Revenue Performance - Revenue for the three months ended September 30, 2025, was $1,446,917, a 1% increase from $1,435,376 in the same period of 2024[131] - Revenue for the nine months ended September 30, 2025, was $4,562,604, a 12% decrease from $5,211,665 in the same period of 2024[132] Profit and Loss - Gross profit for the three months ended September 30, 2025, was $493,307, a 6% increase from $464,445 in the same period of 2024[131] - Net loss for the three months ended September 30, 2025, was $(2,731,341), a 239% increase from $(804,987) in the same period of 2024[131] Expenses - Selling, general and administrative expenses for the three months ended September 30, 2025, were $2,372,465, a 90% increase from $1,245,428 in the same period of 2024[134] - The Company reported a significant increase in consulting and professional fees, rising by $304,136 for the three months ended September 30, 2025, due to preparations for its initial public offering[134] Cash Flow - Cash used in operating activities for the nine months ended September 30, 2025, was $(3,887,737), a decrease of $(5,151,263) compared to cash provided by operating activities of $1,263,526 in the same period of 2024[140] - Cash provided by financing activities for the nine months ended September 30, 2025, was $5,196,432, an increase of $8,760,108 compared to $(3,563,676) in the same period of 2024[142] Financing Activities - The Company entered into an ELOC Facility allowing the sale of up to $25 million of common stock, with 123,208 shares issued for net proceeds of approximately $497,750 as of September 30, 2025[136][138] Seasonal Trends - The Company expects seasonal revenue fluctuations, typically highest in the third and fourth quarters and lowest in the first and second quarters[130]

Financial Performance - Total assets increased to $5,071,410 as of September 30, 2025, up from $3,533,888 as of December 31, 2024, representing a growth of 43.5%[11] - Net loss for the nine months ended September 30, 2025, was $5,696,669, a reduction of 37.5% from $9,136,523 for the same period in 2024[22] - The company reported a net loss per share of $1.65 for the three months ended September 30, 2025, compared to a loss of $20.41 for the same period in 2024[14] - The Company experienced a net cash used in operating activities of $6,428,362 for the nine months ended September 30, 2025, compared to $8,249,334 for the same period in 2024, indicating improved cash flow management[22] - The net loss for Q3 2025 was $1.69 million, improving by $1.48 million from a net loss of $3.17 million in Q3 2024[140] Cash and Capital Management - Cash and cash equivalents at the end of the period were $4,664,127, compared to $6,143,752 at the end of September 30, 2024, reflecting a decrease of 23.9%[22] - The Company anticipates continuing to incur net losses for at least the next twelve months and plans to launch its first product candidate in mid-2026[30] - The Company expects to need additional capital to sustain operations, particularly for marketing and commercialization activities[31] - Management's plans to raise additional capital include proceeds from equity securities or debt offerings and generating product revenue from OTC products[33] - Cash used in operating activities for the nine months ended September 30, 2025, was $6.4 million, an improvement from $8.2 million in the same period in 2024[146] Research and Development - Research and development expenses for the nine months ended September 30, 2025, totaled $2,403,363, slightly down from $6,011,201 for the same period in 2024[14] - For the three months ended September 30, 2025, total research and development expenses were $504,387, compared to $2,401,359 for the same period in 2024, indicating a significant reduction[95] - The Company reported a total contract amount of approximately $7.2 million for the XYNGARI™ Phase 3 STAR-1 clinical trial, with $0.7 million recognized in research and development expense during the nine months ended September 30, 2025[86] - The Company achieved statistically significant results in its Phase 3 STAR-1 clinical trial of XYNGARI for moderate-to-severe acne, leading to a strategic shift towards OTC products[106] - Research and development expenses decreased by $1.9 million from $2.4 million in Q3 2024 to $0.5 million in Q3 2025, primarily due to reduced clinical expenses from the XYNGARI™ STAR-1 acne study[141] Product Development and Launch Plans - The Company plans to launch its first OTC product, a once-weekly topical acne kit, in mid-2026, targeting patients with mild to severe acne[109] - The initial acne kit will utilize salicylic acid as the active ingredient combined with Spongilla technology, aiming to penetrate the skin effectively[111] - The company is exploring the use of Spongilla technology for the topical delivery of botulinum toxin, potentially expanding its applications in dermatology[115] - The company plans to launch its first OTC pharmaceutical product for dermatology in mid-2026, focusing on direct-to-consumer sales[126] - The Company is currently finalizing