UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: SPECTRAL AI, INC. (Exact Name of Registrant as Specified in Its Charter) (State or other jurisdiction of incorporation or organization) ...

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q FOR THE QUARTER 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 000-08187 NEW CONCEPT ENERGY, INC. (State or Other Jurisdiction of Incorporation or Organization) Nevada 75-2399477 (I.R.S. Employer Identification No.) ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-42126 Perceptive Capital Solutions Corp (Exact name of registrant as specified in its charter) Cayman Islands 98-1783595 (State or ...

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: 001-40927 ZEO ENERGY CORP. (Exact name of registrant as specified in its charter) Delaware 98-1601409 (Sta ...

[FORM 10-Q Cover Page](index=1&type=section&id=FORM%2010-Q%20Cover%20Page) This section details ZEO ENERGY CORP.'s Form 10-Q filing, stock exchange listings, and company classifications - ZEO ENERGY CORP. filed a Form 10-Q for the quarterly period ended June 30, 2025[1](index=1&type=chunk) - The company's Class A Common Stock (ZEO) and Warrants (ZEOWW) are registered on The Nasdaq Stock Market LLC[2](index=2&type=chunk) - ZEO ENERGY CORP. is classified as a Non-accelerated filer, Smaller reporting company, and Emerging growth company[3](index=3&type=chunk) Shares Outstanding as of August 12, 2025 | Class | Shares Outstanding | | :------------------ | :----------------- | | Class A Common Stock | 28,352,032 | | Class V Common Stock | 26,480,000 | [TABLE OF CONTENTS](index=3&type=section&id=TABLE%20OF%20CONTENTS) This section outlines the structure and organization of the Form 10-Q report [PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Zeo Energy Corp.'s unaudited condensed consolidated financial statements and accompanying notes for the specified periods [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at June 30, 2025, and December 31, 2024 Key Balance Sheet Figures | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--------------------------------------- | :------------ | :---------------- | :----------- | :--------- | | Total Assets | $46,230,636 | $60,976,116 | $(14,745,480) | (24.2)% | | Total Liabilities | $16,276,304 | $18,063,424 | $(1,787,120) | (9.9)% | | Total Stockholders' Deficit | $(59,446,742) | $(88,912,079) | $29,465,337 | (33.1)% | | Cash and cash equivalents | $68,691 | $5,634,115 | $(5,565,424) | (98.8)% | | Intangibles, net | $- | $7,571,156 | $(7,571,156) | (100.0)% | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's financial performance for the three and six months ended June 30, 2025 and 2024 Three Months Ended June 30, 2025 vs. 2024 | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :----------- | :--------- | | Total Revenues | $18,101,930 | $14,796,272 | $3,305,658 | 22.3% | | Loss from Operations | $(2,853,506) | $(2,662,870) | $(190,636) | 7.2% | | Net Loss | $(2,679,464) | $(1,757,319) | $(922,145) | 52.5% | | Loss per Class A Common Share | $(0.11) | $(0.06) | $(0.05) | 83.3% | Six Months Ended June 30, 2025 vs. 2024 | Metric | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :----------- | :--------- | | Total Revenues | $26,885,625 | $34,938,428 | $(8,052,803) | (23.0)% | | Loss from Operations | $(16,364,904) | $(6,711,418) | $(9,653,486) | 143.8% | | Net Loss | $(15,998,827) | $(5,864,421) | $(10,134,406) | 172.8% | | Loss per Class A Common Share | $(0.44) | $(0.60) | $0.16 | (26.7)% | | Depreciation and amortization | $8,076,181 | $913,198 | $7,162,983 | 784.4% | | General and administrative | $15,334,050 | $8,742,993 | $6,591,057 | 75.4% | [Condensed Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders' Deficit](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Redeemable%20Non-Controlling%20Interests%20and%20Stockholders%27%20Deficit) This section outlines changes in redeemable non-controlling interests and stockholders' deficit for the reported periods Stockholders' Deficit | Period | Amount | | :-------------------- | :------------- | | June 30, 2025 | $(59,446,742) | | December 31, 2024 | $(88,912,079) | - Significant changes for the six months ended June 30, 2025, include **$3,215,449** in stock-based compensation, **$19,167,500** from Class A common stock issued in exchange for OpCo class B units, and **$15,999,471** from subsequent measurement of redeemable non-controlling interests[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the cash flow activities from operations, investing, and financing for the six months ended June 30 Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 | 2024 | Change ($) | | :--------------------------------------- | :----------- | :------------ | :----------- | | Net cash used in operating activities | $(4,549,934) | $(12,351,750) | $7,801,816 | | Net cash used in investing activities | $(807,025) | $(330,829) | $(476,196) | | Net cash (used in) provided by financing activities | $(208,465) | $10,002,393 | $(10,210,858) | | Cash and cash equivalents, end of the period | $68,691 | $5,342,120 | $(5,273,429) | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [NOTE 1—BASIS OF PRESENTATION AND OTHER INFORMATION](index=11&type=section&id=NOTE%201%E2%80%94BASIS%20OF%20PRESENTATION%20AND%20OTHER%20INFORMATION) This note outlines the basis of financial statement preparation and the adoption or evaluation of new accounting standards - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and should be read in conjunction with the Form 10-K[24](index=24&type=chunk) - ASU 2023-05 (Business Combinations—Joint Venture Formations) was adopted and did not have a material impact[26](index=26&type=chunk) - ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation Disclosures) are currently being evaluated for their impact on future financial statements[27](index=27&type=chunk)[28](index=28&type=chunk) [NOTE 2—DISAGGREGATION OF REVENUES AND SEGMENT REPORTING](index=12&type=section&id=NOTE%202%E2%80%94DISAGGREGATION%20OF%20REVENUES%20AND%20SEGMENT%20REPORTING) This note details the company's revenue breakdown by type and confirms its operation as a single reportable segment Total Net Revenues | Period | 2025 | 2024 | Change ($) | Change (%) | | :-------------------- | :----------- | :----------- | :----------- | :--------- | | Three Months Ended June 30 | $18,101,930 | $14,796,272 | $3,305,658 | 22.3% | | Six Months Ended June 30 | $26,885,625 | $34,938,428 | $(8,052,803) | (23.0)% | Revenue by Type (Six Months Ended June 30) | Revenue Type | 2025 | 2024 | | :-------------------------- | :----------- | :----------- | | Solar system installations, net | $26,064,556 | $33,101,976 | | Roofing installations | $821,069 | $1,676,357 | - The Company operates as a single operating and reportable segment, focused on the sales and installation of solar panel technology to individual households within the United States[32](index=32&type=chunk) [NOTE 3—PROPERTY AND EQUIPMENT](index=13&type=section&id=NOTE%203%E2%80%94PROPERTY%20AND%20EQUIPMENT) This note provides details on the company's property and equipment, including internally-developed software and depreciation expense Property and Equipment, Net | Metric | June 30, 2025 | December 31, 2024 | Change ($) | | :-------------------------- | :------------ | :---------------- | :----------- | | Total property and equipment, net | $2,849,966 | $2,475,963 | $374,003 | | Internally-developed software | $1,795,250 | $988,225 | $807,025 | Depreciation Expense (Six Months Ended June 30) | Year | Amount | | :--- | :------- | | 2025 | $433,022 | | 2024 | $330,946 | [NOTE 4—INTANGIBLE ASSETS](index=13&type=section&id=NOTE%204%E2%80%94INTANGIBLE%20ASSETS) This note details the company's intangible assets and associated amortization expense for the reported periods Intangible Assets, Net | Metric | June 30, 2025 | December 31, 2024 | Change ($) | | :------------------------ | :------------ | :---------------- | :----------- | | Total intangible assets, net | $- | $7,571,156 | $(7,571,156) | Amortization Expense (Six Months Ended June 30) | Year | Amount | | :--- | :----------- | | 2025 | $7,571,156 | | 2024 | $514,017 | [NOTE 5—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES](index=13&type=section&id=NOTE%205%E2%80%94ACCRUED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) This note provides a breakdown of accrued expenses and other current liabilities, including related party balances Accrued Expenses and Other Current Liabilities | Metric | June 30, 2025 | December 31, 2024 | Change ($) | | :--------------------------------------- | :------------ | :---------------- | :----------- | | Total accrued expenses and other current liabilities | $4,116,182 | $5,181,087 | $(1,064,905) | | Accrued expenses and other current liabilities – related parties | $1,358,427 | $3,359,101 | $(2,000,674) | [NOTE 6—LEASES](index=14&type=section&id=NOTE%206%E2%80%94LEASES) This note details the company's lease obligations, including new operating leases and weighted-average lease terms and discount rates - The Company entered into a new operating lease for office space in Richmond, Virginia, in June 2025, with a 3-year term[37](index=37&type=chunk) Operating Lease Liabilities | Metric | June 30, 2025 | December 31, 2024 | Change ($) | | :-------------------------- | :------------ | :---------------- | :----------- | | Total operating lease liabilities | $1,136,495 | $1,382,814 | $(246,319) | | Weighted-average remaining lease term | 2.11 years | 2.39 years | - | | Weighted-average discount rate | 5.04% | 4.97% | - | - As of June 30, 2025, the weighted-average remaining lease term for all finance leases is **2.78 years** and the weighted average discount rate is **9.76%**[40](index=40&type=chunk) [NOTE 7—DEBT](index=15&type=section&id=NOTE%207%E2%80%94DEBT) This note outlines the company's debt obligations, including vehicle loans and a convertible promissory note with a high effective interest rate - As of June 30, 2025, the weighted-average interest rate on the Company's vehicle loan obligations was **7.63%**, with total long-term debt (net of current portion) of **$337,483**[41](index=41&type=chunk)[42](index=42&type=chunk) - The Company issued a convertible promissory note to LHX Intermediate LLC for up to **$4,000,000**, with **$2.5 million** advanced as of June 30, 2025[43](index=43&type=chunk) - The convertible note is repayable in Class A common stock at **$1.35 per share**, resulting in a computed effective interest rate of **114.8%** as of June 30, 2025[44](index=44&type=chunk) [NOTE 8—FAIR VALUE MEASUREMENTS](index=16&type=section&id=NOTE%208%E2%80%94FAIR%20VALUE%20MEASUREMENTS) This note details the fair value measurement of warrant liabilities and the associated gain on change in fair value Warrant Liabilities (Level 1 Measurement) | Metric | June 30, 2025 | December 31, 2024 | Change ($) | | :--------------------------------------- | :------------ | :---------------- | :----------- | | Warrant liabilities | $881,820 | $1,449,000 | $(567,180) | | Gain on change in fair value of warrant liabilities (six months) | $(567,180) | - | - | [NOTE 9—REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY](index=16&type=section&id=NOTE%209%E2%80%94REDEEMABLE%20NON-CONTROLLING%20INTERESTS%20AND%20EQUITY) This note outlines the company's capital stock structure, changes in equity, and the unrecorded Tax Receivable Agreement liability Capital Stock as of June 30, 2025 | Class | Authorized Shares | Issued Shares | Outstanding Shares | | :-------------------------- | :---------------- | :------------ | :----------------- | | Class A common stock | 300,000,000 | 22,096,464 | 22,096,464 | | Class V common stock | 100,000,000 | 26,480,000 | 26,480,000 | | Class A convertible preferred units | 1,500,000 | 1,500,000 | 1,500,000 | - During the six months ended June 30, 2025, **8,750,000** Class A common shares were issued in exchange for OpCo class B units and corresponding class V common shares[48](index=48&type=chunk) - The total unrecorded Tax Receivable Agreement (TRA) liability is approximately **$18.9 million** as of June 30, 2025[51](index=51&type=chunk) OpCo Class A Preferred Dividends | Period | Amount | | :-------------------- | :------- | | Three Months Ended June 30, 2025 | $422,966 | | Six Months Ended June 30, 2025 | $828,203 | [NOTE 10—STOCK-BASED COMPENSATION](index=18&type=section&id=NOTE%2010%E2%80%94STOCK-BASED%20COMPENSATION) This note details the company's stock-based compensation plans, including the 2024 Omnibus Incentive Equity Plan and various awards - The 2024 Omnibus Incentive Equity Plan was approved on March 6, 2024, reserving **3,220,400 shares**, with an automatic annual increase[54](index=54&type=chunk) - Performance-based executive shares for the CEO are tied to stock price thresholds (**$7.50, $12.50, $15.00**) within three years of the closing date[57](index=57&type=chunk) Equity Compensation Expense (Six Months Ended June 30, 2025) | Award Type | Expense | | :--------------------------------------- | :----------- | | CEO Performance-Based Awards | $1,284,672 | | February 2025 Grants (740k + 250k shares) | $592,920 | | Sun Managers, LLC Management Incentive Plan | $792,750 | | Seasonal Manager Stock Compensation Plan | $545,107 | - As of June 30, 2025, remaining unrecognized compensation expense for various plans totals approximately **$3.05 million**, to be recognized over periods ranging from **0.75 to 2.6 years**[58](index=58&type=chunk)[62](index=62&type=chunk)[69](index=69&type=chunk) [NOTE 11—RELATED PARTY TRANSACTIONS](index=20&type=section&id=NOTE%2011%E2%80%94RELATED%20PARTY%20TRANSACTIONS) This note outlines the company's transactions with related parties, including solar leasing revenue and convertible debt arrangements Related Party Revenue (Solar Leasing) | Period | 2025 | 2024 | | :-------------------- | :----------- | :----------- | | Three Months Ended June 30 | $8,125,483 | $6,997,626 | | Six Months Ended June 30 | $10,692,787 | $15,810,395 | - The Company transferred a **$3,000,000** rebate from Solar Leasing to White Horse Energy (wholly owned by the CEO) in the form of convertible debt, with a principal balance of **$3,000,000** as of June 30, 2025[72](index=72&type=chunk) - Interest income from the related party note receivable was **$75,786** for the six months ended June 30, 2025[72](index=72&type=chunk) - An unrecorded Tax Receivable Agreement (TRA) liability of approximately **$18.9 million** exists as of June 30, 2025[73](index=73&type=chunk) [NOTE 12—NET LOSS PER SHARE](index=21&type=section&id=NOTE%2012%E2%80%94NET%20LOSS%20PER%20SHARE) This note presents the basic and diluted net loss per Class A common share and weighted-average shares outstanding Loss per Class A Common Share – Basic and Diluted | Period | 2025 | 2024 | | :-------------------- | :------- | :------- | | Three Months Ended June 30 | $(0.11) | $(0.06) | | Six Months Ended June 30 | $(0.44) | $(0.60) | Weighted-Average Class A Common Shares Outstanding – Basic and Diluted | Period | 2025 | 2024 | | :-------------------- | :----------- | :----------- | | Three Months Ended June 30 | 22,096,464 | 5,026,964 | | Six Months Ended June 30 | 19,983,013 | 3,010,654 | - **43,221,852** potential common share equivalents were excluded from diluted loss per share calculations as of June 30, 2025, due to their anti-dilutive effect[74](index=74&type=chunk) [NOTE 13—INCOME TAXES](index=22&type=section&id=NOTE%2013%E2%80%94INCOME%20TAXES) This note details the effective tax rate, deferred tax assets and liabilities, and the valuation allowance recorded Effective Tax Rate (ETR) from Continuing Operations | Period | ETR | | :--------------------------------------- | :-------- | | Three Months Ended June 30, 2025 | 8.5% benefit on loss | | Six Months Ended June 30, 2025 | 2.2% expense on loss | Net Deferred Tax Assets and Liabilities | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Net deferred tax asset | $- | $661,904 | | Net deferred tax assets and liabilities | $- | $238,491 | - A valuation allowance was recorded on deferred tax assets as their realization is not more likely than not[76](index=76&type=chunk) [NOTE 14—SUBSEQUENT EVENTS](index=22&type=section&id=NOTE%2014%E2%80%94SUBSEQUENT%20EVENTS) This note discloses significant events occurring after the reporting period, including debt conversion, new legislation, and a merger - On July 1, 2025, approximately **$2.55 million** of outstanding accounts payable was converted into an **18%** annual interest note payable[78](index=78&type=chunk) - The One Big Beautiful Bill Act of 2025 (OBBBA) was signed into law on July 4, 2025, and is not expected to materially impact the 2025 effective tax rate[79](index=79&type=chunk) - The merger with Heliogen, Inc. was completed on August 8, 2025, making Heliogen a direct, wholly-owned subsidiary of Zeo Energy[80](index=80&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Zeo Energy Corp.'s financial condition, results of operations, and key influencing factors [Cautionary Note Regarding Forward-Looking Statements](index=23&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This note advises that the report contains forward-looking statements subject to risks and uncertainties, with no obligation to update - The report contains forward-looking statements that involve known and unknown risks, uncertainties, and assumptions, and the company disclaims any obligation to update them[82](index=82&type=chunk) [Overview](index=23&type=section&id=Overview) This section describes Zeo Energy Corp.'s business model, product offerings, operational regions, and customer financing methods - Zeo Energy Corp. is a vertically integrated company offering sales, design, procurement, installation, and maintenance of residential solar energy systems, with a mission to expedite the transition to renewable energy[83](index=83&type=chunk) - The company also sells and installs roofing, insulation, energy-efficient appliances, and battery storage systems[86](index=86&type=chunk) - Operations are primarily in Florida, Texas, Arkansas, Missouri, Ohio, and Illinois, with an expanding customer base in California, Colorado, Minnesota, Utah, and Virginia[83](index=83&type=chunk) - The business model is capital-light, utilizing approximately **280 sales agents** and **12 independent sales dealers**, with most equipment drop-shipped to installation sites[86](index=86&type=chunk) - Most customers finance purchases through third-party long-term lenders or leasing products[87](index=87&type=chunk) [Recent Developments](index=24&type=section&id=Recent%20Developments) This section highlights significant recent events, including the acquisition of Heliogen, Inc [Heliogen Acquisition](index=24&type=section&id=Heliogen%20Acquisition) This section details the merger agreement and completion of the Heliogen, Inc. acquisition, including share exchange terms - On May 28, 2025, the Company entered into a Merger Agreement to acquire Heliogen, Inc., with the mergers completed on August 8, 2025[89](index=89&type=chunk) - Heliogen common stockholders received **0.9591 shares** of Zeo Class A Common Stock for each share of Heliogen Common Stock[91](index=91&type=chunk) - All Heliogen RSUs were automatically accelerated and fully vested, while Heliogen Options and Commercial Warrants were cancelled without payment due to exercise prices being at or above the purchase price[93](index=93&type=chunk)[94](index=94&type=chunk)[96](index=96&type=chunk) [Key Operating and Financial Metrics and Outlook](index=25&type=section&id=Key%20Operating%20and%20Financial%20Metrics%20and%20Outlook) This section presents key operating and financial metrics for the reported periods and discusses their use in performance evaluation Key Operating and Financial Metrics (Three Months Ended June 30) | Metric | 2025 | 2024 | | :------------------ | :----------- | :----------- | | Revenue, net | $18,101,930 | $14,796,272 | | Gross profit | $10,603,679 | $7,573,890 | | Gross margin | 58.6% | 51.2% | | Contribution profit | $2,741,929 | $3,165,365 | | Contribution margin | 15.1% | 21.4% | | Loss from operations | $(2,853,506) | $(2,662,870) | | Net loss | $(2,679,464) | $(1,757,319) | | Adjusted EBITDA | $1,400,148 | $775,737 | | Adjusted EBITDA margin | 