UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-42653 COLUMBUS CIRCLE CAPITAL CORP I (Exact name of registrant as specified in its charter) 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 Cayman Islands 99-3947168 (State or ...

or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (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 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Commission File Number: 001-42653 COLUMBUS CIRCLE CAPITAL CORP I (Exact name of registrant as specified in its charter) Cayman Islands 99-3947168 (State or other jurisdiction of incorporatio ...

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter 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 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) Commission file number: 001-42721 INDIGO ACQUISITION CORP. (Exact Name of Registrant as Specified in Its Charter) Cayman Islands N/A (State or other jurisdiction of inc ...

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 quarter 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: 001-42721 INDIGO ACQUISITION CORP. (Exact Name of Registrant as Specified in Its Charter) Cayman Islands N/A (State or other jurisdiction of inc ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or Dakota Gold Corp. (Exact Name of Registrant as Specified in its charter) (State or other jurisdiction of incorporation or organization) Delaware 85-3475290 (I.R.S. Employer Identification No.) [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the tr ...

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: 001-41228 BARFRESH FOOD GROUP INC. (Exact name of registrant as specified in its charter) (State or other jur ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The financial statements for the period ended June 30, 2025, show a significant increase in cash and cash equivalents to $105.5 million, primarily due to financing activities, while the net loss widened substantially to $21.3 million, driven by escalated research and development and general administrative expenses related to ongoing Phase 3 clinical trials, and total stockholders' equity increased to $103.3 million from $92.0 million at year-end 2024 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $105.9 million from $96.7 million at December 31, 2024, driven by a rise in cash and cash equivalents, while total liabilities decreased to $2.5 million from $4.7 million, leading to an increase in total stockholders' equity to $103.3 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $105,462 | $94,851 | | Total current assets | $105,857 | $96,686 | | Total liabilities | $2,527 | $4,693 | | Total stockholders' equity | $103,330 | $91,993 | | Total liabilities and stockholders' equity | $105,857 | $96,686 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a significantly higher net loss for the three and six months ended June 30, 2025, compared to the same periods in 2024, with the six-month net loss increasing to $21.3 million from $7.4 million year-over-year, primarily due to a sharp rise in both Research and Development (R&D) and General and Administrative (G&A) expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Research and development | $11,804 | $5,003 | | General and administrative | $11,326 | $2,577 | | Total operating expenses | $23,130 | $7,580 | | Net loss | $(21,255) | $(7,374) | | Net loss per share | $(0.56) | $(4.65) | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) For the six months ended June 30, 2025, stockholders' equity increased from $91.99 million to $103.33 million, primarily driven by **$23.2 million** in net proceeds from a public offering and **$8.7 million** in stock-based compensation, partially offset by a net loss of **$21.3 million** - Key drivers for the change in stockholders' equity in the first half of 2025 included a public offering netting **$23.2 million**, warrant exercises, and significant stock-based compensation expense, counteracted by the period's net loss[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, cash and cash equivalents increased by $10.6 million due to $23.8 million in net cash provided by financing activities, which more than offset the $13.2 million of net cash used in operating activities, contrasting with a net cash decrease of $0.4 million in the prior year period Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(13,230) | $(8,197) | | Net cash provided by financing activities | $23,841 | $7,789 | | Net change in cash and cash equivalents | $10,611 | $(408) | | Cash and cash equivalents, end of period | $105,462 | $9,384 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's business as a Phase 3 pharmaceutical firm with a significant accumulated deficit of $336.1 million, but management believes current cash of $105.5 million is sufficient for operations for at least the next 12 months, with key disclosures including the terms of the levosimendan license agreement with Orion, details of recent equity financings, and a breakdown of stock-based compensation expenses - The company is a Phase 3 development-stage pharmaceutical company focused on novel cardiopulmonary therapies[20](index=20&type=chunk) - As of June 30, 2025, the company had an accumulated deficit of **$336.1 million** but possessed cash and cash equivalents of **$105.5 million**, which management believes is sufficient to fund operations for at least the next 12 months[21](index=21&type=chunk) - In February 2024, the company amended its license agreement with Orion for levosimendan, gaining global rights for PH-HFpEF, which increased future milestone payments to Orion upon regulatory approvals in the US and Japan[36](index=36&type=chunk) - The company operates as a single segment focused on identifying and developing therapeutics for cardiovascular and pulmonary diseases, with performance assessed by the CEO based on net loss and cash flow[67](index=67&type=chunk)[68](index=68&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant increase in operating expenses for the first half of 2025, attributing it to expanded clinical trial activities for its levosimendan program (Phase 3 LEVEL and LEVEL-2 studies) and higher stock-based compensation, noting that the company raised approximately $25.0 million in gross proceeds from a private placement in March 2025 and, with $105.9 million in current assets as of June 30, 2025, believes it has sufficient capital to fund operations through 2027 [Overview and Recent Events](index=22&type=section&id=Overview%20and%20Recent%20Events) Tenax is a clinical-stage pharmaceutical company focused on developing cardiopulmonary therapies, with its prioritized product candidate being levosimendan for pulmonary hypertension, and in March 2025, the company raised $25.0 million in gross proceeds to advance its Phase 3 oral levosimendan program, including the ongoing LEVEL study and the planned LEVEL-2 study, with enrollment for the LEVEL study expected to be completed in the first half of 2026 - The company is prioritizing the development of levosimendan for pulmonary hypertension and has deprioritized a Phase 3 trial of imatinib[79](index=79&type=chunk) - In March 2025, a private placement raised gross proceeds of approximately **$25.0 million** to fund the ongoing Phase 3 LEVEL study and initiate a second global Phase 3 study, LEVEL-2[80](index=80&type=chunk) - Enrollment for the Phase 3 LEVEL study is ongoing, with completion expected in the first half of 2026[81](index=81&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Operating expenses increased significantly for the three and six months ended June 30, 2025, compared to the prior year, with R&D expenses for the six-month period rising 136% to $11.8 million due to costs for the Phase 3 LEVEL and LEVEL-2 trials, and G&A expenses increasing 340% to $11.3 million, primarily due to a $6.9 million increase in non-cash stock-based compensation and higher professional fees Operating Expenses Comparison (in thousands) | Expense Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Research and development | $11,804 | $5,003 | 136% | | General and administrative | $11,326 | $2,577 | 340% | | **Total operating expenses** | **$23,130** | **$7,580** | **205%** | - The increase in R&D costs was primarily due to expenses for the ongoing Phase 3 LEVEL trial and preliminary work on the LEVEL-2 study[84](index=84&type=chunk) - The surge in G&A expenses was mainly driven by a **$6.9 million** increase in non-cash stock-based compensation from options granted in late 2024 and early 2025[87](index=87&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) The company had an accumulated deficit of $336.1 million as of June 30, 2025, but with working capital of $103.3 million, management believes it has sufficient funds for operations through 2027, a position strengthened by several financings, including a March 2025 offering that provided $23.2 million in net proceeds, even as net cash used in operations increased to $13.2 million for the first six months of 2025 from $8.2 million in the prior year period - As of June 30, 2025, the company had an accumulated deficit of **$336.1 million** and working capital of **$103.3 million**[91](index=91&type=chunk)[93](index=93&type=chunk) - Management believes the company has sufficient capital to fund operations through 2027[103](index=103&type=chunk) Recent Financings (Gross Proceeds) | Date | Type | Gross Proceeds | | :--- | :--- | :--- | | March 2025 | Private Placement | $25.0 million | | August 2024 | Private Placement | $99.7 million | | February 2024 | Registered Public Offering | $9.0 million | Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(13,230) | $(8,197) | | Net cash provided by financing activities | $23,841 | $7,789 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is a smaller reporting company and is therefore not required to provide the information requested by this item - As a smaller reporting company, Tenax Therapeutics is not required to provide quantitative and qualitative disclosures about market risk[107](index=107&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation as of June 30, 2025, the company's President and Chief Executive Officer and Interim Chief Financial Officer concluded that the disclosure controls and procedures were effective, with no material changes in the company's internal control over financial reporting during the most recent fiscal quarter - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[110](index=110&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[111](index=111&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that there are no material pending legal proceedings to which it is a party or to which any of its property is subject - The company is not a party to any material pending legal proceedings[115](index=115&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) The company states that the risks it faces have not materially changed from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K[116](index=116&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, which include the Restated Certificate of Incorporation, certifications by the CEO and Interim CFO pursuant to the Sarbanes-Oxley Act, and Inline XBRL documents - The exhibits filed with this report include certifications from the President and Chief Executive Officer and the Interim Chief Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[118](index=118&type=chunk)

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) [Registrant Information](index=1&type=section&id=Registrant%20Information) This section details Aterian, Inc.'s registrant information for its 10-Q report, including company specifics, stock ticker, and exchange, confirming compliance with reporting requirements - Company Name: **Aterian, Inc.**[2](index=2&type=chunk) - Jurisdiction of Incorporation: **Delaware**[2](index=2&type=chunk) Key Registrant Details | Metric | Detail | | :--- | :--- | | Ticker Symbol | ATER | | Registered Exchange | The Nasdaq Stock Market LLC | - The company is designated as a **non-accelerated filer** and a **smaller reporting company**[4](index=4&type=chunk) - As of August 12, 2025, **9,985,104 shares of common stock** were outstanding[5](index=5&type=chunk) [Table of Contents](index=3&type=section&id=Table%20of%20Contents) [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=4&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements Disclaimer](index=4&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section warns investors that the quarterly report contains forward-looking statements whose actual results may differ materially, advising review of the "Risk Factors" section - This report contains "forward-looking statements," and actual results may differ significantly from these statements[8](index=8&type=chunk) - The company does not undertake any obligation to publicly revise these forward-looking statements, unless required by law[9](index=9&type=chunk) - Investors should carefully consider the factors discussed in the "Risk Factors" section[8](index=8&type=chunk) [PART I—FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Item 1. Financial Statements.](index=5&type=section&id=Item%201.