Satellogic (SATL) - 2025 Q2 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements Forward-looking statements are subject to inherent risks and uncertainties, potentially causing actual results to differ - Forward-looking statements are based on current expectations and beliefs, but actual results may differ materially due to inherent risks, uncertainties, and assumptions[9] - Key risk factors include the ability to generate expected revenue, market acceptance of EO services, dependence on third parties (e.g., SpaceX), capital intensity, and geopolitical uncertainties[10][13] - The company assumes no obligation to update or revise forward-looking statements[12] Part I - Financial Information Item 1. Financial Statements and Supplemental Data This section presents Satellogic Inc.'s unaudited condensed consolidated financial statements and detailed notes Condensed Consolidated Statements of Operations and Comprehensive Loss Revenue increased, but net loss varied across periods, primarily due to changes in the fair value of financial instruments | Metric (in thousands of U.S. dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenue | $4,440 | $3,501 | $7,827 | $6,829 | | Total costs and expenses | $10,725 | $18,178 | $23,627 | $36,104 | | Operating loss | $(6,285) | $(14,677) | $(15,800) | $(29,275) | | Total other (expense) income, net | $(407) | $(3,069) | $(22,758) | $(2,216) | | Net loss available to stockholders | $(6,652) | $(18,101) | $(39,233) | $(33,279) | | Basic net loss per share | $(0.06) | $(0.20) | $(0.39) | $(0.37) | - Revenue increased by 27% for the three months and 15% for the six months ended June 30, 2025, compared to the prior year[16] - Net loss decreased by 63% for the three months ended June 30, 2025, but increased by 18% for the six months ended June 30, 2025, primarily due to a significant negative change in the fair value of financial instruments[16] Condensed Consolidated Balance Sheets Total assets and liabilities increased, leading to a larger stockholders' deficit, driven by cash and convertible notes | Metric (in thousands of U.S. dollars) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Total assets | $73,846 | $61,691 | | Total liabilities | $141,959 | $114,723 | | Total stockholders' (deficit) equity | $(68,113) | $(53,032) | | Cash and cash equivalents | $32,569 | $22,493 | | Secured Convertible Notes at fair value | $97,710 | $79,070 | | Warrant liabilities | $13,757 | $11,511 | - Total assets increased by $12.155 million, or 19.7%, from December 31, 2024, to June 30, 2025[19] - Total liabilities increased by $27.236 million, or 23.7%, primarily due to the Secured Convertible Notes and warrant liabilities[19] Condensed Consolidated Statements of Stockholders' Equity (Deficit) Stockholders' deficit increased due to net losses, partially offset by proceeds from stock issuances | Metric (in thousands of U.S. dollars) | December 31, 2024 | June 30, 2025 | | :------------------------------------ | :---------------- | :------------ | | Total stockholders' (deficit) equity | $(53,032) | $(68,113) | | Net loss | $(400,105) | $(439,338) | | Additional paid-in capital | $356,247 | $379,393 | | Issuance of Common Stock under ATM Program | — | $2,584 | | Issuance of Class A Common Stock under Registered Direct Offering | — | $18,769 | - Net loss contributed $(39,233) million to the accumulated deficit for the six months ended June 30, 2025[22] - Additional paid-in capital increased by $23.146 million, mainly from the Registered Direct Offering ($18.769 million) and ATM Program ($2.584 million)[22] Condensed Consolidated Statements of Cash Flows Cash used in operating activities significantly decreased, while financing activities provided substantial cash | Cash Flow Activity (in thousands of U.S. dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(9,064) | $(23,891) | | Net cash used in investing activities | $(2,689) | $(3,320) | | Net cash provided by financing activities | $21,430 | $27,361 | | Net increase in cash, cash equivalents and restricted cash | $9,677 | $150 | - Net cash used in operating activities decreased by 62.1% from $23.891 million in H1 2024 to $9.064 million in H1 2025[25] - Net cash provided by financing activities was $21.430 million in H1 2025, primarily from stock issuances, compared to $27.361 million in H1 2024, which included proceeds from Secured Convertible Notes[25] Notes to the Condensed Consolidated Financial Statements These notes provide detailed information supporting the condensed consolidated financial statements, covering business nature, accounting policies, and financial instruments Note 1. Nature of the Business and Basis of Presentation Satellogic aims to build a planetary analytics platform but faces a 'going concern' warning due to insufficient liquidity - Satellogic's strategy is to build a planetary scale analytics platform based on a proprietary satellite constellation for insights from images and information, with