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 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-42391 Newbury Street II Acquisition Corp (Exact name of registrant as specified in its charter) | Cayman Islands | 98-1797287 | ...

Unaudited Interim Condensed Consolidated Financial Statements [Interim Condensed Consolidated Statement of Financial Position](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) The Company's financial position as of June 30, 2025, shows a significant increase in total assets, primarily driven by a substantial rise in cash and cash equivalents and the recognition of a mining concession asset. Liabilities also increased, notably due to new long-term liabilities associated with the mining concession acquisition and environmental remediation provisions | Metric | June 30, 2025 ($) | December 31, 2024 ($) | Change ($) | % Change | | :-------------------------------- | :------------------ | :-------------------- | :--------- | :------- | | **ASSETS** | | | | | | Cash and cash equivalents | 70,581,382 | 38,930,957 | 31,650,425 | 81.30% | | Receivables and prepaid expenses | 982,435 | 683,655 | 298,780 | 43.70% | | Mining concession asset | 10,013,929 | – | 10,013,929 | N/A | | Property, plant and equipment | 1,562,263 | 680,062 | 882,201 | 129.73% | | Total assets | 86,112,562 | 42,556,391 | 43,556,171 | 102.35% | | **LIABILITIES** | | | | | | Account payables and accrued liabilities | 3,970,980 | 2,229,584 | 1,741,396 | 78.19% | | Provision for environmental remediation | 490,434 | – | 490,434 | N/A | | Warrants liability | – | 3,163,115 | (3,163,115) | -100.00% | | Current portion of lease liability | 469,542 | 82,795 | 386,747 | 467.15% | | Current portion of other long-term liabilities | 7,407,142 | – | 7,407,142 | N/A | | Other long-term liabilities | 2,116,353 | – | 2,116,353 | N/A | | Total liabilities | 15,164,818 | 5,548,226 | 9,618,522 | 173.37% | | **EQUITY** | | | | | | Share capital | 146,845,506 | 102,256,065 | 44,589,441 | 43.61% | | Contributed surplus | 31,907,541 | 17,110,478 | 14,797,063 | 86.48% | | Deficit | (107,805,303) | (82,358,377) | (25,446,926) | 30.90% | | Total equity | 70,947,744 | 37,008,166 | 33,939,578 | 91.71% | - The Company recognized a new Mining Concession Asset of **$10,013,929** as of June 30, 2025, which was zero at December 31, 2024. This is a significant addition to non-current assets[4](index=4&type=chunk) - Total liabilities increased by **173.37%** from $5,548,226 at December 31, 2024, to **$15,164,818** at June 30, 2025, primarily due to the recognition of a provision for environmental remediation and other long-term liabilities related to the mining concession acquisition[4](index=4&type=chunk) [Interim Condensed Consolidated Statement of Operations and Comprehensive Loss](index=3&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Operations%20and%20Comprehensive%20Loss) For the six months ended June 30, 2025, the Company reported a significantly higher net loss compared to the same period in 2024, primarily driven by increased exploration and evaluation expenses and a substantial revaluation loss on warrants liability. Finance income partially offset these losses | Metric | For the three months ended June 30, 2025 ($) | For the three months ended June 30, 2024 ($) | For the six months ended June 30, 2025 ($) | For the six months ended June 30, 2024 ($) | | :------------------------------------ | :------------------------------------------- | :------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Exploration and evaluation expenses | (7,433,113) | (5,181,251) | (12,291,882) | (9,019,771) | | General and administration expenses | (2,236,131) | (1,222,105) | (4,134,425) | (2,425,283) | | Revaluation of warrants liability | – | 94,691 | (10,564,474) | 466,205 | | Foreign exchange gain (loss) | 531,002 | (282,152) | 633,141 | (461,787) | | Interest income | 701,763 | 295,166 | 1,079,543 | 512,552 | | Finance costs | (83,572) | (36,349) | (169,887) | (129,153) | | Net loss and comprehensive loss | (8,518,993) | (6,331,921) | (25,446,926) | (11,057,158) | | Basic and diluted loss per common share | (0.11) | (0.09) | (0.31) | (0.17) | - Net loss for the six months ended June 30, 2025, significantly increased to **$25,446,926**, up **130.14%** from $11,057,158 in the prior year, primarily due to a **$10,564,474 revaluation loss on warrants liability** in 2025 compared to a $466,205 gain in 2024[6](index=6&type=chunk) - Exploration and evaluation expenses rose by **36.28%** to **$12,291,882** for the six months ended June 30, 2025, from $9,019,771 in the same period of 2024, reflecting increased activity[6](index=6&type=chunk) - Basic and diluted loss per common share increased to **$0.31** for the six months ended June 30, 2025, from $0.17 in the prior year, reflecting the higher net loss and increased weighted average common shares outstanding[6](index=6&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, the Company experienced a net cash outflow from operating activities, but this was significantly offset by substantial cash inflows from financing activities, primarily from share and warrant exercises, leading to a strong increase in cash and cash equivalents | Cash Flow Activity | For the six months ended June 30, 2025 ($) | For the six months ended June 30, 2024 ($) | Change ($) | % Change | | :------------------------------------ | :------------------------------------------- | :------------------------------------------- | :--------- | :------- | | Net loss | (25,446,926) | (11,057,158) | (14,389,768) | 130.14% | | Cash flows from (used in) operating activities | (13,015,016) | (10,597,286) | (2,417,730) | 22.82% | | Cash flows from (used in) financing activities | 44,266,124 | 18,041,924 | 26,224,200 | 145.35% | | Cash flows from (used in) investing activities | (132,079) | (66,649) | (65,430) | 98.17% | | Net change in cash and cash equivalents | 31,119,029 | 7,377,989 | 23,741,040 | 321.78% | | Cash and cash equivalents, end of period | 70,581,382 | 21,135,511 | 49,445,871 | 233.94% | - Cash proceeds from issuance of shares increased by **161.09%** to **$36,357,305** for the six months ended June 30, 2025, from $13,925,729 in the prior year, significantly boosting financing activities[8](index=8&type=chunk) - Cash proceeds from warrant exercises also saw a substantial increase of **80.55%** to **$7,857,044** in 2025, compared to $4,351,656 in 2024[8](index=8&type=chunk) [Interim Condensed Consolidated Statement of Changes in Equity](index=5&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) The Company's total equity significantly increased for the six months ended June 30, 2025, primarily driven by substantial share issuances and warrant exercises, despite a considerable net loss for the period | Metric | Balance January 1, 2025 ($) | Issuance of shares – Offering March 2025 ($) | Exercise of warrants ($) | Exercise of options ($) | Share-based compensation ($) | Net loss for the period ($) | Balance June 30, 2025 ($) | | :-------------------------- | :-------------------------- | :------------------------------------------- | :----------------------- | :---------------------- | :--------------------------- | :-------------------------- | :-------------------------- | | Share capital | 102,256,065 | 36,357,305 | 7,857,044 | 547,979 | – | – | 146,845,506 | | Contributed surplus | 17,110,478 | – | 13,727,590 | – | 1,069,473 | – | 31,907,541 | | Deficit | (82,358,377) | – | – | – | – | (25,446,926) | (107,805,303) | | Total | 37,008,166 | 36,357,305 | 21,584,634 | 547,979 | 1,069,473 | (25,446,926) | 70,947,744 | - Share capital increased by **$44,589,441** from January 1, 2025, to June 30, 2025, primarily due to the issuance of shares from the March 2025 Offering (**$36,357,305**) and the exercise of warrants (**$7,857,044**)[9](index=9&type=chunk) - Contributed surplus increased by **$14,797,063**, largely from the exercise of warrants (**$13,727,590**) and share-based compensation (**$1,069,473**)[9](index=9&type=chunk) - Despite a net loss of **$25,446,926** for the period, total equity nearly doubled from $37,008,166 at January 1, 2025, to **$70,947,744** at June 30, 2025, reflecting strong capital raising activities[9](index=9&type=chunk) Notes to the Interim Condensed Consolidated Financial Statements [1. Nature of Operations](index=6&type=section&id=1.%20NATURE%20OF%20OPERATIONS) Collective Mining Ltd. is engaged in mineral property acquisition, exploration, and development in Colombia. The Company's shares trade on the TSX and NYSE American LLC, but it has not yet generated revenue from mining operations, remaining in the exploration stage - Collective Mining Ltd. (CML) and its subsidiaries are primarily focused on the acquisition, exploration, and development of mineral properties in Colombia[12](index=12&type=chunk) - The Company's common shares trade on the Toronto Stock Exchange (TSX) under 'CNL' and on the NYSE American LLC under 'CNL' as of July 17, 2024[13](index=13&type=chunk) - To date, the Company has not generated any revenue from mining or other operations, as it is currently in the exploration stage[14](index=14&type=chunk) [2. Basis of Preparation](index=6&type=section&id=2.%20BASIS%20OF%20PREPARATION) The interim financial statements are prepared in accordance with IFRS Accounting Standards, specifically IAS 34, and are consistent with the most recent audited annual financial statements. Key accounting policy expansions include the capitalization of mining concession acquisition costs and the recognition of environmental remediation provisions - The interim consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS Accounting Standards) applicable to interim financial reporting, including IAS 34[15](index=15&type=chunk) - The Company expanded its accounting policy for exploration and evaluation expenditures to capitalize the cost of acquiring mining concessions as mining concession assets, where directly associated with a specific area of interest and meeting asset recognition criteria[17](index=17&type=chunk) - A new accounting policy includes provisions for environmental remediation assumed in connection with mining concession acquisitions, recognized when a present obligation exists, settlement is probable, and the amount can be reliably estimated[18](index=18&type=chunk) - Management exercises significant judgment in recognizing the mining concession asset and corresponding liability, based on a legally binding agreement and effective transfer of control, despite pending regulatory approval and future cash settlement[19](index=19&type=chunk) [3. New Accounting Standards](index=7&type=section&id=3.%20NEW%20ACCOUNTING%20STANDARDS) The Company is assessing the potential impact of IFRS 18, 'Presentation and Disclosure in Financial Statements,' which is effective January 1, 2027. This new standard will significantly change the presentation of primary financial statements, requiring separate categories for operating, investing, and financing activities, and new disclosure requirements for management-defined performance measures - IFRS 18, 'Presentation and Disclosure in Financial Statements,' issued in April 2024, is expected to have a substantive impact on financial statements, including changes to the income statement structure and disclosure requirements[22](index=22&type=chunk) - The standard, effective for annual reporting periods beginning on or after January 1, 2027, will require companies to present separate categories of income and expense for operating, investing, and financing activities with prescribed subtotals[22](index=22&type=chunk) - Management-defined performance measures will also need to be explained and included in a separate note within the consolidated financial statements[22](index=22&type=chunk) [4. Receivables and Prepaid Expenses](index=9&type=section&id=4.%20RECEIVABLES%20AND%20PREPAID%20EXPENSES) Receivables and prepaid expenses increased by 43.70% to $982,435 as of June 30, 2025, compared to December 31, 2024, primarily driven by higher prepaid expenses and advances to suppliers | Category | June 30, 2025 ($) | December 31, 2024 ($) | Change ($) | % Change | | :------------------ | :------------------ | :-------------------- | :--------- | :------- | | Prepaid expenses | 661,145 | 517,442 | 143,703 | 27.77% | | Advance to suppliers | 269,834 | 72,082 | 197,752 | 274.35% | | Other receivables | 51,456 | 94,131 | (42,675) | -45.33% | | Total | 982,435 | 683,655 | 298,780 | 43.70% | - Advances to suppliers saw a significant increase of **274.35%** from $72,082 to **$269,834**[25](index=25&type=chunk) [5. Mining Concession Asset](index=9&type=section&id=5.