TABLE OF CONTENTS FORM 10-Q _______________________ x 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 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________________ For the transition period from _______ to ________ Commission File Number: 001-40212 Connect Biopharma Holdings Limited (Exact name of ...

Connect Biopharma Reports Second Quarter 2025 Financial Results and Provides Business Update – Initiated Phase 2 Seabreeze STAT asthma and COPD studies evaluating rademikibart as an adjunct treatment for acute exacerbations – – Presented positive data at ATS 2025 and EAACI 2025 supporting the potential of rademikibart to deliver differentiated efficacy and safety in patients with eosinophilic-driven type 2 asthma and COPD – – New drug application for rademikibart for the treatment of AD submitted to China's ...

[Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) LiveOne's Q1 Fiscal 2026 saw a significant revenue decline, increased losses, and negative Adjusted EBITDA, alongside strategic staff reductions and new B2B partnerships [Q1 Fiscal 2026 Financial Summary](index=1&type=section&id=Q1%20Fiscal%202026%20Financial%20Summary) LiveOne's Q1 Fiscal 2026 revenue decreased to **$19.2 million** from **$33.1 million** year-over-year, leading to an operating loss of **$4.0 million** and a net loss of **$3.9 million**, with Adjusted EBITDA turning negative at **($1.8) million** Q1 Fiscal 2026 Financial Summary (In thousands, except per share data) | | Three Months Ended June 30, | | | :--- | :--- | :--- | | | **2025** | **2024** | | **Revenue** | $19,207 | $33,078 | | **Operating loss** | $(4,034) | $(784) | | **Net loss** | $(3,864) | $(1,557) | | **Adjusted EBITDA*** | $(1,812) | $2,903 | | **Net loss per share** | $(0.04) | $(0.02) | [Key Business Highlights](index=1&type=section&id=Key%20Business%20Highlights) The company executed a **31% staff reduction**, secured major B2B partnerships including a **$16.5 million** Amazon deal, and raised **$10.2 million** in equity for Bitcoin and Web3 initiatives - Executed a **31% staff reduction**, decreasing employee count from 138 to 95[4](index=4&type=chunk) - Secured major B2B partnerships, including a 3-year, **$16.5 million** deal with Amazon via PodcastOne and a partnership with a Fortune 250 company projected to generate over **$26 million** in revenue[4](index=4&type=chunk) - Completed a **$10.2 million** equity raise to fund a Bitcoin yield strategy and other Web3 initiatives[4](index=4&type=chunk) - Subsidiary PodcastOne (PODC) reported a record **$15 million** in revenue for Q1 2026[4](index=4&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) This section details the drivers behind the Q1 Fiscal 2026 revenue decline and its impact on operating loss and Adjusted EBITDA [Detailed Quarterly Results Discussion](index=2&type=section&id=Detailed%20Quarterly%20Results%20Discussion) Q1 Fiscal 2026 revenue declined to **$19.2 million** due to Slacker revenue reductions, resulting in an operating loss of **$4.0 million** and a **$4.7 million** decrease in Adjusted EBITDA to **($1.8) million** - Q1 Fiscal 2026 revenue was **$19.2 million**, a decrease from **$33.1 million** in the prior year, primarily due to reductions in Slacker revenues[5](index=5&type=chunk) - Operating loss for the quarter was **($4.0) million**, compared to a **($0.8) million** loss in Q1 Fiscal 2025, largely resulting from the decrease in Slacker revenue[5](index=5&type=chunk) - Adjusted EBITDA was **($1.8) million**, a decrease of **$4.7 million** from **$2.9 million** in the prior-year quarter, with the Audio Division also impacted by the decline in Slacker revenues[6](index=6&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section presents LiveOne's consolidated statements of operations and balance sheets, along with reconciliations of non-GAAP financial measures [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) LiveOne reported Q1 Fiscal 2026 revenue of **$19.2 million**, total operating expenses of **$23.2 million**, and a loss from operations of **$4.0 million**, with a net loss attributable to LiveOne of **$3.6 million** or **($0.04)** per share Consolidated Statements of Operations (In thousands, except per share) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Revenue** | $19,207 | $33,078 | | **Total operating expenses** | $23,241 | $33,862 | | **Loss from operations** | $(4,034) | $(784) | | **Net loss** | $(3,864) | $(1,557) | | **Net loss attributed to LiveOne** | $(3,593) | $(1,945) | | **Net loss per share** | $(0.04) | $(0.02) | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were **$48.9 million**, total liabilities **$61.0 million**, and total stockholders' deficit **$12.1 million**, with cash and cash equivalents significantly increasing to **$11.9 million** Consolidated Balance Sheets (In thousands) | | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $11,891 | $4,119 | | **Total Current Assets** | $22,946 | $15,246 | | **Total Assets** | $48,940 | $40,517 | | **Total Current Liabilities** | $33,956 | $36,384 | | **Total Liabilities** | $61,032 | $48,929 | | **Total equity (deficit)** | $(12,092) | $(8,412) | [Reconciliation of Non-GAAP Measures](index=7&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) This section reconciles non-GAAP metrics, showing Q1 FY2026 Adjusted EBITDA at **($1.8) million** (down from **$2.9 million**) and Contribution Margin at **$3.4 million** (down from **$8.3 million**) [Adjusted EBITDA Reconciliation](index=7&type=section&id=Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA for Q1 FY2026 was **($1,812) thousand**, a significant decrease from **$2,903 thousand** in the prior year, largely due to a swing in Slacker operations Adjusted EBITDA Reconciliation (In thousands) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net Loss** | $(3,864) | $(1,557) | | **Total Adjusted EBITDA*** | **$(1,812)** | **$2,903** | | *By Segment:* | | | | Operations – PodcastOne | $580 | $(316) | | Operations – Slacker | $(191) | $5,425 | | Operations – Other | $(715) | $(628) | | Corporate | $(1,486) | $(1,578) | [Contribution Margin Reconciliation](index=8&type=section&id=Contribution%20Margin%20Reconciliation) Q1 FY2026 Contribution Margin was **$3,425 thousand**, a substantial decrease from **$8,343 thousand** year-over-year, reflecting a lower Gross Profit Contribution Margin Reconciliation (In thousands) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Revenue** | $19,207 | $33,078 | | **Gross Profit** | $2,170 | $7,216 | | **Contribution Margin*** | **$3,425** | **$8,343** | [Supplementary Information](index=2&type=section&id=Supplementary%20Information) This section provides details on the conference call, explanations of non-GAAP measures, forward-looking statements, and a company overview [Conference Call Information](index=2&type=section&id=Conference%20Call%20Information) LiveOne scheduled a conference call and webcast for August 13, 2025, at 10:00 AM ET to discuss Q1 Fiscal 2026 financial results, with dial-in and webcast details provided Conference Call Information | | Details | | :--- | :--- | | **Date** | Wednesday, August 13, 2025 | | **Time** | 10:00 AM Eastern Time (7:00 AM Pacific Time) | | **Webcast Link** | Provided in the report | | **Dial-in** | (800) 715-9871 | | **Conference Code** | 2892444 | [About Non-GAAP Financial Measures](index=4&type=section&id=About%20Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like Contribution Margin and Adjusted EBITDA to assess segment performance, acknowledging their limitations as supplements to GAAP results - The company uses non-GAAP measures, Contribution Margin and Adjusted EBITDA, to evaluate the performance of its operating segments[11](index=11&type=chunk)[12](index=12&type=chunk) - Adjusted EBITDA is defined as earnings excluding interest, taxes, depreciation, amortization, and other specific non-recurring or non-cash items like stock-based compensation and acquisition-related costs[13](index=13&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section includes forward-looking statements subject to risks and uncertainties, cautioning that actual results may differ materially from expectations, with further details in SEC filings - The press release contains "forward-looking statements" that involve risks and uncertainties, which may cause actual results to differ materially from expectations[9](index=9&type=chunk) - Key risks include reliance on its largest OEM customer, ability to consummate proposed transactions, ability to continue as a going concern, and risks related to digital assets[9](index=9&type=chunk) [Company Overview](index=2&type=section&id=Company%20Overview) LiveOne is a Los Angeles-based creator-first music, entertainment, and technology platform operating through subsidiaries like Slacker and PodcastOne, delivering content via memberships and events - LiveOne is a creator-first music, entertainment, and technology platform based in Los Angeles[8](index=8&type=chunk) - Its key subsidiaries include Slacker, PodcastOne (Nasdaq: PODC), PPVOne, and others[8](index=8&type=chunk)

[Q2 2025 Financial Results and Strategic Update](index=1&type=section&id=Q2%202025%20Financial%20Results%20%26%20Strategic%20Update) ProPhase Labs announced its Q2 2025 financial and operational results, highlighting significant improvements and advancing non-dilutive liquidity initiatives for transformative growth [Company Announcement & Overview](index=1&type=section&id=Company%20Announcement%20%26%20Overview) ProPhase Labs announced its Q2 2025 financial and operational results, highlighting significant improvements and advancing non-dilutive liquidity initiatives for transformative growth - ProPhase Labs announced its financial and operational results for the three and six months ended June 30, 2025[1](index=1&type=chunk) - The company achieved significant operational and financial improvements, advancing multiple non-dilutive liquidity initiatives aimed at transformative growth[1](index=1&type=chunk) - The company will host a virtual conference call on Wednesday, August 13, 2025, at 2:00 PM ET[1](index=1&type=chunk)[2](index=2&type=chunk) [Key Highlights and Subsequent Events](index=1&type=section&id=Key%20Highlights%20and%20Subsequent%20Events) The company achieved key Q2 and year-to-date milestones, including BE-Smart™ patent approval, Nebula Genomics reaching breakeven, and significant financial and operational improvements - The BE-Smart™ esophageal pre-cancer diagnostic test received a key U.S. patent, strengthening the IP portfolio and accelerating commercialization[4](index=4&type=chunk)[6](index=6&type=chunk) - Nebula Genomics transitioned from sustained losses to **breakeven** with a clear path to profitability by streamlining operations, exiting in-house labs, and optimizing cost structures[5](index=5&type=chunk) - Achieved significant profitability turnaround, with stockholders' equity increasing to **$11.5 million** as of June 30, 2025, operating expenses decreasing by **over 35%** year-over-year, and most high-cost debt repaid[6](index=6&type=chunk) - Completed strategic portfolio adjustments, generating **$8.7 million** from the sale of PMI and Pharmaloz real estate and eliminating **over $20 million** in debt/liabilities[6](index=6&type=chunk) [BE-Smart™ Esophageal Pre-Cancer Diagnostic Test](index=1&type=section&id=BE-Smart%E2%84%A2%20Esophageal%20Pre-Cancer%20Diagnostic%20Test) The BE-Smart™ test received a key U.S. patent, strengthening its IP portfolio and accelerating market entry under favorable regulatory conditions - In August 2025, the U.S. Patent and Trademark Office granted a key U.S. patent for the company's BE-Smart™ esophageal adenocarcinoma risk assessment test[4](index=4&type=chunk) - ProPhase Labs owns the entire intellectual property portfolio behind BE-Smart™[4](index=4&type=chunk) - BE-Smart™ is accelerating market entry following favorable regulatory changes and continues development under the CLIA framework[6](index=6&type=chunk) [Nebula Genomics Operations Streamlining](index=1&type=section&id=Nebula%20Genomics%20Operations%20Streamlining) Nebula