IPO and Financial Proceeds - The company completed its Initial Public Offering (IPO) on July 15, 2024, raising gross proceeds of $230 million from the sale of 23 million units at $10.00 per unit[132]. - The Underwriters exercised the Over-Allotment Option to purchase an additional 3,000,000 Option Units on July 15, 2024[158]. - A cash underwriting discount of $4,000,000 was paid to the Underwriters, which is 2.0% of the gross proceeds from the Initial Public Offering[159]. Financial Performance - For the three months ended September 30, 2025, the company reported a net income of $2,011,042, primarily from interest earned on marketable securities[142]. - For the nine months ended September 30, 2025, the company had a net income of $6,220,473, with interest income from marketable securities amounting to $7,553,223[143]. - The company has not generated any operating revenues to date and relies on interest income from investments held in the Trust Account[141]. Assets and Liabilities - As of September 30, 2025, the company had marketable securities in the Trust Account totaling approximately $243.08 million, including $7.55 million of interest income[149]. - As of September 30, 2025, the company had a working capital deficit of $332,033, with $97,652 in its operating bank account[151]. - The company has no long-term debt or capital lease obligations, indicating a clean balance sheet[157]. Business Combination and Future Operations - The company has until July 15, 2026, to complete its Business Combination, or it will cease operations and redeem public shares[135]. - The company may seek to extend the Combination Period, which would require approval from public shareholders[136]. - The Minovia Business Combination Agreement was entered into on June 25, 2025, with the intention of merging with Minovia, resulting in the company becoming a wholly owned subsidiary of Pubco[138]. Management and Accounting Considerations - Management has determined a lack of liquidity to sustain operations for at least one year, raising substantial doubt about the company's ability to continue as a going concern[156]. - The company incurred $37,500 and $112,500 in fees for administrative services for the three and nine months ended September 30, 2025, respectively[157]. - The company applies the two-class method for calculating net income (loss) per Ordinary Share, allocating net income pro rata to different classes of shares[166]. - The company is evaluating the impact of adopting ASU 2024-03, which requires additional disclosures about specific expense categories[167]. - Management does not believe that recently issued accounting standards will have a material effect on the financial statements[168]. - The company is classified as a smaller reporting company and is not required to provide extensive market risk disclosures[169]. Transaction Costs - The company incurred transaction costs of $15,574,281 related to the IPO, which included a cash underwriting fee of $4 million and a deferred fee of $10.95 million[146]. Equity Classification - Class A Ordinary Shares subject to possible redemption are classified as temporary equity, reflecting uncertainty in future events[165].

Financial Performance - For the three months ended September 30, 2025, the company reported a net income of approximately $3.2 million, primarily from $3.3 million of interest income[148]. - For the nine months ended September 30, 2025, the company reported a net income of approximately $5.0 million, consisting of approximately $5.4 million of interest income[149]. - As of September 30, 2025, the company had approximately $325,000 in cash and a working capital of approximately $216,000[141]. Initial Public Offering (IPO) - The Initial Public Offering (IPO) generated gross proceeds of $300.15 million from the sale of 30,015,000 Units at $10.00 per Unit, with offering costs of approximately $17.8 million[129]. - The underwriters received an upfront underwriting fee of approximately $1.5 million upon the closing of the Initial Public Offering[155]. - The company granted underwriters a 45-day option to purchase up to 3,915,000 additional Units to cover over-allotments, which was fully exercised on May 1, 2025[154]. - The Deferred Fee to underwriters is approximately $11.7 million, payable only if the company completes an Initial Business Combination[155]. Business Combination - The company has entered into a non-binding letter of intent for a potential business combination with OnMed LLC, a developer of healthcare infrastructure solutions[139]. - The Initial Business Combination must involve businesses with an aggregate fair market value of at least 80% of the Trust Account value at the time of the agreement[133]. - The company has not yet selected a specific business combination target and has not initiated substantive discussions with any potential targets[127]. - Various macroeconomic and geopolitical risks could negatively impact the company's search for an Initial Business Combination[145]. Trust Account and Expenses - The company deposited $300.15 million in a Trust Account, which will be held until the completion of the Initial Business Combination or other specified conditions[131]. - The company will incur increased expenses due to being a public company, including legal and compliance costs[147]. - The company agreed to reimburse the Sponsor $15,000 per month for administrative services starting May 1, 2025, with a total of $45,000 recorded for the three months ended September 30, 2025[151]. - The company recorded $37,500 in general and administrative expenses for CFO services for the three months ended September 30, 2025[157]. - The company recorded an outstanding balance of $75,000 in accrued expenses related to administrative services as of September 30, 2025[151]. - As of September 30, 2025, the company had no off-balance sheet arrangements or contractual obligations[161]. Regulatory and Compliance - The company qualifies as an "emerging growth company" under the JOBS Act, allowing it to delay the adoption of new accounting standards[162]. - The company will indemnify the Sponsor from claims related to the Initial Public Offering or its operations, with indemnified parties unable to access Trust Account funds[153]. Warrant Valuation - The fair value per Public Warrant and Private Placement Warrant was approximately $0.144, based on a Monte Carlo simulation with an exercise price of $11.50 and an estimated underlying stock price of $10.07[160].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ BERTO ACQUISITION CORP. (Exact name of registrant as specified in its charter) Cayman Islands 99-4250815 (State or other jurisdicti ...