a focus on multi-temporal analysis and high frequency of revisits[31] - The company completed its Domestication to a Delaware corporation on March 26, 2025[29] - The company has an accumulated deficit of $439.3 million as of June 30, 2025, and its current cash and cash equivalents of $32.6 million are not sufficient to fund operations for the next one year, raising substantial doubt about its ability to continue as a going concern[36][46] Note 2. Summary of Significant Accounting Policies Key accounting policies cover credit risk, asset impairment, foreign currency, and leases, highlighting customer concentration - As of June 30, 2025, three customers accounted for 60% of accounts receivable, and four customers accounted for more than 10% of revenue, totaling $6.1 million for the six months ended June 30, 2025[52][54] - Lease expense decreased due to the termination of a facility lease in the Netherlands in 2024, but lease obligations and right-of-use assets increased in H1 2025 due to new ground station antenna leases[60] | Metric (in thousands of U.S. dollars) | June 30, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------ | | Allowance for credit losses (beginning of year) | $148 | $126 | | Provision | $(8) | $47 | | Write offs | $(11) | — | | Recoveries collected | $(41) | $(59) | | Allowance for credit losses (end of period) | $88 | $114 | Note 3. Accounting Standards Updates This note discusses recently issued accounting standards not yet adopted, including updates on income tax and expense disaggregation - ASU No. 2023-09 (Income Taxes) requires consistent categories and greater disaggregation of income tax disclosures, effective for annual periods beginning after December 15, 2024[66] - ASU 2024-03 (Expense Disaggregation Disclosures) requires footnote disclosure of specific natural expenses (e.g., employee compensation, depreciation) within income statement captions, effective for fiscal years beginning after December 15, 2026[67] - ASU 2024-04 (Debt with Conversion and Other Options) provides guidance on induced conversion or extinguishment accounting for convertible debt, effective for annual periods beginning after December 15, 2025[68] Note 4. Segment Information The company operates as a single segment, with revenue from Asset Monitoring, CaaS, and Space Systems, primarily in the U.S - The company operates as one operating segment, with the CEO as the chief operating decision maker[70] | Revenue by Business Line (in thousands of U.S. dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Asset Monitoring | $3,544 | $2,964 | $6,165 | $5,148 | | Constellation as a Service ("CaaS") | $412 | $412 | $824 | $824 | | Space Systems | $484 | $125 | $838 | $857 | | Total Revenue | $4,440 | $3,501 | $7,827 | $6,829 | | Revenue by Geographic Area (in thousands of U.S. dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | U.S. | $3,359 | $2,411 | $5,920 | $3,987 | | Albania | $412 | $412 | $824 | $824 | | India | $10 | $124 | $23 | $856 | | All Other | $659 | $554 | $1,060 | $1,162 | | Total | $4,440 | $3,501 | $7,827 | $6,829 | Note 5. Revenue from Contracts with Customers This note details revenue recognition policies, disaggregating revenue by business line, timing, and geography | Revenue by Timing (in thousands of U.S. dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Over time | $878 | $536 | $1,633 | $1,680 | | Point-in time | $3,562 | $2,965 | $6,194 | $5,149 | | Total revenue | $4,440 | $3,501 | $7,827 | $6,829 | | Remaining Performance Obligations (in thousands of U.S. dollars) | Within 1 Year | Years 1-2 | Years 2-3 | Thereafter | | :--------------------------------------------------------------- | :------------ | :-------- | :-------- | :--------- | | Total | $8,478 | $3,165 | $7,000 | $24,000 | - Contract liabilities increased to $6.471 million as of June 30, 2025, from $5.871 million at December 31, 2024, primarily due to collections from a new customer for performance obligations to be satisfied in 2025[78] Note 6. Warrant Liabilities Total warrant liabilities increased due to changes in fair value for Liberty, PIPE, and $8.63 Warrants | Warrant Type (in thousands of U.S. dollars) | December 31, 2024 | June 30, 2025 | | :------------------------------------------ | :---------------- | :------------ | | Liberty Warrants and Liberty Advisory Fee Warrant | $8,012 | $9,687 | | PIPE Warrant | $471 | $521 | | $8.63 Warrants | $3,028 | $3,549 | | Total Warrant Liabilities | $11,511 | $13,757 | - The fair value of Liberty Warrants and Liberty Advisory Fee Warrant was remeasured to $9.7 million as of June 30, 2025, and will expire on February 10, 2027[84] - The fair value of the PIPE Warrant was remeasured to $0.5 million as of June 30, 2025, and will expire on January 25, 2027[86] Note 7. Earnout Liabilities Sponsor Earnout liability increased due to fair value changes, remaining unvested as stock price targets were not met | Metric (in thousands of U.S. dollars) | December 