PART I [Business](index=5&type=section&id=Item%201.%20Business) Connexa Sports Technologies, after divesting its legacy business, now focuses on licensing AI and metaverse matchmaking technology and developing a new social networking vertical - On March 18, 2024, the Company acquired **70% of Yuanyu Enterprise Management Co., Limited (YYEM) for $56 million**, concurrently divesting its legacy "Slinger Bag" business for $1.00, making YYEM its sole operating subsidiary[16](index=16&type=chunk)[17](index=17&type=chunk) - Primary revenue is derived from licensing **six metaverse-related technologies and five AI matchmaking patents**, designed to integrate with major AI models like Huawei Pangu and Baidu Wenxinyiyan[20](index=20&type=chunk)[21](index=21&type=chunk) Fiscal Year 2025 Revenue | Metric | Value | | :--- | :--- | | Royalty Revenue | $12.8 million | - A new social networking vertical was established in February 2025 through an agreement with TikTok to produce content for the MENA region, creating an independent revenue stream[27](index=27&type=chunk) - The company has **three main licensees** for its technology, covering Japan/South Korea, UK/Europe, and Sub-Saharan Africa[35](index=35&type=chunk) [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant operational, financial, and regulatory risks, including reliance on licensees, market competition, funding needs, and geopolitical exposure through its Hong Kong subsidiary - A substantial portion of revenue is dependent on intellectual property licensing agreements with third parties, and their failure to perform could significantly impact financial results[61](index=61&type=chunk)[62](index=62&type=chunk) - The love and marriage market is highly competitive with low switching costs for consumers, and competition from large, established players like Facebook's dating feature poses a significant threat[68](index=68&type=chunk)[70](index=70&type=chunk) - The company may require additional financing to fund its working capital needs and growth strategy, with no guarantee of availability on favorable terms[115](index=115&type=chunk)[116](index=116&type=chunk) - Operating a subsidiary in Hong Kong exposes the company to risks from the Chinese government, which could exercise significant oversight and control, potentially impacting operations and stock value[142](index=142&type=chunk)[148](index=148&type=chunk) - The company's former independent auditor, Olayinka Oyebola & Co. (OOC), faces SEC charges, which could impact the credibility of past financial statements for both Connexa and YYEM and potentially require restatements[125](index=125&type=chunk)[127](index=127&type=chunk) - Following the acquisition of YYEM, the former YYEM shareholder owns approximately **55.8% of the company's common stock**, enabling significant influence over corporate matters[161](index=161&type=chunk) [Unresolved Staff Comments](index=36&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) This item is not applicable to the company because it qualifies as a smaller reporting company - Not applicable to smaller reporting companies[178](index=178&type=chunk) [Cybersecurity](index=36&type=section&id=Item%201C.%20Cybersecurity) The company has established a comprehensive cybersecurity risk management framework, managed internally and overseen by the Board, with no material incidents reported for FY2025 - A cybersecurity risk management framework is in place, managed by internal IT staff with oversight from the Board of Directors[180](index=180&type=chunk)[184](index=184&type=chunk) - No cybersecurity incidents occurred during the fiscal year ended April 30, 2025, that resulted in operational interruptions or material impact[183](index=183&type=chunk) [Properties](index=38&type=section&id=Item%202.%20Properties) The company does not own any real estate, leasing its principal office in Hong Kong for HKD 42,000 monthly, with the lease expiring in August 2026 - The company leases its principal office in Hong Kong for **HKD 42,000 per month**, with the lease expiring in August 2026[186](index=186&type=chunk) [Legal Proceedings](index=38&type=section&id=Item%203.%20Legal%20Proceedings) As of the report date, the company was not involved in any pending or threatened legal proceedings expected to materially affect its operations - There are no pending or threatened legal proceedings that could materially affect the company[187](index=187&type=chunk) [Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[189](index=189&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=39&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "YYAI" with 509 holders of record as of August 7, 2025, and it has no plans to pay cash dividends, retaining earnings for operations and expansion - The company's common stock is listed on Nasdaq under the symbol **"YYAI"**[192](index=192&type=chunk) - As of August 7, 2025, there were **509 holders of record** of the common stock[193](index=193&type=chunk) - The company has never declared or paid cash dividends and does not anticipate paying any in the near future[194](index=194&type=chunk) [Selected Financial Data](index=39&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable to the company because it qualifies as a smaller reporting company - Not applicable to smaller reporting companies[200](index=200&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operation](index=40&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operation) For FY2025, revenue increased by 147% to $12.8 million due to new licensing agreements, driving a 145% increase in gross profit and a 71% increase in operating income, while working capital grew 93% despite a decrease in operating cash flow due to increased accounts receivable Results of Operations (FY 2025 vs. FY 2024) | Metric | FY 2025 ($M) | FY 2024 ($M) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $12.8 | $5.2 | +147% | | Gross Profit | $9.8 | $4.0 | +145% | | Operating Income | $6.6 | $3.9 | +71% | Cash Flow Summary (FY 2025 vs. FY 2024) | Metric | FY 2025 ($M) | FY 2024 ($M) | | :--- | :--- | :--- | | Cash Flow from Operating Activities | ($0.38) | $2.49 | | Cash Flow from Financing Activities | $0.39 | ($2.45) | - Working capital increased by **93% to $16.0 million** as of April 30, 2025, up from $8.2 million a year prior[216](index=216&type=chunk) - The decrease in operating cash flow was primarily driven by a **$10.0 million increase in accounts receivable**, as licensees have up to 90 days after year-end to pay[216](index=216&type=chunk)[218](index=218&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company because it qualifies as a smaller reporting company - As a smaller reporting company, we are not required to provide this information[250](index=250&type=chunk) [Financial Statements and Supplementary Data](index=47&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) This section presents the company's audited consolidated financial statements for FY2025 and FY2024, with an unqualified opinion from Enrome LLP, reflecting the reverse acquisition accounting of YYEM and detailing key financial figures and accounting policies - The financial statements were audited by Enrome LLP, which issued an **unqualified opinion**[256](index=256&type=chunk) - The acquisition of YYEM was accounted for as a "reverse acquisition," with YYEM being the accounting acquirer and Connexa (the legal acquirer) being the accounting acquiree[281](index=281&type=chunk)[282](index=282&type=chunk) Consolidated Balance Sheet Highlights (as of April 30) | Metric | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Total Assets | 32,905,794 | 23,164,682 | | Total Liabilities | 6,487,171 | 1,442,006 | | Total Shareholders' Equity | 26,418,623 | 21,722,676 | Consolidated Statement of Operations Highlights (for the year ended April 30) | Metric | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Revenue | 12,818,182 | 5,195,804 | | Net Income | 4,633,447 | 2,625,554 | | Net Income Attributable to Controlling Interest | 3,491,287 | 2,625,554 | - The company's three largest customers accounted for **100% of total accounts receivable and revenues** for the year ended April 30, 2025[353](index=353&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=71&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) On March 24, 2025, the company dismissed Bush & Associates CPA and engaged Enrome LLP as its new independent registered public accounting firm to improve communication efficiency, with no disagreements on accounting principles or disclosures - The company changed its independent auditor from Bush & Associates CPA to Enrome LLP on **March 24, 2025**[383](index=383&type=chunk) - The reason for the change was to address communication challenges due to the geographic locations of the auditor and management[384](index=384&type=chunk) - There were no disagreements with the former auditor on any matter of accounting principles or practices[385](index=385&type=chunk) [Controls and Procedures](index=71&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of April 30, 2025, with no material changes to internal control over financial reporting during the fiscal year - Management concluded that disclosure controls and procedures were **effective** as of the end of the fiscal year, April 30, 2025[387](index=387&type=chunk) - No material changes to internal control over financial reporting occurred during the year ended April 30, 2025[388](index=388&type=chunk) [Other Information](index=72&type=section&id=Item%209B.%20Other%20Information) This item is not applicable - Not applicable[392](index=392&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=72&type=section&id=Item%209C.%20Foreign%20Jurisdictions%20that%20Prevent%20Inspection) This item is not applicable - Not applicable[393](index=393&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=73&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section provides biographical details for the company's executive officers, Thomas Tarala (CEO) and Guibao Ji (CFO), and its five-member Board of Directors, which includes three independent directors and an Audit Committee Financial Expert - The company's executive officers are **Thomas Tarala (CEO)** and **Guibao Ji (CFO)**[396](index=396&type=chunk) - The Board of Directors is composed of **five members, three of whom are independent**[407](index=407&type=chunk)[408](index=408&type=chunk) - Chenlong Liu is qualified as the **Audit Committee Financial Expert**[410](index=410&type=chunk) [Executive Compensation](index=78&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation for FY2025 and FY2024 is detailed, including CEO Thomas Tarala's $720,000 base salary, $300,000 stock signing bonus, and $1,000,000 merger success fee, and CFO Guibao Ji's $250,000 annual salary, with director compensation now a $15,000 quarterly cash payment Executive Compensation (FY 2025) | Name and Principal Position | Salary ($) | Share Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | | Thomas Tarala (CEO) | 320,000 | 1,300,000 | 1,620,000 | | Guibao Ji (CFO) | 111,111 | - | 111,111 | - CEO Thomas Tarala's employment agreement includes a base salary of **$720,000**, a **$300,000 signing bonus** in common stock, and a **$1,000,000 success fee** related to the YYEM merger[429](index=429&type=chunk) - CFO Guibao Ji's employment agreement provides for an annual salary of **$250,000** and a discretionary bonus[436](index=436&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=81&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of August 7, 2025, director Hongyu Zhou was the largest beneficial owner, holding 55.81% of the company's common stock, representing the entire ownership of all current officers and directors as a group, with 1,500,000 shares available for future issuance under the 2020 Global Share Incentive Plan Security Ownership of Major Shareholders and Management | Name | of Shares | % of Class | | :--- | :--- | :--- | | Hongyu Zhou (Director) | 8,127,572 | 55.81% | | All current officers and directors as a group (5 persons) | 8,127,572 | 55.81% | - The 