[Financial Highlights and Management Commentary](index=1&type=section&id=Financial%20Highlights%20and%20Management%20Commentary) This section covers key financial performance and management's strategic outlook [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) American Shared Hospital Services reported a **16% sequential revenue increase** in Q2 2025, driven by strong Gamma Knife and LINAC performance, despite flat year-over-year total revenue Q2 2025 Revenue Performance vs. Prior Periods | Revenue Category | Sequential Change (vs Q1 2025) | Year-over-Year Change (vs Q2 2024) | | :--- | :--- | :--- | | **Total Revenue** | ▲ 16% | ▲ 0.2% | | **Gamma Knife Revenue** | ▲ 25% | ▼ 5% | | **LINAC Revenue** | ▲ 7% | ▲ 34% | | **Proton Beam Radiation Therapy Revenue** | ▲ 17% | ▼ 21% | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management expressed optimism for growth, focusing on direct patient services, operational efficiencies, and strategic acquisitions, highlighting diversification success - The CEO highlighted a focus on expanding the business model and operational enhancements, with expected growth from a new Esprit system in Guadalajara, Mexico, and expansion in Rhode Island[2](index=2&type=chunk) - The CFO emphasized the positive momentum from the growth strategy, which focuses on shifting from a traditional leasing model to being a direct provider of radiation therapy services[2](index=2&type=chunk) - The Executive Chairman noted four years of consecutive revenue growth and three years of sustained profitability, underscoring the success of recent acquisitions and the ongoing pursuit of additional strategic tuck-in acquisitions[4](index=4&type=chunk) [Financial Results](index=2&type=section&id=Financial%20Results) This section details the company's financial performance for Q2 and year-to-date 2025, including revenue, gross margin, and net income [Second Quarter 2025 Performance (Three Months Ended June 30, 2025)](index=2&type=section&id=Second%20Quarter%202025%20Performance%20(Three%20Months%20Ended%20June%2030%2C%202025)) Q2 2025 revenue was **$7.1 million**, up **0.2%** year-over-year, but the company reported a **net loss of $280,000** due to lower volumes and the absence of a prior-year bargain purchase gain Q2 2025 vs. Q2 2024 Financial Summary (in US Dollars) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $7,071,000 | $7,056,000 | ▲ 0.2% | | Gross Margin | $1,630,000 | $2,468,000 | ▼ 34.0% | | Net (Loss)/Income | $(280,000) | $3,602,000 | - | | Diluted EPS | $(0.04) | $0.55 | - | | Adjusted EBITDA | $1,701,000 | $2,010,000 | ▼ 15.4% | - Revenue from the direct patient services segment grew **11% to $3.5 million**, primarily due to the Rhode Island centers and the new facility in Puebla, Mexico[6](index=6&type=chunk) - Revenue from the medical equipment leasing segment fell **8% to $3.6 million** due to lower Gamma Knife volumes from expired contracts and decreased PBRT volumes[7](index=7&type=chunk) - The net loss in Q2 2025 contrasts with a large net income in Q2 2024, which included a **$3,679,000 net bargain purchase gain** from the RI Acquisition[9](index=9&type=chunk) [Year-to-Date 2025 Performance (Six Months Ended June 30, 2025)](index=3&type=section&id=Year-to-Date%202025%20Performance%20(Six%20Months%20Ended%20June%2030%2C%202025)) H1 2025 revenue increased **7% to $13.2 million**, driven by direct patient services, but resulted in a **net loss of $905,000** compared to prior year's profit H1 2025 vs. H1 2024 Financial Summary (in US Dollars) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $13,183,000 | $12,272,000 | ▲ 7.4% | | Gross Margin | $2,572,000 | $4,611,000 | ▼ 44.2% | | Net (Loss)/Income | $(905,000) | $3,721,000 | - | | Diluted EPS | $(0.14) | $0.57 | - | | Adjusted EBITDA | $2,650,000 | $3,754,000 | ▼ 29.4% | - Direct patient services revenue grew **61% to $6.6 million**, while leasing segment revenue decreased to **$6.6 million** due to expired contracts, equipment downtime, and lower PBRT volumes[11](index=11&type=chunk)[12](index=12&type=chunk) - The net loss for the first half of 2025 is compared against a net income in H1 2024 that included a **$3,679,000 net bargain purchase gain**[14](index=14&type=chunk) [Balance Sheet Highlights](index=3&type=section&id=Balance%20Sheet%20Highlights) This section provides a snapshot of the company's financial position, including cash, total assets, and shareholders' equity [Balance Sheet Summary](index=3&type=section&id=Balance%20Sheet%20Summary) As of June 30, 2025, cash and equivalents remained stable at **$11.3 million**, total assets increased to **$63.5 million**, and shareholders' equity was **$24.5 million** Balance Sheet Data (Unaudited, in US Dollars) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents and restricted cash | $11,331,000 | $11,275,000 | | Total assets | $63,494,000 | $60,197,000 | | Shareholders' equity (excluding NCI) | $24,481,000 | $25,183,000 | | Equity per outstanding share | $3.78 | $3.92 | [Supplementary Information](index=3&type=section&id=Supplementary%20Information) This section provides details on the upcoming conference call, non-GAAP financial measures, and condensed consolidated financial statements [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) The company scheduled a conference call for August 13, 2025, at 1:00 PM ET to discuss Q2 2025 financial results, with replay options available - A conference call to discuss Q2 2025 results was scheduled for 1:00 pm ET on the day of the earnings release[16](index=16&type=chunk) - Details for participation, including phone numbers and a webcast link, were provided, and a replay will be available through August 20, 2025[17](index=17&type=chunk)[18](index=18&type=chunk) [Non-GAAP Financial Measures](index=5&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted EBITDA is used as a non-GAAP measure to assess core operational performance, excluding non-recurring items, with a detailed reconciliation provided - Adjusted EBITDA is defined as net income (loss) adjusted for interest, taxes, depreciation, amortization, stock-based compensation, bargain purchase gains, and asset write-down costs[22](index=22&type=chunk) - Management uses this non-GAAP measure for period-to-period comparisons, believing it provides supplemental information on the performance of the recurring core business[23](index=23&type=chunk) Reconciliation of GAAP Net (Loss) Income to Non-GAAP Adjusted EBITDA (in US Dollars) | | Three months ended June 30, | Six months ended June 30, | | :--- | :--- | :--- | :--- | | | **2025** | **2024** | **2025** | **2024** | | **Net (loss) income** | **$(280,000)** | **$3,602,000** | **$(905,000)** | **$3,721,000** | | Adjustments | $1,981,000 | $(1,592,000) | $3,555,000 | $(133,000) | | **Adjusted EBITDA** | **$1,701,000** | **$2,010,000** | **$2,650,000** | **$3,754,000** | [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents unaudited condensed consolidated statements of operations and balance sheet data for the reported periods Condensed Consolidated Statements of Operations (Unaudited, in US Dollars) | | Three months ended June 30, | Six months ended June 30, | | :--- | :--- | :--- | :--- | :--- | | | **2025** | **2024** | **2025** | **2024** | | **Revenues** | $7,071,000 | $7,056,000 | $13,183,000 | $12,272,000 | | **Gross margin** | $1,630,000 | $2,468,000 | $2,572,000 | $4,611,000 | | **Operating (loss)** | $(544,000) | $(1,000) | $(1,843,000) | $(86,000) | | **Net (loss) income attributable to AMS** | $(280,000) | $3,602,000 | $(905,000) | $3,721,000 |

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents BV Financial, Inc.'s unaudited consolidated financial statements for Q2 2025, covering balance sheets, income, comprehensive income, equity, and cash flows, with detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets slightly decreased to **$908.3 million** at June 30, 2025, driven by cash reduction for FHLB repayment, while net loans and deposits increased Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $56,323 | $70,500 | -20.1% | | Net loans | $742,414 | $729,238 | +1.8% | | **Total assets** | **$908,327** | **$911,821** | **-0.4%** | | Total deposits | $658,891 | $651,491 | +1.1% | | FHLB borrowings | $0 | $15,000 | -100.0% | | **Total liabilities** | **$710,336** | **$716,322** | **-0.8%** | | **Total stockholders' equity** | **$197,991** | **$195,499** | **+1.3%** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net income decreased for both Q2 and six-month periods of 2025, primarily due to increased compensation expenses and a shift to credit loss provisions Income Statement Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $9,156 | $8,909 | $17,799 | $16,872 | | Provision (Recovery) for credit losses | $178 | ($111) | $475 | ($92) | | Total noninterest income | $714 | $596 | $1,243 | $1,174 | | Total noninterest expense | $5,755 | $4,897 | $11,932 | $9,820 | | **Net income** | **$2,861** | **$3,399** | **$4,960** | **$5,973** | | **Diluted earnings per share** | **$0.29** | **$0.32** | **$0.50** | **$0.52** | - Compensation and related benefits expense increased significantly to **$4.0 million** in Q2 2025 from **$3.1 million** in Q2 2024, and to **$8.5 million** for the six months of 2025 from **$6.2 million** in the prior year period[10](index=10&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive income was **$2.9 million** for Q2 2025 and **$5.2 million** for the six months, including net income and unrealized gains on securities Comprehensive Income (in thousands) | Component | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $2,861 | $3,399 | $4,960 | $5,973 | | Other comprehensive income | $75 | $119 | $269 | $121 | | **Total comprehensive income** | **$2,936** | **$3,518** | **$5,229** | **$6,094** | [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity increased to **$198.0 million** at June 30, 2025, driven by net income, partially offset by **$5.3 million** in stock repurchases - For the six months ended June 30, 2025, the company repurchased shares for a total cost of **$5.265 million**[17](index=17&type=chunk) - Net income of **$4.960 million** and other comprehensive income of **$269,000** contributed positively to equity, while stock repurchases were the primary offsetting factor[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents decreased by **$14.2 million** for the six months ended June 30, 2025, due to investing and financing activities, despite operating cash flow Net Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,148 | $6,068 | | Net cash (used in) provided by investing activities | ($10,520) | $5,353 | | Net cash (used in) provided by financing activities | ($10,805) | $5,476 | | **Net (decrease) and increase in cash** | **($14,177)** | **$16,897** | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial items, including loan and securities portfolios, credit loss allowances, deposit structure, and regulatory capital - The company's primary business is attracting public deposits to fund various loans, including one-to-four-family real estate, commercial real estate, and construction loans, mainly in the Baltimore metropolitan area and the Eastern Shore of Maryland[24](index=24&type=chunk)[28](index=28&type=chunk) - The Allowance for Credit Losses (ACL) on loans was **$9.2 million** as of June 30, 2025, up from **$8.5 