%20MINING%20CONCESSION%20ASSET) As of June 30, 2025, the Company recognized a new mining concession asset of $10,013,929, primarily from the exercise of the First Guayabales Option. This includes the original acquisition cost, adjusted for fair value, and a provision for environmental remediation | Component | June 30, 2025 ($) | December 31, 2024 ($) | | :------------------------------------------ | :------------------ | :-------------------- | | Opening balance | – | – | | Addition: Original acquisition cost – First Guayabales Option | 9,833,334 | – | | Addition: Environmental remediation | 490,434 | – | | Fair value adjustment – First Guayabales Option | (309,839) | – | | Total Mining concession asset | 10,013,929 | – | - On June 23, 2025, the Company exercised its option to acquire the mining concession contract under the First Guayabales Option, expediting full ownership and eliminating the option to terminate the agreement[28](index=28&type=chunk)[45](index=45&type=chunk) - The acquisition cost of the mining concession contract includes a **$490,434 provision for environmental remediation** related to past activities in the concession area, specifically for two tailings ponds and a waste dump[31](index=31&type=chunk)[32](index=32&type=chunk) [6. Property, Plant and Equipment](index=11&type=section&id=6.%20PROPERTY,%20PLANT%20AND%20EQUIPMENT) The net book value of property, plant and equipment increased significantly to $1,562,263 as of June 30, 2025, from $680,062 at January 1, 2025, primarily due to substantial additions, particularly in right-of-use assets | Category | Net book value, June 30, 2025 ($) | Net book value, January 1, 2025 ($) | Change ($) | % Change | | :-------------------- | :-------------------------------- | :---------------------------------- | :--------- | :------- | | Land and Buildings | 57,086 | 58,749 | (1,663) | -2.83% | | Exploration Equipment and structures | 382,493 | 343,704 | 38,789 | 11.29% | | Computer Equipment | 16,218 | 34,123 | (17,905) | -52.47% | | Leasehold Improvement | 67,768 | 96,971 | (29,203) | -30.12% | | Right of use assets | 1,038,698 | 146,515 | 892,183 | 608.94% | | Total | 1,562,263 | 680,062 | 882,201 | 129.73% | - Additions to property, plant and equipment totaled **$1,406,077** for the six months ended June 30, 2025, with right-of-use assets accounting for **$1,273,998** of this amount[34](index=34&type=chunk) - Depreciation expense for the six months ended June 30, 2025, was **$376,036**, significantly higher than $158,864 for the same period in 2024, reflecting increased asset base[36](index=36&type=chunk) [7. Mineral Interests](index=12&type=section&id=7.%20MINERAL%20INTERESTS) The Company holds mineral interests primarily through the Guayabales and San Antonio projects in Colombia. Significant developments include the acceleration of the First Guayabales Option to acquire 100% ownership, leading to the recognition of a mining concession asset and related liabilities. The Company continues to incur substantial exploration and evaluation expenses across its projects and surface rights agreements - On June 23, 2025, the Company accelerated the terms of the First Guayabales Option agreement, leading to the transfer of **100%** of the mining concession contract into its name, with the transfer expected within 60 days[38](index=38&type=chunk)[45](index=45&type=chunk) - The accelerated First Guayabales Option resulted in the recognition of a **$9,833,334 original acquisition cost** and a **$490,434 provision for environmental remediation**, totaling a **$10,013,929 mining concession asset**[46](index=46&type=chunk)[47](index=47&type=chunk) - For the six months ended June 30, 2025, exploration and evaluation expenses for the First Guayabales Option were **$9,385,306**, a significant increase from $4,475,233 in the prior year[49](index=49&type=chunk) - The Company has made total option payments of **$1,750,000** for the Second Guayabales Option as of June 30, 2025, and **$580,000** for the San Antonio Project[56](index=56&type=chunk)[66](index=66&type=chunk) - For the six months ended June 30, 2025, exploration and evaluation expenses for the San Antonio Project increased substantially to **$1,719,915** from $142,577 in the prior year[65](index=65&type=chunk) [7. (a) Guayabales Project](index=12&type=section&id=7.%20(a)%20Guayabales%20Project) The Guayabales Project involves multiple option agreements for mineral and surface rights. The First Guayabales Option was accelerated, leading to full ownership and the recognition of a mining concession asset and related long-term liabilities. The Company continues to incur significant exploration expenditures and option payments for the Second Guayabales Option and various surface rights agreements - The Company exercised the First Guayabales Option on June 23, 2025, accelerating the acquisition of **100%** of the mining concession contract and removing the termination option[28](index=28&type=chunk)[45](index=45&type=chunk) - The total consideration for the First Guayabales Option, valued at **$9,833,334** (present value of **$9,523,495**), is now recognized as a mining concession asset and a corresponding financial liability, including a **$490,434 provision for environmental remediation**[46](index=46&type=chunk)[47](index=47&type=chunk) - For the six months ended June 30, 2025, exploration and evaluation expenses for the First Guayabales Option were **$9,385,306**, and total option payments made from inception reached **$2,166,666**[49](index=49&type=chunk)[50](index=50&type=chunk) - The Second Guayabales Option requires total payments of **$7,050,000** over three phases, with **$1,750,000** in option payments made as of June 30, 2025[54](index=54&type=chunk)[56](index=56&type=chunk) - The Company has entered into multiple surface rights agreements, with total option payments of **$1,875,000** for the October 2023 agreements and **$260,953** for the May 2024 agreements as of June 30, 2025[58](index=58&type=chunk)[61](index=61&type=chunk) [7. (b) San Antonio Project](index=15&type=section&id=7.%20(b)%20San%20Antonio%20Project) The San Antonio Project is under an option agreement expiring in July 2027, requiring total payments of $2,500,000, with an additional $2,500,000 option to acquire the NSR. Exploration and evaluation expenses for this project significantly increased for the six months ended June 30, 2025 - The San Antonio Project option agreement, entered on July 9, 2020, provides the Company the right to explore, develop, and acquire the property over a seven-year term, expiring July 9, 2027, for total payments of **$2,500,000**[62](index=62&type=chunk)[63](index=63&type=chunk) - An additional **$2,500,000** payment can be made upon reaching commercial production to acquire the **1.5% Net Smelter Return (NSR)**[63](index=63&type=chunk) - For the six months ended June 30, 2025, exploration and evaluation expenses for the San Antonio Project were **$1,719,915**, a substantial increase from $142,577 in the same period of 2024[65](index=65&type=chunk) - As of June 30, 2025, total option payments made for the San Antonio Project from inception amounted to **$580,000**[66](index=66&type=chunk) [8. Long-Term VAT Receivable](index=16&type=section&id=8.%20LONG-TERM%20VAT%20RECEIVABLE) The Company's long-term VAT receivable increased by 28.78% to $2,912,553 as of June 30, 2025, from $2,261,717 at December 31, 2024, reflecting additional VAT related to local purchases and services for exploration activities | Category | June 30, 2025 ($) | December 31, 2024 ($) | Change ($) | % Change | | :-------------------------------- | :------------------ | :-------------------- | :--------- | :------- | | Opening balance | 2,261,717 | 1,799,497 | 462,220 | 25.69% | | VAT related to local purchases and services | 650,836 | 462,220 | 188,616 | 40.81% | | Balance, end of period | 2,912,553 | 2,261,717 | 650,836 | 28.78% | | Long-term portion | 2,912,553 | 2,261,717 | 650,836 | 28.78% | - The VAT receivable is classified as long-term, as it will be recovered when the related project commences production, subject to local regulations[67](index=67&type=chunk) [9. Provision for Environmental Remediation](index=16&type=section&id=9.%20PROVISION%20FOR%20ENVIRONMENTAL%20REMEDIATION) A new provision for environmental remediation of $490,434 was recognized as of June 30, 2025, as part of the mining concession asset acquisition. This provision covers the treatment and closure of two tailings ponds and a waste dump from past activities, and management is evaluating potential additional costs | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :------------------------------------ | :------------------ | :-------------------- | | Opening balance | – | – | | Environmental remediation – First Guayabales Option | 490,434 | – | | Balance, end of period | 490,434 | – | - The **$490,434 provision** specifically covers the treatment and closure of two small tailings ponds and a waste dump, arising from past activities in the concession area prior to the Company's acquisition[69](index=69&type=chunk) - This provision has been capitalized as part of the costs directly attributable to the acquisition of the mining concession asset[70](index=70&type=chunk) - Management is continuing to evaluate regulatory, environmental, and legal requirements, including potential additional costs for decommissioning and reclamation related to a small-scale mining operation within the property boundaries[71](index=71&type=chunk) [10. Warrants Liability](index=18&type=section&id=10.%20WARRANTS%20LIABILITY) The warrants liability balance was reduced to zero as of June 30, 2025, from $3,163,115 at December 31, 2024, due to the exercise of all outstanding warrants. This resulted in a significant revaluation loss for the six months ended June 30, 2025 | Metric | Six-month period ended June 30, 2025 ($) | Year ended December 31, 2024 ($) | | :------------------------------------ | :--------------------------------------- | :------------------------------- | | Opening balance | 3,163,115 | 1,638,808 | | Warrants exercised | (13,727,589) | (1,784,361) | | Fair value revaluation of warrants liability | 10,564,474 | 2,115,036 | | Balance, end of period | – | 3,163,115 | - All **2,250,000 Warrants** from the March 2024 Offering were exercised on March 20, 2025, generating total proceeds of **$7,857,044** (C$11,272,500)[80](index=80&type=chunk) - For the six months ended June 30, 2025, the Company recognized a derivative loss of **$10,564,474** from the revaluation of warrants, a significant change from a gain of $611,760 in the prior year[79](index=79&type=chunk) - The warrants were classified as derivative financial liabilities because they were denominated in Canadian dollars while the Company's functional currency is the US dollar[75](index=75&type=chunk)[79](index=79&type=chunk) [11. Lease Liabilities](index=19&type=section&id=11.%20LEASE%20LIABILITIES) Lease liabilities significantly increased to $1,179,909 as of June 30, 2025, from $155,527 at December 31, 2024, primarily due to new leases entered during the period. The Company recognized substantial interest accretion expense and lease payments | Category | June 30, 2025 ($) | December 31, 2024 ($) | Change ($) | % Change | | :------------------------ | :------------------ | :-------------------- | :--------- | :------- | | Opening balance | 155,527 | 119,697 | 35,830 | 29.94% | | New leases during the period | 1,273,998 | 124,778 | 1,149,220 | 921.09% | | Termination of lease agreement | (155,527) | – | (155,527) | N/A | | Lease payments | (323,317) | (114,790) | (208,527) | 181.66% | | Interest accretion expense | 128,805 | 50,126 | 78,679 | 157.00% | | Foreign exchange | 100,423 | (24,284) | 124,707 | -513.53% | | Balance, end of period | 1,179,909 | 155,527 | 1,024,382 | 658.65% | | Current portion | (469,542) | (82,795) | (386,747) | 467.15% | | Long-term portion | 710,367 | 72,732 | 637,635 | 876.69% | - New leases totaling **$1,273,998** were added during the period, representing a substantial increase from $124,778 in the prior year[81](index=81&type=chunk) - Interest accretion expense on lease liabilities increased by **157%** to **$128,805** for the six months ended June 30, 2025, from $50,126 in the prior year[81](index=81&type=chunk) - Lease payments recognized as lease expense within exploration and evaluation expenses for contracts with terms of 12 months or less were **$281,844** for the six months ended June 30, 2025, up from $102,835 in the prior year[83](index=83&type=chunk) [12. Other Long-Term Liabilities](index=20&type=section&id=12.