[Part I – Financial Information](index=5&type=section&id=Part%20I%20%E2%80%93%20Financial%20Information) [Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) For the six months ended June 30, 2025, The Oncology Institute, Inc. reported total operating revenue of $224.2 million, a 16% increase year-over-year, driven primarily by a 33% growth in dispensary revenue, while recording a net loss of $36.6 million, slightly higher than the $35.4 million loss in the prior-year period, with cash and cash equivalents decreasing to $30.3 million from $49.7 million at year-end 2024, and net cash used in operating activities improving significantly to $15.2 million from $31.5 million [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets decreased to $159.8 million from $172.7 million at December 31, 2024, primarily due to a $19.4 million reduction in cash and cash equivalents, while total liabilities remained relatively stable at $168.8 million, shifting the company's financial position from a total stockholders' equity of $3.6 million to a total stockholders' deficit of $9.0 million Condensed Consolidated Balance Sheet Summary | Financial Item | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 30,292 | 49,669 | | Total current assets | 104,792 | 112,435 | | Total assets | 159,798 | 172,717 | | **Liabilities** | | | | Total current liabilities | 64,778 | 52,231 | | Long-term debt, net | 75,023 | 93,131 | | Total liabilities | 168,783 | 169,128 | | **Stockholders' Equity (Deficit)** | | | | Total stockholders' equity (deficit) | (8,985) | 3,589 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, total operating revenue increased by 21.5% to $119.8 million year-over-year, driven by a 40.8% surge in dispensary revenue, with loss from operations improving to $11.2 million from $16.4 million in Q2 2024, though the net loss widened to $17.0 million from $15.5 million due to a $4.0 million unfavorable change in the fair value of conversion option derivative liabilities, resulting in a six-month revenue growth of 16% to $224.2 million and a net loss of $36.6 million Condensed Consolidated Statements of Operations Summary | Metric ($ in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total operating revenue** | **119,802** | **98,578** | **224,208** | **193,244** | | Patient services revenue | 55,891 | 52,461 | 108,959 | 104,914 | | Dispensary revenue | 62,573 | 44,440 | 111,866 | 84,119 | | Loss from operations | (11,211) | (16,364) | (21,122) | (34,336) | | **Net loss** | **(17,009)** | **(15,479)** | **(36,594)** | **(35,368)** | | Net loss per share, basic & diluted | (0.15) | (0.17) | (0.35) | (0.39) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities significantly improved to $15.2 million from $31.5 million in the prior-year period, despite a similar net loss, driven by changes in working capital and non-cash adjustments, while net cash used in investing activities was $1.4 million, a sharp contrast to the $37.6 million provided in the prior year, and financing activities used $2.8 million, primarily for a $20 million debt repayment partially offset by $15.4 million in private placement proceeds, leading to an overall $19.4 million decrease in cash and cash equivalents Condensed Consolidated Statements of Cash Flows Summary | Cash Flow Activity ($ in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | (15,190) | (31,543) | | Net cash (used in) provided by investing activities | (1,410) | 37,564 | | Net cash used in financing activities | (2,777) | (3,085) | | **Net (decrease) increase in cash** | **(19,377)** | **2,936** | | Cash at beginning of period | 49,669 | 33,488 | | **Cash at end of period** | **30,292** | **36,424** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's business operations, significant accounting policies, and financial activities, including a Research Services Agreement with Helios to operate the Clinical Trials segment, a February 2025 debt amendment involving a $20 million prepayment and covenant removal, and a March 2025 private placement raising $16.5 million in gross proceeds, with the company concluding it has sufficient liquidity to operate as a going concern for at least one year, and providing breakdowns of revenue, debt, share-based compensation, and segment performance, showing strong growth in the Dispensary segment - On March 31, 2025, the Company entered into a Research Services Agreement with Helios CR, Inc., under which the Clinical Trials segment will be operated by Helios in a profit-sharing arrangement, which resulted in a **$2.4 million loss** from the write-off of the segment's net assets[23](index=23&type=chunk) - The company evaluated its financial condition and concluded it has **sufficient liquidity to fund operations for at least one year** from the issuance date of the financial statements, supported by a debt amendment, a private placement, and cost reduction initiatives[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - In February 2025, the company amended its Facility Agreement, making a **$20 million partial debt prepayment** and removing a covenant that required maintaining a **$40 million cash balance**[102](index=102&type=chunk)[103](index=103&type=chunk) - In March 2025, the company completed a private placement (PIPE) resulting in **gross proceeds of approximately $16.5 million** and an associated exchange of **$4.1 million in debt for equity and warrants**[139](index=139&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 21.5% year-over-year revenue growth in Q2 2025 to a 40.8% increase in dispensary revenue and a 6.5% rise in patient services revenue, with dispensary growth driven by a 102.8% increase in prescription fills, while successfully reducing SG&A expenses by 3.5% in Q2 2025 through cost discipline and operational efficiency initiatives, including planned AI pilots for automation, leading to significant Adjusted EBITDA improvement with a loss of $4.1 million in Q2 2025 compared to a loss of $8.7 million in Q2 2024, and believing it has sufficient liquidity for the next year, supported by a recent private placement, debt restructuring, and improved cash flow from operations [Results of Operations](index=42&type=section&id=Results%20of%20Operations) For Q2 2025, total operating revenue increased 21.5% to $119.8 million from $98.6 million in Q2 2024, driven by a 40.8% increase in Dispensary revenue and a 6.5% increase in Patient Services revenue, with operating expenses as a percentage of revenue decreasing from 116.6% to 109.4%, leading to an improved operating loss of $11.2 million versus $16.4 million in the prior-year quarter, aided by a 3.5% reduction in SG&A expenses due to cost discipline Operating Revenue by Category | Revenue Category ($ in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Patient services | 55,891 | 52,461 | 3,430 | 6.5% | | Dispensary | 62,573 | 44,440 | 18,133 | 40.8% | | Clinical trials & other | 1,338 | 1,677 | (339) | (20.2)% | | **Total operating revenue** | **119,802** | **98,578** | **21,224** | **21.5%** | - The increase in dispensary revenue was primarily due to a **102.8% increase** in the number of prescription fills, offset by a **30.6% decrease** in average revenue per fill[206](index=206&type=chunk) - Selling, general and administrative (SG&A) expenses **decreased by 3.5%** in Q2 2025 compared to Q2 2024, reflecting cost discipline and operational efficiency, with the company planning to launch AI pilots for prior-authorization and denial automation to further improve efficiency[211](index=211&type=chunk) [Key Business Metrics](index=45&type=section&id=Key%20Business%20Metrics) Management uses key metrics including the number of clinics, lives under value-based contracts, and Adjusted EBITDA to evaluate performance, with the company operating 80 clinics and managing 1.9 million lives under value-based contracts as of Q2 2025, and Adjusted EBITDA, a non-GAAP measure, showing significant improvement with a loss of $4.1 million for the three months ended June 30, 2025, compared to a loss of $8.7 million in the same period of 2024, driven by higher revenue and lower operating expenses Key Performance Indicators | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Clinics | 80 | 87 | | Lives under value-based contracts | 1.9 million | 2.0 million | | Adjusted EBITDA ($ in thousands) | (4,089) | (8,709) | Adjusted EBITDA Reconciliation | Reconciliation to Adjusted EBITDA ($ in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net loss | (17,009) | (15,479) | | Depreciation and amortization | 1,805 | 1,518 | | Interest expense, net | 1,870 | 2,119 | | Share-based compensation | 752 | 3,387 | | Changes in fair value of liabilities | 4,040 | (3,120) | | Other adjustments | 4,513 | 2,274 | | **Adjusted EBITDA** | **(4,089)** | **(8,709)** | [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) The company asserts it has sufficient liquidity to fund operations for at least one year, supported by its cash balance of $30.3 million as of June 30, 2025, a March 2025 private placement that raised $16.5 million, and a February 2025 debt amendment that removed a restrictive cash covenant, with cash flow from operations improving by $16.4 million for the first six months of 2025 compared to the prior year due to better working capital management, and material future cash requirements including debt service of $94.1 million and operating lease payments of $32.7 million - The company concluded it has **sufficient liquidity for at least one year**, citing its cash balance, a recent private placement raising **~$16.5M**, a debt amendment removing a **$40M cash covenant**, and improved operational cash flow[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) - Net cash used in operating activities **improved by $16.4 million** for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to better working capital management and non-cash adjustments[229](index=229&type=chunk)[233](index=233&type=chunk) Material Cash Requirements | Material Cash Requirements (Total) | Amount ($ in thousands) | | :--- | :--- | | Convertible note (principal & interest) | 94,105 | | Operating leases | 32,738 | | Deferred acquisition and contingent consideration | 143 | | Other (finance leases, D&O insurance) | 407 | | **Total** | **127,393** | [Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate risk, inflation risk, and impairment risk, with interest rate risk considered minimal due to the short-term nature of its cash holdings, while inflation poses a risk by potentially increasing the costs of drugs, labor, and other business expenses faster than forecasted, and impairment risk relates to the potential for writing down goodwill or intangible assets if economic conditions worsen, interest rates rise, or reporting units underperform - The company identifies its main market risks as **interest rate risk, inflation risk, and impairment risk**[257](index=257&type=chunk) - **Inflation is a key concern** as it can increase costs for drugs, labor, and administration, potentially causing the company to use cash faster than planned[259](index=259&type=chunk) - There is a **risk of goodwill or intangible asset impairment** if reporting units underperform, the economy enters a recession, or interest rates continue to rise[260](index=260&type=chunk) [Controls and Procedures](index=52&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 June 30, 2025, with no material changes to the company's internal control over financial reporting during the quarter, while acknowledging the inherent limitations of any control system, noting it can provide only reasonable, not absolute, assurance of achieving its objectives - Based on an evaluation as of June 30, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective**[261](index=261&type=chunk) - **No changes occurred** during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[262](index=262&type=chunk) [Part II – Other Information](index=54&type=section&id=Part%20II%20%E2%80%93%20Other%20Information) [Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) The company is **not currently involved in any legal proceedings that would have a material adverse effect** on its business, financial condition, or results of operations[266](index=266&type=chunk) [Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) **No material changes** have been made to the risk factors described in the Annual Report on Form 10-K for the year ended December 31, 2024[267](index=267&type=chunk) [Other Information](index=54&type=section&id=Item%205.%20Other%20Information) During the quarter, a director by deputization, M33 Growth I L.P., adopted a Rule 10b5-1 trading plan for the sale of up to 3 million shares of common stock, and subsequent to the quarter end, on August 13, 2025, the company entered into At-the-Market (ATM) Sales Agreements to sell, at its option, up to $15 million of its common stock - On June 12, 2025, director M33 Growth I L.P. adopted a **Rule 10b5-1 trading plan for the sale of up to 3,000,000 shares of common stock** through May 18, 2026[271](index=271&type=chunk) - On August 13, 2025, the company established an At-the-Market (ATM) offering program, allowing it to **sell up to $15 million in common stock** through agents BTIG, LLC and B. Riley Securities, Inc[272](index=272&type=chunk) [Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and interactive data files (XBRL), also referencing previously filed documents such as the merger agreement, corporate bylaws, and various warrant and debt agreements

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: 000-30141 LIVEPERSON, INC. (Exact name of registrant as specified in its charter) Delaware 13-3861628 (State ...

