Treasury Management and ETH Strategy - The company adopted an Ethereum-focused treasury management strategy in August 2025, aiming to acquire and grow its ETH position [279]. - The company aims to maximize ETH accumulation and value accretion while maintaining robust controls over its digital assets [280]. - The company's treasury strategy is designed to bring value to shareholders by deploying ETH across various DeFi activities [282]. - The company has not reduced its treasury or sold any of its ETH staking rewards to date [283]. - The company actively deploys ETH in the treasury across staking, lending, and advanced DeFi protocols to generate yields [284]. - The transition of Ethereum to a Proof-of-Stake consensus mechanism is expected to enhance ETH's value as a yield-bearing digital asset [281]. - The issuance rate of new ETH has dropped significantly since Ethereum switched from Proof-of-Work to Proof-of-Stake in September 2022 [295]. - The Ethereum network's transition to Proof-of-Stake is designed to dramatically reduce energy use while maintaining security and decentralization [299]. - The company implemented an Ethereum-focused treasury strategy in August 2025, aiming to acquire and grow its ETH position without a specific target for maximum holdings [430]. Financial Performance - Total revenue for the three months ended September 30, 2025, was $4,110,169, compared to $0 for the same period in 2024 [407]. - General and administrative expenses increased to $224,604,532 for the three months ended September 30, 2025, from $596,172 in 2024, representing an increase of $224,008,360 [409]. - The net loss from continuing operations for the three months ended September 30, 2025, was $208,670,965, compared to a net loss of $532,389 for the same period in 2024, an increase of $208,138,576 [411]. - Other income, net for the three months ended September 30, 2025, was $11,823,398, compared to $63,783 for the same period in 2024, an increase of $11,759,615 [410]. - For the nine months ended September 30, 2025, total revenue was $4,110,169, with general and administrative expenses rising to $227,954,479 from $3,471,965 in 2024 [413][414]. - The net loss for the nine months ended September 30, 2025, was $220,837,892, compared to a net loss of $1,894,683 for the same period in 2024, representing an increase of $218,943,209 [416]. - The net loss from continuing operations for the nine months ended September 30, 2025, was $212,008,038, significantly higher than the net loss of $1,658,746 for the same period in 2024 [421]. - Cash used in operating activities from continuing operations totaled $18,286,323 for the nine months ended September 30, 2025, compared to $531,565 for the same period in 2024 [425]. - Cash used in investing activities from continuing operations was $252,370,414 for the nine months ended September 30, 2025, compared to $0 for the same period in 2024 [426]. - Cash provided by financing activities from continuing operations totaled $825,274,591 for the nine months ended September 30, 2025, compared to cash used of $996,005 for the same period in 2024 [427]. Capital Raising and Stock Transactions - The company plans to raise capital through equity or equity-linked debt to increase its ETH holdings, benefiting shareholders [282]. - The company increased its authorized number of shares of common stock from 100 million to 1 billion on July 24, 2025 [324]. - Following a special meeting on October 7, 2025, the company further increased its authorized shares from 1 billion to 5 billion [327]. - On July 29, 2025, the company entered into a securities purchase agreement to sell 14,393,417 shares at an offering price of $26.50 per share [329]. - The company issued senior secured convertible notes totaling $156.25 million on August 8, 2025, at a cash exchange of 96% of the principal amount [335]. - The September 2025 Convertible Notes were sold for an aggregate principal amount of $360 million, with cash received equal to 97.25% of this amount [343]. - The company authorized a stock repurchase program for up to $250 million of its common stock, set to expire by June 30, 2026, or upon repurchase of the maximum amount [363]. - The company sold 739,050 shares under the Sales Agreement for gross proceeds of approximately $40,990,338 during the three months ended September 30, 2025 [373]. - Since September 30, 2025, the company sold 410,403 shares for net proceeds of approximately $6,861,299 after deducting commissions [374]. - The company entered into a Transaction Agreement to obtain up to $50.0 million with a forward rate of 9.90% per annum, collateralized by approximately $80.8 million of ETH [379]. Operational Changes and Strategic Initiatives - The company has alleviated substantial doubt about its ability to continue as a going concern due to significant fundraising events in the third quarter of 2025 [275]. - The company focuses on generating recurring revenues through various DeFi protocols that improve Ethereum network integrity and security [276]. - The company has two legacy biotechnology programs classified as discontinued operations, focusing on different diseases [278]. - The company made a strategic shift to discontinue its pharmaceutical research operations and Gaming Technology Platform, impacting financial reporting for the period [408]. - The company invested $15 million to acquire a 15% interest in Satschel, securing exclusive rights to list Ethereum L2 tokens on the platform [401]. - The company commenced native staking in August 2025 and liquid staking in September 2025, intending for staking to become a primary yield generation strategy within the current fiscal year [457]. Regulatory and Compliance Considerations - The regulatory landscape for digital assets is rapidly evolving, potentially impacting the company's operations and compliance obligations [323]. - The company utilizes third-party qualified custodians to hold its Ethereum, ensuring risk management and operational best practices [308]. - The company is in the process of onboarding a third qualified custodian as part of its risk management process [314].