2020 Global Share Incentive Plan has **1,500,000 shares of common stock** available for issuance[449](index=449&type=chunk) [Certain Relationships and Related Transactions and Director Independence](index=82&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) The company has significant related-party transactions with director Hongyu Zhou, including a $2,827,528 contingent receivable from his guarantee on an investment and a $775,406 payable to him for covered expenses - Director Hongyu Zhou has provided a guarantee on the value of the company's investment in Brightstar Technology Group, creating a contingent receivable of **$2,827,528** as of April 30, 2025[450](index=450&type=chunk) - As of April 30, 2025, the company had a payable of **$775,406** to Mr. Zhou for expenses he covered on behalf of the company[451](index=451&type=chunk) [Principal Accountant Fees and Services](index=82&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) The company incurred $200,000 in audit fees for fiscal year 2025 and $120,000 for fiscal year 2024 from its principal independent accountants, with no other fees paid for tax or other services in either year Accountant Fees | Fee Type | Fiscal 2025 ($) | Fiscal 2024 ($) | | :--- | :--- | :--- | | Audit Fees | 200,000 | 120,000 | | Tax Fees | 0 | 0 | | All Other Fees | 0 | 0 | | **Total** | **200,000** | **120,000** | PART IV [Exhibits, Financial Statement Schedules](index=83&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section incorporates the company's financial statements by reference and provides a comprehensive list of all exhibits filed as part of the Annual Report on Form 10-K, including key corporate documents and material agreements - This section lists all exhibits filed with the Form 10-K, including key corporate documents and material contracts[456](index=456&type=chunk)

Part I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Connexa's operations now focus on licensing AI-powered matchmaking and metaverse technology, generating **$12.8 million** in FY2025 royalties, after acquiring YYEM and divesting its legacy business - The company completed the acquisition of a 70% stake in Yuanyu Enterprise Management Co., Limited (YYEM) for a combined **$56 million**, making YYEM its sole operating subsidiary. Concurrently, it sold its legacy "Slinger Bag" business for **$1.00**[16](index=16&type=chunk)[17](index=17&type=chunk) - The core business is licensing its portfolio of six metaverse-related technologies and five AI matchmaking patents to partners worldwide. The AI technology is designed to integrate with major Big Data models like those from Huawei, Baidu, and Alibaba[18](index=18&type=chunk)[20](index=20&type=chunk) Fiscal Year 2025 Revenue | Metric | Value (USD) | | :--- | :--- | | Royalties Generated | $12.8 million | - A new social networking vertical was launched via a Multi-Channel Network (MCN) agreement with TikTok in February 2025 to create and sell content for users in the Middle East and North Africa (MENA) region[27](index=27&type=chunk) - The company has three main licensees for its technology, covering Japan/South Korea, UK/Europe, and Sub-Saharan Africa[35](index=35&type=chunk) - On July 9, 2025, the company received a notice of non-compliance from Nasdaq regarding the composition of its Board and Audit Committee, and has a cure period to regain compliance[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) [Item 1A. Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant business, Hong Kong, and stock ownership risks, including licensee dependence, regulatory uncertainties, and potential Nasdaq delisting - A substantial portion of revenue is dependent on intellectual property licensing agreements with third parties, and the failure of these licensees to perform could significantly impact financial results[61](index=61&type=chunk)[62](index=62&type=chunk) - The love and marriage market is highly competitive with low switching costs. Competitors, including large social media companies like Facebook, could leverage their existing user bases to gain an advantage[68](index=68&type=chunk)[70](index=70&type=chunk) - The company faces risks related to doing business in Hong Kong, including potential oversight from the Chinese government, uncertainty regarding PRC laws on data security and overseas listings, and the impact of the Hong Kong National Security Law[142](index=142&type=chunk)[147](index=147&type=chunk)[156](index=156&type=chunk) - The company is not currently in compliance with Nasdaq Listing Rule 5605 for board and audit committee independence, which could lead to delisting if not cured within the provided timeframe[162](index=162&type=chunk)[164](index=164&type=chunk) - A single shareholder, Hongyu Zhou, beneficially owns approximately **55.8%** of the company's outstanding common stock, giving him significant influence over corporate matters[161](index=161&type=chunk)[175](index=175&type=chunk) - The company's former independent auditor, Olayinka Oyebola & Co. (OOC), has been charged by the SEC, which could impact the credibility of past financial statements for both the company and its subsidiary YYEM[125](index=125&type=chunk)[127](index=127&type=chunk) [Item 1B. Unresolved Staff Comments](index=36&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) This section is not applicable as the company is a smaller reporting company - Not applicable to smaller reporting companies[178](index=178&type=chunk) [Item 1C. Cybersecurity](index=36&type=section&id=Item%201C.%20Cybersecurity) The company maintains an internally managed cybersecurity risk framework with Board oversight, reporting no material incidents in FY2025 - The company has an internally managed cybersecurity risk management framework integrated into its overall enterprise risk management system[180](index=180&type=chunk) - The Board of Directors oversees the cybersecurity risk profile and receives timely information regarding any significant incidents[184](index=184&type=chunk) - There were no cybersecurity incidents during the fiscal year ended April 30, 2025, that resulted in a material impact on the company's business, financial condition, or results of operations[183](index=183&type=chunk) [Item 2. Properties](index=38&type=section&id=Item%202.%20Properties) The company leases its principal office in Hong Kong for approximately **$5,400** monthly, with the lease expiring in August 2026 - The company's principal office is located at Rm. 3212, Tower 1, The Gateway, Harbour City, 25 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong[186](index=186&type=chunk) - The company leases approximately 800 square feet for HKD42,000 (approx. **$5,400**) per month, with the lease expiring on August 3, 2026[186](index=186&type=chunk) [Item 3. Legal Proceedings](index=38&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any material pending or threatened legal proceedings - There were no pending or threatened legal proceedings that could reasonably be expected to have a material effect on the Company's results of operations[187](index=187&type=chunk) [Item 4. Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[189](index=189&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=39&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under 'YYAI', with no cash dividends paid or planned, and maintains an equity incentive plan - The company's common stock is listed on Nasdaq under the symbol "YYAI". As of August 7, 2025, there were **14,563,019** shares outstanding[6](index=6&type=chunk)[192](index=192&type=chunk) - The company has never declared or paid cash dividends and does not plan to in the near future[194](index=194&type=chunk) - On November 21, 2024, the Company issued **8,127,572** shares of common stock to complete the acquisition of a 70% ownership stake in YYEM[198](index=198&type=chunk) [Item 6. Selected Financial Data](index=39&type=section&id=Item%206.%20Selected%20Financial%20Data) This section is not applicable as the company is a smaller reporting company - Not applicable to smaller reporting companies[200](index=200&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation](index=40&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operation) FY2025 saw significant revenue and gross profit growth driven by licensing, though increased G&A expenses led to a net cash outflow from operations Results of Operations (Year Ended April 30) | | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $12,818,182 | $5,195,804 | $7,622,378 | 147% | | **Gross Profit** | $9,841,259 | $4,018,881 | $5,822,378 | 145% | | **Operating Income** | $6,659,857 | $3,854,505 | $2,725,352 | 71% | - Revenue growth was driven by royalty income from new licensees following agreements made in January 2024[213](index=213&type=chunk) - General and administrative expenses increased significantly by **$3.1 million (1,884%)** due to business growth and costs related to YYEM becoming a Nasdaq-listed company's operating subsidiary, including audit fees, legal fees, and D&O compensation[215](index=215&type=chunk) Cash Flow Summary (Year Ended April 30) | | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash (used in)/provided by Operating Activities** | $(379,388) | $2,486,255 | | **Net cash (used in)/provided by Financing Activities** | $394,781 | $(2,446,904) | - Working capital increased by **93%** to **$16.0 million** as of April 30, 2025, largely due to a **$10.0 million** increase in accounts receivable[216](index=216&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not required as the company is a smaller reporting company - As a smaller reporting company, we are not required to provide this information[250](index=250&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=47&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) FY2025 financial statements show **$32.9 million** in total assets and **$4.6 million** net income, reflecting YYEM reverse acquisition accounting and significant customer concentration Consolidated Balance Sheet Highlights (As of April 30) | | 2025 | 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $22,396,159 | $9,678,124 | | **Total Assets** | $32,905,794 | $23,164,682 | | **Total Current Liabilities** | $6,487,171 | $1,442,006 | | **Total Shareholders' Equity** | $26,418,623 | $21,722,676 | Consolidated Statement of Operations Highlights (Year Ended April 30) | | 2025 | 2024 | | :--- | :--- | :--- | | **Revenue** | $12,818,182 | $5,195,804 | | **Net Income** | $4,633,447 | $2,625,554 | | **Net income per share - basic** | $0.36 | $0.23 | - The acquisition of YYEM was accounted for as a "reverse acquisition," with YYEM deemed the accounting acquirer. The consolidated financial statements represent a continuation of YYEM's financial statements[281](index=281&type=chunk)[282](index=282&type=chunk) - The company has a significant customer concentration risk. For the year ended April 30, 2025, three major customers accounted for **100%** of total accounts receivable and **100%** of total revenues[350](index=350&type=chunk)[353](index=353&type=chunk) - On June 30, 2025, the company entered into a securities purchase agreement for a private placement to raise gross proceeds of **$4.6 million** through the sale of **20 million** units at **$0.23** per unit[381](index=381&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=71&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company changed its independent auditor to Enrome LLP in March 2025 due to geographical challenges, reporting no disagreements with the former firm - On March 24, 2025, the company engaged Enrome LLP as its independent registered public accounting firm, dismissing Bush & Associates CPA (B&A)[383](index=383&type=chunk) - The company stated there were no disagreements with the former auditor, B&A, on any matter of accounting principles, financial statement disclosure, or auditing scope[385](index=385&type=chunk) [Item 9A. Controls and Procedures](index=71&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of April 30, 2025, with no material changes to internal controls during the fiscal year - Based on an evaluation as of the end of the period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of April 30, 2025[387](index=387&type=chunk) - There were no material changes to the company's internal control over financial reporting during the year ended April 30, 2025[388](index=388&type=chunk) [Item 9B. Other Information](index=72&type=section&id=Item%209B.