Full House Resorts(FLL) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Full House Resorts, Inc Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including operations, balance sheets, equity, and cash flows, along with detailed notes on accounting policies and segment information Condensed Consolidated Statements of Operations This table provides a summary of revenues, operating costs, operating income/loss, interest expense, net loss, and basic/diluted loss per share for the three and six months ended June 30, 2025 and 2024 | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $ 73,946 | $ 73,492 | $ 149,004 | $ 143,416 | | Operating costs and expenses | 74,020 | 71,177 | 148,340 | 141,707 | | Operating (loss) income | (74) | 2,315 | 664 | 1,709 | | Interest expense, net | (10,354) | (11,023) | (20,651) | (21,273) | | Net loss | $ (10,383) | $ (8,629) | $ (20,148) | $ (19,901) | | Basic loss per share | $ (0.29) | $ (0.25) | $ (0.56) | $ (0.57) | | Diluted loss per share | $ (0.29) | $ (0.25) | $ (0.56) | $ (0.57) | Condensed Consolidated Balance Sheets This table presents the company's assets, liabilities, and stockholders' equity as of June 30, 2025, and December 31, 2024 | (In thousands, except share data) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | ASSETS | | | | Current assets | $ 43,321 | $ 53,412 | | Property and equipment, net | 429,897 | 446,674 | | Total Assets | $ 651,537 | $ 673,334 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Current liabilities | $ 69,060 | $ 67,455 | | Long-term debt, net | 467,474 | 468,139 | | Total Liabilities | 630,326 | 632,837 | | Total Stockholders' Equity | 21,211 | 40,497 | | Total Liabilities and Stockholders' Equity | $ 651,537 | $ 673,334 | Condensed Consolidated Statements of Changes in Stockholders' Equity This section details changes in common stock, additional paid-in capital, accumulated deficit, and total equity from January 1, 2025, to June 30, 2025 | (In thousands) | Balance, January 1, 2025 | Net loss (Q1 2025) | Net loss (Q2 2025) | Balance, June 30, 2025 | | :------------- | :----------------------- | :----------------- | :----------------- | :--------------------- | | Common Stock | $ 4 | — | — | $ 4 | | Add. Paid-in Cap | $ 115,781 | $ 1,060 | $ 594 | $ 116,643 | | Acc. Deficit | $ (75,288) | $ (9,765) | $ (10,383) | $ (95,436) | | Total Equity | $ 40,497 | $ (9,765) | $ (10,383) | $ 21,211 | - Stockholders' equity decreased from $40.497 million at January 1, 2025, to $21.211 million at June 30, 2025, primarily due to net losses of $9.765 million in Q1 2025 and $10.383 million in Q2 2025[10] Condensed Consolidated Statements of Cash Flows This section outlines net cash flows from operating, investing, and financing activities, and the overall change in cash for the six months ended June 30, 2025 and 2024 | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | $ (1,595) | $ 5,723 | | Net cash used in investing activities | $ (3,802) | $ (33,925) | | Net cash used in financing activities | $ (2,693) | $ (895) | | Net decrease in cash, cash equivalents and restricted cash | $ (8,090) | $ (29,097) | | Cash, cash equivalents and restricted cash, end of period | $ 32,131 | $ 44,697 | - Cash used in operating activities was $1.6 million for the six months ended June 30, 2025, a decrease from $5.7 million provided in the prior-year period, primarily due to timing of working capital spending and decreased operating income[12][155] - Capital expenditures, net of changes in payables, significantly decreased from $33.9 million in H1 2024 to $6.2 million in H1 2025, reflecting the completion of Chamonix construction[12][156] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1. Organization This note describes Full House Resorts, Inc.'s casino operations, segments, and recent strategic developments - Full House Resorts, Inc. operates six casinos across Midwest & South (American Place, Silver Slipper, Rising Star) and West (Bronco Billy's, Chamonix, Grand Lodge) segments, plus contracted sports wagering operations[15][16][17] - Key developments include the phased opening of Chamonix in October 2024, the sale of Stockman's Casino in April 2025, and an extension of the Indiana sports wagering skin through December 2031[18][19][20] Note 2. Basis of Presentation and Significant Accounting Policies This note outlines