components for the acne kit and completing brand identity development[111] Equity and Securities - Total stockholders' equity increased to $3,960,102 as of September 30, 2025, from $1,561,094 as of December 31, 2024, marking a growth of 153.5%[11] - The weighted-average basic and diluted Common Stock increased to 1,026,457 for the three months ended September 30, 2025, compared to 155,465 for the same period in 2024[14] - The company has 844,457 shares of common stock issued and outstanding as of September 30, 2025, with a total of 2,103,974 equity securities authorized[58] - The company has a total of 1,238,949 warrants outstanding as of September 30, 2025, with a fair value of $5.02 per share[69] - The company has not issued any preferred stock as of September 30, 2025, despite having 10,000,000 shares authorized[68] Legal and Regulatory Risks - The Company has not generated any revenue or commercialized any product candidates since its inception[29] - The financial statements have been prepared assuming the Company will continue as a going concern, despite substantial doubt about its ability to do so[33] - The company is currently engaged in a dispute regarding a license agreement with Villani, which could materially affect its business if unresolved[180] - The company has received a notice of material breach from Villani, alleging failure to comply with obligations under the license agreement[186] - Regulatory risks associated with the transition from Rx to OTC pathways could delay product launches and increase costs[170] Market and Competitive Landscape - The dermatology market is shifting towards OTC treatments, with over 70% of acne patients opting for OTC products before consulting a dermatologist[107] - The company faces intense competition from major consumer products companies, including Procter & Gamble and Unilever, which have greater financial resources[178] - Shifting consumer behavior towards online shopping is increasing competition from both legacy competitors and digitally native brands[179] - Advertising and promotional effectiveness is critical for maintaining market position and driving sales growth[179] - Ongoing inflationary pressures could lead to price increases on products, potentially adversely impacting demand[179] Future Outlook - The Company expects that its cash and cash equivalents will fund operations into the second quarter of 2026[29] - Future financing will be necessary to support operations, with potential funding through public or private equity or debt[119] - The company anticipates continued growth in selling, general, and administrative expenses, necessitating additional capital to sustain operations until operating income is generated[152] - Future funding requirements will depend on revenues from OTC product candidates and may involve raising additional capital through equity or debt financings[158] - The anticipated shift to over-the-counter pharmaceutical products may impact the company's relationship with licensors and its product development strategy[180]

Product Development and Clinical Trials - Jaguar Health, Inc. is focused on developing crofelemer for various indications, including symptomatic relief of diarrhea in adult patients with HIV/AIDS and chemotherapy-induced diarrhea in dogs [356]. - The OnTarget study showed that crofelemer achieved statistical significance in preventing cancer therapy-related diarrhea in a subgroup of 183 breast cancer patients out of 287 participants [356]. - Jaguar entered into a 5-year exclusive in-license agreement with Venture Life for Gelclair, a product for managing oral mucositis, which was launched in October 2024 [360]. - The company is pursuing orphan drug designation for crofelemer in the metastatic breast cancer population, which aligns with its focus on orphan diseases [359]. - Enrollment in the Phase 2 study for crofelemer in pediatric patients with microvillus inclusion disease (MVID) is at approximately 25% as of June 23, 2025 [371]. - Crofelemer has been granted orphan drug designation for SBS and MVID in both the US and EU, providing various development incentives [375]. - Initial proof-of-concept results from an ongoing trial in Abu Dhabi showed crofelemer reduced total parenteral nutrition by up to 27% in MVID patients [367]. - The company plans to submit a protocol to the FDA for a pivotal treatment trial for metastatic breast cancer patients using crofelemer [358]. - Canalevia-CA1, an FDA-approved treatment for chemotherapy-induced diarrhea in dogs, is now available from multiple veterinary distributors in the US [380]. - The company plans to submit a Marketing Authorization Application (MAA) for Canalevia for general diarrhea in dogs in the EU, contingent on EMA acceptance of their updated study results [387]. Financial Performance - The net loss for the nine months ended September 30, 2025, was $30.8 million, compared to $29.0 million for the same period in 2024, indicating an increase in losses year-over-year [392]. - As of September 30, 2025, the total stockholders' equity was $4.4 million, with an accumulated