AWRE 10-K & 10-Q changes, risk factors and insider trading

Individual orders can represent a meaningful percentage of our revenues and operating results in any single period and the timing of the receipt of those orders is difficult to predict. The failure to close an order or the deferral or cancellation of an order can result in revenue and net income shortfalls for that quarter. We base our current and future expense levels on our internal operating plans and sales forecasts, and our operating costscosts, areincluding personnel-related costs, may be difficult to areduce largein extentthe fixed.near term. As a result, we may not be able to sufficiently reduce our costs in any quarter to adequately compensate for an unexpected near-term shortfall in revenues, and even a small shortfall could disproportionately and adversely affect our financial results for that quarter.

We derive a significant portion of our revenue directly or indirectly from federal, international, state and local governments. We believe that the success and growth of our business will continue to depend on government customers purchasing our products and services either directly from us or indirectly through our channel partners. Changes in government contracting policies or government budgetary constraints may adversely affect our financial performance. Among the factors that could adversely affect our business are:

Changesthe impact of changes in government contractingpriorities, policiesbudgetary constraints, continuing resolutions, or governmentother budgetary constraints may adversely affect our financial performance. Among the factorsactions that couldreduce adverselyor affectdelay ourgovernment business are:spending;

the impact of actions, such as those recently announced by the U.S. Department of Government Efficiency, intended to reduce the size of the federal government and federal spending, other changes in fiscal policies or decreases in available government funding, changes in government funding priorities;

public perceptions regarding the intrusivenessintrusiveness, fairness, accuracy, or potential bias of these solutions and the manner in which organizations use the biometric information collected;

public perceptions regarding privacy and the confidentialityuse of privatebiometric information;

proposed or enacted legislation related to privacycollection, use and storage of biometric information;

We have made and may continue to make acquisitions of or investments in companies that offer complementary products, services, and technologies, such as our acquisition of FortressID in December of 2021 and our investment in Omlis Limited.technologies. The ultimate success of our acquisitions depends, in part, on our ability to realize the anticipated synergies, cost savings and growth opportunities from integrating acquired businesses or assets into our existing businesses. However, the acquisition and successful integration of independent businesses or assets is a complex, costly and time-consuming process, and the benefits we realized in some cases in the past have not and the benefits we realize in the future may not exceed the costs of the acquisition. The risk and difficulties associated with acquiring and integrating companies and other assets include, among others, difficulties assimilating the operations and personnel of acquired companies, challenges in realizing the value of the acquired assets relative to the price paid, distraction of management from our ongoing businesses and potential product disruptions associated with the sale of the acquired company’s products. These factors could have a material adverse effect on our business, financial condition, operating results and cash flows. Additionally, our acquisitions have provided, in the case of Fortress ID, and may in the future provide for future contingent acquisition payments, based on the achievement of performance targets or milestones. These arrangements can impact or restrict integration of acquired businesses and can result in disputes, including litigation. In addition, there is uncertainty regarding the realizability of investments in private companies, such as our investment in Omlis Limited that was written down to $0 in 2023. Additionally, regardless of the form of consideration we pay, acquisitions and investments could negatively impact our operations and earnings per share.

Our stock price may also be affected by broader market trends unrelated to our performance. As a result, purchasers of our common stock may be unable at any given time to sell their shares at or above the price they paid for them. Moreover, companies that have experienced volatility in the market price of their stock often are subject to securities class action litigation. If we were the subject of such litigation, it could result in substantial costs and divert management's attention and resources.

We prepare our financial statements in accordance with generally accepted accounting principles and certain critical accounting policies and estimates that are relevant to our business. The application of these principles and policies requires us to make significant judgments and estimates. The most significant estimates are discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates,” included elsewhere in thethis financialAnnual statementsReport pertainon toForm revenue recognition, allowance for credit losses, valuation of acquired assets and assumed liabilities in business combinations, valuation of contingent acquisition payments, valuation of investment in note receivable, goodwill and long-lived asset impairment and valuation allowance for deferred income tax assets. Actual results could differ from those estimates. In the event that our judgments and estimates differ from actual results, we may have to change them, which could materially affect our financial position and results of operations.10-K.