%20Other%20Information) This section is not applicable - Not applicable[392](index=392&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=72&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This section is not applicable - Not applicable[393](index=393&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=73&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The company's leadership includes CEO Thomas Tarala and CFO Guibao Ji, with a five-member Board of Directors, including independent members and an Audit Committee Financial Expert - The executive officers are Thomas Tarala (CEO) and Guibao Ji (CFO). The board of directors consists of Thomas Tarala, Hongyu Zhou, Chenlong Liu, and Kong Liu[396](index=396&type=chunk) - The Board is composed of five members, with Chenlong Liu and Kong Liu determined to be independent directors[407](index=407&type=chunk)[408](index=408&type=chunk) - Chenlong Liu is qualified as the Audit Committee Financial Expert[410](index=410&type=chunk) [Item 11. Executive Compensation](index=78&type=section&id=Item%2011.%20Executive%20Compensation) FY2025 CEO compensation totaled **$1.62 million**, including salary and share awards, while director compensation was set at **$15,000** cash per quarter FY2025 Named Executive Officer Compensation | Name and Principal Position | Salary ($) | Share Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | | Thomas Tarala (CEO) | 320,000 | 1,300,000 | 1,620,000 | | Guibao Ji (CFO) | 111,111 | - | 111,111 | - CEO Thomas Tarala's employment agreement includes a **$720,000** annual base salary, a **$300,000** stock signing bonus, and a **$1.0 million** success fee related to the YYEM merger[429](index=429&type=chunk) - CFO Guibao Ji's employment agreement includes an annual salary of **$250,000** and a discretionary bonus[436](index=436&type=chunk) - Director compensation was set at **$15,000** cash per quarter, retroactive to each director's appointment[417](index=417&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=81&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Director Hongyu Zhou beneficially owns **55.81%** of the common stock, making him the largest shareholder, with **1,500,000** shares available under the incentive plan Security Ownership of Major Shareholders and Management | Name | of Shares | % of Class | | :--- | :--- | :--- | | Hongyu Zhou (Director) | 8,127,572 | 55.81% | | All current officers and directors as a group (5 persons) | 8,127,572 | 55.81% | - Percentages are based on **14,563,019** shares of Common Stock outstanding as of August 7, 2025[443](index=443&type=chunk) - The company has **1,500,000** shares of common stock available for issuance under its 2020 Global Share Incentive Plan[449](index=449&type=chunk) [Item 13. Certain Relationships and Related Transactions and Director Independence](index=82&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Director Hongyu Zhou provided a **$4.2 million** guarantee on an investment, resulting in a **$2.8 million** contingent receivable and a **$775,406** payable to him as of April 30, 2025 - Director Hongyu Zhou has provided a guarantee on the value of the company's investment in Brightstar Technology Group Co., Ltd., obligating him to compensate for any decline below a guaranteed amount of **$4,210,385** upon sale[450](index=450&type=chunk) - As of April 30, 2025, the company had a contingent receivable of **$2,827,528** from Mr. Zhou related to the guarantee and a payable of **$775,406** to Mr. Zhou for reimbursed expenses[450](index=450&type=chunk)[451](index=451&type=chunk) [Item 14. Principal Accountant Fees and Services](index=82&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Audit fees from independent accountants increased to **$200,000** in FY2025 from **$120,000** in FY2024, with no other service fees incurred Accountant Fees | | Fiscal 2025 | Fiscal 2024 | | :--- | :--- | :--- | | Audit Fees | $200,000 | $120,000 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | | **Total** | **$200,000** | **$120,000** | Part IV [Item 15. Exhibit and Financial Statement Schedules](index=83&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists all exhibits and incorporates financial statements by reference, including corporate governance documents, material contracts, and SEC certifications - This section lists the financial statements and exhibits filed with the Form 10-K, including corporate governance documents, material contracts, and SEC certifications[455](index=455&type=chunk)[456](index=456&type=chunk)

Part I: [Financial Information](index=5&type=section&id=Part%20I%20FINANCIAL%20INFORMATION) This section presents unaudited financial statements and management's analysis of financial condition and operations [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed financial statements for the quarterly period ended June 30, 2025. It includes the balance sheets, statements of operations, statements of stockholders' equity, and statements of cash flows, along with accompanying notes that provide detailed explanations of the company's accounting policies and financial data [Condensed Balance Sheets](index=5&type=section&id=Condensed%20Balance%20Sheets) This section details the company's financial position, including assets, liabilities, and stockholders' equity Condensed Balance Sheet Summary (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$600,778** | **$678,429** | | Cash and cash equivalents | $250,549 | $349,282 | | Accounts receivable, net | $208,976 | $220,883 | | **Total Liabilities** | **$246,650** | **$221,146** | | User redemption liability | $70,922 | $74,006 | | **Total Stockholders' Equity** | **$354,128** | **$457,283** | - Total assets decreased primarily due to a reduction in cash and cash equivalents, while total stockholders' equity declined significantly, driven by a large increase in treasury stock from **$31.3 million** to **$172.9 million** due to share repurchases[16](index=16&type=chunk) [Condensed Statements of Operations](index=6&type=section&id=Condensed%20Statements%20of%20Operations) This section presents the company's financial performance, including revenue, expenses, and net income or loss Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$86,029** | **$87,926** | **$170,603** | **$170,253** | | Gross Profit | $68,104 | $75,643 | $135,586 | $147,455 | | Income (Loss) from Operations | $1,238 | $(21,657) | $(1,565) | $(5,752) | | **Net Income (Loss)** | **$2,490** | **$(33,966)** | **$3,045** | **$(24,669)** | | Diluted EPS | $0.08 | $(1.32) | $0.10 | $(1.41) | - The company shifted from a significant net loss in Q2 and H1 2024 to a net income in the same periods of 2025, despite relatively flat revenue. This was primarily driven by a substantial reduction in operating expenses, particularly in Sales and Marketing[18](index=18&type=chunk) [Condensed Statements of Cash Flows](index=9&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) This section details cash flows from operating, investing, and financing activities Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $45,715 | $54,386 | | Net cash used in investing activities | $(11,968) | $(4,789) | | Net cash (used in) provided by financing activities | $(132,830) | $205,670 | | **Net change in cash** | **$(99,083)** | **$255,267** | - Financing activities resulted in a significant cash outflow of **$132.8 million** in H1 2025, mainly due to **$140.2 million** in treasury stock purchases. This contrasts sharply with H1 2024, which saw a **$205.7 million** cash inflow from the company's IPO[30](index=30&type=chunk) [Notes to the Condensed Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20the%20Condensed%20Financial%20Statements%20%28Unaudited%29) This section provides detailed explanations of accounting policies, significant transactions, and financial data - The company's primary revenue source is fees from CPG brands when consumers redeem digital promotions through the Ibotta Performance Network (IPN)[34](index=34&type=chunk) - In April 2024, upon the IPO, the company's convertible notes automatically converted to Class A common stock, resulting in a **$9.6 million** loss on debt extinguishment[65](index=65&type=chunk) - A securities class action complaint was filed against the company on April 17, 2025, alleging false and misleading statements in the IPO registration statement. The company intends to defend the case vigorously[128](index=128&type=chunk)[130](index=130&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance and condition, focusing on key operational metrics, results of operations for the three and six months ended June 30, 2025 compared to 2024, and liquidity and capital resources. The analysis highlights a strategic shift with growth in third-party publisher revenue offsetting a decline in direct-to-consumer (D2C) revenue, and a significant use of cash for share repurchases [Financial and Operational Highlights](index=28&type=section&id=Financial%20and%20Operational%20Highlights) This section details Financial and Operational Highlights Key Metrics Comparison (in thousands, except per-unit data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Redemptions | 80,484 | 80,715 | 163,324 | 152,181 | | Redeemers | 17,336 | 13,702 | 17,213 | 13,095 | | Redemptions per redeemer | 4.6 | 5.9 | 9.5 | 11.6 | | Revenue | $86,029 | $87,926 | $170,603 | $170,253 | | Net Income (Loss) | $2,490 | $(33,966) | $3,045 | $(24,669) | | Adjusted EBITDA | $17,882 | $25,274 | $32,555 | $47,933 | - While total redeemers grew significantly year-over-year, redemptions per redeemer declined, indicating lower engagement per user. Adjusted EBITDA also saw a notable decrease in both the three and six-month periods[137](index=137&type=chunk) [Performance Metrics](index=29&type=section&id=Performance%20Metrics) This section details Performance Metrics - The company's growth is driven by its third-party publisher network, which saw redeemers increase from **11.9 million** to **15.7 million** in Q2 YoY[142](index=142&type=chunk)[152](index=152&type=chunk) - Conversely, the direct-to-consumer (D2C) segment experienced a decline, with D2C redeemers falling from **1.8 million** to **1.6 million** in Q2 YoY, attributed to the quantity and quality of available offers[142](index=142&type=chunk)[151](index=151&type=chunk) - Growth in third-party publisher redemptions was primarily driven by the launch of new partners, including Family Dollar, Instacart, and DoorDash[147](index=147&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) This section details Results of Operations Revenue Breakdown - Q2 2025 vs Q2 2024 (in thousands) | Revenue Source | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total D2C Revenue | $37,441 | $46,275 | $(8,834) | (19)% | | Total Third-Party Publishers Revenue | $48,588 | $41,651 | $6,937 | 17% | | **Total Revenue** | **$86,029** | **$87,926** | **$(1,897)** | **(2)%** | - Sales and marketing expenses for Q2 2025 decreased by **$21.2 million** (42%) compared to Q2 2024, mainly due to a **$21.9 million** reduction in stock-based compensation expense, a significant portion of which was related to the Walmart Warrant[189](index=189&type=chunk) - Cost of revenue increased by **$5.6 million** (46%) in Q2 2025 compared to Q2 2024, primarily due to the addition of new third-party publishers[188](index=188&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) This section details Liquidity and Capital Resources - As of June 30, 2025, principal sources of liquidity were **$250.5 million** in cash and cash equivalents and **$99.0 million** available under a revolving credit facility[208](index=208&type=chunk) - The Board of Directors has authorized a Share