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 CANTOR EQUITY PARTNERS, INC. (Exact name of registrant as specified in its charter) Cayman Islands 001-42250 98-1576482 (State or other jurisdiction of inco ...

Q2 2025 Earnings Release Overview Strong Q2 2025 results with increased rental revenue, record Adjusted EBITDA, shareholder returns, and raised guidance [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Natural Gas Services Group reported a strong second quarter of 2025, highlighted by a 13.3% year-over-year increase in rental revenue and a 19.5% rise in Adjusted EBITDA to a record $19.7 million. The company also initiated its first quarterly cash dividend and a share repurchase program, reflecting confidence in its financial health and cash generation capabilities | Metric | Q2 2025 | YoY Change | Sequential Change | | :--- | :--- | :--- | :--- | | Rental Revenue | $39.6 million | +13.3% | +1.7% | | Net Income | $5.2 million | +20.9% | +6.9% | | Diluted EPS | $0.41 | +20.6% | +7.9% | | Adjusted EBITDA | $19.7 million | +19.5% | +1.9% | | Leverage Ratio | 2.31x | N/A | N/A | - The company initiated its first quarterly cash dividend of **$0.10 per share** and authorized a share repurchase program of up to **$6 million**, signaling a strong outlook on cash generation and a commitment to shareholder returns[5](index=5&type=chunk) [Management Commentary and Outlook](index=1&type=section&id=Management%20Commentary%20and%20Outlook) Management attributed the record-setting quarter to strong technology, customer service, and operational discipline, leading to an all-time high in utilized rental horsepower. Citing strong first-half performance and contracted deployments, the company raised its full-year 2025 Adjusted EBITDA guidance. The initiation of a dividend and share buyback program is balanced with continued capital deployment into new units, supported by a strong financial position with the lowest leverage among public peers - Utilized rental horsepower reached an all-time high of **499,000**, and Adjusted EBITDA was a record **$19.7 million** for the quarter[4](index=4&type=chunk) - The company is raising its full-year 2025 Adjusted EBITDA guidance to **$76 - $80 million**, driven by first-half performance and scheduled large-horsepower unit deployments[4](index=4&type=chunk) - A quarterly dividend was initiated at a modest level to balance shareholder returns with capital deployment into new units, with the company noting its leverage of **2.31x** is the lowest among public peers[4](index=4&type=chunk) Corporate Guidance and Subsequent Events Updated 2025 guidance, increased Adjusted EBITDA, capex plans, dividend, share repurchase, and COO transition [Updated 2025 Corporate Guidance](index=2&type=section&id=Updated%202025%20Corporate%20Guidance) The company has increased its full-year 2025 Adjusted EBITDA guidance to a range of $76 million to $80 million. Capital expenditure guidance for growth is set at $95-$115 million, primarily for new units under multi-year contracts, with maintenance capex expected to be $11-$14 million. The target return on invested capital remains at a minimum of 20% | Guidance Metric | 2025 Outlook | | :--- | :--- | | **NEW** FY 2025 Adjusted EBITDA | $76 million - $80 million | | FY 2025 Growth Capital Expenditures | $95 million - $115 million | | FY 2025 Maintenance Capital Expenditures | $11 million - $14 million | | Target Return on Invested Capital | At least 20% | - Growth capital is invested only when a multi-year contract is secured for a new unit. Deployments are heavily weighted to the second half of 2025 and early 2026[7](index=7&type=chunk) [Subsequent Events](index=2&type=section&id=Subsequent%20Events) Following the end of the second quarter, the Board of Directors declared a cash dividend of $0.10 per share, approved a $6 million share repurchase program, and announced that President and COO Brian Tucker will be transitioning out of his role by October 31, 2025, due to personal family reasons - On July 30, 2025, the Board declared a cash dividend of **$0.10 per share**[9](index=9&type=chunk) - On August 5, 2025, it was announced that President and COO Brian Tucker will transition out of his role due to an unexpected family loss[10](index=10&type=chunk) - On August 8, 2025, the Board approved a share repurchase program for up to **$6 million**, expiring on August 6, 2027[11](index=11&type=chunk) Q2 2025 Financial Performance Analysis Robust Q2 2025 financial performance driven by rental revenue, net income, Adjusted EBITDA, and strong operational metrics [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) The company's second quarter 2025 financial results showed strong year-over-year growth, primarily driven by a 13.3% increase in rental revenue. This led to higher gross margins, a rise in operating income to $9.9 million, and an increase in net income to $5.2 million. Adjusted EBITDA grew 19.5% to $19.7 million, while the company maintained a healthy leverage ratio of 2.31x [Revenue](index=2&type=section&id=Revenue) Total revenue for Q2 2025 increased by 7.5% year-over-year to $41.4 million. This growth was entirely driven by a 13.3% increase in rental revenue to $39.6 million, resulting from the addition of higher horsepower units and improved pricing. Utilized horsepower grew 9.7% to 498,651 | Revenue Type | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Rental Revenue | $39.6 million | $34.9 million | +13.3% | | **Total Revenue** | **$41.4 million** | **$38.5 million** | **+7.5%** | - Utilized horsepower increased by **9.7%** year-over-year, from **454,568 hp** to **498,651 hp**[13](index=13&type=chunk) [Gross Margins and Operating Income](index=2&type=section&id=Gross%20Margins%20and%20Operating%20Income) In Q2 2025, total gross margin rose to $15.4 million from $13.4 million in the prior year. Adjusted gross margin, which excludes depreciation, increased to $24.2 million from $21.0 million. Operating income also saw growth, reaching $9.9 million compared to $8.5 million in Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Gross Margin | $15.4 million | $13.4 million | | Adjusted Gross Margin | $24.2 million | $21.0 million | | Operating Income | $9.9 million | $8.5 million | [Net Income and Adjusted EBITDA](index=3&type=section&id=Net%20Income%20and%20Adjusted%20EBITDA) Net income for Q2 2025 was $5.2 million, or $0.41 per diluted share, a significant increase from $4.3 million, or $0.34 per diluted share, in Q2 2024. Adjusted EBITDA grew 19.5% year-over-year to $19.7 million, primarily due to higher rental revenue and improved rental adjusted gross margin | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $5.2 million | $4.3 million | | Diluted EPS | $0.41 | $0.34 | | Adjusted EBITDA | $19.7 million | $16.5 million | [Cash Flows and Debt](index=3&type=section&id=Cash%20Flows%20and%20Debt) For the second quarter of 2025, cash flow from operations was $11.0 million, while cash used in investing activities was $25.7 million, including $25.8 million in capital expenditures. The company ended the quarter with $182.0 million in outstanding debt and a leverage ratio of 2.31x - Cash flow from operating activities was **$11.0 million**, while cash used in investing activities was **$25.7 million**, primarily for capital expenditures of **$25.8 million**[17](index=17&type=chunk) - As of June 30, 2025, outstanding debt was **$182.0 million**, with a leverage ratio of **2.31x** and a fixed charge coverage ratio of **3.04x**[19](index=19&type=chunk) [Selected Financial and Operational Data](index=3&type=section&id=Selected%20Financial%20and%20Operational%20Data) Trailing five-quarter data reveals a consistent upward trend in rental revenue, which grew from $34.9 million in Q2 2024 to $39.6 million in Q2 2025. Utilized horsepower also steadily increased over the period, reaching 498,651 with a horsepower utilization rate of 83.6% in the most recent quarter | (in thousands) | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Rental Revenue** | $34,926 | $37,350 | $38,226 | $38,910 | $39,580 | | Compression Statistics | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Horsepower Utilized** | 454,568 | 475,534 | 491,756 | 492,679 | 498,651 | | **Horsepower Utilization** | 82.3% | 82.0% | 82.1% | 81.7% | 83.6% | Non-GAAP Financial Measures Definitions and reconciliations of key non-GAAP financial measures: Adjusted Gross Margin and Adjusted EBITDA [Adjusted Gross Margin](index=5&type=section&id=Adjusted%20Gross%20Margin) The company defines Adjusted Gross Margin as total revenue less cost of sales, excluding depreciation and amortization. This non-GAAP measure is used by management to focus on current operating performance. For Q2 2025, Adjusted Gross Margin was $24.2 million, reconciled from a GAAP gross margin of $15.4 million by adding back $8.9 million in depreciation - Adjusted Gross Margin is defined as total revenue less costs of revenues (excluding depreciation and amortization expense). Management uses it to represent the results of key components of operations, focusing on current operating performance[23](index=23&type=chunk) | (in thousands) | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Gross margin (GAAP) | $13,430 | $14,936 | $14,630 | $15,717 | $15,350 | | Depreciation add-back | $7,572 | $7,956 | $8,349 | $8,539 | $8,873 | | **Adjusted Gross Margin** | **$21,002** | **$22,892** | **$22,979** | **$24,256** | **$24,223** | [Adjusted EBITDA](index=5&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA, a non-GAAP measure, is defined as net income before interest, taxes, depreciation, amortization, and other specified items like stock-based compensation. Management uses it to evaluate operating performance. For Q2 2025, Adjusted EBITDA was $19.7 million, reconciled from a net income of $5.2 million - Adjusted EBITDA is defined as net income before interest, taxes, depreciation, amortization, impairments, and other non-recurring or non-cash charges. It is a key measure used by management and investors to evaluate operating performance[25](index=25&type=chunk) | (in thousands) | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net income (GAAP) | $4,250 | $5,014 | $2,865 | $4,854 | $5,188 | | **Adjusted EBITDA** | **$16,456** | **$18,186** | **$18,006** | **$19,290** | **$19,665** | Appendix: Consolidated Financial Statements Condensed consolidated financial statements: balance sheets, statements of operations, and cash flows [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, the company's total assets stood at $525.5 million, an increase from $492.5 million at the end of 2024, driven by investment in rental equipment. Total liabilities rose to $259.3 million from $237.5 million, primarily due to an increase in long-term debt to $182.0 million. Total stockholders' equity increased to $266.2 million | (in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $48,882 | $48,176 | | Rental equipment, net | $446,952 | $415,021 | | **Total Assets** | **$525,526** | **$492,528** | | Total Current Liabilities | $24,788 | $17,358 | | Long-term debt | $182,000 | $170,000 | | **Total Liabilities** | **$259,312** | **$237,471** | | **Total Stockholders' Equity** | **$266,214** | **$255,057** | [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, total revenue was $41.4 million, up from $38.5 million in the prior-year period. Operating income increased to $9.9 million from $8.5 million, and net income grew to $5.2 million ($0.41 per diluted share) from $4.3 million ($0.34 per diluted share) year-over-year | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenue | $41,382 | $38,491 | | Operating Income | $9,924 | $8,506 | | **Net Income** | **$5,188** | **$4,250** | | **Diluted EPS** | **$0.41** | **$0.34** | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, the company generated $32.3 million in cash from operating activities. Cash used in investing activities was $45.0 million, largely for the purchase of rental equipment. Cash provided by financing activities was $10.9 million, resulting from net borrowings on the credit facility. The period ended with a cash balance of $0.3 million | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $32,263 | $31,119 | | Net Cash Used in Investing Activities | ($44,962) | ($27,881) | | Net Cash Provided by (Used in) Financing Activities | $10,882 | ($2,368) | | **Net Change in Cash** | **($1,817)** | **$870** |

