Forian Inc. Announces Second Quarter 2025 Financial Results Newtown, PA, August 13, 2025 (GLOBE NEWSWIRE) – Forian Inc. (Nasdaq: FORA), a leading provider of data science driven information and analytics solutions to the life science, healthcare and financial services industries, today announced results for the quarter ended June 30, 2025. "Our strong second quarter results reflect continued execution and extend our track record of growth and operational discipline," said Max Wygod, CEO and Executive Chairm ...

PART I. FINANCIAL INFORMATION This section presents Urgent.ly Inc.'s financial statements and management's discussion, highlighting its financial condition, operational results, and internal controls [Item 1. Financial Statements.](index=5&type=section&id=Item%201.%20Financial%20Statements.) This section presents Urgent.ly Inc.'s unaudited condensed consolidated financial statements, highlighting an accumulated deficit of **$209.9 million** and substantial doubt about its going concern ability - The company has a history of recurring operating losses and an accumulated deficit of **$209.9 million** as of June 30, 2025, raising substantial doubt about its ability to continue as a going concern[30](index=30&type=chunk) [Unaudited Condensed Consolidated Balance Sheets](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section provides a summary of Urgent.ly Inc.'s financial position as of June 30, 2025, and December 31, 2024 **Balance Sheet Summary (in thousands)** | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $4,705 | $14,054 | | Accounts receivable, net | $19,873 | $22,890 | | Total current assets | $26,909 | $40,756 | | Total assets | $40,152 | $54,071 | | Total current liabilities | $29,309 | $37,594 | | Total liabilities | $81,460 | $85,741 | | Total stockholders' deficit | $(41,308) | $(31,670) | [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section details Urgent.ly Inc.'s financial performance and comprehensive loss for the three and six months ended June 30, 2025 and 2024 **Statements of Operations (Six Months Ended June 30, in thousands)** | Metric | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Revenue | $62,959 | $74,629 | | Cost of revenue | $47,037 | $57,948 | | Gross profit | $15,922 | $16,681 | | Total operating expenses | $20,522 | $33,369 | | Operating loss | $(4,600) | $(16,688) | | Total other expense, net | $(6,471) | $(7,845) | | Net loss attributable to common stockholders | $(11,096) | $(24,682) | | Basic and diluted EPS | $(9.18) | $(22.12) | **Statements of Operations (Three Months Ended June 30, in thousands)** | Metric | 2025 | 2024 | | :------------------------------------ | :----- | :----- | | Revenue | $31,687 | $34,537 | | Cost of revenue | $23,754 | $27,207 | | Gross profit | $7,933 | $7,330 | | Total operating expenses | $10,086 | $15,670 | | Operating loss | $(2,153) | $(8,340) | | Total other expense, net | $(3,453) | $(3,217) | | Net loss attributable to common stockholders | $(5,612) | $(11,667) | | Basic and diluted EPS | $(4.50) | $(10.43) | [Unaudited Condensed Consolidated Statements of Stockholders' Deficit](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Deficit) This section outlines changes in Urgent.ly Inc.'s stockholders' deficit for the periods ending June 30, 2025, March 31, 2025, and December 31, 2024 **Stockholders' Deficit (in thousands)** | Metric | December 31, 2024 | March 31, 2025 | June 30, 2025 | | :------------------------ | :---------------- | :------------- | :------------ | | Common Stock (Amount) | $1 | $1 | $1 | | Additional Paid-In Capital | $167,125 | $168,201 | $168,583 | | Accumulated Deficit | $(198,796) | $(204,280) | $(209,892) | | Total Stockholders' Deficit | $(31,670) | $(36,078) | $(41,308) | - Key changes in stockholders' deficit for the six months ended June 30, 2025, include a net loss of **$(11.1 million)**, issuance of common stock of **$0.6 million** in connection with the Highbridge loan amendment, and stock-based compensation expense of **$0.9 million**[22](index=22&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents Urgent.ly Inc.'s cash flow activities from operations, investing, and financing for the six months ended June 30, 2025 and 2024 **Cash Flow Summary (Six Months Ended June 30, in thousands)** | Activity | 2025 | 2024 | | :---------------------- | :----- | :----- | | Operating activities | $(2,191) | $(20,120) | | Investing activities | $(2,456) | $24,678 | | Financing activities | $(4,702) | $(18,066) | | Net decrease in cash | $(9,349) | $(13,458) | | Cash, cash equivalents and restricted cash, end of period | $4,830 | $24,798 | - Net cash used in operating activities for the six months ended June 30, 2025, was **$2.2 million**, primarily due to a net loss of **$11.1 million**, offset by non-cash expenses totaling **$9.3 million** and a decrease in accounts receivable of **$2.9 million**[25](index=25&type=chunk)[182](index=182&type=chunk) - Net cash used in investing activities for the six months ended June 30, 2025, was **$2.5 million**, mainly due to **$2.4 million** in capitalized software investments[25](index=25&type=chunk)[184](index=184&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of Urgent.ly Inc.'s accounting policies, significant transactions, and financial statement line items - The Company's financial statements are prepared assuming it will continue as a going concern, despite recurring operating losses and an accumulated deficit of **$209.9 million** as of June 30, 2025[29](index=29&type=chunk)[30](index=30&type=chunk) - Revenue concentration: **59%** of revenue for Q2 2025 and **56%** for H1 2025 was earned from two customers, with **72%** of accounts receivable at June 30, 2025, due from four customers[41](index=41&type=chunk) - As of June 30, 2025, total principal debt was **$55.3 million**, including a Highbridge Capital term loan (**$43.3 million**) and a MidCap Financial revolving credit facility (**$7.8 million**), with the Structural Capital term loan fully repaid in February 2025[68](index=68&type=chunk)[71](index=71&type=chunk)[77](index=77&type=chunk) - On July 1, 2025, the company issued 112,038 shares of common stock to investors, and on July 11, 2025, it entered into an At-The-Market (ATM) equity offering program to sell up to **$4.0 million** of common stock[98](index=98&type=chunk)[99](index=99&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Urgent.ly Inc.'s financial condition and operational results, highlighting reduced operating losses despite decreased revenue, driven by expense reductions and strategic investments - Urgent.ly operates a leading connected mobility assistance software platform, serving 55 Customer Partners and over 74,000 Service Providers as of June 30, 2025[102](index=102&type=chunk)[103](index=103&type=chunk) - Revenue is primarily generated from multi-year contracts with Customer Partners on a per-incident basis, membership programs, and SaaS solutions[104](index=104&type=chunk) - The company capitalized **$2.7 million** in software development costs in H1 2025 and expects to invest an additional **$2.0-$3.0 million** in the remainder of 2025[112](index=112&type=chunk) [Overview](index=19&type=section&id=Overview) This section provides a general description of Urgent.ly Inc.'s connected mobility assistance software platform and its operational focus - Urgent.ly's platform leverages location-based services, real-time data, AI, and machine-to-machine communication to deliver roadside assistance services[103](index=103&type=chunk) - The company's Sales and Partner Management Department focuses on Customer Partner retention and Consumer satisfaction, often engaging in pilot programs before multi-year contracts[105](index=105&type=chunk) [Key Factors Affecting Our Performance](index=19&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) This section identifies critical elements influencing Urgent.ly Inc.'s financial and operational performance, including customer acquisition, technology investment, and seasonality - New Customer Partner acquisition is a key factor for revenue growth, margin improvement, and profitability, with one new Customer Partner launched and another scaled up in the first half of 2025[106](index=106&type=chunk)[109](index=109&type=chunk) - Continued investment in proprietary technology, machine learning, and data analytics is crucial for maintaining a competitive advantage and expanding platform functionality[110](index=110&type=chunk) - Seasonality impacts service requests, with higher volumes during summer/holiday travel and winter weather, and also during economic downturns due to delayed vehicle maintenance[113](index=113&type=chunk)[114](index=114&type=chunk) [Key Business Metrics](index=20&type=section&id=Key%20Business%20Metrics) This section presents essential operational metrics used to evaluate Urgent.ly Inc.'s business performance, such as consumer satisfaction and dispatch volumes **Consumer Satisfaction Score (1-5 star scale)** | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30, | 4.7 | 4.5 | | Six Months Ended June 30, | 4.6 | 4.6 | **Number of Dispatches (in thousands)** | Period | 2025 | 2024 | Change | | :-------------------------- | :--- | :--- | :----- | | Three Months Ended June 30, | 191 | 205 | (14) | | Six Months Ended June 30, | 380 | 436 | (56) | [Non-GAAP Financial Measures](index=21&type=section&id=Non-GAAP%20Financial%20Measures) This section reconciles GAAP operating expenses and operating loss to their non-GAAP counterparts, providing alternative performance indicators **Non-GAAP Operating Expenses (in thousands)** | Period | 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 expenses (GAAP) | $10,086 | $15,670 | $20,522 | $33,369 | | Less: Depreciation and amortization expense | $(1,079) | $(1,104) | $(2,065) | $(2,206) | | Less: Stock-based compensation expense | $(382) | $(438) | $(920) | $(1,156) | | Less: Non-recurring transaction costs | $(178) | $(207) | $(553) | $(933) | | Less: Restructuring costs | $(315) | $(425) | $(489) | $(1,124) | | **Non-GAAP operating expenses** | **$8,132** | **$13,496** | **$16,495** | **$27,950** | **Non-GAAP Operating Loss (in thousands)** | Period | 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 loss (GAAP) | $(2,153) | $(8,340) | $(4,600) | $(16,688) | | Add: Depreciation and amortization expense | $1,079 | $1,104 | $2,065 | $2,206 | | Add: Stock-based compensation expense | $382 | $438 | $920 | $1,156 | | Add: Non-recurring transaction costs | $178 | $207 | $553 | $933 | | Add: Restructuring costs | $315 | $425 | $489 | $1,124 | | **Non-GAAP operating loss** | **$(199)** | **$(6,166)** | **$(573)** | **$(11,269)** | [Components of Results of Operations](index=22&type=section&id=Components%20of%20Results%20of%20Operations) This section details the primary revenue streams, cost structures, and gross margin expectations for Urgent.ly Inc.'s business operations - Revenue is primarily generated from roadside assistance services (RAS) through full-service outsourcing (flat-rate or claim cost pass-through) and direct membership offerings[126](index=126&type=chunk)[132](index=132&type=chunk) - Cost of revenue mainly consists of fees paid to Service Providers, technology hosting, platform-related costs, and direct call center support[128](index=128&type=chunk)[52](index=52&type=chunk) - Gross margin is expected to increase modestly over the long term due to platform enhancements leading to more cost-effective Service Provider costs[129](index=129&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section analyzes Urgent.ly Inc.'s revenue, gross profit, and operating expenses, explaining the drivers behind changes in financial performance - Revenue decreased by **$2.9 million (8%)** for the three months ended June 30, 2025, primarily due to the early termination of a top 5 global OEM Customer Partner and a reduction in the Otonomo business, partially offset by new Customer Partners[139](index=139&type=chunk) - Gross profit increased by **$0.6 million** for the three months ended June 30, 2025, driven by improved unit economics per dispatch despite a decrease in volume[142](index=142&type=chunk) - Operating expenses significantly decreased across all categories for both the three and six months ended June 30, 2025, primarily due to reductions in Otonomo-related expenses, employee-related costs, and operational efficiencies[143](index=143&type=chunk)[145](index=145&type=chunk)[147](index=147&type=chunk)[149](index=149&type=chunk)[157](index=157&type=chunk)[160](index=160&type=chunk)[162](index=162&type=chunk)[164](index=164&type=chunk) - Revenue decreased by **$11.7 million (16%)** for the six months ended June 30, 2025, due to non-renewal of an auto manufacturer, existing Customer Partner volume reduction, Otonomo business reduction, early termination of a top 5 global OEM, and an EV Customer Partner bankruptcy[154](index=154&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses Urgent.ly Inc.'s ability to meet its short-term and long-term financial obligations, including cash position and debt arrangements - The company faces substantial doubt about its ability to continue as a going concern due to recurring losses and reliance on debt/equity financing[169](index=169&type=chunk) - As of June 30, 2025, cash, cash equivalents, and restricted cash totaled **$4.8 