The Company has prepared its consolidated financial statements in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”) and the instructions to Form 10-K and Article 8 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. As noted in Note 1 - "Organization and Business" and Note 7 - "Business Acquisition", on November 6, 2024, the Company

acquired the remaining 50% of the common units of BlackSky Satellite Systems, f/k/a LeoStella, which is now a wholly-owned subsidiary of BlackSky. Prior to the acquisition, the Company's consolidated financial statements included the Company’s proportionate share of the earnings or losses of its equity method investments and a corresponding increase or decrease to its investments, with recorded losses limited to the carrying value of the Company’s investments. All intercompany transactions and balances have been eliminated upon consolidation.

The Company’s consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities, including derivative financial instruments, that are stated at fair value. Unless otherwise indicated, amounts presented in the Notes pertain to the Company’s continuing operations.

Effective January 1, 2025, the Company reclassified its captions on the consolidated statements of operations and comprehensive loss to better align with the Company’s increasing portfolio of mission solutions product offerings and advanced technology program service offerings. Revenue and costs that were previously classified as imagery & software analytical services are now classified as space-based intelligence & AI services. Professional & engineering services are now either classified as mission solutions if they are related to the Company's product offerings or advanced technology programs if they are related to the Company's service offerings. As a result, for the year ended December 31, 2024, the amounts presented have been reclassified to conform to the current year presentation.

The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingencies at the reporting date, and the reported amounts of revenue and expenses during the reporting period. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Actual results could materially differ from these estimates. Significant estimates made by the Company include, but are not limited to, revenue and associated cost recognition, the collectability of accounts receivable, the recoverability and useful lives of intangible assets and property and equipment, the valuation of equity warrants and warrant liabilities, fair value estimates, the recoverability of goodwill and intangible assets, the provision for income taxes, the incremental borrowing rate to measure the operating lease right of use assets, the effective interest rate of the vendor financing agreement, the fair value of assets acquired and liabilities assumed of a business combination, the capitalization of interest, stock-based compensation, and the obsolescence of satellite work in process and inventory.

The Company classifies cash as restricted when the cash is unavailable for withdrawal or usage for general operations. Restricted cash represents certificates of deposits held by a bank as a compensating balance for letters of credit that are required by certain contracts with customers and cash collateral for leasing arrangements.

The Company invests in short-term investments, which generally consist of A-1, or higher, rated corporate debt and governmental securities. The investments are classified as held-to-maturity and have a stated maturity date of one year or less from the balance sheet date. Any investments with original maturities less than three months are considered cash equivalents.

Accounts receivable represent customer obligations due to the Company for the purchase of our products and services under normal trade terms, without collateral. Most of the Company's sales are with domestic and international government and agencies, which limits uncollectible accounts receivable. The Company reviews accounts receivable on a periodic basis to determine collectability. The Company reserves for any accounts receivable balances that are determined to be uncollectible as an allowance for doubtful accounts. After all attempts to collect an accounts receivable have failed, the accounts receivable balance is written off against the allowance for doubtful accounts. The Company assessed all existing accounts receivable and recorded an allowance for doubtful accounts of $50 thousand and $45 thousand as of December 31, 2025 and 2024, respectively.

Inventories are production costs associated with anticipated future revenue contracts. As of December 31, 2025 and 2024, the Company had $6.2 million and $6.0 million, respectively, of work in process inventory. Inventories are stated on a consistent basis at the lower of historical cost or net realizable value. Net realizable value is determined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company estimates future sales and will write down excess inventories as needed. The Company had a reserve of $0 for inventory as of December 31, 2025 and 2024. The Company’s estimates of future sales are based on confirmed and expected customer contracts. The carrying values of inventories approximated their fair values as of December 31, 2025 and 2024.

