Financial Performance - Enveric reported a net loss of $2,184,966 for the three months ended March 31, 2025, compared to a net loss of $2,456,915 for the same period in 2024, reflecting a decrease of approximately 11%[88]. - Total operating expenses decreased to $2,187,533 for Q1 2025, down from $2,477,317 in Q1 2024, a reduction of about 12%[88]. - General and administrative expenses fell by $525,615, or 28%, to $1,360,138 in Q1 2025, primarily due to reductions in various operational costs[90]. - Research and development expenses increased by $240,216, or approximately 47%, to $746,371 in Q1 2025, driven by higher consulting fees[91]. - The accumulated deficit reached $108,259,471 as of March 31, 2025, with ongoing losses anticipated in the company's development efforts[93]. - The company reported a net cash used in operating activities of $2,391,582 for the three months ended March 31, 2025, compared to $2,598,347 for the same period in 2024, reflecting a decrease of approximately 8%[98][99]. - The company experienced a net increase in cash of $2,053,409 for the three months ended March 31, 2025, compared to $4,068,059 in 2024, indicating a decrease of approximately 49%[97]. Cash Position and Financing - Enveric has cash of $4,294,435 and working capital of $3,650,434 as of March 31, 2025, which is insufficient to meet operating cash needs for the next 12 months[94]. - The company plans to raise additional working capital through public or private equity or debt financings, including an "at-the-market" offering of up to $1.8 million[94]. - Net cash provided by financing activities was $4,448,914 for the three months ended March 31, 2025, down from $6,658,269 in 2024, representing a decline of about 33%[100][101]. Development and Research - Enveric's lead drug candidate, EB-003, is currently in preclinical development with an IND filing expected as the next step[84]. - The company has synthesized over one thousand molecules from its Psybrary™, which includes 20 patent families covering a million potential molecular structures[80]. - Enveric out-licensed the EVM201 Series program to MycoMedica Life Sciences, which will seek to develop and commercialize EB-002, in exchange for development and milestone payments[79]. Going Concern and Risks - The company has substantial doubt about its ability to continue as a going concern for one year after the date of the financial statements[95]. - The company's critical accounting estimates involve significant uncertainty, particularly regarding accruals associated with third-party providers supporting research and development efforts[102]. - The company's primary market risk exposure is related to foreign currency exchange rates, particularly with the Canadian dollar and Australian dollar against the U.S. dollar[105]. - The company has not entered into any financial derivative instruments to hedge against foreign currency exchange rate risks, but may consider such hedging in the future[106]. - The net cash used in operating activities for the three months ended March 31, 2025, included a net loss adjusted for non-cash items of $1,912,659[98]. - The company has not reported any material changes to its critical accounting estimates compared to the previous year[103].

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: March 31, 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: 0-21121 TRANSACT TECHNOLOGIES INC (Exact name of registrant as specified in its charter) | Delawa ...

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the unaudited financial statements, management's analysis, market risk disclosures, and internal controls [Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20Financial%20Statements%20(Unaudited)) The company reported zero revenue and a net income of **$0.85 million** in Q1 2025, but faces substantial doubt about its going concern ability due to insufficient funds [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets decreased to **$16.2 million** from **$21.7 million**, total liabilities increased to **$9.8 million**, and equity declined to **$3.0 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $12,818 | $16,035 | | Total current assets | $15,734 | $21,262 | | Total assets | $16,155 | $21,739 | | **Liabilities & Equity** | | | | Total current liabilities | $7,147 | $4,162 | | Total liabilities | $9,784 | $9,469 | | Total stockholders' equity | $3,006 | $4,682 | | Total liabilities & equity | $16,155 | $21,739 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2025, the company generated zero revenue, reduced operating expenses to **$2.0 million**, and achieved a net income of **$0.85 million** due to non-cash gains, contrasting with a **$3.6 million** net loss in Q1 2024 Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenue | $0 | $58 | | Gross loss | $0 | $(1,125) | | Total operating expenses | $1,974 | $4,091 | | Loss from operations | $(1,974) | $(5,216) | | Total other income, net | $2,819 | $1,577 | | Net income (loss) | $845 | $(3,639) | | Net loss attributable to common stockholders | $(1,676) | $(7,186) | | Net loss per share (basic and diluted) | $(0.20) | $(1.46) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For Q1 2025, net cash used in operating activities was **$1.5 million**, investing activities provided **$1.7 million**, and financing activities used **$3.5 million**, resulting in a total cash decrease of **$3.3 million** Summary of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,476) | $(4,682) | | Net cash provided by (used in) investing activities | $1,749 | $(23,299) | | Net cash used in financing activities | $(3,546) | $0 | | **Net change in cash, cash equivalents and restricted cash** | **$(3,273)** | **$(27,981)** | - In February 2025, the Company announced the launch of its new robotics division, focused on AI-driven, automated manufacturing of EVs and accompanying accessories[19](index=19&type=chunk) - Management has concluded that there is **substantial doubt** about the Company's ability to continue as a going concern for a period of twelve months from the issuance of these financial statements, as existing cash is not sufficient to fund operations[21](index=21&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=13&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strategic shift, zero Q1 2025 revenue, reduced expenses, ongoing going concern issues, and Nasdaq compliance challenges [Results of Operations](index=17&type=section&id=Results%20of%20Operations) In Q1 2025, revenue dropped to zero, operating expenses decreased by **$2.1 million (52%)**, and a **$2.8 million** non-cash gain led to a net income of **$0.85 million**, a significant turnaround from a **$3.6 million** net loss in Q1 2024 Comparison of Operations for the Three Months Ended March 31 (in thousands) | Item | 2025 | 2024 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $0 | $58 | $(58) | -100% | | Gross Loss | $0 | $(1,125) | $1,125 | 100% | | Research and development | $308 | $760 | $(452) | -60% | | Sales and marketing | $0 | $268 | $(268) | -100% | | General and administrative | $1,666 | $3,062 | $(1,396) | -46% | | Loss from operations | $(1,974) | $(5,216) | $3,242 | 62% | | Net income (loss) | $845 | $(3,639) | $4,484 | 123% | - The decrease in operating expenses was primarily due to cost reduction initiatives, including a