PART I—FINANCIAL INFORMATION [Item 1. Unaudited Condensed Consolidated Financial Statements](index=6&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Advent Technologies Holdings, Inc. presents its unaudited condensed consolidated financial statements, highlighting significant net loss, negative working capital, and a going concern warning [Unaudited Condensed Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) | Metric | June 30, 2025 (Unaudited, in thousands of US dollars) | December 31, 2024 (in thousands of US dollars) | | :-------------------------------- | :-------------------------- | :------------------ | | **ASSETS** | | | | Cash and cash equivalents | $75 | $381 | | Total current assets | $1,514 | $2,693 | | Total non-current assets | $5,176 | $5,314 | | **Total assets** | **$6,690** | **$8,007** | | **LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)** | | | | Total current liabilities | $29,362 | $28,772 | | Total non-current liabilities | $6,750 | $530 | | **Total liabilities** | **$36,112** | **$29,302** | | Total stockholders' equity/(deficit) | $(29,422) | $(21,295) | - The company's total assets decreased from **$8,007 thousand** at December 31, 2024, to **$6,690 thousand** at June 30, 2025; total liabilities increased from **$29,302 thousand** to **$36,112 thousand** over the same period, leading to a further deterioration in stockholders' equity from a deficit of **$(21,295) thousand** to **$(29,422) thousand**[16](index=16&type=chunk)[17](index=17&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | Three months ended June 30, 2025 (in thousands of US dollars) | Three months ended June 30, 2024 (in thousands of US dollars) | Six months ended June 30, 2025 (in thousands of US dollars) | Six months ended June 30, 2024 (in thousands of US dollars) | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue, net | $99 | $654 | $231 | $3,392 | | Gross loss | $(293) | $571 | $(473) | $2,832 | | Operating loss | $(2,925) | $2,673 | $(5,863) | $(1,692) | | Loss before income tax | $(3,797) | $(10,213) | $(7,070) | $(19,684) | | Net loss | $(3,797) | $(11,273) | $(7,071) | $(20,629) | | Basic loss per share | $(1.42) | $(4.28) | $(2.66) | $(7.91) | - For the three months ended June 30, 2025, net revenue significantly decreased to **$99 thousand** from **$654 thousand** in the prior year, resulting in a gross loss of **$(293) thousand** compared to a gross profit of **$571 thousand**; the net loss for the quarter was **$(3,797) thousand**, a substantial improvement from **$(11,273) thousand** in the same period last year, primarily due to the absence of large disposal/write-off losses seen in 2024[21](index=21&type=chunk) - For the six months ended June 30, 2025, net revenue was **$231 thousand**, down from **$3,392 thousand** in the prior year; the company reported a net loss of **$(7,071) thousand**, an improvement from **$(20,629) thousand** in the same period of 2024, largely influenced by reduced losses from discontinued operations and lower net gains/losses on asset disposals[21](index=21&type=chunk) [Unaudited Condensed Consolidated Statements of Comprehensive Loss](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) | Metric | Three months ended June 30, 2025 (in thousands of US dollars) | Three months ended June 30, 2024 (in thousands of US dollars) | Six months ended June 30, 2025 (in thousands of US dollars) | Six months ended June 30, 2024 (in thousands of US dollars) | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(3,797) | $(11,273) | $(7,071) | $(20,629) | | Foreign currency translation adjustment | $(1,100) | $50 | $(1,606) | $(57) | | Total other comprehensive loss | $(1,100) | $50 | $(1,606) | $(22) | | Comprehensive loss | $(4,897) | $(11,223) | $(8,677) | $(20,651) | - The company reported a comprehensive loss of **$(4,897) thousand** for the three months ended June 30, 2025, and **$(8,677) thousand** for the six months ended June 30, 2025, including significant foreign currency translation adjustments of **$(1,100) thousand** and **$(1,606) thousand** respectively[23](index=23&type=chunk) [Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity/(Deficit)](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%2F%28Deficit%29) | Metric | Balance as of Dec 31, 2024 (in thousands of US dollars) | Stock based compensation expense (6M 2025, in thousands of US dollars) | Net loss (6M 2025, in thousands of US dollars) | Other comprehensive loss (6M 2025, in thousands of US dollars) | Balance as of June 30, 2025 (in thousands of US dollars) | | :-------------------------------- | :------------------------- | :--------------------------------------- | :------------------- | :----------------------------------- | :-------------------------- | | Additional paid-in capital | $199,015 | $550 | - | - | $199,565 | | Accumulated deficit | $(220,153) | - | $(7,071) | - | $(227,224) | | Accumulated other comprehensive loss | $(157) | - | - | $(1,606) | $(1,763) | | Total stockholders' equity/(deficit) | $(21,295) | $550 | $(7,071) | $(1,606) | $(29,422) | - For the six months ended June 30, 2025, total stockholders' equity/(deficit) decreased from **$(21,295) thousand** to **$(29,422) thousand**, primarily driven by a net loss of **$(7,071) thousand** and other comprehensive loss of **$(1,606) thousand**, partially offset by **$550 thousand** in stock-based compensation expense[29](index=29&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=14&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity | Six months ended June 30, 2025 (in thousands of US dollars) | Six months ended June 30, 2024 (in thousands of US dollars) | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net Cash used in Operating Activities | $(1,159) | $(4,001) | | Net Cash provided by / (used in) Investing Activities | $(29) | $272 | | Net Cash provided by Financing Activities | $893 | $282 | | Net decrease in cash and cash equivalents | $(306) | $(3,730) | | Cash and cash equivalents at end of period | $75 | $682 | - For the six months ended June 30, 2025, net cash used in operating activities improved to **$(1,159) thousand** from **$(4,001) thousand** in the prior year; investing activities used **$(29) thousand**, a decrease from **$272 thousand** provided in 2024; financing activities provided **$893 thousand**, significantly higher than **$282 thousand** in 2024, primarily due to proceeds from borrowings[35](index=35&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=16&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Basis of presentation](index=16&type=section&id=1.%20Basis%20of%20presentation) - Advent Technologies Holdings, Inc. is an advanced materials and technology development company focused on fuel cell and hydrogen technology, developing and manufacturing Membrane Electrode Assembly (MEA) and fuel cell systems[37](index=37&type=chunk) - The Company's headquarters are in Livermore, California, with MEA and fuel cell product development facilities in Livermore, California, and Patras, Greece; facilities in Boston, Denmark, and the Philippines were closed or liquidated in 2024[38](index=38&type=chunk) - On July 25, 2024, Advent Technologies A/S and its subsidiary Advent Green Energy Philippines, Inc. were declared bankrupt and are presented as discontinued operations[46](index=46&type=chunk) - The Company has suffered recurring operating losses and has a negative net working capital position of **$27.8 million** as of June 30, 2025; management concluded substantial doubt exists regarding the Company's ability to continue as a going concern for one year, citing insufficient cash to fund operations and capital expenditures[51](index=51&type=chunk)[55](index=55&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=19&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - The Company operates in one reportable operating segment, with its Chief Executive Officer, Chief Technology Officer, Chief Operating Officer, and General Counsel jointly serving as the Chief Operating Decision-Maker (CODM)[58](index=58&type=chunk) - Advent SA provided a convertible bond loan of **€0.3 million** to Cyrus SA with an **8.00%** annual interest rate, classified as an available-for-sale financial asset and fully reserved as an expected credit loss as of June 30, 2025[62](index=62&type=chunk)[66](index=66&type=chunk) [Note 3. Related party disclosures](index=21&type=section&id=3.%20Related%20party%20disclosures) | Related Party | June 30, 2025 (Unaudited, in thousands of US dollars) | December 31, 2024 (in thousands of US dollars) | | :---------------- | :-------------------------- | :------------------ | | Vassilios Gregoriou | $130 | $125 | | Gary Herman | $44 | - | | Emory S. De Castro | $213 | $180 | | **Total Due to related parties** | **$387** | **$305** | - Outstanding balances due to executives and officers primarily relate to short-term promissory notes with a **5.00%** annual interest rate, due by August 31, 2026; Emory S. De Castro's balance also includes expenses paid on behalf of the Company[68](index=68&type=chunk)[69](index=69&type=chunk) [Note 4. Accounts receivable, net](index=21&type=section&id=4.%20Accounts%20receivable%2C%20net) | Metric | June 30, 2025 (Unaudited, in thousands of US dollars) | December 31, 2024 (in thousands of US dollars) | | :-------------------------------- | :-------------------------- | :------------------ | | Accounts receivable from third party customers | $2,056 | $2,799 | | Less: Allowance for credit losses | $(1,989) | $(1,837) | | **Accounts receivable, net** | **$67** | **$962** | - Net accounts receivable decreased significantly from **$962 thousand** at December 31, 2024, to **$67 thousand** at June 30, 2025, primarily due to an increase in the allowance for credit losses from **$(1,837) thousand** to **$(1,989) thousand**[71](index=71&type=chunk) [Note 5. Inventories](index=22&type=section&id=5.%20Inventories) | Metric | June 30, 2025 (Unaudited, in thousands of US dollars) | December 31, 2024 (in thousands of US dollars) | | :---------------------- | :-------------------------- | :------------------ | | Raw materials and supplies | $5,206 | $4,540 | | Finished goods | $50 | $229 | | Total | $5,256 | $4,769 | | Provision for inventory | $(5,256) | $(4,761) | | **Total Inventories** | **$0** | **$8** | - The provision for inventory increased from **$(4,761) thousand** at December 31, 2024, to **$(5,256) thousand** at June 30, 2025, resulting in a net inventory balance of **$0** at June 30, 2025, down from **$8 thousand**[72](index=72&type=chunk) [Note 6. Prepaid expenses and other current assets](index=22&type=section&id=6.%20Prepaid%20expenses%20and%20other%20current%20assets) | Metric | June 30, 2025 (Unaudited, in thousands of US dollars) | December 31, 2024 (in thousands of US dollars) | | :------------------------ | :-------------------------- | :------------------ | | Prepaid insurance expenses | $233 | $123 | | Prepaid research expenses | $164 | $255 | | Other prepaid expenses | $61 | $19 | | **Total Prepaid expenses** | **$458** | **$397** | | VAT receivable | $11 | $49 | | Grant receivable | $40 | $36 | | Other receivables | $246 | $237 | | **Total Other current assets** | **$297** | **$322** | - Prepaid expenses increased to **$458 thousand** at June 30, 2025, from **$397 thousand** at December 31, 2024, driven by higher prepaid insurance expenses; other current assets slightly decreased to **$297 thousand** from **$322 thousand**[73](index=73&type=chunk)[77](index=77&type=chunk) [Note 7. Intangible Assets](index=23&type=section&id=7.%20Intangible%20Assets) | Metric | June 30, 2025 (Unaudited, in thousands of US dollars) | December 31, 2024 (in thousands of US dollars) | | :---------------------- | :-------------------------- | :------------------ | | Gross Carrying Amount | $300 | $250 | | Accumulated Amortization | $(201) | $(165) | | **Net Carrying Amount** | **$99** | **$85** | - Net intangible assets, primarily software, increased to **$99 thousand** at June 30, 2025, from **$85 thousand** at December 31, 2024; amortization expense for intangible assets was **$7 thousand** for the three months ended June 30, 2025, and **$14 thousand** for the six months ended June 30, 2025[78](index=78&type=chunk)[80](index=80&type=chunk) [Note 8. Property, plant and equipment, net](index=24&type=section&id=8.