Financial Position - As of December 31, 2025, the company had unrestricted cash and cash equivalents of $86.9 million and total net working capital of $3.0 million, raising substantial doubt about its ability to continue as a going concern [23]. - As of December 31, 2025, the company employed approximately 250 full-time employees, with 99% based in North America [48]. Digital Advertising Market - Global digital advertising spending reached an estimated $650 billion in 2025 and is projected to grow to $1 trillion by 2030, with digital advertising accounting for approximately 73% of total global advertising spend in 2025 [24]. - The company processed approximately 11 billion total sessions in 2025, leveraging significant amounts of first-party intent-based data to optimize monetization performance [40]. Business Operations - The company operates approximately 40 websites across various categories, utilizing its platform to efficiently match real-time consumer intent with services or advertisers [33]. - The company plans to expand its existing business lines, including flagship brands like CouponFollow, MapQuest, and Startpage.com, while increasing the number of integrated marketing and advertising partners [44]. - The company aims to develop new products and services, including AI-enabled services, to adapt to the evolving digital marketplace [45]. Management and Strategy - The management team is founder-led and possesses significant experience in digital advertising and publishing, which supports the company's growth strategies [42]. - The company has a proven track record in mergers and acquisitions, seeking complementary businesses to enhance its marketing platform [41]. Data and Compliance - The company emphasizes the importance of first-party data, continuously enhancing its proprietary dataset based on over 560 million distinct search queries each month [37]. - The company relies on pseudonymous data for managing digital advertising campaigns, ensuring compliance with privacy regulations while prohibiting the use of directly identifying information [61]. - Recent privacy regulations, such as the California Consumer Privacy Act (CCPA) and the General Data Protection Regulation (GDPR), impose significant compliance requirements that may affect business operations and costs [64][66]. - The company is subject to scrutiny regarding interest-based advertising practices, which may lead to changes in business practices if new regulations are adopted [70]. - The company participates in industry self-regulatory programs to enhance consumer privacy and provide users with notice and choice regarding data usage [71]. - The company has historically relied on the EU-U.S. Privacy Shield Framework for data transfer, which was invalidated, raising concerns about lawful cross-border data transfers [68]. Market Risks - The competitive landscape includes demand-side platform providers and large companies like Google and Microsoft, which may pressure the company to adjust pricing strategies [59]. - The advertising industry experiences seasonal revenue fluctuations, with the fourth quarter historically showing the highest activity and the first quarter the lowest [56]. - The company faces uncertainty regarding the impact of geopolitical developments and macroeconomic factors, including rising interest rates and inflation, on revenue and operations [58]. - The company does not engage in hedging activities to mitigate foreign currency exchange rate fluctuations, which could impact financial results [57]. - The company is not required to provide quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company [356].

Financial Performance - Full-year 2025 revenue decreased by 23% year-over-year to $266.1 million, with a fourth-quarter revenue decline of 31% to $51.9 million[5] - Adjusted Gross Profit for the full year increased by 1% to $153.4 million, with an Adjusted Gross Profit Margin rising to 58% from 44% year-over-year[5] - GAAP Net Loss for the full year decreased by 17% to $81.2 million, while the fourth-quarter GAAP Net Loss decreased by 1% to $17.8 million[5] - Adjusted EBITDA for the full year increased by 9% to $41.9 million, despite a 54% decrease in fourth-quarter Adjusted EBITDA to $8.2 million[5] - For Q4 2025, the company reported a net loss of $17.8 million, compared to a net loss of $18.0 million in Q4 2024[19] - Adjusted EBITDA for Q4 2025 was $8.2 million, an increase from $17.9 million in Q4 2024[19] - Revenue for Q4 2025 was $51.9 million, down from $75.6 million in Q4 2024, representing a decrease of approximately 31.4%[20] - Gross profit for Q4 2025 was $21.3 million, compared to $31.8 million in Q4 2024, reflecting a decline of