Repurchase Program of up to **$300 million**. During the six months ended June 30, 2025, the company repurchased **$141.6 million** of its Class A common stock[214](index=214&type=chunk)[216](index=216&type=chunk) - The company has non-cancelable purchase obligations of **$148.2 million** and operating lease obligations of **$37.5 million** as of June 30, 2025[223](index=223&type=chunk)[224](index=224&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company identifies its primary market risks as interest rate risk and inflation risk. Interest rate risk pertains to fluctuations on its cash holdings and potential future debt. Inflation risk could increase operating costs. Management states that neither of these risks has had a material effect on the business to date - The company is exposed to interest rate risk on its **$250.6 million** in cash, cash equivalents, and restricted cash, and on its floating-rate credit line, which had no outstanding balance as of June 30, 2025[231](index=231&type=chunk)[232](index=232&type=chunk) - Management does not believe that inflation has had a material effect on the business, but acknowledges that significant inflationary pressures on costs could harm the business if they cannot be offset[233](index=233&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and interim CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of June 30, 2025. There were no material changes to the company's internal control over financial reporting during the quarter - Based on an evaluation as of the end of the period, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[234](index=234&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[235](index=235&type=chunk) Part II: [Other Information](index=47&type=section&id=Part%20II%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity transactions, and other disclosures [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company reports it is a defendant in a consolidated putative securities class action lawsuit filed in April and May 2025. The complaints allege violations of the Securities Act and Exchange Act related to materially false and misleading statements in the company's IPO registration statement and subsequent public statements. The company intends to defend the case vigorously but cannot estimate a range of potential loss - Two putative securities class action complaints were filed against the company, its officers, directors, and IPO underwriters in April and May 2025, which have since been consolidated[239](index=239&type=chunk) - The lawsuits allege materially false and misleading statements in the IPO registration statement regarding risks, data measurement tools, the D2C platform, and client budgets. The company intends to defend itself vigorously[239](index=239&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks that could adversely affect the company's business, financial condition, and stock price. Key risks highlighted include a history of net losses, dependence on key publishers (like Walmart) and CPG brands, potential failure to sustain revenue growth, intense competition, macroeconomic pressures, and risks associated with the dual-class stock structure which concentrates voting power with the CEO - The company has a history of net losses and an accumulated deficit of **$137.4 million** as of June 30, 2025, with an expectation of increasing future expenses[244](index=244&type=chunk) - A substantial portion of the company's white-label redemptions originate from its relationship with Walmart. The termination or non-renewal of the Walmart Program Agreement could materially and adversely affect the business[252](index=252&type=chunk) - The dual-class stock structure concentrates approximately **71.4%** of the voting power with Founder and CEO Bryan Leach as of June 30, 2025, allowing him to control stockholder decisions[422](index=422&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=98&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Securities) This section provides details on the company's repurchases of its Class A common stock during the second quarter of 2025. The repurchases were made under a board-authorized Share Repurchase Program, which was increased to a total of $300 million Share Repurchase Activity - Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 1,043,146 | $45.77 | | May 2025 | 345,227 | $48.56 | | June 2025 | 60,000 | $49.44 | | **Total** | **1,448,373** | **N/A** | - The total authorization under the Share Repurchase Program was increased to **$300 million** after the board approved an additional **$100 million** in both March and June 2025[455](index=455&type=chunk) [Item 5. Other Information](index=98&type=section&id=Item%205.%20Other%20Information) This section discloses the adoption of Rule 10b5-1 trading plans by certain executive officers during the quarter. CEO Bryan Leach and Chief People Officer Marisa Daspit both established such plans in May 2025 to facilitate the sale of company stock - On May 19, 2025, CEO Bryan Leach and his family trusts adopted a Rule 10b5-1 trading plan for the sale of up to **281,532** shares of Class A common stock, plus additional shares related to vested RSUs[459](index=459&type=chunk) - On May 29, 2025, Chief People Officer Marisa Daspit adopted a Rule 10b5-1 trading plan for the sale of up to **51,625** shares of Class A common stock[461](index=461&type=chunk) [Other Items (Defaults, Mine Safety, Exhibits)](index=98&type=section&id=Other%20Items) This section covers standard reporting items including defaults, mine safety disclosures, and filed exhibits - The company reported no defaults upon senior securities and had no mine safety disclosures to report for the period[457](index=457&type=chunk)[458](index=458&type=chunk)

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents AIRO Group Holdings, Inc.'s unaudited condensed consolidated financial statements for periods ending June 30, 2025 and 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash | $40.3M | $20.7M | | Total Current Assets | $79.2M | $42.6M | | Goodwill | $572.0M | $557.5M | | **Total Assets** | **$747.8M** | **$701.0M** | | **Liabilities & Equity** | | | | Total Current Liabilities | $66.5M | $96.6M | | **Total Liabilities** | **$68.3M** | **$152.3M** | | **Total Stockholders' Equity** | **$679.6M** | **$548.7M** | - Total assets increased to **$747.8 million** from **$701.0 million** at year-end 2024, driven by a significant rise in cash following the IPO[11](index=11&type=chunk) - Total liabilities saw a substantial decrease to **$68.3 million** from **$152.3 million**, primarily due to the settlement of contingent consideration and other borrowings post-IPO[12](index=12&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $24.6M | $9.8M | +151.0% | | Gross Profit | $15.0M | $5.8M | +160.3% | | Loss from Operations | ($19.7M) | ($2.7M) | +631.1% | | Net Income (Loss) | $5.9M | ($5.6M) | Turnaround | | Basic EPS | $0.32 | ($0.34) | Turnaround | - The company achieved net income of **$5.9 million** in Q2 2025, a significant **Turnaround** from a net loss of **($5.6 million)** in Q2 2024, primarily driven by a **$15.6 million** gain on debt extinguishment and **$20.1 million** in other income, offsetting a higher loss from operations[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows Highlights (Unaudited, Six Months Ended June 30) | Cash Flow Activity | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | ($30.8M) | ($7.8M) | | Net cash used in investing activities | ($1.1M) | ($0.5M) | | Net cash provided by financing activities | $49.6M | $0.7M | | **Net increase (decrease) in cash** | **$19.6M** | **($7.8M)** | - Net cash provided by financing activities was **$49.6 million** for the first six months of 2025, primarily due to **$61.5 million** in net proceeds from the sale of common stock in the IPO[27](index=27&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company completed its Initial Public Offering (IPO) on June 16, 2025, raising net proceeds of **$61.5 million**, which management believes are sufficient to meet obligations and fund operations for at least the next twelve months, alleviating previous substantial doubt about its ability to continue as a going concern[33](index=33&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - As a result of the IPO, contingencies on certain liabilities were resolved, leading to **$17.5 million** in recorded income, with the settlement involving issuing **1.4 million** shares and paying **$3.3 million** in cash during the quarter[61](index=61&type=chunk) - In September 2024, the company recorded goodwill impairment charges of **$17.0 million** for the Electric Air Mobility segment and **$21.0 million** for the Training segment, triggered by the termination of a planned Business Combination Agreement and delays in securing financing[164](index=164&type=chunk)[165](index=165&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=59&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operational results, IPO impact, and liquidity for periods ending June 30, 2025 and 2024 [Overview](index=59&type=section&id=Overview) - AIRO Group operates as a technologically differentiated aerospace, autonomy, and air mobility platform organized into four segments: Drones, Avionics, Training, and Electric Air Mobility[251](index=251&type=chunk)[252](index=252&type=chunk) - The company completed its IPO on June 16, 2025, raising net proceeds of **$61.5 million**, which is expected to fund future operations and growth[259](index=259&type=chunk) [Results of Operations](index=67&type=section&id=Results%20of%20Operations) Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 ($) | Q2 2024 ($) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $24.6M | $9.8M | +151.0% | | Gross Profit | $15.0M | $5.8M | +160.3% | | General & Administrative Expense | $28.9M | $3.9M | +640.5% | | Net Income (Loss) | $5.9M | ($5.6M) | Turnaround | - The **151%** YoY revenue growth in Q2 2025 was primarily driven by a **$15.0 million** increase in the Drones segment, attributed to successful market entry strategies targeting NATO member countries[296](index=296&type=chunk) - General and administrative expenses increased by **$25.0 million**, largely due to **$13.3 million** in corporate costs contingent upon the IPO, including equity compensation, bonuses, and legal settlement accruals[301](index=301&type=chunk) [Liquidity and Capital Resources](index=71&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had cash and restricted cash of **$40.5 million** and working capital of **$12.6 million**[309](index=309&type=chunk) - Management believes that the proceeds from the IPO and existing cash are sufficient to fund operations for at least the next 12 months[309](index=309&type=chunk) - For the six months ended June 30, 2025, net cash provided by financing activities was **$49.6 million**, mainly from the IPO proceeds, while net cash used in operating activities was **$30.8 million**[314](index=314&type=chunk)[315](index=315&type=chunk)[317](index=317&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=81&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is foreign currency exchange rate exposure from international operations and sales, subject to global political and economic factors - The company's primary market risk is foreign currency exchange rate risk, as a majority of its sales are to international customers and it has operations in Canada and Denmark[361](index=361&type=chunk) - International sales are subject to numerous political and economic factors, including changes in foreign government budgets, global economic conditions, trade sanctions, and regulatory requirements[361](index=361&type=chunk) [Item 4. Controls and Procedures](index=81&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of June 30, 2025, due to identified material weaknesses in internal financial reporting controls - The CEO and CFO concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025[363](index=363&type=chunk) - The ineffectiveness is attributed to material weaknesses in internal control over financial reporting[363](index=363&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=82&type=section&id=Item%201.