million** at year-end 2024, with the methodology using historical loss rates adjusted for a 12-month GDP forecast[79](index=79&type=chunk)[40](index=40&type=chunk)[42](index=42&type=chunk) - Total loans increased to **$751.6 million**, with commercial investor real estate loans comprising the largest segment at **43.67%** of the portfolio[79](index=79&type=chunk) - As of June 30, 2025, the Bank exceeded all regulatory capital requirements to be considered 'well capitalized', with a Tier 1 leverage ratio of **19.75%** and a Total Capital ratio of **25.70%**[135](index=135&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operating results, covering balance sheet changes, net interest income, credit losses, noninterest items, and asset quality [Comparison of Financial Condition at June 30, 2025 (unaudited) and December 31, 2024](index=40&type=section&id=Comparison%20of%20Financial%20Condition%20at%20June%2030%2C%202025%20(unaudited)%20and%20December%2031%2C%202024) Total assets decreased to **$908.3 million** due to cash reduction for FHLB repayment, partially offset by increased loans, deposits, and stockholders' equity - Total assets decreased by **0.4%** to **$908.3 million** at June 30, 2025[176](index=176&type=chunk) - Loans receivable increased by **1.9%** to **$751.6 million**, while cash and cash equivalents decreased by **20.1%** to **$56.3 million**[177](index=177&type=chunk)[178](index=178&type=chunk) - Total liabilities decreased by **0.8%** to **$710.3 million**, primarily due to the repayment of FHLB borrowings, while total deposits increased by **1.1%**[180](index=180&type=chunk)[181](index=181&type=chunk) - Stockholders' equity increased by **1.3%** to **$198.0 million**, reflecting net income partially offset by **$4.3 million** in stock repurchases[182](index=182&type=chunk) [Comparison of Operating Results for the Three and Six Months Ended June 30, 2025 and 2024](index=41&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Net income decreased for both Q2 and six-month periods of 2025, primarily due to increased credit loss provisions and higher non-interest expenses, despite net interest income growth Net Income and EPS Comparison | Period | Net Income (2025) | Net Income (2024) | Diluted EPS (2025) | Diluted EPS (2024) | | :--- | :--- | :--- | :--- | :--- | | **Three Months** | $2.9M | $3.4M | $0.29 | $0.32 | | **Six Months** | $5.0M | $6.0M | $0.50 | $0.52 | - Net interest income for Q2 2025 increased to **$9.2 million** from **$8.9 million** in Q2 2024, with the net interest margin rising slightly to **4.36%** from **4.33%**[204](index=204&type=chunk) - A provision for credit losses of **$178,000** was recorded in Q2 2025, compared to a recovery of **$111,000** in Q2 2024[206](index=206&type=chunk) - Non-interest expense for Q2 2025 rose to **$5.8 million** from **$4.9 million** in Q2 2024, primarily due to a **$927,000** increase in compensation and benefits, which included **$1.1 million** in costs for the 2024 Equity Incentive Plan[208](index=208&type=chunk) [Asset Quality](index=46&type=section&id=Asset%20Quality) Asset quality slightly deteriorated, with non-performing assets increasing to **$4.5 million**, and the allowance for credit losses rising to **$9.2 million** Asset Quality Metrics | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Non-performing assets | $4.5 million | $4.2 million | | Non-performing loans | $4.4 million | $4.0 million | | Allowance for credit losses (ACL) | $9.2 million | $8.5 million | | ACL to total loans | 1.22% | 1.15% | | ACL to non-performing loans | 208.6% | 212.5% | [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity and capital, with primary sources including deposits and FHLB borrowing capacity, exceeding all regulatory capital requirements - Primary sources of funds are deposits, loan and security payments, and FHLB borrowings[213](index=213&type=chunk) - At June 30, 2025, the company had a **$165.5 million** line of credit with the FHLB and a **$20.0 million** short-term unsecured facility from a correspondent bank[213](index=213&type=chunk) - Uninsured deposits were **$171.5 million** (**24.9%** of total deposits), of which **$53.2 million** were secured by collateral or FHLB letters of credit[215](index=215&type=chunk) - The Bank was categorized as **'well capitalized'** at June 30, 2025, exceeding all regulatory capital requirements[216](index=216&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the Company qualifies as a smaller reporting company - The company, as a smaller reporting company, is not required to provide these disclosures[217](index=217&type=chunk) [Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[218](index=218&type=chunk) - No material changes were identified in the company's internal controls over financial reporting during the quarter ended June 30, 2025[219](index=219&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal actions, with management expecting no material adverse effect on financial condition or results - The company is subject to routine legal actions but does not expect them to have a material financial impact[222](index=222&type=chunk) [Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - Risk factors remain consistent with those disclosed in the 2024 Annual Report on Form 10-K[223](index=223&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity) The company actively repurchases stock, completing one program in January 2025 and announcing a new 10% repurchase program in April 2025 - On April 4, 2025, the Company announced a new stock repurchase program for up to **10%** of its outstanding common stock (approximately **1,059,404 shares**)[224](index=224&type=chunk) Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 40,700 | $15.33 | | May 2025 | 116,300 | $15.85 | | June 2025 | 120,080 | $14.73 | | **Total** | **277,080** | **$15.29** | [Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable - There were no defaults upon senior securities[227](index=227&type=chunk) [Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - This item is not applicable to the company[228](index=228&type=chunk) [Other Information](index=49&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during Q2 2025 - No directors or executive officers adopted or terminated a Rule 10b5-1 trading plan during the quarter[229](index=229&type=chunk) [Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits include CEO and CFO certifications (302 and 906) and Inline XBRL financial data[231](index=231&type=chunk)

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Bogota Financial Corp.'s unaudited consolidated financial statements, offering a quantitative overview of its performance and financial position for the periods ended June 30, 2025 [Consolidated Statements of Financial Condition](index=4&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Total assets decreased to **$921.8 million** at June 30, 2025, primarily due to reduced cash and net loans, while liabilities also fell and equity slightly increased Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $20,334 | $52,232 | (61.1)% | | Loans, net | $693,211 | $711,716 | (2.6)% | | Securities available for sale | $144,602 | $140,307 | 3.1% | | **Total Assets** | **$921,835** | **$971,490** | **(5.1)%** | | Total deposits | $628,230 | $642,188 | (2.2)% | | FHLB advances (short & long term) | $135,944 | $172,173 | (21.0)% | | **Total Liabilities** | **$783,395** | **$834,201** | **(6.1)%** | | **Total Stockholders' Equity** | **$138,440** | **$137,289** | **0.8%** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) The company achieved net income of **$224 thousand** in Q2 2025 and **$955 thousand** for the six months, a significant turnaround from prior year losses, driven by higher net interest income Key Income Statement Data (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $3,695 | $2,744 | $7,288 | $5,395 | | Provision (Recovery) for Credit Losses | $0 | $35 | ($80) | $70 | | Non-interest Income | $332 | $303 | $1,221 | $602 | | Non-interest Expense | $3,855 | $3,726 | $7,714 | $7,369 | | **Net Income (Loss)** | **$224** | **($432)** | **$955** | **($873)** | | **EPS - diluted** | **$0.02** | **($0.03)** | **$0.08** | **($0.07)** | [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) The company reported a comprehensive loss of **$81 thousand** in Q2 2025, but a comprehensive income of **$1.0 million** for the six-month period, a significant improvement year-over-year Comprehensive Income (Loss) Summary (in thousands) | Period | Net Income (Loss) | Other Comprehensive (Loss) Income | Comprehensive (Loss) Income | | :--- | :--- | :--- | :--- | | **Three Months Ended June 30, 2025** | $224 | ($306) | ($81) | | **Three Months Ended June 30, 2024** | ($432) | $784 | $351 | | **Six Months Ended June 30, 2025** | $955 | $55 | $1,010 | | **Six Months Ended June 30, 2024** | ($873) | $483 | ($391) | [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity increased to **$138.4 million** at June 30, 2025, driven by net income, partially offset by stock repurchases and comprehensive loss - Stockholders' equity increased to **$138.4 million** at June 30, 2025, from **$137.3 million** at January 1, 2025[18](index=18&type=chunk) - Key activities affecting equity in the first six months of 2025 included net income of **$955,342**, stock-based compensation of **$446,615**, and stock repurchases of **$402,792**[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities was **$1.9 million** for the six months ended June 30, 2025, with investing activities providing **$16.4 million** and financing activities using **$50.2 million**, resulting in a **$31.9 million** net decrease in cash Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $1,904 | ($1,230) | | Net cash from investing activities | $16,372 | ($41,156) | | Net cash from financing activities | ($50,174) | $35,048 | | **Net decrease in cash** | **($31,899)** | **($7,338)** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, the composition of the securities and loan portfolios, including a decrease in total loans, and information on derivative instruments used for interest rate risk hedging - The available-for-sale securities portfolio increased to **$144.6 million** at June 30, 2025, from **$140.3 million** at Dec 31, 2024. The portfolio consists mainly of mortgage-backed securities and corporate bonds[37](index=37&type=chunk) - Total loans decreased to **$695.8 million** at June 30, 2025, from **$714.3 million** at Dec 31, 2024, with residential first mortgages being the largest category at **$458.2 million**[42](index=42&type=chunk) - Non-performing loans were **$13.9 million** at June 30, 2025, slightly down from **$14.0 million** at year-end 2024. The allowance for credit losses was **$2.59 million**[49](index=49&type=chunk)[42](index=42&type=chunk) - The company uses interest rate swaps with notional amounts of **$65.0 million** (cash flow hedges) and **$60.0 million** (fair value hedges) to manage interest rate risk on FHLB advances, deposits, and loans[67](index=67&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and results, highlighting decreased assets and liabilities, significant net income improvement driven by higher net interest income, and stable asset quality - Total assets decreased by **$49.7 million (5.1%)** to **$921.8 million** at June 30, 2025, from