Financial Performance - Revenue for the nine months ended September 30, 2025, was $11.6 million, a decrease of 56.3% compared to $26.5 million for the same period in 2024[232]. - The company incurred a net loss of $22.7 million for the nine months ended September 30, 2025, compared to a net income of $2.4 million for the same period in 2024[232]. - Revenue decreased by $2.7 million, or 50%, to $2.7 million for the three months ended September 30, 2025, and decreased by $14.9 million, or 56%, to $11.6 million for the nine months ended September 30, 2025, compared to the same periods in 2024[271]. - The company reported a net loss of $11.9 million for the three months ended September 30, 2025, compared to a net income of $8.7 million for the same period in 2024[270]. - The company incurred operating losses of $23.9 million and $33.1 million for the nine months ended September 30, 2025 and 2024, respectively[290]. Cost and Expenses - The cost of revenue decreased by $0.9 million, or 40%, to $1.4 million for the three months ended September 30, 2025, and decreased by $3.9 million, or 52%, to $3.7 million for the nine months ended September 30, 2025, compared to the same periods in 2024[272]. - Total operating expenses for the three months ended September 30, 2025, were $10.9 million, a decrease of $4.5 million compared to the same period in 2024[270]. - Gross profit decreased by $1.8 million, or 58%, to $1.3 million for the three months ended September 30, 2025, and decreased by $11.0 million, or 58%, to $8.0 million for the nine months ended September 30, 2025 compared to the same periods in 2024[273]. - Sales and marketing expenses decreased by $2.1 million, or 40%, to $3.1 million for the three months ended September 30, 2025, and decreased by $8.9 million, or 49%, to $9.2 million for the nine months ended September 30, 2025 compared to the same periods in 2024[274][276]. - Research and development expenses decreased by $1.2 million, or 37%, to $2.0 million for the three months ended September 30, 2025, and decreased by $6.8 million, or 51%, to $6.4 million for the nine months ended September 30, 2025 compared to the same periods in 2024[277][278]. - General and administrative expenses decreased by $1.3 million, or 18%, to $5.8 million for the three months ended September 30, 2025, and decreased by $4.5 million, or 22%, to $16.2 million for the nine months ended September 30, 2025 compared to the same periods in 2024[279][280]. Strategic Initiatives - The Allurion Program includes the Allurion Smart Capsule, the world's first swallowable intragastric balloon, and AI-powered remote patient monitoring tools[227]. - The Allurion Virtual Care Suite (VCS) was launched in April 2024 in the U.S. for patients utilizing various weight loss treatments, enhancing patient management[229]. - The company has submitted a premarket application to the FDA for the Allurion Program, aiming for commercialization in the U.S. by June 30, 2026[230][235]. - The company announced a strategic restructuring plan, including a reduction in force of approximately 70 employees, or about 65% of its workforce, with expected severance charges of approximately $1.5 million[249]. - The company signed a term sheet with a strategic partner to expand ex-US distribution and enhance the R&D pipeline, including the potential joint development of a novel GLP-1 drug-eluting intragastric balloon[253]. - The company expects to begin enrollment for a prospective, multi-center study on the combination of the Allurion Program with a low-dose of GLP-1 for weight loss while maintaining muscle mass this year[253]. Financing and Capital Management - The Omnibus Amendment requires the company to maintain minimum cash balances and achieve designated revenue thresholds, tested quarterly[235]. - The company raised at least $12.0 million in aggregate net proceeds through the issuance of shares as part of the Omnibus Amendment[236]. - The Second Amendment to Note Purchase Agreement allows for the mandatory conversion of $5.0 million of RTW Convertible Notes if market capitalization falls below $15.0 million[240]. - The company entered into a securities purchase agreement to issue and sell 2,994,012 shares of Common Stock for an aggregate purchase price of approximately $5.0 million[250]. - The company received net proceeds of $1.3 million from the issuance of shares and warrants in the Leavitt Private Placement on February 20, 2025[295]. - The company received $40.0 million in proceeds from the Revenue Interest Financing Agreement with RTW on August 1, 2023, with an obligation to remit revenue interest payments at specified rates[313]. - The revenue interest payment rate was increased from 6% to 12% for net sales less than or equal to $100 million prior to December 31, 2026, and from 10% to 12% for net sales on or after January 1, 2027[313]. - Cash provided by financing activities for the nine months ended September 30, 2025, was $14.4 million, consisting of $13.6 million from a public offering[328]. - The company entered into a November 2025 Securities Purchase Agreement, agreeing to issue 2,994,012 shares for approximately $5.0 million at a price of $1.67 per share[308]. - On April 16, 2024, the company received $48 million in gross proceeds from the Amended Note Purchase Agreement with RTW, used to repay the Fortress Term Loan[311]. Cash and Liquidity - As of September 30, 2025, the company had $6.1 million in cash and cash equivalents and an accumulated deficit of $244.9 million[290]. - The company expects to continue generating significant operating losses for the foreseeable future and may need to raise additional capital[292]. - For the nine months ended September 30, 2025, net cash used in operating activities was $23.6 million, compared to $29.0 million for the same period in 2024[318][319]. - The company has various non-cancellable operating leases expiring between 2025 and 2028, impacting future cash requirements[310]. - As of September 30, 2025, cash and cash equivalents totaled $6.1 million, primarily invested in money market funds[336]. - The company has no variable rate debt outstanding as of September 30, 2025[337]. Foreign Currency Exposure - A 10% increase or decrease in current exchange rates could materially impact the business, financial condition, or results of operations[339]. - The primary foreign currency exposure is related to sales and expenses in Europe, with additional exposure in the Middle East and Asia-Pacific regions[339]. - An immediate 10% adverse change in foreign exchange rates during the nine months ended September 30, 2025, would have impacted revenues by approximately 5% and expenses by 4%, affecting net income by about 3%[340]. - In comparison, during the nine months ended September 30, 2024, a similar adverse change would have impacted revenues by approximately 6% and expenses by 2%, affecting net loss by about 2%[340]. - The company has not engaged in any foreign currency hedging activities to date[340]. - The company will continue to reassess its approach to managing foreign currency exchange rate risks as international operations grow[340]. Investment Policy - The investment policy focuses on capital preservation and liquidity needs, avoiding speculative financial instruments[335]. - External investment managers are utilized to adhere to the investment policy guidelines[335].