the basis of financial statement presentation and significant accounting policies, including stock-based compensation and new accounting pronouncements - Stock-based compensation for the six months ended June 30, 2025, was $0.4 million, significantly lower than $1.4 million in the prior-year period, primarily due to a $0.8 million reversal of previously recognized 2024 costs because certain performance criteria were not met[25] - The Company adopted the 2025 Equity Incentive Plan, authorizing 2,300,000 new shares, succeeding the 2015 Plan to maintain flexibility in its compensation program[26] - The Company is evaluating the impact of new accounting pronouncements ASU 2023-09 (Income Taxes) and ASU 2024-03 (Disaggregation of Income Statement Expenses), with planned adoption for annual periods ending December 31, 2025, and December 15, 2026, respectively[27][28] Note 3. Receivables, net This note details the composition of accounts receivable and the provision for credit losses | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Casino | $ 349 | $ 653 | | Hotel | 19 | 13 | | Other Operations | 3,291 | 3,042 | | Contracted Sports Wagering | 5 | 1,017 | | Other | 1,053 | 514 | | Total Accounts Receivable | 4,717 | 5,239 | | Less: Provision for credit losses | (162) | (138) | | Accounts receivable, net | $ 4,555 | $ 5,101 | - The provision for credit losses increased from $138 thousand at January 1, 2025, to $162 thousand at June 30, 2025, with a current period provision of $33 thousand[32] Note 4. Disposition This note describes the sale of Stockman's Casino, including the proceeds and associated gain or loss - The Company completed the sale of Stockman's Casino in two phases: real property for $7.0 million (closed September 2024, $1.9 million gain) and remaining operating assets for $2.2 million (closed April 2025, $0.2 million loss for H1 2025)[35] | (In thousands) | March 31, 2025 | | :------------- | :------------- | | ASSETS | | | Current assets held for sale | $ 278 | | Property and equipment, net | 378 | | Goodwill | 1,809 | | Other intangible assets, net | 4 | | Valuation Allowance - Transaction Costs | (212) | | Total assets held for sale, net | $ 2,257 | | LIABILITIES | | | Total liabilities related to assets held for sale | $ 75 | Note 5. Leases This note provides information on the company's operating and finance leases, including lease assets, liabilities, and total lease costs - The Company has significant operating leases for land, casino, and office space, with terms up to 97 years, including contingent rent provisions for Silver Slipper and American Place[37][38][40] - The Grand Lodge Casino lease was extended through December 31, 2034, with annual rent increasing by 2% annually after January 2025. The corporate office lease was extended through April 2030[45][46] | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Lease Assets | | | | Operating lease ROU assets, net | $ 54,531 | $ 55,957 | | Finance lease ROU assets, net | 305 | 976 | | Total lease assets | $ 59,002 | $ 61,178 | | Lease Liabilities | | | | Current operating lease obligations | $ 4,084 | $ 4,226 | | Current finance lease obligations | 1,011 | 1,610 | | Noncurrent operating lease obligations | 51,448 | 52,324 | | Noncurrent finance lease obligations | 791 | 1,095 | | Total lease liabilities | $ 57,334 | $ 59,255 | | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total lease costs | $ 2,849 | $ 2,724 | $ 5,872 | $ 5,404 | Note 6. Long-Term Debt This note details the company's long-term debt, including senior secured notes and the revolving credit facility | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Revolving Credit Facility due 2027 | $ 25,000 | $ 27,000 | | 8.25% Senior Secured Notes due 2028 | 450,000 | 450,000 | | Less: Unamortized debt issuance costs and discounts/premiums, net | (7,526) | (8,861) | | Total Long-Term Debt, net | $ 467,474 | $ 468,139 | - The Company has $450.0 million in 8.25% Senior Secured Notes due 2028, which were increased through additional offerings in 2022 and 2023 to fund projects like Chamonix and American Place[53][54][55][56] - The revolving credit facility with Capital One was extended to January 1, 2027, and has $25.0 million outstanding at June 30, 2025, with an interest rate of SOFR plus 3.00% (or base rate plus 2.00%)[62][63][65] Note 