year-end 2024, mainly from a **$31.9 million** drop in cash and an **$18.5 million** decrease in net loans[88](index=88&type=chunk) - Total liabilities fell by **$50.8 million (6.1%)** to **$783.4 million**, driven by a **$36.2 million** decrease in borrowings and a **$14.0 million** decrease in deposits[93](index=93&type=chunk) - For Q2 2025, net income was **$224 thousand**, a significant turnaround from a net loss of **$432 thousand** in Q2 2024, driven by a **$951 thousand** increase in net interest income. The net interest margin improved to **1.74%** from **1.21%** YoY[107](index=107&type=chunk)[115](index=115&type=chunk) - For the six months ended June 30, 2025, net income was **$955 thousand**, compared to a net loss of **$873 thousand** in the prior year period. The result was boosted by a **$1.9 million** increase in net interest income and a one-time BOLI death benefit of approximately **$543 thousand**[121](index=121&type=chunk) - Asset quality remained stable, with non-performing assets at **$13.9 million (1.5% of total assets)** at June 30, 2025. The allowance for credit losses was **0.37%** of total loans[91](index=91&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages interest rate risk using NPV and NII analyses, with a **+200 bp** shock scenario showing a **17.83%** NPV decrease and **3.47%** NII decrease, both within policy limits Net Portfolio Value (NPV) Sensitivity Analysis (June 30, 2025) | Basis Point Change | NPV (in thousands) | Percent Change | | :--- | :--- | :--- | | +400 bp | $82,457 | (34.92)% | | +200 bp | $104,106 | (17.83)% | | 0 | $126,693 | 0.00% | | -200 bp | $148,859 | 17.50% | Net Interest Income (NII) Sensitivity Analysis (Year One) | Basis Point Change | Change in NII (%) | | :--- | :--- | | +400 bp | (6.97)% | | +200 bp | (3.47)% | | 0 | 0.00% | | -200 bp | 2.87% | [Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report[150](index=150&type=chunk) - There were no changes in the company's internal control over financial reporting during the second quarter of 2025 that have materially affected, or are reasonably likely to materially affect, these controls[151](index=151&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) As of June 30, 2025, the company was not involved in any material legal proceedings beyond routine business matters - The company reports no pending legal proceedings, other than routine proceedings in the ordinary course of business, that would be material to its financial condition or results of operations[153](index=153&type=chunk) [Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024, have been reported - No material changes in the risk factors from those disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, have been reported[154](index=154&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company reported no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities for the period - The company reported "None" for this item[155](index=155&type=chunk) [Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - The company reported "None" for this item[156](index=156&type=chunk) [Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is reported as "Not applicable"[157](index=157&type=chunk) [Other Information](index=46&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements during Q2 2025 - No directors or executive officers adopted or terminated a Rule 10b5-1 trading plan or any "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025[158](index=158&type=chunk) [Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate documents, CEO/CFO certifications, and iXBRL data files - The filing includes CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as financial statements formatted in iXBRL[160](index=160&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarterly Period Ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number 001-41835 AGAPE ATP CORPORATION (Exact name of registrant issuer as specified in its charter) (State or other ju ...

Part I: Financial Information [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents Dogwood Therapeutics' unaudited condensed consolidated financial statements for the periods ended June 30, 2025 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$96.7 million**, liabilities decreased to **$14.2 million**, and stockholders' equity turned positive to **$6.9 million** as of June 30, 2025 Condensed Consolidated Balance Sheet Highlights (Unaudited) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$96,692,527** | **$94,308,246** | | Cash | $13,402,809 | $14,847,949 | | Goodwill | $12,458,383 | $11,812,476 | | Intangible assets | $69,303,582 | $65,710,527 | | **Total Liabilities** | **$14,151,904** | **$30,027,223** | | Debt with related party | $0 | $15,381,077 | | **Total stockholders' equity (deficit)** | **$6,878,599** | **($10,124,339)** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company reported no revenue, with net loss increasing to **$14.7 million** for the six months ended June 30, 2025, driven by a **$6.1 million** debt conversion loss and higher R&D expenses Statement of Operations Highlights (Unaudited, Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | $0 | $0 | | Research and development expenses | $5,006,941 | $679,801 | | General and administrative expenses | $3,346,100 | $1,704,124 | | Loss from operations | ($8,353,041) | ($2,383,925) | | Loss on debt conversion with related party | ($6,134,120) | $0 | | **Net loss** | **($14,732,305)** | **($2,341,168)** | | Net loss per common share, basic and diluted | ($9.51) | ($2.78) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased to **$8.7 million**, while financing activities provided **$7.3 million**, resulting in a **$1.5 million** net decrease in cash for the six months ended June 30, 2025 Cash Flow Summary (Unaudited, Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($8,708,672) | ($1,749,160) | | Net cash provided by financing activities | $7,252,245 | $1,452,397 | | **Net decrease in cash** | **($1,456,427)** | **($296,763)** | | Cash, beginning of period | $14,847,949 | $3,316,946 | | Cash, end of period | $13,402,809 | $3,020,183 | - Non-cash financing activities for the six months ended June 30, 2025, included the conversion of **$19.5 million** in related-party debt and **$0.4 million** in accrued interest into Series A-1 Non-Voting Convertible Preferred Stock[15](index=15&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's business focus, going concern issues, the Pharmagesic acquisition, debt conversion, and recent equity financing activities - The company is a pre-revenue, development-stage biopharmaceutical firm focused on two main areas: Nav 1.7 modulation for pain (lead candidate Halneuron®) and antiviral therapies for fatigue-related illnesses (IMC-1, IMC-2)[18](index=18&type=chunk) - Management has concluded there is substantial doubt about the Company's ability to operate as a going concern within one year, as current cash is insufficient to fund operations beyond the first quarter of 2026. Additional financing is required[23](index=23&type=chunk) - On October 7, 2024, the company acquired Pharmagesic (Holdings) Inc. in a business combination, which was accounted for using the acquisition method. This transaction brought in the Halneuron® program[17](index=17&type=chunk)[58](index=58&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operations, and liquidity, highlighting increased expenses from clinical trials and the need for additional financing due to going concern issues [Overview](index=27&type=section&id=Overview) The company focuses on developing pain and fatigue medicines, with lead candidate Halneuron® in a Phase 2b trial and antiviral programs seeking partnerships - The lead product candidate, Halneuron®, is in a Phase 2b clinical trial (HALT-CINP-203) for chemotherapy-induced neuropathic pain (CINP)[125](index=125&type=chunk) - An interim analysis of the HALT-CINP-203 trial is expected in the fourth quarter of 2025, with top-line data anticipated in the second half of 2026[126](index=126&type=chunk) - The antiviral programs for IMC-1 (fibromyalgia) and IMC-2 (Long-COVID) are secondary priorities, and the company is seeking partnerships to advance them[127](index=127&type=chunk)[130](index=130&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Operating expenses significantly increased for the six months ended June 30, 2025, driven by a **$4.3 million** rise in R&D and a **$1.6 million** increase in G&A expenses Comparison of Operating Expenses (Six Months Ended June 30) | Expense Category | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Research and development | $5,006,941 | $679,801 | +$4,327,140 | | General and administrative | $3,346,100 | $1,704,124 | +$1,641,976 | | **Total operating expenses** | **$8,353,041** | **$2,383,925** | **+$5,969,116** | [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) With **$13.4 million** cash as of June 30, 2025, the company's liquidity is limited to Q1 2026, necessitating additional financing due to going concern issues - The company's cash on hand of approximately **$13.4 million** as of June 30, 2025, is expected to fund operations only through the first quarter of 2026[138](index=138&type=chunk)[143](index=143&type=chunk) - A registered direct offering in March 2025 raised net proceeds of approximately **$4.25 million**[141](index=141&type=chunk) - Substantial doubt exists regarding the company's ability to continue as a going concern, and it will need to raise additional funds through equity, debt, or partnerships to continue its strategy[143](index=143&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Dogwood Therapeutics is not required to provide market risk disclosures - This item is not required for smaller reporting companies[154](index=154&type=chunk) [Item 4. Controls and Procedures](index=32&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 in internal control over financial reporting - Based on an evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[156](index=156&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[157](index=157&type=chunk) Part II: Other Information [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material pending or ongoing litigation - The company does not currently have any pending or ongoing material litigation[160](index=160&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) No material changes from previously disclosed risk factors in the 2024 Annual Report on Form 10-K are reported - No material changes from risk factors previously disclosed in the 2024 Annual Report on Form 10-K are reported[161](index=161&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities during the period - None[162](index=162&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated any Rule 10b5-1 trading arrangements during the six months ended June 30, 2025 - No director or officer adopted or terminated any Rule 10b5-1 trading arrangement during the six months ended June 30, 2025[165](index=165&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section refers to the Exhibit Index, listing all exhibits filed with or incorporated by reference into this Quarterly Report on Form 10-Q

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39811 Dogwood Therapeutics, Inc. (866) 620-8655 (Registrant's telephone number) Not applicable (Former name, f ...

