[PART I – FINANCIAL INFORMATION](index=4&type=section&id=Part%20I%20%E2%80%93%20Financial%20Information) [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201%2E%20FINANCIAL%20STATEMENTS) [Condensed Consolidated Balance Sheets (unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28unaudited%29) Acuren Corporation's Condensed Consolidated Balance Sheets detail financial position, with slight increases in assets and liabilities, and equity growth despite a rising accumulated deficit | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------- | :------------ | :---------------- | :----- | :------- | | Total assets | $2,242,358 | $2,207,739 | $34,619 | 1.57% | | Total liabilities | $1,063,295 | $1,056,567 | $6,728 | 0.64% | | Total stockholders' equity | $1,179,063 | $1,151,172 | $27,891 | 2.42% | | Cash and cash equivalents | $130,056 | $139,134 | $(9,078) | -6.52% | | Accounts receivable, net | $257,646 | $236,520 | $21,126 | 8.93% | | Goodwill | $876,790 | $845,939 | $30,851 | 3.65% | | Accumulated deficit | $(133,015) | $(106,989) | $(26,026)| 24.33% | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29%20%28unaudited%29) The Condensed Consolidated Statements of Operations show increased service revenue but declining gross profit and net losses for both periods, with a significantly higher loss in the six-month Successor period | Metric (in thousands) | 3 Months Ended June 30, 2025 (Successor) | 3 Months Ended June 30, 2024 (Predecessor) | Change | % Change | | :-------------------- | :--------------------------------------- | :--------------------------------------- | :----- | :------- | | Service revenue | $313,925 | $309,292 | $4,633 | 1.50% | | Gross profit | $74,101 | $80,619 | $(6,518) | -8.08% | | Income from operations | $18,350 | $19,749 | $(1,399) | -7.09% | | Net loss | $(233) | $(5,450) | $5,217 | -95.72% | | Metric (in thousands) | 6 Months Ended June 30, 2025 (Successor) | 6 Months Ended June 30, 2024 (Predecessor) | Change | % Change | | :-------------------- | :--------------------------------------- | :--------------------------------------- | :----- | :------- | | Service revenue | $548,140 | $532,354 | $15,786 | 2.97% | | Gross profit | $117,770 | $136,467 | $(18,697)| -13.70% | | Income from operations | $8,910 | $33,743 | $(24,833)| -73.60% | | Net loss | $(26,026) | $(6,721) | $(19,305)| 287.23% | [Condensed Consolidated Statements of Stockholders' Equity (unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20%28unaudited%29) The Condensed Consolidated Statements of Stockholders' Equity detail equity changes, with total equity increasing in the Successor period due to share-based compensation and other comprehensive income, despite net losses | Metric (in thousands) | Successor (Dec 31, 2024) | Successor (June 30, 2025) | Change (H1 2025) | | :-------------------- | :----------------------- | :------------------------ | :--------------- | | Total Stockholders' Equity | $1,151,172 | $1,179,063 | $27,891 | | Net loss (H1 2025) | | $(26,026) | | | Share-based compensation expense (H1 2025) | | $2,980 | | | Other comprehensive income (H1 2025) | | $50,937 | | | Metric (in thousands) | Predecessor (Dec 31, 2023) | Predecessor (June 30, 2024) | Change (H1 2024) | | :-------------------- | :----------------------- | :------------------------ | :--------------- | | Total Stockholders' Equity | $381,999 | $380,136 | $(1,863) | | Net loss (H1 2024) | | $(6,721) | | | Share-based compensation expense (H1 2024) | | $17,696 | | | Other comprehensive loss (H1 2024) | | $(12,838) | | [Condensed Consolidated Statements of Cash Flows (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%28unaudited%29) The Condensed Consolidated Statements of Cash Flows show significant improvement in Successor period operating cash flow, less cash used in investing, and a shift in financing activities from providing to using cash | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2025 (Successor) | 6 Months Ended June 30, 2024 (Predecessor) | Change | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :----- | | Operating activities | $26,305 | $(8,754) | $35,059 | | Investing activities | $(28,407) | $(56,627) | $28,220 | | Financing activities | $(10,308) | $8,750 | $(19,058)| | Net change in cash and cash equivalents | $(9,078) | $(56,265) | $47,187 | [Notes to the Condensed Consolidated Financial Statements (unaudited)](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20%28unaudited%29) These notes provide essential context for the financial statements, detailing accounting policies, business combinations, equity, debt, tax, and other disclosures, clarifying the Acuren Acquisition's impact and recent corporate actions [NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=NOTE%201%2E%20BASIS%20OF%20PRESENTATION%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - Acuren Corporation is a leading provider of critical asset integrity services, primarily operating in North America across various industrial markets such as chemical, pipeline, refinery, and power generation[20](index=20&type=chunk) - The company completed the Acuren Acquisition on July 30, 2024, and subsequently changed its name from Admiral Acquisition Limited. This acquisition established Acuren as the accounting acquirer (Successor) and ASP Acuren as the accounting Predecessor, resulting in non-comparable financial statements across periods due to the application of acquisition method accounting[21](index=21&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) [NOTE 2. BUSINESS COMBINATIONS](index=11&type=section&id=NOTE%202%2E%20BUSINESS%20COMBINATIONS) - During the first six months of 2025, Acuren (Successor) completed two minor business combinations for a total cash consideration of **$16.7 million**, contributing **$3.0 million** in service revenue and **$3.9 million** in goodwill[28](index=28&type=chunk) - The significant Acuren Acquisition was completed on July 30, 2024, with an aggregate purchase consideration of **$1.9 billion**, comprising **$1.87 billion** in cash and **$4.0 million** in equity consideration. This acquisition resulted in the recognition of **$865.6 million** in goodwill[29](index=29&type=chunk)[31](index=31&type=chunk) - In the first six months of 2024, the Predecessor completed three minor business combinations for **$47.6 million** cash, generating **$7.5 million** in revenue and **$22.2 million** in goodwill[32](index=32&type=chunk) [NOTE 3. STOCKHOLDERS' EQUITY](index=12&type=section&id=NOTE%203%2E%20STOCKHOLDERS%27%20EQUITY) - On December 16, 2024, the Company domesticated from the British Virgin Islands to Delaware, converting ordinary shares to common stock and Founder Preferred Shares to Series A Preferred Stock on a one-to-one basis, with no change in outstanding shares or proportional equity interest[33](index=33&type=chunk) | Share Class | Par Value | Authorized Shares | Issued & Outstanding (June 30, 2025) | | :---------- | :-------- | :---------------- | :----------------------------------- | | Common Stock | $0.0001 | 500,000,000 | 121,476,215 | | Preferred Stock | $0.0001 | 5,000,000 | | | Series A Preferred Stock | | | 1,000,000 | - Holders of Series A Preferred Stock are entitled to an annual dividend in common stock, equal to **20%** of the common stock's market price appreciation above **$10.00 per share**, once the average price exceeds **$11.50** for **10 consecutive trading days** (condition met in Q1 2025). These shares automatically convert to common stock on a one-for-one basis on December 31, 2034, or at the holder's option prior to that date[36](index=36&type=chunk)[37](index=37&type=chunk)[40](index=40&type=chunk) - As of June 30, 2025, there were **18,264,876 warrants** outstanding, exercisable for approximately **4,566,219 shares** of common stock at an exercise price of **$11.50 per share**, expiring three years after the Acuren Acquisition[43](index=43&type=chunk) [NOTE 4. EARNINGS PER SHARE](index=15&type=section&id=NOTE%204%2E%20EARNINGS%20PER%20SHARE) | Metric | 3 Months Ended June 30, 2025 (Successor) | 6 Months Ended June 30, 2025 (Successor) | | :----- | :--------------------------------------- | :--------------------------------------- | | Basic loss per common stock | $(0.00) | $(0.21) | | Basic loss per Series A Preferred Stock | $(0.00) | $(0.21) | | Diluted loss per common stock | $(0.00) | $(0.21) | | Diluted loss per Series A Preferred Stock | $(0.00) | $(0.21) | | Metric | 3 Months Ended June 30, 2024 (Predecessor) | 6 Months Ended June 30, 2024 (Predecessor) | | :----- | :--------------------------------------- | :--------------------------------------- | | Basic loss per common share | $(1.08) | $(1.34) | | Diluted loss per common share | $(1.08) | $(1.34) | - For the three and six months ended June 30, 2025, potentially dilutive shares (stock options, warrants, RSUs, and contingently issuable Series A Preferred Stock dividends) were excluded from diluted EPS calculations as their impact would have been anti-dilutive[47](index=47&type=chunk) [NOTE 5. ACCOUNTS RECEIVABLE](index=17&type=section&id=NOTE%205%2E%20ACCOUNTS%20RECEIVABLE) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Accounts receivable | $204,555 | $216,613 | $(12,058)| | Unbilled receivable | $56,281 | $24,171 | $32,110 | | Allowance for credit losses | $(3,190) | $(4,264) | $1,074 | | Total accounts receivable, net | $257,646 | $236,520 | $21,126 | [NOTE 6. PROPERTY AND EQUIPMENT](index=17&type=section&id=NOTE%206%2E%20PROPERTY%20AND%20EQUIPMENT) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Property and equipment, net | $185,675 | $189,233 | $(3,558)| | Depreciation Expense (in thousands) | 3 Months Ended June 30, 2025 (Successor) | 3 Months Ended June 30, 2024 (Predecessor) | Change | | :---------------------------------- | :--------------------------------------- | :--------------------------------------- | :----- | | Total depreciation expense | $16,315 | $9,519 | $6,796 | | Depreciation Expense (in thousands) | 6 Months Ended June 30, 2025 (Successor) | 6 Months Ended June 30, 2024 (Predecessor) | Change | | :---------------------------------- | :--------------------------------------- | :--------------------------------------- | :----- | | Total depreciation expense | $31,912 | $18,712 | $13,200 | [NOTE 7. GOODWILL](index=18&type=section&id=NOTE%207%2E%20GOODWILL) | Metric (in thousands) | December 31, 2024 | June 30, 2025 | Change (H1 2025) | | :-------------------- | :---------------- | :------------ | :--------------- | | Balance | $845,939 | $876,790 | $30,851 | | Acquisitions | | $3,927 | | | Currency adjustments | | $26,924 | | [NOTE 8. INTANGIBLE ASSETS](index=18&type=section&id=NOTE%208%2E%20INTANGIBLE%20ASSETS) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Net Carrying Amount | $742,092 | $740,657 | $1,435 | | Amortization Expense (in thousands) | 3 Months Ended June 30, 2025 (Successor) | 3 Months Ended June 30, 2024 (Predecessor) | Change | | :---------------------------------- | :--------------------------------------- | :--------------------------------------- | :----- | | Amortization expense | $13,200 | $10,200 | $3,000 | | Amortization Expense (in thousands) | 6 Months Ended June 30, 2025 (Successor) | 6 Months Ended June 30, 2024 (Predecessor) | Change | | :---------------------------------- | :--------------------------------------- | :--------------------------------------- | :----- | | Amortization expense | $26,200 | $20,100 | $6,100 | [NOTE 9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES](index=18&type=section&id=NOTE%209%2E%20ACCRUED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Total accrued expenses and other current liabilities | $73,704 | $67,676 | $6,028 | | Accrued salaries, wages and related employee benefits | $35,737 | $33,929 | $1,808 | | Income taxes payable | $6,993 | $2,633 | $4,360 | [NOTE 10. FAIR VALUE MEASUREMENTS](index=18&type=section&id=NOTE%2010%2E%20FAIR%20VALUE%20MEASUREMENTS) - The Company categorizes fair value measurements into a three-level hierarchy: Level 1 for unadjusted quoted prices in active markets, Level 2 for observable inputs (direct or indirect), and Level 3 for unobservable inputs[57](index=57&type=chunk)[63](index=63&type=chunk) - The carrying values of cash, accounts receivable, prepaid expenses, accounts payable, and accrued expenses approximate their fair values due to their short maturity. Long-term debt and finance lease obligations also approximate fair value based on current lending rates[58](index=58&type=chunk) [NOTE 11. LONG-TERM DEBT](index=19&type=section&id=NOTE%2011%2E%20LONG-TERM%20DEBT) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Total debt | $751,263 | $754,798 | $(3,535)| | Long-term debt, net of current portion | $743,532 | $747,048 | $(3,516)| | Term Loan outstanding principal | $769,197 | $773,063 | $(3,866)| | Revolving credit facility outstanding | $0 | $0 | $0 | - The 2024 Credit Agreement provides for a **$775.0 million** seven-year senior secured Term Loan and a **$75.0 million** five-year senior secured Revolving Credit Facility. As of June 30, 2025, the Company was in compliance with all covenants[61](index=61&type=chunk)[65](index=65&type=chunk) - On January 31, 2025, the Term Loan interest rate margins decreased (base rate from **2.50% to 1.75%**, SOFR from **3.50% to 2.75%**). Subsequently, on August 4, 2025, in connection with the NV5 acquisition, new fungible term loans of **$875.0 million** were added, increasing total term loans to **$1.6 billion**, and the Revolving Credit Facility increased to **$125.0 million**[67](index=67&type=chunk)[69](index=69&type=chunk)[98](index=98&type=chunk) [NOTE 12. FINANCIAL INSTRUMENTS](index=21&type=section&id=NOTE%2012%2E%20FINANCIAL%20INSTRUMENTS) - The Company uses interest rate swap agreements to mitigate interest rate exposure on its variable rate debt. These derivatives were not designated as hedging instruments, and all historical agreements were terminated during the six months ended June 30, 2024 (Predecessor)[75](index=75&type=chunk) [NOTE 13. INCOME TAXES](index=21&type=section&id=NOTE%2013%2E%20INCOME%20TAXES) | Metric | 3 Months Ended June 30, 2025 (Successor) | 3 Months Ended June 30, 2024 (Predecessor) | | :----- | :--------------------------------------- | :--------------------------------------- | | Income tax expense | $3,909 | $7,909 | | Effective tax rate | 106.3% | 321.6% | | Metric | 6 Months Ended June 30, 2025 (Successor) | 6 Months Ended June 30, 2024 (Predecessor) | | :----- | :--------------------------------------- | :--------------------------------------- | | Income tax expense | $5,374 | $7,199 | | Effective tax rate | (26.0)% | 1,506.1% | - The effective tax rates for the Successor period were significantly impacted by the disparity between results of operations across tax jurisdictions and a **$11.1 million** valuation allowance recorded against interest limitation carryforwards. The Predecessor's high effective tax rate was primarily due to non-deductible stock compensation expense[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) - The 'One Big Beautiful Bill Act,' enacted on July 4, 2025, includes changes to federal tax law (e.g., R&D expensing, bonus depreciation). The Company is evaluating its impact on future periods, as these changes were not reflected in the H1 2025 financial statements[80](index=80&type=chunk) [NOTE 14. STOCK-BASED COMPENSATION](index=21&type=section&id=NOTE%2014%2E%20STOCK-BASED%20COMPENSATION) - Acuren's RSU program includes time-based units (vest over three years), market-based units (vest upon stock price reaching **$20.00**), and performance-based units (vest based on Adjusted EBITDA targets)[82](index=82&type=chunk)[83](index=83&type=chunk) | Metric (in thousands) | 3 Months Ended June 30, 2025 (Successor) | 6 Months Ended June 30, 2025 (Successor) | | :-------------------- | :--------------------------------------- | :--------------------------------------- | | Total share-based compensation expense | $1,900 | $3,000 | | Time-based RSUs | $900 | $1,700 | | Market-based RSUs | $300 | $600 | | Performance-based RSUs | $700 | $700 | - As of June 30, 2025, total unrecognized compensation expense was **$9.3 million** for time-based RSUs (avg. **2.3 years**), **$2.5 million** for market-based RSUs (avg. **1.7 years**), and **$8.7 million** for performance-based RSUs (avg. **2.8 years**)[86](index=86&type=chunk) [NOTE 15. COMMITMENTS AND CONTINGENCIES](index=22&type=section&id=NOTE%2015%2E%20COMMITMENTS%20AND%20CONTINGENCIES) - The Company is involved in various legal claims arising in the normal course of business but does not anticipate any material adverse effect on its business, results of operations, cash flows, or financial condition from these liabilities[87](index=87&type=chunk) [NOTE 16. SEGMENT REPORTING](index=22&type=section&id=NOTE%2016%2E%20SEGMENT%20REPORTING) - Acuren operates in two reportable segments: United States and Canada, both providing the same services to a similar customer base. Operations in the UK are included within the United States segment[106](index=106&type=chunk) | Segment (in thousands) | 3 Months Ended June 30, 2025 (Successor) | 3 Months Ended June 30, 2024 (Predecessor) | Change | % Change | | :--------------------- | :--------------------------------------- | :--------------------------------------- | :----- | :------- | | US Service Revenue | $164,079 | $165,623 | $(1,544) | -0.93% | | Canada Service Revenue | $150,339 | $144,036 | $6,303 | 4.38% | | US Gross Profit | $37,828 | $44,079 | $(6,251) | -14.18% | | Canada Gross Profit | $36,273 | $36,540 | $(267) | -0.73% | | Segment (in thousands) | 6 Months Ended June 30, 2025 (Successor) | 6 Months Ended June 30, 2024 (Predecessor) | Change | % Change | | :--------------------- | :--------------------------------------- | :--------------------------------------- | :----- | :------- | | US Service Revenue | $311,769 | $308,927 | $2,842 | 0.92% | | Canada Service Revenue | $237,311 | $224,191 | $13,120 | 5.85% | | US Gross Profit | $65,922 | $81,075 | $(15,153)| -18.69% | | Canada Gross Profit | $51,848 | $55,392 | $(3,544) | -6.40% | [NOTE 17. RELATED PARTIES](index=23&type=section&id=NOTE%2017%2E%20RELATED%20PARTIES) - Mariposa Acquisition IX, LLC (the "Founder Entity"), controlled by Co-Chairman Sir Martin E. Franklin, holds **1,000,000 shares** of Series A Preferred Stock and **18,877,500 shares** of common stock[91](index=91&type=chunk) - The Company incurred advisory fees of **$0.5 million** and **$1.0 million** for the three and six months ended June 30, 2025, respectively, paid to Mariposa Capital, LLC, an affiliate of the Company's Co-Chairmen[92](index=92&type=chunk) - During the Predecessor period ended June 30, 2024, the Company expensed **$0.9 million** (three months) and **$1.7 million** (six months) to American Securities, LLC, an agreement that terminated upon the