7. Customer Contract Liabilities This note presents the breakdown and changes in customer contract liabilities, including chip liability, players club points, and sports wagering | (In thousands) | Outstanding Chip Liability | Players Club Points | Contracted Sports Wagering | Progressive Jackpots and Other | | :------------- | :------------------------- | :------------------ | :------------------------- | :----------------------------- | | Balance at January 1, 2025 | $ 683 | $ 930 | $ 10,404 | $ 5,767 | | Balance at June 30, 2025 | $ 622 | $ 999 | $ 6,567 | $ 5,901 | | Increase (Decrease) | $ (61) | $ 69 | $ (3,837) | $ 134 | - Contracted sports wagering liabilities decreased by $3.837 million for the six months ended June 30, 2025, indicating a reduction in deferred revenues from these contracts[68] Note 8. Income Taxes This note discusses effective income tax rates, valuation allowances, and the impact of new tax legislation | Effective Income Tax Rates | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :------------------------- | :------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | Rate | 0.9% | (0.6)% | 0.9% | (1.7)% | - Changes in effective income tax rates were primarily due to projections for pre-tax book income in 2025, changes in valuation allowances, and the release of deferred tax liabilities from the Stockman's intangible asset sale[69] - The Company continues to maintain a valuation allowance against deferred tax assets, as it has not met the 'more likely than not' threshold for their realizability, which does not affect actual taxes paid[70] - New U.S. tax legislation (OBBBA) signed in July 2025 makes permanent many 2017 tax provisions and introduces corporate tax changes effective 2026; the Company does not expect a material impact on operations[72] Note 9. Commitments and Contingencies This note outlines legal proceedings and the estimated reconciliation payment for the Illinois gaming license - The Company is involved in various legal proceedings but does not expect a material effect on its financial position or results of operations[73] - A 'Reconciliation Payment' for the Illinois gaming license, estimated at $50.7 million, is due to the Illinois Gaming Board, with annual installments expected to begin in February 2026[74][76] | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Estimated IGB Reconciliation Fee | $ 50,717 | $ 46,039 | | Less: Amount representing interest | (8,498) | (11,173) | | Present value of IGB Reconciliation Fee | $ 42,219 | $ 34,866 | Note 10. Earnings (Loss) Per Share This note presents basic and diluted earnings per share calculations and related weighted-average common shares | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss ─ basic | $ (10,383) | $ (8,629) | $ (20,148) | $ (19,901) | | Weighted-average common shares ─ basic | 36,055 | 34,710 | 35,944 | 34,650 | | Basic loss per share | $ (0.29) | $ (0.25) | $ (0.56) | $ (0.57) | | Diluted loss per share | $ (0.29) | $ (0.25) | $ (0.56) | $ (0.57) | - Anti-dilutive share-based awards excluded from diluted EPS calculation were 3,394 thousand for Q2 2025 and 3,249 thousand for H1 2025[77] Note 11. Segment Information This note provides financial data for the company's reportable segments: Midwest & South, West, and Contracted Sports Wagering - The Company manages three reportable segments: Midwest & South (American Place, Silver Slipper, Rising Star), West (Bronco Billy's, Chamonix, Grand Lodge), and Contracted Sports Wagering[16][78] - Adjusted Segment EBITDA is the primary measure of segment profitability used by the CEO for performance assessment and resource allocation[80][82] | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | | | | | | Midwest & South | $ 57,802 | $ 55,458 | $ 114,976 | $ 110,088 | | West | 14,485 | 15,151 | 30,089 | 28,185 | | Contracted Sports Wagering | 1,659 | 2,883 | 3,939 | 5,143 | | Adjusted Segment EBITDA | | | | | | Midwest & South | $ 12,757 | $ 12,275 | $ 25,865 | $ 24,958 | | West | (1,138) | 865 | (3,606) | 731 | | Contracted Sports Wagering | 1,611 | 2,577 | 3,791 | 4,512 | | Adjusted Segment EBITDA Margin | | | | | | Midwest & South | 22.1 % | 22.1 % | 22.5 % | 22.7 % | | West | (7.9)% | 5.7 % | (12.0)% | 2.6 % | | Contracted Sports Wagering | 97.1 % | 89.4 % | 96.2 % | 87.7 % | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operating