million**, with a principal debt balance of **$55.3 million**[170](index=170&type=chunk) - The company repaid the Structural Loan Agreement in February 2025, extended the Highbridge Loan Agreement maturity to July 31, 2026, and entered into a new MidCap Financial Revolving Credit Facility for up to **$20.0 million**[171](index=171&type=chunk)[173](index=173&type=chunk)[177](index=177&type=chunk) - An At-The-Market (ATM) equity offering program was established in July 2025 to sell up to **$4.0 million** of common stock[176](index=176&type=chunk) [Cash Flows](index=29&type=section&id=Cash%20Flows) This section analyzes Urgent.ly Inc.'s cash generation and usage from operating, investing, and financing activities for the reported periods **Net Cash Provided by (Used in) Activities (Six Months Ended June 30, in thousands)** | Activity | 2025 | 2024 | | :---------------------- | :----- | :----- | | Operating activities | $(2,191) | $(20,120) | | Investing activities | $(2,456) | $24,678 | | Financing activities | $(4,702) | $(18,066) | - Net cash used in operating activities significantly decreased to **$2.2 million** in H1 2025 from **$20.1 million** in H1 2024, primarily due to a reduced net loss and favorable changes in accounts receivable[182](index=182&type=chunk)[183](index=183&type=chunk) - Net cash used in investing activities was **$2.5 million** in H1 2025, a shift from **$24.7 million** provided in H1 2024, mainly due to investments in capitalized software and the absence of proceeds from short-term deposits/marketable securities sales seen in the prior year[184](index=184&type=chunk)[185](index=185&type=chunk) [Contractual Obligations and Commitments](index=30&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines Urgent.ly Inc.'s significant contractual cash obligations, including credit facilities, long-term debt, and operating leases - Principal commitments include contractual cash obligations under credit facilities, long-term debt, and operating leases[189](index=189&type=chunk) [Emerging Growth Company Status](index=30&type=section&id=Emerging%20Growth%20Company%20Status) This section discusses Urgent.ly Inc.'s status as an emerging growth company and its election to delay adoption of new accounting pronouncements - As an 'emerging growth company' under the JOBS Act, Urgent.ly has elected to delay the adoption of new or revised accounting pronouncements, which may affect comparability with other public companies[190](index=190&type=chunk) [Critical Accounting Estimates](index=30&type=section&id=Critical%20Accounting%20Estimates) This section confirms that there are no material changes to Urgent.ly Inc.'s critical accounting estimates previously disclosed in the Annual Report - Management believes there are no material changes to the critical accounting estimates previously disclosed in the Annual Report[192](index=192&type=chunk) [Recent Accounting Pronouncements](index=30&type=section&id=Recent%20Accounting%20Pronouncements) This section details recent accounting pronouncements, including ASU 2023-09, and their potential impact on Urgent.ly Inc.'s financial disclosures - The FASB issued ASU 2023-09 in December 2023, effective for annual periods beginning after December 15, 2024, which provides improvements to income tax disclosures, and the company is evaluating its impact[46](index=46&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Urgent.ly Inc. is not required to provide detailed quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[194](index=194&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that Urgent.ly Inc.'s disclosure controls and procedures were ineffective as of June 30, 2025, due to material weaknesses in internal control over financial reporting, with remediation plans underway - Disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in internal control over financial reporting[195](index=195&type=chunk) - Two material weaknesses identified: (i) lack of evidence of segregation of duties within accounting and finance, and (ii) ineffective design and maintenance of IT general controls for information systems and user privileges[198](index=198&type=chunk) - Remediation plans include designing and maintaining new/revised controls for IT user access and reorganizing the finance department to improve segregation of duties[199](index=199&type=chunk)[200](index=200&type=chunk) PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, and other disclosures relevant to Urgent.ly Inc [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) Urgent.ly Inc. is not currently involved in any legal proceedings that are expected to have a material adverse effect on its business, financial condition, or results of operations - The company is not currently a party to any actions, claims, suits, or other legal proceedings that would individually or in the aggregate have a material adverse effect on its business, financial condition, or results of operations[206](index=206&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) This section highlights new risk factors, including potential Nasdaq delisting due to non-compliance and the adverse impact of significant share sales, such as through the ATM Program - The company received a notification from Nasdaq on March 19, 2025, regarding non-compliance with the Minimum Net Income Requirement and other Continued Listing Standards, posing a risk of delisting[208](index=208&type=chunk)[209](index=209&type=chunk) - Sales of a substantial number of common shares, including through the ATM Program or exercise of registration rights, could significantly reduce the market price of the common stock and cause dilution[211](index=211&type=chunk)[215](index=215&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds occurred during the fiscal quarter ended June 30, 2025 - No unregistered sales of equity securities or use of proceeds were reported[216](index=216&type=chunk) [Item 3. Defaults Upon Senior Securities](index=33&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to Urgent.ly Inc. for the reporting period - Not applicable[217](index=217&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Urgent.ly Inc. for the reporting period - Not applicable[218](index=218&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025[219](index=219&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of this Quarterly Report on Form 10-Q, including corporate governance documents, employment/advisor agreements, the Sales Agreement for the ATM Program, and various certifications - Exhibits include amendments to the Certificate of Incorporation, Bylaws, Promotion Letter, Advisor Agreement, Sales Agreement for the ATM Program, and certifications (302 and 906)[221](index=221&type=chunk) [Signatures](index=35&type=section&id=Signatures) This section provides the official signatures for the Quarterly Report on Form 10-Q, confirming its submission - The report was signed by Matthew Booth, Chief Executive Officer (Principal Executive and Financial Officer) on August 13, 2025[226](index=226&type=chunk)

Part I. Financial Information This section presents Motorsport Games Inc.'s unaudited financial statements and management's discussion [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) Unaudited consolidated financial statements and notes for Motorsport Games Inc. for periods ending June 30, 2025 and December 31, 2024 [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024%20%28Unaudited%29) Balance sheets show increased cash, total assets, and stockholders' equity, with decreased current liabilities, leading to positive working capital | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------------- | :------------ | :------------------ | | Cash and cash equivalents | $2,365,410 | $859,271 | | Total Current Assets | $4,756,491 | $2,796,482 | | Total Assets | $8,154,140 | $6,268,221 | | Total Current Liabilities | $2,572,456 | $5,021,782 | | Total Liabilities | $2,583,900 | $5,042,219 | | Total Stockholders' Equity | $5,570,240 | $1,226,002 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20%28Unaudited%29) Statements of operations show significant net income increase for Q2 and H1 2025, driven by higher revenues, reduced expenses, and settlement gains | Metric | Three Months Ended June 30, 2025 (USD) | Three Months Ended June 30, 2024 (USD) | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $2,591,840 | $1,881,653 | $4,350,293 | $4,910,689 | | Gross profit | $2,136,953 | $1,110,006 | $3,430,020 | $3,472,415 | | Total operating expenses | $1,273,387 | $2,549,258 | $3,159,649 | $6,126,991 | | Net income | $4,238,172 | $2,087,483 | $5,260,785 | $404,085 | | Net income attributable to Motorsport Games Inc. | $4,258,400 | $2,105,928 | $5,299,458 | $440,972 | | Basic and diluted EPS | $0.82 | $0.77 | $1.26 | $0.16 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20%28Unaudited%29) Comprehensive income was reported, but foreign currency translation adjustments led to significant other comprehensive losses for Q2 and H1 2025 | Metric | Three Months Ended June 30, 2025 (USD) | Three Months Ended June 30, 2024 (USD) | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $4,238,172 | $2,087,483 | $5,260,785 | $404,085 | | Foreign currency translation adjustments | $(2,338,360) | $(60,886) | $(3,170,090) | $456,442 | | Comprehensive income | $1,899,812 | $2,026,597 | $2,090,695 | $860,527 | | Comprehensive income attributable to Motorsport Games Inc. | $1,916,796 | $2,025,623 | $2,068,974 | $940,900 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20%28Unaudited%29) Stockholders' equity significantly increased from December 2024 to June 2025, driven by net income and equity issuance, despite foreign currency losses | Metric | January 1, 2025 (USD) | June 30, 2025 (USD) | | :-------------------------------- | :-------------- | :------------ | | Class A Common Stock Shares | 3,183,558 | 5,456,286 | | Class A Common Stock Amount | $315 | $504 | | Additional Paid-In Capital | $92,960,275 | $95,213,629 | | Accumulated Deficit | $(91,789,968) | $(86,490,510) | | Accumulated Other Comprehensive Gain (Loss) | $(674,434) | $(3,904,918) | | Total Stockholders' Equity Attributable to Motorsport Games Inc. | $496,258 | $4,818,775 | | Total Stockholders' Equity | $1,226,002 | $5,570,240 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20%28Unaudited%29) Positive operating cash flow for H1 2025, a significant improvement from prior year, driven by net income and equity issuance, despite investing activities | Metric | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $274,747 | $(1,069,590) | | Net cash used in investing activities | $(370,000) | $(25,145) | | Net cash provided by (used in) financing activities | $1,653,543 | $(50,000) | | Net increase (decrease) in cash and cash equivalents | $1,506,139 | $(1,145,772) | | Total cash and cash equivalents at end of period | $2,365,410 | $529,438 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes explain Motorsport Games Inc.'s business, accounting policies, assets, liabilities, equity, and segment reporting, highlighting key changes [NOTE 1 - Business Organization, Nature of Operations, and Risks and Uncertainties](index=12&type=section&id=NOTE%201%20-%20BUSINESS%20ORGANIZATION%2C%20NATURE%20OF%20OPERATIONS%2C%20AND%20RISKS%20AND%20UNCERTAINTIES) Motorsport Games Inc. faces substantial doubt about its going concern ability due to an **$86.5 million** accumulated deficit and insufficient cash, prompting funding and cost reduction efforts - The Company had net income of **$5.3 million** and generated cash flows from operations of **$0.3 million** for the six months ended June 30, 2025[32](index=32&type=chunk) - As of June 30, 2025, the Company had an accumulated deficit of **$86.5 million**, working capital of **$2.2 million**, and cash and cash equivalents of **$2.4 million**[32](index=32&type=chunk) - Management concludes there is substantial doubt about the Company's ability to continue as a going concern for a period of at least 12 months[47](index=47&type=chunk) - The Company is exploring additional funding (equity/debt), strategic alternatives (asset sales/licensing), and cost reduction/restructuring initiatives to address liquidity[35](index=35&type=chunk)[41](index=41&type=chunk)[211](index=211&type=chunk) - Workforce reduction in October 2024 impacted approximately **38%** of worldwide employees, resulting in a **$0.2 million** restructuring charge[36](index=36&type=chunk)[212](index=212&type=chunk) - The Company completed a private placement in April 2025, raising approximately **$2.35 million** net proceeds for working capital and general corporate expenses[39](index=39&type=chunk) [NOTE 2 – Basis of Presentation and Summary of Significant Accounting Policies](index=14&type=section&id=NOTE%202%20%E2%80%93%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Unaudited financial statements adhere to U.S. GAAP; ASU No. 2023-07 had no material impact. Key policies include ratable subscription revenue and capitalized software development costs - The Company adopted ASU No. 2023-07, Segment Reporting, on January 1, 2024, which requires enhanced disclosures about significant segment expenses and interim disclosures, but had no material impact on financial position, results of operations, or cash flows[58](index=58&type=chunk) - Revenue from subscription-based matchmaking