31, 2024 | June 30, 2025 | | :------------------------------------ | :---------------- | :------------ | | Sponsor Earnout | $1,501 | $1,854 | | Change in fair value of financial instruments | — | $353 | - The Sponsor Earnout of 1,775,962 shares of Class A common stock remains unvested as the stock price triggering events ($12.50, $15.00, and $20.00 per share) were not satisfied during the six months ended June 30, 2025[92] Note 8. Property and Equipment Net property and equipment decreased due to depreciation, with Uruguay holding the majority of these assets | Property and Equipment (in thousands of U.S. dollars) | June 30, 2025 | December 31, 2024 | | :---------------------------------------------------- | :------------ | :---------------- | | Satellites and other equipment | $29,644 | $30,668 | | Satellites under construction | $15,653 | $14,458 | | Total property and equipment | $52,277 | $52,334 | | Less: Accumulated depreciation | $(27,461) | $(25,106) | | Property and equipment, net | $24,816 | $27,228 | | Property and Equipment by Geography (in thousands of U.S. dollars) | June 30, 2025 | December 31, 2024 | | :----------------------------------------------------------------- | :------------ | :---------------- | | Uruguay | $30,776 | $26,833 | | Argentina | $358 | $392 | | Spain | $7 | $746 | | Other countries | $10 | $134 | | Total | $31,151 | $28,105 | Note 9. Additional Financial Statement Information This note provides supplementary details on prepaid expenses, other assets, accrued expenses, and interest income | Metric (in thousands of U.S. dollars) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Prepaid expenses | $2,221 | $2,892 | | OS Warrants | $649 | $322 | | Total prepaid expenses and other current assets | $3,731 | $3,907 | | Metric (in thousands of U.S. dollars) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Payroll and benefits payable | $2,960 | $2,286 | | Advisory Fee cash payable | $7,500 | $7,500 | | Total accrued expenses and other liabilities | $12,673 | $12,137 | | Interest Income, Net (in thousands of U.S. dollars) | 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 | $285 | $307 | $462 | $511 | Note 10. Income Tax This note discusses the company's income tax position, effective tax rate, and the impact of the 'One Big Beautiful Bill Act' (OBBBA) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total loss before income tax | $(6,692) | $(17,746) | $(38,558) | $(31,491) | | Income tax (benefit) expense | $(40) | $355 | $675 | $1,788 | | Effective tax provision rate | 0.6% | (2.0%) | (1.8%) | (5.7%) | - The effective tax rate for the six months ended June 30, 2025, was (1.8%), primarily impacted by the location of income, a full deferred tax asset valuation allowance, and interest/penalties related to uncertain tax positions[98] - The 'One Big Beautiful Bill Act' (OBBBA), enacted on July 4, 2025, introduces significant tax law changes, and the company is assessing its potential impacts[99] Note 11. Stock-based Compensation This note summarizes stock option and RSU activity, showing a decrease in options but an increase in unvested RSUs | Stock Option Activity | Number of Options | Weighted-Average Exercise Price | | :-------------------- | :---------------- | :------------------------------ | | Outstanding at December 31, 2024 | 3,234,296 | $1.50 | | Exercised | (1,236,659) | $1.08 | | Outstanding at June 30, 2025 | 1,995,277 | $1.78 | | RSU Activity | Number of RSUs | Weighted Average Grant-Date Value | | :------------- | :------------- | :-------------------------------- | | Outstanding unvested RSUs at December 31, 2024 | 2,893,396 | $1.40 | | Granted during the year | 2,059,382 | $3.54 | | Vested during the year | (1,178,430) | $1.28 | | Outstanding unvested RSUs at June 30, 2025 | 3,564,199 | $2.64 | Note 12. Net Loss Per Share Basic and diluted net loss per share remained consistent due to the anti-dilutive effect of all potential common shares | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net loss attributable to holders of Common Stock | $(6,652) | $(18,101) | $(39,233) | $(33,279) | | Basic weighted-average shares outstanding | 103,206,882 | 90,678,183 | 99,949,214 | 90,504,845 | | Basic net loss per share | $(0.06) | $(0.20) | $(0.39) | $(0.37) | | Diluted net loss per share | $(0.06) | $(0.20) | $(0.39) | $(0.37) | - All potential common shares, including warrants, earnout shares, stock options, restricted stock units, and shares convertible from Secured Convertible Notes, were anti-dilutive and thus not included in the diluted EPS calculation[101][102] | Anti-Dilutive Securities | Three and Six Months Ended June 30, 2025 | Three and Six Months Ended June 30, 2024 | | :----------------------- | :--------------------------------------- | :--------------------------------------- | | Warrants | 49,184,815 | 49,184,915 | | Sponsor earnout shares | 1,775,962 | 1,775,962 | | Stock options | 1,995,277 | 4,702,325 | | Restricted stock