%20Financial%20Statements.) This section presents Aterian, Inc.'s unaudited condensed consolidated financial statements and notes, covering financial position and operating results for periods ending June 30, 2025 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets decreased to **$45.421 million** from **$49.542 million**, while total liabilities increased and stockholders' equity decreased Condensed Consolidated Balance Sheets (Thousand Dollars) | Metric (Thousand Dollars) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash | 10,495 | 17,998 | | Inventory | 18,496 | 13,749 | | Total Assets | 45,421 | 49,542 | | Credit Facility | 7,248 | 6,948 | | Accounts Payable | 6,124 | 3,080 | | Total Liabilities | 21,128 | 19,525 | | Total Stockholders' Equity | 24,293 | 30,017 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net revenue for the three months ended June 30, 2025, decreased **30.5%** to **$19.462 million**, with net loss increasing to **$4.860 million** and diluted loss per share to **$0.63** Condensed Consolidated Statements of Operations (Thousand Dollars) | Metric (Thousand Dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | 19,462 | 27,984 | 34,822 | 48,199 | | Cost of Goods Sold | 8,896 | 11,093 | 14,832 | 18,139 | | Gross Profit | 10,566 | 16,891 | 19,990 | 30,060 | | Operating Loss | (4,505) | (3,205) | (8,201) | (8,482) | | Net Loss | (4,860) | (3,629) | (8,756) | (8,791) | | Basic and Diluted Net Loss Per Share | (0.63) | (0.52) | (1.16) | (1.28) | [Condensed Consolidated Statements of Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Comprehensive loss for the three months ended June 30, 2025, increased to **$4.512 million**, while for six months, it decreased to **$8.273 million**, mainly due to foreign currency translation adjustments Condensed Consolidated Statements of Comprehensive Loss (Thousand Dollars) | Metric (Thousand Dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Loss | (4,860) | (3,629) | (8,756) | (8,791) | | Foreign Currency Translation Adjustment | 348 | 20 | 483 | (29) | | Comprehensive Loss | (4,512) | (3,609) | (8,273) | (8,820) | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity decreased to **$24.293 million** by June 30, 2025, primarily due to a **$8.756 million** net loss, partially offset by stock-based compensation and other comprehensive income Condensed Consolidated Stockholders' Equity (Thousand Dollars) | Metric (Thousand Dollars) | January 1, 2025 | June 30, 2025 | | :--- | :--- | :--- | | Total Stockholders' Equity | 30,017 | 24,293 | | Net Loss | - | (8,756) | | Stock-Based Compensation Expense | - | 2,549 | | Other Comprehensive Income | - | 483 | Condensed Consolidated Stockholders' Equity (Thousand Dollars) | Metric (Thousand Dollars) | January 1, 2024 | June 30, 2024 | | :--- | :--- | :--- | | Total Stockholders' Equity | 36,031 | 30,887 | | Net Loss | - | (8,791) | | Stock-Based Compensation Expense | - | 3,006 | | Other Comprehensive Loss | - | (29) | [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, operating activities used **$8.287 million** cash, investing activities used **$6 thousand**, and financing activities provided **$388 thousand** Condensed Consolidated Statements of Cash Flows (Thousand Dollars) | Metric (Thousand Dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash (Used in) Provided by Operating Activities | (8,287) | 2,896 | | Net Cash Used in Investing Activities | (6) | (242) | | Net Cash Provided by (Used in) Financing Activities | 388 | (2,336) | | Effect of Foreign Currency on Cash and Restricted Cash | 448 | (29) | | Net Change in Cash and Restricted Cash During Period | (7,457) | 289 | | Cash and Restricted Cash, End of Period | 11,686 | 22,484 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the unaudited condensed consolidated financial statements, covering company overview, accounting policies, asset/liability composition, credit, equity, and subsequent events [1. COMPANY OVERVIEW](index=11&type=section&id=1.%20COMPANY%20OVERVIEW) Aterian, Inc. is a consumer products company operating primarily through online retail channels like Amazon, Walmart, and Target, as well as its direct-to-consumer websites - The company primarily sells consumer products through online retail channels (e.g., Amazon, Walmart, Target) and its direct-to-consumer websites[29](index=29&type=chunk) - Key brands include Squatty Potty, HomeLabs, Mueller Living, PurSteam, Healing Solutions, and Photo Paper Direct (PPD)[30](index=30&type=chunk) - The company is headquartered in New Jersey, with offices in China, the Philippines, and the United Kingdom[31](index=31&type=chunk) - The company has incurred continuous losses and negative operating cash flows since inception, expecting continued losses and negative cash flows in the near term, but anticipates gradual profitability improvement with scale[32](index=32&type=chunk) [Liquidity and Going Concern](index=11&type=section&id=Liquidity%20and%20Going%20Concern) The company faces significant going concern doubts due to continuous losses, negative operating cash flow, accumulated deficit, and reliance on external capital, exacerbated by new tariffs - The company has incurred continuous losses since inception, with a net loss of **$8.8 million** for the six months ended June 30, 2025, operating cash outflow of **$8.3 million**, and an accumulated deficit of **$720.4 million**[35](index=35&type=chunk) - Changes in U.S. trade policy, particularly tariffs on Chinese imports, have significantly increased the company's cost of goods sold, pressuring profit margins[33](index=33&type=chunk) - The company announced a fixed cost reduction plan on May 14, 2025, including approximately **20 employee** layoffs, expected to save **$5 million to $6 million** annually[39](index=39&type=chunk) - The company currently has no firm commitments for additional external capital, and if unable to generate cash from operations or obtain external capital, it may not meet its obligations over the next 12 months[38](index=38&type=chunk) - Despite progress in reducing operating losses and strengthening the balance sheet, uncertainties in business operations and forecasts raise **substantial doubt about the company's ability to continue as a going concern**[41](index=41&type=chunk) [2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=13&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the significant accounting policies used in preparing the condensed consolidated financial statements, including presentation basis, estimates, consolidation, and revenue recognition [Basis of Presentation](index=13&type=section&id=Basis%20of%20Presentation) The condensed consolidated financial statements and notes are prepared in accordance with U.S. GAAP - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP[43](index=43&type=chunk) [Unaudited Interim Financial Information](index=13&type=section&id=Unaudited%20Interim%20Financial%20Information) Interim condensed consolidated financial statements are unaudited, include management's necessary adjustments, and do not necessarily indicate future performance - The interim condensed consolidated financial statements are unaudited and include normal recurring adjustments deemed necessary by management[44](index=44&type=chunk)[46](index=46&type=chunk) - Results for the three and six months ended June 30, 2025, are not necessarily indicative of results for the year ended December 31, 2025, or any future period[44](index=44&type=chunk) [Use of Estimates](index=13&type=section&id=Use%20of%20Estimates) Financial statement preparation requires management estimates and assumptions affecting reported amounts, which are continuously evaluated, but actual results may differ - Financial statement preparation requires management to make estimates and assumptions affecting reported amounts[47](index=47&type=chunk) - Management continuously evaluates estimates and assumptions, but actual results may differ from estimates[47](index=47&type=chunk) [Principles of Consolidation](index=13&type=section&id=Principles%20of%20Consolidation) The condensed consolidated financial statements include the accounts of the company and its wholly-owned subsidiaries, with all intercompany balances and transactions eliminated - The condensed consolidated financial statements include the accounts of the company and its wholly-owned subsidiaries, with all intercompany balances and transactions eliminated[48](index=48&type=chunk) [Restricted Cash](index=13&type=section&id=Restricted%20Cash) As of June 30, 2025, restricted cash includes **$0.1 million** related to Chinese subsidiaries and **$1.1 million** for letters of credit and the Midcap credit facility cash sweep account Restricted Cash Categories (Million Dollars) | Restricted Cash Category (Million Dollars) | June 30, 2025 | | :--- | :--- | | Related to Chinese Subsidiaries | 0.1 | | Related to Letters of Credit | 1.0 | | Related to Midcap Credit Facility Cash Sweep Account | 0.1 | | **Total** | **1.2** | Restricted Cash Categories (Million Dollars) | Restricted Cash Category (Million Dollars) | December 31, 2024 | | :--- | :--- | | Related to Chinese Subsidiaries | 0.1 | | Related to Letters of Credit | 1.0 | | **Total** | **1.1** | [Inventory and Cost of Goods Sold](index=13&type=section&id=Inventory%20and%20Cost%20of%20Goods%20Sold) Company inventory, primarily finished goods, is valued at the lower of FIFO or net realizable value; cost of goods sold includes manufacturing, duties, and freight - The company's inventory consists almost entirely of finished goods, valued at the lower of FIFO or net realizable value[51](index=51&type=chunk) - Cost of goods sold includes product manufacturing costs, duties, shipping, and freight[51](index=51&type=chunk) - Inventory valuation requires management judgment based on historical data and market conditions, and future changes in assumptions could lead to additional inventory write-downs[51](index=51&type=chunk) [Accounts Receivable](index=14&type=section&id=Accounts%20Receivable) Accounts receivable are presented at historical cost less an allowance for credit losses; as of June 30, 2025, the company had **no allowance for credit losses**, compared to **$147 thousand** as of December 31, 2024 - Accounts receivable are presented at historical cost less an allowance for credit losses[53](index=53&type=chunk) Allowance for Credit Losses (Thousand Dollars) | Metric (Thousand Dollars) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Allowance for Credit Losses | — | (147) | [Revenue Recognition](index=14&type=section&id=Revenue%20Recognition) Revenue is recognized under ASC Topic 606 from consumer product sales when control transfers to the customer, typically upon shipment - The company recognizes revenue under ASC Topic 606, primarily from consumer product sales[54](index=54&type=chunk) - Revenue is recognized when control of the product transfers to the customer, typically on the shipment date[56](index=56&type=chunk) - Platform fees are recorded in sales and distribution expenses, not as a reduction of revenue, because the company owns and controls all goods before transfer to customers[58](index=58&type=chunk) Sales Return Refund Liability (Million Dollars) | Metric (Million Dollars) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Sales Return Refund Liability | 0.2 | 0.3 | [Net Revenue by Category](index=15&type=section&id=Net%20Revenue%20by%20Category) For the three months ended June 30, 2025, net revenue was **$19.462 million**, with North America contributing **$18.198 million** and direct sales remaining the primary source Net Revenue by Category (Thousand Dollars) | Category (Thousand Dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | North America Direct Sales | 16,581 | 26,300 | | North America Wholesale/Other | 1,617 | 155 | | Other Regions Direct Sales | 1,264 | 1,529 | | **Total Net Revenue** | **19,462** | **27,984** | Net Revenue by Category (Thousand Dollars) | Category (Thousand Dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | North America Direct Sales | 30,168 | 45,020 | | North America Wholesale/Other | 2,023 | 300 | | Other Regions Direct Sales | 2,631 | 2,879 | | **Total Net Revenue** | **34,822** | **48,199** | [Net Revenue by Product Categories](index=16&type=section&id=Net%20Revenue%20by%20Product%20Categories) For the three months ended June 30, 2025, net revenue was **$19.462 million**, with heating, cooling, and air quality products contributing **$4.836 million** Net Revenue by Product Category (Thousand Dollars) | Product Category (Thousand Dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Heating, Cooling, and Air Quality | 4,836 | 10,396 | | Kitchen Appliances | 3,288 | 2,111 | | Health & Beauty | 1,898 | 3,431 | | Cookware, Kitchen Tools & Gadgets | 421 | 1,294 | | Home Office | 1,690 | 2,310 | | Home Goods | 3,892 | 5,046 | | Essential Oils & Related Accessories | 3,431 | 3,236 | | Other | 6 | 160 | | **Total Net Revenue** | **19,462** | **27,984** | Net Revenue by Product Category (Thousand Dollars) | Product Category (Thousand Dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Heating, Cooling, and Air Quality | 6,175 | 13,600 | | Kitchen Appliances | 5,080 | 4,032 | | Health & Beauty | 4,952 | 6,744 | | Cookware, Kitchen Tools & Gadgets | 1,321 | 2,690 | | Home Office | 3,274 | 4,341 | | Home Goods | 7,847 | 9,932 | | Essential Oils & Related Accessories | 6,164 | 6,443 | | Other | 9 | 417 | | **Total Net Revenue** | **34,822** | **48,199** | [Intangibles](index=17&type=section&id=Intangibles) The company reviews long-lived assets for impairment when events indicate carrying value may not be recoverable, performing recoverability tests due to new tariffs without recognizing impairment - The company reviews long-lived assets for impairment when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable[62](index=62&type=chunk) - As of June 30, 2025, due to concerns about revenue and profitability from new tariffs, the company performed a recoverability test but did not recognize an impairment loss[64](index=64&type=chunk) - For the three and six months ended June 30, 2024, no triggering events required testing for intangible asset impairment losses[65](index=65&type=chunk) [Fair Value of Financial Instruments](index=17&type=section&id=Fair%20Value%20of%20Financial%20Instruments) Financial instruments are recorded at historical cost, with warrant liabilities measured at fair value, decreasing to **$19 thousand** as of June 30, 2025 - The company's financial instruments (including net accounts receivable, accounts payable, and accrued and other current liabilities) are recorded at historical cost, with their carrying values approximating fair values[67](index=67&type=chunk) - Warrant liabilities related to the March 2022 common stock offering are measured at fair value using the Black-Scholes model[68](index=68&type=chunk) Fair Value of Warrant Liabilities (Thousand Dollars) | Metric (Thousand Dollars) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Fair Value of Warrant Liabilities | 19 | 109 | [Recent Accounting Pronouncements](index=18&type=section&id=Recent%20Accounting%20Pronouncements) The company is evaluating recent accounting pronouncements, including ASU 2023-09 (income taxes) and ASU 2024-03 (expense disaggregation), for future adoption and disclosure - FASB issued ASU 2023-09 in August 2023, requiring enhanced income tax disclosure transparency, which the company will adopt in its annual report for the year ended December 31, 2025[71](index=71&type=chunk) - FASB issued ASU 2024-03 in November 2024, requiring disaggregation of income statement expense information, which the company is evaluating and will adopt for fiscal years beginning after December 15, 2026[72](index=72&type=chunk) [3. ACCOUNTS RECEIVABLE](index=19&type=section&id=3.