Financial Performance - For the three months ended September 30, 2025, the company reported a net income of $96, consisting solely of interest income [132]. - The company has no revenues to date and expects to incur increased expenses as a result of being a public company, including legal and compliance costs [131]. Initial Public Offering (IPO) - The company completed its Initial Public Offering on November 10, 2025, raising gross proceeds of $172,000,000 from the sale of 17,250,000 Units at $10.00 per Unit [134]. - Following the IPO, a total of $172,500,000 was placed in the Trust Account, with transaction costs amounting to $2,079,000 [135]. Liquidity and Financial Needs - As of September 30, 2025, the company had liquidity needs satisfied through $25,000 from founder shares and $243,748 borrowed under an unsecured promissory note [133]. - The company intends to use substantially all funds in the trust account to complete its initial business combination and may make permitted withdrawals of interest as needed [136]. - The company has estimated primary liquidity requirements of approximately $180,000 for legal and accounting expenses, $150,000 for directors and officers insurance, and $205,000 for miscellaneous expenses [139]. - Prior to the initial business combination, the company will have $695,000 of proceeds held outside the trust account for operational and due diligence expenses [137]. - The company does not expect to need additional funds following the IPO to meet operating expenditures, but may require additional financing for the business combination [142]. Accounting Standards and Reporting - The FASB issued ASU 2023-07, effective for fiscal years beginning after December 15, 2023, requiring enhanced segment reporting disclosures [154]. - The ASU mandates annual and interim disclosures of significant segment expenses provided to the chief operating decision maker (CODM) [154]. - Public entities must disclose the title and position of the CODM and how they use reported measures of segment profit or loss [154]. - Companies with a single reportable segment must provide all disclosures required by the ASU and existing segment disclosures [154]. - Management believes that recently issued accounting standards will not materially affect condensed financial statements [155]. - The company is classified as a smaller reporting company and is not required to provide certain market risk disclosures [157]. Off-Balance Sheet Arrangements - The company has no off-balance sheet arrangements or long-term liabilities as of September 30, 2025 [145].

Financial Performance - Rental income for the three months ended September 30, 2025, increased by $1.7 million to $4.6 million compared to $2.9 million for the same period in 2024 [170]. - Rental income increased by $0.8 million for the nine months ended September 30, 2025, compared to the same period in 2024, primarily driven by the Aventura, FL property [182]. - The Company reported a net loss of $12.4 million for the three months ended September 30, 2025, compared to a net loss of $22.0 million for the same period in 2024 [230]. - For the nine months ended September 30, 2025, the net loss was $63.1 million, down from $142.2 million in the same period of 2024 [230]. - Net Operating Income (NOI) on a cash basis for the three months ended September 30, 2025, was $235,000, compared to a loss of $2.3 million in 2024 [230]. - NOI-cash basis at share for the nine months ended September 30, 2025, was $6.8 million, compared to $1.0 million in 2024 [230]. Asset Management - As of September 30, 2025, the company's portfolio consisted of 13 properties with approximately 1.3 million square feet of gross leasable area (GLA) and 198 acres of land [158]. - The company recorded a gain of $8.9 million from the sale of two properties for $52.6 million during the nine months ended September 30, 2025 [188]. - The company sold 91 consolidated properties from October 24, 2022, through September 30, 2025, generating approximately $1.1 billion in gross proceeds [200]. - The company had four assets under contract for sale as of November 13, 2025, with total anticipated proceeds of $240.8 million [201]. - The company is currently executing a Plan of Sale approved by shareholders, which allows for the sale of all assets and distribution of net proceeds [160]. Expenses and Impairments - The company recorded an impairment loss of $0.8 million for the three months ended September 30, 2025, and a total of $18.8 million for the nine months ended September 30, 2025 [161][181]. - The company recorded $8.5 million in other-than-temporary impairment losses on investments in unconsolidated entities during the nine months ended September 30, 2025 [161]. - An impairment of real estate assets of $18.8 million was recognized due to the agreement to sell one property