation adjustment associated with our outstanding Convertible Notes.
Other Expense, Net
Other expense, net, primarily consists of costs related to the debt discounts and issuance costs associated with our outstanding Convertible Notes.
Income Tax Benefit (Provision)
Our provision for income taxes consists of U.S. federal and state income taxes and income taxes in certain foreign jurisdictions in which we previously conducted business. We record deferred tax assets and liabilities based on differences between the book and tax bases of assets and liabilities. The deferred tax assets and liabilities are calculated by applying enacted tax rates and laws to taxable years in which such differences are expected to reverse. Because we have a recent history of pre-tax book losses and are expected to be in a pre-tax book loss position in the near term, a valuation allowance was maintained against the deferred tax assets in all jurisdictions other than in the United Kingdom as of June 30, 2026.
Loss from Discontinued Operations
Loss from discontinued operations consists of the net financial results associated with the historical footwear business, which was sold and ceased operations during the quarter ended June 30, 2026 and represented a strategic shift that had a material impact on operating results. Prior period amounts have been adjusted from those reported to reflect discontinued operations.
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Results of Operations
The following tables set forth our results of operations for the periods presented in dollars and as a percentage of net revenue:
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
(in thousands) (in thousands)
Statements of Operations Data:
Net revenue $ 2,758 $ — $ 2,758 $ —
Costs and expenses:
Costs of net revenue 2,758 — 2,758 —
Selling, general and administrative expenses1 10,695 5,060 16,707 12,458
Total operating expense 13,453 5,060 19,465 12,458
Loss from operations (10,695 ) (5,060 ) (16,707 ) (12,458 )
Interest income 79 — 79 —
Interest expense (1,458 ) — (1,458 ) —
Loss on fair market value of debt (229 ) — (229 ) —
Other expense, net (503 ) — (503 ) —
Loss before income tax benefit (provision) (12,806 ) (5,060 ) (18,818 ) (12,458 )
Income tax benefit (provision) 28 (81 ) (51 ) (147 )
Net loss from continuing operations (12,778 ) (5,141 ) (18,869 ) (12,605 )
Discontinued operations (note 3)
Loss from discontinued operations before gain from disposal, net of tax2 (25,143 ) (10,360 ) (39,776 ) (24,771 )
Gain from disposal of discontinued operations 21,552 — 21,552 —
Loss from discontinued operations, net of tax (3,591 ) (10,360 ) (18,224 ) (24,771 )
Net loss $ (16,369 ) $ (15,501 ) $ (37,093 ) $ (37,376 )
________________
(1) Includes stock-based compensation expense of approximately $2.1 million and $2.4 million for the three and six months ended June 30, 2026, respectively, and approximately $0.5 million and $0.8 million for the same periods in 2025.
(2) Includes depreciation and amortization expense of $8.8 million and $9.8 million for the three and six months ended June 30, 2026, respectively, and $1.9 million and $3.8 million for the same periods in 2025. Includes stock-based compensation expense of approximately $1.1 million and $2.0 million for the three and six months ended June 30, 2026, respectively, and approximately $1.5 million and $3.6 million for the same periods in 2025.
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Comparison of the Three Months Ended June 30, 2026 and 2025
Net Revenue
Three Months Ended June 30,
2026 2025 $ Change % Change
(dollars in thousands)
Net revenue $ 2,758 $ — $ 2,758 NM
Net revenue increased by $2.8 million for the three months ended June 30, 2026 as compared to the same period in 2025, as the Company did not operate the AI Infrastructure Business, our ongoing operations, in the prior period.
Operating Costs and Expenses
Three Months Ended June 30,
2026 2025 $ Change % Change
(dollars in thousands)
Costs of net revenue $ 2,758 $ — $ 2,758 NM
Selling, general, and administrative expenses 10,695 5,060 5,635 111.4 %
Total operating expense $ 13,453 $ 5,060 $ 8,393 165.9 %
Costs of net revenue
Costs of net revenue increased by $2.8 million for the three months ended June 30, 2026 as compared to the same period in 2025, as the Company did not operate the AI Infrastructure Business in the prior period.