We are primarily engaged in the development and sale of biometrics products, solutions and services. Our software products are used in government and commercial systems and applications and fulfill a broad range of functions critical to secure biometric enrollment, authentication, identification and transactions. Principal government applications of biometrics systems include border control, visa applicant screening, law enforcement, national defense, intelligence, secure credentialing, access control, and background checks. Principal commercial applications include: i) user enrollment and authentication used for login to mobile devices, computers, networks, and software programs; ii) user authentication for financial transactions and purchases (online and in-person); iii) physical access control to buildings; and iv) identity proofing of prospective employees and customers. We sell our biometrics software products and services globally through a multifaceted distribution strategy using systems integrators, OEMs, VARs, partners, and directly to end-userend user customers. We also derive a portion of our revenue from the sale of imaging software licenses to OEMs and systems integrators that incorporate our software into medical imaging products and medical systems.

We used revenue and operating loss to summarize our financial results over the past two yearsyears, as we believe these measurementsmeasures areprovide the most meaningful wayunderstanding to understandof our operating performance. The comparisons below reflect certain reclassifications described in more detail in Note 2 to the consolidated financial statements

Revenue and operating loss in 20242025 were $17.4$17.3 million and $5.5$6.6 million, respectively, which compared to revenue and operating loss in 20232024 of $18.2$17.4 million and $8.5$5.5 million, respectively.

Lower revenue in 20242025 as compared to 20232024 was primarily due to decreases in revenue from our perpetual software licenses of $1.2 million and software subscriptions of $0.7$0.3 million, which were partially offset by an increase and services and other revenue of $0.1 million and an increase in revenue from software maintenance of $0.9$0.1 million. LowerHigher operating loss in 20242025 as compared 2023to 2024 was primarily due a negative adjustment of $2.7 million to a note receivabledecrease in 2023revenue thatof did$0.1 not recur in 2024million and a year-over-year decreaseincreases in research and development expenseexpenses of $1.4$0.5 million, cost of revenue of $0.5 million and general and administrative expenses of $0.2 million, which were partially offset by decreaseda revenuedecrease in sales and marketing expense of $0.9$0.3 million and the impact of a 2023 fair value adjustment to contingent consideration of $0.8 million that did not recur in 2024.million.

Software LicenseLicenses Revenue

Software licenselicenses revenue consists of revenue from the salelicensing of biometrics and imaging software products. SalesLicensing of software products dependdepends on our ability to win proposals to supply software for biometricsbiometric systems projects either directly to end user customers or indirectly through channel partners.

Software licenselicenses revenue decreased 18%4% from $9.5$7.7 million in 20232024 to $7.8$7.3 million in 2024.2025. As a percentage of total revenue, software licenselicenses revenue decreased from 52%44% in 20232024 to 45%42% in 2024.2025. The $1.7$0.4 million decrease in software licenselicenses revenue was primarily due to a decrease in perpetual licenseslicense sales, which can fluctuate from period to period. With the introduction of AwareID, we have incorporated SaaS offering into our product line-up. For the year ended December 31, 2024 we generated $0.1 million of revenue from SaaS contracts compared to a de minimis amount for the year ended December 31, 2023. We expect SaaS revenue to continue to grow as a component of software license revenue going forward.

Software maintenance revenue consists of revenue from the sale of software maintenance contracts.contracts and SaaS subscription arrangements. Software maintenance contracts entitle customers to receive software support and software updates, if and when they become available, during the term of the contract. SaaS revenue represents a relatively small portion of both software maintenance revenue and total revenue.

Software maintenance revenue increased 12%2% from $7.7 million in 2023 to $8.6 million in 2024.2024 to $8.7 million in 2025. As a percentage of total revenue, software maintenance revenue increased from 42%50% in 20232024 to 49%51% in 2024.2025. The dollar increase in software maintenance revenue was primarily due to software maintenance related to perpetual license sales during the second half of 2023 as well as for the year ended December 31, 2024.sales.

A majority of our customers purchaseenter into software maintenance contracts when they initially purchaselicense our software licenses.products. SinceBecause our software is used in active biometrics systems, many of our customers continue to renew their maintenance contracts in subsequent years while those systems remain operational.