Prepaid expenses are advance payments made in the ordinary course of business and are amortized on a straight-line basis over the period of benefit. As of December 31, 2025, the Company recognized expected insurance recoveries as a current asset. These expected insurance recoveries relate to a contingent liability for an ongoing claim that is expected to be resolved within insurance limits. See Note 23—“Commitments and Contingencies” for additional information on the contingent liability. The carrying values of prepaid expenses and other current assets approximated their fair values as of December 31, 2025 and 2024

Property and equipment are stated at cost, less accumulated depreciation. In the consolidated statements of operations and comprehensive loss, the Company recognizes depreciation expense on a straight-line basis over the estimated useful life of the asset to its residual value.


			Estimated useful lives (years)
Satellites			3 - 5

Capitalized software			3
Office furniture and fixtures			5
Production and engineering equipment			3 - 6
Computer equipment and software			3
Site and other equipment			3 - 4
Leasehold improvements			shorter of useful life or remaining lease term

Capitalized satellite costs include material costs, labor costs incurred from the start of the pre-acquisition stage through the construction stage, insurance, interest, and the costs incurred to launch the satellite into orbit for its intended use. Labor costs incurred prior to and after the pre-acquisition and construction stages are charged to expense. Once the satellite has reached orbit and makes contact with the Company's network, the Company commences depreciation. The designated useful life of the Company's satellites is recognized using the straight-line method. Subsequent to launch, the Company's satellites must meet certain performance and operational criteria to be deemed commercially viable. If the criteria are not met, the Company assesses the satellite for impairment.

The Company capitalizes internal and external costs that are incurred to develop and implement internal-use software, which consist primarily of costs related to design, coding, and testing. Internal costs include salaries and allocations of fringe and stock-based compensation for employees developing our internal-use software. When such software is ready for its intended use, capitalization ceases and costs are amortized on a straight-line basis over the estimated life to either depreciation or cost of sales depending on the nature of the software. Costs incurred prior to and after the application development stage are charged to expense. The Company regularly reviews its capitalized software projects for impairment.

Goodwill is tested annually for impairment, as of October 1, or more frequently if events or circumstances indicate that the carrying value of goodwill may be impaired. Goodwill is tested for impairment at the reporting unit level by first taking a qualitative approach to determine whether it is more likely than not that a reporting unit's fair value is less than its carrying value. If the Company determines that it is more likely than not that a reporting unit's fair value is less than its carrying amount, the Company then compares the reporting unit’s carrying amount to the fair value of the reporting unit. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. In testing for goodwill impairment, the Company may utilize a mix of income and market approaches that include the use of comparable multiples of publicly traded companies whose services are comparable to ours. The Company concluded it has one reporting unit as of December 31, 2025 with goodwill of $10.3 million.

The Company continuously evaluates whether indicators of impairment exist to determine whether it is necessary to perform a quantitative goodwill impairment test. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include a significant decline in the Company's common stock value, a significant decline in the Company's expected future cash flows, a significant adverse change in legal factors or in the business climate, unanticipated competition, the testing for recoverability of a significant asset group within a reporting unit, or slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of goodwill and could have a material impact on the consolidated financial statements.

The Company reviews long-lived assets, including intangible assets, property and equipment, satellite work in process and other long-term assets, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. Significant judgments in this area involve determining whether a triggering event has occurred and determining the future cash flows for assets involved. A triggering event for assessing impairment can be a change in the estimated useful life of an intangible asset. Once a triggering event is identified and we conduct an analysis for impairment, we compare the undiscounted cash flows expected to be generated from the long-lived assets (or asset group) to the related net book values. If the undiscounted cash flows exceed the net book value, the long-lived assets are not impaired. If the net book value exceeds the undiscounted cash flows, we measure and recognize an impairment charge based upon the difference between the carrying value of long-lived assets (or asset group) and their fair value.

Finite-lived intangible assets include various assets that are subject to amortization, including trade names, trademarks, and customer relationships. Such intangible assets are amortized on a straight-line basis over their estimated useful lives. The estimated useful lives of the Company's finite-lived intangible assets are as follows:

Indefinite life intangible assets are made up of in-process research and development, which has an indefinite life until development is complete. These assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable.