Selling, General, and Administrative Expense
Selling, general, and administrative expense increased by $5.6 million, or 111%, for the three months ended June 30, 2026 as compared to the same period in 2025. The increase was primarily driven by increased legal and other corporate outside services, increases in stock-based compensation expense, and increases in other operating expenses associated with the AI Infrastructure Business, our ongoing operations, which the Company did not operate in the prior period.
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Interest Income
Three Months Ended June 30,
2026 2025 $ Change % Change
(dollars in thousands)
Interest income $ 79 $ — $ 79 NM
Interest income increased by $0.4 million for the three months ended June 30, 2026 as compared to the same period in 2025, as the Company did not operate the AI Infrastructure Business, our ongoing operations, in the prior period.
Interest Expense
Three Months Ended June 30,
2026 2025 $ Change % Change
(dollars in thousands)
Interest expense $ 1,458 $ — $ 1,458 NM
Interest expense increased by $1.5 million for the three months ended June 30, 2026 as compared to the same period in 2025. The change was due to interest expense recorded on the Convertible Notes issued during the current period.
Loss on Fair Market Value of Debt
Three Months Ended June 30,
2026 2025 $ Change % Change
(dollars in thousands)
Loss on fair market value of convertible debt $ 229 $ — $ 229 NM
Loss on fair market value of debt increased by $0.2 million for the three months ended June 30, 2026 as compared to the same period in 2025. The change was due to the fair market value adjustment on our Convertible Notes.
Other Expense, Net
Three Months Ended June 30,
2026 2025 $ Change % Change
(dollars in thousands)
Other expense, net $ 503 $ — $ 503 NM
Other expense increased by $0.5 million for the three months ended June 30, 2026 as compared to the same period in 2025. The change was due to the issuance costs associated with our Convertible Notes.
Income Tax Benefit (Provision)
Three Months Ended June 30,
2026 2025 $ Change % Change
(dollars in thousands)
Income tax benefit (provision) $ 28 $ (81 ) $ 109 (134.6 )%
Income tax provision changed to a benefit of $28 thousand from an expense of $81 thousand for the three months ended June 30, 2026 as compared to the same period in 2025, primarily due to a change in the mix of taxable income in foreign jurisdictions that resulted in differences in the effective tax rates for the comparative period.
Discontinued Operations
Three Months Ended June 30,
2026 2025 $ Change % Change
(dollars in thousands)
Loss from discontinued operations before gain from disposal, net of tax $ (25,143 ) $ (10,360 ) $ (14,783 ) 142.7 %
Gain from disposal of discontinued operations 21,552 — 21,552 NM
Loss from discontinued operations, net of tax $ (3,591 ) $ (10,360 ) $ 6,769 (65.3 )%
Loss from discontinued operations before gain from disposal, net of tax increased by $14.7 million, or 142.7%, for the three months ended June 30, 2026 as compared to the same period in 2025, related to the operation of the historical footwear business during the quarter, primarily due to lower gross profit, driven by fewer days of sales and a reduction in marketing and promotional activities, and a loss on debt extinguishment.
Gain from disposal of discontinued operations increased by $21.6 million for the three months ended June 30, 2026 as compared to the same period in 2025, related to the gain on the Asset Sale completed during the quarter.
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Comparison of the Six Months Ended June 30, 2026 and 2025
Net Revenue
Six Months Ended June 30,
2026 2025 $ Change % Change
(dollars in thousands)
Net revenue $ 2,758 $ — $ 2,758 NM
Net revenue increased by $2.8 million for the six months ended June 30, 2026 as compared to the same period in 2025, as the Company did not operate the AI Infrastructure Business, our ongoing operations, in the prior period.
Operating Costs and Expenses
Six Months Ended June 30,
2026 2025 $ Change % Change
(dollars in thousands)
Costs of net revenue $ 2,758 $ — $ 2,758 NM
Selling, general, and administrative expenses 16,707 12,458 4,249 34.1 %
Total operating expense $ 19,465 $ 12,458 $ 7,007 56.2 %
Costs of net revenue
Costs of net revenue increased by $2.8 million for the six months ended June 30, 2026 as compared to the same period in 2025, as the Company did not operate the AI Infrastructure Business, our ongoing operations, in the prior period.
