[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited interim consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the company [Interim Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Interim%20Consolidated%20Financial%20Statements%20(Unaudited)) The unaudited interim financial statements for the six months ended June 30, 2025, show a deteriorating financial position with a **$23.2 million** net loss, negative gross margins, and substantial non-cash charges, raising going concern doubts [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$15.0 million** while liabilities grew to **$18.2 million**, resulting in a **$3.1 million** stockholders' deficit and a **$4.6 million** working capital deficit Consolidated Balance Sheet Summary (Unaudited) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $11,643,452 | $6,325,679 | | **Total Assets** | $15,031,082 | $10,006,215 | | **Total Current Liabilities** | $16,281,393 | $15,265,907 | | **Total Liabilities** | $18,158,973 | $17,638,097 | | **Total Stockholders' Deficit** | ($3,127,891) | ($7,631,882) | - The company's working capital deficit was **$(4,637,940)** as of June 30, 2025, compared to **$(8,940,228)** as of December 31, 2024[55](index=55&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Revenues declined by **27%** for the six months ended June 30, 2025, with a negative gross margin in Q2, leading to a **$23.2 million** net loss driven by significant non-cash charges Statement of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $2,842,596 | $3,255,393 | $5,353,920 | $7,299,230 | | **Gross Margin** | ($31,373) | $30,655 | $257,680 | $871,978 | | **Operating Loss** | ($4,198,280) | ($3,947,921) | ($7,164,698) | ($6,225,190) | | **Net Loss** | ($18,137,743) | ($5,253,004) | ($23,196,999) | ($7,954,282) | | **Basic and Diluted EPS** | ($5.34) | ($201.01) | ($7.15) | ($304.38) | - A significant loss on debt extinguishment of **$12.3 million** and a loss on settlement of liability of **$2.6 million** were major contributors to the net loss in the first six months of 2025[11](index=11&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating activities used **$3.4 million** in cash for the six months ended June 30, 2025, with financing activities providing **$8.2 million**, increasing total cash to **$5.1 million** Cash Flow Summary for the Six Months Ended June 30 (Unaudited) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net Cash Used in Operating Activities** | ($3,359,662) | ($3,697,209) | | **Net Cash Used in Investing Activities** | ($42,272) | ($5,939) | | **Net Cash Provided by Financing Activities** | $8,196,600 | $3,008,237 | | **Change in Cash, Cash Equivalents, and Restricted Cash** | $4,794,666 | ($694,911) | | **Total Cash, Cash Equivalents, and Restricted Cash at End of Period** | $5,082,212 | $452,785 | [Notes to the Condensed Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Financial%20Statements) Key notes include a change in auditors, non-reliance on prior financials, substantial going concern doubt, heavy reliance on dilutive high-interest debt, and ongoing legal proceedings including a Bank of America default - The company dismissed its previous auditor, BF Borgers CPA PC, following an SEC order, and as a result, comparative financial figures for the three and six months ended June 30, 2024, have not been restated and should not be relied upon[17](index=17&type=chunk)[18](index=18&type=chunk)[20](index=20&type=chunk) - Substantial doubt exists about the Company's ability to continue as a going concern due to significant net losses of **$23.2 million** for the six months ended June 30, 2025, an accumulated deficit of **$88.3 million**, and a working capital deficit, with continued operations dependent on raising additional capital[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) - The company is heavily reliant on working capital loans, many structured as Revenue Interest Purchase Agreements or containing high interest rates and conversion features leading to significant shareholder dilution[81](index=81&type=chunk)[82](index=82&type=chunk) - Numerous debt-to-equity conversions and share issuances occurred, including over **1 million shares** issued to settle **$4.1 million** in payables, resulting in a **$2.6 million** loss on conversion and indicating significant dilutive financing activities[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - The company defaulted on its line of credit with Bank of America, leading to a lawsuit seeking over **$1.9 million**, and failed to make the final payment by the July 31, 2025 deadline despite a forbearance agreement[164](index=164&type=chunk)[165](index=165&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **27%** revenue decline to market slowdowns, with increased net loss due to non-cash debt extinguishment losses and higher marketing and professional fees, highlighting ongoing liquidity and going concern risks - The company positions itself as "America's Patriotic Brand," focusing on safes, concealed carry products, and American Rebel Light Beer, leveraging CEO Andy Ross's public persona for marketing[188](index=188&type=chunk)[198](index=198&type=chunk) Revenue by Product Category (Six Months Ended June 30) | Percentage of revenue | 2025 | 2024 | | :--- | :--- | :--- | | Safes | 95.7% | 99.2% | | Soft goods | 1.6% | 0.5% | | Beverages | 2.7% | 0.3% | | Total | 100% | 100% | - Revenue for the six months ended June 30, 2025, decreased by **27%** to **$5.4 million** from **$7.3 million** in the prior year, attributed by management to slower sales and market conditions in the second amendment industry[225](index=225&type=chunk) - Operating expenses for the first six months of 2025 increased by **5%** year-over-year, driven by a **195%** increase in marketing and brand development costs and a **46%** increase in administrative expenses[225](index=225&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) - The company's working capital deficit was **$4.6 million** as of June 30, 2025, with operations primarily funded through dilutive issuances of capital stock and convertible debt[236](index=236&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not applicable to the company as a smaller reporting company - The company has indicated that this item is not applicable[243](index=243&type=chunk) [Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of June 30, 2025, due to a material weakness in internal control over financial reporting, specifically inadequate management reviews and technical accounting competencies - The CEO and Interim Principal Accounting Officer concluded that the Company's disclosure controls and procedures were not effective as of June 30, 2025[245](index=245&type=chunk) - A material weakness in internal control over financial reporting was identified due to deficiencies in management reviews and a lack of sufficient technical accounting competencies[246](index=246&type=chunk) [PART II. OTHER INFORMATION](index=54&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section details legal proceedings, risk factors, unregistered equity sales, defaults on senior securities, and other pertinent information [Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) The company faces legal actions including a trademark infringement claim from Liberty Safe and a **$1.9 million** lawsuit from Bank of America for a defaulted line of credit - The company received a complaint from Liberty Safe and Security Products, Inc. for alleged trademark infringement, which management believes is without merit but has initiated settlement discussions[249](index=249&type=chunk) - Bank of America filed a complaint against the company on March 21, 2025, seeking no less than **$1,906,743** due to a default on a line of credit, with a forbearance agreement executed on May 30, 2025[250](index=250&type=chunk) [Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) This section refers to risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024, with no new factors detailed in this quarterly report - The report directs investors to the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2024[252](index=252&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company engaged in extensive unregistered sales of equity securities, including common and Series D Preferred Stock, to settle payables and convert debt, highlighting reliance on dilutive financing - In April 2025, the company entered into a settlement agreement with Silverback Capital Corporation (SCC) to exchange payables totaling **$4.7 million** for shares of common stock[255](index=255&type=chunk) - On April 4, 2025, the company entered into agreements for a private placement to sell an aggregate of **724,640 shares** of common stock (or pre-funded warrants) and accompanying series A and B warrants[260](index=260&type=chunk) - Numerous conversions of debt into common stock and Series D Preferred Stock occurred throughout April and May 2025 with various lenders, indicating a pattern of settling obligations with equity[258](index=258&type=chunk)[262](index=262&type=chunk)[278](index=278&type=chunk) [Defaults Upon Senior Securities](index=59&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company defaulted on its Bank of America line of credit, failing to make the **$1.8 million** final payment by July 31, 2025, and acknowledges cash flow restraints and missed payments on other financing agreements - The company's subsidiary, Champion Safe, defaulted on its Credit Agreement with Bank of America[286](index=286&type=chunk) - Champion did not make the final payment of all amounts owed under the Credit Agreement by the extended forbearance deadline of July 31, 2025, with the total amount due being **$1,831,014.51**[291](index=291&type=chunk) - The company has experienced cash flow restraints and has missed payments due under several other financing agreements, though it is working with lenders for solutions[293](index=293&type=chunk) [Mine Safety Disclosure](index=61&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This section is not applicable to the company - The company has indicated that this item is not applicable[296](index=296&type=chunk) [Other Information](index=61&type=section&id=Item%205.%20Other%20Information) Post-quarter, on July 31, 2025, the company secured a **$500,000** promissory note with **$350,000** net proceeds to support refinancing and extend the Bank of America forbearance agreement, with a debt-to-equity conversion option - On July 31, 2025, the Company entered into a two-year promissory note for a gross principal of **$500,000**, with net proceeds of **$350,000**[297](index=297&type=chunk) - The proceeds are intended to support refinancing efforts with Bank of America, specifically to extend the existing forbearance agreement[298](index=298&type=chunk) [Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including numerous financing and securities agreements, highlighting the complexity of capital-raising and debt-restructuring activities

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-41584 ALPHATIME ACQUISITION CORP (Exact name of registrant as specified in its charter) | Cayman Islands | N/A | | --- | --- | | (State or O ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-41584 ALPHATIME ACQUISITION CORP (Exact name of registrant as specified in its charter) (Address of principal executive offices) (zip code) ...

PART I - FINANCIAL INFORMATION [Condensed Consolidated Financial Statements](index=2&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the periods ended June 30, 2025 [Balance Sheets](index=2&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets and stockholders' equity significantly increased due to a substantial rise in cash from financing activities Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $97,901,357 | $39,990,827 | | Total Current Assets | $98,362,270 | $40,315,205 | | Total Assets | $98,968,970 | $40,952,875 | | **Liabilities & Equity** | | | | Total Current Liabilities | $1,194,377 | $424,585 | | Total Stockholders' Equity | $97,774,593 | $40,528,290 | [Statements of Operations](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Net losses widened for the three and six-month periods due to higher General & Administrative and R&D expenses Condensed Consolidated Statements of Operations Highlights | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | General and administrative | $2,502,637 | $1,792,613 | $5,982,647 | $3,950,358 | | Research and development | $1,639,864 | $909,612 | $3,305,777 | $1,933,435 | | Operating Loss | $(4,142,501) | $(2,702,225) | $(9,288,424) | $(5,883,793) | | Net Loss | $(3,520,434) | $(2,374,634) | $(8,291,446) | $(5,194,218) | | Net Loss Per Share (Basic and diluted) | $(0.16) | $(0.17) | $(0.40) | $(0.38) | [Statements of Changes in Stockholders' Equity](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity more than doubled, driven by significant net proceeds from the issuance of common stock - Total stockholders' equity grew from **$40.5 million** on December 31, 2024, to **$97.8 million** on June 30, 2025[16](index=16&type=chunk) - The primary driver for the equity increase was the issuance of 6,242,266 shares from registered offerings, yielding net proceeds of **$63.1 million** in the first six months of 2025[16](index=16&type=chunk) [Statements of Cash Flows](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) A substantial cash inflow from financing activities offset increased cash usage in operations, boosting total cash reserves Cash Flow Summary (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(5,605,030) | $(3,725,447) | | Net Cash Provided by Financing Activities | $63,521,676 | $2,194,041 | | Net Increase in Cash and Cash Equivalents | $57,910,530 | $(1,531,406) | | Cash and Cash Equivalents, End of Period | $97,901,357 | $27,067,039 | [Notes to Financial Statements](index=5&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's single business segment, R&D commitments, recent equity offerings, and stock compensation - The company operates as a single business segment focused on the development and commercialization of its nuclear fuel[24](index=24&type=chunk)[91](index=91&type=chunk) - R&D expenses associated with the Idaho National Laboratory (INL) project totaled **$1.6 million** for the six months ended June 30, 2025, a significant increase from $0.7 million in the same period of 2024[47](index=47&type=chunk) - The company raised net proceeds of **$63.1 million** from At-the-Market (ATM) offerings by selling 6,242,266 shares during the first six months of 2025[62](index=62&type=chunk) - On May 8, 2025, stockholders approved an increase in authorized common shares from **25,000,000 to 100,000,000**[53](index=53&type=chunk) [Management's Discussion and Analysis (MD&A)](index=16&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, fuel development progress, and liquidity, highlighting increased spending and successful capital raises [Business Overview and Fuel Development](index=17&type=section&id=OVERVIEW%20OF%20OUR%20BUSINESS%20AND%20DEVELOPMENT%20OF%20LIGHTBRIDGE%20FUEL) The company is advancing its next-generation metallic nuclear fuel through key collaborations and positive feasibility studies - The company is developing next-generation metallic nuclear fuel to improve the economics and safety of existing and new nuclear power plants, including for emerging uses like powering data centers[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - Collaboration with Idaho National Laboratory (INL) is central to R&D, with total estimated cash payments under current CRADA and SPPA agreements at approximately **$6.8 million**[122](index=122&type=chunk) - A feasibility study with RATEN ICN in Romania indicated that Lightbridge Fuel™ can **double the discharged burnup** in a CANDU reactor[126](index=126&type=chunk) - The company signed a memorandum of understanding (MOU) with Oklo, Inc in January 2025 to explore co-locating a fuel fabrication facility and collaborating on recycling spent uranium-zirconium fuel[115](index=115&type=chunk) [Operations