Revenue Performance - Q3 2025 revenue was $47.0 million, a decrease of 27% compared to $64.5 million in Q3 2024[8] - Owned and Operated revenue decreased 52% to $20.7 million compared to $43.5 million in Q3 2024, as the company shifted focus to Commerce Media Solutions[8] - Revenue for the three months ended September 30, 2025, was $47,029 thousand, a decrease of 27% compared to $64,516 thousand for the same period in 2024[19] Profitability and Loss - The net loss for Q3 2025 was $7.6 million, or $0.27 per share, compared to a net loss of $7.9 million, or $0.48 per share, for Q3 2024[8] - Adjusted net loss for Q3 2025 was $6,544,000, compared to $3,686,000 in Q3 2024, with a nine-month adjusted net loss of $19,049,000 versus $15,226,000 in the prior year[33] - Net loss for the nine months ended September 30, 2025, was $23,048 thousand, compared to a net loss of $25,847 thousand for the same period in 2024, representing a 10.8% improvement[21] Adjusted EBITDA - Adjusted EBITDA loss was $3.4 million, representing 7% of revenue, an improvement compared to the previous year[8] - Adjusted EBITDA for the nine months ended September 30, 2025, was $(9,224) thousand, worsening from $(3,910) thousand in 2024[31] - The company expects adjusted EBITDA profitability in Q4 2025 and full-year double-digit revenue growth in 2026[5] Gross Profit and Margins - Commerce Media Solutions reported gross profit of $4.1 million, an increase of 27% over Q3 2024, representing 22% of revenue for Q3 2025[8] - Media margin for the three months ended September 30, 2025, was $12,797 thousand, accounting for 27% of revenue, compared to 28% in the same period of 2024[26] - Gross profit (exclusive of depreciation and amortization) for the nine months ended September 30, 2025, was $32,589 thousand, down 30% from $46,898 thousand in 2024[26] Cost Management - Total costs and expenses for the three months ended September 30, 2025, were $53,332 thousand, down from $68,404 thousand in 2024[19] - Cash used in operating activities for the nine months ended September 30, 2025, was $(4,257) thousand, an improvement from $(11,963) thousand in 2024[21] Shareholder Metrics - The weighted average number of shares outstanding for the three months ended September 30, 2025, was 28,097,016, compared to 16,452,273 in 2024[19] - The company reported a basic and diluted loss per share of $(0.94) for the nine months ended September 30, 2025, compared to $(1.75) in 2024[19] Strategic Initiatives - The company entered new partnerships with Authentic Brands and Databricks, enhancing data intelligence capabilities[4] - The company aims to leverage AI capabilities and proprietary first-party data to improve monetization and return Commerce Media Solutions gross margin to the high twenties[11] Key Metrics and Definitions - Adjusted EBITDA is a primary metric for evaluating operating performance, with adjustments made for non-recurring and unusual items to provide a clearer view of business operations[35] - Annual Revenue Run Rate is calculated based on active media partner contracts, reflecting the company's current monetization levels and operational performance[38] - The company emphasizes media margin as a key metric for evaluating operational performance, indicating its importance in assessing the efficiency of digital marketing services[34]

Financial Performance - Net loss for the three months ended September 30, 2025, was CAD 4,735,000, compared to a net loss of CAD 2,941,000 for the same period in 2024, reflecting an increase in loss of approximately 60.9%[5] - For the nine months ended September 30, 2025, the net loss was CAD 19,420,000, slightly improved from CAD 20,781,000 in the same period of 2024, indicating a decrease in loss of about 6.5%[5] - The operating loss for the three months ended September 30, 2025, was $4,058,000, compared to an operating loss of $3,505,000 for the same period in 2024[102] - For the nine months ended September 30, 2025, the total operating loss was $11,297,000, compared to $10,267,000 for the same period in 2024[103] - The company reported a loss before taxes of $19,420,000 for the nine months ended September 30, 2025, compared to a loss of $20,781,000 for the same period in 2024[103] Revenue and Assets - For the three months ended September 30, 2025, the Company reported revenue of $1,065 million, a 31% increase from $812 million in the same period of 2024[105] - For the nine months ended September 30, 2025, revenue reached $2,395 million, up 44% from $1,649 million in the prior year[105] - Total assets decreased to CAD 148,082,000 as of September 30, 2025, down from CAD 151,447,000 as of December 31, 2024, representing a decline of approximately 2.4%[3] Liabilities and