Financial Performance - Total assets as of September 30, 2025, were $210.6 million, with net assets decreasing by $3.3 million, or 4.32%, compared to the previous quarter[3][5] - Net investment income before taxes was $0.6 million, or $0.04 per share, while the net decrease in net assets from operations was $1.3 million, or $0.09 per share[3][11] - Total investment income for Q3 2025 was $4,356,484, a decrease of 36.3% from $6,846,775 in Q3 2024[19] - Net investment income after taxes for Q3 2025 was $508,465, down 78.1% from $2,325,943 in Q3 2024[19] - The company reported a net decrease in net assets resulting from operations of $(1,260,530) for Q3 2025, compared to an increase of $6,606,629 in Q3 2024[19] - Earnings per share for Q3 2025 were $(0.09), compared to $0.46 in Q3 2024[19] Investment Portfolio - The investment portfolio consisted of 41 portfolio companies, with 78.32% being first lien investments and 98.49% of the debt portfolio being floating rate investments[12] - The company made an investment of $0.02 million in one existing portfolio company during the quarter[5][10] - The internal rate of return on fully realized investments in two portfolio companies was 12.67%[5] Income and Expenses - Total expenses for Q3 2025 were $3,890,011, a decrease of 10.9% compared to $4,368,755 in Q3 2024[19] - Interest income from non-controlled, non-affiliated investments decreased to $3,888,504 in Q3 2025 from $4,674,329 in Q3 2024, a decline of 16.8%[19] - The company experienced a net realized loss from investments of $(1,768,995) in Q3 2025, compared to a gain of $4,280,686 in Q3 2024[19] Distributions - The company declared a distribution of $0.12 per share for the quarter ending December 31, 2025, representing a 20.14% yield based on a share price of $2.78 as of September 30, 2025[5][9] - The company declared distributions of $0.14 per common share for Q3 2025, an increase from $0.12 in Q3 2024[19] Cash and Commitments - As of September 30, 2025, the company had $11.6 million in cash, including $7.8 million in restricted cash[13] - The company entered into a commitment with Investcorp Capital plc to provide capital support for its 4.875% notes due April 1, 2026[7][16] Market Focus - The company targets investment opportunities in middle-market companies with annual revenues of at least $50 million and EBITDA of at least $15 million[20] Debt Investments - The weighted average yield on debt investments increased to 10.87% from 10.57% in the prior quarter[5] - The weighted average shares of common stock outstanding increased slightly to 14,431,202 in Q3 2025 from 14,403,752 in Q3 2024[19] - The company received $7.5 million in proceeds from repayments, sales, and amortization during the quarter[10]

Revenue and Customer Base - The company generated substantial revenue from customers located in the PRC, accounting for nearly all revenue for the fiscal years ended June 30, 2025 and 2024[30]. - For the fiscal year ended June 30, 2025, three significant customers accounted for 27.5%, 25.8%, and 16.2% of total sales, indicating a reliance on a few major clients[55]. - Revenue from AI services under AI Assist contributed 99.4% of total revenue for the fiscal year ended June 30, 2025, compared to 100% in the previous year[135]. - The AI Assist product generated 100% of the company's revenue for the fiscal years ended June 30, 2024, and June 30, 2025, with AI services contributing 99.70% of revenue in the fiscal year ended June 30, 2023[177]. - The top three customers for the fiscal year ended June 30, 2025, contributed approximately 69.5% of total revenue, with Baojiang at 27.5%, Pengbosheng at 25.8%, and Blue Legend at 16.2%[191]. - The company had 28 customers in the fiscal year ended June 30, 2025, compared to nine in 2024 and five in 2023[191]. Regulatory and Legal Environment - Recent regulatory changes in China, including the Cybersecurity Review Measures, may impact the company's operations and require compliance with new data security laws[29]. - The company has not received any notices requiring cybersecurity reviews as of the report date, but future regulations may impose operational challenges[30]. - The legal environment in the PRC presents uncertainties that could limit the company's legal protections and operational stability[34]. - The evolving regulatory landscape for data privacy and security may increase compliance costs and affect business practices[69]. - Cybersecurity threats, including potential data breaches, could lead to significant financial, legal, or reputational losses for the company[75]. - Failure to comply with privacy policies or regulations could result in governmental investigations, fines, and damage to the company's reputation[71]. Financial Performance - For the fiscal year ended June 30, 2025, Helport AI reported