about 33.0%[20] - Adjusted Gross Profit for Q4 2025 was $34.9 million, down from $44.7 million in Q4 2024, a decrease of approximately 21.8%[20] - For the full year 2025, the company reported a net loss of $81.2 million, compared to a net loss of $97.3 million in 2024[19] - Total revenue for the year 2025 was $266.1 million, a decrease from $343.9 million in 2024, representing a decline of about 22.7%[20] - The company incurred interest expenses of $27.6 million for the year 2025, down from $31.6 million in 2024[19] - Amortization related to cost of revenue for the year 2025 was $53.0 million, compared to $51.0 million in 2024[20] - Acquisition and restructuring costs for the year 2025 totaled $9.6 million, significantly lower than $31.4 million in 2024[19] User Engagement - Daily active users for Startpage.com reached 1.6 million in December 2025, representing a 42% increase year-over-year[6] - Mapquest.com recorded 36 million sessions in December 2025, up 24% year-over-year[6] Strategic Focus - The company is focusing on continued investment in AI capabilities to drive long-term growth[4] - System1 is evaluating opportunities to strengthen its balance sheet and optimize its capital structure[4] Assets and Liabilities - Total assets decreased to $404.972 million in 2025 from $459.129 million in 2024[18] - Total liabilities increased to $387.553 million in 2025 from $374.133 million in 2024[18]

Core Insights - 1.org has partnered with Guide Dogs of America | Tender Loving Canines (GDA | TLC) to allocate a portion of its search-driven advertising revenue to support the training and placement of guide and service dogs [1][5] - The 1.org mobile app allows users to contribute to GDA | TLC by simply conducting their regular web searches, making it a cost-free way to support the cause [2][3] Company Overview - 1.org is a charitable search engine developed by System1 (NYSE: SST) that aims to redirect the value generated from web searches towards impactful causes, including animal welfare, disaster relief, education, and cancer care [3][10] - The platform operates as a registered Charitable Fundraising Platform in California, donating a percentage of its advertising revenue to vetted nonprofit organizations across six focus areas [10] Partnership Details - The collaboration with GDA | TLC enables users to support the training of guide and service dogs without any financial burden, as the revenue generated from ads shown during searches will fund the nonprofit's mission [5][11] - GDA | TLC provides expertly-trained guide and service dogs at no cost to recipients, emphasizing the transformative impact these dogs have on individuals' lives [5][11] User Engagement - Users can enhance their impact by generating custom invite links through the 1.org referral feature, which triggers a $5 donation to their selected charity for each new user who joins via the link [6] - The process for users includes installing the 1.org browser extension or Android app, creating a free account, selecting a charity, and conducting searches as usual [7] Target Beneficiaries - The guide and service dogs trained by GDA | TLC primarily assist individuals who are blind or visually impaired, veterans with military-related PTSD, traumatic brain injury, or military sexual trauma, and children with autism [8]

Core Viewpoint - System1, Inc. is currently not in compliance with NYSE listing standards due to its market capitalization and stockholder's equity being below $50 million, and it has 18 months to address these deficiencies [1][2]. Group 1: Compliance Issues - The company was notified by the NYSE that its 30 trading-day average market capitalization was less than $50 million [1]. - As of September 30, 2025, the last reported stockholder's equity was also less than $50 million [1]. - System1 has a period of 18 months to cure these deficiencies, pending NYSE's approval of its business plan [1]. Group 2: Business Plan Submission - The company plans to notify the NYSE by December 22, 2025, of its intention to submit a business plan by January 22, 2026 [2]. - The business plan aims to address the market capitalization and stockholder's equity deficiencies to regain compliance with NYSE standards [2]. - System1 will consider all available alternatives to rectify the identified deficiencies [2]. Group 3: Company Overview - System1 operates several flagship brands across various consumer verticals, including shopping, travel, and search [3]. - The company utilizes an AI and machine learning-powered customer acquisition and marketing platform [3]. - Its platform is designed to deliver high-intent customers to advertising partners, maximizing their reach and effectiveness [3].