and online racing system (RaceControl) is recognized ratably over the subscription term[60](index=60&type=chunk) - Software development costs are expensed until technological feasibility is reached, then capitalized and amortized to cost of revenue over the estimated lives of the products[61](index=61&type=chunk) [NOTE 3 – Intangible Assets](index=16&type=section&id=NOTE%203%20%E2%80%93%20INTANGIBLE%20ASSETS) Intangible assets decreased slightly by June 30, 2025, due to amortization and foreign currency adjustments, following the **$6.0 million** NASCAR License sale in October 2023 - The Company secured exclusive video game developer and publisher rights for the 24 Hours of Le Mans race and FIA World Endurance Championship (WEC) for a ten-year period through a joint venture with ACO[63](index=63&type=chunk) - In October 2023, the Company sold its NASCAR License to iRacing.com Motorsport Simulations, LLC for **$6.0 million**, fully paid by December 31, 2024[65](index=65&type=chunk) Intangible Assets Summary | Intangible Asset Category | Balance as of January 1, 2025 (USD) | Additions (USD) | Amortization Expense (USD) | Foreign Currency Translation Adjustments (USD) | Balance as of June 30, 2025 (USD) | | :------------------------ | :---------------------------- | :-------- | :------------------- | :--------------------------------------- | :---------------------------- | | Licensing Agreements (Finite) | $2,381,743 | - | - | $19,939 | $2,401,682 | | Software (Finite) | $7,976,068 | $370,000 | - | $139,868 | $8,485,936 | | Distribution Contracts (Finite) | $560,000 | - | - | - | $560,000 | | Trade Names (Indefinite) | $201,969 | - | - | $21,225 | $223,194 | | Non Compete Agreements (Finite) | $170,222 | - | - | $10,044 | $180,266 | | Accumulated Amortization | $(7,924,704) | - | $(476,169) | $(119,207) | $(8,520,080) | | **Total** | **$3,365,298** | **$370,000** | **$(476,169)** | **$71,869** | **$3,330,998** | - Amortization expense for intangible assets was approximately **$0.5 million** for the six months ended June 30, 2025, down from **$1.1 million** in the prior year[68](index=68&type=chunk) [NOTE 4 – Accrued Expenses and Other Current Liabilities](index=18&type=section&id=NOTE%204%20%E2%80%93%20ACCRUED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) Accrued expenses and other current liabilities increased from **$1.07 million** to **$1.35 million** by June 30, 2025, driven by royalties, professional fees, and deferred revenue Accrued Expenses and Other Current Liabilities Summary | Category | June 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------------- | :------------ | :------------------ | | Accrued royalties | $252,647 | $148,006 | | Accrued professional and consulting fees | $97,191 | $68,517 | | Accrued development costs | $59,436 | $26,925 | | Accrued taxes | $216,008 | $55,131 | | Accrued payroll | $125,895 | $191,736 | | Deferred revenue | $507,137 | $390,463 | | Loss contingency reserves | - | $41,764 | | Accrued other | $89,387 | $147,521 | | **Total** | **$1,347,701** | **$1,070,063** | - Revenue recognized from contract liability at the beginning of the period was approximately **$0.4 million** for the six months ended June 30, 2025, up from **$0.3 million** in the prior year[72](index=72&type=chunk) [NOTE 5 – Related Party Loans](index=18&type=section&id=NOTE%205%20%E2%80%93%20RELATED%20PARTY%20LOANS) The company has a **$12 million** line of credit with Driven Lifestyle at **10%** interest, not a viable future liquidity source, with no balance due as of June 30, 2025 - The Company has a **$12 million** line of credit with Driven Lifestyle, bearing **10%** annual interest, but does not view it as a viable source for future liquidity due to uncertainty of future borrowing requests[73](index=73&type=chunk)[74](index=74&type=chunk)[227](index=227&type=chunk) - As of June 30, 2025, there was no balance due to Driven Lifestyle under the **$12 million** Line of Credit[75](index=75&type=chunk)[226](index=226&type=chunk) [NOTE 6 – Related Party Transactions](index=18&type=section&id=NOTE%206%20%E2%80%93%20RELATED%20PARTY%20TRANSACTIONS) Ongoing related party transactions include payables and a sponsorship agreement; Backoffice Services Agreement fees with Driven Lifestyle were significantly reduced - The Company owed approximately **$12,000** to related parties as of June 30, 2025, down from **$26,000** at December 31, 2024[76](index=76&type=chunk) - In June 2025, the Company entered a sponsorship agreement with a significant shareholder, generating approximately **$25,000** in revenue[78](index=78&type=chunk) - The Backoffice Services Agreement with Driven Lifestyle was revised, reducing the monthly fee from **$17,500** (effective Jan 2023) to **$12,500** (effective July 2024), and further to **$5,000** (July-Aug 2025) then **$500** (starting Sep 2025) for U.S. payroll services only[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) - Fees incurred for Backoffice Services Agreement were **$75,000** for the six months ended June 30, 2025, a decrease from **$105,000** in the prior year[83](index=83&type=chunk) [NOTE 7 – Stockholders' Equity](index=19&type=section&id=NOTE%207%20%E2%80%93%20STOCKHOLDERS'%20EQUITY) As of June 30, 2025, the company had **5,078,450** Class A and **700,000** Class B common shares outstanding, following recent offerings that raised **$1.0 million** and **$2.5 million** gross proceeds - As of June 30, 2025, the Company had **5,078,450** shares of Class A common stock and **700,000** shares of Class B common stock outstanding[84](index=84&type=chunk) - In July 2024, the Company completed offerings that raised approximately **$1.0 million** in gross proceeds, involving shares, pre-funded warrants, and purchase warrants[89](index=89&type=chunk)[228](index=228&type=chunk) - In April 2025, the Company completed a private placement, issuing **1,894,892** shares of Class A common stock and a pre-funded warrant for **377,836** shares, raising approximately **$2.5 million** in gross proceeds (**$2.35 million** net)[39](index=39&type=chunk)[96](index=96&type=chunk)[149](index=149&type=chunk)[229](index=229&type=chunk) - The April 2025 private placement included a Right of First Refusal for purchasers in certain subsequent financings and the appointment of a Class II director to the board[151](index=151&type=chunk)[152](index=152&type=chunk)[229](index=229&type=chunk) [NOTE 8 – Share-Based Compensation](index=21&type=section&id=NOTE%208%20%E2%80%93%20SHARE-BASED%20COMPENSATION) The MSGM 2021 Stock Plan had **96,828** options outstanding at **$61.76** weighted average exercise price, with no stock-based compensation expense recognized for Q2 and H1 2025 - As of June 30, 2025, **3,172** shares of Class A common stock were available for issuance under the MSGM 2021 Stock Plan[97](index=97&type=chunk) - There were **96,828** options outstanding under the MSGM 2021 Stock Plan as of June 30, 2025, with a weighted average exercise price of **$61.76**[98](index=98&type=chunk)[101](index=101&type=chunk) Stock-based Compensation Expense | Expense Category | Three Months Ended June 30, 2025 (USD) | Three Months Ended June 30, 2024 (USD) | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and Administrative | $- | $9,643 | $- | $79,374 | | Sales and Marketing | $- | $125 | $- | $1,472 | | Development | $- | $890 | $- | $(1,997) | | **Total Stock-based compensation expense** | **$-** | **$10,658** | **$-** | **$78,849** | [NOTE 9 – Commitments and Contingencies](index=22&type=section&id=NOTE%209%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) The company is involved in legal proceedings and has significant commitments; recent settlements include gains of **$0.5 million**, **$0.8 million**, and **$0.175 million** - The Company settled claims with Innovate 2 Corp. (formerly HC2 Holdings 2 Inc.) for **$500,000**, with **$300,000** paid by March 31, 2025, and the remaining **$200,000** due by October 31, 2025[110](index=110&type=chunk)[202](index=202&type=chunk) - A settlement with Wesco Insurance Company in June 2025 resulted in an **$800,000** payment to Driven Lifestyle for the Company's benefit, recorded as other operating income[112](index=112&type=chunk)[202](index=202&type=chunk) - The Company secured exclusive video game developer and publisher rights for the 24 Hours of Le Mans race and WEC, committing to fund up to **€8 million** for development and an annual royalty of **€250,000**[115](index=115&type=chunk) - The Prior BTCC License Agreement was terminated in November 2023, and a settlement in April 2024 resulted in a **$0.6 million** gain and a new non-exclusive license for BTCC downloadable content for rFactor 2[118](index=118&type=chunk)[119](index=119&type=chunk)[201](index=201&type=chunk) - INDYCAR Licenses were terminated in November 2023, leading to a settlement in May 2024 where the Company paid **$400,000** and recognized a **$2.5 million** gain, granting INDYCAR a royalty-free, perpetual license to use the licensed IP[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[201](index=201&type=chunk) - The deferred payment for the Studio397 acquisition was settled for **$750,000**, payable in five installments, resulting in a gain of approximately **$175,000**. The final payment was made on July 2, 2025[126](index=126&type=chunk)[148](index=148&type=chunk)[204](index=204&type=chunk) [NOTE 10 – Concentrations](index=26&type=section&id=NOTE%2010%20%E2%80%93%20CONCENTRATIONS) Revenue and accounts receivable are highly concentrated, with Customer D and Customer H accounting for **65.5%** and **18.1%** of H1 2025 revenues Revenue Concentration by Customer | Customer | Three Months Ended June 30, 2025 (Revenue %) | Three Months Ended June 30, 2024 (Revenue %) | Six Months Ended June 30, 2025 (Revenue %) | Six Months Ended June 30, 2024 (Revenue %) | | :--------- | :------------------------------------------- | :------------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Customer B | *% | 23.6% | *% | 21.2% | | Customer C | *% | 20.5% | *% | 20.6% | | Customer D | 58.2% | 41.2% | 65.5% | 47.3% | | Customer H | 23.2% | *% | 18.1% | *% | | **Total** | **81.4%** | **85.3%** | **83.6%** | **89.1%** | Accounts Receivable Concentration by Customer | Customer | June 30, 2025 (Accounts Receivable %) | December 31, 2024 (Accounts Receivable %) | | :--------- | :------------------------------------ | :---------------------------------------- | | Customer B | *% | 16.8% | | Customer C | *% | 15.1% | | Customer D | 52.0% | 45.2% | | Customer H | 30.3% | *% | | **Total** | **82.3%** | **77.1%** | - A reduction in sales from or loss of these concentrated customers could have a material adverse effect on the Company's results of operations and financial condition[129](index=129&type=chunk) [NOTE 11 – Segment Reporting](index=27&type=section&id=NOTE%2011%20%E2%80%93%20SEGMENT%20REPORTING) The company operates in Gaming and Esports segments; Gaming generated all revenues and gross profit, while Esports reported operating losses - The Company's two reportable segments are Gaming (interactive racing video games) and Esports (esports tournaments and events)[131](index=131&type=chunk) - All reported revenues for the three and six months ended June 30, 2025 and 2024, were generated by the Gaming segment[135](index=135&type=chunk) Segment Financial Performance | Metric | Three Months Ended June 30, 2025 (USD) | Three Months Ended June 30, 2024 (USD) | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | **Revenues:** | | | | | | Gaming | $2,591,840 | $1,881,653 | $4,350,293 | $4,910,689 | | Esports | - | - | - | - | | **Total Revenues** | **$2,591,840** | **$1,881,653** | **$4,350,293** | **$4,910,689** | | **Gross Profit:** | | | | | | Gaming | $2,136,953 | $1,110,006 | $3,430,020 | $3,472,415 | | Esports | - | - | - | - | | **Total Gross Profit** | **$2,136,953** | **$1,110,006** | **$3,430,020** | **$3,472,415** | | **Income (Loss) From Operations:** | | | | | | Gaming | $1,989,365 | $2,091,424 | $1,917,646 | $967,877 | | Esports | $(21,302) | $(32,676) | $(42,778) | $(124,453) | | **Total Income From Operations** | **$1,968,063** | **$2,058,748** | **$1,874,868** | **$843,424** | | **Total Assets:** | | | | | | Gaming | $6,674,308 | $5,065,073 | $6,674,308 | $5,065,073 | | Esports | $1,479,832 | $1,203,148 | $1,479,832 | $1,203,148 | | **Total Assets** | **$8,154,140** | **$6,268,221** | **$8,154,140** | **$6,268,221** | [NOTE 12 - Subsequent Events](index=29&type=section&id=NOTE%2012%20-%20SUBSEQUENT%20EVENTS) Subsequent to June 30, 2025, Motorsport Games released Le Mans Ultimate Version 1.0 and revised its Backoffice Services Agreement, reducing monthly fees to **$500** - On July 22, 2025, the Company released Le Mans Ultimate Version 1.0, completing its Early Access phase[138](index=138&type=chunk) - Effective July 1, 2025, the Revised Backoffice Services Agreement with Driven Lifestyle reduced the monthly fee to **$5,000** for July and August 2025, and then to **$500** for U.S. payroll services only starting September 1, 2025[139](index=139&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) Management discusses Motorsport Games' financial condition and operational results for Q2 and H1 2025, detailing revenue drivers, expense changes, liquidity, and strategic initiatives [About Motorsport