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements and notes for the periods ended June 30, 2025, and 2024 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024) Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Cash and cash equivalents | $281,927 | $37,797 | +$244,130 | | Total current assets | $366,294 | $161,067 | +$205,227 | | Total assets | $426,035 | $354,161 | +$71,874 | | Total current liabilities | $54,633 | $32,085 | +$22,548 | | Total shareholders' equity | $224,848 | $175,545 | +$49,303 | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | :-------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------- | | Total revenues | $26,195 | $14,256 | +$11,939 | $41,583 | $28,759 | +$12,824 | | Research and development | $10,490 | $9,954 | +$536 | $21,942 | $18,922 | +$3,020 | | Selling, general and administrative | $18,430 | $17,056 | +$1,374 | $36,800 | $33,798 | +$3,002 | | Loss from operations | $(2,725) | $(15,705) | +$12,980 | $(17,159) | $(26,912) | +$9,753 | | Net gain on realized contingent milestone and royalty assets | $75,137 | $0 | +$75,137 | $75,137 | $0 | +$75,137 | | Net income (loss) | $54,835 | $(16,529) | +$71,364 | $41,256 | $(28,193) | +$69,449 | | Net income (loss) per share - basic | $1.09 | $(0.34) | +$1.43 | $0.83 | $(0.58) | +$1.41 | [Condensed Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Condensed Consolidated Statements of Shareholders' Equity | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total shareholders' equity | $224,848 | $175,545 | +$49,303 | | Additional paid-in capital | $1,149,123 | $1,141,060 | +$8,063 | | Accumulated deficit | $(924,266) | $(965,522) | +$41,256 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Condensed Consolidated Statements of Cash Flows | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | :-------------------- | | Net cash provided by (used in) operating activities | $251,113 | $(5,437) | +$256,550 | | Net cash provided by (used in) investing activities | $(5,626) | $13,997 | $(19,623) | | Net cash used in financing activities | $(1,357) | $(1,760) | +$403 | | Net increase in cash, cash equivalents, and restricted cash | $244,130 | $6,800 | +$237,330 | | Cash, cash equivalents, and restricted cash at end of period | $282,763 | $47,181 | +$235,582 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Details significant accounting policies, revenue recognition, segment information, and key financial events impacting the statements - The company is a biopharmaceutical company focused on developing and commercializing medicines[12](index=12&type=chunk) - The accounting policy for "Future Contingent Milestone and Royalty Assets" was revised, now accounted for under ASC Topic 450, Contingencies, with subsequent gains recognized using gain contingency guidance and impairments using loss contingency guidance[17](index=17&type=chunk)[20](index=20&type=chunk) - The Contingent Consideration asset was fully settled through the Royalty Sales Agreement, assigning TRELEGY royalties to GSK, and recognized under the gain contingency model[21](index=21&type=chunk) - The company expects its cash, cash equivalents, and marketable securities to be **sufficient to fund operations for at least the next twelve months**[16](index=16&type=chunk) - YUPELRI received regulatory approval by China's NMPA in June 2025, triggering a **$7.5 million licensing revenue milestone** from Viatris[29](index=29&type=chunk) - The company co-promotes YUPELRI in the US under a **35% profit and loss sharing arrangement** with Viatris[30](index=30&type=chunk) - The company operates in a **single segment**: development and commercialization of human therapeutics[39](index=39&type=chunk) - Increase in cash and cash equivalents primarily due to **$225.0 million from TRELEGY royalties sale** (June 2025) and **$50.0 million milestone payment** from Royalty Pharma (February 2025)[43](index=43&type=chunk) - Contingent liability for ampreloxetine funding from Royalty Pharma was **$31.640 million** as of June 30, 2025, with an imputed effective interest rate of approximately **8.3%**[51](index=51&type=chunk)[54](index=54&type=chunk) - A contract derivative, recognized within non-current other assets, increased in fair value to **$2.365 million** as of June 30, 2025, driven by a decrease in the estimated discount rate to **5.0%**[57](index=57&type=chunk) - The company retained the right to receive remaining potential **$150.0 million in Milestone Payments** from Royalty Pharma for TRELEGY global net sales in 2025 and 2026[62](index=62&type=chunk) - Sublease income is recognized as a reduction to rent expense within selling, general and administrative expenses[64](index=64&type=chunk) - Income tax expense of **$17.8 million** for the six months ended June 30, 2025, primarily due to the net gain on realized contingent milestone and royalty assets from the TRELEGY royalties sale[72](index=72&type=chunk)[136](index=136&type=chunk) - The company did not accrue any estimated losses related to its ongoing legal proceedings as of June 30, 2025[78](index=78&type=chunk) Key Financial Metrics from Notes | Metric | 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 (loss) per share - basic | $1.09 | $(0.34) | $0.83 | $(0.58) | | Net income (loss) per share - diluted | $1.08 | $(0.34) | $0.81 | $(0.58) | | Viatris collaboration agreement revenue | $18,695 | $14,256 | $34,083 | $28,759 | | Licensing revenue | $7,500 | $0 | $7,500 | $0 | | Total share-based compensation expense | $4,543 | $5,376 | $9,420 | $10,604 | | Sublease income | $2,447 | $2,204 | $4,751 | $4,294 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's perspective on financial performance, operational updates, liquidity, and future outlook [Forward-Looking Statements](index=31&type=section&id=Forward-Looking%20Statements) - Forward-looking statements involve risks, uncertainties, and assumptions, and actual results may differ materially from expectations[84](index=84&type=chunk) - The company does not assume any obligation to update forward-looking statements[84](index=84&type=chunk) [Management Overview](index=33&type=section&id=Management%20Overview) - Theravance Biopharma is a biopharmaceutical company focused on developing and commercializing medicines[85](index=85&type=chunk) - Key programs include **YUPELRI®** (revefenacin) inhalation solution for COPD and **ampreloxetine** for symptomatic neurogenic orthostatic hypotension (nOH) in Multiple System Atrophy (MSA) patients[86](index=86&type=chunk) [Core Program Updates](index=33&type=section&id=Core%20Program%20Updates) Updates on YUPELRI's China approval, ampreloxetine's Phase 3 study, and the sale of TRELEGY royalties to GSK - YUPELRI (revefenacin) inhalation solution is a once-daily, nebulized LAMA approved for maintenance treatment of COPD in the US[87](index=87&type=chunk) - China's NMPA approved YUPELRI on June 26, 2025, triggering a **$7.5 million milestone payment** from Viatris[90](index=90&type=chunk)[91](index=91&type=chunk) - Ampreloxetine is an investigational, wholly-owned NRI for symptomatic nOH in MSA patients, currently in a **Phase 3 CYPRESS study**[94](index=94&type=chunk)[100](index=100&type=chunk) - Previous Phase 3 studies (SEQUOIA and REDWOOD) for ampreloxetine did not meet primary endpoints for the overall population but **showed benefit in MSA patients**[98](index=98&type=chunk)[99](index=99&type=chunk) - FDA granted **Orphan Drug Designation status** to ampreloxetine for symptomatic nOH in MSA in May 2023[100](index=100&type=chunk) - The company sold its remaining royalty interest in TRELEGY to GSK for a one-time upfront payment of **$225.0 million** on June 2, 2025[109](index=109&type=chunk) - Retained the right to receive potential remaining **$150.0 million in Milestone Payments** from Royalty Pharma based on TRELEGY global net sales in 2025 and 2026[109](index=109&type=chunk) - Received a **$50.0 million Milestone Payment** from Royalty Pharma in February 2025 for achieving 2024 TRELEGY global net sales thresholds ($3.46 billion)[103](index=103&type=chunk) YUPELRI US Net Sales Milestones | YUPELRI US Net Sales (in a Calendar Year) | Sales Milestones Due from Viatris | | :---------------------------------------- | :-------------------------------- | | $250.0 million | $25.0 million | | $500.0 million | $50.0 million | | $750.0 million | $75.0 million | YUPELRI China Region Net Sales Milestones | YUPELRI China Region Net Sales (Cumulative) | Sales Milestones Due from Viatris | | :---------------------------------------- | :-------------------------------- | | $100.0 million | $2.5 million | | $200.0 million | $5.0 million | | $400.0 million | $10.0 million | | $800.0 million | $20.0 million | YUPELRI China Region Royalty Rates | YUPELRI China Region Net Sales Thresholds (Annual) | Royalty Rate Due from Viatris | | :---------------------------------------- | :---------------------------- | | ≤ $75.0 million | 14% | | > $75.0 million to ≤ $150.0 million | 17% | | > $150.0 million | 20% | TRELEGY Global Net Sales Royalty Rates | TRELEGY Global Net Sales Thresholds (Annual) | Royalty Rate Due from GSK to Royalty Pharma | | :---------------------------------------- | :---------------------------------------- | | ≤ $750.0 million | 6.5% | | > $750.0 million to ≤ $1,250.0 million | 8.0% | | > $1,250.0 million to ≤ $2,250.0 million | 9.0% | | > $2,250.0 million | 10.0% | [Critical Accounting Policies and Estimates](index=41&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Financial statements are prepared in accordance with US GAAP, requiring management estimates and assumptions[115](index=115&type=chunk) - No material changes to critical accounting policies and estimates since the Annual Report on Form 10-K for the year ended December 31, 2024[116](index=116&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Analyzes revenue growth and a shift to net income driven by the TRELEGY royalty sale and increased YUPELRI sales Results of Operations Summary | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change ($) | Change (%) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change ($) | Change (%) | | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | :--------- | :--------- | :---------------------------------------- | :---------------------------------------- | :--------- | :--------- | | Total revenues | $26,195 | $14,256 | $11,939 | 84% | $41,583 | $28,759 | $12,824 | 45% | | Total research & development | $10,490 | $9,954 | $536 | 5% | $21,942 | $18,922 | $3,020 | 16% | | Selling, general and administrative | $18,430 | $17,056 | $1,374 | 8% | $36,800 | $33,798 | $3,002 | 9% | | Impairment of long-lived assets (non-cash) | $0 | $2,951 | $(2,951) | NM | $0 | $2,951 | $(2,951) | NM | | Net gain on realized contingent milestone and royalty assets | $75,137 | $0 | $75,137 | NM | $75,137 | $0 | $75,137 | NM | | Interest expense (non-cash) | $(663) | $(644) | $(19) | 