Financial Data and Key Metrics Changes - Revenue for Q3 was approximately $62 million, with adjusted gross profit of $36 million and adjusted EBITDA of $9.9 million, each down 4% year over year [5][17] - Marketing revenue came in at $39 million, down 43% year over year and down 28% sequentially [12][16] - Product revenue was $22.5 million, up 8% year over year but down 6% sequentially [17] Business Line Data and Key Metrics Changes - The product segment showed strong year-over-year growth, with revenue increasing 8% from Q3 2024 and adjusted gross profit up 6% year over year [5][7] - Marketing segment profit was $16.6 million, down 14% year over year and down 15% sequentially, driven by lower traffic acquisition costs [12][19] - Sessions increased 23% year over year and 12% sequentially, reflecting strong execution in the product segment [17] Market Data and Key Metrics Changes - The transition away from Google's AdSense for Domains (AFD) product had a significant negative impact on marketing revenue, which previously contributed approximately 39% of marketing platform revenue [18][19] - The company is transitioning to Google's Related Search on Content (RSoC) product, which is expected to provide a more stable revenue stream moving forward [6][13] Company Strategy and Development Direction - The company is focusing on integrating AI across its operations and expanding its product offerings, particularly in the areas of search, shopping, and geolocation [6][11] - There is a strategic emphasis on acquiring direct users to reduce dependency on third-party distribution platforms [11] - The company plans to increase investment in its product segment, which is viewed as having more predictable growth compared to the marketing business [10][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the volatility in the marketing segment but expressed confidence in returning to growth as the transition to RSoC completes [13][21] - The leadership team believes the majority of the volatility tied to Google Marketplace dynamics is behind them and anticipates providing guidance in the near future [21] - The company remains committed to enforcing high standards of traffic quality and is pursuing claims against partners for invalid traffic [14] Other Important Information - The company ended the quarter with $54.6 million of unrestricted cash and an outstanding balance of $265 million of term-loan debt [20][21] - The company is not providing Q4 2025 guidance at this time but expects to stabilize and rebound in the marketing segment [21] Q&A Session Summary Question: Efforts with Microsoft and Bing's market share gains - The company has been working closely with Bing and has seen improved performance, leading to a shift in efforts towards Bing as monetization increases [23][24] Question: Collaboration with OpenAI and Anthropic - The company highlighted its new product Vanish, which focuses on private AI, and mentioned ongoing work with various AI models to enhance its platform [25][26]

Financial Performance - Revenue for the three months ended September 30, 2025, was $61,561, a decrease of 31% compared to $88,832 in the same period in 2024[108] - Revenue for the nine months ended September 30, 2025, was $214,189, a decline of 20% from $268,330 in 2024[109] - Total revenue decreased by 31% to $61.6 million for the three months ended September 30, 2025, compared to $88.8 million in the same period of 2024[113] - Marketing revenue decreased by 43% to $39.1 million for the three months ended September 30, 2025, compared to $68.1 million in the same period of 2024[113] - Products revenue increased by 8% to $22.5 million for the three months ended September 30, 2025, compared to $20.7 million in the same period of 2024[113] Operating Expenses - Operating expenses for the three months ended September 30, 2025, totaled $77,126, down 30% from $110,648 in 2024[108] - Total operating expenses for the nine months ended September 30, 2025, were $258,785, down 25% from $345,028 in 2024[109] - Salaries and benefits for the three months ended September 30, 2025, were $21,354, a decrease of 27% from $29,177 in 2024[108] - Traffic Acquisition Cost (TAC) decreased by $26.8 million to $84.0 million for the three months ended September 30, 2025, from $110.8 million in the prior year[114] Net Loss - The net loss attributable to System1, Inc. for the three months ended September 30, 2025, was $18,516, a reduction of 22% from $23,602 in 2024[108] - The net loss attributable to System1, Inc. for the nine months ended September 30, 2025, was $51,862, a decrease of 14% from $60,512 in 2024[109] Cash Flow and Liquidity - Cash provided by operating activities was $6.5 million for the nine months ended September 30, 2025, compared to cash used of $6.0 million in the same period of 2024[134] - As of September 30, 2025, the company had unrestricted cash and cash equivalents of $54.6 million and $50.0 million available to borrow on its 2022 Revolving Facility[132] - The company expects existing cash and cash equivalents and cash flows from operating and financing activities to be sufficient to fund its operating and cash commitments for at least the next twelve months[130] Business Operations - The company operates approximately 40 websites, including leading search