below book value during the nine months ended September 30, 2025 [191]. - General and administrative expenses decreased by $2.3 million for the three months ended September 30, 2025, primarily due to reduced staffing and lower employee bonuses [176]. - Property operating expenses decreased by $2.3 million for the nine months ended September 30, 2025, mainly due to a $1.0 million reduction in common area expenses and a $1.3 million decrease in insurance expenses related to sold properties [183]. Debt and Cash Flow - As of September 30, 2025, the company had outstanding debt of $200.0 million after repaying $40.0 million against the principal of the Term Loan Facility [205]. - Net operating cash outflows amounted to $33.7 million for the nine months ended September 30, 2025, as rental income did not fully cover obligations [197]. - The company generated net investing cash inflows of $43.6 million during the nine months ended September 30, 2025, driven by asset sales [197]. - Interest expense decreased by $0.8 million for the three months ended September 30, 2025, due to partial pay downs of the Term Loan Facility [180]. Legal Matters - The Company is currently involved in multiple derivative lawsuits alleging breaches of fiduciary duty against its executives and board members [220][221]. - The Company intends to vigorously defend itself against the allegations in these lawsuits [221]. - Management believes that the resolution of ordinary course legal proceedings will not have a material effect on the Company's financial position [222]. Strategic Initiatives - The strategic review process for enhancing shareholder value remains ongoing, with the Board of Trustees overseeing the Plan of Sale [159]. - The company faces challenging market conditions, including elevated interest rates and limited availability of debt and equity capital, which may impact asset pricing [164]. Investment Activities - The Company invested $3.8 million and $21.8 million in consolidated properties during the three and nine months ended September 30, 2025, respectively [217]. - For the same periods in 2024, the Company invested $3.3 million and $25.7 million in consolidated properties, along with $5.8 million and $9.0 million in unconsolidated joint ventures [218]. Dividends - The company did not declare dividends on Class A common shares during the nine months ended September 30, 2025, with the last dividend declared on February 25, 2019 [211].

Financial Performance - As of June 30, 2025, the company reported a net income of $53, consisting solely of interest income[134]. - The company completed its Initial Public Offering on November 10, 2025, raising gross proceeds of $172,000,000 from the sale of 17,250,000 Units at $10.00 per Unit[136]. - Following the IPO, a total of $172,500,000 was placed in the Trust Account, with transaction costs amounting to $2,079,000[137]. Liquidity and Funding - The company has liquidity needs satisfied through $25,000 from founder shares and up to $5,000,000 in loans from the sponsor, with $171,148 borrowed under an unsecured promissory note as of June 30, 2025[135][148]. - The company intends to use substantially all funds in the trust account to complete its initial business combination, with any remaining proceeds used for working capital[138]. - The company does not anticipate needing to raise additional funds to meet operating expenditures prior to the initial business combination[145]. - Prior to the initial business combination, the company will have $695,000 available outside the trust account for operational expenses and due diligence[139]. Expenses and Costs - The company expects to incur approximately $180,000 for legal, accounting, and due diligence expenses related to business combinations, along with $150,000 for directors and officers insurance[141]. - The company does not have any long-term debt or off-balance sheet arrangements as of June 30, 2025[146]. Accounting Policies and Standards - The company has identified critical accounting policies, including the treatment of ordinary shares subject to possible redemption as temporary equity[154]. - The FASB issued ASU 2023-07, effective for fiscal years beginning after December 15, 2023, requiring significant segment expense disclosures[156]. - Public entities must disclose the title and position of the chief operating decision maker (CODM) and how they use reported segment profit or loss measures[156]. - Companies with a single reportable segment must provide all disclosures required by ASU 2023-07 and existing segment disclosures in Topic 280[156]. - Management believes that recently issued accounting standards will not materially affect the condensed financial statements[157]. - The company is classified as a smaller reporting company and is not required to provide certain market risk disclosures[158].