significant decrease in headcount, suspension of marketing efforts, and fewer professional service engagements[72](index=72&type=chunk)[73](index=73&type=chunk)[75](index=75&type=chunk) [Liquidity and Capital Resources](index=18&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity weakened with cash falling to **$12.8 million** and working capital to **$8.6 million**, reinforcing the 'going concern' issue as current funds are insufficient for the next 12 months Liquidity Position (in millions) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $12.8 | $16.0 | | Marketable securities | $2.5 | $4.1 | | Working capital | $8.6 | $17.1 | - The company is required to redeem its Series H-7 Preferred Stock in 12 equal monthly installments, which commenced in May 2024, payable in cash or, subject to limitations, common stock[85](index=85&type=chunk)[86](index=86&type=chunk) - In March 2025, the company amended the terms of the Series H-7 Preferred Stock, modifying a restrictive covenant to require maintaining cash equal to at least **120%** of the outstanding stated value of the stock[92](index=92&type=chunk)[93](index=93&type=chunk) - As of March 31, 2025, the company had no direct, full-time employees following an internal restructuring and is now working with consultants to re-engineer its 'Vanish' vehicle to lower material and manufacturing costs[59](index=59&type=chunk) - The company received a Nasdaq deficiency notice for its stock price falling below the **$1.00** minimum bid requirement and has until July 14, 2025, to regain compliance[51](index=51&type=chunk)[52](index=52&type=chunk) - Management states that existing cash and marketable securities as of March 31, 2025, will not be sufficient to fund operations for at least the next twelve months, raising substantial doubt about its ability to continue as a going concern[83](index=83&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=22&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) This section is not applicable for the reporting period - The company has indicated that this disclosure is not applicable[106](index=106&type=chunk) [Controls and Procedures](index=22&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective as of March 31, 2025, due to material weaknesses including lack of formalized policies, insufficient segregation of duties, and inadequate IT controls - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **ineffective** as of March 31, 2025[108](index=108&type=chunk) - A material weakness was identified due to: (i) lack of formalized controls and policies, (ii) failure to maintain effective control activities over the control environment, and (iii) insufficient segregation of duties and oversight in finance and accounting functions due to limited personnel[110](index=110&type=chunk) - To remediate the material weakness, management has engaged external consultants to provide support and assist in evaluating complex accounting applications[111](index=111&type=chunk) [PART II - OTHER INFORMATION](index=23&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section details legal proceedings, key risk factors, equity transactions, and other relevant corporate information [Legal Proceedings](index=23&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is subject to various legal claims in the ordinary course of business, but management does not believe the outcome of any of these matters will have a material adverse effect on its financial position or operations - The Company is subject to various legal proceedings and claims arising in the ordinary course of business, which management believes are incidental and will not have a material adverse effect[35](index=35&type=chunk)[114](index=114&type=chunk) [Risk Factors](index=23&type=section&id=ITEM%201A.%20Risk%20Factors) The primary risk factor highlighted is the company's ability to continue as a 'going concern,' as it lacks sufficient financial resources for the next twelve months and depends on raising additional capital - Management has **substantial doubt** about the Company's ability to continue as a going concern because it lacks sufficient resources to fund operations for the next twelve months[118](index=118&type=chunk) - The company will need to raise additional capital to finance its losses; if unsuccessful in commercializing products and raising capital, it may need to curtail or cease operations[119](index=119&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period - None[120](index=120&type=chunk) [Defaults Upon Senior Securities](index=24&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the period - None[121](index=121&type=chunk) [Mine Safety Disclosures](index=24&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[122](index=122&type=chunk) [Other Information](index=24&type=section&id=ITEM%205.%20Other%20Information) The company announced its 2025 Annual Meeting of Stockholders will be held virtually on May 19, 2025, with new deadlines for stockholder proposals due to a significant change in meeting date - The Company's 2025 Annual Meeting of Stockholders was scheduled to be held virtually on May 19, 2025[123](index=123&type=chunk) - The deadline for stockholder proposals for the Annual Meeting was set for April 18, 2025, due to the meeting date changing by more than 30 days from the previous year's anniversary[124](index=124&type=chunk)[125](index=125&type=chunk) [Exhibits](index=24&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to preferred stock designations, waiver agreements, and officer certifications [Signatures](index=25&type=section&id=SIGNATURES) This section contains the official signatures of the principal executive and financial officers, certifying the report's contents - The report was signed on May 14, 2025, by Joshua Silverman, Executive Chairman (Principal Executive Officer), and Joseph Ramelli, Chief Financial Officer (Principal Financial and Accounting Officer)[130](index=130&type=chunk)

Revenue and Profitability - Revenue for the three months ended March 31, 2025, was $629,000, representing a 146% increase from $255,000 in the same period of 2024[12] - For the three months ended March 31, 2025, total net revenue was $629,000, a 147.1% increase from $255,000 in the same period of 2024[56] - Revenue from Components was $492,000, significantly up from $159,000 in the prior year, while Consumer Audio Products revenue increased to $137,000 from $96,000[56] - Gross profit for Q1 2025 was $69,000, compared to a gross deficit of $83,000 in Q1 2024[13] - The cost of net revenue for the same period was $560,000, compared to $338,000 in 2024, resulting in a gross loss of $9,563,000 for Q1 2025, compared to a net income of $2,707,000 in Q1 2024[170] Expenses and Losses - Total operating expenses increased to $9,500,000 in Q1 2025, up 133% from $4,075,000 in Q1 2024[13] - The net loss attributable to common stockholders for Q1 2025 was $9,563,000, compared to a net loss of $3,135,000 in Q1 2024[13] - Net cash used in operating activities was $6,024,000 for Q1 2025, an increase from $3,540,000 in Q1 2024, indicating higher cash outflows[21] - The company incurred salaries, benefits, and stock-based compensation expenses of $3,558,000 for Q1 2025, up from $2,284,000 in Q1 2024, indicating a 56% increase[170] - Research and development expenses increased to $2,361,000 in