engines and digital media publishing sites[94] - As of September 30, 2025, the company processes daily advertising campaign optimizations across approximately 40 advertising vertical categories[93] Segment Performance - Segment adjusted gross profit for Marketing decreased by 14% to $16.6 million for the three months ended September 30, 2025, compared to $19.4 million in the same period of 2024[120] - Segment adjusted gross profit for Products increased by 6% to $21.2 million for the three months ended September 30, 2025, compared to $20.1 million in the same period of 2024[120] Product Metrics - Products sessions increased by 111.3 million to 584.7 million for the three months ended September 30, 2025, compared to 473.4 million in the same period of 2024[115] Regulatory Classification - The company is classified as a "smaller reporting company" and is not required to provide quantitative and qualitative disclosures about market risk[147]

Financial Performance - Revenue decreased 31% year-over-year to $61.6 million[6] - GAAP gross profit decreased 8% year-over-year to $22.8 million[6] - Adjusted gross profit decreased 4% year-over-year to $36.1 million, with adjusted gross profit margin increasing to 59% from 42% year-over-year[6] - GAAP net loss improved 28% year-over-year to $22.0 million[6] - Adjusted EBITDA decreased 4% year-over-year to $9.9 million[6] - For the three months ended September 30, 2025, the net loss was $22.0 million, an improvement from a net loss of $30.6 million in the same period of 2024[20] - Adjusted EBITDA for Q3 2025 was $9.9 million, slightly down from $10.3 million in Q3 2024[20] - The company incurred $2.0 million in acquisition and restructuring costs in Q3 2025, compared to $8.1 million in Q3 2024, indicating a reduction in restructuring expenses[20] - Interest expense decreased to $7.1 million in Q3 2025 from $8.0 million in Q3 2024, reflecting improved debt management[20] - Depreciation and amortization expenses were $20.8 million in Q3 2025, slightly up from $20.1 million in Q3 2024[20] - Stock-based compensation and distributions to members decreased to $2.8 million in Q3 2025 from $3.8 million in Q3 2024, indicating cost control measures[20] - The income tax benefit for Q3 2025 was $(0.5) million, compared to a benefit of $0.6 million in Q3 2024[20] - Non-cash revaluation of warrant liability resulted in a loss of $(0.1) million in Q3 2025, compared to a gain of $0.3 million in Q3 2024[20] - Other expenses were $(0.2) million in Q3 2025, with no other expenses reported in Q3 2024[20] - The company continues to focus on improving its financial metrics and reducing losses while managing operational costs effectively[20] Market Expansion and Product Development - CouponFollow.com expanded into the European market with localized coupon content in Germany, France, and Poland[7] - MapQuest launched redesigned apps on iOS and Android, enhancing user features[7] - Startpage.com released Vanish Private AI Chat, ensuring user privacy with no logging of IP addresses or queries[7] Future Guidance and Uncertainty - System1 does not plan to provide financial guidance for Q4 2025 due to uncertainty with a key advertising partner[5] Asset Management - Total assets decreased to $385.2 million from $459.1 million as of December 31, 2024[18]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q2 2025 was $11.7 million, an 18% increase year over year [4][30] - Total revenue for Q2 2025 was approximately $78.1 million, reflecting a 17% year over year decrease but a 5% sequential increase [30] - Adjusted gross profit was $41 million, representing a 6% year over year increase [4][30] Business Line Data and Key Metrics Changes - Products revenue increased by 34% year over year to $24 million, with an 8% sequential increase [9][30] - Marketing segment revenue was $54.1 million, down 29% year over year but up 4% sequentially [18][30] - Adjusted gross profit for the marketing segment was $20 million, down 17% year over year [18][30] Market Data and Key Metrics Changes - The owned and operated products segment showed strong performance, with revenue increasing 34% year over year [5][30] - The partner marketing business saw a 29% sequential increase in average revenue per partner [20][30] Company Strategy and Development Direction - The company is focusing on leveraging its expertise in agentic coding to modernize legacy technology platforms for other companies [7][8] - There is a strong belief that the product segment alone is undervalued compared to the overall company valuation [17][23] - The company plans to pursue strategic M&A opportunities to enhance its product offerings and market position [46][49] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about the second half of 2025, anticipating stabilization in the Google advertising market [22][34] - The company is confident in the resilience of its business fundamentals and is focused on operational efficiencies [34][35] - Management acknowledges the current volatility in the marketing segment but believes it will stabilize, allowing for growth [22][34] Other Important Information - The company ended the quarter with $63.6 million in unrestricted cash, an increase of approximately $20 million compared to Q1 [33] - There is no guidance provided for 2025 due to ongoing market volatility [34] Q&A Session Summary Question: What KPIs should investors focus on for the product side? - Management emphasized traffic and monetization rates as key metrics, specifically sessions and revenue per session [40][41] Question: Can you provide high-level comments on the second half of the year? - Management indicated that as political spending decreases, they expect to see lower pricing in the advertising market, which could benefit the company [42][44] Question: What are the thoughts on strategic M&A and capital access? - Management expressed confidence in their ability to access capital for strategic acquisitions and highlighted their historical success in M&A [46][49]