%20OTHER%20LONG-TERM%20LIABILITIES) A new other long-term liability of $9,523,495 was recognized as of June 30, 2025, stemming from the exercise of the First Guayabales Option. This represents the present value of the total consideration owed for the mining concession contract, with a significant portion classified as current | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :------------------------------------------ | :------------------ | :-------------------- | | Opening balance | – | – | | Original acquisition cost – First Guayabales Option | 9,833,334 | – | | Fair value long-term liability | (309,839) | – | | Balance, end of period | 9,523,495 | – | | Current portion | (7,407,142) | – | | Long-term portion | 2,116,353 | – | - The financial liability of **$9,523,495** represents the present value of the total consideration owing for the First Guayabales Option, discounted at **4.95%** over 2025 to 2028[85](index=85&type=chunk) - A significant portion, **$7,407,142**, is classified as current, indicating expected payments within one year[84](index=84&type=chunk) [13. Related Party Transactions](index=20&type=section&id=13.%20RELATED%20PARTY%20TRANSACTIONS) Compensation for key management personnel, including salaries, benefits, and share-based payments, increased by 85.24% to $1,041,030 for the six months ended June 30, 2025, compared to the same period in 2024 | Category | For the six months ended June 30, 2025 ($) | For the six months ended June 30, 2024 ($) | Change ($) | % Change | | :------------------------ | :--------------------------------------- | :--------------------------------------- | :--------- | :------- | | Management salaries and benefits | 465,554 | 390,000 | 75,554 | 19.37% | | Share-based payments | 575,476 | 171,993 | 403,483 | 234.59% | | Total | 1,041,030 | 561,993 | 479,037 | 85.24% | - Share-based payments to key management personnel saw a substantial increase of **234.59%** to **$575,476** in 2025 from $171,993 in 2024[88](index=88&type=chunk) [14. Financial Instruments](index=21&type=section&id=14.%20FINANCIAL%20INSTRUMENTS) The Company's financial liabilities significantly increased to $10,703,404 as of June 30, 2025, from $3,318,642 at December 31, 2024. This change is primarily due to the reclassification of warrants liability to zero (due to exercise) and the recognition of new lease and other long-term liabilities, all measured at amortized cost or fair value Level 2 | Financial Liabilities (As at June 30, 2025) | FVTPL ($) | FVOCI ($) | Amortized Cost ($) | Total ($) | | :---------------------------------------- | :-------- | :-------- | :----------------- | :-------- | | Warrants liability (level 2) | – | – | – | – | | Lease liabilities (level 2) | – | – | 1,179,909 | 1,179,909 | | Other long-term liabilities | – | – | 9,523,495 | 9,523,495 | | Total | – | – | 10,703,404 | 10,703,404 | | Financial Liabilities (As at December 31, 2024) | FVTPL ($) | FVOCI ($) | Amortized Cost ($) | Total ($) | | :---------------------------------------- | :-------- | :-------- | :----------------- | :-------- | | Warrants liability (level 2) | 3,163,115 | – | – | 3,163,115 | | Lease liabilities (level 2) | – | – | 155,527 | 155,527 | | Total | 3,163,115 | – | 155,527 | 3,318,642 | - The carrying values for cash and cash equivalents, accounts payable and accrued liabilities, lease liabilities, and other long-term liabilities approximate their fair values[91](index=91&type=chunk) - There were no transfers between the fair value hierarchy levels during the three months ended June 30, 2025[92](index=92&type=chunk) [15. Financial and Capital Risk Management](index=21&type=section&id=15.%20FINANCIAL%20AND%20CAPITAL%20RISK%20MANAGEMENT) The Company manages financial risks including currency, credit, liquidity, and interest rate risks, with a focus on mitigating exposure through cash management and dealing with reputable financial institutions. Capital management relies on equity issuances, with a current base shelf prospectus allowing for up to C$200,000,000 in future issuances, of which C$159,750,000 remains available - The Company is exposed to foreign currency risk from balances denominated in Canadian dollars and Colombian pesos; a **10%** strengthening/weakening against the U.S. dollar would impact net loss by **$506,821 (CAD)** and **$619,448 (COP)** respectively[96](index=96&type=chunk) - Liquidity risk is managed by evaluating cash position and forecasting requirements, but current cash is insufficient for continued exploration, mine building, and future option obligations, necessitating further financing[99](index=99&type=chunk) - The Company relies on equity issuances for capital, with a current base shelf prospectus allowing for up to **C$200,000,000**, of which **C$159,750,000** remains as of August 12, 2025[103](index=103&type=chunk)[104](index=104&type=chunk) [15. (a) Financial Risk Management](index=21&type=section&id=15.%20(a)%20Financial%20Risk%20Management) The Company faces foreign currency risk due to operations in Canadian dollars and Colombian pesos, credit risk primarily from cash and receivables managed by dealing with highly-rated financial institutions, and liquidity risk, which is significant given current cash levels are insufficient for long-term obligations without further financing. Interest rate risk on cash balances is minimal - The Company's functional currency is the U.S. dollar, but it conducts activities in Canadian dollars and Colombian pesos, exposing it to foreign exchange gains and losses[94](index=94&type=chunk) - As of June 30, 2025, a **10%** fluctuation in CAD or COP against the U.S. dollar would result in an increase/reduction in net loss of **$506,821 (CAD)** and **$619,448 (COP)** respectively[96](index=96&type=chunk) - Credit risk is managed by holding cash and cash equivalents with financial institutions rated 'BBB-' or higher and by minimal concentration of credit risk on receivables[97](index=97&type=chunk) - The Company's cash balance of **$70,581,382** as of June 30, 2025, is not sufficient to fund continued exploration, mine construction, and all future option obligations, highlighting significant liquidity risk[99](index=99&type=chunk) [15. (b) Capital Management](index=23&type=section&id=15.%20(b)%20Capital%20Management) The Company manages its capital to ensure going concern status for mineral exploration and evaluation, primarily through equity issuances. A new base shelf prospectus filed in December 2023 allows for up to C$200,000,000 in capital raises, with C$159,750,000 remaining available as of August 12, 2025 - The Company's capital structure includes equity components and cash and cash equivalents, with a primary reliance on equity issuances to raise new capital[101](index=101&type=chunk) - A new short form base shelf prospectus, effective until January 2026, allows the Company to issue various securities for up to an aggregate total of **C$200,000,000**[103](index=103&type=chunk) - As of August 12, 2025, **C$159,750,000** remains available under the current base shelf prospectus[104](index=104&type=chunk) - The Company monitors actual expenditures against annual estimates for exploration and administration to ensure sufficient capital for ongoing obligations[104](index=104&type=chunk) [16. Share Capital](index=24&type=section&id=16.%20SHARE%20CAPITAL) The Company's authorized share capital consists of an unlimited number of common shares without par value. During the six months ended June 30, 2025, the Company issued 7,251,818 common shares through a private placement, stock option exercises, and warrant exercises, significantly increasing its outstanding shares - Authorized share capital consists of an unlimited number of common shares without par value, and no dividends have been paid or declared since inception[107](index=107&type=chunk) - For the six months ended June 30, 2025, the Company issued **4,741,984 common shares** from a private placement, **259,834** from stock option exercises, and **2,250,000** from warrant exercises[112](index=112&type=chunk) - The March 2025 private placement generated **$36,357,304** (C$52,161,824) in proceeds, with issue costs of **$172,887** recognized as a reduction in share capital[112](index=112&type=chunk) [17. Earnings per Share](index=24&type=section&id=17.%20Earnings%20per%20share) The basic net loss per common share increased to $0.31 for the six months ended June 30, 2025, from $0.17 in the prior year, reflecting a higher net loss and an increased weighted average number of common shares outstanding. Diluted loss per share is the same as basic due to the anti-dilutive effect of outstanding options and warrants | Metric | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :------------------------------------ | :------------------------------------- | :------------------------------------- | | Net loss | $(25,446,926) | $(11,057,158) | | Weighted average number of common shares outstanding | 81,819,848 | 66,479,549 | | Basic net loss per common share | $ (0.31) | $ (0.17) | - The weighted average number of common shares outstanding increased by **23.07%** to **81,819,848** in 2025 from 66,479,549 in 2024[110](index=110&type=chunk) - All outstanding stock options and share warrants were excluded from the calculation of diluted loss per share because their effect would be anti-dilutive due to the net loss incurred[111](index=111&type=chunk) [18. Share-Based Payments](index=25&type=section&id=18.%20SHARE%20BASED%20PAYMENTS) The Company granted 900,000 stock options during the six months ended June 30, 2025, increasing total outstanding options to 5,024,966. Share-based compensation expense recognized for the period significantly increased, and a substantial unamortized portion remains to be recognized in future periods | Metric | 2025 (Number of stock options) | 2025 (Weighted average exercise price C$) | 2024 (Number of stock options) | 2024 (Weighted average exercise price C$) | | :-------------------------- | :----------------------------- | :--------------------------------------- | :----------------------------- | :--------------------------------------- | | Outstanding, beginning of period | 4,434,800 | 4.07 | 4,177,217 | 3.10 | | Granted | 900,000 | 13.54 | – | – | | Exercised | (259,834) | (3.03) | (654,817) | (1.23) | | Forfeited | (50,000) | (4.12) | – | – | | Outstanding, June 30 | 5,024,966 | 5.82 | 3,522,400 | 3.45 | - The Company granted **900,000 stock options** with a weighted average exercise price of **C$13.54** and a grant date fair value of **$8.34 per share** during the six months ended June 30, 2025[115](index=115&type=chunk)[117](index=117&type=chunk) - Share-based compensation expense recognized for the six months ended June 30, 2025, was **$1,069,474**, an increase of **55.14%** from $689,360 in the prior year[117](index=117&type=chunk) - As of June 30, 2025, the unamortized portion of share-based expenses is **$4,158,348**, which will be recognized in future periods[116](index=116&type=chunk) [19. Expenses by Nature](index=26&type=section&id=19.%20EXPENSES%20BY%20NATURE) The Company's expenses by nature show significant increases across exploration and evaluation, general and administration, and finance costs for the six months ended June 30, 2025, compared to the prior year. Drilling services and share-based compensation were major contributors to the increases in their respective categories - Total exploration and evaluation expenses increased by **36.28%** to **$12,291,882** for the six months ended June 30, 2025, from $9,019,771 in the prior year[118](index=118&type=chunk) - Total general and administration expenses increased by **70.47%** to **$4,134,425** for the six months ended June 30, 2025, from $2,425,283 in the prior year[119](index=119&type=chunk) - Total finance costs increased by **31.54%** to **$169,887** for the six months ended June 30, 2025, from $129,153 in the prior year[120](index=120&type=chunk) [19. (a) Exploration and Evaluation Expenses](index=26&type=section&id=19.%20(a)%20Exploration%20and%20evaluation) Exploration and evaluation expenses significantly increased for the six months ended June 30, 2025, primarily driven by higher drilling services, salaries and benefits, and community expenses, reflecting intensified exploration activities | Category | Six months ended June 30, 2025 ($) | Six months ended June 30, 2024 ($) | Change ($) | % Change | | :-------------------------- | :--------------------------------- | :--------------------------------- | :--------- | :------- | | Drilling services | 5,241,694 | 3,040,470 | 2,201,224 | 72.39% | | Option payments and fees | 1,279,210 | 1,223,463 | 55,747 | 4.56% | | Salaries and benefits | 1,467,149 | 1,105,431 | 361,718 | 32.72% | | Assaying | 1,065,381 | 1,031,962 | 33,419 | 3.24% | | Field costs, surveys and other | 955,013 | 864,563 | 90,450 | 10.46% | | Transportation and meals | 641,438 | 490,037 | 151,401 | 30.90% | | Community expenses | 345,945 | 148,811 | 197,134 | 132.47% | | Depreciation and amortization | 352,382 | 137,877 | 214,505 | 155.58% | | Total | 12,291,882 | 9,019,771 | 3,272,111 | 36.28% | - Drilling services expenses increased by **72.39%** to **$5,241,694** for the six months ended June 30, 2025, from $3,040,470 in the prior year, indicating a significant ramp-up in exploration activities[118](index=118&type=chunk) - Community expenses more than doubled, increasing by **132.47%** to **$345,945**, reflecting increased engagement in local communities[118](index=118&type=chunk) [19. (b) General and Administration Expenses](index=27&type=section&id=19.