Games](index=30&type=section&id=About%20Motorsport%20Games) Motorsport Games is a racing game developer, publisher, and esports provider with Le Mans and WEC licenses, developing new titles after selling NASCAR and terminating other licenses - Motorsport Games is a racing game developer, publisher, and esports ecosystem provider for official motorsport racing series, including the 24 Hours of Le Mans and FIA World Endurance Championship[141](index=141&type=chunk) - The company sold its NASCAR licensed rights in October 2023 and had a limited non-exclusive right to sell NASCAR games and DLCs through December 31, 2024[143](index=143&type=chunk) - Le Mans Ultimate, the official game of WEC and 24 Hours of Le Mans, was released on PC in early access on February 20, 2024[144](index=144&type=chunk) [Recent Events](index=31&type=section&id=Recent%20Events) The company explores strategic alternatives like asset sales to improve working capital and reduce cash burn, and settled the Studio397 acquisition deferred payment for **$750,000** - The Company continues to explore strategic alternatives, including asset sales or licensing, to improve working capital and reduce cash burn, in addition to past sales of its NASCAR License and Traxion[146](index=146&type=chunk) - The deferred payment for the Studio397 acquisition was settled for **$750,000**, payable in five equal installments, with the final payment made on July 2, 2025[148](index=148&type=chunk) [Private Placement Offering](index=31&type=section&id=Private%20Placement%20Offering) An April 2025 private placement raised **$2.35 million** net proceeds through Class A common stock and pre-funded warrant issuance, including a Right of First Refusal and a new director appointment - In April 2025, the Company completed a private placement, raising approximately **$2.35 million** net proceeds from the issuance of **1,894,892** shares of Class A common stock and a pre-funded warrant for **377,836** shares[149](index=149&type=chunk) - The private placement included a Right of First Refusal for purchasers to participate in certain subsequent financings and the appointment of Mr. Guoquan (Paul) Huang as a Class II director[151](index=151&type=chunk)[152](index=152&type=chunk) [Nasdaq Compliance](index=32&type=section&id=Nasdaq%20Compliance) Motorsport Games regained Nasdaq Stockholders' Equity Requirement compliance by April 15, 2025, reporting **$5,570,240** in equity as of June 30, 2025 - The Company received a deficiency letter from Nasdaq on November 20, 2024, for non-compliance with the Stockholders' Equity Requirement (**$2.5 million** minimum)[153](index=153&type=chunk) - Nasdaq granted an extension until April 14, 2025, to regain compliance[154](index=154&type=chunk) - As of June 30, 2025, the Company's stockholders' equity was **$5,570,240**, indicating compliance with the Nasdaq Stockholders' Equity Requirement[155](index=155&type=chunk) [Trends and Factors Affecting Our Business](index=32&type=section&id=Trends%20and%20Factors%20Affecting%20Our%20Business) Financial results are driven by product releases like Le Mans Ultimate; the company focuses on digital downloads, expanding recurring revenue via subscriptions and new annualized sports games Le Mans Ultimate Release Schedule | Title | Release Date and Platform | | :-------------------------- | :------------------------ | | Le Mans Ultimate | February 20, 2024, available on PC | | Le Mans Ultimate – 2024 DLC Pack 1 | July 23, 2024, available on PC | | Le Mans Ultimate – 2024 DLC Pack 2 | September 24, 2024, available on PC | | Le Mans Ultimate – 2024 DLC Pack 3 | December 10, 2024, available on PC | | Le Mans Ultimate – 2024 DLC Pack 4 | February 25, 2025, available on PC | | Le Mans Ultimate – 2024 DLC Pack 5 | June 10, 2025, available on PC | | Le Mans Ultimate – Version 1.0 Release | July 22, 2025, available on PC | - Substantially all revenue from video games for game consoles and PCs for the six months ended June 30, 2025 and 2024, was through digital channels[158](index=158&type=chunk) - The company plans to organize the 2025/26 Le Mans Virtual Series and expand its esports segment beyond Le Mans[159](index=159&type=chunk) - For the six months ended June 30, 2025, sales for Microsoft Windows via Steam comprised approximately **68%** of total revenue, and sales via Genba comprised approximately **15%**[160](index=160&type=chunk) - The company aims to expand recurring revenue through subscriptions (e.g., RaceControl) and new annualized sports franchise games, such as with Le Mans[161](index=161&type=chunk) [Components of Our Results of Operations](index=33&type=section&id=Components%20of%20Our%20Results%20of%20Operations) This section outlines key financial components: Revenues, Cost of Revenues, Sales and Marketing, Development, General and Administrative, and Depreciation and Amortization - Revenues are primarily derived from sales of games and related content, with new sources including sponsorship from esports events, software development services, and subscription services (RaceControl launched December 2024)[163](index=163&type=chunk) - Cost of revenues for the Gaming segment includes royalty expenses (historically NASCAR), merchant fees, manufacturing/packaging/hosting/shipping costs, distribution fees, mobile platform fees, and amortization of acquired licenses and internally-developed software[167](index=167&type=chunk) - Development expenses include in-house team salaries, operating expenses, consulting for external development, and software licenses/maintenance[169](index=169&type=chunk) - General and administrative expenses cover salaries, benefits, and other costs for finance, HR, IT, legal, facilities, and external services[170](index=170&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Results of operations show significant improvements in net income and gross profit margins for Q2 and H1 2025, driven by Le Mans Ultimate sales, reduced expenses, and substantial settlement gains [Three Months Ended June 30, 2025 compared to Three Months Ended June 30, 2024](index=34&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) For Q2 2025, consolidated revenues increased by **37.7%** to **$2.6 million**, gross profit surged by **92.5%** to **$2.1 million**, and net income reached **$4.2 million** Three Months Ended June 30, 2025 vs 2024 Financial Summary | Metric | June 30, 2025 (USD) | June 30, 2024 (USD) | Change (USD) | Change (%) | | :-------------------------------- | :------------ | :------------ | :--------- | :--------- | | Revenues | $2,591,840 | $1,881,653 | $710,187 | 37.7% | | Cost of Revenues | $454,887 | $771,647 | $(316,760) | (41.0)% | | Gross Profit | $2,136,953 | $1,110,006 | $1,026,947 | 92.5% | | Sales and marketing | $126,307 | $205,549 | $(79,242) | (38.6)% | | Development | $270,343 | $868,745 | $(598,402) | (68.9)% | | General and administrative | $865,040 | $1,411,826 | $(546,786) | (38.7)% | | Total Operating Expenses | $1,273,387 | $2,549,258 | $(1,275,871) | (50.0)% | | Net income | $4,238,172 | $2,087,483 | $2,150,689 | 103.0% | - Increase in Gaming segment revenues was primarily due to a **$1.3 million** increase from Le Mans Ultimate sales (especially DLCs) and **$0.2 million** from RaceControl, offset by a **$0.9 million** decrease in NASCAR-related revenues[174](index=174&type=chunk) - Gross profit margin increased to **82.4%** in 2025 from **59.0%** in 2024, driven by reduced royalty payments related to NASCAR titles[178](index=178&type=chunk) - Development expenses decreased by **$0.6 million** (**68.9%**) due to lower payroll from reduced headcount and capitalization of internally-developed software costs[182](index=182&type=chunk) - General and administrative expenses decreased by **$0.5 million** (**38.7%**) primarily due to a reduction in legal and professional fees[183](index=183&type=chunk) - Other operating income increased by **$0.9 million** to **$1.1 million**, including **$0.8 million** from the Wesco Insurance Company settlement[186](index=186&type=chunk) - Other income, net increased by **$2.2 million** to **$2.3 million**, primarily from foreign currency gains[188](index=188&type=chunk) [Six Months Ended June 30, 2025 compared to Six Months Ended June 30, 2024](index=37&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) For H1 2025, consolidated revenues decreased by **11.4%** to **$4.4 million**, gross profit remained stable at **$3.4 million**, and net income significantly increased to **$5.3 million** Six Months Ended June 30, 2025 vs 2024 Financial Summary | Metric | June 30, 2025 (USD) | June 30, 2024 (USD) | Change (USD) | Change (%) | | :-------------------------------- | :------------ | :------------ | :--------- | :--------- | | Revenues | $4,350,293 | $4,910,689 | $(560,396) | (11.4)% | | Cost of Revenues | $920,273 | $1,438,274 | $(518,001) | (36.0)% | | Gross Profit | $3,430,020 | $3,472,415 | $(42,395) | (1.2)% | | Sales and marketing | $224,008 | $455,935 | $(231,927) | (50.9)% | | Development | $872,296 | $1,932,102 | $(1,059,806) | (54.9)% | | General and administrative | $2,033,522 | $3,602,092 | $(1,568,570) | (43.5)% | | Total Operating Expenses | $3,159,649 | $6,126,991 | $(2,967,342) | (48.4)% | | Net income | $5,260,785 | $404,085 | $4,856,700 | 1201.9% | - Decrease in Gaming segment revenues was primarily due to a **$2.4 million** decrease in NASCAR-related revenues, offset by a **$1.6 million** increase from Le Mans Ultimate sales and **$0.3 million** from RaceControl[192](index=192&type=chunk) - Gross profit margin increased to **78.8%** in 2025 from **70.7%** in 2024, mainly due to reduced royalty payments for NASCAR titles[195](index=195&type=chunk) - Development expenses decreased by **$1.0 million** (**54.9%**) due to lower payroll from reduced headcount and capitalization of internally-developed software costs[198](index=198&type=chunk) - General and administrative expenses decreased by **$1.6 million** (**43.5%**) primarily due to a **$1.1 million** decrease in legal and professional fees[199](index=199&type=chunk) - Other operating income increased by **$1.3 million** to **$1.6 million**, including **$0.8 million** from Wesco settlement and **$0.5 million** from HC2 Holdings 2 Inc. settlement[202](index=202&type=chunk) - Other income, net increased by **$3.8 million** to **$3.4 million**, primarily from foreign currency gains and a **$0.2 million** gain from the Luminis settlement[204](index=204&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Motorsport Games faces substantial doubt about its going concern ability due to an **$86.5 million** accumulated deficit and insufficient cash, prompting funding, asset sales, and cost reduction efforts Liquidity Summary | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------------- | :------------ | :------------------ | | Cash and cash equivalents | $2,365,410 | $859,271 | | Working capital (deficiency) | $2,184,035 | $(2,225,300) | - The Company had net income of **$5.3 million** and generated cash flows from operations of **$0.3 million** for the six months ended June 30, 2025, primarily due to **$0.8 million** from Wesco settlement and **$0.5 million** from HC2 Holdings 2 Inc. settlement[208](index=208&type=chunk) - As of June 30, 2025, the Company had an accumulated deficit of **$86.5 million** and does not believe current capital resources are sufficient to fund operations over the next year[208](index=208&type=chunk) - Management concludes there is substantial doubt about the Company's ability to continue as a going concern[208](index=208&type=chunk)[219](index=219&type=chunk) - The Company is exploring additional funding (equity/debt), strategic alternatives (asset sales/licensing), and cost reduction/restructuring initiatives[211](index=211&type=chunk) - The April Purchase Agreements include a prohibition on issuing certain securities for **4.5 months** and a Right of First Refusal for purchasers in subsequent financings, limiting future fundraising flexibility[214](index=214&type=chunk)[229](index=229&type=chunk) - Net cash provided by operating activities for the six months ended June 30, 2025, was **$0.3 million**, a significant improvement from **$1.1 million** used in the prior year[222](index=222&type=chunk) - Net cash provided by financing activities for the six months ended June 30, 2025, was **$1.7 million**, primarily from **$2.3 million** raised in a private placement offering[224](index=224&type=chunk) [Off-Balance Sheet Arrangements](index=44&type=section&id=Off-Balance%20Sheet%20Arrangements) Motorsport Games Inc. did not have any off-balance sheet arrangements during the periods presented or currently - The Company did not have any off-balance sheet arrangements during the periods presented or currently[232](index=232&type=chunk) [Critical Accounting Policies and Estimates](index=44&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The primary critical accounting policy is Development Costs, capitalized post-technological feasibility; no other material changes were reported - Costs incurred internally for software product development are expensed until technological feasibility is established, then capitalized and amortized over the estimated life of the products[233](index=233&type=chunk) - Technological feasibility is generally reached shortly before products are released to production[233](index=233&type=chunk) - Sales