Company Overview - System1 operates an omnichannel marketing platform connecting customers with advertisers in shopping, travel, and search[17] - The company's Responsive Acquisition Marketing Platform (RAMP) identifies, markets to, and monetizes consumers across advertising verticals[20] - System1 monetized 66 billion sessions on its platform in 2023[21] - The platform generates over 1 billion monthly sessions on owned and operated properties and across approximately 220 active network partners[25] Financial Performance - System1's total advertising spend processed by RAMP is over $734 million[21] - The company's adjusted gross profit is $165 million for the twelve months ending June 30, 2025[56] - Adjusted EBITDA is $52 million, representing a 32% margin on gross profit for the twelve months ending June 30, 2025[58] Technology and Operations - System1 processes over 978 million queries per month across owned and operated and partner sites[25] - The platform generates over 16 billion rows of first-party data per day, informing machine learning pipelines[25] - System1 launches over 82,000 quarterly marketing campaigns leveraging AI and automation, a 2x increase from Q1 2025[25] - The company automates 90% of buy-side decisions using AI and machine learning[50]

Part I [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) The company significantly improved its financial performance, narrowing net losses and achieving positive operating cash flow, despite a decrease in total assets [Condensed Consolidated Balance Sheets](index=4&type=page&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $429.2 million, primarily due to intangible asset reduction, while stockholders' equity significantly declined Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$429,249** | **$459,129** | | Cash and cash equivalents | $63,648 | $63,607 | | Intangible assets, net | $185,340 | $222,341 | | Goodwill | $82,407 | $82,407 | | **Total Liabilities** | **$375,805** | **$374,133** | | Current debt, net | $21,544 | $16,405 | | Non-current debt, net | $241,795 | $255,118 | | **Total Stockholders' Equity** | **$53,444** | **$84,996** | [Condensed Consolidated Statements of Operations](index=6&type=page&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 revenue decreased by 17.4% to $78.1 million, but operating and net losses significantly narrowed year-over-year Q2 and Six-Month Performance Comparison (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $78,115 | $94,581 | $152,628 | $179,498 | | Operating Loss | $(15,905) | $(29,086) | $(29,031) | $(54,882) | | Net Loss Attributable to System1, Inc. | $(17,463) | $(26,373) | $(33,346) | $(36,910) | | Basic and Diluted Net Loss Per Share | $(2.23) | $(3.80) | $(4.37) | $(5.38) | [Condensed Consolidated Statements of Cash Flows](index=10&type=page&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow turned positive at $8.5 million for H1 2025, a significant improvement from the prior year's cash usage Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $8,543 | $(6,022) | | Net cash used in investing activities | $(3,107) | $(3,218) | | Net cash used in financing activities | $(8,094) | $(53,929) | | **Net decrease in cash** | **$(2,679)** | **$(63,175)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=page&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Key notes include a corporate reorganization, a 1-for-10 reverse stock split, segment reporting changes, and details on debt and related party transactions - A corporate reorganization on August 1, 2024, established System1 Holdings, LLC as an intermediate holding company for the 'Products' and 'Marketing' businesses[27](index=27&type=chunk)[92](index=92&type=chunk) - A **1-for-10 reverse stock split** of Class A and Class C common stock was effective on June 11, 2025, with retroactive adjustments to all share and per-share amounts[32](index=32&type=chunk)[93](index=93&type=chunk) - Reportable segments were changed in Q2 2025 to 'Marketing' and 'Products', with prior year information revised accordingly[70](index=70&type=chunk) - The Term Loan had **$270.1 million** principal outstanding as of June 30, 2025, with **$50.0 million** available on the Revolving Facility, and the company was in compliance with covenants[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk) - The company sold **450,000 shares** of Class A common stock for **$2.3 million** in a private placement to a founder's family foundation on April 28, 2025[84](index=84&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 15% revenue decline driven by Marketing, offset