Acuren Acquisition[92](index=92&type=chunk)[94](index=94&type=chunk) [NOTE 18. SUPPLEMENTAL CASH FLOW DISCLOSURES](index=25&type=section&id=NOTE%2018%2E%20SUPPLEMENTAL%20CASH%20FLOW%20DISCLOSURES) | Metric (in thousands) | 6 Months Ended June 30, 2025 (Successor) | 6 Months Ended June 30, 2024 (Predecessor) | Change | | :-------------------- | :--------------------------------------- | :--------------------------------------- | :----- | | Interest paid | $28,269 | $7,377 | $20,892 | | Income taxes paid | $12,293 | $16,723 | $(4,430) | | Purchases of property and equipment accrued and not yet paid | $2,729 | $1,795 | $934 | | Increases in operating lease assets | $4,464 | $6,688 | $(2,224) | | Increases in finance lease assets | $7,512 | $5,776 | $1,736 | [NOTE 19. SUBSEQUENT EVENTS](index=25&type=section&id=NOTE%2019%2E%20SUBSEQUENT%20EVENTS) - On August 4, 2025, the Company completed the acquisition of NV5 Global, Inc. for approximately **$1.7 billion**, consisting of **$618.7 million** in cash and the issuance of approximately **79.0 million shares** of common stock[96](index=96&type=chunk) - In connection with the NV5 acquisition, the Credit Agreement was amended to include new fungible term loans of **$875.0 million**, increasing total term loans to **$1.6 billion**, and to increase the senior secured revolving credit facility from **$75.0 million to $125.0 million**[98](index=98&type=chunk) - The initial accounting for the NV5 acquisition is incomplete, and required disclosures will be provided in the Form 10-Q for the quarter ended September 30, 2025[97](index=97&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=26&type=section&id=ITEM%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) [Overview](index=27&type=section&id=Overview) Acuren Corporation is a leading North American provider of critical asset integrity services, specializing in TICC, NDT, RAT solutions, and engineering consulting across diverse industrial markets - Acuren is a leading provider of critical asset integrity services in North America, catering to industrial markets such as chemical, pipeline, refinery, power generation, and renewable energy[104](index=104&type=chunk) - The company's services include Testing, Inspection, Certification and Compliance (TICC), Nondestructive Testing (NDT), Rope Access Technology (RAT) solutions for difficult-to-reach areas, and specialized materials engineering with in-lab destructive testing capabilities[105](index=105&type=chunk) - Acuren operates with two reportable segments: the United States (which includes UK operations) and Canada, both offering similar services to comparable customer bases[106](index=106&type=chunk) [Recent Developments](index=27&type=section&id=Recent%20Developments) Recent developments include the **$1.7 billion** NV5 Global acquisition, new tax legislation, and repriced credit facility interest rate margins, impacting the company's financial structure and future tax obligations [Merger with NV5 and Issuance of New Fungible Term Loans](index=27&type=section&id=Merger%20with%20NV5%20and%20Issuance%20of%20New%20Fungible%20Term%20Loans) - On August 4, 2025, Acuren completed the acquisition of NV5 Global, Inc. for approximately **$1.7 billion**, paid with **$618.7 million** in cash and **79.0 million shares** of common stock[107](index=107&type=chunk) - In connection with the NV5 acquisition, the Credit Agreement was amended to include **$875.0 million** in new fungible term loans, increasing the total term loans outstanding to **$1.6 billion**, and to increase the senior secured revolving credit facility from **$75.0 million to $125.0 million**[110](index=110&type=chunk) [Tax Legislation](index=27&type=section&id=Tax%20Legislation) - The 'One Big Beautiful Bill Act' was enacted on July 4, 2025, introducing changes to federal tax law, including the restoration of immediate expensing for domestic R&D expenditures, reinstatement of **100% bonus depreciation**, and more favorable rules for business interest expense limitations[108](index=108&type=chunk) - These tax law changes were not reflected in the income tax provision for the three and six months ended June 30, 2025, as the enactment occurred after the balance sheet date. The Company is currently evaluating the impact on future periods[108](index=108&type=chunk) [Credit Facility Updates](index=27&type=section&id=Credit%20Facility%20Updates) - On January 31, 2025, the Company entered into the First Amendment to the Credit Agreement, which decreased the interest rate margins for the Term Loan (base rate from **2.50% to 1.75%**, SOFR from **3.50% to 2.75%**)[109](index=109&type=chunk) - A Second Amendment to the Credit Agreement, entered into on August 4, 2025, in connection with the NV5 acquisition, increased the total term loans outstanding to **$1.6 billion** and the senior secured revolving credit facility from **$75.0 million to $125.0 million**[110](index=110&type=chunk) [Certain Factors and Trends Affecting Acuren's Results of Operations](index=28&type=section&id=Certain%20Factors%20and%20Trends%20Affecting%20Acuren%27s%20Results%20of%20Operations) Acuren's results are influenced by recent acquisitions, potential cost increases from tariffs, inflationary pressures, and the ongoing evaluation of the OECD's Pillar 2 global minimum corporate tax framework [Summary of Acquisitions](index=28&type=section&id=Summary%20of%20Acquisitions) - In addition to the significant Acuren Acquisition, the Company completed other minor acquisitions during the reported periods, which impact the comparability of its results of operations[112](index=112&type=chunk) [Economic, Industry and Market Factors](index=28&type=section&id=Economic%2C%20Industry%20and%20Market%20Factors) - The Company may experience increased costs due to recent tariff developments between the United States, Canada, and the UK, and has observed inflationary pressures in 2024 and 2025, which it aims to mitigate through cost management and pricing initiatives[113](index=113&type=chunk) - Acuren is evaluating the impact of the OECD's Pillar 2 framework for a global minimum corporate tax of **15%**, with certain aspects effective January 1, 2024, and others January 1, 2025. To date, Pillar 2 has not had a material impact on the effective tax rate or consolidated financial statements[114](index=114&type=chunk) [Description of Key Financial Statement Line Items](index=28&type=section&id=Description%20of%20Key%20Financial%20Statement%20Line%20Items) This section defines key financial statement line items: Service revenue, Cost of revenue, and Selling, general and administrative expenses, explaining their composition and recognition methods [Service revenue](index=28&type=section&id=Service%20revenue) - Service revenue is generated from Acuren's professionals (engineers, scientists, technicians) performing inspections, testing, and related services for customers, primarily on a time and materials basis, and is recognized as services are performed[115](index=115&type=chunk) [Cost of revenue](index=28&type=section&id=Cost%20of%20revenue) - Cost of revenue primarily consists of direct labor, materials, and indirect costs such as supplies, tools, facility costs, equipment depreciation, and travel expenses, recognized as labor hours are incurred[116](index=116&type=chunk) [Selling, general and administrative expenses](index=28&type=section&id=Selling%2C%20general%20and%20administrative%20expenses) - Selling, general and administrative expenses include indirect costs of services, employee compensation, information systems and technology costs, share-based compensation, amortization of intangibles, and facility-related expenses[117](index=117&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) This section analyzes Acuren's operating results, comparing Successor (2025) to Predecessor (2024) periods, with the Acuren Acquisition significantly impacting comparability of service revenue, gross profit, and net loss | Metric (in thousands) | 3 Months Ended June 30, 2025 (Successor) | 3 Months Ended June 30, 2024 (Predecessor) | Change | % Change | | :-------------------- | :--------------------------------------- | :--------------------------------------- | :----- | :------- | | Service revenue | $313,925 | $309,292 | $4,633 | 1.5% | | Gross profit | $74,101 | $80,619 | $(6,518) | -8.1% | | Selling, general and administrative expenses | $55,236 | $60,870 | $(5,634) | -9.3% | | Income from operations | $18,350 | $19,749 | $(1,399) | -7.1% | | Net loss | $(233) | $(5,450) | $5,217 | -95.7% | | Metric (in thousands) | 6 Months Ended June 30, 2025 (Successor) | 6 Months Ended June 30, 2024 (Predecessor) | Change | % Change | | :-------------------- | :--------------------------------------- | :--------------------------------------- | :----- | :------- | | Service revenue | $548,140 | $532,354 | $15,786 | 3.0% | | Gross profit | $117,770 | $136,467 | $(18,697)| -13.7% | | Selling, general and administrative expenses | $107,694 | $102,724 | $4,970 | 4.8% | | Income from operations | $8,910 | $33,743 | $(24,833)| -73.6% | | Net loss | $(26,026) | $(6,721) | $(19,305)| 287.2% | [Comparison of the three months ended June 30, 2025 (Successor) to the three months ended June 30, 2024 (Predecessor)](index=29&type=section&id=Comparison%20of%20the%20three%20months%20ended%20June%2030%2C%202025%20%28Successor%29%20to%20the%20three%20months%20ended%20June%2030%2C%202024%20%28Predecessor%29) - Service revenue increased by **1.5%** to **$313.9 million**, driven by new customer wins and higher volumes of callout work[120](index=120&type=chunk) - Cost of revenue increased by **5.0%** to **$239.8 million**, primarily due to higher direct costs supporting increased volumes, direct depreciation expense from the Acuren Acquisition, and incremental labor/onboarding costs for new customer sites[121](index=121&type=chunk) - Gross profit decreased by **8.1%** to **$74.1 million**, mainly attributable to the absence of high-margin turnaround activity and changes in business mix, partially offset by strong callout activity and new customer contributions[122](index=122&type=chunk) - Selling, general and administrative (SG&A) expenses decreased by **9.3%** to **$55.2 million**, primarily due to lower share-based compensation expense, partially offset by higher amortization from the Acuren Acquisition and increased employee/transaction-related costs[124](index=124&type=chunk) - Total depreciation and amortization expense increased by **50.2%** to **$29.5 million**, driven by the step-up in property and equipment and intangible assets resulting from the Acuren Acquisition[125](index=125&type=chunk) - Net interest expense decreased by **12.1%** to **$15.5 million**, primarily due to lower average interest rates compared to the prior year period[126](index=126&type=chunk) [Comparison of the six months ended June 30, 2025 (Successor) to the six months ended June 30, 2024 (Predecessor)](index=31&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030%2C%202025%20%28Successor%29%20to%20the%20six%20months%20ended%20June%2030%2C%202024%20%28Predecessor%29) - Service revenue increased by **3.0%** to **$548.1 million**, driven by strong performance in run and maintain and callout work, partially offset by lower non-recurring turnaround activity and adverse weather in the U.S. during Q1 2025[128](index=128&type=chunk) - Cost of revenue increased by **8.7%** to **$430.4 million**, primarily due to direct costs associated with the increased revenue base and higher depreciation expense from the Acuren Acquisition[129](index=129&type=chunk) - Gross profit decreased by **13.7%** to **$117.8 million**, mainly due to adverse weather events in Q1 2025, the timing of turnaround activity, a less favorable mix of work, and the absence of certain one-time, higher-margin projects from the prior year[130](index=130&type=chunk) - Selling, general and administrative (SG&A) expenses increased by **4.8%** to **$107.7 million**, driven primarily by higher employee-related costs and increased amortization expense related to the step-up in intangible assets from the Acuren Acquisition[131](index=131&type=chunk) - Total depreciation and amortization expense increased by **50.0%** to **$58.1 million**, primarily due to the step-up in property and equipment and intangible assets from the Acuren Acquisition[132](index=132&type=chunk) - Net interest expense decreased by **6.2%** to **$31.5 million**, primarily due to lower average interest rates compared to the prior year period[133](index=133&type=chunk) [Operating Segment Results](index=34&type=section&id=Operating%20Segment%20Results) This section analyzes Acuren's United States and Canada operating segments for the three and six months ended June 30, 2025 (Successor) compared to 2024 (Predecessor), detailing changes in service revenue and gross profit [Comparison of the three months ended June 30, 2025 (Successor) to the three months ended June 30, 2024 (Predecessor)](index=34&type=section&id=Comparison%20of%20the%20three%20months%20ended%20June%2030%2C%202025%20%28Successor%29%20to%20the%20three%20months%20ended%20June%2030%2C%202024%20%28Predecessor%29) - United States service revenue decreased by **0.9%** to **$164.1 million**, primarily due to lower turnaround volumes and softness in the chemicals and refining end markets[138](index=138&type=chunk) - United States segment gross profit decreased by **14.2%** to **$37.8 million**, mainly attributable to lower turnaround and project activity compared to the prior year's second quarter[139](index=139&type=chunk) - Canada service revenue increased by **4.4%** to **$150.3 million**, driven by higher customer penetration and improved volumes in run and maintain and callout work, supported by growth in energy processing and midstream energy infrastructure[140](index=140&type=chunk) - Canada segment gross profit slightly decreased by **0.7%** to **$36.3 million**, primarily due to a less favorable mix of work and the absence of one-time higher margin projects that benefited the prior year period[141](index=141&type=chunk) [Comparison of the six months ended June 30, 2025 (Successor) to the six months ended June 30, 2024 (Predecessor)](index=35&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030%2C%202025%20%28Successor%29%20to%20the%20six%20months%20ended%20June%2030%2C%202024%20%28Predecessor%29) - United States service revenue increased by **0.9%** to **$311.8 million**, driven by improved run and maintain volumes and higher customer penetration, partially offset by adverse weather events in Q1 2025 and reduced customer demand in the chemicals and refining end markets[145](index=145&type=chunk) - United States segment gross profit decreased by **18.7%** to **$65.9 million**, primarily attributable to adverse weather events in Q1 2025, lower turnaround and project volumes, and a less favorable mix of work compared to the prior-year period[146](index=146&type=chunk) - Canada service revenue increased by **5.9%** to **$237.3 million**, driven by higher customer penetration and improved volumes in run and maintain and callout work, supported by growth in the energy processing and midstream energy infrastructure end markets[147](index=147&type=chunk) - Canada segment gross profit decreased by **6.4%** to **$51.8 million**, primarily due to a less favorable mix of work and the absence of one-time higher margin projects that benefited the prior year period[148](index=148&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Acuren's liquidity and capital resources are sufficient to fund operations, service debt, and strategic acquisitions, supported by a Term Loan and Revolving Credit Facility, with improved operating cash flows [Overview](index=35&type=section&id=Overview) - Acuren believes its available cash, future cash flows from operations, access to capital markets, and the Revolving Credit Facility are sufficient to fund operations, service indebtedness, and maintain compliance with debt covenants over the next **12 months**[149](index=149&type=chunk)[151](index=151&type=chunk) - Principal liquidity requirements include working capital, general corporate purposes (capital expenditures, debt service), and funding/integrating strategic acquisitions[151](index=151&type=chunk) [Financing](index=37&type=section&id=Financing) - The Company has a **$775.0 million** seven-year senior secured Term Loan and a **$75.0 million** five-year senior secured revolving credit facility. As of June 30, 2025, **$769.2 million** was outstanding under the Term Loan, with no amounts outstanding under the Revolving Credit Facility[152](index=152&type=chunk) - Acuren was in compliance with all covenants under its Credit Facility as of June 30, 2025[152](index=152&type=chunk) - The Predecessor's 2019 Credit Agreement, which provided for a **$715.0 million** term loan and a **$75.0 million** revolving credit facility, was repaid in full in connection with the Acuren Acquisition on July 30, 2024[153](index=153&type=chunk) [Cash Flows](index=37&type=section&id=Cash%20Flows) | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2025 (Successor) | 6 Months Ended June 30, 2024 (Predecessor) | Change | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :----- | | Operating activities | $26,305 | $(8,754) | $35,059 | | Investing activities | $(28,407) | $(56,627) | $28,220 | | Financing activities | $(10,308) | $8,750 | $(19,058)| | Net change in cash and cash equivalents | $(9,078) | $(56,265) | $47,187 | - Net cash provided by operating activities for the six months ended June 30, 2025, increased by **$35.1 million** to **$26.3 million**, primarily driven by favorable changes in working capital, partially offset by lower gross profit and higher SG&A expenses[155](index=155&type=chunk) - Net cash used in investing activities decreased by **$28.2 million** to **$28.4 million** for the six months ended June 30, 2025, primarily due to less cash used in acquisitions[156](index=156&type=chunk) - Net cash used in financing activities for the six months ended June 30, 2025, was **$10.3 million**, mainly for Term Loan payments, finance lease obligations, and debt issuance costs. In the prior year, net cash provided by financing activities was **$8.8 million**, primarily from 2019 Credit Agreement borrowings[157](index=157&type=chunk) [Off-Balance Sheet Arrangements](index=39&type=section&id=Off-Balance%20Sheet%20Arrangements) - The Company did not have any material off-balance sheet arrangements with unconsolidated entities or financial partnerships during the six months ended June 30, 2025, or the six months ended June 30, 2024[160](index=160&type=chunk) [Recently Issued Accounting Pronouncements](index=39&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) - The Company has not adopted any new accounting pronouncements since the audited consolidated financial statements for the year ended December 31, 