Review](index=21&type=section&id=OPERATIONS%20REVIEW) Operating expenses and net loss increased significantly in Q2 and the first half of 2025, driven by intensified R&D and higher G&A costs Comparison of Operating Results (Three Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | G&A Expenses | $2.5M | $1.8M | +$0.7M | +39% | | R&D Expenses | $1.6M | $0.9M | +$0.7M | +78% | | Net Loss | $(3.5)M | $(2.4)M | +$1.1M | +46% | Comparison of Operating Results (Six Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | G&A Expenses | $6.0M | $4.0M | +$2.0M | +50% | | R&D Expenses | $3.3M | $1.9M | +$1.4M | +74% | | Net Loss | $(8.3)M | $(5.2)M | +$3.1M | +60% | - The increase in R&D for Q2 2025 was primarily due to a **$0.5 million increase** in INL project labor costs[143](index=143&type=chunk) - The increase in G&A for the first six months of 2025 was driven by higher professional fees (**$0.7M**) and stock-based compensation (**$0.9M**), including a $0.5M charge for accelerated vesting for a former employee[149](index=149&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=LIQUIDITY,%20CAPITAL%20RESOURCES%20AND%20FINANCIAL%20POSITION) The company's cash position strengthened significantly through equity offerings, ensuring sufficient funding for near-term operations - Cash and cash equivalents stood at **$97.9 million** as of June 30, 2025[157](index=157&type=chunk) - Management believes it has sufficient liquidity for at least the next 12 months, with estimated cash requirements of **$39.0 million** for that period[156](index=156&type=chunk)[158](index=158&type=chunk) - Long-term capital requirements for development and commercialization are estimated to be in the range of **$200 million to $300 million** over the next 10 to 15 years[160](index=160&type=chunk) - The primary source of liquidity is the At-the-Market (ATM) equity offering, which raised **$63.1 million** in the first half of 2025[157](index=157&type=chunk)[162](index=162&type=chunk) [Market Risk Disclosures](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is not required to provide disclosures about market risk - As a "smaller reporting company," Lightbridge is exempt from this disclosure requirement[174](index=174&type=chunk) [Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls over financial reporting were effective as of June 30, 2025 - The CEO and CFO concluded that disclosure controls and procedures were **effective** as of June 30, 2025[176](index=176&type=chunk) - **No material changes** were made to internal control over financial reporting during the quarter[177](index=177&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) The company is not aware of any material legal proceedings against it - The company reports **no material legal proceedings**[178](index=178&type=chunk) [Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor related to the use of Artificial Intelligence has been added since the last annual report - A new risk factor was added concerning the challenges and risks associated with the use of AI, including **flawed algorithms, data quality issues, and cybersecurity threats**[180](index=180&type=chunk) [Other Information](index=26&type=section&id=Item%205.%20Other%20Information) This section discloses recent bylaw amendments, an expanded R&D agreement, and the adoption of trading plans by directors - The company amended its bylaws on August 11, 2025, to update nomination and proposal procedures[183](index=183&type=chunk) - A modification to the Strategic Partnership Project Agreement (SPPA) with Battelle Energy Alliance (BEA) was executed on August 1, 2025, to expand the R&D scope[185](index=185&type=chunk) - Two directors, Jesse Funches and Sweta Chakraborty, adopted Rule 10b5-1 stock trading plans in May 2025[186](index=186&type=chunk)[190](index=190&type=chunk) [Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists key agreements and corporate documents filed with the report - Key exhibits filed include the Open Market Sales Agreement with Jefferies LLC, amended corporate bylaws, and a modification to the SPPA with Battelle Energy Alliance, LLC[189](index=189&type=chunk)

[Financial Statements](index=2&type=section&id=Financial%20Statements) [Consolidated Statements of Financial Position](index=2&type=section&id=Consolidated%20Statements%20of%20Financial%20Position) As of June 30, 2025, the company's financial position shows a significant decrease in cash and cash equivalents to $46.3 million from $106.7 million at year-end 2024, with total assets declining to $783.7 million from $856.9 million, while total liabilities increased, driven primarily by a rise in the warrant liability to $88.6 million, leading to a reduction in total equity to $484.8 million from $570.6 million Key Balance Sheet Items (in thousands of Canadian dollars) | Account | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $46,298 | $106,653 | -$60,355 | | Total Current Assets | $62,112 | $123,250 | -$61,138 | | Mining interests | $493,299 | $506,670 | -$13,371 | | Total Assets | $783,738 | $856,902 | -$73,164 | | Total Current Liabilities | $158,759 | $144,501 | +$14,258 | | Warrant liability | $88,578 | $67,852 | +$20,726 | | Total Liabilities | $298,905 | $286,273 | +$12,632 | | Total Equity | $484,833 | $570,629 | -$85,796 | - The company reported a negative working capital of **$96.6 million** as of June 30, 2025, a key factor in the going concern assessment[15](index=15&type=chunk) [Consolidated Statements of Loss](index=3&type=section&id=Consolidated%20Statements%20of%20Loss) For the six months ended June 30, 2025, the company's net loss significantly widened to $84.7 million from $36.7 million in the prior year period, driven by higher operating costs, a $25.8 million asset impairment charge, and a $23.9 million negative change in the fair value of the warrant liability, while revenues increased to $6.9 million from $4.4 million year-over-year Performance Summary for the Six Months Ended June 30 (in thousands of Canadian dollars) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $6,859 | $4,399 | +55.9% | | Operating loss | ($61,218) | ($33,956) | +80.3% | | Impairment of assets | ($25,793) | ($5,438) | +374.3% | | Change in fair value of warrant liability | ($23,903) | $10,045 | Negative Swing | | Net loss | ($84,734) | ($36,668) | +131.0% | | Basic and diluted net loss per share | ($0.62) | ($0.43) | +44.2% | [Consolidated Statements of Comprehensive Loss](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) The company reported a comprehensive loss of $91.2 million for the six months ended June 30, 2025, a substantial increase from the $35.3 million loss in the same period of 2024, primarily due to the higher net loss of $84.7 million, compounded by a $6.5 million other comprehensive loss, which included negative currency translation adjustments Comprehensive Loss for the Six Months Ended June 30 (in thousands of Canadian dollars) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Net loss | (84,734) | (36,668) | | Other comprehensive (loss) income | (6,456) | 1,385 | | **Comprehensive loss** | **(91,190)** | **(35,283)** | [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, cash used in operating activities was $33.1 million, and cash used in investing activities was $27.7 million, primarily for additions to mining interests, resulting in a total decrease in cash of $60.4 million and an ending cash balance of $46.3 million Cash Flow Summary for the Six Months Ended June 30 (in thousands of Canadian dollars) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash flows used in operating activities | ($33,089) | ($22,308) | | Net cash flows used in investing activities | ($27,705) | ($16,412) | | Net cash flows (used in) provided by financing activities | ($2,752) | $27,569 | | **Decrease in cash and cash equivalents** | **($60,355)** | **($9,775)** | | Cash and cash equivalents – End of period | $46,298 | $33,680 | [Consolidated Statements of Changes in Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity decreased from $570.6 million at the beginning of 2025 to $484.8 million at June 30, 2025, primarily driven by the comprehensive loss of $91.2 million for the period, partially offset by equity issued for deferred consideration and share-based compensation - The company's deficit increased from **$598.3 million** to **$683.1 million** during the first six months of 2025 due to the net loss of $84.7 million[8](index=8&type=chunk) - Share capital increased by **$3.7 million**, mainly from shares issued for the settlement of deferred consideration (**$3.4 million**)[8](index=8&type=chunk) [Notes to the Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) [Note 1: Nature of operations and going concern](index=8&type=section&id=Note%201%3A%20Nature%20of%20operations%20and%20going%20concern) The company is a mineral exploration and development firm focused on projects in North America, with management identifying material uncertainties that cast substantial doubt on its ability to continue as a going concern, given a negative working capital of **$96.6 million** and an accumulated deficit of **$683.1 million** as of June 30, 2025, making its continued operations dependent on securing additional financing - The company's financial statements have been prepared on a going concern basis, but management acknowledges material uncertainties related to its ability to continue operations[15](index=15&type=chunk)[16](index=16&type=chunk) - Key projects include the Cariboo Gold Project (BC), San Antonio Gold Project (Mexico), and Trixie Test Mine (USA)[13](index=13&type=chunk) - Future operations depend on securing additional financing through asset sales, project debt, offtake/royalty financing, or capital markets; failure to do so may require curtailing planned activities[17](index=17&type=chunk) [Note 4: Mining interests](index=9&type=section&id=Note%204%3A%20Mining%20interests) The net book value of mining interests decreased to $493.3 million from $506.7 million, primarily due to a significant impairment charge of **$25.3 million** recorded on the QR Mill during the first quarter of 2025, following an optimized feasibility study for the Cariboo Gold Project which removed the need for the mill, resulting in the QR Mill's net book value being fully written off - An impairment charge of **$25.3 million** was recorded on mining interests related to the QR Mill in Q1 2025[21](index=21&type=chunk)[25](index=25&type=chunk) - The impairment was triggered by an optimized feasibility study for the Cariboo Gold Project that eliminated the need to transport concentrate to the QR Mill[25](index=25&type=chunk) [Note 7: Long-term debt and credit facility](index=12&type=section&id=Note%207%3A%20Long-term%20debt%20and%20credit%20facility) As of June 30, 2025, total long-term debt and credit facility stood at $43.2 million, with $37.0 million classified as current, including a **US$50 million** credit facility designated for the Cariboo gold project, of which the outstanding **US$25 million** was repaid subsequent to the quarter-end using proceeds from a new financing facility Debt Balance (in thousands of Canadian dollars) | Category | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Current portion | 37,037 | 40,314 | | Non-current portion | 6,155 | 5,503 | | **Total** | **43,192** | **45,817** | - The **US$50 million** Credit Facility matures on October 31, 2025, and the outstanding **US$25 million** was repaid on July 21, 2025[29](index=29&type=chunk)[32](index=32&type=chunk) [Note 9: Warrants](index=13&type=section&id=Note%209%3A%20Warrants) Certain warrants exercisable in U.S. dollars are classified as a financial liability and measured at fair value, with the warrant liability increasing to $88.6 million at June 30, 2025, from $67.9 million at year-end 2024, resulting in a $23.9 million charge to the statement of loss for the six-month period due to the change in fair value Warrant Liability Movement (in thousands of Canadian dollars) | Period | Balance – Beginning of period | Change in fair value | Balance – End of period | | :--- | :--- | :--- | :--- | | H1 2025 | $67,852 | $23,903 | $88,578 | - The warrants are revalued at each reporting period using the Black-Scholes model, with changes in fair value recognized in the income statement[35](index=35&type=chunk) [Note 13: Segmented information](index=18&type=section&id=Note%2013%3A%20Segmented%20information) The company's operations are segmented geographically across Canada, Mexico, and the USA, with Canada being the largest contributor to the operating loss at $55.3 million for the six months ended June 30, 2025, primarily due to a $25.8 million asset impairment, while the USA was the sole source of revenue at $6.9 million Operating Loss by Segment for Six Months Ended June 30, 2025 (in thousands of Canadian dollars) | Segment | Revenues | Impairment of assets | Operating loss | | :--- | :--- | :--- | :--- | | Canada | $— | ($25,793) | ($55,339) | | Mexico | $— | $— | ($4,057) | | USA | $6,859 | $— | ($1,822) | | **Total** | **$6,859** | **($25,793)** | **($61,218)** | Non-Current Assets by Segment as of June 30, 2025 (in thousands of Canadian dollars) | Segment | Non-Current Assets (excluding investments) | | :--- | :--- | | Canada | $504,996 | | Mexico | $48,739 | | USA | $142,999 | | **Total** | **$696,734** | [Note 15: Subsequent events](index=20&type=section&id=Note%2015%3A%20Subsequent%20events) Subsequent to the quarter-end, the company secured significant financing to address its liquidity needs and fund the Cariboo Gold Project, including a **US$450 million** senior secured project loan facility, of which an initial **US$100 million** was drawn, and planned private placements for aggregate gross proceeds of up to **US$195 million** - On July 21, 2025, the company entered into a **US$450 million** credit facility with Appian Capital for the Cariboo Gold Project, with an initial draw of **US$100 million**[49](index=49&type=chunk) - On July 31, 2025, the company announced a "bought deal" private placement for gross proceeds of **US$120 million**[50](index=50&type=chunk) - Concurrently, a non-brokered private placement with a strategic investor was arranged for gross proceeds of **US$75 million**[52](index=52&type=chunk)