Mining Operations - The company has not mined or sold thermal coal since mid-2019, with all mining operations currently idled due to adverse market conditions [191]. - In 2023, the Carnegie 1 Mine produced approximately 67,000 tons of coal, selling at an average price of $180 per ton [194]. - The Carnegie 2 Mine produced approximately 13,000 tons of coal in 2023, with an average selling price of $237 per ton [195]. - The McCoy Elkhorn subsidiary has an estimated capacity to produce up to approximately 40,000 tons per month from Mine 15 when operational [193]. - The company holds 11 additional coal mining permits that are currently idled or in various stages of reclamation [200]. - Wyoming County Coal holds approximately 5,668,000 tons of coal deposits, with no current production [214]. - The E4-2 mine produced approximately 106,000 tons of coal in 2022, selling at an average price of $153 per ton [225]. - The Gold Star Mine is currently idled and has been mined in the past using room-and-pillar methods [233]. - ERC Mining Indiana Corporation holds approximately 4,383,298 tons of coal deposits in reclamation status [232]. Processing Facilities - The Bevins 1 Preparation Plant has a processing capacity of 800 tons per hour and can store approximately 100,000 tons of clean coal [196]. - The Mill Creek Preparation Plant has an 800 ton-per-hour processing capacity, currently utilizing less than 10% of its available capacity [211]. - The Supreme Energy Preparation Plant is a 400 ton-per-hour facility that is currently idled and would require capital investment to bring back into operation [206]. - The Davidson Branch Preparation Plant has a capacity of 1,300 tons per hour but is currently not operating due to idled mining operations [226]. Financial Performance - Total revenue for the three months ended September 30, 2025, was $50,165, a decrease of $185,278 (78.7%) compared to $235,443 in 2024, primarily due to the absence of revenue from metal recovery and sales [251]. - Total revenue for the nine months ended September 30, 2025, was $95,349, down $238,208 (71.4%) from $333,557 in 2024, mainly driven by a reduction of $146,055 in royalty income [254]. - Total operating expenses for the three months ended September 30, 2025, were $4,359,718, a decrease of $3,985,618 (47.8%) compared to $8,345,336 in 2024, largely due to lower general and administrative expenses [252]. - Total operating expenses for the nine months ended September 30, 2025, were $16,152,058, down $7,519,858 (31.7%) from $23,671,916 in 2024, primarily due to reduced coal production costs [256]. - Net loss for the three months ended September 30, 2025, was $6,302,798, a decrease of $2,614,084 (29.3%) compared to a net loss of $8,916,882 in 2024 [250]. - Net loss for the nine months ended September 30, 2025, was $21,620,830, down $5,424,925 (20.1%) from $27,045,755 in 2024 [250]. - Interest expense for the three months ended September 30, 2025, was $1,980,211, an increase of $1,003,750 (102.8%) compared to $976,461 in 2024 [253]. - Interest income for the nine months ended September 30, 2025, was $21,356, a decrease of $977,301 (97.9%) from $998,657 in 2024 [257]. Cash Flow and Liquidity - As of September 30, 2025, the company has a cash balance of $2,081,780 and a working deficit of $75,743,188 [259]. - Cash used in operating activities decreased by $6,864,631 to $(10,685,238) compared to the prior period, primarily due to a $5,424,925 decrease in net loss [260]. - Cash provided by investing activities was $3,930,735 for the nine months ended September 30, 2025, a significant improvement from cash used of $(145,900,141) in the same period of 2024 [261]. - Cash provided by financing activities decreased to $9,341,649 in 2025 from $145,065,317 in 2024, largely due to the absence of proceeds from tax-exempt bonds received in the prior year [262]. - The company does not have any credit lines currently available to fund liquidity requirements, which poses significant uncertainties for future liquidity [259]. Business Diversification - The company has established subsidiaries focused on the recovery and sale of metals and rare earth elements, diversifying its revenue streams [189]. - The company anticipates increasing revenues from its new ReElement and Electrified Materials businesses in 2025, following the suspension of coal production activities in 2023 [258]. - The company will continue to require cash flows from financing activities to support operations and the development of new business models [258]. Management and Internal Controls - Management concluded that disclosure controls and procedures were not effective due to insufficient staffing and lack of timely reconciliations [271]. - There have been no changes in the company's internal control over financial reporting that materially affected its controls during the period ended September 30, 2025 [273].

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO ___________ COMMISSION FILE NO.: 001-41434 NOCERA, INC. (Exact name of registrant as specified in charter) Nevada 16-1626611 (State or o ...

