[Business Highlights](index=1&type=section&id=Business%20Highlights) Cue Biopharma achieved positive clinical data for CUE-101, advanced its autoimmune pipeline, secured a $12 million collaboration, and raised $20 million - Reported encouraging clinical data from the Phase 1b trial of CUE-101 for HPV+ HNSCC, with a new complete response and a confirmed **50% overall response rate (ORR)**. The 12-month overall survival was **88%** and median overall survival (mOS) reached **32 months**[3](index=3&type=chunk)[7](index=7&type=chunk) - Received positive FDA feedback on the Pre-IND Briefing Document for CUE-401, supporting the planned IND submission for treating autoimmune diseases[5](index=5&type=chunk)[6](index=6&type=chunk) - Announced a strategic research collaboration and license agreement with Boehringer Ingelheim to develop CUE-501 for autoimmune diseases, which includes a **$12 million upfront payment** and up to approximately **$345 million in potential milestone payments**[5](index=5&type=chunk)[6](index=6&type=chunk) - Successfully raised approximately **$20 million** through a public offering to support operations[5](index=5&type=chunk)[6](index=6&type=chunk) [Financial Performance](index=2&type=section&id=Financial%20Performance) Collaboration revenue increased to **$3.0 million**, operating expenses decreased, leading to a reduced net loss of **$8.5 million**, and cash improved to **$27.5 million** [Second Quarter 2025 Financial Results](index=2&type=section&id=Second%20Quarter%202025%20Financial%20Results) Q2 2025 collaboration revenue rose to **$3.0 million**, R&D expenses decreased to **$7.9 million**, and G&A expenses slightly increased to **$3.7 million** Q2 2025 vs Q2 2024 Financial Summary | Financial Metric | Q2 2025 | Q2 2024 | Change Driver | | :--- | :--- | :--- | :--- | | Collaboration Revenue | $3.0 million | $2.7 million | Timing of revenue from BI collaboration | | R&D Expenses | $7.9 million | $9.5 million | Decreases in clinical trials costs and employee compensation | | G&A Expenses | $3.7 million | $3.5 million | Increase in professional fees | [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net loss for Q2 2025 narrowed to **$8.5 million** (or **$0.09** per share), and for the six months, it improved to **$20.7 million** Statement of Operations Highlights (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Collaboration revenue | $2,954 | $2,658 | | Total operating expenses | $11,589 | $13,041 | | Loss from operations | $(8,635) | $(10,383) | | Net loss | $(8,482) | $(10,171) | | Net loss per share | $(0.09) | $(0.20) | Statement of Operations Highlights (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Collaboration revenue | $3,374 | $4,375 | | Total operating expenses | $24,309 | $27,426 | | Loss from operations | $(20,935) | $(23,051) | | Net loss | $(20,739) | $(22,518) | | Net loss per share | $(0.24) | $(0.45) | [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Cash and cash equivalents increased to **$27.5 million**, total assets grew to **$40.7 million**, and stockholders' equity remained stable at **$18.2 million** Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $27,492 | $22,459 | | Total assets | $40,707 | $32,191 | | Liabilities | $22,548 | $14,692 | | Stockholders' equity | $18,159 | $17,499 | [Corporate Information and Forward-Looking Statements](index=3&type=section&id=Corporate%20Information%20and%20Forward-Looking%20Statements) Cue Biopharma, a clinical-stage biopharmaceutical company, develops injectable biologics using its Immuno-STAT® platform, with forward-looking statements subject to various risks [About Cue Biopharma](index=3&type=section&id=About%20Cue%20Biopharma) Cue Biopharma is a clinical-stage company developing injectable biologics using its proprietary Immuno-STAT® platform to selectively modulate disease-specific T cells - The company's core technology is the proprietary **Immuno-STAT® (Selective Targeting and Alteration of T cells) platform**[14](index=14&type=chunk) - The company's focus is on developing injectable biologics to selectively modulate disease-specific T cells for treating cancer and autoimmune diseases[14](index=14&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section details risks and uncertainties for forward-looking statements, including CUE-101 potential, IND submissions, and milestone payments, citing operational and financial challenges - Forward-looking statements in the release cover the potential of CUE-101, plans for an IND submission for CUE-401, and potential future milestone payments[16](index=16&type=chunk) - Key risks identified include a limited operating history, history of losses, ability to obtain adequate financing, potential for negative clinical trial results, and securing FDA approvals[16](index=16&type=chunk)[17](index=17&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ——————— FORM 10-Q ——————— ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from: _____________ to _____________ ACCESS Newswire Inc. (Exact name of registrant as specified in its charter) (State or Other Jurisdiction of Incorporation ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-12575 UTAH MEDICAL PRODUCTS INC (Exact name of Registrant as specified in its charter) (State or other jurisdiction of incorporation or organiz ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Blue Foundry Bancorp's unaudited consolidated financial statements for Q2 and H1 2025, detailing financial position and performance with accompanying notes [Consolidated Balance Sheets](index=3&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Total assets increased to **$2.13 billion** by June 30, 2025, driven by loan growth, while liabilities rose to **$1.81 billion** and equity decreased to **$321.3 million** Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | **Total Assets** | **$2,127,504** | **$2,060,683** | | Cash and cash equivalents | $41,877 | $42,502 | | Securities (AFS & HTM) | $313,301 | $330,104 | | Loans receivable, net | $1,659,732 | $1,570,517 | | **Total Liabilities** | **$1,806,204** | **$1,728,485** | | Deposits | $1,416,321 | $1,343,320 | | Advances from FHLB | $343,000 | $339,500 | | **Total Shareholders' Equity** | **$321,300** | **$332,198** | [Consolidated Statements of Operations](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For Q2 2025, net loss improved to **$2.0 million** from **$2.3 million** year-over-year, driven by a **$2.1 million** increase in net interest income, with the six-month net loss narrowing to **$4.6 million** Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Interest Income | $23,438 | $21,292 | $46,151 | $42,134 | | Total Interest Expense | $11,798 | $11,719 | $23,767 | $23,144 | | **Net Interest Income** | **$11,640** | **$9,573** | **$22,384** | **$18,990** | | Provision for (release of) credit losses | $463 | $(762) | $664 | $(1,297) | | Total Non-interest Income | $405 | $536 | $799 | $987 | | Total Non-interest Expenses | $13,539 | $13,215 | $27,168 | $26,457 | | **Net Loss** | **$(1,957)** | **$(2,344)** | **$(4,649)** | **$(5,183)** | | **Diluted Loss Per Share** | **$(0.10)** | **$(0.11)** | **$(0.23)** | **$(0.24)** | [Consolidated Statements of Comprehensive Loss](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20LOSS) Comprehensive loss for Q2 2025 was **$2.4 million**, including a **$2.0 million** net loss and **$0.5 million** other comprehensive loss, resulting in a six-month comprehensive loss of **$4.2 million** Comprehensive Loss Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Loss | $(1,957) | $(2,344) | $(4,649) | $(5,183) | | Total Other Comprehensive (Loss) Income | $(473) | $292 | $409 | $1,997 | | **Comprehensive Loss** | **$(2,430)** | **$(2,052)** | **$(4,240)** | **$(3,186)** | [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20SHAREHOLDERS'%20EQUITY) Shareholders' equity decreased from **$332.2 million** at year-end 2024 to **$321.3 million** at June 30, 2025, primarily due to a **$4.6 million** net loss and **$8.6 million** in treasury stock purchases - For the six months ended June 30, 2025, total shareholders' equity decreased by **$10.9 million**[19](index=19&type=chunk) - Key drivers of the decrease in equity were the net loss of **$4.6 million** and the repurchase of treasury stock totaling **$8.6 million**[19](index=19&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the six months ended June 30, 2025, cash and cash equivalents decreased by **$0.6 million**, with net cash used in operating and investing activities largely offset by financing activities driven by increased deposits Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(1,785) | $9,270 | | Net cash (used in) provided by investing activities | $(67,427) | $1,648 | | Net cash provided by financing activities | $68,587 | $3,319 | | **Net (decrease) increase in cash and cash equivalents** | **$(625)** | **$14,237** | [Notes to the Consolidated Financial Statements](index=10&type=section&id=NOTES%20TO%20THE%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes detail financial accounts and policies, including securities portfolio unrealized losses, loan portfolio growth to **$1.67 billion**, a **$13.3 million** allowance for credit losses, and **$426.0 million** in interest rate swaps - The securities portfolio includes available-for-sale securities with a fair value of **$284.2 million** and held-to-maturity securities with an amortized cost of **$29.1 million**, with unrealized losses primarily due to interest rate changes, not credit quality[33](index=33&type=chunk)[35](index=35&type=chunk)[46](index=46&type=chunk) Loan Portfolio Composition (in thousands) | Loan Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Residential | $519,370 | $518,243 | | Multifamily | $633,849 | $671,116 | | Commercial real estate | $293,179 | $259,633 | | Construction | $97,207 | $85,546 | | Consumer and other | $83,706 | $7,211 | | **Total Loans** | **$1,673,036** | **$1,583,482** | - The allowance for credit losses on loans was **$13.3 million** at June 30, 2025, up from **$13.0 million** at year-end 2024, with a provision of **$350 thousand** recorded for the first six months of 2025[76](index=76&type=chunk)[82](index=82&type=chunk) - The company uses interest rate swaps with a total notional amount of **$426.0 million** as of June 30, 2025, designated as cash flow hedges against FHLB advances and brokered deposits[118](index=118&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's financial performance, highlighting reduced net losses for Q2 and H1 2025 due to improved net interest income, alongside loan portfolio growth, deposit increases, and capital adequacy [Comparison of Operating Results](index=41&type=section&id=Comparison%20of%20Operating%20Results) Q2 2025 net loss improved to **$2.0 million** from **$2.3 million** year-over-year, driven by a **$2.1 million** increase in net interest income, despite higher credit loss provisions and non-interest expenses - Net interest income for Q2 2025 increased by **$2.1 million** year-over-year, with the net interest margin expanding by **32 basis points** to **2.28%**[166](index=166&type=chunk) - A provision for credit losses of **$463 thousand** was recorded in Q2 2025, compared to a **$762 thousand** release in Q2 2024, primarily due to growth in unfunded loan commitments and shifts in the loan portfolio composition[167](index=167&type=chunk) - Non-interest expense for Q2 2025 rose by **$324 thousand** year-over-year, driven by higher compensation, benefits, and data processing costs[169](index=169&type=chunk) [Comparison of Financial Condition](index=45&type=section&id=Comparison%20of%20Financial%20Condition) Total assets