Equity - Current liabilities increased significantly to CAD 88,098,000, compared to CAD 71,973,000 as of December 31, 2024, marking an increase of about 22.5%[3] - Shareholders' equity decreased to CAD 48,035,000 as of September 30, 2025, down from CAD 64,318,000 as of December 31, 2024, a decline of approximately 25.4%[3] - Total liabilities as of September 30, 2025, amounted to $94,277, with convertible notes payable accounting for $65,867[80] Cash Flow and Financing - Cash and cash equivalents decreased to CAD 3,044,000 as of September 30, 2025, from CAD 3,717,000 as of December 31, 2024, a decrease of about 18.1%[3] - Cash used in operating activities for the nine months ended September 30, 2025, was CAD 6,917, an improvement from CAD 10,891 in the prior year[10] - The company reported a cash inflow of CAD 7,339 from financing activities for the nine months ended September 30, 2025, compared to CAD 5,199 in the same period of 2024[10] - The Company closed a financing of $34,500 million on October 22, 2025, issuing 46,000,000 units at a price of $0.75 per unit[107] Government Support and Loans - The company received a government loan of CAD 5,267 from FedNor in 2024 to support its operations[19] - The balance of Government Loans as of September 30, 2025, is $5,008, and Government Grants total $3,124, resulting in a combined total of $8,132[38] Shareholder and Stock Options - The weighted average number of common shares outstanding increased to 17,809,773 for the three months ended September 30, 2025, compared to 14,317,536 for the same period in 2024, an increase of about 24.8%[5] - The Company issued 17,962,172 common shares as of September 30, 2025, an increase from 14,809,197 shares as of December 31, 2024, following a share consolidation[54] - The company granted 125,000 stock options at an exercise price of $2.60, with a fair value of $190, during the nine months ended September 30, 2025[61] Commitments and Future Plans - As of September 30, 2025, the total commitments amount to $139,293,000, including convertible notes payments of $122,186,000[97] - The company is constructing an expanded hydrometallurgical cobalt refinery in Ontario, Canada, and is exploring various optimizations for a recycled battery material program[15] Market and Financial Instruments - The fair value of the 2027 convertible notes is influenced by an equity volatility of 65%, with a potential increase of $207 or a decrease of $234 if volatility changes by 10%[88] - The fair value of the 2028 warrants is estimated using an equity volatility of 64%, with a potential increase of $57 or a decrease of $134 if volatility changes by 10%[90]

Clinical Trials and Product Development - The company has initiated a Phase 3 clinical trial for its lead product candidate ARD-101, targeting hyperphagia associated with Prader-Willi Syndrome, with topline data expected in Q3 2026[99]. - Enrollment for the HERO clinical trial began in Q2 2025, with protocol amendments made to broaden eligibility, including lowering the minimum age from 13 to 10 years[99]. - The company plans to replace the previously intended EMPOWER trial with two new Phase 2 trials for ARD-201, focusing on weight regain prevention and weight loss[101][103]. - The POWER trial is expected to initiate in the second half of 2025, with interim data anticipated in the second half of 2026, targeting weight regain after GLP-1 receptor agonist treatment[101]. - The STRENGTH trial, also a Phase 2 study, is planned for the first half of 2026, exploring the additive effects of ARD-201 in combination with GLP-1RA therapy[103]. - The company has delayed plans for a Phase 2 trial of ARD-101 for hypothalamic obesity to focus resources on ARD-201[100]. - The ARD-101 program is currently in Phase 3, while ARD-201 is in Phase 2, with both targeting obesity-related conditions[105]. - The HERO Open Label Extension trial commenced in Q3 2025, allowing patients from the HERO trial to continue receiving treatment[99]. - The company is focused on developing small-molecule therapeutics targeting Bitter Taste Receptors (TAS2Rs) to address hunger-associated conditions[98]. - ARD-201 induced significant weight loss of -18.8% ± 2.1% in DIO mice after 30 days of treatment while on a high-fat diet[107]. - Glucose homeostasis improved in the ARD-201 group on Day 14 compared to the negative control, as indicated by the area under the curve (AUC) from an Intraperitoneal Glucose Tolerance Test (IPGTT)[112]. - At termination of the preclinical study, ARD-201 monotherapy and the combination with low-dose tirzepatide showed significant reductions in fat mass compared to the vehicle group[121]. Financial Performance and Funding - As of September 30, 2025, the