Q1 2025, up $646,000 from $1,715,000 in Q1 2024, primarily due to increased headcount and related costs[204] - Sales and marketing expenses rose to $1,495,000 in Q1 2025, an increase of $566,000 from $929,000 in Q1 2024, mainly due to higher salaries and consulting expenses[205] - General and administrative expenses surged to $5,644,000 in Q1 2025, an increase of $4,213,000 from $1,431,000 in Q1 2024, largely due to increased amortization and headcount-related costs[206] Cash and Liquidity - Cash and cash equivalents decreased to $171,000 as of March 31, 2025, down from $3,330,000 as of December 31, 2024[9] - The company had cash and cash equivalents of $171,000 at the end of Q1 2025, down from $2,763,000 at the end of Q1 2024, reflecting a decrease in liquidity[21] - Total current assets decreased to $2,693,000 as of March 31, 2025, from $6,439,000 as of December 31, 2024[9] Compliance and Regulatory Issues - The company has received a notification from Nasdaq regarding non-compliance with the minimum bid price requirement, with a compliance period until November 3, 2025, to regain compliance[27] - The company has been granted a 180-day grace period to regain compliance with the minimum bid price requirement, which is critical for maintaining its Nasdaq listing[28] Stock and Equity - The company issued 5,986,893 common shares as stock-based compensation during the three months ended March 31, 2025[16] - The weighted average number of common shares used in computing net loss per common share was 53,681,828 for Q1 2025[13] - The company executed a 1-for-150 reverse stock split in April 2024, which has been retroactively adjusted in the financial statements[30] - The company issued common stock purchase warrants in connection with the February 2024 Public Offering, with a fair value of $6.308 million allocated to the warrants liability[126] Liabilities and Debt - Total liabilities decreased to $13,987,000 as of March 31, 2025, from $14,899,000 as of December 31, 2024[9] - The company issued promissory notes totaling $1,000,000 on January 19, 2024, with gross proceeds of $600,000 received before fees and expenses[97] - The DV Convertible Note was issued with a principal amount of $10,000,000, maturing on December 31, 2027, and carries an interest rate of 5.12% per annum[102] - As of March 31, 2025, the carrying value of the DV Convertible Note was $9,582,000 after a partial repayment of $406,000[108] Inventory and Assets - Total inventories decreased from $1.618 million on December 31, 2024, to $1.342 million on March 31, 2025[87] - Property and equipment, net increased from $58,000 on December 31, 2024, to $98,000 on March 31, 2025[87] - The company has made a deposit of $2 million related to a pending acquisition of CompuSystems Inc, recorded as "deposit on business combination" as of March 31, 2025[95] Future Outlook and Risks - The Company expects operating losses to continue due to additional costs related to research and development, plans to expand its product portfolio, and increase market share[78] - The Company will need to raise additional funds in the next 12 months through selling equity or incurring debt, raising substantial doubt about its ability to continue as a going concern[79] - The company has incurred recurring losses since inception and is subject to risks associated with being an emerging business[201]

Exhibit 99.1 INNOVATIVE SOLUTIONS & SUPPORT REPORTS SECOND QUARTER 2025 RESULTS Exton, PA, May 14, 2025 – Innovative Solutions & Support, Inc. (Nasdaq: ISSC) ("IS&S" or the "Company"), a leading provider of advanced avionic solutions for commercial, business aviation and military markets, today reported fiscal second quarter financial results for the three-month period ended March 31, 2025. SECOND QUARTER 2025 HIGHLIGHTS (all comparisons versus the prior year period unless otherwise noted) MANAGEMENT COMMEN ...

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=ITEM%201.%20Financial%20Statements%20(Unaudited)) Unaudited Q1 2025 financials show revenue growth to $12.5 million, a net income decline, and significant asset and equity increases driven by a stock offering [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) As of March 31, 2025, total assets increased to $443.9 million and shareholders' equity to $77.2 million, driven by utility plant growth, cash, and a stock offering Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Net utility plant | $378,245 | $359,379 | | Cash and cash equivalents | $31,467 | $9,047 | | Total Assets | $443,918 | $405,137 | | **Capitalization and Liabilities** | | | | Total shareholders' equity | $77,216 | $47,604 | | Long-term debt, net | $118,876 | $118,518 | | Total Capitalization and Liabilities | $443,918 | $405,137 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(unaudited)) Q1 2025 total revenue rose 7.3% to $12.5 million, yet operating income slightly decreased and net income fell to $0.59 million, yielding diluted EPS of $0.02 Q1 2025 vs. Q1 2024 Operating Results (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $12,457 | $11,610 | $847 | 7.3% | | Operating Income | $1,255 | $1,267 | ($12) | (0.9)% | | Net Income | $591 | $691 | ($100) | (14.5)% | | Diluted EPS | $0.02 | $0.03 | | | | Dividends declared per share | $0.08 | $0.08 | | | [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity%20(unaudited)) Shareholders' equity grew from $47.6 million to $77.2 million by March 31, 2025, primarily from a $30.8 million common stock issuance, partially offset by $1.9 million in dividends - The company issued **3,220,000 shares** of common stock, resulting in a net increase of **$30.8 million** to equity in Q1 2025[18](index=18&type=chunk) - Dividends of **$0.08 per share** were declared, totaling approximately **$1.9 million** for the quarter[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Q1 2025 cash flows show $7.5 million from operations, $15.2 million used in investing for capital expenditures, and a strong $29.8 million inflow from financing, primarily a stock issuance Q1 2025 vs. Q1 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,477 | $8,068 | | Net cash used in investing activities | ($15,216) | ($5,765) | | Net cash provided by financing activities | $29,758 | $15,806 | | **Increase in cash, cash equivalents, and restricted cash** | **$22,019** | **$18,109** | - The primary source of financing cash flow in Q1 2025 was the **$31.0 million** net proceeds from the issuance of common stock[20](index=20&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail key accounting policies and events, including a pending acquisition, regulatory rate case updates, a recent public stock offering, and goodwill reclassification - The company entered an agreement to acquire seven public water systems from the City of Tucson for **$8.4 million**, adding approximately **2,200 water service connections**. The acquisition is expected to close in mid-2025[27](index=27&type=chunk) - The ACC approved a **$1.1 million** annual revenue increase for the GW-Farmers utility, to be phased in starting May 1, 2025. A related **$3.0 million** acquisition premium was deferred for recovery in a future rate case[28](index=28&type=chunk)[42](index=42&type=chunk) - In March 2025, the company filed a new general rate case for its GW-Santa Cruz and GW-Palo Verde utilities[29](index=29&type=chunk) - A public offering of **3,220,000 shares** of common stock was completed on March 27, 2025, generating net proceeds of approximately **$30.8 million**[43](index=43&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 performance, highlighting revenue growth, net income decline due to higher costs, and strategic initiatives like acquisitions, rate cases, and a successful equity raise [Overview and Business Outlook](index=20&type=section&id=Overview%20and%20Business%20Outlook) The company, a water resource management firm, maintains a positive business outlook in Arizona, driven by strong population and economic growth in the Phoenix MSA - The company's strategy is centered on "Total Water Management," a comprehensive approach involving water reuse, regional planning, and advanced technology[70](index=70&type=chunk) - The Phoenix MSA, a key market, is the **10th largest in the U.S.