%20Property%2C%20plant%20and%20equipment%2C%20net) | Metric | June 30, 2025 (Unaudited, in thousands of US dollars) | December 31, 2024 (in thousands of US dollars) | | :-------------------------------- | :-------------------------- | :------------------ | | Land, Buildings & Leasehold Improvements | $964 | $865 | | Machinery | $5,008 | $4,512 | | Equipment | $1,817 | $1,747 | | Less: accumulated depreciation | $(3,244) | $(102) | | Less: impairment | - | $(2,384) | | **Total Property, plant and equipment, net** | **$4,545** | **$4,638** | - Net property, plant and equipment decreased slightly to **$4,545 thousand** at June 30, 2025, from **$4,638 thousand** at December 31, 2024; this change reflects additions of **$5 thousand** for equipment in the six months ended June 30, 2025, and depreciation expense of **$0.4 million** for the same period[82](index=82&type=chunk)[83](index=83&type=chunk)[86](index=86&type=chunk) - During the three and six months ended June 30, 2024, the Company disposed of assets with an aggregate net book value of **$13.6 million** for net proceeds of **$0.9 million**, resulting in a loss of **$12.7 million**; this included a **$9.8 million** write-off of leasehold improvements and **$0.5 million** of furniture due to abandoning the Hood Park facility[84](index=84&type=chunk)[85](index=85&type=chunk) [Note 9. Other non-current assets](index=25&type=section&id=9.%20Other%20non-current%20assets) - Other non-current assets as of June 30, 2025, and December 31, 2024, remained stable at **$0.3 million**, primarily comprising advances to suppliers for fixed asset acquisition and guarantees to suppliers[87](index=87&type=chunk) [Note 10. Trade and other payables](index=25&type=section&id=10.%20Trade%20and%20other%20payables) - Trade and other payables increased to **$18.9 million** at June 30, 2025, from **$16.7 million** at December 31, 2024, reflecting higher balances due to suppliers and consulting service providers[88](index=88&type=chunk) [Note 11. Other current liabilities](index=25&type=section&id=11.%20Other%20current%20liabilities) | Metric | June 30, 2025 (Unaudited, in thousands of US dollars) | December 31, 2024 (in thousands of US dollars) | | :-------------------------- | :-------------------------- | :------------------ | | Accrued expenses | $320 | $388 | | Other short-term payables | $1,842 | $1,303 | | Taxes and duties payable | $302 | $330 | | Social security funds | $226 | $189 | | Fischer settlement – current liability | $411 | - | | **Total** | **$3,101** | **$2,210** | - Other current liabilities increased to **$3,101 thousand** at June 30, 2025, from **$2,210 thousand** at December 31, 2024, primarily due to higher other short-term payables and a new Fischer settlement current liability of **$411 thousand**[89](index=89&type=chunk) [Note 12. Leases](index=26&type=section&id=12.%20Leases) | Metric | June 30, 2025 (Unaudited, in thousands of US dollars) | December 31, 2024 (in thousands of US dollars) | | :---------------------- | :-------------------------- | :------------------ | | Right-of-use assets, net | $214 | $274 | | Operating lease liabilities (current) | $151 | $89 | | Long-term operating lease liabilities | $64 | $184 | | **Total discounted lease payments** | **$215** | **$273** | | Rental expense (3 months ended June 30) | $0.1 million | $0.2 million | | Rental expense (6 months ended June 30) | $0.1 million | $0.7 million | - Right-of-use assets and operating lease liabilities decreased from December 31, 2024, to June 30, 2025; rental expense for operating leases significantly decreased from **$0.7 million** to **$0.1 million** for the six months ended June 30, 2025, compared to the same period in 2024[93](index=93&type=chunk) [Note 13. Short-term loan payable](index=27&type=section&id=13.%20Short-term%20loan%20payable) - The Company entered into multiple short-term loan agreements with Agile Capital Funding, LLC, with the latest on June 20, 2025, for **$1.465 million**; this loan has an effective interest rate of **206%** per year and requires weekly payments through maturity on February 27, 2026[97](index=97&type=chunk) - These loans are collateralized by substantially all of the Company's assets, including goods, accounts, equipment, inventory, and intellectual property[98](index=98&type=chunk) [Note 14. Private Placement Warrants and Working Capital Warrants](index=28&type=section&id=14.%20Private%20Placement%20Warrants%20and%20Working%20Capital%20Warrants) - As of June 30, 2025, the Company had **65,671** Private Placement Warrants and Working Capital Warrants outstanding, each exercisable for one share of Common Stock at **$345.00** per share[100](index=100&type=chunk) - These warrants are classified as liabilities and are subject to re-measurement at fair value each reporting period, with changes recognized in the statement of operations, as they are not indexed to the issuer's common stock[102](index=102&type=chunk) [Note 15. Stockholders' Equity](index=28&type=section&id=15.%20Stockholders%27%20Equity) - As of June 30, 2025, the Company had **2,670,286** shares of common stock issued and outstanding, following the issuance of **33,778** common shares related to restricted stock unit vesting on April 14, 2025[104](index=104&type=chunk)[105](index=105&type=chunk) - A **1-for-30** reverse stock split was effective on May 13, 2024, converting existing shares and adjusting options, warrants, and convertible securities accordingly, without changing the authorized share count[106](index=106&type=chunk)[107](index=107&type=chunk)[109](index=109&type=chunk)[227](index=227&type=chunk) - The Company has an At The Market Offering Agreement to sell up to **$50 million** of common stock, with **56,349** shares sold during the six months ended June 30, 2024[110](index=110&type=chunk)[112](index=112&type=chunk) - Stock-based compensation expense for stock options and restricted stock units (RSUs) was **$0.2 million** and **$0.3 million**, respectively, for the six months ended June 30, 2025[120](index=120&type=chunk)[122](index=122&type=chunk) [Note 16. Revenue](index=32&type=section&id=16.%20Revenue) | Revenue Type | Three Months Ended June 30, 2025 (in thousands of US dollars) | Three Months Ended June 30, 2024 (in thousands of US dollars) | Six Months Ended June 30, 2025 (in thousands of US dollars) | Six Months Ended June 30, 2024 (in thousands of US dollars) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Sales of goods | $72 | $654 | $78 | $2,274 | | Sales of services | $27 | - | $153 | $1,118 | | **Total revenue from contracts with customers** | **$99** | **$654** | **$231** | **$3,392** | | Revenue recognized at a point in time | $72 | $654 | $78 | $2,274 | | Revenue recognized over time | $27 | - | $153 | $1,118 | - Total revenue from contracts with customers decreased significantly to **$99 thousand** for the three months ended June 30, 2025, from **$654 thousand** in the prior year, and to **$231 thousand** for the six months ended June 30, 2025, from **$3,392 thousand** in the prior year, primarily due to a decline in sales of goods[124](index=124&type=chunk) - Contract liabilities increased to **$3.7 million** at June 30, 2025, from **$3.2 million** at December 31, 2024, indicating payments received in advance of performance obligations being satisfied[125](index=125&type=chunk) [Note 17. Collaborative Arrangements](index=33&type=section&id=17.%20Collaborative%20Arrangements) - The Company has a Cooperative Research and Development Agreement (CRADA) with Triad National Security, LLC, Alliance for Sustainable Energy LLC, and Brookhaven Science Associates, extended until September 3, 2024, to build a fuel cell prototype; the government's estimated contribution is **$1.2 million**, with the Company contributing **$1.2 million** in cash and **$0.6 million** in-kind[126](index=126&type=chunk) - For the three and six months ended June 30, 2024, **$0.1 million** was recognized in research and development expenses related to collaborative arrangements; no revenue has been recognized from the CRADA to date[126](index=126&type=chunk)[127](index=127&type=chunk) [Note 18. Income Taxes](index=33&type=section&id=18.%20Income%20Taxes) - For the six months ended June 30, 2025, the Company recorded an income tax expense of **$(1) thousand**, compared to a benefit of **$0.1 million** in the prior year, mainly related to net operating loss carryforwards[129](index=129&type=chunk) - A full valuation allowance is maintained against deferred tax assets for net operating losses, as it is more likely than not that the benefits will not be realized[130](index=130&type=chunk) [Note 19. Segment Reporting and Information about Geographical Areas](index=34&type=section&id=19.%20Segment%20Reporting%20and%20Information%20about%20Geographical%20Areas) - The Company operates as a single reportable business segment, focusing on the development and manufacturing of high-temperature proton exchange membranes (HT-PEMs) and fuel cell systems[131](index=131&type=chunk) | Geographic Location | Three Months Ended June 30, 2025 (in thousands of US dollars) | Three Months Ended June 30, 2024 (in thousands of US dollars) | Six Months Ended June 30, 2025 (in thousands of US dollars) | Six Months Ended June 30, 2024 (in thousands of US dollars) | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | North America | $10 | $649 | $135 | $3,217 | | Europe | $89 | $5 | $96 | $175 | | **Total net sales** | **$99** | **$654** | **$231** | **$3,392** | - North American revenue significantly decreased from **$3,217 thousand** to **$135 thousand** for the six months ended June 30, 2025, while European revenue decreased from **$175 thousand** to **$96 thousand** in the same period[133](index=133&type=chunk) [Note 20. Commitments and contingencies](index=35&type=section&id=20.%20Commitments%20and%20contingencies) - A former employee, Chris Kaskavelis, filed a claim against Advent SA for **€107,194.90** in unpaid wages, **€612,206.40** for severance, and **€50,000** for moral damages; the Company has accrued **$124 thousand** for unpaid wages but denies other claims[135](index=135&type=chunk) - The Company settled an arbitration award with F.E.R. fischer Edelstahlrohre GmbH for **€5,366,625.55**, payable in monthly installments starting September 1, 2025; a reduced settlement of **€4,366,625.55** is possible if paid by June 30, 2026, with an additional loss of **$1 million** recorded for this contingency in the six months ended June 30, 2025[136](index=136&type=chunk) - The Company terminated a supply agreement with BASF New Business GmbH, agreeing to return **4,473 sqm** of membrane and pay **€44,759** in unpaid license fees, while BASF waived payment of **€608,412** and the requirement to purchase **14,000 m2**[139](index=139&type=chunk) - A supply agreement with Shin-Etsu Polymer Singapore Pte, Ltd for bipolar plates is on hold, with Shin-Etsu potentially claiming the remaining purchase requirement of **57,600** pieces[140](index=140&type=chunk) [Note 21. Net loss per share](index=37&type=section&id=21.%20Net%20loss%20per%20share) Net Loss Per Share (Net loss in thousands of US dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(3,797) | $(11,273) | $(7,071) | $(20,629) | | Basic weighted average number of shares | 2,665,089 | 2,634,179 | 2,653,490 | 2,609,549 | | Basic loss per share | $(1.42) | $(4.28) | $(2.66) | $(7.91) | | Diluted loss per share | $(1.42) | $(4.28) | $(2.66) | $(7.91) | - Basic and diluted loss per share were **$(1.42)** for the three months ended June 30, 2025, and **$(2.66)** for the six months ended June 30, 2025; the effect of potential common stock equivalents was anti-dilutive due to the Company incurring losses[143](index=143&type=chunk)[145](index=145&type=chunk) [Note 22. Discontinued Operations](index=38&type=section&id=22.%20Discontinued%20Operations) | Metric | Three Months Ended June 30, 2025 (in thousands of US dollars) | Three Months Ended June 30, 2024 (in thousands of US dollars) | Six Months Ended June 30, 2025 (in thousands of US dollars) | Six Months Ended June 30, 2024 (in thousands of US dollars) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue, net | - | $151 | - | $864 | | Operating income/(loss) | - | $(1,060) | - | $(1,000) | | Income/(loss) from discontinued operations | - | $(1,060) | - | $(1,000) | | Comprehensive income/(loss) from discontinued operations | - | $(1,060) | - | $(965) | - For the three and six months ended June 30, 2025, there were no revenues or losses from discontinued operations, as Advent Technologies A/S and its subsidiary were declared bankrupt on July 25, 2024, and are being liquidated[46](index=46&type=chunk)[147](index=147&type=chunk) [Note 23. Subsequent Events](index=38&type=section&id=23.