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number 000-51726 Magyar Bancorp, Inc. (Exact Name of Registrant as Specified in Its Charter) aUNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 (State or Other Jurisdiction of Incorp ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2025 or ☐ Transition report pursuant to section 13 or 15(d) of the Securities and Exchange Act of 1934 For the transition period from ________ to ________ Commission File No. 001-35526 NEONODE INC. (Exact name of registrant as specified in its charter) | Delaware | 94-1517641 | | --- | --- | | (Stat ...

[Executive Summary of Financial Results](index=1&type=section&id=I.%20Executive%20Summary%20of%20Financial%20Results) Neonode experienced revenue declines and increased losses from continuing operations in Q2 and H1 2025, alongside a decrease in cash and working capital [Financial Summary for Three Months Ended June 30, 2025](index=1&type=section&id=A.%20Financial%20Summary%20for%20Three%20Months%20Ended%20June%2030,%202025) Neonode reported a 25.2% revenue decline to $0.6 million for Q2 2025, with operating expenses up 5.3% and loss from continuing operations increasing to $2.0 million ($0.12 per share) Q2 2025 Financial Highlights (Continuing Operations) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Revenues | $0.6M | $0.8M | -25.2% | | Operating Expenses | $2.7M | $2.566M | +5.3% | | Loss from Continuing Operations | $2.0M | $1.7M | +17.6% | | Loss per Share (Continuing Ops) | $0.12 | $0.11 | +9.1% | | Cash used by Operations | $1.7M | $1.2M | +41.7% | | Cash & Accounts Receivable (as of June 30, 2025) | $13.6M | $17.2M (Dec 31, 2024) | -20.9% | - Revenues from continuing operations decreased by **25.2%** to **$0.6 million** compared to the prior year[4](index=4&type=chunk) - Loss from continuing operations increased to **$2.0 million**, or **$0.12 per share**, compared to $1.7 million, or $0.11 per share, in the prior year[4](index=4&type=chunk) [Financial Summary for Six Months Ended June 30, 2025](index=1&type=section&id=B.%20Financial%20Summary%20for%20Six%20Months%20Ended%20June%2030,%202025) H1 2025 revenues from continuing operations decreased 31.1% to $1.1 million, with operating expenses down 1.5% and loss widening to $3.8 million ($0.23 per share) H1 2025 Financial Highlights (Continuing Operations) | Metric | H1 2025 | H1 2024 | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Revenues | $1.1M | $1.615M | -31.1% | | Operating Expenses | $5.2M | $5.249M | -1.5% | | Loss from Continuing Operations | $3.8M | $3.4M | +11.8% | | Loss per Share (Continuing Ops) | $0.23 | $0.22 | +4.5% | | Cash used by Operations | $3.1M | $3.1M | 0% | - Revenues from continuing operations for the six months decreased by **31.1%** to **$1.1 million** compared to the same period in the prior year[4](index=4&type=chunk) - Loss from continuing operations for the six months was **$3.8 million**, or **$0.23 per share**, compared to $3.4 million, or $0.22 per share, for the same period in the prior year[4](index=4&type=chunk) [CEO's Commentary and Business Outlook](index=2&type=section&id=II.%20CEO's%20Commentary%20and%20Business%20Outlook) The CEO addresses declining legacy business revenues, emphasizing strategic focus on MultiSensing® and zForce® technology platforms for future growth and new market opportunities [Overview of Q2 Performance and Challenges](index=2&type=section&id=A.%20Overview%20of%20Q2%20Performance%20and%20Challenges) The CEO noted continued revenue decline from legacy business in printer and automotive infotainment, a trend expected until new customer projects reach production - The second quarter saw a decline in revenues from the legacy business due to negative trends in the printer and automotive infotainment markets[5](index=5&type=chunk) - These challenges are expected to remain until new customers move from the deployment phase to the production phase[5](index=5&type=chunk) [Strategic Focus and Technology Advancement](index=2&type=section&id=B.%20Strategic%20Focus%20and%20Technology%20Advancement) Neonode expands business and advances MultiSensing® and zForce® platforms, investing in data-driven HMI solutions, strategic automotive partnerships, and new verticals to drive future growth - Neonode is actively working to expand business opportunities and advance the product roadmap across its MultiSensing® and zForce® core technology platforms[5](index=5&type=chunk) - For MultiSensing, the company continues to build on and invest in being the first mover in fully synthetic, data-driven HMI solutions, building strategic partnerships in the automotive sector, and exploring new verticals[6](index=6&type=chunk) - With the zForce platform, Neonode continues to serve its existing customer base while focusing on new project deliveries[6](index=6&type=chunk) [Detailed Financial Overview for Q2 2025](index=2&type=section&id=III.%20Detailed%20Financial%20Overview%20for%20Q2%202025) This section provides a detailed analysis of Neonode's Q2 2025 financial performance, covering revenue, operating expenses, profitability, cash position, and working capital [Revenue Analysis](index=2&type=section&id=A.%20Revenue%20Analysis) Q2 2025 total revenues from continuing operations decreased 25.2% to $0.6 million, driven by a 34.2% fall in license revenues, partially offset by a 4.3% increase in NRE revenues Q2 2025 Revenue Breakdown (Continuing Operations) | Revenue Type | Q2 2025 | Q2 2024 | Change (%) | | :------------------------ | :-------- | :-------- | :--------- | | Total Revenues | $0.6M | $0.8M | -25.2% | | License Revenues | $0.4M | $0.614M | -34.2% | | Non-recurring Engineering | $0.2M | $0.187M | +4.3% | - The decrease in license revenues was mainly due to lower demand for legacy customers' products within printer and passenger car touch applications[7](index=7&type=chunk) - Revenues from new licensing customers partially offset the decline in license revenues[7](index=7&type=chunk) [Operating Expenses and Profitability](index=2&type=section&id=B.%20Operating%20Expenses%20and%20Profitability) Q2 2025 operating expenses from continuing operations rose 5.3% to $2.7 million, resulting in a $2.0 million loss ($0.12 per share) and increased cash used by operations Q2 2025 Operating Expenses and Loss (Continuing Operations) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Operating Expenses | $2.7M | $2.566M | +5.3% | | Loss from Continuing Operations | $2.0M | $1.7M | +17.6% | | Loss per Share (Continuing Ops) | $0.12 | $0.11 | +9.1% | - Cash used by operations increased to **$1.7 million** in the second quarter of 2025 compared to $1.2 million for the same period in 2024[9](index=9&type=chunk) - The increase in cash used by operations was primarily due to a lower net loss and fewer component purchases following the phaseout of TSM manufacturing[9](index=9&type=chunk) [Cash Position and Working Capital](index=2&type=section&id=C.%20Cash%20Position%20and%20Working%20Capital) Cash and accounts receivable decreased to $13.6 million by June 30, 2025, with working capital also declining, though the company deems its liquidity sufficient for strategy execution Cash and Working Capital (Continuing Operations) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :-------------------------- | :-------------- | :------------- | :------- | | Cash and Accounts Receivable | $13.6M | $17.2M | -$3.6M | | Working Capital | $12.1M | $16.1M | -$4.0M | - The company's financial position and liquidity provide stability and enable it to execute its strategy to secure more licensing opportunities[10](index=10&type=chunk) [Company Information and Legal Disclosures](index=3&type=section&id=IV.%20Company%20Information%20and%20Legal%20Disclosures) This section provides essential company contact information, an overview of Neonode's business, and a safe harbor statement regarding forward-looking statements and associated risks [Contact Information](index=3&type=section&id=A.%20Contact%20Information) Contact details for Neonode's President & CEO Daniel Alexus and CFO Fredrik Nihlén are provided for inquiries - Contact information for President and CEO Daniel Alexus and Chief Financial Officer Fredrik Nihlén is provided[11](index=11&type=chunk) [About Neonode](index=3&type=section&id=B.%20About%20Neonode) Neonode Inc. (NASDAQ:NEON), a publicly traded company founded in 2001, specializes in advanced optical sensing solutions for various applications, holding over 100 patents globally - Neonode Inc. (NASDAQ:NEON) is a publicly traded company, headquartered in Stockholm, Sweden, established in 2001[11](index=11&type=chunk) - The Company provides advanced optical sensing solutions for contactless touch, touch, gesture control, and in-cabin monitoring[11](index=11&type=chunk) - Neonode's technology is deployed in more than **90 million products**, and the Company holds more than **100 patents** worldwide, serving Fortune 500 companies[11](index=11&type=chunk) [Safe Harbor Statement](index=3&type=section&id=C.%20Safe%20Harbor%20Statement) This press release includes forward-looking statements on growth and performance, subject to risks like customer reliance and product development cycles, with no duty to update - The press release contains forward-looking statements relating to expectations for growth and future performance[13](index=13&type=chunk) - These statements are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different[13](index=13&type=chunk) - Risks include reliance on customers' ability to design, manufacture, and sell products with Neonode's technology, the length of customer product development cycles, and dependence on suppliers[14](index=14&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=V.%20Consolidated%20Financial%20Statements) This section presents Neonode's consolidated balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows for the reported periods [Consolidated Balance Sheets](index=4&type=section&id=A.%20Consolidated%20Balance%20Sheets) Total assets decreased to $15.058 million by June 30, 2025, driven by lower cash, while total liabilities increased and stockholders' equity declined to $12.652 million Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :-------------------------- | :-------------- | :------------- | :------- | | Total Assets | $15,058 | $18,381 | -$3,323 | | Cash and cash equivalents | $13,238 | $16,427 | -$3,189 | | Total Liabilities | $2,406 | $1,939 | +$467 | | Total Stockholders' Equity | $12,652 | $16,442 | -$3,790 | - Current assets decreased from **$17,685 thousand** at December 31, 2024, to **$14,405 thousand** at June 30, 2025[16](index=16&type=chunk) - Current liabilities increased from **$1,620 thousand** at December 31, 2024, to **$2,215 thousand** at June 30, 2025[16](index=16&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=B.