deficit of $376.9 million and cash reserves of $3.5 million [392]. - The company incurred approximately $3.8 million on its primary R&D projects as of September 30, 2025, with future expenses dependent on trial outcomes and regulatory requirements [397]. - Product revenue for the nine months ended September 30, 2025, was $8,148,000, a slight increase of 0.7% compared to $8,095,000 in 2024 [419]. - Total revenue increased by $96,000, or 1.2%, from $8,180,000 in 2024 to $8,276,000 in 2025 [419]. - License revenue rose by 100% from $85,000 in 2024 to $128,000 in 2025 due to a new license agreement [425]. - Operating expenses totaled $32,942,000, an increase of 6.8% from $30,854,000 in the prior year [419]. - Research and development expenses decreased by $1,355,000, or 11.3%, from $12,008,000 in 2024 to $10,653,000 in 2025 [428]. - Sales and marketing expenses increased by $1,980,000, or 39.8%, from $4,977,000 in 2024 to $6,957,000 in 2025, primarily due to increased personnel costs [429]. - General and administrative expenses rose by $1,287,000, or 10.3%, from $12,471,000 in 2024 to $13,758,000 in 2025 [431]. - Net loss attributable to common stockholders increased by $1,801,000, or 6.3%, from $28,572,000 in 2024 to $30,373,000 in 2025 [419]. - Gross product sales for the nine months ended September 30, 2025, were $11,115,000, up 1.2% from $10,983,000 in 2024 [423]. - Total revenue for the three months ended September 30, 2025, was $3.083 million, a decrease of $25,000 or 0.8% compared to $3.108 million in the same period in 2024 [439]. - Product revenue for the three months ended September 30, 2025, was $3.041 million, a decrease of $25,000 or 0.8% compared to $3.066 million in the same period in 2024 [439]. - The loss before income tax expense for the three months ended September 30, 2025, was $9.648 million, a decrease of $373,000 or 3.7% compared to a loss of $10.021 million in the same period in 2024 [439]. - The net loss attributable to common stockholders for the three months ended September 30, 2025, was $9.502 million, a decrease of $352,000 or 3.6% compared to $9.854 million in the same period in 2024 [439]. Market Opportunities and Strategic Initiatives - Jaguar estimates that US veterinarians see approximately six million annual cases of acute and chronic diarrhea in dogs, highlighting a significant market opportunity for crofelemer [388]. - Canalevia-CA1 received conditional approval from the FDA, allowing for commercialization while the company continues to gather evidence for full approval [389]. - The company has formed a joint venture, Magdalena, to develop novel, natural prescription medicines for mental health, leveraging Jaguar's medicinal plant library [390]. Operational Challenges and Liquidity - The company continues to monitor inflationary pressures, which have contributed to higher operating costs and may impact gross margins in future periods [411]. - The company is focused on maintaining effective liquidity management strategies to address potential cash flow impacts from escalating lease commitments [416]. - The company recognizes challenges related to liquidity, with recurring operating losses and negative cash flows raising uncertainties about future liquidity [458]. - As of September 30, 2025, the company had cash of $3.5 million, which is insufficient to fund its operating plan for at least one year [453]. - Cash provided by financing activities for the nine months ended September 30, 2025, was $13.9 million, a decrease of $14.5 million compared to $28.4 million in the prior period [469]. - Total cash used in operating activities for the nine months ended September 30, 2025, was $18.2 million, a decrease of $3.4 million compared to $21.6 million in the same period in 2024 [464]. Legal and Compliance Expenses - Legal services increased by $1.2 million from $1.6 million for the nine months ended September 30, 2024, to $2.8 million in the same period in 2025 due to higher corporate legal expenses [434]. - Legal services increased by $360,000 from $391,000 in Q3 2024 to $751,000 in Q3 2025 due to higher corporate legal expenses [450]. - Public company expenses decreased by $222,000 from $1.4 million for the nine months ended September 30, 2024, to $1.1 million in the same period in 2025 due to lower printing costs [434]. - Public company expenses decreased by $221,000 from $361,000 in Q3 2024 to $140,000 in Q3 2025 due to lower printing costs [450].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ FORM 10-Q (Mark One) Commission File Number 001-42612 DIGITAL ASSET ACQUISITION CORP. (Exact name of registrant as specified in its charter) Cayman Isl ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-42718 Jefferson Capital, Inc. (Exact name of registrant as specified in its charter) DELAWARE 33-1923926 (IRS Employe ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) DIGITAL ASSET ACQUISITION CORP. (Exact name of registrant as specified in its charter) Cayman Islands N/A (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission File Number 001-42612 ☒ QUARTERLY REPORT UNDER SEC ...