%20Subsequent%20Events) - On July 17, 2025, the Company settled an outstanding claim of **€10.4 million ($12.2 million)** against Advent Technologies, GmbH, with the bankruptcy trustee of Advent Technologies A/S for **€100 thousand ($119 thousand)**[148](index=148&type=chunk) - On August 6, 2025, the Company entered into a new enhanced license agreement with Triad National Security, LLC for the Ion Pair technology, gaining exclusivity in marine, aviation, and portable power fields while retaining non-exclusive rights elsewhere[149](index=149&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Company's financial condition and operational results, including business developments, key performance factors, liquidity, capital resources, and critical accounting policies [Overview](index=39&type=section&id=Overview) - Advent Technologies Holdings, Inc. is an advanced materials and technology development company specializing in fuel cell and hydrogen technology, focusing on Membrane Electrode Assembly (MEA) and complete fuel cell systems for various markets[153](index=153&type=chunk)[154](index=154&type=chunk) - Current revenue is primarily from sales and servicing of fuel cell systems and MEAs, with future income expected to be weighted towards Joint Development Agreements (JDAs) and Technology Assessment Agreements (TAAs), supplemented by grant funding[155](index=155&type=chunk) [Business Developments](index=39&type=section&id=Business%20Developments) - The Company secured a **€34.5 million** non-dilutive grant from the EU Innovation Fund for its RHyno Project, aimed at establishing infrastructure for developing and manufacturing innovative fuel cells and electrolyzers at a megawatt scale[159](index=159&type=chunk)[160](index=160&type=chunk) - Advent entered a multi-million-dollar joint benchmarking project with Airbus to accelerate the development of its Ion Pair™ MEA technology for hydrogen fuel cells in aviation, with Phase Two kicking off in February 2025[162](index=162&type=chunk)[163](index=163&type=chunk) - The Honey Badger 50™ (HB50) portable fuel cell system was launched, fulfilling an order from the U.S. Department of Defense; subsequent contracts totaling **$5.0 million** were secured with the US DoD to optimize HB50 with Ion Pair MEA technology and develop advanced manufacturing processes[164](index=164&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) - Advent Technologies A/S was declared bankrupt on July 25, 2024, by a Danish court due to inability to pay claims, leading to its liquidation and that of its subsidiary, Advent Green Energy Philippines, Inc.[175](index=175&type=chunk) - The Company received Nasdaq deficiency letters for failing to meet the minimum bid price, periodic reporting requirements, and minimum stockholders' equity; while the bid price deficiency was resolved via a reverse stock split, remedial measures for the stockholders' equity deficiency are ongoing[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) [Key Factors Affecting Our Results](index=43&type=section&id=Key%20Factors%20Affecting%20Our%20Results) - Future success depends on increased customer demand for fuel cell systems and MEAs, with anticipated substantial new orders from major organizations as production scales up[179](index=179&type=chunk) - The successful development of the Advanced MEA product, in partnership with Los Alamos National Laboratory, is crucial for achieving cost-competitiveness and widespread adoption of hydrogen fuel cells by delivering up to three times the power output of current MEAs[180](index=180&type=chunk) [Components of Results of Operations](index=44&type=section&id=Components%20of%20Results%20of%20Operations) - Revenue is expected to increase materially, shifting towards Joint Development Agreements (JDAs) and Technology Assessment Agreements (TAAs) over time[182](index=182&type=chunk) - Cost of revenues is expected to decrease as the focus shifts from product sales to services under JDAs and TAAs[183](index=183&type=chunk) - Research and development expenses are projected to increase substantially due to investments in improved technology and products[185](index=185&type=chunk) - Administrative and selling expenses are expected to rise in line with production and revenue growth, and due to costs associated with operating as a public company[186](index=186&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) Comparison of Three Months Ended June 30, 2025 vs. 2024 (in thousands of US dollars) | Metric | 3 Months Ended June 30, 2025 (in thousands of US dollars) | 3 Months Ended June 30, 2024 (in thousands of US dollars) | $ Change (in thousands of US dollars) | % Change | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :------- | :------- | | Revenue, net | $99 | $654 | $(555) | (84.9)% | | Gross profit / (loss) | $(293) | $571 | $(864) | (151.3)% | | Income from grants | $1 | $424 | $(423) | (99.8)% | | Research and development expenses | $(342) | $(695) | $353 | (50.8)% | | Administrative and selling expenses | $(1,956) | $2,374 | $(4,330) | (182.4)% | | Operating loss | $(2,925) | $2,673 | $(5,598) | (209.4)% | | Loss before income tax | $(3,797) | $(10,213) | $6,416 | (62.8)% | | Net loss | $(3,797) | $(11,273) | $7,476 | (66.3)% | Comparison of Six Months Ended June 30, 2025 vs. 2024 (in thousands of US dollars) | Metric | 6 Months Ended June 30, 2025 (in thousands of US dollars) | 6 Months Ended June 30, 2024 (in thousands of US dollars) | $ Change (in thousands of US dollars) | % Change | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :------- | :------- | | Revenue, net | $231 | $3,392 | $(3,161) | (93.2)% | | Gross profit / (loss) | $(473) | $2,832 | $(3,305) | (116.7)% | | Income from grants | $43 | $1,262 | $(1,219) | (96.6)% | | Research and development expenses | $(698) | $(2,110) | $1,412 | (66.9)% | | Administrative and selling expenses | $(4,206) | $(3,819) | $(387) | 10.1% | | Operating loss | $(5,863) | $(1,692) | $(4,171) | 246.5% | | Loss before income tax | $(7,070) | $(19,684) | $12,614 | (64.1)% | | Net loss | $(7,071) | $(20,629) | $13,558 | (65.7)% | - Revenue decreased significantly for both the three-month (**84.9%**) and six-month (**93.2%**) periods ended June 30, 2025, primarily due to an increase in contract liabilities related to services under Joint Development Agreements and Technology Assessment Agreements expected to be delivered later in 2025[194](index=194&type=chunk)[204](index=204&type=chunk) - Operating loss worsened for both periods, increasing by **209.4%** for the three months and **246.5%** for the six months, driven by increased cost of revenues, reduced grant income, and higher administrative and selling expenses[193](index=193&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk)[198](index=198&type=chunk)[203](index=203&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[208](index=208&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the Company had **$0.1 million** in cash and cash equivalents, a working capital deficit of **$(27.8) million**, and used **$1.2 million** in operating activities for the six months then ended[215](index=215&type=chunk) - Management concluded that substantial doubt exists about the Company's ability to continue as a going concern for one year, citing insufficient cash to fund operations and the need to raise additional capital in the very short term[217](index=217&type=chunk) Consolidated Cash Flows (Six Months Ended June 30, in thousands of US dollars) | Cash Flow Activity | 2025 (in thousands of US dollars) | 2024 (in thousands of US dollars) | $ Change (in thousands of US dollars) | % Change | | :------------------------------------------ | :----- | :----- | :------- | :------- | | Net Cash used in Operating Activities | $(1,159) | $(4,001) | $2,842 | (71.0)% | | Net Cash provided by / (used in) Investing Activities | $(29) | $272 | $(301) | (110.7)% | | Net Cash provided by Financing Activities | $893 | $282 | $611 | 216.7% | | Net decrease in cash and cash equivalents | $(306) | $(3,730) | $3,424 | (91.8)% | | Cash and cash equivalents at the end of period | $75 | $682 | $(607) | (89.0)% | - Cash flows from financing activities significantly increased to **$0.9 million** for the six months ended June 30, 2025, primarily due to net proceeds from borrowings, compared to **$0.3 million** in 2024[223](index=223&type=chunk) EBITDA and Adjusted EBITDA (Six Months Ended June 30, in Millions of US dollars) | Metric (in Millions of US dollars) | 2025 | 2024 | $ Change | | :--------------------------------- | :--- | :--- | :------- | | Net loss from continuing operations | $(7.07) | $(19.63) | $12.56 | | EBITDA | $(5.46) | $(0.94) | $(4.52) | | Adjusted EBITDA | $(5.46) | $(1.00) | $(4.46) | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company outlines its exposure to market risks, including interest rate, inflation, and foreign exchange fluctuations, and discusses mitigation strategies - The Company holds **$0.1 million** in cash and cash equivalents and has **$1.5 million** in short-term debt, exposing it to interest rate risk, though current operating and savings accounts are not significantly affected by U.S. interest rate changes[257](index=257&type=chunk) - Inflation is not currently considered to have a material effect on the business; mitigation strategies include seeking alternative, lower-cost supplies and pre-buying materials[258](index=258&type=chunk) - Advent is exposed to foreign exchange risk due to costs and revenues denominated in Euros; while no hedging transactions have been entered into yet, the Company plans to implement mitigation features as it scales up[259](index=259&type=chunk) [Item 4. Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) Management identified material weaknesses in internal controls as of June 30, 2025, but asserts fair financial statement presentation, with a remediation plan underway - As of June 30, 2025, the Company's disclosure controls and procedures were not effective due to identified material weaknesses in internal control over financial reporting[264](index=264&type=chunk) - Material weaknesses were identified in the entity-level control environment, financial statement close and reporting process (e.g., lack of documentation, reconciliation controls, segregation of duties), and IT processes (e.g., user access, application change controls)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk) - Despite the material weaknesses, management concluded that the financial statements in this report fairly present the Company's financial position, results of operations, and cash flows in accordance with U.S. GAAP[265](index=265&type=chunk)[274](index=274&type=chunk) - A remediation plan is being implemented to enhance the control environment, including hiring qualified professionals, improving IT systems, enhancing policies and documentation, and increasing testing frequency[275](index=275&type=chunk)[279](index=279&type=chunk) PART II—OTHER INFORMATION [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) This section details ongoing legal proceedings, including an employee claim, an arbitration settlement, and a shareholder demand letter regarding fiduciary duty - A former employee, Chris Kaskavelis, filed a claim against Advent SA for **€107,194.90** in unpaid wages, **€612,206.40** for severance, and **€50,000** for moral damages; the Company has accrued **$124 thousand** for unpaid wages but denies other claims[282](index=282&type=chunk) - The Company settled an arbitration award with F.E.R. fischer Edelstahlrohre GmbH for **€5,366,625.55**, payable in monthly installments starting September 1, 2025; a reduced settlement of **€4,366,625.55** is possible if paid by June 30, 2026[283](index=283&type=chunk) - A shareholder demand letter was received to inspect books and records regarding alleged breaches of fiduciary duty by AMCI's former board and officers in connection with the February 2021 merger; a putative class action complaint was filed in Delaware Court of Chancery, but the Company is not named as a defendant[284](index=284&type=chunk) [Item 1A. Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors detailed in the 2024 Annual Report are noted, which could significantly impact the Company's financial performance - There are no material changes to the risk factors described in the 2024 Annual Report, which cover potential significant negative impacts on the Company's business, financial condition, results of operations, cash flows, and prospects[287](index=287&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported for the period - No unregistered sales of equity securities or use of proceeds were reported[288](index=288&type=chunk) [Item 3. Defaults Upon Senior Securities](index=62&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - No defaults upon senior securities were reported[289](index=289&type=chunk) [Item 4. Mine Safety Disclosures](index=62&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[290](index=290&type=chunk) [Item 5. Other Information](index=62&type=section&id=Item%205.%20Other%20Information) No other information was reported - No other information was reported[291](index=291&type=chunk) [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including certifications and XBRL data files | Exhibit Number | Description | | :------------- | :----------------------------------------------------------------- | | 31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) | | 31.2* | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) | | 32.1** | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 | | 32.2** | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 | | 101.INS* | Inline XBRL Instance | | 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | Signatures - The report was signed on August 12, 2025, by Gary Herman, Interim Chief Financial Officer, on behalf of Advent Technologies Holdings, Inc.[296](index=296&type=chunk)[297](index=297&type=chunk)

[Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Atlantic American Corporation shifted from net losses in 2024 to net income in Q2 and H1 2025, driven by increased premium revenue and unrealized gains on equity securities Consolidated Financial Performance (in millions, 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 | | :--- | :--- | :--- | :--- | :--- | | **Net Income (Loss) (in millions)** | $3.3 | ($0.7) | $4.1 | ($2.7) | | **Diluted EPS (in dollars)** | $0.15 | ($0.04) | $0.19 | ($0.14) | Operating Income Growth (in millions) | Period | Increase in Operating Income (in millions) | | :--- | :--- | | **Three Months Ended June 30, 2025** | $2.7 | | **Six Months Ended June 30, 2025** | $5.4 | - The increase in net income was primarily the result of increases in premium revenue, coupled with an increase in unrealized gains on equity securities[2](index=2&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management expressed satisfaction with strong earned premium growth across all segments, attributing success to new business and high retention, and anticipates sustained profitable growth - Both property & casualty and life & health segments delivered **strong earned premium growth**, supported by new business momentum and retention of existing contracts[4](index=4&type=chunk) - The company believes it is well-positioned to deliver **sustained, profitable growth** and drive **long-term value creation** for shareholders in the second half of the year[4](index=4&type=chunk) [Business Segment Performance](index=1&type=section&id=Business%20Segment%20Performance) Both Life & Health and Property & Casualty segments contributed to growth, with operating income driven by specific lines and significant year-over-year premium increases - Operating income growth was primarily driven by the inland marine line of business in property and casualty, and the Medicare supplement and group accident and health lines in life and health operations[3](index=3&type=chunk) Net Insurance Premiums by Segment (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Life and health (in thousands)** | $29,005 | $27,449 | $57,587 | $54,123 | | **Property and casualty (in thousands)** | $21,141 | $17,544 | $39,472 | $35,422 | | **Total (in thousands)** | **$50,146** | **$44,993** | **$97,059** | **$89,545** | [Detailed Financial Statements](index=3&type=section&id=Detailed%20Financial%20Statements) This section presents unaudited financial data for Q2 and H1 2025, including consolidated statements of operations, selected balance sheet data, and non-GAAP operating income reconciliation [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2025 total revenue increased to **$55.3 million**, driven by higher net insurance premiums and unrealized gains on equity securities, resulting in **$3.3 million** net income Q2 2025 vs Q2 2024 Statement of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Total Revenue (in thousands)** | $55,290 | $47,668 | | **Total Benefits and Expenses (in thousands)** | $51,074 | $48,517 | | **Income (Loss) Before Income Taxes (in thousands)** | $4,216 | ($849) | | **Net Income (Loss) (in thousands)** | $3,316 | ($684) | [Selected Balance Sheet Data](index=3&type=section&id=Selected%20Balance%20Sheet%20Data) As of June 30, 2025, the company's financial position strengthened with total assets at **$429.3 million** and book value per common share improving to **$4.94** Balance Sheet Highlights (in thousands, except per share data) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets (in thousands)** | $429,339 | $393,428 | | **Total Shareholders' Equity (in thousands)** | $106,168 | $99,613 | | **Book Value Per Common Share (in dollars)** | $4.94 | $4.61 | [Reconciliation of Non-GAAP Financial Measure](index=1&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measure) Non-GAAP operating income, used to assess core performance, significantly improved in Q2 2025 to **$1.6 million** from a **$1.1 million** loss in Q2 2024 - Operating income (loss) is a non-GAAP measure defined as net income (loss) excluding income tax, realized investment gains/losses, and unrealized gains/losses on equity securities[5](index=5&type=chunk) Reconciliation to Non-GAAP Operating Income (Loss) (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) (in thousands)** | $3,316 | ($684) | $4,118 | ($2,682) | | **Non-GAAP Operating Income (Loss) (in thousands)** | $1,591 | ($1,105) | $1,859 | ($3,497) | [Important Disclosures](index=1&type=section&id=Important%20Disclosures) This section provides crucial context, explaining the non-GAAP operating income measure and including a forward-looking statements disclaimer regarding potential risks and uncertainties - The company presents the non-GAAP measure of operating income (loss) to isolate 'core' operating results from items like taxes and investment gains/losses, which management believes are beyond its control or not part of primary operations[5](index=5&type=chunk) - The report contains forward-looking statements that are subject to risks and uncertainties, including macroeconomic conditions, regulatory changes, market disruption, cybersecurity matters, and other factors detailed in SEC filings[6](index=6&type=chunk)

```markdown [Introductory Note](index=3&type=section&id=Introductory%20Note) This section outlines forward-looking statements, their inherent risks, and uncertainties that could cause actual results to differ [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements, their inherent risks, and uncertainties that could cause actual results to differ - Forward-looking statements involve risks and uncertainties related to Sensus Healthcare, Inc., its industry, and general economic conditions, which may cause actual results to differ materially from expectations[9](index=9&type=chunk) - Key risk factors include inflationary pressures, government/third-party payor reimbursement levels, customer concentration (U.S. and China), development of new technologies, regulatory requirements, manufacturing management, international business risks, IT system performance, and intellectual property protection[9](index=9&type=chunk) - Geopolitical uncertainties (Middle East conflict, Russian invasion of Ukraine) have not had a significant impact on the business to date, but developments are continuously monitored[10](index=10&type=chunk) [PART I – Financial Information](index=4&type=section&id=PART%20I%20%E2%80%93%20Financial%20Information) [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents unaudited condensed consolidated financial statements, including balance sheets, income, equity, and cash flows [Condensed Consolidated Balance Sheets (unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) Condensed Consolidated Balance Sheets (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Assets** | | | | | | Cash and cash equivalents | $22,162 | $22,056 | $106 | 0.5% | | Accounts receivable, net | $12,622 | $19,731 | $(7,109) | -36.0% | | Inventories | $12,405 | $10,097 | $2,308 | 22.9% | | Total current assets | $52,219 | $56,738 | $(4,519) | -8.0% | | Total assets | $58,852 | $62,165 | $(3,313) | -5.3% | | **Liabilities** | | | | | | Accounts payable and accrued expenses | $5,365 | $4,811 | $554 | 11.5% | | Total current liabilities | $6,413 | $5,885 | $528 | 9.0% | | Total liabilities | $6,788 | $6,338 | $450 | 7.1% | | **Stockholders' Equity** | | | | | | Retained earnings | $9,825 | $13,434 | $(3,609) | -26.9% | | Total stockholders' equity | $52,064 | $55,827 | $(3,763) | -6.7% | [Condensed Consolidated Statements of Income (Loss) (unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)%20(unaudited)) Condensed Consolidated Statements of Income (Loss) (in thousands, except per share data) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenues | $7,315 | $9,239 | $(1,924) | -20.8% | $15,659 | $19,902 | $(4,243) | -21.3% | | Cost of sales | $4,412 | $3,816 | $596 | 15.6% | $8,403 | $7,817 | $586 | 7.5% | | Gross profit | $2,903 | $5,423 | $(2,520) | -46.5% | $7,256 | $12,085 | $(4,829) | -40.0% | | Total operating expenses | $4,846 | $3,441 | $1,405 | 40.8% | $11,845 | $7,216 | $4,629 | 64.2% | | (Loss) income from operations | $(1,943) | $1,982 | $(3,925) | -198.0% | $(4,589) | $4,869 | $(9,458) | -194.2% | | Net (loss) income | $(1,037) | $1,612 | $(2,649) | -164.3% | $(3,609) | $3,886 | $(7,495) | -192.9% | | Net (loss) income per share – basic | $(0.06) | $0.10 | $(0.16) | -160.0% | $(0.22) | $0.24 | $(0.46) | -191.7% | | Net (loss) income per share – diluted | $(0.06) | $0.10 | $(0.16) | -160.0% | $(0.22) | $0.24 | $(0.46) | -191.7% | [Condensed Consolidated Statements of Stockholders' Equity (unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20(unaudited)) Changes in Stockholders' Equity (in thousands, except shares) | Item | December 31, 2024 | March 31, 2025 | June 30, 2025 | | :--- | :--- | :--- | :--- | | Common Stock (Amount) | $169 | $169 | $169 | | Additional Paid-In Capital | $45,795 | $45,874 | $45,941 | | Treasury Stock (Amount) | $(3,571) | $(3,871) | $(3,871) | | Retained Earnings | $13,434 | $10,862 | $9,825 | | Total Stockholders' Equity | $55,827 | $53,034 | $52,064 | - During the six months ended June 30, 2025, the company recorded a **net loss of $3,609 thousand**, which reduced retained earnings. Stock-based compensation added **$151 thousand** to additional paid-in capital[18](index=18&type=chunk) - Treasury stock increased by **$300 thousand** due to repurchases of **50,360 shares** during the six months ended June 30, 2025[18](index=18&type=chunk)[82](index=82&type=chunk) [Condensed Consolidated Statements of Cash Flows (unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $440 | $(3,957) | $4,397 | | Net cash used in investing activities | $(34) | $(236) | $202 | | Net cash (used in) provided by financing activities | $(300) | $17 | $(317) | | Net increase (decrease) in cash and cash equivalents | $106 | $(4,176) | $4,282 | | Cash and cash equivalents – end of period | $22,162 | $18,972 | $3,190 | - Operating cash flow significantly improved, shifting from a **$4.0 million** usage in H1 2024 to a **$0.4 million** provision in H1 2025, primarily due to a **$7.1 million** decrease in accounts receivable and a **$3.2 million** increase in inventories[21](index=21&type=chunk)[126](index=126&type=chunk) - Financing activities used **$0.3 million** in H1 2025 due to common stock repurchases, compared to **$17 thousand** provided in H1 2024 from stock option exercises[21](index=21&type=chunk)[129](index=129&type=chunk) [Notes to the Condensed Consolidated Financial Statements (unaudited)](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) [Note 1 — Organization and Summary of Significant Accounting Policies](index=8&type=section&id=Note%201%20%E2%80%94%20Organization%20and%20Summary%20of%20Significant%20Accounting%20Policies) [Description of the Business](index=8&type=section&id=Description%20of%20the%20Business) - Sensus Healthcare, Inc. manufactures radiation therapy devices for healthcare providers globally[22](index=22&type=chunk) - In 2024, the company formed Sensus Healthcare Services, LLC, a wholly owned subsidiary providing operational healthcare services, including leased equipment and radiation oncology/physics oversight for dermatology clinics[23](index=23&type=chunk) [Basis of Presentation and Principles of Consolidation](index=8&type=section&id=Basis%20of%20Presentation%20and%20Principles%20of%20Consolidation) - Financial statements are prepared in accordance with GAAP for interim information, consolidating subsidiaries, and eliminating intercompany transactions[24](index=24&type=chunk)[25](index=25&type=chunk) [Use of Estimates](index=8&type=section&id=Use%20of%20Estimates) - Management makes estimates and assumptions affecting reported amounts in financial statements, with actual results potentially differing[27](index=27&type=chunk) [Revenue Recognition](index=8&type=section&id=Revenue%20Recognition) - Revenue is derived from device sales and related maintenance/repair services, recognized upon transfer of control of goods or services[28](index=28&type=chunk)[30](index=30&type=chunk) Disaggregated Revenue (in thousands) | Revenue Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Product Revenue - recognized at a point in time | $5,390 | $8,074 | $12,098 | $17,566 | | Product Revenue - recognized over time | $358 | $0 | $557 | $0 | | Service Revenue - recognized at a point in time | $726 | $367 | $1,350 | $739 | | Service Revenue - recognized over time | $841 | $798 | $1,654 | $1,597 | | Total Revenue | $7,315 | $9,239 | $15,659 | $19,902 | - Deferred revenue for service contracts expected to be recognized in the future totals **$480 thousand** as of June 30, 2025, with **$348 thousand** in H2 2025, **$122 thousand** in 2026, and **$10 thousand** in 2027[37](index=37&type=chunk)[38](index=38&type=chunk) [Concentration](index=10&type=section&id=Concentration) - One U.S. customer accounted for **56%** and **83%** of revenue for the three months ended June 30, 2025 and 2024, respectively, and **63%** and **77%** for the six months ended June 30, 2025 and 2024, respectively[41](index=41&type=chunk) - This same customer represented **78%** and **86%** of accounts receivable as of June 30, 2025 and December 31, 2024, respectively[41](index=41&type=chunk) [Geographical Information](index=10&type=section&id=Geographical%20Information) Total Revenue by Country (in thousands) | Country | 3 Months Ended June 30, 2025 | % | 3 Months Ended June 30, 2024 | % | 6 Months Ended June 30, 2025 | % | 6 Months Ended June 30, 2024 | % | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | United States | $6,712 | 92% | $8,667 | 94% | $14,863 | 95% | $19,146 | 96% | | China | $587 | 8% | $572 | 6% | $763 | 5% | $727 | 4% | | Other | $16 | 0% | $0 | 0% | $33 | 0% | $29 | 0% | | Total Revenue | $7,315 | 100% | $9,239 | 100% | $15,659 | 100% | $19,902 | 100% | [Fair Value of Financial Instruments](index=11&type=section&id=Fair%20Value%20of%20Financial%20Instruments) - Carrying amounts of cash equivalents, accounts receivable, accounts payable, and the revolving credit facility approximate fair value due to their relatively short maturities[45](index=45&type=chunk) [Fair Value Measurements](index=11&type=section&id=Fair%20Value%20Measurements) - The company uses a fair value hierarchy (Level 1, 2, 3) that prioritizes inputs to valuation approaches, with Level 1 being quoted prices in active markets for identical assets/liabilities and Level 3 being unobservable inputs[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) [Cash and Cash Equivalents](index=11&type=section&id=Cash%20and%20Cash%20Equivalents) - Cash and cash equivalents primarily consist of cash, money market funds, and short-term, highly liquid investments with original maturities of three months or less[49](index=49&type=chunk) [Accounts Receivable](index=11&type=section&id=Accounts%20Receivable) - The allowance for expected credit losses remained at **$0.1 million** as of June 30, 2025, and December 31, 2024[50](index=50&type=chunk) - Credit loss expense was **$0** for the three and six months ended June 30, 2025, compared to **$42 thousand** for the same periods in 2024[50](index=50&type=chunk) [Inventories](index=12&type=section&id=Inventories) - Inventories consist of finished product and components, stated at the lower of cost or net realizable value, determined using the first-in, first-out method[51](index=51&type=chunk) [Earnings Per Share](index=12&type=section&id=Earnings%20Per%20Share) Net (Loss) Income Per Share (in thousands, except per share data) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income | $(1,037) | $1,612 | $(3,609) | $3,886 | | Weighted average shares – basic | 16,320 | 16,298 | 16,331 | 16,297 | | Net (loss) income per share - basic | $(0.06) | $0.10 | $(0.22) | $0.24 | | Weighted average shares – diluted | 16,320 | 16,333 | 16,331 | 16,326 | | Net (loss) income per share - diluted | $(0.06) | $0.10 | $(0.22) | $0.24 | - Diluted net loss per share for the three and six months ended June 30, 2025, excludes dilutive effects of stock options and restricted stock awards because their inclusion would be antidilutive due to the net loss[52](index=52&type=chunk) [Leases](index=12&type=section&id=Leases) - The company evaluates arrangements at inception to determine if they are or contain a lease, recognizing operating lease assets and liabilities based on the present value of lease payments[53](index=53&type=chunk) - For leases where the company is the lessor, lease income is recognized on a straight-line basis over the lease term, and non-lease components are accounted for separately or combined based on criteria[55](index=55&type=chunk)[57](index=57&type=chunk) [Income Taxes](index=13&type=section&id=Income%20Taxes) - Deferred tax assets and liabilities are recognized for future tax consequences of events, with a valuation allowance recorded if realization is not probable[59](index=59&type=chunk) - Uncertain tax positions are recognized only if more likely than not to be sustained upon examination by taxing authorities[60](index=60&type=chunk) [Recent Accounting Pronouncements](index=13&type=section&id=Recent%20Accounting%20Pronouncements) - The company is evaluating ASU 2023-09 (Income Taxes) for enhanced transparency in income tax disclosures, effective for fiscal years beginning after December 15, 2024[61](index=61&type=chunk) - ASU 2024-01 (Compensation - Stock Compensation) clarifies scope application for profits interest awards but is not expected to have a significant impact on the company's financial statements[62](index=62&type=chunk) - The company is evaluating ASU 2024-03 (Income Statement - Expense Disaggregation Disclosures) for its potential impact, effective for annual reporting periods beginning after December 15, 2026[63](index=63&type=chunk) [Note 2 — Property and Equipment](index=14&type=section&id=Note%202%20%E2%80%94%20Property%20and%20Equipment) Property and Equipment, Net (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Operations equipment | $968 | $940 | | Equipment leased to customers | $2,357 | $1,597 | | Tradeshow and demo equipment | $1,184 | $1,184 | | Computer equipment | $175 | $168 | | Research and development equipment | $100 | $0 | | Subtotal | $4,784 | $3,889 | | Construction in progress | $228 | $228 | | Less accumulated depreciation | $(2,298) | $(2,120) | | Property and Equipment, Net | $2,714 | $1,997 | - Depreciation expense was **$99 thousand** for the three months ended June 30, 2025 (vs. **$31 thousand** in 2024) and **$185 thousand** for the six months ended June 30, 2025 (vs. **$101 thousand** in 2024)[64](index=64&type=chunk) [Note 3 — Debt](index=15&type=section&id=Note%203%20%E2%80%94%20Debt) - The company has a revolving credit facility with Comerica Bank, amended in October 2024, increasing maximum borrowings to **$15 million** (previously **$10 million**)[66](index=66&type=chunk) - Interest on borrowings is SOFR plus **2.50%** (**6.95%** at June 30, 2025), due upon demand, and secured by all company assets[66](index=66&type=chunk) - The company was in compliance with financial covenants as of June 30, 2025, and December 31, 2024, with no outstanding borrowings[67](index=67&type=chunk) [Note 4 — Product Warranties](index=15&type=section&id=Note%204%20%E2%80%94%20Product%20Warranties) Changes in Product Warranty Liability (in thousands) | Item | Amount | | :--- | :--- | | Balance, December 31, 2024 | $329 | | Warranties accrued during the period | $138 | | Payments on warranty claims | $(200) | | Balance, June 30, 2025 | $267 | [Note 5 — Leases](index=15&type=section&id=Note%205%20%E2%80%94%20Leases) [Operating Lease Agreements](index=15&type=section&id=Operating%20Lease%20Agreements) - The company leases its headquarters office until September 2027 and entered into a sublease for an adjacent office space in January 2025, also ending in September 2027[69](index=69&type=chunk) Maturity of Operating Lease Liability (in thousands) as of June 30, 2025 | Year | Amount | | :--- | :--- | | 2025 (July 1 - December 31, 2025) | $138 | | 2026 | $281 | | 2027 | $214 | | Total undiscounted operating leases payments | $633 | | Present Value of Operating Lease Liability | $595 | - Weighted-average remaining lease term is **2.25 years**, and the weighted-average discount rate is **5.32%**[71](index=71&type=chunk) [Lessor Accounting](index=16&type=section&id=Lessor%20Accounting) - Sensus Healthcare Services, LLC leases superficial radiotherapy equipment to dermatology clinics, typically with initial **60-month** terms and one-year automatic renewals[73](index=73&type=chunk) Lease Income - Operating Leases (in thousands) | Lease Income Type | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | | :--- | :--- | :--- | | Fixed payments | $64 | $128 | | Variable payments | $294 | $429 | | Total | $358 | $557 | Future Minimum Fixed Lease Payments to be Received (in thousands) as of June 30, 2025 | Year | Amount | | :--- | :--- | | 2025 (July 1 - December 31, 2025) | $128 | | 2026 | $256 | | 2027 | $256 | | 2028 | $256 | | 2029 | $256 | | Thereafter | $87 | | Total | $1,239 | [Note 6 – Commitments and Contingencies](index=17&type=section&id=Note%206%20%E2%80%93%20Commitments%20and%20Contingencies) [Manufacturing Agreement](index=17&type=section&id=Manufacturing%20Agreement) - The company has a contract manufacturing agreement for SRT-100 devices, which renews annually unless terminated with **60 days'** notice[77](index=77&type=chunk) - Prepayments for finished goods were **$1.3 million** (Q2 2025) and **$4.9 million** (H1 2025), with **$2.7 million** in prepaid inventory as of June 30, 2025[78](index=78&type=chunk) [Legal Contingencies](index=17&type=section&id=Legal%20Contingencies) - The Department of Justice is investigating the billing practices of a physician using the SRT-100, considering expanding the investigation to Sensus Healthcare[80](index=80&type=chunk) - Sensus disputes any wrongdoing, as it does not submit claims or provide billing advice, and believes it has strong defenses if legal action is pursued. The cost, if any, is currently unestimable[80](index=80&type=chunk) [Note 7 — Stockholders' Equity](index=17&type=section&id=Note%207%20%E2%80%94%20Stockholders%27%20Equity) [Preferred Stock](index=17&type=section&id=Preferred%20Stock) - The company has authorized **5,000,000 shares** of preferred stock, but no shares were issued or outstanding at June 30, 2025, or December 31, 2024[81](index=81&type=chunk) [Treasury Stock](index=18&type=section&id=Treasury%20Stock) - Treasury stock includes shares surrendered by employees for tax withholding and shares repurchased in open market transactions. No shares were surrendered for tax withholding in Q2 2025 or H1 2025[82](index=82&type=chunk) - The company repurchased **50,360 shares** in open market transactions during the six months ended June 30, 2025, but none in Q2 2025 or Q2 2024[82](index=82&type=chunk) [Note 8 — Equity-based Compensation](index=18&type=section&id=Note%208%20%E2%80%94%20Equity-based%20Compensation) [2016 and 2017 Equity Incentive Plans](index=18&type=section&id=2016%20and%202017%20Equity%20Incentive%20Plans) - As of June 30, 2025, **200,223 shares** were available to be granted under the Plans (vs. **195,223** at December 31, 2024)[83](index=83&type=chunk) - On December 17, 2024, **100,000 shares** were issued to employees and directors at **$7.78** per share, with vesting periods ranging from immediate to **four years**[85](index=85&type=chunk) [Restricted Stock](index=18&type=section&id=Restricted%20Stock) Restricted Stock Activity (Six Months Ended June 30, 2025) | Item | Restricted Stock (Shares) | Weighted Average Grant Date Fair Value | | :--- | :--- | :--- | | Outstanding at December 31, 2024 | 135,000 | $7.04 | | Vested | (10,000) | $2.65 | | Forfeited | (5,000) | $6.40 | | Outstanding at June 30, 2025 | 120,000 | $7.44 | - Stock compensation expense related to restricted stock was **$72 thousand** for Q2 2025 (vs. **$66 thousand** in Q2 2024) and **$151 thousand** for H1 2025 (vs. **$158 thousand** in H1 2024)[88](index=88&type=chunk) - Unrecognized stock compensation expense was **$0.7 million** as of June 30, 2025, to be recognized over a weighted-average period of **3.0 years**[88](index=88&type=chunk) [Stock Options](index=19&type=section&id=Stock%20Options) Stock Options Activity (After December 31, 2024) | Item | Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (In Years) | | :--- | :--- | :--- | :--- | | Outstanding - December 31, 2024 | 77,550 | $5.55 | 3.08 | | Outstanding - June 30, 2025 | 77,550 | $5.55 | 2.58 | | Exercisable - June 30, 2025 | 77,550 | $5.55 | 2.58 | - No stock compensation expense related to stock options was incurred for the three and six months ended June 30, 2025 and 2024[90](index=90&type=chunk) [Note 9 — Income Taxes](index=19&type=section&id=Note%209%20%E2%80%94%20Income%20Taxes) Income Tax (Benefit) Expense and Effective Tax Rates | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Income tax (benefit) expense (in thousands) | $(723) | $579 | $(613) | $1,406 | | Effective tax rate | 41.1% | 26.4% | 14.5% | 26.6% | - The increase in the effective tax rate for Q2 2025 (**41.1%** vs. **26.4%**) was primarily due to the reversal of a negative effective tax rate from Q1 2025, as the projected full-year tax liability began to exceed estimated tax credits[95](index=95&type=chunk) - The