revenue of $34.9 million, a 18.3% increase from $29.5 million in the previous fiscal year[135]. - Net income for the fiscal year ended June 30, 2025, was $1.9 million, a decrease from $7.37 million in the fiscal year ended June 30, 2024[135]. - The company relies on dividends from its Singapore subsidiary for cash requirements, which may impact its financial flexibility[97]. - Economic conditions, including inflation and potential recession, may adversely affect the company's revenue and profitability, particularly impacting demand for its AI Assist product[91][92]. - The company has been moderately impacted by the COVID-19 pandemic, with a reduction in billable contact center seats affecting revenue[93]. Operational Challenges and Growth - The company faces challenges in recruiting, training, and retaining skilled personnel, which is critical for its growth and operational efficiency[78]. - The company must effectively manage its growth and execute strategies to avoid adverse impacts on its business and financial results[79]. - Future acquisitions may pose risks related to integration and resource diversion, potentially affecting the company's financial performance[89][90]. - The company has experienced substantial growth and expects continued expansion in operations, particularly in the PRC, U.S., and Southeast Asia[77]. Research and Development - The company has two pending patent applications in Singapore and is investing significantly in research and development to keep pace with technological advances in AI products[42]. - R&D costs for the fiscal years 2023, 2024, and 2025 were US$375,410, US$4,303,490, and US$6,316,962, accounting for 18.3%, 48.6%, and 38.6% of total operating costs respectively[209]. - The company’s R&D efforts in fiscal year 2025 focused on enhancing the fine-tuning capabilities of large AI models for diverse applications[183]. - The R&D team consists of 58 members, with 36 focused on AI operations and 22 on product development, resulting in two patents currently under application review in Singapore[206]. Technology and Product Development - The company has designed effective systems to integrate AI Assist software into contact centers, enhancing its competitive position[42]. - The AI Assist software features four primary functions, including real-time speech guidance and compliance monitoring, aimed at enhancing customer engagement efficiency[131]. - The company has developed over 100 sets of dialog libraries and training tools tailored to various industry scenarios, enhancing its competitive advantage[139]. - The flagship software, AI Assist, serves enterprise clients across industries such as banking and insurance, enhancing operational efficiency[222]. Partnerships and Supplier Relationships - The company relies on third-party agents for payment processing, which introduces credit risks and potential disruptions in cash flow[39]. - The company’s reliance on Youfei Shuke as a key developer partner exposes it to risks if the partner fails to cooperate or experiences operational disruptions[43]. - The company has maintained a long-term partnership with Youfei Shuke, which has been the sole supplier for AI operation services since fiscal year 2024[186]. - The company is actively seeking to diversify its supplier base to mitigate risks associated with reliance on Youfei Shuke[59]. Market Expansion and Strategy - The company plans to expand its presence in the North American and Southeast Asian markets, focusing on sectors such as insurance sales, real estate brokerage, and mortgage lending[149][150]. - The Southeast Asia office, opened in January 2025, has driven growth primarily in the consumer financing sector, establishing a "Global Center of Excellence for AI Training and Operations"[150]. - The company aims to partner with BPO contact centers globally to enhance sales revenue and operational efficiency, targeting BPO operators with significant outbound telesales operations[152][153]. - The company has initiated online promotional campaigns for its AI software and AI+BPO solutions in 2025, utilizing search engine optimization and strategic advertising to increase product exposure[155]. Internal Controls and Governance - Helport AI has not identified any material weaknesses in its internal control over financial reporting for the fiscal year ended June 30, 2025[100]. - Helport AI's reporting obligations may place a significant strain on its management and operational resources[101]. - Helport AI's board of directors has discretion over future dividend declarations, which depend on various factors including financial condition and cash requirements[104]. - Helport AI's independent registered public accounting firm must attest to the effectiveness of its internal controls once it ceases to be an "emerging growth company"[101].