company had an accumulated deficit of $98.3 million and net losses of $16.3 million and $40.0 million for the three and nine months ended September 30, 2025, respectively[125]. - The company raised a total of $129.1 million in gross proceeds from the sale of convertible preferred stock and completed its IPO in February 2025, receiving net proceeds of approximately $87.5 million[127]. - The company does not expect to generate any revenue from product sales until regulatory approval for ARD-101 or other product candidates is obtained, which may take several years[128]. - The company plans to continue developing ARD-101 and other product candidates, conduct ongoing clinical trials, and expand its intellectual property portfolio[129]. - The company has incurred significant operating expenses, primarily in research and development, which are expected to increase substantially in the foreseeable future[135]. - Research and development (R&D) expenses increased to $13.7 million for the three months ended September 30, 2025, compared to $4.1 million for the same period in 2024, representing a $9.7 million increase[152]. - General and administrative (G&A) expenses rose to $4.0 million for the three months ended September 30, 2025, up from $1.0 million in 2024, marking a $2.9 million increase[154]. - The net loss for the three months ended September 30, 2025, was $16.3 million, compared to a net loss of $4.2 million for the same period in 2024, reflecting a $12.1 million increase in losses[152]. - For the nine months ended September 30, 2025, total R&D expenses were $34.6 million, up from $9.3 million in 2024, indicating a $25.3 million increase[158]. - G&A expenses for the nine months ended September 30, 2025, were $9.4 million, compared to $3.9 million in 2024, resulting in a $5.5 million increase[159]. - The company reported a net loss of $40.0 million for the nine months ended September 30, 2025, compared to a net loss of $11.8 million for the same period in 2024, an increase of $28.2 million[156]. - As of September 30, 2025, the company had cash, cash equivalents, and short-term investments totaling $126.4 million, which is expected to fund operations into 2027[163]. - The company raised a total of $129.1 million in gross proceeds from the sale of convertible preferred stock prior to its IPO in February 2025, which generated net proceeds of $87.5 million from the sale of 6,120,661 shares of common stock at an IPO price of $16.00 per share[162]. - The company anticipates substantial increases in G&A expenses as it expands its headcount to support ongoing R&D and potential commercialization activities[148]. - The accumulated deficit as of September 30, 2025, was $98.3 million, with expectations of continued losses for the foreseeable future[165]. - Net cash used in operating activities increased to $37.4 million for the nine months ended September 30, 2025, compared to $10.4 million for the same period in 2024, primarily due to a reported net loss of $40.0 million[170]. - Net cash used in investing activities was $74.0 million for the nine months ended September 30, 2025, mainly from the purchase of short-term investments, while it was only $0.1 million in 2024[171]. - Net cash provided by financing activities was $89.0 million for the nine months ended September 30, 2025, primarily from the IPO proceeds of $91.1 million, net of costs[172]. - The company reported a net loss of $40.0 million for the nine months ended September 30, 2025, compared to a net loss of $11.8 million for the same period in 2024[170]. - The increase in cash used in operations in 2025 was primarily attributable to increased research and development activities[170]. Operational and Economic Factors - The company relies on third parties for the manufacture of ARD-101 and other product candidates, aiming to maintain an efficient infrastructure[131]. - Macroeconomic trends, including inflation and geopolitical conflicts, may negatively impact the company's business and financial position[133]. - The company has not experienced material changes in its contractual obligations and other commitments as of March 31, 2025[173]. - The company does not believe that inflation has had a material effect on its results of operations during the periods presented[179]. - The company has not had a formal hedging program for foreign currency, and the impact of foreign currency costs has been negligible[178]. - The company is exposed to interest rate risk but does not expect a hypothetical 100 basis point change in interest rates to materially impact its financial statements[177]. - The company is focused on enhancing operational systems and hiring additional personnel to meet public company obligations[170].