grew by **$66.8 million** to **$2.13 billion** by June 30, 2025, driven by **$89.6 million** loan growth and **$73.0 million** deposit increase, while equity decreased by **$10.9 million** - Gross loans increased by **$89.6 million** since year-end 2024, with significant growth in consumer loans (+$76.5 million) and commercial real estate loans (+$33.5 million)[188](index=188&type=chunk) - Total deposits grew by **$73.0 million**, or **5.4%**, since year-end 2024, supported by an increase in brokered deposits to **$225.0 million**[189](index=189&type=chunk) - Total shareholders' equity declined by **$10.9 million**, primarily due to the repurchase of shares at a cost of **$8.5 million** and the net loss for the period[192](index=192&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$256.1 million** in FHLB borrowing capacity, exceeding all regulatory capital requirements and remaining 'well capitalized' with a **13.51%** Tier 1 leverage ratio - Available borrowing capacity at June 30, 2025, included **$256.1 million** from the FHLB of New York, a **$110.3 million** line with the Federal Reserve, and a **$30.0 million** unsecured line with a correspondent bank[205](index=205&type=chunk) Bank Regulatory Capital Ratios as of June 30, 2025 | Ratio | Actual | Minimum for Well Capitalized | | :--- | :--- | :--- | | Common equity tier 1 | 18.11% | 6.50% | | Tier 1 capital | 18.11% | 8.00% | | Total capital | 18.98% | 10.00% | | Tier 1 (leverage) capital | 13.51% | 5.00% | [Quantitative and Qualitative Disclosure About Market Risk](index=46&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURE%20ABOUT%20MARKET%20RISK) The company's primary market risk is interest rate risk, managed with **$426.0 million** in interest rate swaps, where a **100 basis point** rate increase would decrease Economic Value of Equity by **15.4%** - The company utilizes interest rate swaps to manage risk, with an aggregate notional amount of **$426 million** as of June 30, 2025[197](index=197&type=chunk) Net Interest Income Sensitivity Analysis (at June 30, 2025) | Change in Interest Rates (bps) | Change in NII (in thousands) | Percent Change | | :--- | :--- | :--- | | +200 | $1,309 | 2.5% | | +100 | $709 | 1.4% | | -100 | $907 | 1.7% | | -200 | $1,824 | 3.5% | Economic Value of Equity (EVE) Sensitivity Analysis (at June 30, 2025) | Change in Interest Rates (bps) | Change in EVE (in thousands) | Percent Change | | :--- | :--- | :--- | | +200 | $(68,059) | (30.9)% | | +100 | $(33,957) | (15.4)% | | -100 | $32,592 | 14.8% | | -200 | $66,292 | 30.1% | [Controls and Procedures](index=49&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, with no material changes to internal control over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[209](index=209&type=chunk) [PART II. OTHER INFORMATION](index=49&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=49&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not currently involved in any material legal proceedings, and any normal course actions are not expected to materially affect its financial condition or operations - The Company is not engaged in any material legal proceedings at the present time[211](index=211&type=chunk) [Risk Factors](index=49&type=section&id=ITEM%201A.%20RISK%20FACTORS) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in risk factors have occurred since the last Annual Report on Form 10-K[212](index=212&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=50&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES.%20USE%20OF%20PROCEEDS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) During Q2 2025, the company repurchased **406,391 shares** at an average price of **$9.45** per share and authorized a new program to repurchase up to **1,082,533 additional shares** Share Repurchases for Quarter Ended June 30, 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April | 231,145 | $9.04 | | May | 165,842 | $10.04 | | June | 9,404 | $8.98 | | **Total** | **406,391** | **$9.45** | - On June 18, 2025, the Company adopted its sixth repurchase program to repurchase up to **1,082,533 shares**, or **5%** of its outstanding common stock[214](index=214&type=chunk) [Defaults Upon Senior Securities](index=50&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) Not applicable [Mine Safety Disclosures](index=50&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) Not applicable [Other Information](index=50&type=section&id=ITEM%205.%20OTHER%20INFORMATION) During Q2 2025, no directors or officers adopted or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements - No directors or officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company's securities under Rule 10b5-1(c) during Q2 2025[217](index=217&type=chunk) [Exhibits](index=51&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with or incorporated by reference into the Form 10-Q, including the company's certificate of incorporation, bylaws, and required certifications

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-42275 KAIROS PHARMA, LTD. (Exact name of registrant as specified in its charter) Delaware 46-2993314 (State or othe ...

Part I. Financial Information [Financial Statements (Unaudited)](index=2&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for H1 2025 show decreased assets and equity, a net loss, and negative operating cash flow compared to prior periods [Consolidated Balance Sheets](index=2&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Cash and cash equivalents | $9,969 | $10,326 | ($357) | | Total Current Assets | $20,627 | $21,157 | ($530) | | Total Assets | $24,117 | $24,970 | ($853) | | **Liabilities & Equity** | | | | | Total Current Liabilities | $5,076 | $5,072 | $4 | | Total Liabilities | $6,871 | $7,344 | ($473) | | Total Stockholders' Equity | $17,246 | $17,626 | ($380) | - Total assets decreased from **$25.0 million** at the end of 2024 to **$24.1 million** as of June 30, 2025, primarily driven by a decrease in cash and cash equivalents[9](index=9&type=chunk)[10](index=10&type=chunk) [Consolidated Statements of Operations](index=3&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Q2 2025 vs Q2 2024 Performance (in thousands, except per share) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net sales | $5,948 | $5,062 | +17.5% | | Gross margin | $2,960 | $2,757 | +7.4% | | Gross margin % | 49.8% | 54.5% | -4.7 p.p. | | Operating income (loss) | ($844) | ($566) | -49.1% | | Net income (loss) | ($742) | ($797) | +6.9% | | Diluted EPS | ($0.08) | ($0.09) | +11.1% | H1 2025 vs H1 2024 Performance (in thousands, except per share) | Metric | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net sales | $12,124 | $11,161 | +8.6% | | Gross margin | $6,148 | $5,977 | +2.9% | | Gross margin % | 50.7% | 53.6% | -2.9 p.p. | | Operating income (loss) | ($1,221) | ($1,426) | +14.4% | | Net income (loss) | ($1,124) | ($1,604) | +30.0% | | Diluted EPS | ($0.12) | ($0.18) | +33.3% | [Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20(LOSS)) - For the six months ended June 30, 2025, the company reported a comprehensive loss of **$820,000**, an improvement from the **$1,842,000** comprehensive loss in the same period of 2024, aided by a **positive foreign currency translation gain of $304,000**[14](index=14&type=chunk) [Consolidated Statement of Stockholders' Equity](index=4&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20STOCKHOLDERS'%20EQUITY) - Total stockholders' equity decreased from **$17.6 million** at the end of 2024 to **$17.2 million** at June 30, 2025, primarily due to a **net loss of $1.12 million** for the six-month period, partially offset by share-based compensation and positive other comprehensive income[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | ($233) | ($284) | | Cash provided by (used in) investing activities | ($347) | ($164) | | Cash provided by (used in) financing activities | ($95) | ($223) | | **Net change in cash** | **($675)** | **($671)** | - Cash and cash equivalents decreased by **$675,000** during the first six months of 2025, ending the period at **$10.0 million**, driven by cash used in operating and investing activities[19](index=19&type=chunk) [Notes to Consolidated Financial Statements](index=5&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - The company operates as a global market leader for advanced programming and security deployment solutions used in electronics manufacturing[21](index=21&type=chunk) Revenue by Category - Six Months Ended June 30 (in thousands) | Net sales by type | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Equipment | $6,315 | $5,719 | +10.4% | | Adapter | $4,293 | $3,662 | +17.2% | | Software and Maintenance | $1,516 | $1,780 | -14.8% | | **Total** | **$12,124** | **$11,161** | **+8.6%** | - The company operates as a single segment entity, designing, manufacturing, and selling programming systems[59](index=59&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=12&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reports operational progress and revenue growth despite economic headwinds, maintaining a debt-free balance sheet with $10 million in cash [Overview](index=12&type=section&id=Overview) - The company made progress in key operational areas and improved its cost basis despite a challenging global economic environment[63](index=63&type=chunk) - A significant automated programming system order was received late in Q2 from a leading global automotive EV supplier[63](index=63&type=chunk) - Management remains cautious due to near-term headwinds from economic and cross-border trade uncertainty, which has stalled some capital investments[66](index=66&type=chunk) [Results of Operations](index=15&type=section&id=Results%20of%20Operations) Q2 2025 Key Operational Metrics (in millions, except percentages) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $5.9M | $5.1M | +17.5% | | Bookings | $5.8M | $5.6M | +3.6% | | Gross Margin % | 49.8% | 54.5% | -4.7 p.p. | | R&D Expense | $1.66M | $1.41M | +17.6% | | SG&A Expense | $2.14M | $1.91M | +12.1% | - Net sales in Q2 2025 were **$5.9 million**, a **17.5% increase** from the prior year, driven by strong growth in non-automated programming systems and adapter sales[82](index=82&type=chunk) - Gross margin declined to **49.8%** in Q2 2025 from **54.5%** in Q2 2024, attributed to a lower margin product mix and configuration of automated systems for a large customer order[87](index=87&type=chunk) - Bookings in Q2 2025 were **$5.8 million**, including a **$1.4 million order** for 10 PSV automated systems from a major EV supplier in China, with automotive electronics constituting **66% of Q2 bookings**[84](index=84&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=17&type=section&id=Financial%20Condition,%20Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had working capital of **$15.6 million** and cash and cash equivalents of **$10.0 million**[93](index=93&type=chunk) - Cash decreased by **$534,000** from December 31, 2024, due to one-time expenses and investments, partially offset by an improved cost structure[93](index=93&type=chunk) - The company has no debt and believes it has sufficient cash to fund operations and capital requirements for at least the next year[93](index=93&type=chunk)[96](index=96&type=chunk) [Non-GAAP Financial Measures](index=17&type=section&id=NON-GENERALLY%20ACCEPTED%20ACCOUNTING%20PRINCIPLES%20(GAAP)%20FINANCIAL%20MEASURES) Reconciliation of Net Income to EBITDA and Adjusted EBITDA (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income (loss) | ($742) | ($797) | | EBITDA earnings (loss) | ($687) | ($379) | | Adjusted EBITDA, excluding equity compensation | ($437) | $3 | - Adjusted EBITDA, excluding equity compensation, was **($437,000)** in Q2 2025, a significant decrease from **$3,000** in Q2 2024[98](index=98&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=18&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that this section is not applicable for this reporting period - Not applicable[101](index=101&type=chunk) [Controls and Procedures](index=18&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, but a material weakness in IT user access and segregation of duties remains under remediation - Management concluded that disclosure controls and procedures were effective as of the evaluation date[102](index=102&type=chunk) - A material weakness in internal controls over financial reporting related to IT user access and segregation of duties, identified as of December 31, 2024, is still being remediated[103](index=103&type=chunk)[104](index=104&type=chunk) - Despite the material weakness, management performed additional procedures and concluded the financial statements are fairly presented in all material respects[103](index=103&type=chunk) Part II. Other Information [Legal Proceedings](index=18&type=section&id=Item%201.