[Executive Summary](index=2&type=section&id=Executive%20Summary) [Overall Performance and Strategic Highlights](index=2&type=section&id=Overall%20Performance%20and%20Strategic%20Highlights) Ecopetrol Group maintained solid 1H 2025 operating performance, achieving competitive profitability through diversification, integration, cost cutting, and optimization, with COP 61.0 trillion in revenues, COP 24.4 trillion EBITDA, and COP 4.9 trillion net income - Maintained solid operating performance in 1H 2025, demonstrating sustainable value generation despite challenging market conditions like declining Brent crude prices and geopolitical tensions[5](index=5&type=chunk) - Financial results were underpinned by market and portfolio diversification, value chain integration, cost cutting, and operational optimization, leading to competitive profitability[6](index=6&type=chunk) Ecopetrol Group Key Financial Results (1H 2025) | Metric | Amount (COP Trillion) | EBITDA Margin | | :----- | :-------------------- | :------------ | | Revenues | 61.0 | | | EBITDA | 24.4 | 40% | | Net Income | 4.9 | | - Completed dividend payments to shareholders totaling **COP 8.8 trillion**, delivering an approximate **10% dividend yield**[8](index=8&type=chunk) - Hydrocarbons business achieved **751 mboed production** in 1H 2025, driven by strong performance in Colombian fields (Caño Sur, CPO-09) and the Permian Basin (U.S.)[9](index=9&type=chunk) - Declared commercial feasibility for the Lorito discovery (Meta Department), the largest in the last decade, realizing benefits from acquiring a **45% stake in CPO-09**[10](index=10&type=chunk) - Energy Transition business closed an acquisition agreement for the **205 MW Windpeshi wind project** and commercialized natural gas for an average of **58 GBTUD** for four years, plus **60 GBTUD** of imported gas for five years (starting 2Q26)[12](index=12&type=chunk) - Total investments reached **USD 2,582 million** by the end of 2Q25, maintaining operational growth across all business lines[14](index=14&type=chunk) [I. Financial and Operating Results](index=3&type=section&id=I.%20Financial%20and%20Operating%20Results) [Financial Summary Income Statement](index=3&type=section&id=Financial%20Summary%20Income%20Statement) Ecopetrol Group's 2Q25 and 1H25 net consolidated profit and EBITDA significantly decreased due to lower total sales and gross profit, with net profit dropping by 44.2% and 29.4% respectively Ecopetrol Group Financial Summary Income Statement (COP Billion) | Metric | 2Q25 | 2Q24 | ∆ ($) | ∆ (%) | 6M 2025 | 6M 2024 | ∆ ($) | ∆ (%) | | :-------------------------------- | :--- | :--- | :---- | :---- | :------ | :------ | :---- | :---- | | Total Sales | 29,669 | 32,627 | (2,958) | (9.1%) | 61,035 | 63,929 | (2,894) | (4.5%) | | Gross profit | 8,508 | 12,047 | (3,539) | (29.4%) | 19,168 | 24,285 | (5,117) | (21.1%) | | Operating profit | 5,637 | 9,535 | (3,898) | (40.9%) | 14,017 | 19,337 | (5,320) | (27.5%) | | Net consolidated profit | 2,456 | 4,400 | (1,944) | (44.2%) | 6,688 | 9,477 | (2,789) | (29.4%) | | Net profit attributable to Ecopetrol shareholders | 1,811 | 3,376 | (1,565) | (46.4%) | 4,938 | 7,387 | (2,449) | (33.2%) | | EBITDA | 11,136 | 14,052 | (2,916) | (20.8%) | 24,394 | 28,291 | (3,897) | (13.8%) | | EBITDA Margin | 37.5% | 43.1% | - | (5.6%) | 40.0% | 44.3% | - | (4.3%) | [Sales Revenues](index=4&type=section&id=Sales%20Revenues) 2Q25 total sales revenue decreased by 9.1% to COP 29.7 trillion, driven by lower crude oil and product prices, partially offset by exchange rate effects and stronger differentials, with local sales down 4.9% and exports up 3.7% - Accumulated sales revenue in 2Q25 totaled **COP 29.7 trillion**, a **9.1% decrease** compared to 2Q24[22](index=22&type=chunk) - Total volume sold in 2Q25 was **987 mboed**, a **0.1% decrease** from 2Q24, primarily due to lower local sales volume partially offset by increased export volumes[24](index=24&type=chunk) Ecopetrol Group Volumetric Sales (mboed) | Category | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :--------- | :--- | :--- | :---- | :------ | :------ | :---- | | Total Local Volumes | 414.4 | 435.9 | (4.9%) | 416.6 | 435.0 | (4.2%) | | Total Export Volumes | 572.2 | 551.7 | 3.7% | 554.8 | 538.5 | 3.0% | | Total Sold Volumes | 986.6 | 987.6 | (0.1%) | 971.4 | 973.5 | (0.2%) | - A lower weighted average sales price of crude oil and products (**-12.0 USD/Bl**) contributed to revenue decrease, in line with Brent decline, partially offset by strengthening crude trading and product differentials[27](index=27&type=chunk) Ecopetrol Group Basket Realization Prices (USD/Bl) | Metric | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :------- | :--- | :--- | :---- | :------ | :------ | :---- | | Brent | 66.7 | 85.0 | (21.5%) | 70.8 | 83.5 | (15.2%) | | Crude Sales Basket | 63.0 | 78.7 | (19.9%) | 65.8 | 76.2 | (13.6%) | | Product Sales Basket | 79.2 | 91.4 | (13.3%) | 82.7 | 92.0 | (10.1%) | | Gas Sales Basket | 26.9 | 27.1 | (0.7%) | 27.9 | 27.7 | 0.7% | - The hedging program covered **1.5 million barrels** for Ecopetrol S.A., **7.2 million barrels** for Ecopetrol Trading Asia, and **0.7 million barrels** for Ecopetrol US Trading during 2Q25[33](index=33&type=chunk) [Cost of Sales](index=6&type=section&id=Cost%20of%20Sales) 2Q25 cost of sales increased by 2.8% (COP +0.6 trillion), driven by a 21.0% rise in depreciation and 9.3% in fixed costs, while variable costs decreased by 5.3% due to lower crude, gas, and product purchases - Cost of sales increased by **2.8% (COP +0.6 trillion)** in 2Q25 compared to 2Q24[35](index=35&type=chunk) - Variable costs decreased by **5.3% (COP -0.6 trillion)** in 2Q25, primarily due to lower purchase value of crude oil, gas, and products (**-COP 1.6 trillion**), partially offset by increased refined product purchases (**COP +0.3 trillion**) and a negative exchange rate effect (**COP +0.6 trillion**)[36](index=36&type=chunk)[39](index=39&type=chunk) - Fixed costs increased by **9.3% (COP +0.5 trillion)** in 2Q25, attributed to greater construction activity at ISA and higher maintenance and general costs due to inflation and exchange rate effects[36](index=36&type=chunk) - Depreciation and amortization increased by **21.0% (COP +0.7 trillion)** in 2Q25, driven by higher production, increased capital investment, and exchange rate effects on USD-functional currency subsidiaries[37](index=37&type=chunk) [Operational and Exploratory Expenses, net of Other Income](index=6&type=section&id=Operational%20and%20Exploratory%20Expenses,%20net%20of%20Other%20Income) 2Q25 operating expenses, net of other income, increased by 14.3% (COP +0.4 trillion), driven by a higher tax rate, increased provisions for impairment and environmental/labor updates, and higher labor expenses - Operating expenses, net of other income, increased by **14.3% (COP +0.4 trillion)** in 2Q25 compared to 2Q24[38](index=38&type=chunk) - Key drivers for the increase include a higher tax rate due to an internal commotion decree (**COP +0.1 trillion**), higher provisions (**COP +0.2 trillion**) for Air-E portfolio impairment and environmental/labor updates, and higher labor expenses (**COP +0.1 trillion**) due to salary increases and inflation[40](index=40&type=chunk) [Financial Results (Non-Operational)](index=6&type=section&id=Financial%20Results%20(Non-Operational)) 2Q25 financial expenses remained stable, a net effect of higher income from exchange rate differences offsetting increased financial expenses from interest on USD-denominated debt due to higher average exchange rates and inflation - Financial expenses remained at similar levels compared to 2Q24[38](index=38&type=chunk) - This stability resulted from higher income from exchange rate differences (lower closing exchange rate on net liability position) largely offsetting increased financial expenses from interest on USD-denominated debt (higher average exchange rate and inflation)[38](index=38&type=chunk) [Income Taxes](index=7&type=section&id=Income%20Taxes) 2Q25 Effective Tax Rate decreased to 34.3% due to a lower income tax surcharge, while Ecopetrol disputes DIAN's VAT interpretation on fuel imports, facing potential liabilities of COP 0.9 trillion for the Refinery and COP 6.5 trillion for the Company, plus COP 3.3 trillion in interest - The Effective Tax Rate for 2Q25 was **34.3%**, down from **42.3%** in 2Q24, primarily due to a lower income tax surcharge (**0% in 2Q25 vs 10% in 2Q24**) based on Brent price projection[41](index=41&type=chunk) - DIAN issued an opinion in December 2024 stating that gasoline and Diesel imports are subject to **19% VAT**, which Ecopetrol and Refinería de Cartagena S.A.S. dispute[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) - DIAN notified the Refinery of assessments and requirements totaling **COP 1.3 trillion** and the Company of requirements totaling **COP 6.5 trillion** for 2022-2024, with estimated accrued interest of **COP 3.3 trillion**[43](index=43&type=chunk) - Ecopetrol and the Refinery have been making VAT payments on gasoline and diesel imports since January 2025, estimated at **COP 3.6 trillion** for 2025, with approximately **COP 3.3 trillion** expected to be recovered through tax discount and refund procedures[45](index=45&type=chunk)[46](index=46&type=chunk) [Financial Position Statements](index=7&type=section&id=Financial%20Position%20Statements) Between March and June 2025, Group assets decreased by 1.9% (COP 5.7 trillion) due to lower FEPC receivables, cash consumption, and revaluation effects, while liabilities decreased by 4.1% (COP 8.0 trillion) mainly from dividend payments, and equity increased by COP 2.3 trillion to COP 105.6 trillion - Group's assets decreased by **COP 5.7 trillion (-1.9%)** between March and June 2025[47](index=47&type=chunk) - Main drivers for asset decrease included lower FEPC accounts receivable (**COP -4.5 trillion**), cash consumption (**COP -3.9 trillion**), revaluation effect on USD-functional currency assets (**COP -2.6 trillion**), and asset depreciation (**COP -4.5 trillion**), partially offset by higher CAPEX (**COP 5.1 trillion**) and increased tax credits (**COP 4.8 trillion**)[47](index=47&type=chunk) - Liabilities decreased by **COP -8.0 trillion (-4.1%)** during 2Q25, mainly due to payment of 100% of declared dividends, offset by increased financial obligations from short-term debt and revaluation effect of USD-denominated debt[48](index=48&type=chunk) - Group's equity totaled **COP 105.6 trillion** at the end of 2Q25, an increase of **COP 2.3 trillion** from 1Q25, driven by profits[49](index=49&type=chunk) [Cash Flow, Debt and FEPC](index=8&type=section&id=Cash%20Flow,%20Debt%20and%20FEPC) Ecopetrol Group's 2Q25 cash balance was COP 13.1 trillion, with operating cash flow and short-term debt covering dividends and CAPEX; total debt increased by COP 1.6 trillion to COP 120.3 trillion (USD 29,550 million), while the FEPC receivable decreased by COP 4.5 trillion to COP 2.5 trillion Ecopetrol Group Cash Position (COP Billion) | Metric | 2Q25 | 2Q24 | 6M 2025 | 6M 2024 | | :------------------------------ | :--- | :--- | :------ | :------ | | Initial cash and cash equivalents | 14,101 | 15,167 | 14,054 | 12,336 | | (+) Cash flow from operations | 10,046 | 17,071 | 16,168 | 23,084 | | (-) CAPEX | (5,031) | (4,628) | (8,990) | (8,901) | | (-) Dividend payments | (9,672) | (11,922) | (10,695) | (12,192) | | Final cash and cash equivalents | 10,118 | 13,237 | 10,118 | 13,237 | | Total cash | 13,142 | 15,939 | 13,142 | 15,939 | - Cash balance of **COP 13.1 trillion** at the end of 2Q25 (**23% COP, 77% USD**)[52](index=52&type=chunk) - Debt balance increased by **COP 1.6 trillion** to **COP 120.3 trillion (USD 29,550 million)** at the end of 2Q25, driven by short-term and long-term investment loans, partially offset by USD-denominated debt revaluation[53](index=53&type=chunk) - Gross Debt/EBITDA ratio was **2.4x** (below the 2.5x limit), Net Debt/EBITDA was **2.2x**, and Debt/Equity ratio was **1.1x** at the end of June[54](index=54&type=chunk) - FEPC account receivable decreased by **COP 4.5 trillion** to **COP 2.5 trillion** at the end of June 2025, mainly due to **COP 5.4 trillion** in payments received for 2024 accrual, partially offset by 2Q25 accrual of **COP 0.9 trillion**[55](index=55&type=chunk) [Efficiencies](index=9&type=section&id=Efficiencies) Ecopetrol Group achieved **COP 2.2 trillion** in efficiencies by 2Q25, with **66% (COP 1.4 trillion)** impacting EBITDA through OPEX reductions and revenue generation, reducing lifting cost by **0.81 USD/Bl**, alongside **COP 0.7 billion** in CAPEX efficiencies and **COP 0.1 billion** in working capital improvements - Achieved **COP 2.2 trillion** in efficiencies by the end of 2Q25[56](index=56&type=chunk) - **66%** of efficiencies (**COP 1.4 trillion**) impacted EBITDA, with **COP 0.8 trillion** from OPEX (e.g., corporate cost efficiencies, new service contracting, energy efficiency) and **COP 0.7 trillion** from revenue generation (e.g., synergies in crude transportation, higher margins in product purchases/exports)[56](index=56&type=chunk)[57](index=57&type=chunk) - Efficiencies reduced lifting cost by **0.81 USD/Bl**, refining cash cost by **0.07 USD/bl**, and cost per barrel transported by **0.015 USD/bl**[57](index=57&type=chunk) - **COP 0.7 billion (29%)** in CAPEX efficiencies achieved through optimization of investment costs in projects, including drilling and completion (Permian) and surface facility projects[57](index=57&type=chunk) - **COP 0.1 billion (5%)** in working capital improvements from inventory management and financial cost savings[57](index=57&type=chunk) [Investments](index=10&type=section&id=Investments) Ecopetrol Group invested **USD 2,582 million (COP 10.8 trillion)** by 2Q25, with **62%** in Colombia; Hydrocarbons received **61% (USD 1,583 million)**, Energy for Transition **14% (USD 348 million)**, and Transmission and Toll Roads **25% (USD 651 million)** - Total investments by Ecopetrol Group reached **USD 2,582 million (COP 10.8 trillion)** by the end of 2Q25[60](index=60&type=chunk) - Investments were primarily in Colombia (**62%**), followed by Brazil (**17%**) and the United States (**15%**)[60](index=60&type=chunk) Ecopetrol Group Investments by Segment (6M 2025) | Business Segment | Millions USD | Trillions COP | % Share | | :----------------- | :----------- | :------------ | :------ | | Hydrocarbons | 1,583 | 6.6 | 61% | | Energies for the Transition | 348 | 1.5 | 14% | | Transmission and Toll Roads | 651 | 2.7 | 25% | | Total | 2,582 | 10.8 | 100% | - Hydrocarbons investments (**USD 1,583 million**) focused on E&P in Meta, Brazil (Orca discovery), and the Permian Basin (U.S.), refining operational continuity (Barrancabermeja refinery maintenance), and transport infrastructure[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) - Energy for Transition investments (**USD 348 million**) concentrated on gas chain growth (Piedemonte assets, Tayrona Block) and renewable energy projects (solar farms, Coral hydrogen project)[64](index=64&type=chunk)[65](index=65&type=chunk) - Transmission and Toll Roads investments (**USD 651 million**) were mainly in energy transmission (**87%**) in Brazil, Peru, and Colombia, with **11%** in Toll Roads and **2%** in Telecommunications[65](index=65&type=chunk) [II. Business Lines Results](index=11&type=section&id=II.%20Business%20Lines%20Results) [1. HYDROCARBONS](index=11&type=section&id=1.%20HYDROCARBONS) The Hydrocarbons segment saw mixed 2Q25/1H25 results, with 2 successful exploration wells and stable 1H25 production at 750.5 mboed, decreased lifting and dilution costs, improved refining margins, and strong commercial management EBITDA despite lower transported volumes [1.1 Exploration, Development and Production](index=11&type=section&id=1.1%20Exploration,%20Development%20and%20Production) In 2Q25, Ecopetrol drilled 6 exploratory wells with 2 successes, declared Lorito commercial, and maintained 1H25 production at 750.5 mboed, while lifting and dilution costs decreased due to efficiencies and exchange rates, despite a decline in segment net income and EBITDA from lower Brent prices - **6 exploratory wells** drilled in 2Q25 (out of 10 planned for the year), with **2 successful** (Sirius-2 ST2, Currucutu-1) and 2 under evaluation[68](index=68&type=chunk)[194](index=194&type=chunk) - Declaration of commerciality for the Lorito discovery (Llanos Sur basin) adds **1,450 bpd potential** to the production portfolio[70](index=70&type=chunk) Ecopetrol Group Gross Production (mboed) | Production - mboed | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :----------------- | :--- | :--- | :---- | :------ | :------ | :---- | | Total Ecopetrol Group | 755.5 | 759.6 | (0.5%) | 750.5 | 750.3 | 0.0% | - 1H25 production levels maintained (**+0.21 mboed**) compared to 1H24, driven by growth in Caño Sur and Chichimene, acquisition of **45% of CPO-09**, and Permian production increase, offsetting environmental impacts and natural gas decline[78](index=78&type=chunk) - Deferred production of **1.5 million barrels** in 2Q25 (cumulative **1.8 million barrels** for 1H25) due to blockades and pipeline unavailability[79](index=79&type=chunk)[80](index=80&type=chunk) Ecopetrol Group Lifting and Dilution Cost (USD/Bl) | Metric | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :----------- | :--- | :--- | :---- | :------ | :------ | :---- | | Lifting Cost | 11.97 | 12.08 | (0.9%) | 11.59 | 12.04 | (3.7%) | | Dilution Cost | 4.36 | 5.38 | (19.0%) | 4.89 | 5.40 | (9.4%) | - 1H25 lifting cost decreased by **-0.45 USD/Bl** due to a positive exchange rate effect (**-0.81 USD/Bl**) and efficiencies (**+0.37 USD/Bl**), partially offsetting cost increases from inflation and maintenance[84](index=84&type=chunk)[85](index=85&type=chunk) - 1H25 dilution cost decreased by **-0.51 USD/Bl** due to lower naphtha