Genomics successfully transformed into a leaner, more scalable business, achieving breakeven profitability through operational streamlining and cost optimization - Nebula Genomics has successfully transformed into a leaner, stronger, and more scalable business[5](index=5&type=chunk) - Through streamlined operations, exiting in-house labs, and optimizing team and technology expenses, Nebula transitioned from historical losses to **breakeven** with a clear path to sustained profitability[5](index=5&type=chunk) - Nebula is prepared for its next growth phase, whether through a strategic sale or continued expansion over the next 9 to 12 months[5](index=5&type=chunk) [Financial & Operational Achievements](index=1&type=section&id=Financial%20%26%20Operational%20Achievements) The company achieved a clear profitability turnaround, significantly increasing stockholders' equity and reducing operating expenses and high-cost debt - Achieved a clear turnaround in profitability, including significant positive impacts from subsequent events[6](index=6&type=chunk) - Stockholders' equity increased from **$7.4 million** at year-end 2024 to **$11.5 million** as of June 30, 2025[6](index=6&type=chunk) - Year-to-date operating expenses decreased by **over 35%** through rigorous portfolio optimization and cost controls[6](index=6&type=chunk) - Repaid most commercial cash advance debt, reducing overhead and increasing financial flexibility[6](index=6&type=chunk) - Gross margins improved in Q2 2025, with losses narrowing compared to Q2 2024[6](index=6&type=chunk) [Strategic Growth Initiatives](index=2&type=section&id=Strategic%20Growth%20Initiatives) ProPhase Labs is pursuing strategic growth initiatives, including recovering **$50 million** in insurance claims via Crown Medical Collections and a board-approved crypto treasury strategy for non-dilutive funding - Crown Medical Collections is expected to recover approximately **$50 million** in insurance receivables for ProPhase (net of contingency fees), with significant cash flow anticipated in the coming months[7](index=7&type=chunk)[8](index=8&type=chunk) - The company is actively pursuing non-dilutive financing strategies, including Debtor-in-Possession (DIP) or similar funding, to support core business development[7](index=7&type=chunk)[8](index=8&type=chunk)[11](index=11&type=chunk) - The Board has approved a strategic treasury initiative to acquire and hold selected digital assets, including Bitcoin, as a complementary growth lever for the core diagnostic and consumer health businesses[9](index=9&type=chunk) - The Board is exploring share issuance guardrails to prevent unnecessary dilution and ensure agile action to raise substantial capital with minimal dilution during significant stock price appreciation[10](index=10&type=chunk)[11](index=11&type=chunk) [Crown Medical Collections Opportunity](index=2&type=section&id=Crown%20Medical%20Collections%20Opportunity) Crown Medical Collections is projected to recover approximately **$50 million** in insurance receivables for ProPhase, with significant cash flow expected in the coming months - Crown Medical Collections is estimated to recover approximately **$50 million** in insurance receivables for ProPhase, net of contingency fees[7](index=7&type=chunk) - The company anticipates Crown Medical's efforts will begin generating significant cash flow in the coming months, potentially sooner[8](index=8&type=chunk) - Management is actively pursuing non-dilutive financing strategies, such as Debtor-in-Possession (DIP) financing, to support core business development[7](index=7&type=chunk) [Crypto Treasury Strategy & Share Issuance Guardrails](index=2&type=section&id=Crypto%20Treasury%20Strategy%20%26%20Share%20Issuance%20Guardrails) The Board approved a strategic crypto treasury plan to acquire digital assets and is evaluating share issuance guardrails to prevent dilution while enabling future capital raises - The Board has approved a strategic treasury initiative involving the acquisition and long-term holding of selected digital assets, including Bitcoin, as a complementary growth lever for core operations[9](index=9&type=chunk) - The company is not pursuing a reverse merger but seeks collaboration with leading cryptocurrency players while advancing its core business[9](index=9&type=chunk) - The Board is evaluating share issuance guardrails to avoid unnecessary dilution and ensure flexibility to raise hundreds of millions of dollars with minimal dilution if the stock price significantly appreciates[10](index=10&type=chunk) - The goal is to fund the crypto treasury strategy through Crown Medical Collections and other potential liquidity events, such as a possible sale of Nebula Genomics, without issuing new shares[11](index=11&type=chunk) [CEO Commentary](index=2&type=section&id=CEO%20Commentary) CEO Ted Karkus highlighted H1 2025 as a transformative period, marked by non-core asset divestitures, debt reduction, streamlined costs, positive gross margins, and accelerated BE-Smart™ market entry - H1 2025 was a transformative period for ProPhase, marked by the divestiture of non-core businesses, a reduction of **over $10 million** in liabilities, significant gains, and continued cost structure streamlining[13](index=13&type=chunk) - These measures significantly improved the balance sheet and sharpened the company's focus on high-potential opportunities in diagnostics and consumer health[13](index=13&type=chunk) - Operationally, the company achieved positive gross margins and nearly halved operating losses year-over-year[14](index=14&type=chunk) - The FDA's recent non-enforcement stance on LDTs enables a faster market launch for the BE-Smart™ test[14](index=14&type=chunk) - The company is committed to advancing the commercial potential of its core businesses while actively exploring new cryptocurrency treasury initiatives[14](index=14&type=chunk) [Detailed Financial Performance](index=3&type=section&id=Detailed%20Financial%20Results) This section provides a comprehensive overview of the company's financial performance, including comparative results for the three months ended June 30, 2025, and its financial position and liquidity [Three Months Ended June 30, 2025 vs. 2024](index=3&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20vs.%202024) For Q2 2025, net revenue decreased year-over-year, but improved product mix and cost controls led to positive gross margins and reduced operating losses Q2 2025 Key Financial Data (vs. Q2 2024) | Metric | June 30, 2025 (USD Thousands) | June 30, 2024 (USD Thousands) | Change (USD Thousands) | Change (%) | | :--------------------------------- | :---------------------------- | :---------------------------- | :--------------------- | :--------- | | Net Revenue | 1,247 | 1,504 | (257) | -17.1% | | Cost of Revenues | 513 | 1,659 | (1,146) | -69.1% | | Gross Profit (Loss) | 734 | (155) | 889 | 573.5% | | General and Administration | 4,624 | 6,933 | (2,309) | -33.3% | | Research and Development | 4 | 140 | (136) | -97.1% | | Net Loss from Continuing Operations | (4,472) | (5,463) | 991 | -18.1% | | Diluted Loss Per Share from Continuing Operations | (0.11) | (0.29) | 0.18 | -62.1% | - Gross margin significantly improved from **(10.3)%** in Q2 2024 to **58.9%** in Q2 2025, primarily due to a better product mix in consumer products[19](index=19&type=chunk) - General and administrative expenses decreased by **$2.3 million**, mainly due to reduced personnel, management, and professional service fees, along with the removal of PMI-related costs[20](index=20&type=chunk) - Research and development expenses decreased by **$0.136 million**, reflecting streamlined focus and efforts due to reduced product development and field testing activities[21](index=21&type=chunk) [Financial Position and Liquidity](index=3&type=section&id=Financial%20Position%20and%20Liquidity) As of June 30, 2025, cash and equivalents decreased, but working capital deficit improved, and shareholder equity significantly increased due to equity issuance and asset sales H1 2025 Financial Position Overview | Metric | June 30, 2025 (USD Thousands) | December 31, 2024 (USD Thousands) | Change (USD Thousands) | | :--------------------- | :---------------------------- | :-------------------------------- | :--------------------- | | Cash and Cash Equivalents | 169 | 678 | (509) | | Working Capital Deficit | (1,100) | (1,500) | 400 | | Stockholders' Equity | 11,400 | 7,400 | 4,000 | - Cash and cash equivalents decreased by approximately **$0.5 million**, primarily due to **$4.2 million** cash used in operations and **$2.5 million** in note repayments, partially offset by **$4.7 million** from common stock and note issuances and **$0.8 million** from PMI sale[23](index=23&type=chunk) - Stockholders' equity increased from **$7.4 million** as of December 31, 2024, to **$11.4 million** as of March 31, 2025[23](index=23&type=chunk) [Non-GAAP Financial Measures](index=10&type=section&id=Non-GAAP%20Financial%20Measures) This section presents the reconciliation of non-GAAP financial metrics, including EBITDA and Adjusted EBITDA, to their most directly comparable GAAP measures [Reconciliation of EBITDA and Adjusted EBITDA](index=10&type=section&id=Reconciliation%20of%20EBITDA%20and%20Adjusted%20EBITDA) The company provides EBITDA and Adjusted EBITDA as non-GAAP metrics to offer supplemental insights into ongoing operational performance, excluding specific non-cash and non-recurring items - EBITDA is defined as net income (loss) before net interest expense, income taxes, depreciation, and amortization[36](index=36&type=chunk) - Adjusted EBITDA further excludes acquisition costs, other non-cash items, and non-recurring expenses[36](index=36&type=chunk) - The company uses EBITDA and Adjusted EBITDA to evaluate and manage operations, considering them useful supplemental information regarding ongoing economic performance[38](index=38&type=chunk) EBITDA and Adjusted EBITDA Reconciliation (USD Thousands) | Metric | June 30, 2025 | June 30, 2024 | | :--------------------------------- | :------------ | :------------ | | GAAP Loss from Continuing Operations | (4,472) | (5,463) | | Net Interest | 587 | 522 | | Income Tax Benefit | 779 | (2,287) | | Depreciation and Amortization | 1,349 | 1,536 | | **EBITDA** | **(1,757)** | **(5,692)** | | Stock-Based Compensation Expense | 508 | 796 | | Non-Cash Rent Expense | 442 | 67 | | **Adjusted EBITDA from Continuing Operations** | **(807)** | **(4,829)** | [Corporate Information and Disclosures](index=4&type=section&id=Corporate%20Information%20%26%20Disclosures) This section provides essential company information, forward-looking statements, and investor relations contacts [About ProPhase Labs Inc.](index=4&type=section&id=About%20ProPhase%20Labs%20Inc.) ProPhase Labs Inc. is a next-generation biotechnology, genomics, and consumer products company focused on building a healthier world through innovative and actionable insights - ProPhase Labs (Nasdaq: PRPH) is a next-generation biotechnology, genomics, and consumer products company[24](index=24&type=chunk) - The company's mission is to build a healthier world through bold innovation and actionable insights[24](index=24&type=chunk) - Key businesses include industry-leading whole genome sequencing solutions, breakthrough diagnostic development like esophageal cancer early detection, and a world-class direct-to-consumer OTC dietary supplement platform[24](index=24&type=chunk) - In August 2025, the company's BE-Smart™ esophageal adenocarcinoma risk assessment test received a key U.S. patent[24](index=24&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This document contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, involving risks and uncertainties that may cause actual results to differ materially from projections - This document contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995[25](index=25&type=chunk) - Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from projections[25](index=25&type=chunk) - The company undertakes no obligation