** and is expected to see continued population growth, reaching **5.8 million by 2030**[71](index=71&type=chunk) - Job growth in the Phoenix MSA is forecasted at **2.2% for 2025**, outpacing national gains, with major investments from companies like Taiwan Semiconductor and Intel[73](index=73&type=chunk)[74](index=74&type=chunk) [Factors Affecting our Results of Operations](index=22&type=section&id=Factors%20Affecting%20our%20Results%20of%20Operations) Company results are influenced by population growth, regulation, infrastructure investment, and costs, with active connections up 4.3% and significant investments in acquisitions and infrastructure - Active service connections increased by **4.3% organically** to **65,163** as of March 31, 2025, compared to the prior year[81](index=81&type=chunk) - A pending acquisition from the City of Tucson is expected to add approximately **2,200 water service connections**[84](index=84&type=chunk) - The EPA's new regulations on PFAS will require increased capital expenditures and operating costs, which the company generally expects to recover through rates, subject to regulatory lag[89](index=89&type=chunk) - The estimated rate base as of December 31, 2024, was **$212.5 million**, an **82% increase** from the rate base in the 2019 general rate case, reflecting significant infrastructure investment[95](index=95&type=chunk) [Rate Regulation Updates](index=28&type=section&id=Rate%20Regulation%20Updates) The company actively manages regulatory filings, with GW-Santa Cruz and GW-Palo Verde filing a rate case for a $6.5 million revenue increase and Formula Rates, following a $1.1 million increase approval for GW-Farmers - On March 5, 2025, the company filed a general rate case for its GW-Santa Cruz and GW-Palo Verde utilities, requesting a **$6.5 million** net annual revenue increase and proposing the use of Formula Rates[103](index=103&type=chunk) Recent Approved Rate Cases (in millions) | Company | Approved Incremental Annual Revenue ($) | ACC Decision | Rates Effective | | :--- | :--- | :--- | :--- | | GW-Saguaro | 0.4 | 79383 | July 01, 2024 | | GW-Farmers | 1.1 | 80695 | May 01, 2025 | [Comparison of Results of Operations for the Three Months Ended March 31, 2025 and 2024](index=29&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031,%202025%20and%202024) Q1 2025 total revenue increased 7.3% to $12.5 million, driven by connection growth and consumption, but operating expenses rose 8.3% to $11.2 million, leading to a 14.5% net income decrease to $0.6 million Q1 2025 vs. Q1 2024 Financial Summary (in thousands) | Metric | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $12,457 | $11,610 | $847 | 7.3% | | Operating expenses | $11,202 | $10,343 | ($859) | (8.3)% | | Operating income | $1,255 | $1,267 | ($12) | (0.9)% | | Net income | $591 | $691 | ($100) | (14.5)% | - Revenue growth was driven by a **4.3% increase** in total active connections and a **24.2% increase** in water consumption, particularly from irrigation, construction, and commercial customers[110](index=110&type=chunk)[111](index=111&type=chunk) - Operating expenses increased primarily due to a **$0.24 million (30.5%)** rise in utilities, chemicals, and repairs, and a **$0.39 million (13.4%)** increase in depreciation and amortization from a larger asset base[112](index=112&type=chunk)[113](index=113&type=chunk)[115](index=115&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by operations, debt, and equity, with Q1 2025 seeing a $30.8 million stock offering and an increased $20.0 million revolving credit facility, ensuring sufficient capital for future needs - In March 2025, a public offering of common stock generated approximately **$30.8 million** in net proceeds[120](index=120&type=chunk) - The revolving credit facility with Northern Trust was amended in April 2025 to increase the borrowing capacity from **$15.0 million to $20.0 million** and extend the maturity to May 2027. No amount was outstanding as of March 31, 2025[124](index=124&type=chunk) - Cash used in investing activities increased to **$15.2 million** in Q1 2025 from **$5.8 million** in Q1 2024, reflecting an increase in capital expenditures[131](index=131&type=chunk) - The company was in compliance with all financial debt covenants as of March 31, 2025[136](index=136&type=chunk) [Item 3. Qualitative and Quantitative Disclosures About Market Risk](index=34&type=section&id=ITEM%203.%20Qualitative%20and%20Quantitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company is a smaller reporting company - Not applicable[139](index=139&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025. There were no material changes in the company's internal control over financial reporting during the quarter - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[139](index=139&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended March 31, 2025[140](index=140&type=chunk) [PART II. OTHER INFORMATION](index=35&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=35&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is not involved in any legal proceedings that are expected to have a material effect on its financial condition or operations - The company is not currently involved in any legal proceeding expected to have a material effect on the company[141](index=141&type=chunk) [Item 1A. Risk Factors](index=35&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 - There have been no material changes to the risk factors disclosed in the 2024 Form 10-K[142](index=142&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not sell any unregistered securities during the first quarter of 2025. It did purchase 725 shares of its common stock, which were shares withheld from employees to satisfy tax obligations related to the vesting of restricted stock awards - No unregistered securities were sold during the three months ended March 31, 2025[143](index=143&type=chunk) - The company withheld **725 shares** from employees at an average price of **$11.35 per share** to satisfy tax obligations on vested restricted stock awards[146](index=146&type=chunk) [Item 5. Other Information](index=35&type=section&id=ITEM%205.%20Other%20Information) During the first quarter of 2025, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated a Rule 10b5-1 trading plan during the quarter[149](index=149&type=chunk) [Item 6. Exhibits](index=36&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the report, including corporate governance documents, a recent loan modification agreement, CEO/CFO certifications, and XBRL data files - Key exhibits filed include the Sixth Modification Agreement to the Northern Trust loan, CEO and CFO certifications (Rule 13a-14(a) and Section 1350), and Inline XBRL documents[150](index=150&type=chunk)