Financial Performance - Net sales for the three months ended September 30, 2025, were $29,166, compared to $22,916 for the same period in 2024, reflecting a year-over-year increase of 27.5%[19] - The net loss for the three months ended September 30, 2025, was $5.10 million, slightly improved from a net loss of $5.30 million in the same period of 2024, indicating a reduction of 3.8%[19] - The net loss for the nine months ended September 30, 2025, was $15,469,715, compared to a net loss of $17,000,508 for the same period in 2024, indicating a 9% improvement in financial performance[29] - The company reported a net loss of $5,100,559 for the three months ended September 30, 2025, compared to a net loss of $5,300,913 for the same period in 2024[125] - Basic and diluted loss per share for the nine months ended September 30, 2025, was $0.12, an improvement from $0.14 in the same period of 2024[125] - Net loss decreased to $5,100,559 for the three months ended September 30, 2025, down 4% from $5,300,913 in the prior year, a reduction of $200,354[158] - Net loss for the nine months ended September 30, 2025, was $15,469,715, a decrease of 9% from $17,000,508 in the prior year[167] Assets and Equity - Total assets increased to $44.79 million as of September 30, 2025, up from $37.81 million at December 31, 2024, representing a growth of 18.5%[17] - Cash and cash equivalents increased to $34.94 million as of September 30, 2025, compared to $27.67 million at December 31, 2024, marking a rise of 26.4%[17] - Total stockholders' equity rose to $41.19 million as of September 30, 2025, up from $33.42 million at December 31, 2024, an increase of 23.2%[17] - The company’s total accumulated deficit increased to $(144,871,901) as of September 30, 2025, compared to $(127,871,393) at the end of 2023[27] - As of September 30, 2025, cash and cash equivalents totaled $34,942,070, with total assets of $44,786,666 and stockholders' equity of $41,190,512[182] Expenses - Research and development expenses for the nine months ended September 30, 2025, totaled $8.65 million, down 32.5% from $12.81 million in the same period of 2024[19] - Research and development expenses decreased by 24% to $2,917,473 for the three months ended September 30, 2025, compared to $3,828,301 for the same period in 2024[154] - General and administrative expenses increased by 54% to $2,290,839 for the three months ended September 30, 2025, compared to $1,490,481 for the same period in 2024[154] - General and administrative expenses increased by 53% to $7,113,774 for the nine months ended September 30, 2025, from $4,642,603 in the prior year[162] Cash Flow - The company reported a net cash used in operating activities of $10,436,426 for the nine months ended September 30, 2025, down from $12,414,222 in 2024, showing a 16% decrease[29] - Net cash provided by financing activities was $18,936,908, consisting of $4,493,488 from the sale of common stock under the 2023 and 2025 Purchase Agreements[181] - For the nine months ended September 30, 2025, the net cash used in operating activities was $10,436,426, primarily due to a net loss of $15,469,715[179] - Net cash used in investing activities for the same period was $1,226,376, which included $953,184 for asset additions for the Colorado headquarters facility and labs[180] Stock and Financing - The company has continued to expand its common stock issuance, raising additional capital through various institutional investments and market sales[21] - The company issued common stock to institutional investors amounting to $4,493,488 during the nine months ended September 30, 2025, compared to $9,175,900 in the same period of 2024, reflecting a 51% decrease[29] - The company has $26.8 million remaining under the 2025 Purchase Agreement and $12.2 million available under the Roth Sales Agreement for future financing needs[199] Revenue Recognition - The company’s revenue recognition is based on technology license and material supply agreements, with revenue recognized when control of goods or services is transferred to customers[36] - As of September 30, 2025, the Company recognized $29,166 and $77,688 in revenue related to its first commercial agreement for the three and nine months ended September 30, 2025, respectively[61] - Licensing and royalty revenue for the nine months ended September 30, 2025, was $77,688, up from $58,938 in the prior year[159] - 100% of the