to update forward-looking statements unless required by applicable securities laws[25](index=25&type=chunk) [Media and Investor Relations](index=4&type=section&id=Media%20and%20Investor%20Relations) Contact information for ProPhase Labs Inc.'s media relations, institutional investors, and retail investor relations is provided - Media and institutional investor relations contact: investorrelations@prophaselabs.com[26](index=26&type=chunk) - Retail investor relations contact: Renmark Financial Communications, John Boidman, jboidman@renmarkfinancial.com, Phone: (416) 644-2020 or (212) 812-7680[26](index=26&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the company's condensed consolidated balance sheets, statements of operations and comprehensive income (loss), and cash flows [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed consolidated balance sheets for ProPhase Labs Inc. and its subsidiaries detail assets, liabilities, and stockholders' equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (USD Thousands, except share and per share amounts) | | | June 30, 2025 | | December 31, 2024 | | --- | --- | --- | --- | --- | | | | (Unaudited) | | | | **ASSETS** | | | | | | **Current assets** | | | | | | Cash and cash equivalents | $ | 169 | $ | 678 | | Accounts receivable, net | | 20,086 | | 20,058 | | Inventory, net | | 830 | | 1,143 | | Prepaid expenses and other current assets | | 3,484 | | 2,615 | | Current assets in discontinued operations | | — | | 6,143 | | **Total current assets** | | **24,571** | | **30,637** | | Property, plant and equipment, net | | 3,581 | | 7,501 | | Prepaid expenses, net of current portion | | 151 | | 217 | | Operating lease right-of-use asset, net | | 45 | | 4,115 | | Intangible assets, net | | 8,459 | | 9,750 | | Goodwill | | 5,231 | | 5,231 | | Other assets | | 3 | | 310 | | Non-current assets in discontinued operations | | — | | 5,439 | | **TOTAL ASSETS** | **$** | **42,041** | **$** | **63,200** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | | | **Current liabilities** | | | | | | Accounts payable | $ | 15,032 | $ | 13,717 | | Accrued diagnostic services | | 75 | | 31 | | Accrued advertising and other allowances | | 151 | | 151 | | Finance lease liabilities | | 2,625 | | 2,147 | | Operating lease liabilities | | 102 | | 1,214 | | Short-term loan payable, net of discount of $304 and $237 | | 2,425 | | 3,207 | | Deferred revenue | | 1,418 | | 1,698 | | Income tax payable | | 1,374 | | 1,987 | | Other current liabilities | | 1,765 | | 2,115 | | Current liabilities in discontinued operations | | — | | 5,867 | | **Total current liabilities** | | **25,626** | | **32,134** | | **Non-current liabilities:** | | | | | | Unsecured promissory notes, net of discount of $127 | | — | | 9,873 | | Unsecured long-term debt, net of discount of $216 and $423 | | 436 | | 1,779 | | Due to sellers (see Note 3) | | 2,000 | | 2,000 | | Deferred revenue, net of current portion | | 654 | | 784 | | Operating lease liabilities, net of current portion | | — | | 3,762 | | Finance lease liabilities, net of current portion | | 1,889 | | 2,591 | | Non-current liabilities in discontinued operations | | — | | 2,924 | | **Total non-current liabilities** | | **4,979** | | **23,713** | | **Total liabilities** | | **30,605** | | **55,847** | | **COMMITMENTS AND CONTINGENCIES** | | | | | | **Stockholders' equity** | | | | | | Preferred stock authorized 1,000,000, $0.0005 par value, no shares issued and outstanding | | — | | — | | Common stock authorized 50,000,000, $0.0005 par value, 41,541,205 and 29,874,029 shares outstanding, respectively | | 29 | | 23 | | Additional paid-in capital | | 120,145 | | 129,921 | | Subscription receivable | | — | | — | | Accumulated deficit | | (58,899) | | (58,393) | | Treasury stock, at cost, 8,692,005 and 12,940,967 shares , respectively | | (49,643) | | (64,000) | | Accumulated other comprehensive loss | | (196) | | (198) | | **Total stockholders' equity** | | **11,436** | | **7,353** | | **TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY** | **$** | **42,041** | **$** | **63,200** | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) Condensed consolidated statements of operations and comprehensive income (loss) for ProPhase Labs Inc. and subsidiaries compare revenues, costs, expenses, and net income (loss) for the three months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (USD Thousands, except per share amounts) | | | For the three months ended | | | --- | --- | --- | --- | | | | June 30, 2025 | June 30, 2024 | | Revenues, net | $ | 1,247 | $ 1,504 | | Cost of revenues | | 513 | 1,659 | | Gross profit (loss) | | 734 | (155) | | Operating expenses: | | | | | General and administration | | 4,624 | 6,933 | | Research and development | | 4 | 140 | | Total operating expenses | | 4,628 | 7,073 | | Loss from operations | | (3,894) | (7,228) | | Debt extinguishment loss | | (287) | — | | Interest expense | | (587) | (522) | | Loss from disposal of fixed assets | | (823) | — | | Loss from operations before income taxes | | (3,693) | (7,750) | | Income tax (expense) benefit | | (779) | 2,287 | | Loss from continuing operations after income taxes | | (4,472) | (5,463) | | Discontinued operations: | | | | | Loss from discontinued operations, net of tax | | — | (690) | | Gain from disposal of discontinued operations | | — | — | | Income (loss) from discontinued operations | | — | (690) | | Net income (loss) | $ | (4,472) | $ (6,153) | | Other comprehensive income: | | | | | Unrealized gain on marketable securities | | 2 | (58) | | Total comprehensive loss | $ | (4,470) | $ (6,211) | | Net earnings (loss) per share: | | | | | Loss from continuing operations, basic and diluted | $ | (0.11) | $ (0.29) | | Income (loss) from discontinued operations, basic and diluted | $ | — | $ (0.04) | | Net loss per share, basic and diluted | $ | (0.11) | $ (0.33) | | Weighted average common shares outstanding: | | | | | Basic | | 41,541 | 18,888 | | Diluted | | 41,541 | 18,888 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed consolidated statements of cash flows for ProPhase Labs Inc. and subsidiaries detail cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (USD Thousands) | | | For the six months ended | | | --- | --- | --- | --- | | | | June 30, 2025 | June 30, 2024 | | **Cash flows from operating activities** | | | | | Net loss | $ | (506) | $ (12,418) | | Less: Gain (loss) from discontinued operations, net of tax | | 8,644 | (1,431) | | Net loss from continuing operations | | (9,150) | (10,987) | | Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | | | | | Realized loss on marketable debt securities | | — | 18 | | Depreciation and amortization | | 2,831 | 3,141 | | Amortization of debt discount | | 849 | 369 | | Amortization on operating lease right-of-use assets | | 210 | 222 | | Stock-based compensation expense | | 1,029 | 2,385 | | Inventory reserve | | — | (63) | | Loss (gain) from disposal of fixed assets | | 868 | (19) | | Debt extinguishment loss | | 718 | — | | Changes in operating assets and liabilities: | | | | | Accounts receivable | | (28) | 3,322 | | Inventory | | 313 | 394 | | Prepaid expenses and other current assets | | (803) | (777) | | Deferred tax asset | | — | (4,900) | | Other assets | | — | 847 | | Accounts payable and accrued expenses | | 448 | 3,896 | | Accrued diagnostic services | | 44 | (87) | | Accrued advertising and other allowances | | — | (13) | | Deferred revenue | | (410) | (768) | | Deferred tax liability | | — | — | | Lease liabilities | | (29) | (927) | | Income tax payable | | (613) | (618) | | Other liabilities | | (350) | (1,181) | | Net cash used in operating activities - continuing operations | | (4,225) | (5,746) | | Net cash provided by (used in) operating activities - discontinued operations | | 597 | (4,236) | | **Net cash used in operating activities** | | **(3,628)** | **(9,982)** | | **Cash flows from investing activities** | | | | | Proceeds from sales of marketable securities | | — | 3,374 | | Proceeds from sales of fixed assets | | 120 | 150 | | Capital expenditures | | — | (867) | | Net cash provided by investing activities - continuing operations | | 120 | 2,657 | | Net cash provided by (used in) investing activities - discontinued operations | | 800 | (98) | | **Net cash provided by investing activities** | | **920** | **2,559** | | **Cash flows from financing activities** | | | | | Proceeds from issuance of note payable, net | | 687 | 3,868 | | Proceeds from issuance of common shares, net | | 3,558 | 4,624 | | Repayment of note payable | | (2,511) | (888) | | Net cash provided by financing activities - continuing operations | | 2,234 | 7,604 | | Net cash used in financing activities - discontinued operations | | (35) | (10) | | **Net cash provided by financing activities** | | **2,199** | **7,594** | | **Decrease in cash and cash equivalents** | | **(509)** | **171** | | Cash and cash equivalents at the beginning of the period | | 678 | 1,609 | | **Cash and cash equivalents at the end of the period** | **$** | **169** | **$ 1,780** | | **Supplemental disclosures:** | | | | | Cash paid for income taxes | $ | 347 | $ 454 | | Interest payments | $ | 672 | $ 1,237 | | Supplemental disclosure of non-cash investing and financing activities: | | | | | Issuance of common stock as commitment fee for future financing | $ | 158 | $ — |

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part provides Loar Holdings Inc.'s unaudited condensed consolidated financial statements and related notes for the periods ended June 30, 2025, and December 31, 2024 [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Loar Holdings Inc.'s unaudited condensed consolidated financial statements and detailed notes for the periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024) This section presents the company's condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :---------------- | | Total Assets | $1,498,223 | $1,450,618 | | Total Liabilities | $369,490 | $362,113 | | Total Equity | $1,128,733 | $1,088,505 | | Cash and cash equivalents | $103,342 | $54,066 | | Accounts receivable, net | $71,945 | $63,834 | | Inventories | $99,883 | $92,639 | | Retained earnings (accumulated deficit) | $11,469 | $(20,560) | [Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) This section details the company's condensed consolidated statements of operations for the three and six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales | $123,123 | $97,015 | $237,782 | $188,859 | | Cost of sales | $56,924 | $49,489 | $111,877 | $96,900 | | Gross profit | $66,199 | $47,526 | $125,905 | $91,959 | | Operating income | $27,317 | $22,188 | $53,461 | $43,545 | | Interest expense, net | $6,481 | $10,636 | $12,940 | $28,370 | | Income before income taxes | $20,836 | $9,907 | $40,521 | $13,530 | | Net income | $16,713 | $7,641 | $32,029 | $9,890 | | Basic EPS | $0.18 | $0.09 | $0.34 | $0.11 | | Diluted EPS | $0.17 | $0.09 | $0.33 | $0.11 | [Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2025 and 2024](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) This section presents the company's condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $16,713 | $7,641 | $32,029 | $9,890 | | Cumulative translation adjustments, net of tax | $(143) | $36 | $(399) | $204 | | Comprehensive income | $16,570 | $7,677 | $31,630 | $10,094 | [Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2025 and 2024](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) This section outlines the company's condensed consolidated statements of equity for the three and six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Equity (in thousands) | Metric | Balance, Jan 1, 2025 | Net Income (Q1) | Stock-based Comp (Q1) | CTA (Q1) | Balance, Mar 31, 2025 | Net Income (Q2) | Stock-based Comp (Q2) | Exercise of Stock Options | CTA (Q2) | Balance, Jun 30, 2025 | | :--------------------------------- | :------------------- | :-------------- | :-------------------- | :------- | :-------------------- | :-------------- | :-------------------- | :------------------------ | :------- | :-------------------- | | Common Stock Amount | $936 | — | — | — | $936 | — | — | — | — | $936 | | Additional Paid-in Capital | $1,108,225 | — | $3,089 | — | $1,111,314 | — | $3,650 | $1,859 | — | $1,116,823 | | Retained Earnings (Accumulated Deficit) | $(20,560) | $15,316 | — | — | $(5,244) | $16,713 | — | — | — | $11,469 | | Accumulated Other Comprehensive Loss | $(96) | — | — | $(256) | $(352) | — | — | — | $(143) | $(495) | | Total Equity | $1,088,505 | $15,316 | $3,089 | $(256) | $1,106,654 | $16,713 | $3,650 | $1,859 | $(143) | $1,128,733 | - The company underwent a Corporate Conversion from a Delaware limited liability company to a Delaware corporation on April 16, 2024, in preparation for its public offering[26](index=26&type=chunk) - The company completed its initial public offering (IPO) on April 29, 2024, selling **12.6 million shares** of common stock and receiving approximately **$325.4 million** in net proceeds[27](index=27&type=chunk) - A follow-on offering on December 12, 2024, issued **3,852,500 shares** of common stock, generating approximately **$311.6 million** in net proceeds[28](index=28&type=chunk) [Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030%2C%202025%20and%202024) This section provides the company's condensed consolidated statements of cash flows for the six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $52,163 | $17,895 | | Net cash used in investing activities | $(4,718) | $(3,841) | | Net cash provided by financing activities | $1,749 | $37,616 | | Net increase in cash and cash equivalents | $49,276 | $51,714 | | Cash and cash equivalents, end of period | $103,342 | $73,203 | | Interest paid during the period, net | $13,056 | $28,035 | | Income taxes paid during the period, net | $7,061 | $5,596 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the unaudited condensed consolidated financial statements, explaining accounting policies and significant financial events [Note 1. Organization](index=9&type=section&id=Note%201.%20Organization) This note details the company's corporate conversion, initial public offering, and follow-on offering activities - Loar Holdings Inc. converted from a Delaware limited liability company to a Delaware corporation on April 16, 2024, in preparation for its IPO[26](index=26&type=chunk) - The company completed its IPO on April 29, 2024, selling **12.6 million shares** of common stock and receiving approximately **$325.4 million** in net proceeds[27](index=27&type=chunk) - A follow-on offering on December 12, 2024, issued **3,852,500 shares** of common stock, generating approximately **$311.6 million** in net proceeds[28](index=28&type=chunk) - During the three months ended June 30, 2025, the company paid **$0.9 million** in fees related to a secondary offering by existing shareholders, from which it received no proceeds[29](index=29&type=chunk) [Note 2. Basis of Presentation](index=9&type=section&id=Note%202.%20Basis%20of%20Presentation) This note describes the basis of financial statement presentation, including unaudited status, GAAP conformity, and recent accounting pronouncements - The financial information is unaudited and reflects all adjustments necessary for a fair presentation, prepared in conformity with U.S. GAAP[31](index=31&type=chunk) - Reclassifications were made to the prior year's condensed consolidated statement of cash flows to conform with the current year's presentation, with no changes to results of operations, financial position, or cash flows[32](index=32&type=chunk) - The FASB issued ASU 2023-09 (Income Taxes) effective for annual periods beginning after December 15, 2024, requiring enhanced income tax disclosures; the company is evaluating its impact[33](index=33&type=chunk)[34](index=34&type=chunk) - The FASB issued ASU 2024-03 (Expense Disaggregation Disclosures) effective for fiscal years beginning after December 15, 2026, requiring disaggregated income statement expense information; the company is evaluating its impact[35](index=35&type=chunk) [Note 3. Acquisition](index=10&type=section&id=Note%203.%20Acquisition) This note provides details on the acquisition of Applied Avionics, LLC, including purchase price allocation and pro forma sales impact - On August 26, 2024, the company acquired **100%** of Applied Avionics, LLC (AAI) for **$383.5 million** in cash[36](index=36&type=chunk) AAI Purchase Price Allocation (in thousands) | Asset/Liability | Amount | | :---------------------- | :------- | | Current assets | $7,169 | | Property, plant and equipment | $6,996 | | Intangible assets | $152,100 | | Goodwill | $219,301 | | Deferred income taxes | $2,026 | | Current liabilities | $(4,043) | | **Net assets acquired** | **$383,549** | - Goodwill is primarily attributable to the assembled workforce, expected synergies, and management's industry operating expertise, and is deductible for tax purposes[38](index=38&type=chunk) - Pro forma net sales for the three and six months ended June 30, 2024, including AAI, would have been **$108.7 million** and **$210.7 million**, respectively[39](index=39&type=chunk) [Note 4. Revenue Recognition](index=11&type=section&id=Note%204.%20Revenue%20Recognition) This note outlines the company's revenue recognition policies, including timing, warranty treatment, and sales by end market - Revenue is recognized when control of the promised good or service is transferred to the customer, generally upon shipment of goods[42](index=42&type=chunk)[43](index=43&type=chunk) - Products are covered by a standard assurance warranty (**25 days to two years**), and warranties are accounted for under ASC 460, not as a separate performance obligation[44](index=44&type=chunk) Net Sales by End Market (in thousands) | End Market | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Commercial Aerospace | $54,276 | $41,193 | $102,743 | $82,535 | | Business Jet and General Aviation | $30,162 | $27,163 | $61,020 | $52,777 | | Defense | $31,471 | $20,877 | $60,253 | $37,512 | | Non-Aerospace | $7,214 | $7,782 | $13,766 | $16,035 | | **Total Net Sales** | **$123,123** | **$97,015** | **$237,782** | **$188,859** | Contract Liabilities (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------ | :-------------- | :---------------- | | Contract liabilities, current | $3,879 | $4,159 | | Contract liabilities, long-term | — | — | | **Total** | **$3,879** | **$4,159** | [Note 5. Inventories](index=12&type=section&id=Note%205.%20Inventories) This note provides a breakdown of the company's inventories by category as of June 30, 2025, and December 31, 2024 Inventories (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------- | :-------------- | :---------------- | | Raw materials | $35,672 | $39,162 | | Work-in-process | $38,294 | $29,797 | | Finished goods | $25,917 | $23,680 | | **Total** | **$99,883** | **$92,639** | [Note 6. Property, Plant and Equipment](index=12&type=section&id=Note%206.%20Property%2C%20Plant%20and%20Equipment) This note details the company's property, plant, and equipment, including land, buildings, machinery, and accumulated depreciation Property, Plant and Equipment (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Land | $15,794 | $15,411 | | Buildings and improvements | $35,906 | $35,504 | | Machinery, equipment, furniture and fixtures | $90,422 | $86,297 | | Less: accumulated depreciation and amortization | $(66,456) | $(60,607) | | **Total** | **$75,666** | **$76,605** | [Note 7. Accrued Expenses and Other Current Liabilities](index=12&type=section&id=Note%207.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) This note presents a breakdown of accrued expenses and other current liabilities as of June 30, 2025, and December 31, 2024 Accrued Expenses and Other Current Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Compensation and related benefits | $12,258 | $14,162 | | Contract liabilities | $3,879 | $4,159 | | Other | $10,448 | $8,580 | | **Total** | **$26,585** | **$26,901** | [Note 8. Long-Term Debt](index=12&type=section&id=Note%208.%20Long-Term%20Debt) This note details the company's long-term debt, including term loans, debt issuance costs, and amendments to the Credit Agreement Long-Term Debt (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Term loans | $281,366 | $281,366 | | Less: unamortized debt issuance costs | $(3,697) | $(4,073) | | **Total net debt** | **$277,669** | **$277,293** | - The Credit Agreement was amended on May 10, 2024, to extend the maturity date to **May 10, 2030**, and reduce the applicable margin by **2.0 to 2.5 percentage points**[56](index=56&type=chunk) - On August 26, 2024, an incremental term loan of **$360 million** was made available under the Credit Agreement to finance the AAI acquisition[57](index=57&type=chunk) - As of June 30, 2025, **$281.4 million** was outstanding under the Credit Agreement, with **$100.0 million** in delayed draw term loan commitments and **$50.0 million** in revolving line of credit available[62](index=62&type=chunk) [Note 9. Fair Value of Financial Instruments](index=14&type=section&id=Note%209.%20Fair%20Value%20of%20Financial%20Instruments) This note discusses the fair value of the company's financial instruments, noting their carrying amounts approximate fair value - The carrying amounts of the company's financial instruments (cash, receivables, payables, leases, and debt) approximate fair value due to their short-term nature or market-aligned interest rates[64](index=64&type=chunk) [Note 10. Commitments and Contingencies](index=14&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) This note outlines the company's legal proceedings, pending acquisitions, and related financing commitments - The company is involved in various lawsuits and claims, but management believes the ultimate liability will not have a material impact on the condensed consolidated financial statements[65](index=65&type=chunk) - On March 7, 2025, the company entered into a purchase agreement to acquire **100%** of LMB Fans & Motors (LMB) for **€365 million** plus estimated net debt of **€44.3 million**, expected to close in Q3 2025[66](index=66&type=chunk) - The LMB acquisition will be financed through additional borrowings under the existing Credit Agreement (an incremental **€400.0 million** loan facility) and cash on hand[67](index=67&type=chunk) [Note 11. Net Income per Common Share](index=14&type=section&id=Note%2011.%20Net%20Income%20per%20Common%20Share) This note provides the calculation of basic and diluted net income per common share for the reported periods Net Income per Common Share (in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $16,713 | $7,641 | $32,029 | $9,890 | | Weighted-average common shares outstanding - basic | 93,586 | 87,534 | 93,571 | 87,534 | | Weighted average common shares outstanding—diluted | 96,113 | 89,242 | 95,933 | 89,242 | | Net income per common shares—basic | $0.18 | $0.09 | $0.34 | $0.11 | | Net income per common shares—diluted | $0.17 | $0.09 | $0.33 | $0.11 | [Note 12. Income Taxes](index=14&type=section&id=Note%2012.%20Income%20Taxes) This note details the effective income tax rates and the factors influencing changes for the reported periods Effective Income Tax Rates | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three months ended June 30 | 19.8% | 22.9% | | Six months ended June 30 | 21.0% | 26.9% | - The decrease in the 2025 effective tax rate for both periods was primarily due to the discrete impact of excess tax benefits associated with share-based payments[69](index=69&type=chunk)[70](index=70&type=chunk) - For the six months, the decrease was also attributed to a reduction in the valuation allowance against the company's deferred tax asset for its disallowed interest carryforward[70](index=70&type=chunk) [Note 13. Subsequent Events](index=15&type=section&id=Note%2013.