Selling, General, and Administrative Expense
Selling, general, and administrative expense increased by $4.2 million, or 34.1%, for the six months ended June 30, 2026 as compared to the same period in 2025. The increase was primarily driven by increased legal and other corporate outside services, increases in stock-based compensation expense, and increases in other operating expenses associated with the AI Infrastructure Business, our ongoing operations, which the Company did not operate in the prior period.
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Interest Income
Six Months Ended June 30,
2026 2025 $ Change % Change
(dollars in thousands)
Interest income $ 79 $ — $ 79 NM
Interest income increased by $0.1 million for the six months ended June 30, 2026 as compared to the same period in 2025, as the Company did not operate the AI Infrastructure Business, our ongoing operations, in the prior period.
Interest Expense
Six Months Ended June 30,
2026 2025 $ Change % Change
(dollars in thousands)
Interest expense $ 1,458 $ — $ 1,458 NM
Interest expense increased by $1.5 million for the six months ended June 30, 2026 as compared to the same period in 2025. The change was due to interest expense recorded on our Convertible Notes issued during the current period.
Loss on Fair Market Value of Debt
Three Months Ended June 30,
2026 2025 $ Change % Change
(dollars in thousands)
Loss on fair market value of convertible debt $ 229 $ — $ 229 NM
Loss on fair market value of debt increased by $0.2 million for the six months ended June 30, 2026 as compared to the same period in 2025. The change was due to the fair market value adjustment on our Convertible Notes.
Other Expense, Net
Six Months Ended June 30,
2026 2025 $ Change % Change
(dollars in thousands)
Other expense, net $ 503 $ — $ 503 NM
Other expense increased by $0.5 million for the six months ended June 30, 2026 as compared to the same period in 2025. The change was due to the issuance costs associated with our Convertible Notes.
Income Tax Benefit (Provision)
Six Months Ended June 30,
2026 2025 $ Change % Change
(dollars in thousands)
Income tax provision $ (51 ) $ (147 ) $ 96 (65.3 )%
Income tax provision decreased by $0.1 million, or 65.3%, for the six months ended June 30, 2026 as compared to the same period in 2025, primarily due to a change in the mix of taxable income in foreign jurisdictions that resulted in differences in the effective tax rates for the comparative period.
Discontinued Operations
Six Months Ended June 30,
2026 2025 $ Change % Change
(dollars in thousands)
Loss from discontinued operations before gain from disposal, net of tax $ (39,776 ) $ (24,771 ) $ (15,005 ) 60.6 %
Gain from disposal of discontinued operations 21,552 — 21,552 NM
Loss from discontinued operations, net of tax $ (18,224 ) $ (24,771 ) $ 6,547 (26.4 )%
Loss from discontinued operations before gain from disposal, net of tax increased by $15.0 million, or 60.6%, for the six months ended June 30, 2026 as compared to the same period in 2025, related to the operation of the historical footwear business during the quarter, primarily due to lower gross profit, driven by fewer days of sales and a reduction in marketing and promotional activities, and a loss on debt extinguishment.
Gain from disposal of discontinued operations increased by $21.6 million for the six months ended June 30, 2026 as compared to the same period in 2025, related to the gain on the Asset Sale completed during the quarter.
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Non-GAAP Financial Measures
This Quarterly Report on Form 10-Q and accompanying financial tables includes references to adjusted EBITDA, which is a non-GAAP financial measure. We believe that this non-GAAP financial measure, when reviewed in conjunction with GAAP financial measures, and not in isolation or as substitutes for analysis of our results of operations under GAAP, is useful to investors as it is a widely used measure of performance, and the adjustments we make to this non-GAAP financial measure provides investors further insight into our profitability and additional perspectives in comparing our performance to other companies and in comparing our performance over time on a consistent basis. This non-GAAP financial measure should not be considered as alternatives to net income or loss as calculated and presented in accordance with GAAP.