3% | $(1,306) | $(1,273) | $(33) | 3% | | Interest and other income, net | $1,457 | $1,128 | $329 | 29% | $2,396 | $2,562 | $(166) | (6)% | | Provision for income tax expense | $(18,371) | $(1,308) | $(17,063) | 1,305% | $(17,812) | $(2,570) | $(15,242) | 593% | - Total revenues increased due to higher YUPELRI net sales and a **$7.5 million licensing revenue** from China's NMPA approval[118](index=118&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) - R&D expenses increased due to the CYPRESS study and ampreloxetine regulatory activities, partially offset by decreased share-based compensation[122](index=122&type=chunk)[123](index=123&type=chunk) - SG&A expenses increased due to one-time legal costs and pre-launch medical affairs and commercialization expenses for ampreloxetine[127](index=127&type=chunk)[128](index=128&type=chunk) - The **$75.1 million net gain** on contingent milestone and royalty assets resulted from the sale of TRELEGY royalties to GSK[131](index=131&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) Details the company's strong liquidity position, cash flow changes, and capital resources as of June 30, 2025 - As of June 30, 2025, the company had approximately **$338.8 million in cash, cash equivalents, and marketable securities** (excluding restricted cash) and no long-term debt[137](index=137&type=chunk) - Cash resources are expected to be **sufficient to fund operations for at least the next twelve months**[139](index=139&type=chunk) - Liquidity was significantly boosted by a **$50.0 million milestone** from Royalty Pharma (February 2025) and **$225.0 million** from GSK for the Royalty Sales Agreement (June 2025)[137](index=137&type=chunk) - The company indemnifies officers and directors and maintains insurance, believing the fair value of these indemnification agreements is minimal, and no liabilities were recognized as of June 30, 2025[147](index=147&type=chunk) Cash Flow Summary | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | :-------------------- | | Net cash provided by (used in) operating activities | $251,113 | $(5,437) | +$256,550 | | Net cash provided by (used in) investing activities | $(5,626) | $13,997 | $(19,623) | | Net cash used in financing activities | $(1,357) | $(1,760) | +$403 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a "smaller reporting company," Theravance Biopharma is not required to provide quantitative and qualitative disclosures about market risk - The company is a "smaller reporting company" and is not required to provide this information[148](index=148&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the company's evaluation of disclosure controls and procedures, concluding their effectiveness, while also acknowledging the inherent limitations of control systems [Evaluation of Disclosure Controls and Procedures](index=49&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - CEO and CFO concluded that disclosure controls and procedures were **effective at the reasonable assurance level** as of June 30, 2025[149](index=149&type=chunk) [Limitations on the Effectiveness of Controls](index=49&type=section&id=Limitations%20on%20the%20Effectiveness%20of%20Controls) - Control systems provide only **reasonable, not absolute, assurance** that objectives are met[150](index=150&type=chunk) - Inherent limitations mean not all control issues or fraud instances may be detected[150](index=150&type=chunk) [Changes in Internal Control over Financial Reporting](index=51&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - **No material changes** in internal control over financial reporting were identified during Q2 2025[151](index=151&type=chunk) [PART II. OTHER INFORMATION](index=51&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) This section details the company's ongoing patent infringement lawsuits related to YUPELRI against generic drug manufacturers [Litigation – Patent Infringement](index=51&type=section&id=Litigation%20%E2%80%93%20Patent%20Infringement) - In January 2023, generic companies filed ANDAs for YUPELRI, leading to patent infringement suits by the company[152](index=152&type=chunk) - A **stay of approval through May 2026** was imposed by the FDA on generic ANDAs[152](index=152&type=chunk) - As of July 31, 2025, litigation with several generic companies settled, granting royalty-free licenses to launch generic YUPELRI in the US on or after **April 23, 2039**[154](index=154&type=chunk) - Patent litigation against two remaining generic companies and affiliates is pending[154](index=154&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) This section outlines various risks that could materially and adversely affect the company's business, financial condition, and operating results [Summary of Principal Risks Associated with Theravance Biopharma's Business](index=53&type=section&id=Summary%20of%20Principal%20Risks%20Associated%20with%20Theravance%20Biopharma's%20Business) - Risks include inability to achieve or sustain profitability, YUPELRI market acceptance issues, delays in clinical studies, failure to obtain regulatory approvals, partner non-compliance, substantial competition, extensive regulation, and generic competition for YUPELRI[158](index=158&type=chunk) [RISKS RELATING TO THE COMPANY](index=55&type=section&id=RISKS%20RELATING%20TO%20THE%20COMPANY) - The company may **never achieve or sustain profitability** from operations, despite recent net income driven by a one-time gain from TRELEGY royalties sale[159](index=159&type=chunk) - Commercial success of YUPELRI depends on continued acceptance by physicians, patients, and payors, and faces competition from short-acting nebulized bronchodilators and new therapies[162](index=162&type=chunk)[165](index=165&type=chunk)[188](index=188&type=chunk) - Clinical studies for product candidates are expensive, lengthy, and may face delays or adverse results, as seen with izencitinib and previous ampreloxetine studies[167](index=167&type=chunk)[171](index=171&type=chunk) - Regulatory approval for product candidates like ampreloxetine is complex and uncertain, requiring extensive data and potentially additional testing[172](index=172&type=chunk)[175](index=175&type=chunk) - Dependence on partners like Viatris for YUPELRI commercialization and potential future partners for other candidates carries risks of non-fulfillment or termination of agreements[177](index=177&type=chunk)[178](index=178&type=chunk) - The sale of TRELEGY royalties means future Milestone Payments depend on GSK's commercialization ability and TRELEGY sales, with **no control over the program**[211](index=211&type=chunk)[212](index=212&type=chunk) - The ongoing Strategic Review Committee process may be time-consuming, disruptive, and may not result in additional transactions or value for shareholders[184](index=184&type=chunk) - Reliance on **single-source third-party manufacturers** for API and drug products for YUPELRI and product candidates poses supply chain risks[189](index=189&type=chunk)[192](index=192&type=chunk) [RISKS RELATED TO LEGAL AND REGULATORY UNCERTAINTY](index=86&type=section&id=RISKS%20RELATED%20TO%20LEGAL%20AND%20REGULATORY%20UNCERTAINTY) - Reliance on patents, trade secrets, and confidentiality agreements to protect intellectual property, with risks of challenges, invalidation, or misappropriation[252](index=252&type=chunk)[253](index=253&type=chunk) - Ongoing patent infringement litigation for YUPELRI against generic companies, with settlements granting licenses for generic launch in **April 2039** for some, but litigation pending for others[256](index=256&type=chunk) - Product liability lawsuits are inherent in pharmaceutical development and commercialization, potentially leading to substantial liabilities, reputational harm, and diversion of resources[258](index=258&type=chunk)[262](index=262&type=chunk) - Subject to complex and evolving data protection laws (e.g., CCPA, GDPR), with risks of government enforcement actions, private litigation, and significant compliance costs for non-compliance or data breaches[263](index=263&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk) - Healthcare law changes, government restrictions on pricing and reimbursement (e.g., IRA, state laws), and cost-containment initiatives may negatively impact revenues and profitability[272](index=272&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk) - Compliance with anti-kickback, fraud and abuse, and transparency laws (e.g., Anti-Kickback Statute, False Claims Act, Physician Payment Sunshine Act) is critical, with potential for significant penalties, fines, and exclusion from government programs for violations[296](index=296&type=chunk)[298](index=298&type=chunk)[299](index=299&type=chunk) [RISKS RELATING TO OUR ORDINARY SHARES](index=105&type=section&id=RISKS%20RELATING%20TO%20OUR%20ORDINARY%20SHARES) - Market price for ordinary shares has fluctuated widely and may continue to do so, influenced by low trading volumes and concentrated ownership[303](index=303&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk) - Activist shareholders could negatively impact business by diverting management attention and resources, causing operational disruptions, and increasing share price volatility[308](index=308&type=chunk)[310](index=310&type=chunk) - Concentration of ownership (**three largest shareholders collectively owned 43.1%** as of June 30, 2025) limits other shareholders' ability to influence corporate matters[312](index=312&type=chunk) - Certain constitutional provisions and a potential shareholder rights plan may discourage third-party acquisition, limiting opportunities to sell shares at a premium[313](index=313&type=chunk)[314](index=314&type=chunk) - Shareholders may face difficulties protecting their interests due to **Cayman Islands incorporation**, which has different shareholder rights and fiduciary responsibilities compared to US jurisdictions[315](index=315&type=chunk)[316](index=316&type=chunk) - The company is a "smaller reporting company," which allows for reduced reporting and disclosure requirements, potentially making ordinary shares less attractive to some investors[326](index=326&type=chunk)[328](index=328&type=chunk) [Item 6. Exhibits](index=115&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including key agreements, certifications, and financial statements in iXBRL format - Exhibit 2.1: Assignment Agreement, dated May 30, 2025, between Theravance Biopharma, Inc. and GlaxoSmithKline Intellectual Property Development Limited[330](index=330&type=chunk) - Exhibit 31.1 and 31.2: Certifications of Chief Executive Officer and Chief Financial Officer[330](index=330&type=chunk) - Exhibit 32: Certifications of CEO and CFO pursuant to 18 U.S.C. Section 1350[330](index=330&type=chunk) - Exhibit 101: Financial statements in iXBRL format[330](index=330&type=chunk) [Signatures](index=116&type=section&id=Signatures) This section contains the official signatures of the company's Chief Executive Officer and Chief Financial Officer, certifying the report's submission - Report signed by Rick E Winningham, CEO, and Aziz Sawaf, SVP & CFO, on August 13, 2025[334](index=334&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended 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: 001-39875 STARDUST POWER INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorpo ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Commission File Number: 001-39875 STARDUST POWER INC. (Exact name of registrant as specified in its charter) Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended 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 __________ (State or other jurisdiction of incorpo ...