%20(b)%20General%20and%20administration) General and administration expenses rose substantially for the six months ended June 30, 2025, primarily due to a significant increase in share-based compensation, salaries and benefits, and consulting and professional fees | Category | Six months ended June 30, 2025 ($) | Six months ended June 30, 2024 ($) | Change ($) | % Change | | :-------------------------- | :--------------------------------- | :--------------------------------- | :--------- | :------- | | Share-based compensation | 1,069,474 | 689,360 | 380,114 | 55.14% | | Salaries and benefits | 1,251,597 | 775,163 | 476,434 | 61.46% | | Consulting and professional fees | 741,028 | 216,402 | 524,626 | 242.43% | | Office administration | 299,751 | 174,750 | 125,001 | 71.53% | | Regulatory and compliance fees | 256,651 | 142,533 | 114,118 | 80.07% | | Total | 4,134,425 | 2,425,283 | 1,709,142 | 70.47% | - Consulting and professional fees experienced a significant increase of **242.43%** to **$741,028** for the six months ended June 30, 2025, from $216,402 in the prior year[119](index=119&type=chunk) - Share-based compensation increased by **55.14%** to **$1,069,474**, and salaries and benefits rose by **61.46%** to **$1,251,597**[119](index=119&type=chunk) [19. (c) Finance Costs](index=27&type=section&id=19.%20(c)%20Finance%20costs) Finance costs increased for the six months ended June 30, 2025, primarily due to a substantial rise in interest accretion expense related to lease liabilities, partially offset by the absence of finance issue expense from the prior year | Category | Six months ended June 30, 2025 ($) | Six months ended June 30, 2024 ($) | Change ($) | % Change | | :------------------------ | :--------------------------------- | :--------------------------------- | :--------- | :------- | | Finance issue expense | – | 65,849 | (65,849) | -100.00% | | Interest accretion expense | 128,805 | 26,549 | 102,256 | 385.16% | | Other finance expense | 41,082 | 36,755 | 4,327 | 11.77% | | Total | 169,887 | 129,153 | 40,734 | 31.54% | - Interest accretion expense increased significantly by **385.16%** to **$128,805** for the six months ended June 30, 2025, from $26,549 in the prior year, primarily due to lease liabilities[120](index=120&type=chunk) [20. Cash Flow Information](index=27&type=section&id=20.%20CASH%20FLOW%20INFORMATION) Net changes in working capital items resulted in a cash inflow of $926,264 for the six months ended June 30, 2025, a positive reversal from a cash outflow of $476,332 in the prior year. This improvement was driven by a significant increase in accounts payables and accrued liabilities | Category | Six months ended June 30, 2025 ($) | Six months ended June 30, 2024 ($) | Change ($) | | :-------------------------------- | :--------------------------------- | :--------------------------------- | :--------- | | Receivables and prepaid expenses | (747,018) | (228,306) | (518,712) | | Accounts payables and accrued liabilities | 1,673,282 | (248,026) | 1,921,308 | | Net changes in working capital items | 926,264 | (476,332) | 1,402,596 | - Accounts payables and accrued liabilities contributed a cash inflow of **$1,673,282** in 2025, a significant improvement from a cash outflow of $248,026 in 2024[121](index=121&type=chunk) - Receivables and prepaid expenses resulted in a higher cash outflow of **$747,018** in 2025 compared to $228,306 in 2024[121](index=121&type=chunk) [21. Commitments, Option Agreements and Contingencies](index=28&type=section&id=21.%20COMMITMENTS,%20OPTION%20AGREEMENTS%20AND%20CONTINGENCIES) As of June 30, 2025, the Company has total contractual commitments of $4,858,815, primarily for service contracts (drilling) and lease commitments. Additionally, under the assumption of exercising all options, future payments for mineral option agreements total $12,288,329. The Company is also subject to environmental contingencies related to Colombian laws | Commitment Category | Total ($) | Less than 1 Year ($) | Years 2 – 5 ($) | After 5 Years ($) | | :-------------------- | :-------- | :------------------- | :-------------- | :---------------- | | Service contracts | 3,516,520 | 3,516,520 | – | – | | Other lease commitments | 1,342,295 | 631,928 | 710,367 | – | | Total Commitments | 4,858,815 | 4,148,448 | 710,367 | – | | Option Agreement Category | Total ($) | Less than 1 Year ($) | Years 2 – 5 ($) | After 5 Years ($) | | :-------------------------- | :-------- | :------------------- | :-------------- | :---------------- | | Second Guayabales Option | 5,300,000 | 250,000 | 2,900,000 | 2,150,000 | | San Antonio Option | 4,420,000 | 420,000 | 1,500,000 | 2,500,000 | | Other Option agreements | 2,568,329 | 999,900 | 1,568,429 | – | | Total Option Agreements | 12,288,329 | 1,669,900 | 5,968,429 | 4,650,000 | - The Company's exploration activities are subject to Colombian environmental laws and regulations, which may become more restrictive and require future expenditures not yet recognized in the financial statements[127](index=127&type=chunk) [22. Subsequent Events](index=28&type=section&id=22.%20SUBSEQUENT%20EVENTS) Subsequent to the quarter end, the Company made a payment of $4 million related to the amended First Guayabales Option agreement - Subsequent to June 30, 2025, the Company paid **$4 million** with respect to the amended First Guayabales Option[128](index=128&type=chunk)

[Applied Therapeutics Second Quarter 2025 Results](index=1&type=section&id=Applied%20Therapeutics%20Second%20Quarter%202025%20Results) [Management Commentary](index=1&type=section&id=Management%20Commentary) The interim CEO highlighted strong execution in H1 2025, focusing on clinical operations, pipeline advancement, and regulatory alignment for rare disease programs - The company is preparing for a potential New Drug Application (NDA) submission for govorestat for the treatment of CMT-SORD, with a meeting scheduled with the FDA in **Q3 2025**[3](index=3&type=chunk) - A new sponsored sorbitol assay has been launched at no cost to patients to remove barriers to diagnosis and treatment for the CMT-SORD community[3](index=3&type=chunk) - The company's primary focus for the remainder of the year is on regulatory alignment across its pipeline for rare diseases, including CMT-SORD, Classic Galactosemia, and PMM2-CDG[3](index=3&type=chunk) [Recent Highlights & Pipeline Update](index=1&type=section&id=Recent%20Highlights%20%26%20Pipeline%20Update) Applied Therapeutics reported significant progress across its clinical pipeline, advancing CMT-SORD, addressing Classic Galactosemia CRL, presenting PMM2-CDG data, and completing corporate developments [CMT-SORD Program](index=1&type=section&id=CMT-SORD%20Program) The govorestat program for CMT-SORD is advancing toward a potential NDA submission, supported by positive 24-month MRI data and a newly launched no-cost Urine Sorbitol Assay - A meeting with the FDA is scheduled for **Q3 2025** to align on the planned NDA submission strategy for govorestat in treating CMT-SORD[6](index=6&type=chunk) - Full 12-month results and 24-month MRI data from the INSPIRE Phase 2/3 trial were presented, demonstrating that govorestat slowed the progression of the disease and was generally safe and well-tolerated[7](index=7&type=chunk) - In July 2025, the company launched a sponsored, no-cost Urine Sorbitol Assay to help healthcare providers identify patients with suspected CMT-SORD[6](index=6&type=chunk)[7](index=7&type=chunk) [Classic Galactosemia Program](index=2&type=section&id=Classic%20Galactosemia%20Program) The company is actively evaluating its response to the FDA's Complete Response Letter (CRL) for govorestat in Classic Galactosemia, with the review progressing as planned - The company is actively evaluating its response to the FDA's Complete Response Letter (CRL) for govorestat in Classic Galactosemia, with the process progressing as planned[8](index=8&type=chunk) [PMM2-CDG Program](index=2&type=section&id=PMM2-CDG%20Program) Results from an investigator-initiated trial of govorestat for PMM2-CDG are scheduled for presentation, with govorestat having received Orphan Drug and Rare Pediatric Disease designations - Data from an ongoing trial of govorestat for PMM2-CDG will be presented at the ASHG Annual Meeting in **October 2025**[9](index=9&type=chunk) - Govorestat has received Orphan Drug Designation and Rare Pediatric Disease designation from the FDA for the treatment of PMM2-CDG, an ultra-rare and severe metabolic disorder[9](index=9&type=chunk) [Corporate Developments](index=2&type=section&id=Corporate%20Developments) The company entered an out-licensing agreement for AT-001 for Diabetic Cardiomyopathy and made key leadership promotions in July 2025 - Entered into an out-licensing agreement with Biossil, Inc. for AT-001, granting Biossil exclusive worldwide rights to develop and commercialize the drug for Diabetic Cardiomyopathy (DbCM), with Applied Therapeutics receiving an upfront payment and eligibility for future royalties and milestones[10](index=10&type=chunk) - Promoted Evan Bailey, M.D., to Chief Medical Officer and Dottie Caplan to Executive Vice President, Patient Advocacy and Government Affairs[10](index=10&type=chunk) [Second Quarter 2025 Financial Results](index=3&type=section&id=Second%20Quarter%202025%20Financial%20Results) Applied Therapeutics reported a net loss of **$21.3 million** for Q2 2025, a significant shift from a net income of **$2.9 million** in Q2 2024, primarily due to changes in warrant liabilities and increased G&A expenses Financial Metrics | Financial Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | **Net Income (Loss)** | $(21.3) million | $2.9 million | Decreased significantly | | **Net Loss per Share (basic)** | $(0.15) | $0.02 (income) | N/A | | **R&D Expenses** | $9.9 million | $10.0 million | -1.0% | | **G&A Expenses** | $13.2 million | $10.6 million | +24.5% | | **Cash & Cash Equivalents** | $30.4 million (as of Jun 30, 2025) | $79.4 million (as of Dec 31, 2024) | -61.7% YTD | - The increase in General and administrative expenses was primarily driven by higher legal, professional, personnel, and data storage costs[16](index=16&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) The condensed financial statements detail the company's financial position and operational results, reflecting a significant reduction in cash and total assets and a net loss for the quarter due to non-operational changes [Condensed Balance Sheets](index=6&type=section&id=Condensed%20Balance%20Sheets) As of June 30, 2025, total assets decreased to **$37.3 million** from **$86.7 million** at year-end 2024, primarily due to a decline in cash and cash equivalents Balance Sheet Summary (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $30,421 | $79,398 | | Total current assets | $34,511 | $83,646 | | **Total Assets** | **$37,342** | **$86,691** | | **Liabilities & Equity** | | | | Total current liabilities | $17,749 | $27,296 | | Total liabilities | $19,904 | $29,685 | | Total stockholders' equity | $17,438 | $57,006 | | **Total Liabilities and Stockholders' Equity** | **$37,342** | **$86,691** | [Condensed Statements of Operations](index=7&type=section&id=Condensed%20Statements%20of%20Operations) For Q2 2025, the company reported no revenue and a net loss of **$21.3 million**, contrasting with a **$2.9 million** net income in Q2 2024, largely due to changes in the fair value of warrant liabilities Statements of Operations Summary (in thousands, except per share data) | (in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenue | $— | $144 | | Research and development | $9,923 | $10,004 | | General and administrative | $13,175 | $10,580 | | Loss from operations | $(23,098) | $(20,440) | | Change in fair value of warrant liabilities | $1,437 | $22,744 | | **Net income (loss)** | **$(21,330)** | **$2,898** | | **Net income (loss) per share - basic** | **$(0.15)** | **$0.02** |

Table of Contents 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 001-41529 SPRING VALLEY ACQUISITION CORP. II (Exact name of registrant as specified in its charter) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Cayman Islands 98- ...