Adjusted EBITDA is defined as net income or loss before stock-based compensation expense, depreciation and amortization expense, net income or loss from discontinued operations, interest income or expense, and income tax provision or benefit.
There are a number of limitations related to the use of these non-GAAP financial measures. Some of these limitations are:
• adjusted EBITDA does not reflect stock-based compensation expense, and therefore does not include all of our compensation costs;
• adjusted EBITDA does not reflect depreciation and amortization expense and, although these are non-cash expenses, the assets being depreciated may have to be replaced in the future, increasing our cash requirements;
• adjusted EBITDA does not reflect losses from other expenses and therefore does not include all of our debt costs;
• adjusted EBITDA does not reflect losses from the fair value of debt, and therefore does not include all of our debt costs;
• adjusted EBITDA does not reflect interest income or expense, or the cash required to service interest on our debt, which reduces cash available to us;
• adjusted EBITDA does not reflect income tax expense, or tax payments that may reduce cash available to us, and;
• adjusted EBITDA does not reflect losses from discontinued operations, which may reduce cash available to us.
Further, other companies, including companies in our industry, may calculate this non-GAAP financial measure differently, which reduces its usefulness as a comparative measure. Because of these limitations, we consider, and investors should consider, this non-GAAP financial measure together with other operating and financial performance measures presented in accordance with GAAP.
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The following table presents a reconciliation of adjusted EBITDA to its most comparable GAAP measure, net loss:
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
(in thousands) (in thousands)
Net loss $ (16,369 ) $ (15,501 ) $ (37,093 ) $ (37,376 )
Add (deduct):
Stock-based compensation expense 2,012 415 2,395 753
Interest income (79 ) — (79 ) —
Interest expense 1,458 — 1,458 —
Other expense, net 503 — 503 —
Loss on fair-market-value of debt 229 — 229 —
Income tax (benefit) provision (28 ) 81 51 147
Discontinued operations 3,591 10,360 18,224 24,771
Adjusted EBITDA $ (8,683 ) $ (4,645 ) $ (14,311 ) $ (11,705 )
Adjusted EBITDA loss increased by $4.0 million and $2.6 million for the three and six months ended June 30, 2026, respectively, as compared to the same periods in 2025. The change was primarily due to increases in operating expenses from continuing operations as described in the sections above.
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Liquidity and Capital Resources
As of June 30, 2026, we had cash and cash equivalents of $37.4 million.
The Company's principal sources of liquidity are a combination of equity and debt financing, including Convertible Notes issued in April and June 2026 and our at-the-market equity program, enabling us to access equity funding on an ongoing basis. These principal capital resources are further discussed below, under the headings Convertible Notes and ATM Offering.
On August 6, 2026, the Board of Directors of the Company declared $0.31 per share of common stock as the amount of the special dividend payable from the proceeds of the Asset Sale to stockholders of record as of June 25, 2026. The anticipated payment date is August 20, 2026 and we anticipate the total payment will be $3.6 million.
The Company's primary anticipated outflows are as follows: acquisitions of components and infrastructure equipment for our AI Infrastructure Business, including the procurement, maintenance, and hosting of high-performance GPU hardware, costs for data center space, recurring payroll and benefits for the teams responsible for the ongoing engineering, security, and management of these infrastructure environments, and general corporate activities. We expect to fund our operations through debt or equity financings, as well as expected future operating cash flow.
The Company's principal capital resources consist of the following:
Convertible Notes
On April 14, 2026, the Company entered into a Securities Purchase Agreement (as subsequently amended, the "Amended Purchase Agreement"), pursuant to which the Company agreed to issue and sell to the holder of the Convertible Notes senior secured convertible notes in an aggregate original principal amount of up to $50.0 million (the "Convertible Notes"), convertible into shares of the Company's Class A common stock (the "Facility"). On June 15, 2026, the Company entered into Amendment No. 1 to the Amended Purchase Agreement (the "First Amendment") to, among other changes, increase the amount of senior secured convertible notes that the Company may issue and sell by $50.0 million, for an aggregate original principal amount of up to $100.0 million.