%20ACCOUNTS%20RECEIVABLE) Net accounts receivable decreased to **$3.032 million** as of June 30, 2025, from **$3.782 million**, with no allowance for credit losses recorded at the current period end Accounts Receivable (Thousand Dollars) | Metric (Thousand Dollars) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade Accounts Receivable | 3,032 | 3,929 | | Allowance for Credit Losses | — | (147) | | **Net Accounts Receivable** | **3,032** | **3,782** | [4. INVENTORY](index=19&type=section&id=4.%20INVENTORY) Total inventory increased to **$18.496 million** as of June 30, 2025, from **$13.749 million**, comprising **$14.617 million** on-hand and **$3.879 million** in-transit Inventory (Thousand Dollars) | Metric (Thousand Dollars) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | On-Hand Inventory | 14,617 | 12,484 | | In-Transit Inventory | 3,879 | 1,265 | | **Total Inventory** | **18,496** | **13,749** | - As of June 30, 2025, the company held approximately **$4.0 million** in on-hand inventory at Amazon, compared to **$3.5 million** as of December 31, 2024[76](index=76&type=chunk) [5. PREPAID EXPENSES AND OTHER CURRENT ASSETS](index=19&type=section&id=5.%20PREPAID%20EXPENSES%20AND%20OTHER%20CURRENT%20ASSETS) Total prepaid expenses and other current assets slightly increased to **$3.287 million** as of June 30, 2025, including **$1.061 million** in restricted cash and **$905 thousand** in prepaid insurance Prepaid Expenses and Other Current Assets (Thousand Dollars) | Metric (Thousand Dollars) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Prepaid Inventory | 477 | 904 | | Restricted Cash | 1,061 | 1,015 | | Prepaid Software | 444 | 456 | | Prepaid Insurance | 905 | 528 | | Prepaid Freight Forwarder | 147 | 145 | | Other | 253 | 142 | | **Total Prepaid and Current Assets** | **3,287** | **3,190** | [6. ACCRUED AND OTHER CURRENT LIABILITIES](index=19&type=section&id=6.%20ACCRUED%20AND%20OTHER%20CURRENT%20LIABILITIES) Total accrued and other current liabilities decreased to **$7.149 million** as of June 30, 2025, with accrued compensation significantly reduced and new accrued restructuring costs Accrued and Other Current Liabilities (Thousand Dollars) | Metric (Thousand Dollars) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accrued Compensation Costs | 14 | 2,500 | | Accrued Restructuring Costs | 1,432 | — | | Accrued Professional and Consulting Fees | 177 | 235 | | Sales Return Reserve | 694 | 989 | | Accrued Insurance Premium Financing | 602 | 305 | | Warrant Liabilities | 19 | 109 | | **Total Accrued and Current Liabilities** | **7,149** | **8,804** | [7. CREDIT FACILITY AND WARRANTS](index=21&type=section&id=7.%20CREDIT%20FACILITY%20AND%20WARRANTS) This section details the company's credit and security agreement with MidCap Funding IV Trust, including terms, amendments, financial covenants, and related warrants [MidCap Credit Facility](index=21&type=section&id=MidCap%20Credit%20Facility) The MidCap credit facility, amended in February 2024 to extend its term and reduce minimum liquidity covenants, had a balance of **$7.248 million** as of June 30, 2025, with the company in compliance - The company entered into a credit agreement with MidCap on December 22, 2021, for a revolving credit facility of up to **$40.0 million**[79](index=79&type=chunk) - The credit facility was amended on February 23, 2024, extending the term to **December 2026** and reducing the minimum liquidity financial covenant from **$15.0 million** to **$6.8 million**[83](index=83&type=chunk) - As of June 30, 2025, the company was in compliance with the financial covenants in the credit agreement[85](index=85&type=chunk) MidCap Credit Facility (Thousand Dollars) | Metric (Thousand Dollars) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total MidCap Credit Facility | 7,248 | 6,948 | [Interest Expense, Net](index=21&type=section&id=Interest%20Expense,%20Net) Net interest expense for the three months ended June 30, 2025, was **$222 thousand**, remaining flat, while for six months, it decreased to **$397 thousand** Net Interest Expense (Thousand Dollars) | Metric (Thousand Dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Interest Expense | 253 | 296 | 474 | 689 | | Interest Income | (31) | (68) | (77) | (137) | | **Net Interest Expense** | **222** | **228** | **397** | **552** | [Securities Purchase Agreement and Warrants](index=22&type=section&id=Securities%20Purchase%20Agreement%20and%20Warrants) In March 2022, the company raised **$27.5 million** through a private placement of common stock and warrants, with **$19 thousand** in unexercised warrant liabilities as of June 30, 2025 - The company raised approximately **$27.5 million** in March 2022 through a private placement of common stock and warrants[89](index=89&type=chunk) - As of June 30, 2025, **590,637 common stock warrants** remain unexercised and are recorded as a **$19 thousand** liability on the company's condensed consolidated balance sheets[89](index=89&type=chunk) [8. STOCK-BASED COMPENSATION](index=23&type=section&id=8.%20STOCK-BASED%20COMPENSATION) The company operates multiple equity incentive plans, with **841,603** shares available for future grants under the 2018 plan and **$3.2 million** in unrecognized stock-based compensation expense - The company maintains the 2014 Amended and Restated Equity Incentive Plan, the 2018 Equity Incentive Plan, and the 2022 Inducement Equity Incentive Plan[90](index=90&type=chunk)[91](index=91&type=chunk)[93](index=93&type=chunk) Shares Available for Future Grant | Plan Name | Shares Available for Future Grant as of June 30, 2025 | | :--- | :--- | | 2018 Equity Incentive Plan | 841,603 | | 2022 Inducement Equity Incentive Plan | 193,476 | - As of June 30, 2025, total unrecognized compensation expense related to unvested restricted common stock was **$3.2 million**, expected to be recognized over a weighted-average period of **1.85 years**[98](index=98&type=chunk) Stock-Based Compensation Expense (Thousand Dollars) | Metric (Thousand Dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Sales and Distribution Expenses | 125 | 946 | 317 | 1,245 | | General and Administrative Expenses | (3) | 1,975 | 588 | 3,343 | | **Total Stock-Based Compensation Expense** | **122** | **2,921** | **905** | **4,588** | [9. NET LOSS PER SHARE](index=26&type=section&id=9.%20NET%20LOSS%20PER%20SHARE) Basic and diluted net loss per share are calculated by dividing net loss by weighted-average common shares outstanding, with both being equal due to the company's net loss position - Basic and diluted net loss per share are calculated by dividing net loss by the weighted-average number of common shares outstanding during the period[100](index=100&type=chunk) - Since the company is in a net loss position, all common stock purchase options are considered anti-dilutive, resulting in equal basic and diluted net loss per share[100](index=100&type=chunk) Net Loss Per Share | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Loss (Thousand Dollars) | (4,860) | (3,629) | (8,756) | (8,791) | | Weighted-Average Shares Outstanding (Thousands) | 7,674,910 | 6,973,218 | 7,564,523 | 6,881,648 | | **Basic and Diluted Net Loss Per Share** | **(0.63)** | **(0.52)** | **(1.16)** | **(1.28)** | [10. COMMITMENTS AND CONTINGENCIES](index=26&type=section&id=10.%20COMMITMENTS%20AND%20CONTINGENCIES) This section discloses potential sales tax liabilities of approximately **$0.7 million** and legal proceedings, with the company maintaining sufficient insurance coverage to mitigate risks [Sales or Other Similar Taxes](index=26&type=section&id=Sales%20or%20Other%20Similar%20Taxes) The company estimates potential sales tax liabilities of approximately **$0.7 million** due to past sales in certain states before establishing nexus, recorded in accrued liabilities - The company estimates potential sales tax liabilities (including current sales tax payable) of approximately **$0.7 million**, recorded in accrued and other current liabilities[103](index=103&type=chunk) [Legal Proceedings](index=26&type=section&id=Legal%20Proceedings) The company is involved in various legal proceedings and claims, but believes their ultimate outcome will not materially adversely affect its financial position or operating results - The company is subject to various legal proceedings and claims from time to time, but believes the ultimate outcome will not materially adversely affect its financial position or operating results[104](index=104&type=chunk) - The company maintains adequate insurance coverage to further mitigate risks[104](index=104&type=chunk) [11. INTANGIBLES](index=27&type=section&id=11.%20INTANGIBLES) Net book value of intangible assets decreased to **$8.975 million** as of June 30, 2025, primarily comprising trademarks and customer relationships, with **$8.975 million** in total expected future amortization Intangible Assets (Thousand Dollars) | Intangible Asset Category (Thousand Dollars) | Net Book Value as of June 30, 2025 | Net Book Value as of December 31, 2024 | | :--- | :--- | :--- | | Trademarks | 5,628 | 6,119 | | Customer Relationships | 3,325 | 3,610 | | Software | 22 | 28 | | **Total Intangible Assets** | **8,975** | **9,757** | Estimated Amortization Expense (Thousand Dollars) | Amortization Year | Estimated Amortization (Thousand Dollars) | | :--- | :--- | | Remaining 2025 | 782 | | 2026 | 1,564 | | 2027 | 1,554 | | 2028 | 1,551 | | 2029 | 1,551 | | 2030 | 1,529 | | Thereafter | 444 | | **Total** | **8,975** | [12. RESTRUCTURING](index=28&type=section&id=12.%20RESTRUCTURING) The company announced a fixed cost reduction plan on May 14, 2025, including approximately **20 employee** layoffs, incurring **$1.8 million** in restructuring charges and expecting **$5 million to $6 million** in annual savings - The company announced a fixed cost reduction plan on May 14, 2025, including approximately **20 employee** layoffs, expected to be completed by the end of Q3 2025[106](index=106&type=chunk) - For the three and six months ended June 30, 2025, the company recognized approximately **$1.8 million** in restructuring charges, primarily related to severance[106](index=106&type=chunk)[110](index=110&type=chunk) - The plan is expected to result in annual savings of approximately **$5 million to $6 million**[106](index=106&type=chunk) Restructuring Costs (Thousand Dollars) | Restructuring Cost Category (Thousand Dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Employee Severance | 1,795 | 132 | 1,795 | 683 | | Other Restructuring Costs | — | (115) | — | (108) | | **Total Restructuring Costs** | **1,795** | **17** | **1,795** | **575** | - As of June 30, 2025, the company's restructuring liability was **$1.4 million**, recorded in accrued expenses and other current liabilities[111](index=111&type=chunk) [13. SEGMENT INFORMATION](index=29&type=section&id=13.%20SEGMENT%20INFORMATION) Aterian, Inc. operates as a single operating segment, with the CEO evaluating financial performance and allocating resources based on consolidated operating margin and net income - The company is identified as a **single operating segment**[113](index=113&type=chunk) - The Chief Operating Decision Maker (CEO) evaluates financial performance and allocates resources based on consolidated operating margin and net income[113](index=113&type=chunk) Segment Information (Thousand Dollars) | Metric (Thousand Dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | 19,462 | 27,984 | 34,822 | 48,199 | | Cost of Goods Sold | 8,896 | 11,093 | 14,832 | 18,139 | | Variable Cost of Goods Sold | 9,048 | 12,024 | 16,421 | 22,345 | | Other Vendor and Compensation Expenses | 5,497 | 4,721 | 10,053 | 10,751 | | Net Loss | (4,860) | (3,629) | (8,756) | (8,791) | [14. SUBSEQUENT EVENTS](index=29&type=section&id=14.%20SUBSEQUENT%20EVENTS) On July 4, 2025, the U.S. enacted the OBBBA, extending tax provisions and modifying international tax frameworks, which the company is currently assessing for financial statement impact - On July 4, 2025, the U.S. enacted the Omnibus Budget Reconciliation Act (OBBBA), which includes permanently extending certain expiring provisions of the Tax Cuts and Jobs Act, modifying international tax frameworks, and reinstating preferential tax treatment for certain business provisions[117](index=117&type=chunk) - The company is currently evaluating the impact of this act on its consolidated financial statements[117](index=117&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 discussion and analysis of the company's financial condition and operating results, highlighting macroeconomic factors, tariffs, and restructuring impacts [Overview](index=30&type=section&id=Overview) Aterian is a consumer products company selling proprietary brands across various categories through online retail channels and its direct-to-consumer websites - The company primarily sells consumer products through online retail channels (e.g., Amazon, Walmart, Target) and its direct-to-consumer websites[120](index=120&type=chunk) - Key brands include Squatty Potty, HomeLabs, Mueller Living, PurSteam, Healing Solutions, and Photo Paper Direct (PPD)[121](index=121&type=chunk) [Seasonality of Business and Product Mix](index=30&type=section&id=Seasonality%20of%20Business%20and%20Product%20Mix) Product sales are seasonal, with environmental appliances peaking in summer and other categories in Q4, while global supply chain costs and geopolitical events impact margins - Environmental appliance products experience significantly higher sales during the summer months[122](index=122&type=chunk) - Essential oils, small kitchen appliances, and accessories typically see higher sales in the fourth quarter, including Thanksgiving and Christmas[122](index=122&type=chunk) - Global supply chain costs, lead times, delays, and global and geopolitical events directly impact the company's profit margins[123](index=123&type=chunk) [Financial Operations Overview](index=30&type=section&id=Financial%20Operations%20Overview) This