2024[27](index=27&type=chunk) [Critical Accounting Estimates](index=39&type=section&id=Critical%20Accounting%20Estimates) - There have been no significant changes to the Company's critical accounting policies and estimates from the information provided in its 2024 Annual Report[162](index=162&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=39&type=section&id=ITEM%203%2E%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) - There have been no significant changes to the Company's quantitative and qualitative disclosures about market risk from those discussed in its 2024 Annual Report[163](index=163&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=40&type=section&id=ITEM%204%2E%20CONTROLS%20AND%20PROCEDURES) [Evaluation of Disclosure Controls and Procedures](index=40&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded Acuren's disclosure controls and procedures were not effective as of June 30, 2025, due to previously identified material weaknesses - As of June 30, 2025, the CEO and CFO concluded that the Company's disclosure controls and procedures were not effective at a reasonable assurance level due to material weaknesses previously disclosed in the 2024 Annual Report[165](index=165&type=chunk) [Material Weaknesses in Internal Control Over Financial Reporting](index=40&type=section&id=Material%20Weaknesses%20in%20Internal%20Control%20Over%20Financial%20Reporting) Acuren identified material weaknesses in internal control over financial reporting due to insufficient accounting and IT resources, leading to ineffective period-end financial reporting and IT general controls - The Company lacked a sufficient complement of resources with appropriate accounting knowledge, training, and experience to timely and accurately analyze, record, and disclose accounting matters, and to establish effective processes and controls[167](index=167&type=chunk) - Ineffective controls were identified in the period-end financial reporting process, including the design and maintenance of formal accounting policies, procedures, and controls for complete, accurate, and timely financial accounting, reporting, and disclosures, as well as controls over account reconciliations and journal entries, including segregation of duties[167](index=167&type=chunk) - The Company did not design and maintain effective information technology (IT) general controls for financial reporting systems, specifically regarding user access, program change management, computer operations, and program development controls[169](index=169&type=chunk) - These material weaknesses resulted in the misstatement of income tax provision and deferred tax liabilities, leading to a restatement of financial statements for the Predecessor period, and immaterial audit adjustments to various financial statement line items[167](index=167&type=chunk) [Management's Plans to Remediate the Material Weaknesses](index=41&type=section&id=Management%27s%20Plans%20to%20Remediate%20the%20Material%20Weaknesses) Management is actively implementing remediation plans for material weaknesses, including engaging a third-party SOX advisor, hiring qualified finance personnel, providing targeted training, and enhancing accounting and IT controls - Management has engaged a third-party advisor to support the design and implementation of a robust Sarbanes-Oxley Act (SOX) compliance program[174](index=174&type=chunk) - The Company has hired a new Corporate Controller and VP of Finance with experience in building and enhancing control environments to strengthen the finance organization[174](index=174&type=chunk) - Remediation efforts include delivering targeted training on SOX requirements and internal controls, completing a financial statement risk assessment, documenting business processes and controls, developing enhanced policies for journal entries and account reconciliations, initiating remediation of segregation of duties conflicts, and implementing monitoring controls over key information systems[174](index=174&type=chunk) - The Company plans to continue hiring qualified accounting, finance, and IT personnel to support ongoing remediation and sustain a strong control environment. Full remediation will be concluded only after new and enhanced controls have been in place and tested for effectiveness[171](index=171&type=chunk)[172](index=172&type=chunk) [Changes in Internal Control Over Financial Reporting](index=41&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) Aside from ongoing remediation efforts for identified material weaknesses, there have been no other material changes to Acuren's internal control over financial reporting during the three months ended June 30, 2025 - Other than the described remediation efforts, there have been no other material changes to the Company's internal control over financial reporting during the three months ended June 30, 2025[173](index=173&type=chunk) [PART II – OTHER INFORMATION](index=42&type=section&id=Part%20II%20%E2%80%93%20Other%20Information) [ITEM 1. LEGAL PROCEEDINGS](index=42&type=section&id=ITEM%201%2E%20LEGAL%20PROCEEDINGS) - For information on legal proceedings, refer to Note 15. Commitments and Contingencies in this Quarterly Report, which states that the Company does not expect any material adverse effect from current claims[176](index=176&type=chunk) [ITEM 1A. RISK FACTORS](index=42&type=section&id=ITEM%201A%2E%20RISK%20FACTORS) [Risks Related to NV5](index=42&type=section&id=Risks%20Related%20to%20NV5) This section outlines specific risks for NV5, including vulnerability to economic downturns, government funding fluctuations, contract challenges, potential losses from lump-sum agreements, and operational risks - Demand for NV5's services from state and local government and private clients is cyclical and vulnerable to economic downturns, which could lead to project delays, cancellations, and adverse impacts on financial results[178](index=178&type=chunk)[179](index=179&type=chunk) - NV5 derives approximately **63%** of its gross revenues from public and quasi-public governmental agencies, making its business highly dependent on continued government program funding and susceptible to changes in appropriations, budget constraints, or policy shifts[180](index=180&type=chunk)[181](index=181&type=chunk) - NV5's business relies on winning new contracts and renewing existing ones, a process affected by market conditions, financing, and governmental approvals. Failure to secure these could adversely impact profitability[183](index=183&type=chunk) - Lump-sum contracts, which accounted for **52%** of NV5's revenue in fiscal 2024, expose the company to risks such as underestimation of costs, unforeseen difficulties, and delays, potentially leading to project losses[184](index=184&type=chunk) - NV5's financial results can be adversely impacted by adverse weather conditions and seasonal revenue fluctuations, particularly during the months of November through March[185](index=185&type=chunk) - The loss of key personnel or the inability to attract and retain qualified staff, especially those with government security clearances, could significantly disrupt NV5's business operations and ability to provide services[193](index=193&type=chunk)[194](index=194&type=chunk) - Employee, agent, or partner misconduct, or NV5's failure to comply with various laws and regulations (e.g., government procurements, data privacy, anti-bribery), could harm its reputation, lead to fines, penalties, and criminal/civil enforcement actions[196](index=196&type=chunk) - NV5 is subject to stringent and evolving foreign data privacy and security laws (e.g., EU GDPR, UK GDPR). Non-compliance or challenges to data transfer mechanisms could lead to regulatory investigations, litigation, fines, and business disruptions[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk) [Risks Related to the NV5 Merger](index=47&type=section&id=Risks%20Related%20to%20the%20NV5%20Merger) This section details risks from the NV5 merger, including potential litigation, integration challenges, stock price volatility, increased indebtedness, and loss of key business relationships - Litigation related to the merger could result in injunctions preventing its completion or substantial costs for Acuren and NV5, diverting management time and resources[209](index=209&type=chunk) - Acuren may face difficulties in successfully integrating NV5's business and realizing anticipated benefits and synergies due to complexities, differing operational philosophies, and challenges in combining systems and assets[211](index=211&type=chunk)[212](index=212&type=chunk)[217](index=217&type=chunk) - The market price of Acuren's common stock may experience volatility due to factors such as the inability to achieve expected benefits and synergies from the merger, transaction costs, or an increase in outstanding shares[214](index=214&type=chunk)[215](index=215&type=chunk) - Acuren's indebtedness increased significantly upon completion of the merger (total term loans to **$1.6 billion**), which could heighten vulnerability to adverse economic conditions, limit access to additional financing, and require a substantial portion of cash flow for debt payments[216](index=216&type=chunk)[220](index=220&type=chunk) - The merger may lead to a loss of customers, distributors, suppliers, and other business partners, or the termination of existing contracts, if these parties are adversely affected by the combination or prefer not to work with the combined entity[218](index=218&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=48&type=section&id=ITEM%202%2E%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) - There were no unregistered sales of equity securities or use of proceeds to report during the period[219](index=219&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=49&type=section&id=ITEM%203%2E%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) - There were no defaults upon senior securities to report during the period[221](index=221&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=49&type=section&id=ITEM%204%2E%20MINE%20SAFETY%20DISCLOSURES) - This item is not applicable to the Company[222](index=222&type=chunk) [ITEM 5. OTHER INFORMATION](index=49&type=section&id=ITEM%205%2E%20OTHER%20INFORMATION) - During the three months ended June 30, 2025, none of the Company's officers or directors adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement"[223](index=223&type=chunk) [ITEM 6. EXHIBITS](index=49&type=section&id=ITEM%206%2E%20EXHIBITS) - The exhibits filed with this Quarterly Report include certifications by the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2), the Agreement and Plan of Merger (Exhibit 2.1), and various Inline XBRL documents (Exhibits 101.INS, 101.SCH, 101.DEF, 101.CAL, 101.LAB, 101.PRE, 104)[224](index=224&type=chunk) [Signatures](index=50&type=section&id=Signatures) - The report was duly signed on August 14, 2025, by Talman Pizzey, Chief Executive Officer and Director, and Kristin Schultes, Chief Financial Officer[230](index=230&type=chunk)

[Management's Responsibilities over Financial Reporting](index=2&type=section&id=Management's%20Responsibilities%20over%20Financial%20Reporting) Management is responsible for preparing the financial statements in accordance with IAS 34 and maintaining internal controls - Management is responsible for preparing the condensed interim consolidated financial statements in accordance with International Accounting Standard 34, reflecting best estimates and judgment[3](index=3&type=chunk) - A system of internal controls is maintained to safeguard assets, authorize transactions, and ensure reliable financial information[4](index=4&type=chunk) - The Board of Directors, through the Audit Committee, reviews and approves the financial statements[4](index=4&type=chunk) - The condensed interim consolidated financial statements have not been audited[5](index=5&type=chunk) [Condensed Interim Consolidated Financial Statements](index=4&type=section&id=CONDENSED%20INTERIM%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents the company's earnings, comprehensive income, cash flows, financial position, and changes in equity [Condensed Interim Consolidated Statements of Earnings (Loss)](index=4&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Earnings%20(Loss)) The Company reported a significant turnaround to profitability, driven by a substantial increase in revenues and mine operating earnings Key Financial Performance (Six Months Ended June 30) | Metric | 2025 (in thousands USD) | 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $508,171 | $242,180 | 109.8% | | Mine operating earnings | $113,156 | $15,141 | 647.3% | | Net earnings (loss) for the period | $62,819 | ($61,814) | N/A (swing to profit) | | Basic EPS | $0.12 | ($0.21) | N/A (swing to profit) | Key Financial Performance (Three Months Ended June 30) | Metric | 2025 (in thousands USD) | 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $264,229 | $136,166 | 94.0% | | Mine operating earnings | $49,351 | $15,462 | 219.2% | | Net earnings (loss) for the period | $56,579 | ($48,251) | N/A (swing to profit) | | Basic EPS | $0.11 | ($0.17) | N/A (swing to profit) | - The acquisition of Gatos Silver Inc. contributed **$193.6 million in revenues** and **$24.1 million in net earnings** for the six months ended June 30, 2025, since January 16, 2025[62](index=62&type=chunk) [Condensed Interim Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Total comprehensive income increased substantially, driven by net earnings and a significant unrealized gain on marketable securities Comprehensive Income (Six Months Ended June 30) | Metric | 2025 (in thousands USD) | 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Net earnings (loss) for the period | $62,819 | ($61,814) | N/A (swing to profit) | | Unrealized gain on fair value of investments in marketable securities, net of tax | $30,150 | $2,487 | 1112.3% | | Total comprehensive income (loss) | $91,087 | ($59,896) | N/A (swing to profit) | Comprehensive Income (Three Months Ended June 30) | Metric | 2025 (in thousands USD) | 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Net earnings (loss) for the period | $56,579 | ($48,251) | N/A (swing to profit) | | Unrealized gain on fair value of investments in marketable securities, net of tax | $15,879 | $9,287 | 71.0% | | Total comprehensive income (loss) | $70,570 | ($39,208) | N/A (swing to profit) | [Condensed Interim Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Cash%20Flows) The Company saw a significant increase in cash from operations and a positive shift in investing activities due to the Gatos acquisition Cash Flow Summary (Six Months Ended June 30) | Metric | 2025 (in thousands USD) | 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Cash generated in operating activities | $145,598 | $29,278 | 397.3% | | Cash (used in) provided by investing activities | $48,158 | ($57,077) | N/A (swing to inflow) | | Cash (used in) provided by financing activities | ($13,371) | $56,208 | -123.8% | | Increase in cash and cash equivalents | $180,385 | $28,409 | 534.9% | | Cash and cash equivalents, end of period | $384,753 | $152,173 | 152.8% | - The acquisition of Gatos Silver Inc. contributed **$159.56 million in cash acquired**, net of cash consideration paid, to investing activities for the six months ended June 30, 2025[13](index=13&type=chunk) [Condensed Interim Consolidated Statements of Financial Position](index=7&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Financial%20Position) The Company's financial position grew substantially due to the Gatos acquisition, which increased assets, liabilities, and equity Financial Position Highlights (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Total assets | $4,094,036 | $1,979,788 | 106.8% | | Total liabilities | $1,191,616 | $628,717 | 89.5% | | Total equity | $2,902,420 | $1,351,071 | 114.8% | | Cash and cash equivalents | $384,753 | $202,180 | 90.3% | | Mining interests | $2,675,695 | $1,034,522 | 158.6% | | Deferred tax liabilities | $571,027 | $80,094 | 613.0% | - The acquisition of Gatos Silver Inc. significantly increased mining interests and property, plant and equipment, contributing to the overall growth in assets[60](index=60&type=chunk) [Condensed Interim Consolidated Statements of Changes in Equity](index=8&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity increased significantly due to net earnings, other comprehensive income, and share capital issued for the Gatos acquisition Total Equity (Six Months Ended June 30) | Metric | June 30, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Total equity | $2,902,420 | $1,351,071 | 114.8% | | Equity attributable to owners of the Company | $2,497,005 | $1,351,071 | 84.8% | | Non-controlling interest | $405,415 | $0 | N/A (newly recognized) | - The acquisition of Gatos Silver Inc. resulted in the issuance of **179,640,768 shares**, adding **$1,020,359 thousand to share capital** and recognizing **$407,096 thousand in non-controlling interest**[16](index=16&type=chunk) [Notes to Condensed Interim Consolidated Financial Statements](index=10&type=section&id=NOTES%20TO%20CONDENSED%20INTERIM%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations of the accounting policies and specific items in the financial statements [Note 1. Nature of Operations](index=10&type=section&id=Note%201.%20Nature%20of%20Operations) The Company is a North American mining company focused on silver and gold production with four producing mines in Mexico - First Majestic Silver Corp. is engaged in the production, development, exploration, and acquisition of mineral properties, with a focus on silver and gold in North America[19](index=19&type=chunk) - The Company operates four producing mines in Mexico: **Santa Elena Silver/Gold Mine**, **Los Gatos Silver Mine (70% interest, newly acquired)**, **San Dimas Silver/Gold Mine**, and **La Encantada Silver Mine**[19](index=19&type=chunk) - The **Jerritt Canyon Gold Mine** in Nevada, USA, was placed on temporary suspension on March 20, 2023, to focus on exploration, resource expansion, and operational optimization[19](index=19&type=chunk) - The Company also owns two additional suspended mines in Mexico (San Martin and Del Toro) and operates its own minting facility, First Mint, LLC[19](index=19&type=chunk) [Note 2. Basis of Presentation](index=10&type=section&id=Note%202.