%20Consolidated%20Statements%20of%20Operations) Q2 2025 total revenues were $0.599 million, with operating loss widening to $(2.110) million and net loss at $(1.868) million; H1 revenues were $1.112 million with a net loss of $(3.601) million Consolidated Statements of Operations Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------------- | :-------- | :-------- | :-------- | :-------- | | Total Revenues | $599 | $801 | $1,112 | $1,615 | | Gross Margin | $593 | $777 | $1,097 | $1,574 | | Total Operating Expenses | $2,703 | $2,566 | $5,172 | $5,249 | | Operating Loss | $(2,110) | $(1,789) | $(4,075) | $(3,675) | | Loss from Continuing Operations | $(1,984) | $(1,677) | $(3,784) | $(3,393) | | Net Loss | $(1,868) | $(1,695) | $(3,601) | $(3,779) | | Basic & Diluted Loss per Share (Continuing Ops) | $(0.12) | $(0.11) | $(0.23) | $(0.22) | | Basic & Diluted Loss per Share | $(0.11) | $(0.11) | $(0.21) | $(0.25) | - Research and development expenses increased to **$1,074 thousand** in Q2 2025 from $975 thousand in Q2 2024[18](index=18&type=chunk) - Sales and marketing expenses increased to **$596 thousand** in Q2 2025 from $544 thousand in Q2 2024[18](index=18&type=chunk) [Consolidated Statements of Comprehensive Loss](index=6&type=section&id=C.%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Q2 2025 comprehensive loss was $(1.923) million, while H1 comprehensive loss was $(3.790) million, with foreign currency translation adjustments impacting both periods Consolidated Statements of Comprehensive Loss Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------- | :-------- | :-------- | :-------- | :-------- | | Net Loss | $(1,868) | $(1,695) | $(3,601) | $(3,779) | | Foreign currency translation adjustments | $(55) | $(32) | $(189) | $(66) | | Comprehensive Loss | $(1,923) | $(1,727) | $(3,790) | $(3,845) | - Foreign currency translation adjustments resulted in an other comprehensive loss of **$(55) thousand** for Q2 2025 and **$(189) thousand** for H1 2025[20](index=20&type=chunk) [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=D.%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity decreased to $12.652 million by June 30, 2025, primarily due to net losses and foreign currency translation adjustments Consolidated Stockholders' Equity Highlights (in thousands) | Metric | Dec 31, 2024 | June 30, 2025 | Change | | :-------------------------- | :------------- | :-------------- | :------- | | Total Stockholders' Equity | $16,442 | $12,652 | -$3,790 | | Accumulated Deficit | $(224,080) | $(227,681) | -$3,601 | | Accumulated Other Comprehensive Loss | $(450) | $(639) | -$189 | - Net loss for the six months ended June 30, 2025, was **$(3,601) thousand**, contributing to the decrease in equity[22](index=22&type=chunk) - Foreign currency translation adjustments also contributed to the decrease in equity by **$(189) thousand** for the six months ended June 30, 2025[22](index=22&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=E.%20Consolidated%20Statements%20of%20Cash%20Flows) H1 2025 net cash used in operating activities was $(3.110) million, with a net decrease in cash and cash equivalents of $(3.189) million, ending at $13.238 million Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | H1 2025 | H1 2024 | Change | | :-------------------------------- | :-------- | :-------- | :------- | | Net Cash Used in Operating Activities | $(3,110) | $(3,135) | +$25 | | Net Cash Provided by (Used in) Investing Activities | $(15) | $153 | -$168 | | Net Cash Used in Financing Activities | $(5) | $(13) | +$8 | | Net Change in Cash and Cash Equivalents | $(3,189) | $(3,048) | -$141 | | Cash and Cash Equivalents at End of Period | $13,238 | $13,107 | +$131 | - Adjustments to reconcile net loss to net cash used in operating activities included depreciation and amortization, amortization of operating lease right-of-use assets, and changes in accounts receivable and other operating assets/liabilities[24](index=24&type=chunk) - Cash paid for income taxes was **$10 thousand** in H1 2025, down from $21 thousand in H1 2024[24](index=24&type=chunk)

[FORM 10-Q Cover Page](index=1&type=section&id=FORM%2010-Q%20Cover%20Page) [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides the basic identification details for Sanara MedTech Inc.'s quarterly report, including the filing period, state of incorporation, and contact information - Registrant: **SANARA MEDTECH INC.**[2](index=2&type=chunk) - Quarterly Period Ended: **June 30, 2025**[2](index=2&type=chunk) [Securities Information](index=1&type=section&id=Securities%20Information) Details regarding the company's registered securities, including the trading symbol and exchange, are provided | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common Stock, $0.001 par value | SMTI | The Nasdaq Capital Market | [Filer Status and Shares Outstanding](index=1&type=section&id=Filer%20Status%20and%20Shares%20Outstanding) The company confirms its compliance with SEC filing requirements and discloses its filer status and the number of common shares issued and outstanding as of a recent date - The registrant has filed all required reports during the preceding 12 months and has been subject to filing requirements for the past 90 days[4](index=4&type=chunk) | Large accelerated filer | Accelerated filer | Non-accelerated filer | Smaller reporting company | Emerging growth company | | :---------------------- | :---------------- | :-------------------- | :------------------------ | :---------------------- | | ☐ | ☐ | ☒ | ☒ | ☐ | - As of August 12, 2025, **8,902,351 shares** of the Issuer's common stock, $0.001 par value per share, were issued and outstanding[5](index=5&type=chunk) [Table of Contents](index=3&type=section&id=Table%20of%20Contents) [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.%20FINANCIAL%20STATEMENTS) This section presents Sanara MedTech Inc.'s unaudited consolidated financial statements, including the balance sheets, statements of operations, changes in shareholders' equity, and cash flows for the periods ended June 30, 2025, along with detailed notes explaining significant accounting policies, recent acquisitions, debt, equity, and segment reporting [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :----------------------------- | :------------------------ | :------------------ | | Total Assets | $98,767,645 | $88,091,992 | | Total Liabilities | $63,375,699 | $49,180,030 | | Total Shareholders' Equity | $35,391,946 | $38,911,962 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Revenue | $25,830,834 | $20,158,823 | $49,264,930 | $38,695,461 | | Gross Profit | $23,893,552 | $18,150,137 | $45,492,681 | $34,796,729 | | Operating Loss | $(31,348) | $(2,884,856) | $(2,111,377) | $(4,416,563) | | Net Loss Attributable to Shareholders | $(2,014,362) | $(3,504,014) | $(5,541,539) | $(5,268,198) | | Net Loss Per Share (Basic & Diluted) | $(0.23) | $(0.41) | $(0.64) | $(0.62) | [Consolidated Statements of Changes in Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) | Metric | Balance at December 31, 2024 | Balance at June 30, 2025 | | :----------------------------------- | :--------------------------- | :----------------------- | | Common Stock (Shares) | 8,753,773 | 8,903,662 | | Common Stock (Amount) | $8,754 | $8,904 | | Additional Paid-In Capital | $77,179,211 | $78,678,081 | | Accumulated Deficit | $(37,784,392) | $(43,287,572) | | Total Shareholders' Equity | $38,911,962 | $35,391,946 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity (Six Months Ended June 30) | 2025 | 2024 | | :-------------------------------------------- | :----------- | :----------- | | Net Cash Provided by (Used in) Operating Activities | $665,127 | $(3,006,300) | | Net Cash Used in Investing Activities | $(9,107,823) | $(124,580) | | Net Cash Provided by Financing Activities | $9,523,145 | $4,134,039 | | Net Increase in Cash | $1,080,449 | $1,003,159 | | Cash, End of Period | $16,958,744 | $6,150,375 | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed disclosures and explanations for the unaudited consolidated financial statements, covering the company's business segments, significant accounting policies, recent acquisitions, equity investments, debt obligations, and related party transactions [NOTE 1 – NATURE OF BUSINESS AND BACKGROUND](index=9&type=section&id=NOTE%201%20%E2%80%93%20NATURE%20OF%20BUSINESS%20AND%20BACKGROUND) Sanara MedTech Inc. is a medical technology company focused on surgical, chronic wound, and skin markets, operating through two reportable segments: Sanara Surgical and Tissue Health Plus (THP), with a strategic shift in 2024 to reflect the growing importance of value-based wound care - Sanara MedTech Inc. is a medical technology company focused on developing and commercializing transformative technologies in surgical, chronic wound, and skin markets[20](index=20&type=chunk) - The Company operates through two reportable segments: Sanara Surgical and Tissue Health Plus (THP), a change implemented in Q2 2024 to reflect the growing investment in value-based wound care strategy[21](index=21&type=chunk)[22](index=22&type=chunk) - Sanara Surgical markets soft tissue repair (e.g., CellerateRX Surgical, BIASURGE) and bone fusion products (e.g., BiFORM, ALLOCYTE Plus) for sterile environments, and includes an in-house R&D team[23](index=23&type=chunk)[24](index=24&type=chunk) - THP aims to simplify skin health, starting with wound care, by offering a value-based wound care program to payers and risk-bearing entities, coordinating community and home-based care, and launched its first pilot program in Q2 2025[25](index=25&type=chunk)[26](index=26&type=chunk) [NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=NOTE%202%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the company's key accounting principles, including consolidation, use of estimates, revenue recognition, and policies for assets like accounts receivable, inventory, property, goodwill, and intangibles, as well as equity investments, fair value measurements, and recently adopted and issued accounting pronouncements - The company's unaudited consolidated financial statements include Sanara MedTech Inc. and its wholly-owned and majority-owned subsidiaries, with all significant intercompany transactions eliminated[27](index=27&type=chunk) - Revenue is recognized when control of promised goods or services is transferred to the customer, primarily from product sales (soft tissue repair, bone fusion), with SaaS revenue starting in Q2 2025 from the THP segment[33](index=33&type=chunk)[38](index=38&type=chunk)[40](index=40&type=chunk) | Revenue Stream (Three Months Ended June 30) | 2025 | 