section outlines key financial operations, including net revenue sources, cost of goods sold impacted by tariffs, and the composition of sales, general, and administrative expenses [Net Revenue](index=30&type=section&id=Net%20Revenue) Company revenue primarily stems from U.S. consumer product sales via online retail and direct-to-consumer channels, recognized when product control transfers to the customer - The company's revenue primarily derives from selling consumer products in the U.S. through online retail channels and its direct-to-consumer websites[124](index=124&type=chunk) - Revenue is recognized when control of the product transfers to the customer, typically on the shipment date[124](index=124&type=chunk) [Cost of Goods Sold](index=30&type=section&id=Cost%20of%20Goods%20Sold) Cost of goods sold includes inventory book value, manufacturing costs, duties, and freight, increasing in Q1 and Q2 2025 due to new U.S. tariffs on Chinese imports - Cost of goods sold includes the book value of inventory, encompassing manufacturer product costs, duties, and shipping and freight[125](index=125&type=chunk) - In Q1 and Q2 2025, new tariffs imposed by the U.S. government on Chinese imports led to increased cost of goods sold[126](index=126&type=chunk) - The company partially offset increased costs through price increases, which resulted in lower sales volume[126](index=126&type=chunk) [Expenses](index=32&type=section&id=Expenses) This section details the company's expenses, including sales and distribution, general and administrative, and net interest expense, outlining their components and influencing factors [Sales and Distribution Expenses](index=32&type=section&id=Sales%20and%20Distribution%20Expenses) Sales and distribution expenses encompass online advertising, marketing, platform commissions, fulfillment, and warehousing costs, fluctuating with sales volume, product mix, and fulfillment methods - Sales and distribution expenses include online advertising, marketing, and promotional costs, sales and e-commerce platform commissions, fulfillment (including shipping and handling), and warehousing costs[128](index=128&type=chunk) - These expenses fluctuate with sales volume, product mix, and fulfillment methods (FBM or FBA/WFS)[128](index=128&type=chunk) [General and Administrative Expenses](index=32&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses include executive, finance, legal, and HR compensation, facilities, insurance, travel, professional services, and public company costs - General and administrative expenses include cash and stock-based compensation and employee benefits for executive management, financial administration, legal, and human resources departments[129](index=129&type=chunk) - They also include facility costs, insurance, travel, professional services, and other general administrative expenses, including costs incurred as a public company[129](index=129&type=chunk) [Interest Expense, Net](index=32&type=section&id=Interest%20Expense,%20Net) Net interest expense includes interest costs from the credit facility and amortization of deferred financing costs and debt discounts - Net interest expense includes interest costs from the credit facility, as well as amortization of deferred financing costs and debt discounts related to the credit facility[130](index=130&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) This section compares operating results for the three and six months ended June 30, 2025 and 2024, showing declines in net revenue and gross profit due to macroeconomic factors and tariffs [Comparison of the Three Months Ended June 30, 2025 and 2024](index=33&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) For the three months ended June 30, 2025, net revenue decreased **30.5%** to **$19.5 million**, gross profit fell **37.4%**, and net loss increased to **$4.9 million** Operating Results Comparison (Thousand Dollars) | Metric (Thousand Dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | 19,462 | 27,984 | (8,522) | (30.5)% | | Cost of Goods Sold | 8,896 | 11,093 | (2,197) | (19.8)% | | Gross Profit | 10,566 | 16,891 | (6,325) | (37.4)% | | Operating Loss | (4,505) | (3,205) | (1,300) | (40.6)% | | Net Loss | (4,860) | (3,629) | (1,231) | (33.9)% | Operating Results as Percentage of Net Revenue | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Revenue Percentage | 100.0% | 100.0% | | Cost of Goods Sold Percentage | 45.7% | 39.6% | | Gross Profit Percentage | 54.3% | 60.4% | | Sales and Distribution Expenses Percentage | 63.5% | 54.2% | | General and Administrative Expenses Percentage | 13.9% | 17.6% | | Operating Loss Percentage | (23.1)% | (11.5)% | | Net Loss Percentage | (25.0)% | (13.0)% | [Net Revenue](index=34&type=section&id=Net%20Revenue) Net revenue for the three months ended June 30, 2025, decreased **30.5%** to **$19.5 million**, primarily due to a **$10.0 million** decline in direct net revenue from tariffs and macroeconomic challenges - For the three months ended June 30, 2025, net revenue decreased **30.5%** to **$19.5 million** year-over-year[134](index=134&type=chunk) - Direct net revenue decreased by **$10.0 million (35.9%)**, primarily due to increased sales costs from new tariffs, price increases to mitigate impact, and challenging macroeconomic conditions leading to lower sales volume[134](index=134&type=chunk) - Sales across all product categories, except kitchen appliances, decreased compared to the prior year period, mainly due to the macroeconomic environment and price increases from tariffs[134](index=134&type=chunk) [Cost of Goods Sold and Gross Profit](index=34&type=section&id=Cost%20of%20Goods%20Sold%20and%20Gross%20Profit) For the three months ended June 30, 2025, cost of goods sold decreased **19.8%** to **$8.9 million**, while gross profit margin declined to **54.3%** due to product mix and tariffs - For the three months ended June 30, 2025, cost of goods sold decreased **19.8%** to **$8.9 million** year-over-year, primarily due to lower sales volume[135](index=135&type=chunk) - Gross profit margin decreased from **60.4%** to **54.3%**, primarily due to product mix changes, increased sales costs from new tariffs, and price increases partially offsetting costs[136](index=136&type=chunk) [Sales and Distribution Expenses](index=34&type=section&id=Sales%20and%20Distribution%20Expenses) Sales and distribution expenses decreased **18.5%** to **$12.4 million** for the three months ended June 30, 2025, but increased as a percentage of net revenue to **63.3%** - For the three months ended June 30, 2025, sales and distribution expenses decreased **18.5%** to **$12.4 million** year-over-year, primarily due to lower variable sales and distribution expenses from reduced product volume[138](index=138&type=chunk) - Fixed sales and distribution costs (including stock-based compensation) increased from **$3.1 million** to **$3.3 million**, primarily due to increased restructuring costs, partially offset by lower stock-based compensation and miscellaneous office expenses[139](index=139&type=chunk) - As a percentage of net revenue, sales and distribution expenses increased from **54.2%** to **63.3%**, primarily due to product mix and increased marketing costs[140](index=140&type=chunk) [General and Administrative Expenses](index=36&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses decreased **45.0%** for the three months ended June 30, 2025, primarily due to reduced stock-based compensation and headcount costs - For the three months ended June 30, 2025, general and administrative expenses decreased **45.0%** year-over-year[142](index=142&type=chunk) - This was primarily due to a **$2.0 million** decrease in stock-based compensation, a **$0.4 million** reduction in employee headcount expenses, and a **$0.5 million** decrease in miscellaneous costs, partially offset by a **$0.7 million** increase in restructuring costs[142](index=142&type=chunk) [Interest expense, net](index=36&type=section&id=Interest%20expense,%20net) Net interest expense for the three months ended June 30, 2025, was **$222 thousand**, remaining relatively flat compared to the prior year period - For the three months ended June 30, 2025, net interest expense was **$222 thousand**, relatively flat compared to **$228 thousand** in the prior year period[143](index=143&type=chunk) [Change in fair market value of warrant liabilities](index=36&type=section&id=Change%20in%20fair%20market%20value%20of%20warrant%20liabilities) The change in fair market value of warrant liabilities for the three months ended June 30, 2025, was a **negative $35 thousand**, an improvement linked to a decrease in period-end stock price - The change in fair market value of warrant liabilities for the three months ended June 30, 2025, was a **negative $35 thousand**, an improvement from **negative $52 thousand** in the prior year period, primarily due to a decrease in period-end stock price[144](index=144&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=37&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) For the six months ended June 30, 2025, net revenue decreased **27.8%** to **$34.8 million**, gross profit fell **33.5%**, and net loss remained flat at **$8.8 million** Operating Results Comparison (Thousand Dollars) | Metric (Thousand Dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | 34,822 | 48,199 | (13,377) | (27.8)% | | Cost of Goods Sold | 14,832 | 18,139 | (3,307) | (18.2)% | | Gross Profit | 19,990 | 30,060 | (10,070) | (33.5)% | | Operating Loss | (8,201) | (8,482) | 281 | 3.3% | | Net Loss | (8,756) | (8,791) | 35 | 0.4% | Operating Results as Percentage of Net Revenue | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Revenue Percentage | 100.0% | 100.0% | | Cost of Goods Sold Percentage | 42.6% | 37.6% | | Gross Profit Percentage | 57.4% | 62.4% | | Sales and Distribution Expenses Percentage | 63.3% | 58.9% | | General and Administrative Expenses Percentage | 17.7% | 21.1% | | Operating Loss Percentage | (23.6)% | (17.6)% | | Net Loss Percentage | (25.1)% | (18.2)% | [Net Revenue](index=38&type=section&id=Net%20Revenue) Net revenue for the six months ended June 30, 2025, decreased **27.8%** to **$34.9 million**, driven by a **$15.1 million** decline in direct net revenue due to program changes and tariffs - For the six months ended June 30, 2025, net revenue decreased **27.8%** to **$34.9 million** year-over-year[147](index=147&type=chunk) - Direct net revenue decreased by **$15.1 million (31.5%)**, linked to changes in Amazon's marketing affiliate program, price increases due to new tariffs, and weaker consumer demand in the macroeconomic environment[147](index=147&type=chunk) - Sales across all product categories, except kitchen appliances, decreased compared to the prior year period, mainly due to the macroeconomic environment and price increases from tariffs[148](index=148&type=chunk) [Cost of Goods Sold and Gross Profit](index=38&type=section&id=Cost%20of%20Goods%20Sold%20and%20Gross%20Profit) For the six months ended June 30, 2025, cost of goods sold decreased **18.2%** to **$14.8 million**, while gross profit margin declined to **57.4%** due to product mix and tariffs - For the six months ended June 30, 2025, cost of goods sold decreased **18.2%** to **$14.8 million** year-over-year, primarily due to lower sales volume[149](index=149&type=chunk) - Gross profit margin decreased from **62.4%** to **57.4%**, primarily due to product mix changes, increased sales costs from new tariffs, and price increases partially offsetting costs[150](index=150&type=chunk) [Sales and Distribution Expenses](index=38&type=section&id=Sales%20and%20Distribution%20Expenses) Sales and distribution expenses decreased **22.4%** to **$22.0 million** for the six months ended June 30, 2025, but increased as a percentage of net revenue to **63.1%** - For the six months ended June 30, 2025, sales and distribution expenses decreased **22.4%** to **$22.0 million** year-over-year, primarily due to lower variable sales and distribution expenses from reduced product volume[152](index=152&type=chunk) - Fixed sales and distribution costs (including stock-based compensation) decreased from **$6.0 million** to **$5.6 million**, primarily due to lower stock-based compensation, employee headcount expenses, and miscellaneous office expenses, partially offset by increased restructuring costs[153](index=153&type=chunk) - As a percentage of net revenue, sales and distribution expenses increased from **58.9%** to **63.1%**, primarily due to product mix and increased marketing costs[154](index=154&type=chunk) [General and Administrative Expenses](index=40&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses decreased **39.3%** for the six months ended June 30, 2025, primarily due to reduced stock-based compensation and headcount costs - For the six months ended June 30, 2025, general and administrative expenses decreased **39.3%** year-over-year[156](index=156&type=chunk) - This was primarily due to a **$2.8 million** decrease in stock-based compensation, a **$0.8 million** reduction in employee headcount expenses, and a **$0.8 million** decrease in miscellaneous costs, partially offset by a **$0.4 million** increase in restructuring costs[156](index=156&type=chunk) [Interest expense, net](index=40&type=section&id=Interest%20expense,%20net) Net interest expense for the six months ended June 30, 2025, decreased **28.1%** to **$397 thousand**, mainly due to lower average borrowings and reduced interest income - For the six months ended June 30, 2025, net interest expense decreased **28.1%** to **$397 thousand** year-over-year, primarily due to a **$0.2 million** decrease in interest expense from lower average borrowings and a **$0.1 million** decrease in interest income[157](index=157&type=chunk) [Change in fair market value of warrant liabilities](index=40&type=section&id=Change%20in%20fair%20market%20value%20of%20warrant%20liabilities) The change in fair market value of warrant liabilities for the six months ended June 30, 2025, was a **negative $90 thousand**, an improvement linked to a decrease in period-end stock price - The change in fair market value of warrant liabilities for the six months ended June 30, 2025, was a **negative $90 thousand**, an improvement from **negative $569 thousand** in the prior year