%20Subsequent%20Events) This note describes significant events occurring after the balance sheet date, including new legislation and acquisitions - On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, making permanent key elements of the Tax Cuts and Jobs Act, which will require evaluation of deferred tax balances[71](index=71&type=chunk) - On July 28, 2025, the company completed the acquisition of Beadlight Ltd. for approximately **£25 million** (**$33 million**) using cash on hand[72](index=72&type=chunk) - On August 1, 2025, the Credit Agreement was amended to reduce the applicable interest margin by **0.5%**[73](index=73&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition, operational results, strategic developments, and future outlook for the periods ended June 30, 2025 [Overview](index=16&type=section&id=Overview) This section provides an overview of Loar Holdings Inc.'s business, focusing on its niche aerospace and defense components and competitive strengths - Loar Holdings Inc. specializes in the design, manufacture, and sale of niche aerospace and defense components, focusing on mission-critical, highly engineered solutions with high intellectual property content[77](index=77&type=chunk) - The company's products support nearly every major aircraft platform and include a diverse range of applications such as auto throttles, seat belts, water purification systems, and brake discs[78](index=78&type=chunk) - The company primarily serves commercial, business jet and general aviation, and defense end markets, which have long historical track records of consistent growth[80](index=80&type=chunk) - Key competitive strengths include a portfolio of mission-critical components, IP-driven proprietary products, focus on higher-margin aftermarket content, diversified revenue streams, and a disciplined acquisition strategy[81](index=81&type=chunk) [Recent Developments](index=17&type=section&id=Recent%20Developments) This section highlights recent strategic developments, including acquisitions, financing activities, and new tax legislation impacting the company - The company entered into a purchase agreement to acquire LMB Fans & Motors for **€365 million** plus net debt, with the transaction expected to close in Q3 2025[82](index=82&type=chunk) - The LMB acquisition will be financed through additional borrowings under the existing Credit Agreement (an incremental **€400.0 million** loan facility) and cash on hand[83](index=83&type=chunk) - The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, making permanent key tax provisions, which will require evaluation of deferred tax balances[85](index=85&type=chunk) - On July 28, 2025, the company completed the acquisition of Beadlight Ltd. for approximately **£25 million** (**$33 million**) using cash on hand[86](index=86&type=chunk) [Outlook](index=18&type=section&id=Outlook) This section outlines the company's future expectations for net sales growth, product development, market penetration, and acquisition strategy - Net sales growth for the remainder of 2025 is anticipated to be driven by organic growth, particularly the conversion of high levels of backlog, and the impact from strategic acquisitions[89](index=89&type=chunk) - The company plans to continue its commitment to develop new products and services, further market penetration, and pursue an aggressive acquisition strategy[89](index=89&type=chunk) - Continued inflationary pressures and supply chain disruptions have not materially affected year-to-date results and are not expected to materially affect the outlook[89](index=89&type=chunk) [Results of Operations](index=18&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance for the three and six months ended June 30, 2025, compared to the prior year Operating Data Summary (in thousands, except percentages) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Sales | $123,123 | $97,015 | $237,782 | $188,859 | | Gross Profit | $66,199 | $47,526 | $125,905 | $91,959 | | Operating Income | $27,317 | $22,188 | $53,461 | $43,545 | | Net Income | $16,713 | $7,641 | $32,029 | $9,890 | | Net Income Margin | 13.6% | 7.9% | 13.5% | 5.2% | | Adjusted EBITDA | $47,118 | $35,031 | $90,251 | $68,062 | | Adjusted EBITDA Margin | 38.3% | 36.1% | 38.0% | 36.0% | [Three months ended June 30, 2025 compared with three months ended June 30, 2024](index=18&type=section&id=Three%20months%20ended%20June%2030%2C%202025%20compared%20with%20three%20months%20ended%20June%2030%2C%202024) This section compares the company's financial performance for the three months ended June 30, 2025, against the same period in 2024 [Net Sales](index=18&type=section&id=Net%20Sales%20(3M)) This section analyzes the drivers of net sales growth for the three months ended June 30, 2025, including organic and acquisition contributions - Net sales for the three months ended June 30, 2025, increased by **$26.1 million**, or **26.9%**, to **$123.1 million**[91](index=91&type=chunk) - Net organic sales increased by **$11.0 million** (**11.3%**) to **$108.0 million**, driven by increases in OEM total commercial sales, aftermarket total commercial sales, and defense sales[95](index=95&type=chunk) - Net acquisition sales from AAI contributed **$15.1 million**, representing **15.6%** of the total net sales increase[96](index=96&type=chunk) [Gross Profit and Cost of Sales](index=19&type=section&id=Gross%20Profit%20and%20Cost%20of%20Sales%20(3M)) This section examines changes in cost of sales and gross profit, highlighting factors influencing the gross profit percentage for the three months - Cost of sales increased by **$7.4 million** (**15.0%**) to **$56.9 million**, primarily due to increased sales[97](index=97&type=chunk) - Cost of sales as a percentage of net sales decreased by **4.8%** to **46.2%**, driven by operating leverage, strategic value drivers, and favorable sales mix[97](index=97&type=chunk) - Gross profit increased by **$18.7 million** (**39.3%**) to **$66.2 million**, with the gross profit percentage improving to **53.8%** from **49.0%**[97](index=97&type=chunk) [Selling, General and Administrative Expenses](index=19&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses%20(3M)) This section details the increase in selling, general, and administrative expenses, attributing it to public company costs and amortization - Selling, general and administrative expenses increased by **$9.6 million** to **$36.9 million**, or **30.0%** as a percentage of net sales[98](index=98&type=chunk)[99](index=99&type=chunk) - The increase was primarily due to additional costs associated with being a public company (SOX compliance), amortization of intangible assets, and research and development expenses, partially offset by lower stock-based compensation[99](index=99&type=chunk) [Transaction Expenses](index=20&type=section&id=Transaction%20Expenses%20(3M)) This section reports the increase in transaction expenses, including costs related to a secondary offering - Transaction expenses increased to **$2.0 million** from **$0.9 million**, including approximately **$0.9 million** related to a secondary offering[100](index=100&type=chunk) [Operating Income](index=20&type=section&id=Operating%20Income%20(3M)) This section analyzes the change in operating income and its percentage of net sales for the three months ended June 30, 2025 - Operating income increased to **$27.3 million**, or **22.2%** as a percentage of net sales, from **$22.2 million** (**22.9%**) in the prior year[101](index=101&type=chunk) [Interest Expense](index=20&type=section&id=Interest%20Expense%20(3M)) This section details the decrease in interest expense, primarily due to debt repayment and lower interest rates - Interest expense decreased by **$4.2 million** (**39.1%**) to **$6.5 million**, primarily due to debt repayment from IPO proceeds and lower interest rates[102](index=102&type=chunk) [Income Tax Provision](index=20&type=section&id=Income%20Tax%20Provision%20(3M)) This section reports the increase in income tax provision, driven by higher earnings for the three months - The income tax provision increased to **$4.1 million** from **$2.3 million**, driven by higher earnings[103](index=103&type=chunk) [Net Income](index=20&type=section&id=Net%20Income%20(3M)) This section highlights the increase in net income and its margin for the three months ended June 30, 2025 - Net income increased to **$16.7 million**, or **13.6%** as a percentage of net sales, from **$7.6 million** (**7.9%**) in the prior year[104](index=104&type=chunk) [Six months ended June 30, 2025 compared with six months ended June 30, 2024](index=21&type=section&id=Six%20months%20ended%20June%2030%2C%202025%20compared%20with%20six%20months%20ended%20June%2030%2C%202024) This section compares the company's financial performance for the six months ended June 30, 2025, against the same period in 2024 [Net Sales](index=21&type=section&id=Net%20Sales%20(6M)) This section analyzes the drivers of net sales growth for the six months ended June 30, 2025, including organic and acquisition contributions - Net sales for the six months ended June 30, 2025, increased by **$48.9 million**, or **25.9%**, to **$237.8 million**[105](index=105&type=chunk) - Net organic sales increased by **$21.2 million** (**11.2%**) to **$210.1 million**, driven by aftermarket total commercial sales, defense sales, and OEM total commercial sales[107](index=107&type=chunk) - Net acquisition sales from AAI contributed **$27.7 million**, representing **14.7%** of the total net sales increase[108](index=108&type=chunk) [Gross Profit and Cost of Sales](index=21&type=section&id=Gross%20Profit%20and%20Cost%20of%20Sales%20(6M)) This section examines changes in cost of sales and gross profit, highlighting factors influencing the gross profit percentage for the six months - Cost of sales increased by **$15.0 million** (**15.5%**) to **$111.9 million**, primarily due to increased sales[109](index=109&type=chunk) - Cost of sales as a percentage of net sales decreased by **4.2%** to **47.1%**, driven by operating leverage, strategic value drivers, and favorable sales mix[109](index=109&type=chunk) - Gross profit increased by **$33.9 million** (**36.9%**) to **$125.9 million**, with the gross profit percentage improving to **52.9%** from **48.7%**[109](index=109&type=chunk) [Selling, General and Administrative Expenses](index=21&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses%20(6M)) This section details the increase in selling, general, and administrative expenses, attributing it to public company costs and amortization - Selling, general and administrative expenses increased by **$19.8 million** to **$70.0 million**, or **29.4%** as a percentage of net sales[110](index=110&type=chunk)[111](index=111&type=chunk) - The increase was due to additional costs associated with being a public company (SOX compliance), amortization of intangible assets, stock-based compensation, and research and development expenses[111](index=111&type=chunk) [Transaction Expenses](index=22&type=section&id=Transaction%20Expenses%20(6M)) This section reports the increase in transaction expenses, including costs related to a secondary offering - Transaction expenses increased to **$2.4 million** from **$1.1 million**, including approximately **$0.9 million** related to a secondary offering[112](index=112&type=chunk) [Operating Income](index=22&type=section&id=Operating%20Income%20(6M)) This section analyzes the change in operating income and its percentage of net sales for the six months ended June 30, 2025 - Operating income increased to **$53.5 million**, or **22.5%** as a percentage of net sales, from **$43.5 million** (**23.0%**) in the prior year[113](index=113&type=chunk) [Interest Expense](index=22&type=section&id=Interest%20Expense%20(6M)) This section details the decrease in interest expense, primarily due to debt repayment and lower interest rates - Interest expense decreased by **$15.4 million** (**54.4%**) to **$12.9 million**, primarily due to debt repayment from IPO proceeds and lower interest rates[114](index=114&type=chunk) [Income Tax Provision](index=22&type=section&id=Income%20Tax%20Provision%20(6M)) This section reports the increase in income tax provision, driven by higher earnings for the six months - The income tax provision increased to **$8.5 million** from **$3.6 million**, driven by higher