Financial Proceeds and Offerings - The Company received net proceeds of approximately $41.2 million from the July 2025 Offering, selling 13,850,000 Common Shares at $3.25 each[74]. - The Company received net proceeds of approximately $46.0 million from the September 2025 Registered Direct Offering, selling 10,000,000 Common Shares at $5.00 each[77]. - The Company received net proceeds of approximately $55.3 million from the September 2025 Public Offering, selling 7,004,740 Common Shares at $6.15 each and 2,755,260 pre-funded Warrants[78]. - The Company raised approximately $139.1 million from the October 2025 Offering, which included the sale of 10,152,175 Common Shares at $9.34 each and 5,925,000 pre-funded Warrants[79]. - The Company plans to use net proceeds from recent offerings, totaling approximately $194.4 million, for working capital and to advance the Elk Creek Project towards commercial operation[80][98]. Elk Creek Project Development - The Elk Creek Project is focused on producing niobium, scandium, and titanium, with potential for rare earth elements, which are critical for electrification and decarbonization initiatives[72]. - The Company is advancing the Elk Creek Project to commercial production and is focused on securing the necessary project financing[73]. - The Elk Creek Project's niobium has applications in solid-state lithium-ion batteries, which may enhance battery safety and reduce charging times[72]. - The Company is conducting technical and economic studies to assess the viability of extracting rare earth elements from the Elk Creek Project[72]. - The Company plans to update the feasibility study for the Elk Creek Project based on the results of the 2025 Drilling Program[66]. - The Elk Creek Project's 2025 Drilling Program included 11 HQ diamond drill holes totaling approximately 7,339 meters and four additional drill holes totaling approximately 2,235 meters, aimed at converting Indicated Mineral Resources into Measured Mineral Resources[82][83]. - The Company completed the acquisition of two parcels of land for approximately $11.3 million, providing full ownership of all land necessary for the Elk Creek Project[83]. - The Company is assessing the potential to produce rare earth products and negotiate offtake agreements for niobium, scandium, and titanium from the Elk Creek Project[86]. Financial Performance and Losses - The Company incurred total operating expenses of $12.0 million for the three months ended September 30, 2025, compared to $1.4 million for the same period in 2024, reflecting a significant increase in exploration expenditures[88]. - The net loss attributable to the Company for the three months ended September 30, 2025, was $42.7 million, compared to a net loss of $2.1 million for the same period in 2024[88]. - The adjusted net loss for the three months ended September 30, 2025, was $8.3 million, compared to an adjusted net loss of $1.4 million for the same period in 2024[121]. - During the three months ended September 30, 2025, the Company's operating activities consumed $6.7 million of cash, reflecting losses of $43.5 million primarily due to increased fair value related to share-based compensation and other liabilities[110]. - Investing activities consumed $14.1 million of cash during the same period, reflecting the acquisition of additional land and mineral rights for the Elk Creek Project[112]. Cash Flow and Financial Position - As of September 30, 2025, the Company had cash of $162.8 million and working capital of $159.6 million, a substantial increase from $25.6 million and $24.8 million, respectively, as of June 30, 2025[99]. - The Company expects planned cash outflows of approximately $40.0 million to $50.0 million over the next twelve months for advancing the Elk Creek Project and corporate overhead costs[100]. - Financing inflows were $158.0 million during the three months ended September 30, 2025, primarily from equity offerings and Warrant exercises[113]. Capital Requirements and Risks - The Company anticipates that it will operate at a loss for the foreseeable future and will need to secure additional capital to finance construction and achieve commercial production[102]. - The estimated total upfront capital expenditure for the Elk Creek Project is approximately $1,141.0 million, with funding expected to come from a combination of debt and equity financing[106]. - The Company has no current funding commitments beyond potential advances under the Yorkville Equity Facility Financing Agreement