Table of Contents ☒ 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 001-41529 SPRING VALLEY ACQUISITION CORP. II UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (Exact name of registrant as specified in its charter) Cayman Islands 98- ...

[Report Information](index=1&type=section&id=Report%20Information) Global Water Resources, Inc is classified as a non-accelerated filer and a smaller reporting company - Global Water Resources, Inc is a **non-accelerated filer** and a **smaller reporting company**[4](index=4&type=chunk) Key Metrics | Metric | Value | | :--- | :--- | | Common shares outstanding as of August 12, 2025 | 27,473,277 shares | | Common stock par value | $0.01 per share | [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [ITEM 1. Financial Statements (Unaudited)](index=5&type=section&id=ITEM%201.%20Financial%20Statements%20(Unaudited)) This section presents the company's unaudited condensed consolidated financial statements, reflecting growth in total assets and equity alongside a year-over-year decrease in net income [Condensed Consolidated Balance Sheets (unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) The balance sheet shows an increase in total assets, primarily driven by growth in net utility plant, and a significant rise in shareholders' equity Financial Position Summary | Metric (in thousands of USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Net utility plant | 401,749 | 359,379 | | Cash and cash equivalents | 10,220 | 9,047 | | Total assets | 449,382 | 405,137 | | **Capitalization and Liabilities** | | | | Total shareholders' equity | 76,740 | 47,604 | | Long-term debt, net | 116,803 | 118,518 | | Total capitalization | 193,543 | 166,122 | | Total current liabilities | 20,006 | 22,258 | | Total other liabilities | 235,833 | 216,757 | | Total capitalization and liabilities | 449,382 | 405,137 | [Condensed Consolidated Statements of Operations (unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(unaudited)) The operations statement reveals a year-over-year revenue increase, but higher operating expenses led to a slight decline in net income Operating Performance Summary | Metric (in thousands of USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | 14,241 | 13,510 | 26,698 | 25,120 | | Operating income | 2,620 | 2,797 | 3,875 | 4,064 | | Net income | 1,612 | 1,730 | 2,203 | 2,421 | | Basic earnings per share | 0.06 | 0.07 | 0.08 | 0.10 | | Diluted earnings per share | 0.06 | 0.07 | 0.08 | 0.10 | | Dividends per share | 0.08 | 0.08 | 0.15 | 0.15 | [Condensed Consolidated Statements of Shareholders' Equity (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity%20(unaudited)) Shareholders' equity increased significantly due to the issuance of common stock, which raised substantial net proceeds - Total shareholders' equity was **$76,740 thousand** as of June 30, 2025, a significant increase from $47,604 thousand on December 31, 2024, primarily due to the issuance of **3,220,000 common shares** for net proceeds of **$30,783 thousand**[18](index=18&type=chunk) Shareholders' Equity Summary | Metric (in thousands of USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Common shares outstanding | 27,830,545 | 24,570,994 | | Common stock | 273 | 240 | | Additional paid-in capital | 76,469 | 47,366 | | Retained earnings | — | — | | Total shareholders' equity | 76,740 | 47,604 | [Condensed Consolidated Statements of Cash Flows (unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Cash flow from operations decreased, while cash used in investing activities increased significantly, offset by strong cash generation from financing activities Cash Flow Summary | Cash Flow Activity (in thousands of USD) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | 8,827 | 13,571 | | Net cash used in investing activities | (35,395) | (12,211) | | Net cash provided by financing activities | 27,788 | 13,573 | | Increase in cash, cash equivalents, and restricted cash | 1,220 | 14,933 | | Cash, cash equivalents, and restricted cash at end of period | 12,376 | 19,696 | [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of accounting policies, recent acquisitions, regulatory matters, and other key financial components [1. Description of Business, Basis of Presentation, Significant Accounting Policies, and Recent Accounting Pronouncements](index=10&type=section&id=1.%20Description%20of%20Business%2C%20Basis%20of%20Presentation%2C%20Significant%20Accounting%20Policies%2C%20and%20Recent%20Accounting%20Pronouncements) This note outlines the basis for the financial statements and discusses the potential impact of new accounting standards on future disclosures - The company is evaluating the impact of ASU 2023-09 (Income Tax Disclosure Improvements) and ASU 2024-03/2025-01 (Expense Disaggregation Disclosures for Comprehensive Income) on its financial statement disclosures[25](index=25&type=chunk)[26](index=26&type=chunk) [2. Acquisitions](index=10&type=section&id=2.%20Acquisitions) This note details the company's recent acquisition of seven water systems in Tucson to expand its service area and customer base in Pima County - On July 8, 2025, the company's subsidiary GW-Ocotillo acquired seven water systems from Tucson Water for approximately **$8.2 million in cash**, serving about **2,200 water connections** with a current rate base of approximately **$7.7 million**[27](index=27&type=chunk) [3. Regulatory Matters](index=11&type=section&id=3.%20Regulatory%20Matters) This note details recent decisions and activities by the Arizona Corporation Commission (ACC) that affect the company's revenue requirements and rate structures - GW-Santa Cruz and GW-Palo Verde filed rate case applications on March 5, 2025, with hearings expected to begin in the **fourth quarter of 2025**[28](index=28&type=chunk) - The ACC approved the GW-Farmers rate case on April 29, 2025, with a **$1.1 million annual revenue increase**, a **9.6% return on equity**, and rates effective in three phases starting May 1, 2025[29](index=29&type=chunk) - The ACC approved the rate case for GW-Saguaro and six other utilities on June 20, 2024, resulting in a collective annual revenue increase of approximately **$351 thousand**, effective in five phases starting July 1, 2024[30](index=30&type=chunk) [4. Revenue Recognition](index=12&type=section&id=4.%20Revenue%20Recognition) This note provides a breakdown of revenue by source and customer class, along with policies for contract balances and credit loss allowances Revenue by Source | Revenue Source (in thousands of USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total water service revenue | 7,368 | 6,668 | 13,348 | 11,894 | | Total wastewater and recycled water service revenue | 6,873 | 6,842 | 13,350 | 13,226 | | Total regulated revenue | 14,241 | 13,510 | 26,698 | 25,120 | Contract Balances | Contract Balance (in thousands of USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accounts receivable, net | 3,830 | 3,233 | | Deferred revenue - ICFA | 22,449 | 21,517 | Allowance for Credit Losses | Credit Loss Allowance (in thousands of USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Beginning balance | (163) | (122) | | Credit loss expense | (59) | (103) | | Write-offs | 56 | 90 | | Recoveries | (4) | (28) | | Ending balance | (170) | (163) | [5. Earnings Per Share](index=13&type=section&id=5.%20Earnings%20Per%20Share) This note provides the calculation for basic and diluted earnings per share, including the impact of dilutive securities - For the three and six months ended June 30, 2025, approximately **130,000 share-based awards** were excluded from the diluted EPS calculation because their effect was anti-dilutive[38](index=38&type=chunk) Weighted-Average Shares Outstanding | Metric (in thousands of shares) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Basic weighted-average common shares | 27,463 | 24,199 | 25,925 | 24,188 | | Effect of dilutive securities | 42 | 110 | 62 | 118 | | Diluted weighted-average common shares | 27,505 | 24,309 | 25,987 | 24,306 | [6. Utility Plant](index=14&type=section&id=6.%20Utility%20Plant) This note details the composition of the company's utility plant assets and provides information on depreciation expenses - Depreciation expense for the three and six months ended June 30, 2025, was **$3.2 million** and **$6.4 million**, respectively, an increase from the prior year periods[39](index=39&type=chunk) Utility Plant Composition | Utility Plant (in thousands of USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Transmission and distribution plant | 342,068 | 321,075 | | Equipment | 75,931 | 67,917 | | Office buildings and other structures | 68,858 | 67,313 | | Construction in progress | 73,095 | 54,388 | | Land | 2,315 | 2,300 | | Total utility plant | 562,267 | 512,993 | [7. Taxes, prepaid expenses and other current assets](index=14&type=section&id=7.%20Taxes%2C%20prepaid%20expenses%20and%20other%20current%20assets) This note provides a detailed breakdown of taxes, prepaid expenses, and other current assets as of the reporting date Current Assets Breakdown | Current Assets (in thousands of USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | ICFA receivable | 2,191 | 1,871 | | Prepaid expenses | 697 | 648 | | Buckeye growth premium receivable | 615 | 738 | | Prepaid insurance | 303 | 533 | | Income taxes receivable | 149 | 149 | | Other current assets | 14 | 141 | | Total taxes, prepaid expenses and other current assets | 3,969 | 4,080 | [8. Goodwill](index=14&type=section&id=8.%20Goodwill) This note explains the changes in goodwill during the reporting period, primarily related to a reclassification to regulatory assets for a rate case - In March 2025, the company reclassified approximately **$3.0 million of goodwill** to regulatory assets to establish an acquisition premium related to the GW-Farmers rate case[42](index=42&type=chunk) Goodwill Reconciliation | Goodwill Movement (in thousands of USD) | Amount | | :--- | :--- | | Balance at December 31, 2024 | 9,486 | | Reclassification to regulatory assets | (2,959) | | Other adjustments | (245) | | Balance at June 30, 2025 | 6,282 | [9. Equity](index=15&type=section&id=9.%20Equity) This note discloses the details of the company's public offering of common stock completed in March 2025 - On March 27, 2025, the company completed a public offering of **3,220,000 shares** of common stock at **$10.00 per share**, raising gross proceeds of approximately **$32.2 million** and net proceeds of approximately **$30.8 million**[43](index=43&type=chunk) - Certain existing shareholders, including directors and their affiliates, purchased **1,439,200 shares** of common stock[43](index=43&type=chunk) [10. Debt](index=15&type=section&id=10.%20Debt) This note details the company's debt arrangements, including updates on its WIFA loan and revolving credit facility - The final disbursement of the WIFA loan was received in May 2025, with an outstanding balance of **$1.6 million** as of June 30, 2025[44](index=44&type=chunk) - The company's revolving credit facility with Northern Trust was amended on April 14, 2025, extending the maturity date to May 18, 2027, and increasing the maximum borrowing amount from **$15 million to $20 million**[45](index=45&type=chunk) - As of June 30, 2025, and December 31, 2024, the company had **no outstanding borrowings** under the revolving credit facility[45](index=45&type=chunk) [11. Accrued Expenses and Other Current Liabilities](index=15&type=section&id=11.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) This note presents a detailed breakdown of accrued expenses and other current liabilities as of the reporting date Current Liabilities Breakdown | Current Liabilities (in thousands of USD) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accrued project liabilities | 4,536 | 5,858 | | Other taxes | 1,550 | 1,648 | | AIAC refund, current portion | 1,431 | 1,431 | | Interest | 1,186 | 1,180 | | Accrued payroll | 1,036 | 991 | | Dividends payable | 695 | 614 | | Customer advances | 545 | 556 | | Accrued franchise fees | 350 | 353 | | Other accrued liabilities | 1,190 | 1,170 | | Total accrued expenses and other current liabilities | 12,519 | 13,801 | [12. Fair Value](index=16&type=section&id=12.