results, liquidity, and capital resources, including an executive overview, recent developments, and segment performance Executive Overview This section provides a high-level summary of the company's business, operational focus, and factors influencing financial results - The Company's primary business is owning and operating casino and hospitality facilities, with revenues mainly from slot machines, table games, hotels, and food and beverage[96][102] - Operations are highly competitive and capital-intensive, relying on operating cash flow to service debt and fund capital expenditures. The company focuses on improving operating margins and assessing growth opportunities[105] - Financial results are subject to seasonality, gaming hold percentages, economic conditions, weather, regulatory changes, and competitive factors[103][104] Recent Developments This section highlights key recent events, including asset dispositions and contract extensions - The sale of Stockman's Casino was completed in April 2025 for $9.2 million, resulting in a $0.2 million loss for the six months ended June 30, 2025[106] - The active sports wagering agreement in Indiana was extended through December 2031, with the operator prepaying $1.5 million for the remaining term[107] Key Performance Indicators This section defines the primary metrics used to evaluate the company's operational and financial performance - Key gaming revenue indicators include slot coin-in, table game drop (volume indicators), slot win, and table game hold (profitability indicators)[109][110] - Hotel occupancy rate is used to evaluate room utilization, including complimentary room sales[111] - Adjusted EBITDA, Adjusted Segment EBITDA, and Adjusted Segment EBITDA Margin are used to assess performance and allocate resources, with Adjusted Segment EBITDA being the GAAP measure of segment profitability[112][113] Results of Operations This section analyzes the company's consolidated and segment-specific financial performance for the reporting periods Consolidated Operating Results This section provides a detailed analysis of the company's overall revenues, operating expenses, and net loss | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenues | $ 73,946 | $ 73,492 | $ 149,004 | $ 143,416 | | Operating Expenses | 74,020 | 71,177 | 148,340 | 141,707 | | Operating (loss) income | (74) | 2,315 | 664 | 1,709 | | Net loss | $ (10,383) | $ (8,629) | $ (20,148) | $ (19,901) | - Consolidated total revenues increased by 0.6% for Q2 2025 and 3.9% for H1 2025, driven by the ramp-up of American Place and Chamonix, despite the sale of Stockman's[120] - Consolidated operating expenses increased by 4.0% for Q2 2025 and 4.7% for H1 2025, primarily due to increased casino and selling, general and administrative expenses at American Place and Chamonix[121][122][123] | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Slot coin-in | $ 787,467 | $ 775,776 | $ 1,543,755 | $ 1,500,625 | | Slot win | $ 60,776 | $ 59,269 | $ 117,527 | $ 112,402 | | Slot hold percentage | 7.7 % | 7.6 % | 7.6 % | 7.5 % | | Table game drop | $ 53,815 | $ 47,811 | $ 108,340 | $ 94,739 | | Table game win | $ 8,715 | $ 8,593 | $ 19,056 | $ 17,853 | | Table game hold percentage | 16.2 % | 18.0 % | 17.6 % | 18.8 % | Interest Expense This section discusses the company's net interest expense and the factors influencing its changes | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest expense, net | $ 10,354 | $ 11,023 | $ 20,651 | $ 21,273 | - Net interest expense decreased for both three- and six-month periods ended June 30, 2025, primarily due to lower interest rates and a reduced outstanding balance on the revolving credit facility[125] Income Tax Expense This section analyzes the company's income tax provision and effective tax rates | Income Tax (Benefit) Provision | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :----------------------------- | :------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | Amount (in thousands) | $ (95) | $ 111 | $ (79) | $ 337 | | Effective Tax Rate | 0.9% | (0.6)% | 0.9% | (1.7)% | - The changes in effective income tax rates were mainly due to projections for pre-tax book income in 2025, valuation allowance adjustments, and the release of deferred tax liabilities from the Stockman's sale[126] Operating Results – Reportable