%20Basis%20of%20Presentation) The financial statements are prepared in accordance with IAS 34, using consistent accounting policies and presented in thousands of USD - These condensed interim consolidated financial statements are prepared in accordance with **International Accounting Standard (IAS) 34**, 'Interim Financial Reporting' of the IFRS Accounting Standards[21](index=21&type=chunk) - The statements are prepared on a historical cost basis, except for certain items measured at fair value, such as derivative financial instruments and marketable securities[22](index=22&type=chunk) - All dollar amounts are presented in **thousands of United States dollars** unless otherwise specified[22](index=22&type=chunk) - The consolidated financial statements incorporate the accounts of the Company and its controlled subsidiaries, with intercompany balances and transactions eliminated[23](index=23&type=chunk) [Note 3. Material Accounting Policy Information, Estimates and Judgments](index=10&type=section&id=Note%203.%20Material%20Accounting%20Policy%20Information%2C%20Estimates%20and%20Judgments) Management applies significant judgments and estimates, particularly for business combinations, while adopting new IFRS amendments [New and amended IFRS standards that are effective for the current year](index=12&type=section&id=New%20and%20amended%20IFRS%20standards%20that%20are%20effective%20for%20the%20current%20year) - The Company applied amendments to **IAS 21, 'Lack of Exchangeability,'** effective January 1, 2025, which clarify how to assess currency exchangeability and determine spot exchange rates when exchangeability is lacking[27](index=27&type=chunk)[28](index=28&type=chunk) - The adoption of these amendments has **not had any material impact** on the Company's consolidated financial statements[27](index=27&type=chunk)[29](index=29&type=chunk) [Future Changes in Accounting Policies Not Yet Effective in the Current Period](index=12&type=section&id=Future%20Changes%20in%20Accounting%20Policies%20Not%20Yet%20Effective%20in%20the%20Current%20Period) - The IASB released **IFRS 18 'Presentation and Disclosure in Financial Statements'** (effective January 1, 2027), which replaces IAS 1 and introduces new requirements for statement of earnings categories, management-defined performance measures (MPMs), and improved aggregation/disaggregation[31](index=31&type=chunk) - The Company is currently evaluating the impact of IFRS 18 on its consolidated financial statements[32](index=32&type=chunk) - Amendments to **IFRS 9 and IFRS 7** (effective January 1, 2026) provide guidance on derecognition of financial liabilities, classification of financial assets, and new disclosure requirements for FVOCI equity instruments and contingent features[33](index=33&type=chunk)[35](index=35&type=chunk) - The Company is currently evaluating the impact of these amendments to IFRS 9 and IFRS 7[34](index=34&type=chunk) [Critical Judgments and Estimates](index=14&type=section&id=Critical%20Judgments%20and%20Estimates) - Fair value estimates in business combinations, such as the acquisition of Gatos Silver Inc., require management judgments and estimates regarding mineral reserves, future metal prices, operating costs, capital expenditures, and discount rates[36](index=36&type=chunk)[37](index=37&type=chunk) - Provisional amounts recognized at the acquisition date are subject to retrospective adjustment during a measurement period (not exceeding one year) to reflect new information[38](index=38&type=chunk)[39](index=39&type=chunk) - The Company determined it obtained control over the **Los Gatos Joint Venture (LGJV)** as of January 16, 2025, based on its ability to direct activities that most significantly affect the LGJV's returns, leading to consolidation[43](index=43&type=chunk) [New Accounting Policies](index=16&type=section&id=New%20Accounting%20Policies) - Revenue from concentrate sales is recognized when control is transferred, with provisional payments subject to **mark-to-market adjustments** at each reporting date using forward market prices[44](index=44&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) - Revenue from the sale of coins, ingots, and bullion is recorded when products are shipped and funds are received; amounts received prior to shipping are recorded as unearned revenue[53](index=53&type=chunk) - Non-controlling interest represents equity interests in subsidiaries owned by external parties, presented as a component of equity and measured at the proportionate share of the entity's recognized net assets[45](index=45&type=chunk)[46](index=46&type=chunk) [Note 4. Acquisition of Gatos Silver Inc.](index=20&type=section&id=Note%204.%20Acquisition%20of%20Gatos%20Silver%20Inc.) The Company acquired Gatos Silver Inc for $1.05 billion, gaining a 70% interest in the Los Gatos Joint Venture [Consideration and Purchase Price Allocation](index=20&type=section&id=Consideration%20and%20Purchase%20Price%20Allocation) - On January 16, 2025, First Majestic acquired Gatos Silver Inc. for a total consideration of **$1.05 billion**, issuing 177,433,006 common shares, 2,207,762 common shares for DSUs/RSUs, and 8,242,244 options[54](index=54&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) - Gatos holds a **70% interest** in the Los Gatos Joint Venture, which owns the producing Los Gatos underground silver mine in Chihuahua, Mexico, supporting First Majestic's growth strategy[55](index=55&type=chunk) - Since January 16, 2025, the acquisition of Gatos contributed **$193.6 million of revenues** and **$24.1 million of net earnings** to the Company's financial results for the six months ended June 30, 2025[62](index=62&type=chunk) - The fair value of depletable mining interest was determined using discounted cash flow models with a **6.00% discount rate** and average long-term metal prices (e.g., Silver $28.50, Gold $2,200)[64](index=64&type=chunk)[65](index=65&type=chunk) Allocation of Purchase Price (Fair Values at Acquisition Date) | Asset/Liability | Amount (in thousands USD) | | :--- | :--- | | Cash and cash equivalents | $167,401 | | Inventories | $19,107 | | Trade and other receivables | $19,644 | | VAT receivables | $2,026 | | Prepaid expenses and other | $6,505 | | Mining interest | $1,658,689 | | Property, plant and equipment | $185,261 | | Right-of-use assets | $281 | | Trade and other payables | ($65,037) | | Income taxes payable | ($12,717) | | Lease obligations | ($415) | | Decommissioning liabilities | ($8,112) | | Deferred tax liabilities | ($511,314) | | **Net assets acquired** | **$1,461,319** | | Non-controlling interests | ($407,096) | | **Net assets attributable to the Company** | **$1,054,223** | [Note 5. Segmented Information](index=27&type=section&id=Note%205.%20Segmented%20Information) The Company's operating segments include four producing mines in Mexico, the suspended Jerritt Canyon mine, and First Mint LLC - The Company's significant operating segments include four producing mines in Mexico (Santa Elena, Los Gatos, San Dimas, La Encantada), the Jerritt Canyon Gold Mine in Nevada (temporarily suspended), non-producing properties in Mexico, and First Mint LLC[67](index=67&type=chunk) - The Company's chief operating decision maker evaluates segment performance based on **mine operating earnings**[67](index=67&type=chunk) - For the six months ended June 30, 2025, five customers accounted for **97% of sales revenue**, with two major metal brokers contributing **80% of total revenue**[76](index=76&type=chunk) Segment Performance (Six Months Ended June 30) | Segment | 2025 Revenue (in thousands USD) | 2024 Revenue (in thousands USD) | 2025 Mine Operating Earnings (in thousands USD) | 2024 Mine Operating Earnings (in thousands USD) | | :--- | :--- | :--- | :--- | :--- | | Santa Elena | $144,971 | $124,392 | $56,121 | $41,868 | | Los Gatos | $193,578 | $0 | $48,134 | $0 | | San Dimas | $125,012 | $92,327 | $11,091 | ($10,239) | | La Encantada | $39,030 | $25,034 | ($469) | ($10,264) | | Jerritt Canyon | $278 | $1,574 | ($1,100) | ($2,640) | | First Mint | $15,641 | $4,284 | $5,185 | ($323) | Total Assets by Segment (June 30, 2025) | Segment | Total Assets (in thousands USD) | | :--- | :--- | | Santa Elena | $404,194 | | Los Gatos | $2,001,881 | | San Dimas | $561,938 | | La Encantada | $100,250 | | Non-producing Properties | $127,667 | | Jerritt Canyon | $608,797 | | First Mint | $17,547 | | Others | $271,762 | | **Consolidated** | **$4,094,036** | [Note 6. Revenues](index=31&type=section&id=Note%206.%20Revenues) Revenues derive primarily from precious metals sales, with silver and gold being the largest contributors to significant growth - As at June 30, 2025, unearned revenue was **$0.1 million**, down from $0.6 million at December 31, 2024[80](index=80&type=chunk) Revenue Composition (Six Months Ended June 30) | Metal | 2025 Gross Revenue (in thousands USD) | 2025 % of Gross Revenue | 2024 Gross Revenue (in thousands USD) | 2024 % of Gross Revenue | | :--- | :--- | :--- | :--- | :--- | | Silver | $283,124 | 56% | $100,905 | 41% | | Gold | $170,406 | 33% | $142,394 | 59% | | Lead | $19,681 | 4% | $0 | 0% | | Zinc | $36,658 | 7% | $0 | 0% | | Copper | $849 | 0% | $0 | 0% | | **Total Gross Revenue** | **$510,718** | **100%** | **$243,299** | **100%** | | Less: Smelting & Refining Costs | ($2,547) | | ($1,119) | | | **Total Revenues** | **$508,171** | | **$242,180** | | [Gold Stream Agreement with Sandstorm Gold Ltd.](index=31&type=section&id=Gold%20Stream%20Agreement%20with%20Sandstorm%20Gold%20Ltd.) - The Santa Elena mine is subject to a gold streaming agreement requiring the Company to sell **20% of its gold production** to Sandstorm Gold Ltd. at the lesser of market price or **$450 per ounce** (subject to 1% annual inflation)[81](index=81&type=chunk)[105](index=105&type=chunk) - **Zero ounces of gold** were delivered to Sandstorm during the three and six months ended June 30, 2025[81](index=81&type=chunk) [Net Smelter Royalty](index=31&type=section&id=Net%20Smelter%20Royalty) - The Ermitaño mine has a **2% Net Smelter Return (NSR) royalty** agreement with Orogen Royalties Inc. and an underlying 2% NSR royalty with Osisko Gold Royalties Ltd[82](index=82&type=chunk)[106](index=106&type=chunk) - NSR royalty payments for Ermitaño production were **$5.9 million** for the six months ended June 30, 2025 (up from $5.0 million in 2024)[82](index=82&type=chunk)[106](index=106&type=chunk) - The La Encantada property is subject to a **100% gross value royalty** on the first 1,000 ounces of gold produced annually to Metalla Royalty and Streaming Limited, incurring $0.2 million in H1 2025[83](index=83&type=chunk)[112](index=112&type=chunk) - The Los Gatos Silver Mine pays a production royalty to La Cuesta International S.A. de C.V. (**2% NSR until $10 million, then 0.5% NSR**), incurring $0.6 million in H1 2025 (nil in H1 2024)[84](index=84&type=chunk)[85](index=85&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) [Gold Stream Agreement with Wheaton Precious Metals Corporation](index=33&type=section&id=Gold%20Stream%20Agreement%20with%20Wheaton%20Precious%20Metals%20Corporation) - The San Dimas mine has a streaming agreement with Wheaton Precious Metals International (WPMI) for **25% of gold equivalent production** at the lesser of market price or **$600 per ounce** (plus 1% annual inflation)[86](index=86&type=chunk)[111](index=111&type=chunk) - The Company delivered **16,198 ounces of gold** to WPMI for the six months ended June 30, 2025 (up from 14,734 ounces in 2024) at an average price of $638 per ounce[87](index=87&type=chunk) [Note 7. Cost of Sales](index=33&type=section&id=Note%207.%20Cost%20of%20Sales) Cost of sales increased significantly, primarily driven by higher labor costs, consumables, energy, and workers' participation costs - Other costs in 2025 included increased diesel consumption due to weather-related disruptions preventing the use of liquid natural gas[89](index=89&type=chunk) Cost of Sales Components (Six Months Ended June 30) | Component | 2025 (in thousands USD) | 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Labour costs | $106,426 | $83,383 | 27.6% | | Consumables and materials | $60,502 | $37,395 | 61.8% | | Energy | $27,207 | $19,303 | 40.9% | | Workers' participation costs | $18,523 | $10,460 | 77.1% | | Environmental duties and royalties | $11,396 | $6,428 | 77.3% | | **Total Cost of Sales** | **$258,856** | **$169,585** | **52.6%** | [Note 8. General and Administrative Expenses](index=35&type=section&id=Note%208.%20General%20and%20Administrative%20Expenses) General and administrative expenses increased due to higher salaries, corporate administration, and professional fees General and Administrative Expenses (Six Months Ended June 30) | Component | 2025 (in thousands USD) | 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Corporate administration | $6,547 | $4,590 | 42.6% | | Salaries and benefits | $11,209 | $8,604 | 30.3% | | Audit, legal and professional fees | $5,886 | $4,196 | 40.3% | | **Total G&A Expenses** | **$25,228** | **$18,746** | **34.6%** | [Note 9. Mine Holding Costs](index=35&type=section&id=Note%209.%20Mine%20Holding%20Costs) Mine holding costs for temporarily suspended mines decreased slightly, with Jerritt Canyon remaining the largest component - Mine holding costs are primarily comprised of labour, electricity, security, environmental, and community support costs for mines under temporary suspension[91](index=91&type=chunk) Mine Holding Costs by Mine (Six Months Ended June 30) | Mine | 2025 (in thousands USD) | 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Del Toro | $881 | $1,409 | -37.5% | | San Martin | $253 | $287 | -11.8% | | Santa Elena | $1,826 | $1,887 | -3.2% | | Jerritt Canyon | $7,332 | $8,437 | -13.1% | | **Total Mine Holding Costs** | **$10,292** | **$12,020** | **-14.3%** | [Note 10. Investment and Other Income (Loss)](index=35&type=section&id=Note%2010.%20Investment%20and%20Other%20Income%20(Loss)) Investment and other income increased due to higher interest income and a gain from marketable securities Investment and Other Income (Six Months Ended June 30) | Component | 2025 (in thousands USD) | 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Gain (loss) from investment in silver futures derivatives | ($1,712) | $252 | N/A (swing to loss) | | Gain from investment in marketable securities | $1,268 | $97 | 1207.2% | | Interest income and other | $7,283 | $3,209 | 127.0% | | **Total Investment and Other Income** | **$6,839** | **$3,558** | **92.2%** | [Note 11. Finance Costs](index=37&type=section&id=Note%2011.%20Finance%20Costs) Finance costs remained relatively stable, primarily consisting of interest and accretion expenses on various liabilities Finance Costs (Six Months Ended June 30) | Component | 2025 (in thousands USD) | 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Debt facilities | $6,130 | $6,851 | -10.5% | | Accretion of decommissioning liabilities | $5,530 | $4,805 | 15.1% | | Lease liabilities | $913 | $1,238 | -26.3% | | Interest and other | $2,188 | $1,525 | 43.5% | | **Total Finance Costs** | **$14,761** | **$14,419** | **2.4%** | [Note 12. Earnings or Loss per Share](index=37&type=section&id=Note%2012.%20Earnings%20or%20Loss%20per%20Share) The Company reported a positive shift in earnings per share, moving from a loss to a gain despite an increase in shares outstanding - For the six months ended June 30, 2025, dilutive securities included stock options and restricted/deferred share units, while certain options, warrants, and convertible debentures were anti-dilutive[94](index=94&type=chunk) Earnings Per Share (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Net earnings (loss) attributable to owners of the Company (in thousands USD) | $54,812 | ($61,814) | N/A (swing to profit) | | Weighted average shares outstanding - basic | 469,163,327 | 289,619,145 | 62.0% | | Basic EPS | $0.12 | ($0.21) | N/A (swing to profit) | | Diluted EPS | $0.12 | ($0.21) | N/A (swing to profit) | [Note 13. Inventories](index=39&type=section&id=Note%2013.%20Inventories) Total inventories increased significantly, driven by a substantial rise in materials, supplies, and stockpile - Inventories are presented at the lower of weighted average cost or net realizable value, and **no write-downs** were included in mineral inventories as of June 30, 2025[95](index=95&type=chunk)[96](index=96&type=chunk) Inventories (June 30, 2025 vs. December 31, 2024) | Component | June 30, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Finished goods | $6,706 | $5,036 | 33.2% | | Work-in-process | $4,073 | $4,162 | -2.2% | | Stockpile | $12,492 | $6,580 | 89.8% | | Silver coins and bullion | $5,965 | $8,613 | -30.8% | | Materials and supplies | $53,756 | $38,133 | 41.0% | | **Total Inventories** | **$82,992** | **$62,524** | **32.7%** | [Note 14. Other Financial Assets](index=39&type=section&id=Note%2014.%20Other%20Financial%20Assets) Other financial assets increased significantly due to a substantial rise in marketable securities designated as FVTOCI Other Financial Assets (June 30, 2025 vs. December 31, 2024) | Component | June 30, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | FVTPL marketable securities | $5,893 | $1,283 | 359.3% | | FVTOCI marketable securities | $75,931 | $48,498 | 56.6% | | **Total Other Financial Assets** | **$81,824** | **$49,781** | **64.4%** | [Fair Value through Profit or Loss ("FVTPL") Marketable Securities](index=39&type=section&id=Fair%20Value%20through%20Profit%20or%20Loss%20(%22FVTPL%22)%20Marketable%20Securities) - Gain on marketable securities designated as FVTPL for the six months ended June 30, 2025, was **$1.3 million** (compared to $0.1 million in 2024) and was recorded through profit or loss[98](index=98&type=chunk) [Fair Value through Other Comprehensive Income ("FVTOCI") Marketable Securities](index=39&type=section&id=Fair%20Value%20through%20Other%20Comprehensive%20Income%20(%22FVTOCI%22)%20Marketable%20Securities) - Changes in fair value of marketable securities designated as FVTOCI for the six months ended June 30, 2025, resulted in a gain of **$28.3 million** (compared to $1.9 million in 2024), net of tax, recorded through other comprehensive income[99](index=99&type=chunk) - These FVTOCI gains will **not be transferred into earnings or loss** upon disposition or impairment[99](index=99&type=chunk) - As of June 30, 2025, the carrying value of all shares designated at FVTOCI was **$75.9 million** (up from $48.5 million in December 2024)[99](index=99&type=chunk) [Note 15. Mining Interests](index=40&type=section&id=Note%2015.