returns and price protection reserves are no longer relevant critical accounting estimates starting in 2025[234](index=234&type=chunk) [Recently Issued Accounting Standards](index=44&type=section&id=Recently%20Issued%20Accounting%20Standards) As an emerging growth company, Motorsport Games elected to delay new accounting pronouncement adoption until applicable to private companies - As an emerging growth company, Motorsport Games has elected to use the extended transition period under the JOBS Act for complying with new or revised financial accounting standards[235](index=235&type=chunk) [Non-GAAP Financial Measures](index=44&type=section&id=Non-GAAP%20Financial%20Measures) The company uses Adjusted EBITDA as a non-GAAP financial measure to assess operating performance, excluding specific items to enhance understanding of normalized operating performance - Adjusted EBITDA is defined as EBITDA adjusted to exclude gain from settlement of license liabilities and other agreements, impairment of intangible assets, loss contingency expense, and stock-based compensation expenses[237](index=237&type=chunk) - Management uses Adjusted EBITDA to assess operating performance, as it eliminates items affecting comparability between periods and is believed to be representative of core ongoing operating business[238](index=238&type=chunk) Adjusted EBITDA (Three Months) | Metric | Three Months Ended June 30, 2025 (USD) | Three Months Ended June 30, 2024 (USD) | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net income | $4,238,172 | $2,087,483 | | Interest expense, net | $4,740 | $29,746 | | Depreciation and amortization | $253,935 | $587,160 | | **EBITDA** | **$4,496,847** | **$2,704,389** | | Gain from settlement of license liabilities | - | $(3,248,000) | | Gain from Wesco Settlement Agreement | $(800,000) | - | | Stock-based compensation | - | $10,658 | | **Adjusted EBITDA** | **$3,696,847** | **$(532,953)** | Adjusted EBITDA (Six Months) | Metric | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net income | $5,260,785 | $404,085 | | Interest expense, net | $17,750 | $60,628 | | Depreciation and amortization | $505,992 | $1,189,106 | | **EBITDA** | **$5,784,527** | **$1,653,819** | | Gain from settlement of license liabilities | - | $(3,248,000) | | Gain from settlement of purchase commitment liabilities | $(175,460) | - | | Gain from Settlement Agreement | $(500,000) | - | | Gain from Wesco Settlement Agreement | $(800,000) | - | | Stock-based compensation | - | $78,849 | | **Adjusted EBITDA** | **$4,309,067** | **$(1,515,332)** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there are no applicable quantitative and qualitative disclosures about market risk for the company - The company states that quantitative and qualitative disclosures about market risk are not applicable[243](index=243&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to un-remediated material weaknesses in internal control - Disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in internal control over financial reporting[245](index=245&type=chunk) - Material weaknesses include failure to design and maintain effective monitoring procedures, lack of sufficient accounting personnel, and inadequate independent review of complex accounting analyses[246](index=246&type=chunk)[257](index=257&type=chunk) - The company plans to make progress on remediation plans described in its 2024 Form 10-K[247](index=247&type=chunk) - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control during the quarter ended June 30, 2025[249](index=249&type=chunk) Part II. Other Information This section provides other information including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings, but believes the aggregate outcome is not reasonably likely to have a material adverse effect on its business - The Company believes the outcome of all pending legal proceedings in aggregate is not reasonably likely to have a material adverse effect on its business, prospects, results of operations, financial condition, and/or cash flows, except as otherwise disclosed[251](index=251&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) The company highlights significant risks, including substantial doubt about its going concern ability, un-remediated material weaknesses, limitations on future equity sales, potential Nasdaq delisting, and high revenue concentration - The Company has incurred significant losses since inception and expects to continue incurring losses, raising substantial doubt about its ability to continue as a going concern[253](index=253&type=chunk)[254](index=254&type=chunk) - Un-remediated material weaknesses in internal control over financial reporting could adversely affect financial reporting accuracy and timeliness, potentially impacting business and stock price[257](index=257&type=chunk)[258](index=258&type=chunk) - Limitations on the ability to sell securities under the April Purchase Agreements (e.g., **4.5-month** prohibition on new issuances and Right of First Refusal) may affect the company's ability to finance operations[259](index=259&type=chunk) - Failure to maintain compliance with Nasdaq's listing requirements, specifically the Stockholders' Equity Requirement, could lead to delisting, adversely affecting market price and liquidity of Class A common stock[261](index=261&type=chunk)[264](index=264&type=chunk) - The company depends on a relatively small number of franchises and customers for a significant portion of its revenues and profits, with top two customers accounting for **84%** of revenue for the six months ended June 30, 2025[265](index=265&type=chunk) - The sale of the NASCAR License and termination of BTCC and INDYCAR licenses will materially adversely impact cash flows and results of operations as no more revenues are anticipated from these products[266](index=266&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during Q2 2025, other than previously reported, and no Class A common stock shares were purchased - No unregistered sales of equity securities occurred during the quarter ended June 30, 2025, other than those previously reported[268](index=268&type=chunk) - The Company did not purchase any shares of its Class A common stock during the quarter ended June 30, 2025[269](index=269&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) During Q2 2025, no directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - None of the company's directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[272](index=272&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, warrant agreements, securities purchase agreements, certifications, and XBRL - Exhibits include Certificate of Incorporation, Bylaws, Pre-Funded Warrant, Form of Securities Purchase Agreement, CEO and CFO Certifications, and Inline XBRL documents[273](index=273&type=chunk) Signatures The report is duly signed on behalf of Motorsport Games Inc. by its Chief Executive Officer and Chief Financial Officer as of August 13, 2025 [Signatures](index=52&type=section&id=Signatures) The report is duly signed by Stephen Hood, CEO, and Stanley Beckley, CFO, on behalf of Motorsport Games Inc. as of August 13, 2025 - The report was signed by Stephen Hood, Chief Executive Officer, and Stanley Beckley, Chief Financial Officer, on August 13, 2025[276](index=276&type=chunk)

[Executive Summary & Business Update](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Update) Motorsport Games achieved significant Q2 2025 growth, driven by "Le Mans Ultimate" performance and strategic initiatives, solidifying its financial position and expanding the Le Mans franchise [Q2 2025 Highlights & CEO Commentary](index=1&type=section&id=Q2%202025%20Highlights%20%26%20CEO%20Commentary) Motorsport Games reported significant growth in Q2 2025, driven by the strong performance of 'Le Mans Ultimate' and strategic marketing, now on a more solid financial footing - Q2 2025 was an incredible period of growth, with Le Mans Ultimate achieving **record player activity** and greatly increased revenues year-over-year due to key features and strong marketing[3](index=3&type=chunk) - The company plans to continue this trend with an expansion downloadable content (DLC) for Le Mans Ultimate, including the European Le Mans Series, expected to be delivered by the end of Q3 2025[3](index=3&type=chunk) - Motorsport Games is committed to growing the Le Mans franchise and developing new titles to bolster its portfolio and diversify income streams, now operating on a more solid financial footing[3](index=3&type=chunk) [Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) The company demonstrated robust Q2 2025 financial performance with substantial year-over-year increases across key metrics including revenue, gross profit, net income, and Adjusted EBITDA [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20and%20Subsequent%20Business%20Update) Motorsport Games reported a strong Q2 2025 with significant year-over-year increases in revenue, gross profit, net income, and Adjusted EBITDA, driven by product performance and strategic financial management [Revenue and Gross Profit](index=1&type=section&id=Select%20Financial%20Highlights%20-%20Revenue%20and%20Gross%20Profit) Q2 2025 saw a substantial year-over-year increase in revenue and gross profit, significantly improving the gross profit margin Revenue and Gross Profit (in millions USD) | Metric | Q2 2025 (approx.) | Q2 2024 (approx.) | Change ($) | Change (%) | | :----- | :---------------- | :---------------- | :--------- | :--------- | | Revenue | $2.6 million | $1.9 million | $0.7 million | 37.7% | | Gross Profit | $2.1 million | $1.1 million | $1.0 million | 90.9% | | Gross Profit Margin | 82.4% | 59.0% | 23.4 pp | | [Net Income and EPS](index=1&type=section&id=Select%20Financial%20Highlights%20-%20Net%20Income%20and%20EPS) Net income and EPS attributable to Class A common stock experienced significant year-over-year growth in Q2 2025, bolstered by revenue and other operating income Net Income and EPS (in millions USD, except per share) | Metric | Q2 2025 (approx.) | Q2 2024 (approx.) | Change ($) | Change (%) | | :----- | :---------------- | :---------------- | :--------- | :--------- | | Net Income | $4.2 million | $2.1 million | $2.1 million | 103.0% | | Net Income Attributable to Motorsport Games Inc. | $4.3 million | $2.1 million | $2.2 million | 102.2% | | Net Income Attributable to Class A Common Stock per Share | $0.82 | $0.77 | $0.05 | 6.5% | - The increase in net income was driven by a **$0.7 million increase in consolidated revenue** and **$1.1 million in other operating income**, which included $0.8 million from the Wesco Insurance Company settlement and $0.3 million from negotiated vendor invoice discounts[6](index=6&type=chunk) [Adjusted EBITDA](index=2&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA showed a significant positive turnaround in Q2 2025, primarily due to increased net income and reduced stock-based compensation Adjusted EBITDA (in USD) | Metric | Q2 2025 | Q2 2024 | Change ($) | | :----- | :------ | :------ | :--------- | | Adjusted EBITDA | $3,696,847 | $(532,953) | $4,229,800 | - The improvement in Adjusted EBITDA was primarily due to the same factors driving the change in net income, as well as a decrease in stock-based compensation compared to the prior year period[8](index=8&type=chunk) [Cash Flow, Liquidity, and Capital Management](index=2&type=section&id=Cash%20Flow%2C%20Liquidity%2C%20and%20Capital%20Management) The company maintained a stable cash position, generated positive operational cash flow in H1 2025, and secured additional funding for working capital and strategic investments [Cash Flow and Liquidity](index=2&type=section&id=Cash%20Flow%20and%20Liquidity) As of June 30, 2025, the Company had $2.4 million in cash, increasing to $2.8 million by July 31, 2025, and generated $0.3 million in cash from operations during the first six months of 2025 Cash and Cash Equivalents (in millions USD) | Metric | As of June 30, 2025 | As of July 31, 2025 | | :----- | :------------------ | :------------------ | | Cash and Cash Equivalents | ~$2.4 million | ~$2.8 million | - Generated cash from operations of **$0.3 million** during the six months ended June 30, 2025, primarily due to **$0.8 million from the Wesco Insurance Company settlement** and **$0.5 million from a settlement agreement with HC2 Holdings 2 Inc**[7](index=7&type=chunk)[10](index=10&type=chunk) - The Company expects a net cash outflow from operations for the foreseeable future as it continues to develop its product portfolio and invest in new video game titles[10](index=10&type=chunk) - Completed a registered direct offering on July 29, 2024, raising approximately **$1.0 million in gross proceeds** for working capital and general corporate purposes[12](index=12&type=chunk) - Entered into a private placement on April 11, 2025, for approximately **$2.5 million in gross proceeds** (net $2.35 million) from the issuance of Class A common stock and pre-funded warrants, intended for working capital, general corporate expenses, and strategic initiatives[13](index=13&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes Adjusted EBITDA as a non-GAAP measure to provide a clearer view of core operating performance by excluding non-recurring and non-cash items [Use of Non-GAAP Financial