Financial Performance - Total revenue increased 13% year-over-year to $60.2 million, with telehealth revenue growing 18% to $47.3 million[6] - Adjusted EBITDA rose 20% to $5.1 million, while telehealth adjusted EBITDA increased 30% to $2.9 million[6] - For the fourth quarter of 2025, the company expects revenue in the range of $45 million to $46 million and adjusted EBITDA between $3 million and $4 million[10] - Full year 2025 revenue is projected to be between $192 million and $193 million, reflecting an increase of approximately 24% versus 2024[10] - Total revenues for the nine months ended September 30, 2025, increased to $186.98 million, a 25.3% rise from $149.34 million in the same period of 2024[20] - Gross profit for Q3 2025 was $52.76 million, compared to $48.26 million in Q3 2024, reflecting an increase of 9.3%[20] - The consolidated adjusted EBITDA for the nine months ended September 30, 2025, was $19,796,724, significantly higher than $8,115,725 for the same period in 2024[28] Subscriber Growth - The number of active telehealth subscribers increased 14% to approximately 310,000 at quarter-end[9] - LifeMD's RexMD business added nearly 10,000 net new subscribers in the quarter, returning to growth[3] Debt and Cash Management - LifeMD paid off all outstanding debt during the quarter, significantly strengthening its balance sheet[5] - Cash at the end of Q3 2025 was $23.79 million, down from $37.59 million at the end of Q3 2024[22] - Net cash used in operating activities for Q3 2025 was $(147,137), a significant decrease from $6.20 million provided in Q3 2024[22] Operating Loss and Expenses - Operating loss for Q3 2025 narrowed to $(1.97) million, an improvement from $(4.00) million in Q3 2024[20] - Net loss attributable to LifeMD, Inc. for Q3 2025 was $(3.81) million, compared to $(4.66) million in Q3 2024, showing a reduction of 18.2%[20] - Total expenses for the nine months ended September 30, 2025, were $164.94 million, up from $149.13 million in the same period of 2024[20] Telehealth Performance - Telehealth revenue for Q3 2025 reached $47.28 million, up 17.5% from $40.15 million in Q3 2024[20] - Telehealth operating loss for the three months ended September 30, 2025, was $3,043,374, an improvement from a loss of $3,745,522 in 2024[29] - Telehealth adjusted EBITDA for the nine months ended September 30, 2025, reached $10,494,043, compared to $2,664,501 in 2024[29] WorkSimpli Performance - LifeMD completed the divestiture of its majority ownership in WorkSimpli, transforming into a pure-play virtual care and pharmacy platform[4] - WorkSimpli reported an operating income of $1,074,160 for the three months ended September 30, 2025, a recovery from an operating loss of $250,752 in 2024[30] - WorkSimpli adjusted EBITDA for the nine months ended September 30, 2025, was $9,302,680, up from $5,451,224 in 2024[30] Other Financial Metrics - Gross margin was 88% compared to 91% in the prior-year period, with telehealth gross margin at 86% excluding WorkSimpli[9] - The company incurred litigation costs of $959,802 for the three months ended September 30, 2025, compared to $644,170 in 2024[29] - Stock-based compensation expense for the three months ended September 30, 2025, was $3,198,036, compared to $2,394,235 in 2024[29] - The company reported a foreign exchange loss of $314,960 for the three months ended September 30, 2025[30] - Interest expense (excluding amortization of debt discount) for the nine months ended September 30, 2025, was $1,317,389, compared to $1,266,412 in 2024[28] Strategic Plans - LifeMD plans to enhance its core telehealth business while managing the non-core subsidiary WorkSimpli separately[24]

Financial Performance - Total revenue increased 13% year-over-year to $60.2 million, with telehealth revenue growing 18% to $47.3 million[6] - Adjusted EBITDA rose 20% to $5.1 million, while telehealth adjusted EBITDA increased 30% to $2.9 million[6] - For the fourth quarter of 2025, the company expects revenue in the range of $45 million to $46 million and adjusted EBITDA between $3 million and $4 million[10] - Total revenues for the nine months ended September 30, 2025, were $186.98 million, up 25.3% from $149.34 million in the same period of 2024[20] - Gross profit for Q3 2025 was $52.76 million, compared to $48.26 million in Q3 2024, reflecting an increase of 9.3%[20] - The consolidated adjusted EBITDA for the nine months ended September 30, 2025, was $19,796,724, significantly higher than $8,115,725 for the same period in 2024, indicating a 144.5% increase[28] Subscriber Growth - The number of active telehealth subscribers increased 14% to approximately 310,000 at quarter-end[9] - LifeMD's RexMD business added nearly 10,000 net new subscribers in the quarter, returning to growth[3] Debt and Cash Management - LifeMD paid off all outstanding debt during the quarter, improving its balance sheet significantly[5] - Cash totaled $23.8 million as of September 30, 2025, following the payoff of approximately $17 million of all remaining debt[9] - Cash at the end of Q3 2025 was $23.79 million, down from $37.59 million at the end of Q3 2024[22] - Net cash used in operating activities for Q3 2025 was $(147,137), a significant decrease from $6.20 million provided in Q3 2024[22] Operating Loss and Net Loss - Operating loss for Q3 2025 improved to $(1.97) million from $(4.00) million in Q3 2024, indicating a reduction in losses[20] - Net loss attributable to LifeMD, Inc. for Q3 2025 was $(3.81) million, a decrease from $(4.66) million in Q3 2024[20] - Basic loss per share for common stockholders was $(0.10) in Q3 2025, compared to $(0.13) in Q3 2024[20] - For the three months ended September 30, 2025, the net loss attributable to common shareholders was $4,582,680, compared to a loss of $5,434,485 for the same period in 2024, representing a 15.7% improvement[28] Expenses and Cost