purchase price and reduction in dilution factor, partially offset by lower crude oil volumes marketed[86](index=86&type=chunk)[87](index=87&type=chunk) Exploration and Production Income Statement (COP Billion) | Metric | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :-------------------------------- | :--- | :--- | :---- | :------ | :------ | :---- | | Total revenue | 18,089 | 21,499 | (15.9%) | 36,506 | 40,215 | (9.2%) | | Gross income | 3,865 | 7,487 | (48.4%) | 9,273 | 13,981 | (33.7%) | | Operating income | 2,232 | 5,843 | (61.8%) | 6,397 | 10,876 | (41.2%) | | Net income attributable to owners of Ecopetrol | 842 | 2,341 | (64.0%) | 2,924 | 4,639 | (37.0%) | | EBITDA | 5,915 | 8,661 | (31.7%) | 13,121 | 16,376 | (19.9%) | | EBITDA Margin | 32.7% | 40.3% | (7.6%) | 35.9% | 40.7% | (4.8%) | [1.2 Transport and Logistics](index=15&type=section&id=1.2%20Transport%20and%20Logistics) 2Q25 transported volumes decreased by 5.9% due to third-party disruptions, but Ecopetrol's mitigation strategies helped; 1H25 cost per transported barrel increased by 2.3% to **3.14 USD/Bl**, while 2Q25 segment revenues increased due to exchange rates and rate updates Ecopetrol Group Transported Volumes (mbd) | Metric | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :------- | :--- | :--- | :---- | :------ | :------ | :---- | | Crude oil | 786.7 | 848.9 | (7.3%) | 794.8 | 831.2 | (4.4%) | | Products | 297.4 | 303.5 | (2.0%) | 293.0 | 304.2 | (3.7%) | | Total | 1,084.0 | 1,152.4 | (5.9%) | 1,087.8 | 1,135.4 | (4.2%) | - Crude oil transported volumes decreased due to lower third-party production, blockades, and infrastructure damage by third parties, particularly affecting Caño Limón-Coveñas and Bicentennial pipelines[97](index=97&type=chunk)[98](index=98&type=chunk) - Mitigation strategies included using alternate routes (Bicentennial Pipeline), increasing operating capacity of strategic systems (Araguaney - Cusiana, Vasconia-Barrancabermeja), and testing dual pumping in the Ayacucho-Coveñas system[99](index=99&type=chunk)[100](index=100&type=chunk) - Incidents involving third parties affecting transport infrastructure increased to **20 events** in 1H25 (**8 in 2Q25**) from **2 events** in 1H24 (**0 in 2Q24**)[105](index=105&type=chunk) Ecopetrol Group Cost per Transported Barrel (USD/Bl) | Metric | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :------------------------ | :--- | :--- | :---- | :------ | :------ | :---- | | Cost per Transported Barrel | 3.24 | 3.23 | 0.3% | 3.14 | 3.07 | 2.3% | - 1H25 cost per transported barrel increased by **0.07 USD/Bl** due to lower transported volume (**+0.15 USD/Bl**) and higher costs from inflation and emergency care (**+0.12 USD/Bl**), partially offset by a positive exchange rate effect (**-0.20 USD/Bl**)[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) Transport Segment Profit or Loss Statement (COP Billion) | Metric | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :-------------------------------- | :--- | :--- | :---- | :------ | :------ | :---- | | Total revenue | 3,868 | 3,625 | 6.7% | 7,849 | 7,194 | 9.1% | | Gross income | 2,833 | 2,562 | 10.6% | 5,804 | 5,204 | 11.5% | | Operating income | 2,520 | 2,359 | 6.8% | 5,268 | 4,805 | 9.6% | | Net income attributable to owners of Ecopetrol | 1,299 | 1,317 | (1.4%) | 2,594 | 2,649 | (2.1%) | | EBITDA | 2,906 | 2,728 | 6.5% | 6,028 | 5,546 | 8.7% | | EBITDA Margin | 75.1% | 75.3% | (0.2%) | 76.8% | 77.1% | (0.3%) | [1.3 Refining and Petrochemicals](index=17&type=section&id=1.3%20Refining%20and%20Petrochemicals) The refining segment achieved a **12.5 USD/Bl** integrated gross margin in 2Q25, up from **9.1 USD/Bl**, despite lower throughput, driven by improved gasoline and diesel differentials; Esenttia increased sales volumes and captured **USD 3.1 million** in OPEX efficiencies, while refining cash cost increased to **5.74 USD/Bl** - The refining segment achieved an integrated gross margin of **12.5 USD/Bl** in 2Q25, up from **9.1 USD/Bl** in 2Q24, driven by improved international gasoline and diesel differentials[117](index=117&type=chunk) - Consolidated throughput was **413.3 mboed** in 2Q25, lower than **424.4 mboed** in 2Q24, affected by maintenance and lower light crude oil receipt[117](index=117&type=chunk) - Ecopetrol made its first export of IFO 380 marine fuel (**185 thousand barrels**) from Cartagena Refinery and set a record in liquid asphalt exports (**56,700 tons**) from Barrancabermeja Refinery[123](index=123&type=chunk) Cartagena Refinery Performance | Metric | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :------------------ | :--- | :--- | :---- | :------ | :------ | :---- | | Throughput (mbd) | 193.4 | 195.1 | (0.9%) | 191.1 | 199.3 | (4.1%) | | Gross Margin (USD/Bl) | 11.0 | 9.1 | 20.9% | 10.7 | 12.4 | (13.7%) | Barrancabermeja Refinery Performance | Metric | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :------------------ | :--- | :--- | :---- | :------ | :------ | :---- | | Throughput (mbd) | 219.9 | 229.2 | (4.1%) | 213.5 | 227.1 | (6.0%) | | Gross Margin (USD/Bl) | 13.9 | 9.2 | 51.1% | 12.6 | 11.6 | 8.6% | Esenttia Sales (Kton) | Metric | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :--------- | :--- | :--- | :---- | :------ | :------ | :---- | | Total Sales | 95.8 | 94.1 | 1.8% | 207.1 | 185.4 | 11.7% | - Esenttia captured **USD 3.1 million** in OPEX efficiencies in 1H25[129](index=129&type=chunk) Refining Cash Cost (USD/Bl) | Metric | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :---------------- | :--- | :--- | :---- | :------ | :------ | :---- | | Refining Cash Cost | 5.74 | 5.56 | 3.2% | 5.66 | 5.49 | 3.1% | - Refining cash cost increased by **0.18 USD/Bl** in 2Q25 due to lower crude oil loading and higher costs (inflation, gas, operational activity in Esenttia), partially offset by exchange rate effect[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) Refining Segment Income Statement (COP Billion) | Metric | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :-------------------------------- | :--- | :--- | :---- | :------ | :------ | :---- | | Total revenue | 15,682 | 16,733 | (6.3%) | 32,958 | 34,378 | (4.1%) | | Gross income | 404 | 195 | 107.2% | 605 | 1,392 | (56.5%) | | Operating income (loss) | (206) | (356) | (42.1%) | (594) | 278 | (313.7%) | | Net income attributable to owners of Ecopetrol | (379) | (517) | (26.7%) | (792) | (318) | 149.1% | | EBITDA | 665 | 435 | 52.9% | 1,147 | 1,881 | (39.0%) | | EBITDA Margin | 4.2% | 2.6% | 1.6% | 3.5% | 5.5% | (2.0%) | [1.4 Commercial Management](index=20&type=section&id=1.4%20Commercial%20Management) Ecopetrol's commercial offices traded **45 million barrels** in 2Q25, generating **USD 44 million** EBITDA and **USD 40 million** net income, with 1H25 accumulating **USD 110 million** EBITDA and **USD 94 million** net income, while expanding product exports and trading **280 thousand carbon credits** - Commercial offices in Houston and Singapore traded **45 million barrels** of crude oil and products in 2Q25, achieving **USD 44 million** in EBITDA and **USD 40 million** in net income[138](index=138&type=chunk) - Accumulated 1H25 results for commercial offices: **USD 110 million** in EBITDA and **USD 94 million** in net income[138](index=138&type=chunk) - Expanded product portfolio with the first export of RMG380-grade fuel oil (**320 thousand barrels**), first delivery of IFO380 marine diesel (**186 thousand barrels**), and first direct sale of paraffin to Brazil (**200 tons**)[139](index=139&type=chunk) - The Carbon Trading Desk traded approximately **280 thousand carbon credits (tCO2e)** in 2Q25, with **87%** for internal Group requirements and **13%** marketed with third parties[140](index=140&type=chunk) [2. ENERGIES FOR THE TRANSITION](index=21&type=section&id=2.%20ENERGIES%20FOR%20THE%20TRANSITION) Ecopetrol advanced energy transition by commercializing natural gas (58 GBTUD local, 60 GBTUD imported), incorporating **630 MW** renewable energy (**208 MW** operational), achieving **2.42 PJ** energy savings (COP 53 billion, 171,226 tCO2e reduction), and adding **19,242** social gas connections [Natural Gas](index=21&type=section&id=Natural%20Gas) Ecopetrol commercialized natural gas (58 GBTUD local, 60 GBTUD imported), reduced its 1H25 natural gas consumption by **8%**, increased substitute energy use to nearly **12%**, and plans regasification on the Pacific coast for 2H26 - Commercialized natural gas for an average of **58 GBTUD** for the next four years[141](index=141&type=chunk) - For the first time, commercialized a block of **60 GBTUD** of imported natural gas for five years (starting 2Q26)[141](index=141&type=chunk) - Achieved an **8% reduction** in natural gas consumption in 1H25 and increased the use of substitute energy sources to nearly **12%** of current consumption[142](index=142&type=chunk) - Regasification on the Pacific coast planned for 2H26; Caribbean options are being evaluated for 2026-2027[143](index=143&type=chunk)[144](index=144&type=chunk) [Renewable Energy](index=21&type=section&id=Renewable%20Energy) By 2Q25, Ecopetrol Group incorporated **630 MW** of renewable energy (**208 MW** operational), reducing **23,900 tCO2e** and saving **COP 29.3 billion** in 2025, while fulfilling conditions for the **205 MW Windpeshi** project and signing agreements for **1,087 MW** and **1,300 MW** wind/solar portfolios - Incorporated a total of **630 MW** of renewable energy by the end of 2Q25 (**208 MW** in operation, **228 MW** from MEM purchases, **95 MW** under construction, **99 MW** in execution)[145](index=145&type=chunk) - Operational renewable energy projects accumulated **23,900 tCO2e reduction** and **COP 29.3 billion** in energy cost savings in 2025[146](index=146&type=chunk) - Fulfilled conditions precedent for acquiring **100%** of Wind Autogeneración S.A.S. (**Windpeshi wind project, 205 MW**) in La Guajira, expected to contribute to energy cost optimization and decarbonization[146](index=146&type=chunk) - Signed a Master Investment Agreement with AES for a potential **49% stake** in the Jemeiwaa Ka'l wind cluster (**1,087 MW**)[146](index=146&type=chunk) - Signed a contract with Statkraft to acquire a solar and wind portfolio of up to **1,300 MW**[146](index=146&type=chunk) [Wholesale Energy Market (MEM)](index=22&type=section&id=Wholesale%20Energy%20Market%20(MEM)) In 1H25, Ecopetrol Group's average electricity demand was **23.3 GWh per day**, with **87.7%** covered by self-generation and contracts (up from **80.6%** in 1H24), minimizing spot market exposure and achieving **6.2%** lower average contract rates than regulated market rates - 1H25 average electricity demand was **23.3 GWh per day**, with **58.4%** met by self-generation and **41.6%** by MEM purchases[147](index=147&type=chunk) - **87.7%** of the Group's energy demand was covered through self-generation and contracts (up from **80.6%** in 1H24), minimizing spot market exposure to **12.3%**[147](index=147&type=chunk) - Average rates settled in contracts were **6.2% lower** than regulated market rates published by XM[148](index=148&type=chunk) [Energy Efficiency](index=22&type=section&id=Energy%20Efficiency) By 1H25, Ecopetrol achieved **2.42 PJ** in energy optimization, reducing **171,226 tons of CO2e** and saving approximately **COP 53 billion**, with cumulative savings since 2018 reaching **22.33 PJ (89% of 2030 goal)** - Accumulated energy optimization of **2.42 PJ** by the end of 1H25, impacting **171,226 tons of CO2e** and saving **COP 53 billion**[149](index=149&type=chunk) - Total cumulative energy savings since 2018 reached **22.33 PJ (89% of 2030 goal)**, equivalent to the consumption of over **1.1 million Colombian households**[149](index=149&type=chunk) [Social Gas & Invercolsa](index=22&type=section&id=Social%20Gas%20%26%20Invercolsa) Ecopetrol's social gas initiative added **19,242** new home connections in 1H25, totaling **94,507** since 2019, while Invercolsa's user base grew by **3.9%** to over **4.1 million** users - The social gas initiative made **19,242** new home connections in social strata 1 and 2 during 1H25, totaling **94,507** physical connections since 2019[150](index=150&type=chunk) - Invercolsa and its affiliates registered over **4.1 million users** connected to gas service, a **3.9% increase** compared to 2Q24, driven by network projects and social gas[151](index=151&type=chunk) [3. ENERGY TRANSMISSION AND TOLL ROADS](index=22&type=section&id=3.%20ENERGY%20TRANSMISSION%20AND%20TOLL%20ROADS) The Energy Transmission and Toll Roads segment secured new projects but saw 2Q25 revenues decrease by **2.5%** due to a Brazilian RBSE methodology adjustment, reducing ISA's EBITDA by **COP 594 billion** and net income by **COP 140 billion**, while toll road projects progressed and segment net income attributable to Ecopetrol owners significantly declined [3.1 Energy Transmission](index=22&type=section&id=3.1%20Energy%20Transmission) ISA Energía in Brazil was awarded seven transmission network reinforcements (**BRL 250 million CAPEX**) and commissioned projects in Colombia (**COP 16 billion**) and Brazil (**USD 57 million**); ANEEL's RBSE methodology adjustment reduced ISA's EBITDA by **COP 594 billion** and net income by **COP 140 billion** - ISA Energía in Brazil was awarded seven transmission network reinforcements in 2Q25, with CAPEX of **BRL 250 million (~COP 187 billion)**[152](index=152&type=chunk) - Projects commissioned in 2Q25 include the Bolivar Sabanalarga and Bolivar Termocartagena transmission line renovation in Colombia (**COP 16 billion**), and seven reinforcements in Brazil (**USD 57 million**), including the Água Vermelha project[153](index=153&type=chunk) - ANEEL's decision in June 2025 adjusted the methodology for calculating the financial component of Brazil's Existing System Basic Network (RBSE)[156](index=156&type=chunk) - This decision led to a reduction of **COP 594 billion** in ISA's EBITDA and **COP 140 billion** in net income, implying lower RBSE-related collections from July 2025 to July 2028[157](index=157&type=chunk) [3.2 Toll Roads](index=23&type=section&id=3.2%20Toll%20Roads) The **COP 11 billion** Caracolí vehicular bridge in Colombia was inaugurated, construction began on Panama's Eastern Pan-American Highway, Chile's Orbital Sur route is progressing for 2028 construction, and Ruta del Maipo expects Free Flow system completion in 4Q25 - The Caracolí vehicular bridge (**COP 11 billion investment**) was inaugurated on Circunvalar de la Prosperidad in Colombia[158](index=158&type=chunk) - Construction phase began for the rehabilitation, improvement, and maintenance of the Eastern Pan-American Highway in Panama[158](index=158&type=chunk) - The Orbital Sur route in Chile is progressing for construction in 2028; Ruta del Maipo is set to complete its Free Flow system in Santiago in 4Q25[159](index=159&type=chunk) [3.3 Telecommunications](index=23&type=section&id=3.3%20Telecommunications) Internexa expanded its fiber optic network, opening new nodes in eight cities in Colombia and five in Peru to boost connectivity - Internexa expanded fiber optic coverage, opening new nodes in eight cities in Colombia and five in Peru[160](index=160&type=chunk) [Financial Results (Energy Transmission and Toll Roads)](index=24&type=section&id=Financial%20Results%20(Energy%20Transmission%20and%20Toll%20Roads)) 2Q25 sales revenue for Energy Transmission and Toll Roads decreased by **2.5%** due to Brazil's RBSE methodology revision, despite new projects; increased costs and higher indebtedness led to a **78.7%** decrease in net income attributable to Ecopetrol owners Energy Transmission and Toll Roads Income Statement (COP Billion) | Metric | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :-------------------------------- | :--- | :--- | :---- | :------ | :------ | :---- | | Total revenue | 3,343 | 3,427 | (2.5%) | 7,354 | 7,095 | 3.7% | | Gross income | 1,533 | 1,903 | (19.4%) | 3,748 | 3,917 | (4.3%) | | Operating income (loss) | 1,085 | 1,688 | (35.7%) | 2,930 | 3,377 | (13.2%) | | Net income attributable to owners of Ecopetrol | 50 | 235 | (78.7%) | 212 | 419 | (49.4%) | | EBITDA | 1,644 | 2,227 | (26.2%) | 4,081 | 4,487 | (9.0%) | | EBITDA Margin | 49.1% | 65.0% | (15.9%) | 55.5% | 63.2% | (7.7%) | - Sales revenue in 2Q25 decreased by **2.5%** due to the revised methodology for calculating the financial component of Brazil's RBSE, partially offset by new projects and contractual escalators[162](index=162&type=chunk) - Cost of sales and operating expenses increased due to inflation, increased construction activity, new project commissioning, and recognition of portfolio impairment (Air-E)[163](index=163&type=chunk) - Net financial result reflected higher indebtedness to support operations in Brazil and Peru, and increased monetary adjustments on debt indexed to UF (Chile) and IPCA (Brazil)[164](index=164&type=chunk) [III. Corporate Governance and Social Bodies](index=24&type=section&id=III.