Company's net sales for the nine months ended September 30, 2025, were generated internationally, compared to 81% internationally and 19% in the U.S. in the prior year[160] Development and Operations - The company is focused on developing its proprietary engineered electro-optic polymers for applications in telecommunications and data transmission, potentially supporting generative AI[32] - The company expects to continue incurring substantial research and development expenses to support the commercialization of its electro-optic materials platform[155] - The company commenced commercial operations in May 2023, focusing on a material supply license agreement for Perkinamine chromophore materials[144] - The company has one customer that accounted for 10% or more of total revenue, indicating a concentration of credit risk[135] Legal and Tax Matters - The company did not recognize any income tax benefits for losses for the three and nine months ended September 30, 2025, due to the uncertainty of realizing net deferred tax assets[83] - As of September 30, 2025, the company had no unrecognized tax benefits or related interest and penalties, and no significant changes are expected in the next twelve months[84] - The company has not experienced any material legal proceedings during the reporting period[195]

Preliminary Third Quarter 2025 Financial Results Preliminary Q3 2025 financial results exceeded guidance for Net Sales and Adjusted EBITDA, with a cautionary note on data finalization [Highlights of Preliminary Results](index=1&type=section&id=Highlights_of_Preliminary_Results) Preliminary Q3 2025 Net Sales and Adjusted EBITDA exceeded guidance, with strong year-over-year growth and reduced loss Preliminary Q3 2025 Financial Highlights | Metric | Preliminary Q3 2025 | Guidance | YoY Growth/Change | | :-------------------- | :------------------ | :--------- | :------------------ | | Net Sales | $16.0 million | $15.9 million | 26% Growth | | Adjusted EBITDA | $(2.2) million | $(2.7) million | $3.3 million reduction in loss | [CEO Commentary on Performance](index=1&type=section&id=CEO_Commentary_on_Performance) CEO highlighted preliminary results exceeding guidance, attributing continued Net Sales growth and Adjusted EBITDA improvement to strategic actions - Preliminary Q3 Net Sales and Adjusted EBITDA exceeded guidance, showing continued year-over-year Net Sales growth and Adjusted EBITDA improvement[3](index=3&type=chunk) - Results underscore a focus on driving near-term revenue growth and executing strategic actions, such as a recent equity raise, to enhance financial flexibility and potential for sustained net sales growth and profitability[3](index=3&type=chunk) [Cautionary Note on Preliminary Data](index=1&type=section&id=Cautionary_Note_on_Preliminary_Data) The reported Q3 2025 financial data is preliminary and subject to finalization and potential material adjustments during Form 10-Q preparation - Preliminary Q3 2025 Net Sales and Adjusted EBITDA are subject to finalization and adjustment during the preparation of the Company's Quarterly Report on Form 10-Q[4](index=4&type=chunk) - Investors should exercise caution in relying on this preliminary information, as material adjustments may be identified[4](index=4&type=chunk) Company Overview and Investor Information This section provides an overview of Dragonfly Energy's business and details for its third quarter 2025 webcast [About Dragonfly Energy](index=1&type=section&id=About_Dragonfly_Energy) Dragonfly Energy is a leading lithium battery technology company specializing in cell manufacturing, battery pack assembly, and full system integration - Dragonfly Energy is a comprehensive lithium battery technology company specializing in cell manufacturing, battery pack assembly, and full system integration[7](index=7&type=chunk) - The company's Battle Born Batteries® brand is a frontrunner in the lithium battery industry, with hundreds of thousands of reliable battery packs deployed[7](index=7&type=chunk) - Dragonfly Energy's mission is the future deployment of its proprietary, nonflammable, all-solid-state battery cells, utilizing a patented dry electrode manufacturing process[7](index=7&type=chunk) [Third Quarter 2025 Webcast Details](index=1&type=section&id=Third_Quarter_2025_Webcast_Details) Dragonfly Energy will host a conference call on November 14, 2025, to discuss its Q3 2025 financial and operational