%20Fair%20Value) This note provides information on financial assets and liabilities measured at fair value and explains the valuation methods used - The estimated fair value of the contingent consideration (growth premium) related to the GW-Farmers acquisition was **$1.2 million**, and for the GW-Saguaro utilities was **$0.7 million**, remaining unchanged as of June 30, 2025, and December 31, 2024[48](index=48&type=chunk)[49](index=49&type=chunk) Fair Value Measurements | Fair Value Measurement (in thousands of USD) | Total at June 30, 2025 | Total at December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | HUF funds - restricted cash | 507 | 870 | | Certificates of deposit - restricted | 1,649 | 1,239 | | **Liabilities** | | | | Contingent consideration | 1,923 | 1,942 | Fair Value of Long-Term Debt | Long-Term Debt (in thousands of USD) | Carrying Value at June 30, 2025 | Fair Value at June 30, 2025 | Carrying Value at Dec 31, 2024 | Fair Value at Dec 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Long-term debt | 116,803 | 115,145 | 118,518 | 118,702 | [13. Income Taxes](index=17&type=section&id=13.%20Income%20Taxes) This note provides the company's effective tax rate for the reporting periods and explains the primary reasons for rate changes - The increase in the effective tax rate for the second quarter of 2025 was primarily due to differences between book and taxable compensation expense related to **share-based compensation**[53](index=53&type=chunk) - The increase in the effective tax rate for the first half of 2025 was mainly due to a **reduction in deferred tax assets** in the prior year period[53](index=53&type=chunk) - The company is evaluating the impact of the "One Big Beautiful Bill Act" but does not expect a material impact on its results of operations, cash flows, or financial condition[54](index=54&type=chunk) Effective Tax Rate | Effective Tax Rate | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Effective tax rate | 27.7% | 25.7% | 26.6% | 24.9% | [14. Share-based Compensation](index=17&type=section&id=14.%20Share-based%20Compensation) This note details the share-based compensation expenses for employees and non-employees during the reporting periods Share-based Compensation Expense | Share-based Compensation (in thousands of USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total employee share-based compensation | 192 | 268 | 369 | 551 | | Total non-employee share-based compensation | (2) | 53 | (5) | 44 | | Total share-based compensation | 190 | 321 | 364 | 595 | [15. Transactions With Related Parties](index=17&type=section&id=15.%20Transactions%20With%20Related%20Parties) This note discloses transactions between the company and its related parties, including an employee medical benefits plan and stock purchases - The company provides medical benefits to employees through a plan sponsored by an affiliate of a significant shareholder and director, with medical claims paid totaling **$0.5 million** and **$1.0 million** for the three and six months ended June 30, 2025, respectively[56](index=56&type=chunk) - Certain directors and their affiliates purchased a total of **1,439,200 common shares** in the March 2025 public offering[57](index=57&type=chunk) [16. Commitments and Contingencies](index=17&type=section&id=16.%20Commitments%20and%20Contingencies) This note details the company's commitments and contingencies, including growth premiums, ICFA repayment obligations, and asset retirement obligations - As of June 30, 2025, the estimated fair value of the growth premium liability related to the Farmers Water Co acquisition was **$1.2 million**[58](index=58&type=chunk) - The carrying value of the growth premium liability within the GW-Saguaro utility service area was **$0.7 million**[59](index=59&type=chunk) - The company has an obligation to repay ICFA advances related to the CP Water utility through future ICFA fee reductions, with a liability of **$0.9 million**[60](index=60&type=chunk) - As of June 30, 2025, the estimated liability for asset retirement obligations was **$1.0 million**, an increase from $0.7 million at December 31, 2024[61](index=61&type=chunk) - Management is not aware of any legal proceedings that would have a material effect on the company's financial condition, results of operations, or cash flows[62](index=62&type=chunk) [17. Business Segment Information](index=18&type=section&id=17.%20Business%20Segment%20Information) This note states that the company operates as a single segment and provides a reconciliation of non-GAAP measures used by management - The company operates as a **single operating and reportable segment**, providing regulated water, wastewater, and recycled water services primarily within one geographic region in Arizona[63](index=63&type=chunk) Reconciliation of Non-GAAP Measures | Metric (in thousands of USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | 1,612 | 1,730 | 2,203 | 2,421 | | EBITDA | 6,826 | 6,565 | 12,307 | 11,768 | | Adjusted EBITDA | 6,935 | 6,793 | 12,577 | 12,197 | [18. Other, Net](index=20&type=section&id=18.%20Other%2C%20Net) This note presents the components of "Other, Net" for the reporting periods, primarily consisting of the Buckeye growth premium and AFUDC-Equity Components of Other, Net | Other, Net (in thousands of USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Buckeye growth premium | 615 | 480 | 1,233 | 1,257 | | AFUDC-Equity | 277 | 237 | 556 | 444 | | Other | (3) | 55 | (2) | 73 | | Total Other, Net | 889 | 772 | 1,787 | 1,774 | [19. Supplemental Cash Flow Information](index=20&type=section&id=19.%20Supplemental%20Cash%20Flow%20Information) This note provides supplemental cash flow data, including cash paid for interest and income taxes, and non-cash activities Supplemental Cash Flow Data | Supplemental Cash Flow Info (in thousands of USD) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cash paid for interest (net of capitalized amounts) | 2,839 | 2,290 | | Cash paid for income taxes | 1,027 | — | | Operating cash flows used for operating leases | 192 | 153 | | Capital expenditures (accrued in accounts payable and accrued liabilities) | 5,067 | 710 | | Utility plant constructed and contributed by developers | 15,424 | 2,645 | | Increase in asset retirement obligations | 278 | — | [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operational results, covering business outlook, key performance factors, and a comparative analysis of liquidity and capital resources [Overview](index=21&type=section&id=Overview) The company is a water resource management firm that owns and operates 39 utility systems in Arizona using a "Total Water Management" approach - GWRI is a water resource management company that owns, operates, and manages **39 water, wastewater, and recycled water utility systems** in the Phoenix and Tucson metropolitan areas of Arizona[71](index=71&type=chunk) - The company employs a **"Total Water Management"** approach to reduce reliance on scarce water resources and ensure sustainability through recycled water reuse and regional planning[71](index=71&type=chunk)[76](index=76&type=chunk) [Business Outlook](index=22&type=section&id=Business%20Outlook) The company continues to experience organic growth and is optimistic about long-term prospects despite a recent downturn in housing permit forecasts - As of June 30, 2025, the company's active connections **grew by 3.8% year-over-year**, demonstrating organic growth[72](index=72&type=chunk) - The Phoenix metropolitan area's population is projected to reach **5.8 million by 2030** and **6.5 million by 2040**[72](index=72&type=chunk) Phoenix Metro Housing Permit Forecast | Phoenix Metro Area Housing Permit Forecast | 2025 | 2026 | | :--- | :--- | :--- | | Single-family permits | 24,010 | 24,090 | | Multi-family permits | 10,559 | 10,728 | Housing Equivalent Permits (Y-o-Y Change) | Housing Equivalent Permits (Y-o-Y Change) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | City of Maricopa single-family permits | 177 | 233 | (24)% | 365 | 558 | (35)% | | Phoenix Metro single-family permits | 5,929 | 6,898 | (14)% | 12,337 | 14,433 | (15)% | | City of Maricopa multi-family equivalent permits | 86 | 776 | (89)% | 290 | 1,176 | (75)% | [Factors Affecting our Results of Operations](index=22&type=section&id=Factors%20Affecting%20our%20Results%20of%20Operations) This section discusses various factors influencing the company's performance, including growth, acquisitions, regulation, investment, costs, weather, and water supply [Population and Community Growth](index=23&type=section&id=Population%20and%20Community%20Growth) Population and community growth in the Phoenix metropolitan area directly drive revenue and variable expense growth through an increase in active service connections - As of June 30, 2025, active service connections increased by **2,383, or 3.8%**, to **65,639**, primarily due to organic growth in the service area[80](index=80&type=chunk) - Approximately **89.8%** of active service connections are served by the GW-Santa Cruz and GW-Palo Verde utilities[80](index=80&type=chunk) [Recent Acquisition Activity](index=24&type=section&id=Recent%20Acquisition%20Activity) The company recently acquired seven water systems in Tucson to expand its customer base and improve operational efficiency through integration and upgrades - On July 8, 2025, the company completed the acquisition of seven water systems from Tucson Water, serving approximately **2,200 water connections** and expected to generate about **$1.5 million** in annual revenue[84](index=84&type=chunk) - This acquisition brings the company's total customer count in Pima County to approximately **7,200**, and the company plans to upgrade these systems by installing AMI smart water meters[84](index=84&type=chunk) [Economic and Environmental Utility Regulation](index=24&type=section&id=Economic%20and%20Environmental%20Utility%20Regulation) The company is extensively regulated by the ACC and must comply with environmental rules, which may increase costs but are typically recoverable through rates - The ACC sets **"just and reasonable" rates** by evaluating the "used and useful" nature of utility plant and the "prudence" of costs using a historical test year[85](index=85&type=chunk) - Revenue for the company's water utilities consists of a fixed fee and a consumption-based volumetric fee, while wastewater services are based on a fixed fee[86](index=86&type=chunk) - The EPA has finalized Maximum Contaminant Levels (MCLs) for six PFAS, and the company expects compliance to **increase capital expenditures and operating costs**[89](index=89&type=chunk) - The company has completed its service line inventory, found **no lead pipes**, and does not expect the new Lead and Copper Rule to materially impact its results of operations[93](index=93&type=chunk) [Infrastructure Investment](index=25&type=section&id=Infrastructure%20Investment) Infrastructure investment is a key driver of earnings growth by expanding the "used and useful" rate base, which is supported by a capital improvement plan - Capital expenditures are a component of the rate base, and the company recovers a return on equity and debt service costs on these investments through rates[94](index=94&type=chunk) - As of December 31, 2024, the company's estimated rate base was **$212.5 million**, an **82% increase** since 2019[96](index=96&type=chunk) [Production and Treatment Costs](index=25&type=section&id=Production%20and%20Treatment%20Costs) Significant production costs are incurred for water and wastewater services, and while generally recoverable, regulatory lag can impact profits during periods of cost increases - The company's most significant costs include **labor, water and wastewater treatment chemicals, and electricity** for operating pumps and other equipment[97](index=97&type=chunk) - **Regulatory lag** can lead to decreased profit margins and earnings when production costs or other operating expenses increase significantly[97](index=97&type=chunk) [Weather and Seasonality](index=26&type=section&id=Weather%20and%20Seasonality) Customer water consumption is influenced by weather, with higher demand in summer, and the company's geographic concentration makes it sensitive to extreme weather patterns - Customer water usage is affected by weather conditions, with **higher demand in the summer** due to increased temperatures and outdoor uses like irrigation[99](index=99&type=chunk) - The geographic concentration of the company's service areas makes its operations **more sensitive to extreme weather patterns**[100](index=100&type=chunk) - The **second and third quarters** are typically the highest revenue periods for water and wastewater services[100](index=100&type=chunk) [Access to and Quality of Water Supply](index=26&type=section&id=Access%20to%20and%20Quality%20of%20Water%20Supply) The