Transfers of Financial Assets

9 Months Ended

Sep. 30, 2025

Transfers and Servicing [Abstract]

Transfers of Financial Assets

12. Transfers of Financial Assets

On April 30, 2025 and May 7, 2025, the Company entered into multiple merchant cash advance agreements (the “First MCA”) with Genesis Equity Group Funding LLC (“GEG”) under which it transferred the rights to specified future receivables of an aggregate $1,485 (the “First MCA Purchased Amount”) in exchange for aggregate upfront cash proceeds of $897 (the “First MCA Purchase Price”). The First MCA was to be repaid in weekly payments of $71 until the First MCA Purchased Amount is fully repaid.

On August 15, 2025, the Company entered into an additional merchant cash advance agreement (the “Second MCA”) with GEG under which it transferred the rights to specified future receivables of an aggregate $2,475 (the “Second Purchased Amount”) in exchange for aggregate upfront cash proceeds of $1,389. The Second MCA will be repaid in weekly installments of $88 until the MCA is fully repaid. The proceeds from the Second MCA were used to repay the First MCA and for working capital needs.

Upon evaluation under ASC 860, Transfers and Servicing, the Company determined that the transaction does not meet the criteria for sale accounting. Although legal title was transferred, the Company retains significant continuing involvement in the form of collection responsibilities and operational dependencies that affect the cash flows of the transferred receivables.

Specifically, the Company retains effective control over the receivables, as payment to GEG is dependent on the Company’s future settlement proceeds; retains significant risks and rewards, as it continues to manage and collect the receivables; granted a security interest to GEG under Article 9 of the UCC, which indicates that the receivables have not been isolated from the Company in bankruptcy; and did not sufficiently demonstrate that GEG has the unilateral ability to pledge or exchange the receivables without restriction.

Accordingly, the transferred receivables continue to be recognized on the Company’s balance sheet, and the proceeds received from GEG are recorded as a secured borrowing. The liability is presented within “accrued expenses and other current liabilities” and as of September 30, 2025, the related secured borrowing liability was approximately $1,217.