results - A conference call to discuss Q3 2025 financial and operational results will be held on Friday, November 14, 2025, at 4:30 PM Eastern Time[5](index=5&type=chunk) - The call can be accessed live via webcast or telephone, with specific dial-in numbers and a conference ID provided[5](index=5&type=chunk) - An archive of the webcast will be available shortly after the call on the Investor Relations section of Dragonfly Energy's website[6](index=6&type=chunk) Disclosures and Non-GAAP Measures This section outlines forward-looking statements and the use of non-GAAP financial measures, including their definitions, rationale, limitations, and reconciliation [Forward-Looking Statements](index=2&type=section&id=Forward_Looking_Statements) This press release contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially - The press release includes forward-looking statements concerning future results, operations, and financial position, subject to risks and uncertainties[9](index=9&type=chunk) - Factors such as market recovery, ability to penetrate new markets, supply chain, intellectual property, and competition could cause actual results to differ materially[10](index=10&type=chunk) - The Company undertakes no obligation to update these statements to reflect events or circumstances occurring after their original date, except as required by law[11](index=11&type=chunk) [Use of Non-GAAP Financial Measures](index=2&type=section&id=Use_of_Non_GAAP_Financial_Measures) Dragonfly Energy uses non-GAAP financial measures like EBITDA and Adjusted EBITDA to supplement GAAP information and enhance understanding of financial performance - Non-GAAP financial measures like EBITDA and Adjusted EBITDA are provided to supplement GAAP information and enhance understanding of financial performance[12](index=12&type=chunk) - These non-GAAP measures should be considered as a supplement to, not a substitute for, financial information prepared on a GAAP basis[12](index=12&type=chunk) [Definition and Rationale for Adjusted EBITDA](index=3&type=section&id=Definition_and_Rationale_for_Adjusted_EBITDA) Adjusted EBITDA is a non-GAAP measure used by management to evaluate operating performance by excluding specific non-cash and non-recurring items - Adjusted EBITDA is a non-GAAP measure calculated by adjusting EBITDA to exclude stock-based compensation expense and changes in fair market value of warrant liabilities[13](index=13&type=chunk) - It is a key measure used by management to evaluate operating performance, generate future operating plans, and make strategic decisions, highlighting trends in core operating results[14](index=14&type=chunk) [Limitations of Adjusted EBITDA](index=3&type=section&id=Limitations_of_Adjusted_EBITDA) Adjusted EBITDA has analytical limitations as it does not reflect cash expenditures, tax expenses, or cash requirements for asset replacements - Adjusted EBITDA does not reflect cash expenditures, future capital expenditure requirements, contractual commitments, or changes in working capital needs[16](index=16&type=chunk) - It does not reflect tax expense or cash requirements to pay taxes, nor does it account for cash requirements for asset replacements despite depreciation and amortization being non-cash charges[16](index=16&type=chunk) - The usefulness of Adjusted EBITDA as a comparative measure is limited because other companies in the industry may calculate it differently[16](index=16&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures](index=4&type=section&id=Reconciliation_of_GAAP_to_Non_GAAP_Measures) A reconciliation table details the calculation of EBITDA and Adjusted EBITDA from Net (Loss) Income Before Taxes for Q3 2025 and Q3 2024 Reconciliation of GAAP to Non-GAAP Measures (Unaudited) (U.S. Dollars in Thousands) | | Three Months Ended | | | :---------------------------------- | :------------------ | :------------------ | | | Sep 30, 2025 | Sep 30, 2024 | | **EBITDA Calculation** | | | | Net (Loss) Income Before Taxes | $(11,089) | $(6,779) | | Interest Expense | 6,409 | 5,615 | | Depreciation and Amortization | 502 | 327 | | **EBITDA** | **$(4,178)** | **$(837)** | | **Adjustments to EBITDA** | | | | Stock - Based Compensation | 168 | 256 | | Separation Agreement Expense | 35 | - | | Lease Impairment | 555 | - | | Preferred Stock Financing expenses | 13 | - | | Debt Restructure Expense | 354 | - | | Change in fair market value of warrant liability | 883 | (4,875) | | **Adjusted EBITDA** | **$(2,170)** | **$(5,456)** |