decrease in the effective tax rate for H1 2025 (**14.5%** vs. **26.6%**) was primarily due to an increase in estimated tax credits expected to be generated and utilized[95](index=95&type=chunk) [Note 10 — Segment Reporting](index=20&type=section&id=Note%2010%20%E2%80%94%20Segment%20Reporting) - The company operates as a single reportable segment, focusing on selling medical devices for skin conditions using SRT technology and providing related services[97](index=97&type=chunk) - The CEO serves as the operating decision-maker, assessing performance and making decisions based on net income, revenue, and gross profit[98](index=98&type=chunk) [Note 11 — Subsequent Events](index=20&type=section&id=Note%2011%20%E2%80%94%20Subsequent%20Events) - The company did not identify any subsequent events that would have required adjustment to or disclosure in the condensed consolidated financial statements up to the date of issuance[99](index=99&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, condition, liquidity, capital resources, and factors impacting future outlook [Overview](index=21&type=section&id=Overview) - Sensus Healthcare, Inc. is a medical device company specializing in non-invasive, cost-effective treatments for oncological and non-oncological skin conditions using proprietary superficial radiation therapy (SRT) technology[101](index=101&type=chunk) - The company's portfolio includes SRT-100, SRT-100+, and SRT-100 Vision devices, which have been used to treat hundreds of thousands of patients globally[101](index=101&type=chunk) [Segment Information](index=21&type=section&id=Segment%20Information) - The company manages its business globally within one reportable segment, consistent with how management views the business and allocates resources[102](index=102&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) [Three months ended June 30, 2025 compared to the three months ended June 30, 2024](index=21&type=section&id=Three%20months%20ended%20June%2030%2C%202025%20compared%20to%20the%20three%20months%20ended%20June%2030%2C%202024) - Revenues decreased by **$1.9 million** (**20.7%**) to **$7.3 million**, primarily due to lower unit sales to a large customer[104](index=104&type=chunk) - Cost of sales increased by **$0.6 million** (**15.8%**) to **$4.4 million**, driven by higher servicing costs and a new placement program[105](index=105&type=chunk) - Gross profit decreased by **$2.5 million** (**46.3%**) to **$2.9 million**, with the gross profit percentage falling to **39.7%** from **58.7%**[106](index=106&type=chunk) - Total operating expenses increased significantly: General and administrative by **$0.4 million** (**25.0%**) due to higher professional fees and compensation; Selling and marketing by **$0.4 million** (**40.0%**) due to tradeshows, clinical studies, and headcount; Research and development by **$0.6 million** (**66.7%**) for next-generation systems[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) [Six months ended June 30, 2025 compared to the six months ended June 30, 2024](index=22&type=section&id=Six%20months%20ended%20June%2030%2C%202025%20compared%20to%20the%20six%20months%20ended%20June%2030%2C%202024) - Revenues decreased by **$4.2 million** (**21.1%**) to **$15.7 million**, primarily due to lower unit sales to a large customer[112](index=112&type=chunk) - Cost of sales increased by **$0.6 million** (**7.7%**) to **$8.4 million**, driven by higher servicing costs and a new placement program[113](index=113&type=chunk) - Gross profit decreased by **$4.8 million** (**39.7%**) to **$7.3 million**, with the gross profit percentage falling to **46.5%** from **60.8%**[114](index=114&type=chunk) - Total operating expenses increased significantly: General and administrative by **$1.0 million** (**31.3%**) due to higher professional fees and compensation; Selling and marketing by **$1.3 million** (**56.5%**) due to tradeshows, clinical studies, and headcount; Research and development by **$2.3 million** (**127.8%**) due to lobbying costs for billing code reimbursement, increased headcount, and next-generation product development[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) [Financial Condition](index=23&type=section&id=Financial%20Condition) [Assets](index=23&type=section&id=Assets) - Cash and cash equivalents increased by **$0.1 million** to **$22.2 million** at June 30, 2025[120](index=120&type=chunk) - Accounts receivable decreased by **$7.1 million** to **$12.6 million**, mainly due to lower sales and extended payment terms with the primary customer[121](index=121&type=chunk) - Inventories increased by **$2.3 million** to **$12.4 million**, in anticipation of increasing future sales[121](index=121&type=chunk) [Liabilities](index=23&type=section&id=Liabilities) - There were no borrowings outstanding under the revolving line of credit with Comerica Bank at June 30, 2025, or December 31, 2024[122](index=122&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) - The company believes its cash equivalents, borrowing capacity, and access to capital are sufficient to meet operating and funding requirements for the next **12 months**[123](index=123&type=chunk) - Funding for the six months ended June 30, 2025, primarily came from equipment sales. Short-term capital needs include expanding sales, marketing, and R&D activities[123](index=123&type=chunk)[127](index=127&type=chunk) - The company received **$0.3 million** in Employee Retention Credits (ERC) in Q2 2025 and **$0.2 million** in Q4 2024, recorded against payroll expenses[123](index=123&type=chunk) [Cash flows](index=24&type=section&id=Cash%20flows) [Cash flows from operating activities](index=24&type=section&id=Cash%20flows%20from%20operating%20activities) - Net cash provided by operating activities was **$0.4 million** for H1 2025, a significant improvement from **$4.0 million** used in H1 2024[126](index=126&type=chunk) - The improvement was primarily driven by a **$7.1 million** decrease in accounts receivable and a **$3.2 million** increase in inventories in H1 2025[126](index=126&type=chunk) [Cash flows from investing activities](index=25&type=section&id=Cash%20flows%20from%20investing%20activities) - Net cash used in investing activities was **$34 thousand** for H1 2025, primarily for property and equipment purchases, a decrease from **$0.2 million** used in H1 2024[128](index=128&type=chunk) [Cash flows from financing activities](index=25&type=section&id=Cash%20flows%20from%20financing%20activities) - Net cash used in financing activities was **$0.3 million** for H1 2025, reflecting common stock repurchases, compared to **$17 thousand** provided in H1 2024 from stock option exercises[129](index=129&type=chunk) [Inflation](index=25&type=section&id=Inflation) - The company experienced continued increases in commodity, shipping, energy, and labor costs during Q1 and Q2 2025, leading to inflationary pressures[130](index=130&type=chunk) - Actions are being taken, such as ordering inventory in advance, to minimize the effects of inflation on product cost and sales[130](index=130&type=chunk) [Indebtedness](index=25&type=section&id=Indebtedness) - Refer to Note 3, Debt, for detailed information regarding the company's revolving credit facility[131](index=131&type=chunk) [Contractual Obligations and Commitments](index=25&type=section&id=Contractual%20Obligations%20and%20Commitments) - Refer to Note 6, Commitments and Contingencies, for detailed information regarding the company's contractual obligations and commitments[132](index=132&type=chunk) [Critical Accounting Policies and Estimates](index=25&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Management has identified revenue recognition policies as critical to understanding the financial condition and results of operations, but has not applied any critical accounting estimates[133](index=133&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No quantitative or qualitative disclosures about market risk are applicable to the company for the reported period - This item is not applicable to the company for the reported period[134](index=134&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of disclosure controls and procedures and reports on internal control changes [Evaluation of Disclosure Control and Procedures](index=26&type=section&id=Evaluation%20of%20Disclosure%20Control%20and%20Procedures) - Management, including the CEO and CFO, concluded that the company maintained effective disclosure controls and procedures as of June 30, 2025[135](index=135&type=chunk) [Changes in Internal Control Over Financial Reporting](index=26&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - There have been no significant changes in internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[136](index=136&type=chunk) [PART II – Other Information](index=26&type=section&id=PART%20II%20%E2%80%93%20Other%20Information) [Item 1. Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to detailed disclosures on legal proceedings and contingencies in the financial statement notes - The company is party to certain legal proceedings in the ordinary course of business. Refer to Note 6, Commitments and Contingencies, for further details[138](index=138&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the annual and quarterly reports for a comprehensive discussion of material risk factors - Readers should carefully consider the risk factors discussed in Part I, Item 1A. 'Risk Factors' in the 2024 Annual Report, as updated in subsequent quarterly reports[139](index=139&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales or purchases of equity securities occurred during the three months ended June 30, 2025 - There were no unregistered sales of securities during the three months ended June 30, 2025[140](index=140&type=chunk) - There were no purchases of equity securities by the registrant and affiliated purchasers during the three months ended June 30, 2025[142](index=142&type=chunk) [Item 3. Defaults Upon Senior Securities](index=26&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reported period - There were no defaults upon senior securities[143](index=143&type=chunk) [Item 4. Mine Safety Disclosure](index=26&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) Mine safety disclosure requirements are not applicable to the company - This item is not applicable to the company[144](index=144&type=chunk) [Item 5. Other Information](index=26&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading plans during the quarter - None of the company's directors or officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[145](index=145&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including CEO/CFO certifications and XBRL documents Exhibit Index | Exhibit No. | Description | | :--- | :--- | | 31.1* | Certification of Joseph C. Sardano, Chairman and Chief Executive Officer | | 31.2* | Certification of Javier Rampolla, Chief Financial Officer | | 32.1* | Certification of Joseph C. Sardano, Chairman and Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350 | | 32.2* | Certification of Javier Rampolla, Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350 | | 101.INS* | Inline XBRL Instance Document | | 104.* | Cover Page Interactive Data File | [Signatures](index=28&type=section&id=Signatures) This section contains required signatures from the CEO and CFO, certifying the filing of the report - The report is duly signed on behalf of Sensus Healthcare, Inc. by Joseph C. Sardano, Chief Executive Officer, and Javier Rampolla, Chief Financial Officer, on August 12, 2025[150](index=150&type=chunk)[152](index=152&type=chunk) ```