company relies on groundwater and recycled water, faces water resource constraints in parts of Pima County, and expects a new "farm-to-city" program to support sustainability - The company primarily relies on **groundwater and recycled water supplies** to meet future demand in its service areas[101](index=101&type=chunk) - Water resource constraints exist in areas near the City of Maricopa in Pima County, which could affect developers' ability to obtain final plat approval[101](index=101&type=chunk) - Arizona's **"farm-to-city" program** (Senate Bill 1611), signed in June 2025, allows agricultural water rights to be converted for new development, which is expected to promote water sustainability and regional growth[102](index=102&type=chunk) [Rate Regulation Updates](index=26&type=section&id=Rate%20Regulation%20Updates) The ACC has approved a "formula rate plan" policy to allow for more predictable rate adjustments, and the company has filed a new rate case seeking a significant revenue increase - In December 2024, the ACC approved a **"Formula Rate Policy Statement"** allowing utilities to adjust rates annually based on a pre-approved formula to reduce "regulatory lag"[103](index=103&type=chunk) - On March 5, 2025, GW-Santa Cruz and GW-Palo Verde filed a rate case requesting a net annual revenue increase of approximately **$6.5 million**, to be implemented in two phases starting May 2026[105](index=105&type=chunk) - The company has proposed adopting a **formula rate** in the future for smaller, more gradual annual updates to costs and investments[105](index=105&type=chunk) Recent Rate Case History | Company | Approved ROE | Approved Incremental Annual Revenue (in millions of USD) | Application Date | ACC Decision No | Rate Effective Date | | :--- | :--- | :--- | :--- | :--- | :--- | | GW-Santa Cruz | 9.20% | 1.2 | July 22, 2020 | 78644 | July 1, 2022 | | GW-Palo Verde | 9.20% | 0.7 | July 22, 2020 | 78644 | July 1, 2022 | | GW-Farmers | 9.60% | 1.1 | June 27, 2024 | 80695 | May 1, 2025 | [Comparison of Results of Operations for the Three Months Ended June 30, 2025 and 2024](index=28&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) Total revenue grew 5.4% to $14.2 million, but an 8.5% increase in operating expenses led to a 6.3% decline in operating income and a 6.8% drop in net income - Revenue growth was primarily driven by organic growth in active water and wastewater connections, increased water and recycled water consumption, and rate increases for GW-Saguaro and GW-Farmers[111](index=111&type=chunk) - The increase in operations and maintenance personnel costs was mainly due to higher salaries and medical costs from filling vacant positions[113](index=113&type=chunk) - The increase in depreciation and amortization was primarily attributable to an increase in depreciable fixed assets and additional amortization from a new office lease[115](index=115&type=chunk) Q2 Operating Results Summary | Metric (in thousands of USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 14,241 | 13,510 | 731 | 5.4% | | Operating expenses | 11,621 | 10,713 | (908) | (8.5)% | | Operating income | 2,620 | 2,797 | (177) | (6.3)% | | Net income | 1,612 | 1,730 | (118) | (6.8)% | | Basic earnings per share | 0.06 | 0.07 | (0.01) | (14.3)% | Q2 Revenue Breakdown | Revenue Detail (in thousands of USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total water service revenue | 7,368 | 6,668 | 700 | 10.5% | | Total wastewater and recycled water service revenue | 6,873 | 6,842 | 31 | 0.5% | | Active water connections | 36,382 | 35,128 | 1,254 | 3.6% | | Active wastewater connections | 29,257 | 28,128 | 1,129 | 4.0% | | Water consumption (million gallons) | 1,201 | 1,110 | 91 | 8.2% | | Recycled water consumption (million gallons) | 289 | 232 | 57 | 24.5% | Q2 Operating Expense Breakdown | Operating Expense Detail (in thousands of USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Operations and maintenance personnel costs | 1,356 | 1,184 | (172) | (14.5)% | | Utilities, chemicals, and repairs | 1,183 | 1,084 | (99) | (9.1)% | | Depreciation and amortization | 3,317 | 2,996 | (321) | (10.7)% | | Total operations and maintenance expenses | 3,917 | 3,485 | (432) | (12.4)% | | Total general and administrative expenses | 4,387 | 4,232 | (155) | (3.7)% | | Total operating expenses | 11,621 | 10,713 | (908) | (8.5)% | [Comparison of Results of Operations for the Six Months Ended June 30, 2025 and 2024](index=31&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Total revenue grew 6.3% to $26.7 million, but an 8.4% increase in operating expenses led to a 4.7% decline in operating income and a 9.0% drop in net income - Revenue growth was primarily driven by organic growth in active water and wastewater connections, increased water and recycled water consumption, and rate increases for GW-Saguaro and GW-Farmers[119](index=119&type=chunk) - The increase in utilities, chemicals, and repairs expense was mainly due to **higher electricity purchases ($0.2 million)** and **increased chemical costs ($0.1 million)** to support higher consumption and equipment operation[122](index=122&type=chunk) - The increase in depreciation and amortization was primarily attributable to a **6.7% increase in depreciable fixed assets** and additional amortization from a new office lease[125](index=125&type=chunk) H1 Operating Results Summary | Metric (in thousands of USD) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 26,698 | 25,120 | 1,578 | 6.3% | | Operating expenses | 22,823 | 21,056 | (1,767) | (8.4)% | | Operating income | 3,875 | 4,064 | (189) | (4.7)% | | Net income | 2,203 | 2,421 | (218) | (9.0)% | | Basic earnings per share | 0.08 | 0.10 | (0.02) | (20.0)% | H1 Revenue Breakdown | Revenue Detail (in thousands of USD) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total water service revenue | 13,348 | 11,894 | 1,454 | 12.2% | | Total wastewater and recycled water service revenue | 13,350 | 13,226 | 124 | 0.9% | | Active water connections | 36,382 | 35,128 | 1,254 | 3.6% | | Active wastewater connections | 29,257 | 28,128 | 1,129 | 4.0% | | Water consumption (million gallons) | 2,037 | 1,783 | 254 | 14.2% | | Recycled water consumption (million gallons) | 399 | 301 | 98 | 32.5% | H1 Operating Expense Breakdown | Operating Expense Detail (in thousands of USD) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Operations and maintenance personnel costs | 2,696 | 2,477 | (219) | (8.8)% | | Utilities, chemicals, and repairs | 2,215 | 1,875 | (340) | (18.1)% | | Depreciation and amortization | 6,645 | 5,930 | (715) | (12.1)% | | Total operations and maintenance expenses | 7,604 | 6,769 | (835) | (12.3)% | | Total general and administrative expenses | 8,574 | 8,357 | (217) | (2.6)% | | Total operating expenses | 22,823 | 21,056 | (1,767) | (8.4)% | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company funds its operations through cash flow, debt, equity, and grants, and believes its current resources are sufficient for future needs - The company's primary capital sources are **internal operating cash flow, debt and equity financing, and government grants**[128](index=128&type=chunk) - On March 27, 2025, the company raised approximately **$30.8 million in net proceeds** from a public offering of common stock[130](index=130&type=chunk) - WIFA awarded a **$1.6 million grant** to the GW-Farmers utility for smart water meter replacement[131](index=131&type=chunk) - The revolving credit facility was increased to **$20 million** with its maturity extended to May 18, 2027, and had **no outstanding balance** as of June 30, 2025[133](index=133&type=chunk) - The company expects its existing cash and **$20 million revolving credit facility** to be sufficient to meet its operational and capital needs for the next 12 months and beyond, while remaining in compliance with debt covenants[137](index=137&type=chunk) - The company maintains a monthly dividend program, currently set at **$0.02533 per share** (annualized at $0.30396)[138](index=138&type=chunk) - For the six months ended June 30, 2025, net cash provided by operating activities was **$8.8 million**, net cash used in investing activities was **$35.4 million**, and net cash provided by financing activities was **$27.8 million**[140](index=140&type=chunk)[141](index=141&type=chunk)[144](index=144&type=chunk) - As of June 30, 2025, the company was in **compliance with the financial debt covenants** under its senior secured notes and Northern Trust loan agreement[146](index=146&type=chunk) [ITEM 3. Qualitative and Quantitative Disclosures About Market Risk](index=35&type=section&id=ITEM%203.%20Qualitative%20and%20Quantitative%20Disclosures%20About%20Market%20Risk) This section states that disclosures about market risk are not applicable - This section is **not applicable**[149](index=149&type=chunk) [ITEM 4. Controls and Procedures](index=35&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective, and no material changes were made to internal controls - As of June 30, 2025, the company's disclosure controls and procedures were determined to be **effective**[149](index=149&type=chunk) - There were **no material changes** to the company's internal controls during the fiscal quarter ended June 30, 2025[150](index=150&type=chunk) [PART II. OTHER INFORMATION](index=37&type=section&id=PART%20II.%20OTHER%20INFORMATION) [ITEM 1. Legal Proceedings](index=37&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material impact - The company is **not involved in any legal proceedings** expected to have a material impact on it[151](index=151&type=chunk) [ITEM 1A. Risk Factors](index=37&type=section&id=ITEM%201A.%20Risk%20Factors) This section updates risk factors, highlighting regulatory dependence for expansion and water resource limitations in Pima County - The company's expansion into new service areas and existing water/wastewater services **depend on regulatory approvals**, and failure to obtain them would adversely affect future growth[152](index=152&type=chunk) - **Water resource limitations** near the City of Maricopa in Pima County could affect developers' ability to obtain final plat approval, thereby limiting future growth[153](index=153&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section discloses that no unregistered equity securities were sold and details stock repurchases to cover employee tax obligations - There were **no sales of unregistered securities** during the three months ended June 30, 2025[155](index=155&type=chunk) - The shares purchased represent shares withheld from employees or board members to satisfy tax obligations related to the vesting of restricted stock awards[158](index=158&type=chunk) Share Repurchases | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | May 1, 2025 to May 31, 2025 | 11,347 | $10.41 | [ITEM 3. Defaults Upon Senior Securities](index=38&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This section states that no defaults upon senior securities occurred during the reporting period - There were **no defaults upon senior securities**[159](index=159&type=chunk) [ITEM 4. Mine Safety Disclosures](index=38&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable - Mine safety disclosures are **not applicable**[160](index=160&type=chunk) [ITEM 5. Other Information](index=38&type=section&id=ITEM%205.%20Other%20Information) This section discloses that no Rule 10b5-1 trading plans were adopted or terminated by directors or officers during the period - During the three months ended June 30, 2025, **no director or officer** of the company adopted or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement[161](index=161&type=chunk) [ITEM 6. Exhibits](index=39&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the report, including corporate charters, loan agreement amendments, and XBRL files - Exhibits include the company's Articles of Incorporation, Amended Bylaws, the Sixth Modification Agreement with Northern Trust Company, and **XBRL-related files**[162](index=162&type=chunk) [Signatures](index=40&type=section&id=Signatures) The report was duly signed on behalf of the company by its Chief Financial Officer - The report was signed on August 13, 2025, by **Michael J. Liebman, Chief Financial Officer and Corporate Secretary**, on behalf of Global Water Resources, Inc[167](index=167&type=chunk)

Table of Contents 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 BANK OF THE JAMES FINANCIAL GROUP, INC. (Exact Name of Registrant as Specified in Its Charter) _____ ...