period, primarily due to a decrease in period-end stock price[158](index=158&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash flow, liquidity, and going concern status, highlighting continuous losses, negative operating cash flow, and the impact of tariffs [Cash Flows for the Six Months Ended June 30, 2025 and 2024](index=41&type=section&id=Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) For the six months ended June 30, 2025, operating activities used **$8.3 million** cash, investing activities used **$6 thousand**, and financing activities provided **$0.4 million** Cash Flows (Thousand Dollars) | Cash Flow Category (Thousand Dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash (Used in) Provided by Operating Activities | (8,287) | 2,896 | | Net Cash Used in Investing Activities | (6) | (242) | | Net Cash Provided by (Used in) Financing Activities | 388 | (2,336) | | Effect of Exchange Rates on Cash | 448 | (29) | | **Net Change in Cash and Restricted Cash During Period** | **(7,457)** | **289** | [Net Cash (Used in) Provided by Operating Activities](index=41&type=section&id=Net%20Cash%20(Used%20in)%20Provided%20by%20Operating%20Activities) Net cash used in operating activities for the six months ended June 30, 2025, was **$8.3 million**, driven by net cash operating loss and working capital outflows for inventory - Net cash used in operating activities for the six months ended June 30, 2025, was **$8.3 million**, primarily due to a net cash operating loss of **$6.7 million** and working capital outflows of **$1.6 million**, linked to summer air quality product procurement and inventory accumulation to avoid high tariffs[161](index=161&type=chunk) - For the six months ended June 30, 2024, net cash provided by operating activities was **$2.9 million**, primarily due to working capital inflows of **$7.9 million**, related to seasonal air quality product payment timing[162](index=162&type=chunk) [Net Cash Used in Investing Activities](index=41&type=section&id=Net%20Cash%20Used%20in%20Investing%20Activities) Net cash used in investing activities for the six months ended June 30, 2025, was **$6 thousand**, primarily for property and equipment purchases - Net cash used in investing activities for the six months ended June 30, 2025, was **$6 thousand**, primarily for property and equipment purchases[163](index=163&type=chunk) - For the six months ended June 30, 2024, net cash used in investing activities was **$0.2 million**, primarily for minority equity investments[163](index=163&type=chunk) [Net Cash Provided by (Used in) Financing Activities](index=41&type=section&id=Net%20Cash%20Provided%20by%20(Used%20in)%20Financing%20Activities) Net cash provided by financing activities for the six months ended June 30, 2025, was **$0.4 million**, mainly from MidCap credit facility borrowings and insurance financing - Net cash provided by financing activities for the six months ended June 30, 2025, was **$0.4 million**, primarily from net borrowings on the MidCap Credit Facility and net proceeds from insurance financing, partially offset by seller note repayments[164](index=164&type=chunk) - For the six months ended June 30, 2024, net cash used in financing activities was **$2.3 million**, primarily for net repayments on the MidCap Credit Facility and payments for insurance obligations[165](index=165&type=chunk) [Liquidity and Going Concern](index=42&type=section&id=Liquidity%20and%20Going%20Concern) The company faces significant going concern doubts due to continuous losses, negative operating cash flow, accumulated deficit, and reliance on external capital, exacerbated by new tariffs - The company has incurred continuous losses since inception, with a net loss of **$8.8 million** for the six months ended June 30, 2025, operating cash outflow of **$8.3 million**, and an accumulated deficit of **$720.4 million**[169](index=169&type=chunk) - Changes in U.S. trade policy, particularly tariffs on Chinese imports, have significantly increased the company's cost of goods sold, pressuring profit margins[167](index=167&type=chunk) - The company announced a fixed cost reduction plan on May 14, 2025, including approximately **20 employee** layoffs, expected to save **$5 million to $6 million** annually[172](index=172&type=chunk)[173](index=173&type=chunk) - The company currently has no firm commitments for additional external capital, and if unable to generate cash from operations or obtain external capital, it may not meet its obligations over the next 12 months[171](index=171&type=chunk) - Despite progress in reducing operating losses and strengthening the balance sheet, uncertainties in business operations and forecasts raise **substantial doubt about the company's ability to continue as a going concern**[175](index=175&type=chunk) [MidCap Credit Facility](index=43&type=section&id=MidCap%20Credit%20Facility) The MidCap credit facility, amended in February 2024 to extend its term and reduce minimum liquidity covenants, had a balance of **$7.2 million** as of June 30, 2025, with the company in compliance - The company's credit facility with MidCap was amended on February 23, 2024, extending the term to **December 2026**[178](index=178&type=chunk) - The minimum liquidity financial covenant was reduced from **$15.0 million** to **$6.8 million**[178](index=178&type=chunk) - As of June 30, 2025, the MidCap Credit Facility had an outstanding balance of **$7.2 million**, and the company was in compliance with all financial covenants[180](index=180&type=chunk) [Share Repurchase](index=43&type=section&id=Share%20Repurchase) The board authorized a **$3.0 million** share repurchase program in March 2025, but it was temporarily suspended in May 2025, with no repurchases made as of August 12, 2025 - The board of directors authorized a share repurchase program on March 14, 2025, to repurchase up to **$3.0 million** of common stock[181](index=181&type=chunk) - The company temporarily suspended the share repurchase program on May 2, 2025[181](index=181&type=chunk) - As of August 12, 2025, the company had not made any share repurchases[181](index=181&type=chunk) [Trade Policy](index=43&type=section&id=Trade%20Policy) New U.S. tariffs on Chinese imports in Q1 2025 are expected to increase product costs and reduce consumer demand, with the company evaluating mitigation strategies - In Q1 2025, the U.S. government announced a series of new tariff policies, particularly targeting Chinese imports[182](index=182&type=chunk) - These tariffs could significantly increase the company's import costs and potentially lead to higher prices, thereby reducing consumer demand[183](index=183&type=chunk) - The company is evaluating mitigation strategies, including exploring alternative sourcing, working with suppliers to manage cost increases, and implementing price increases[183](index=183&type=chunk) [Non-GAAP Financial Measures](index=45&type=section&id=Non-GAAP%20Financial%20Measures) This section presents non-GAAP financial measures like Contribution Margin and Adjusted EBITDA to help investors understand core operating performance, not as GAAP substitutes - The company uses non-GAAP measures such as Contribution Margin, Contribution Margin as a percentage of net revenue, EBITDA, and Adjusted EBITDA to assess core operating performance[185](index=185&type=chunk) - Contribution Margin is defined as gross profit less e-commerce platform commissions, online advertising, sales, and fulfillment expenses[186](index=186&type=chunk) - Adjusted EBITDA is defined as EBITDA adjusted for stock-based compensation expense, change in fair market value of warrant liabilities, restructuring charges, and other net expenses[186](index=186&type=chunk) - These non-GAAP measures should not be considered as substitutes for operating loss or net loss under GAAP and may not be comparable to similarly titled measures used by other companies[190](index=190&type=chunk) [Contribution Margin](index=47&type=section&id=Contribution%20Margin) Contribution Margin for the three months ended June 30, 2025, significantly decreased to **$1.518 million** (**7.8%**), and for six months, it also declined to **$3.569 million** (**10.2%**) Contribution Margin (Thousand Dollars) | Metric (Thousand Dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Gross Profit | 10,566 | 16,891 | 19,990 | 30,060 | | Less: E-commerce Platform Commissions, Online Advertising, Sales, and Fulfillment Expenses | (9,048) | (12,024) | (16,421) | (22,345) | | **Contribution Margin** | **1,518** | **4,867** | **3,569** | **7,715** | | Gross Profit as a Percentage of Net Revenue | 54.3% | 60.4% | 57.4% | 62.4% | | **Contribution Margin as a Percentage of Net Revenue** | **7.8%** | **17.4%** | **10.2%** | **16.0%** | [Adjusted EBITDA](index=47&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA for the three months ended June 30, 2025, worsened to **negative $2.184 million**, and for six months, to **negative $4.689 million**, with negative percentages of net revenue Adjusted EBITDA (Thousand Dollars) | Metric (Thousand Dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Loss | (4,860) | (3,629) | (8,756) | (8,791) | | EBITDA | (4,223) | (2,766) | (7,516) | (7,105) | | Other Net Expenses | 157 | 43 | 217 | 50 | | Change in Fair Market Value of Warrant Liabilities | (35) | (52) | (90) | (569) | | Restructuring Charges | 1,795 | 17 | 1,795 | 575 | | Stock-Based Compensation Expense | 122 | 2,921 | 905 | 4,588 | | **Adjusted EBITDA** | **(2,184)** | **163** | **(4,689)** | **(2,461)** | | Net Loss as a Percentage of Net Revenue | (25.0)% | (13.0)% | (25.1)% | (18.2)% | | **Adjusted EBITDA as a Percentage of Net Revenue** | **(11.2)%** | **0.6%** | **(13.5)%** | **(5.1)%** | [Critical Accounting Policies and Use of Estimates](index=48&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) This section reiterates critical accounting policies and estimates, including revenue recognition and intangible asset impairment, with no significant changes since December 31, 2024 [Intangible asset valuation](index=48&type=section&id=Intangible%20asset%20valuation) The company reviews long-lived assets for impairment when events indicate carrying value may not be recoverable, performing recoverability tests due to new tariffs without recognizing impairment - The company reviews long-lived assets for impairment when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable[197](index=197&type=chunk) - As of June 30, 2025, due to concerns about revenue and profitability from new tariffs, the company performed a recoverability test but did not recognize an impairment loss[198](index=198&type=chunk) - Intangible asset valuation involves judgments and estimates regarding market growth rates, sales price and volume growth, foreign exchange rate fluctuations, raw material prices and availability, and future operating efficiencies[201](index=201&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This section states that quantitative and qualitative disclosures about market risk are not applicable to the company's business - This section is not applicable for quantitative and qualitative disclosures about market risk[203](index=203&type=chunk) [Item 4. Controls and Procedures.](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures.) This section discusses the effectiveness of disclosure controls and procedures and changes in internal control over financial reporting, which management deemed effective with no material changes [Evaluation of Disclosure Controls and Procedures](index=49&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management, with CEO and CFO involvement, assessed the effectiveness of disclosure controls and procedures as of June 30, 2025, concluding they were effective - The company's management assessed the effectiveness of its disclosure controls and procedures as of June 30, 2025, concluding they were effective[205](index=205&type=chunk) [Changes in Internal Control over Financial Reporting](index=49&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) There were no material changes in the company's internal control over financial reporting during the six months ended June 30, 2025 - There were no material changes in the company's internal control over financial reporting during the six months ended June 30, 2025[206](index=206&type=chunk) [Limitations on Effectiveness of Controls and Procedures](index=49&type=section&id=Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) Management acknowledges that controls provide only reasonable assurance of achieving objectives, requiring judgment in evaluating benefits versus costs - Any control and procedure, no matter how well designed and operated, can only provide reasonable assurance of achieving its control objectives[207](index=207&type=chunk) - Management must exercise judgment in evaluating the benefits of controls against their costs[207](index=207&type=chunk) [PART II—OTHER INFORMATION](index=50&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) [Item 1. Legal Proceedings.](index=50&type=section&id=Item%201.%20Legal%20Proceedings.) The company is involved in various legal proceedings and claims, but believes their ultimate outcome will not materially adversely affect its financial position or operating results - The company is subject to various legal proceedings and claims from time to time, but believes the ultimate outcome will not materially adversely affect its financial position or operating results[209](index=209&type=chunk) - The company maintains adequate insurance coverage to further mitigate risks[209](index=209&type=chunk) [Item 1A. Risk Factors.](index=50&type=section&id=Item%201A.%20Risk%20Factors.) This section details various risks, including business operations (e.g., continuous losses, going concern doubts, growth strategy challenges), litigation, government regulation, and common stock ownership risks [Risks Relating to Our Business](index=50&type=section&id=Risks%20Relating%20to%20Our%20Business) The company faces risks from continuous losses, negative operating cash flow, and going concern doubts, alongside challenges in growth strategies and retaining key personnel - The company has a history of losses and may not achieve or maintain profitability or positive cash flow, with its independent registered public accounting firm raising **substantial doubt about its ability to continue as a going concern**[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - The company's growth strategies, including new product, market, and geographic expansion