Management - Total expenses for the nine months ended September 30, 2025, were $164.94 million, up from $149.13 million in the same period of 2024[20] - The company incurred litigation costs of $959,802 for the three months ended September 30, 2025, compared to $644,170 in 2024, which is a 49.0% increase[29] - Stock-based compensation expense for the three months ended September 30, 2025, was $3,198,036, up from $2,394,235 in 2024, reflecting a 33.6% increase[29] - Interest expense (excluding amortization of debt discount) for the three months ended September 30, 2025, was $228,975, compared to $458,154 in 2024, showing a 50.1% decrease[28] Gross Margin - Gross margin was 88% compared to 91% in the prior-year period, with telehealth gross margin at 86%[9] Strategic Moves - LifeMD completed the divestiture of its majority ownership in WorkSimpli, positioning itself as a pure-play telehealth and pharmacy platform[4] - LifeMD plans to enhance its core telehealth business and improve adjusted EBITDA metrics to provide clearer insights into financial performance[24] Telehealth Performance - Telehealth revenue for Q3 2025 reached $47.28 million, a 17.5% increase from $40.15 million in Q3 2024[20] - Telehealth operating loss for the three months ended September 30, 2025, was $3,043,374, a decrease from $3,745,522 in 2024, reflecting a 18.8% improvement[29] - Telehealth adjusted EBITDA for the nine months ended September 30, 2025, reached $10,494,043, compared to $2,664,501 in 2024, marking a 294.5% increase[29] WorkSimpli Performance - WorkSimpli reported an operating income of $1,074,160 for the three months ended September 30, 2025, compared to an operating loss of $250,752 in 2024, indicating a significant turnaround[30] - WorkSimpli adjusted EBITDA for the nine months ended September 30, 2025, was $9,302,680, up from $5,451,224 in 2024, representing a 70.5% increase[30] Foreign Exchange and Other Losses - The company reported a foreign exchange loss of $314,960 for the three months ended September 30, 2025, down from $429,695 in 2024, indicating a 26.7% improvement[30]

Financial Performance - Total revenue for Q1 fiscal 2026 increased by 10% to $6.0 million, up from $5.4 million in the prior year[5] - GAAP net income rose by 9% to $1.8 million, compared to $1.7 million in Q1 fiscal 2025[5] - Earnings per share (EPS) increased by 13% to $0.09 per diluted share, up from $0.08 in the same quarter last year[5] - Operating income for the quarter increased by 28% to $1.9 million from $1.5 million year-over-year[6] - Net income for the three months ended September 30, 2025, was $1,819,529, an increase of 9.2% compared to $1,665,155 in the same period of 2024[19] Revenue Composition - Recurring revenue accounted for approximately 99% of total revenue[6] Cash Flow and Liquidity - The company ended the quarter with $28.8 million in cash and no bank debt[10] - The company generated $1.5 million in cash from operations during the quarter[6] - Cash and cash equivalents at the end of the period increased to $28,794,806, up from $25,790,206, representing a growth of 7.8%[19] - Net cash provided by operating activities decreased to $1,538,447 from $1,868,900, reflecting a decline of 17.6% year-over-year[19] Shareholder Returns - A quarterly dividend of $0.02 per share was declared, representing a 10% increase since the last dividend[6] - Common stock buyback amounted to $149,985, indicating a commitment to returning value to shareholders[19] - Dividends paid decreased slightly to $402,917 from $422,954, a reduction of 4.7% year-over-year[19] - The company has approximately $7.8 million remaining of the $21 million total common share buyback authorization[8] Expenses and Liabilities - Cash paid for income taxes rose significantly to $536,561, compared to $312,098, marking an increase of 71.5%[19] - Bad debt expense increased to $225,000, up from $150,000, reflecting a rise of 50%[19] - Accounts receivables decreased by $245,439, compared to a decrease of $259,388 in the previous year[19] Financing Activities - The company reported a net cash used in financing activities of $1,292,087, slightly higher than $1,266,642 in the prior year[19] - The company recognized a non-cash common stock issuance to pay accrued liabilities amounting to $100,000, compared to $69,985 in the previous year[19] Share Redemption - The company redeemed 70,093 preferred shares for a total of $749,995 during the quarter[7]

Financial Performance - Total revenue for Q1 fiscal 2026 increased by 10% to $6.0 million, compared to $5.4 million in Q1 fiscal 2025[5] - GAAP net income rose by 9% to $1.8 million, up from $1.7 million in the prior year[5] - Earnings per share (EPS) increased by 13% to $0.09 per diluted share, compared to $0.08 per diluted share in the previous year[5] - Operating income for the quarter increased by 28% to $1.9 million from $1.5 million year-over-year[6] - Net income for the three months ended September 30, 2025, was $1,819,529, an increase of 9.2% compared to $1,665,155 in 2024[19] Revenue Composition - Recurring revenue accounted for approximately 99% of total revenue[6] Cash and Liquidity - The company ended the quarter with $28.8 million in cash and no bank debt[10] - Cash generated from operations was $1.5 million during the quarter[6] - Cash and cash equivalents at the end of the period increased to $28,794,806, up from $25,790,206, representing a growth of 7.8%[19] - Net cash provided by operating activities decreased to $1,538,447 from $1,868,900, reflecting a decline of 17.6% year-over-year[19] Shareholder Returns - The board declared a quarterly dividend of $0.02 per share, representing a 10% increase since the last dividend declaration[6] - Common stock buyback amounted to $149,985, indicating a commitment to returning value to shareholders[19] - Dividends paid decreased slightly to $402,917 from $422,954, a reduction of 4.7% year-over-year[19] - The company has approximately $7.8 million remaining of the $21 million total common share buyback authorization[8] Expenses and Investments - Cash paid for income taxes rose significantly to $536,561, compared to $312,098 in the previous year, marking an increase of 72.2%[19] - The company reported a bad debt expense of $225,000, which is a 50% increase from $150,000 in the prior year[19] - The purchase of property and equipment was $11,750, reflecting ongoing investment in operational capacity[19] Financing Activities - The company experienced a net cash used in financing activities of $1,292,087, compared to $1,266,642 in the previous year, indicating a slight increase of 2%[19] - The company redeemed 70,093 preferred shares for a total of $749,995 during the quarter[7] Accounts Receivable - The company reported a decrease in accounts receivables by $245,439, compared to a decrease of $259,388 in the previous year[19]

Financial Position - As of September 30, 2025, total assets amounted to $244,722, with total current liabilities of $288,850, resulting in a shareholder's deficit of $44,128[11]. - As of September 30, 2025, the Company reported a working capital deficit of $288,850 and $0 in cash[39]. - The Company has no amounts outstanding under any Working Capital Loan as of September 30, 2025[40]. - The Company has no off-balance sheet financing arrangements or long-term debt obligations, only incurring $10,000 per month for office space and administrative support[103]. - As of September 30, 2025, the Company had $0 in cash and a working capital deficit of $288,850[98]. Initial Public Offering (IPO) - The company completed its Initial Public Offering on October 24, 2025, raising gross proceeds of $60,000,000 from the issuance of 6,000,000 units at $10.00 per unit[27]. - Following the IPO, an additional $9,000,000 was generated from the over-allotment option, bringing total gross proceeds to $69,000,000[29]. - The total transaction costs related to the IPO amounted to $1,708,648, including a cash underwriting fee of $600,000[28]. - The underwriters exercised their over-allotment option in full, allowing for an additional purchase of 900,000 Units at the Initial Public Offering price[71]. - On October 24, 2025, the Company completed its Initial Public Offering (IPO) of 6,000,000 Units at $10.00 per Unit, generating gross proceeds of $60,000,000[86]. - The underwriters fully exercised their over-allotment option, purchasing an additional 900,000 Units, bringing total gross proceeds to $69,000,000[95]. Business Operations - The company has not yet commenced any operations and will not generate operating revenues until after completing its initial business combination[26]. - The Company has not generated any revenues to date and does not expect to do so until after completing its initial business combination[93]. - The Company intends to use funds outside the Trust Account for evaluating acquisition candidates and conducting due diligence[97]. - The Company intends to focus on industries that complement its management team's background for potential business combinations[25]. Shareholder Information - Shareholders will have the option to redeem their public shares for a pro rata portion of the trust account, initially valued at $10.00 per share[32]. - The public shares are subject to redemption, with 6,900,000 shares valued at $60,000,000 as of October 24, 2025, and increased to $69,000,000 after the over-allotment option[53]. - The Company has a Combination Period of 18 months from the Initial Public Offering closing, with possible one-month extensions, and must complete a Business Combination within this timeframe[35]. Financial Instruments and Reporting - The fair value of the Company's financial instruments approximates their carrying amounts due to their short-term nature[56]. - The Company has not recognized any unrecognized tax benefits as of September 30, 2025, and is not subject to income taxes in the Cayman Islands or the United States[49][50]. - The Company adopted ASU 2023-07 and ASU 2023-09, which enhance segment reporting and income tax disclosures, respectively, with no impact on financial position or cash flows[59][60]. - The company is classified as an "emerging growth company" and has opted not to comply with certain reporting requirements applicable to other public companies[41][43]. - The company is classified as a smaller reporting company and is not required to disclose risk factors in its quarterly report[113]. Management and Governance - The Company has granted a right of first refusal to D. Boral Capital LLC and ARC Group Securities LLC for future public and private equity and debt offerings for a period of 12 months post-business combination[74]. - The Company has committed to pay the Sponsor $10,000 per month for administrative services for up to 18 months, starting from October 23, 2025[68]. - The Company issued 1,725,000 insider shares to the Sponsor for a total cash consideration of $25,000, with the Sponsor retaining a 20% ownership post-IPO[63]. - The insider shares are subject to certain transfer restrictions and anti-dilution adjustments to maintain proportionate ownership post-business combination[65][66]. - The Company has not entered any litigation or legal proceedings against it or its officers as of the reporting date[112]. Internal Controls - There were no changes in internal control over financial reporting that materially affected the company's financial reporting during the last fiscal quarter[110]. - The company has established effective disclosure controls and procedures, ensuring timely and accurate reporting as required by SEC rules[109]. - The company’s management has evaluated the effectiveness of its disclosure controls and concluded they provide reasonable assurance of compliance[109].