Satellite work in process primarily represents amounts paid to third party vendors for components to manufacture the Company's satellites, internal labor costs incurred to develop and integrate the Company's satellites, including salaries and allocations of fringe and stock-based compensation, launch and launch-related costs provided by third-party vendors and capitalized interest. The Company calculates capitalized interest using the weighted average of the stated interest rates of all the financing arrangements in place, based on the amount of cash paid for capital expenditures.

Satellite work in process capitalized, but not yet paid, is recognized as the Company has the rights to the in-process assets being engineered on the Company's behalf or a refund of amounts paid to date, less certain costs. At launch, these costs, and other costs incurred to put a satellite into service, are aggregated and reclassified as property and equipment, subject to depreciation (Note 9). Since the acquisition of BlackSky Satellite Systems, the Company capitalizes depreciation on assets that are used directly in the production of the satellites. Capitalized depreciation expense is recorded as satellite work in process and will begin depreciation once the satellite is placed into service. At times, the Company may assign certain incurred work in process costs to a customer customized satellite procurement contract and will transfer those costs from satellite work in process to mission solutions costs, excluding depreciation and amortization in the consolidated statements of operations and comprehensive loss; these amounts are also presented as transfer of satellite work in process to mission solutions costs in the consolidated statements of cash flows.

As noted in Note 1 and Note 7, in November 2024, the Company acquired the remaining 50% of the common units of BlackSky Satellite Systems, f/k/a LeoStella, which is now a wholly-owned subsidiary of the Company. Prior to the acquisition, the Company had the ability to exercise significant influence, but not control, over LeoStella and accounted for it under the equity method of accounting, including it as an investment in equity method investees on the Company's consolidated balance sheets.

Significant influence typically exists if a Company has a 20% to 50% ownership voting interest in the investee or retains a voting seat on the investee's board of directors. In evaluating whether the Company had significant influence, the Company considered the nature of its ownership interest in the investee, as well as other factors that may have given the Company the ability to exercise significant influence over the investee's operating and capital financial policies. Under the equity method of accounting, the Company's share of the net earnings or losses of the investee were included in the Company's consolidated statements of operations and comprehensive loss. Other than the gain related to the step up acquisition, the Company did not record any percentage of BlackSky Satellite System's, f/k/a LeoStella's, estimated net loss during the year ended December 31, 2024 since the investment in LeoStella was $0 as of December 31, 2023.

The Company may become involved in litigation or other financial claims in the normal course of its business operations. The Company periodically analyzes currently available information relating to these claims, assesses the probability of loss, and provides a range of possible outcomes when it believes that sufficient and appropriate information is available. The Company accrues a liability for those contingencies

where the occurrence of a loss is probable and the amount can be reasonably estimated. If a loss is probable and a range of amounts can be reasonably estimated but no amount within the range is a better estimate than any other amount in the range, then the minimum of the range is accrued. The Company does not accrue a liability when the likelihood that the liability has been incurred is believed to be probable but the amount cannot be reasonably estimated or when the likelihood that a liability has been incurred is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is reasonably possible and the impact could potentially be material, the Company discloses the nature of the contingency and, where feasible, an estimate of the possible loss or range of loss.

Debt issuance costs are capitalized and amortized to interest expense using the effective interest method over the life of the related debt. Short-term and long-term debt are presented net of the unamortized debt issuance costs and debt discount in the consolidated balance sheets.

The Company accounts for certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The process for analyzing the fair value measurement of certain financial instruments on a recurring, or non-recurring, basis includes significant judgment and estimates of inputs including, but not limited to, share price, volatility, discount for lack of marketability, application of an appropriate discount rate, and probability of liquidating events. The Company utilizes the market valuation methodology and specific option pricing methodology, such as the Monte Carlo simulation, to value its more complex financial instruments, whereas the Company utilizes the Black-Scholes option-pricing model to value standard common stock warrants and common stock options.