```markdown [PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, equity, and cash flows, along with detailed notes explaining significant accounting policies, financial performance, and other relevant disclosures for the periods ended June 30, 2025 and 2024 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (June 30, 2025 vs. September 30, 2024) | Metric | June 30, 2025 | September 30, 2024 | Change | % Change | | :-------------------------------- | :------------ | :----------------- | :------- | :------- | | Cash and cash equivalents | $1,154,000 | $4,285,000 | $(3,131,000) | -73.1% | | Total current assets | $4,118,000 | $8,883,000 | $(4,765,000) | -53.6% | | Total assets | $23,757,000 | $30,669,000 | $(6,912,000) | -22.5% | | Total current liabilities | $5,439,000 | $7,812,000 | $(2,373,000) | -30.4% | | Total liabilities | $15,174,000 | $17,607,000 | $(2,433,000) | -13.8% | | Total stockholders' equity | $8,566,000 | $13,040,000 | $(4,474,000) | -34.3% | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :------------------------------------------------ | :----------- | :----------- | :----------- | :------- | | Revenues: Oil and natural gas | $3,153,000 | $4,452,000 | $(1,299,000) | -29.2% | | Total Revenues | $3,192,000 | $4,506,000 | $(1,314,000) | -29.2% | | General and administrative expenses | $1,868,000 | $1,303,000 | $565,000 | 43.4% | | Net loss from continuing operations | $(1,553,000) | $(1,006,000) | $(547,000) | 54.4% | | Net (loss) earnings from discontinued operations | $0 | $(228,000) | $228,000 | -100.0% | | Net loss attributable to Barnwell Industries, Inc. | $(1,550,000) | $(1,246,000) | $(304,000) | 24.4% | | Basic and diluted loss per common share (continuing ops) | $(0.15) | $(0.10) | $(0.05) | 50.0% | | Basic and diluted loss per common share (total) | $(0.15) | $(0.12) | $(0.03) | 25.0% | Condensed Consolidated Statements of Operations Highlights (Nine Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :------------------------------------------------ | :----------- | :----------- | :----------- | :------- | | Revenues: Oil and natural gas | $10,593,000 | $13,726,000 | $(3,133,000) | -22.8% | | Total Revenues | $10,695,000 | $14,346,000 | $(3,651,000) | -25.5% | | General and administrative expenses | $5,193,000 | $3,879,000 | $1,314,000 | 33.9% | | Net loss from continuing operations | $(4,691,000) | $(2,438,000) | $(2,253,000) | 92.4% | | Net (loss) earnings from discontinued operations | $12,000 | $(1,008,000) | $1,020,000 | -101.2% | | Net loss attributable to Barnwell Industries, Inc. | $(4,674,000) | $(3,682,000) | $(992,000) | 26.9% | | Basic and diluted loss per common share (continuing ops) | $(0.47) | $(0.27) | $(0.20) | 74.1% | | Basic and diluted loss per common share (total) | $(0.47) | $(0.37) | $(0.10) | 27.0% | [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Condensed Consolidated Statements of Comprehensive Loss Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :------------------------------------------------ | :----------- | :----------- | :----------- | :------- | | Net loss | $(1,553,000) | $(1,234,000) | $(319,000) | 25.8% | | Total other comprehensive (loss) income | $(37,000) | $(9,000) | $(28,000) | 311.1% | | Total comprehensive loss | $(1,590,000) | $(1,243,000) | $(347,000) | 27.9% | | Comprehensive loss attributable to Barnwell Industries, Inc. | $(1,587,000) | $(1,255,000) | $(332,000) | 26.5% | Condensed Consolidated Statements of Comprehensive Loss Highlights (Nine Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :------------------------------------------------ | :----------- | :----------- | :----------- | :------- | | Net loss | $(4,679,000) | $(3,446,000) | $(1,233,000) | 35.8% | | Total other comprehensive (loss) income | $53,000 | $(44,000) | $97,000 | -220.5% | | Total comprehensive loss | $(4,626,000) | $(3,490,000) | $(1,136,000) | 32.5% | | Comprehensive loss attributable to Barnwell Industries, Inc. | $(4,621,000) | $(3,726,000) | $(895,000) | 24.0% | [Condensed Consolidated Statements of Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Condensed Consolidated Statements of Equity Highlights (Nine Months Ended June 30, 2025 vs. September 30, 2024) | Metric | June 30, 2025 | September 30, 2024 | Change | % Change | | :-------------------------------- | :------------ | :----------------- | :------- | :------- | | Common stock | $5,111,000 | $5,098,000 | $13,000 | 0.3% | | Additional paid-in capital | $7,824,000 | $7,690,000 | $134,000 | 1.7% | | (Accumulated deficit) retained earnings | $(4,079,000) | $595,000 | $(4,674,000) | -785.5% | | Accumulated other comprehensive income | $1,996,000 | $1,943,000 | $53,000 | 2.7% | | Total stockholders' equity | $8,566,000 | $13,040,000 | $(4,474,000) | -34.3% | - The company's **accumulated deficit significantly increased by $4,674,000**, moving from a **retained earnings** position of **$595,000** at September 30, 2024, to an **accumulated deficit** of **$(4,079,000)** at June 30, 2025, **primarily due to** the **net loss** incurred during the period[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows Highlights (Nine Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :------------------------------------------------ | :----------- | :----------- | :----------- | :------- | | Net cash (used in) provided by operating activities from continuing operations | $(1,163,000) | $4,349,000 | $(5,512,000) | -126.7% | | Net cash used in investing activities from continuing operations | $(2,235,000) | $(1,729,000) | $(506,000) | 29.3% | | Net cash used in financing activities from continuing operations | $(60,000) | $(226,000) | $166,000 | -73.5% | | Net cash provided by (used in) discontinued operations | $193,000 | $(813,000) | $1,006,000 | -123.7% | | Net (decrease) increase in cash and cash equivalents | $(3,351,000) | $1,563,000 | $(4,914,000) | -314.4% | | Cash and cash equivalents of continuing operations at end of period | $1,154,000 | $4,349,000 | $(3,195,000) | -73.5% | - **Operating cash flows** from continuing operations **significantly decreased by $5,512,000**, shifting from a positive inflow of **$4,349,000** in 2024 to an outflow of **$(1,163,000)** in 2025, **primarily due to** lower oil and natural gas segment results, higher general and administrative expenses from shareholder contests, and no distributions from land investment partnerships in the current period[19](index=19&type=chunk)[169](index=169&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Summary of Significant Accounting Policies](index=10&type=section&id=1.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - The company's condensed consolidated financial statements include Barnwell Industries, Inc. and all majority-owned subsidiaries, including a **77.6%**-owned land investment general partnership and a **75%**-owned land investment partnership. Undivided interests in oil and natural gas joint ventures are consolidated proportionately, while **significant** but non-controlling interests are accounted for by the equity method[20](index=20&type=chunk)[21](index=21&type=chunk) - On March 14, 2025, the Company completed the sale of Water Resources International, Inc., its contract drilling segment, classifying its assets, liabilities, and results as discontinued operations for all periods presented[28](index=28&type=chunk) [2. Going Concern](index=11&type=section&id=2.%20GOING%20CONCERN) - The Company faces **substantial doubt** about its ability to continue as a going concern for one year from the filing date due to uncertainties in oil and natural gas **operating cash flows**, impacts of recently imposed tariffs on oil prices, and **significant** costs incurred from shareholder consent solicitation and proxy contests[31](index=31&type=chunk)[32](index=32&type=chunk) - The Company is exploring potential funding sources, including debt financing, stock issuance, and partial or complete sale of its interests in Kukio Resort Land Development Partnerships, but no probable timing or amounts have been secured. The recent sale of U.S. oil and natural gas properties is not expected to be sufficient to overcome the going concern doubt[33](index=33&type=chunk) [3. Discontinued Operations](index=12&type=section&id=3.%20DISCONTINUED%20OPERATIONS) - On March 14, 2025, Barnwell sold its wholly-owned subsidiary, Water Resources International, Inc. (contract drilling segment), for **$1,050,000**, consisting of a **$250,000** cash payment and an **$800,000** promissory note. The Company recorded a **loss of $193,000** on the sale[34](index=34&type=chunk)[37](index=37&type=chunk) - The promissory note's payment schedule was amended in August 2025, extending due dates and **increasing** the annual interest rate from zero to **12%** (beginning August 15, 2025) and then to **18%** (beginning December 15, 2025)[35](index=35&type=chunk) Financial Results from Discontinued Operations (Nine Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :--------------------------------------- | :----------- | :----------- | :----------- | :------- | | Revenues: Contract drilling | $1,156,000 | $3,084,000 | $(1,928,000) | -62.5% | | Total Revenues | $1,156,000 | $3,110,000 | $(1,954,000) | -62.8% | | Total Costs and expenses | $951,000 | $4,118,000 | $(3,167,000) | -76.9% | | Net (loss) earnings from discontinued operations | $12,000 | $(1,008,000) | $1,020,000 | -101.2% | [4. Loss Per Common Share](index=14&type=section&id=4.%20LOSS%20PER%20COMMON%20SHARE) Basic and Diluted Loss Per Common Share (Three Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------------------------------------------------------------- | :----- | :----- | :----- | :------- | | Net loss per common share from continuing operations attributable to Barnwell Industries, Inc. stockholders | $(0.15) | $(0.10) | $(0.05) | 50.0% | | Net loss per common share from discontinued operations | $0.00 | $(0.02) | $0.02 | -100.0% | | Net loss per common share attributable to Barnwell Industries, Inc. stockholders | $(0.15) | $(0.12) | $(0.03) | 25.0% | Basic and Diluted Loss Per Common Share (Nine Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------------------------------------------------------------- | :----- | :----- | :----- | :------- | | Net loss per common share from continuing operations attributable to Barnwell Industries, Inc. stockholders | $(0.47) | $(0.27) | $(0.20) | 74.1% | | Net loss per common share from discontinued operations | $0.00 | $(0.10) | $0.10 | -100.0% | | Net loss per common share attributable to Barnwell Industries, Inc. stockholders | $(0.47) | $(0.37) | $(0.10) | 27.0% | - Potentially dilutive securities, including **465,000** stock options and **214,270** restricted stock units for the three months ended June 30, 2025, were excluded from diluted EPS calculations as their inclusion would have been anti-dilutive[43](index=43&type=chunk) [5. Accounts and Other Receivables and Allowance for Credit Losses](index=15&type=section&id=5.%20ACCOUNTS%20AND%20OTHER%20RECEIVABLES%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) - The Company recorded an estimated accrued insurance recovery receivable of **$348,000** as of June 30, 2025, for legal fees covered under directors and officers' liability insurance policies[46](index=46&type=chunk) Allowance for Credit Losses Activity (Nine Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :--------------------------------------- | :----------- | :----------- | :----------- | :------- | | Allowance for credit losses at beginning of period | $141,000 | $50,000 | $91,000 | 182.0% | | (Reversal of) provision for expected credit losses | $(8,000) | $53,000 | $(61,000) | -115.1% | | Write-offs charged against the allowance | $(77,000) | $(7,000) | $(70,000) | 1000.0% | | Allowance for credit losses at end of period | $50,000 | $110,000 | $(60,000) | -54.5% | [6. Investments](index=16&type=section&id=6.%20INVESTMENTS) - Barnwell holds indirect non-controlling ownership interests in the Kukio Resort Land Development Partnerships, which derive income from real estate sales and club memberships. The last two single-family lots in Increment I were sold in Q1 2024, with no sales in the current period[49](index=49&type=chunk)[51](index=51&type=chunk) - Equity in income of affiliates was nil for the three and nine months ended June 30, 2025, compared to **$1,071,000** for the nine months ended June 30, 2024, due to no lot sales in the current period and the suspension of equity method earnings recognition after cumulative distributions exceeded the investment balance[54](index=54&type=chunk)[55](index=55&type=chunk) - Increment II is not yet under development, and there is no assurance of future development or payments from it[52](index=52&type=chunk)[58](index=58&type=chunk) [7. Oil and Natural Gas Properties and Asset Retirement Obligations](index=18&type=section&id=7.