2024 | | :------------------------------------------ | :----------- | :----------- | | Soft tissue repair products | $22,661,457 | $17,641,318 | | Bone fusion products | $3,142,795 | $2,516,599 | | SaaS | $26,582 | $- | | Royalties | $- | $906 | | **Total Net Revenue** | **$25,830,834** | **$20,158,823** | - The company capitalizes costs for internal use software during the application development stage, particularly for the THP platform, with approximately **$3.4 million capitalized** as of June 30, 2025, to be depreciated over five years once placed in service[44](index=44&type=chunk)[46](index=46&type=chunk) - Goodwill, primarily from the Scendia acquisition within the Sanara Surgical segment, is tested annually for impairment and was not impaired as of June 30, 2025 or 2024[47](index=47&type=chunk)[80](index=80&type=chunk) | Intangible Assets (June 30, 2025) | Cost | Accumulated Amortization | Net | | :-------------------------------- | :----------- | :----------------------- | :----------- | | Patents and Other IP | $38,056,240 | $(6,171,366) | $31,884,874 | | Customer relationships and other | $7,971,752 | $(3,594,886) | $4,376,866 | | Licenses | $6,784,278 | $(2,053,450) | $4,730,828 | | **Total** | **$52,812,270** | **$(11,819,702)** | **$40,992,568** | - The company adopted ASU 2023-07 (Segment Reporting) effective for its annual report for FY2024 and interim filings beginning Q1 2025, which did not materially impact its financial position, results, or cash flows[66](index=66&type=chunk) [NOTE 3 – CAREPICS ACQUISITION](index=18&type=section&id=NOTE%203%20%E2%80%93%20CAREPICS%20ACQUISITION) On April 1, 2025, Sanara MedTech acquired CarePICS, LLC, a mobile and web app platform for vascular and wound care clinicians, for $2.0 million cash consideration plus $1.65 million to satisfy existing debt, and potential earnout payments up to $20 million, with the acquisition accounted for as an asset acquisition - On April 1, 2025, Sanara MedTech acquired CarePICS, LLC, a mobile and web app platform for clinicians treating vascular and wound care patients, which will be utilized in the THP platform[69](index=69&type=chunk)[70](index=70&type=chunk) | CarePICS Acquisition Consideration | Amount | | :------------------------------- | :----------- | | Cash consideration | $2,000,000 | | Contingent consideration | $1,355,603 | | Direct transaction costs | $122,146 | | **Total purchase consideration** | **$3,477,749** | - The acquisition included potential earnout payments up to **$10 million** for the first two earnout periods (ending March 31, 2027) based on SaaS P&L EBITDA, and up to an additional **$10 million** over 10 years based on patient volume, payable in cash or Class A-2/B Units[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - The CarePICS Acquisition was accounted for as an asset acquisition, with the purchase consideration primarily allocated to developed technology (**$5,127,749**) and assumed debt (**$(1,650,000)**)[76](index=76&type=chunk)[77](index=77&type=chunk) [NOTE 4 – CONVERTIBLE LOAN RECEIVABLE](index=19&type=section&id=NOTE%204%20%E2%80%93%20CONVERTIBLE%20LOAN%20RECEIVABLE) The company's $1.0 million convertible loan to Biomimetic Innovations Limited (BMI), including accrued interest, was converted into equity of BMI on January 16, 2025, resulting in a zero loan balance as of June 30, 2025 - A **$1,079,391** convertible loan to Biomimetic Innovations Limited (BMI), including accrued interest, was converted into equity of BMI on January 16, 2025[78](index=78&type=chunk) - The convertible loan receivable balance was **$0** as of June 30, 2025, down from **$1,101,478** as of December 31, 2024[78](index=78&type=chunk) [NOTE 5 – GOODWILL AND INTANGIBLES, NET](index=20&type=section&id=NOTE%205%20%E2%80%93%20GOODWILL%20AND%20INTANGIBLES%2C%20NET) Goodwill remained stable at $3.6 million, entirely within the Sanara Surgical segment, with no impairment recorded. Total net intangible assets were $41.0 million as of June 30, 2025, slightly down from $41.0 million at December 31, 2024, with a weighted-average amortization period of 14.2 years | Metric | December 31, 2023 | December 31, 2024 | June 30, 2025 | | :----- | :------------------ | :------------------ | :------------ | | Goodwill | $3,601,781 | $3,601,781 | $3,601,781 | - Goodwill is entirely within the Sanara Surgical segment and was not impaired as of June 30, 2025 or 2024[80](index=80&type=chunk) | Intangible Assets (Net) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Patents and Other IP | $31,884,874 | $33,000,384 | | Customer relationships and other | $4,376,866 | $4,941,181 | | Licenses | $4,730,828 | $3,065,211 | | **Total Net Intangible Assets** | **$40,992,568** | **$41,006,776** | - The weighted-average amortization period for finite-lived intangible assets was **14.2 years** as of June 30, 2025[81](index=81&type=chunk) [NOTE 6 – INVESTMENTS IN EQUITY SECURITIES](index=21&type=section&id=NOTE%206%20%E2%80%93%20INVESTMENTS%20IN%20EQUITY%20SECURITIES) The company holds nonmarketable equity investments in privately held companies, including DirectDerm (cost method), and ChemoMouthpiece, SI Technologies, and BMI (equity method), with significant changes including the Pixalere Redemption in January 2025 converting an investment into an intangible asset and increased ownership in BMI to 9.678% by July 1, 2025 - The company's equity investments include nonmarketable securities in privately held companies, reported at cost or using the equity method based on influence[82](index=82&type=chunk) - In January 2025, the Pixalere investment was reclassified from a cost method investment (**$2,084,278**) to an intangible asset for an amended license agreement, and Pixalere Canada's equity in Pixalere USA was redeemed[85](index=85&type=chunk)[86](index=86&type=chunk)[96](index=96&type=chunk) - The company uses the equity method for investments in ChemoMouthpiece (**6.59% ownership**), SI Healthcare Technologies (**50% ownership**), and Biomimetic Innovations Limited (BMI), where its ownership increased to approximately **9.678%** by July 1, 2025, following additional capital contributions[88](index=88&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) | Investment (June 30, 2025) | Carrying Amount | Economic Interest | | :------------------------- | :-------------- | :---------------- | | ChemoMouthpiece, LLC | $5,017,758 | 6.59% | | SI Healthcare Technologies, LLC | $47,976 | 50.00% | | Biomimetic Innovations Limited | $4,450,078 | 6.67% | | Direct Dermatology Inc. | $1,000,000 | ~8.1% (as of Dec 31, 2024) | | **Total Investments** | **$10,515,812** | | | Share of Losses from Equity Method Investments (Six Months Ended June 30) | 2025 | 2024 | | :-------------------------------------------------------------------- | :----------- | :----------- | | ChemoMouthpiece, LLC | $(154,484) | $- | | SI Healthcare Technologies, LLC | $7,273 | $- | | Biomimetic Innovations Limited | $(191,879) | $- | | **Total** | **$(339,090)** | **$-** | [NOTE 7 – OPERATING LEASES](index=24&type=section&id=NOTE%207%20%E2%80%93%20OPERATING%20LEASES) The company holds two material operating leases for office space, with ROU assets of $1.09 million and related lease liabilities of $1.23 million as of June 30, 2025, and a weighted average remaining lease term of 5.6 years - As of June 30, 2025, the company had two material operating leases for office space, with one renewed for an additional three-year term in August 2025[98](index=98&type=chunk) | Operating Lease Metrics (June 30, 2025) | Amount | | :------------------------------------ | :----------- | | Right of Use Assets | $1,088,149 | | Lease Liabilities | $1,234,225 | | Weighted Average Remaining Lease Term | 5.6 years | | Weighted Average Discount Rate | 13.2% | | Operating Lease Expense (Six Months Ended June 30) | 2025 | 2024 | | :------------------------------------------------- | :----------- | :----------- | | Lease Expense | $260,197 | $277,596 | | Cash Paid for Operating Lease Liabilities | $259,786 | $267,223 | [NOTE 8 – DEBT AND CREDIT FACILITIES](index=25&type=section&id=NOTE%208%20%E2%80%93%20DEBT%20AND%20CREDIT%20FACILITIES) The company's CRG Term Loan facility provides up to $55.0 million, with $42.75 million drawn as of June 30, 2025, and $12.25 million remaining available. The loan bears 13.25% interest (8% cash, 5.25% PIK) and matures in May 2029, with the company in compliance with all debt covenants - The company has a CRG Term Loan facility for up to **$55.0 million**, with **$42.75 million** principal outstanding as of June 30, 2025, and **$12.25 million** available for future borrowing[102](index=102&type=chunk)[103](index=103&type=chunk)[105](index=105&type=chunk)[112](index=112&type=chunk)[225](index=225&type=chunk) - The CRG Term Loan bears interest at **13.25%** per annum (**8.00% cash, 5.25% paid-in-kind**) and has a maturity date of **May 30, 2029**[106](index=106&type=chunk)[105](index=105&type=chunk) | Debt Components (June 30, 2025) | Amount | | :------------------------------ | :----------- | | CRG Term Loan (Principal) | $42,750,000 | | Paid-in-kind interest | $1,834,210 | | Back-end fee | $735,576 | | Less: Unamortized debt issuance costs | $(1,103,124) | | **Long-term debt, net** | **$44,216,662** | - The company was in compliance with all debt covenants as of June 30, 2025, including maintaining liquidity above **$3.0 million** and meeting annual minimum revenue targets (e.g., **$75.0 million** for FY2025)[113](index=113&type=chunk)[230](index=230&type=chunk) [NOTE 9 - COMMITMENTS AND CONTINGENCIES](index=27&type=section&id=NOTE%209%20-%20COMMITMENTS%20AND%20CONTINGENCIES) This note details various license agreements for antimicrobial products (BIAKŌS, ABF, Debrider) with Rochal, including royalty commitments, and the BMI License Agreement for trauma products with associated royalties and milestone payments. It also covers earnout liabilities from the Precision Healing merger and Applied Asset Purchase, and a new license agreement with Tufts University for collagen peptides - The company has exclusive worldwide license agreements with Rochal for antimicrobial products (BIAKŌS, BIASURGE, CuraShield) and a debrider, with royalty payments ranging from **2-4% of net sales** and minimum annual royalties[115](index=115&type=chunk)[116](index=116&type=chunk)[118](index=118&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) | Royalty Expense (Six Months Ended June 30) | 2025 | 2024 | | :----------------------------------------- | :----------- | :----------- | | BIAKŌS License Agreement | $85,435 | $77,305 | - The BMI License Agreement grants exclusive U.S. marketing and distribution rights for OsStic and ARC trauma products, requiring **3% royalties** on