%20Corporate%20Governance%20and%20Social%20Bodies) [Board of Directors](index=24&type=section&id=Board%20of%20Directors) Ecopetrol S.A.'s Board of Directors approved key appointments, including President and Vice President, formed support committees, and approved the Group's 2024 Full IFRS financial statements, 20F report, and 1Q25 financial statements - Approved the appointment of Dr. Guillermo García Realpe as President and Dr. Mónica de Greiff Lindo as Vice President of the Board of Directors[165](index=165&type=chunk) - Approved the formation of support committees of the Board of Directors and appointed their presidents[165](index=165&type=chunk) - Approved the Group's financial statements under Full IFRS for December 31, 2024, and the 20F 2024 report for filing with the SEC[165](index=165&type=chunk) - Approved separate Financial Statements of Ecopetrol and consolidated statements of the Group corresponding to 1Q25[169](index=169&type=chunk) - Approved key appointments including Julián Fernando Lemos as Corporate Vice President of Strategy and Business Development, Diana Marcela Jiménez as Director of Institutional Relations and Communications, Julio César Herrera as Commercial and Marketing Vice President, and Rodolfo Mario García as temporary Compliance Corporate Director[169](index=169&type=chunk) [IV. Presentation of Results](index=25&type=section&id=IV.%20Presentation%20of%20Results) [Conference Details](index=25&type=section&id=Conference%20Details) Ecopetrol S.A. will host a virtual conference on Wednesday, August 13, 2025, at 9:00 a.m. Colombian time (10:00 a.m. New York Time) to discuss its 2Q25 results, with a webcast available in Spanish and English - A virtual conference to comment on 2Q25 results is scheduled for Wednesday, August 13, 2025, at 9:00 a.m. Colombian time (10:00 a.m. New York Time)[166](index=166&type=chunk) - The conference will be transmitted in Spanish and English via webcast, with a link provided for access and questions[167](index=167&type=chunk) - The results announcement, presentation, webcast, and recording will be available on the Ecopetrol website[168](index=168&type=chunk) [Ecopetrol Group Appendices](index=26&type=section&id=Ecopetrol%20Group%20Appendices) [Table 1: Income Statement - Ecopetrol Group](index=26&type=section&id=Table%201:%20Income%20Statement%20-%20Ecopetrol%20Group) This table details the Ecopetrol Group's income statement for 2Q25 and 1H25, presenting total revenue, cost of sales, gross income, operating income, finance result, income tax, net income attributable to owners, EBITDA, and EBITDA margin Ecopetrol Group Income Statement (COP Billion) | Billion (COP) | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :-------------------------------- | :--- | :--- | :---- | :------ | :------ | :---- | | Total revenue | 29,669 | 32,627 | (9.1%) | 61,035 | 63,929 | (4.5%) | | Total cost of sales | 21,161 | 20,580 | 2.8% | 41,867 | 39,644 | 5.6% | | Gross income | 8,508 | 12,047 | (29.4%) | 19,168 | 24,285 | (21.1%) | | Operating income | 5,637 | 9,535 | (40.9%) | 14,017 | 19,337 | (27.5%) | | Net income attributable to owners of Ecopetrol | 1,811 | 3,376 | (46.4%) | 4,938 | 7,387 | (33.2%) | | EBITDA | 11,136 | 14,052 | (20.8%) | 24,394 | 28,291 | (13.8%) | | EBITDA margin | 37.5% | 43.1% | (5.6%) | 40.0% | 44.3% | (4.3%) | [Table 2: Statement of Financial Position / Balance Sheet - Ecopetrol Group](index=27&type=section&id=Table%202:%20Statement%20of%20Financial%20Position%20/%20Balance%20Sheet%20-%20Ecopetrol%20Group) This table presents the Ecopetrol Group's consolidated balance sheet as of June 30, 2025, and March 31, 2025, showing a 1.9% decrease in total assets, a 4.1% decrease in total liabilities, and a 2.2% increase in total equity Ecopetrol Group Statement of Financial Position (COP Billion) | Billion (COP) | June 30, 2025 | March 31, 2025 | ∆ (%) | | :-------------------------------- | :------------ | :------------- | :---- | | Total current assets | 59,170 | 63,995 | (7.5%) | | Total non-current assets | 235,440 | 236,326 | (0.4%) | | Total assets | 294,610 | 300,321 | (1.9%) | | Total current liabilities | 40,689 | 48,138 | (15.5%) | | Total non-current liabilities | 148,340 | 148,885 | (0.4%) | | Total liabilities | 189,029 | 197,023 | (4.1%) | | Total equity | 105,581 | 103,298 | 2.2% | [Table 3: Cash Flow Statement - Ecopetrol Group](index=28&type=section&id=Table%203:%20Cash%20Flow%20Statement%20-%20Ecopetrol%20Group) This table outlines the Ecopetrol Group's cash flow statement for 2Q25 and 1H25, detailing cash flow from operating activities (COP 10,046 billion and COP 16,168 billion respectively), investing activities (COP 6,084 billion and COP 11,552 billion used), and financing activities (COP 7,692 billion and COP 8,264 billion used) Ecopetrol Group Cash Flow Statement (COP Billion) | Billion (COP) | 2Q25 | 2Q24 | 6M 2025 | 6M 2024 | | :-------------------------------- | :--- | :--- | :------ | :------ | | Cash flow provided by operating activities | 10,046 | 17,071 | 16,168 | 23,084 | | Net cash used in investing activities | (6,084) | (4,525) | (11,552) | (8,534) | | Net cash used in financing activities | (7,692) | (14,727) | (8,264) | (14,122) | | Net (decrease) increase in cash and cash equivalents | (3,983) | (1,930) | (3,936) | 901 | | Cash and cash equivalents at the end of the period | 10,118 | 13,237 | 10,118 | 13,237 | [Table 4: EBITDA Reconciliation - Ecopetrol Group](index=29&type=section&id=Table%204:%20EBITDA%20Reconciliation%20-%20Ecopetrol%20Group) This table reconciles the Ecopetrol Group's net income attributable to owners to consolidated EBITDA for 2Q25 (COP 11,136 billion) and 1H25 (COP 24,394 billion), with adjustments for depreciation, financial results, income tax, and non-controlling interests Ecopetrol Group EBITDA Reconciliation (COP Billion) | Billion (COP) | 2Q25 | 2Q24 | 6M 2025 | 6M 2024 | | :-------------------------------- | :--- | :--- | :------ | :------ | | Net income attributable to the owners of Ecopetrol | 1,811 | 3,376 | 4,938 | 7,387 | | (+) Depreciation, amortization and depletion | 4,494 | 3,714 | 8,384 | 7,287 | | (+/-) Financial result, net | 2,085 | 2,090 | 4,503 | 4,092 | | (+) Income tax | 1,285 | 3,234 | 3,224 | 6,154 | | (+) Non-controlling interest | 645 | 1,024 | 1,750 | 2,090 | | Consolidated EBITDA | 11,136 | 14,052 | 24,394 | 28,291 | [Table 5: EBITDA Consolidation by Segment (2Q25)](index=29&type=section&id=Table%205:%20EBITDA%20Consolidation%20by%20Segment%20(2Q25)) This table breaks down 2Q25 consolidated EBITDA (COP 11,136 billion) by segment, with Upstream contributing the largest share (COP 5,915 billion), followed by Midstream (COP 2,906 billion), Energy (COP 1,644 billion), and Downstream (COP 665 billion) EBITDA Consolidation by Segment (2Q25) (COP Billion) | Billion (COP) | Upstream | Downstream | Midstream | Energy | Eliminations | Consolidated | | :-------------- | :------- | :--------- | :-------- | :----- | :----------- | :----------- | | Consolidated EBITDA | 5,915 | 665 | 2,906 | 1,644 | 6 | 11,136 | [Table 6: Investment by Segment - Ecopetrol Group](index=29&type=section&id=Table%206:%20Investment%20by%20Segment%20-%20Ecopetrol%20Group) This table details Ecopetrol Group's 6M 2025 investments totaling **USD 2,582 million**, with Hydrocarbons accounting for **73% (USD 1,891 million)**, Energy Transmission and Toll Roads for **25.2% (USD 651 million)**, and Energies for the Transition for **1.6% (USD 40 million)** Ecopetrol Group Investment by Segment (6M 2025) (Million USD) | Million (USD) | Ecopetrol S.A. | Affiliates and Subsidiaries | Total 6M 2025 | % Share | | :-------------------------- | :------------- | :-------------------------- | :------------ | :------ | | Hydrocarbons | 1,202 | 689 | 1,891 | 73% | | Production | 928 | 511 | 1,439 | 55.7% | | Downstream | 127 | 45 | 172 | 6.7% | | Exploration | 125 | 31 | 156 | 6.0% | | Midstream* | 0 | 102 | 102 | 3.9% | | Corporate** | 22 | 0 | 22 | 0.9% | | Energies for the Transition** | 36 | 4 | 40 | 1.6% | | Energy Transmission and Toll Roads | 0 | 651 | 651 | 25.2% | | Energy Transmission | 0 | 568 | 568 | 22.0% | | Toll Roads | 0 | 72 | 72 | 2.8% | | Telecommunications | 0 | 11 | 11 | 0.4% | | Total | 1,238 | 1,344 | 2,582 | 100.0% | [Ecopetrol S.A. Appendices](index=30&type=section&id=Ecopetrol%20S.A.%20Appendices) This section provides Ecopetrol S.A.'s separate financial statements, showing a significant decrease in 2Q25 and 1H25 total revenue and net income, a slight decrease in total assets and liabilities, and a modest increase in equity attributable to owners Ecopetrol S.A. Income Statement (COP Billion) | Billion (COP) | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :-------------------------------- | :--- | :--- | :---- | :------ | :------ | :---- | | Total revenue | 23,259 | 27,395 | (15.1%) | 48,265 | 52,727 | (8.5%) | | Gross income | 3,527 | 6,528 | (46.0%) | 8,016 | 12,355 | (35.1%) | | Operating income | 2,015 | 5,178 | (61.1%) | 5,447 | 10,028 | (45.7%) | | Net income attributable to owners of Ecopetrol | 1,811 | 3,376 | (46.4%) | 4,938 | 7,387 | (33.2%) | | EBITDA | 4,656 | 7,260 | (35.9%) | 10,345 | 14,201 | (27.2%) | | EBITDA margin | 20.0% | 26.50% | (6.5%) | 21.40% | 26.90% | (5.5%) | Ecopetrol S.A. Statement of Financial Position (COP Billion) | Billion (COP) | June 30, 2025 | March 31, 2025 | ∆ (%) | | :-------------------------------- | :------------ | :------------- | :---- | | Total current assets | 41,864 | 44,477 | (5.9%) | | Total non-current assets | 166,989 | 168,268 | (0.8%) | | Total assets | 208,853 | 212,745 | (1.8%) | | Total current liabilities | 32,588 | 37,695 | (13.5%) | | Total non-current liabilities | 97,040 | 97,565 | (0.5%) | | Total liabilities | 129,628 | 135,260 | (4.2%) | | Total equity | 79,225 | 77,485 | 2.2% | [Table 9: Export Destinations - Ecopetrol Group](index=32&type=section&id=Table%209:%20Export%20Destinations%20-%20Ecopetrol%20Group) This table details Ecopetrol Group's crude oil and product export destinations for 2Q25 and 1H25, with Asia and the U.S. Gulf Coast as primary crude markets, and the U.S. Gulf Coast and Central America/Caribbean for products Ecopetrol Group Crude Exports by Destination (mboed) | Crudes - mboed | 2Q25 | 2Q24 | % Share | 6M 2025 | 6M 2024 | % Share | | :--------------- | :--- | :--- | :------ | :------ | :------ | :------ | | U.S. Gulf Coast | 181.2 | 164.8 | 41.1% | 181.5 | 176.4 | 42.1% | | Asia | 190.4 | 236.8 | 43.2% | 190.4 | 226.9 | 44.1% | | Europe | 31.7 | 9.4 | 7.2% | 26.9 | 4.7 | 6.2% | | Total | 441.0 | 428.5 | 100.0% | 431.5 | 421.0 | 100.0% | Ecopetrol Group Product Exports by Destination (mboed) | Products - mboed | 2Q25 | 2Q24 | % Share | 6M 2025 | 6M 2024 | % Share | | :----------------- | :--- | :--- | :------ | :------ | :------ | :------ | | Central America / Caribbean | 35.0 | 45.1 | 31.1% | 27.3 | 40.8 | 25.7% | | U.S. Gulf Coast | 42.2 | 42.8 | 37.5% | 40.4 | 39.1 | 38.0% | | U.S. East Coast | 17.2 | 0.0 | 15.3% | 12.2 | 0.0 | 11.5% | | Total | 112.6 | 109.1 | 100.0% | 106.2 | 104.2 | 100.0% | [Table 10: Local Purchases and Imports - Ecopetrol Group](index=32&type=section&id=Table%2010:%20Local%20Purchases%20and%20Imports%20-%20Ecopetrol%20Group) This table details Ecopetrol Group's 2Q25 and 1H25 local purchases and imports of crude oil, gas, products, and diluent, showing a significant decrease in local purchases and an increase in imports across all categories Ecopetrol Group Local Purchases (mboed) | Local Purchases - mboed | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :---------------------- | :--- | :--- | :---- | :------ | :------ | :---- | | Crude Oil | 178.5 | 217.9 | (18.1%) | 185.4 | 211.0 | (12.1%) | | Gas | 4.9 | 6.4 | (23.4%) | 3.8 | 6.6 | (42.4%) | | Products | 2.8 | 3.4 | (17.6%) | 3.1 | 3.3 | (6.1%) | | Total | 186.4 | 227.8 | (18.2%) | 192.3 | 220.9 | (12.9%) | Ecopetrol Group Imports (mboed) | Imports - mboed | 2Q25 | 2Q24 | ∆ (%) | 6M 2025 | 6M 2024 | ∆ (%) | | :---------------- | :--- | :--- | :---- | :------ | :------ | :---- | | Crude Oil | 63.1 | 46.9 | 34.5% | 65.6 | 50.6 | 29.6% | | Products | 78.0 | 67.0 | 16.4% | 87.0 | 65.4 | 33.0% | | Diluent | 27.4 | 27.6 | (0.7%) | 32.9 | 29.3 | 12.3% | | Total | 168.5 | 141.5 | 19.1% | 185.5 | 145.2 | 27.8% | | Total (Local + Imports) | 354.9 | 369.3 | (3.9%) | 377.8 | 366.1 | 3.2% | [Table 11: Exploratory Well Details - Ecopetrol Group](index=33&type=section&id=Table%2011:%20Exploratory%20Well%20Details%20-%20Ecopetrol%20Group) This table details the 6 exploratory wells drilled by Ecopetrol Group in 1H25, with two successful (Currucutu-1, Sirius-2 ST2), two under evaluation, and two dry, across various basins with different operators Ecopetrol Group Exploratory Well Details (1H25) | | Quartes | Name | Initial Well Classification (Lahee) | Block | Basin | Operator / Partner | Status | TD Date | | :-- | :------ | :--- | :-------------------------------- | :---- | :---------- | :--------------------------------- | :---------- | :-------- | | 1 | First | Toritos Oeste-1 | A1 | LLA123 | LLanos Central | Geopark 50%(operador) -Hocol 50% | Under Evaluation | Feb 10/2025 | | 2 | First | Currucutu-1 | A3 | LLA123 | LLanos Central | Geopark 50%(operador) -Hocol 50% | Successful | Apr 4/2025 | | 3 | First | Sirius-2 ST2 | A1 | Gua Off 0 | Caribe Offshore | Petrobras 44% (operador) - Ecopetrol 56% | Successful | Jan 7/2025 | | 4 | First | Andina Este-1 | A3 | Capachos | Piedemonte | Parex 50% (operador) - Ecopetrol 50% | Dry | Feb 4/2025 | | 5 | Second | Buena Suerte-1 | A3 | Gua Off 0 | Caribe Offshore | Parex 50% (operador) - Ecopetrol 50% | Dry | Jun 3/2025 | | 6 | Second | Toritos Sur-3 | A1 | LLA123 | Llanos Central | Geopark 50% (Operador) - HOCOL 50% | Under Evaluation | Apr 19/2025 | [Table 12: HSE Performance (Health, Safety and Environment)](index=33&type=section&id=Table%2012:%20HSE%20Performance%20(Health,%20Safety%20and%20Environment)) This table presents Ecopetrol Group's 2Q25 and 1H25 HSE performance, showing an increase in total registrable injuries frequency to **0.30** and **0.31** respectively, and an increase in environmental incidents (hydrocarbon spills >1 barrel) to **1** in 2Q25 and **2** in 1H25 Ecopetrol Group HSE Performance | HSE Indicators* | 2Q 2025 | 2Q 2024 | 6M 2025 | 6M 2024 | | :------------------------------------------ | :------ | :------ | :------ | :------ | | Frequency of total registrable injuries (No. Recordable cases / Million man hours) | 0.30 | 0.21 | 0.31 | 0.19 | | Environmental incidents** | 1 | 0 | 2 | 0 |

Exhibit 99.1 Approved and authorized on behalf of the Board on August 12, 2025: FOREMOST CLEAN ENERGY LTD. (Signed) "Jason Barnard" (Signed) "Andrew Lyons" Jason Barnard, Director Andrew Lyons, Director Condensed Interim Consolidated Financial Statements (Expressed in Canadian Dollars) (Unaudited – Prepared by Management) June 30, 2025 Corporate Head Office 250 – 750 West Pender Street Vancouver, BC V6C 2T7 FOREMOST CLEAN ENERGY LTD. Condensed Interim Consolidated Statements of Financial Position (Expressed ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission File Number 001-41488 SHUTTLE PHARMACEUTICALS HOLDINGS, INC. (Exact name of registrant as specified in its charter) ...