%20Legal%20Proceedings) Details several legal actions, including settlements with Robert Perrin and First Citizens Community Bank, and an accrued **$0.8 million** for litigation as of June 30, 2025 - In March 2025, the company agreed to settle a lawsuit with stockholder Robert Perrin for **$0.8 million**, to be paid over six quarters starting in Q3 2025[368](index=368&type=chunk) - A legal action from First Citizens Community Bank (FCCB) was settled, and all payment obligations of approximately **$0.2 million** were fulfilled as of April 30, 2025[367](index=367&type=chunk) - As of June 30, 2025, the company had accrued **$0.8 million** related to litigation[369](index=369&type=chunk) [Item 1A. Risk Factors](index=82&type=section&id=Item%201A.%20Risk%20Factors) Outlines key investment risks including limited operating history, recurring losses, supplier dependency, regulatory hurdles for eVTOL, government contract reliance, and internal control weaknesses - The company has a limited operating history, a history of losses, and expects to incur significant expenses and continuing losses for the foreseeable future[371](index=371&type=chunk)[375](index=375&type=chunk)[377](index=377&type=chunk) - Material weaknesses in internal control over financial reporting have been identified, which could affect the ability to accurately and timely report financial results[373](index=373&type=chunk)[493](index=493&type=chunk) - The business is highly dependent on sales to the U.S. government, particularly the Department of Defense, making it vulnerable to budget cuts, funding changes, or contract terminations[373](index=373&type=chunk)[457](index=457&type=chunk) - The market for eVTOL aircraft is still emerging and unproven, and the company's eVTOL aircraft is still in development and has not yet obtained FAA certification[373](index=373&type=chunk)[428](index=428&type=chunk)[429](index=429&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=126&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported for the period - None reported for the period[539](index=539&type=chunk) [Item 3. Defaults Upon Senior Securities](index=126&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported for the period - None reported for the period[540](index=540&type=chunk) [Item 4. Mine Safety Disclosures](index=126&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[541](index=541&type=chunk) [Item 5. Other Information](index=126&type=section&id=Item%205.%20Other%20Information) Discloses new employment agreements for key executives and a five-year lease agreement in Phoenix, Arizona, for drone innovation expansion - On August 11, 2025, the company entered into new employment agreements with CEO Joseph Burns (**$700k** base salary, **$350k** IPO bonus), President John Uczekaj (**$500k** base salary), and Executive Chairman Chirinjeev Kathuria (**$400k** base salary, **$100k** IPO bonus)[543](index=543&type=chunk)[544](index=544&type=chunk) - On August 12, 2025, the company entered into a five-year lease in Phoenix, Arizona, to expand its U.S. drone innovation footprint, with total expected rent payments of approximately **$2.3 million**[545](index=545&type=chunk)[546](index=546&type=chunk) [Item 6. Exhibits](index=128&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including corporate governance documents, equity incentive plans, and new agreements - The report includes several exhibits, such as the Amended and Restated Certificate of Incorporation, the 2025 Equity Incentive Plan, and new employment agreements for key executives[547](index=547&type=chunk)

[Business Update and Highlights](index=1&type=section&id=Business%20Update%20and%20Highlights) Cyclacel executed key financing activities, including a reverse stock split, and advanced a strategic acquisition of FITTERS Sdn. Bhd. [Corporate and Financing Activities](index=1&type=section&id=Corporate%20and%20Financing%20Activities) During and shortly after the second quarter of 2025, Cyclacel executed several key corporate and financing actions, including dividend payments, a stock sale, and a reverse stock split - Declared and paid quarterly cash dividends of **$0.15 per share** on its 6% Convertible Exchangeable Preferred Stock in both April and June 2025[4](index=4&type=chunk) - In June, the company raised **$3.0 million** in gross proceeds by selling 3,000,000 shares of Series F Convertible Preferred Stock to accredited investors at $1.00 per share[4](index=4&type=chunk) - A **one-for-fifteen reverse stock split** was implemented, effective July 7, 2025, to meet the Nasdaq Capital Market's minimum share bid price requirement[4](index=4&type=chunk) [Strategic Transactions](index=1&type=section&id=Strategic%20Transactions) The company entered into a share exchange agreement to acquire FITTERS Sdn. Bhd., later amended to include a cash consideration and extended deadline, with a shareholder vote scheduled - Announced a share exchange agreement with FITTERS Diversified Berhad to acquire **100%** of FITTERS Sdn. Bhd. in exchange for approximately **19.99%** of Cyclacel's common stock[4](index=4&type=chunk) - The agreement was amended in July to include a **$1.0 million cash payment** from Cyclacel to FITTERS Parent and to extend the final closing date to September 30, 2025[5](index=5&type=chunk) - A special meeting is scheduled for September 4, 2025, for shareholders to vote on the approval of the transaction[5](index=5&type=chunk) [Second Quarter 2025 Financial Results](index=2&type=section&id=Second%20Quarter%202025%20Financial%20Results) The company significantly reduced its net loss in Q2 2025 due to substantial decreases in operating expenses, improving its cash position [Cash Position and Liquidity](index=2&type=section&id=Cash%20Position%20and%20Liquidity) As of June 30, 2025, the company's cash and cash equivalents stood at $4.3 million, an increase from $3.2 million at the end of 2024, projected to fund expenditures into Q4 2025 | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $4.3 million | $3.2 million | - Net cash used in operating activities was **$1.1 million** for the three months ended June 30, 2025[6](index=6&type=chunk) - The company estimates its current cash resources will fund planned expenditures into the **fourth quarter of 2025**[6](index=6&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Total operating expenses saw a substantial year-over-year decrease, driven by significant reductions in both Research & Development and General & Administrative costs following strategic changes [Research and Development (R&D) Expenses](index=2&type=section&id=Research%20and%20Development%20(R%26D)%20Expenses) R&D expenses dramatically decreased to $0.1 million for Q2 2025 from $2.0 million in Q2 2024, primarily due to the cessation of the transcriptional regulation program after the UK subsidiary's liquidation | Expense Category | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | R&D Expenses | $0.1 million | $2.0 million | - The decrease was mainly due to the liquidation of the UK subsidiary, Cyclacel Limited, on January 24, 2025, which halted expenditure for the transcriptional regulation program[7](index=7&type=chunk) [General and Administrative (G&A) Expenses](index=2&type=section&id=General%20and%20Administrative%20(G%26A)%20Expenses) G&A expenses were reduced to $1.2 million in Q2 2025 from $1.6 million in the same period of 2024, reflecting lower operating costs partially offset by one-time legacy severance and higher legal fees | Expense Category | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | G&A Expenses | $1.2 million | $1.6 million | - The reduction was attributed to lower operating costs, with savings partially offset by one-off legacy severance costs and increased legal fees[8](index=8&type=chunk) [Net Loss](index=2&type=section&id=Net%20Loss) The company's net loss for Q2 2025 narrowed significantly to $1.3 million, compared to $3.3 million in Q2 2024, primarily due to reduced operating expenses despite the absence of UK R&D tax credits | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Loss | $1.3 million | $3.3 million | - There were **no research and development tax credits** in Q2 2025, compared to **$0.4 million** in Q2 2024, due to the liquidation of the UK subsidiary[9](index=9&type=chunk) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Loss Per Share | ($0.98) | ($172.18) | [Financial Statements](index=4&type=section&id=Financial%20Statements) Detailed financial statements for Q2 2025 show a reduced operating loss and a positive shift in stockholders' equity [Consolidated Statements of Operations (Loss)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20(Loss)) For the three months ended June 30, 2025, Cyclacel reported no revenue and a total operating loss of $1.32 million, a significant improvement from the $3.64 million operating loss in the same period of 2024 Q2 2025 vs Q2 2024 Statement of Operations (in $000s) | Line Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenues | $0 | $4 | | Research and development | $68 | $2,023 | | General and administrative | $1,249 | $1,625 | | **Operating loss** | **($1,317)** | **($3,644)** | | **Net loss** | **($1,318)** | **($3,257)** | | Net loss applicable to common shareholders | ($1,338) | ($3,257) | | Net loss per share – basic and diluted | ($0.98) | ($172.18) | [Consolidated Balance Sheet](index=5&type=section&id=Consolidated%20Balance%20Sheet) As of June 30, 2025, the company's balance sheet showed total assets of $4.4 million and total liabilities of $0.77 million, resulting in a positive stockholders' equity of $3.63 million Consolidated Balance Sheet Summary (in $000s) | Line Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Current Assets** | | | | Cash and cash equivalents | $4,275 | $3,137 | | Total current assets | $4,383 | $3,674 | | **Total Assets** | **$4,401** | **$4,094** | | **Current Liabilities** | | | | Accounts payable | $221 | $4,599 | | Total current liabilities | $760 | $6,268 | | **Total Liabilities** | **$770** | **$6,268** | | **Stockholders' Equity** | **$3,631** | **($2,174)** | [Company Overview and Forward-Looking Statements](index=2&type=section&id=Company%20Overview%20and%20Forward-Looking%20Statements) Cyclacel Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company focused on cancer medicines, with forward-looking statements highlighting inherent risks [About Cyclacel Pharmaceuticals, Inc.](index=2&type=section&id=About%20Cyclacel%20Pharmaceuticals%2C%20Inc.) Cyclacel is a clinical-stage biopharmaceutical company developing cancer medicines based on cell cycle, epigenetics, and mitosis biology, with its primary program evaluating plogosertib - Cyclacel is a clinical-stage biopharmaceutical company focused on developing innovative cancer medicines[11](index=11&type=chunk) - The company's main program is evaluating plogosertib, a PLK1 inhibitor, in patients with solid tumors and hematological malignancies[11](index=11&type=chunk) [Forward-looking Statements](index=3&type=section&id=Forward-looking%20Statements) This section provides a standard safe harbor statement, cautioning that the press release contains forward-looking statements with inherent risks and uncertainties - Warns that statements regarding drug efficacy, future plans, cash runway, and clinical data timing are forward-looking and subject to risks[12](index=12&type=chunk) - Key risks include candidates failing in later-stage trials, difficulty in trial enrollment, reliance on outside financing, and maintaining Nasdaq listing requirements[12](index=12&type=chunk)