%20OIL%20AND%20NATURAL%20GAS%20PROPERTIES%20AND%20ASSET%20RETIREMENT%20OBLIGATIONS) - The Company incurred non-cash ceiling test impairments for its U.S. oil and natural gas properties of **$200,000** and **$865,000** for the three and nine months ended June 30, 2025, respectively. This compares to **$599,000** and **$2,276,000** for the same periods in 2024, which included Canadian properties[64](index=64&type=chunk)[65](index=65&type=chunk) - Declines in the 12-month historical rolling average first-day-of-the-month oil and gas prices could lead to further impairment write-downs in the quarter ending September 30, 2025[66](index=66&type=chunk) - Barnwell has provided **$975,000** in cumulative cash deposits to Canada's Orphan Well Association (OWA) for abandonment and reclamation costs, with a portion of the unused deposit now estimated to be applied to future reclamation work[67](index=67&type=chunk) [8. Retirement Plans](index=20&type=section&id=8.%20RETIREMENT%20PLANS) - Barnwell sponsors a noncontributory defined benefit pension plan (Pension Plan) and a Supplemental Executive Retirement Plan (SERP), with benefit accruals frozen since December 31, 2019[68](index=68&type=chunk) Net Periodic Benefit (Income) Cost (Nine Months Ended June 30) | Metric | Pension Plan 2025 | Pension Plan 2024 | SERP 2025 | SERP 2024 | | :-------------------------------- | :---------------- | :---------------- | :-------- | :-------- | | Interest cost | $293,000 | $308,000 | $71,000 | $72,000 | | Expected return on plan assets | $(600,000) | $(575,000) | $0 | $0 | | Amortization of net actuarial gain | $0 | $0 | $0 | $(64,000) | | Net periodic benefit (income) cost | $(307,000) | $(267,000) | $71,000 | $8,000 | - The Pension Plan held **520,350** shares of Barnwell common stock at June 30, 2025, representing over **5%** of the Company's outstanding common shares[71](index=71&type=chunk)[100](index=100&type=chunk) [9. Income Taxes](index=21&type=section&id=9.%20INCOME%20TAXES) Income Tax (Benefit) Provision from Continuing Operations (Nine Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------------- | :----------- | :----------- | :----------- | :------- | | Current | $186,000 | $140,000 | $46,000 | 32.9% | | Deferred | $(51,000) | $47,000 | $(98,000) | -208.5% | | Total Income tax (benefit) provision | $135,000 | $187,000 | $(52,000) | -27.8% | - Consolidated taxes do not bear a customary relationship to pretax results due to separate taxation in Canada and the U.S., inability to offset operating results between Canadian subsidiaries, and limited sheltering of non-unitary income from Hawaii land investment partnerships[72](index=72&type=chunk) - The 'One Big Beautiful Bill Act,' signed on July 4, 2025, permanently extends **100%** bonus depreciation for certain capital expenditures. The Company is evaluating its full impact, which is not reflected in the June 30, 2025 financial statements[73](index=73&type=chunk) [10. Segment Information](index=22&type=section&id=10.%20SEGMENT%20INFORMATION) - Following the sale of the contract drilling segment, Barnwell's continuing operations consist of two principal business segments: Oil and Natural Gas (Canada, U.S. states of Oklahoma and Texas) and Land Investment (leasehold land interests in Hawaii)[74](index=74&type=chunk)[75](index=75&type=chunk) Segment Revenues (Nine Months Ended June 30) | Segment | 2025 | 2024 | Change | % Change | | :-------------------- | :----------- | :----------- | :----------- | :------- | | Oil and natural gas | $10,593,000 | $13,726,000 | $(3,133,000) | -22.8% | | Land investment | $0 | $500,000 | $(500,000) | -100.0% | | Total revenues | $10,695,000 | $14,346,000 | $(3,651,000) | -25.5% | Segment Operating Profit (Nine Months Ended June 30) | Segment | 2025 | 2024 | Change | % Change | | :-------------------- | :--------- | :--------- | :--------- | :------- | | Oil and natural gas | $663,000 | $2,000 | $661,000 | 33050.0% | | Land investment | $0 | $500,000 | $(500,000) | -100.0% | | Total operating profit | $720,000 | $566,000 | $154,000 | 27.2% | [11. Revenue From Contracts With Customers](index=23&type=section&id=11.%20REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) Disaggregated Revenue by Stream (Nine Months Ended June 30) | Revenue Stream | 2025 | 2024 | Change | % Change | | :-------------------- | :----------- | :----------- | :----------- | :------- | | Oil | $8,104,000 | $10,474,000 | $(2,370,000) | -22.6% | | Natural gas | $1,267,000 | $1,768,000 | $(501,000) | -28.3% | | Natural gas liquids | $1,222,000 | $1,484,000 | $(262,000) | -17.7% | | Contingent residual payments | $0 | $500,000 | $(500,000) | -100.0% | | Other | $58,000 | $66,000 | $(8,000) | -12.1% | | Total revenues before interest income | $10,651,000 | $14,292,000 | $(3,641,000) | -25.5% | Disaggregated Revenue by Geographical Region (Nine Months Ended June 30) | Region | 2025 | 2024 | Change | % Change | | :-------------------- | :----------- | :----------- | :----------- | :------- | | United States | $1,078,000 | $2,463,000 | $(1,385,000) | -56.2% | | Canada | $9,573,000 | $11,829,000 | $(2,256,000) | -19.1% | | Total revenues before interest income | $10,651,000 | $14,292,000 | $(3,641,000) | -25.5% | Accounts Receivables from Contracts with Customers | Date | Amount | | :-------------------- | :----------- | | June 30, 2025 | $1,128,000 | | September 30, 2024 | $1,472,000 | | September 30, 2023 | $2,344,000 | *Accounts receivables from contracts with customers **decreased by $344,000** from September 30, 2024, to June 30, 2025* [12. Accumulated Other Comprehensive Income](index=25&type=section&id=12.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME) Accumulated Other Comprehensive Income (Nine Months Ended June 30) | Component | 2025 | 2024 | Change | % Change | | :--------------------------------------- | :----------- | :----------- | :----------- | :------- | | Net current period other comprehensive income (Foreign currency translation) | $53,000 | $20,000 | $33,000 | 165.0% | | Net current period other comprehensive loss (Retirement plans) | $0 | $(64,000) | $64,000 | -100.0% | | Accumulated other comprehensive income, net of taxes (End of period) | $1,996,000 | $2,060,000 | $(64,000) | -3.1% | [13. Fair Value Measurements](index=25&type=section&id=13.%20FAIR%20VALUE%20MEASUREMENTS) - The fair values of cash, receivables, payables, and current liabilities approximate their carrying values due to their short-term nature[83](index=83&type=chunk) - Fair values of oil and natural gas properties and asset retirement obligations are based on estimated discounted cash flow models and market assumptions, **primarily using Level 3 inputs** such as future commodity prices, reserve projections, development costs, production rates, and risk-adjusted discount rates[84](index=84&type=chunk)[86](index=86&type=chunk) [14. Debt](index=26&type=section&id=14.%20DEBT) - In March 2025, the Company entered into an 11-month, **9.4%** annual interest rate financing agreement for **$183,000** to cover directors and officers insurance premiums. The outstanding liability was **$109,000** as of June 30, 2025[87](index=87&type=chunk) [15. Stockholders' Equity](index=26&type=section&id=15.%20STOCKHOLDERS'%20EQUITY) - The Board granted **105,820** restricted stock units (RSUs) to independent directors and **66,000** RSUs to the CEO in fiscal 2025, vesting ratably over three years[88](index=88&type=chunk)[89](index=89&type=chunk) Restricted Stock Unit Activity (October 1, 2024, to June 30, 2025) | Activity | Restricted Stock Units | Weighted-Average Grant Date Fair Value | | :-------------------- | :--------------------- | :------------------------------------- | | Nonvested at October 1, 2024 | 110,892 | $2.63 | | Granted | 171,820 | $1.82 | | Vested | (20,000) | $2.63 | | Forfeited | (78,356) | $2.13 | | Nonvested at June 30, 2025 | 184,356 | $2.09 | - On January 26, 2025, the Board adopted a shareholder rights plan, entitling holders to purchase common stock at **$9.00**, designed to impose **significant** dilution on any person or group acquiring **20%** or more of outstanding common stock without Board approval[92](index=92&type=chunk)[93](index=93&type=chunk) [16. Contingencies](index=28&type=section&id=16.%20CONTINGENCIES) - Management is not aware of any claims or litigation likely to have a material adverse effect on its results of operations, financial position, or liquidity, other than the shareholder contest actions discussed elsewhere in the filing[96](index=96&type=chunk) [17. Information Relating to the Condensed Consolidated Statements of Cash Flows](index=28&type=section&id=17.%20INFORMATION%20RELATING%20TO%20THE%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Supplemental Cash Flow Information (Nine Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | | :------------------------------------------------ | :----------- | :----------- | :----------- | :------- | | Cash paid for income taxes, net of refunds | $148,000 | $71,000 | $77,000 | 108.5% | | Prepaid insurance funded by short-term premium financing | $168,000 | $0 | $168,000 | N/A | - Capital expenditure accruals related to oil and natural gas exploration and development **decreased by $2,187,000** in the nine months ended June 30, 2025, compared to a **decrease of $628,000** in the prior year[97](index=97&type=chunk) [18. Related Party Transactions](index=28&type=section&id=18.%20RELATED%20PARTY%20TRANSACTIONS) - Kaupulehu Developments is entitled to receive payments from lot sales by KD I and KD II, entities within the Kukio Resort Land Development Partnerships where Barnwell holds indirect non-controlling interests. No lots were sold in the nine months ended June 30, 2025, compared to **$500,000** received in the prior year[98](index=98&type=chunk)[99](index=99&type=chunk) - During the three months ended June 30, 2025, the Barnwell Pension Plan purchased **48,664** shares of Barnwell common stock, resulting in the plan owning over **5%** of the Company's common shares outstanding[100](index=100&type=chunk) [19. Subsequent Events](index=29&type=section&id=19.%20SUBSEQUENT%20EVENTS) - On August 8, 2025, Barnwell agreed to sell all its U.S. oil and natural gas assets for **$2,300,000**, expecting to incur a **loss on sale of approximately $700,000** after taxes in Q3 2025. This sale means Barnwell will no longer own any U.S. oil and natural gas assets[101](index=101&type=chunk) - In August 2025, the promissory note from the Water Resources sale was amended, extending payment due dates and **increasing** the annual interest rate from zero to **12%** (from August 15, 2025) and then to **18%** (from December 15, 2025)[102](index=102&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, including forward-looking statements, critical accounting policies, current outlook, segment overview, detailed analysis of financial performance, and liquidity and capital resources, with a focus on continuing operations [Cautionary Statement Relevant to Forward-Looking Information](index=30&type=section&id=Cautionary%20Statement%20Relevant%20to%20Forward-Looking%20Information) - The report contains forward-looking statements based on current expectations, which involve risks, uncertainties, and assumptions that could cause actual results to differ materially. Barnwell disclaims any obligation to publicly update or revise these statements[105](index=105&type=chunk) [Critical Accounting Policies and Estimates](index=30&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - The most critical accounting policies and estimates relate to the full-cost ceiling calculation, depletion of oil and natural gas properties, and income taxes. There have been no **significant** changes to these policies during the three and nine months ended June 30, 2025[106](index=106&type=chunk) [Current Outlook](index=30&type=section&id=Current%20Outlook) - The Company's ability to sustain its business depends on sufficient oil and natural gas **operating cash flows**, which are highly sensitive to fluctuating prices and operating expenses. Funding discretionary capital expenditures for reserve growth or replacement requires external debt/equity sources not currently in place[108](index=108&type=chunk)[109](index=109&type=chunk) - **Substantial doubt** exists about the Company's ability to continue as a going concern for one year due to shareholder contest costs, impacts of tariffs on oil prices, and uncertainty in cash inflows, which limit capital expenditures and funding for non-discretionary outflows[110](index=110&type=chunk)[111](index=111&type=chunk) - The Company is evaluating the impact of new FASB ASUs on segment reporting (ASU 2023-07), income tax disclosures (ASU 2023-09), and income statement expense disaggregation (ASU 2024-03), with some effective for fiscal 2025 or later[112](index=112&type=chunk)[113](index=113&type=chunk)[115](index=115&type=chunk) [Overview](index=32&type=section&id=Overview) - Following the sale of its contract drilling segment, Barnwell's continuing operations are focused on: 1) acquiring, developing, producing, and selling oil and natural gas in Canada and the U.S. (Oklahoma and Texas), and 2) leasehold land interests in Hawaii (land investment segment)[117](index=117&type=chunk)[118](index=118&type=chunk) - The land investment segment includes rights to percentage of sales payments from Increment I (now fully sold), potential future distributions from Increment II (not yet developed), and an indirect ownership interest in the Kukio Resort Land Development Partnerships[119](index=119&type=chunk)[121](index=121&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) [Summary of Results From Continuing Operations](index=34&type=section&id=Summary%20of%20Results%20From%20Continuing%20Operations) - **Net