and the exercise of Options and Warrants[107]. - The Company has historically relied on debt and equity financings to fund its activities, but faces uncertainty in securing additional financing due to market conditions[114]. - The Company has incurred losses since inception and will require additional capital to meet long-term operating requirements and achieve commercial production[108]. - The Company has limited financial resources compared to its proposed expenditures and no source of operating income, raising concerns about future funding availability[115]. Interest Rate and Currency Risks - The company is exposed to interest rate risk primarily related to earned interest income on cash deposits and short-term investments, balancing liquidity and interest rate returns[126]. - The company incurs expenditures in both U.S. dollars and Canadian dollars, with fluctuations in currency exchange rates potentially impacting operating costs[127]. - The company faces commodity price risk associated with elements related to the Elk Creek Project, which is not currently in production[128].

Revenue Growth - For the three months ended September 30, 2025, total revenue increased 1,419% to $11.9 million, compared to $0.8 million for the same period in 2024, primarily due to hardware sales to a new customer[232] - For the nine months ended September 30, 2025, total revenue increased 857% to $14.9 million, compared to $1.6 million for the same period in 2024, driven by hardware sales of $10.4 million in Q3 2025[234] Cost of Revenue - Cost of revenue for the three months ended September 30, 2025, increased by 2,020% to $10.1 million, compared to $0.5 million for the same period in 2024, primarily due to higher hardware costs[243] - Cost of revenue for the nine months ended September 30, 2025, increased by 980% to $11.2 million, compared to $1.0 million for the same period in 2024, driven by higher hardware costs[244] Research and Development (R&D) Expenses - R&D expenses for the three months ended September 30, 2025, increased by $3.9 million, or 67%, to $9.7 million compared to $5.8 million for the same period in 2024[245] - For the nine months ended September 30, 2025, R&D expenses rose by $16.6 million, or 106%, reaching $32.4 million, up from $15.8 million in 2024[246] Selling, General and Administrative (SG&A) Expenses - SG&A expenses for the three months ended September 30, 2025, increased by $8.8 million, or 158%, to $14.3 million compared to $5.5 million for the same period in 2024[247] - For the nine months ended September 30, 2025, SG&A expenses increased by $25.7 million, or 177%, to $40.2 million, up from $14.5 million in 2024[248] Net Loss - The net loss for the three months ended September 30, 2025, was $26.3 million, compared to a net loss of $25.6 million in 2024, representing a 3% increase[255] - For the nine months ended September 30, 2025, the net loss was $203.6 million, a 274% increase from a net loss of $54.5 million in 2024[255] Cash Flow - Cash used in operating activities for the nine months ended September 30, 2025, was $57.3 million, compared to $35.8 million in 2024[269] - Cash provided by financing activities for the nine months ended September 30, 2025, was $31.8 million, down from $102.4 million in 2024[269] - Net cash used in operating activities increased to $57.3 million for the nine months ended September 30, 2025, compared to $35.8 million for the same period in 2024, primarily due to a $149.1 million increase in net loss[270] - Cash used in investing activities was $0.7 million for the nine months ended September 30, 2025, down from $1.2 million in 2024[271] - Net cash provided by financing activities was $31.8 million for the nine months ended September 30, 2025, compared to $102.4 million in 2024, with significant contributions from a $20.0 million Committed Equity Facility and $15.9 million from Merger and PIPE financing[272] Equity and Financing - The company entered into a $50.0 million common stock purchase agreement to accelerate commercialization of its South Asia smart infrastructure contract and invest in next-generation chip development[226] - The company raised approximately $30.0 million through a securities purchase agreement, intending to use the net proceeds for general corporate and working capital purposes[227] - The company entered into a Committed Equity Facility allowing the sale of up to $50 million of newly issued shares, with $20 million net proceeds from 5,673,734 shares sold as of September 