Financial Performance - Total assets increased to $22.71 billion as of September 30, 2025, up from $16.49 billion at December 31, 2024, representing a 37.5% growth[16] - Net loan and lease receivables rose to $14.40 billion, compared to $9.55 billion in the previous year, marking a 50.5% increase[15] - Total deposits reached $19.45 billion, an increase of 39.5% from $13.94 billion at the end of 2024[16] - Net income for the quarter was $55.16 million, compared to $39.94 million in the same quarter last year, representing a 38.1% increase[20] - Basic earnings per share for Class A common stock increased to $0.25, up from $0.19 year-over-year, a growth of 31.6%[20] - Total comprehensive income for the nine months ended September 30, 2025, was $192,394,000, compared to $158,422,000 for the same period in 2024, reflecting a 21% increase[21] Income and Expenses - Net interest income after provision for credit losses was $98.65 million for the quarter, down from $124.23 million year-over-year, a decrease of 20.6%[18] - Noninterest income surged to $109.78 million for the quarter, compared to $16.90 million in the same quarter last year, reflecting a significant increase[18] - Total noninterest expense increased to $163.33 million for the quarter, compared to $85.65 million in the previous year, reflecting higher operational costs[20] Credit Losses and Provisions - The provision for credit losses on loans and leases was $46.06 million, up from $6.73 million in the prior year, indicating increased risk management measures[18] - The provision for credit losses on loans and leases for the nine months ended September 30, 2025, was $42,663,000, significantly higher than $2,684,000 in 2024[26] - The allowance for credit losses on loans and leases was $168.96 million as of September 30, 2025, compared to $88.56 million at the end of 2024, indicating a significant increase in provisions for potential credit losses[129] Merger and Acquisition - Mechanics Bancorp completed the merger with HomeStreet Bank on September 2, 2025, with legacy Mechanics Bank shareholders owning approximately 91.7% of the combined company on an economic basis[42] - The merger is classified as a reverse acquisition, with Mechanics Bank as the accounting acquirer, and the identifiable assets and liabilities were remeasured at fair value as of the acquisition date[43] - The preliminary purchase price for the acquisition of HomeStreet was $265.8 million, resulting in a preliminary bargain purchase gain of $90.4 million due to HomeStreet's financial distress and significant discount to its tangible book value[88] - HomeStreet reported after-tax losses of $27.5 million in 2023, $144.3 million in 2024, and $8.9 million in the first two quarters of 2025, contributing to its financial distress[88] Loan Portfolio and Quality - The total loan portfolio amounted to $709,239 million as of September 30, 2025, with a year-to-date gross charge-off of $1,221 million[160] - The total past due loans as of September 30, 2025, amounted to $94.199 million, with total loans not past due at $14.474 billion, indicating a past due ratio of approximately 0.65%[139] - The percentage of modified loans in financial distress for commercial and industrial loans was 2.92% as of September 30, 2025, reflecting the company's efforts to assist borrowers[140] - The total amortized cost of loans modified during the quarter ended September 30, 2025, was $11.966 million, with a significant portion attributed to payment delays and term extensions[141] Securities and Investments - The total fair value of available-for-sale securities was $3.49 billion as of September 30, 2025, with a significant portion in mortgage-backed securities[126] - The company executed an investment portfolio restructuring in the first quarter of 2024, selling $1.8 billion of lower yielding AFS securities and realizing a loss of $207.2 million[1] - The company held $1,186,260 thousand in total securities held-to-maturity, down by $177,879 thousand compared to December 31, 2024[1] Regulatory and Compliance - The company’s financial statements are prepared in accordance with U.S. GAAP, ensuring compliance with industry practices[32] - The company will adopt ASU 2023-09, effective after December 15, 2024, which expands income tax disclosures but will not impact financial position[79] - The company is assessing the impact of ASU 2024-03, effective after December 15, 2026, which requires disaggregation of income statement expenses[80] Tax and Community Investments - Tax credits and other tax benefits recognized for Q3 2025 were $1,012,000, compared to $869,000 in Q3 2024, representing a 16.4% increase[171] - The balance of CRA investments increased to $77.9 million as of September 30, 2025, up from $55.9 million at December 31, 2024, reflecting a 39.5% growth[171] - The Company recognized dividend income on CRA investments of $2.3 million for Q3 2025, compared to $1.6 million in Q3 2024, marking a 43.8% increase[171]

Investment Portfolio Overview - As of September 30, 2025, the total investment portfolio had an aggregate fair value of $859.1 million, consisting of investments in 55 companies across 22 states and 16 different industries[31]. - The five largest investments at fair value totaled $196.5 million, representing 22.9% of the total investment portfolio[31]. - The investment portfolio comprised approximately 90.9% in debt investments and 9.1% in equity investments at cost[24]. - Secured first lien debt investments accounted for $646.1 million, or 73.7% of the total cost of debt investments as of September 30, 2025[32]. - The total cost of debt investments was $796.6 million, representing 90.9% of the total investments[32]. - Preferred equity investments were valued at $37.4 million, or 4.3% of total investments as of September 30, 2025[32]. - Common equity/equivalents were valued at $42.6 million, or 4.8% of total investments as of September 30, 2025[32]. - As of September 