%20Mining%20Interests) Mining interests more than doubled due to the Gatos Silver Inc acquisition, which added significant mineral properties - The acquisition of Gatos Silver Inc. significantly increased depletable properties by **$1,122,262 thousand** and non-depletable properties by **$536,427 thousand**[102](index=102&type=chunk)[103](index=103&type=chunk) Mining Interests (June 30, 2025 vs. December 31, 2024) | Component | June 30, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Depletable properties | $1,886,847 | $779,890 | 141.9% | | Non-depletable properties (exploration and evaluation costs, exploration potential) | $788,848 | $254,632 | 209.8% | | **Total Mining Interests** | **$2,675,695** | **$1,034,522** | **158.6%** | [Santa Elena Silver/Gold Mine, Sonora State, Mexico](index=42&type=section&id=Santa%20Elena%20Silver/Gold%20Mine%2C%20Sonora%20State%2C%20Mexico) - The Santa Elena Mine is subject to a gold streaming agreement with Sandstorm, requiring the sale of **20% of its life-of-mine gold production** at the lesser of $450 per ounce (subject to annual inflation) or market price[105](index=105&type=chunk) - The Ermitaño mine, part of Santa Elena operations, has a **2% NSR royalty** agreement with Orogen Royalties Inc. and an underlying 2% NSR royalty with Osisko Gold Royalties Ltd., incurring **$5.9 million in H1 2025**[106](index=106&type=chunk) [Los Gatos Silver Mine, Chihuahua State, Mexico](index=42&type=section&id=Los%20Gatos%20Silver%20Mine%2C%20Chihuahua%20State%2C%20Mexico) - Following the acquisition, the Company holds a **70% interest** in the Los Gatos underground mine, which produces zinc and lead concentrates (containing silver and gold)[107](index=107&type=chunk) - Zinc and lead contribute approximately **75% and 25% of total revenues**, respectively, from the Los Gatos Silver Mine[107](index=107&type=chunk) - The Los Gatos Silver Mine is subject to a production royalty to La Cuesta International S.A. de C.V. (**2% NSR until $10 million, then 0.5% NSR**), incurring $0.6 million in H1 2025[108](index=108&type=chunk)[109](index=109&type=chunk) [San Dimas Silver/Gold Mine, Durango State, Mexico](index=44&type=section&id=San%20Dimas%20Silver/Gold%20Mine%2C%20Durango%20State%2C%20Mexico) - The San Dimas Mine is subject to a gold and silver streaming agreement with WPMI, entitling WPMI to **25% of gold equivalent production** (90:1 silver to gold ratio) at a price of the lesser of $600 (plus inflation) or market price[111](index=111&type=chunk) [La Encantada Silver Mine, Coahuila State, Mexico](index=44&type=section&id=La%20Encantada%20Silver%20Mine%2C%20Coahuila%20State%2C%20Mexico) - The Company pays a **100% gross value royalty** on the first 1,000 ounces of gold produced annually from the La Encantada property to Metalla Royalty and Streaming Limited, incurring $0.2 million in H1 2025[112](index=112&type=chunk) [Jerritt Canyon Gold Mine, Nevada, United States](index=44&type=section&id=Jerritt%20Canyon%20Gold%20Mine%2C%20Nevada%2C%20United%20States) - The Jerritt Canyon Mine is subject to a **0.75% NSR royalty** on gold and silver production and additional **2.5% to 5% NSR royalties** within specific mining areas[113](index=113&type=chunk)[114](index=114&type=chunk) - **No royalty payments** from gold production at Jerritt Canyon were incurred for the three and six months ended June 30, 2025[114](index=114&type=chunk) [Springpole Silver Stream, Ontario, Canada](index=44&type=section&id=Springpole%20Silver%20Stream%2C%20Ontario%2C%20Canada) - In July 2020, the Company agreed to purchase **50% of the life-of-mine payable silver** from the Springpole Gold Project, with the final **$5.0 million payment** made in cash in March 2025[115](index=115&type=chunk)[116](index=116&type=chunk) - First Mining has the right to repurchase 50% of the silver stream for **$22.5 million** prior to production, which would reduce First Majestic's stream to 25%[119](index=119&type=chunk) - The expiry date of **30.0 million common share purchase warrants** of First Mining, held by First Majestic, was extended to March 31, 2028, with the exercise price amended to CAD$0.20[117](index=117&type=chunk)[118](index=118&type=chunk) [Note 16. Property, Plant and Equipment](index=47&type=section&id=Note%2016.%20Property%2C%20Plant%20and%20Equipment) Property, plant and equipment increased significantly, primarily due to the acquisition of Gatos Silver Inc - The acquisition of Gatos Silver Inc. added **$185,261 thousand** to Property, Plant and Equipment[122](index=122&type=chunk) - Property, plant and equipment is depreciated using either the **straight-line or units-of-production method** over the shorter of the estimated useful life or the expected life of mine[121](index=121&type=chunk) - Assets under construction include innovation projects such as high-intensity grinding (HIG) mills, plant improvements, and other mine infrastructures[123](index=123&type=chunk) Property, Plant and Equipment Carrying Values (June 30, 2025 vs. December 31, 2024) | Component | June 30, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Land and Buildings | $179,646 | $84,899 | 111.6% | | Machinery and Equipment | $304,853 | $240,617 | 26.7% | | Assets under Construction | $63,608 | $43,322 | 46.8% | | Other | $8,980 | $9,792 | -8.4% | | **Total PP&E** | **$557,087** | **$378,630** | **47.1%** | [Note 17. Right-of-Use Assets](index=49&type=section&id=Note%2017.%20Right-of-Use%20Assets) Right-of-use assets decreased due to depreciation, partially offset by new additions and the Gatos acquisition - Right-of-use assets are initially measured at cost and subsequently at cost less accumulated depreciation and impairment losses, with depreciation recorded on a straight-line basis[129](index=129&type=chunk) - The acquisition of Gatos added **$281 thousand** in right-of-use assets[130](index=130&type=chunk) Right-of-Use Assets (June 30, 2025 vs. December 31, 2024) | Component | June 30, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Land and Buildings | $5,978 | $7,046 | -15.2% | | Machinery and Equipment | $11,156 | $16,853 | -33.8% | | **Total Right-of-Use Assets** | **$17,134** | **$23,898** | **-28.3%** | [Note 18. Restricted Cash](index=50&type=section&id=Note%2018.%20Restricted%20Cash) Non-current restricted cash increased primarily due to an increase in funds frozen by SAT related to the Primero tax dispute - The **$105.6 million** in restricted cash related to the SAT Primero tax dispute represents VAT refunds due to Primero Empresa Minera (PEM) that were frozen by the Servicio de Admistracion Tributaria (SAT)[132](index=132&type=chunk) Non-Current Restricted Cash (June 30, 2025 vs. December 31, 2024) | Component | June 30, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Nevada Division of Environmental Protection | $19,765 | $19,346 | 2.2% | | SAT Primero tax dispute | $105,562 | $86,726 | 21.7% | | **Total Non-Current Restricted Cash** | **$125,327** | **$106,072** | **18.1%** | [Note 19. Trade and Other Payables](index=50&type=section&id=Note%2019.%20Trade%20and%20Other%20Payables) Trade and other payables increased significantly, driven by higher trade payables and trade-related accruals - Trade and other payables primarily consist of amounts outstanding for purchases related to mining operations, exploration, evaluation activities, and corporate expenses, with normal credit periods of **30 to 90 days**[133](index=133&type=chunk) Trade and Other Payables (June 30, 2025 vs. December 31, 2024) | Component | June 30, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Trade payables | $58,921 | $35,397 | 66.4% | | Trade related accruals | $59,026 | $23,196 | 154.5% | | Payroll and related benefits | $41,208 | $32,239 | 27.8% | | **Total Trade and Other Payables** | **$176,625** | **$103,895** | **70.0%** | [Note 20. Debt Facilities](index=51&type=section&id=Note%2020.%20Debt%20Facilities) Total debt facilities remained stable, consisting of convertible debentures and a recently amended revolving credit facility Debt Facilities (June 30, 2025 vs. December 31, 2024) | Component | June 30, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Convertible Debentures | $214,053 | $209,083 | 2.4% | | Revolving Credit Facility | $340 | $399 | -14.8% | | **Total Debt Facilities** | **$214,393** | **$209,482** | **2.3%** | [Convertible Debentures](index=51&type=section&id=Convertible%20Debentures) - The Company issued **$230 million** of unsecured senior convertible debentures in December 2021, maturing January 15, 2027, with an interest rate of **0.375% per annum**[136](index=136&type=chunk) - The debentures are convertible into common shares at a rate of **60.3865 common shares per $1,000 principal amount**, representing an initial conversion price of **$16.56 per share**[137](index=137&type=chunk) - The debt portion was initially valued at **$180.4 million** and is recorded as a financial liability on an amortized cost basis, while the conversion option is classified as equity at **$42.3 million**[142](index=142&type=chunk)[143](index=143&type=chunk) [Revolving Credit Facility](index=52&type=section&id=Revolving%20Credit%20Facility) - The senior secured revolving credit facility was amended on April 11, 2025, extending its maturity date to **April 11, 2028**, with a credit limit of **$175.0 million** and an accordion feature of **$100 million**[145](index=145&type=chunk) - Gatos Silver Inc. was incorporated into the facility as a material subsidiary and guarantor[145](index=145&type=chunk) - As of June 30, 2025, the Company was in compliance with all financial covenants, including a **net leverage ratio of not more than 3.50 to 1.00** and an **interest coverage ratio of not less than 4.00 to 1.00**[147](index=147&type=chunk) - The undrawn portion of the Revolving Credit Facility, net of letters of credit and drawdowns, was **$139.6 million** as of June 30, 2025[148](index=148&type=chunk) [Note 21. Lease Liabilities](index=54&type=section&id=Note%2021.%20Lease%20Liabilities) Total lease liabilities decreased due to principal repayments, partially offset by new additions and the Gatos acquisition - The acquisition of Gatos Silver Inc. added **$415 thousand** in lease liabilities[151](index=151&type=chunk) Lease Liabilities (June 30, 2025 vs. December 31, 2024) | Component | June 30, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Category I leases | $1,526 | $2,662 | -42.7% | | Category II leases | $18,615 | $24,873 | -25.2% | | **Total Lease Liabilities** | **$20,141** | **$27,535** | **-26.9%** | [Category I leases](index=55&type=section&id=Category%20I%20leases) - Category I leases primarily relate to financing arrangements for vehicles and equipment, with remaining lease terms of **one to three years** and incremental borrowing rates ranging from **3.8% to 8.5% per annum**[153](index=153&type=chunk) [Category II leases](index=55&type=section&id=Category%20II%20leases) - Category II leases primarily relate to equipment and building rental contracts, land easement contracts, and service contracts containing embedded leases, with remaining lease terms of **one to seven years** and incremental borrowing rates ranging from **3.4% to 11.8% per annum**[154](index=154&type=chunk) [Note 22. Share Capital](index=56&type=section&id=Note%2022.%20Share%20Capital) Share capital increased significantly due to shares issued for the Gatos acquisition and the exercise of stock options [Authorized and issued capital](index=56&type=section&id=Authorized%20and%20issued%20capital) - The Company has **unlimited authorized common shares** with no par value[156](index=156&type=chunk) - The Company renewed its share repurchase program on September 12, 2024, permitting the repurchase of up to **10,000,000 shares** (3.32% of issued and outstanding shares)[160](index=160&type=chunk) - For the six months ended June 30, 2025, the Company repurchased **768,500 common shares for $4.27 million** as part of the Share Repurchase Program[160](index=160&type=chunk) [Stock options](index=58&type=section&id=Stock%20options) - Under the 2022 Long-Term Incentive Plan (LTIP), the maximum number of common shares reserved for issuance cannot exceed **6% of the Company's issued and outstanding shares**[161](index=161&type=chunk) - The Gatos acquisition resulted in the issuance of **8,242,244 First Majestic options** in exchange for existing Gatos options, with a contractual term of 10 years[162](index=162&type=chunk) - Total share-based payments expense related to Options was **$3.8 million** for the six months ended June 30, 2025[165](index=165&type=chunk) Stock Options Outstanding (June 30, 2025) | Metric | Number of Options | Weighted Average Exercise Price (CAD $/Share) | | :--- | :--- | :--- | | Balance, end of the period | 10,676,624 | 10.41 | [Restricted Share Units](index=61&type=section&id=Restricted%20Share%20Units) - Under the 2022 LTIP, the Company may award non-transferable Restricted Share Units (RSUs) with a graded vesting schedule over **three years**, settled in cash or equity at the Company's discretion[167](index=167&type=chunk) - As of June 30, 2025, there were **1,650,676 equity-settled RSUs** and **381,662 cash-settled RSUs** outstanding, with a total liability of **$1.6 million** for cash-settled RSUs[168](index=168&type=chunk)[169](index=169&type=chunk) - Total share-based payments expense for equity-settled RSUs was **$2.5 million** for the six months ended June 30, 2025[169](index=169&type=chunk) [Performance Share Units](index=63&type=section&id=Performance%20Share%20Units) - Under the 2022 LTIP, Performance Share Units (PSUs) are awarded, with the number of units issued on vesting varying from **0% to 200%** based on the Company's total shareholder return compared to peers over a three-year period[171](index=171&type=chunk) - As of June 30, 2025, there were **1,209,781 equity-settled PSUs** and **57,270 cash-settled PSUs** outstanding, with a total liability of **$0.2 million** for cash-settled PSUs[172](index=172&type=chunk)[173](index=173&type=chunk) - Total share-based payments expense related to equity-settled PSUs was **$1.2 million** for the six months ended June 30, 2025[173](index=173&type=chunk) [Deferred Share Units](index=65&type=section&id=Deferred%20Share%20Units) - Under the 2019 LTIP, Deferred Share Units (DSUs) were awarded, typically vesting immediately and settled in common shares. As of June 30, 2025, **30,161 equity-settled DSUs** were outstanding[174](index=174&type=chunk)[175](index=175&type=chunk) - Under the 2022 DSU Plan, DSUs are cash-settled only. As of June 30, 2025, **164,454 cash-settled DSUs** were outstanding, with a total liability of **$1.4 million**[175](index=175&type=chunk)[176](index=176&type=chunk) - Total share-based payments expense related to DSUs under the 2022 DSU plan was **$0.7 million** for the six months ended June 30, 2025[176](index=176&type=chunk) [Dividends](index=65&type=section&id=Dividends) - The dividend declared on August 13, 2025, was subsequent to the period end and not recognized as a distribution during the period presented[177](index=177&type=chunk) Dividends Declared (Six Months Ended June 30, 2025) | Declaration Date | Record Date | Dividend per Common Share | | :--- | :--- | :--- | | February 19, 2025 | February 28, 2025 | $0.0057 | | May 7, 2025 | May 16, 2025 | $0.0045 | | August 13, 2025 | August 29, 2025 | $0.0048 | [Note 23. Non-Controlling Interests](index=67&type=section&id=Note%2023.%20Non-Controlling%20Interests) Non-controlling interests were recognized due to the Gatos acquisition, representing the 30% interest in the Los Gatos Joint Venture - The acquisition of Gatos on January 16, 2025, resulted in the Company owning **70% of the Los Gatos Joint Venture (LGJV)**, with the remaining **30% presented as non-controlling interest**[179](index=179&type=chunk) LGJV Financial Information (100% Basis, June 30, 2025) | Metric | Amount (in thousands USD) | | :--- | :--- | | Total assets | $1,912,041 | | Total liabilities | $560,658 | | Net assets | $1,351,383 | | Non-controlling interest (30%) | $405,415 | LGJV Performance (Six Months Ended June 30, 2025) | Metric | Amount (in thousands USD) | | :--- | :--- | | Revenue | $193,578 | | Total net income | $26,691 | | Cash flows from operating activities | $104,162 | | Dividends paid to non-controlling interests | ($9,688) | [Note 24. Financial Instruments and Related Risk Management](index=68&type=section&id=Note%2024.%20Financial%20Instruments%20and%20Related%20Risk%20Management) The Company manages various financial risks and monitors its capital structure, reporting compliance with all debt covenants [Fair value and categories of financial instruments](index=68&type=section&id=Fair%20value%20and%20categories%20of%20financial%20instruments) - The Company uses a fair value hierarchy (**Level 1, 2, and 3**) to categorize financial assets and liabilities, with Level 1 for unadjusted quoted prices in active markets and Level 2 for observable inputs[183](index=183&type=chunk)[184](index=184&type=chunk) - Marketable securities (common shares) and silver futures derivatives are valued using **Level 1 inputs**, while marketable securities (stock warrants) and trade receivables from concentrate sales are valued using **Level 2 inputs**[186](index=186&type=chunk) - There were **no transfers between fair value levels** during the six months ended June 30, 2025[185](index=185&type=chunk) [Capital risk management](index=70&type=section&id=Capital%20risk%20management) - The Company's objectives for capital management are to maintain financial flexibility, continue as a going concern, optimize growth, and maximize shareholder returns[187](index=187&type=chunk) - The Company was in **compliance with all debt covenants** as of June 30, 2025[190](index=190&type=chunk) Capital Structure (June 30, 2025 vs. December 31, 2024) | Component | June 30, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | Change (%) | | :--- | :--- | :--- | :--- | | Equity | $2,902,420 | $1,351,071 | 114.8% | | Debt facilities | $214,393 | $209,482 | 2.3% | | Lease liabilities | $20,141 | $27,535 | -26.9% | | Less: cash and cash equivalents | ($384,753) | ($202,180) | 90.3% | | **Net Capital** | **$2,752,201** | **$1,385,908** | **98.6%** | [Financial risk management](index=71&type=section&id=Financial%20risk%20management) - The Company is exposed to credit risk, liquidity risk, currency risk, commodity price risk, and interest rate risk[192](index=192&type=chunk)[193](index=193&type=chunk)[197](index=197&type=chunk)[201](index=201&type=chunk)[203](index=203&type=chunk)[206](index=206&type=chunk) - As of June 30, 2025, net VAT receivable was **$52.3 million**, and trade receivables are not significant due to timely payments from major customers[194](index=194&type=chunk)[195](index=195&type=chunk) - Total available liquidity at June 30, 2025, was **$583.8 million**, including **$139.6 million** of undrawn revolving credit facility[198](index=198&type=chunk) - A **25 basis points** increase or decrease in the market interest rate would not have a significant impact on net earnings or loss[207](index=207&type=chunk) Currency Risk Sensitivity (June 30, 2025) | Currency | Net Assets (Liabilities) Exposure (in thousands USD) | Effect of +/- 10% Change (in thousands USD) | | :--- | :--- | :--- | | Canadian Dollar | $5,944 | $594 | | Mexican Peso | $112,152 | $11,215 | | **Total** | **$118,096** | **$11,809** | Commodity Price Risk Exposure (June 30, 2025) | Metal | Metals in Inventory (in thousands USD) | Trade Receivable from Concentrate Sales (in thousands USD) | Total (in thousands USD) | | :--- | :--- | :--- | :--- | | Silver | $1,387 | $3,100 | $4,487 | | Gold | $712 | $62 | $774 | | Zinc | $75 | $3,155 | $3,230 | | Lead | $15 | $278 | $293 | | Copper | $1 | $57 | $58 | | **Total** | **$2,190** | **$6,652** | **$8,842** | [Note 25. Supplemental Cash Flow Information](index=75&type=section&id=Note%2025.