The framework for measuring fair value specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

Level 2 Inputs. Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

The Company generates revenue from the sale of space-based intelligence & AI services, mission solutions, and advanced technology programs. Revenue generated from space-based intelligence & AI services and advanced technology programs is classified as service revenue and revenue generated from mission solutions is classified as product revenue. Space-based intelligence & AI services revenue is largely generated from subscription contracts with domestic and international government agencies and includes imagery, data, software, and analytics. This revenue is primarily recognized from services rendered under non-cancellable subscription order agreements or, in limited circumstances, variable not-to-exceed purchase orders. Mission

solutions revenue is generated from firm-fixed price long-term engineering and construction contracts related to the Company's product offerings. Advanced technology programs revenue is primarily generated from firm fixed price service solutions, cost-plus service contracts and on a time and materials basis.

In accordance with Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“Accounting Standards Codification (“ASC”) 606”), the Company uses the five-step model of identifying the contract with a customer, identifying the performance obligations contained in a contract, determining the transaction price, allocating the transaction price, and determining when performance obligations are satisfied. Application of this model requires the application of significant judgment, as further discussed below.

Revenue is measured as the fair value of consideration received or receivable and net of discounts. The Company applies a policy election to exclude transaction taxes collected from customer sales when the tax is both imposed on and concurrent with a specific revenue-producing transaction. The Company estimates any variable consideration, and whether the transaction price is constrained, upon execution of each contract. Variable consideration is estimated as the most likely amount that is dependent upon the occurrence or non-occurrence of a future event. We continually review, and may reassess, the transaction price based on forecasted service level provisions within a limited amount of our customer purchase orders, costs incurred to date and historical experience. As a result, we may update our estimated constraints on revenue, which are generally provided on a prospective basis. The Company did not have any active contracts with significant variable consideration as of December 31, 2025.

Space-based intelligence & AI services revenue include imagery delivered from the Company’s proprietary satellite constellation and BlackSky Spectra software platform and in, limited cases, imagery directly uploaded to certain customers. Customers can directly task the Company's proprietary satellite constellation to collect and deliver imagery over specific locations, sites and regions that are critical to their operations. The Company offers customers several service level subscription options that include on-demand tasking or multi-year assured access programs. Assure access customers can secure priority access and imaging capacity at a premium over a region of interest on a take or pay basis. Imagery revenue is recognized over the subscription period based on the promise to continuously provide contractual satellite capacity for tasked imagery or analytics at the discretion of the customer. These products, based on the context of the contract, are capable of being distinct performance obligations.

The Company leverages proprietary AI and ML algorithms to analyze data coming from both the Company’s proprietary sensor network and third-party space and terrestrial sources to provide hard-to-get data, insights, and analytics for customers. The Company continues to integrate and enhance its offerings by performing contract development, while retaining the intellectual property rights. The Company also offers services related to object, change and anomaly detection, site monitoring, and enhanced analytics services that can detect key pattern of life changes in critical locations such as ports, airports, and construction sites; retail activity; commodities stockpiles; and other sites that contain critical commodities and supply chain inventory.

The Company's analytics services are also offered on a similar subscription basis and provide customers with access to the Company's site monitoring, event monitoring and global data services. Analogous with the recognition of revenue for imagery, software analytical services revenue is recognized ratably over the subscription period.

The Company provides mission solutions, which develop and deliver customized advanced satellite and payload systems for a limited number of customers, leveraging the Company’s capabilities in mission systems engineering and operations. These offerings furnish government customers with an end-to-end pathway to customized sovereign space-based intelligence capabilities, enabling nations to accelerate the development, launch, and operation of their own space programs with full autonomy and control, ground station operations,

The Company offers various advanced technology programs, including technology enabled professional service solutions to support customer-specific software development requests, integration, testing, and training. These services, based on the context of the contract, are capable of being distinct performance obligations.

Advanced technology programs revenue is primarily generated from cost-plus contracts, and time and materials basis contracts and firm-fixed price service solutions contracts. For contracts structured as cost-plus or on a time and materials basis, the Company recognizes revenue based on the right-to-invoice when practically expedient, as the Company is contractually able to invoice the customer based on the control transferred to the customer in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date.