Measures](index=3&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) The company uses Adjusted EBITDA, a non-GAAP measure, to assess operating performance by excluding items not representative of its core business, such as interest, depreciation, amortization, and specific gains/losses from settlements and stock-based compensation - Adjusted EBITDA is defined as EBITDA (net income plus interest expense, depreciation, and amortization, less income tax benefit) adjusted to exclude gain from settlement of license liabilities and other agreements, impairment of intangible assets, loss contingency expense, and stock-based compensation expenses[15](index=15&type=chunk) - Management uses Adjusted EBITDA to manage the business and evaluate financial performance, as it eliminates items affecting comparability between periods that are not considered representative of core ongoing operating business[16](index=16&type=chunk) - Adjusted EBITDA is not a recognized term under U.S. GAAP and should not be considered an alternative to GAAP measures like revenue, net income, or cash flows from operations, nor a measure of liquidity or free cash flows[17](index=17&type=chunk) [Company Information & Disclosures](index=3&type=section&id=Company%20Information%20%26%20Disclosures) This section provides an overview of Motorsport Games' business, outlines communication practices, details forward-looking statements, and lists contact information [About Motorsport Games](index=3&type=section&id=About%20Motorsport%20Games) Motorsport Games is a racing game developer, publisher, and esports ecosystem provider for official motorsport racing series, holding licenses for iconic events and owning simulation platforms - Motorsport Games is a racing game developer, publisher, and esports ecosystem provider for official motorsport racing series, aiming to create authentically realistic racing games[18](index=18&type=chunk) - The company is the officially licensed video game developer and publisher for iconic series including the 24 Hours of Le Mans and FIA World Endurance Championship, recently releasing Le Mans Ultimate Version 1.0[18](index=18&type=chunk) - Motorsport Games also owns the industry-leading rFactor 2 and KartKraft simulation platforms and is an award-winning esports partner for the 24 Hours of Le Mans, creating the renowned Le Mans Virtual Series[18](index=18&type=chunk) [Conference Call and Webcast Details](index=3&type=section&id=Conference%20Call%20and%20Webcast%20Details) The company will host a conference call and webcast on August 13, 2025, at 5:00 p.m. ET to discuss its financial results, accessible via phone or the investor relations website - A conference call and webcast will be held on August 13, 2025, at 5:00 p.m. ET to discuss financial results, accessible by dialing 1-800-579-2543 or 1-785-424-1789 (Conference ID 'MOTOR') or via the Motorsport Games Investor Relations website[18](index=18&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements regarding the company's future plans, including growth of the Le Mans franchise, new titles, and financial stability, which are subject to significant risks and uncertainties - Forward-looking statements include confidence in solid financial footing, efforts to grow the Le Mans franchise and new titles, planned updates for Le Mans Ultimate, and the need for additional funding to continue operations[20](index=20&type=chunk) - Significant risks and uncertainties include difficulties in achieving growth plans, delays in new game features or DLC, failure to improve long-term funding, decreased sales due to asset disposition, and inability to execute business strategies[21](index=21&type=chunk) - Other risks include unanticipated events impacting product timing, less than expected benefits from management strategies, negative operating cash flows, difficulties in resolving liquidity issues, and challenges in completing cost reduction initiatives[21](index=21&type=chunk) [Website and Social Media Disclosure](index=5&type=section&id=Website%20and%20Social%20Media%20Disclosure) Motorsport Games communicates material financial information to investors via its investor relations website, SEC filings, press releases, conference calls, webcasts, and social media - The company announces material financial information through its investor relations website (ir.motorsportgames.com), SEC filings, press releases, public conference calls, webcasts, social media, and blogs[24](index=24&type=chunk) Company Websites and Social Media Channels | Websites | Social Media | | :------------------ | :-------------------- | | motorsportgames.com | Twitter: @msportgames | | | Instagram: msportgames | | | Facebook: Motorsport Games | | | LinkedIn: Motorsport Games | [Contacts](index=5&type=section&id=Contacts) Contact information for investor relations and media inquiries is provided - Investors can contact Investors@motorsportgames.com[25](index=25&type=chunk) - Media can contact PR@motorsportgames.com[25](index=25&type=chunk) [Appendix: Financial Statements](index=6&type=section&id=Appendix%3A%20Financial%20Statements) The appendix presents the unaudited condensed consolidated statements of operations, detailing financial results for the three and six months ended June 30, 2025 and 2024 [Condensed Consolidated Statements of Operations](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The unaudited condensed consolidated statements of operations provide a detailed breakdown of the company's financial performance for the three and six months ended June 30, 2025, and 2024, covering revenues, cost of revenues, operating expenses, and net income Condensed Consolidated Statements of Operations (in USD) | 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 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $2,591,840 | $1,881,653 | $4,350,293 | $4,910,689 | | Cost of revenues | $454,887 | $771,647 | $920,273 | $1,438,274 | | Gross profit | $2,136,953 | $1,110,006 | $3,430,020 | $3,472,415 | | Sales and marketing | $126,307 | $205,549 | $224,008 | $455,935 | | Development | $270,343 | $868,745 | $872,296 | $1,932,102 | | General and administrative | $865,040 | $1,411,826 | $2,033,522 | $3,602,092 | | Depreciation and amortization | $11,697 | $63,138 | $29,823 | $136,862 | | Total operating expenses | $1,273,387 | $2,549,258 | $3,159,649 | $6,126,991 | | Gain from settlement of license liabilities | $- | $3,248,000 | $- | $3,248,000 | | Other operating income | $1,104,497 | $250,000 | $1,604,497 | $250,000 | | Income from operations | $1,968,063 | $2,058,748 | $1,874,868 | $843,424 | | Interest expense | $(4,740) | $(29,746) | $(17,750) | $(60,628) |\ | Other income (loss), net | $2,274,849 | $58,481 | $3,403,667 | $(378,711) | | Net income | $4,238,172 | $2,087,483 | $5,260,785 | $404,085 | | Net income attributable to Motorsport Games Inc. | $4,258,400 | $2,105,928 | $5,299,458 | $440,972 | | Net income attributable to Class A common stock per share: Basic and diluted | $0.82 | $0.77 | $1.26 | $0.16 | | Weighted-average shares of Class A common stock outstanding: Basic and diluted | $5,206,536 | $2,722,728 | $4,195,047 | $2,722,728 |

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 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: 001-41880 (Exact name of registrant as specified in its charter) Cayman Islands N/A (State or other jurisdiction of incorporation or organizati ...

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 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: 001-41880 AIMEI HEALTH TECHNOLOGY CO., LTD (Exact name of registrant as specified in its charter) Cayman Islands N/A (State or other jurisdicti ...

[FORWARD-LOOKING STATEMENTS](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS) This report contains forward-looking statements regarding company strategy and financial projections, which are subject to substantial risks - This Quarterly Report on Form 10-Q contains forward-looking statements regarding the company's strategy, future preclinical studies and clinical trials, financial position, projected costs, and management objectives[12](index=12&type=chunk) - Key forward-looking statements include the ability to secure funding, the potential advantages of the RADR platform, strategic plans for drug candidate development and data expansion, R&D efforts, and the intention to leverage AI, machine learning, and biomarker data[13](index=13&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements as actual results may differ materially due to various factors, including those discussed in the **Risk Factors section of the 2024 Form 10-K**[14](index=14&type=chunk)[15](index=15&type=chunk) [PART I – FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part presents the company's unaudited financial statements and management's discussion and analysis for the reporting period [Item 1. Financial Statements.](index=5&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited condensed consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects a decrease in total assets and stockholders' equity driven by lower cash and marketable securities | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :------------------ | | **Assets** | | | | Cash and cash equivalents | $6,061,408 | $7,511,079 | | Marketable securities | $9,840,366 | $16,501,984 | | Total current assets | $17,200,790 | $25,247,629 | | Total assets | $17,420,292 | $25,571,792 | | **Liabilities** | | | | Accounts payable and accrued expenses | $4,752,848 | $4,140,361 | | Total current liabilities | $4,884,363 | $4,331,175 | | Total liabilities | $4,897,887 | $4,384,018 | | **Stockholders' Equity** | | | | Total stockholders' equity | $12,522,405 | $21,187,774 | - **Total assets decreased by approximately $8.15 million** from December 31, 2024, to June 30, 2025, primarily due to reductions in marketable securities and cash and cash equivalents[21](index=21&type=chunk) - **Total stockholders' equity decreased by approximately $8.67 million**, largely driven by accumulated deficit from net losses[21](index=21&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company's net loss decreased year-over-year due to a significant reduction in research and development expenses | 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 | $1,583,521 | $1,519,724 | $3,093,598 | $3,000,939 | | Research and development expenses | $3,068,379 | $3,888,737 | $6,332,334 | $8,139,523 | | Total operating expenses | $4,651,900 | $5,408,461 | $9,425,932 | $11,140,462 | | Loss from operations | $(4,651,900) | $(5,408,461) | $(9,425,932) | $(11,140,462) | | Interest income | $114,745 | $188,660 | $264,535 | $389,610 | | Other income, net | $206,140 | $260,295 | $293,599 | $350,536 | | NET LOSS | $(4,331,015) | $(4,959,506) | $(8,867,798) | $(10,400,316) | | Net loss per share (basic and diluted) | $(0.40) | $(0.46) | $(0.82) | $(0.97) | - **Net loss decreased** for both the three and six months ended June 30, 2025, compared to the same periods in 2024, primarily due to a reduction in research and development expenses[23](index=23&type=chunk) - **Research and development expenses decreased by 21%** for the three months and **22% for the six months** ended June 30, 2025, year-over-year[23](index=23&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Comprehensive loss narrowed year-over-year, though other comprehensive income shifted to a loss due to market factors | 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 | $(4,331,015) | $(4,959,506) | $(8,867,798) | $(10,400,316) | | Other comprehensive (loss) income | $(83,691) | $(8,445) | $(105,947) | $100,875 | | Comprehensive loss | $(4,414,706) | $(4,967,951) | $(8,973,745) | $(10,299,441) | - The company reported a **comprehensive loss of $4,414,706** for the three months ended June 30, 2025, and **$8,973,745 for the six months** ended June 30, 2025[25](index=25&type=chunk) - **Other comprehensive loss for the six months ended June 30, 2025, was $(105,947)**, a significant change from the income of $100,875 in the prior year, primarily due to unrealized losses on foreign currency translation and available-for-sale securities[25](index=25&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity declined significantly in the first half of 2025, primarily due to the net loss incurred during the period | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------- | :------------------ | :------------------ | | Total Stockholders' Equity | $21,187,774 | $12,522,405 | | Accumulated Deficit | $(76,025,617) | $(84,893,415) | | Additional Paid-in Capital | $97,058,323 | $97,366,699 | | Accumulated Other Comprehensive Income | $153,990 | $48,043 | - **Total stockholders' equity decreased by approximately $8.67 million** from December 31, 2024, to June 30, 2025, primarily due to the net loss incurred during the period[27](index=27&type=chunk) - Stock-based compensation contributed **$308,376 to additional paid-in capital** during the six months ended June 30, 2025[27](index=27&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flow from investing activities turned positive due to redemptions of marketable securities, offsetting operating cash usage | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash flows used in operating activities | $(8,312,887) | $(8,259,161) | | Net cash flows provided by (used in) investing activities | $6,832,489 | $(758,231) | | Net cash flows provided by financing activities | $- | $54,716 | | Change in cash and cash equivalents | $(1,449,671) | $(8,961,184) | | Cash and cash equivalents, end of period | $6,061,408 | $12,976,565 | - **Net cash used in operating activities slightly increased to $8,312,887** for the six months ended June 30, 2025, compared to $8,259,161 in the prior year[29](index=29&type=chunk) - Investing activities shifted from a net cash outflow of $758,231 in 2024 to a **net cash inflow of $6,832,489 in 2025**, primarily due to increased net redemptions of marketable securities[29](index=29&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of the company's accounting policies, financial position, and operational activities [Note 1. Organization, Principal Activities, and Basis of Presentation](index=10&type=section&id=Note%201.