earnings[115](index=115&type=chunk) [Net Income](index=22&type=section&id=Net%20Income%20(6M)) This section highlights the increase in net income and its margin for the six months ended June 30, 2025 - Net income increased to **$32.0 million**, or **13.5%** as a percentage of net sales, from **$9.9 million** (**5.2%**) in the prior year[116](index=116&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity position, capital resources, and cash flow activities from operations, investing, and financing Capitalization Summary (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Cash and cash equivalents | $103,342 | $54,066 | | Total debt | $280,960 | $280,695 | | Stockholders' equity | $1,128,733 | $1,088,505 | | Total capitalization (debt plus equity) | $1,409,693 | $1,369,200 | | Total debt to total capitalization | 20% | 21% | - As of June 30, 2025, the company had availability of **$100 million** in delayed draw term loan commitments and a **$50 million** revolving line of credit[118](index=118&type=chunk) - Management believes that net cash provided by operating activities and available borrowings will be sufficient to fund cash requirements for at least the next twelve months[118](index=118&type=chunk) [Operating Activities](index=23&type=section&id=Operating%20Activities%20(Cash%20Flow)) This section analyzes net cash provided by operating activities, driven by net income and non-cash operating items - Net cash provided by operating activities increased by **$34.3 million** to **$52.2 million** for the six months ended June 30, 2025, driven by higher net income and increased non-cash operating items[119](index=119&type=chunk) [Investing Activities](index=23&type=section&id=Investing%20Activities%20(Cash%20Flow)) This section details net cash used in investing activities, primarily related to capital expenditures - Net cash used in investing activities was **$4.7 million** for the six months ended June 30, 2025, primarily related to capital expenditures[120](index=120&type=chunk) [Financing Activities](index=23&type=section&id=Financing%20Activities%20(Cash%20Flow)) This section discusses net cash provided by financing activities, including stock option exercises and IPO proceeds - Net cash provided by financing activities was **$1.7 million** for the six months ended June 30, 2025, primarily from stock option exercises[121](index=121&type=chunk) - In the prior year, net cash provided by financing activities was **$37.6 million**, principally from IPO proceeds offset by debt repayments[121](index=121&type=chunk) [Credit Agreement](index=23&type=section&id=Credit%20Agreement%20(Liquidity)) This section outlines the terms and amendments of the Credit Agreement, including maturity, interest margins, and loan commitments - The Credit Agreement was amended on May 10, 2024, to extend the maturity date to **May 10, 2030**, and reduce the applicable interest margin[125](index=125&type=chunk) - A **$360 million** incremental term loan was made available on August 26, 2024, to finance the AAI acquisition[127](index=127&type=chunk) - Significant debt repayments were made in 2024: **$284.6 million** using IPO proceeds in May and **$330.0 million** using follow-on offering proceeds in December[124](index=124&type=chunk)[128](index=128&type=chunk) - As of June 30, 2025, **$281.4 million** was outstanding under the Credit Agreement, with **$100.0 million** in delayed draw term loan commitments and **$50.0 million** in revolving line of credit available[129](index=129&type=chunk) [Other Obligations and Commitments](index=24&type=section&id=Other%20Obligations%20and%20Commitments%20(Liquidity)) This section addresses other obligations and commitments, noting no material changes except for a pending acquisition - No material changes to other obligations and commitments occurred during the six months ended June 30, 2025, other than the pending LMB acquisition[130](index=130&type=chunk) [Off-Balance Sheet Arrangements](index=24&type=section&id=Off-Balance%20Sheet%20Arrangements%20(Liquidity)) This section confirms the absence of material off-balance sheet arrangements impacting the company's financial condition - As of June 30, 2025, the company did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition, results of operations, or cash flows[131](index=131&type=chunk) [Critical Accounting Estimates](index=24&type=section&id=Critical%20Accounting%20Estimates) This section refers to the company's critical accounting policies and estimates, emphasizing management's judgment and potential for different results - A complete discussion of the company's most critical accounting policies and estimates is included in Management's Discussion and Analysis of Financial Condition and Results of Operations in its Annual Report on Form 10-K for the year ended December 31, 2024[133](index=133&type=chunk) - Management's judgment is required in the selection and application of certain accounting policies and methods, and the sensitivity of financial statements to these estimates could create materially different results under different conditions[132](index=132&type=chunk) [Non-GAAP Financial Measures](index=24&type=section&id=Non-GAAP%20Financial%20Measures) This section explains the use of non-GAAP financial measures like EBITDA and Adjusted EBITDA, including their limitations and reconciliation - The company presents EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin as non-GAAP measures to evaluate operating performance, assess management, and evaluate acquisitions[134](index=134&type=chunk) - These non-GAAP measures have limitations, as they do not reflect significant interest expense, cash requirements for asset replacement, integration costs, amortization expense, or tax payments[135](index=135&type=chunk)[138](index=138&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (in thousands, except percentages) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $16,713 | $7,641 | $32,029 | $9,890 | | Interest expense, net | $6,481 | $10,636 | $12,940 | $28,370 | | Refinancing costs | — | $1,645 | — | $1,645 | | Income tax provision | $4,123 | $2,266 | $8,492 | $3,640 | | Depreciation | $3,050 | $2,730 | $5,948 | $5,408 | | Amortization | $9,637 | $7,039 | $19,197 | $14,304 | | **EBITDA** | **$40,004** | **$31,957** | **$78,606** | **$63,257** | | Other income, net | — | $(2,867) | — | $(2,867) | | Transaction expenses | $1,984 | $929 | $2,444 | $1,105 | | Stock-based compensation | $3,650 | $4,387 | $6,739 | $4,474 | | Acquisition and facility integration costs | $1,480 | $625 | $2,462 | $2,093 | | **Adjusted EBITDA** | **$47,118** | **$35,031** | **$90,251** | **$68,062** | | Net sales | $123,123 | $97,015 | $237,782 | $188,859 | | Adjusted EBITDA Margin | 38.3% | 36.1% | 38.0% | 36.0% | [JOBS Act Election](index=26&type=section&id=JOBS%20Act%20Election) This section discusses the company's election as an 'emerging growth company' under the JOBS Act and its implications for accounting standard compliance - As an "emerging growth company" under the JOBS Act, the company has elected to use the extended transition period for complying with new or revised accounting standards[139](index=139&type=chunk) - This election may result in the company's financial statements not being comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates[139](index=139&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that the company's market risks have not materially changed for the six months ended June 30, 2025, and refers to the more comprehensive disclosure in its Annual Report on Form 10-K for the year ended December 31, 2024 - The company's market risks have not materially changed for the six months ended June 30, 2025, and are described more fully in the Annual Report on Form 10-K for the year ended December 31, 2024[140](index=140&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the company's compliance with SEC rules regarding internal controls, noting that no material changes to internal control over financial reporting occurred during the three months ended June 30, 2025. The first Section 404 assessment will be for the fiscal year ending December 31, 2025 - The company is required to comply with Section 302 of the Sarbanes-Oxley Act following its initial public offering on April 29, 2024[141](index=141&type=chunk) - No material changes in the company's internal control over financial reporting occurred during the three months ended June 30, 2025[142](index=142&type=chunk) - The first assessment of the effectiveness of internal control over financial reporting under Section 404 will be for the fiscal year ending December 31, 2025[141](index=141&type=chunk) [PART II. OTHER INFORMATION](index=27&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part contains other information not included in the financial statements, such as legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) This section states that there are no legal proceedings to report for the company - No legal proceedings were reported[146](index=146&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the comprehensive list of risk factors detailed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - Readers should refer to the risk factors disclosed in Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2024[147](index=147&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is marked as not applicable for the current report - This item is not applicable[148](index=148&type=chunk) [Item 3. Defaults Upon Senior Securities](index=27&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is marked as not applicable for the current report - This item is not applicable[149](index=149&type=chunk) [Item 4. Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is marked as not applicable for the current report - This item is not applicable[150](index=150&type=chunk) [Item 5. Other Information](index=27&type=section&id=Item%205.%20Other%20Information) This section reports that no directors or executive officers adopted, terminated, or modified Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading agreements during the three months ended June 30, 2025 - No directors or officers adopted, terminated, or modified Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading agreements during the three months ended June 30, 2025[151](index=151&type=chunk) [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, various agreements, and certifications required by the Securities Exchange Act - The report includes exhibits such as the Certificate of Incorporation, By-laws, Waiver to Registration Rights Agreement, Amended and Restated 2024 Equity Incentive Plan, Amended and Restated Commitment Letter, Seventeenth Amendment to Credit Agreement, and various certifications[152](index=152&type=chunk) [SIGNATURES](index=29&type=section&id=SIGNATURES) This section contains the official signatures for the Form 10-Q, certifying its submission on behalf of Loar Holdings Inc [SIGNATURES](index=29&type=section&id=SIGNATURES_Details) This section provides the details of the official certification and signing of the Form 10-Q by the company's authorized officer - The report was signed by Glenn D'Alessandro, Treasurer and Chief Financial Officer of Loar Holdings Inc., on August 13, 2025[158](index=158&type=chunk)