Clinical Trials and Regulatory Status - NurOwn® has completed Phase 3 ALS and Phase 2 PMS clinical trials, with top-line data announced on November 17, 2020, and March 24, 2021, respectively[89]. - The FDA granted Fast Track designation and Orphan Drug status for NurOwn® for ALS, providing potential for extended exclusivity[91]. - On September 27, 2023, the Advisory Committee voted 17 no, 1 yes, and 1 abstention, indicating that NurOwn® did not demonstrate substantial evidence of effectiveness for mild to moderate ALS[89]. - The BLA for NurOwn® was withdrawn on November 3, 2023, in coordination with the FDA, viewed as a withdrawal without prejudice[89]. - A Special Protocol Assessment (SPA) request for a planned Phase 3b clinical trial was submitted to the FDA on February 23, 2024, and written agreement was received on April 9, 2024[104]. - The company is actively exploring next steps for NurOwn®, including publication of emerging clinical data and development of a protocol for an additional clinical study[89]. - The company has reached alignment with the FDA on the Chemistry, Manufacturing, and Controls (CMC) aspects of the Phase 3b clinical trial for NurOwn®[137]. - The company announced the completion of a productive meeting with the FDA on December 7, 2023, to discuss plans for a SPA for a Phase 3b registrational trial[137]. - The FDA issued a Refusal to File (RTF) letter on November 10, 2022, citing insufficient completeness for substantive review[121]. - Following discussions with the FDA, the company requested to file the BLA over Protest on February 6, 2023, which was confirmed on February 7, 2023[123]. Financial Performance and Funding - General and administrative expenses for Q3 2025 decreased by $855,000 to $1,148,000 compared to $2,003,000 in Q3 2024, primarily due to reductions in payroll and other costs[180]. - Net loss for Q3 2025 was $2,106,000, an improvement from a net loss of $2,708,000 in Q3 2024, resulting in a net loss per share of $0.19 compared to $0.51[183]. - For the nine months ended September 30, 2025, net loss was $7,873,000, down from $8,650,000 in the same period of 2024, with a net loss per share of $0.91 versus $1.80[184]. - Cash used in operating activities for the nine months ended September 30, 2025 was $6,235,000, primarily due to clinical trial costs and payroll[191]. - Cash and cash equivalents as of September 30, 2025 amounted to $236,000[190]. - The company raised $6,100,000 from financing activities during the nine months ended September 30, 2025, through sales of common stock and short-term loans[192]. - The company anticipates needing substantial additional financing to fund operations and clinical trials, with potential dilution to existing shareholders[205]. - The company is considering multiple alternatives to meet capital needs, including public and private sales of common stock and convertible promissory notes[186]. - A recent securities purchase agreement was entered into, issuing a promissory note of $182,400, with a 12% interest rate that increases to 22% if not timely paid[202]. - The company has filed for delisting from Nasdaq and is now quoted on the OTCQB Venture Market under the symbol "BCLI"[206]. - The company faces additional compliance requirements due to state-level regulations affecting trading liquidity[206]. - The company is assessing its ability to obtain funding from third parties and the costs associated with clinical trials and R&D programs[207]. - The company emphasizes the importance of regulatory approvals and the associated time and costs[207]. Research and Development - The company is actively engaged in research for the clinical development of NurOwn® and MSC-NTF derived exosomes in various neurodegenerative disorders[161]. - The company has received $400,000 out of $500,000 awarded for ALS biomarker research from The ALS Association and I AM ALS[155]. - The company is considering advancing NurOwn® as an innovative treatment option in Alzheimer's Disease based on emerging scientific insights[151]. - Research and development expenditures for the three months ended September 30, 2025, were $899,000, a decrease of $146,000 compared to the same period in 2024[176]. - For the nine months ended September 30, 2025, research and development expenditures increased to $3,323,000, up by $395,000 from $2,928,000 in the same period in 2024[178]. Clinical Trial Results - Completed Phase 1/2 and Phase 2 open-label clinical trials of NurOwn® in ALS patients, demonstrating tolerability and preliminary signs of activity[105]. - Phase 2 trial involved 48 patients randomized 3:1 to receive NurOwn® or placebo, with no discontinuations due to adverse events[108]. - NurOwn® treatment showed higher response rates in the ALS functional rating scale compared to placebo, particularly in rapid progressors[111]. - Statistically significant increases in neurotrophic factors and reductions in inflammatory markers were observed post-treatment in NurOwn® participants[114]. - Phase 3 trial enrolled a population of rapid progressors, but did not achieve statistically significant results despite showing numerical improvements[117]. - New analyses indicated a statistically significant treatment difference in a secondary endpoint for participants with a baseline ALSFRS-R score of at least 35[119]. - The Phase 2 PMS clinical trial enrolled 20 patients, with 80% (16 patients) completing the study, and no deaths or serious adverse events related to multiple sclerosis were reported[147]. - 38% of NurOwn® treated patients showed at least a 10-point improvement in the MS Walking Scale (MSWS-12) from baseline to week 28[148]. - NurOwn® treated patients exhibited a mean improvement of 10% in the timed 25-foot walk (T25FW) and a 4.8% improvement in the 9-hole peg test (9-HPT) compared to matched historical controls[157]. Company Operations and Intellectual Property - The company employs 23 individuals across the United States and Israel, with a focus on recruiting and retaining talent to