OsStic net sales and annual minimum royalties starting at **$100,000** after regulatory approval[123](index=123&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk) - The Applied Asset Purchase includes an earnout of up to **$10.0 million** based on net sales of a collagen-based product, with installment payments of **$625,000** made in August 2024 and August 2025[131](index=131&type=chunk)[132](index=132&type=chunk) - A license agreement with Tufts University for 18 unique collagen peptides involves a new subsidiary (SCP) and royalties of **1.5% or 3%** on net sales, with minimum annual royalties starting at **$50,000**[135](index=135&type=chunk) [NOTE 10 – SHAREHOLDERS' EQUITY](index=31&type=section&id=NOTE%2010%20%E2%80%93%20SHAREHOLDERS%27%20EQUITY) The company's 2014 LTIP terminated in September 2024, replaced by the 2024 LTIP which authorized 1,000,000 shares for awards. During the six months ended June 30, 2025, 170,842 restricted stock awards were issued, resulting in $2.74 million in share-based compensation expense, with $7.35 million unrecognized - The 2014 Omnibus Long Term Incentive Plan (LTIP) terminated on September 3, 2024, with no future awards. The 2024 LTIP was approved, authorizing **1,000,000 shares** for awards[137](index=137&type=chunk)[138](index=138&type=chunk) - During the six months ended June 30, 2025, **170,842 restricted stock awards** (net of forfeitures) were issued under the 2024 LTIP, with a fair value of **$5,825,941**[139](index=139&type=chunk) | Share-based Compensation Expense (Six Months Ended June 30) | 2025 | 2024 | | :-------------------------------------------------------- | :----------- | :----------- | | Total Share-based Compensation Expense | $2,740,343 | $2,214,931 | - As of June 30, 2025, there was **$7,350,817** of total unrecognized share-based compensation expense, expected to be recognized over a weighted-average period of **1.4 years**[141](index=141&type=chunk) | Stock Options (June 30, 2025) | Options | Weighted Average Exercise Price | Weighted Average Remaining Contract Life | Aggregate Intrinsic Value | | :---------------------------- | :-------- | :------------------------------ | :--------------------------------------- | :------------------------ | | Outstanding | 31,013 | $10.57 | 5.3 years | $552,803 | | Exercisable | 31,013 | $10.57 | 5.3 years | $552,803 | [NOTE 11 – RELATED PARTIES](index=32&type=section&id=NOTE%2011%20%E2%80%93%20RELATED%20PARTIES) The company has ongoing product license agreements with Rochal Industries, a related party, for antimicrobial and debrider products, and a consulting agreement with Ann Beal Salamone (a director of both companies). It also has a transaction advisory services agreement with Catalyst, another related party, for which it incurred $30,000 in costs during the six months ended June 30, 2025 - The company has exclusive product license agreements with Rochal Industries, a related party, for antimicrobial products (BIAKŌS, BIASURGE, CuraShield) and a debrider[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk) - Ann Beal Salamone, a director of the company and a significant shareholder/Chair of Rochal, has a consulting agreement with the company for an annual fee of **$177,697**[148](index=148&type=chunk) - The company incurred **$30,000** in costs during the six months ended June 30, 2025, under a Transaction Advisory Services Agreement with Catalyst, a related party, for various advisory and corporate development services[149](index=149&type=chunk)[150](index=150&type=chunk) | Related Party Balances | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Accounts receivable – related parties | $9,081 | $40,566 | | Accounts payable – related parties | $32,355 | $30,913 | [NOTE 12 – SEGMENT REPORTING](index=34&type=section&id=NOTE%2012%20%E2%80%93%20SEGMENT%20REPORTING) The company reports two segments: Sanara Surgical (soft tissue repair and bone fusion products) and Tissue Health Plus (THP) (value-based wound care services), a change implemented in Q2 2024. Segment Adjusted EBITDA is the primary profitability measure, with THP showing a significant net loss and negative Segment Adjusted EBITDA due to buildout costs - The company changed its reportable segments in Q2 2024 to Sanara Surgical and Tissue Health Plus (THP), reflecting the growing importance of value-based wound care[152](index=152&type=chunk)[159](index=159&type=chunk) - Sanara Surgical focuses on soft tissue repair and bone fusion products, while THP is dedicated to value-based wound care services, aiming to reduce hospitalizations and improve patient quality of life[154](index=154&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - Segment Adjusted EBITDA is the primary profitability measure used by the CEO (CODM) for assessing financial performance and resource allocation[153](index=153&type=chunk) | Segment Adjusted EBITDA (Six Months Ended June 30) | 2025 | 2024 | | :------------------------------------------------- | :----------- | :----------- | | Sanara Surgical | $7,414,885 | $2,532,145 | | THP | $(4,092,077) | $(1,628,543) | | **Total Segment Adjusted EBITDA** | **$3,322,808** | **$903,602** | - THP segment does not include **$3.4 million** of internal use software costs capitalized during the six months ended June 30, 2025, which are part of its buildout[163](index=163&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=37&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial condition and operational results for the quarter ended June 30, 2025, highlighting revenue growth, segment performance, recent strategic developments, and liquidity, while also discussing forward-looking statements and key accounting estimates [CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS](index=37&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns readers that the report contains forward-looking statements about future events and financial performance, which are subject to various risks and uncertainties that could cause actual results to differ materially from projections - The report contains forward-looking statements regarding future events or financial/operating performance, including value-based wound and skin services and THP platforms[165](index=165&type=chunk) - These statements are subject to risks and uncertainties, such as shortfalls in revenue growth, ability to implement strategies, capital requirements, debt compliance, product development, market acceptance, competition, and regulatory changes[165](index=165&type=chunk)[171](index=171&type=chunk) [OVERVIEW](index=38&type=section&id=OVERVIEW) Sanara MedTech is a medical technology company focused on surgical, chronic wound, and skin markets, operating through two segments: Sanara Surgical (products for sterile environments) and Tissue Health Plus (THP) (value-based wound care services). The company aims to expand its offerings and has initiated a formal process to evaluate strategic alternatives for THP - Sanara MedTech is a medical technology company focused on developing and commercializing transformative technologies to improve clinical outcomes and reduce healthcare expenditures in surgical, chronic wound, and skin markets[167](index=167&type=chunk) - The company operates through two reportable segments, Sanara Surgical and THP, a change implemented in Q2 2024 due to the growing importance of the value-based wound care program[168](index=168&type=chunk) - Sanara Surgical markets soft tissue repair (e.g., CellerateRX Surgical, BIASURGE) and bone fusion products (e.g., BiFORM, ALLOCYTE Plus) and includes an in-house R&D team[169](index=169&type=chunk)[170](index=170&type=chunk) - THP focuses on value-based wound care services, planning to offer programs to payers and risk-bearing entities to divest wound care spend risk, reduce hospitalizations, and improve patient quality of life[172](index=172&type=chunk)[173](index=173&type=chunk) - THP's comprehensive approach includes a Care Hub for virtual patient monitoring, a Managed Services Organization (MSO) Network of third-party providers, and a Technology Platform leveraging AI/ML for workflow automation and integration[183](index=183&type=chunk)[184](index=184&type=chunk) - The company has initiated a formal process to evaluate a full range of strategic alternatives for THP to maximize shareholder value[184](index=184&type=chunk) [RECENT DEVELOPMENTS](index=41&type=section&id=RECENT%20DEVELOPMENTS) Recent developments include the CRG Term Loan amendment, allowing additional borrowings up to $12.25 million by December 31, 2025, and the third borrowing of $12.25 million used for acquisitions and working capital. The company also made an initial €3.0 million cash investment in BMI, converted a €1.0 million loan to equity, and acquired CarePICS for $2.0 million cash plus $1.65 million debt satisfaction and potential earnouts - The CRG Term Loan Agreement was amended to allow up to two additional borrowings, with a third borrowing of **$12.25 million** made on March 31, 2025, for acquisitions (like CarePICS) and working capital. An additional **$12.25 million** can be drawn by December 31, 2025[187](index=187&type=chunk) - The company made an initial **€3.0 million** cash investment in Biomimetic Innovation Limited (BMI) and converted a **€1.0 million** convertible loan into BMI equity, resulting in approximately **6.67% ownership**, increasing to **9.678%** by July 1, 2025, after additional milestone payments[189](index=189&type=chunk) - On April 1, 2025, the company acquired CarePICS, LLC for **$2.0 million cash**, paid **$1.65 million** to satisfy existing debt, and agreed to potential earnout payments[190](index=190&type=chunk) [COMPONENTS OF RESULTS OF OPERATIONS](index=42&type=section&id=COMPONENTS%20OF%20RESULTS%20OF%20OPERATIONS) The company's revenue primarily comes from sales of soft tissue repair and bone fusion products, with SaaS revenue from the THP segment starting in Q2 2025. Cost of goods sold includes acquisition costs and royalties, while operating expenses comprise SG&A, R&D (expected to increase), depreciation and amortization, and changes in earnout liabilities - Revenue is primarily derived from sales of soft tissue repair and bone fusion products to hospitals and acute care facilities, with CellerateRX Surgical being the substantial majority[191](index=191&type=chunk) | Revenue Stream (Six Months Ended June 30) | 2025 | 2024 | | :------------------------------------------ | :----------- | :----------- | | Soft tissue repair products | $43,193,897 | $33,723,610 | | Bone fusion products | $6,044,451 | $4,970,945 | | SaaS | $26,582 | $- | | Royalties | $- | $906 | | **Total Net Revenue** | **$49,264,930** | **$38,695,461** | - Cost of goods sold includes acquisition costs