7.7% | 5.2% | Key Operating and Financial Metrics (Six Months Ended June 30) | Metric | 2025 | 2024 | | :------------------ | :----------- | :----------- | | Revenue, net | $26,885,625 | $34,938,428 | | Gross profit | $14,378,437 | $13,589,677 | | Gross margin | 53.5% | 38.9% | | Contribution profit | $(34,390) | $5,237,435 | | Contribution margin | (0.1)% | 15.0% | | Loss from operations | $(16,364,904) | $(6,711,418) | | Net loss | $(15,998,827) | $(5,864,421) | | Adjusted EBITDA | $(4,953,383) | $(199,531) | | Adjusted EBITDA margin | (18.4)% | (0.6)% | - The company uses non-GAAP measures like Contribution Profit and Adjusted EBITDA to evaluate financial performance, efficiency, pricing strategy, and resource allocation[100](index=100&type=chunk)[101](index=101&type=chunk) [Key Factors that May Influence Future Results of Operations](index=26&type=section&id=Key%20Factors%20that%20May%20Influence%20Future%20Results%20of%20Operations) This section discusses factors impacting future financial performance, including market expansion, product offerings, and economic pressures - Future revenue growth is dependent on expanding product offerings and services into new residential markets, particularly underserved areas with favorable incentives and net metering policies[103](index=103&type=chunk) - Plans include expanding the roofing business to facilitate solar installations and offering more financing options, such as leasing[104](index=104&type=chunk) - The company intends to increase its in-house sales force and external sales dealers to target new customers in Southern U.S. regional residential markets[105](index=105&type=chunk) - Inflationary pressures are increasing costs for labor, raw materials, and components, along with supply chain constraints and trade tariffs, which may pressure operating margins[106](index=106&type=chunk) - Higher interest rates have led more homeowners to opt for lease contracts over conventional loans, impacting the competitive advantage of financed solar power[107](index=107&type=chunk) - Reliance on contract manufacturers and suppliers means delays or price increases in raw materials could adversely impact cash flows and results of operations[108](index=108&type=chunk) [Components of Condensed Consolidated Statements of Operations](index=27&type=section&id=Components%20of%20Condensed%20Consolidated%20Statements%20of%20Operations) This section defines the primary components of the statements of operations, including revenue, cost of goods sold, and operating expenses - Primary revenue source is residential solar system sales, recognized upon installation inspection, net of financing fees[109](index=109&type=chunk) - Cost of goods sold includes product costs, installation labor, and permitting, and decreased due to lower revenues and the impact of higher interest rates on consumer financing[112](index=112&type=chunk)[113](index=113&type=chunk) - Operating expenses consist of sales and marketing (including commissions, advertising) and general and administrative (including personnel, professional services, software, facilities costs)[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) - Depreciation and amortization primarily relate to vehicles, furniture, internally developed software, and acquired intangibles[118](index=118&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) This section provides a detailed comparative analysis of the company's financial performance for the reported periods [Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=28&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) This section analyzes the financial performance for the three-month period, highlighting changes in revenue, costs, and expenses - Revenue, net increased by **$3.3 million (22.3%)** to **$18.1 million**, primarily due to an increase in revenues with a related-party third-party operator[119](index=119&type=chunk)[120](index=120&type=chunk) - Cost of goods sold increased by **$0.2 million (3.2%)** but declined as a percentage of revenue from **47.7% to 40.2%** due to an increase in the average selling price of contracts[119](index=119&type=chunk)[121](index=121&type=chunk) - Depreciation and amortization increased significantly by **$2.7 million (599.9%)** to **$3.2 million**, mainly due to amortization of acquired contracts from the Lumio Asset Purchase Agreement[119](index=119&type=chunk)[122](index=122&type=chunk) - Sales and marketing expenses increased by **$1.2 million (27.3%)** due to efforts to expand year-round sales through digital lead generation[119](index=119&type=chunk)[124](index=124&type=chunk) - General and administrative expenses decreased by **$0.7 million (11.6%)** due to a **$1.5 million** decrease in stock compensation and a **$0.6 million** decrease in bad debt expense, partially offset by increased payroll and public company expenses[119](index=119&type=chunk)[123](index=123&type=chunk) - Other income (expense), net decreased by **$0.84 million**, shifting from income to expense, primarily due to a gain on fair value of warrant liabilities in the prior period[119](index=119&type=chunk)[125](index=125&type=chunk) [Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=29&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) This section analyzes the financial performance for the six-month period, detailing changes in revenue, costs, and operating expenses - Revenue, net decreased by **$8.0 million (23.0%)** to **$26.9 million**, primarily due to a decrease in deferred revenue recognized in Q1 2025 compared to Q1 2024[126](index=126&type=chunk)[127](index=127&type=chunk) - Cost of goods sold decreased by **$8.9 million (42.2%)**, improving as a percentage of revenue from **60.2% to 45.2%**, mainly due to the impact of deferred revenue costs in 2023 being deferred to 2024, with no similar costs in 2025[126](index=126&type=chunk)[128](index=128&type=chunk) - Depreciation and amortization increased by **$7.2 million (784.4%)** to **$8.1 million**, primarily due to increased amortization of acquired contracts from the Lumio Asset Purchase Agreement[126](index=126&type=chunk)[129](index=129&type=chunk) - General and administrative expenses increased by **$6.6 million (75.4%)** to **$15.3 million**, driven by higher payroll costs, stock compensation, professional fees related to being a public company, and a **$3.2 million** bad debt reserve[126](index=126&type=chunk)[130](index=130&type=chunk) - Sales and marketing expenses decreased by **$3.2 million (29.2%)** due to a **$2.5 million** reduction in stock compensation expense and lower commissions from decreased revenue[126](index=126&type=chunk)[131](index=131&type=chunk) - Other income, net increased by **$46,792 (7.1%)**, influenced by a decrease in the gain on fair value of warrant liabilities and a decrease in interest expense[126](index=126&type=chunk)[132](index=132&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's cash position, cash flow activities, and future capital requirements Cash and Cash Equivalents | Period | Amount | | :-------------------- | :----------- | | June 30, 2025 | $68,691 | | December 31, 2024 | $5,634,115 | - Net cash used in operating activities decreased by **$7.8 million** to **$(4.5) million** for the six months ended June 30, 2025, primarily due to positive cash flows from accounts receivable, prepaids, accounts payable, and contract liabilities, offset by increased net loss and lower stock compensation[139](index=139&type=chunk)[140](index=140&type=chunk) - Net cash used in investing activities increased to **$(0.8) million** for the six months ended June 30, 2025, mainly due to purchases of property and equipment[139](index=139&type=chunk)[141](index=141&type=chunk) - Net cash (used in) provided by financing activities shifted from **$10.0 million** provided in 2024 to **$(0.2) million** used in 2025, primarily due to cash acquired from the business combination in 2024 not recurring[139](index=139&type=chunk)[142](index=142&type=chunk) - The proceeds from the Heliogen business combination are expected to meet business needs for the next twelve months, but additional debt or equity financing may be required for future growth[137](index=137&type=chunk) - Current indebtedness includes approximately **$2.5 million** in trade-credit with solar equipment distributors and **$0.6 million** in debt on service trucks and vehicles[143](index=143&type=chunk) [Non-GAAP Financial Measures](index=31&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures used by management to evaluate performance [Contribution Profit and Contribution Margin](index=32&type=section&id=Contribution%20Profit%20and%20Contribution%20Margin) This section defines contribution profit and margin, explaining their use in evaluating financial performance and resource allocation - Contribution profit is defined as revenue, net less direct costs of revenue, commissions expense, and depreciation and amortization; contribution margin is the ratio of contribution profit to revenue, net[147](index=147&type=chunk) - These metrics are used by management to understand financial performance, efficiency, evaluate pricing strategy, and allocate resources[147](index=147&type=chunk) Contribution Profit and Margin (Six Months Ended June 30) | Metric | 2025 | 2024 | | :------------------ | :----------- | :----------- | | Total Contribution profit | $(34,390) | $5,237,435 | | Contribution margin | (0.1)% | 15.0% | [Adjusted EBITDA](index=33&type=section&id=Adjusted%20EBITDA) This section defines Adjusted EBITDA and its use as an internal performance measure for comparative analysis - Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation, amortization, other income/expenses, and stock compensation, adjusted to exclude merger and acquisition expenses[149](index=149&type=chunk) - It is used as an internal performance measure to allow for a more relevant comparison of results to other companies by excluding non-cash and non-recurring charges[149](index=149&type=chunk) Adjusted EBITDA and Margin (Six Months Ended June 30) | Metric | 2025 | 2024 | | :------------------ | :----------- | :----------- | | Adjusted EBITDA | $(4,953,383) | $(199,531) | | Adjusted EBITDA margin | (18.4)% | (0.6)% | [Critical Accounting Estimates](index=33&type=section&id=Critical%20Accounting%20Estimates) This section confirms no material changes to critical accounting policies and estimates since the prior annual report - There have been no material changes to critical accounting policies and estimates since the Annual Report on Form 10-K for the year ended December 31, 2024[150](index=150&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Zeo Energy Corp. is not required to provide quantitative and qualitative disclosures about market risk [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to material weaknesses, though financial statements are fairly presented - Disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses that are still being remediated[152](index=152&type=chunk) - Management believes the condensed consolidated financial statements fairly represent the company's financial condition, results of operations, and cash flows[152](index=152&type=chunk) - No changes in internal control over financial reporting materially affected or are reasonably likely to materially affect internal control over financial reporting during the period[154](index=154&type=chunk) [PART II – OTHER INFORMATION](index=34&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, and other relevant information [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings - No legal proceedings were reported[156](index=156&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) This section references the Annual Report for risk factors and highlights new risks related to the Heliogen acquisition and integration - Substantial costs incurred in connection with the Heliogen Mergers could adversely affect financial condition and results of operations[160](index=160&type=chunk) - Inability to effectively manage and integrate Heliogen's business could harm the company's reputation and operating results[162](index=162&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds - No unregistered sales of equity securities or use of proceeds were reported[163](index=163&type=chunk) [Item 3. Defaults Upon Senior Securities](index=35&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities were reported[164](index=164&type=chunk) [Item 4. Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[165](index=165&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarterly period ended June 30, 2025 - No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter[166](index=166&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of, or incorporated by reference into, the Form 10-Q, including key agreements, corporate documents, and certifications - Key exhibits include the Agreement and Plan of Merger and Reorganization (Heliogen), Certificate of Incorporation, Bylaws, and certifications from the Principal Executive Officer and Principal Financial Officer[168](index=168&type=chunk) [SIGNATURES](index=37&type=section&id=SIGNATURES) This section contains the official signatures of the company's executive and financial officers, certifying the report - The report was signed by Timothy Bridgewater, Chief Executive Officer, and Cannon Holbrook, Chief Financial Officer, on August 12, 2025[173](index=173&type=chunk)

Part I. Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements.) The company, a non-operational blank check entity, reported a $2.46 million net income for H1 2025 from trust account interest, with assets of $131.2 million primarily held in trust [Condensed Financial Statements](index=4&type=section&id=Condensed%20Financial%20Statements) Condensed Balance Sheet Highlights (Unaudited) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $1,121,801 | $1,368,608 | | Investments in Trust Account | $129,902,367 | $127,163,421 | | **Total Assets** | **$131,216,755** | **$128,753,770** | | **Liabilities & Equity** | | | | Total Liabilities | $4,511,581 | $4,504,272 | | Class A Ordinary Shares subject to possible redemption | $129,902,367 | $127,163,421 | | Total Shareholders' Deficit | ($3,197,193) | ($2,913,923) | Condensed Statement of Operations (Unaudited) | Account | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | General and administrative expenses | $162,835 | $305,907 | | Loss from operations | ($162,835) | ($305,907) | | Interest earned on Investments in Trust Account | $1,374,969 | $2,738,946 | | **Net income** | **$1,222,925** | **$2,455,676** | | Basic and diluted net income per share, Class A | $0.07 | $0.14 | Condensed Statement of Cash Flows (Unaudited) | Cash Flow Item | Six Months Ended June 30, 2025 | | :--- | :--- | | Net income | $2,455,676 | | Interest earned on Investments in Trust Account | ($2,738,946) | | **Net cash used in operating activities** | **($246,807)** | | Cash - Beginning of period | $1,368,608 | | **Cash - End of period** | **$1,121,801** | [Notes to Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) Notes detail the company's formation, IPO proceeds, accounting policies for redeemable shares, related party transactions, and key commitments - The Company is a blank check company formed to effect a Business Combination and **has not commenced any operations** as of June 30, 2025[20](index=20&type=chunk)[21](index=21&type=chunk) - On November 12, 2024, the Company consummated its IPO of 12,650,000 units at $10,00 per unit, generating gross proceeds of **$126.5 million**[23](index=23&type=chunk)[28](index=28&type=chunk) - Class A Ordinary Shares subject to redemption are classified as temporary equity, with the redemption value increasing to **$129.9 million** as of June 30, 2025[54](index=54&type=chunk) - The Company pays an affiliate of the Sponsor **$10,000 per month** for office space and administrative support, totaling $60,000 for H1 2025[69](index=69&type=chunk) - The underwriters are entitled to a deferred underwriting discount of **$4,427,500** payable upon the completion of the Company's initial Business Combination[77](index=77&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses the company's non-operational status, with net income of $2.46 million for H1 2025 driven by trust interest, and sufficient working capital - The company's activities since inception have been limited to organizational activities, the IPO, and searching for a **Business Combination target**[104](index=104&type=chunk)[108](index=108&type=chunk) Results of Operations Summary | Period | Net Income | Key Drivers | | :--- | :--- | :--- | | **Three Months Ended June 30, 2025** | $1,222,925 | $1.37M interest income from Trust Account, offset by $162,835 in operating expenses | | **Six Months Ended June 30, 2025** | $2,455,676 | $2.74M interest income from Trust Account, offset by $305,907 in operating expenses | - As of June 30, 2025, the company had **$1.12 million in cash** for working capital and **$129.9 million** in cash and investments held within the Trust Account[114](index=114&type=chunk)[115](index=115&type=chunk) - The Sponsor may provide up to **$1.5 million in Working Capital Loans**, which can be converted into warrants at $1.00 per warrant upon a Business Combination[117](index=117&type=chunk) [Quantitative and Qualitative Disclosures Regarding Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20Regarding%20Market%20Risk.) As a smaller reporting company, the company is not required to provide disclosures about market risk - As a smaller reporting company defined by Rule 12b-2 of the Exchange Act, the company is **not required to provide** quantitative and qualitative disclosures about market risk[130](index=130&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025 - Based on an evaluation conducted by management, the company's principal executive officer and principal financial officer concluded that the disclosure controls and procedures were **effective** as of June 30, 2025[132](index=132&type=chunk) Part II. Other Information [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings.) The company is not aware of any material pending or contemplated litigation - There is **no material litigation** currently pending or contemplated against the company or its officers and directors[136](index=136&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors.) Key risks include impacts from international trade policies and the potential for Nasdaq delisting if a business combination is not completed by November 2027 - Changes in **international trade policies and tariffs** could negatively impact the search for a suitable business combination target or the future performance of a post-combination company[138](index=138&type=chunk)[140](index=140&type=chunk) - The company's securities face **suspension and delisting** from Nasdaq if a business combination is not completed by November 7, 2027, in accordance with Nasdaq's 36-month requirement for SPACs[142](index=142&type=chunk)[143](index=143&type=chunk)[145](index=145&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) No unregistered sales of equity securities occurred, and the use of IPO proceeds remains unchanged - There were **no unregistered sales** of equity securities in the reported period[147](index=147&type=chunk) - There has been **no material change** in the planned use of proceeds from the IPO and Private Placement as described in the IPO Registration Statement[148](index=148&type=chunk) [Other Information](index=34&type=section&id=Item%205.%20Other%20Information.) No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - **No directors or officers** adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[152](index=152&type=chunk) [Exhibits](index=34&type=section&id=Item%206.%20Exhibits.) This section lists filed exhibits, including officer certifications and Inline XBRL data files - The report includes exhibits such as **CEO and CFO certifications** (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (101 series)[154](index=154&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 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 _____ LUCID DIAGNOSTICS INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 82-5488042 (State or Other Jurisdiction of (IRS Employer In ...

[Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights that forward-looking statements are subject to risks and uncertainties, including those related to the proposed merger, going concern status, and Nasdaq compliance - Forward-looking statements involve risks and uncertainties, including the proposed merger with Decoy Therapeutics, the company's ability to continue as a going concern, and Nasdaq listing compliance[8](index=8&type=chunk)[9](index=9&type=chunk)[10](index=10&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk)[14](index=14&type=chunk) [PART I. Financial Information](index=5&type=section&id=PART%20I.%20Financial%20Information) This part presents the company's unaudited financial statements, management's discussion, market risk disclosures, and internal controls [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents Salarius Pharmaceuticals' unaudited condensed consolidated financial statements, including balance sheets, operations, cash flows, and equity, with explanatory notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | Change | | :-------------------------- | :------------------------ | :-------------------------- | :----- | | Cash and cash equivalents | $794,886 | $2,434,528 | $(1,639,642) | | Total current assets | $1,359,578 | $2,987,562 | $(1,627,984) | | Total assets | $1,392,778 | $3,022,974 | $(1,630,196) | | Total liabilities | $2,222,502 | $1,511,279 | $711,223 | | Total stockholders' equity (deficit) | $(829,724) | $1,511,695 | $(2,341,419) | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance over periods, including research and development, general and administrative expenses, and net loss Condensed Consolidated Statements of Operations Highlights | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Research and development | $116,383 | $214,447 | $191,915 | $457,449 | | General and administrative | $849,182 | $1,253,070 | $2,492,345 | $2,781,683 | | Total operating expenses | $965,565 | $1,467,517 | $2,684,260 | $3,239,132 | | Net loss | $(957,825) | $(1,424,433) | $(2,667,358) | $(3,139,723) | | Loss per common share (basic and diluted) | $(0.45) | $(2.37) | $(1.41) | $(5.62) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows Highlights | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(2,044,011) | $(2,426,147) | | Net cash provided by (used in) financing activities | $404,369 | $(200,940) | | Net decrease in cash and cash equivalents | $(1,639,642) | $(2,627,087) | | Cash and cash equivalents at end of period | $794,886 | $3,272,823 | [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20%28Deficit%29) This section tracks changes in the company's stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit Stockholders' Equity (Deficit) Changes | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------- | :---------------- | :-------------- | | Common Stock (Shares) | 1,441,157 | 2,127,286 | | Common Stock (Amount) | $144 | $213 | | Additional Paid-In Capital | $83,435,169 | $83,761,039 | | Accumulated Deficit | $(81,923,618) | $(84,590,976) | | Total Stockholders' Equity (Deficit) | $1,511,695 | $(829,724) | - A **1-for-8 reverse stock split** was effected on June 14, 2024, and all historical share and per share amounts have been retroactively adjusted[33](index=33&type=chunk)[34](index=34&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and additional information supporting the condensed consolidated financial statements [NOTE 1. Organization and Operations](index=9&type=section&id=NOTE%201.%20ORGANIZATION%20AND%20OPERATIONS) This note describes Salarius's business as a clinical-stage biopharmaceutical company, its proposed merger with Decoy Therapeutics, and going concern uncertainties - Salarius is a clinical-stage biopharmaceutical company developing two small molecule drugs: **SP-3164** (targeted protein degrader) and **seclidemstat (SP-2577)** (targeted protein inhibitor) for cancer treatment[29](index=29&type=chunk) - The company entered into a Merger Agreement with Decoy Therapeutics Inc. on **January 10, 2025**, to combine operations[30](index=30&type=chunk) - Substantial doubt exists about the company's ability to continue as a going concern due to recurring losses and no product revenue, requiring additional capital or potential dissolution if the merger is not consummated[31](index=31&type=chunk)[32](index=32&type=chunk) - A **1-for-8 reverse stock split** was effected on June 14, 2024, retroactively adjusting all historical share and per share amounts[33](index=33&type=chunk)[34](index=34&type=chunk) [NOTE 2. Basis of Presentation and Significant Accounting Policies](index=10&type=section&id=NOTE%202.%20BASIS%20OF%20PRESENTATION%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the basis for preparing the financial statements and the key accounting policies applied, including estimates and revenue recognition - Unaudited condensed consolidated financial statements are prepared in conformity with GAAP and SEC rules for interim financial information, not including all disclosures required for complete annual statements[35](index=35&type=chunk)[37](index=37&type=chunk) - Key accounting policies include consolidating wholly-owned subsidiaries, using estimates, classifying highly liquid investments with original maturities of three months or less as cash equivalents, and assessing warrants for liability or equity classification[36](index=36&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk) - Research and development costs are expensed as incurred, and equity-based compensation is measured at grant date fair value and recognized over the vesting period using the Black-Scholes model[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) - Basic and diluted net loss per share are the same due to the company's loss position, and a full valuation allowance is established against net deferred tax assets due to uncertainty of realization[46](index=46&type=chunk)[48](index=48&type=chunk) [NOTE 3. Prepaid Expenses and Other Current Assets](index=13&type=section&id=NOTE%203.%20PREPAID%20EXPENSES%20AND%20OTHER%20CURRENT%20ASSETS) This note details the composition of prepaid expenses and other current assets, including insurance and deferred offering costs Prepaid Expenses and Other Current Assets | Category | June 30, 2025 | December 31, 2024 | | :------------------------------ | :-------------- | :---------------- | | Insurance | $28,310 | $287,785 | | Deferred offering cost | $509,931 | $221,580 | | Other prepaid and current assets | $26,451 | $43,669 | | Total | $564,692 | $553,034 | - The note payable for directors' and officers' insurance, which was **$0.2 million** at December 31, 2024, was **$0 million** at June 30, 2025[50](index=50&type=chunk) [NOTE 4. Commitments and Contingencies](index=13&type=section&id=NOTE%204.%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses the company's contractual obligations, including a Cancer Research Grant Contract and a license agreement with the University of Utah - The company has a Cancer Research Grant Contract with CPRIT (up to **$16.1 million**, expired 2023) with ongoing revenue-sharing payment obligations on net sales of covered products[51](index=51&type=chunk)[53](index=53&type=chunk) - A 2011 license agreement with the University of Utah grants exclusive rights to LSD1, requiring **2% equity ownership**, revenue sharing on commercial sales, and milestone payments[54](index=54&type=chunk) [NOTE 5. Fair Value of Financial Instruments](index=14&type=section&id=NOTE%205.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) This note explains the fair value measurement of financial instruments and the hierarchy used for valuation inputs - Recorded values of financial instruments (cash, accounts payable, notes payable) approximate fair values due to their short-term nature[55](index=55&type=chunk) - Fair value hierarchy uses **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), and **Level 3** (significant unobservable inputs)[60](index=60&type=chunk) [NOTE 6. Stockholders' Equity](index=14&type=section&id=NOTE%206.%20STOCKHOLDERS%27%20EQUITY) This note details changes in stockholders' equity, including common stock sales, warrant activity, and the impact of a reverse stock split - During the six months ended June 30, 2025, the company sold **399,291 shares** of common stock through an ATM offering for **$0.4 million** and **286,772 shares** under an ELOC agreement for **$0.7 million**[56](index=56&type=chunk)[57](index=57&type=chunk) - Outstanding warrants decreased significantly from approximately **1,250,850** at June 30, 2024, to **86,661** at June 30, 2025[64](index=64&type=chunk) - A Series A-1 Common Stock Purchase Warrant for **454,546 shares** was canceled on January 10, 2025, in exchange for **$350,000 cash**[62](index=62&type=chunk)[105](index=105&type=chunk) [NOTE 7. Equity-Based Compensation](index=15&type=section&id=NOTE%207.%20EQUITY-BASED%20COMPENSATION) This note describes the company's equity incentive plan, stock option activity, and unrecognized compensation costs - The 2015 Equity Incentive Plan expired in **January 2025**, with no shares remaining for future awards[66](index=66&type=chunk) Stock Option Activity Highlights | Metric | June 30, 2025 | June 30, 2024 | | :----------------------------------- | :------------ | :------------ | | Stock options granted (6 months) | 0 | 21,125 | | Outstanding at period end (shares) | 31,554 | 31,554 | | Weighted Average Exercise Price (Outstanding) | $66.75 | $66.75 | | Exercisable at period end (shares) | 28,896 | 8,692 | - Unrecognized compensation cost related to unvested stock options was approximately **$0.1 million** as of June 30, 2025, to be recognized over a weighted-average period of **0.35 years**[70](index=70&type=chunk) [NOTE 8. Segment Reporting](index=17&type=section&id=NOTE%208.