The Convertible Notes contain customary affirmative and negative covenants, including certain limitations on debt, liens, restricted payments, asset transfers, changes in the business and transactions with affiliates. The Convertible Notes also contain standard and customary events of default.
$3.25 million in aggregate principal amount of Convertible Notes was issued on April 19, 2026. $5.0 million in additional aggregate principal amount of Convertible Notes was issued on June 4, 2026. As of June 30, 2026, an aggregate principal amount of $8.25 million of Convertible Notes had been issued under the Facility. The remaining Convertible Notes, if issued, may be issued in one or more future closings, subject to the terms of the Amended Purchase Agreement.
Unless earlier converted, or redeemed, the Convertible Notes will mature on the second anniversary of the date of issuance (the "Maturity Date"), and we are required to pay, on the Maturity Date, all outstanding principal, accrued and unpaid interest and accrued and unpaid late charges on such principal and interest, if any.
The Convertible Notes bear interest at the rate of 12.0% per annum which (a) commenced accruing on the date of issuance, (b) is computed on the basis of a 360-day year and twelve 30-day months and (c) is payable, subject to the satisfaction of customary equity conditions, in shares of our Class A common stock or, at our option, in cash, in arrears on the first calendar day of each calendar quarter, commencing on the three month anniversary of the issuance date (each an "Interest Date"). If a holder elects to convert or redeem all or any portion of a Convertible Note prior to the Maturity Date, all accrued and unpaid interest on the amount being converted or redeemed will also be payable. The Convertible Notes were issued with a 5% original issue discount. We are required to pay a late charge not in excess of 17% on any amount of principal or other amounts that are not paid when due.
The Convertible Notes are senior secured obligations of the Company, which are secured by the AI Infrastructure and all of the other assets of the Company and its subsidiaries. Until such date no Convertible Notes remain outstanding, all payments due under the Convertible Notes will be senior to all of our other indebtedness and other indebtedness of any of our subsidiaries.
Each holder of Convertible Notes may convert all, or any part, of the outstanding principal of the Convertible Notes, together with accrued and unpaid interest, any make-whole amount and any late charges thereon, at any time, at such holder's option, into our Class A common stock at the then-applicable "Conversion Price." Conversions and issuance of our Class A common stock pursuant to the Convertible Notes are prohibited if such conversion or issuance would cause the applicable holder (together with its affiliates) to beneficially own in excess of 4.99% of our Class A common stock outstanding immediately after giving effect to such conversion or issuance. The beneficial ownership percentage limitation may be increased to a maximum of 9.99%, at the option of the holder, except that any increase will only be effective upon 61-days' prior written notice to the Company. The maximum beneficial ownership limitation may not be waived or amended and will apply to any successor holder of a Convertible Note. For further discussion on the Convertible Notes and their terms, see Note 5 to the unaudited condensed consolidated financial statements included in this Form 10-Q.
ATM Offering
On April 28, 2026, we entered into an "at-the-market offering" ("ATM") program with Chardan Capital Markets LLC ("Chardan"), to sell shares of our Class A common stock having an aggregate offering price of up to $50 million, from time to time. On June 11, 2026, we increased the maximum aggregate offering amount of shares issuable pursuant to the ATM program by an additional aggregate amount of up to $48.1 million, for a total aggregate offering price of up to $98.1 million.
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Cash Flows
Six Months Ended June 30,
2026 2025
(in thousands)
Net cash used in operating activities, continuing operations $ (7,304 ) $ (13,529 )
Net cash used in operating activities, discontinued operations (15,884 ) (23,046 )
Net cash used in investing activities, continuing operations (2,101 ) (1,280 )
Net cash provided by investing activities, discontinued operations 38,166 386
Net cash provided by financing activities, continuing operations 23,373 41
Net cash (used in) provided by financing activities, discontinued operations (25,225 ) 2,111
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash 11 1,734
Net increase (decrease) in cash, cash equivalents, and restricted cash $ 11,036 $ (33,583 )
Operating Activities
During the six months ended June 30, 2026, net cash used in operating activities from continuing operations was $7.3 million, which consisted of a net loss from continuing operations of $18.9 million, in part driven by a net change of $8.5 million in our operating assets and liabilities and non-cash charges of $3.0 million resulting from stock-based compensation expense, a discount on the issuance of Convertible Notes, and an increase in the fair value of the Convertible Notes.