[PART I FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial information of Verde Clean Fuels, Inc. for the reported periods [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Verde Clean Fuels, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, statements of stockholders' equity, and statements of cash flows, along with comprehensive notes detailing accounting policies, related party transactions, commitments, contingencies, and other financial disclosures for the periods ended June 30, 2025, and December 31, 2024 [CONDENSED CONSOLIDATED BALANCE SHEETS](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time **Condensed Consolidated Balance Sheets (Unaudited):** | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :---------------- | :------------------ | | Cash and cash equivalents | $62,054,765 | $19,044,067 | | Total current assets | $63,973,280 | $20,174,410 | | Total assets | $68,726,638 | $23,572,306 | | Total current liabilities | $2,933,046 | $2,810,585 | | Total liabilities | $2,978,788 | $2,888,830 | | Total stockholders' equity | $65,747,850 | $20,683,476 | - Cash and cash equivalents significantly increased by approximately **$43 million** from December 31, 2024, to June 30, 2025, primarily due to the PIPE Investment[12](index=12&type=chunk) - Total assets more than doubled, from **$23.6 million to $68.7 million**, driven by the increase in cash and cash equivalents[12](index=12&type=chunk) [CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section outlines the company's financial performance over specific periods, detailing revenues, expenses, and net loss **Condensed Consolidated Statements of Operations (Unaudited):** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative expenses | $3,094,320 | $2,988,774 | $6,091,842 | $5,778,150 | | Research and development expenses | $145,242 | $173,020 | $328,548 | $258,855 | | Total operating loss | $3,239,562 | $3,161,794 | $6,420,390 | $6,037,005 | | Other (income) | $(665,363) | $(316,208) | $(1,195,606) | $(662,336) | | Net loss | $(2,545,999) | $(2,831,720) | $(5,249,584) | $(5,360,803) | | Net loss attributable to Verde Clean Fuels, Inc. | $(1,260,130) | $(903,707) | $(2,506,841) | $(1,676,078) | | Loss per share of Class A common stock | $(0.07) | $(0.14) | $(0.15) | $(0.27) | - Net loss attributable to Verde Clean Fuels, Inc. increased by **39.4%** for the three months ended June 30, 2025, compared to the same period in 2024, from **$(903,707) to $(1,260,130)**[14](index=14&type=chunk) - Loss per share of Class A common stock improved from **$(0.14) to $(0.07)** for the three months ended June 30, 2025, despite a higher net loss, due to a significant increase in weighted average shares outstanding[14](index=14&type=chunk) [CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS%27%20EQUITY) This section details changes in the company's equity accounts, including common stock, additional paid-in capital, and noncontrolling interest **Key Changes in Stockholders' Equity (Six Months Ended June 30, 2025 vs. December 31, 2024):** | Metric | December 31, 2024 | June 30, 2025 | Change | | :-------------------------------- | :---------------- | :---------------- | :----- | | Class A Common Stock Shares | 9,549,621 | 22,049,621 | +12,500,000 | | Additional Paid In Capital | $37,502,903 | $62,797,055 | +$25,294,152 | | Noncontrolling Interest | $10,434,454 | $32,710,267 | +$22,275,813 | | Total Stockholders' Equity | $20,683,476 | $65,747,850 | +$45,064,374 | - The issuance of **12,500,000 Class A common stock shares** to Cottonmouth for **$50,000,000** significantly increased additional paid-in capital and total stockholders' equity during the six months ended June 30, 2025[19](index=19&type=chunk) - Noncontrolling interest increased substantially, reflecting a rebalancing of ownership percentage due to the issuance of Class A shares[19](index=19&type=chunk) [CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section presents the cash inflows and outflows from operating, investing, and financing activities over specific periods **Condensed Consolidated Statements of Cash Flows (Unaudited):** | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(5,883,483) | $(5,016,976) | | Net cash used in investing activities | $(551,927) | $(552,300) | | Net cash provided by financing activities | $49,446,108 | $- | | Net change in cash, cash equivalents and restricted cash | $43,010,698 | $(5,569,276) | | Cash, cash equivalents and restricted cash, end of period | $62,154,765 | $23,309,901 | - Net cash provided by financing activities was **$49.4 million** for the six months ended June 30, 2025, primarily from the issuance of Class A common stock to Cottonmouth, compared to **$0** in the prior year period[23](index=23&type=chunk) - The company experienced a significant positive net change in cash, cash equivalents, and restricted cash of **$43 million** for the six months ended June 30, 2025, a substantial improvement from a net decrease of **$5.6 million** in the same period of 2024[23](index=23&type=chunk) [NOTE 1 – THE COMPANY](index=10&type=section&id=NOTE%201%20%E2%80%93%20THE%20COMPANY) This note provides an overview of Verde Clean Fuels, Inc., its business focus, stock listings, and significant corporate events - Verde Clean Fuels, Inc. is a clean fuels company focused on deploying its proprietary syngas-to-gasoline plus (STG+®) process to convert diverse feedstocks into finished liquid fuels, with a current focus on converting associated natural gas into lower carbon intensity gasoline[24](index=24&type=chunk) - The company's Class A common stock and warrants are listed on Nasdaq under symbols 'VGAS' and 'VGASW', respectively, with primary stockholders being Bluescape Clean Fuels Holdings, LLC and Cottonmouth Ventures, LLC[25](index=25&type=chunk) - The company consummated a business combination on February 15, 2023, with CENAQ Energy Corp., which was subsequently renamed Verde Clean Fuels, Inc., adopting an umbrella partnership C corporation structure[26](index=26&type=chunk)[27](index=27&type=chunk) [NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=NOTE%202%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note details the critical accounting policies and estimates used in preparing the financial statements, highlighting the company's development stage and associated risks - The company is in the development stage, has not yet commenced principal operations or generated revenue, and faces risks including permits, regulatory approvals, commodity price fluctuations, and financing availability[30](index=30&type=chunk)[31](index=31&type=chunk) - Significant estimates in financial statements include fair values of equity instruments, impairment of intangible and long-lived assets, and income taxes, which may change as more current information becomes available[32](index=32&type=chunk)[33](index=33&type=chunk) - The company accounts for warrants as either equity-classified or liability-classified based on specific terms and applicable authoritative guidance, with equity-classified warrants recorded in additional paid-in capital and liability-classified warrants remeasured at fair value each period[49](index=49&type=chunk)[50](index=50&type=chunk) [NOTE 3 – RELATIONSHIP WITH COTTONMOUTH AND PERMIAN BASIN PROJECT](index=18&type=section&id=NOTE%203%20%E2%80%93%20RELATIONSHIP%20WITH%20COTTONMOUTH%20AND%20PERMIAN%20BASIN%20PROJECT) This note describes the strategic partnership with Cottonmouth Ventures, LLC, and their joint development of the Permian Basin Project - Cottonmouth Ventures, LLC, a subsidiary of Diamondback Energy, Inc., is Verde's second largest shareholder and is jointly developing the Permian Basin Project to convert associated natural gas into gasoline using Verde's STG+® technology[82](index=82&type=chunk)[84](index=84&type=chunk) - In January 2025, Cottonmouth made a second investment of **$50 million** by purchasing **12,500,000 shares of Class A common stock** at **$4.00 per share**, increasing its ownership and leading to changes in the company's charter and board composition[86](index=86&type=chunk)[89](index=89&type=chunk) - Under the Joint Development Agreement (JDA), Cottonmouth reimburses Verde for **65%** of approved development costs, including Front-End Engineering and Design (FEED) study costs for the Permian Basin Project[85](index=85&type=chunk) [NOTE 4 – PROPERTY, PLANT, AND EQUIPMENT](index=19&type=section&id=NOTE%204%20%E2%80%93%20PROPERTY%2C%20PLANT%2C%20AND%20EQUIPMENT) This note details the company's property, plant, and equipment, including capitalized construction in progress and FEED costs for the Permian Basin Project **Property, Plant, and Equipment, Net:** | Asset Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :---------------- | :------------------ | | Construction in progress | $2,245,700 | $1,028,900 | | Property, plant and equipment, net | $2,315,784 | $1,096,270 | - Construction in progress assets more than doubled from **$1,028,900** at December 31, 2024, to **$2,245,700** at June 30, 2025, reflecting ongoing capitalized FEED costs for the Permian Basin Project[90](index=90&type=chunk) - As of June 30, 2025, capitalized FEED costs for the Permian Basin Project totaled **$6,414,100**, with **$4,168,400** reimbursed by Cottonmouth[90](index=90&type=chunk) [NOTE 5 - ACCRUED LIABILITIES](index=19&type=section&id=NOTE%205%20-%20ACCRUED%20LIABILITIES) This note provides a breakdown of the company's accrued liabilities, including compensation, legal fees, and excise tax **Accrued Liabilities:** | Accrued Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :---------------- | :------------------ | | Accrued compensation | $467,856 | $331,398 | | Accrued legal fees | $253,800 | $467,645 | | Accrued excise tax liability | $- | $978,412 | | Total accrued liabilities | $751,223 | $1,907,165 | - Total accrued liabilities decreased significantly from **$1,907,165** at December 31, 2024, to **$751,223** at June 30, 2025, primarily due to the payment of the accrued excise tax liability[91](index=91&type=chunk)[93](index=93&type=chunk) - The accrued excise tax liability of **$978,412** as of December 31, 2024, was paid in full during the six months ended June 30, 2025[92](index=92&type=chunk)[93](index=93&type=chunk) [NOTE 6 – RELATED PARTY TRANSACTIONS](index=21&type=section&id=NOTE%206%20%E2%80%93%20RELATED%20PARTY%20TRANSACTIONS) This note discloses transactions and relationships with related parties, including Holdings, Cottonmouth, and Chemex Global, LLC - Holdings maintains a majority ownership and control of the Board of Directors, with certain management holding Series A and Founder Incentive Units entitling them to participate in Holdings' earnings and distributions[94](index=94&type=chunk) - Cottonmouth is a related party due to its ownership interest in the Company's Class A common stock and its involvement in the Permian Basin Project[95](index=95&type=chunk) - The Company entered into a contract with Chemex Global, LLC for the Permian Basin Project's FEED study, with Chemex being a related party due to an unrelated preferred equity investment by Holdings' parent in Shaw Group (Chemex's parent) and a shared director[96](index=96&type=chunk) [NOTE 7 – COMMITMENTS AND CONTINGENCIES](index=21&type=section&id=NOTE%207%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's contractual commitments, including operating leases, and any contingent liabilities **Operating Lease Costs:** | Lease Cost Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $94,313 | $84,104 | $188,626 | $163,909 | | Variable lease cost | $45,558 | $34,599 | $93,732 | $73,460 | | Total operating lease cost | $139,871 | $118,703 | $282,358 | $237,369 | - Total operating lease costs increased by **17.8%** for the three months ended June 30, 2025, and by **18.9%** for the six months ended June 30, 2025, compared to the respective prior year periods[100](index=100&type=chunk) - The company maintains a restricted cash balance of **$100,000** as of June 30, 2025, and December 31, 2024, to support a letter of credit[101](index=101&type=chunk) [NOTE 8 – STOCKHOLDERS' EQUITY](index=22&type=section&id=NOTE%208%20%E2%80%93%20STOCKHOLDERS%27%20EQUITY) This note details the components of stockholders' equity, including earn-out shares, stock options, and share-based compensation - Earn out shares for Holdings (**3,500,000 Class C common stock**) and Sponsor (**3,234,375 Class A common stock**) are subject to vesting based on Class A common stock VWAP reaching **$15.00 and $18.00** within five years of the Business Combination[104](index=104&type=chunk)[105](index=105&type=chunk) **Share-based Compensation Expense:** | Period | 2025 | 2024 | | :-------------------------------- | :--------- | :--------- | | Three Months Ended June 30 | $494,959 | $262,627 | | Six Months Ended June 30 | $911,509 | $511,328 | - The company awarded **2,726,306 additional stock options** in 2025 with an exercise price of **$4.76 per share**, increasing total outstanding options to **5,950,499** as of June 30, 2025[110](index=110&type=chunk)[111](index=111&type=chunk) [NOTE 9 – WARRANTS](index=24&type=section&id=NOTE%209%20%E2%80%93%20WARRANTS) This note describes the outstanding warrants, their exercise terms, and conditions for redemption - As of June 30, 2025, there were **15,383,263 warrants** outstanding, each entitling the holder to purchase one share of Class A common stock at **$11.50 per share**, expiring on February 15, 2028[121](index=121&type=chunk)[122](index=122&type=chunk) - Warrants are exercisable for cash only if an effective registration statement and current prospectus are available; otherwise, they may be exercised on a cashless basis under certain conditions[121](index=121&type=chunk) - The company may redeem warrants at **$0.01 per warrant** if the Class A common stock's reported last sale price equals or exceeds **$18.00** for 20 trading days within a 30-trading day period, and a current registration statement is in effect[123](index=123&type=chunk) [NOTE 10 – LOSS PER SHARE](index=25&type=section&id=NOTE%2010%20%E2%80%93%20LOSS%20PER%20SHARE) This