[Cyclacel Pharmaceuticals Q2 2025 Earnings Release](index=1&type=section&id=Cyclacel%20Pharmaceuticals%20Q2%202025%20Earnings%20Release) [Business Highlights](index=1&type=section&id=Business%20Highlights) Cyclacel executed key corporate actions including dividend payments, a strategic acquisition, a private placement, and a reverse stock split to enhance compliance and capital structure - The company declared and paid quarterly cash dividends of **$0.15 per share** on its 6% Convertible Exchangeable Preferred Stock in April and June 2025[4](index=4&type=chunk) - Entered into a share exchange agreement with FITTERS Diversified Berhad to acquire **100% of FITTERS Sdn. Bhd.** in exchange for approximately **19.99% of Cyclacel's common stock**, later amended to include a **$1 million cash consideration** from Cyclacel, with the closing date extended to September 30, 2025[4](index=4&type=chunk)[5](index=5&type=chunk) - Raised **$3 million in gross proceeds** through a securities purchase agreement with accredited investors for **3,000,000 shares of Series F Convertible Preferred Stock** at **$1.00 per share**[4](index=4&type=chunk) - Implemented a **one-for-fifteen reverse stock split**, effective July 7, 2025, to regain compliance with Nasdaq's minimum bid price requirement[4](index=4&type=chunk) [Second Quarter 2025 Financial Results](index=2&type=section&id=Second%20Quarter%202025%20Financial%20Results) Cyclacel reported a significantly reduced net loss in Q2 2025, driven by decreased R&D and G&A expenses, improving its cash position and extending its cash runway [Financial Position](index=2&type=section&id=Financial%20Position) The company's cash and cash equivalents increased, with an estimated cash runway extending into the fourth quarter of 2025 Financial Position (In millions of US dollars) | Metric | Q2 2025 | Q4 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $4.3 | $3.2 | - Net cash used in operating activities was **$1.1 million** for the three months ended June 30, 2025[6](index=6&type=chunk) - The company estimates its current cash resources will fund planned expenditures into the **fourth quarter of 2025**[6](index=6&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Operating expenses significantly decreased in Q2 2025, primarily due to reduced research and development activities and lower general and administrative costs Operating Expenses (In millions of US dollars) | Expense Category | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Research and development | $0.1 | $2.0 | -$1.9 | | General and administrative | $1.2 | $1.6 | -$0.4 | - The decrease in R&D expenses is primarily due to the cessation of the transcriptional regulation program after the liquidation of the UK subsidiary, Cyclacel Limited, on January 24, 2025[7](index=7&type=chunk) - G&A expenses decreased due to lower operating costs under current management, partially offset by one-off legacy severance costs and increased legal fees[8](index=8&type=chunk) [Net Loss](index=2&type=section&id=Net%20Loss) The company significantly reduced its net loss in Q2 2025 compared to the prior year, despite receiving no research and development tax credits Net Loss (In millions of US dollars) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Loss | $1.3 | $3.3 | - The company received **no research & development tax credits** in Q2 2025, compared to **$0.4 million** in Q2 2024, due to the liquidation of its UK subsidiary[9](index=9&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) This section presents the unaudited consolidated financial statements for Q2 2025, including the Statements of Operations detailing the net loss and the Balance Sheet outlining assets and stockholders' equity [Consolidated Statements of Operations (Loss)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20(Loss)) This statement details the company's revenues, operating expenses, and net loss for the three months ended June 30, 2025 and 2024 Consolidated Statements of Operations (Loss) (In thousands of US dollars) | | Three Months Ended June 30, | | | :--- | :--- | :--- | | | **2025** | **2024** | | **Revenues** | **$ -** | **$ 4** | | Operating expenses: | | | | Research and development | 68 | 2,023 | | General and administrative | 1,249 | 1,625 | | **Total operating expenses** | **1,317** | **3,648** | | **Operating loss** | **(1,317)** | **(3,644)** | | Total other income (expense), net | 1 | (25) | | Loss before taxes | (1,316) | (3,669) | | Income tax benefit | (2) | 412 | | **Net loss** | **(1,318)** | **(3,257)** | | Net loss applicable to common shareholders | $ (1,338) | $ (3,257) | | **Net loss per share – basic and diluted** | **$ (0.98)** | **$ (172.18)** | [Consolidated Balance Sheet](index=5&type=section&id=Consolidated%20Balance%20Sheet) This statement presents the company's financial position, including assets, liabilities, and stockholders' equity, as of June 30, 2025 and December 31, 2024 Consolidated Balance Sheet (In thousands of US dollars) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $ 4,275 | $ 3,137 | | Total current assets | 4,383 | 3,674 | | **Total assets** | **$ 4,401** | **$ 4,094** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | 760 | 6,268 | | **Total liabilities** | **770** | **6,268** | | **Stockholders' equity** | **3,631** | **(2,174)** | | **Total liabilities and stockholders' equity** | **$ 4,401** | **$ 4,094** | [Company Information and Disclosures](index=2&type=section&id=Company%20Information%20and%20Disclosures) This section outlines Cyclacel's business as a clinical-stage biopharmaceutical company and includes standard forward-looking statements regarding potential risks and uncertainties [About Cyclacel Pharmaceuticals, Inc.](index=2&type=section&id=About%20Cyclacel%20Pharmaceuticals%2C%20Inc.) Cyclacel is a clinical-stage biopharmaceutical company focused on developing cancer medicines based on cell cycle, epigenetics, and mitosis biology - Cyclacel is a clinical-stage biopharmaceutical company focused on developing cancer medicines based on cell cycle, epigenetics, and mitosis biology[11](index=11&type=chunk) - The company's epigenetic/anti-mitotic program is evaluating plogosertib, a PLK1 inhibitor, in patients with solid tumors and hematological malignancies[11](index=11&type=chunk) [Forward-looking Statements](index=3&type=section&id=Forward-looking%20Statements) This section contains disclaimers regarding forward-looking statements, highlighting inherent risks and uncertainties that could impact future results - The press release contains forward-looking statements regarding the company's plans, prospects, cash runway, and clinical development, which are subject to risks and uncertainties including clinical trial outcomes, market conditions, financing needs, and Nasdaq listing compliance[12](index=12&type=chunk)

PART I [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited financial statements, management's discussion and analysis, and disclosures on market risk and controls [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements for the period ended June 30, 2025, show significant revenue growth alongside widening net losses, driven by the scaling of new manufacturing operations, with the notes highlighting high customer concentration, related-party debt, and going concern doubts [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$13.15 million** from **$12.86 million** at year-end 2024, primarily due to a significant rise in accounts receivable, while total liabilities decreased from **$10.51 million** to **$9.61 million**, largely because convertible notes were reclassified from current to long-term, consequently improving stockholders' equity to **$3.54 million** from **$2.34 million** and turning working capital positive Condensed Consolidated Balance Sheet Highlights (in USD) | Balance Sheet Item | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $5,201,109 | $4,916,614 | | **Total Assets** | **$13,151,387** | **$12,855,875** | | **Total Current Liabilities** | $4,538,892 | $8,813,996 | | **Total Liabilities** | **$9,608,777** | **$10,514,292** | | **Total Stockholders' Equity** | **$3,542,610** | **$2,341,583** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the three and six months ended June 30, 2025, net revenue more than doubled year-over-year, reaching **$3.3 million** and **$6.5 million**, respectively, but despite improved gross profit, the net loss widened for both periods due to a sharp increase in operating expenses, particularly general and administrative costs associated with scaling production Statement of Operations Summary (in USD) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Revenue** | $3,299,738 | $1,362,986 | $6,493,260 | $2,830,002 | | **Gross Profit** | $606,459 | $148,759 | $1,158,974 | $432,347 | | **Operating Loss** | $(1,346,021) | $(826,415) | $(2,028,561) | $(1,851,515) | | **Net Loss** | $(1,603,156) | $(942,554) | $(2,521,538) | $(1,993,521) | | **Net Loss Per Share** | $(0.17) | $(0.22) | $(0.27) | $(0.48) | [Condensed Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity increased from **$2.34 million** at December 31, 2024, to **$3.54 million** at June 30, 2025, primarily driven by capital raising activities, including **$2.4 million** from the At-The-Market (ATM) program and **$1.17 million** from the exercise of warrants, which more than offset the **$2.52 million** net loss incurred during the period - Key drivers for the increase in stockholders' equity during the first six months of 2025 were: - **Common stock issued via ATM program:** +**$2,407,448**[17](index=17&type=chunk) - **Exercise of warrants:** +**$1,173,158**[17](index=17&type=chunk) - **Net loss:** -**$2,521,538**[17](index=17&type=chunk) [Condensed Statements of Cash Flows](index=11&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, the company's cash position decreased by **$1.69 million**, with net cash used in operating activities significantly increasing to **$3.94 million** from **$1.36 million** in the prior year, driven by higher net loss and investments in working capital, partially offset by **$2.72 million** in net cash provided by financing activities, mainly from stock sales and warrant exercises Cash Flow Summary (in USD) | Cash Flow Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(3,942,856) | $(1,357,463) | | **Net cash used in investing activities** | $(491,332) | $(566,431) | | **Net cash provided by financing activities** | $2,717,102 | $2,202,108 | | **Net (decrease) increase in cash** | **$(1,688,323)** | **$278,272** | | **Cash - ending of period** | $641,129 | $936,061 | [Notes to Financial Statements](index=13&type=section&id=Condensed%20Consolidated%20Notes%20to%20Financial%20Statements%20(Unaudited)) The notes provide critical context to the financial statements, detailing the company's business, accounting policies, and significant transactions, including a going concern warning due to recurring losses and an accumulated deficit of over **$20 million**, significant reliance on related-party financing, extremely high customer concentration, and commitments related to the new Peru facility lease, technology licensing, and a pending lawsuit - The company is engaged in developing, marketing, and distributing plant-based, dehydrated fruit and vegetable snacks and powders from its production facility in Pisco, Peru, using proprietary GentleDry™ Technology[23](index=23&type=chunk)[24](index=24&type=chunk) - The financial statements were prepared under the assumption of a going concern, but recurring losses, an accumulated deficit of **$20,083,595**, and limited working capital raise substantial doubt about the company's ability to continue operations without additional funding[28](index=28&type=chunk) - The company has a very high customer concentration, with three customers accounting for **97.1%** of net revenue and **97.6%** of accounts receivable for the six months ended June 30, 2025, compared to one customer accounting for **99%** of net revenue in the same period of 2024[81](index=81&type=chunk) - The company initiated an organizational realignment to open its Peru factory, incurring total costs of approximately **$5.5 million**, with realignment costs for the six months ended June 30, 2025, being approximately **$1.07 million**, including capitalized equipment and factory idle capacity expenses[157](index=157&type=chunk)[158](index=158&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant revenue growth of **142%** in Q2 and **129%** in H1 2025, driven by increased sales to major customers, with the transition to in-house manufacturing at the new Peru facility improving gross margins to **18.4%** in Q2, though this transition also led to higher operating expenses, including **$480,320** in idle capacity costs, which widened the net loss, and liquidity remains a concern with a low cash balance and an accumulated deficit of over **$20 million**, raising substantial doubt about the company's ability to continue as a going concern despite recent capital raises [Results of Operations (Q2 2025 vs Q2 2024)](index=47&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202025%2C%20and%202024) In Q2 2025, net revenue increased by **142%** to **$3.3 million** compared to Q2 2024, and gross margin improved significantly from **10.9%** to **18.4%** due to the operational start of the new Peru facility, however, operating expenses surged by **347%**, primarily from **$480,320** in factory idle capacity costs, leading to an increased net loss of **$1.6 million**, up from **$0.9 million** in the prior-year quarter - Net revenue grew by **142%** year-over-year, primarily due to increased sales to the company's largest customer[176](index=176&type=chunk) - Gross margin improved to **18.4%** from **10.9%** in the prior year, attributed to the transition from third-party suppliers to the company's own manufacturing facility in Peru[178](index=178&type=chunk) - General and administrative expenses increased by **347%**, largely due to **$480,320** in idle capacity costs associated with the new production facility as it scales up operations[179](index=179&type=chunk)[180](index=180&type=chunk) [Results of Operations (H1 2025 vs H1 2024)](index=50&type=section&id=Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%2C%20and%202024) For the first six months of 2025, net revenue grew **129%** to **$6.5 million**, and gross margin expanded to **17.8%** from **15.3%** in H1 2024, reflecting efficiency gains from the new facility, but despite this, the net loss increased by **26%** to **$2.5 million**, driven by higher general & administrative, shipping, and advertising expenses related to business expansion Six-Month Operational Highlights (in USD) | Metric | H1 2025 | H1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | **Net Revenue** | $6,493,260 | $2,830,002 | +129% | | **Gross Profit** | $1,158,974 | $432,347 | +168% | | **Gross Margin** | 17.8% | 15.3% | +2.5 p.p. | | **Operating Loss** | $(2,028,561) | $(1,851,515) | +9.6% | | **Net Loss** | $(2,521,538) | $(1,993,521) | +26% | [Liquidity and Capital Resources](index=52&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity position improved, with working capital turning positive to **$662,217** at June 30, 2025, from a deficit of **$3.9 million** at year-end 2024, however, cash on hand was low at **$641,129**, and the company has historically relied on debt and equity financing to fund its operations, which have generated an accumulated deficit of **$20.1 million**, with cash used in operations increasing significantly to **$3.9 million** in H1 2025, funded primarily by **$2.7 million** raised from financing activities Working Capital (in USD) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Current Assets** | $5,201,109 | $4,916,614 | | **Current Liabilities** | $4,538,892 | $8,813,996 | | **Working Capital** | **$662,217** | **$(3,897,382)** | - Net cash used in operating activities increased by **190%** to **$3.9 million** for H1 2025, mainly due to a **$1.44 million** increase in accounts receivable and a **$0.55 million** increase in prepaid inventory[205](index=205&type=chunk) - Net cash from financing activities was **$2.7 million** in H1 2025, primarily from **$2.4 million** in proceeds from the sale of common stock and **$1.2 million** from warrant exercises, offset by **$0.85 million** in debt repayments[207](index=207&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is classified as a "smaller reporting company" and is therefore not required to provide quantitative and qualitative disclosures about market risk - As a "smaller reporting company," as defined in Rule 12b-2 of the Exchange Act, the Company is exempt from providing the information required by this item[214](index=214&type=chunk) [Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of June 30, 2025, and concluded that they were not effective, with no material changes in internal control over financial reporting during the six-month period - Based on an evaluation as of June 30, 2025, the chief executive officer and chief financial officer concluded that the company's disclosure controls and procedures were not effective[215](index=215&type=chunk) - No changes in internal control over financial reporting occurred during the six months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal controls[216](index=216&type=chunk) PART II [PART II. OTHER INFORMATION](index=55&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, unregistered sales of equity securities, defaults upon senior securities, other information, and exhibits [Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) The company is currently involved in a lawsuit filed by its former chief financial officer alleging wrongful termination, and while management believes the outcome is not likely to have a material adverse effect on the company's financial position, the ultimate result is unpredictable and no liability has been accrued - The Company is defending a lawsuit from its former CFO for wrongful termination, and management does not believe the outcome will be materially adverse, but cannot predict the result or estimate a potential loss[218](index=218&type=chunk) [Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) As a "smaller reporting company," BranchOut Food Inc. is not required to provide risk factor disclosures in its Form 10-Q - The Company is not required to provide the information for this item as it is a "smaller reporting company"[220](index=220&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company reported no unregistered sales of equity securities or use of proceeds during the reporting period - None reported[221](index=221&type=chunk) [Defaults Upon Senior Securities](index=55&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None reported[222](index=222&type=chunk) [Other Information](index=55&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - None reported[224](index=224&type=chunk) [Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents like the Articles of Incorporation and Bylaws, as well as certifications from the CEO and CFO as required by the Sarbanes-Oxley Act, and interactive data files (XBRL) - The report includes exhibits such as Articles of Incorporation, Bylaws, CEO/CFO certifications (Rule 13a-14(a) and Section 906), and Inline XBRL documents[225](index=225&type=chunk)

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the first half of 2025 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Binah Capital Group, Inc. as of June 30, 2025, and for the three and six-month periods then ended [Condensed Consolidated Statements of Financial Condition](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) As of June 30, 2025, total assets increased slightly to **$67.8 million** from **$66.7 million** at year-end 2024, driven by higher receivables Condensed Consolidated Statements of Financial Condition (in thousands) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$67,791** | **$66,677** | | Cash, cash equivalents and restricted cash | $8,170 | $8,486 | | Goodwill | $39,839 | $39,839 | | **Total Liabilities** | **$51,404** | **$50,499** | | Notes payable, net | $18,620 | $19,561 | | **Total Stockholders' Equity and Mezzanine Equity** | **$16,387** | **$16,178** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the six months ended June 30, 2025, the company reported net income of **$0.38 million**, a significant improvement from a net loss of **$2.32 million** in the same period of 2024 Financial Performance Summary (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$41,497** | **$40,648** | **$90,431** | **$82,095** | | Commissions | $33,998 | $33,663 | $75,137 | $68,057 | | Advisory fees | $6,627 | $6,320 | $13,542 | $12,004 | | **Total Expenses** | **$42,058** | **$41,171** | **$89,537** | **$84,062** | | **Net Income (Loss)** | **$(654)** | **$(736)** | **$378** | **$(2,319)** | | Net Income (Loss) per share | $(0.04) | $(0.04) | $0.02 | $(0.18) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities was **$1.1 million**, a reversal from **$2.1 million** used in the prior year period, mainly due to improved net income Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Provided By (Used In) Operating Activities | $1,117 | $(2,113) | | Net Cash Used In Investing Activities | $(8) | $(18) | | Net Cash (Used In) Provided By Financing Activities | $(1,425) | $1,535 | | **Net Change in Cash, Cash Equivalents and Restricted Cash** | **$(316)** | **$(596)** | | Cash, Cash Equivalents and Restricted Cash - End of Period | $8,170 | $7,025 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes provide critical context to the financial statements, detailing accounting policies, revenue streams, debt, and legal contingencies - On March 15, 2024, the company consummated a reverse recapitalization transaction with Kingswood Acquisition Corp (KWAC), resulting in the current public company structure[30](index=30&type=chunk)[31](index=31&type=chunk) - For accounting purposes, this was treated as **BMS acquiring KWAC**[30](index=30&type=chunk)[31](index=31&type=chunk) Revenue from Contracts with Customers by Product (Six Months Ended June 30, in thousands) | Product | 2025 | 2024 | | :--- | :--- | :--- | | Variable annuities and other insurance commissions | $50,653 | $50,070 | | Mutual fund commissions | $11,535 | $9,908 | | Securities commissions | $6,017 | $5,588 | | Alternative investments | $6,932 | $2,491 | | Advisory fees | $13,542 | $12,004 | | **Total** | **$88,679** | **$80,061** | - The company entered into a **$20.3 million** term loan facility with Byline Bank on December 23, 2024[88](index=88&type=chunk) - As of June 30, 2025, the outstanding balance was **$18.6 million**, net of unamortized costs[88](index=88&type=chunk) - As of June 30, 2025, the company has accrued **$0.7 million** for litigation contingencies, net of **$1.0 million** of expected insurance proceeds[125](index=125&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance for the second quarter and first half of 2025, highlighting revenue growth, expense trends, and liquidity [Financial Highlights and Asset Trends](index=27&type=section&id=Financial%20Highlights%20and%20Asset%20Trends) For the six months ended June 30, 2025, the company achieved net income of **$0.4 million** on **$90.4 million** in revenue, with total assets growing to **$27.8 billion** Key Financial Highlights (in millions) | Metric | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | | Total Revenue | $90.4 | $82.1 | | Net Income (Loss) | $0.4 | $(2.3) | Asset Trends (in billions) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Advisory and Brokerage Assets | $27.8 | $25.1 | | Advisory Assets | $2.7 | $2.3 | | Brokerage Assets | $25.1 | $22.8 | | Total Net New Assets (Six Months) | $(1.1) | $(2.1) | [Key Performance Metrics and Non-GAAP Financial Measures](index=28&type=section&id=Key%20Performance%20Metrics%20and%20Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like Gross Profit and EBITDA to evaluate performance, showing significant growth for the six months ended June 30, 2025 Non-GAAP Financial Metrics (in millions) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $8.8 | $7.3 | $17.4 | $15.1 | | EBITDA | $1.0 | $0.6 | $3.2 | $0.5 | [Results of Operations](index=30&type=section&id=Results%20of%20Operations) For the first six months of 2025, total revenues increased **10.2%** to **$90.4 million**, driven by commissions and advisory fees, while expenses grew slower - For the six months