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's Q1 2025 financial statements reflect decreased assets and revenue, a net loss, and improved operating cash flow, alongside two acquisitions [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets decreased to **$59.8 million** from **$65.0 million**, driven by reduced cash, while stockholders' deficit widened Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $9,605 | $19,627 | | Inventory | $22,039 | $19,351 | | Total current assets | $38,153 | $44,941 | | Total assets | $59,838 | $65,010 | | **Liabilities & Stockholders' Deficit** | | | | Total current liabilities | $25,810 | $27,064 | | Debt, noncurrent | $7,500 | $7,500 | | Total liabilities | $46,714 | $48,787 | | Total stockholders' deficit | $(11,648) | $(8,549) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2025 net revenue decreased to **$43.5 million**, leading to a wider operating loss of **$3.5 million** and a net loss of **$3.5 million** Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue, net | $43,547 | $53,545 | | Gross profit | $23,064 | $29,740 | | Operating loss | $(3,508) | $(533) | | Interest expense | $346 | $4,129 | | Net loss | $(3,547) | $(3,391) | | Net loss per share | $(0.10) | $(0.10) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 saw improved operating cash flow at **$6.9 million** used, but total cash decreased by **$10.8 million** due to acquisitions Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,872) | $(12,380) | | Net cash used in investing activities | $(3,389) | $(518) | | Net cash used in financing activities | $(536) | $(381) | | **Net decrease in cash** | **$(10,797)** | **$(13,279)** | | Cash at end of period | $13,507 | $81,584 | - Cash paid for acquisitions totaled **$2.8 million** in Q1 2025, with no similar activity in Q1 2024[16](index=16&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the strategic shift to DTC, **$2.8 million** in acquisitions, a credit facility amendment, and a probable loss from a regulatory investigation - In Q3 2024, the company made a strategic decision to wind down sales through its retail channel to focus on its direct-to-consumer (DTC) platform[22](index=22&type=chunk) - The company acquired Grab Green for **$2.2 million** and 8Greens for **$0.6 million** in cash during Q1 2025[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) - The company is under investigation by the California Autorenewal Task Force (CART) for compliance with California's Automatic Renewal Law. A loss is considered probable, but an estimate of the amount cannot be made at this time[85](index=85&type=chunk) - Subsequent to the quarter end, on May 8, 2025, the company amended its Siena Revolver credit facility, extending the maturity date to April 10, 2028[130](index=130&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 **19%** revenue decline due to lower DTC orders and platform migration, gross margin decrease, and confirms sufficient liquidity for the next 12 months - The company is exiting the brick-and-mortar retail channel, a process expected to be completed in 2025, to improve profitability with an insignificant impact on revenue[140](index=140&type=chunk) - In March 2025, the company began migrating its e-commerce platform from an in-house solution to third-party providers, which has caused temporary operational disruptions and adversely affected operating results[148](index=148&type=chunk)[175](index=175&type=chunk) Key Operating Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | DTC Total Orders (thousands) | 622 | 773 | | DTC Active Customers (thousands) | 678 | 807 | | DTC Net Revenue Per Order | $66.49 | $66.27 | Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss | $(3,547) | $(3,391) | | **Adjusted EBITDA** | **$(1,598)** | **$1,893** | | Net loss margin | (8.1)% | (6.3)% | | Adjusted EBITDA margin | (3.7)% | 3.5% | - Management believes that currently available resources, including cash and availability under the Siena Revolver and SEPA, will provide sufficient funds for at least one year[191](index=191&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Grove is not required to provide quantitative and qualitative disclosures about market risk[207](index=207&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - The company's Certifying Officers concluded that disclosure controls and procedures were effective as of March 31, 2025[208](index=208&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the quarter ended March 31, 2025[209](index=209&type=chunk) [Part II - OTHER INFORMATION](index=43&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company faces an ongoing investigation by California authorities regarding Automatic Renewal Law compliance, with a probable but unestimable loss - The company is being investigated by a task force of California district attorneys (CART) regarding its compliance with California's Automatic Renewal Law, Unfair Competition Law, and False Advertising Law. A loss is probable, but the amount is not yet estimable[85](index=85&type=chunk)[211](index=211&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant business, financial, operational, cybersecurity, and securities ownership risks, including potential NYSE delisting and public benefit corporation challenges - Business Risks: The company faces risks from reliance on consumer discretionary spending, potential advertising inaccuracies, challenges in achieving profitable growth, and disruptions from its e-commerce platform migration[214](index=214&type=chunk) - Financial & Operational Risks: The company has a history of losses, may require additional financing, faces intense competition, and is dependent on its supply chain and third-party providers[214](index=214&type=chunk)[232](index=232&type=chunk) - Cybersecurity and Data Privacy Risks: The company is vulnerable to cybersecurity attacks and must comply with evolving data privacy laws like the CCPA, with failures potentially harming the business[215](index=215&type=chunk)[303](index=303&type=chunk)[309](index=309&type=chunk) - Securities Ownership Risks: Risks include stock price volatility, potential dilution from warrants, NYSE delisting risk, and restrictive covenants in its loan agreements[216](index=216&type=chunk)[333](index=333&type=chunk)[351](index=351&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the reporting period - None[366](index=366&type=chunk) [Defaults Upon Senior Securities](index=71&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the reporting period - None[366](index=366&type=chunk) [Mine Safety Disclosures](index=71&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - None[366](index=366&type=chunk) [Other Information](index=71&type=section&id=Item%205.%20Other%20Information) The company reported no other material information for the period - None[366](index=366&type=chunk) [Exhibits](index=71&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including merger agreements, corporate governance documents, and officer certifications