note presents the calculation of basic and diluted loss per share for Class A common stock, explaining the impact of various equity instruments **Loss Per Share of Class A Common Stock:** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to Verde Clean Fuels, Inc. | $(1,260,130) | $(903,707) | $(2,506,841) | $(1,676,078) | | Basic weighted-average shares outstanding | 18,836,078 | 6,297,162 | 16,833,316 | 6,235,439 | | Basic loss per share | $(0.07) | $(0.14) | $(0.15) | $(0.27) | | Diluted loss per share | $(0.07) | $(0.14) | $(0.15) | $(0.27) | - Basic and diluted loss per share for Class A common stock improved from **$(0.14) to $(0.07)** for the three months ended June 30, 2025, and from **$(0.27) to $(0.15)** for the six months ended June 30, 2025, primarily due to a significant increase in weighted-average shares outstanding[126](index=126&type=chunk) - Warrants, Sponsor earn out shares, and stock options were excluded from diluted EPS calculations as their inclusion would be anti-dilutive due to the net loss or exercise price exceeding the average stock price[126](index=126&type=chunk) [NOTE 11 – INCOME TAX](index=26&type=section&id=NOTE%2011%20%E2%80%93%20INCOME%20TAX) This note details the company's income tax position, including effective tax rates and the valuation allowance against deferred tax assets **Effective Tax Rates:** | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30 | 1.1% | 0.5% | | Six Months Ended June 30 | (0.5)% | 0.3% | - The company's effective tax rate for the six months ended June 30, 2025, was **(0.5)%**, compared to **0.3%** in the prior year, differing significantly from the statutory rate due to losses allocated to noncontrolling interest and a full valuation allowance against deferred tax assets[132](index=132&type=chunk)[133](index=133&type=chunk) - The company maintains a full valuation allowance against its deferred tax assets as of June 30, 2025, due to uncertainty regarding their realization[133](index=133&type=chunk) [NOTE 12 - SEGMENT INFORMATION](index=27&type=section&id=NOTE%2012%20-%20SEGMENT%20INFORMATION) This note clarifies that the company operates as a single segment and provides a breakdown of significant expenses - The company operates in one operating segment, as its CEO (Chief Operating Decision Maker) reviews financial information on a combined basis for decision-making[139](index=139&type=chunk) **Significant Segment Expenses:** | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Outside services | $1,041,772 | $1,468,002 | $2,289,389 | $2,942,826 | | Employee compensation-related | $984,279 | $704,948 | $1,742,494 | $1,205,216 | | Share-based compensation | $494,959 | $262,627 | $911,509 | $511,327 | | Total operating loss | $3,239,562 | $3,161,794 | $6,420,390 | $6,037,005 | - Employee compensation-related expenses increased significantly by **39.6%** for the three months and **44.6%** for the six months ended June 30, 2025, compared to the prior year periods, while outside services decreased[140](index=140&type=chunk) [NOTE 13 – SUBSEQUENT EVENTS](index=27&type=section&id=NOTE%2013%20%E2%80%93%20SUBSEQUENT%20EVENTS) This note discloses significant events occurring after the reporting period, including new legislative acts - On July 4, 2025, the 'One Big, Beautiful Bill Act' (OBBBA) was signed into federal law, introducing provisions for bonus depreciation, immediate expensing of research expenditures, and updates to disallowed interest calculations, which the company is currently evaluating for potential impact[141](index=141&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=28&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on Verde Clean Fuels, Inc.'s financial condition and results of operations for the periods ended June 30, 2025, and June 30, 2024. It covers the company's business overview, recent developments, key factors influencing future results, components of operations, detailed financial comparisons, liquidity, and capital resources [Overview](index=29&type=section&id=Overview) This section provides a high-level summary of Verde Clean Fuels' business model and current operational status - Verde Clean Fuels is a clean fuels company focused on deploying its proprietary STG+® technology to convert syngas from diverse feedstocks into finished liquid fuels, specifically targeting associated natural gas to produce lower carbon intensity gasoline[145](index=145&type=chunk) - As of June 30, 2025, the company is still developing its first commercial production facility and has not yet generated revenue from its principal business activities, operating as a single reportable segment[146](index=146&type=chunk) [Development](index=29&type=section&id=Development) This section outlines the historical development and investment in the company's core STG+® technology - The company acquired its STG+® technology from Primus Green Energy in 2020, which had invested over **$110 million** in its development, including a demonstration plant that operated for over **10,500 hours**[147](index=147&type=chunk)[148](index=148&type=chunk) [Recent Developments](index=30&type=section&id=Recent%20Developments) This section highlights significant corporate and financial events that have occurred recently - In January 2025, Verde Clean Fuels completed a **$50 million PIPE Investment** with Cottonmouth Ventures, LLC, issuing **12,500,000 shares of Class A common stock** at **$4.00 per share**[149](index=149&type=chunk) - Following the PIPE Investment, the company amended its charter to increase authorized Class C common stock and expand its Board of Directors from seven to eight, granting Cottonmouth certain director designation and board observer rights[151](index=151&type=chunk) [Key Factors and Trends Influencing our Prospects and Future Results](index=30&type=section&id=Key%20Factors%20and%20Trends%20Influencing%20our%20Prospects%20and%20Future%20Results) This section discusses the primary drivers and challenges that are expected to shape the company's future financial performance and operational success - A critical factor for future success is the successful construction and operation of the first commercial production plant utilizing the patented STG+® technology[153](index=153&type=chunk) - The Permian Basin Project, a joint development with Cottonmouth, aims to convert associated natural gas from Diamondback's operations into gasoline, mitigating flaring and producing a high-margin product[154](index=154&type=chunk)[155](index=155&type=chunk) - The company is advancing development activities for the Permian Basin Project, including a FEED study, and expects commercial operations within **18-24 months** after achieving Final Investment Decision (FID)[157](index=157&type=chunk)[158](index=158&type=chunk) [Key Components of Results of Operations](index=31&type=section&id=Key%20Components%20of%20Results%20of%20Operations) This section breaks down the main categories of revenues and expenses that constitute the company's financial results - The company is an early-stage entity with no current revenues, expecting future revenue primarily from distributions and operator fees from the proposed Permian Basin Project[161](index=161&type=chunk)[162](index=162&type=chunk) - General and administrative expenses include compensation, business development, legal, accounting, and insurance costs, with an expectation of higher public company compliance costs post-Business Combination[163](index=163&type=chunk) - Research and development expenses cover non-capitalized technology activities, including labor, engineering software, and demonstration plant operations and maintenance[164](index=164&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section provides a detailed comparison and analysis of the company's financial performance for the reported periods **Operating Expenses and Other Income (Three Months Ended June 30):** | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--------- | :--------- | :--------- | :--------- | | General and administrative expenses | $3,094,320 | $2,988,774 | $105,546 | 3.5% | | Research and development expenses | $145,242 | $173,020 | $(27,778) | -16.1% | | Other (income) | $(665,363) | $(316,208) | $(349,155) | 110.4% | | Net loss | $(2,545,999) | $(2,831,720) | $285,721 | -10.1% | **Operating Expenses and Other Income (Six Months Ended June 30):** | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :--------- | :--------- | :--------- | :--------- | | General and administrative expenses | $6,091,842 | $5,778,150 | $313,692 | 5.4% | | Research and development expenses | $328,548 | $258,855 | $69,693 | 26.9% | | Other (income) | $(1,195,606) | $(662,336) | $(533,270) | 80.5% | | Net loss | $(5,249,584) | $(5,360,803) | $111,219 | -2.1% | - Other income significantly increased by **110%** for the three months and **81%** for the six months ended June 30, 2025, primarily due to higher interest and dividend income from increased cash and cash equivalents following the PIPE Investment[172](index=172&type=chunk)[177](index=177&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations and its sources of funding - As of June 30, 2025, the company had **$62.1 million** in cash and cash equivalents, expected to fund operations and development for the next **12 months**[180](index=180&type=chunk) - Additional capital will be required to complete the first commercial production plant, likely through equity, debt, or joint ventures, with uncertainty regarding availability and favorable terms[181](index=181&type=chunk)[182](index=182&type=chunk) **Summary Statement of Cash Flows (Six Months Ended June 30):** | Cash Flow Activity | 2025 | 2024 | | :--------------------------------------- | :---------------- | :---------------- | | Net cash used in operating activities | $(5,883,483) | $(5,016,976) | | Net cash used in investing activities | $(551,927) | $(552,300) | | Net cash provided by financing activities | $49,446,108 | $- | | Net change in cash, cash equivalents and restricted cash | $43,010,698 | $(5,569,276) | [Commitments and Contractual Obligations](index=35&type=section&id=Commitments%20and%20Contractual%20Obligations) This section details the company's binding agreements and financial obligations that require future payments - The company maintained a restricted cash balance of **$100,000** as of June 30, 2025, and December 31, 2024, to support a letter of credit[187](index=187&type=chunk) [Off-Balance Sheet Arrangements](index=35&type=section&id=Off-Balance%20Sheet%20Arrangements) This section discloses any financial arrangements that are not recorded on the company's balance sheet but could impact its financial condition - As of June 30, 2025, Verde Clean Fuels has not engaged in any off-balance sheet arrangements[188](index=188&type=chunk) [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section outlines the accounting policies and judgments that are most important to the portrayal of the company's financial condition and results - The preparation of financial statements requires management to make significant estimates and assumptions, particularly regarding fair values of equity instruments, impairment of assets, and income taxes, which could differ from actual results[189](index=189&type=chunk) [Recent Accounting Pronouncements](index=35&type=section&id=Recent%20Accounting%20Pronouncements) This section discusses new accounting standards and their potential impact on the company's financial reporting - The company is evaluating the impact of ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation Disclosures), effective for fiscal years beginning after December 15, 2024, and December 15, 2026, respectively[77](index=77&type=chunk)[80](index=80&type=chunk)[191](index=191&type=chunk) - The SEC's climate-related disclosure mandate (Release No. 33-11275) is currently under an administrative stay, and its future effectiveness is uncertain, with the company monitoring its status[78](index=78&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=35&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, Verde Clean Fuels, Inc. is not required to provide quantitative and qualitative disclosures about market risk - Verde Clean Fuels, Inc. is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company[192](index=192&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=35&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025. No material changes in internal control over financial reporting were identified during the period - The company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[193](index=193&type=chunk) - No material changes in internal control over financial reporting occurred during the period covered by the report[194](index=194&type=chunk) [PART II OTHER INFORMATION](index=36&type=section&id=PART%20II%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=36&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Verde Clean Fuels, Inc. is not currently a party to any material pending legal proceedings and has not recognized any provisions for legal proceedings as of June 30, 2025 - The company is not a party to any material pending legal proceedings as of June 30, 2025[196](index=196&type=chunk) - No provisions for legal proceedings were recognized as of June 30, 2025[196](index=196&type=chunk) [ITEM 1A. RISK FACTORS](index=36&type=section&id=ITEM%201A.%20RISK%20FACTORS) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the period ended December 31, 2024, have occurred[197](index=197&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=36&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This item is not applicable to the company for the reporting period [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=36&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) There have been no defaults upon senior securities during the reporting period [ITEM 4. MINE SAFETY DISCLOSURES](index=36&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company for the reporting period [ITEM 5. OTHER INFORMATION](index=36&type=section&id=ITEM%205.%20OTHER%20INFORMATION) There is no other information to report under this item [ITEM 6. EXHIBITS](index=36&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed as part of the Form 10-Q, including organizational documents, certifications, and XBRL-related documents - Exhibits include the Fifth Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, and certifications from the Principal Executive Officer and Principal Financial Officer[203](index=203&type=chunk) - The report also includes Inline XBRL Instance Document and related taxonomy extension documents[203](index=203&type=chunk) [SIGNATURES](index=38&type=section&id=SIGNATURES) The report is duly signed on behalf of Verde Clean Fuels, Inc. by its Chief Executive Officer, Ernest Miller, and Chief Financial Officer, George Burdette, on August 13, 2025 - The report was signed by Ernest Miller, Chief Executive Officer, and George Burdette, Chief Financial Officer, on August 13, 2025[207](index=207&type=chunk)