[Part I. FINANCIAL INFORMATION](index=4&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Item 1. Interim Financial Statements](index=4&type=section&id=Item%201.%20Interim%20Financial%20Statements) This section presents CXApp Inc.'s unaudited condensed consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flows, along with detailed notes explaining the company's organization, significant accounting policies, and specific financial line items [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets show a decrease in total assets and stockholders' equity from December 31, 2024, to June 30, 2025, primarily driven by a reduction in current assets and an increase in convertible debt, while current liabilities decreased significantly due to the settlement of a promissory note and a decrease in warrant liability | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :------------------ | | Total Assets | $29,568 thousand | $31,803 thousand | | Total Liabilities | $15,258 thousand | $16,211 thousand | | Total Stockholders' Equity | $14,310 thousand | $15,592 thousand | | Current Assets | $6,238 thousand | $7,080 thousand | | Current Liabilities | $7,653 thousand | $11,576 thousand | | Working Capital Deficiency | $(1,415) thousand | $(4,496) thousand | - The company's working capital deficiency improved from **$(4,496) thousand** as of December 31, 2024, to **$(1,415) thousand** as of June 30, 2025[22](index=22&type=chunk)[222](index=222&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the three and six months ended June 30, 2025, CXApp reported reduced revenues and gross profit compared to the prior year, but also significantly decreased net losses, primarily due to a substantial positive change in the fair value of derivative liability and lower interest expenses | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $1,223 | $1,766 | $2,447 | $3,584 | | Gross Profit | $1,052 | $1,413 | $2,126 | $2,904 | | Loss from Operations | $(4,111) | $(3,650) | $(7,856) | $(7,237) | | Total Other Income (Expense) | $973 | $(1,765) | $3,102 | $(3,555) | | Net Loss | $(3,139) | $(5,256) | $(4,755) | $(10,426) | | Basic and Diluted Net Loss Per Share | $(0.16) | $(0.34) | $(0.23) | $(0.68) | - Net loss significantly decreased for both the three-month and six-month periods ended June 30, 2025, compared to the same periods in 2024, driven by a positive change in fair value of derivative liability and reduced interest expense[11](index=11&type=chunk)[210](index=210&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) The statements of stockholders' equity show a decrease in total equity from January 1, 2025, to June 30, 2025, primarily due to net losses and cumulative translation adjustments, partially offset by stock-based compensation and common shares issued for debt extinguishment and commitment shares | Metric (in thousands) | January 1, 2025 | June 30, 2025 | | :-------------------------------- | :---------------- | :------------ | | Total Stockholders' Equity | $15,592 | $14,310 | | Net Loss (Q1 2025) | - | $(1,616) | | Net Loss (Q2 2025) | - | $(3,139) | | Stock-based Compensation (Q1 2025) | - | $624 | | Stock-based Compensation (Q2 2025) | - | $754 | | Common Shares Issued for Debt Extinguishment | - | $1,003 | | Common Shares Issued for Repayment of Debt | - | $1,328 | | Common Shares Issued for Commitment Shares | - | $89 | | Cumulative Translation Adjustment (Q1 2025) | - | $(1) | | Cumulative Translation Adjustment (Q2 2025) | - | $(301) | - As of August 12, 2025, there were **23,435,234 shares** of Class A common stock issued and outstanding[4](index=4&type=chunk) [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, CXApp experienced a net decrease in cash and cash equivalents, with significant cash usage in operating activities partially offset by proceeds from financing activities, primarily through the issuance of convertible debt | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net Cash Used in Operating Activities | $(3,991) | $(2,560) | | Net Cash Used in Investing Activities | $(16) | $(26) | | Net Cash Provided by Financing Activities | $3,990 | $2,480 | | Net Decrease in Cash and Cash Equivalents | $(26) | $(115) | | Cash and Cash Equivalents, End of Period | $4,854 | $6,160 | - Non-cash financing activities for the six months ended June 30, 2025, included **$2,331 thousand** for common shares issued for debt extinguishment and **$89 thousand** for commitment shares[16](index=16&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the company's financial position, operations, and cash flows, including significant accounting policies, revenue disaggregation, asset valuations, debt instruments, stock-based compensation, and recent events, offering crucial context for the condensed consolidated financial statements [NOTE 1 – Organization, Nature of Business and Basis of Presentation](index=8&type=section&id=NOTE%201%20%E2%80%93%20Organization%2C%20Nature%20of%20Business%20and%20Basis%20of%20Presentation) CXApp Inc. delivers intelligent enterprise workplace experiences through its AI-powered SaaS platform, which offers digital transformation solutions for hybrid workplaces, including employee applications, indoor mapping, and generative AI analytics. The company was formed through a business combination in March 2023, where KINS acquired Inpixon's enterprise apps business and changed its name to CXApp Inc. - CXApp's SaaS platform focuses on AI-powered solutions for enterprise workplace experiences, including indoor mapping, on-device positioning, augmented reality, and generative AI applications[17](index=17&type=chunk)[18](index=18&type=chunk) - The company was formed on March 14, 2023, through a Business Combination where KINS Technology Group Inc. acquired Inpixon's enterprise apps business and subsequently changed its name to CXApp Inc[19](index=19&type=chunk)[21](index=21&type=chunk) [NOTE 2 – Summary of Significant Accounting Policies](index=8&type=section&id=NOTE%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines CXApp's critical accounting policies, including its going concern assessment, revenue recognition methods for SaaS, professional services, and hardware, and valuation methodologies for complex financial instruments like convertible debt and derivative warrant liabilities. It also details the company's status as an emerging growth company and its election regarding new accounting standards - As of June 30, 2025, the Company had a working capital deficiency of approximately **$1,415 thousand** and incurred net losses of **$3,139 thousand** and **$4,755 thousand** for the three and six months ended June 30, 2025, respectively, indicating substantial doubt about its ability to continue as a going concern[22](index=22&type=chunk) - To mitigate going concern indicators, CXApp entered into a Securities Purchase Agreement with Avondale Capital, LLC, for up to **$20,000 thousand**, with **$15,800 thousand** remaining available as of June 30, 2025, and also has **$3,520 thousand** remaining from a prior agreement with Streeterville Capital, LLC[23](index=23&type=chunk)[24](index=24&type=chunk) - The Company recognizes revenue from SaaS licenses ratably over the service term, professional services using the percentage of completion or time-based methods, and hardware sales at the point of shipment[50](index=50&type=chunk)[52](index=52&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk)[60](index=60&type=chunk) - CXApp accounts for convertible debt using the fair value option (Level 3 inputs) and derivative warrant liabilities at fair value (Level 1 inputs), with changes recognized in the consolidated statements of operations[46](index=46&type=chunk)[74](index=74&type=chunk)[81](index=81&type=chunk)[84](index=84&type=chunk)[86](index=86&type=chunk) - The Company is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised financial accounting standards[32](index=32&type=chunk)[33](index=33&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) [NOTE 3 – Disaggregation of Revenue](index=21&type=section&id=NOTE%203%20%E2%80%93%20Disaggregation%20of%20Revenue) CXApp's revenue primarily consists of subscription-based software licenses and maintenance contracts, with a significant shift towards these recurring streams and a reduction in non-subscription professional services and hardware sales for the periods presented | Revenue Type (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Software Subscription | $0 | $1,504 | $0 | $3,092 | | License & Maintenance Contracts | $1,175 | $0 | $2,386 | $0 | | Total Subscription Revenue | $1,175 | $1,504 | $2,386 | $3,092 | | Professional Services | $20 | $262 | $33 | $492 | | Hardware | $28 | $0 | $28 | $0 | | Total Non-Subscription Revenue | $48 | $262 | $61 | $492 | | Total Revenue | $1,223 | $1,766 | $2,447 | $3,584 | - For the three months ended June 30, 2025, subscription revenue accounted for approximately **96%** of total revenue, an increase from **85%** in the same period of 2024, reflecting a strategic shift to a full SaaS delivery model[97](index=97&type=chunk)[204](index=204&type=chunk) [NOTE 4 – Property and Equipment, net](index=22&type=section&id=NOTE%204%20%E2%80%93%20Property%20and%20Equipment%2C%20net) CXApp's net property and equipment decreased from $64 thousand at December 31, 2024, to $57 thousand at June 30, 2025, primarily due to depreciation and amortization expenses, despite minor additions to computer and office equipment | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Computer and office equipment | $212 | $177 | | Furniture and fixtures | $13 | $11 | | Leasehold improvements | $5 | $4 | | Software | $1 | $0 | | Total Gross Property and Equipment | $231 | $192 | | Less: Accumulated depreciation and amortization | $(174) | $(128) | | Total Property and Equipment, Net | $57 | $64 | - Depreciation and amortization expense for property and equipment was **$24 thousand** for the six months ended June 30, 2025, compared to **$44 thousand** for the same period in 2024[99](index=99&type=chunk) [NOTE 5 – Goodwill and Intangible Assets](index=22&type=section&id=NOTE%205%20%E2%80%93%20Goodwill%20and%20Intangible%20Assets) CXApp's goodwill remained constant at $8,737 thousand, with no impairment recognized, while net intangible assets decreased due to ongoing amortization, primarily affecting customer relationships and developed technology - Goodwill remained at **$8,737 thousand** as of June 30, 2025, and December 31, 2024, with no impairment recognized after a qualitative assessment[100](index=100&type=chunk)[102](index=102&type=chunk) | Intangible Asset (in thousands) | Weighted Average Remaining Useful Life (Years) | Net Carrying Amount (June 30, 2025) | Net Carrying Amount (December 31, 2024) | | :-------------------------------- | :--------------------------------------------- | :---------------------------------- | :------------------------------------ | | Trade Name/Trademarks | 4.67 | $2,216 | $2,451 | | Customer Relationships | 2.67 | $3,034 | $3,596 | | Developed Technology | 7.67 | $6,704 | $7,139 | | Patents and Intellectual Property | 7.67 | $2,084 | $2,218 | | Totals | - | $14,038 | $15,404 | | Future Amortization Expense (in thousands) | Amount | | :----------------------------------------- | :----- | | 2025 (remainder of year) | $1,365 | | 2026 | $2,731 | | 2027 | $2,731 | | 2028 | $1,844 | | 2029 | $1,611 | | Thereafter | $3,756 | | Total | $14,038 | [NOTE 6 – Deferred Revenue](index=23&type=section&id=NOTE%206%20%E2%80%93%20Deferred%20Revenue) Deferred revenue decreased slightly from $2,683 thousand at December 31, 2024, to $2,532 thousand at June 30, 2025, as recognized revenue from license agreements and professional services exceeded new deferred revenue and advances from customers | Deferred Revenue (in thousands) | January 1, 2025 | June 30, 2025 | | :-------------------------------- | :-------------- | :------------ | | Deferred Revenue – January 1, 2025 | $2,683 | - | | Revenue recognized | $(2,447) | - | | Revenue deferred | $2,240 | - | | Advance from customer | $56 | - | | Deferred Revenue – June 30, 2025 | - | $2,532 | - The Company expects to satisfy its remaining performance obligations for deferred revenue, primarily related to license agreements and professional services, over the next twelve months[107](index=107&type=chunk) [NOTE 7 – Accrued Liabilities](index=24&type=section&id=NOTE%207%20%E2%80%93%20Accrued%20Liabilities) Accrued liabilities remained stable, decreasing slightly from $2,383 thousand at December 31, 2024, to $2,373 thousand at June 30, 2025, with accrued expenses and reimbursements being the largest component | Accrued Liability (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Accrued expenses and reimbursements | $1,468 | $1,690 | | Accrued compensation and benefits | $412 | $382 | | Accrued insurance premium and interest | $168 | $23 | | Accrued bonus and commissions | $159 | $134 | | Accrued sales and other indirect taxes payable | $106 | $95 | | Income tax payables | $47 | $46 | | Accrued transaction costs | $13 | $13 | | Total Accrued Liabilities | $2,373 | $2,383 | - The Company owed **$168 thousand** on its Directors & Officers (D&O) insurance policy as of June 30, 2025, an increase from **$23 thousand** at December 31, 2024[109](index=109&type=chunk) [NOTE 8 – Promissory Note](index=24&type=section&id=NOTE%208%20%E2%80%93%20Promissory%20Note) The Streeterville promissory note, with an initial principal of $3,885 thousand, was fully paid down by January 17, 2025, through a combination of cash payments and exchanges for Class A Common Stock, resulting in a significant reduction in interest expense for the current period - The Streeterville promissory note, with an initial principal of **$3,885 thousand**, was fully paid down by January 17, 2025[110](index=110&type=chunk)[119](index=119&type=chunk) - During the period from July 15, 2024, to December 26, 2024, **$3,428 thousand** of the note's outstanding balance was exchanged for approximately **2,012,107 shares** of Class A Common Stock[117](index=117&type=chunk) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Principal amount | $0 | $3,885 | | Interest | $0 | $372 | | Accrued monitoring fee | $0 | $273 | | Total | $0 | $4,530 | | Less: Extinguishment | $0 | $3,927 | | Net Promissory Note | $0 | $603 | - Interest expense on the promissory note was **$0** for the three and six months ended June 30, 2025, a significant decrease from **$322 thousand** and **$642 thousand** for the same periods in 2024[119](index=119&type=chunk) [NOTE 9 – Warrants](index=25&type=section&id=NOTE%209%20%E2%80%93%20Warrants) CXApp had 10,751,862 Public Warrants and 10,280,000 Private Placement Warrants outstanding as of June 30, 2025, with no exercises or exchanges occurring during the periods presented. These warrants are classified as derivative liabilities and are remeasured at fair value each reporting period - As of June 30, 2025, there were **10,751,862 Public Warrants** and **10,280,000 Private Placement Warrants** outstanding[120](index=120&type=chunk)[122](index=122&type=chunk) - Each whole warrant entitles the holder to purchase one share of Class A common stock at **$11.50 per share**, expiring on March 15, 2028[120](index=120&type=chunk)[121](index=121&type=chunk) - The Private Placement Warrants are identical to Public Warrants but are exercisable on a cashless basis and non-redeemable as long as held by initial purchasers or permitted transferees[123](index=123&type=chunk) - Changes in the fair value of derivative warrant liabilities resulted in a non-cash gain of **$1,262 thousand** and **$3,576 thousand** for the three and six months ended June 30, 2025, respectively, compared to losses of **$1,051 thousand** and **$2,523 thousand** for the same periods in 2024[75](index=75&type=chunk) [NOTE 10 – Stock Option Plan and Stock-Based Compensation](index=26&type=section&id=NOTE%2010%20%E2%80%93%20Stock%20Option%20Plan%20and%20Stock-Based%20Compensation) CXApp's 2023 Equity Incentive Plan had 2,149,550 stock options outstanding and 1,597,435 restricted stock units (RSUs) outstanding as of June 30, 2025. The company recognized significant non-cash stock-based compensation expenses for both options and RSUs, with a remaining unrecognized expense of $545 thousand for options and $914 thousand for RSUs - As of June 30, 2025, **2,149,550 stock options** were outstanding with a weighted average exercise price of **$1.44**, and **979,547 options** were exercisable[132](index=132&type=chunk) - Non-cash stock-based compensation expense related to stock options was **$51 thousand** for the three months and **$310 thousand** for the six months ended June 30, 2025[132](index=132&type=chunk) - As of June 30, 2025, **1,597,435 restricted stock units (RSUs)** were outstanding[136](index=136&type=chunk) - Non-cash stock-based compensation expense related to RSUs was **$703 thousand** for the three months and **$1,068 thousand** for the six months ended June 30, 2025[137](index=137&type=chunk) - Remaining unrecognized stock compensation expense totaled approximately **$545 thousand** for options (over 2.53 years) and **$914 thousand** for RSUs (over 0.86 year) as of June 30, 2025[132](index=132&type=chunk)[137](index=137&type=chunk) [NOTE 11 – Convertible Debt](index=29&type=section&id=NOTE%2011%20%E2%80%93%20Convertible%20Debt) CXApp's convertible debt increased to $7,534 thousand as of June 30, 2025, primarily due to new Pre-Paid Purchase agreements with Avondale Capital, LLC, and Streeterville Capital, LLC. The company recognized unrealized losses on changes in fair value for these instruments and settled portions of the debt by issuing Class A Common Stock - On March 26, 2025, CXApp entered into a Securities Purchase Agreement with Avondale Capital, LLC, for up to **$20,000 