[Report Overview](index=1&type=section&id=Report%20Overview) [Q1 2025 Highlights](index=1&type=section&id=Q1%202025%20Highlights) In the first quarter of 2025, Global Water Resources saw a 7.3% increase in total revenue to $12.5 million, driven by organic growth and higher consumption, while net income declined by 14.5% to $0.6 million Q1 2025 Key Financial & Operational Metrics | Metric | Q1 2025 Value | Change vs. Q1 2024 | | :--- | :--- | :--- | | Total Revenue | $12.5 million | ▲ 7.3% | | Net Income | $0.6 million | ▼ 14.5% | | Adjusted EBITDA | $5.6 million | ▲ 4.4% | | Active Service Connections | 65,163 | ▲ 4.3% | | Water Consumption | 0.84 billion gallons | ▲ 24.2% | | Cash and Cash Equivalents | $31.5 million | ▲ from $9.0M at YE 2024 | - The company invested **$15.2 million** in infrastructure projects to support existing utilities and future growth[5](index=5&type=chunk) - Filed general rate case applications for two utilities, requesting a net annual revenue increase of **$6.5 million**[5](index=5&type=chunk)[6](index=6&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management attributes the 7.3% top-line growth to increased active connections and consumption, highlighting progress on rate cases and a strengthened capital position of approximately $51.5 million for growth opportunities, including the pending acquisition of seven water systems - CEO Ron Fleming credited revenue growth to organic increases in active connections and higher consumption, expressing confidence in future growth through rate increases[4](index=4&type=chunk) - The company filed rate cases for GW-Santa Cruz and GW-Palo Verde, requesting a **$6.5 million** net revenue increase, and received approval for the GW-Farmers case, which will add approximately **$1.1 million** in annual revenue once phased in[6](index=6&type=chunk)[7](index=7&type=chunk) - CFO Mike Liebman noted that a **$30.8 million** stock offering and an expanded **$20 million** credit facility have positioned the company with approximately **$51.5 million** in capital resources for growth opportunities[9](index=9&type=chunk)[10](index=10&type=chunk) - The acquisition of seven water systems from the City of Tucson is expected to close in mid-2025, adding approximately **2,200** water service connections[10](index=10&type=chunk) [Subsequent Events](index=1&type=section&id=Subsequent%20Events) Following Q1, the Arizona Corporation Commission (ACC) approved the GW-Farmers rate case, expected to increase annual revenue by about $1.1 million, and the company extended its revolving credit facility's maturity and increased borrowing capacity - On April 22, 2025, the ACC approved the GW-Farmers rate case, with new rates expected to generate an approximate **$1.1 million** increase in annual revenue, implemented in three stages starting May 1, 2025[5](index=5&type=chunk) - The company extended the maturity of its revolving credit facility to May 18, 2027, and increased the available principal from **$15 million** to **$20 million**[5](index=5&type=chunk) [Financial Performance](index=3&type=section&id=Financial%20Performance) [Financial Summary](index=3&type=section&id=Financial%20Summary) For Q1 2025, total revenues increased 7.3% to $12.5 million, while operating expenses grew 8.3% to $11.2 million, leading to a 14.5% decrease in net income to $0.6 million, though Adjusted EBITDA showed a 4.4% increase to $5.6 million [Revenue Analysis](index=3&type=section&id=Revenue%20Analysis) Total regulated revenue for Q1 2025 increased by 7.3% to $12.5 million compared to the prior year, primarily driven by a 14.4% increase in water service revenue from organic connection growth, higher consumption, and new rates Revenue Breakdown (Three Months Ended March 31) | Revenue Source | 2025 ($ thousands) | 2024 ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Water service | 5,980 | 5,226 | ▲ 14.4% | | Wastewater and recycled water service | 6,477 | 6,384 | ▲ 1.5% | | **Total revenue** | **12,457** | **11,610** | **▲ 7.3%** | - The revenue increase was attributed to organic growth in active connections, increased water consumption (from irrigation, construction, and commercial customers), and higher rates from the GW-Saguaro general rate case effective July 2024[14](index=14&type=chunk) [Operating Expenses Analysis](index=3&type=section&id=Operating%20Expenses%20Analysis) Total operating expenses rose by 8.3% to $11.2 million, mainly due to a 12.3% rise in operations and maintenance costs from higher chemical and power usage, and a 13.4% increase in depreciation and amortization from an expanded asset base Operating Expenses Breakdown (Three Months Ended March 31) | Expense Category | 2025 ($ thousands) | 2024 ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Operations and maintenance | 3,687 | 3,284 | ▲ 12.3% | | General and administrative | 4,187 | 4,125 | ▲ 1.5% | | Depreciation and amortization | 3,328 | 2,934 | ▲ 13.4% | | **Total operating expenses** | **11,202** | **10,343** | **▲ 8.3%** | - Higher O&M costs were due to increased chemical and power purchases from higher consumption, as well as new IT and labor service contracts[16](index=16&type=chunk) - The increase in depreciation and amortization was attributable to a larger base of depreciable fixed assets and new vehicle and office leases[18](index=18&type=chunk) [Other Expense](index=4&type=section&id=Other%20Expense) Other expense increased to $0.5 million in Q1 2025 from $0.3 million in Q1 2024, primarily due to a $0.2 million reduction in income from Buckeye growth premiums because of fewer new meter connections - The increase in other expense was mainly caused by a **$0.2 million** decrease in income from Buckeye growth premiums and a **$0.1 million** increase in net interest expense[19](index=19&type=chunk) [Net Income and Adjusted EBITDA](index=4&type=section&id=Net%20Income%20and%20Adjusted%20EBITDA) Net income for Q1 2025 decreased by 14.5% to $0.6 million, or $0.02 per share, while Adjusted EBITDA, a non-GAAP measure, increased by 4.4% to $5.6 million Profitability Metrics (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Income | $0.6 million | $0.7 million | ▼ 14.5% | | EPS (Diluted) | $0.02 | $0.03 | ▼ 33.3% | | Adjusted EBITDA | $5.6 million | $5.4 million | ▲ 4.4% | [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements detail the company's financial position as of March 31, 2025, and its performance for the first quarter, showing a significant increase in cash and shareholders' equity due to a stock offering, alongside revenue growth offset by higher expenses [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were $443.9 million, up from $405.1 million at year-end 2024, driven by a rise in cash and cash equivalents to $31.5 million following a stock offering, and growth in net utility plant, with total shareholders' equity increasing substantially to $77.2 million Selected Balance Sheet Data (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $31,467 | $9,047 | | Net utility plant | $378,245 | $359,379 | | **Total Assets** | **$443,918** | **$405,137** | | Long-term debt, net | $118,876 | $118,518 | | Total shareholders' equity | $77,216 | $47,604 | | **Total Capitalization and Liabilities** | **$443,918** | **$405,137** | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2025, the company generated $12.5 