%20SEGMENT%20REPORTING) This note clarifies that the company operates as a single segment focused on cancer treatment development, with no revenue-generating products - The company operates as one operating and reportable segment, focused on developing cancer treatments with **SP-3164** and **SP-2577**, and has no revenue-generating products[72](index=72&type=chunk)[73](index=73&type=chunk) Segment Expenses and Net Loss | Expense Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Research and development: SP-3164 | $8,406 | $125,974 | $29,443 | $212,860 | | Research and development: SP-2577 | $107,977 | $88,473 | $162,472 | $244,589 | | General and administrative: Professional services and Consulting | $515,414 | $764,432 | $1,749,109 | $1,332,897 | | General and administrative: Personnel cost | $180,933 | $247,539 | $432,041 | $1,088,980 | | General and administrative: Facility cost | $152,835 | $241,099 | $311,195 | $359,806 | | Net loss | $957,825 | $1,424,432 | $2,667,358 | $3,139,723 | [NOTE 9. Subsequent Event](index=17&type=section&id=NOTE%209.%20SUBSEQUENT%20EVENT) This note reports events occurring after the balance sheet date, including further equity sales and Nasdaq delisting notices - Subsequent to June 30, 2025, the company issued **5,518,308 shares** of common stock for **$3.8 million** under the ELOC Agreement[75](index=75&type=chunk) - On April 23, 2025, Salarius received a Nasdaq delisting notice for non-compliance with the Minimum Bid Price Requirement (**$1.00 per share**) and the Equity Standard (**$2.5 million** stockholders' equity)[76](index=76&type=chunk)[77](index=77&type=chunk) - Nasdaq granted an extension until **mid-August 2025** for the Equity Standard and **late August 2025** for the Minimum Bid Price Requirement, contingent on achieving scheduled milestones[81](index=81&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, condition, and outlook, emphasizing the clinical-stage focus, recurring losses, capital needs, merger developments, and Nasdaq compliance challenges [Overview](index=19&type=section&id=Overview) This overview describes Salarius as a clinical-stage biopharmaceutical company, its accumulated deficit, and the substantial doubt regarding its going concern ability - Salarius is a clinical-stage biopharmaceutical company focused on developing cancer treatments, with two small molecule drugs in its pipeline: **SP-3164** and **seclidemstat (SP-2577)**[85](index=85&type=chunk) - The company has an accumulated deficit of **$84.6 million** as of June 30, 2025, and has never been profitable, with no product revenue to date[86](index=86&type=chunk) - Substantial doubt exists about the company's ability to continue as a going concern, requiring significant additional capital to fund operations beyond **Q2 2026**; failure to raise capital could lead to cessation of operations[88](index=88&type=chunk)[89](index=89&type=chunk)[91](index=91&type=chunk) - As of the filing date, cash and cash equivalents are approximately **$3.4 million**, and stockholders' equity is above **$2.5 million**, following recent equity sales[86](index=86&type=chunk) [Recent Developments](index=20&type=section&id=Recent%20Developments) This section details recent corporate actions, including equity sales, amendments to the Decoy Therapeutics merger agreement, and Nasdaq delisting notices - In July 2025, Salarius issued **5,463,671 common shares** for **$3.5 million** under the ELOC Agreement, and stockholders approved removing the ELOC Exchange Cap and a reverse stock split[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - The merger agreement with Decoy Therapeutics has been amended multiple times, resulting in Salarius's legacy stockholders retaining **7.6%** of the combined company (down from **14.1%**) and introducing post-closing anti-dilution price protection for preferred stockholders[96](index=96&type=chunk)[99](index=99&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) - Nasdaq issued delisting notices for non-compliance with the Minimum Bid Price Requirement and the Equity Standard; an appeal was granted, extending compliance deadlines to **mid-August 2025** for Equity Standard and **late August 2025** for Minimum Bid Price Requirement[106](index=106&type=chunk)[107](index=107&type=chunk)[111](index=111&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section analyzes the company's operating expenses and net loss, comparing performance across periods and explaining key drivers of change Operating Expenses and Net Loss (YoY Comparison) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Research and development | $116,383 | $214,447 | $(98,064) | $191,915 | $457,449 | $(265,534) | | General and administrative | $849,182 | $1,253,070 | $(403,888) | $2,492,345 | $2,781,683 | $(289,338) | | Net loss | $(957,825) | $(1,424,433) | $(466,608) | $(2,667,358) | $(3,139,723) | $(472,365) | - The decrease in R&D expenses is primarily due to a cost-savings plan implemented in **Q3 2023**, including a significant reduction in operating personnel and curtailment of sponsored clinical trials[115](index=115&type=chunk)[120](index=120&type=chunk) - G&A expenses decreased due to lower personnel, insurance, and facility costs, partially offset by higher professional expenses related to the merger[117](index=117&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's cash position, capital needs, and ability to fund operations, highlighting the going concern risk - The company has an accumulated deficit of **$84.6 million** as of June 30, 2025, and has never generated revenue from product sales[125](index=125&type=chunk) Cash Flow Summary | Cash Flow Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | Operating activities | $(2,044,011) | $(2,426,147) | | Financing activities | $404,369 | $(200,940) | | Net decrease in cash | $(1,639,642) | $(2,627,087) | - Cash and cash equivalents were **$0.8 million** at June 30, 2025, but increased to approximately **$3.4 million** as of the report date due to **$3.8 million** in July 2025 ELOC sales, expected to fund operations into **Q2 2026**[127](index=127&type=chunk)[128](index=128&type=chunk) - Substantial doubt about the company's ability to continue as a going concern persists, and failure to close the merger or secure additional capital could lead to a wind-down of operations[126](index=126&type=chunk)[128](index=128&type=chunk) [Critical Accounting Policies and Estimates](index=27&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section discusses the significant judgments and assumptions management uses in preparing the financial statements - Financial statements require management estimates and assumptions in accordance with GAAP[132](index=132&type=chunk) - No material changes to critical accounting policies have occurred since the Annual Report on Form 10-K filed on **March 21, 2025**[133](index=133&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Salarius Pharmaceuticals is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[134](index=134&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the effectiveness of disclosure controls and procedures, concluding they were effective, with no significant changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=28&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of the reporting date - Disclosure controls and procedures were evaluated as **effective** at a reasonable assurance level as of **June 30, 2025**[136](index=136&type=chunk) [Changes in Internal Control over Financial Reporting](index=28&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports that no significant changes in internal control over financial reporting occurred during the period - No significant changes in internal control over financial reporting occurred during the three months ended **June 30, 2025**[137](index=137&type=chunk) [PART II. Other Information](index=28&type=section&id=PART%20II.%20Other%20Information) This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, and exhibits [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings but may become involved in ordinary course business litigation in the future - The company is not a party to any material legal proceedings as of the report date[139](index=139&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) This section highlights risks including potential dissolution if the Decoy Therapeutics merger and financing fail, and Nasdaq delisting due to non-compliance with minimum bid price and equity standards - Failure to complete the Qualified Financing and the merger with Decoy Therapeutics in the near term would likely lead to Salarius's dissolution and liquidation, with no assurances of distributions to stockholders[141](index=141&type=chunk)[143](index=143&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk) - The company's common stock is subject to delisting from Nasdaq due to non-compliance with the minimum bid price and stockholders' equity requirements, which would seriously harm liquidity and ability to raise capital[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) - Delisting could result in trading on less recognized markets (e.g., 'Pink Sheets'), reduced liquidity, lower market price, and limited access to capital, potentially leading to a 'penny stock' designation[157](index=157&type=chunk)[158](index=158&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report in this period - No unregistered sales of equity securities or use of proceeds to report[159](index=159&type=chunk) [Item 3. Defaults Upon Senior Securities](index=31&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report in this period - No defaults upon senior securities to report[159](index=159&type=chunk) [Item 4. Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[160](index=160&type=chunk) [Item 5. Other Information](index=31&type=section&id=Item%205.%20Other%20Information) No other information is reported under this item - No other information to report[161](index=161&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including merger agreement amendments, corporate documents, certifications, and XBRL data - Exhibits include multiple amendments to the Agreement and Plan of Merger with Decoy Therapeutics, corporate organizational documents, certifications (e.g., SOX 302, 906), and XBRL financial data[163](index=163&type=chunk) [SIGNATURES](index=36&type=section&id=SIGNATURES) This section provides the official signatures of the company's principal executive and financial officers, certifying the report - The report was signed by David J. Arthur (President and CEO) and Mark J. Rosenblum (CFO and EVP of Finance) on **August 12, 2025**[169](index=169&type=chunk)