from manufacturers, raw material costs, and royalties. Operating expenses include SG&A, R&D (expected to increase), depreciation and amortization, and changes in fair value of earnout liabilities[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) [RESULTS OF OPERATIONS](index=44&type=section&id=RESULTS%20OF%20OPERATIONS) For the six months ended June 30, 2025, net revenue increased by 27% to $49.3 million, driven by higher sales of soft tissue repair and bone fusion products. Gross profit rose 31% to $45.5 million, while SG&A and R&D expenses also increased, leading to a net loss of $5.5 million. Segment Adjusted EBITDA improved to $3.3 million, despite a significant negative contribution from the THP segment due to platform buildout costs | Financial Metric (Six Months Ended June 30) | 2025 | 2024 | Change (%) | | :------------------------------------------ | :----------- | :----------- | :--------- | | Net Revenue | $49,264,930 | $38,695,461 | 27% | | Gross Profit | $45,492,681 | $34,796,729 | 31% | | Selling, General and Administrative | $42,993,804 | $35,149,867 | 22% | | Research and Development | $2,371,613 | $1,931,949 | 23% | | Net Loss | $(5,545,781) | $(5,328,245) | 4% | | Segment Adjusted EBITDA | $3,322,808 | $903,602 | 268% | - Net revenue increase was primarily due to increased sales of soft tissue repair products (CellerateRX Surgical, BIASURGE) and bone fusion products, driven by increased market penetration and geographic expansion[202](index=202&type=chunk) - Higher gross margins were realized due to increased sales of soft tissue repair products and lower manufacturing costs for CellerateRX Surgical[203](index=203&type=chunk)[204](index=204&type=chunk) - SG&A increased due to higher direct sales and marketing expenses (**$3.7 million**) and additional SG&A in the THP segment (**$3.1 million**). R&D increased, with **$3.4 million** capitalized for the THP technology platform buildout[205](index=205&type=chunk)[206](index=206&type=chunk) - The net loss for the six months ended June 30, 2025, included **$5.4 million** related to the THP segment, primarily due to buildout costs and increased interest expense[210](index=210&type=chunk) - Segment Adjusted EBITDA for THP was **$(4.1) million** for the six months ended June 30, 2025, reflecting higher costs related to its platform buildout[216](index=216&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=47&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Cash on hand was $17.0 million at June 30, 2025. The company expects to invest $5.5-$6.5 million in THP during H2 2025 and anticipates sufficient liquidity for the next 12 months from cash, operations, and $12.25 million available under the CRG Term Loan. Recent financing activities include the CRG Term Loan amendment and third borrowing, the BMI investment, and the CarePICS acquisition | Cash and Liquidity | June 30, 2025 | December 31, 2024 | | :----------------- | :------------ | :---------------- | | Cash on hand | $16,958,744 | $15,878,295 | | Available CRG Term Loan | $12,250,000 | (Not applicable) | - The company expects to invest between **$5.5 million** and **$6.5 million** in the THP strategy during the second half of 2025, with no material cash investments anticipated after year-end[217](index=217&type=chunk) - The CRG Term Loan Agreement was amended, and a third borrowing of **$12.25 million** was made, with **$12.25 million** still available for future borrowing until December 31, 2025[223](index=223&type=chunk)[224](index=224&type=chunk) - The company made an initial **€3.0 million** cash investment in BMI and converted a **€1.0 million** loan to equity, with additional **€4.0 million** committed upon milestones[234](index=234&type=chunk) - The CarePICS Acquisition involved **$2.0 million** cash consideration and **$1.65 million** to satisfy existing debt, plus potential earnout payments[235](index=235&type=chunk) - Net cash provided by operating activities was **$0.7 million** for the six months ended June 30, 2025, an increase from **$3.0 million used** in the prior year, due to revenue growth and improved receivables collection[240](index=240&type=chunk) - Net cash used in investing activities was **$9.1 million**, primarily for the CarePICS acquisition (**$2.1 million**), BMI investment (**$3.5 million**), and THP technology platform capitalization (**$3.4 million**)[241](index=241&type=chunk) - Net cash provided by financing activities was **$9.5 million**, mainly from CRG Term Loan proceeds, partially offset by CarePICS debt payoff[242](index=242&type=chunk) [MATERIAL TRANSACTIONS WITH RELATED PARTIES](index=52&type=section&id=MATERIAL%20TRANSACTIONS%20WITH%20RELATED%20PARTIES) The company has a consulting agreement with Ann Beal Salamone (a director and significant shareholder of Rochal) for an annual fee of $177,697, and a Transaction Advisory Services Agreement with Catalyst, a related party, incurring $30,000 in costs during the six months ended June 30, 2025 - Ann Beal Salamone, a director of the company and a significant shareholder/Chair of Rochal, has a consulting agreement for **$177,697 annually**, renewed for successive one-year terms[243](index=243&type=chunk) - The company incurred **$30,000** in costs during the six months ended June 30, 2025, under a Transaction Advisory Services Agreement with Catalyst, a related party, for advisory and corporate development services[244](index=244&type=chunk)[245](index=245&type=chunk) | Related Party Balances | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Accounts receivable – related parties | $9,081 | $40,566 | | Accounts payable – related parties | $32,355 | $30,913 | [IMPACT OF INFLATION AND CHANGING PRICES](index=53&type=section&id=IMPACT%20OF%20INFLATION%20AND%20CHANGING%20PRICES) Inflation and changing prices have not had a material impact on the company's historical results of operations and are not anticipated to have a material impact in the future - Inflation and changing prices have not materially impacted historical results and are not anticipated to materially impact future results[247](index=247&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=53&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) The company's critical accounting estimates, including revenue and expense accruals, fair value measurements, and purchase price allocation, have not significantly changed since December 31, 2024 - Critical accounting estimates, such as revenue and expense accruals, fair value measurement of assets and liabilities, and purchase price allocation, have not significantly changed since December 31, 2024[248](index=248&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=53&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, Sanara MedTech Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Sanara MedTech Inc. is not required to provide quantitative and qualitative disclosures about market risk[249](index=249&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=53&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) The company's disclosure controls and procedures were evaluated as effective as of June 30, 2025, and there were no material changes in internal control over financial reporting during the quarter - The company's disclosure controls and procedures were evaluated as effective as of June 30, 2025[250](index=250&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025[251](index=251&type=chunk) [Part II – Other Information](index=55&type=section&id=Part%20II%20%E2%80%93%20Other%20Information) [ITEM 1. LEGAL PROCEEDINGS](index=55&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not aware of any material pending legal proceedings - To the company's knowledge, there are no material pending legal proceedings to which it is a party or of which any of its property is the subject[253](index=253&type=chunk) [ITEM 1A. RISK FACTORS](index=55&type=section&id=ITEM%201A.%20RISK%20FACTORS) There were no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[254](index=254&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=55&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) There were no unregistered sales of equity securities during the quarter. The company repurchased 20,755 shares of common stock in April and May 2025, primarily for tax withholding obligations related to restricted stock vesting - No sales of unregistered securities were reported during the quarter ended June 30, 2025[255](index=255&type=chunk) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :----------------------- | :----------------------------- | :--------------------------- | | April 1 - April 30, 2025 | 15,826 | $33.85 | | May 1 - May 31, 2025 | 4,929 | $30.88 | | June 1 - June 30, 2025 | - | $- | | **Total** | **20,755** | | - Shares purchased were transferred from employees to satisfy tax withholding obligations associated with the vesting of restricted stock awards[256](index=256&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=55&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) There were no defaults upon senior securities - No defaults upon senior securities[257](index=257&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=55&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - This item is not applicable to the company[258](index=258&type=chunk) [ITEM 5. OTHER INFORMATION](index=55&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No director or officer adopted, modified, or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - No director or officer adopted, modified, or terminated any "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025[259](index=259&type=chunk) [ITEM 6. EXHIBITS](index=56&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed as part of the report, including various agreements (asset purchase, merger, unit purchase), organizational documents, and certifications - The exhibits include various agreements such as the Asset Purchase Agreement (Rochal, Applied), Agreement and Plan of Merger (Precision Healing), Membership Interest Purchase Agreement (Scendia Biologics), and Unit Purchase Agreement (CarePICS)[261](index=261&type=chunk) - Organizational documents like the Amended and Restated Certificate of Formation and Bylaws are also filed[261](index=261&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer are included, as required by the Sarbanes-Oxley Act[261](index=261&type=chunk) [SIGNATURES](index=58&type=section&id=SIGNATURES) [Report Signature](index=58&type=section&id=Report%20Signature) The report is signed on behalf of Sanara MedTech Inc. by Elizabeth B. Taylor, Chief Financial Officer, on August 13, 2025 - The report was signed by Elizabeth B. Taylor, Chief Financial Officer, on August 13, 2025[266](index=266&type=chunk)