Revenue Performance - Total revenues for the three months ended September 30, 2025, were $13.2 million, a 7% increase from $12.3 million in the same period of 2024[165]. - For the nine months ended September 30, 2025, total revenues decreased to $36.5 million from $44.2 million, representing a decline of 17%[181]. - Digital colocation revenue decreased by 25% to $7.2 million from $9.5 million year-over-year, primarily due to a reduction in customer numbers and average contract size[166]. - Digital colocation revenue for the same period decreased by 18% to $21.3 million, primarily due to a reduction in customer numbers and average contract size[182]. - Energy management revenue increased by 176% to $5.4 million from $2.0 million, driven by enhanced energy management programs and higher energy prices[167]. - Energy management revenue increased by 121% to $13.6 million, driven by enhanced energy management programs and higher energy prices[183]. - Digital assets mining revenue decreased to $0.6 million from $0.8 million, reflecting industry-wide challenges including higher energy costs and increased network difficulty[168]. - Digital assets mining revenue fell by 85% to $1.6 million, attributed to higher energy costs and increased network difficulty[184]. Profitability and Expenses - Gross profit for the three months ended September 30, 2025, was $8.6 million, compared to $4.3 million in the same period of 2024[165]. - Operating expenses totaled $7.0 million, down from $15.7 million, with significant reductions in stock-based compensation and depreciation[165]. - Selling, general and administrative expenses rose by 34% to $17.5 million, mainly due to higher legal expenses and employee compensation[189]. - Stock-based compensation expenses decreased significantly to $1.7 million from $11.3 million due to the reversal of previously recognized expenses[190]. - The company recorded a net loss of $8.0 million for the nine months ended September 30, 2025, compared to a net loss of $41.6 million in the prior year[181]. - Net income for the three months ended September 30, 2025, was $0.3 million, a significant improvement from a net loss of $12.2 million in the same period of 2024[165]. - For the nine months ended September 30, 2025, the company reported a net loss of $5.9 million, a significant decrease from a net loss of $41.6 million for the same period in 2024, representing an improvement of $35.7 million[218]. Cash Flow and Debt - As of September 30, 2025, the company had $24.2 million in overdue debt, with ongoing legal disputes affecting its financial position[205]. - As of September 30, 2025, the company had a cash and cash equivalent balance of $2.3 million, down from $6.1 million as of December 31, 2024[207]. - The company had negative working capital of $38.7 million as of September 30, 2025, compared to $35.9 million as of December 31, 2024[207]. - Net cash used in operating activities for the nine months ended September 30, 2025, was $3.4 million, contrasting with net cash provided of $3.1 million for the same period in 2024[208]. - The outstanding balance of the Celsius Promissory Note was $10.5 million as of September 30, 2025, all classified as a current liability[214]. - Current liabilities totaled $59.9 million as of September 30, 2025, slightly down from $61.9 million as of December 31, 2024[217]. - The company continues to seek additional capital to address near-term debt repayment obligations and operational costs, indicating a reliance on external debt facilities and potential equity financing[220]. Operational Developments - The company launched a GPU pilot program aimed at expanding its role as an AI cloud provider, with a 100-day plan to evaluate performance and market fit[164]. - Current operational capacity is approximately 129 MW, with additional capacity under development in strategically located sites within the PJM Energy Market[163]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $1.9 million, compared to $2.5 million for the same period in 2024[225]. - The company is actively negotiating with suppliers to optimize cash flow and reduce operational costs[221]. Regulatory Impact - The enactment of the "One Big Beautiful Bill Act" (OBBBA) is expected to have an immaterial impact on the company's financials due to a full valuation allowance[198].