[PART I — FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Financial Statements](index=6&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Zevra Therapeutics achieved a net income of **$71.6 million** for the six months ended June 30, 2025, a significant turnaround driven by a **$148.3 million** gain from a PRV sale and increased revenue from MIPLYFFA, despite an OLPRUVA impairment. [Condensed Consolidated Balance Sheets](index=7&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2025, total assets increased to **$256.3 million** from **$178.1 million** at year-end 2024, primarily due to higher cash and marketable securities, while total stockholders' equity grew substantially to **$117.2 million**. Balance Sheet Summary | Balance Sheet Item | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 47,712 | 33,785 | | Securities at fair value | 169,988 | 41,721 | | Total current assets | 226,337 | 86,027 | | Intangible assets, net | 7,053 | 68,993 | | **Total assets** | **256,277** | **178,127** | | **Liabilities & Equity** | | | | Total current liabilities | 28,832 | 34,065 | | Long-term debt | 60,692 | 59,504 | | **Total liabilities** | **139,047** | **138,461** | | **Total stockholders' equity** | **117,230** | **39,666** | - The significant decrease in net intangible assets from **$69.0 million** to **$7.1 million** is primarily due to a **$58.7 million** impairment charge related to OLPRUVA recorded in Q2 2025[17](index=17&type=chunk)[113](index=113&type=chunk) [Condensed Consolidated Statements of Operations](index=8&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The company reported a net income of **$74.7 million** for Q2 2025 and **$71.6 million** for the first six months, a significant improvement from prior-year losses, driven by a **$148.3 million** gain on a PRV sale and increased net revenue, partially offset by a **$58.7 million** OLPRUVA impairment. Statements of Operations Summary | Metric ($ in thousands, except EPS) | 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, net | 25,881 | 4,449 | 46,282 | 7,874 | | Impairment of intangible assets | 58,710 | — | 58,710 | — | | Loss from operations | (71,039) | (23,795) | (76,401) | (44,281) | | Gain on sale of PRV | 148,325 | — | 148,325 | — | | **Net income (loss)** | **74,707** | **(19,925)** | **71,608** | **(36,547)** | | Diluted EPS | $1.21 | $(0.48) | $1.16 | $(0.87) | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the six months ended June 30, 2025, net cash used in operating activities decreased to **$11.8 million**, while investing activities provided **$22.5 million**, primarily from **$150.0 million** in PRV sale proceeds, partially offset by investment purchases. Cash Flow Activity Summary | Cash Flow Activity ($ in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | (11,823) | (35,274) | | Net cash provided by investing activities | 22,476 | 14,664 | | Net cash provided by financing activities | 2,988 | 16,547 | | **Net increase (decrease) in cash** | **13,927** | **(3,789)** | - The primary driver of positive cash flow from investing activities was the **$150.0 million** received from the sale of the Priority Review Voucher (PRV)[27](index=27&type=chunk) [Notes to Financial Statements](index=14&type=section&id=NOTES%20TO%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes detail significant events including FDA approval and commercialization of MIPLYFFA, the **$150.0 million** PRV sale, a **$58.7 million** OLPRUVA intangible asset impairment, revenue breakdown, debt structure, and ongoing litigation with Commave. - The company sold a transferable rare priority review voucher (PRV) received with the FDA approval of MIPLYFFA for **$150.0 million**, resulting in a net gain of **$148.3 million** in Q2 2025[41](index=41&type=chunk) - A **$58.7 million** intangible asset impairment charge was recorded in Q2 2025 for OLPRUVA after a triggering event indicated its carrying amount was not recoverable[113](index=113&type=chunk) - For the six months ended June 30, 2025, the company recognized an inventory write-down charge of approximately **$11.7 million** for unsaleable inventory, compared to **$3.2 million** in the same period of 2024[54](index=54&type=chunk) Revenue by Source | Revenue Source ($ in millions) | Six Months Ended June 30, 2025 | | :--- | :--- | | MIPLYFFA Sales | 38.6 | | Arimoclomol French AC | 5.0 | | AZSTARYS License Agreement | 2.1 | | OLPRUVA Sales | 0.4 | | **Total Revenue** | **46.3** | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=39&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's transformation into a commercial-stage rare disease company, highlighting the successful launch of MIPLYFFA, the **$148.3 million** PRV gain, and the **$58.7 million** OLPRUVA impairment, with **$217.7 million** in cash and investments providing sufficient funding for the next twelve months. [Overview](index=39&type=section&id=Overview) Zevra has transformed into a commercial-stage rare disease company with approved products MIPLYFFA and OLPRUVA, driven by the FDA approval of MIPLYFFA, the **$148.3 million** PRV sale, and the acquisition of Acer Therapeutics, focusing on late-stage development. - The company's five-year strategic plan focuses on transforming Zevra into a leading rare-disease company by prioritizing late-stage clinical development and commercial opportunities over in-house drug discovery[127](index=127&type=chunk) - MIPLYFFA was approved by the FDA on September 20, 2024, for Niemann-Pick disease type C (NPC), and the associated Priority Review Voucher (PRV) was sold for net proceeds of **$148.3 million** on April 1, 2025[129](index=129&type=chunk) - The acquisition of Acer Therapeutics was completed on November 17, 2023, adding the FDA-approved product OLPRUVA and the investigational candidate celiprolol to Zevra's portfolio[130](index=130&type=chunk) [Results of Operations](index=49&type=section&id=Results%20of%20Operations) For the six months ended June 30, 2025, net income was **$71.6 million**, a significant improvement driven by a **$38.4 million** increase in revenue from MIPLYFFA sales and a **$148.3 million** PRV gain, partially offset by a **$58.7 million** OLPRUVA impairment. Operations Metrics | Metric ($ in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue, net | 46,282 | 7,874 | 38,408 | | Impairment of intangible assets | 58,710 | — | 58,710 | | Research and development | 6,691 | 22,798 | (16,107) | | Selling, general and administrative | 40,327 | 22,535 | 17,792 | | Gain on sale of PRV | 148,325 | — | 148,325 | | **Net income (loss)** | **71,608** | **(36,547)** | **108,155** | - The increase in net income was primarily attributable to the **$148.3 million** gain on the sale of the PRV and a **$38.4 million** increase in revenue, mainly from MIPLYFFA sales[185](index=185&type=chunk)[186](index=186&type=chunk) - R&D expenses decreased by **$16.1 million**, primarily due to reduced spending on the Phase 2 clinical study for KP1077[190](index=190&type=chunk) - SG&A expenses increased by **$17.8 million**, reflecting higher personnel costs, professional fees, and other expenses related to building the commercial organization[191](index=191&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company held **$217.7 million** in cash, cash equivalents, and investments, with liquidity bolstered by product sales and **$148.3 million** net proceeds from a PRV sale, and management believes current capital is sufficient for at least the next twelve months. - As of June 30, 2025, the company had cash, cash equivalents and investments of **$217.7 million**[193](index=193&type=chunk) - In August 2024, the company completed an equity offering, raising net proceeds of approximately **$64.5 million** to support commercialization and development activities[199](index=199&type=chunk) - The company has a senior secured loan facility for up to **$100.0 million**, with **$60.0 million** funded as of the Term Loans Closing Date on April 5, 2024[205](index=205&type=chunk) - Management believes available cash and future operating cash flow are sufficient to fund capital requirements for at least the next twelve months[214](index=214&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section is not applicable for the reporting period. - Not applicable[222](index=222&type=chunk) [Controls and Procedures](index=59&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter. - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[224](index=224&type=chunk) - No material changes to internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[225](index=225&type=chunk) [PART II — OTHER INFORMATION](index=60&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Legal Proceedings](index=60&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is engaged in a legal dispute with Commave Therapeutics SA regarding the AZSTARYS License Agreement, with the case currently in the discovery phase, and Zevra intends to vigorously defend itself against the alleged breach of contract. - A legal dispute has arisen with Commave Therapeutics SA concerning the AZSTARYS License Agreement, with Commave filing a complaint in the Court of Chancery of the State of Delaware in September 2024[227](index=227&type=chunk)[228](index=228&type=chunk) - The case is currently in the discovery phase after the company's motion to dismiss was denied in February 2025, and the company believes the lawsuit is without merit but cannot predict the outcome[229](index=229&type=chunk)[230](index=230&type=chunk) [Risk Factors](index=60&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company highlights risks including potential impairment of remaining assets after a **$58.7 million** OLPRUVA charge, the impact of healthcare reforms like the Inflation Reduction Act, challenges in retaining key personnel, and geopolitical disputes affecting supply chains. - Following a **$58.7 million** impairment charge on definite-lived intangible assets in Q2 2025, there is a risk that remaining assets could become impaired in the future, which would negatively affect operating results[239](index=239&type=chunk) - Healthcare reform, including the Inflation Reduction Act of 2022 (IRA) and the fictional One Big Beautiful Bill Act of July 2025, could increase costs, create pricing pressure, and negatively impact the business through measures like Medicare price negotiations and Medicaid funding reductions[240](index=240&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk) - The company's success is highly dependent on its ability to retain key executives and qualified scientific, clinical, and commercial personnel in a competitive hiring environment[236](index=236&type=chunk)[238](index=238&type=chunk) - The company faces risks from significant political, trade, and regulatory developments, such as tariffs and sanctions, which could impair development and commercialization efforts by affecting supply chains and increasing costs[235](index=235&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) There were no unregistered sales of equity securities or purchases of equity securities by the issuer during the reporting period. - None[262](index=262&type=chunk) [Other Information](index=68&type=section&id=ITEM%205.