units | 3,564,199 | 3,017,253 | | Shares convertible from Secured Convertible Notes | 25,000,000 | 25,000,000 | | Total | 81,520,253 | 83,680,455 | Note 13. Fair Value Measurements and Financial Instruments This note outlines the fair value hierarchy for financial instruments, detailing valuation methods and unobservable inputs | Financial Instruments (in thousands of U.S. dollars) | Level 1 (June 30, 2025) | Level 3 (June 30, 2025) | Level 1 (December 31, 2024) | Level 3 (December 31, 2024) | | :--------------------------------------------------- | :---------------------- | :---------------------- | :-------------------------- | :-------------------------- | | OS Warrants | — | $649 | — | $322 | | $8.63 Warrants liability | $3,549 | — | $3,028 | — | | PIPE Warrant liability | — | $521 | — | $471 | | Liberty Warrants and Liberty Advisory Fee Warrant liability | — | $9,687 | — | $8,012 | | Sponsor Earnout liability | — | $1,854 | — | $1,501 | | Secured Convertible Notes | — | $97,710 | — | $79,070 | - The fair values of OS Warrants, PIPE Warrant, Liberty Warrants, Liberty Advisory Fee Warrant, and Sponsor Earnout are estimated using Black-Scholes or Monte Carlo models, with significant unobservable inputs including volatility and time to expiry[103][105] - The fair value of Secured Convertible Notes is determined using the 'with' method, with inputs including credit spread (25.00% to 37.50%), volatility (50%), and risk-free rate (3.7%)[105] Note 14. Related Parties This note discloses transactions with equity method investee OS and commissions paid to CF&Co. for financing services - Purchases from equity method investee Officina Stellare S.p.A. (OS) totaled $0.2 million for the six months ended June 30, 2025, with $0.2 million owed to OS at period-end[108] - CF&Co. receives a 3.0% commission on gross sales under the ATM Program and a 4.0% cash fee on aggregate gross proceeds from the Registered Direct Offering[109][110] Note 15. Secured Convertible Notes This note details Secured Convertible Notes, including principal, interest, conversion features, and fair value option election | Metric (in thousands of U.S. dollars) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Secured Convertible Notes | $97,710 | $79,070 | - The Secured Convertible Notes have an aggregate principal amount of $30.0 million, bear interest at SOFR plus 6.50% per annum (10.70% as of June 30, 2025), and mature on April 12, 2028[111][113] - The notes are convertible into Class A common stock at an initial conversion price of $1.20 per share and are secured by substantially all of the company's and its subsidiaries' assets[112][111] Note 16. Commitments and Contingencies The company has no material legal claims but significant future purchase commitments for satellite launch services - The company is not aware of any contingent liabilities that should be reflected in the Condensed Consolidated Financial Statements as of June 30, 2025, and December 31, 2024[118] - Future purchase commitments under non-cancellable launch service contracts total $10.7 million through 2028, with approximately $0.5 million due in 2025[119] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operating results, non-GAAP measures, liquidity, and critical accounting policies Company Overview Satellogic is a vertically integrated geospatial company building a scalable EO platform with a 200-satellite vision - Satellogic is the first vertically integrated geospatial company, building a scalable, fully automated Earth Observation (EO) platform[122] - The company's operating model provides significant cost advantages, enabling satellite production and launch for less than one-tenth the cost of competitors, and captures approximately 10x more imagery[123] - As of June 30, 2025, the company had 21 commercial satellites in orbit (20 operational), with a long-term vision to reach approximately 200 satellites for daily planetary remaps[123] - Business lines include Asset Monitoring (predictable revenue, D&I customers), Constellation as a Service (CaaS) (recurring government/D&I revenue), and Space Systems (satellite sales and support)[124][126][127][128] Key Factors Affecting Operating Results Performance is influenced by competitive advantages, long sales cycles, customer concentration, and capital intensity - Key opportunities include continued adoption of high-resolution EO images, especially with U.S. government D&I customers, and increased market adoption of next-generation high-resolution space system sales[130] - Challenges include long and complex sales cycles (especially for government contracts), dependence on a small number of customers for a large portion of revenue, and the capital-intensive nature of improving technology and launching new satellites[130][131] - The Domestication is expected to provide greater visibility to investors and customers, particularly for U.S. government D&I-related contracts[132] Key Components of Results of Operations This