%20Supplemental%20Cash%20Flow%20Information) This section details non-cash activities, including the Gatos acquisition, and changes in non-cash working capital items - In June 2025, the **$5.0 million loan agreement** to Sierra Madre was amended to extend the repayment date by one year to May 7, 2027, with a **15% annual interest rate**[208](index=208&type=chunk) Non-Cash Investing and Financing Activities (Six Months Ended June 30, 2025) | Activity | Amount (in thousands USD) | | :--- | :--- | | Transfer of share-based payments reserve upon settlement of RSU's, PSU's and DSU's | $3,241 | | Transfer of share-based payments reserve upon exercise of options | $22,210 | | Acquisition of Gatos | $1,453,478 | | **Total** | **$1,478,929** | Net Change in Non-Cash Working Capital Items (Six Months Ended June 30) | Item | 2025 (in thousands USD) | 2024 (in thousands USD) | | :--- | :--- | :--- | | (Increase) decrease in trade and other receivables | ($4,917) | $875 | | (Increase) decrease in value added taxes receivable | ($5,637) | $2,709 | | (Increase) in inventories | ($679) | ($3,372) | | Increase (decrease) in income taxes payable | ($5,063) | ($970) | | Increase (decrease) in trade and other payables | $12,958 | ($423) | | (Increase) decrease in restricted cash | ($19,255) | $8,064 | | **Total Net Change** | **($20,695)** | **$6,860** | [Note 26. Contingencies and Other Matters](index=76&type=section&id=Note%2026.%20Contingencies%20and%20Other%20Matters) The Company faces significant tax reassessments from the Mexican tax authority (SAT) which it is vigorously disputing [Claims and Legal Proceedings Risks](index=76&type=section&id=Claims%20and%20Legal%20Proceedings%20Risks) - The Company is subject to various claims and legal proceedings in the ordinary course of business, with potential material adverse impacts if resolved unfavorably[212](index=212&type=chunk) - Provisions are established for probable and reasonably estimable liabilities, but there is no guarantee of sufficient insurance coverage[212](index=212&type=chunk) [Primero Tax Rulings](index=76&type=section&id=Primero%20Tax%20Rulings) - The SAT issued tax reassessments for 2010-2016 totaling **$974.3 million** against Primero Empresa Minera (PEM) related to silver sales from the San Dimas Mine, disputing the use of the Advance Pricing Agreement (APA)[217](index=217&type=chunk) - The Company is defending the APA in Mexican legal proceedings and pursuing Mutual Agreement Procedure (MAP) under tax treaties, which Mexico has refused[218](index=218&type=chunk)[219](index=219&type=chunk) - A **NAFTA APA Claim** was submitted to ICSID, and the Tribunal partially granted provisional measures, ordering Mexico to permit withdrawal of VAT refunds[224](index=224&type=chunk)[225](index=225&type=chunk)[229](index=229&type=chunk) - A **NAFTA VAT Claim** was filed with ICSID regarding the ongoing denial of access to PEM's VAT refunds; Mexico objected to its discontinuance, so proceedings will continue[233](index=233&type=chunk)[234](index=234&type=chunk) - If the SAT's attempts to nullify the APA are successful, the incremental income tax for 2010-2019 could be **$298.0 million** (before interest/penalties). **No liability has been recognized**[230](index=230&type=chunk)[231](index=231&type=chunk) [La Encantada Tax Re-assessments](index=82&type=section&id=La%20Encantada%20Tax%20Re-assessments) - The SAT issued tax assessments to Minera La Encantada (MLE) for fiscal years 2012-2017 totaling **$298.4 million**, primarily related to a prior forward silver purchase agreement and denial of mine development costs[236](index=236&type=chunk) - The Company is vigorously disputing these assessments and has **not recognized a liability**, based on advice from legal and financial advisors[236](index=236&type=chunk) [San Martin Tax Re-assessments](index=82&type=section&id=San%20Martin%20Tax%20Re-assessments) - The SAT issued tax assessments to Minera El Pilon (MEP) for fiscal years 2014-2017 totaling **$30.1 million**, related to a prior forward silver purchase agreement and denial of mine development costs[237](index=237&type=chunk) - The Company is defending the validity of the agreement and disputing the assessments, with **no liability recognized**[237](index=237&type=chunk) [La Parrilla Tax Re-assessments](index=82&type=section&id=La%20Parrilla%20Tax%20Re-assessments) - The SAT issued tax assessments to First Majestic Plata (FMP) for fiscal years 2014-2017 totaling **$30.8 million**, related to a prior forward silver purchase agreement and denial of mine development costs[238](index=238&type=chunk) - The Company is disputing these assessments and has **not recognized a liability**[238](index=238&type=chunk) [Del Toro Tax Re-assessments](index=84&type=section&id=Del%20Toro%20Tax%20Re-assessments) - The SAT issued tax assessments to First Majestic Del Toro (FMDT) for fiscal years 2015-2016 totaling **$26.7 million**, primarily related to the denial of mine development costs, refining costs, and other expenses[240](index=240&type=chunk) - The Company is defending the validity of the expenses and disputing the assessments, with **no liability recognized**[240](index=240&type=chunk) [CFM Tax Re-assessments](index=84&type=section&id=CFM%20Tax%20Re-assessments) - The SAT issued a tax assessment to Corporacion First Majestic (CFM) for fiscal year 2016 totaling **$78.0 million**, disputing Mexico's right to tax a Canadian-level transaction[241](index=241&type=chunk) - The Company is vigorously disputing this assessment and has **not recognized a liability**[241](index=241&type=chunk) [First Silver Litigation](index=84&type=section&id=First%20Silver%20Litigation) - The Company has an unpaid judgment of **$64.3 million** (CAD$81.5 million) against Hector Davila Santos, recognized by the Mexican Supreme Court in November 2022[242](index=242&type=chunk) - Enforcement efforts are ongoing in Mexico, but **no accrual has been made** for the unrecovered judgment due to uncertainties in collection[242](index=242&type=chunk) [Note 27. Subsequent Events](index=84&type=section&id=Note%2027.%20Subsequent%20Events) Subsequent to the reporting period, the Company declared a quarterly common share dividend of $0.0048 per share - On August 13, 2025, the Company's Board of Directors approved the declaration of a quarterly common share dividend of **$0.0048 per share**[243](index=243&type=chunk) - This dividend is payable on or after September 15, 2025, to common shareholders of record as at the close of business on August 29, 2025[243](index=243&type=chunk) - The dividend was declared subsequent to the quarter-end and has **not been recognized as a distribution** to owners during the period ended June 30, 2025[243](index=243&type=chunk)

Exhibit 99.1 LAZYDAYS REPORTS SECOND QUARTER 2025 FINANCIAL RESULTS Tampa, FL (August 14, 2025) – Lazydays Holdings, Inc. (NasdaqCM: GORV) ("Lazydays," the "Company" or "we") today reports financial results for the second quarter ended June 30, 2025. Ron Fleming, CEO, said, "We continued to advance our turnaround plan in the second quarter of 2025. Our focus on operational performance resulted in increases in gross profit margins across all products and services compared to the prior year period, and our pu ...

[Executive Summary & Company Overview](index=1&type=section&id=Executive%20Summary%20%26%20Company%20Overview) Lazydays Holdings, Inc. reports Q2 2025 financial and operational highlights, detailing turnaround progress, improved margins, and debt reduction [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Lazydays advanced its Q2 2025 turnaround plan, achieving increased gross profit margins, reducing liabilities by over $200 million through divestitures, and reporting a reduced net loss and improved Adjusted EBITDA despite lower revenue - The company advanced its turnaround plan, focusing on operational performance and streamlining its footprint through asset divestitures[2](index=2&type=chunk) - Gross profit margins increased across all products and services compared to the prior year period[2](index=2&type=chunk) - Divestitures reduced total liabilities by over **$200 million** during the first half of the year, with the cash balance remaining unchanged at June 30, 2025, compared to December 31, 2024[2](index=2&type=chunk) Q2 2025 vs Q2 2024 Key Financials | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | Change (YoY) | | :------------------------- | :------------------- | :------------------- | :----------- | | Total Revenue | 131.3 | 235.6 | -44.3% | | Net Loss | (24.6) | (44.2) | +44.4% | | Adjusted EBITDA | (6.2) | (9.4) | +34.0% | | Net Loss per Diluted Share | (6.67) | (96.53) | +93.1% | [About Lazydays](index=1&type=section&id=About%20Lazydays) Lazydays Holdings, Inc. is a prominent RV industry player since 1976, offering exceptional sales, service, and parts, and is publicly listed on Nasdaq under 'GORV' - Lazydays has been a prominent player in the RV industry since 1976, known for exceptional RV sales, service, and ownership experiences[4](index=4&type=chunk) - The company offers a wide selection of RV brands, state-of-the-art service facilities, and an extensive range of accessories and parts[5](index=5&type=chunk) - Lazydays is a publicly listed company on the Nasdaq stock exchange under the ticker '**GORV**'[6](index=6&type=chunk) [Consolidated Results of Operations](index=3&type=section&id=Consolidated%20Results%20of%20Operations) This section details Lazydays' Q2 and YTD 2025 financial performance, covering revenue, profitability, and net loss, with significant year-over-year changes [Revenue Analysis](index=3&type=section&id=Revenue%20Analysis) Total revenue for Q2 2025 and the six months ended June 30, 2025, significantly decreased by 44.3% and 41.3% respectively, primarily due to declines in new and pre-owned vehicle retail sales Revenue Breakdown (Three Months Ended June 30) | Revenue Category | 2025 ($ thousands) | 2024 ($ thousands) | YoY Change (%) | | :------------------------ | :----------------- | :----------------- | :------------- | | New vehicle retail | 77,463 | 143,333 | -46.0% | | Pre-owned vehicle retail | 29,461 | 57,254 | -48.5% | | Finance and insurance | 10,575 | 16,041 | -34.1% | | Service, body and parts | 10,850 | 15,144 | -28.3% | | **Total revenue** | **131,297** | **235,602** | **-44.3%** | Revenue Breakdown (Six Months Ended June 30) | Revenue Category | 2025 ($ thousands) | 2024 ($ thousands) | YoY Change (%) | | :------------------------ | :----------------- | :----------------- | :------------- | | New vehicle retail | 174,982 | 296,024 | -40.9% | | Pre-owned vehicle retail | 70,134 | 136,282 | -48.5% | | Finance and insurance | 22,077 | 34,370 | -35.8% | | Service, body and parts | 23,426 | 28,885 | -18.9% | | **Total revenue** | **297,112** | **505,722** | **-41.3%** | [Profitability and Expenses](index=3&type=section&id=Profitability%20and%20Expenses) Gross profit decreased in Q2 and YTD 2025 despite reduced costs and operating expenses, with substantial impairment charges impacting operating loss Profitability and Expenses (Three Months Ended June 30) | Metric | 2025 ($ thousands) | 2024 ($ thousands) | YoY Change (%) | | :----------------------------------- | :----------------- | :----------------- | :------------- | | Total cost applicable to revenue | 97,108 | 188,198 | -48.4% | | Gross profit | 34,189 | 47,404 | -27.9% | | Depreciation and amortization | 3,400 | 4,956 | -31.4% | | Selling, general, and administrative | 35,826 | 52,010 | -31.1% | | Impairment charges | 7,676 | — | N/A | | Loss from operations | (12,713) | (9,562) | -33.0% | | Floor plan interest expense | (3,269) | (5,708) | +42.7% | | Other interest expense | (7,398) | (5,837) | -26.8% | Profitability and Expenses (Six Months Ended June 30) | Metric | 2025 ($ thousands) | 2024 ($ thousands) | YoY Change (%) | | :----------------------------------- | :----------------- | :----------------- | :------------- | | Total cost applicable to revenue | 219,081 | 420,552 | -47.9% | | Gross profit | 78,031 | 85,170 | -8.3% | | Depreciation and amortization | 7,982 | 10,417 | -23.4% | | Selling, general, and administrative | 74,455 | 100,896 | -26.2% | | Impairment charges | 10,576 | — | N/A | | Loss from operations | (14,982) | (26,143) | +42.7% | | Floor plan interest expense | (7,859) | (13,384) | +41.3% | | Other interest expense | (13,567) | (10,360) | -31.0% | [Net Loss and Earnings Per Share](index=3&type=section&id=Net%20Loss%20and%20Earnings%20Per%20Share) Lazydays reported a reduced net loss and significantly lower net loss per diluted share for Q2 and YTD 2025, partly due to a higher weighted average number of shares Net Loss and EPS (Three Months Ended June 30) | Metric | 2025 ($ thousands) | 2024 ($ thousands) | YoY Change (%) | | :------------------------- | :----------------- | :----------------- | :------------- | | Net loss | (24,589) | (44,221) | +44.4% | | Diluted Loss per share | (6.67) | (96.53) | +93.1% | | Weighted average shares | 3,684,277 | 479,163 | +668.9% | Net Loss and EPS (Six Months Ended June 30) | Metric | 2025 ($ thousands) | 2024 ($ thousands) | YoY Change (%) | | :------------------------- | :----------------- | :----------------- | :------------- | | Net loss | (34,122) | (66,201) | +48.5% | | Diluted Loss per share | (9.27) | (146.57) | +93.7% | | Weighted average shares | 3,680,539 | 479,060 | +668.3% | [Other Key Metrics and Operational Highlights](index=4&type=section&id=Other%20Key%20Metrics%20and%20Operational%20Highlights) This section presents key operational metrics for Q2 and YTD 2025, covering gross profit margins, retail unit sales, average selling prices, and revenue/gross profit mix [Gross Profit Margins by Category](index=4&type=section&id=Gross%20Profit%20Margins%20by%20Category) Lazydays achieved improved gross profit margins across most categories for Q2 and YTD 2025, with significant expansion in new and pre-owned vehicle retail and service, body and parts Gross Profit Margins (Three Months Ended June 30) | Category | 2025 | 2024 | Change (pp) | | :------------------------ | :------ | :------ | :---------- | | New vehicle retail | 11.0 % | 9.2 % | +1.8 | | Pre-owned vehicle retail | 20.3 % | 19.0 % | +1.3 | | Finance and insurance | 96.7 % | 96.0 % | +0.7 | | Service, body and parts | 54.7 % | 52.8 % | +1.9 | | **Total gross profit margin** | **26.0 %** | **20.1 %** | **+5.9** | Gross Profit Margins (Six Months Ended June 30) | Category | 2025 | 2024 | Change (pp) | | :------------------------ | :------ | :------ | :---------- | | New vehicle retail | 11.1 % | 6.4 % | +4.7 | | Pre-owned vehicle retail | 20.9 % | 14.8 % | +6.1 | | Finance and insurance | 96.5 % | 96.1 % | +0.4 | | Service, body and parts | 54.7 % | 53.5 % | +1.2 | | **Total gross profit margin** | **26.3 %** | **16.8 %** | **+9.5** | [Retail Unit Sales and Average Selling Price](index=4&type=section&id=Retail%20Unit%20Sales%20and%20Average%20Selling%20Price) Retail unit sales for new and pre-owned vehicles significantly decreased in Q2 and YTD 2025, while new vehicle average selling price and average gross profit per retail unit generally increased across categories Retail Units Sold (Three Months Ended June 30) | Category | 2025 | 2024 | YoY Change (%) | | :------------------------ | :---- | :---- | :------------- | | New vehicle retail | 1,068 | 2,036 | -47.5% | | Pre-owned vehicle retail | 598 | 1,100 | -45.7% | | Consignment vehicle | 185 | 49 | +277.6% | | **Total retail units sold** | **1,851** | **3,185** | **-41.9%** | Average Selling Price & Gross Profit per Retail Unit (Q2 2025 vs 2024) | Metric | 2025 ($) | 2024 ($) | YoY Change (%) | | :------------------------------------ | :------- | :------- | :------------- | | New vehicle retail (ASP) | 72,531 | 70,458 | +2.9% | | Pre-owned vehicle retail (ASP) | 49,266 | 52,049 | -5.4% | | New vehicle retail (Avg GP excl. LIFO)| 7,962 | 6,412 | +24.2% | | Pre-owned vehicle retail (Avg GP excl. LIFO)| 9,998 | 9,909 | +0.9% | | Finance and insurance (Avg GP) | 5,527 | 5,084 | +8.7% | [Revenue and Gross Profit Mix](index=4&type=section&id=Revenue%20and%20Gross%20Profit%20Mix) Q2 2025 revenue mix showed new vehicle retail's share decreasing while finance and insurance, and service, body and parts increased, with gross profit mix shifts including increased contributions from consignment vehicles and LIFO adjustments Revenue Mix (Three Months Ended June 30) | Category | 2025 | 2024 | | :------------------------ | :------ | :------ | | New vehicle retail | 59.0 % | 60.8 % | | Pre-owned vehicle retail | 22.4 % | 24.3 % | | Finance and insurance | 8.1 % | 6.8 % | | Service, body and parts | 8.2 % | 6.5 % | Gross Profit Mix (Three Months Ended June 30) | Category | 2025 | 2024 | | :------------------------ | :------ | :------ | | New vehicle retail | 24.9 % | 27.8 % | | Pre-owned vehicle retail | 17.5 % | 23.0 % | | Consignment vehicle | 6.1 % | 1.2 % | | Finance and insurance | 29.9 % | 32.5 % | | Service, body and parts | 17.4 % | 16.9 % | | LIFO | 4.3 % | (0.7)% | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Lazydays reported significant decreases in total assets and liabilities, driven by reduced floor plan notes payable and related party debt Balance Sheet Highlights (June 30, 2025 vs December 31, 2024) | Metric | June 30, 2025 ($ thousands) | Dec 31, 2024 ($ thousands) | Change (%) | | :--------------------------- | :-------------------------- | :------------------------- | :--------- | | Total assets | 429,064 | 675,830 | -36.5% | | Cash | 24,702 | 24,702 | 0.0% | | Inventories, net | 165,634 | 211,946 | -21.9% | | Current assets held for sale | 6,495 | 86,869 | -92.5% | | Total liabilities | 373,115 | 586,230 | -36.4% | | Floor plan notes payable | 185,460 | 306,036 | -39.4% | | Related party debt | 3,111 | 36,217 | -91.4% | | Total stockholders' equity | 55,949 | 89,600 | -37.6% | - Floor plan notes payable associated with inventories classified as held for sale decreased from **$86.8 million** as of December 31, 2024, to **$6.5 million** as of June 30, 2025[12](index=12&type=chunk) [Statements of Cash Flows](index=8&type=section&id=Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, Lazydays generated positive operating cash flow, received substantial cash from investing activities, and had a net cash outflow from financing Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 ($ thousands) | 2024 ($ thousands) | Change ($ thousands) | | :---------------------------------------- | :----------------- | :----------------- | :------------------- | | Net cash provided by operating activities | 7,358 | 101,315 | -93,957 | | Net cash provided by investing