Segments This section provides a detailed breakdown of revenues and Adjusted Segment EBITDA for each of the company's operating segments Midwest & South This section details the financial performance of the Midwest & South segment, including revenue and EBITDA drivers - Midwest & South segment revenues increased by 4.2% (Q2 2025) and 4.4% (H1 2025), driven by continued growth at American Place, offsetting declines at Silver Slipper and Rising Star[132] - Casino revenue increased by 7.2% (Q2 2025) and 7.4% (H1 2025), with slot revenue up 9.6% (Q2 2025) and 8.1% (H1 2025)[133] - Adjusted Segment EBITDA rose by 3.9% (Q2 2025) and 3.6% (H1 2025), benefiting from American Place's growth and Silver Slipper's operational expense reductions, partially offset by increased advertising and labor costs at American Place[135] West This section details the financial performance of the West segment, including revenue and EBITDA, considering new property ramp-ups and asset sales - West segment revenues declined by 4.4% (Q2 2025) but rose by 6.8% (H1 2025), reflecting revenue growth at Chamonix and the impact of Stockman's sale[137] - Casino revenue declined by 6.9% (Q2 2025) and 1.4% (H1 2025) due to Stockman's sale, while table games revenue increased significantly by 45.7% (Q2 2025) and 29.6% (H1 2025) due to expanded operations at Chamonix/Bronco Billy's[138] - Adjusted Segment EBITDA for the West segment was negative $(1.1) million in Q2 2025 and $(3.6) million in H1 2025, down from positive figures in prior periods, reflecting Stockman's sale and early inefficiencies at Chamonix[140] Contracted Sports Wagering This section details the financial performance of the Contracted Sports Wagering segment, focusing on revenue and EBITDA trends - Contracted Sports Wagering revenues declined by $1.2 million (Q2 2025) and $1.2 million (H1 2025) due to fewer active sports wagering skins[142] - Adjusted Segment EBITDA for Contracted Sports Wagering declined by $1.0 million (Q2 2025) and $0.7 million (H1 2025)[142] Corporate This section outlines changes in corporate-level expenses and their contributing factors - Corporate expenses increased by $0.5 million in Q2 2025 due to higher third-party professional services fees, but decreased by $0.2 million in H1 2025 due to lower accrued bonus compensation and certain professional services fees[143] Non-GAAP Financial Measure (Adjusted EBITDA) This section defines and reconciles Adjusted EBITDA, a non-GAAP measure used for evaluating operating performance - Adjusted EBITDA is a non-GAAP measure used by management to evaluate operating performance in the gaming and hospitality industries, excluding interest, taxes, depreciation, amortization, preopening, impairment, asset write-offs, gains/losses from asset sales, project development, acquisition costs, and non-cash share-based compensation[144] | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $ (10,383) | $ (8,629) | $ (20,148) | $ (19,901) | | Operating (loss) income | (74) | 2,315 | 664 | 1,709 | | Adjusted EBITDA | $ 11,134 | $ 14,141 | $ 22,621 | $ 26,550 | Liquidity and Capital Resources This section discusses the company's cash position, cash flow activities, debt obligations, and future capital requirements Cash Flows This section analyzes the company's cash flows from operating, investing, and financing activities - At June 30, 2025, the Company had $32.1 million in cash and equivalents. Management believes current cash, available credit, and operating cash flows will be sufficient for the next 12 months[154] - Cash used in operations was $1.6 million for H1 2025, compared to $5.7 million provided in H1 2024, primarily due to working capital timing and decreased operating income[155] - Cash used in investing activities significantly decreased from $33.9 million in H1 2024 to $3.8 million in H1 2025, reflecting the completion of Chamonix construction[156] - Cash used in financing activities was $2.7 million in H1 2025, compared to $0.9 million in H1 2024, primarily due to a $2.0 million net paydown of the Credit Facility[157] Other Factors Affecting Liquidity This section discusses additional factors impacting the company's liquidity, including debt and future obligations - The Company has significant outstanding debt, with principal maturing in February 2028. Additional financing may be