support its objectives[93]. - The proprietary NurOwn® technology involves a multi-step manufacturing process that includes harvesting and isolating stem cells from the patient's bone marrow[96]. - The company has a strong intellectual property portfolio and holds exclusive rights to commercialize NurOwn® technology through a licensing agreement with Ramot, Tel Aviv University[91]. - The company has developed a validated cryopreservation process for MSC, allowing multiple doses of NurOwn® from a single bone marrow harvest[125]. - As of November 1, 2023, the company optimized its manufacturing capabilities for NurOwn® by leveraging partnerships and operational resources[129]. - The company contracted with City of Hope and Dana Farber Cancer Institute for the manufacturing of NurOwn® for its Phase 3 clinical study[126][127]. - The company holds approximately 30 granted patents and has pending applications across key global markets, including the U.S., Europe, and South America[156]. - The company qualifies as a smaller reporting company, omitting certain market risk disclosures[212]. - The company has no off-balance sheet arrangements that could materially affect its financial condition[211]. - The company’s accounting policies include stock-based compensation, which is estimated using the Black-Scholes option valuation model[210]. - Changes in assumptions for stock-based compensation could significantly impact net loss and net loss per share[210].

Financial Performance - For the three months ended September 30, 2025, the company generated net revenues of $1.6 million, a decrease of $0.8 million from $2.4 million in the same period in 2024[207][209]. - Gross profit for the same period was $0.7 million, down from $1.1 million in 2024, resulting in a gross margin of 43%, compared to 46% in the prior year[207][211][213]. - Operating expenses totaled $4.0 million for the three months ended September 30, 2025, consistent with $3.9 million for the same period in 2024[214]. - The company reported a net loss of $3.5 million for the three months ended September 30, 2025, unchanged from the loss reported in 2024[207][216]. - Net revenues decreased by $3.6 million to $5.8 million for the nine months ended September 30, 2025, compared to $9.4 million in 2024, primarily due to dropping the largest wholesale account and limited cash for marketing[218]. - Gross profit decreased by $2.1 million to $2.3 million for the nine months ended September 30, 2025, from $4.4 million in 2024, with a gross margin of 40% compared to 47% in the prior year[221][222]. - Operating loss increased to $7.3 million for the nine months ended September 30, 2025, compared to $4.7 million in 2024[218]. - Net loss was $7.7 million for both the nine months ended September 30, 2025, and 2024, maintained due to effective cost-cutting measures[226]. Debt and Cash Flow - Digital Brands Group's total outstanding debt as of September 30, 2025, is approximately $6.4 million, which is considered significant for the company's size and revenue base[164]. - The company has an accumulated deficit of $134.8 million as of September 30, 2025[207]. - Cash provided by financing activities was $23.4 million for the nine months ended September 30, 2025, compared to $3.7 million in 2024, including $6.6 million from common stock issuance[234]. - Cash used in operating activities increased by $7.8 million to $11.2 million for the nine months ended September 30, 2025, driven by higher operational losses[232]. - As of September 30, 2025, the company had cash of $6.7 million and a working capital deficit of $4.8 million[229]. Operational Strategy - The company aims to expand its customer base through both online and traditional wholesale channels, utilizing paid and organic online strategies as well as physical retail distribution[170]. - Digital Brands Group's strategy includes transitioning several brands from wholesale to direct-to-consumer models, enhancing customer engagement and retention[156]. - The company defines "closet share" as the percentage of a customer's clothing units that belong to its brands, with a higher closet share indicating increased revenue potential[159]. - The company anticipates that operating expenses will increase in absolute dollars due to brand acquisitions, but expects operating expenses as a percentage of revenue to decrease over time[170]. - The company has successfully eliminated several million in expenses within six months of acquiring Bailey, including merging technology contracts and reducing office space costs[171]. - The company is focused on achieving near-term free cash flow through cash flow positive acquisitions and reducing redundant expenses[171]. - The company has identified the need to balance marketing spend between online and offline channels to effectively acquire customers at a reasonable cost[170]. - The company expects gross margins to expand as revenues increase and leverage fixed costs, with a higher mix of e-commerce revenue[223]. Marketing and Investments - The company plans to invest approximately $1 million in marketing, technology, and product development by the end of 2025[201][205]. - The company signed an Exclusive Private Label Manufacturing Agreement with AAA Tuscaloosa, LLC to manufacture private label knit apparel products for the University of Alabama[200]. - The company completed a Series D Preferred Stock offering, raising approximately $12.7 million before deducting offering costs[196][199]. - The second largest wholesale account requested to double the number of domestic retail doors from 50 to 100, which may offset the decline in wholesale revenue[219]. Cost Increases - The company has experienced increased costs in raw materials, with fabric prices rising between 10% to 100%, and shipping costs increasing from 25% to 300% depending on various factors[162]. - The company expects to continue incurring additional expenses related to operating as a public company, which will increase overall operating costs[178].