million in revenue, a 7.3% increase year-over-year, but due to an 8.3% rise in operating expenses and higher other expenses, operating income slightly decreased to $1.255 million, and net income fell to $0.591 million Statement of Operations Summary (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenue | $12,457 | $11,610 | | Total operating expenses | $11,202 | $10,343 | | Operating Income | $1,255 | $1,267 | | **Net Income** | **$591** | **$691** | | Diluted EPS | $0.02 | $0.03 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, net cash from operating activities was $7.5 million, with $15.2 million used in investing activities, and a positive $29.8 million from financing activities, largely due to a common stock issuance, resulting in a significant increase in total cash to $33.2 million Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $7,477 | $8,068 | | Net cash used in investing activities | ($15,216) | ($5,765) | | Net cash provided by financing activities | $29,758 | $15,806 | | **Increase in cash, cash equivalents, and restricted cash** | **$22,019** | **$18,109** | - Financing activities were primarily driven by the issuance of common stock, which provided net proceeds of **$31,041 thousand**[44](index=44&type=chunk) [Business Strategy and Outlook](index=4&type=section&id=Business%20Strategy%20and%20Outlook) [Business Strategy](index=4&type=section&id=Business%20Strategy) The company's near-term growth strategy focuses on increasing service connections, enhancing operational efficiencies, and securing rate increases from the ACC, with a core component being the continued aggregation of water and wastewater utilities through acquisitions to implement its regional "Total Water Management" approach - The company's strategy involves three main pillars: - Increasing service connections - Improving operating efficiencies - Increasing utility rates as approved by the ACC[23](index=23&type=chunk) - A key strategic focus is the acquisition and consolidation of water and wastewater utilities to realize benefits of regionalization and environmental stewardship[23](index=23&type=chunk) [Growth Drivers](index=4&type=section&id=Growth%20Drivers) Organic growth remains strong, with a 4.3% year-over-year increase in active service connections to 65,163, supported by positive population and economic trends in Arizona's "Sun Corridor," including projected job additions and a strong housing market - Active service connections increased by **4.3%** to **65,163** as of March 31, 2025, compared to the prior year, driven by organic growth[24](index=24&type=chunk) - The Phoenix metropolitan area's population is projected to grow to **5.8 million** by 2030, supported by a diverse employment base and low taxes[25](index=25&type=chunk) - Despite a Q1 pullback, single-family permits in the Greater Phoenix area are projected to remain strong at **27,333** for 2025, supporting future connection growth[11](index=11&type=chunk) [Shareholder Information](index=4&type=section&id=Shareholder%20Information) [Dividend Policy](index=4&type=section&id=Dividend%20Policy) The company has declared a monthly cash dividend of $0.02533 per common share, corresponding to an annualized dividend of $0.30396 per share - A monthly cash dividend of **$0.02533** per common share was declared, payable on May 30, 2025, to holders of record on May 16, 2025[22](index=22&type=chunk) - The annualized dividend rate is **$0.30396** per common share[22](index=22&type=chunk) [Conference Call Information](index=4&type=section&id=Conference%20Call%20Information) Global Water Resources will host a conference call on Thursday, May 15, 2025, at 1:00 p.m. Eastern time to discuss the first quarter 2025 financial results, with a webcast and replay available Conference Call Details | Item | Detail | | :--- | :--- | | Date | Thursday, May 15, 2025 | | Time | 1:00 p.m. Eastern time | | Toll-free dial-in | 1-833-816-1435 | | International dial-in | 1-412-317-0527 | | Conference ID | 10199311 | [Appendices](index=5&type=section&id=Appendices) [About Global Water Resources](index=5&type=section&id=About%20Global%20Water%20Resources) Global Water Resources, Inc. is a water resource management company that owns and operates 32 water, wastewater, and recycled water systems, primarily in growth areas near Phoenix and Tucson, recognized for its "Total Water Management" (TWM) approach, recycling over 1 billion gallons of water annually - The company operates **32** systems providing water, wastewater, and recycled water services in Arizona[29](index=29&type=chunk) - It utilizes an integrated "Total Water Management" (TWM) approach to manage the entire water cycle and maximize the use of recycled water[30](index=30&type=chunk) [Use of Non-GAAP Measures](index=5&type=section&id=Use%20of%20Non-GAAP%20Measures) This report includes the non-GAAP financial measures EBITDA and Adjusted EBITDA, which management defines and presents as useful supplemental indicators of operating performance, while cautioning against their use as alternatives to GAAP measures - The report uses non-GAAP measures EBITDA and Adjusted EBITDA[33](index=33&type=chunk) - Adjusted EBITDA is defined as EBITDA excluding non-recurring events, restricted stock expense, and gain/loss on disposal of assets[33](index=33&type=chunk) - Management cautions that its calculation of these measures may differ from other companies and should not be used as an alternative to GAAP measures like net income[34](index=34&type=chunk) [Reconciliation of Net Income to EBITDA and Adjusted EBITDA](index=10&type=section&id=Reconciliation%20of%20Net%20Income%20to%20EBITDA%20and%20Adjusted%20EBITDA) A reconciliation is provided to bridge the GAAP measure of Net Income to the non-GAAP measures of EBITDA and Adjusted EBITDA, showing that for Q1 2025, Net Income of $0.591 million reconciles to an Adjusted EBITDA of $5.643 million Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $591 | $691 | | Adjustments (Taxes, Interest, D&A) | +$4,890 | +$4,512 | | **EBITDA** | **$5,481** | **$5,203** | | EBITDA adjustments (Stock expense, etc.) | +$162 | +$200 | | **Adjusted EBITDA** | **$5,643** | **$5,403** | [Cautionary Note Regarding Forward-Looking Statements](index=6&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) The press release contains forward-looking statements regarding future events and performance, based on current expectations and subject to significant risks and uncertainties, with investors cautioned to consult SEC filings for a comprehensive discussion of risk factors - The report contains forward-looking statements concerning strategies, future performance, growth, rate case outcomes, and acquisitions[36](index=36&type=chunk) - Actual results may differ materially from these statements due to a number of risks, uncertainties, and other factors[36](index=36&type=chunk) - Investors are advised to consult the "Risk Factors" section of the company's SEC filings (Form 10-K and 10-Q) for a full disclosure of potential risks[36](index=36&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 March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 001-36312 (Commission file number) POWER REIT (Exact name of registrant as specified in its charter) Maryland 45-3116572 (State or other jurisdiction of incorporation or organization) 301 Winding Road ...