[PART I – FINANCIAL INFORMATION](index=7&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section covers financial statements, management's analysis, market risk, and internal controls [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) Financial statements for Q2 2025 reflect a deteriorating position, increased net loss, and going concern doubts Condensed Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $76,972 | $107,750 | | Total current assets | $80,141 | $136,904 | | Total assets | $84,573 | $144,663 | | **Liabilities & Stockholders' Deficit** | | | | Total current liabilities | $59,338 | $62,458 | | Total liabilities | $137,719 | $154,172 | | Total stockholders' deficit | ($53,146) | ($9,509) | Condensed Consolidated Statements of Operations Summary (in thousands) | 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 | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $3,056 | $2,293 | $5,810 | $11,538 | | Research and development | $16,218 | $17,245 | $34,559 | $35,931 | | General and administrative | $7,415 | $10,503 | $16,340 | $22,063 | | Restructuring expenses | $3,940 | $— | $3,940 | $— | | Net loss | ($24,296) | ($24,268) | ($48,419) | ($43,574) | | Net loss per share | ($4.87) | ($4.96) | ($9.72) | ($8.93) | - The company has incurred cumulative net losses and negative cash flows since inception, with a net loss of **$48.4 million** for the six months ended June 30, 2025, and an accumulated deficit of **$944.0 million**, raising substantial doubt about its ability to continue as a going concern[32](index=32&type=chunk) - On July 25, 2025, the company effected a **1-for-25 reverse stock split**, with all share and per share amounts retroactively adjusted to reflect this split[39](index=39&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail ADC platforms, clinical candidates, May 2025 restructuring, collaboration revenue, and debt repayment - In May 2025, the company implemented a strategic restructuring plan, reducing its employee base by approximately **55%** and narrowing its focus to Emi-Le development for breast cancer and the XMT-2056 trial[30](index=30&type=chunk) - Collaboration revenue for the six months ended June 30, 2025, was primarily driven by performance under agreements with **Johnson & Johnson ($4.0 million)**, **GSK ($1.0 million)**, and **Merck KGaA ($0.5 million)**[61](index=61&type=chunk)[73](index=73&type=chunk)[83](index=83&type=chunk) - On July 1, 2025, the company fully repaid all amounts owed under its New Credit Facility, paying approximately **$17.9 million**, which included **$16.7 million** of principal[101](index=101&type=chunk) Restructuring Charges (in thousands) | Item | Three and six months ended June 30, 2025 | | :--- | :--- | | **Total Costs Incurred** | **$3,940** | | Research and development related | $2,919 | | General and administrative related | $1,021 | | **Accrued Restructuring Costs** | | | Balance at Dec 31, 2024 | $— | | Additional expense | $3,940 | | Cash payments | ($2,373) | | Balance at June 30, 2025 | $1,567 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses clinical candidates, restructuring, financial performance, and liquidity, noting going concern doubts - The company is focusing on its two clinical-stage candidates: Emi-Le (B7-H4-targeting Dolasynthen ADC) and XMT-2056 (HER2-targeting Immunosynthen ADC)[152](index=152&type=chunk) - Positive interim data for Emi-Le presented at ASCO 2025 showed a **31% confirmed ORR** in patients with B7-H4 high tumor expression and a **56% ORR** in patients with ACC-1[154](index=154&type=chunk)[155](index=155&type=chunk) - A strategic restructuring was implemented in May 2025, reducing the workforce by approximately **55%** and narrowing focus to breast cancer for Emi-Le, with estimated aggregate costs of **$4.0 - $4.5 million**[159](index=159&type=chunk)[160](index=160&type=chunk) - As of June 30, 2025, the company had **$77.0 million** in cash and cash equivalents, which is projected to fund operations into mid-2026, but there is substantial doubt about the company's ability to continue as a going concern[165](index=165&type=chunk)[207](index=207&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Collaboration revenue varied by period, while operating expenses declined due to restructuring efforts Comparison of Three Months Ended June 30, 2025 and 2024 (in thousands) | Item | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Collaboration Revenue | $3,056 | $2,293 | $763 | | R&D Expense | $16,218 | $17,245 | ($1,027) | | G&A Expense | $7,415 | $10,503 | ($3,088) | | Restructuring Expense | $3,940 | $— | $3,940 | | Net Loss | ($24,296) | ($24,268) | ($28) | Comparison of Six Months Ended June 30, 2025 and 2024 (in thousands) | Item | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Collaboration Revenue | $5,810 | $11,538 | ($5,728) | | R&D Expense | $34,559 | $35,931 | ($1,372) | | G&A Expense | $16,340 | $22,063 | ($5,723) | | Restructuring Expense | $3,940 | $— | $3,940 | | Net Loss | ($48,419) | ($43,574) | ($4,845) | [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity relies on collaborations and equity, with $77.0 million cash, but additional capital is needed for going concern - As of June 30, 2025, the company had **$77.0 million** in cash and cash equivalents, and on July 1, 2025, it repaid its entire debt facility for approximately **$17.9 million**[197](index=197&type=chunk)[201](index=201&type=chunk) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($51,928) | ($54,512) | | Net cash provided by (used in) investing activities | $27,395 | ($67,033) | | Net cash (used in) provided by financing activities | ($6,245) | $5,982 | - The company will need to raise additional funds through equity offerings, debt, or collaborations to continue operations, as failure to do so could force delays or elimination of development programs[207](index=207&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate sensitivity on cash and equivalents, with no material foreign currency exposure - The company's main market risk is interest rate sensitivity on its **$77.0 million** in cash and cash equivalents, but a **1%** change in interest rates is not expected to have a material impact due to the short-term and low-risk nature of its investments[214](index=214&type=chunk) - The company is not currently exposed to material foreign currency exchange rate risks, though this could change with increased contracts with vendors in Europe or Asia[215](index=215&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[217](index=217&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the second quarter of 2025[218](index=218&type=chunk) [PART II - OTHER INFORMATION](index=45&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, other information, and exhibits [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in material legal proceedings, but may face claims in the ordinary course - As of the filing date, Mersana Therapeutics is not involved in any material legal proceedings[219](index=219&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) This section details significant financial, developmental, operational, and regulatory risks, including going concern doubts - A primary risk is the need for substantial additional financing to achieve its goals, as current cash is projected to last only into mid-2026, raising substantial doubt about its ability to continue as a going concern[221](index=221&type=chunk)[225](index=225&type=chunk) - The company's business is highly dependent on the success of its two clinical-stage candidates, Emi-Le and XMT-2056, and any failure in their clinical development would severely affect the business[235](index=235&type=chunk)[236](index=236&type=chunk) - The May 2025 restructuring and workforce reduction may not result in anticipated savings and could disrupt business operations, reduce employee morale, and harm the ability to attract and retain qualified personnel[455](index=455&type=chunk) - The company relies heavily on third-party manufacturers for clinical supplies and CROs to conduct clinical trials, exposing it to risks of supply interruption, quality issues, and lack of direct control over trial execution[262](index=262&type=chunk)[266](index=266&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=115&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period covered by this report - There were no unregistered sales of equity securities in the reported period[496](index=496&type=chunk) [Item 5. Other Information](index=116&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-10b5-1 trading arrangements during Q2 2025 - No directors or officers adopted or terminated a Rule 10b5-1 or non-10b5-1 trading plan during the second quarter of 2025[497](index=497&type=chunk) [Item 6. Exhibits](index=116&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate documents and officer certifications

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) 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 Securities registered pursuant to Section 12(b) of the Act: | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | --- | --- | --- | | Common Stock, $0.000 ...

[Star Equity Holdings, Inc. 2025 Second Quarter Financial Results](index=1&type=section&id=Star%20Equity%20Holdings%2C%20Inc.%202025%20Second%20Quarter%20Financial%20Results) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) The company reported significant Q2 2025 growth with a 75.8% revenue surge and a shift to positive net income and Adjusted EBITDA Q2 2025 vs. Q2 2024 Financial Highlights | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $23.7 million | $13.5 million | +75.8% | | Gross Profit | $6.3 million | $2.2 million | +182.2% | | Net Income (Loss) | $3.5 million | ($3.8 million) | N/A | | Diluted EPS | $1.07 | ($1.19) | N/A | | Adjusted EBITDA | $7.0 million | ($0.5 million) | N/A | Year-to-Date (6M) 2025 vs. 2024 Financial Highlights | Metric | 6M 2025 | 6M 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $36.6 million | $22.6 million | +62.1% | | Gross Profit | $9.4 million | $3.8 million | +147.7% | | Net Income (Loss) | $2.3 million | ($6.0 million) | N/A | | Diluted EPS | $0.71 | ($1.90) | N/A | | Adjusted EBITDA | $6.2 million | ($1.6 million) | N/A | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management attributes strong performance to the Building Solutions division, acquisitions, and a significant investment gain - Consolidated revenue growth of **76%** was driven by strong performance in the Building Solutions division and contributions from the acquisitions of TT and ADT[4](index=4&type=chunk) - The Investments Division generated **$5.8 million in adjusted EBITDA**, primarily from a **$5.5 million realized gain** on the sale of its investment in Servotronics[4](index=4&type=chunk) - A definitive merger agreement has been signed with Hudson Global, Inc. (Nasdaq: HSON), with shareholder votes scheduled for August 21, 2025. The merger is expected to create value through scale, diversification, and cost savings[4](index=4&type=chunk) [Financial Performance Analysis](index=3&type=section&id=Financial%20Performance%20Analysis) Q2 2025 saw dramatic improvement with 75.8% revenue growth and a 10-point gross margin expansion, leading to profitability [Revenues](index=3&type=section&id=Revenues) Total revenues grew 75.8% to $23.7 million, fueled by the Building Solutions and new Energy Services segments Revenues by Segment (in thousands) | Segment | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Building Solutions | $20,384 | $13,483 | +51.2% | | Energy Services | $3,324 | $— | N/M | | **Total Revenues** | **$23,708** | **$13,483** | **+75.8%** | [Gross Profit](index=3&type=section&id=Gross%20Profit) Consolidated gross profit surged 182.2% to $6.3 million, with total gross margin expanding to 26.4% Gross Profit by Segment (in thousands) | Segment | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Building Solutions | $5,243 | $2,229 | +135.2% | | Energy Services | $1,084 | $— | N/M | | **Total Gross Profit** | **$6,253** | **$2,216** | **+182.2%** | Gross Margin by Segment | Segment | Q2 2025 | Q2 2024 | Change (ppt) | | :--- | :--- | :--- | :--- | | Building Solutions | 25.7% | 16.5% | +9.2% | | Energy Services | 32.6% | — | N/M | | **Total Gross Margin** | **26.4%** | **16.4%** | **+10.0%** | [Operating Expenses](index=3&type=section&id=Operating%20Expenses) SG&A expenses rose 20.2% due to acquisitions but improved as a percentage of revenue from 39.6% to 27.1% - SG&A expenses increased by **20.2% to $6.4 million** in Q2 2025, driven by acquisitions and M&A costs[10](index=10&type=chunk)[37](index=37&type=chunk) - SG&A as a percentage of revenue improved significantly, falling to **27.1% in Q2 2025 from 39.6% in Q2 2024**[10](index=10&type=chunk) [Net Income and Adjusted EBITDA](index=3&type=section&id=Net%20Income%20and%20Adjusted%20EBITDA) The company achieved a