by Products growth, alongside significant cost reductions, improved liquidity, and positive operating cash flow [Company Overview](index=25&type=page&id=Company%20Overview) System1 utilizes its proprietary RAMP platform to monetize traffic from its 40 owned and operated websites, following recent corporate reorganization and stock split - The core technology is the proprietary Responsive Acquisition Marketing Platform (RAMP), matching consumer demand with advertisers without third-party cookies[88](index=88&type=chunk)[89](index=89&type=chunk) - As of June 30, 2025, the company owns and operates approximately **40 websites**, including search engines and digital media properties[90](index=90&type=chunk) [Results of Operations](index=28&type=page&id=Results%20of%20Operations) Q2 2025 revenue declined 17% to $78.1 million due to Marketing segment weakness, but operating loss significantly improved due to cost reductions Revenue by Reportable Segment (in thousands) | Segment | Q2 2025 | Q2 2024 | Change (%) | YTD 2025 | YTD 2024 | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Marketing | $54,142 | $76,654 | (29)% | $106,392 | $146,784 | (28)% | | Products | $23,973 | $17,927 | 34% | $46,236 | $32,714 | 41% | | **Total Revenue** | **$78,115** | **$94,581** | **(17)%** | **$152,628** | **$179,498** | **(15)%** | - Marketing segment RTAC decreased to **117%** in Q2 2025 from 120% YoY, while the six-month RTAC increased to **121%** from 119%[111](index=111&type=chunk) - Products segment sessions increased to **522.5 million** in Q2 2025, with revenue-per-session (RPS) rising to **$0.05** from $0.04[112](index=112&type=chunk) - Salaries and benefits expense decreased due to an **$11.1 million** reduction in CouponFollow share-based liability accruals and a **10% headcount reduction** in Q2 2025[117](index=117&type=chunk) - Selling, general, and administrative expense decreased primarily from a **$4.3 million** reduction in professional and consulting fees in Q2 2025[118](index=118&type=chunk) [Liquidity and Capital Resources](index=33&type=page&id=Liquidity%20and%20Capital%20Resources) The company maintains **$63.6 million** in cash and **$50.0 million** available on its revolving facility, with positive operating cash flow of **$8.5 million** for H1 2025, supporting liquidity for the next twelve months - The company held **$63.6 million** in unrestricted cash and cash equivalents and **$50.0 million** available on its 2022 Revolving Facility as of June 30, 2025[127](index=127&type=chunk) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $8,543 | $(6,022) | | Net cash used in investing activities | $(3,107) | $(3,218) | | Net cash used in financing activities | $(8,094) | $(53,929) | - A contractual obligation requires spending **$5.0 million** with a service provider between July 2025 and June 2026[63](index=63&type=chunk)[139](index=139&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a 'smaller reporting company', the company is exempt from providing quantitative and qualitative disclosures about market risk - As a 'smaller reporting company', the company is not required to provide quantitative and qualitative disclosures about market risk[143](index=143&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed ineffective as of June 30, 2025, due to material weaknesses in internal control over financial reporting, with a remediation plan underway - Disclosure controls and procedures were deemed **not effective** as of June 30, 2025, due to identified material weaknesses in internal control over financial reporting[144](index=144&type=chunk) - Identified material weaknesses include insufficient accounting professionals, ineffective controls for complex transactions, and a lack of formal accounting policies impacting segregation of duties and reporting accuracy[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk) - The remediation plan involves hiring skilled accounting personnel, engaging an advisory firm, and implementing more formal and robust controls and policies[149](index=149&type=chunk)[151](index=151&type=chunk) Part II [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing legal proceedings are not expected to materially affect the company's financial position or results of operations - The company states that ongoing legal proceedings are not expected to materially affect its financial statements[153](index=153&type=chunk) [Risk Factors](index=38&type=page&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported since the last Annual Report on Form 10-K - No material changes to risk factors were reported since the last Annual Report on Form 10-K[155](index=155&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company sold **$2.25 million** in unregistered securities in Q2 2025 and has **$23.9 million** remaining in its share repurchase program - In Q2 2025, the company sold **$2.25 million** of unregistered securities for general corporate expenses[156](index=156&type=chunk) Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Value Remaining in Program (millions) | | :--- | :--- | :--- | :--- | | June 1 - 30 | 144 | $4.35 | $23.9 | [Other Information](index=39&type=section&id=Item%205.%20Other%20Information) No other information was reported for the period - None[161](index=161&type=chunk)