Portfolio and Property Management - As of March 31, 2025, the company's portfolio consisted of 67 consolidated operating hotel properties, totaling 16,736 rooms[184] - The company managed 50 of its 68 hotel properties through Remington Hospitality, a subsidiary of Ashford Inc.[189] - The company owns 100% of its hotel properties, totaling 2,800 rooms across various locations[280] - The hotel portfolio includes 15 Embassy Suites and Hilton Garden Inn properties, with room counts ranging from 119 to 276[280] - The company reported a total of 333 owned rooms, representing 100% ownership in the hotel properties[281] - The company has expanded its portfolio to include 1,158 owned rooms across various locations, maintaining a 100% ownership rate[281] - The total number of hotel properties owned by the company is 17,329, with 17,196 rooms[282] Financial Performance - Total revenue decreased by $26.5 million, or 8.7%, to $277.4 million for the three months ended March 31, 2025, compared to $303.9 million in the same period of 2024[211] - Net loss attributable to the Company was $20.0 million for the 2025 quarter, a decrease of $91.5 million from net income of $71.6 million in the 2024 quarter[215] - Net income for Q1 2025 was $(22,198) thousand, a significant decrease from $72,405 thousand in Q1 2024[276] - EBITDA for Q1 2025 was $92,857 thousand, down from $199,679 thousand in Q1 2024, representing a decline of approximately 53.5%[276] - FFO available to common stockholders and OP unitholders for Q1 2025 was $(33,374) thousand, compared to $(31,900) thousand in Q1 2024[279] - Adjusted FFO available to common stockholders and OP unitholders for Q1 2025 was $(5,625) thousand, an improvement from $(13,777) thousand in Q1 2024[279] Revenue and Occupancy Metrics - Rooms revenue decreased by $22.9 million, or 10.0%, to $206.3 million in the 2025 quarter, primarily due to decreases from hotel dispositions and properties in receivership[216] - RevPAR increased to $132.04 in the 2025 quarter from $125.30 in the 2024 quarter, reflecting a 5.6% increase[212] - Occupancy rate improved to 67.98% in the 2025 quarter compared to 66.90% in the 2024 quarter[212] - ADR rose to $194.24 in the 2025 quarter from $187.30 in the 2024 quarter, marking a 3.1% increase[212] - The company anticipates a 5% growth in occupancy rates for the next quarter, supported by ongoing marketing efforts[281] Expenses and Cost Management - Hotel operating expenses decreased by $22.4 million, or 10.6%, to $188.5 million in the 2025 quarter compared to the 2024 quarter[219] - Depreciation and amortization expenses decreased by $3.2 million, or 7.9%, to $37.3 million in the 2025 quarter[222] - Property taxes, insurance, and other expenses decreased by $1.3 million, or 7.6%, to $16.0 million in the 2025 quarter[221] - Corporate, general and administrative expense decreased by $3.9 million, or 47.6%, to $4.3 million in the 2025 quarter compared to the 2024 quarter[225] Financing and Capital Structure - The company has the authority to issue up to 450,000,000 shares of capital stock, including 395,000,000 shares of common stock and 55,000,000 shares of preferred stock[195] - The company closed on a $580 million refinancing secured by 16 hotels, replacing previous loans with a combined outstanding balance of approximately $438.7 million[253] - The company extended its Morgan Stanley Pool mortgage loan secured by 17 hotels, with a current balance of $409.8 million, to March 2026[256] - The company has a total indebtedness of $2.7 billion, with $2.6 billion being variable-rate debt[285] - A 25-basis point change in interest rates on the variable-rate debt would impact the company's results by approximately $6.5 million per year[285] Strategic Initiatives and Future Outlook - The company is focused on acquiring hotel properties that are expected to be accretive to its portfolio and is pursuing capital market activities to enhance long-term stockholder value[187] - The company is committed to pursuing hotel-related investments as suitable situations arise, with no formal commitment to invest in additional assets[248] - The company is exploring strategic acquisitions to bolster its market position, with a goal of increasing its market share by 15%[281] - The company is committed to sustainability initiatives, targeting a 30% reduction in energy consumption across its properties by 2025[281] - The company has invested in new technology to enhance customer experience, aiming for a 20% increase in customer satisfaction ratings[281] Cash Flow and Liquidity - Cash and cash equivalents as of March 31, 2025, totaled $85.8 million, with restricted cash of $139.2 million[238] - Net cash flows used in operating activities were $25.0 million for the three months ended March 31, 2025, compared to $46.5 million for the same period in 2024[261] - Net cash flows provided by investing activities were $99.5 million for the three months ended March 31, 2025, primarily from the disposition of the Courtyard Boston[262] - Net cash flows used in financing activities were $70.0 million for the three months ended March 31, 2025, with significant repayments of indebtedness totaling $523.5 million[264] Market Risk and Interest Rate Sensitivity - The analysis of market risk includes sensitivity to changes in interest rates on borrowings under debt instruments[284] - The information presented regarding market risk has limited predictive value due to potential future exposures[286] - Interest rate changes have no impact on the remaining $88.8 million of fixed-rate debt[285] - The company has various interest rate caps in place to limit exposure to interest rate fluctuations[285]