Financial Performance - The company recorded a net loss of $6.0 million for the three months ended September 30, 2025, compared to a net loss of $7.7 million for the same period in 2024, representing a decrease of approximately 22.3%[110] - As of September 30, 2025, the company had an accumulated deficit of $374.0 million[110] - Total operating expenses for the three months ended September 30, 2025, were $7.2 million, compared to $7.0 million for the same period in 2024, an increase of approximately 3.9%[130] - The company incurred net cash used in operating activities of $16.0 million for the nine months ended September 30, 2025, compared to $19.4 million for the same period in 2024, reflecting ongoing research and development expenses and severance costs[162] - The company anticipates incurring additional losses and negative cash flows from operations until it can generate significant milestone payments and royalties from its product candidates[158] - The net change in cash and cash equivalents for the nine months ended September 30, 2025, was a decrease of $13.2 million, compared to a decrease of $15.0 million in 2024[162] Revenue and Expenses - Research and development expenses for the three months ended September 30, 2025, were $2.9 million, down from $4.1 million in the same period of 2024, a reduction of approximately 29.0%[130] - The company recognized $0.2 million in license and other revenue for the three months ended September 30, 2025, compared to $1.0 million in the same period of 2024, a decline of approximately 80.0%[130] - Research and development expenses decreased by $5.4 million from $14.3 million for the nine months ended September 30, 2024 to $9.0 million for the nine months ended September 30, 2025[140] - General and administrative expenses increased by $0.9 million from $8.7 million for the nine months ended September 30, 2024 to $9.6 million for the nine months ended September 30, 2025[141] - License and other revenue increased by $1.7 million from $1.4 million for the nine months ended September 30, 2024 to $3.0 million for the nine months ended September 30, 2025[138] - Other income, net was $5.5 million for the nine months ended September 30, 2025, compared to $0.8 million for the same period in 2024[143] - Interest income for the three months ended September 30, 2025, was $65,000, down from $338,000 in the same period of 2024, a decrease of approximately 80.8%[130] - Interest income decreased by $0.8 million from $1.1 million for the nine months ended September 30, 2024 to $0.3 million for the nine months ended September 30, 2025[142] - Non-cash interest expense on liability related to the sales of future royalties was $8.0 million for the nine months ended September 30, 2025, compared to $7.2 million for the same period in 2024[144] Strategic Actions - The company has paused all internal research and development programs while exploring strategic alternatives to advance its SCS platform and drug development pipeline[121] - The company is considering various strategic alternatives, including potential sales, licenses, or partnerships, to maximize stockholder value[111] - The company expects to require additional capital to fund ongoing operations and may seek financing through equity offerings or debt financings[155] - The company plans to raise additional capital through equity or debt financings, monetizing royalties, or entering into strategic collaborations[158] - The company aims to establish commercial manufacturing capabilities and obtain marketing approvals for its product candidates[161] Going Concern - The company does not believe it will be able to fund its operations for the next 12 months, raising substantial doubt about its ability to continue as a going concern[113] - Cash and cash equivalents are projected to be insufficient to fund operations for the next 12 months, prompting the company to pause all internal research and development programs[159] - The company has raised substantial doubt regarding its ability to continue as a going concern, as its consolidated financial statements do not reflect potential future adjustments related to asset recoverability[160] Cash Flow and Financing - As of September 30, 2025, the company had cash and cash equivalents of $6.8 million[146] - The company sold 109,957 shares of common stock for net proceeds of $1.4 million under the Sales Agreement during the nine months ended September 30, 2025[152] - The company received an additional $3.0 million from the Purchaser in exchange for remaining assets related to its SCS Microinjector technology[149] - Investing activities resulted in a net cash outflow of $9,000 for the nine months ended September 30, 2025, down from $9.9 million in 2024, primarily due to the acquisition of property and equipment[163] - Financing activities provided net cash of $2.8 million for the nine months ended September 30, 2025, a significant decrease from $14.3 million in 2024, mainly from net proceeds of $2.9 million from a Purchase and Sale Agreement[164] - The company has incurred $2.3 million in severance and related costs due to a reduction in force during the nine months ended September 30, 2025[162]