required for planned capital expenditures, such as the permanent American Place facility[158][164] - The estimated long-term obligation for the Illinois gaming license is $50.7 million, with a discounted present value of $42.2 million, and annual payments expected to begin in 2026[162] - The Hyatt Lake Tahoe lessor has an option to purchase the Grand Lodge leasehold interest and related casino operating assets at any time prior to lease expiration[167] Off-balance Sheet Arrangements This section confirms the absence of material off-balance sheet arrangements - The Company has no material off-balance sheet arrangements that are reasonably likely to have a current or future material effect on its financial condition or results of operations[168] Critical Accounting Estimates and Policies This section notes any significant changes in critical accounting estimates and policies - There have been no significant changes in the Company's critical accounting estimates and policies since December 31, 2024[169] Forward-Looking Statements This section provides a cautionary statement regarding forward-looking information and associated risks - This report contains forward-looking statements regarding growth strategies, construction budgets, operational performance, financing, debt refinancing, capital investments, marketing efforts, and regulatory impacts[170] - These statements are based on current beliefs and expectations and are subject to inherent uncertainties, risks, and changes in circumstances that could cause actual results to differ materially[171] - The Company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law[172] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section addresses the company's exposure to market risks - This item is not applicable to the Company[173] Item 4. Controls and Procedures This section reports on the effectiveness of the company's disclosure controls and internal control over financial reporting - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[174] - There have been no material changes in internal control over financial reporting during the last fiscal quarter[176] Item 5. Other Information This section provides other material information not covered elsewhere, such as trading arrangements - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[177] PART II OTHER INFORMATION This section contains additional information not included in the financial statements, such as legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings The company is involved in various legal proceedings, but management does not expect a material adverse effect on its financial position or operations - The Company is party to various legal proceedings but does not expect a material adverse effect on its financial position or results of operations[178] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024, were reported - No material changes to risk factors were reported from the Annual Report on Form 10-K for the year ended December 31, 2024[179] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details inducement equity awards of restricted shares granted to employees, exempt from registration under Section 4(a)(2) of the Securities Act of 1933 - The Compensation Committee approved inducement equity awards totaling 82,288 restricted shares to four employees between November 2024 and May 2025[181] - These awards were granted outside the 2015 Equity Incentive Plan as a material inducement for employment and were issued under Section 4(a)(2) of the Securities Act of 1933, exempt from registration[182] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including employment agreements, officer certifications, and Inline XBRL documents - Exhibits include employment agreements for Daniel R. Lee, Lewis A. Fanger, and Elaine L. Guidroz, along with certifications from the principal executive and financial officers (31.1, 31.2, 32.1, 32.2)[183] - The filing also includes various Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE) and the Cover Page Interactive Data File (104)[183] Signatures This section contains the required signatures of the Chief Executive Officer and Chief Financial Officer for the Form 10-Q, dated August 7, 2025 - The report was signed by Daniel R. Lee, Chief Executive Officer, and Lewis A. Fanger, Chief Financial Officer, on August 7, 2025[189]