30, 2025, total investments at fair value reached $859,124 million, an increase from $796,260 million in 2024, representing a growth of 7.9%[34]. - The healthcare, education, and childcare sector accounted for 31.8% of total investments in 2025, up from 12.8% in 2024, indicating a significant strategic shift[34]. - The diversified/conglomerate manufacturing sector saw an increase in fair value from $160,264 million in 2024 to $202,466 million in 2025, representing a growth of 26.4%[34]. Investment Strategy and Focus - The investment strategy focuses on lower middle market companies with annual EBITDA between $3 million and $25 million[23]. - The company has invested in approximately 292 different companies since its initial public offering in 2001[28]. - Experienced management teams are a critical criterion for investment, with a focus on aligning management incentives with investor interests[39]. - The investment committee, comprising seasoned professionals with over 30 years of experience, plays a crucial role in the investment approval process[42]. - The company conducts extensive due diligence, including financial analysis and management assessments, to evaluate potential investments[37]. - The investment structure typically includes secured first lien debt and preferred equity, aimed at maximizing returns while managing risks[40]. Financial Management and Fees - The base management fee is set at an annual rate of 1.75%, based on the average total assets, with a potential reduction to 0.5% for syndicated loan participations[61]. - The income-based incentive fee is applicable if quarterly net investment income exceeds 1.75% of net assets, with a tiered structure for additional income[63]. - The capital gains-based incentive fee is 20% of net realized capital gains, with no fees recorded since inception through September 30, 2025, due to cumulative unrealized capital depreciation[65]. - The Adviser provides significant managerial assistance to portfolio companies, with fees credited against the base management fee[62]. - The company’s Board of Directors approved the renewal of the Advisory Agreement through August 31, 2026, considering the quality of services and investment performance[58]. Compliance and Regulatory Requirements - The company must distribute at least 90.0% of its taxable ordinary income and realized net short-term capital gains to qualify as a RIC[73]. - At least 90.0% of the company's gross income must come from specific sources to maintain its BDC status[77]. - The company must ensure that no more than 25% of its total assets are invested in the securities of one issuer[77]. - The company is required to maintain an asset coverage of at least 150% for its senior securities representing indebtedness[91]. - The company is subject to asset coverage ratio requirements under the 1940 Act, which could restrict distributions necessary to maintain RIC status[167]. Risks and Challenges - The company faces risks related to market conditions, including volatility in capital markets and potential impacts on valuations of investments[95]. - The company may experience fluctuations in results due to inflation affecting its portfolio companies[106]. - The company has significant potential conflicts of interest, which could impact investment returns[95]. - The company may face challenges in raising capital due to market volatility and credit conditions[103]. - The company is exposed to risks from investments in foreign portfolio companies, including political instability and currency fluctuations[141][142]. - The company operates in a highly competitive market for investment opportunities, facing pressure from larger entities with greater financial resources[116]. Debt and Leverage - As of September 30, 2025, the company incurred leverage through various debt instruments totaling $428.1 million at cost, with an effective annual cash interest rate of 5.6%[165]. - The company has a Credit Facility with maximum borrowings of $320.0 million, with no outstanding borrowings as of September 30, 2025[153]. - The Credit Facility requires the company to maintain a minimum net worth of $581.0 million as of September 30, 2025, and asset coverage of at least 150%[154]. - The company may issue equity to repay amounts outstanding under the Credit Facility, which could lead to substantial dilution for existing stockholders[157]. - The company has incurred leverage to generate capital for additional investments, which may be at risk if asset values decline[179]. Valuation and Performance Monitoring - The Valuation Team assesses fair value of investments quarterly, with oversight from the Board of Directors[54]. - The company’s net asset value (NAV) could be materially affected by fair value determinations of investments[57]. - The fair value of privately held securities may not be readily determinable, leading to fluctuations in reported values over time[121]. - The lack of liquidity in privately held investments may hinder the company's ability to quickly obtain cash equal to the recorded value of its investments[125]. - The company maintains ongoing monitoring of portfolio companies to ensure performance aligns with expectations and to identify best practices[50]. Distributions and Tax Implications - Distributions to U.S. stockholders attributable to Investment Company Taxable Income are generally taxable as ordinary income[79]. - The company intends to allocate capital gain distributions proportionately between common and preferred shares based on total distributions paid[80]. - The company intends to distribute at least 90.0% of its Investment Company Taxable Income to stockholders through monthly distributions[203]. - Distributions may include a return of capital, which could affect stockholders' tax liabilities and reduce the company's asset base[205][206]. - The company may not declare dividends or repurchase shares until asset coverage tests under the 1940 Act are satisfied[176].