Press Release Overview [Introduction](index=1&type=section&id=Introduction) The Oncology Institute, Inc, (TOI) announced its Q2 2025 financial results and reaffirmed its full-year 2025 guidance - The Oncology Institute, Inc, (NASDAQ: TOI) reported financial results for the three months ended June 30, 2025[1](index=1&type=chunk) - TOI is one of the largest value-based community oncology groups in the United States[1](index=1&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) The CEO highlighted strong Q2 revenue growth driven by the pharmacy business and new capitated lives, reinforcing confidence in 2025 guidance - Achieved over **20% year-over-year revenue growth** in Q2 2025[2](index=2&type=chunk) - Pharmacy business grew over **40% year-over-year**, and over **50,000 new capitated lives** were added to the value-based business[2](index=2&type=chunk) - Expanding partnerships in Florida and Nevada are expected to significantly increase covered lives[2](index=2&type=chunk)[5](index=5&type=chunk) - Confidence in achieving revenue at the **high end of 2025 guidance** and **Adjusted EBITDA positivity** by year-end 2025[2](index=2&type=chunk) Highlights [Recent Operational Highlights](index=1&type=section&id=Recent%20Operational%20Highlights) Q2 operational achievements included fee-for-service revenue growth, record pharmacy performance, expanded capitated partnerships, and key executive appointments - Fee-for-service revenue grew **10%** over Q2 2024, driven by momentum in new markets[5](index=5&type=chunk) - Retail Pharmacy and Dispensary set fill records, contributing **$62.6 million in revenue** and over **$11 million in gross profit** in Q2 2025[5](index=5&type=chunk) - Planned expansion of existing fully delegated capitated partnership with Elevance into two new counties in Central Florida, potentially doubling covered lives[5](index=5&type=chunk) - Welcomed Dr, Jeff Langsam as Chief Clinical Officer and Kristin England as Chief Administrative Officer[5](index=5&type=chunk) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) TOI reported a 21.5% increase in Q2 2025 consolidated revenue, a 34.4% rise in gross profit, and a 53.1% improvement in Adjusted EBITDA loss **Q2 2025 Financial Highlights (YoY Comparison):** | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :-------------------------- | :------------------ | :------------------ | :--------- | | Consolidated Revenue | $119.8 | $98.6 | 21.5% | | Gross Profit | $17.5 | $13.0 (calculated from Statement of Operations) | 34.4% | | Net Loss | $(17.0) | $(15.5) | 9.7% | | Basic & Diluted EPS | $(0.15) | $(0.17) | 11.8% (improvement) | | Adjusted EBITDA | $(4.1) | $(8.7) | 53.1% (improvement) | | Cash & Cash Equivalents (as of June 30, 2025) | $30.3 | N/A | N/A | Financial Outlook and Guidance [Fiscal Year 2025 Guidance](index=1&type=section&id=Fiscal%20Year%202025%20Guidance) The company reaffirmed its full-year 2025 guidance for revenue, gross profit, Adjusted EBITDA, and Free Cash Flow, expecting to reach the high end of the revenue range **Full Year 2025 Guidance:** | Metric | Range | | :---------------- | :------------------- | | Revenue | $460 to $480 million | | Gross Profit | $73 to $82 million | | Adjusted EBITDA | $(8) to $(17) million | | Free Cash Flow | $(12) to $(21) million | - The Company believes it can reach the **higher-end of the revenue guidance range** for 2025 due to strong revenue growth in the first half of the year[6](index=6&type=chunk) [Q3 2025 Outlook](index=2&type=section&id=Q3%202025%20Outlook) TOI anticipates a Q3 2025 Adjusted EBITDA loss between $(2.5) million and $(3.5) million **Q3 2025 Adjusted EBITDA Outlook:** | Metric | Range | | :-------------- | :-------------------------- | | Adjusted EBITDA | $(2.5) to $(3.5) million | Company Information [About The Oncology Institute, Inc.](index=3&type=section&id=About%20The%20Oncology%20Institute%2C%20Inc.) TOI is a leading provider of value-based cancer care in community settings, operating over 100 clinics and serving approximately 1.9 million patients - Founded in 2007, TOI provides highly specialized, value-based cancer care in community settings[10](index=10&type=chunk) - Serves approximately **1.9 million patients** with cutting-edge, evidence-based care, including clinical trials and transfusions[10](index=10&type=chunk) - Operates over **100 clinics** and affiliate locations across five states with over 180 employed and affiliate clinicians[10](index=10&type=chunk) [Webcast and Conference Call](index=3&type=section&id=Webcast%20and%20Conference%20Call) The company hosted a conference call and webcast on August 13, 2025, to discuss its Q2 results, with replay details available - Conference call held on Wednesday, August 13, 2025, at 5:00 p,m, (Eastern Time) to discuss second quarter results and management's outlook[7](index=7&type=chunk) - Access details for the live call, replay (available until August 20, 2025), and webcast via the Investor Relations section of TOI's website[8](index=8&type=chunk)[9](index=9&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements subject to risks and uncertainties, and the company disclaims any obligation to update them - Press release contains forward-looking statements, which are not historical facts and are subject to risks and uncertainties[11](index=11&type=chunk) - Actual events and circumstances may differ materially from assumptions, and TOI does not undertake any obligation to update these statements[11](index=11&type=chunk) Non-GAAP Financial Measures [Explanation of Non-GAAP Measures](index=4&type=section&id=Explanation%20of%20Non-GAAP%20Measures) TOI uses Adjusted EBITDA and Free Cash Flow as supplementary non-GAAP measures to evaluate performance and facilitate peer comparisons - TOI uses **Adjusted EBITDA** and **Free Cash Flow** as non-GAAP metrics to assess operational and financial performance, plan future periods, and compare with similar companies[4](index=4&type=chunk)[12](index=12&type=chunk)[14](index=14&type=chunk) - **Free Cash Flow** is defined as net cash flow provided by (used in) operations plus cash paid for interest, less capital expenditures, useful for understanding cash available for strategic initiatives[13](index=13&type=chunk) - **Adjusted EBITDA** is defined as net (loss) income plus depreciation, amortization, interest, taxes, non-cash items, share-based compensation, goodwill impairment charges, change in fair value of liabilities, unrealized gains or losses on investments, and other specific adjustments[15](index=15&type=chunk) [Free Cash Flow Reconciliation](index=5&type=section&id=Free%20Cash%20Flow%20Reconciliation) Free Cash Flow for the first six months of 2025 improved by 54.1% to $(14.6) million, driven by reduced net cash used in operations **Free Cash Flow Reconciliation (Six Months Ended June 30):** | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :------------------------------------------ | :--------- | :--------- | :--------- | :--------- | | Net cash and cash equivalents used in operating activities | $(15,190) | $(31,543) | $16,353 | 51.8% | | Cash paid for interest | $2,158 | $2,224 | $(66) | (3.0)% | | Purchases of property and equipment | $(1,536) | $(2,436) | $900 | 36.9% | | **Free Cash Flow** | **$(14,568)** | **$(31,755)** | **$17,187** | **54.1%** | [Adjusted EBITDA Reconciliation](index=5&type=section&id=Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA loss improved significantly by over 53% for both the three and six-month periods ending June 30, 2025 **Adjusted EBITDA Reconciliation (Three Months Ended June 30):** | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :--------- | :--------- | :--------- | :--------- | | Net loss | $(17,009) | $(15,479) | $(1,530) | 9.9% | | Depreciation and amortization | $1,805 | $1,518 | $287 | 18.9% | | Interest expense, net | $1,870 | $2,119 | $(249) | (11.8)% | | Non-cash addbacks | $2,222 | $(69) | $2,291 | (3,320.3)% | | Share-based compensation | $752 | $3,387 | $(2,635) | (77.8)% | | Changes in fair value of liabilities | $4,040 | $(3,120) | $7,160 | (229.5)% | | **Adjusted EBITDA** | **$(4,089)** | **$(8,710)** | **$4,621** | **(53.1)%** | **Adjusted EBITDA Reconciliation (Six Months Ended June 30):** | Metric (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :--------- | :--------- | :--------- | :--------- | | Net loss | $(36,594) | $(35,368) | $(1,226) | 3.5% | | Depreciation and amortization | $3,589 | $3,007 | $582 | 19.4% | | Interest expense, net | $7,440 | $4,103 | $3,337 | 81.3% | | Non-cash addbacks | $2,059 | $(108) | $2,167 | (2,006.5)% | | Share-based compensation | $2,210 | $7,474 | $(5,264) | (70.4)% | | Changes in fair value of liabilities | $7,392 | $(3,120) | $10,512 | (336.9)% | | **Adjusted EBITDA** | **$(9,198)** | **$(19,651)** | **$10,453** | **(53.2)%** | - Non-cash addbacks for the three and six months ended June 30, 2025, primarily included a **$2,398 thousand write-off** of net assets from the Clinical Trials segment[19](index=19&type=chunk) Key Business Metrics [Key Business Metrics Summary](index=5&type=section&id=Key%20Business%20Metrics%20Summary) As of Q2 2025, TOI operated 80 clinics in 20 markets, serving 1.9 million lives under value-based contracts **Key Business Metrics (as of June 30):** | Metric | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Clinics | 80 | 87 | | Markets | 20 | 14 | | Lives under value-based contracts (millions) | 1.9 | 2.0 | **Key Financial Metrics (Three & Six Months Ended June 30):** | Metric (in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------- | :-------- | :-------- | :--------- | :--------- | | Net loss | $(17,009) | $(15,479) | $(36,594) | $(35,368) | | Adjusted EBITDA | $(4,089) | $(8,709) | $(9,198) | $(19,650) | Consolidated Financial Statements (Unaudited) [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased by 7.5% to $159.8 million as of June 30, 2025, while the company's stockholders' equity shifted to a deficit **Consolidated Balance Sheet Highlights (in thousands):** | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :-------------- | :---------------- | :--------- | :--------- | | Cash and cash equivalents | $30,292 | $49,669 | $(19,377) | (39.0)% | | Total current assets | $104,792 | $112,418 | $(7,626) | (6.8)% | | Total assets | $159,798 | $172,717 | $(12,919) | (7.5)% | | Total current liabilities | $64,778 | $52,215 | $12,563 | 24.1% | | Long-term debt, net | $75,023 | $93,131 | $(18,108) | (19.4)% | | Total liabilities | $168,783 | $169,128 | $(345) | (0.2)% | | Total stockholders' equity (deficit) | $(8,985) | $3,589 | $(12,574) | (350.4)% | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2025 operating revenue grew 21.5% to $119.8 million, and loss from operations improved, though net loss slightly increased due to non-operating items **Consolidated Statements of Operations Highlights (in thousands, Three Months Ended June 30):** | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :--------- | :--------- | :--------- | :--------- | | Patient services revenue | $55,891 | $52,461 | $3,430 | 6.5% | | Dispensary revenue | $62,573 | $44,440 | $18,133 | 40.8% | | Total operating revenue | $119,802 | $98,578 | $21,224 | 21.5% | | Loss from operations | $(11,211) | $(16,364) | $5,153 | (31.5)% (improvement) | | Total other non-operating loss (income) | $5,929 | $(885) | $6,814 | (769.9)% | | Net loss | $(17,009) | $(15,479) | $(1,530) | 9.9% | | Basic & Diluted EPS | $(0.15) | $(0.17) | $0.02 | (11.8)% (improvement) | **Consolidated Statements of Operations Highlights (in thousands, Six Months Ended June 30):** | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------- | :--------- | :--------- | :--------- | :--------- | | Total operating revenue | $224,208 | $193,244 | $30,964 | 16.0% | | Loss from operations | $(21,122) | $(34,336) | $13,214 | (38.5)% (improvement) | | Total other non-operating loss (income) | $15,603 | $1,032 | $14,571 | 1411.9% | | Net loss | $(36,594) | $(35,368) | $(1,226) | 3.5% | | Basic & Diluted EPS | $(0.35) | $(0.39) | $0.04 | (10.3)% (improvement) | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities for the first half of 2025 decreased significantly, though the overall cash position declined by $19.4 million **Consolidated Statements of Cash Flows Highlights (in thousands, Six Months Ended June 30):** | Metric | 2025 | 2024 | Change ($) | | :------------------------------------------ | :--------- | :--------- | :--------- | | Net cash used in operating activities | $(15,190) | $(31,543) | $16,353 | | Net cash (used in) provided by investing activities | $(1,410) | $37,564 | $(38,974) | | Net cash used in financing activities | $(2,777) | $(3,085) | $308 | | Net (decrease) increase in cash and cash equivalents | $(19,377) | $2,936 | $(22,313) | | Cash and cash equivalents at end of period | $30,292 | $36,424 | $(6,132) | - **Significant decrease in net cash used in operating activities**, primarily due to improved net loss adjustments and changes in operating assets and liabilities[26](index=26&type=chunk) - Shift from cash provided by investing activities in 2024 (due to sales of marketable securities) to cash used in 2025, with purchases of property and equipment remaining consistent[26](index=26&type=chunk) Contacts [Contacts Information](index=8&type=section&id=Contacts%20Information) The report provides contact details for media and investor relations inquiries - Media contact: Daniel Virnich, MD, danielvirnich@theoncologyinstitute,com, (562) 735-3226 x 81125[27](index=27&type=chunk) - Investor relations contact: ICR Strategic Communications, investors@icrinc,com[27](index=27&type=chunk)