%20Organization,%20Principal%20Activities,%20and%20Basis%20of%20Presentation) Lantern Pharma is an AI-driven company developing targeted oncology therapies using its proprietary RADR platform - Lantern Pharma Inc is an AI-focused company dedicated to developing cancer therapies and transforming oncology drug discovery and development[31](index=31&type=chunk) - The company's **RADR AI platform** uses big data analytics and machine learning to identify drug candidates and patient populations likely to respond[31](index=31&type=chunk) - The development portfolio includes three clinical-stage oncology candidates: **LP-300 (Phase 2 for NSCLC)**, **LP-184/STAR-001 (Phase 1 for solid tumors and CNS cancers)**, and **LP-284 (Phase 1 for hematological cancers)**, plus an ADC program[33](index=33&type=chunk)[34](index=34&type=chunk) [Note 2. Liquidity and Going Concern](index=11&type=section&id=Note%202.%20Liquidity%20and%20Going%20Concern) Significant net losses raise substantial doubt about the company's ability to continue as a going concern without additional funding | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :----------------------------- | :----------------------------- | | Net Loss | $(8,868,000) | $(10,400,000) | | Working Capital (as of June 30, 2025) | $12,316,000 | N/A | - The company's ability to continue as a going concern is **highly contingent on raising additional capital** for ongoing research and development and clinical trials[38](index=38&type=chunk) - In July 2025, the company entered into an **ATM Sales Agreement to sell up to $15,530,000 of common stock** to support capital needs[37](index=37&type=chunk) [Note 3. Summary of Significant Accounting Policies](index=11&type=section&id=Note%203.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines key accounting policies for estimates, taxes, R&D costs, marketable securities, and other financial items [Use of Estimates and Assumptions](index=11&type=section&id=Use%20of%20Estimates%20and%20Assumptions) Financial statement preparation requires management to make estimates and assumptions, particularly for R&D accruals, fair value of equity-based awards, lease payments, and marketable securities[39](index=39&type=chunk) [Income Taxes](index=11&type=section&id=Income%20Taxes) - Due to operating losses, the company has **no corporate income tax liabilities** and has recorded a full valuation allowance on its deferred tax assets[40](index=40&type=chunk) - The company is assessing the potential impact of the recently enacted **One Big Beautiful Bill Act (OBBB)** on future gross tax assets and liabilities[41](index=41&type=chunk) [Foreign Currency](index=12&type=section&id=Foreign%20Currency) Financial statements of the Australian subsidiary (functional currency: AUD) are translated to USD, with translation gains/losses recorded in accumulated other comprehensive income (loss)[42](index=42&type=chunk) [Risks and Uncertainties](index=12&type=section&id=Risks%20and%20Uncertainties) - The company operates in an industry subject to intense competition, government regulation, and rapid technological change, facing financial, operational, technological, and regulatory risks[43](index=43&type=chunk) - Marketable securities are subject to interest rate, market, and credit risks, and **cash balances may exceed FDIC insurance limits**[44](index=44&type=chunk) - Reliance on foreign third-party manufacturers and service providers exposes the company to risks from changes in U.S. and international trade policies, including tariffs[45](index=45&type=chunk) [Research and Development](index=13&type=section&id=Research%20and%20Development) Research and development costs, including payroll, contractor expenses, research studies, manufacturing, clinical site costs, and technical infrastructure for the RADR platform, are expensed as incurred[47](index=47&type=chunk) [Cash and Cash Equivalents](index=13&type=section&id=Cash%20and%20Cash%20Equivalents) | Metric | June 30, 2025 | December 31, 2024 | | :---------------- | :-------------- | :---------------- | | Cash Equivalents | $4,617,000 | $6,619,000 | - Cash equivalents include money market funds and other highly liquid instruments with original maturities of 3 months or less[48](index=48&type=chunk) [Leases](index=13&type=section&id=Leases) - Operating leases are recognized on the balance sheet as right-of-use (ROU) assets and lease liabilities, based on the present value of future minimum lease payments[49](index=49&type=chunk) - Short-term leases (12 months or less) are expensed on a straight-line basis and do not result in ROU assets or lease liabilities[49](index=49&type=chunk) [Marketable Securities](index=13&type=section&id=Marketable%20Securities) - Marketable securities, including government and agency securities, corporate bonds, mutual funds, and common stock, are classified as **available-for-sale** and recorded at fair value[50](index=50&type=chunk)[51](index=51&type=chunk) - Unrealized gains and losses on available-for-sale debt securities are recorded in accumulated other comprehensive income (loss), while changes in fair value of equity securities are recorded in other income, net[51](index=51&type=chunk)[52](index=52&type=chunk) [Recent Accounting Pronouncements](index=14&type=section&id=Recent%20Accounting%20Pronouncements) - The company is assessing the impact of **ASU 2023-09 (Income Taxes)** effective for the 2025 annual period, which requires enhanced income tax disclosures[54](index=54&type=chunk) - The company is also assessing **ASU 2024-03 (Expense Disaggregation Disclosures)** effective for annual periods beginning after December 15, 2026, which requires disaggregated income statement expense disclosures[55](index=55&type=chunk) [Note 4. Commitments and Contingencies](index=14&type=section&id=Note%204.%20Commitments%20and%20Contingencies) The company maintains various research and license agreements, with related expenses decreasing year-over-year [General](index=14&type=section&id=General) - The company engages in various agreements (license, strategic alliance, research service) for product candidate advancement and R&D efforts[56](index=56&type=chunk) - CRO services for the LP-300 Phase 2 clinical trial are transitioning from Fortrea Inc to other service providers as of July 2025[57](index=57&type=chunk) | 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 | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Amount Expensed for License, Strategic Alliance, and Research Agreements | $1,133,000 | $1,639,000 | $2,314,000 | $3,741,000 | | Amount accrued and payable (June 30, 2025) | $1,382,000 | N/A | N/A | N/A | | Amount accrued and payable (December 31, 2024) | N/A | N/A | N/A | $1,725,000 | | Prepaid expenses and other current assets (June 30, 2025) | $368,000 | N/A | N/A | N/A | | Prepaid expenses and other current assets (December 31, 2024) | N/A | N/A | N/A | $490,000 | [Actuate Therapeutics](index=15&type=section&id=Actuate%20Therapeutics) - The company collaborates with Actuate Therapeutics, Inc to utilize its RADR® platform for biomarker-derived signatures for Actuate's product candidates[63](index=63&type=chunk) - As of June 30, 2025, the company holds **13,889 shares of Actuate common stock** with a fair value of approximately **$85,000**, down from $111,000 at December 31, 2024[64](index=64&type=chunk) [Note 5. Leases](index=16&type=section&id=Note%205.%20Leases) The company's operating lease assets and liabilities decreased, with future minimum lease payments totaling $151,801 | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Operating lease, right-of-use asset, net | $143,240 | $239,985 | | Total operating lease liabilities | $145,039 | $243,657 | | Weighted average remaining term (years) | 0.89 | 1.31 | | Weighted average discount rate | 9.50% | 9.03% | - Future estimated minimum lease payments under non-cancelable operating leases total **$151,801**, with $97,057 due in the remaining six months of 2025 and $54,744 in 2026[66](index=66&type=chunk) | Lease Expense Component | 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 | $53,000 | $45,000 | $106,000 | $90,000 | | Short-term lease cost | $4,800 | $4,800 | $9,600 | $9,300 | | Total lease expense | $57,800 | $49,800 | $115,600 | $99,300 | [Note 6. Stockholders' Equity](index=17&type=section&id=Note%206.%20Stockholders'%20Equity) The company initiated an ATM Sales Agreement in July 2025 while all outstanding warrants expired unexercised [Common Stock](index=17&type=section&id=Common%20Stock) - As of June 30, 2025, and December 31, 2024, **10,784,725 shares of Common Stock** were issued and outstanding[71](index=71&type=chunk) - In July 2025, the company entered an **ATM Sales Agreement to sell up to $15,530,000 of common stock**, with 15,185 shares sold for approximately $80,000 through August 12, 2025[72](index=72&type=chunk) [Warrants](index=17&type=section&id=Warrants) - No warrant exercises occurred during the three or six months ended June 30, 2025[73](index=73&type=chunk) - **All outstanding warrants expired unexercised** by June 30, 2025, resulting in no outstanding warrants[73](index=73&type=chunk) [Options](index=18&type=section&id=Options) | Metric | June 30, 2025 | | :------------------------ | :-------------- | | Options Outstanding | 1,239,766 | | Weighted Average Exercise Price | $5.72 | | Exercisable Options | 1,057,353 | | Weighted Average Exercise Price (Exercisable) | $5.95 | | Stock-based Compensation | 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 | $65,791 | $56,051 | $139,544 | $112,296 | | Research and development | $94,835 | $78,120 | $168,832 | $155,932 | | Total | $160,626 | $134,171 | $308,376 | $268,228 | [Note 7. Marketable Securities](index=18&type=section&id=Note%207.%20Marketable%20Securities) Marketable securities totaled $9.8 million, consisting primarily of government and agency debt securities with minor unrealized losses | Security Type | Aggregate Fair Value (June 30, 2025) | | :------------------------------ | :----------------------------------- | | Government and agency debt securities | $9,951,540 | | Equity securities | $4,505,440 | | Total | $14,456,980 | | Included in cash and cash equivalents | $4,616,614 | | Included in marketable securities | $9,840,366 | - All debt securities are **due within one year**, totaling $9,951,540 as of June 30, 2025[76](index=76&type=chunk) - **Unrealized losses on government and agency debt securities were $453**, all for less than 12 months, and are not believed to represent credit losses[77](index=77&type=chunk) [Note 8. Fair Value Measurements](index=19&type=section&id=Note%208.%20Fair%20Value%20Measurements) All marketable securities are classified as Level 1 or Level 2 for fair value measurement, with no assets using Level 3 inputs - Fair value measurements are based on a hierarchy: **Level 1** (quoted prices in active markets for identical assets), **Level 2** (observable inputs for similar assets), and **Level 3** (unobservable inputs)[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) | Description | Total Fair Value (June 30, 2025) | Level 1 | Level 2 | Level 3 | | :------------------------------ | :------------------------------- | :-------- | :-------- | :-------- | | Government and agency debt securities | $9,951,540 | $- | $9,951,540 | $- | | Money markets | $626,569 | $626,569 | $- | $- | | Mutual funds – fixed income | $2,922,809 | $2,922,809 | $- | $- | | Mutual funds – alternative investments | $871,200 | $871,200 | $- | $- | | Common stock | $84,862 | $84,862 | $- | $- | | Total | $14,456,980 | $4,505,440 | $9,951,540 | $- | - All marketable securities are classified as **Level 1 or Level 2**, with no financial assets measured using Level 3 inputs[82](index=82&type=chunk) [Note 9. Loss Per Share of Common Shares](index=20&type=section&id=Note%209.%20Loss%20Per%20Share%20of%20Common%20Shares) Potentially dilutive securities are excluded from the diluted loss per share calculation due to the company's net loss position | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :-------------- | :-------------- | | Warrants to purchase common stock | - | 81,496 | | Stock options | 1,239,766 | 1,063,548 | | Total potentially dilutive securities | 1,239,766 | 1,145,044 | - Due to net losses, potentially dilutive securities (warrants and stock options) are **excluded from diluted loss per share calculations** as their effect would be anti-dilutive[84](index=84&type=chunk) [Note 10. Segment Reporting](index=20&type=section&id=Note%2010.