activities | 171,924 | (9,967) | +181,891 | | Net cash used in financing activities | (179,282) | (107,411) | -71,871 | | Net decrease in cash | — | (16,063) | +16,063 | | Cash, end of period | 24,702 | 42,022 | -17,320 | - Net proceeds from the sale of businesses, property, and equipment were **$171.9 million** in 2025, a substantial increase from **$2.95 million** in 2024[14](index=14&type=chunk) - Net repayments under M&T bank floor plan were **$120.7 million** in 2025, compared to **$114.8 million** in 2024[14](index=14&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=9&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section defines and reconciles non-GAAP financial measures, EBITDA and Adjusted EBITDA, for insights into core operating performance [Definition and Rationale](index=9&type=section&id=Definition%20and%20Rationale) This section defines EBITDA and Adjusted EBITDA as non-GAAP measures, explaining their adjustments for non-operating and non-cash items to evaluate core operating results - EBITDA is defined as net income (loss) excluding interest expense, income tax expense (benefit), and depreciation and amortization expense[15](index=15&type=chunk) - Adjusted EBITDA is further adjusted to include floor plan interest expense and excludes stock-based compensation expense, LIFO adjustment, impairment charges, loss (gain) on sale of businesses, property and equipment, and change in fair value of warrant liabilities[15](index=15&type=chunk) - Adjusted EBITDA is considered an important measure for evaluating core operating results by removing the impact of capital structure, tax consequences, asset base, non-cash charges, and gains/losses on asset sales[17](index=17&type=chunk) [EBITDA and Adjusted EBITDA Reconciliation](index=9&type=section&id=EBITDA%20and%20Adjusted%20EBITDA%20Reconciliation) Lazydays reported improved Adjusted EBITDA for Q2 and YTD 2025, with the reconciliation detailing adjustments from net loss to reflect core operating performance EBITDA and Adjusted EBITDA Reconciliation (Three Months Ended June 30) | Metric | 2025 ($ thousands) | 2024 ($ thousands) | YoY Change ($ thousands) | | :-------------------------- | :----------------- | :----------------- | :----------------------- | | Net loss | (24,589) | (44,221) | +19,632 | | EBITDA | (10,858) | (3,899) | -6,959 | | **Adjusted EBITDA** | **(6,240)** | **(9,404)** | **+3,164** | EBITDA and Adjusted EBITDA Reconciliation (Six Months Ended June 30) | Metric | 2025 ($ thousands) | 2024 ($ thousands) | YoY Change ($ thousands) | | :-------------------------- | :----------------- | :----------------- | :----------------------- | | Net loss | (34,122) | (66,201) | +32,079 | | EBITDA | (4,722) | (15,019) | +10,297 | | **Adjusted EBITDA** | **(10,265)** | **(27,565)** | **+17,300** | [Forward-Looking Statements](index=1&type=section&id=Forward-Looking%20Statements) This cautionary statement addresses forward-looking information, highlighting inherent risks and uncertainties that may cause actual results to differ from projections [Forward-Looking Statements](index=1&type=section&id=Forward-Looking%20Statements) This cautionary statement emphasizes that forward-looking information involves inherent risks and uncertainties, and actual results may differ materially due to various factors, with no obligation for the company to update them - Forward-looking statements involve risks and uncertainties and are not guarantees of future performance[7](index=7&type=chunk) - Actual results may differ materially due to factors such as economic and financial conditions, changes in customer demand, relationships with manufacturers and suppliers, indebtedness, and government regulations[7](index=7&type=chunk)[8](index=8&type=chunk) - The company disclaims any obligation to publicly update forward-looking statements to reflect subsequent events or circumstances, except as required by law[8](index=8&type=chunk)

Exhibit 99.1 Eco Wave Power Global AB (publ) Condensed consolidated financial statements As of June 30, 2025 Unaudited Index | | Page | | --- | --- | | CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | 1 | | CONDENSED CONSOLIDATED STATEMENTS OF LOSS | 2 | | CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | 3 | | CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | 4 | | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | 5 | | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 6 | i Eco Wave ...

EX-99.1 2 realpha_ex991.htm PRESS RELEASE EXHIBIT 99.1 reAlpha Tech Corp. Announces 1,909% Year-over-Year Revenue Growth for Quarter Ended June 30, 2025 DUBLIN, Ohio, August 14, 2025 (GLOBE NEWSWIRE) -- reAlpha Tech Corp. (Nasdaq: AIRE) (the "Company" or "reAlpha"), an AI-powered real estate technology company, today announced financial results and business highlights for the quarter ended June 30, 2025. Business Highlights · Revenue increased 1,909% to approximately $1.3 million in the second quarter of 20 ...

[Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlights the transformative Beckley Psytech combination, solidifying atai's leadership in psychedelic mental health and advancing its clinical pipeline with strong investor confidence - The planned strategic combination with Beckley Psytech is expected to establish atai as a **global leader** in psychedelic mental health[3](index=3&type=chunk) - The combination adds **BPL-003**, a late-stage, clinically-validated asset for treatment-resistant depression (TRD), to atai's wholly owned pipeline[3](index=3&type=chunk) - Recent fundraising efforts in 2025 totaled nearly **$140 million**, reflecting strong investor confidence in the company's strategy[3](index=3&type=chunk) [Key Highlights](index=1&type=section&id=Key%20Highlights) Positive topline data for BPL-003 in TRD demonstrated rapid, durable effects, with cash expected to fund operations into H2 2027, and key milestones anticipated in Q3 2025 - Positive topline data from the **Phase 2b trial of BPL-003** in TRD met primary and key secondary endpoints, showing single-dose effects for up to **8 weeks**[4](index=4&type=chunk) - Topline data from the eight-week open-label extension of the BPL-003 Phase 2b trial is expected in **Q3 2025**[4](index=4&type=chunk) - The company's cash, securities, and other assets are expected to fund combined operations into the **second half of 2027**[4](index=4&type=chunk) [Recent Clinical Highlights and Upcoming Milestones](index=2&type=section&id=Recent%20Clinical%20Highlights%20and%20Upcoming%20Milestones) Updates on key clinical programs include positive BPL-003 Phase 2b results, VLS-01 data delay to H2 2026, ongoing EMP-01 enrollment, and Inidascamine's Phase 2b trial not meeting its primary endpoint [BPL-003 (Intranasal Mebufotenin)](index=2&type=section&id=BPL-003) BPL-003's Phase 2b study in TRD met all endpoints, showing rapid, durable antidepressant effects for up to 8 weeks, with the 8 mg dose selected for Phase 3 - The Phase 2b study met its primary endpoint, demonstrating rapid and durable antidepressant effects for up to **8 weeks** with a single dose[5](index=5&type=chunk) - BPL-003 was generally well-tolerated, with **99%** of treatment-emergent adverse events being mild or moderate, and no drug-related serious adverse events[5](index=5&type=chunk) - The **8 mg dose** has been selected for Phase 3 advancement, with an End-of-Phase 2 meeting request planned for **Q3 2025**[5](index=5&type=chunk) [VLS-01 (Buccal Film DMT)](index=2&type=section&id=VLS-01) Topline data for VLS-01 in TRD is delayed to H2 2026 due to slower site activation and patient recruitment in its Phase 2 trial - Topline data from the Phase 2 trial of VLS-01 in TRD patients is now anticipated in the **second half of 2026**[5](index=5&type=chunk) - The delay is attributed to slower-than-anticipated site activation and patient recruitment[5](index=5&type=chunk) [EMP-01 (Oral R-MDMA)](index=2&type=section&id=EMP-01) Enrollment continues for the Phase 2 study of EMP-01 for social anxiety disorder, with topline data expected in Q1 2026 - Patient enrollment continues in the Phase 2 study of EMP-01 for social anxiety disorder (SAD)[5](index=5&type=chunk) - Topline data from the Phase 2 study are anticipated in the **first quarter of 2026**[5](index=5&type=chunk) [Inidascamine (RL-007)](index=3&type=section&id=Inidascamine) Inidascamine's Phase 2b trial for CIAS did not meet its primary endpoint, leading atai to reallocate resources to its wholly owned psychedelic programs - The Phase 2b trial of inidascamine for CIAS did not meet its primary endpoint with statistical significance[10](index=10&type=chunk) - atai plans to allocate resources to its wholly owned pipeline of psychedelic product candidates focused on affective disorders[10](index=10&type=chunk) [Novel 5-HT2A Receptor Agonists](index=2&type=section&id=Novel%205-HT2A%20Receptor%20Agonists) Novel 5-HT2A receptor agonists with non-hallucinogenic potential in rodent studies are undergoing further optimization and evaluation for therapeutic use - Discovered novel **5-HT2A receptor agonists** that maintain non-hallucinogenic potential in rodent drug discrimination studies[6](index=6&type=chunk) [Corporate Updates](index=3&type=section&id=Corporate%20Updates) atai is advancing its strategic combination with Beckley Psytech for Q4 2025 shareholder approval and initiating US redomiciliation for structural and operational efficiencies - The planned strategic combination with Beckley Psytech is expected to proceed to shareholder approval in **Q4 2025**[10](index=10&type=chunk) - The company has initiated the process to move its corporate domicile to the US for structural simplification and operational efficiencies[10](index=10&type=chunk) [Consolidated Financial Results](index=3&type=section&id=Consolidated%20Financial%20Results) Q2 2025 net loss significantly narrowed to $27.7 million, cash increased to $95.9 million, R&D expenses decreased, and G&A expenses rose due to strategic transactions [Financial Position and Liquidity](index=3&type=section&id=Financial%20Position%20and%20Liquidity) As of June 30, 2025, cash and equivalents totaled $95.9 million, an increase driven by $89.2 million in equity issuances, funding operations into H2 2027 Cash, Cash Equivalents, and Short-Term Securities | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Cash, cash equivalents and short-term securities | $95.9 million | $72.3 million | - The **$23.6 million** increase in cash is primarily due to **$89.2 million** in net proceeds from equity issuances, offset by cash used in operations and debt payoff[7](index=7&type=chunk) - The company's cash runway is expected to fund operations for the combined company into the **second half of 2027**[7](index=7&type=chunk) [Operating Expenses and Net Loss](index=3&type=section&id=Operating%20Expenses%20and%20Net%20Loss) Q2 2025 saw R&D expenses decrease to $11.1 million, G&A expenses increase to $14.9 million, and net loss narrow significantly to $27.7 million Operating Expenses and Net Loss (Q2) | Expense Category | 2025 (Millions USD) | 2024 (Millions USD) | Change (Millions USD) | | :--- | :--- | :--- | :--- | | R&D Expenses | $11.1 | $12.6 | ($1.5) | | G&A Expenses | $14.9 | $13.4 | +$1.5 | | Net Loss | ($27.7) | ($57.3) | $29.6 | - The decrease in R&D expenses was primarily due to lower personnel-related expenses and consulting services[8](index=8&type=chunk) - The increase in G&A expenses was largely due to legal and professional service costs related to the planned Beckley Psytech combination and US redomiciliation[9](index=9&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) Condensed consolidated financial statements detail a Q2 2025 net loss of $27.7 million, with total assets of $189.2 million and stockholders' equity of $143.9 million [Condensed Consolidated Statements of Operations](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Q2 2025 statements show revenue of $0.7 million, total operating expenses of $26.0 million, and a net loss of $27.7 million, or ($0.14) per share Condensed Consolidated Statements of Operations (Three Months Ended June 30) | Metric | 2025 (unaudited) | 2024 | | :--- | :--- | :--- | | Revenue (Thousands USD) | $719 | $273 | | Total operating expenses (Thousands USD) | $25,992 | $26,002 | | Loss from operations (Thousands USD) | ($25,273) | ($25,729) | | Net loss attributable to stockholders (Thousands USD) | ($27,729) | ($57,312) | | Net loss per share — basic and diluted (USD) | ($0.14) | ($0.36) | [Condensed Consolidated Balance Sheet](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEET) As of June 30, 2025, the balance sheet reports total assets of $189.2 million, total liabilities of $45.3 million, and stockholders' equity of $143.9 million Condensed Consolidated Balance Sheet (Thousands USD) | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $61,940 | $17,505 | | Total assets | $189,204 | $159,387 | | Total liabilities | $45,279 | $42,833 | | Total stockholders' equity | $143,925 | $116,554 | [Legal Disclaimers and Forward-Looking Statements](index=4&type=section&id=Legal%20Disclaimers) This section outlines forward-looking statements regarding business strategy, clinical development, the Beckley Psytech transaction, and financial projections, all subject to significant risks and uncertainties - The press release includes forward-looking statements regarding business strategy, product candidate development, the proposed transaction with Beckley Psytech, and cash runway[13](index=13&type=chunk) - These statements involve risks and uncertainties, including the possibility that proposed transactions may not be completed or their anticipated benefits realized[14](index=14&type=chunk) - Investors are urged to read the S-4 Registration Statement and Proxy Statement, when available, for important information about the proposed transactions[16](index=16&type=chunk)

[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents Werewolf Therapeutics' unaudited condensed consolidated financial statements and management's discussion for Q2 and H1 2025 [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) Presents Werewolf Therapeutics' unaudited condensed consolidated financial statements for Q2 and H1 2025, showing a net loss and decreased cash [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $92.6 million by June 30, 2025, driven by reduced cash, while equity fell due to net losses Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $77,596 | $110,995 | | Total current assets | $80,439 | $113,066 | | Total assets | $92,566 | $126,929 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $15,171 | $15,180 | | Total liabilities | $51,102 | $53,539 | | Accumulated deficit | $(450,659) | $(414,588) | | Total stockholders' equity | $41,464 | $73,390 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net loss for Q2 2025 was $18.0 million, with H1 2025 net loss at $36.1 million, and collaboration revenue at zero Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $0 | $1,143 | $0 | $1,885 | | Research and development | $13,143 | $15,271 | $26,263 | $28,179 | | General and administrative | $4,399 | $4,832 | $9,270 | $9,828 | | Operating loss | $(17,542) | $(18,960) | $(35,533) | $(36,122) | | Net loss | $(17,982) | $(17,249) | $(36,071) | $(33,442) | | Net loss per share, basic | $(0.40) | $(0.40) | $(0.80) | $(0.79) | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased from $73.4 million to $41.5 million by June 30, 2025, primarily due to the $36.1 million net loss - Total stockholders' equity declined from **$73.4 million** at December 31, 2024 to **$41.5 million** at June 30, 2025, primarily due to a net loss of **$36.1 million** for the six-month period[26](index=26&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased to $34.1 million in H1 2025, leading to a $33.7 million net decrease in cash Six Months Ended June 30, Cash Flow Summary (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(34,112) | $(29,474) | | Net cash used in investing activities | $0 | $(128) | | Net cash provided by financing activities | $388 | $10,539 | | **Net decrease in cash** | **$(33,724)** | **$(19,063)** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Details accounting policies, the conclusion of the Jazz collaboration, the K2HV loan, and the company's liquidity outlook - The company is an early-stage biopharmaceutical company pioneering therapeutics to stimulate the immune system for cancer treatment[31](index=31&type=chunk) - With **$77.6 million** in cash and cash equivalents as of June 30, 2025, the company expects to fund its operating expenses and capital expenditure requirements for at least the next twelve months, but will require additional funding thereafter[33](index=33&type=chunk) - In June 2024, the company completed its last material performance obligation under the Collaboration Agreement with Jazz Pharmaceuticals, resulting in the recognition of all remaining deferred revenue from that agreement[44](index=44&type=chunk) - In May 2024, the company repaid its loan with Pacific Western Bank and entered into a new loan agreement with K2 HealthVentures (K2HV), drawing down **$30.0 million** in gross proceeds[55](index=55&type=chunk)[56](index=56&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, clinical program updates for WTX-124 and WTX-330, and liquidity, confirming cash sufficiency into Q4 2026 [Overview](index=20&type=section&id=Overview) Werewolf develops conditionally activated immunotherapies, with lead candidates WTX-124 and WTX-330 in Phase 1/1b and Phase 1b/2 trials respectively - The company's most advanced product candidates, WTX-124 (IL-2) and WTX-330 (IL-12), are systemically delivered, conditionally activated INDUKINE molecules for treating various tumor types[91](index=91&type=chunk) - WTX-124 is being evaluated in a Phase 1/1b clinical trial as a monotherapy and in combination with KEYTRUDA, with plans to present interim data from expansion arms in the second half of 2025[92](index=92&type=chunk) - WTX-330 initiated a Phase 1b/2 clinical trial in Q1 2025, with the first patient dosed in Q2 2025 for the treatment of advanced or metastatic solid tumors[93](index=93&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q2 2025 saw zero revenue and decreased R&D expenses, while H1 2025 net loss increased to $36.1 million due to lower interest income Comparison of Three Months Ended June 30, (in thousands) | Item | 2025 | 2024 | $ Change | | :--- | :--- | :--- | :--- | | Collaboration revenue | $0 | $1,143 | $(1,143) | | Research and development | $13,143 | $15,271 | $(2,128) | | General and administrative | $4,399 | $4,832 | $(433) | | **Net loss** | **$(17,982)** | **$(17,249)** | **$(733)** | - The **$2.1 million** decrease in Q2 2025 R&D expenses was primarily due to a **$1.8 million** decrease in manufacturing costs for WTX-330 and a **$0.5 million** decrease in personnel costs[116](index=116&type=chunk)[119](index=119&type=chunk) Comparison of Six Months Ended June 30, (in thousands) | Item | 2025 | 2024 | $ Change | | :--- | :--- | :--- | :--- | | Collaboration revenue | $0 | $1,885 | $(1,885) | | Research and development | $26,263 | $28,179 | $(1,916) | | General and administrative | $9,270 | $9,828 | $(558) | | **Net loss** | **$(36,071)** | **$(33,442)** | **$(2,629)** | - The **$1.9 million** decrease in H1 2025 R&D expenses was mainly from a **$2.2 million** reduction in manufacturing costs and a **$0.7 million** decrease in personnel costs, partially offset by a **$0.7 million** increase in clinical trial costs for WTX-124 and WTX-330[126](index=126&type=chunk)[127](index=127&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had $77.6 million in cash, sufficient into Q4 2026, but requires substantial additional funding - As of June 30, 2025, the company had cash and cash equivalents of **$77.6 million**[147](index=147&type=chunk) - Management estimates that existing cash will be sufficient to fund operational expenses and capital expenditure requirements into the fourth quarter of 2026[147](index=147&type=chunk) - The company has an active K2HV Loan Agreement with **$30.0 million** drawn and up to an additional **$20.0 million** available through May 1, 2026, subject to lender consent[139](index=139&type=chunk)[140](index=140&type=chunk) - The company's at-the-market (ATM) offering capacity is limited to an aggregate offering price of up to **$12.5 million** due to the "Baby Shelf Limitation" under Form S-3 rules[145](index=145&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the registrant is exempt from providing market risk disclosures - As a smaller reporting company, the registrant is not required to provide the information for this item[161](index=161&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of June 30, 2025, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[162](index=162&type=chunk) - There were no changes during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[163](index=163&type=chunk) [PART II. OTHER INFORMATION](index=34&type=section&id=PART%20II.