Services and other revenue consists of fees we charge to perform software development, integration, installation, customization, and customizationother services.professional services, as well as subscription-based SaaS offerings and hardware included with certain software licenses. Similar to software license revenue, services revenue depends on our ability to win biometrics systems projects either directly with end user customers or in conjunction with channel partners. OtherSaaS revenue consistsreflects ofrecurring hardwaresubscription fees thatfor areaccess included with some ofto our biometric software licenses. Services and other revenue fluctuate when we commence new projects and/or when we complete projects that were started in previous periods.solutions.

Cost of Services and Other Revenue

Cost of services and other revenue consists primarily of engineering costs to perform customer services projects.projects, amortization of intangible technology assets related to acquisitions, and other third-party costs that are included with some of our software licenses. Such costs primarily include: i) engineering salaries, stock-based compensation, fringe benefits, and facilities; ii) engineering consultants and contractors; iii) software license fees; and iv) hardware costs.

Gross margins on services and other revenue are a function of: i) the nature of the projects; ii) the level of engineering difficulty and labor hours required to complete project tasks; and iii) how much we were able to charge.charge; Grossand marginsiv) inproduct these years reflect the profitability mix of customer projects.mix. We expect that gross margins on services and other revenue will continue to fluctuate in future periods based on the nature, complexity, and pricing of future projects.projects and product mix.

Research and development expense consists of costs for: i) engineering personnel, including salaries, stock-based compensation, fringe benefits, and facilities; ii) engineering consultants and contractors, and iii) other engineering expenses such as supplies, equipment depreciation, dues and memberships and travel. Engineering costs incurred to develop our technology and products are classified as research and development expense. As described in the cost of servicesrevenue section, engineering costs incurred to provide engineering services for customer projects are classified as cost of servicesrevenue and are not included in research and development expense.

The following table presents the classification of total engineering costs tobetween research and development expense and cost of servicesrevenue and other for the years ended December 31, 20242025 and 2023 was2024 (in thousands):

Total engineering costs decreasedincreased 15%6% from $10.4$8.2 million in 20232024 to $8.9$8.7 million in 2024.2025. As a percentage of total revenue, total engineering costs decreasedincreased from 57%47% in 20232024 to 51%50% in 2024.2025. Prior period amounts have been reclassified to conform to the current period presentation.

Our engineering headcount decreasedincreased from 42 in 2023 to 33 in 2024.2024 to 45 in 2025. The decreaseincrease in engineering costs is primarily a result of reducingincreasing our engineering headcount byduring approximatelythe 10% in 2023 and 20% in 2024.year. The reductionincrease was driven by strategic initiatives and to optimize resources, improve operational efficiency, and align our engineering capabilities with current business priorities. We believe our currentexpect engineering organization is adequately staffedcosts to supportincrease ourin product2026 roadmap,primarily customerdue commitments,to andthe innovationfull-year efforts.impact of engineering personnel hired during 2025.

As we described in the Part I—Business of this Form 10-K, we intend to introduce new products that will allow us to offer more complete biometrics solutions. We believe this strategy will allow us to sell more software into biometrics systems projects in order to grow our revenue. Our preference is to develop such products internally, however to the extent we are unable to do that, we may purchase or license technologies from third parties. We anticipate that we will continue to focus our future research and development activities on enhancing existing products and developing new products. We expect research and development expenses to decreaseincrease in absolute dollars and as a percentage of revenues in the next year and then to increase in absolute dollars in proceeding years.year.

Selling and marketing expense decreased 3%5% from $8.0 million in 2023 to $7.7 million in 2024.2024 to $7.3 million in 2025. As a percentage of total revenue, selling and marketing expensedecreased wasfrom 44% in both 2024 andto 2023.42% in 2025. The dollar decrease in selling and marketing expense was primarily due to decreaseda $0.2 million decrease in travel expense, a $0.1 million decrease in bonus and commission expense ofand $0.2a $0.1 million asdecrease ain resulttrade show costs. We expect selling and marketing expense to increase primarily due to the full-year impact of decreasedsales revenue.and marketing personnel hired during 2025. We expect to be strategic in expanding our sales and marketing force to pursue future opportunities.