Financial Performance [Q2 2025 Financial Results](index=1&type=section&id=Q2%202025%20Financial%20Results) Network-1 reported no revenue for Q2 2025, a decrease from $100,000 in Q2 2024, while net loss narrowed to $463,000, or $0.02 per share, primarily due to a reduced share of loss from its equity investee Q2 Financial Performance Comparison (2025 vs. 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Revenue** | $0 | $100,000 | | **Net Loss** | $(463,000) | $(658,000) | | **Net Loss per Share (Basic & Diluted)** | $(0.02) | $(0.03) | - The net loss for Q2 2025 included a **$279,000** share of the net loss from its equity investee, ILiAD Biotechnologies, which was substantially lower than the **$677,000** share of loss recorded in Q2 2024[3](index=3&type=chunk) [H1 2025 Financial Results](index=1&type=section&id=H1%202025%20Financial%20Results) For H1 2025, Network-1's revenue increased to $150,000 from $100,000 in H1 2024, entirely from Remote Power Patent litigation settlements, while net loss significantly reduced to $826,000, or $0.04 per share H1 Financial Performance Comparison (2025 vs. 2024) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Revenue** | $150,000 | $100,000 | | **Net Loss** | $(826,000) | $(1,578,000) | | **Net Loss per Share (Basic & Diluted)** | $(0.04) | $(0.07) | - The reduced net loss in H1 2025 was heavily influenced by a lower share of loss from its equity investee, amounting to **$741,000** compared to **$1,305,000** in H1 2024[4](index=4&type=chunk) - All revenue in both 2025 and 2024 periods was derived from litigation settlements concerning the company's Remote Power Patent[2](index=2&type=chunk) [Financial Position](index=1&type=section&id=Financial%20Position) As of June 30, 2025, Network-1 maintained a solid balance sheet with **$38.485 million** in cash, cash equivalents, and marketable securities, and **$38.288 million** in working capital, deemed sufficient for future operations Key Balance Sheet Items (as of June 30, 2025) | Metric | Amount | | :--- | :--- | | **Cash and cash equivalents** | $13,424,000 | | **Marketable securities** | $25,061,000 | | **Total Current Assets** | $38,665,000 | | **Working Capital** | $38,288,000 | - Total assets decreased from **$45.4 million** at year-end 2024 to **$42.8 million** as of June 30, 2025, while total liabilities were reduced from **$1.1 million** to **$0.565 million** over the same period[17](index=17&type=chunk) Business and Operational Highlights [Patent Litigation and Portfolio Development](index=1&type=section&id=Patent%20Litigation%20and%20Portfolio%20Development) During the quarter, Network-1 actively pursued intellectual property monetization and expansion, initiating patent infringement litigation against Samsung and acquiring a new smart home technology patent portfolio - On June 27, 2025, Network-1 filed a patent infringement lawsuit against Samsung in the Eastern District of Texas, alleging infringement of its M2M/IoT patents by Samsung's mobile devices supporting eSIM and 5G technologies[5](index=5&type=chunk) - On March 31, 2025, the company acquired the "Smart Home Patent Portfolio," including **8 issued U.S. patents** and numerous pending U.S. and international applications related to the interoperability of smart home IoT devices[6](index=6&type=chunk) [Capital Allocation](index=1&type=section&id=Capital%20Allocation) Network-1 continued its capital return program for shareholders through share repurchases and dividends, with the Board of Directors authorizing an extension and increase of the share repurchase program and maintaining its semi-annual dividend policy - The Board of Directors extended and increased the share repurchase program, authorizing the repurchase of up to **$5,000,000** of common stock over the next 24 months[7](index=7&type=chunk) Share Repurchase Activity (H1 2025) | Period | Shares Repurchased | Cost (exclusive of commissions) | Average Price Per Share | | :--- | :--- | :--- | :--- | | **Q2 2025** | 44,811 | $55,337 | $1.23 | | **H1 2025** | 151,473 | $202,194 | $1.33 | - The company maintained its dividend policy of **$0.05 per share** semi-annually, with a dividend paid on March 28, 2025[9](index=9&type=chunk) Financial Statements [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The unaudited statement of operations details the company's revenues, operating expenses, other income, and net loss for the three and six-month periods ending June 30, 2025, compared to 2024, driven by operating expenses and equity method investee losses, partially offset by interest and dividend income Condensed Consolidated Statements of Operations Highlights | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | **Revenue** | $0 | $150,000 | | **Total Operating Expenses** | $720,000 | $1,515,000 | | **Operating Loss** | $(720,000) | $(1,365,000) | | **Total Other Income, net** | $467,000 | $1,100,000 | | **Share of Net Loss of Equity Method Investee** | $(279,000) | $(741,000) | | **Net Loss** | $(463,000) | $(826,000) | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2025, shows total assets of **$42.8 million** and total stockholders' equity of **$42.3 million**, reflecting a decrease from year-end 2024 primarily due to net loss and capital returns Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $38,665,000 | $40,832,000 | | **Total Assets** | $42,826,000 | $45,414,000 | | **Total Liabilities** | $565,000 | $1,103,000 | | **Total Stockholders' Equity** | $42,261,000 | $44,311,000 | Company Overview and Forward-Looking Statements [Company Profile](index=3&type=section&id=Company%20Profile) Network-1 Technologies is an intellectual property company focused on acquiring, developing, licensing, and protecting patented technologies, holding **115 U.S.** and **17 international patents** across four main portfolios, with its Remote Power Patent generating over **$188 million** in licensing revenue - The company's business model is to acquire, develop, and monetize high-quality patents with significant licensing opportunities[10](index=10&type=chunk) - Network-1's Remote Power Patent has generated licensing revenue exceeding **$188,000,000** from May 2007 through June 30, 2025[10](index=10&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) The earnings release includes forward-looking statements subject to significant risks and uncertainties, including unpredictable revenue from IP licensing, outcomes of pending litigation, and the ability to successfully execute its patent acquisition and investment strategy - The report contains forward-looking statements under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995[11](index=11&type=chunk) - Identified risks include uncertain revenue from IP licensing, outcomes of pending litigation (HFT and M2M/IoT portfolios), and the ability to successfully acquire and monetize new patent portfolios[11](index=11&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-41825 SPARK I ACQUISITION CORPORATION (Exact Name of Registrant as Specified in Its Charter) Cayman Islands 87-1738866 (State or other juris ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) Presents the unaudited condensed financial statements and management's discussion for Spark I Acquisition Corporation [Item 1. Financial Statements of Spark I Acquisition Corporation](index=4&type=section&id=Item%201.%20Financial%20Statements%20of%20Spark%20I%20Acquisition%20Corporation) Presents Spark I Acquisition Corporation's unaudited condensed financial statements and comprehensive notes for the periods ended June 30, 2025, and December 31, 2024 [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) Presents the company's financial position, detailing assets, liabilities, and shareholders' deficit at specific dates Condensed Balance Sheets (Unaudited) | Metric | June 30, 2025 ($) | December 31, 2024 ($) | | :----------------------------------- | :-------------- | :------------------ | | **ASSETS** | | | | Cash | $1,101,828 | $375,403 | | Prepaid expenses | $74,661 | $104,411 | | Total Current Assets | $1,176,489 | $479,814 | | Investments held in trust | $109,172,314 | $106,926,172 | | Total Assets | $110,348,803 | $107,405,986 | | **LIABILITIES AND SHAREHOLDERS' DEFICIT** | | | | Accrued expenses and offering costs | $843,123 | $505,218 | | Related party payable | $3,500 | $3,500 | | Note payable - Sponsor | $1,000,000 | — | | Convertible note payable - Sponsor | $1,540,000 | — | | Sponsor advance | — | $840,000 | | Total Current Liabilities | $3,386,623 | $1,348,718 | | Deferred underwriting fee payable | $3,500,000 | $3,500,000 | | Total Liabilities | $6,886,623 | $4,848,718 | | Class A ordinary shares subject to possible redemption | $109,172,314 | $106,926,172 | | Total Shareholders' Deficit | $(5,710,134) | $(4,368,904) | | Total Liabilities and Shareholders' Deficit | $110,348,803 | $107,405,986 | [Condensed Unaudited Statements of Operations](index=5&type=section&id=Condensed%20Unaudited%20Statements%20of%20Operations) Details the company's revenues, expenses, and net income for the specified interim periods Condensed Unaudited Statements of Operations | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Administrative fee - related party | $285,650 | $331,465 | $555,300 | $652,680 | | Formation and operating expenses | $478,217 | $138,726 | $785,932 | $373,443 | | TOTAL EXPENSES | $763,867 | $470,191 | $1,341,232 | $1,026,123 | | Interest Income | $1 | $2 | $2 | $3 | | Unrealized gain on investments held in Trust Account | $1,126,449 | $1,341,032 | $2,246,142 | $2,667,341 | | TOTAL OTHER INCOME | $1,126,450 | $1,341,034 | $2,246,144 | $2,667,344 | | Net income | $362,583 | $870,843 | $904,912 | $1,641,221 | | Basic and diluted net income per share, Class A ordinary shares | $0.02 | $0.05 | $0.06 | $0.10 | | Basic and diluted net income per Class B ordinary share | $0.02 | $0.05 | $0.06 | $0.10 | [Condensed Unaudited Statements of Changes in Shareholders' Deficit](index=6&type=section&id=Condensed%20Unaudited%20Statements%20of%20Changes%20in%20Shareholders'%20Deficit) Outlines changes in equity components, including net income and remeasurement adjustments, over the reporting period - The Company's total shareholders' deficit **increased from $(4,368,904)** at **January 1, 2025**, **to $(5,710,134)** at **June 30, 2025**, primarily due to net income being offset by remeasurement adjustments of Class A ordinary shares subject to possible redemption[11](index=11&type=chunk) - For the six months ended **June 30, 2025**, net income was **$904,912**, while the remeasurement of Class A ordinary shares subject to possible redemption resulted in a **decrease of $2,246,142**[11](index=11&type=chunk) [Condensed Unaudited Statements of Cash Flows](index=7&type=section&id=Condensed%20Unaudited%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities for the interim periods Condensed Unaudited Statements of Cash Flows | Cash Flow Activity | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net income | $904,912 | $1,641,221 | | Interest earned on investments held in Trust Account | $(2,246,142) | $(2,667,341) | | Net Cash Used In Operating Activities | $(973,575) | $(932,964) | | Proceeds from Convertible note payable - Sponsor | $700,000 | — | | Proceeds from Note payable - Sponsor | $1,000,000 | — | | Net Cash Provided By Financing Activities | $1,700,000 | — | | Net change in cash | $726,425 | $(932,964) | | Cash at beginning of period | $375,403 | $1,404,174 | | Cash at end of period | $1,101,828 | $471,210 | | Conversion of Sponsor advance to convertible note payable - Sponsor | $840,000 | — | [Notes to Condensed Unaudited Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Unaudited%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed financial statements [NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS AND GOING CONCERN](index=8&type=section&id=NOTE%201%20%E2%80%94%20DESCRIPTION%20OF%20ORGANIZATION%20AND%20BUSINESS%20OPERATIONS%20AND%20GOING%20CONCERN) Describes the company's formation, business purpose, IPO details, and assesses its ability to continue as a going concern - Spark I Acquisition Corporation was **formed on July 12, 2021**, as a blank check company to effect a business combination, and has **not generated operating revenues to date**, generating non-operating income from interest on IPO proceeds[16](index=16&type=chunk)[17](index=17&type=chunk) - The Company consummated its **Initial Public Offering of 10,000,000 units** at **$10.00 per unit** on **October 11, 2023**, generating **$100,000,000 gross proceeds**, with **$10.05 per unit** placed in a Trust Account[18](index=18&type=chunk)[21](index=21&type=chunk) - Public shareholders have redemption rights for their shares, but the Company will not redeem shares if net tangible assets fall below **$5,000,001**[22](index=22&type=chunk)[24](index=24&type=chunk) - If a business combination is not completed by **September 29, 2026**, the Company will **redeem 100% of public shares and liquidate**[27](index=27&type=chunk) - As of **June 30, 2025**, the Company had a working capital **deficit of $2,210,134**, and management has determined that its liquidity condition **raises substantial doubt about its ability to continue as a going concern** for the next twelve months[32](index=32&type=chunk)[34](index=34&type=chunk) [NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=14&type=section&id=NOTE%202%20%E2%80%94%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Outlines the key accounting principles and methods applied in preparing the financial statements - The Company is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised financial accounting standards[40](index=40&type=chunk)[41](index=41&type=chunk) - **Class A ordinary shares subject to possible redemption are classified as temporary equity**, with changes in redemption value recognized immediately and adjusted at each reporting period[43](index=43&type=chunk)[44](index=44&type=chunk) Class A Ordinary Shares Subject to Possible Redemption Reconciliation | Period | Amount ($) | Shares | | :------------------------------------------ | :------------- | :--------- | | Class A ordinary shares subject to possible redemption, January 