Financial Performance - Revenue for the three months ended September 30, 2025, was $144,926, representing a 186% increase from $50,683 in the same period of 2024[170]. - Revenue for the nine months ended September 30, 2025, was $232,094, a 114% increase from $108,264 in the same period of 2024[171]. - The company incurred an operating loss of $4.7 million for the three months ended September 30, 2025, compared to a loss of $57.5 million in the same period of 2024[182]. - For the three months ended September 30, 2025, the company reported a net income of $1,375,294, compared to a net loss of $33,323,555 for the same period in 2024[187]. - For the nine months ended September 30, 2025, the company reported a net loss of $(1,736,512), compared to a net loss of $(46,620,619) for the same period in 2024[189]. - Adjusted EBITDA for the three months ended September 30, 2025, was $(4,127,015), while for the same period in 2024, it was $(2,331,722)[188]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $(14,128,556), slightly improved from $(14,258,963) in the same period of 2024[189]. Expenses and Costs - Cost of Goods Sold for the three months ended September 30, 2025, increased by $38,009, or 253%, compared to the same period in 2024[173]. - General and administrative expenses increased by $2,533,495, or 127%, for the three months ended September 30, 2025, compared to the same period in 2024[176]. - Product development expenses decreased by $356,761, or 100%, for the three months ended September 30, 2025, compared to the same period in 2024[174]. - Depreciation and amortization increased by $148,704, or 220%, for the three months ended September 30, 2025, compared to the same period in 2024[177]. - Sales and marketing expenses decreased by $65,382, or 81%, for the three months ended September 30, 2025, compared to the same period in 2024[175]. - The company incurred interest expenses of $1,822,448 for the nine months ended September 30, 2025, compared to $1,352,823 for the same period in 2024[189]. - The company reported depreciation and amortization expenses of $421,096 for the nine months ended September 30, 2025, compared to $205,111 for the same period in 2024[189]. - The company had transaction costs of $25,000 for the nine months ended September 30, 2025, significantly lower than $55,038,544 for the same period in 2024[189]. Funding and Capital - The Company closed a public offering of 9,189,096 shares at a combined price of $1.00 per share, raising approximately $6.0 million in gross proceeds[153]. - The company plans to fund operations through revenue, private and public equity offerings, and anticipated cash tax refunds of approximately $1.2 million[183]. - The company continues to pursue funding opportunities to alleviate substantial doubt regarding its ability to continue as a going concern[184]. Intellectual Property and Technology - The Company has approximately 125 granted patents and 25 pending applications, indicating a strong intellectual property position in the market[148]. - The Supply Agreement with Telcel includes a three-year initial term for providing 5G-based Fixed Wireless Access solutions[155]. - The Company acquired assets from Crowdkeep, Inc. for 4,065,689 shares of common stock, enhancing its IoT technology platform capabilities[158]. - The VeeaONE Platform enables the formation of secure private clouds, enhancing data privacy and reducing transport costs[151]. - The VeeaHub product integrates multiple functionalities, including a Wi-Fi Access Point and IoT gateway, aimed at broad market adoption[148]. Market and Risks - Revenue is primarily generated from the sale of VeeaHub devices, licenses, and subscriptions, reflecting a diversified revenue model[152]. - The Crowdkeep Convertible Notes have an aggregate principal amount of $1,000,000 with an annual interest rate of 8%[159]. - The company’s forward-looking statements highlight potential risks related to revenue generation and market acceptance of its products[142]. - The accumulated deficit as of September 30, 2025, was $219.6 million[182]. - The change in fair value of Earn-Out Share Liability was $(13,520,000) for the nine months ended September 30, 2025, compared to $(24,750,000) for the same period in 2024[189]. - The company recognized a UK R&D tax credit of $(1,223,328) for the nine months ended September 30, 2025, compared to $(1,251,243) for the same period in 2024[189].