General and administrative expense decreasedincreased 3% from $6.5$6.7 million in 20232024 to $6.4$6.9 million in 2024.2025 primarily as a result of the write-off of the Anonybit note receivable. As a percentage of total revenue, general and administrative expense increased from 36%39% in 20232024 to 37%40% in 2024.2025. While we expect general and administrative expenses to increase in absolute terms as we continue to invest in our business, the trajectory of these costs as a percentage of total revenue will depend on revenue growth. Future trends will be influenced by our ability to scale operations efficiently and drive revenue expansion. Prior period amounts have been reclassified to conform to the current period presentation.

Interest income decreased from $1.3 million in 2023 to $1.2 million in 2024.2024 to $0.9 million in 2025. The dollar decrease in interest income was primarily due to lower average cash balances during the year and lower interest rates within our money market accounts.

As of December 31, 2024,2025, our material cash requirements from known contractual and other obligations consisted primarily of payments under the operating lease for our corporate headquarters,headquarters. which weWe estimate lease payments will be approximately $0.7 million in each of 2025, 2026,2026 and 2027, approximately $0.8 million in 2028each of 2028, 2029 and 2029,2030, and $2.7$1.9 million thereafter. These amounts represent fixed contractual obligations under the lease agreement. See Note 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for moreadditional information onregarding our operating lease.

Our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, to our financial statements,statements included elsewhere in this Annual Report. We have identified the following as our significant accounting policies and estimates, which are defined as those that are reflective of significant judgments and uncertainties, are the most pervasive and important to the presentation of our financial condition and results of operations and could potentially result in materially different results under different assumptions, judgments or conditions.

Revenue recognition. In accordance with Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers (“ASC 606”), revenue is recognized when a customer obtains control of promised goods and services. The amount of revenue recognized reflects the consideration to whichthat we expect to be entitled to receive in exchange for these goods and services. In addition, ASC 606 requires disclosures of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

We categorize revenue as software licenses, software maintenance, orand services and other revenue.revenue, which includes SaaS subscription arrangements. Revenue from software licenses is recognized at a point in time upon delivery, provided all other revenue recognition criteria are met. We recognize software maintenance revenue and revenue from SaaS subscription arrangements, over time on a straight-line basis over the contract period. Services revenue is recognized over time as the services are delivered using an input methodmethod, (i.e.,based on labor hours incurred as a percentage of total labor hours budgeted),budgeted, provided all other revenue recognition criteria are met.

Also, with the delivery of our currentcertain products in a hosted environment withthrough AwareID, we recognize revenue from our SaaS arrangements ratably over the subscription period.

Our arrangements can include variable fees, such as the option to purchase additional usage of a previously delivered software license. We may also provide pricing concessions to clients, a business practice that also gives rise to variable fees in contracts. For variable fees arising from the client’s purchase of additional usage of a previously delivered software license, we apply the sales and usage-based royalties guidance related to a license of intellectual property and recognizes therecognize revenue in the period the underlying sale or usage occurs. We include variable fees in the determination of total transaction price if it is not probable that a future significant reversal of revenue will occur. We use the expected value or most likely value amount, whichever is more appropriate for specific circumstances, to estimate variable consideration, and the estimates are based on the level of historical price concessions offered to clients.

Goodwill and intangible assets impairment. Our goodwill and intangible assets result from our previous business acquisitions. Goodwill and intangible assets with indefinite useful lives are not amortized but are tested for impairment at least annually or as circumstances indicate their value may no longer be recoverable. We do not carry any intangible assets with indefinite useful lives other than goodwill. We perform our annual goodwill impairment test in the fourth quarter. To assess if goodwill is impaired, we first review qualitative factors to determine whether further impairment testing is necessary. If based on the qualitative assessment, we consider it more-likely-than-not that our reporting unitsunit's fair value is less than its carrying amount, we perform a quantitative impairment test. An excess of carrying value over fair value would indicate that goodwill may be impaired.

Allowance for credit losses. We make judgments as to our ability to collect outstanding and unbilled receivables to reflect any estimated credit losses. The allowance is evaluated each quarter on a customer by customercustomer-by-customer basis and considers historical write-off experience with each customer, the number of days that any delinquent invoices are past due, and an evaluation of the potential risk of loss associated with any delinquent accounts. If the judgments we make to determine the allowance for credit losses do not reflect the future ability to collect outstanding receivables, additional provisions for credit losses may be required.