loss** from continuing operations attributable to Barnwell **increased by $532,000** to **$1,550,000** for the three months ended June 30, 2025, compared to **$1,018,000** in the prior year[123](index=123&type=chunk) - For the nine months ended June 30, 2025, **net loss** from continuing operations **increased by $2,012,000** to **$4,686,000**, compared to **$2,674,000** in the prior year, driven by higher general and administrative expenses, **decreased** equity in income from affiliates, and lower oil and natural gas revenues[124](index=124&type=chunk)[125](index=125&type=chunk) - General and administrative expenses **increased by $1,314,000** for the nine months, **primarily due to $1,599,000** in costs related to shareholder consent solicitation, legal actions, and a proxy contest, partially offset by estimated insurance recoveries[124](index=124&type=chunk) [General](index=35&type=section&id=General) - Barnwell is subject to foreign currency translation and transaction gains/losses due to Canadian dollar fluctuations against the U.S. dollar. The average Canadian dollar exchange rate **decreased by 1%** and **3%** for the three and nine months ended June 30, 2025, respectively, compared to prior periods[126](index=126&type=chunk)[127](index=127&type=chunk) - Other comprehensive loss from foreign currency translation adjustments was **$37,000** for the three months ended June 30, 2025, a **$49,000** change from income of **$12,000** in the prior year, with no taxes due to a full valuation allowance[127](index=127&type=chunk) [Oil and Natural Gas](index=35&type=section&id=Oil%20and%20Natural%20Gas) Average Price Per Unit (Three Months Ended June 30) | Commodity | 2025 | 2024 | Change | % Change | | :-------------------- | :----- | :----- | :----- | :------- | | Natural Gas (Mcf) | $1.39 | $1.00 | $0.39 | 39% | | Oil (Bbls) | $55.78 | $70.64 | $(14.86) | -21% | | Natural gas liquids (Bbls) | $25.93 | $29.81 | $(3.88) | -13% | Net Production Volumes (Three Months Ended June 30) | Commodity | 2025 | 2024 | Change | % Change | | :-------------------- | :------- | :------- | :------- | :------- | | Natural Gas (Mcf) | 290,000 | 348,000 | (58,000) | -17% | | Oil (Bbls) | 42,000 | 50,000 | (8,000) | -16% | | Natural gas liquids (Bbls) | 14,000 | 16,000 | (2,000) | -13% | - Oil and natural gas revenues **decreased by $1,299,000 (29%)** and **$3,133,000 (23%)** for the three and nine months ended June 30, 2025, respectively, **primarily due to** decreases in production from natural declines and properties sold, as well as lower oil prices[136](index=136&type=chunk) - The Company amended Canadian natural gas and oil sales contracts in February and June 2025, respectively, to fix prices for certain volumes, representing approximately **39%** of Canadian natural gas gross production and **18%** of Canadian oil gross production for the nine months ended June 30, 2025[137](index=137&type=chunk)[138](index=138&type=chunk) [Sale of Interest in Leasehold Land](index=38&type=section&id=Sale%20of%20Interest%20in%20Leasehold%20Land) - No revenues from the sale of interest in leasehold land were recorded for the three and nine months ended June 30, 2025, compared to **$500,000** for the nine months ended June 30, 2024, which resulted from the sale of the last two single-family lots in Increment I[143](index=143&type=chunk) - There is no assurance of future sales or development of Increment II, where the Company holds an indirect non-controlling ownership interest[144](index=144&type=chunk) [General and Administrative Expenses](index=39&type=section&id=General%20and%20Administrative%20Expenses) - General and administrative expenses **increased by $565,000 (43%)** for the three months and **$1,314,000 (34%)** for the nine months ended June 30, 2025, **primarily due to $657,000** and **$1,599,000**, respectively, in new fees and costs related to a shareholder consent solicitation, legal actions, and a proxy contest, partially offset by estimated insurance recoveries[145](index=145&type=chunk)[146](index=146&type=chunk) - Related costs are expected to continue beyond June 30, 2025, as the annual stockholders meeting was rescheduled due to a lack of quorum, and the amount of future costs is uncertain[147](index=147&type=chunk) [Depletion, Depreciation, and Amortization](index=39&type=section&id=Depletion,%20Depreciation,%20and%20Amortization) - Depletion, depreciation, and amortization **decreased by $450,000 (35%)** and **$1,593,000 (39%)** for the three and nine months ended June 30, 2025, respectively, **primarily due to** a lower depletion rate resulting from **significant** ceiling test impairments in prior periods and **decreased** production[148](index=148&type=chunk)[141](index=141&type=chunk) [Impairment of Assets](index=39&type=section&id=Impairment%20of%20Assets) - The Company incurred non-cash ceiling test impairments for its U.S. oil and natural gas properties of **$200,000** and **$865,000** for the three and nine months ended June 30, 2025, respectively. This is a **decrease from $599,000** and **$2,276,000** in the prior year periods, which included Canadian properties[150](index=150&type=chunk)[151](index=151&type=chunk) - Future declines in the 12-month historical rolling average first-day-of-the-month oil and gas prices could lead to further impairment write-downs in the quarter ending September 30, 2025[152](index=152&type=chunk) [Foreign Currency (Gain) Loss](index=40&type=section&id=Foreign%20Currency%20(Gain)%20Loss) - The Company recorded a **$219,000** foreign currency gain for the three months ended June 30, 2025, compared to a **$61,000 loss** in the prior year. For the nine months, a **$122,000** foreign currency **loss** was recorded, compared to a **$63,000 loss** in the prior year, due to exchange rate changes on intercompany loans[153](index=153&type=chunk) [Equity in Income of Affiliates](index=40&type=section&id=Equity%20in%20Income%20of%20Affiliates) - Equity in income of affiliates was nil for the three and nine months ended June 30, 2025, a **decrease from $1,071,000** for the nine months ended June 30, 2024. This decline is **primarily due to** no lot sales by the Kukio Resort Land Development Partnerships in the current period[154](index=154&type=chunk) - The Company suspended equity method earnings recognition in Q2 2021 after cumulative distributions exceeded its investment balance. Future earnings will only be recognized once its share of cumulative earnings exceeds distributions during the suspended period[157](index=157&type=chunk) [Income Taxes](index=41&type=section&id=Income%20Taxes) - Barnwell's effective consolidated income tax rate from continuing operations was **2%** for the three months and **(3%)** for the nine months ended June 30, 2025, compared to **(2%)** and **(8%)** for the same periods in 2024[159](index=159&type=chunk) - The non-customary relationship between consolidated taxes and pretax results is due to separate taxation in Canada and the U.S., inability to offset operating results between Canadian subsidiaries, and limited sheltering of non-unitary income from Hawaii land investment partnerships[160](index=160&type=chunk) [Net (Loss) Earnings Attributable to Non-controlling Interests](index=42&type=section&id=Net%20(Loss)%20Earnings%20Attributable%20to%20Non-controlling%20Interests) - **Net loss** attributable to non-controlling interests totaled **$3,000** and **$5,000** for the three and nine months ended June 30, 2025, respectively, a **significant** change from **net earnings of $12,000** and **$236,000** in the prior year periods. This change is **primarily due to** decreases in equity in income of affiliates and percentage of sales revenues[163](index=163&type=chunk) [Net (Loss) Earnings From Discontinued Operations](index=42&type=section&id=Net%20(Loss)%20Earnings%20From%20Discontinued%20Operations) - **Net earnings** from discontinued operations were **$12,000** for the nine months ended June 30, 2025, compared to a **net loss of $1,008,000** in the prior year, following the sale of the contract drilling segment on March 14, 2025[164](index=164&type=chunk)[165](index=165&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) - At June 30, 2025, Barnwell had a working capital deficit of **$1,321,000**, including **$918,000** in incurred but unpaid legal and professional service costs related to shareholder contests, net of **$348,000** in estimated insurance recoveries[167](index=167&type=chunk)[168](index=168&type=chunk) - The Company's **primary liquidity sources** are cash on hand and cash flow from oil and natural gas operations, as cash flow from the land investment segment is expected to be intermittent and not **significant**[167](index=167&type=chunk) - **Substantial doubt** about the Company's ability to continue as a going concern persists due to uncertainties in oil and natural gas cash inflows, shareholder contest costs, and the impact of tariffs, despite the recent sale of U.S. oil and natural gas properties[174](index=174&type=chunk)[175](index=175&type=chunk) [Cash Flows From Continuing Operations](index=43&type=section&id=Cash%20Flows%20From%20Continuing%20Operations) - **Cash flows used in continuing operations totaled $1,163,000** for the nine months ended June 30, 2025, a **$5,512,000 decrease** from **$4,349,000** provided in the prior year, **primarily due to** lower oil and natural gas operating results, higher G&A expenses from shareholder contests, and no land investment distributions[169](index=169&type=chunk) - **Cash flows used in investing activities** from continuing operations **increased by $506,000** to **$2,235,000**, driven by higher capital expenditures in oil and natural gas and cash divested from discontinued operations, partially offset by dividends and note receivable payments from discontinued operations[170](index=170&type=chunk) - **Cash flows used in financing activities** from continuing operations **decreased by $166,000** to **$60,000**, mainly due to a **decrease** in distributions to non-controlling interests, partially offset by repayments for insurance premium financing[171](index=171&type=chunk) [Going Concern](index=43&type=section&id=Going%20Concern) - The Company's future sustainability hinges on sufficient oil and natural gas **operating cash flows**, which are vulnerable to price fluctuations and operating expenses. Discretionary capital expenditures require external funding not currently secured[173](index=173&type=chunk) - **Substantial doubt** about the Company's ability to continue as a going concern for one year exists due to **increased** uncertainty in oil and natural gas cash inflows, shareholder contest costs, and the economic impact of tariffs, limiting funding for both discretionary and non-discretionary outflows[174](index=174&type=chunk) [Oil and Natural Gas Capital Expenditures](index=44&type=section&id=Oil%20and%20Natural%20Gas%20Capital%20Expenditures) Oil and Natural Gas Capital Expenditures (Excluding Acquisitions and ARO) | Period | 2025 | 2024 | Change | % Change | | :-------------------- | :--------- | :--------- | :--------- | :------- | | Three months ended June 30 | $385,000 | $751,000 | $(366,000) | -48.7% | | Nine months ended June 30 | $767,000 | $1,806,000 | $(1,039,000) | -57.5% | - Estimated investments in oil and natural gas properties for fiscal 2025 range from **$800,000** to **$1,000,000**, subject to adjustment based on cash flows and management's assessment of the market[177](index=177&type=chunk) [Oil and Natural Gas Property Dispositions](index=44&type=section&id=Oil%20and%20Natural%20Gas%20Property%20Dispositions) - No **significant** oil and natural gas property dispositions occurred during the nine months ended June 30, 2025, though **$282,000** in proceeds from a late September 2024 sale were credited in October 2024[178](index=178&type=chunk) - On August 8, 2025, Barnwell agreed to sell all its U.S. oil and natural gas assets for **$2,300,000**, meaning the Company will no longer own any U.S. oil and natural gas assets[180](index=180&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the Company's disclosure controls and procedures, confirming their effectiveness as of June 30, 2025, and stating that no material changes occurred in internal control over financial reporting during the quarter [Disclosure Controls and Procedures](index=45&type=section&id=Disclosure%20Controls%20and%20Procedures) - Barnwell's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[182](index=182&type=chunk) [Changes in Internal Control Over Financial Reporting](index=45&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - There were no changes in Barnwell's internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting[183](index=183&type=chunk) [PART II - OTHER INFORMATION](index=46&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) This section details the legal dispute between Barnwell and the Sherwood Group regarding director nominations, culminating in a Delaware Chancery Court ruling in favor of the Company, invalidating the Sherwood Group's nominations - Barnwell filed a lawsuit against the Sherwood Group in Delaware Chancery Court, seeking declaratory judgment that the Sherwood Group's director nomination notice for the 2025 Annual