For firm fixed price mission solutions and advanced technology programs contracts, the Company recognizes revenue over time using the cost to cost input method to measure progress to complete the performance obligation. A performance obligation's EAC includes all direct costs such as labor, fringe, materials, subcontract costs and overhead. The Company uses significant judgment to estimate total costs at completion on a performance obligation by performance obligation basis including, but not limited to, labor productivity, program schedule, technical risk analysis, complexity, scope of the work and identified risks. Due to the continuous nature of the work, as well as when a change in circumstances warrants a modification, the EAC is reviewed and may result in cumulative changes to the contract profit. The Company recognizes changes in estimated contract sales or costs and the resulting changes in contract profit on a cumulative basis in the period in which the change is identified. If, at any time, the estimate of contract profitability indicates a probable anticipated loss on a contract, the Company recognizes the total loss as and when known. The following table presents the effect of aggregate net EAC adjustments on the Company's contracts:

(1) The year ended December 31, 2025 included an incremental change in a performance obligation of $7.8 million from a contract modification of an existing advanced technology programs contract. The remaining EAC adjustments are not individually significant to the Company.

Space-based intelligence & AI services costs primarily include cloud computing and hosting services, internal labor to support the ground station network and space operations, and third-party data and imagery. Mission solutions costs primarily include the cost of direct materials to build and test specific components, such as the communications system, payloads, and sensor integration, as well as internal labor for design and engineering in support of long-term development contracts for customized customer satellites and payload systems. The Company also recognizes internal labor costs and external subcontract labor costs for its

The Company incurs research and development costs, which are expensed as incurred, for researching next generation space and ground architectures in support of its long-term strategy. With the Company's acquisition of BlackSky Satellite Systems, f/k/a LeoStella, in November 2024, research and development expense also includes investments in next generation satellite design and functionality. In addition, the Company recognizes costs incurred before the technological feasibility stage for internal projects, such as aerospace and other satellite developments, as research and development costs.

Advertising costs are expenses associated with promoting the Company’s services and products. Advertising costs are expensed as incurred and included in selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss. For the years ended December 31, 2025 and 2024, advertising costs were $2.0 million and $1.6 million, respectively.

The Company accounts for income taxes following the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enacted date.

The Company measures deferred tax assets based on the amount that the Company believes is more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including reversals of existing taxable temporary differences, tax-planning strategies, and historical results of recent operations. In evaluating the objective evidence that historical results provide, the Company considers three trailing years of cumulative operating income or loss. Valuation allowances are provided, if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. A full valuation allowance was recorded against the deferred tax assets as of December 31, 2025 and 2024. Changes in tax laws and rates may affect recorded deferred tax assets and liabilities and the Company's effective tax rate in the future.

The Company believes that its tax positions comply with applicable tax law. The Company may recognize the 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 the taxing authorities, based on the technical merits of the position.

The Company's income tax expense or benefit, liability and/or receivable, deferred tax assets and liabilities, and liabilities for uncertain tax benefits reflect management’s best assessment of estimated current and future taxes to be paid or received.

subsidiary of Osprey, and BlackSky Holdings, Inc. Osprey pre-Merger Class B common shares were exchanged for shares of the Company’s Class A common stock (the "Sponsor Shares") upon completion of the Merger. The Company accounted for the Sponsor Shares in accordance with the guidance contained in ASC 815-40, under which the Sponsor Shares did not meet the criteria for equity treatment and were recorded as derivative liabilities in the Company’s consolidated balance sheets as of December 31, 2025. The Sponsor Shares are adjusted to fair value at each reporting period and any net gains or losses in the change in fair value are recognized in loss on derivatives in the Company’s consolidated statements of operations and comprehensive loss.

The Company grants restricted stock units ("RSUs") to certain employees, for which the grant date fair value is equal to the fair value of the Class A common stock on the date of grant. In order to determine the fair value of its Class A common stock on the date of grant prior to the Merger, the Company historically performed a valuation analysis using a combination of market and income approaches. Subsequent to the Merger, the Company uses the New York Stock Exchange (“NYSE”) trading price as the fair value of the Class A common stock for valuation purposes. For all awards where vesting is only subject to a service condition, including those subject to graded vesting, the Company has elected to use the straight-line method to recognize the fair value as compensation cost over the requisite service period.