Recent Accounting Pronouncements. In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires an annual tabular effective tax rate reconciliation disclosure including information for specified categories and jurisdiction levels, as well as,as disclosure of income taxes paid, net of refunds received, disaggregated by federal, state/local, and significant foreign jurisdiction. This ASU will beis effective for the Company’s fiscal year ended December 31, 2025 year-end,and withhas earlybeen adopted in these consolidated financial statements on a prospective basis. The adoption permitted.did Wenot arehave assessinga material impact on the impact of the standard on ourCompany’s consolidated financial statements.

Investing in our common stock involves a high degree of risk. Our Annual Report on Form 10-K for the year ended December 31, 2025 includes a detailed discussion of our risk factors under the heading “Part I, Item 1A—Risk Factors.” There have been no material changes from such risk factors during the threesix months ended MarchJune 31,30, 2026. You should consider carefully the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2025, and all other information contained in or incorporated by reference in this Quarterly Report on Form 10-Q before making an investment decision. If any of the risks discussed in the Annual Report on Form 10-K or herein actually occur, they may materially harm our business, financial condition, operating results, cash flows or growth prospects. As a result, the market price of our common stock could decline, and you could lose all or part of your investment. Additional risks and uncertainties that are not yet identified or that we think are immaterial may also materially harm our business, financial condition, operating results, cash flows or growth prospects and could result in a complete loss of your investment.

We use revenue and results of operations to summarize financial results as we believe these measurements are the most meaningful way to understand our operating performance. The comparisons below reflect certain reclassifications described in more detail in Note 1 to the consolidated financial statements Revenue and operating loss for the threesix months ended MarchJune 31,30, 2026 were $3.4$6.6 million and $3.7$6.4 million, respectively. These results compared to revenue of $3.6$7.5 million and operating loss of $1.9$3.8 million for the threesix months ended MarchJune 31,30, 2025. The decrease in revenue was primarily due to lower software license revenue. The increase in operating loss was primarily due to lower revenue, one-time severance costs in the current quarterperiod of $0.7 million and a $0.6 million increase in salary-related expenses resulting from additional headcount hired in 2025. These severance costs relate to workforce reduction actions taken during the quarterperiod as part of our efforts to align our cost structure with current business conditions. TheseWe expect to realize incremental cost savings from these actions arethroughout expectedthe toremainder reduceof operating expenses in future periods.2026.

Software license revenue decreased 22%33% from $1.3$1.4 million in the three months ended MarchJune 31,30, 2025 to $1.0 million for the three months ended MarchJune 31,30, 2026. As a percentage of total revenue, software license revenue decreased from 36% in the firstsecond quarter of 2025 to 30%29% in the current year quarter. The $0.3$0.4 million decrease in software license revenue was due primarily to a decrease in perpetual licenses sales due to a decrease in one-time license deals in the current quarter.

Software maintenance wasdecreased 7% from $2.1 million in each of the three months ended MarchJune 31,30, 20262025 andto 2025.$2.0 million for the three months ended June 30, 2026. As a percentage of total revenue, software maintenance revenue increased from 58%55% in the firstsecond quarter of 2025 to 61% in the current year first quarter. Prior period amounts have been reclassified to conform to the current period presentation. See Note 1 to the consolidated financial statements for additional information regarding these reclassifications.period.

Services and other revenue increased 54% from $0.2$0.5 million in the threesix months ended MarchJune 31,30, 2025 to $0.3$0.6 million in the threesix months ended MarchJune 31,30, 2026. As a percentage of total revenue, services and other revenue increased from 5%7% in the threesix months ended MarchJune 31,30, 2025 to 8%9% in the current year period. The increase was primarily due to growth in SaaS revenue, which increased from $47$0.1 thousandmillion in the threesix months ended MarchJune 31,30, 2025 to $0.1$0.3 million in the current year firstperiod quarter.and was partially offset by lower services revenue. The increase in SaaS revenue reflects expansion of subscription-based customer arrangements. Prior period amounts have been reclassified to conform to the current period presentation. See Note 1 to the consolidated financial statements for additional information regarding these reclassifications.