%20Legal%20Proceedings) As of June 30, 2025, the company was not a party to any material pending legal proceedings - The company reports no material pending legal proceedings as of June 30, 2025[106](index=106&type=chunk) [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - The company states there are no material changes to the Risk Factors described in its Annual Report on Form 10-K for the year ended December 31, 2024[107](index=107&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=18&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company reported no unregistered sales, use of proceeds, or issuer purchases of equity securities, nor any Rule 10b5-1 trading arrangements - During the quarter ended June 30, 2025, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or other non-Rule 10b5-1 trading arrangement[112](index=112&type=chunk) [Exhibits](index=19&type=section&id=Item%206.%20Exhibits) The report lists several exhibits filed with the Form 10-Q, including a material contractor agreement, CEO/CFO certifications, and Interactive Data Files - Exhibits filed include an Independent Contractor Agreement with Theisen Advisory Group, CEO/CFO certifications, and Interactive Data Files[110](index=110&type=chunk)

Preliminary Sections [Glossary of Commonly Used Terms](index=4&type=section&id=Glossary%20of%20Commonly%20Used%20Terms) This section defines technical and company-specific terms, including abbreviations for measurements, business entities, operational concepts, and financial agreements - Key defined terms relate to the company's natural gas operations, its carbon capture, utilization, and sequestration (CCUS) business, and its various joint ventures and credit facilities[11](index=11&type=chunk)[18](index=18&type=chunk)[30](index=30&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=8&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section cautions that forward-looking statements are subject to risks and uncertainties, advising readers to consult the 2024 Annual Report on Form 10-K risk factors - Forward-looking statements cover business strategy, reserves, drilling plans, hedging, CCUS business growth, and anticipated benefits of the Bedrock acquisition[39](index=39&type=chunk)[40](index=40&type=chunk)[43](index=43&type=chunk) PART I FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=10&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents BKV Corporation's unaudited condensed consolidated financial statements for Q2 and H1 2025, including balance sheets, operations, cash flows, equity, and accounting notes [Condensed Consolidated Financial Statements](index=11&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Unaudited financial statements show **total assets at $2.30 billion**, **net income of $25.9 million**, and **$98.8 million net cash from operations** for H1 2025 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $21,426 | $14,868 | | Total current assets | $98,436 | $94,610 | | Total natural gas properties, net | $1,938,337 | $1,888,281 | | **Total assets** | **$2,304,427** | **$2,231,088** | | Total current liabilities | $174,731 | $166,205 | | Long-term debt, net | $200,000 | $165,000 | | **Total liabilities** | **$716,369** | **$671,514** | | **Total stockholders' equity** | **$1,590,131** | **$1,559,574** | Condensed Consolidated Statement of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Natural gas, NGL, and oil sales | $199,729 | $125,854 | $415,855 | $267,541 | | Total revenues | $322,044 | $136,198 | $400,864 | $288,112 | | Income (loss) from operations | $128,398 | $(43,181) | $34,695 | $(77,544) | | **Net income (loss) attributable to BKV** | **$104,572** | **$(59,697)** | **$25,906** | **$(98,282)** | | **Diluted EPS** | **$1.23** | **$(0.90)** | **$0.30** | **$(1.48)** | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $98,783 | $9,782 | | Net cash provided by (used in) investing activities | $(129,654) | $101,633 | | Net cash provided by (used in) financing activities | $37,429 | $(267,287) | | **Net increase (decrease) in cash** | **$6,558** | **$(155,872)** | [Notes to the Condensed Consolidated Financial Statements](index=17&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies, debt structure, derivative instruments, the BKV-CIP Joint Venture consolidation, commitments, contingencies, and significant subsequent events like a new acquisition agreement - On May 8, 2025, the company formed the BKV-CIP Joint Venture with Copenhagen Infrastructure Partners (CIP) to develop CCUS projects, consolidating the JV as a Variable Interest Entity (VIE) due to BKV's controlling interest and asset contribution[136](index=136&type=chunk)[138](index=138&type=chunk) - The **final $20.0 million contingent consideration payment** related to the Devon Barnett Acquisition was made on January 8, 2025[93](index=93&type=chunk)[144](index=144&type=chunk) - Subsequent to quarter end, on August 7, 2025, the company agreed to acquire Barnett shale assets from Bedrock Production, LLC for approximately **$370.0 million**, comprising **$260.0 million in cash** and up to **$110.0 million in BKV common stock**[153](index=153&type=chunk) Derivative Positions as of June 30, 2025 (Natural Gas - NYMEX Henry Hub) | Year | Instrument | MMBtu | Weighted Avg Price/Ceiling (USD) | | :--- | :--- | :--- | :--- | | **2025** | Swap | 48,960,000 | $3.41 | | | Collars | 6,120,000 | $4.11 | | **2026** | Swap | 71,575,000 | $3.71 | | | Call options | 36,500,000 | $5.00 | | | Put options | 36,500,000 | $3.00 (Floor) | | **2027** | Swap | 36,500,000 | $3.96 | | | Call options | 36,500,000 | $5.00 | | | Put options | 36,500,000 | $3.00 (Floor) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, liquidity, and capital resources, focusing on commodity prices, production, and strategic initiatives including CCUS and the Bedrock acquisition [Overview and Recent Developments](index=36&type=section&id=Overview%20and%20Recent%20Developments) BKV is a growth-driven energy company focused on natural gas, midstream, power generation, and CCUS, aiming for net-zero emissions, with recent strategic moves including a CCUS joint venture, a new CCUS project, and the Bedrock acquisition - The company's core business is natural gas production, with a vertically integrated strategy targeting net-zero emissions for Scope 1 and 2 by the early 2030s and Scope 1, 2, and 3 by the late 2030s[156](index=156&type=chunk) - On August 7, 2025, BKV agreed to acquire Bedrock's Barnett assets for **$370.0 million**, adding approximately **108 MMcfe/d of production** and nearly **1 Tcfe of 1P reserves**[161](index=161&type=chunk) - A new CCUS project announced on July 21, 2025, is expected to capture and sequester approximately **70,000 metric tons of CO2 per year** starting in 2027[158](index=158&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Financial results significantly improved due to higher realized natural gas prices, with **Q2 2025 natural gas revenues up 88%** and **net income of $104.6 million**, while G&A expenses increased due to growth initiatives and DD&A decreased from a depletion rate adjustment Comparison of Operating Revenues (Three Months Ended June 30, in thousands) | Revenue Line | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Natural gas revenues | $155,562 | $82,840 | $72,722 | 88% | | NGL revenues | $41,630 | $41,216 | $414 | 1% | | Derivative gains (losses), net | $112,208 | $(7,486) | $119,694 | N/A | - The **$72.7 million (88%) increase** in Q2 2025 natural gas revenue was primarily driven by a **$71.0 million positive impact from higher commodity prices**, with a smaller **$1.7 million contribution from increased production volumes**[175](index=175&type=chunk) Comparison of Operating Expenses (Three Months Ended June 30, in thousands) | Expense Line | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Gathering and transportation | $63,026 | $53,714 | $9,312 | 17% | | DD&A, and accretion | $38,044 | $59,313 | $(21,269) | (36)% | | General and administrative | $30,516 | $19,296 | $11,220 | 58% | - General and administrative expenses increased by **$11.2 million (58%)** in Q2 2025 compared to Q2 2024, driven by costs related to company-wide growth initiatives, including higher labor, consulting, and severance costs[193](index=193&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity relies on operating cash flow and its RBL Credit Agreement, with **$98.8 million in operating cash flow** for H1 2025, a **$76.3 million working capital deficit**, and **$200.0 million outstanding** on an **$850.0 million borrowing base** - Net cash provided by operating activities for the first six months of 2025 was **$98.8 million**, a significant increase from **$9.8 million** in the same period of 2024, primarily due to higher income from operations and lower interest payments[230](index=230&type=chunk) - Accrued capital expenditures for the six months ended June 30, 2025, were **$136.8 million**, a substantial increase from **$32.9 million** in the prior-year period[167](index=167&type=chunk)[234](index=234&type=chunk) RBL Credit Agreement Status (as of June 30, 2025) | Metric | Amount (in millions) | | :--- | :--- | | Borrowing Base | $850.0 | | Elected Commitment | $665.0 | | Outstanding Balance | $200.0 | | Letters of Credit | $14.1 | | Available Capacity (as of Aug 12, 2025) | $368.9 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages commodity price volatility for natural gas and NGLs using derivative instruments, while also addressing counterparty credit risk and interest rate risk from its floating-rate RBL Credit Agreement - The company hedges a portion of its production to manage cash flow volatility, with the fair value of its commodity derivative instruments being a **net liability of $82.5 million** as of June 30, 2025[254](index=254&type=chunk)[261](index=261&type=chunk) - A hypothetical **$0.10 per Mcf change** in NYMEX natural gas prices would have resulted in a **$7.0 million change** in natural gas hedge revenues for the six months ended June 30, 2025[257](index=257&type=chunk) - The company is exposed to interest rate risk on its **$200.0 million of outstanding floating-rate debt** under the RBL Credit Agreement, where a **1.0% increase** in average interest rates would have increased interest expense by **$1.1 million** for the first half of 2025[266](index=266&type=chunk) [Item 4. Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of June 30, 2025, due to a material weakness in internal control over financial reporting related to income tax accounting - A material weakness in internal control over financial reporting related to the accounting for income taxes continued to exist as of June 30, 2025[269](index=269&type=chunk) - The weakness stems from controls not being designed with sufficient precision to prepare and review the income tax provision, related balances, and disclosures, leading to past audit adjustments and financial statement revisions[270](index=270&type=chunk) - The company is actively working on remediating the material weakness by designing and implementing additional internal controls related to its income tax accounting processes[272](index=272&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 11 of the financial statements for legal proceedings, stating that while subject to various claims, their ultimate liability is not expected to have a material adverse effect - Information on legal proceedings is incorporated by reference from Note 11 - Commitments and Contingencies in the financial statements[276](index=276&type=chunk)[142](index=142&type=chunk) [Item 1A. Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, highlighting new risks associated with the pending Bedrock acquisition, including potential failure to close and difficulties in integration and realizing anticipated benefits - A new material risk factor has been added concerning the pending Bedrock acquisition, which is expected to close in late Q3 or early Q4 2025[277](index=277&type=chunk)[278](index=278&type=chunk) - Risks include the potential failure to satisfy closing conditions, which are not entirely within the company's control, and the negative consequences of a failed transaction, such as incurred expenses and adverse market reactions[278](index=278&type=chunk) - Even if completed, the company faces integration risks, such as the inability to achieve anticipated synergies and cost savings, and potential unknown liabilities associated with the acquired assets[279](index=279&type=chunk)[281](index=281&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities[280](index=280&type=chunk) [Item 5. Other Information](index=57&type=section&id=Item%205.%20Other%20Information) The company disclosed that no director or executive officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading agreement during Q2 2025 - No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans during the quarter[282](index=282&type=chunk) [Item 6. Exhibits](index=58&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including credit agreement amendments, the BKV dCarbon Project LLC agreement, CEO and CFO certifications, and XBRL data files - Key exhibits filed include the Limited Liability Company Agreement of BKV dCarbon Project, LLC, and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act[283](index=283&type=chunk)

PART I [Business Overview](index=4&type=section&id=Item%201%20Business) Kennametal is a global industrial technology leader in materials science, operating Metal Cutting and Infrastructure segments - Kennametal Inc. is a global industrial technology leader founded in 1938, specializing in tungsten carbide technology for metal cutting and extreme wear applications[11](index=11&type=chunk)[99](index=99&type=chunk) - The company operates in two segments: **Metal Cutting** and **Infrastructure**, offering standard and custom products like tooling, wear components, and metallurgical powders[15](index=15&type=chunk)[100](index=100&type=chunk) - International operations generated **60% of consolidated sales** in 2025, with key markets in Western Europe, China, and India, highlighting global diversification but also exposure to international risks[17](index=17&type=chunk)[49](index=49&type=chunk) - R&D efforts focus on new product and process technology development, utilizing a disciplined 'stage-gate' framework to accelerate commercial success and enhance operational excellence[21](index=21&type=chunk) - The company maintains a competitive position in major markets, differentiating through customer support, innovation, product performance, quality, and brand recognition, rather than solely on price[24](index=24&type=chunk)[25](index=25&type=chunk) - As of June 30, 2025, Kennametal employed **8,124 people globally**, with approximately 1,900 represented by labor unions[33](index=33&type=chunk)[34](index=34&type=chunk)[37](index=37&type=chunk)[40](index=40&type=chunk) Human Capital Metrics (FY2025 vs. FY2024) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Recordable Incident Rate (TRIR) | 0.42 | 0.35 | | Voluntary Turnover Rate | 7.7% | 7.9% | [Risk Factors](index=8&type=section&id=Item%201A.%20Risk%20Factors) The company faces material risks from global operations, business strategy, cybersecurity, raw materials, and debt covenants - Geopolitical conflicts (Middle East, Russia-Ukraine) pose significant global operational risks, potentially leading to supply chain disruptions, increased cybersecurity threats, unfavorable exchange rates, and reduced customer demand[46](index=46&type=chunk) - International operations, which account for **60% of sales**, are exposed to risks like currency exchange rate fluctuations, trade barriers, regional economic uncertainty, and political instability[49](index=49&type=chunk) - Business strategy risks include the possibility that restructuring efforts may not achieve intended benefits, challenges in successfully integrating acquisitions, and the potential for future goodwill impairment charges (**goodwill totaled $282.7 million** at June 30, 2025)[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) - Cybersecurity threats to information technology systems could lead to operational disruptions, data misuse, litigation, and reputational damage, despite current security measures[65](index=65&type=chunk) - Fluctuations in raw material prices (e.g., tungsten, cobalt, steel) and supply availability, largely from international sources, can significantly impact operating results and profitability[67](index=67&type=chunk) - Debt agreements contain restrictive covenants, including a **maximum leverage ratio**, which could limit the company's ability to incur additional debt, make acquisitions, pay dividends, or fund capital expenditures[68](index=68&type=chunk) [Unresolved Staff Comments](index=13&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments[69](index=69&type=chunk) [Cybersecurity](index=13&type=section&id=Item%201C.%20Cybersecurity) Cybersecurity risk is managed through the NIST framework, with oversight from the Board of Directors and Audit Committee - Kennametal assesses, identifies, and manages cybersecurity risks through a structured process guided by the NIST Cybersecurity Framework[70](index=70&type=chunk) - The company monitors third-party service providers for security adherence and deploys state-of-the-art technologies, a **24/7 Security Operations Center**, and regular testing to identify and respond to security incidents[71](index=71&type=chunk)[72](index=72&type=chunk) - Cybersecurity risk oversight is maintained by the Board of Directors, with the Audit Committee specifically tasked with monitoring these risks and evaluating the company's approach[73](index=73&type=chunk) - Management, led by the Chief Information Security Officer (CISO) with over 20 years of experience, oversees risk assessment and mitigation, providing regular reports to the Board[74](index=74&type=chunk) [Properties](index=13&type=section&id=Item%202.%20Properties) The company operates numerous manufacturing, distribution, and R&D facilities globally, all deemed adequate for current needs - Principal executive offices are in Pittsburgh, PA, with corporate offices in Neuhausen (Switzerland), Bangalore (India), and Singapore[75](index=75&type=chunk) - The company operates numerous manufacturing facilities across the United States and internationally (e.g., Bolivia, Brazil, Canada, China, Germany, India, Israel, Poland, South Africa, Spain, UK, Vietnam)[76](index=76&type=chunk) - Facilities produce a diverse range of products for both **Metal Cutting** (e.g., carbide round tools, metal cutting inserts, toolholders) and **Infrastructure** (e.g., metallurgical powders, wear parts, mining and construction tools) segments[76](index=76&type=chunk) - Research and development efforts are primarily conducted at the technology center in Latrobe, PA, and facilities in Rogers, AR, Fürth, Germany, and Bangalore, India[77](index=77&type=chunk) - Production capacity is adequate for present needs, and properties are generally in good condition and suitable for business operations[78](index=78&type=chunk) [Legal Proceedings](index=15&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings and intends to vigorously defend a recent breach of contract lawsuit - The company is a party to legal claims and proceedings in the ordinary course of business, which may relate to operations or assets[79](index=79&type=chunk) - In February 2025, MachiningCloud, Inc. filed a lawsuit against Kennametal, alleging breach of contract and seeking over **$330 million in damages**; the company intends to vigorously defend the action[336](index=336&type=chunk) - Management believes that the ultimate liability from these actions will not materially affect the company's financial position, results of operations, or liquidity, though the outcome of litigation is uncertain[79](index=79&type=chunk) [Mine Safety Disclosures](index=15&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the registrant[80](index=80&type=chunk) PART II [Market for Common Equity, Stockholder Matters, and Issuer Purchases](index=15&type=section&id=Item%205.%20Market%20for%20the%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on the NYSE, and it executed share repurchases under an authorized program in fiscal 2025 - Kennametal's capital stock is traded on the New York Stock Exchange under the symbol **'KMT'**[3](index=3&type=chunk) - As of July 31, 2025, there were **1,197 shareholders of record**[81](index=81&type=chunk) - In fiscal 2025, a New Peer Group was established for executive compensation evaluation, comprising 20 companies including Alamo Group, Inc. and Barnes Group Inc[85](index=85&type=chunk)[86](index=86&type=chunk) - During 2025, the company repurchased **2.5 million shares** of common stock for **$60 million** under a $200 million, three-year share repurchase program authorized in February 2024[105](index=105&type=chunk)[148](index=148&type=chunk) Issuer Purchases of Equity Securities (Q4 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :--- | :--- | :--- | :--- | :--- | | April 1 through April 30, 2025 | 183 | $21.89 | — | $145,000,000 | | May 1 through May 31, 2025 | 121,891 | $21.42 | 120,000 | $142,300,000 | | June 1 through June 30, 2025 | 115,578 | $21.68 | 112,000 | $140,000,000 | | Total | 237,652 | $21.55 | 232,000 | | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2025 sales and operating income declined due to lower volumes and unfavorable currency, despite restructuring benefits - Sales decreased **4% in 2025**, primarily due to a 4% organic sales decline and a 1% unfavorable currency exchange effect, partially offset by a 1% favorable business days effect[102](index=102&type=chunk)[111](index=111&type=chunk) - Operating income decreased due to lower sales and production volumes, higher wages, general inflation, unfavorable foreign currency exchange ($6 million), and increased tariffs ($4 million), partially offset by restructuring benefits ($23 million), pricing, lower raw material costs, and benefits from the Inflation Reduction Act and tornado recovery ($13 million and $12 million, respectively, in Infrastructure)[103](index=103&type=chunk) - The