Certain of the Company’s RSUs had performance vesting conditions that were triggered upon the consummation of the Merger. Therefore, since the performance conditions attributable to these RSUs had been met, the Company commenced recording the associated compensation expense, inclusive of a catch-up amount for the service period between their grant date and satisfaction of the performance condition, as of the closing of the Merger. The fair value of the RSUs that included a performance condition was recognized as compensation expense over the requisite service period using the accelerated attribution method, which accounts for RSUs with discrete vesting dates as if they were separate awards. The Company has not issued any RSUs with performance conditions since 2021 and there were no such RSUs outstanding as of December 31, 2025. Expense related to stock-based payments is classified in the consolidated statements of operations and comprehensive loss based upon the classification of each employee's cash compensation.

The Company uses the Black-Scholes option pricing model to value all options, including stock options and options issued under the 2021 Employee Stock Purchase Plan ("ESPP"), and the straight-line method to recognize the fair value as compensation cost over the requisite service period. The fair value of each option is estimated as of the date of grant. The Company granted stock options during the year ended December 31, 2025 and used the following inputs when applying the Black-Scholes option pricing model:

Expected Dividend Yield: The Black-Scholes valuation model requires an expected dividend yield as an input. The dividend yield is based on historical experience and expected future changes. The Company has not historically paid and currently has no plans to pay dividends on its Class A common stock.

Expected Term: For options granted since 2021, as there is not a significant history of option exercises as a public company, the Company considered the stock option vesting terms and contractual period, as well as the demographics of the holders, in estimating the expected term. The Company will review its estimate in the future and adjust it, if necessary, due to changes in the Company’s historical exercises.

The most significant assumption used to determine the fair value of Legacy BlackSky's equity-based awards was the estimated fair value of the Legacy BlackSky Class A common stock on the grant date. Prior to the Merger, in order to determine the fair value of its Class A common stock on the date of grant. Legacy BlackSky historically relied on a valuation analysis performed using a combination of market and income approaches. After the Merger, the Company uses the NYSE trading price as the fair value of the Company's Class A common stock for valuation purposes.

The Company incurs underwriting discounts and commissions, legal fees, accounting fees, placement agent fees, and other third-party costs related directly to equity issuances. Transaction costs incurred for equity issuances are allocated to the components of the transaction based on their relative fair market value, including common equity and equity warrants classified as derivatives and, as such, based on the Company's allocation, are either expensed in the consolidated statements of operations and comprehensive loss or recorded as a reduction to additional paid-in capital in the consolidated statements of changes in stockholders’ equity and consolidated balance sheets.

The Company has also incurred lender fees and other incremental third-party costs associated with its debt financing, as described in Note 15. Lender fees have been capitalized and included in either debt - current portion or long-term debt - net of current portion in the consolidated balance sheets, depending on the classification of the associated debt.

Additionally, the Company incurs legal fees, accounting fees, information technology fees, and other incremental third-party costs, including the business acquisition in 2024, as described in Note 7. Transaction fees are expensed as incurred as selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss.

Deferred offering costs consist of legal fees, accounting fees, underwriting fees, and other third-party costs that are directly related to the Company’s future equity offering(s) and will be charged to additional paid in capital upon the completion of the applicable future transactions.

Business acquisitions are accounted for using the acquisition method of accounting, in accordance with ASC 805, Business Combinations, and are included in the Company's consolidated financial statements from their respective acquisition dates. Assets acquired and liabilities assumed, if any, are measured at fair value on the acquisition date using the appropriate valuation method. Goodwill generated from acquisitions is recognized if the fair value of the purchase consideration transferred, or the fair value of the acquirer’s interest in the acquiree if no consideration is transferred, and any noncontrolling interests is in excess of the net fair value of the identifiable assets acquired and the liabilities assumed. In determining the fair value of identifiable assets, the Company uses various valuation techniques that require it to make estimates and assumptions surrounding projected revenues and costs, future growth, and discount rates.