Cost of revenue increased 93%95% from $0.2 million in the three months ended March 31, 2025 to $0.3 million in the three months ended MarchJune 31,30, 2025 to $0.5 million in the three months ended June 30, 2026. Cost of revenue as a percentage of total revenue increased from 5%7% in the firstsecond quarter of 2025 to 10%16% in the current year firstsecond quarter. The $0.1$0.2 million increase was the result of increased software license costs. Prior period amounts have been reclassified to conform to the current period presentation. See Note 1 to the consolidated financial statements for additional information regarding these reclassifications.

Total engineering costs increased 62%28% from $2.0$2.1 million in the three months ended MarchJune 31,30, 2025 to $3.3$2.6 million in the three months ended MarchJune 31,30, 2026. As a percentage of total revenue, total engineering costs increased from 56%53% in the three months ended MarchJune 31,30, 2025 to 97%81% in the same current year quarter. The spending increase for the three months ended June 30, 2026 compared to the same prior year period was primarily due to salary related costs in relation to additional headcount hired in 2025.

Total engineering costs increased 45% from $4.0 million in the six months ended June 30, 2025 to $5.9 million in the six months ended June 30, 2026. As a percentage of total revenue, total engineering costs increased from 54% in the six months ended June 30, 2025 to 89% in the same current year period. The spending increase for the threesix months ended MarchJune 31,30, 2026 compared to the same prior year period was primarily due to one-time severance costs of $0.6 million including the termination of our chief technology officer and $0.7a $1.3 million increase in salary related costs in relation to additional headcount hired in 2025. We anticipate engineering expenses to decrease during the remainder of 2026 as we focus on strategic product development initiatives.

Selling and marketing expense increaseddecreased 10%29% from $1.7$2.0 million in the three months ended MarchJune 31,30, 2025 to $1.8$1.4 million in the same three month period of 2026. As a percentage of total revenue, selling and marketing expense increaseddecreased from 45%50% in the firstsecond quarter of 2025 to 49%42% in the corresponding period in 2026.

The spendingdecrease increasesin selling and marketing expense for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in the prior yearyear, was primarily due to onelower timepersonnel-related severancecosts resulting from the cost ofsaving $0.1plan millionimplemented andin $0.1March million related2026 to higherbetter headcountalign hiredthe inCompany's 2025.cost structure with current business needs.

General and administrative expense wasdecreased 7% from $1.7 million for each ofin the three months ended MarchJune 31,30, 20262025 andto 2025.$1.6 million in the three months ended June 30, 2026. As a percentage of total revenue, general and administrative expense wasincreased 47%from 43% in the firstthree quartermonths ofended June 30, 2025 andto 49%47% in the corresponding period of 2026. Prior period amounts have been reclassified to conform to the current period presentation. See Note 1 to the consolidated financial statements for additional information regarding these reclassifications.

Interest Income. Interest income was $0.2$0.4 million and $0.3$0.5 million in the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The decrease in interest income in the threesix months ended MarchJune 31,30, 2026 was primarily the result of lower average cash balances during the current year period.

Income taxes. Total income tax expense was $8$1 thousand and $7$26 thousand for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The income tax expense relates to state income taxes.

We have evaluated the positive and negative evidence bearing upon our ability to realize our deferred tax assets, which primarily consist of net operating loss carryforwards and research and development tax credits. We considered the history of cumulative net losses, estimated future taxable income and prudent and feasible tax planning strategies and we have concluded that it is more likely than not that we will not realize the benefits of our deferred tax assets. As a result, as of MarchJune 31,30, 2026 and December 31, 2025, we recorded a full valuation allowance against our net deferred tax assets.

At MarchJune 31,30, 2026, we had cash, cash equivalents and marketable securities of $19.6$16.8 million, which represented a decrease of $2.7$5.5 million from December 31, 2025. The decrease in cash, cash equivalents and marketable securities was primarily due to the impact of $2.7$5.4 million of cash used in operating activities.

Cash usedprovided inby investing activities was sixteen$1.0 thousandmillion in the first threesix months of 2026, which primarily consisted of net purchasessales of marketable securities.