company completed the sale of a subsidiary in Goshen, Indiana, for **$19 million**, recognizing a **$1.5 million loss** on divestiture[104](index=104&type=chunk) - Restructuring initiatives in fiscal 2024 and 2025 aimed to streamline cost structure and mitigate softer market conditions, delivering annualized run rate pre-tax savings of approximately **$35 million** and **$28 million**, respectively[113](index=113&type=chunk)[114](index=114&type=chunk) - The effective tax rate for 2025 was **25.2%**, up from 21.3% in 2024, primarily due to prior year adjustments and current year benefits from advanced manufacturing production credit and an Indian tax dispute resolution[118](index=118&type=chunk) - Cash flow from operating activities decreased to **$208.3 million** in 2025 from $277.1 million in 2024, primarily due to changes in working capital, including an increase in inventories and decreases in accrued income taxes and pension benefits[109](index=109&type=chunk)[149](index=149&type=chunk) - The company's liquidity is supported by **$140.5 million in cash** and cash equivalents and a **$700.0 million revolving credit facility** with no outstanding borrowings as of June 30, 2025[136](index=136&type=chunk)[140](index=140&type=chunk) Consolidated Financial Highlights (FY2025 vs. FY2024) | Metric | FY2025 (in millions) | FY2024 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Sales | $1,966.8 | $2,046.9 | (4)% | | Operating Income | $143.1 | $170.2 | (16)% | | Operating Margin | 7.3% | 8.3% | (1.0) pp | | Net Income Attributable to Kennametal | $93.1 | $109.3 | (15)% | | Diluted EPS | $1.20 | $1.37 | (12)% | | Cash Flow from Operating Activities | $208.3 | $277.1 | (25)% | | Capital Expenditures | $89.0 | $107.6 | (17)% | | Share Repurchases | $60.0 | $60.0 (approx) | 0% | | Dividends Paid | $62.0 | $63.4 | (2)% | [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company uses derivative instruments to hedge foreign exchange and interest rate risks, with immaterial hypothetical impacts - Kennametal uses derivative financial instruments (currency forward contracts, range forward contracts) to manage market risks from foreign exchange rates and interest rates, primarily to reduce cash flow volatility, not for speculation[187](index=187&type=chunk)[191](index=191&type=chunk) - A hypothetical **10% strengthening or weakening of the U.S. dollar** would result in an immaterial change of $0.3 million to accumulated other comprehensive loss and $0.4 million to pre-tax income[191](index=191&type=chunk) - Less than **1% of the company's debt** was exposed to variable interest rates as of June 30, 2025 and 2024, making a hypothetical 10% change in market interest rates immaterial[192](index=192&type=chunk) Impact of Currency Exchange Rate Fluctuations on Diluted EPS | Year | Impact on Diluted EPS | | :--- | :--- | | 2025 | -$0.02 | | 2024 | -$0.11 | [Financial Statements and Supplementary Data](index=32&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements and reports on the effectiveness of internal controls - Management concluded that the company maintained **effective internal control** over financial reporting as of June 30, 2025, based on COSO criteria[196](index=196&type=chunk) - PricewaterhouseCoopers LLP audited and confirmed the effectiveness of the company's internal control over financial reporting and presented fair consolidated financial statements for the period ended June 30, 2025[201](index=201&type=chunk) - A critical audit matter identified was the **provision for income taxes**, requiring significant auditor effort and specialized skill due to the complexity of management's estimates and judgments regarding unrecognized tax benefits and valuation allowances[208](index=208&type=chunk)[209](index=209&type=chunk) Consolidated Statements of Income (in thousands) | Year ended June 30 | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Sales | $1,966,845 | $2,046,899 | $2,078,184 | | Cost of goods sold | 1,368,775 | 1,419,806 | 1,431,745 | | Gross profit | 598,070 | 627,093 | 646,439 | | Operating expense | 430,835 | 433,161 | 437,292 | | Restructuring and other charges, net | 11,813 | 12,152 | 4,106 | | Loss on divestiture | 1,512 | — | — | | Amortization of intangibles | 10,787 | 11,557 | 12,624 | | Operating income | 143,123 | 170,223 | 192,417 | | Interest expense | 24,930 | 26,472 | 28,496 | | Other (income) expense, net | (13,811) | (699) | 4,300 | | Income before income taxes | 132,004 | 144,450 | 159,621 | | Provision for income taxes | 33,296 | 30,809 | 36,255 | | Net income | 98,708 | 113,641 | 123,366 | | Less: Net income attributable to noncontrolling interests | 5,583 | 4,318 | 4,907 | | Net income attributable to Kennametal | $93,125 | $109,323 | $118,459 | | Basic earnings per share | $1.21 | $1.38 | $1.47 | | Diluted earnings per share | $1.20 | $1.37 | $1.46 | Consolidated Balance Sheets (in thousands) | As of June 30 | 2025 | 2024 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $140,540 | $127,971 | | Accounts receivable, net | 295,401 | 302,810 | | Inventories | 538,237 | 514,632 | | Total current assets | 1,039,270 | 1,002,592 | | Property, plant and equipment, net | 919,914 | 938,063 | | Goodwill | 282,726 | 271,567 | | Other intangible assets, net | 67,209 | 81,421 | | Total assets | $2,545,412 | $2,503,758 | | **LIABILITIES** | | | | Total current liabilities | 422,329 | 415,961 | | Long-term debt, less current maturities | 596,788 | 595,980 | | Total liabilities | 1,220,764 | 1,215,159 | | **EQUITY** | | | | Total Kennametal Shareholders' Equity | 1,283,979 | 1,249,875 | | Total equity | 1,324,648 | 1,288,599 | | Total liabilities and equity | $2,545,412 | $2,503,758 | Consolidated Statements of Cash Flows (in thousands) | Year ended June 30 | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Net cash flow provided by operating activities | $208,324 | $277,108 | $257,945 | | Net cash flow used for investing activities | (61,825) | (109,426) | (89,230) | | Net cash flow used for financing activities | (133,919) | (141,747) | (143,108) | | Net increase in cash and cash equivalents | 12,569 | 21,950 | 20,435 | | Cash and cash equivalents, end of year | $140,540 | $127,971 | $106,021 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=68&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with its accountants - There were no changes in or disagreements with accountants on accounting and financial disclosure[349](index=349&type=chunk) [Controls and Procedures](index=68&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls over financial reporting were effective as of June 30, 2025 - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were **effective as of June 30, 2025**, providing reasonable assurance for timely and accurate financial reporting[350](index=350&type=chunk) - The effectiveness of internal control over financial reporting was audited by PricewaterhouseCoopers LLP and affirmed by management[350](index=350&type=chunk) - No material changes in internal control over financial reporting occurred during the fourth quarter of 2025[350](index=350&type=chunk) [Other Information](index=68&type=section&id=Item%209B.%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements in the quarter ended June 30, 2025[351](index=351&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=68&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable[352](index=352&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=69&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section provides information on executive officers and corporate governance, with key appointments made in 2024 and 2025 - Sanjay Chowbey serves as **President and Chief Executive Officer** since June 2024[353](index=353&type=chunk) - Dave Bersaglini was appointed **Vice President and President, Metal Cutting Business Segment** in August 2024[355](index=355&type=chunk) - Faisal Hamadi became **Vice President and President, Infrastructure Business Segment** in January 2025[356](index=356&type=chunk) - The Audit Committee, composed of Steven H. Wunning (Chair), Shelley Bausch, Douglas T. Dietrich, Sagar A. Patel, and Paul Sternlieb, oversees corporate governance[363](index=363&type=chunk) - The company has an insider trading policy designed to promote compliance with insider trading laws and NYSE listing standards[362](index=362&type=chunk) [Executive Compensation](index=70&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the 2025 Proxy Statement - Executive compensation details, including Compensation Discussion and Analysis, Executive Compensation Tables, and information on retirement programs, are incorporated by reference from the 2025 Proxy Statement[364](index=364&type=chunk) - Information on Board of Directors compensation and benefits is also incorporated by reference[364](index=364&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=70&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Details on equity compensation plans and security ownership are incorporated by reference from the 2025 Proxy Statement - Information on equity compensation plans and security ownership of beneficial owners, management, and directors is incorporated by reference from the 2025 Proxy Statement[365](index=365&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=70&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related person transactions and director independence is incorporated by reference from the 2025 Proxy Statement - Information on related person transactions, executive compensation, and director independence is incorporated by reference from the 2025 Proxy Statement[366](index=366&type=chunk) [Principal Accounting Fees and Services](index=70&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Details on principal accountant fees and services are incorporated by reference from the 2025 Proxy Statement - Information on pre-approval policies for accounting fees and services, and details on principal accountant fees and services, is incorporated by reference from the 2025 Proxy Statement[367](index=367&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=73&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all exhibits and financial statement schedules filed as part of the Form 10-K report - The report includes a schedule of **Valuation and Qualifying Accounts** for the years ended June 30, 2025, 2024, and 2023[372](index=372&type=chunk)[400](index=400&type=chunk) - Various corporate documents, indentures, and material contracts, including stock and incentive plans, are listed, with many incorporated by reference from prior SEC filings[373](index=373&type=chunk)[374](index=374&type=chunk)[375](index=375&type=chunk)[376](index=376&type=chunk)[377](index=377&type=chunk)[378](index=378&type=chunk)[379](index=379&type=chunk)[380](index=380&type=chunk)[381](index=381&type=chunk)[382](index=382&type=chunk)[383](index=383&type=chunk)[384](index=384&type=chunk)[385](index=385&type=chunk)[386](index=386&type=chunk)[387](index=387&type=chunk)[388](index=388&type=chunk)[389](index=389&type=chunk)[390](index=390&type=chunk)[391](index=391&type=chunk)[392](index=392&type=chunk)[393](index=393&type=chunk)[394](index=394&type=chunk)[395](index=395&type=chunk)[396](index=396&type=chunk) - Certifications by the President and CEO, Sanjay Chowbey, and the Vice President Finance and CFO, Patrick S. Watson, are filed as exhibits[396](index=396&type=chunk)[397](index=397&type=chunk) - XBRL (Extensible Business Reporting Language) instance documents for financial statements are attached as Exhibit 101[398](index=398&type=chunk) [Form 10-K Summary](index=78&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company did not include a Form 10-K Summary in this report - No Form 10-K Summary is provided[401](index=401&type=chunk)