Meeting was invalid due to non-compliance with Company Bylaws[185](index=185&type=chunk) - On May 21, 2025, the Delaware Chancery Court ruled in favor of Barnwell, confirming the invalidity of the Sherwood nomination notice and that the Board properly applied the Bylaws. The Sherwood Group did not appeal[187](index=187&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) This section updates the Company's risk factors, highlighting the significant negative impact of activist shareholder actions on business strategies and financial condition, and reiterating substantial doubt about the Company's ability to continue as a going concern - Continued actions by an activist shareholder (Sherwood Group) have had, and are expected to continue to have, a **significant negative impact** on Barnwell's ability to execute business strategies, resulting in **substantial** legal and advisory fees and potential disruption to business opportunities and employee retention[190](index=190&type=chunk)[191](index=191&type=chunk) - The Company faces **substantial doubt** about its ability to continue as a going concern due to insufficient oil and natural gas **operating cash flows**, dependence on volatile oil and natural gas prices, and the financial strain from shareholder contest costs and tariffs[192](index=192&type=chunk)[193](index=193&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides details on purchases of Barnwell common stock by the Barnwell Industries, Inc. Employees' Pension Plan Trust, an affiliated purchaser, during the three months ended June 30, 2025 - On July 3, 2025, the Barnwell Industries, Inc. Employees' Pension Plan Trust reported beneficial ownership of **520,350** shares of Barnwell common stock, representing over **5%** of the Company's outstanding shares[195](index=195&type=chunk) Purchases of Equity Securities by Barnwell Pension Plan (Three Months Ended June 30, 2025) | Period | Total number of shares purchased | Average price paid per share | | :-------------------- | :----------------------------- | :--------------------------- | | April 1 - April 30, 2025 | 23,201 | $1.50 | | May 1 - May 31, 2025 | 6,790 | $1.31 | | June 1 - June 30, 2025 | 18,673 | $1.24 | | Total | 48,664 | | [Item 5. Other Information](index=48&type=section&id=Item%205.%20Other%20Information) This section confirms that no director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025[198](index=198&type=chunk) [Item 6. Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including the Purchase and Sale Agreement, CEO and CFO certifications, and XBRL-related documents - Key exhibits filed include the Purchase and Sale Agreement (Exhibit 10.1), CEO and CFO certifications (Exhibits 31.1, 31.2, 32), and Inline XBRL documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[200](index=200&type=chunk) [Signature](index=50&type=section&id=Signature) This section contains the official signature block for the Form 10-Q filing, signed by Russell M. Gifford, Executive Vice President, Chief Financial Officer, and Treasurer - The report was signed on August 13, 2025, by Russell M. Gifford, Executive Vice President, Chief Financial Officer, and Treasurer of Barnwell Industries, Inc[203](index=203&type=chunk) [Index to Exhibits](index=51&type=section&id=Index%20to%20Exhibits) This section provides a duplicate listing of the exhibits included in the Form 10-Q filing - The index reiterates the list of exhibits filed with the Form 10-Q, including the Purchase and Sale Agreement, certifications, and XBRL documents[204](index=204&type=chunk) ```

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited financial statements reflect a reduced net loss from discontinued operations gain and active financing efforts Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $24,571 | $30,637 | | **Total Assets** | **$42,041** | **$63,200** | | **Total Current Liabilities** | $25,626 | $32,134 | | **Total Liabilities** | **$30,605** | **$55,847** | | **Total Stockholders' Equity** | **$11,436** | **$7,353** | - The **significant decrease in total assets and liabilities** from December 2024 to June 2025 is primarily due to the reclassification and subsequent sale of the Pharmaloz Manufacturing Inc. (PMI) business, which is presented as discontinued operations[11](index=11&type=chunk)[33](index=33&type=chunk) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Statement of Operations Summary (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $1,247 | $1,504 | $2,678 | $3,860 | | Gross profit (loss) | $734 | $(155) | $1,260 | $(215) | | Loss from continuing operations | $(4,472) | $(5,463) | $(9,150) | $(10,987) | | Income (loss) from discontinued operations | $0 | $(690) | $8,644 | $(1,431) | | **Net income (loss)** | **$(4,472)** | **$(6,153)** | **$(506)** | **$(12,418)** | | Net loss per share, basic and diluted | $(0.11) | $(0.33) | $(0.01) | $(0.67) | - The **net loss for the six months ended June 30, 2025, was significantly reduced** due to an **$8.7 million gain** from the disposal of discontinued operations (PMI and PREH)[15](index=15&type=chunk)[182](index=182&type=chunk) - The company recognized **$1.9 million in Employee Retention Tax Credit income** during Q2 2025, which partially offset the loss from operations[15](index=15&type=chunk) Condensed Consolidated Statements of Stockholders' Equity - **Total stockholders' equity increased from $7.4 million at the beginning of 2025 to $11.4 million at June 30, 2025**. This was primarily driven by the issuance of common and treasury shares for cash, which raised **net proceeds of $3.6 million**, offsetting the net loss for the period[19](index=19&type=chunk)[104](index=104&type=chunk) Condensed Consolidated Statements of Cash Flows Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,628) | $(9,982) | | Net cash provided by investing activities | $920 | $2,559 | | Net cash provided by financing activities | $2,199 | $7,594 | | **Decrease in cash and cash equivalents** | **$(509)** | **$171** | | Cash and cash equivalents at end of period | $169 | $1,780 | - **Financing activities in the first six months of 2025 provided $2.2 million in cash**, primarily from the issuance of common shares ($3.6 million) and new notes payable ($1.2 million), offset by repayment of other notes ($2.5 million)[22](index=22&type=chunk) Notes to Condensed Consolidated Financial Statements Notes detail corporate structure, $8.7 million gain from discontinued operations, complex financing, and a subsequent private placement - **Discontinued Operations:** On January 16, 2025, the company **sold its manufacturing subsidiaries, PMI and PREH**. The transaction involved cash payments, debt extinguishment, and assumption of liabilities, resulting in a recognized **gain on sale of approximately $8.7 million**[33](index=33&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk) - **Debt Financing:** The company has **multiple outstanding debt facilities**, including agreements for the sale of future receipts, a collateralized loan, and loans from the CEO and an unaffiliated investor, which included the issuance of warrants[68](index=68&type=chunk)[70](index=70&type=chunk)[81](index=81&type=chunk) - **Equity Financing:** Through its Equity Line of Credit with Keystone Capital, the company **sold 11.3 million shares of common stock for net proceeds of $3.6 million** in the first six months of 2025[101](index=101&type=chunk)[104](index=104&type=chunk) - **Lease Termination:** In March 2025, the company terminated its New York office leases, resulting in a **recognized loss on lease termination of $1.4 million**, which included writing off assets and a settlement payment[154](index=154&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) - **Subsequent Event:** On July 22, 2025, the company entered into a **private placement for an aggregate principal cash investment of $3.0 million** in senior secured convertible notes and warrants[190](index=190&type=chunk)[191](index=191&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strategic shift, revenue decline, improved gross margin, reduced G&A, and tight liquidity with reliance on capital access Results of Continuing Operations Q2 2025 vs Q2 2024 Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $1,247 | $1,504 | $(257) | | Gross Profit (Loss) | $734 | $(155) | $889 | | General & Admin Expenses | $4,624 | $6,933 | $(2,309) | | Net Loss from Continuing Ops | $(4,472) | $(5,463) | $991 | Six Months 2025 vs Six Months 2024 Performance (in thousands) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $2,678 | $3,860 | $(1,182) | | Gross Profit (Loss) | $1,260 | $(215) | $1,475 | | General & Admin Expenses | $8,716 | $14,232 | $(5,516) | | Net Loss from Continuing Ops | $(9,150) | $(10,987) | $1,837 | - The **improvement in gross margin** was attributed to a better product mix in the consumer products segment. The **decrease in G&A expenses** was mainly due to lower personnel costs, overhead, and professional fees following the divestiture of PMI[214](index=214&type=chunk)[216](index=216&type=chunk)[223](index=223&type=chunk) Non-GAAP Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP loss from continuing operations | $(4,472) | $(5,463) | $(9,150) | $(10,987) | | **Adjusted EBITDA from continuing operations** | **$(807)** | **$(4,829)** | **$(2,421)** | **$(9,182)** | Liquidity and Capital Resources - As of June 30, 2025, the company had **cash and cash equivalents of $169,000**, down from $678,000 at year-end 2024. The **working capital deficit was $1.1 million**[232](index=232&type=chunk) - Management states that despite the low cash balance and ongoing losses, it estimates it has **enough cash and liquidity to finance operations for at least 12 months**, relying on access to existing and other financing sources like its at-the-market facility[233](index=233&type=chunk) - The primary sources of capital have been diagnostic services, product sales, equity offerings, and promissory notes. The company **anticipates continued losses and will need additional capital** to fund operations and R&D[233](index=233&type=chunk)[235](index=235&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company reports no material exposure to market risks, including foreign currency, interest rates, or commodity prices - The company does not believe it has **no material exposure to market risks** such as interest rates, foreign currency fluctuations, or commodity prices[253](index=253&type=chunk)[254](index=254&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management deemed disclosure controls effective, while actively remediating previously identified material internal control weaknesses - Management concluded that **disclosure controls and procedures were effective** as of June 30, 2025[258](index=258&type=chunk) - The company is continuing to work on **remediating a previously disclosed material weakness in internal controls**[259](index=259&type=chunk) [PART II. OTHER INFORMATION](index=44&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - As of the filing date, the company is **not involved in any material legal proceedings**[263](index=263&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) Key risks include significant debt, potential Nasdaq delisting, and the need for shareholder approval for recent financing - **Debt Service Risk:** The company may **not generate sufficient cash flow to service its approximately $3.3 million of outstanding indebtedness** as of June 30, 2025[266](index=266&type=chunk) - **Nasdaq Delisting Risk:** The company is **not in compliance with Nasdaq's minimum $1.00 bid price rule**. It has been granted an **extension until December 22, 2025**, to regain compliance[267](index=267&type=chunk)[270](index=270&type=chunk) - **Financing and Shareholder Approval Risk:** A recent private placement of convertible notes and warrants is subject to Nasdaq shareholder approval rules and the company's authorized share limit. **Failure to obtain approval to increase authorized shares could restrict conversions and warrant exercises**, potentially requiring cash settlement[273](index=273&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued 1,000,000 unvested warrants to lenders in connection with secured loan agreements, exempt from registration - On June 22, 2025, the company **issued two unvested warrants, each to purchase 500,000 shares**, in connection with loan agreements. The warrants vest upon shareholder approval of an increase in authorized shares[274](index=274&type=chunk)[275](index=275&type=chunk) [Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the period [Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations [Other Information](index=46&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including various agreements and certifications

Exhibit 99.1 Mesa Air Group Reports Third Quarter Fiscal 2025 Results and Provides Update on Proposed Merger with Republic Airways Holdings Inc. Management to Hold Call Following Market Close Today August 13, 2025 PHOENIX, August 13, 2025 – Mesa Air Group, Inc. (NASDAQ: MESA) ("Mesa" or the "Company") today reported third quarter fiscal 2025 financial and operating results, as well as provided an update on the proposed merger (the "Merger") with Republic Airways Holdings Inc. ("Republic)". Third Quarter Fis ...