During the six months ended June 30, 2025, net cash used in operating activities from continuing operations was $13.5 million, which consisted of a net loss of $12.6 million, in part driven by a net change of $(1.7) million in our operating assets and liabilities and partially offset by non-cash charges of $0.8 million.
During the six months ended June 30, 2026, net cash used in operating activities from discontinued operations was $15.9 million, which consisted of a net loss from discontinued operations of $18.2 million, a net change of $1.1 million in our operating assets and liabilities and by net non-cash charges of $1.3 million. The non-cash activity included $22.8 million of depreciation, amortization, stock-based compensation, loss on extinguishment of debt and interest expenses related to the discontinuation of the historical footwear business, partially offset by a gain on the sale of assets of $21.6 million related to the Asset Sale.
During the six months ended June 30, 2025, net cash used in operating activities from discontinued operations was $23.0 million, which consisted of a net loss of $24.8 million, and a net change of $(5.7) million in our operating assets and liabilities, offset by non-cash charges of $7.4 million.
Investing Activities
During the six months ended June 30, 2026, net cash used in investing activities from continuing operations was $2.8 million from the purchase of GPU assets, partially offset by changes in security deposits of $0.7 million related to leases that were not sold as part of the Asset Sale.
During the six months ended June 30, 2025, net cash used in investing activities from continuing operations was $1.3 million, primarily related to cash outflows for the purchases of property and equipment that was not sold as part of the Asset Sale.
During the six months ended June 30, 2026, net cash provided by investing activities from discontinued operations was $38.2 million, related to the proceeds received from the Asset Sale, partially offset by the escrow receivable from the Asset Sale.
During the six months ended June 30, 2025, net cash provided by investing activities from discontinued operations was $0.4 million related to proceeds from the sale of our international businesses in 2024.
Financing Activities
Net cash provided by financing activities from continuing operations for the six months ended June 30, 2026 was $23.4 million, primarily due to $7.8 million of borrowings related to our Convertible Notes and $15.4 million in net proceeds from the issuance of shares in our ATM offering.
Net cash provided by financing activities from continuing operations for the six months ended June 30, 2025 was $41 thousand, primarily related to cash received from our ESPP program.
Net cash used in financing activities from discontinued operations for the six months ended June 30, 2026 was $25.2 million, related to the repayment of our Credit Agreement.
Net cash provided by financing activities from discontinued operations for the six months ended June 30, 2025 was $2.1 million, primarily due to $5.0 million in borrowings on our Credit Agreement, partially offset by $2.9 million in payments of deferred financing costs.
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Critical Accounting Estimates
Our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.
Certain of our critical accounting estimates have been updated due to the changes in the business we operate as of June 30, 2026. These include updates to Revenue Recognition, the addition of Convertible Notes, and the removal of Inventory. See Note 2 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional detail on our critical accounting estimates.
Aside from those referenced in the preceding paragraph, as of June 30, 2026, there have been no changes to our critical accounting estimates as discussed under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates" in the Form 10-K.
Recent Accounting Pronouncements
For information on new accounting pronouncements adopted and not yet adopted as of the date of this report, see Note 2 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Emerging Growth Company Status
We are currently an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We may take advantage of these exemptions until we are no longer an emerging growth company. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards and, as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions up until December 31, 2026, the last day of the fiscal year following the fifth anniversary of our initial public offering or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.235 billion in annual gross revenue, we have more than $700.0 million in market value of our Class A stock held by non-affiliates or we issue more than $1.0 billion of non-convertible debt securities over a three-year period.
Smaller Reporting Company Status
We are currently a "smaller reporting company," as defined by Rule 12b-2 of the Exchange Act and therefore qualify for reduced disclosure requirements for smaller reporting companies.
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