[FORM 10-Q General Information](index=1&type=section&id=FORM%2010-Q%20General%20Information) This section provides essential identification details for Atlantic American Corporation's Quarterly Report on Form 10-Q, including stock listing, filing status, and common stock outstanding [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides the essential identification details for Atlantic American Corporation's Quarterly Report on Form 10-Q for the period ended June 30, 2025, including its stock listing, filing status, and common stock outstanding - Registrant: ATLANTIC AMERICAN CORPORATION, incorporated in Georgia, with IRS Employer Identification No. **58-1027114**[2](index=2&type=chunk) Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common Stock, par value $1.00 per share | AAME | NASDAQ Global Market | - The registrant is a Non-accelerated filer and a Smaller reporting company[4](index=4&type=chunk) - Total number of Common Stock shares outstanding on July 31, 2025, was **20,397,228**[4](index=4&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section outlines the inherent risks and uncertainties associated with forward-looking statements, emphasizing that actual results may differ materially and the Company disclaims any obligation to update them [Disclaimer on Forward-Looking Statements](index=3&type=section&id=Disclaimer%20on%20Forward-Looking%20Statements) The report contains forward-looking statements subject to various risks and uncertainties, including macroeconomic conditions, industry developments, and regulatory changes. Actual results may differ materially, and the Company disclaims any obligation to update these statements - Forward-looking statements are subject to inherent risks and uncertainties, many beyond the Company's control, and actual results may differ materially[9](index=9&type=chunk) - Key risk factors include macroeconomic conditions, health care/insurance industry developments, financial market disruptions, claim rate increases, internal control weaknesses, reinsurance performance, and regulatory changes[9](index=9&type=chunk) - The Company undertakes no obligation to publicly update any forward-looking statements, except as required by law[9](index=9&type=chunk) [Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) This part presents Atlantic American Corporation's unaudited condensed consolidated financial statements and management's discussion and analysis for the period ended June 30, 2025 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Atlantic American Corporation, including balance sheets, statements of operations, comprehensive income (loss), shareholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial items [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the Company's financial position, detailing assets, liabilities, and shareholders' equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheet Highlights (In thousands) | Metric | June 30, 2025 | December 31, 2024 | Change (2025 vs 2024) | | :------------------------------------ | :------------ | :---------------- | :-------------------- | | Total assets | $429,339 | $393,428 | +$35,911 | | Cash and cash equivalents | $46,423 | $35,570 | +$10,853 | | Total investments | $233,859 | $230,126 | +$3,733 | | Insurance premiums and other receivables | $50,242 | $27,458 | +$22,784 | | Total liabilities | $323,171 | $293,815 | +$29,356 | | Total insurance reserves and policyholder funds | $255,513 | $225,106 | +$30,407 | | Total shareholders' equity | $106,168 | $99,613 | +$6,555 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the Company's financial performance, reporting revenues, benefits, expenses, and net income (loss) for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations Highlights (In thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $55,290 | $47,668 | $105,415 | $94,665 | | Total benefits and expenses | $51,074 | $48,517 | $100,164 | $98,020 | | Income (loss) before income taxes | $4,216 | $(849) | $5,251 | $(3,355) | | Net income (loss) | $3,316 | $(684) | $4,118 | $(2,682) | | Net income (loss) applicable to common shareholders | $3,216 | $(784) | $3,919 | $(2,881) | | Earnings (loss) per common share (basic) | $0.16 | $(0.04) | $0.19 | $(0.14) | | Earnings (loss) per common share (diluted) | $0.15 | $(0.04) | $0.19 | $(0.14) | - Total revenue increased by **$7.6 million (15.9%)** for the three months ended June 30, 2025, and by **$10.75 million (11.4%)** for the six months ended June 30, 2025, compared to the prior year periods[15](index=15&type=chunk) - The Company reported a net income of **$3.316 million** for the three months ended June 30, 2025, a significant improvement from a net loss of **$0.684 million** in the prior year period[15](index=15&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section presents the Company's comprehensive income (loss), including net income and other comprehensive income (loss), for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $3,316 | $(684) | $4,118 | $(2,682) | | Total other comprehensive income (loss), net of tax | $567 | $(1,348) | $3,045 | $(3,314) | | Total comprehensive income (loss) | $3,883 | $(2,032) | $7,163 | $(5,996) | - Total comprehensive income for the six months ended June 30, 2025, was **$7.163 million**, a substantial increase from a loss of $5.996 million in the comparable prior year period, driven by improved net income and positive other comprehensive income[18](index=18&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This section details changes in shareholders' equity, including retained earnings, accumulated other comprehensive loss, and common stock transactions, for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Shareholders' Equity Highlights (In thousands) | Metric | Balance, beginning of period (Six Months Ended June 30, 2025) | Balance, end of period (Six Months Ended June 30, 2025) | Balance, beginning of period (Six Months Ended June 30, 2024) | Balance, end of period (Six Months Ended June 30, 2024) | | :------------------------------------ | :---------------------------------------------------------- | :-------------------------------------------------------- | :---------------------------------------------------------- | :-------------------------------------------------------- | | Retained earnings | $45,854 | $49,366 | $50,929 | $47,641 | | Accumulated other comprehensive loss | $(18,712) | $(15,667) | $(16,121) | $(19,435) | | Total shareholders' equity | $99,613 | $106,168 | $100,672 | $100,672 | | Dividends declared on common stock per share | $0.02 | $0.02 | $0.02 | $0.02 | | Common shares outstanding (end of period) | 20,399,758 | 20,397,228 | 20,402,288 | 20,399,758 | - Total shareholders' equity increased by **$6.555 million** from December 31, 2024, to June 30, 2025, primarily due to net income and an improvement in accumulated other comprehensive loss[13](index=13&type=chunk)[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the Company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows Highlights (In thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $8,556 | $(4,903) | | Net cash provided by (used in) investing activities | $2,708 | $(2,771) | | Net cash (used in) provided by financing activities | $(411) | $586 | | Net increase (decrease) in cash and cash equivalents | $10,853 | $(7,088) | | Cash and cash equivalents at end of period | $46,423 | $21,213 | - Net cash provided by operating activities significantly improved to **$8.556 million** for the six months ended June 30, 2025, compared to a net cash used of **$4.903 million** in the prior year, driven by net income and an increase in insurance reserves[22](index=22&type=chunk) - Cash and cash equivalents increased by **$10.853 million**, reaching **$46.423 million** at June 30, 2025, primarily due to positive cash flows from operating and investing activities[22](index=22&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide essential context and detail for the unaudited condensed consolidated financial statements, covering the basis of presentation, significant accounting policies, recent accounting standards, and specific financial instrument details, credit loss allowances, software capitalization, insurance reserves, credit arrangements, earnings per share, income taxes, leases, commitments, and segment information [Note 1. Basis of Presentation and Significant Accounting Policies](index=9&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) This note describes the basis of financial statement preparation, key accounting policies, and the Company's operating subsidiaries - The Company's primary operating subsidiaries are American Southern Insurance Company (property and casualty) and Bankers Fidelity Life Insurance Company (life and health)[23](index=23&type=chunk) - Financial statements are prepared in accordance with GAAP for interim financial information, with all adjustments considered necessary for fair presentation[23](index=23&type=chunk) - The One Big Beautiful Bill Act of 2025 (OBBBA), enacted July 4, 2025, is not expected to have a material impact on the Company's financials[25](index=25&type=chunk) [Note 2. Recently Issued Accounting Standards](index=9&type=section&id=Note%202.%20Recently%20Issued%20Accounting%20Standards) This note discusses the impact and expected adoption of new accounting standards, particularly ASU No. 2018-12, on the Company's financial statements - ASU No. 2018-12, 'Targeted Improvements to the Accounting for Long-Duration Contracts,' is effective for annual periods beginning after December 15, 2024, and interim periods beginning after December 15, 2025[26](index=26&type=chunk) - The Company expects its Life, Medicare supplement, and certain individual Accident and Health products to be within the scope of ASU 2018-12[26](index=26&type=chunk) - The Company has completed actuarial model development and is testing, expecting a **material impact** on consolidated financial statements upon adoption using the modified retrospective method[26](index=26&type=chunk) [Note 3. Investments](index=11&type=section&id=Note%203.%20Investments) This note provides detailed information on the Company's investment portfolio, including fixed maturities, equity securities, and unrealized gains/losses Fixed Maturities at Fair Value (In thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------------------------- | :------------ | :---------------- | | U.S. Treasury securities and obligations of U.S. Government agencies and authorities | $24,251 | $22,251 | | Loan backed and structured securities | $22,209 | $22,290 | | Obligations of states and political subdivisions | $7,318 | $7,623 | | Corporate securities | $159,339 | $160,261 | | Redeemable preferred stocks | $206 | $187 | | Total fixed maturities | $213,323 | $212,612 | Equity Securities at Fair Value (In thousands) | Category | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Financial services | $1,240 | $1,149 | | Communications | $10,040 | $6,751 | | Total equity securities | $11,280 | $7,900 | - Unrealized losses on fixed maturity securities are primarily due to general market changes in interest rates and credit spreads, not specific credit concerns, and the Company does not intend to sell these before recovery of amortized cost[35](index=35&type=chunk)[38](index=38&type=chunk) - Net realized investment gains were **$16 thousand** for both the three and six months ended June 30, 2025, consistent with the prior year periods[41](index=41&type=chunk)[42](index=42&type=chunk) - The Company holds passive interests in Variable Interest Entities (VIEs) totaling **$7.562 million** as of June 30, 2025, with maximum loss exposure limited to carrying value and outstanding commitments of **$2.2 million**[44](index=44&type=chunk)[45](index=45&type=chunk) [Note 4. Fair Values of Financial Instruments](index=15&type=section&id=Note%204.