ended June 30, 2025, sales-based commission revenue increased by **11.6%** to **$35.3 million**, largely due to higher sales of alternative investment products[165](index=165&type=chunk)[166](index=166&type=chunk) - Trailing-based commission revenue for the six-month period grew **9.4%** to **$39.9 million**, benefiting from positive market volatility and increased trail-based assets[165](index=165&type=chunk)[166](index=166&type=chunk) - Employee compensation and benefits increased by **$2.2 million** (**31.6%**) for the six-month period, mainly due to additional personnel costs and non-cash compensation awards associated with being a public company[179](index=179&type=chunk) - Professional fees decreased by **$3.7 million** (**74.7%**) for the six-month period, as the prior year included significant non-recurring transaction costs related to the Business Combination[181](index=181&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are dividends and fees from subsidiaries, supplemented by a credit facility, with positive cash flow from operations - The company has a term loan with Byline Bank with an outstanding balance of **$18.6 million** (net) as of June 30, 2025, maturing in December 2029[189](index=189&type=chunk) - In H1 2025, the company entered into a **$10 million** notional interest rate swap to hedge a portion of its variable-rate debt, fixing the rate at **3.98%** plus a **4.00%** margin[192](index=192&type=chunk) Contractual Obligations as of June 30, 2025 (in thousands) | Obligation | Total | Less than 1 Year | 1-3 Years | 3-5 Years | | :--- | :--- | :--- | :--- | :--- | | Long-term debt obligations | $19,285 | $1,015 | $8,120 | $10,150 | | Promissory notes - affiliates | $5,313 | $0 | $5,313 | $0 | | Operating lease obligations | $4,405 | $777 | $2,228 | $1,400 | | **Total** | **$29,003** | **$1,792** | **$15,661** | **$11,550** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risk through asset-based fees and interest rate risk on floating-rate debt, partially offset by interest-sharing revenue - The company's fees are sensitive to market fluctuations as they are based on the market value of advisory and brokerage assets[225](index=225&type=chunk) - As of June 30, 2025, **$8.6 million** of the company's outstanding debt was subject to floating interest rates[226](index=226&type=chunk) - Management believes the impact of short-term rate changes is not material due to offsetting interest-sharing revenue[226](index=226&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - Based on an evaluation as of June 30, 2025, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[230](index=230&type=chunk) - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, these controls[231](index=231&type=chunk) [PART II. OTHER INFORMATION](index=41&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, other information, and exhibits [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to any material legal proceedings but is subject to various claims arising in the ordinary course of business - The company is not party to any pending material legal proceedings but is subject to various claims and actions arising in the ordinary course of business[233](index=233&type=chunk)[234](index=234&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes have occurred to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[235](index=235&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) On August 7, 2025, the company amended employment agreements for CEO and CFO, changing equity compensation to restricted stock units - On August 7, 2025, the employment agreements for CEO Craig Gould and CFO David Shane were amended to issue restricted stock units instead of stock options for equity compensation[240](index=240&type=chunk)[241](index=241&type=chunk) - The amendments also allow the 2025 annual bonus for the CEO and CFO to be paid in either cash or vested company shares, as determined by the Board or Compensation Committee[240](index=240&type=chunk)[241](index=241&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including equity agreements and executive certifications

Part I. Financial Information [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed financial statements for Thayer Ventures Acquisition Corporation II, detailing its financial position and performance [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) As of June 30, 2025, the company reported total assets of $203.1 million, liabilities of $8.5 million, and a shareholders' deficit of $7.6 million Condensed Balance Sheets | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$203,139,389** | **$622,778** | | Cash and securities held in Trust Account | $202,248,578 | $— | | **Total Liabilities** | **$8,522,246** | **$662,195** | | Deferred underwriting fee payable | $7,568,750 | $— | | **Class A ordinary shares subject to possible redemption** | **$202,248,578** | **$—** | | **Total Shareholders' Deficit** | **($7,631,435)** | **($39,417)** | [Condensed Statements of Operations](index=5&type=section&id=Condensed%20Statements%20of%20Operations) For the three and six months ended June 30, 2025, the company reported net income of $490,729 and $327,628, respectively, primarily from Trust Account investments Condensed Statements of Operations | | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | General and administrative costs | $471,599 | $489,700 | | Earnings from investments held in Trust Account | $998,578 | $998,578 | | **Net income (loss)** | **$490,729** | **$327,628** | [Condensed Statements of Changes in Shareholders' (Deficit) Equity](index=6&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Shareholders%27%20%28Deficit%29%20Equity) The company's total shareholders' deficit significantly increased to $7.6 million by June 30, 2025, primarily due to the accretion of Class A ordinary shares - The total shareholders' deficit grew to **$(7,631,435)** as of June 30, 2025, from **$(39,417)** at the start of the year[17](index=17&type=chunk) - A major factor in the increased deficit was the accretion of Class A ordinary shares to their redemption amount, totaling **$15,507,590**, which was charged against additional paid-in capital and accumulated deficit[17](index=17&type=chunk) [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, financing activities provided $200.4 million, investing activities used $201.3 million, and operating activities provided $869,178, resulting in no net change in cash Cash Flows (Six Months Ended June 30, 2025) | Cash Flows (Six Months Ended June 30, 2025) | Amount | | :--- | :--- | | Net cash provided by operating activities | $869,178 | | Net cash used in investing activities | ($201,250,000) | | Net cash provided by financing activities | $200,380,822 | | **Net Change in Cash** | **$0** | [Notes to Condensed Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20Condensed%20Financial%20Statements%20%28Unaudited%29) These notes provide critical context, detailing the company's formation as a blank check company, its IPO, going concern uncertainty, and related-party transactions - The company is a blank check company formed to effect a business combination and consummated its Initial Public Offering of **20,125,000 units** on May 16, 2025, generating gross proceeds of **$201,250,000**[25](index=25&type=chunk)[27](index=27&type=chunk) - The company must complete a Business Combination within **21 months** from the IPO closing, by **February 16, 2027**, or it will be required to liquidate and redeem public shares[37](index=37&type=chunk) - Management has identified substantial doubt about the company's ability to continue as a going concern due to a lack of cash, which it plans to address through a Business Combination[44](index=44&type=chunk) - The company has an agreement to pay its Sponsor **$30,000 per month** for office space and administrative services, commencing May 14, 2025[80](index=80&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results, focusing on its limited activities as a blank check company and liquidity concerns [Results of Operations](index=19&type=section&id=Results%20of%20Operations) The company, having no operations or revenue, reported a net income of $327,628 for the six months ended June 30, 2025, primarily from Trust Account investments Results of Operations (Six Months Ended June 30, 2025) | Item | Six Months Ended June 30, 2025 | | :--- | :--- | | Earnings from investments held in Trust Account | $998,578 | | General and administrative costs | ($489,700) | | Share-based compensation expense | ($181,250) | | **Net Income** | **$327,628** | [Liquidity, Capital Resources and Going Concern](index=19&type=section&id=Liquidity%2C%20Capital%20Resources%20and%20Going%20Concern) The company's liquidity is primarily from its IPO and private placement, with $201.25 million in a trust account, but a lack of operating cash raises going concern uncertainty - Following the IPO and Private Placement, a total of **$201,250,000** was placed in the Trust Account[116](index=116&type=chunk)[117](index=117&type=chunk) - As of June 30, 2025, the company had **$0 cash** and was owed **$603,901** by the Sponsor[121](index=121&type=chunk) - Management identified a going concern uncertainty due to the lack of available cash, which it plans to resolve through a Business Combination[124](index=124&type=chunk) [Quantitative and Qualitative Disclosures Regarding Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20Regarding%20Market%20Risk) As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk[132](index=132&type=chunk) [Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period, **June 30, 2025**[134](index=134&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the fiscal quarter[136](index=136&type=chunk) Part II. Other Information [Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that there is no material litigation currently pending or contemplated against the company, its officers, or its directors - To the knowledge of management, there is no material litigation currently pending or contemplated against the company[138](index=138&type=chunk) [Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to the risk factors previously disclosed in its final prospectus for the Initial Public Offering - There have been no material changes to the risk factors disclosed in the company's final IPO prospectus filed on **May 15, 2025**[139](index=139&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=22&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section describes the sale of 362,500 Private Placement Units to the Sponsor for $3.625 million and confirms the use of IPO proceeds, primarily for a trust account - Simultaneously with the IPO on **May 16, 2025**, the company sold **362,500 Private Placement Units** to the Sponsor at **$10.00 per unit**, generating gross proceeds of **$3,625,000**[140](index=140&type=chunk) - Following the IPO, **$201,250,000** was placed in a U.S.-based trust account, with remaining proceeds used to identify a target and fund the initial Business Combination[141](index=141&type=chunk)[142](index=142&type=chunk) [Defaults Upon Senior Securities](index=22&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[143](index=143&type=chunk) [Mine Safety Disclosures](index=22&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reports no mine safety disclosures - None[143](index=143&type=chunk) [Other Information](index=22&type=section&id=Item%205.%20Other%20Information) The company reports no other information - None[143](index=143&type=chunk) [Exhibits](index=23&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including officer certifications and XBRL data files - Exhibits filed include certifications from the Principal Executive Officer and Principal Financial Officer, as well as XBRL Instance Documents[145](index=145&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 ☐ 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: 001-42641 THAYER VENTURES ACQUISITION CORPORATION II (Exact name of registrant as specified in its charter) Cayman Islands 98-1795713 ( ...