Financial Performance - Revenue for the three months ended September 30, 2025, was $144,926, representing a 186% increase compared to $50,683 for the same period in 2024[170]. - Revenue for the nine months ended September 30, 2025, was $232,094, a 114% increase from $108,264 in the same period in 2024[171]. - For the three months ended September 30, 2025, the company reported a net income of $1,375,294, compared to a net loss of $33,323,555 for the same period in 2024[187]. - For the nine months ended September 30, 2025, the company reported a net loss of $(1,736,512), compared to a net loss of $(46,620,619) for the same period in 2024[189]. - Adjusted EBITDA for the three months ended September 30, 2025, was $(4,127,015), while for the same period in 2024, it was $(2,331,722)[188]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $(14,128,556), slightly improved from $(14,258,963) in the same period of 2024[189]. - The company incurred interest expenses of $1,822,448 for the nine months ended September 30, 2025, compared to $1,352,823 for the same period in 2024[189]. - The company recognized a UK R&D tax credit of $(1,223,328) for the nine months ended September 30, 2025, compared to $(1,251,243) for the same period in 2024[189]. - The change in fair value of Earn-Out Share Liability was $(13,520,000) for the nine months ended September 30, 2025, compared to $(24,750,000) for the same period in 2024[189]. - The company reported transaction costs of $25,000 for the nine months ended September 30, 2025, significantly lower than $55,038,544 for the same period in 2024[189]. Expenses - Cost of Goods Sold for the three months ended September 30, 2025, increased by $38,009, or 253%, compared to the same period in 2024[173]. - General and administrative expenses increased by $2,533,495, or 127%, for the three months ended September 30, 2025, compared to the same period in 2024[176]. - Product development expenses decreased by $356,761, or 100%, for the three months ended September 30, 2025, compared to the same period in 2024[174]. - Sales and marketing expenses decreased by $65,382, or 81%, for the three months ended September 30, 2025, compared to the same period in 2024[175]. - Depreciation and amortization increased by $148,704, or 220%, for the three months ended September 30, 2025, compared to the same period in 2024[177]. Capital and Funding - The Company closed a public offering of 9,189,096 shares at a combined price of $1.00 per share, raising approximately $6.0 million in gross proceeds[153]. - The warrants from the public offering have an exercise price of $1.10 and are exercisable immediately, expiring five years from issuance[153]. - The Crowdkeep Convertible Notes have an aggregate principal amount of $1,000,000, with an annual interest rate of 8% and maturity dates in 2026[159]. - The company had cash of $1,071,151 and outstanding debt of $17.5 million as of September 30, 2025[182]. - The company plans to fund operations through revenue, private and public equity offerings, and anticipated cash tax refunds of approximately $1.2 million[183]. - The company’s management continues to pursue funding opportunities to alleviate substantial doubt regarding its ability to continue as a going concern[184]. Intellectual Property and Technology - The Company has approximately 125 granted patents and 25 pending applications, indicating a strong intellectual property position in the market[148]. - The Supply Agreement with Telcel includes a comprehensive Platform-as-a-Service solution featuring 5G-based Fixed Wireless Access, with an initial term of three years[154][155]. - The Company acquired assets from Crowdkeep, Inc. for 4,065,689 shares of common stock, enhancing its IoT technology platform capabilities[158]. - The VeeaONE Platform enables the formation of secure private clouds, enhancing data privacy and reducing costs compared to traditional cloud solutions[151]. - The Company is focused on expanding its market presence through strategic partnerships and innovative product offerings in Edge AI and Hybrid Edge-Cloud Computing[147]. Revenue Recognition - The Company has a five-step approach to revenue recognition based on ASC 606, ensuring compliance and accuracy in financial reporting[164]. Operating Losses - Operating losses for the three months ended September 30, 2025, were $4.7 million, compared to $57.5 million for the same period in 2024[182].