%20Fair%20Values%20of%20Financial%20Instruments) This note outlines the fair value hierarchy and categorization of financial instruments, detailing their measurement at fair value - The Company categorizes financial instruments measured at fair value into a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) Financial Instruments Carried at Fair Value (In thousands) | Asset Category | Level 1 (June 30, 2025) | Level 2 (June 30, 2025) | Level 3 (June 30, 2025) | Total (June 30, 2025) | | :--------------- | :---------------------- | :---------------------- | :---------------------- | :-------------------- | | Fixed maturities | $— | $213,323 | $— | $213,323 | | Equity securities | $11,087 | $— | $193 | $11,280 | | Cash equivalents | $28,421 | $— | $— | $28,421 | | Total | $39,508 | $213,323 | $193 | $253,024 | - The Company had no transfers into or out of Level 3 for the six months ended June 30, 2025, or the year ended December 31, 2024[51](index=51&type=chunk) [Note 5. Allowance for Expected Credit Losses](index=18&type=section&id=Note%205.%20Allowance%20for%20Expected%20Credit%20Losses) This note details the allowances for expected credit losses on reinsurance recoverables and insurance premiums and other receivables Reinsurance Recoverables Allowance for Expected Credit Losses (In thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Balance, beginning of period | $51 | $61 | | Current period change for expected credit losses | $(8) | $(7) | | Balance, end of period | $43 | $54 | Insurance Premiums and Other Receivables Allowance for Expected Credit Losses (In thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- |\n| Balance, beginning of period | $201 | $217 | | Current period change for expected credit losses | $(7) | $2 | | Balance, end of period | $194 | $219 | [Note 6. Internal-Use Software](index=20&type=section&id=Note%206.%20Internal-Use%20Software) This note describes the capitalization of internal-use software implementation costs and the expected timing of amortization - The Company renewed a cloud-based software service (SaaS) hosting arrangement in March 2024 for an additional five years[56](index=56&type=chunk) - Capitalized implementation costs for the software totaled **$4.714 million** as of June 30, 2025, with **$39 thousand** incurred during the six months ended June 30, 2025[57](index=57&type=chunk) - Amortization expense has not yet been recorded as the software is expected to be substantially ready for its intended use in the second half of 2025[57](index=57&type=chunk) [Note 7. Insurance Reserves for Losses and Claims](index=20&type=section&id=Note%207.%20Insurance%20Reserves%20for%20Losses%20and%20Claims) This note provides a roll-forward of insurance reserves for losses and claims, detailing incurred and paid amounts and prior accident year development Roll-forward of Insurance Reserves for Losses and Claims (In thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Beginning insurance reserves for losses and claims, net | $76,317 | $72,800 | | Total incurred | $60,803 | $59,680 | | Total paid | $52,313 | $59,421 | | Ending insurance reserves for losses and claims, net | $84,807 | $73,059 | | Ending insurance reserves for losses and claims, gross | $101,759 | $90,624 | - Prior accident year development was **favorable by $2.543 million** for the six months ended June 30, 2025, primarily due to the Medicare supplement line of business, partially offset by unfavorable development in automobile liability[58](index=58&type=chunk) - Total insurance benefits and losses incurred increased to **$65.560 million** for the six months ended June 30, 2025, from **$63.732 million** in the prior year[58](index=58&type=chunk) [Note 8. Credit Arrangements](index=21&type=section&id=Note%208.%20Credit%20Arrangements) This note details the Company's credit facilities, including the revolving credit agreement and junior subordinated debentures, and their associated terms - The Revolving Credit Agreement with Truist Bank was amended in March 2024, extending maturity to March 22, 2027, and updating interest rates to Adjusted Term SOFR plus 2.00%[59](index=59&type=chunk) - Outstanding borrowings under the revolving credit facility were **$4.021 million** as of June 30, 2025, with an effective interest rate of **6.43%**[60](index=60&type=chunk)[61](index=61&type=chunk) - Junior Subordinated Debentures totaling **$33.738 million** mature in 2032 and 2033, with interest rates based on 3-month SOFR plus applicable tenor spread and margin (effective rate **8.64%** at June 30, 2025)[63](index=63&type=chunk)[64](index=64&type=chunk) [Note 9. Earnings (Loss) Per Common Share](index=23&type=section&id=Note%209.%20Earnings%20(Loss)%20Per%20Common%20Share) This note presents the calculation of basic and diluted earnings (loss) per common share for the reported periods Earnings (Loss) Per Common Share (Six Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------ | :--- | :--- | | Net income (loss) applicable to common shareholders (in thousands) | $3,919 | $(2,881) | | Weighted average shares (in thousands) | 20,398 | 20,401 | | Basic EPS | $0.19 | $(0.14) | | Diluted EPS | $0.19 | $(0.14) | - The assumed conversion of Series D preferred stock was excluded from EPS calculation for the three and six months ended June 30, 2024, due to its antidilutive impact[69](index=69&type=chunk) [Note 10. Income Taxes](index=24&type=section&id=Note%2010.%20Income%20Taxes) This note details the Company's income tax expense (benefit), including federal tax provision and current/deferred components Income Tax Expense (Benefit) (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Federal income tax provision at statutory rate of 21% | $886 | $(179) | $1,103 | $(705) | | Income tax expense (benefit) | $900 | $(165) | $1,133 | $(673) | | Current – Federal | $273 | $— | $273 | $— | | Deferred – Federal | $627 | $(165) | $860 | $(673) | - The Company recorded an income tax expense of **$1.133 million** for the six months ended June 30, 2025, a significant change from a benefit of **$0.673 million** in the prior year[70](index=70&type=chunk) [Note 11. Leases](index=24&type=section&id=Note%2011.%20Leases) This note provides information on the Company's operating lease agreements, lease expense, and related right-of-use assets and liabilities - The Company has two operating lease agreements for office space, with one amended in December 2024 to increase base rent and provide for future adjustments[71](index=71&type=chunk) - Lease expense for the six months ended June 30, 2025, was **$569 thousand**, up from **$507 thousand** in the prior year[73](index=73&type=chunk) Lease Information (Six Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------ | :--------- | :--------- | | Right-of-use assets (in thousands) | $4,880 | $2,196 | | Weighted average discount rate | 7.9% | 6.8% | | Weighted average remaining lease term | 7.4 years | 2.4 years | - Total undiscounted lease payments amount to **$7.203 million**, resulting in an operating lease liability of **$4.983 million** as of June 30, 2025[74](index=74&type=chunk) [Note 12. Commitments and Contingencies](index=25&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) This note addresses the Company's commitments and contingencies, including litigation and regulatory matters - Management believes that current litigation and regulatory matters are not expected to have a **material effect** on the Company's financial condition or results of operations[75](index=75&type=chunk)[76](index=76&type=chunk) [Note 13. Segment Information](index=25&type=section&id=Note%2013.%20Segment%20Information) This note provides financial information by operating segment, including assets, revenue, and income (loss) before income taxes - The Company operates in two principal business units: American Southern (property and casualty) and Bankers Fidelity (life and health), each evaluated on individual performance[77](index=77&type=chunk) - The Chief Operating Decision Maker (CODM) reviews income (loss) before income taxes to assess segment profitability, with significant expenses including insurance benefits and losses incurred, and commissions and underwriting[78](index=78&type=chunk) Segment Assets (In thousands) | Segment | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | American Southern | $174,390 | $147,214 | | Bankers Fidelity | $222,696 | $210,819 | Segment Revenue (In thousands) | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | American Southern | $41,653 | $37,384 | | Bankers Fidelity | $63,590 | $57,374 | | Corporate, Other and Eliminations | $172 | $(93) | | Total revenue | $105,415 | $94,665 | Segment Income (Loss) Before Income Taxes (In thousands) | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | American Southern | $1,560 | $2,258 | | Bankers Fidelity | $8,307 | $(92) | | Corporate, Other and Eliminations | $(4,616) | $(5,521) | | Total income (loss) before income taxes | $5,251 | $(3,355) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance and condition for the three and six months ended June 30, 2025, highlighting key revenue and expense drivers, segment-specific results, investment performance, and liquidity. It also includes a reconciliation of GAAP net income to non-GAAP operating income [Overview](index=28&type=section&id=Overview) This section provides an overview of Atlantic American Corporation's business structure and operating subsidiaries - Atlantic American Corporation is an insurance holding company operating through American Southern (property and casualty) and Bankers Fidelity (life and health) subsidiaries[84](index=84&type=chunk) - Each operating company is managed separately, offers different products, and is evaluated on its individual performance[84](index=84&type=chunk) [Critical Accounting Policies](index=28&type=section&id=Critical%20Accounting%20Policies) This section discusses the critical accounting policies and estimates used in preparing the financial statements - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts and disclosures[85](index=85&type=chunk) - Critical accounting policies are consistent with those disclosed in the 2024 Annual Report, except as noted in Note 1 of the Condensed Consolidated Financial Statements[85](index=85&type=chunk) [Overall Corporate Results](index=28&type=section&id=Overall%20Corporate%20Results) This section summarizes the Company's overall financial performance, including total revenue, net income, and non-GAAP operating income Overall Corporate Financial Results (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $55,290 | $47,668 | $105,415 | $94,665 | | Net income (loss) | $3,316 | $(684) | $4,118 | $(2,682) | | Non-GAAP operating income (loss) | $1,591 | $(1,105) | $1,859 | $(3,497) | - Net income for the three months ended June 30, 2025, was **$3.3 million** (**$0.15 diluted EPS**), a significant improvement from a net loss of **$0.7 million** (**$0.04 diluted EPS**) in the prior year[88](index=88&type=chunk) - Premium revenue increased by **$5.2 million (11.5%)** for the three months and **$7.5 million (8.4%)** for the six months ended June 30, 2025, driven by growth in inland marine, automobile physical damage, Medicare supplement, and group accident and health lines[89](index=89&type=chunk) - Operating income increased by **$2.7 million** for the three months and **$5.4 million** for