%20OTHER%20INFORMATION) Presents other information including significant risk factors and a list of exhibits filed with the Form 10-Q [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) Details risks including limited operating history, dependence on early-stage candidates, funding needs, reliance on third parties, and intense competition [Risks Related to Financial Position and Capital Requirements](index=34&type=section&id=Risks%20Related%20to%20Our%20Limited%20Operating%20History,%20Financial%20Position%20and%20Capital%20Requirements) The company faces risks from its limited operating history, accumulated deficit of $450.7 million, ongoing losses, and the need for substantial additional funding - The company has a limited operating history, an accumulated deficit of **$450.7 million** as of June 30, 2025, and expects to incur significant losses for the foreseeable future[166](index=166&type=chunk)[167](index=167&type=chunk) - Substantial additional funding is required to complete the development and commercialization of product candidates, and an inability to raise this capital could force the company to delay, reduce, or eliminate its R&D programs[170](index=170&type=chunk) - The K2HV Loan Agreement contains operating covenants that restrict the company's ability to incur future debt, pay dividends, and dispose of assets, among other limitations[177](index=177&type=chunk) [Risks Related to Discovery, Development, and Commercialization](index=38&type=section&id=Risks%20Related%20to%20the%20Discovery,%20Development,%20Regulatory%20Approval%20and%20Commercialization%20of%20Our%20Product%20Candidates) Business success depends on early-stage candidates and an unproven platform, facing risks in development, manufacturing, and intense competition - The company's business is highly dependent on the success of its initial INDUKINE and INDUCER molecules, which are in early stages of development and require significant additional development[187](index=187&type=chunk) - The PREDATOR platform approach is unproven, and there is no guarantee it will produce commercially valuable products[196](index=196&type=chunk) - Manufacturing the company's novel multi-domain biologics is complex, has never been done at commercial scale, and is subject to risks of delay or failure[200](index=200&type=chunk) - The company faces substantial competition from major pharmaceutical and biotechnology companies developing immunotherapies, including numerous companies developing IL-2 and IL-12 based therapies[238](index=238&type=chunk)[241](index=241&type=chunk)[242](index=242&type=chunk) [Risks Related to Dependence on Third Parties](index=50&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) Reliance on third-party CROs and CMOs for clinical trials and manufacturing, and a license agreement with Harpoon Therapeutics, poses significant operational risks - The company depends on third-party CROs to conduct preclinical studies and clinical trials and is responsible for ensuring their compliance with regulations like cGCP[259](index=259&type=chunk)[261](index=261&type=chunk) - Without its own clinical manufacturing capabilities, the company relies on third-party CMOs, exposing it to risks of supply disruption, quality issues, and regulatory non-compliance[265](index=265&type=chunk) - The company relies on a license agreement with Harpoon Therapeutics for patent rights essential to its PREDATOR platform and product candidates[285](index=285&type=chunk) [Risks Related to Intellectual Property](index=54&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) Success hinges on obtaining and maintaining patent protection, which is uncertain, and managing risks of infringement claims and trade secret protection - The company's success depends on obtaining and maintaining patent protection for its PREDATOR platform and product candidates, but the scope and validity of such protection are uncertain[275](index=275&type=chunk)[276](index=276&type=chunk) - The company may face third-party claims of intellectual property infringement, which could be expensive and time-consuming to defend and could prevent or delay development efforts[309](index=309&type=chunk) - The company relies on trade secret protection for key aspects of its technology, but it cannot guarantee that these secrets will not be disclosed or independently discovered by competitors[305](index=305&type=chunk) [Risks Related to Regulatory Approval and Legal Compliance](index=65&type=section&id=Risks%20Related%20to%20Regulatory%20Approval%20and%20Marketing%20of%20Our%20Product%20Candidates%20and%20Other%20Legal%20Compliance%20Matters) Regulatory approval is expensive and uncertain, with ongoing compliance burdens, healthcare fraud laws, data privacy regulations, and potential FDA disruptions posing risks - The regulatory approval process is expensive, time-consuming, and uncertain, and the company has no experience in filing for marketing approvals[338](index=338&type=chunk) - Disruptions at the FDA and other government agencies due to funding cuts, personnel losses, or other factors could hinder the timely approval of product candidates[347](index=347&type=chunk) - The company is subject to healthcare fraud and abuse laws, which could expose it to criminal sanctions, civil penalties, and exclusion from government healthcare programs if found non-compliant[415](index=415&type=chunk) - The company must comply with complex and evolving state, national, and international privacy and data security laws, with non-compliance potentially leading to significant fines and reputational damage[425](index=425&type=chunk) [Risks Related to Business Operations and Public Company Status](index=83&type=section&id=Risks%20Related%20to%20Our%20Business%20Operations,%20Employee%20Matters%20and%20Managing%20Growth) Risks include dependence on key personnel, cybersecurity threats, stock price volatility, and increased public company compliance costs - The company is highly dependent on retaining key employees and faces fierce competition for qualified personnel in the Boston area[450](index=450&type=chunk)[451](index=451&type=chunk) - The company is exposed to risks from cyberattacks, which could lead to data loss, operational disruption, and financial loss[453](index=453&type=chunk)[454](index=454&type=chunk) - The company's stock price is volatile, and it may be delisted from Nasdaq if it fails to meet continued listing requirements, such as the minimum bid price[465](index=465&type=chunk)[467](index=467&type=chunk) - In the past, the company has identified material weaknesses in its internal control over financial reporting, which have since been fully remediated[480](index=480&type=chunk) [Item 6. Exhibits](index=91&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications - This section lists the exhibits filed with the report, including corporate governance documents, an employment agreement, and officer certifications required by the Sarbanes-Oxley Act[493](index=493&type=chunk)

Cambridge, MA – August 14, 2025 – Leap Therapeutics, Inc. (Nasdaq:LPTX), a biotechnology company focused on developing targeted and immuno-oncology therapeutics, today reported financial results for the second quarter of 2025. Leap Highlights: DKN-01 Development Update · Reported updated clinical data from Part B of the DeFianCe study of sirexatamab plus bevacizumab and chemotherapy in CRC patients. In the updated analysis as of May 22, 2025, sirexatamab demonstrated a statistically significant benefit on o ...

PART I: FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Unaudited financial statements for June 30, 2025, reflect substantial asset and income growth, primarily from the October 2024 Loan Portfolio Acquisition, maintaining a focus on U.S. cannabis industry loans [Statements of Assets and Liabilities](index=5&type=section&id=Statements%20of%20Assets%20and%20Liabilities) As of June 30, 2025, total assets reached **$331.8 million**, with net assets at **$301.8 million**, reflecting a slight increase from year-end 2024 and a NAV per share of **$13.23** Key Balance Sheet Data (in thousands) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Investments at fair value | $307,499 | $275,241 | | Cash and cash equivalents | $13,829 | $23,932 | | **Total Assets** | **$331,750** | **$309,561** | | **Liabilities** | | | | Revolving line of credit | $5,000 | $0 | | **Total Liabilities** | **$29,907** | **$8,398** | | **Net Assets** | **$301,844** | **$301,163** | | **NAV per Share** | **$13.23** | **$13.20** | [Statements of Operations](index=6&type=section&id=Statements%20of%20Operations) For the six months ended June 30, 2025, total investment income surged to **$25.0 million**, driving net investment income to **$15.3 million** and a net increase in net assets from operations of **$16.2 million** Statements of Operations Highlights (Six Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Total Investment Income | $25,003 | $5,842 | | Net Expenses | $9,690 | $4,396 | | **Net Investment Income** | **$15,313** | **$1,446** | | Net Realized/Unrealized Gains | $886 | $367 | | **Net Increase in Net Assets** | **$16,199** | **$1,813** | | NII Per Share | $0.67 | $0.23 | | Net Increase in Net Assets Per Share | $0.71 | $0.29 | [Statements of Changes in Net Assets](index=7&type=section&id=Statements%20of%20Changes%20in%20Net%20Assets) For the six months ended June 30, 2025, net assets increased by **$0.7 million** to **$301.8 million**, primarily due to a **$16.2 million** net increase from operations, largely offset by **$15.5 million** in stockholder distributions - The primary drivers for the change in net assets during the first six months of 2025 were net income from operations of **$16.2 million**, offset by distributions to stockholders of **$15.5 million**[20](index=20&type=chunk) [Statements of Cash Flows](index=9&type=section&id=Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities was **$5.3 million**, and in financing activities was **$4.8 million**, leading to a **$10.1 million** decrease in cash and cash equivalents Cash Flow Summary (Six Months Ended June 30, 2025) | Activity | Net Cash Flow (in millions) | | :--- | :--- | | Operating Activities | $(5.3) | | Financing Activities | $(4.8) | | **Net Decrease in Cash** | **$(10.1)** | | Cash at Beginning of Period | $23.9 | | **Cash at End of Period** | **$13.8** | [Schedule of Investments](index=10&type=section&id=Schedule%20of%20Investments) As of June 30, 2025, the investment portfolio's fair value reached **$307.5 million**, predominantly in first-lien senior secured U.S. debt, with a **76.1%** concentration in the U.S. Cannabis sector Total Investments (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Amortized Cost | $305,719 | $274,347 | | Fair Value | $307,499 | $275,241 | | % of Net Assets | 101.9% | 91.4% | - The portfolio is heavily concentrated in the U.S. Cannabis industry, which represents **76.1% of net assets** as of June 30, 2025[24](index=24&type=chunk) [Notes to Financial Statements](index=18&type=section&id=Notes%20to%20Financial%20Statements) The notes detail organization, accounting policies, and key events, including the October 2024 Loan Portfolio Acquisition and the new **$100 million** revolving credit facility, with all investments classified as Level 3 - On October 1, 2024, the company acquired a loan portfolio from Chicago Atlantic Loan Portfolio, LLC (CALP) in exchange for **16.6 million shares** of common stock, valued at **$219.6 million**. In connection with this, the company was renamed Chicago Atlantic BDC, Inc. and its ticker changed to 'LIEN'[43](index=43&type=chunk)[45](index=45&type=chunk) - As of June 30, 2025, there were no investments on non-accrual status[75](index=75&type=chunk) - On February 11, 2025, the company entered into a **$100 million** senior secured revolving credit facility maturing in March 2028. As of June 30, 2025, **$5 million** was outstanding[117](index=117&type=chunk)[119](index=119&type=chunk)[122](index=122&type=chunk) - Subsequent to the quarter end, on July 31, 2025, the company received a full principal repayment of approximately **$38.7 million** from its loan to STIIIZY Inc. Additionally, on August 12, 2025, the Board approved a quarterly cash dividend of **$0.34 per share**[169](index=169&type=chunk)[170](index=170&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes significant growth in investment income and portfolio size to the October 2024 Loan Portfolio Acquisition, with the **$307.5 million** portfolio focused on first-lien senior secured cannabis loans, all rated 'Grade 2' - The company's investment strategy focuses on four primary sub-strategies: Cannabis, Growth & Technology, Esoteric & Asset-Based Lending, and Liquidity Solutions[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk) - As of June 30, 2025, the top three portfolio companies represented **39.5%** of the portfolio's fair value, and the single largest portfolio company represented **16.8%**[209](index=209&type=chunk) - All investments in the portfolio were rated 'Grade 2' as of June 30, 2025, indicating they are performing in-line with expectations and involve an acceptable level of risk similar to the time of origination[212](index=212&type=chunk) Operating Expenses Comparison (Six Months Ended June 30) | Expense Category (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Income-based incentive fees | $3,885 | $329 | | Management fee | $2,606 | $492 | | General and administrative expense | $2,341 | $0 | | Transaction expenses related to Loan Portfolio Acquisition | $0 | $2,639 | | **Total operating expenses** | **$11,456** | **$4,396** | | Waivers / Expense limitation | $(1,766) | $0 | | **Net operating expenses** | **$9,690** | **$4,396** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=77&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces valuation, interest rate, and credit risks, with **76.2%** of its debt portfolio in floating-rate investments, where a 100 basis point rate increase could boost annual net income by **$1.8 million** - As of June 30, 2025, **76.2%** of the company's debt investments by principal balance were floating-rate, while **23.8%** were fixed-rate[270](index=270&type=chunk) Annualized Impact of Interest Rate Changes on Net Income (in thousands) | Change in Interest Rates | Increase (Decrease) in Net Income | | :--- | :--- | | Up 300 basis points | $6,445 | | Up 200 basis points | $4,146 | | Up 100 basis points | $1,848 | | Down 100 basis points | $(1,088) | | Down 200 basis points | $(1,730) | | Down 300 basis points | $(2,242) | [Item 4. Controls and Procedures](index=77&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The company's disclosure controls and procedures were deemed effective as of the end of the period covered by the report[272](index=272&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025[273](index=273&type=chunk) PART II: OTHER INFORMATION [Item 1. Legal Proceedings](index=79&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to, nor aware of, any material legal proceedings or threats thereof - As of the filing date, the company is not a party to any material legal proceedings[274](index=274&type=chunk) [Item 1A. Risk Factors](index=79&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors, except for new risks associated with the February 2025 senior secured revolving credit facility, including asset pledging and default consequences - The company highlights new risks associated with its senior secured revolving credit facility entered into in February 2025, noting that a significant amount of assets are pledged as collateral[276](index=276&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=79&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) On April 11, 2025, the company issued **22 shares** of common stock at **$10.71** per share via its Dividend Reinvestment Plan (DRIP), exempt from registration - The company issued **22 shares** of common stock on April 11, 2025, pursuant to its DRIP[280](index=280&type=chunk) [Item 3. Defaults Upon Senior Securities](index=79&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon its senior securities during the period - None[281](index=281&type=chunk) [Item 5. Other Information](index=81&type=section&id=Item%205.%20Other%20Information) No officers or directors adopted or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements during the second quarter of 2025 - No officers or directors adopted or terminated any Rule 10b5-1 trading plans during the quarter[284](index=284&type=chunk) [Item 6. Exhibits](index=82&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the quarterly report, including certifications from the Principal Executive Officer and Principal Financial Officer, and XBRL data