Transfers of Financial Assets |
12 Months Ended |
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Dec. 31, 2025 | |
| Transfers and Servicing [Abstract] | |
| Transfers of Financial Assets | 11. 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.
On December 10, 2025, the Company entered into a merchant cash advance agreement (the “Third MCA”) with Capital Two Corp (“Capital Two”) under which it transferred the rights to specified future receivables of an aggregate $1,728 (the “Third Purchased amount”) in exchange for aggregate upfront cash proceeds of $1,000. As of December 31, 2025 the liability due to the Third MCA had been fully repaid.
Upon evaluation under ASC 860, Transfers and Servicing, the Company determined that the transactions do 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 and Capital Two 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 and Capital Two 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 and Capital Two have 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 and Capital Two are recorded as a secured borrowing. The liability is presented within “accrued expenses and other current liabilities” and as of December 31, 2025, the related secured borrowing liability was approximately $699.
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