Exhibit 99.1 KIMBALL ELECTRONICS REPORTS Q4 RESULTS WITH SOLID FINISH TO THE FISCAL YEAR; COMPANY PROVIDES GUIDANCE FOR FISCAL 2026 JASPER, Ind., August 13, 2025 -- (BUSINESS WIRE) -- Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the fourth quarter and fiscal year ended June 30, 2025. "I'm encouraged by the results for the fourth quarter and solid finish to the fiscal year. Q4 came in better than expected, as sales increased sequentially, margins improved, and working capital ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The company reported a net loss of $1.76 million for the quarter ended June 30, 2025, an improvement from a $2.57 million loss in the prior-year period, primarily due to lower operating expenses, with total assets decreasing to $5.3 million from $7.4 million and net cash used in operating activities approximately $1.7 million, while also highlighting a 1-for-8 reverse stock split and substantial doubt about its ability to continue as a going concern [Condensed Consolidated Balance Sheets](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2025, total assets were $5.31 million, a decrease from $7.36 million on March 31, 2025, primarily driven by a reduction in cash and cash equivalents from $5.50 million to $3.77 million, while total liabilities decreased to $1.88 million from $2.24 million and total stockholders' equity fell from $5.12 million to $3.42 million over the same period Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2025 ($) | March 31, 2025 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $3,765,154 | $5,501,261 | | Total current assets | $4,050,858 | $5,949,800 | | Total assets | $5,306,002 | $7,359,534 | | **Liabilities & Equity** | | | | Total current liabilities | $1,627,437 | $1,899,286 | | Total liabilities | $1,882,489 | $2,236,004 | | Total stockholders' equity | $3,423,513 | $5,123,530 | | Total liabilities and stockholders' equity | $5,306,002 | $7,359,534 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For the three months ended June 30, 2025, the company reported a net loss of $1.76 million, or ($0.85) per share, a reduction from the net loss of $2.57 million, or ($2.76) per share, in the same period of 2024, driven by a significant decrease in total operating expenses to $1.79 million from $2.62 million year-over-year Statement of Operations Summary (Unaudited) | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Total operating expenses | $1,792,390 | $2,620,858 | | Operating Loss | ($1,792,390) | ($2,620,858) | | Net Loss | ($1,761,858) | ($2,571,440) | | Basic and diluted net loss per share | ($0.85) | ($2.76) | | Weighted average shares outstanding | 2,076,416 | 932,248 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the three months ended June 30, 2025, net cash used in operating activities was $1.71 million, comparable to the $1.75 million used in the prior-year period, with minimal net cash used in financing activities at $5,357, a stark contrast to the $5.38 million provided by financing activities in the same quarter of 2024, resulting in a total cash position decrease of $1.74 million Cash Flow Summary (Unaudited) | Activity | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | ($1,714,937) | ($1,747,537) | | Net cash (used in) provided by financing activities | ($5,357) | $5,379,229 | | Net (decrease) increase in cash | ($1,735,790) | $3,630,402 | | Cash, cash equivalents and restricted cash at end of period | $3,863,284 | $9,159,885 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes detail the company's focus on the Hemopurifier® for cancer and viral infections, with an ongoing Phase 1 oncology trial in Australia, a 1-for-8 reverse stock split in June 2025, and crucially, substantial doubt about the company's ability to continue as a going concern due to insufficient cash to fund operations for the next twelve months - The company is focused on developing the Hemopurifier® for cancer and life-threatening viral infections, with the FDA granting it **"Breakthrough Device" designation** for two indications[18](index=18&type=chunk)[23](index=23&type=chunk) - A Phase 1 oncology trial is underway in Australia, with **three participants treated** in the first cohort showing no safety concerns, and enrollment for the second cohort is open, while a planned trial in India was canceled to conserve resources[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) - A **1-for-8 reverse stock split** was effected on June 9, 2025, with all share and per-share amounts retroactively adjusted[29](index=29&type=chunk)[43](index=43&type=chunk) - Management has concluded there is **substantial doubt** about the Company's ability to continue as a going concern, as existing cash is not sufficient to fund operations for at least twelve months[32](index=32&type=chunk) Research and Development Expenses | Period | R&D Expense ($) | | :--- | :--- | | Three months ended June 30, 2025 | $524,368 | | Three months ended June 30, 2024 | $414,658 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's focus on the Hemopurifier® and the progress of its Phase 1 oncology trial in Australia, noting the strategic decision to cancel a similar trial in India to conserve capital, leading to a 31.6% decrease in operating expenses and a reduced net loss of $1.76 million, but highlighting major liquidity concerns with only $3.8 million in cash, raising substantial doubt about its ability to continue as a going concern [Overview](index=18&type=section&id=Overview) The company is a medical therapeutic firm developing the Hemopurifier®, a clinical-stage device for cancer and viral infections, with primary focus on a Phase 1 oncology trial in Australia, which is now enrolling for its second cohort after the initial cohort showed a favorable safety profile, while also conducting pre-clinical research for new applications - The company's primary clinical development priority is the ongoing Phase 1 oncology trial in Australia for the Hemopurifier®[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) - A strategic decision was made to discontinue efforts for a clinical trial in India to conserve resources and focus on the Australian trial[79](index=79&type=chunk) - Pre-clinical research continues to explore new applications, including a study on removing platelet-derived extracellular vesicles, which showed **>98% removal** from human plasma in a simulated session[82](index=82&type=chunk) [Results of Operations](index=20&type=section&id=RESULTS%20OF%20OPERATIONS) For the quarter ended June 30, 2025, operating expenses decreased by $828,468 (31.6%) to $1.79 million compared to the prior-year period, mainly due to a $673,802 reduction in payroll and related expenses, a $138,050 decrease in professional fees, and a $16,616 drop in general and administrative costs, consequently improving the net loss to $1.76 million from $2.57 million year-over-year Operating Expenses Comparison (Q2 2025 vs Q2 2024) | Expense Category | Q2 2025 ($) | Q2 2024 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Payroll and related | $581,000 | $1,254,802 | ($673,802) | (53.7%) | | Professional fees | $476,032 | $614,082 | ($138,050) | (22.5%) | | General and administrative | $735,358 | $751,974 | ($16,616) | (2.2%) | | **Total Operating Expenses** | **$1,792,390** | **$2,620,858** | **($828,468)** | **(31.6%)** | - The decrease in payroll expenses was primarily due to the absence of a **$320,604 severance accrual** from the prior year and lower compensation costs from reduced headcount[88](index=88&type=chunk) - Net loss decreased to **$1.76 million** from **$2.57 million** in the prior-year quarter[92](index=92&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As of June 30, 2025, the company had a cash balance of $3.77 million and working capital of $2.42 million, but management explicitly states this cash is not sufficient to fund operations for the next twelve months, creating substantial doubt about its ability to continue as a going concern and requiring significant additional financing to sustain operations and clinical trials - The company does not expect its existing cash of **$3.77 million** (as of June 30, 2025) to be sufficient to fund operations for at least the next twelve months[93](index=93&type=chunk) - The company must obtain **significant additional financing** to sustain working capital and fund planned clinical trials[94](index=94&type=chunk) Cash Flow Summary (in thousands) | Activity | For the three months ended June 30, 2025 ($ in thousands) | For the three months ended June 30, 2024 ($ in thousands) | | :--- | :--- | :--- | | Operating activities | $(1,715) | $(1,748) | | Investing activities | – | – | | Financing activities | (5) | 5,379 | [Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is not required to provide this information as it qualifies as a smaller reporting company - As a smaller reporting company, Aethlon Medical is not required to provide the information for this item[106](index=106&type=chunk) [Controls and Procedures](index=23&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of the end of the quarter, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2025[109](index=109&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter[110](index=110&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=24&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company reports that it is not currently a party to any pending or threatened legal proceedings - The company is not presently a party to any pending or threatened legal proceedings[112](index=112&type=chunk) [Risk Factors](index=24&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, with key risks including a history of significant losses, the need for additional financing, reliance on third-party suppliers, potential for technology obsolescence, extensive regulation, and risks related to maintaining its Nasdaq listing - There have been no material changes to the risk factors previously disclosed in the Annual Report for the fiscal year ended March 31, 2025[114](index=114&type=chunk) - Principal risks include: history of significant losses, need for additional financing, reliance on third-party suppliers, potential technology obsolescence, regulatory hurdles, and maintaining Nasdaq listing compliance[113](index=113&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=25&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company did not issue or sell any unregistered securities during the three-month period ended June 30, 2025 - No unregistered securities were issued or sold during the three months ended June 30, 2025[115](index=115&type=chunk) [Other Information](index=25&type=section&id=ITEM%205.%20OTHER%20INFORMATION) During the quarter ended June 30, 2025, none of the company's directors or officers entered into, modified, or terminated a Rule 10b5-1 trading arrangement - No directors or officers entered into, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter[118](index=118&type=chunk) [Exhibits](index=26&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed as part of the quarterly report, including corporate governance documents, forms of securities, and officer certifications

[Q2 2025 Earnings Release and Corporate Update](index=1&type=section&id=Q2%202025%20Earnings%20Release%20and%20Corporate%20Update) This report details STRATA's Q2 2025 financial performance, strategic growth initiatives, and key operational highlights [Executive Summary and Business Highlights](index=1&type=section&id=Executive%20Summary%20and%20Business%20Highlights) STRATA expands its XTRAC laser market with new reimbursement codes, achieving operational gains and near cash flow breakeven - The company's growth strategy focuses on expanding into new indications for its XTRAC Excimer laser, leveraging revised reimbursement codes that could more than **triple** the available patient population[3](index=3&type=chunk)[4](index=4&type=chunk) - STRATA is strengthening its intellectual property around the combined use of its excimer laser with JAK inhibitors, an emerging treatment paradigm[4](index=4&type=chunk) - In Q2, the company placed **19 new XTRAC devices**, the highest number in six quarters, while removing 21 from underperforming accounts[4](index=4&type=chunk) - Average gross billings per device increased by **2.7%** over the comparable prior-year period to **$5,512**[4](index=4&type=chunk) - The company ended the quarter with **$6.0 million** in cash and was nearly at operating cash flow breakeven after adjusting for a **$1.3 million** tax payment and approximately **$340 thousand** in legal expenses[4](index=4&type=chunk) [Financial Performance](index=2&type=section&id=Financial%20Performance) Q2 2025 revenue decreased 9% to $7.7 million, resulting in a $2.5 million net loss and negative adjusted EBITDA [Q2 2025 Financial Results](index=2&type=section&id=Q2%202025%20Financial%20Results) Q2 2025 revenue declined 9% to $7.7 million, with gross profit at $4.3 million and a net loss of $2.5 million Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $7.7M | $8.4M | -9% | | Global Recurring Revenue | $5.1M | - | -4% | | Equipment Revenue | $2.5M | - | -18% | | Gross Profit | $4.3M | $5.0M | -14% | | Gross Margin | 56% | ~59% | -3 p.p. | | Operating Expenses | $6.5M | $5.5M | +18% | | Net Loss | ($2.5M) | ($0.1M) | -2400% | | EPS (basic & diluted) | ($0.60) | ($0.03) | -1900% | | Cash and Equivalents | $6.0M | - | - | - The significantly lower net loss in Q2 2024 was partially due to the benefit of **$864 thousand** in funds from the Coronavirus Aid, Relief, and Economic Security ("Cares") act[6](index=6&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) Q2 2025 Non-GAAP Adjusted EBITDA was a loss of $0.76 million, reversing prior-year positive, with XTRAC billings reconciled to GAAP revenue Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net loss | $(2,489) | $(99) | | Non-GAAP EBITDA | $(890) | $1,713 | | **Non-GAAP adjusted EBITDA** | **$(762)** | **$1,012** | Reconciliation of XTRAC Gross Billings to GAAP Revenue (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Gross domestic recurring billings | $4,652 | $4,735 | | **GAAP domestic revenue** | **$4,417** | **$4,715** | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) Consolidated statements as of June 30, 2025, show total assets of $30.7 million, liabilities of $30.4 million, and equity of $0.3 million [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $30.7 million, with cash at $6.0 million and stockholders' equity significantly reduced to $0.3 million Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $5,966 | $7,261 | | Total assets | $30,722 | $36,157 | | Total liabilities | $30,414 | $31,185 | | Total stockholders' equity | $308 | $4,972 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 revenues were $7.7 million, with a gross profit of $4.3 million, leading to a net loss of $2.5 million Statement of Operations Summary - Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenues, net | $7,663 | $8,435 | | Gross profit | $4,306 | $4,977 | | Total operating expenses | $6,530 | $5,463 | | Loss from operations | $(2,224) | $(486) | | **Net loss** | **$(2,489)** | **$(99)** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities for the six months ended June 30, 2025, increased to $2.5 million, with cash ending at $6.0 million Cash Flow Summary - Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,491) | $(213) | | Net cash used in investing activities | $(138) | $(1,070) | | Net cash provided by financing activities | $0 | $(18) | | **Net decrease in cash** | **$(2,629)** | **$(1,301)** | | **Cash at end of period** | **$5,966** | **$6,817** | [Corporate Information](index=2&type=section&id=Corporate%20Information) This section outlines STRATA's business model, partnership program, earnings call details, and forward-looking statement disclaimers - STRATA is a medical technology company focused on dermatologic conditions, offering products like XTRAC® and VTRAC® through a unique fee-per-treatment partnership program rather than direct equipment sales[15](index=15&type=chunk)[16](index=16&type=chunk) - An earnings conference call was scheduled for 4:30 p.m. ET on August 13, 2025, to discuss the financial results and corporate developments[8](index=8&type=chunk) - The press release contains a "Safe Harbor" statement, cautioning that forward-looking statements are subject to significant uncertainties and risks and are not guarantees of future performance[17](index=17&type=chunk)