%20OTHER%20INFORMATION) During the three months ended June 30, 2025, no director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement. - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[267](index=267&type=chunk) [Exhibits](index=70&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed as part of the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer. - The exhibits filed with this report include Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to SEC rules[268](index=268&type=chunk)

PART I — FINANCIAL INFORMATION [Item 1. Financial Statements](index=6&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The company's unaudited financial statements show a significant net income increase due to a PRV sale [Unaudited Condensed Consolidated Balance Sheets](index=6&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Condensed Consolidated Balance Sheets (in thousands) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $226,337 | $86,027 | | **Total assets** | **$256,277** | **$178,127** | | **Total current liabilities** | $28,832 | $34,065 | | **Total liabilities** | $139,047 | $138,461 | | **Total stockholders' equity** | **$117,230** | **$39,666** | - Total assets increased to **$256.3 million** as of June 30, 2025, from $178.1 million at the end of 2024, driven by higher cash and securities[17](index=17&type=chunk) - Total stockholders' equity saw a substantial increase to **$117.2 million** from $39.7 million[17](index=17&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=8&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Condensed Consolidated Statements of Operations | (in thousands) | 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, net** | $25,881 | $4,449 | $46,282 | $7,874 | | **Impairment of intangible assets** | $58,710 | $— | $58,710 | $— | | **Loss from operations** | $(71,039) | $(23,795) | $(76,401) | $(44,281) | | **Gain on sale of PRV** | $148,325 | $— | $148,325 | $— | | **Net income (loss)** | **$74,707** | **$(19,925)** | **$71,608** | **$(36,547)** | | **Diluted net income (loss) per share** | $1.21 | $(0.48) | $1.16 | $(0.87) | - The company reported net income of **$74.7 million** for Q2 2025, a significant turnaround from a net loss of $19.9 million in Q2 2024[18](index=18&type=chunk) - This improvement was driven by a **$148.3 million gain** on the sale of a Priority Review Voucher (PRV), offsetting a $58.7 million impairment charge[18](index=18&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Condensed Consolidated Statements of Cash Flows | (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(11,823) | $(35,274) | | **Net cash provided by investing activities** | $22,476 | $14,664 | | **Net cash provided by financing activities** | $2,988 | $16,547 | | **Net increase (decrease) in cash and cash equivalents** | $13,927 | $(3,789) | | **Cash and cash equivalents, end of period** | $47,712 | $39,260 | - For the first six months of 2025, net cash used in operating activities improved to **$11.8 million** from $35.3 million in the prior year period[27](index=27&type=chunk) - Investing activities provided **$22.5 million** in cash, primarily from the $150.0 million proceeds from the PRV sale[27](index=27&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=14&type=section&id=NOTES%20TO%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Notes detail the $150.0 million PRV sale, a $58.7 million asset impairment, and revenue recognition policies - The company sold a transferable rare priority review voucher (PRV) for aggregate proceeds of **$150.0 million**, resulting in a net gain of $148.3 million[41](index=41&type=chunk) - In Q2 2025, the company recorded an intangible asset impairment charge of **$58.7 million** related to OLPRUVA due to decreased future cash flow expectations[113](index=113&type=chunk) - As of June 30, 2025, the company had **$60.7 million** in long-term debt outstanding from a credit agreement, maturing in 2029[73](index=73&type=chunk) Revenue Breakdown (Six Months Ended June 30, 2025) | Revenue Source | Amount (in millions) | | :--- | :--- | | MIPLYFFA Sales | $38.6 | | Arimoclomol French AC | $5.0 | | AZSTARYS License Agreement | $2.1 | | OLPRUVA Sales | $0.4 | | **Total Revenue** | **$46.3** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses its rare-disease strategy, financial results, and confirms sufficient liquidity for operations - The company's five-year strategic plan focuses on transforming Zevra into a **leading rare-disease company**[127](index=127&type=chunk) - Following FDA approval, MIPLYFFA became commercially available, and the company sold the associated PRV for net proceeds of **$148.3 million**[129](index=129&type=chunk)[138](index=138&type=chunk) - Due to revised commercial expectations for OLPRUVA, the company recorded a significant intangible asset impairment charge of **$58.7 million**[146](index=146&type=chunk) - As of June 30, 2025, the company had cash, cash equivalents, and investments totaling **$217.7 million**, sufficient to fund operations for at least twelve months[193](index=193&type=chunk)[214](index=214&type=chunk) Results of Operations | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :--- | :--- | :--- | | **Revenue, net** | $25,881 | $4,449 | | **Impairment of intangible assets** | $58,710 | $— | | **Gain on sale of PRV** | $148,325 | $— | | **Net income (loss)** | $74,707 | $(19,925) | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company, as a smaller reporting company, is not required to provide this information - The company has determined that this section is **not applicable**[222](index=222&type=chunk) [Item 4. Controls and Procedures](index=59&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and internal financial reporting controls were effective - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2025[224](index=224&type=chunk) - There were **no material changes** in the company's internal control over financial reporting during the fiscal quarter ended June 30, 2025[225](index=225&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=60&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is defending a breach of contract lawsuit from Commave Therapeutics SA regarding the AZSTARYS agreement - A legal dispute has arisen with Commave Therapeutics SA concerning the interpretation of the **AZSTARYS License Agreement**[227](index=227&type=chunk) - Commave filed a complaint against Zevra in September 2024 alleging breach of contract, and the case is now in the **discovery phase**[228](index=228&type=chunk)[229](index=229&type=chunk) - Zevra believes the lawsuit is **without merit** and has not recorded any accrual for contingent liability, but expects to incur significant legal expenses[230](index=230&type=chunk)[232](index=232&type=chunk) [Item 1A. Risk Factors](index=60&type=section&id=ITEM%201A.%20RISK%20FACTORS) Key risks include geopolitical issues, asset impairment charges, and impacts from healthcare reform legislation - **Geopolitical disputes and trade policies**, such as tariffs and sanctions, could materially adversely affect the business by impacting manufacturing and costs[235](index=235&type=chunk) - The company recognized a **$58.7 million impairment charge** on definite-lived intangible assets during Q2 2025 and warns of potential future impairments[239](index=239&type=chunk) - **Healthcare reform legislation**, including the Inflation Reduction Act, could increase costs and create downward pressure on product pricing[240](index=240&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk) - Failure to comply with complex **governmental pricing programs** like MDRP and the 340B program could lead to significant penalties and fines[255](index=255&type=chunk)[257](index=257&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company reports no unregistered sales or repurchases of its equity securities during the period - There were **no unregistered sales** of equity securities during the reporting period[262](index=262&type=chunk) - There were **no purchases** of equity securities by the company or its affiliates[263](index=263&type=chunk) [Item 3. Defaults Upon Senior Securities](index=68&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reports this item is not applicable - The company reports this item is **not applicable**[264](index=264&type=chunk) [Item 4. Mine Safety Disclosures](index=68&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) The company reports this item is not applicable - The company reports this item is **not applicable**[265](index=265&type=chunk) [Item 5. Other Information](index=68&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No material undisclosed events or changes to director nomination procedures occurred during the quarter - During the three months ended June 30, 2025, no director or officer adopted or terminated a **Rule 10b5-1 trading arrangement**[267](index=267&type=chunk) [Item 6. Exhibits](index=70&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including officer certifications and XBRL data - This section provides a list of exhibits filed as part of the Form 10-Q, including **officer certifications** and Inline XBRL documents[268](index=268&type=chunk)