%20Segment%20Reporting) The company operates as a single operating segment, with the CEO acting as the chief operating decision maker - The company operates as **one operating segment**, with its chief executive officer acting as the chief operating decision maker (CODM)[85](index=85&type=chunk) - CODM uses R&D study and material costs, cash balances, operating losses, and budget projections to assess performance and allocate resources[85](index=85&type=chunk) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------- | :----------------------------- | :----------------------------- | | Research and development study and material costs | $4,072,000 | $5,848,000 | | Three Months Ended June 30, 2025 | $1,946,000 | N/A | | Three Months Ended June 30, 2024 | N/A | $2,730,000 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's perspective on the company's financial condition, operational results, and strategic focus [Overview](index=21&type=section&id=Overview) Lantern Pharma is an AI-driven company developing targeted cancer therapies by leveraging its proprietary RADR® data platform - Lantern Pharma is an AI-focused company dedicated to developing cancer therapies, leveraging its proprietary **RADR® platform with over 200 billion data points** to streamline drug discovery and development[87](index=87&type=chunk) - The company has three lead small molecule drug candidates (**LP-300, LP-184, LP-284**) in active clinical programs for various cancer indications, and an Antibody-Drug Conjugate (ADC) program in preclinical research[88](index=88&type=chunk)[91](index=91&type=chunk) - The strategy involves developing new drug candidates and 'rescuing' historical drug candidates by using AI and genomic data to target specific patient populations, aiming to **reduce development time and cost**[89](index=89&type=chunk)[90](index=90&type=chunk) [Components of Our Results of Operations](index=23&type=section&id=Components%20of%20Our%20Results%20of%20Operations) The company's results are primarily driven by research and development expenses across its drug programs and AI platform - The company has **not recognized any revenues** for the three and six-month periods ended June 30, 2025 and 2024[99](index=99&type=chunk) | Research and Development Project | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :------------------------------- | :------------------------------- | :----------------------------- | | LP-300 | $1,164,748 | $2,172,656 | | LP-184 | $1,272,370 | $2,633,833 | | LP-284 | $275,957 | $732,428 | | LP-100 | $31,250 | $60,650 | | ADC Program | $7,999 | $14,376 | | RADR Platform | $263,564 | $517,143 | | Other | $52,491 | $201,248 | | Total research and development expenses | $3,068,379 | $6,332,334 | - General and administrative expenses primarily consist of salaries, professional fees, insurance, and occupancy costs, and are expected to fluctuate and increase with clinical trials and potential commercialization[102](index=102&type=chunk)[103](index=103&type=chunk) [Summary Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)](index=24&type=section&id=Summary%20Results%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030,%202025%20and%202024%20(unaudited)) Net loss decreased for both the three and six-month periods in 2025 compared to 2024, driven by lower R&D spending | 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 | $1,583,521 | $1,519,724 | $3,093,598 | $3,000,939 | | Research and development expenses | $3,068,379 | $3,888,737 | $6,332,334 | $8,139,523 | | Total operating expenses | $4,651,900 | $5,408,461 | $9,425,932 | $11,140,462 | | Loss from operations | $(4,651,900) | $(5,408,461) | $(9,425,932) | $(11,140,462) | | Interest income | $114,745 | $188,660 | $264,535 | $389,610 | | Other income, net | $206,140 | $260,295 | $293,599 | $350,536 | | NET LOSS | $(4,331,015) | $(4,959,506) | $(8,867,798) | $(10,400,316) | [Comparison of the Three Months Ended June 30, 2025 and 2024](index=24&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) For Q2 2025, R&D expenses decreased by 21% while G&A expenses saw a modest 4% increase compared to Q2 2024 [General and Administrative Expenses](index=24&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses **increased by approximately $64,000 (4%) to $1,584,000**, driven by higher professional fees, patent costs, payroll, and corporate insurance, partially offset by decreases in business development and office fees[105](index=105&type=chunk) [Research and Development Expenses](index=24&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses **decreased by approximately $821,000 (21%) to $3,068,000**, primarily due to decreases in research studies, consulting, and payroll, partially offset by increased licensing expenses[106](index=106&type=chunk) [Interest and Other Income, Net](index=24&type=section&id=Interest%20and%20Other%20Income,%20Net) **Interest income decreased by $74,000 (39%) to $115,000**[107](index=107&type=chunk) - Other income, net, decreased by $54,000 to $206,000, mainly due to lower dividend income, partially offset by foreign currency gains and investment income[107](index=107&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=25&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) For H1 2025, R&D expenses decreased by 22% while G&A expenses increased by 3% compared to H1 2024 [General and Administrative Expenses](index=25&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses **increased by approximately $93,000 (3%) to $3,094,000**, primarily due to higher professional fees, payroll, corporate insurance, patent/legal expenses, and rent, offset by decreases in business development and travel expenses[109](index=109&type=chunk) [Research and Development Expenses](index=25&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses **decreased by approximately $1,807,000 (22%) to $6,332,000**, mainly due to decreases in research studies, payroll, and consulting, partially offset by increases in licensing and research materials expenses[110](index=110&type=chunk) [Interest and Other Income, Net](index=25&type=section&id=Interest%20and%20Other%20Income,%20Net) **Interest income decreased by $125,000 to $265,000**[111](index=111&type=chunk) - Other income, net, decreased by $57,000 to $294,000, primarily due to lower dividend income, partially offset by foreign currency gains and investment income[111](index=111&type=chunk) [Cash Flows](index=25&type=section&id=Cash%20Flows) Investing activities provided a significant cash inflow in H1 2025, contrasting with a cash outflow in the prior year [Operating Activities](index=25&type=section&id=Operating%20Activities) **Net cash used in operating activities increased slightly to approximately $8,313,000** for the six months ended June 30, 2025, primarily due to a smaller increase in accounts payable and accrued expenses compared to the prior year[113](index=113&type=chunk) [Investing Activities](index=25&type=section&id=Investing%20Activities) **Net cash provided by investing activities was approximately $6,832,000** for the six months ended June 30, 2025, a significant shift from $758,000 used in the prior year, driven by increased net redemptions of marketable securities[114](index=114&type=chunk) [Financing Activities](index=25&type=section&id=Financing%20Activities) **No financing activities occurred** during the six months ended June 30, 2025, compared to $55,000 provided by warrant exercises in the prior year[115](index=115&type=chunk) [Operating Capital and Capital Expenditure Requirements](index=26&type=section&id=Operating%20Capital%20and%20Capital%20Expenditure%20Requirements) The company requires substantial additional funding to sustain operations beyond June 2026 due to ongoing losses - As of June 30, 2025, the company had **$17.4 million in total assets**, **$12.3 million in working capital**, and **$15.9 million in cash, cash equivalents, and marketable securities**[116](index=116&type=chunk) - Existing liquidity is expected to **fund operations into June 2026**, but substantial additional funding is needed due to anticipated ongoing losses and negative operating cash flows, raising substantial doubt about the company's ability to continue as a going concern[116](index=116&type=chunk)[117](index=117&type=chunk) - Future expenses are expected to increase substantially as the company continues clinical development, initiates new trials, expands its drug candidate portfolio, protects intellectual property, pursues regulatory approvals, and builds commercial infrastructure[119](index=119&type=chunk)[121](index=121&type=chunk) [Critical Accounting Estimates](index=27&type=section&id=Critical%20Accounting%20Estimates) There were no changes to the company's critical accounting estimates during the first six months of 2025 - There have been **no changes** to the company's critical accounting estimates during the six months ended June 30, 2025[123](index=123&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=27&type=section&id=Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company's primary market risk is interest rate sensitivity affecting its investment portfolio and income - The primary market risk exposure is **interest rate sensitivity**, which can affect the market value of fixed-rate securities and future investment income[124](index=124&type=chunk) - The company has **no long-term debt** and does not believe its cash and cash equivalents have significant default or illiquidity risk, though cash balances may exceed federally insured limits[125](index=125&type=chunk)[127](index=127&type=chunk) - **Foreign currency gains of approximately $130,000** were experienced for the six months ended June 30, 2025, related to the Australian subsidiary, but the impact of future foreign currency losses is not expected to be material[128](index=128&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company is exempt from this item's requirements due to its status as a Smaller Reporting Company - As a **Smaller Reporting Company**, Lantern Pharma Inc is exempt from the requirements of Item 3[130](index=130&type=chunk) [Item 4. Controls and Procedures.](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period [Evaluation of Disclosure Controls and Procedures.](index=28&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures.) - Management, with CEO and CFO participation, evaluated disclosure controls and procedures as of June 30, 2025[131](index=131&type=chunk) - Disclosure controls and procedures were concluded to be **effective at the reasonable assurance level**[132](index=132&type=chunk) [Changes in Internal Control Over Financial Reporting.](index=28&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting.) - **No changes** in internal control over financial reporting occurred during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[133](index=133&type=chunk) [Inherent Limitations on Effectiveness of Controls.](index=28&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls.) - Management acknowledges that control systems provide only **reasonable, not absolute, assurance** and are subject to inherent limitations, including faulty judgments, errors, circumvention by individuals, and management override[134](index=134&type=chunk) [PART II – OTHER INFORMATION](index=30&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This part includes information on risk factors and a list of exhibits filed with the report [Item 1A. Risk Factors.](index=30&type=section&id=Item%201A.%20Risk%20Factors.) The company is exempt from this item's requirements due to its status as a Smaller Reporting Company - As a **Smaller Reporting Company**, Lantern Pharma Inc is exempt from the requirements of Item 1A[137](index=137&type=chunk) [Item 6. Exhibits.](index=30&type=section&id=Item%206.%20Exhibits.) This section lists all exhibits filed with the report, including by-law amendments, agreements, and officer certifications - Exhibit 3.4 is **Amendment No. 2 to By-Laws**, incorporated by reference from the Registrant's Current Report on Form 8-K filed July 29, 2025[138](index=138&type=chunk) - Exhibit 10.2 is the **ATM Sales Agreement**, dated July 3, 2025, by and between Lantern Pharma Inc and ThinkEquity LLC, incorporated by reference[138](index=138&type=chunk) - **Certifications of Principal Executive Officer and Principal Financial Officer** (Exhibits 31.1, 31.2, 32.1, 32.2) are filed or furnished electronically herewith[138](index=138&type=chunk) [SIGNATURES](index=32&type=section&id=SIGNATURES) The report is duly signed by the company's Chief Executive Officer and Chief Financial Officer - The report was signed on **August 13, 2025**, by Panna Sharma, Chief Executive Officer, and David R. Margrave, Chief Financial Officer, on behalf of Lantern Pharma Inc[141](index=141&type=chunk)[142](index=142&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-41304 VALUENCE MERGER CORP. I (Exact name of registrant as specified in its charter) Cayman Islands N/A (State or other jurisdiction of ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-41304 VALUENCE MERGER CORP. I (Exact name of registrant as specified in its charter) Cayman Islands N/A (State or other jurisdiction of ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-42497 ODYSIGHT.AI INC. (Exact name of registrant as specified in its charter) Nevada 47-4257143 (State or other jurisdiction (I.R.S. Em ...