the six months ended June 30, 2025, primarily due to increased premium revenue in key business lines[90](index=90&type=chunk) [American Southern Segment Analysis](index=30&type=section&id=American%20Southern%20Segment%20Analysis) This section analyzes the underwriting performance of the American Southern segment, including premiums, loss ratio, and expense ratio American Southern Underwriting Performance (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross written premiums | $52,285 | $36,499 | $61,621 | $44,969 | | Net earned premiums | $21,141 | $17,544 | $39,472 | $35,422 | | Underwriting income (loss) | $(216) | $(231) | $(621) | $296 | | Loss ratio | 75.7% | 81.1% | 77.5% | 76.3% | | Expense ratio | 25.3% | 20.2% | 24.0% | 22.8% | | Combined ratio | 101.0% | 101.3% | 101.5% | 99.1% | - Gross written premiums increased significantly by **43.3%** for the three months and **37.0%** for the six months ended June 30, 2025, driven by growth in automobile liability, inland marine, and automobile physical damage lines[93](index=93&type=chunk) - Net earned premiums increased by **20.5%** for the three months and **11.4%** for the six months ended June 30, 2025, primarily due to inland marine and automobile liability/physical damage[95](index=95&type=chunk) - The loss ratio decreased to **75.7%** for the three months ended June 30, 2025, due to premium growth exceeding incurred losses, but increased to **77.5%** for the six months due to higher losses in automobile physical damage and inland marine[97](index=97&type=chunk) - The expense ratio increased for both periods, primarily due to higher variable commissions resulting from favorable loss experience[98](index=98&type=chunk) [Bankers Fidelity Segment Analysis](index=33&type=section&id=Bankers%20Fidelity%20Segment%20Analysis) This section analyzes the underwriting performance of the Bankers Fidelity segment, including premiums, loss ratio, and expense ratio Bankers Fidelity Underwriting Performance (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross earned premiums | $43,774 | $40,554 | $86,418 | $80,357 | | Net earned premiums | $29,005 | $27,449 | $57,587 | $54,123 | | Underwriting income (loss) | $1,783 | $(560) | $2,304 | $(3,344) | | Loss ratio | 60.8% | 64.0% | 60.7% | 67.8% | | Expense ratio | 33.1% | 38.0% | 35.3% | 38.4% | | Combined ratio | 93.9% | 102.0% | 96.0% | 106.2% | - Gross earned premiums increased by **7.9%** for the three months and **7.5%** for the six months ended June 30, 2025, driven by new business in Medicare supplement and group accident and health[99](index=99&type=chunk) - Net earned premiums increased by **5.7%** for the three months and **6.4%** for the six months ended June 30, 2025, primarily from Medicare supplement, group accident and health, and other individual accident and health lines[101](index=101&type=chunk) - The loss ratio decreased for both periods (**60.8%** and **60.7%** respectively), primarily due to lower utilization within the Medicare supplement line of business[102](index=102&type=chunk) - The expense ratio decreased for both periods (**33.1%** and **35.3%** respectively), mainly due to premium growth coupled with lower variable expenses in group lines of business[103](index=103&type=chunk)[104](index=104&type=chunk) [Net Investment Income and Realized Gains](index=35&type=section&id=Net%20Investment%20Income%20and%20Realized%20Gains) This section details changes in net investment income and realized investment gains for the reported periods - Net investment income increased by **$0.1 million (4.1%)** for the three months ended June 30, 2025, primarily due to increased equity in earnings from limited partnerships and limited liability companies[105](index=105&type=chunk) - Net realized investment gains were **less than $0.1 million** for both the three and six months ended June 30, 2025, consistent with prior periods, resulting from sales and redemptions of fixed maturity securities[106](index=106&type=chunk) [Unrealized Gains on Equity Securities](index=35&type=section&id=Unrealized%20Gains%20on%20Equity%20Securities) This section discusses the recognition of net unrealized gains on equity securities due to market value fluctuations - The Company recognized net unrealized gains on equity securities of **$2.6 million** for the three months and **$3.4 million** for the six months ended June 30, 2025, significantly higher than the prior year periods[107](index=107&type=chunk) - These gains are attributed to fluctuations in the market value of the Company's equity securities[107](index=107&type=chunk) [Interest Expense](index=35&type=section&id=Interest%20Expense) This section explains the changes in interest expense related to the Company's credit arrangements - Interest expense decreased by **$0.1 million (10.8%)** for the three months and **$0.2 million (10.2%)** for the six months ended June 30, 2025[108](index=108&type=chunk) - The decrease is primarily due to changes in the Secured Overnight Financing Rate (SOFR), which is the reference rate for the Company's junior subordinated debentures and revolving credit facility[108](index=108&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the Company's liquidity position, cash needs, funding sources, and capital resources - Primary cash needs are for claims, operating expenses, statutory capital, and debt service, funded by premiums, investment income, and asset sales[109](index=109&type=chunk) - The Parent's cash flows are derived from dividends, management fees, and tax-sharing payments from subsidiaries[110](index=110&type=chunk) - Statutory net income for insurance subsidiaries was **$4.7 million** for the six months ended June 30, 2025, compared to a **$0.4 million loss** in the prior year[111](index=111&type=chunk) - The Parent received **$4.2 million** in dividends from subsidiaries through June 30, 2025, with dividend payments in excess of **$6.3 million** requiring prior approval in 2025[112](index=112&type=chunk) - Cash and cash equivalents increased from **$35.6 million** at December 31, 2024, to **$46.4 million** at June 30, 2025, primarily due to **$8.6 million** from operating activities and **$2.7 million** from investing activities[120](index=120&type=chunk) - The Company believes existing cash, subsidiary payments, and credit facilities will meet liquidity requirements for the foreseeable future[121](index=121&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of disclosure controls and procedures, remediation efforts for material weaknesses, and inherent limitations of internal controls [Evaluation of Disclosure Controls and Procedures](index=39&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were not effective as of June 30, 2025, due to an unremediated material weakness in internal control over financial reporting - Disclosure controls and procedures were deemed **not effective** as of June 30, 2025, due to an unremediated material weakness[124](index=124&type=chunk) [Remediation of Material Weakness in Internal Control Over Financial Reporting](index=39&type=section&id=Remediation%20of%20Material%20Weakness%20in%20Internal%20Control%20Over%20Financial%20Reporting) The Company is actively remediating a material weakness related to the design of controls for reviewing insurance reserves and deferred acquisition costs within its life and health segment. Significant progress has been made, including independent calculations and system development, with full implementation expected by September 30, 2025 - A material weakness was identified in the design of controls for reviewing insurance reserves and deferred acquisition costs in the life and health segment[126](index=126&type=chunk) - Remediation efforts are ongoing, including systematic review of underwriting income components and independent actuarial value calculations for Life and Medicare Supplement products[128](index=128&type=chunk) - A system to perform independent calculations and verify product parameters is being developed, with implementation for individual life and Medicare Supplement products completed in Q2 2025, and full operationalization for other product lines expected by **September 30, 2025**[129](index=129&type=chunk) - Despite deficiencies, management believes the material weakness did not result in any identified material misstatements to financial statements[127](index=127&type=chunk) [Changes in Internal Control Over Financial Reporting](index=40&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) Aside from the ongoing remediation efforts for the identified material weakness, there were no other material changes to the Company's internal control over financial reporting during the quarter ended June 30, 2025 - No other changes in internal control over financial reporting materially affected or are reasonably likely to materially affect the Company's internal control during the quarter ended June 30, 2025, beyond the described remediation efforts[130](index=130&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=40&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) The Company acknowledges that no system of controls can provide absolute assurance of meeting objectives or detecting all control issues and fraud, due to inherent limitations - No system of controls, regardless of design, can provide absolute assurance that all objectives are met or that all control issues and fraud are detected[131](index=131&type=chunk) [Part II. Other Information](index=41&type=section&id=Part%20II.%20Other%20Information) This part includes information on unregistered sales of equity securities, other disclosures, and a list of exhibits filed with the Form 10-Q [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company has an approved share repurchase plan, but no common stock was repurchased during the three months ended June 30, 2025 - The Board of Directors approved a plan on October 31, 2016, to repurchase up to **750,000 shares** of common stock[133](index=133&type=chunk) - No common stock was purchased under the Repurchase Plan during the three months ended June 30, 2025[134](index=134&type=chunk)[135](index=135&type=chunk) - As of June 30, 2025, **325,129 shares** may yet be purchased under the Repurchase Plan[134](index=134&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 trading arrangements were adopted or terminated by the Company's directors or officers during the quarter ended June 30, 2025 - None of the Company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[136](index=136&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications required by the Sarbanes-Oxley Act and Inline XBRL documents - Exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32.1) and various Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[137](index=137&type=chunk) [Signatures](index=42&type=section&id=Signatures) This section contains the authorized signatures for the Form 10-Q report [Authorized Signatures](index=42&type=section&id=Authorized%20Signatures) The report is duly signed on behalf of Atlantic American Corporation by its Vice President and Chief Financial Officer, J. Ross Franklin - The report was signed on **August 12, 2025**, by J. Ross Franklin, Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) of Atlantic American Corporation[139](index=139&type=chunk)[140](index=140&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the quarterly period ended June 30, 2025 Washington, DC 20549 Form 10-Q 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 000-09587 ELECTRO-SENSORS, INC. ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Exact name of registrant as specified in its charter) Minnesota 41-0943459 (State or other jurisdic ...