section defines revenue sources, cost of sales, expenses, and the impact of fair value changes on financial results - Revenue is derived from Asset Monitoring (point-in-time), CaaS (over time), and Space Systems (point-in-time)[136][137] - Cost of sales includes direct costs for ground stations, cloud/infrastructure, and digital image processing[138] - Changes in fair value of financial instruments (Secured Convertible Notes, warrant liabilities, earnout liabilities) are recorded in the income statement, including interest expense on Secured Convertible Notes due to the fair value option election[143] - Other (expense) income, net, primarily consists of foreign exchange gains and losses and gains/losses on disposal of property and equipment[144] Results of Operations - Three Months Ended June 30, 2025 and 2024 Revenue increased, total costs decreased, and net loss improved due to reduced expenses and fair value changes | Metric (in thousands of U.S. dollars) | 2025 | 2024 | $ Change | % Change | | :------------------------------------ | :------- | :------- | :------- | :------- | | Revenue | $4,440 | $3,501 | $939 | 27% | | Total costs and expenses | $10,725 | $18,178 | $(7,453) | (41%) | | Operating loss | $(6,285) | $(14,677) | $8,392 | (57%) | | Net loss | $(6,652) | $(18,101) | $11,449 | (63%) | - Revenue growth was driven by a $0.6 million increase in Asset Monitoring and a $0.4 million increase in Space Systems revenue[149] - Selling, general and administrative expenses decreased by $4.2 million (44%), mainly due to lower professional fees (including those related to Secured Convertible Notes) and workforce reductions[151] - Engineering expenses decreased by $2.0 million (46%), primarily due to workforce reductions and expense control measures[152] - Depreciation expense decreased by $1.3 million (40%) as nine satellites launched in Q2 2022 became fully depreciated[153] - A positive change in fair value of financial instruments of $4.0 million contributed to the reduced net loss, compared to a $4.3 million loss in the prior year, influenced by the Class A common stock trading price[155] Results of Operations - Six Months Ended June 30, 2025 and 2024 Revenue increased and costs decreased, but net loss rose due to a significant negative change in financial instrument fair value | Metric (in thousands of U.S. dollars) | 2025 | 2024 | $ Change | % Change | | :------------------------------------ | :-------- | :-------- | :-------- | :------- | | Revenue | $7,827 | $6,829 | $998 | 15% | | Total costs and expenses | $23,627 | $36,104 | $(12,477) | (35%) | | Operating loss | $(15,800) | $(29,275) | $13,475 | (46%) | | Net loss | $(39,233) | $(33,279) | $(5,954) | 18% | - Revenue growth was primarily driven by a $1.0 million increase in imagery ordered by Asset Monitoring customers[160] - Selling, general and administrative expenses decreased by $7.1 million (37%), mainly due to lower professional fees (including those related to Secured Convertible Notes and advisory fees) and workforce reductions[162] - Engineering expenses decreased by $3.9 million (44%), primarily due to workforce reductions and expense control measures[163] - A negative change in fair value of financial instruments of $17.6 million (totaling $22.7 million loss) significantly impacted the net loss, compared to a $5.0 million loss in the prior year, primarily due to the rise in Class A common stock trading price[166] Non-GAAP Financial Measures This section defines and reconciles non-GAAP measures like EBITDA, Adjusted EBITDA, and Free Cash Flow to GAAP metrics - Non-GAAP EBITDA is defined as net loss excluding interest, income taxes, depreciation, and amortization[170] - Non-GAAP Adjusted EBITDA further adjusts EBITDA for other (expense) income, net, changes in fair value of financial instruments, stock-based compensation, and professional fees related to Secured Convertible Notes[171] - Non-GAAP Free Cash Flow is defined as net cash used in operating activities less payments for capital expenditures[172] | Non-GAAP Metric (in thousands of U.S. dollars) | 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 available to stockholders | $(6,652) | $(18,101) | $(39,233) | $(33,279) | | EBITDA (non-GAAP) | $(4,841) | $(14,643) | $(34,020) | $(25,534) | | Adjusted EBITDA (non-GAAP) | $(3,573) | $(10,029) | $(9,629) | $(19,152) | | Net cash used in operating activities | $(4,342) | $(13,776) | $(9,064) | $(23,891) | | Free Cash Flow (non-GAAP) | $(5,118) | $(15,168) | $(11,753) | $(27,225) | Liquidity and Capital Resources The company faces a 'going concern' warning due to accumulated deficits and requires additional capital for operations - As of June 30, 2025, the company had $32.6 million in cash and cash equivalents and an accumulated deficit of $439.3 million[179][180] - Net cash used in operating activities was $9.1 million for the six months ended June 30, 2025[180] - Recent financing activities include $27.6 million net