30, 2025[265] Partnerships and Initiatives - As of September 30, 2025, there were 53 proof-of-concept initiatives in progress with potential customers[229] - As of September 30, 2025, the company had 42 partners working to integrate its products and services into their offerings[230] - As of September 30, 2025, the company confirmed 26 design wins with partners or customers[231] Company Classification and Accounting - The company is classified as an emerging growth company (EGC) under the JOBS Act, allowing it to delay compliance with certain accounting standards until it no longer qualifies as an EGC[275] - The company has elected to utilize smaller reporting company (SRC) status, which is available as long as annual revenues remain below $100.0 million and public float is less than $700.0 million[278] - The accounting for the Merger was treated as a reverse recapitalization, with no goodwill or intangible assets recognized, and net assets stated at historical cost[283] Tax and Valuation - The company’s deferred tax asset balance is subject to a full valuation allowance, with management's projections of future taxable income being a significant factor in this assessment[287] - The valuation of financial instruments, including the Committed Equity Facility and earnout shares, involves complex estimates and assumptions, impacting the company's financial results[296]

Revenue Growth - For the three months ended September 30, 2025, revenue increased 1,419% to $11.9 million, compared to $0.8 million for the same period in 2024, primarily due to hardware sales to a new customer[232]. - For the nine months ended September 30, 2025, revenue increased 857% to $14.9 million, compared to $1.6 million for the same period in 2024, driven by hardware sales of $10.4 million in Q3 2025[234]. - The company expects growth to continue in both Asia Pacific and North America, with revenue concentrated among a small number of customers[236]. Cost of Revenue - Cost of revenue for the three months ended September 30, 2025, increased by $9.6 million, or 2,020%, to $10.1 million, compared to $0.5 million for the same period in 2024[243]. - Cost of revenue for the nine months ended September 30, 2025, increased by $10.2 million, or 980%, to $11.2 million, compared to $1.0 million for the same period in 2024[244]. Research and Development (R&D) Expenses - R&D expenses for the three months ended September 30, 2025, increased by $3.9 million, or 67%, to $9.7 million compared to $5.8 million for the same period in 2024[245]. - For the nine months ended September 30, 2025, R&D expenses rose by $16.6 million, or 106%, to $32.4 million from $15.8 million in 2024[246]. Selling, General and Administrative (SG&A) Expenses - SG&A expenses for the three months ended September 30, 2025, increased by $8.8 million, or 158%, to $14.3 million compared to $5.5 million in 2024[247]. - SG&A expenses for the nine months ended September 30, 2025, rose by $25.7 million, or 177%, reaching $40.2 million from $14.5 million in 2024[248]. Net Loss and Cash Flow - The company reported a net loss of $26.3 million for the three months ended September 30, 2025, compared to a net loss of $25.6 million in 2024, representing a 3% increase[255]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $(39.4) million, compared to $(28.6) million in 2024, reflecting a 38% increase in losses[255]. - Net cash used in operating activities for the nine months ended September 30, 2025, was $57.3 million, compared to $35.8 million in 2024[269]. - Net cash used in operating activities increased to $57.3 million for the nine months ended September 30, 2025, from $35.8 million in the same period of 2024, primarily due to a $149.1 million increase in net loss[270]. Financing Activities - Net cash provided by financing activities for the nine months ended September 30, 2025, was $31.8 million, down from $102.4 million in 2024[269]. - The company raised net proceeds of $20.0 million from the sale of 5,673,734 shares under the Committed Equity Facility as of September 30, 2025[265]. - Net cash provided by financing activities was $31.8 million for the nine months ended September 30, 2025, down from $102.4 million in 2024, with significant contributions from a $20.0 million Committed Equity Facility and $15.9 million from Merger and PIPE financing[272]. Stock and Equity - As of September 30, 2025, the company had commitments to issue 29,318,739 shares of common stock under stock option awards[260]. - As of September 30, 