significant turnaround, reporting a Q2 2025 net income of $3.5 million and Adjusted EBITDA of $7.0 million Net Income (Loss) and EPS | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income (Loss) | $3.5 million | ($3.8 million) | | Diluted EPS | $1.07 | ($1.19) | | Non-GAAP Adj. Net Income | $6.0 million | ($0.9 million) | | Non-GAAP Adj. Diluted EPS | $1.86 | ($0.29) | - Q2 2025 non-GAAP adjusted EBITDA was a gain of **$7.0 million** versus a loss of $0.5 million in Q2 2024, mainly due to realized gains on securities at the Investments Division[13](index=13&type=chunk) [Operating Cash Flow](index=5&type=section&id=Operating%20Cash%20Flow) Operating cash outflow for Q2 2025 was $1.7 million, with year-to-date outflow improving significantly to $1.1 million Cash Flow from Operations | Period | 2025 | 2024 | | :--- | :--- | :--- | | Q2 | ($1.7 million) | ($1.9 million) | | 6M (YTD) | ($1.1 million) | ($4.3 million) | [Operational and Corporate Updates](index=5&type=section&id=Operational%20and%20Corporate%20Updates) The company maintained a strong backlog, declared a preferred stock dividend, and protected its significant NOL carryforwards [Building Solutions Backlog](index=5&type=section&id=Building%20Solutions%20Backlog) The Building Solutions division ended Q2 2025 with a strong backlog of $25.7 million, supporting a positive outlook Building Solutions Backlog Trend (in thousands) | Quarter | Beginning Backlog | New Orders | Recognized Revenue | Ending Backlog | | :--- | :--- | :--- | :--- | :--- | | Q1 2025 | $17,190 | $22,841 | $12,118 | $27,913 | | Q2 2025 | $27,913 | $18,223 | $20,398 | $25,739 | - The quarter-end backlog of **$25.7 million** and a strong sales pipeline indicate continued strong demand for new projects[8](index=8&type=chunk) [Shareholder Returns and Corporate Actions](index=5&type=section&id=Shareholder%20Returns%20and%20Corporate%20Actions) The company declared a $0.25 per share cash dividend for Series A Preferred Stock and maintained its share repurchase program - A cash dividend of **$0.25 per share** was declared for Series A Preferred Stock in Q2 2025[18](index=18&type=chunk) - As of June 30, 2025, **$721 thousand remains authorized** for repurchase under the company's stock repurchase program[17](index=17&type=chunk) [Net Operating Losses (NOLs)](index=5&type=section&id=Net%20Operating%20Losses%20(NOLs)) The company protects its significant federal and state NOL carryforwards with a shareholder rights plan - The company holds valuable NOLs: **$44.6 million federal and $17.6 million state** as of year-end 2024[19](index=19&type=chunk) - A rights agreement is in place to protect the NOLs, limiting stock ownership to **4.99%** without board approval[19](index=19&type=chunk) [Financial Statements](index=9&type=section&id=Financial%20Statements) Condensed financial statements detail a shift to profitability and growth in total assets and stockholders' equity [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statement of operations shows a net income of $3.5 million in Q2 2025, a reversal from a $3.8 million loss in Q2 2024 Q2 Statement of Operations Summary (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenues | $23,708 | $13,483 | | Gross Profit | $6,253 | $2,216 | | Income (Loss) from Operations | ($952) | ($3,713) | | Net Income (Loss) | $3,451 | ($3,787) | | Net Income (Loss) Attributable to Common | $2,778 | ($4,266) | [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets grew to $102.4 million and stockholders' equity increased to $62.6 million Balance Sheet Summary (in thousands) | Line Item | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $35,185 | $24,414 | | **Total Assets** | **$102,414** | **$83,048** | | Total Current Liabilities | $23,284 | $12,470 | | **Total Liabilities** | **$39,801** | **$28,712** | | **Total Stockholders' Equity** | **$62,613** | **$54,336** | [Non-GAAP Financial Measures Reconciliation](index=12&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) Reconciliations detail adjustments from GAAP net income to non-GAAP measures like adjusted net income and adjusted EBITDA - Q2 2025 GAAP Net Income of **$3.5 million** is reconciled to Non-GAAP Adjusted Net Income of **$6.0 million**. Key adjustments include acquired intangible amortization ($785k), M&A transaction costs ($503k), and impairment of cost method investment ($371k)[42](index=42&type=chunk) - Q2 2025 Non-GAAP Adjusted EBITDA of **$7.0 million** was primarily driven by the Investments division (**$5.8 million**) and the Building Solutions division (**$2.3 million**)[46](index=46&type=chunk) [Supplemental Information](index=15&type=section&id=Supplemental%20Information) Supplemental data details the company's debt structure and provides a breakdown of segment-level financial performance Total Debt Summary (in thousands) | Category | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Short-term debt | $7,345 | $3,911 | | Long Term Debt, net | $6,988 | $7,405 | | **Total Debt** | **$14,333** | **$11,316** | | Weighted-Average Interest Rate | 7.67% | 7.93% | Q2 2025 Segment Performance (in thousands) | Segment | Revenues | Gross Profit | Net Income (Loss) from Operations | | :--- | :--- | :--- | :--- | | Building Solutions | $20,384 | $5,243 | $1,270 | | Energy Services | $3,324 | $1,084 | $109 | | Investments | $158 | $84 | $0 | [About the Company and Forward-Looking Statements](index=6&type=section&id=About%20the%20Company%20and%20Forward-Looking%20Statements) Star Equity Holdings is a diversified holding company, and this report contains forward-looking statements subject to risks - The company operates through three main divisions: **Building Solutions, Energy Services, and Investments**[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - The report includes forward-looking statements that are subject to risks and uncertainties, including those related to the proposed merger with Hudson, business operations, and market conditions[28](index=28&type=chunk)

Exhibit 99.1 For immediate release August 13, 2025 Star Equity Holdings, Inc. Announces 2025 Second Quarter Financial Results Q2 2025 revenues increased ~76% to $23.7 million and gross profit increased ~182% to $6.3 million Generated Adjusted EBITDA of $7.0 million Quarter-end Building Solutions backlog stands at $25.7 million Old Greenwich, CT. - Star Equity Holdings, Inc. (Nasdaq: STRR; STRRP) ("Star" or the "Company"), a diversified holding company, reported today its financial results for the second qua ...

[Business & Strategic Highlights](index=1&type=section&id=Business%20%26%20Strategic%20Highlights) BIO-key's Q2 2025 revenue grew 49% YoY, driven by broad segment growth and a new CyberDefense Initiative targeting defense markets - **Q2 revenue** improved both sequentially and year-over-year, with a strategic focus on BIO-key branded solutions in Europe, the Middle East, Africa (EMEA), and domestic markets[2](index=2&type=chunk) - Launched the **"BIO-key CyberDefense Initiative"** to target the global defense market, leveraging a significant increase in European defense spending commitments, and assembling a specialized team to engage with prime defense contractors[3](index=3&type=chunk)[4](index=4&type=chunk) - A follow-on order exceeding **$600K** from a foreign Defense Ministry[5](index=5&type=chunk) - First major IAM deployment with a national bank in Mozambique[5](index=5&type=chunk) - New partnerships to expand into the Middle East, Spain, and Portugal[5](index=5&type=chunk) - Completed initial phase of biometric deployment for a new international defense agency[5](index=5&type=chunk) - The company is advancing a significant platform modernization for **PortalGuard IDaaS**, with a targeted release in **Q4 2025**, marking the first major upgrade since 2018[7](index=7&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) BIO-key's Q2 2025 revenue grew 49% to **$1.7 million**, with improved net loss and strengthened balance sheet [Q2 2025 Financial Results](index=2&type=section&id=Q2%202025%20Financial%20Results) | Metric | Q2 2025 ($) | Q2 2024 ($) | Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | **1,696,907** | **1,141,286** | **+49%** | | Gross Profit | 1,232,727 | 879,014 | +40% | | Gross Margin | 73% | 77% | -4 p.p. | | Total Operating Expenses | 2,316,577 | 2,533,100 | -8.5% | | Net Loss | (1,167,396) | (1,666,950) | Improved | | EPS (basic & diluted) | (0.20) | (1.00) | Improved | | Revenue Stream | Q2 2025 ($) | Q2 2024 ($) | Change | | :--- | :--- | :--- | :--- | | Software License Fees | 806,087 | 774,225 | +4% | | Services | 321,996 | 283,569 | +14% | | Hardware | 568,824 | 83,492 | +581% | - The decline in gross margin to **73%** from **77%** YoY was primarily due to the significant increase in lower-margin hardware revenues[11](index=11&type=chunk) - Operating expenses decreased by **8.5%** YoY, driven by a **13.5%** reduction in SG&A expenses, while R&D expenses increased by **7.6%** for platform modernization[12](index=12&type=chunk) [Balance Sheet Highlights](index=3&type=section&id=Balance%20Sheet%20Highlights) - As of June 30, 2025, cash and cash equivalents stood at **$2.3 million**, a substantial increase from **$0.4 million** at December 31, 2024[14](index=14&type=chunk) - The company reduced its note payable by **$0.4 million** during Q2'25, leaving a remaining balance of **$0.3 million** on the original **$2.3 million** note[15](index=15&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section presents BIO-key's unaudited condensed consolidated financial statements, including Operations, Balance Sheets, and Cash Flows [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | **2025 ($)** | **2024 ($)** | **2025 ($)** | **2024 ($)** | | **Total revenues** | **1,696,907** | **1,141,286** | **3,304,066** | **3,322,489** | | **Gross profit** | **1,232,727** | **879,014** | **2,560,388** | **2,760,574** | | **Operating loss** | **(1,083,850)** | **(1,654,086)** | **(1,724,488)** | **(2,163,020)** | | **Net loss** | **(1,167,396)** | **(1,666,950)** | **(1,903,941)** | **(2,177,236)** | | **Basic and diluted loss per common share** | **(0.20)** | **(1.00)** | **(0.36)** | **(1.33)** | | Weighted average common shares outstanding (shares) | 5,821,133 | 1,663,042 | 5,267,109 | 1,639,183 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | 2,275,344 | 437,604 | | Total current assets | 4,035,230 | 1,886,958 | | **TOTAL ASSETS** | **10,516,551** | **8,615,560** | | **LIABILITIES & EQUITY** | | | | Total current liabilities | 3,531,910 | 4,553,536 | | **TOTAL LIABILITIES** | **3,664,374** | **4,843,529** | | **TOTAL STOCKHOLDERS' EQUITY** | **6,852,177** | **3,772,031** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | (For the Six Months Ended June 30,) | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | (1,715,324) | (1,123,533) | | Net cash used in investing activities | (6,048) | (1,869) | | Net cash provided in financing activities | 3,493,505 | 1,912,408 | | **Net increase in cash and cash equivalents** | **1,837,741** | **748,951** | | **Cash and cash equivalents, end of period** | **2,275,345** | **1,260,351** | [Other Information](index=3&type=section&id=Other%20Information) This section provides supplementary details, including a corporate overview and the Safe Harbor Statement on forward-looking statements [About BIO-key International, Inc.](index=3&type=section&id=About%20BIO-key%20International%2C%20Inc.) - BIO-key specializes in **biometric-centric**, **multi-factor identity and access management (IAM)** software, offering customers flexible authentication factors including phoneless, tokenless, and passwordless biometric options through its **PortalGuard IAM** solution[17](index=17&type=chunk) [Safe Harbor Statement](index=4&type=section&id=Safe%20Harbor%20Statement) - The report contains **forward-looking statements** that are not guarantees of future performance, subject to risks and uncertainties including a history of losses, ability to raise capital, market acceptance of products, competition, and other factors detailed in SEC filings[18](index=18&type=chunk)