proceeds from Secured Convertible Notes (April 2024), $10.0 million from a private placement of Class A common stock (December 2024), $3.1 million from the ATM Program (H1 2025), and $18.8 million net proceeds from a Registered Direct Offering (April 2025)[182][185][187][189] - Management believes there is 'substantial doubt' about the company's ability to continue as a going concern for one year from the financial statement issuance date without additional capital[191] Cash Flows Summary Cash used in operating activities decreased significantly, while financing activities provided substantial cash | Cash Flow Activity (in thousands of U.S. dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash flows used in operating activities | $(9,064) | $(23,891) | | Net cash flows used in investing activities | $(2,689) | $(3,320) | | Net cash flows provided by financing activities | $21,430 | $27,361 | | Net change in cash, cash equivalents and restricted cash | $9,677 | $150 | - The decrease in cash used in operating activities was primarily due to adjustments for non-cash items and changes in working capital, including improved accounts receivable collection[197][198] - Net cash provided by financing activities was mainly from stock issuances under the Registered Direct Offering and ATM Program, and exercise of stock options[201] Critical Accounting Policies and Estimates Critical accounting policies include revenue recognition, asset impairment, fair value, and income taxes, with no material changes - Critical accounting policies and estimates include revenue recognition, impairment of assets, fair value of financial instruments, and income taxes[203] - There have been no material changes to these critical accounting policies and estimates during the three months ended June 30, 2025[204] Emerging Growth Company and Smaller Reporting Company Status The company maintains EGC and SRC status, allowing for extended accounting transition periods and reduced disclosures - The company is an 'emerging growth company' and has elected to take advantage of the extended transition period for new or revised financial accounting standards[206] - As an EGC, the company is exempt from auditor's attestation report on internal controls (Section 404(b) SOX) and certain PCAOB requirements[207] - The company is also a 'smaller reporting company,' which allows for reduced disclosure obligations, including presenting only two most recent fiscal years of audited financial statements and reduced executive compensation disclosures[209][210] Recent Accounting Pronouncements Information on recent accounting pronouncements and their potential impact is provided in Note 3 - Information on recent accounting pronouncements, their adoption timing, and potential impact is provided in Note 3 to the Condensed Consolidated Financial Statements[211] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there are no quantitative and qualitative disclosures about market risk applicable - This item is not applicable[212] Item 4. Controls and Procedures CEO and CFO concluded disclosure controls were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025[214] - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[215] Part II - Other Information Item 1. Legal Proceedings The company does not believe any pending legal proceedings would be material to its business or financial condition - The company does not believe any currently pending legal claims, lawsuits, or proceedings would be material to its business or financial condition[217] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - No material changes to the risk factors previously disclosed in the 2024 Annual Report[218] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There are no unregistered sales of equity securities or use of proceeds to report for the period - This item is not applicable[219] Item 3. Defaults Upon Senior Securities There are no defaults upon senior securities to report for the period - This item is not applicable[220] Item 4. Mine Safety Disclosures There are no mine safety disclosures applicable to the company for the reporting period - This item is not applicable[221] Item 5. Other Information CEO Emiliano Kargieman adopted a Rule 10b5-1 Trading Plan for the sale of up to 2,000,000 shares - CEO Emiliano Kargieman adopted a Rule 10b5-1 Trading Plan on June 23, 2025, for the sale of up to 2,000,000 shares of common stock[222] - The CEO's trading plan has a term expiring on September 10, 2026[222] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including various agreements and certifications - Key exhibits include the Second Amended and Restated Sales Agreement, Securities Purchase Agreement, Placement Agent Agreement, and Certifications of CEO and CFO[224] Signatures This section contains the formal signatures for the Quarterly Report on Form 10-Q, confirming its submission - The report was signed by Rick Dunn, Chief Financial Officer, on August 12, 2025[227]