2025, the company had cash and cash equivalents of $24.0 million and $30.0 million available to draw on the Committed Equity Facility[274]. Tax and Accounting - The deferred tax asset balance is subject to a full valuation allowance, with management's projections of future taxable income being a significant factor in determining the need for this allowance[287]. - Revenue recognition follows ASC 606, requiring significant estimates and assumptions regarding contracts with customers and performance obligations[289]. - The valuation of financial instruments, including the Committed Equity Facility and earnout shares, involves complex models such as Monte Carlo simulations and the Black-Scholes option pricing model[298][300]. Strategic Initiatives - As of September 30, 2025, there were 53 proof-of-concept initiatives in progress with potential customers[229]. - As of September 30, 2025, the company had 42 partners working to integrate its products and services into their offerings[230]. - As of September 30, 2025, the company confirmed 26 design wins with partners or customers[231]. - The company is evaluating strategies to mitigate the impact of new tariffs on its supply chain and costs, including exploring alternative sourcing and implementing price increases[223]. Company Classification - The company is classified as an emerging growth company (EGC) under the JOBS Act, allowing it to delay compliance with certain accounting standards until it no longer qualifies as an EGC[275]. - The company has elected to utilize smaller reporting company (SRC) status, which is available due to annual revenues being less than $100.0 million and public float being less than $700.0 million[278].

Financial Performance - Revenue for Q1 FY2026 was $13.2 million, a decrease of 18% from $16.1 million in Q1 FY2025[7] - Gross profit for Q1 FY2026 was $3.8 million, representing 28.6% of revenue, down from 32.4% in the prior year[7] - Operating loss for Q1 FY2026 was $2.2 million, compared to a loss of $1.2 million in Q1 FY2025[8] - Net loss for Q1 FY2026 was $2.6 million, or ($0.15) per share, compared to a net loss of $1.7 million, or ($0.10) per share, in the prior year[9] - Adjusted EBITDA for Q1 FY2026 was ($1.7) million, compared to ($0.4) million in the prior year[10] - Net loss for the three months ended September 30, 2025, was $2,562,000, compared to a net loss of $1,669,000 for the same period in 2024, representing an increase in losses of 53.4%[26] - Adjusted EBITDA for the three months ended September 30, 2025, was $(1,718,000), compared to $(372,000) for the same period in 2024, indicating a significant deterioration in operational performance[26] Capital and Funding - The company raised $13.8 million in new capital through public equity offerings and private placements during the quarter[5] - Cash as of September 30, 2025, was $1.6 million, with an additional $12.6 million raised from recent offerings[11] Assets and Liabilities - Total current assets decreased from $31,804,000 in June 2025 to $26,957,000 in September 2025, a decline of approximately 15.3%[24] - Total liabilities decreased from $40,156,000 in June 2025 to $33,015,000 in September 2025, a reduction of approximately 17.7%[24] - Current liabilities decreased from $39,618,000 in June 2025 to $32,169,000 in September 2025, a decline of about 18.8%[24] - Total stockholders' equity improved from a deficit of $(5,404,000) in June 2025 to a deficit of $(3,320,000) in September 2025, indicating a positive change of approximately 38.5%[24] Cash Flow and Inventory - Cash increased from $1,334,000 in June 2025 to $1,588,000 in September 2025, reflecting a growth of 19.0%[24] - Accounts receivable decreased from $11,374,000 in June 2025 to $7,497,000 in September 2025, a decline of approximately 34.1%[24] - Inventories decreased from $17,231,000 in June 2025 to $15,726,000 in September 2025, a reduction of about 8.7%[24] Business Developments - Flux Power secured a large order from a major airline customer, increasing the number of North American airlines served to eight[6] - The SkyEMS 2.0 SaaS platform graduated from beta to production with multiple paying customers[6] - The company received UL EE Listing across its material handling portfolio, opening a new $1 billion total addressable market[6] Depreciation and Amortization - The company reported a depreciation and amortization expense of $251,000 for the three months ended September 30, 2025, consistent with the previous year's expense of $252,000[26]