thousand** in Pre-Paid Purchase agreements, receiving **$3,990 thousand** net proceeds from the initial **$4,200 thousand** Pre-Paid Purchase 1[138](index=138&type=chunk) - As of June 30, 2025, Avondale Pre-Paid Purchase 1 was recorded at a fair value of **$4,388 thousand**, and Streeterville Pre-Paid Purchase 3 was recorded at **$3,139 thousand**, both classified as convertible debt[141](index=141&type=chunk)[147](index=147&type=chunk) - For the six months ended June 30, 2025, the Company recognized an unrealized loss of **$500 thousand** on changes in the fair value of convertible debt[46](index=46&type=chunk)[149](index=149&type=chunk) - During the six months ended June 30, 2025, CXApp issued **1,797,869 shares** of Class A Common Stock to settle **$1,677,755 thousand** of convertible debt obligations[149](index=149&type=chunk) [NOTE 12 – Common Stock](index=31&type=section&id=NOTE%2012%20%E2%80%93%20Common%20Stock) During the six months ended June 30, 2025, CXApp issued a total of 2,109,652 shares of Class A Common Stock to satisfy obligations related to promissory notes, convertible debt, and commitment shares, reflecting ongoing financing and debt management activities - On March 31, 2025, **554,274 shares** of Class A Common Stock were issued to satisfy promissory note and convertible debt obligations[153](index=153&type=chunk) - In April 2025, **971,213 shares** of Class A Common Stock were issued to satisfy convertible debt obligations[153](index=153&type=chunk) - On May 8, 2025, **80,000 shares** of Class A Common Stock were issued as commitment shares for the Security Purchase Agreement with Avondale[154](index=154&type=chunk) - In June 2025, **471,973 shares** of Class A Common Stock were issued to satisfy convertible debt obligations[155](index=155&type=chunk) - Total Class A Common Stock issued during the six months ended June 30, 2025, to satisfy debt obligations was **2,109,652 shares**[156](index=156&type=chunk) [NOTE 13 – Income Taxes](index=32&type=section&id=NOTE%2013%20%E2%80%93%20Income%20Taxes) CXApp recorded a minimal income tax expense of $1 thousand for the three and six months ended June 30, 2025, compared to tax benefits in the prior year, maintaining a valuation allowance against deferred tax assets due to recurring losses and significant permanent differences | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income Tax Expense (Benefit) | $(1) | $159 | $(1) | $366 | - The effective tax rate for the three and six months ended June 30, 2025, was **(0.03%)** and **(0.02%)**, respectively, differing from the U.S. Federal statutory rate due to a valuation allowance against deferred tax assets and permanent differences[160](index=160&type=chunk) - The Company continues to maintain a valuation allowance on its deferred tax assets as of June 30, 2025, due to uncertainty regarding their realizability[161](index=161&type=chunk) [NOTE 14 – Credit Risk and Concentrations](index=32&type=section&id=NOTE%2014%20%E2%80%93%20Credit%20Risk%20and%20Concentrations) CXApp's primary credit risks are concentrated in trade accounts receivable and cash/cash equivalents, with cash deposits held in high-credit-quality financial institutions, including foreign subsidiaries. The company assesses customer financial strength and has not experienced significant credit losses - Financial instruments subject to credit risk include trade accounts receivable and cash and cash equivalents[162](index=162&type=chunk) - Cash deposits are held with high-credit-quality financial institutions, with foreign cash balances of **$127 thousand** as of June 30, 2025[163](index=163&type=chunk) - The Company has not experienced any significant credit losses from cash or accounts receivable for the six months ended June 30, 2025[163](index=163&type=chunk)[164](index=164&type=chunk) [NOTE 15 – Segment Information](index=33&type=section&id=NOTE%2015%20%E2%80%93%20Segment%20Information) CXApp operates as a single operating segment, focusing on its vertical software-as-a-service (SaaS) platform, the CXAI Platform, for enterprise workplace management. The CEO, as CODM, evaluates performance based on consolidated net income, with a focus on cash-based operating expenses - CXApp operates as a single operating segment, offering the CXAI Platform for enterprise workplace management[165](index=165&type=chunk)[166](index=166&type=chunk) - The Chief Executive Officer (CODM) manages the business based on consolidated net income, prioritizing cash-based operating expenses over non-cash adjustments like stock-based compensation and intangible amortization[165](index=165&type=chunk)[166](index=166&type=chunk) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue - Licenses | $1,175 | $1,504 | $2,386 | $3,092 | | Revenue - Professional Services | $20 | $262 | $33 | $492 | | Revenue - Hardware | $28 | $0 | $28 | $0 | | Cost of revenue | $171 | $353 | $321 | $680 | | Research and development (cash) | $1,904 | $1,410 | $3,266 | $2,907 | | Sales and marketing (cash) | $449 | $714 | $955 | $1,745 | | General and administrative (cash) | $1,373 | $1,421 | $3,017 | $2,687 | | Total loss without non-cash | $(1,702) | $(3,738) | $(2,011) | $(7,624) | | Net loss | $(3,139) | $(5,256) | $(4,755) | $(10,426) | [NOTE 16 – Foreign Operations](index=34&type=section&id=NOTE%2016%20%E2%80%93%20Foreign%20Operations) CXApp operates in the United States, Canada, and the Philippines, with the United States generating the majority of revenue and assets, while Canada and the Philippines contribute smaller portions and show varying profitability | Metric (in thousands) | United States | Canada | Philippines | Eliminations | Total | | :-------------------------------- | :------------ | :----- | :---------- | :----------- | :---- | | **For the Three Months Ended June 30, 2025:** | | | | | | | Revenues by geographic area | $1,199 | $1,023 | $183 | $(1,182) | $1,223 | | Operating income (loss) by geographic area | $(4,717) | $599 | $7 | $0 | $(4,111) | | Net income (loss) by geographic area | $(4,036) | $893 | $5 | $0 | $(3,139) | | **As of June 30, 2025:** | | | | | | | Identifiable assets by geographic area | $29,021 | $249 | $298 | $0 | $29,568 | | Long lived assets by geographic area | $14,249 | $120 | $150 | $0 | $14,519 | | Goodwill by geographic area | $8,737 | $0 | $0 | $0 | $8,737 | - For the three months ended June 30, 2025, the United States generated **$1,199 thousand** in revenue, while Canada generated **$1,023 thousand** and the Philippines **$183 thousand**, before eliminations[169](index=169&type=chunk) - As of June 30, 2025, the United States held **$29,021 thousand** in identifiable assets, representing the vast majority of the company's total assets[169](index=169&type=chunk) [NOTE 17 – Leases](index=35&type=section&id=NOTE%2017%20%E2%80%93%20Leases) CXApp has operating leases for administrative offices in the United States, Canada, and the Philippines, with a weighted average remaining lease term of 1.2 years and a discount rate of 8.0% as of June 30, 2025. Total lease payments are projected to be $449 thousand - Operating lease expenses for the three and six months ended June 30, 2025, were approximately **$106 thousand** and **$213 thousand**, respectively[171](index=171&type=chunk) - As of June 30, 2025, the weighted average remaining lease term is **1.2 years**, and the weighted average discount rate used for operating lease liabilities is **8.0%**[172](index=172&type=chunk) | Operating Leases (in thousands) | Amount | | :-------------------------------- | :----- | | Year 2025 | $208 | | Year 2026 | $208 | | Year 2027 | $33 | | Total lease payments | $449 | | Less: Imputed interest | $(27) | | Present value of lease liabilities | $422 | [NOTE 18 – Commitments and Contingencies](index=35&type=section&id=NOTE%2018%20%E2%80%93%20Commitments%20and%20Contingencies) CXApp faces risks and uncertainties from global social and political circumstances, including conflicts and trade tensions, which could negatively impact its financial position. The company assesses contingent liabilities, accruing material probable losses and disclosing reasonably possible ones, with no current material litigation - Global social and political circumstances, such as wars, conflicts, and trade tensions, could adversely affect the Company's financial position and operations[174](index=174&type=chunk)[175](index=175&type=chunk) - The Company assesses contingent liabilities, accruing estimated material losses that are probable and disclosing reasonably possible material losses[176](index=176&type=chunk)[177](index=177&type=chunk) - There is no material litigation, arbitration, or governmental proceeding currently pending against CXApp or its management team[241](index=241&type=chunk) [NOTE 19 – Subsequent Events](index=36&type=section&id=NOTE%2019%20%E2%80%93%20Subsequent%20Events) Subsequent to June 30, 2025, CXApp converted a portion of its Streeterville Convertible Notes into 1,994,072 shares of Class A common stock, received $3,000 thousand in net cash proceeds from Avondale's second tranche Pre-Paid Purchase, and filed a shelf registration statement on Form S-3 for up to $150,000 thousand of various securities - On July 4, 2025, the One Big Beautiful Bill (OBBB) was enacted, reinstating full expensing for R&D expenditures, which is expected to reverse a previously recognized deferred tax asset and increase net operating loss carryforwards[179](index=179&type=chunk) - Following June 30, 2025, CXApp converted a portion of its Streeterville Pre-Paid Purchase 3 Convertible Notes into approximately **1,994,072 shares** of Class A common stock[180](index=180&type=chunk)[181](index=181&type=chunk) - On August 7, 2025, the Company received net cash proceeds of **$3,000 thousand** from the second tranche of the Pre-Paid Purchase Agreement with Avondale[182](index=182&type=chunk) - After June 30, 2025, CXApp filed a shelf registration statement on Form S-3, authorizing the future offering and sale of up to **$150,000 thousand** of various securities, including up to **$7,959 thousand** of common stock[183](index=183&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on CXApp's financial condition and operational results for the three months ended June 30, 2025, highlighting strategic shifts towards an AI-first SaaS model, efforts in cost management, and liquidity position, alongside a detailed comparison of revenues, expenses, and non-GAAP financial measures [Special Note Regarding Forward-Looking Statements](index=37&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This section cautions readers that the report contains forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially from expectations. It advises referring to the Risk Factors section of the Annual Report on Form 10-K for important factors that could impact future performance - The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially[186](index=186&type=chunk) - Readers are advised to refer to the Risk Factors section in the Company's Annual Report on Form 10-K for important factors affecting future performance[186](index=186&type=chunk) [Overview of Our Business](index=37&type=section&id=Overview%20of%20Our%20Business) CXApp is transforming the modern workplace with AI-powered solutions, focusing on AI-first product innovation, enterprise penetration, and margin expansion through cost discipline. The company aims for sustainable growth by scaling its enterprise customer base and optimizing operational efficiency - CXApp's strategic pillars for fiscal year 2025 include AI-First Product Innovation, Enterprise Penetration and Revenue Quality Expansion, and Margin Expansion through Cost Discipline[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) - Enhancements to the Generative AI analytics platform improved data ingestion, real-time behavioral insights, and predictive modeling capabilities[188](index=188&type=chunk) - Recurring SaaS revenue accounted for **99%** of total revenue in Q2 2025, demonstrating the effectiveness of the 'land-and-expand' strategy[188](index=188&type=chunk) - Gross profit for Q2 2025 was **$1,052 thousand**, with gross margin improving to **87%** due to the shift to high-margin SaaS offerings[189](index=189&type=chunk) [Executive Overview](index=37&type=section&id=Executive%20Overview) CXApp is focused on transforming the modern workplace with AI-powered solutions, prioritizing AI-first product innovation, expanding its enterprise customer base, and achieving margin expansion through disciplined cost management. The company's strategy emphasizes sustainable growth and operational efficiency in the hybrid workplace market - CXApp aims to enhance employee experience, operational efficiency, and workplace intelligence through AI-powered solutions[187](index=187&type=chunk) - Key strategic pillars include developing AI-native workplace intelligence tools, expanding high-value enterprise accounts, and streamlining SG&A to improve gross margin[188](index=188&type=chunk)[189](index=189&type=chunk) [Financial Performance Summary](index=38&type=section&id=Financial%20Performance%20Summary) CXApp's financial performance summary highlights an increased gross margin of 86% in Q2 2025, driven by a shift to a SaaS-based model, continued customer expansion in key industries, and strategic investments in R&D despite an overall increase in operating expenses - Gross margin increased to **86%** in Q2 2025, up from **80%** in Q2 2024, due to the shift to an AI-enabled SaaS model[194](index=194&type=chunk) - Operating expenses increased to **$5,163 thousand** in Q2 2025, compared to **$5,063 thousand** in Q2 2024, reflecting strategic investments in R&D[194](index=194&type=chunk) - Cash and cash equivalents stood at **$4,854 thousand** for the three months ended June 30, 2025, providing a strategic buffer for investments[192](index=192&type=chunk) [Strategic Growth Initiatives](index=38&type=section&id=Strategic%20Growth%20Initiatives) CXApp's strategic growth initiatives focus on expanding AI-native capabilities, targeting new market verticals, strengthening partnerships, and maintaining operational excellence through cost optimization and customer retention to enhance profitability and market share - Product innovation includes integrating agentic AI for desk booking and advanced analytics, and developing seamless integrations with enterprise platforms[195](index=195&type=chunk) - Market expansion targets new verticals and strengthens partnerships with cloud providers and technology platforms to increase market share[195](index=195&type=chunk) - Operational excellence focuses on cost optimization, customer retention, and sales efficiency to enhance profitability[195](index=195&type=chunk) [Competitive Positioning and Market Outlook](index=39&type=section&id=Competitive%20Positioning%20and%20Market%20Outlook) CXApp is positioned in a rapidly growing global employee experience and workplace technology market, expected to exceed 20% CAGR. Its AI-driven platform offers differentiated capabilities for hybrid workplace management, aligning with strong enterprise demand despite macroeconomic uncertainties - The global employee experience and workplace technology market is projected to grow at a CAGR exceeding **20%** in the coming years[201](index=201&type=chunk) - CXApp's AI-driven platform differentiates itself with real-time analytics, behavioral insights, and predictive modeling for agile decision-making in hybrid workplaces[201](index=201&type=chunk) - The Company observes strong interest from enterprise clients for intelligent, flexible workplace infrastructure, aligning with its strategy to scale AI-enabled solutions[201](index=201&type=chunk) [Recent Events](index=39&type=section&id=Recent%20Events) On April 8, 2025, CXApp received proceeds from the Avondale convertible Pre-Paid Purchase 1, a key financing event for the company - On April 8, 2025, the Company received proceeds from the Avondale convertible Pre-Paid Purchase 1[198](index=198&type=chunk) [RESULTS OF OPERATIONS](index=39&type=section&id=RESULTS%20OF%20OPERATIONS) CXApp's results of operations for the three months ended June 30, 2025, show a decrease in total revenue and gross profit compared to the prior year, but a significant reduction in net loss, driven by a positive change in other income/expense and lower interest expense, despite an increase in operating expenses due to R&D investments | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Revenues | $1,223 | $1,766 | | Cost of revenues | $(171) | $(353) | | Gross profit | $1,052 | $1,413 | | Operating expenses | $(5,163) | $(5,063) | | Loss from operations | $(4,111) | $(3,650) | | Other expense, net | $973 | $(1,765) | | Income tax benefit, provision (expense) | $(1) | $159 | | Net loss | $(3,139) | $(5,256) | [Revenues](index=40&type=section&id=Revenues) Total revenue for the three months ended June 30, 2025, decreased by 31% to $1,223 thousand, primarily due to a strategic decline in non-recurring Professional Services revenue. Subscription-based revenue increased its share to 96% of total revenue, aligning with the company's focus on recurring, high-margin streams - Total revenue for the three months ended June 30, 2025, was **$1,223 thousand**, a **31% decrease** from **$1,766 thousand** in the prior year[202](index=202&type=chunk) - The decrease was primarily attributable to a decline in non-recurring Professional Services revenue, reflecting a strategic transition to a full SaaS delivery model[202](index=202&type=chunk)[203](index=203&type=chunk) - Subscription-based revenue comprised approximately **96%** of total revenue for the three months ended June 30, 2025, up from **85%** in the same period of 2024[204](index=204&type=chunk) [Gross Margin](index=40&type=section&id=Gross%20Margin) Gross profit margin improved to 86% for the three months ended June 30, 2025, up from 80% in the prior year, despite a decrease in gross profit. This improvement was driven by a 51.55% reduction in cost of revenues, primarily from lower professional services-related costs and reduced hosting expenses - Gross profit margin was **86%** for the three months ended June 30, 2025, compared to **80%** for the same period in 2024[205](index=205&type=chunk) - Cost of revenues decreased by approximately **$182 thousand**, or **51.55%**, due to reductions in professional services-related costs and lower hosting/infrastructure expenses[205](index=205&type=chunk) [Operating Expenses](index=40&type=section&id=Operating%20Expenses) Total operating expenses increased by $100 thousand to $5,163 thousand for the three months ended June 30, 2025, primarily due to a $462 thousand rise in R&D expenses for platform enhancements and Google integration. This increase was partially offset by decreases in sales and marketing and G&A expenses - Total operating expenses increased by **$100 thousand** to **$5,163 thousand** for the three months ended June 30, 2025[206](index=206&type=chunk) - Research and development (R&D) expenses rose by **$462 thousand**, reflecting investments in platform enhancements and strategic integration with Google[207](index=207&type=chunk) - Sales and marketing expenses decreased by **$279 thousand**, and G&A expenses decreased by **$83 thousand** due to cost control measures[208](index=208&type=chunk) [Other Income/Expense](index=40&type=section&id=Other%20Income%2FExpense) Other income/expense shifted from an expense of $1,765 thousand in Q2 2024 to an income of $973 thousand in Q2 2025, a $2,738 thousand increase. This was primarily driven by a $1,931 thousand increase in the change in fair value of derivative warrant liabilities and a $521 thousand decrease in interest expense - Other income/expense was an income of **$973 thousand** for the three months ended June 30, 2025, compared to an expense of **$1,765 thousand** for the same period in 2024[210](index=210&type=chunk) - The **$2,738 thousand** increase in other income was mainly due to a **$1,931 thousand** increase in the change in fair value of derivative warrant liabilities and a **$521 thousand** decrease in interest expense[210](index=210&type=chunk) [Provision for Income Taxes](index=40&type=section&id=Provision%20for%20Income%20Taxes) CXApp recorded a $1 thousand income tax expense for the three months ended June 30, 2025, a change from a $159 thousand tax benefit in the prior year. The prior year's benefit was mainly due to the release of a valuation allowance related to acquired intangible assets - Income tax expense was **$1 thousand** for the three months ended June 30, 2025, compared to a **$159 thousand** tax benefit for the three months ended June 30, 2024[211](index=211&type=chunk) - The prior year's tax benefit resulted primarily from the release of a valuation allowance attributable to acquired intangible assets from the Business Combination[211](index=211&type=chunk) [Non-GAAP Financial information](index=41&type=section&id=Non-GAAP%20Financial%20information) CXApp presents Adjusted EBITDA as a non-GAAP measure to supplement its GAAP results, providing insights into core operating performance by excluding interest, taxes, depreciation, amortization, and other non-cash items. While useful for internal evaluation and industry comparison, it has limitations and should not be considered a substitute for GAAP net income - Adjusted EBITDA is a non-GAAP measure used by management to assess core operating results, allocate resources, evaluate economic outcomes, and compare performance[212](index=212&type=chunk)[215](index=215&type=chunk) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(3,139) | $(4,755) | $(5,256) | $(10,426) | | EBITDA | $(2,282) | $(3,172) | $(4,026) | $(8,436) | | Adjusted EBITDA | $(2,678) | $(5,088) | $(2,110) | $(4,391) | - Adjusted EBITDA excludes non-cash items such as changes in fair value of warrant liabilities, loss on debt extinguishment, unrealized gains/losses, loss on contract to issue common stock, and stock-based compensation[215](index=215&type=chunk) - Limitations of Adjusted EBITDA include not reflecting cash expenditures, working capital needs, interest/principal payments on debt, or cash requirements for asset replacements[217](index=217&type=chunk) [EBITDA](index=41&type=section&id=EBITDA) EBITDA for the three and six months ended June 30, 2025, was $(2,282) thousand and $(3,172) thousand, respectively. Adjusted EBITDA, which further excludes non-cash items like changes in fair value of warrant liabilities and stock-based compensation, was $(2,678) thousand and $(5,088) thousand for the same periods | Metric (in thousands) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(3,139) | $(4,755) | $(5,256) | $(10,426) | | Interest and other income | $163 | $194 | $684 | $946 | | Income tax (benefit)/provision | $1 | $1 | $(159) | $(366) | | Depreciation and amortization | $695 | $1,390 | $705 | $1,410 | | EBITDA | $(2,282) | $(3,172) | $(4,026) | $(8,436) | | Changes in fair value of warrant liabilities | $(880) | $(3,076) | $1,051 | $2,523 | | Loss on debt extinguishment | $0 | $48 | $0 | $0 | | Unrealized (gain) loss | $(291) | $(287) | $30 | $86 | | Loss on contract to issue common stock | $21 | $21 | $0 | $0 | | Stock-based compensation | $754 | $1,378 | $835 | $1,436 | | Adjusted EBITDA | $(2,678) | $(5,088) | $(2,110) | $(4,391) | [Financing Obligations and Requirements](index=42&type=section&id=Financing%20Obligations%20and%20Requirements) CXApp used $3,012 thousand in cash for operating activities during the three months ended June 30, 2025. The company secured $20,000 thousand in potential funding from Avondale Capital, LLC, with $15,800 thousand remaining, and $3,520 thousand remaining from Streeterville Capital, LLC, which management believes is sufficient for liquidity needs for the next 12 months - Net cash used in operating activities was **$3,012 thousand** for the three months ended June 30, 2025[218](index=218&type=chunk) - The Company has access to up to **$20,000 thousand** in funding from Avondale Capital, LLC, with **$15,800 thousand** remaining available as of June 30, 2025[218](index=218&type=chunk) - An additional **$3,520 thousand** in funding remained available under the agreement with Streeterville Capital, LLC, as of June 30, 2025[218](index=218&type=chunk) - Management believes these funds are sufficient to satisfy working capital, capital asset purchases, debt repayments, and other liquidity requirements for at least the next 12 months[218](index=218&type=chunk) [Liquidity and Capital Resources as of June 30, 2025 Compared with June 30, 2024](index=43&type=section&id=Liquidity%20and%20Capital%20Resources%20as%20of%20June%2030%2C%202025%20Compared%20with%20June%2030%2C%202024) CXApp's liquidity position as of June 30, 2025, shows a working capital deficiency of $1,415 thousand and cash of $4,854 thousand. While net cash used in operating activities increased, financing activities provided substantial cash, leading to a net increase in cash and cash equivalents for the three months ended June 30, 2025, compared to the prior year - As of June 30, 2025, the Company had a working capital deficiency of approximately **$1,415 thousand** and cash of approximately **$4,854 thousand**[221](index=221&type=chunk)[222](index=222&type=chunk) | Cash Flows (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(3,012) | $(1,910) | | Net cash provided by (used in) investing activities | $(11) | $(8) | | Net cash provided by (used in) financing activities | $3,990 | $2,480 | | Net increase (decrease) in cash and cash equivalents | $961 | $557 | [Operating Activities for the three months ended June 30, 2025 and June 30, 2024](index=43&type=section&id=Operating%20Activities%20for%20the%20three%20months%20ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) Net cash used in operating activities increased to $3,012 thousand for the three months ended June 30, 2025, from $1,910 thousand in the prior year. This was primarily due to a net loss of $3,139 thousand, partially offset by non-cash income and expenses, and a negative change in operating assets and liabilities | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net income (loss) | $(3,139) | $(5,256) | | Non-cash income and expenses | $596 | $3,302 | | Net change in operating assets and liabilities | $(469) | $44 | | Net cash used in operating activities | $(3,012) | $(1,910) | [Cash Flows from Investing Activities for the three months ended June 30, 2025 and June 30, 2024](index=43&type=section&id=Cash%20Flows%20from%20Investing%20Activities%20for%20the%20three%20months%20ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) Net cash used in investing activities remained minimal, at approximately $11 thousand for the three months ended June 30, 2025, and $8 thousand for the same period in 2024, primarily for the purchase of property and equipment - Net cash used in investing activities was approximately **$11 thousand** for the three months ended June 30, 2025, and **$8 thousand** for the three months ended June 30, 2024[224](index=224&type=chunk) - These amounts were primarily used for the purchase of property and equipment[224](index=224&type=chunk) [Cash Flows from Financing Activities for the three months ended June 30, 2025 and June 30, 2024](index=44&type=section&id=Cash%20Flows%20from%20Financing%20Activities%20for%20the%20three%20months%20ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) Net cash provided by financing activities significantly increased to $3,990 thousand for the three months ended June 30, 2025, compared to $2,480 thousand in the prior year, primarily driven by proceeds from the issuance of convertible debt - Net cash provided by financing activities was approximately **$3,990 thousand** for the three months ended June 30, 2025[225](index=225&type=chunk) - This was primarily due to **$3,990 thousand** in net proceeds received from the issuance of convertible debt on April 8, 2025[225](index=225&type=chunk) [Off-Balance Sheet Arrangements](index=44&type=section&id=Off-Balance%20Sheet%20Arrangements) CXApp does not have any off-balance sheet guarantees, interest rate swap transactions, foreign currency contracts, or engage in trading activities involving non-exchange traded contracts - The Company does not have any off-balance sheet guarantees, interest rate swap transactions, or foreign currency contracts[226](index=226&type=chunk) - CXApp does not engage in trading activities involving non-exchange traded contracts[226](index=226&type=chunk) [Contractual Obligations and Commitments](index=44&type=section&id=Contractual%20Obligations%20and%20Commitments) CXApp's contractual obligations primarily consist of operating lease liabilities, totaling approximately $422 thousand as of June 30, 2025, with $208 thousand expected to be paid within the next twelve months - As of June 30, 2025, total operating lease obligations are approximately **$422 thousand**[227](index=227&type=chunk) - Approximately **$208 thousand** of these operating lease obligations are expected to be paid within the next twelve months[227](index=227&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that there are no applicable quantitative and qualitative disclosures about market risk for CXApp - This section is not applicable for CXApp[228](index=228&type=chunk) [Critical Accounting Policies and Estimates](index=44&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) CXApp's financial statements are prepared under U.S. GAAP, requiring management to make significant assumptions and estimates. The company regularly reviews these policies and estimates, and there have been no significant changes to critical accounting estimates disclosed in the 2024 Annual Report on Form 10-K for the three months ended June 30, 2025 - Financial statements are prepared in accordance with U.S. GAAP, requiring management to make assumptions and estimates[229](index=229&type=chunk) - No significant changes to critical accounting estimates were disclosed for the three months ended June 30, 2025, compared to the 2024 Annual Report on Form 10-K[232](index=232&type=chunk) [Critical Accounting Policies](index=44&type=section&id=Critical%20Accounting%20Policies) CXApp's significant accounting policies are detailed in Note 2 of the unaudited condensed consolidated financial statements - Significant accounting policies are discussed in Note 2 of the unaudited condensed consolidated financial statements[230](index=230&type=chunk) [Critical Accounting Estimates](index=44&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates involve complex judgments and assumptions that could materially impact financial statements. Management believes there have been no significant changes to these estimates during the three months ended June 30, 2025, as compared to the 2024 Annual Report - Critical accounting estimates are those that are complex, require a high degree of judgment, and could materially impact financial statements if different assumptions were used[231](index=231&type=chunk) - No significant changes to critical accounting estimates were identified for the three months ended June 30, 2025, compared to the 2024 Annual Report[232](index=232&type=chunk) [JOBS Act Accounting Election](index=45&type=section&id=JOBS%20Act%20Accounting%20Election) As an 'emerging growth company' under the JOBS Act, CXApp is eligible for certain exemptions from reporting requirements and has irrevocably elected to use the extended transition period for complying with new or revised accounting standards, which may affect comparability with other companies - CXApp is an 'emerging growth company' as defined in the JOBS Act[233](index=233&type=chunk) - The Company has irrevocably elected to take advantage of the extended transition period for complying with new or revised accounting standards, potentially affecting comparability with other companies[234](index=234&type=chunk) [Part II. OTHER INFORMATION](index=46&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) There are no material legal proceedings, arbitrations, or governmental proceedings currently pending against CXApp or its management team - No material litigation, arbitration, or governmental proceeding is currently pending against CXApp or its management[241](index=241&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) As of the reporting date, there have been no material changes to the risk factors previously disclosed in CXApp's Annual Report on Form 10-K - No material changes to the risk factors disclosed in the Annual Report on Form 10-K have occurred as of the date of this Quarterly Report[242](index=242&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) CXApp reports no unregistered sales of equity securities or use of proceeds for the period - There were no unregistered sales of equity securities and use of proceeds during the period[243](index=243&type=chunk) [Item 3. Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) CXApp reports no defaults upon senior securities for the period - There were no defaults upon senior securities during the period[244](index=244&type=chunk) [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to CXApp - This section is not applicable[245](index=245&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) This section includes information on insider trading arrangements and a correction to the definitive proxy statement regarding audit and other service fees for fiscal year 2024 [Insider Trading Arrangements and Policies](index=46&type=section&id=Insider%20Trading%20Arrangements%20and%20Policies) During the three months ended June 30, 2025, no director or officer of CXApp notified the company of the adoption or termination of any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No director or officer notified CXApp of the adoption or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[246](index=246&type=chunk) [Definitive Proxy Statement Correction](index=46&type=section&id=Definitive%20Proxy%20Statement%20Correction) CXApp corrected an inadvertent misstatement in its April 17, 2025, definitive proxy statement regarding audit and other service fees provided by Withum for fiscal year 2024, clarifying the total fees to $382,000 - The Company corrected an inadvertent misstatement in its definitive proxy statement regarding fees for audit and other services provided by Withum for fiscal year 2024[247](index=247&type=chunk) | Fees | 2024 | 2023 | | :---------------- | :----- | :----- | | Audit Fees | $319,000 | $235,000 | | Audit-Related fees | $0 | $0 | | Tax Fees | $38,000 | $9,000 | | All Other Fees | $25,000 | $0 | | Total | $382,000 | $244,000 | [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q, including merger agreements, organizational documents, warrant agreements, and certifications - The section lists various exhibits, including the Agreement and Plan of Merger, Amended and Restated Bylaws, Warrant Agreement, Securities Purchase Agreements, and certifications[251](index=251&type=chunk) [SIGNATURES](index=48&type=section&id=SIGNATURES) The report is signed by Khurram Sheikh, Chairman, Chief Executive Officer and Director (Principal Executive Officer), and Joy Mbanugo, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), on August 12, 2025 - The report is signed by Khurram Sheikh, Chairman, Chief Executive Officer and Director, and Joy Mbanugo, Chief Financial Officer, on August 12, 2025[253](index=253&type=chunk)[254](index=254&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39642 CXApp Inc. (Exact name of Registrant as Specified in Its Charter) (State or other jurisdiction of incorporation or organization) Delaw ...