1, 2024 | $101,677,510 | 10,000,000 | | Remeasurement adjustment on redeemable ordinary shares | $2,667,341 | — | | Class A ordinary shares subject to possible redemption, June 30, 2024 | $104,344,851 | 10,000,000 | | Class A ordinary shares subject to possible redemption, January 1, 2025 | $106,926,172 | 10,000,000 | | Remeasurement adjustment on redeemable ordinary shares | $2,246,142 | — | | Class A ordinary shares subject to possible redemption, June 30, 2025 | $109,172,314 | 10,000,000 | - **Net income per ordinary share is computed using the two-class method**, excluding the remeasurement adjustment for redeemable Class A Ordinary Shares[47](index=47&type=chunk) Basic and Diluted Net Income Per Ordinary Share | Share Class | Period | Numerator: Allocation of net income, as adjusted ($) | Denominator: Basic and diluted weighted average shares outstanding | Basic and diluted net income per share ($) | | :-------------------------- | :----------------------- | :--------------------------------------------- | :--------------------------------------------------------------- | :------------------------------------- | | Class A Redeemable ordinary shares | Six months ended June 30, 2025 | $551,034 | 10,000,000 | $0.06 | | Class A Redeemable ordinary shares | Six months ended June 30, 2024 | $999,399 | 10,000,000 | $0.10 | | Class B Non-redeemable ordinary shares | Six months ended June 30, 2025 | $353,878 | 6,422,078 | $0.06 | | Class B Non-redeemable ordinary shares | Six months ended June 30, 2024 | $641,822 | 6,422,078 | $0.10 | | Class A Redeemable ordinary shares | Three months ended June 30, 2025 | $220,790 | 10,000,000 | $0.02 | | Class A Redeemable ordinary shares | Three months ended June 30, 2024 | $530,288 | 10,000,000 | $0.05 | | Class B Non-redeemable ordinary shares | Three months ended June 30, 2025 | $141,793 | 6,422,078 | $0.02 | | Class B Non-redeemable ordinary shares | Three months ended June 30, 2024 | $340,555 | 6,422,078 | $0.05 | - The Company is **not subject to income taxation by the Government of the Cayman Islands**, and therefore, income taxes are not reflected in its financial statements[52](index=52&type=chunk) - **Investments held in the Trust Account are primarily in U.S. government securities or money market funds** meeting Rule 2a-7 conditions, with fair value approximating carrying amounts[55](index=55&type=chunk)[56](index=56&type=chunk) - The Company accounts for **Public and Private Placement Warrants as equity**, provided they meet ASC 815-40 criteria; otherwise, they would be recorded as liabilities and re-measured[60](index=60&type=chunk) - The Company is **assessing the impact of recently issued accounting standards** ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Disaggregation of Income Statement Expenses), effective for annual periods ending **December 31, 2025**, and **December 15, 2026**, respectively[62](index=62&type=chunk)[63](index=63&type=chunk) [NOTE 3 — INITIAL PUBLIC OFFERING](index=19&type=section&id=NOTE%203%20%E2%80%94%20INITIAL%20PUBLIC%20OFFERING) Details the terms and proceeds of the company's initial public offering - The Company **sold 10,000,000 Units** at **$10.00 per Unit** in its **Initial Public Offering**, with each Unit consisting of **one Class A ordinary share and one-half of one redeemable Public Warrant**[64](index=64&type=chunk) [NOTE 4 — PRIVATE PLACEMENTS](index=19&type=section&id=NOTE%204%20%E2%80%94%20PRIVATE%20PLACEMENTS) Describes the private placement of warrants to the Sponsor and related terms - The Sponsor **purchased 8,490,535 Private Placement Warrants** at **$1.00 each**, generating **$8,490,535**, with proceeds added to the Trust Account[65](index=65&type=chunk)[66](index=66&type=chunk) - Private Placement Warrants are not transferable until **30 days** after a Business Combination and **will expire worthless if a Business Combination is not completed** within the Combination Period[67](index=67&type=chunk) [NOTE 5 — RELATED PARTIES](index=21&type=section&id=NOTE%205%20%E2%80%94%20RELATED%20PARTIES) Discloses transactions and agreements with the company's Sponsor and other related entities - The Sponsor **received 6,870,130 Founder Shares (Class B ordinary shares)** for **$25,000** in offering costs on **December 8, 2021**[68](index=68&type=chunk) - On **October 10, 2023**, the Sponsor **forfeited 448,052 Class B ordinary shares** due to the underwriter not exercising the over-allotment option[70](index=70&type=chunk) - The Sponsor has agreed to a **lock-up period for Founder Shares**, generally **one year after a Business Combination**, with certain exceptions[72](index=72&type=chunk) - The Company **agreed to pay the Sponsor $300,000 for administrative support**, prepaid in **2021**, with **$0 remaining** at **June 30, 2025**[73](index=73&type=chunk) - The Sponsor or affiliates may provide **Working Capital Loans**, which can be repaid without interest upon Business Combination or converted into warrants[74](index=74&type=chunk) - On **January 28, 2025**, the Company **issued an unsecured convertible promissory note** to the Sponsor for **up to $1,900,000**, with **$1,540,000 outstanding** as of **June 30, 2025**, which can be converted into warrants upon a Business Combination[76](index=76&type=chunk) - On **June 25, 2025**, the Company **issued a second unsecured promissory note** to the Sponsor for **up to $2,500,000**, with **$1,000,000 borrowed** as of **June 30, 2025**[77](index=77&type=chunk) [NOTE 6 — COMMITMENTS AND CONTINGENCIES](index=23&type=section&id=NOTE%206%20%E2%80%94%20COMMITMENTS%20AND%20CONTINGENCIES) Identifies the company's contractual obligations, potential liabilities, and forward purchase agreements - Holders of Founder Shares, Private Placement Warrants, and Working Capital Loan warrants are **entitled to registration rights**[79](index=79&type=chunk) - The Company **paid underwriters a $2,000,000 cash discount** and owes a deferred underwriting fee of **$3,500,000**, payable upon completion of a Business Combination[81](index=81&type=chunk)[82](index=82&type=chunk) - A **forward purchase agreement with SparkLabs Group Management, LLC provides for the purchase of at least $115,000,000 in forward purchase units**, but the forward purchaser can terminate its commitment[83](index=83&type=chunk) [NOTE 7 — SHAREHOLDERS' DEFICIT](index=25&type=section&id=NOTE%207%20%E2%80%94%20SHAREHOLDERS'%20DEFICIT) Details the authorized and outstanding share capital, including Class A and Class B ordinary shares - The Company is **authorized to issue 5,000,000 preference shares** and **500,000,000 Class A ordinary shares**; none were issued or outstanding as of **June 30, 2025**, excluding shares subject to redemption[85](index=85&type=chunk)[86](index=86&type=chunk) - As of **June 30, 2025**, there were **6,422,078 Class B ordinary shares** issued and outstanding, with **up to 3,435,065 subject to forfeiture**[88](index=88&type=chunk) - **Founder Shares (Class B ordinary shares) automatically convert into Class A ordinary shares** upon a business combination, or earlier at the holder's option[89](index=89&type=chunk) - Subsequent to the balance sheet date, on **July 9, 2025**, the **Sponsor converted 4,000,000 Class B ordinary shares into Class A ordinary shares**[87](index=87&type=chunk) [NOTE 8 — WARRANTS](index=25&type=section&id=NOTE%208%20%E2%80%94%20WARRANTS) Provides information on outstanding public and private warrants, including exercise and redemption terms - As of **June 30, 2025**, there were **13,490,535 warrants outstanding**, comprising **8,490,535 private** and **5,000,000 public warrants**[91](index=91&type=chunk) - **Public Warrants become exercisable on the later of 30 days after a Business Combination or 12 months from the IPO closing, expiring five years after a Business Combination**[92](index=92&type=chunk) - The Company may **redeem outstanding Public Warrants** if the Class A ordinary share price **equals or exceeds $18.00** for **10 trading days** within a **20-trading day period**[95](index=95&type=chunk)[98](index=98&type=chunk) [NOTE 9 — FAIR VALUE MEASUREMENTS](index=29&type=section&id=NOTE%209%20%E2%80%94%20FAIR%20VALUE%20MEASUREMENTS) Explains the valuation methodologies for financial instruments, particularly investments held in the Trust Account Fair Value Measurements (Level 1 Assets) | Description | Level | June 30, 2025 ($) | Level | December 31, 2024 ($) | | :-------------------------- | :---- | :-------------- | :---- | :------------------ | | Investments held in Trust Account | 1 | $109,172,314 | 1 | $106,926,172 | - **Investments held in the Trust Account are classified as Level 1 measurements**, reflecting their valuation based on quoted prices for identical instruments in active markets[100](index=100&type=chunk) [NOTE 10 — SEGMENT INFORMATION](index=29&type=section&id=NOTE%2010%20%E2%80%94%20SEGMENT%20INFORMATION) States the company operates as a single segment and presents key performance metrics reviewed by management - The Company **operates as a single operating segment**, with the Chief Executive Officer reviewing overall operating results to allocate resources and assess performance[103](index=103&type=chunk)[104](index=104&type=chunk) Key Performance Metrics Reviewed by CODM | Metric | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | | :------------------ | :----------------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | Loss from operations | $(1,341,232) | $(1,026,123) | $(763,867) | $(470,191) | | Total other income | $2,246,144 | $2,667,344 | $1,126,450 | $1,341,034 | | Net income | $904,912 | $1,641,221 | $362,583 | $870,843 | [NOTE 11 — SUBSEQUENT EVENTS](index=30&type=section&id=NOTE%2011%20%E2%80%94%20SUBSEQUENT%20EVENTS) Reports significant events occurring after the balance sheet date, including extension approvals and redemptions - On **July 8, 2025**, shareholders **approved an extension for the business combination deadline from July 11, 2025, to September 29, 2026**[108](index=108&type=chunk) - In connection with the extension, the **Sponsor agreed to convert 4,000,000 Class B ordinary shares into Class A ordinary shares**[109](index=109&type=chunk) - **Holders of 7,763,287 Class A Ordinary Shares exercised redemption rights for approximately $84.8 million**, **leaving about $24.4 million in the Trust Account**[110](index=110&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operational results, business combination search, and liquidity challenges, including the going concern assessment - The Company is a **blank check company formed on July 12, 2021**, focused on effecting a business combination, and has **not generated operating revenues to date**[114](index=114&type=chunk) - The Company **announced a non-binding LOI for a business combination with Kneron**, a full-stack edge AI solutions provider, and is actively negotiating a binding agreement[115](index=115&type=chunk) - Net income for the three months ended **June 30, 2025**, was **$362,583**, compared to **$870,843** for the same period in **2024**, primarily due to changes in operating expenses and unrealized gains on trust account investments[120](index=120&type=chunk)[121](index=121&type=chunk) - For the six months ended **June 30, 2025**, net income was **$904,912**, **down from $1,641,221** in the prior year, driven by increased operating expenses and lower unrealized gains[122](index=122&type=chunk)[123](index=123&type=chunk) - As of **June 30, 2025**, the Company **had $1,101,828** in its operating bank account and a working capital **deficit of $2,210,134**, **raises substantial doubt about its ability to continue as a going concern**[129](index=129&type=chunk)[132](index=132&type=chunk) - The Company has **no off-balance sheet arrangements** and its contractual obligations include monthly management fees and a deferred underwriting commission of **$3,500,000** payable upon a business combination[133](index=133&type=chunk)[134](index=134&type=chunk)[136](index=136&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Spark I Acquisition Corporation is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is **not required to provide quantitative and qualitative disclosures about market risk**[142](index=142&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls were effective as of June 30, 2025, with no material changes in internal control over financial reporting during Q2 2025 - As of **June 30, 2025**, the Company's disclosure controls and procedures were evaluated and **deemed effective at a reasonable assurance level**[144](index=144&type=chunk) - There were **no material changes in the Company's internal control over financial reporting** during the second quarter of **2025**[145](index=145&type=chunk) [PART II - OTHER INFORMATION](index=39&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) Covers legal proceedings, risk factors, equity sales, and other disclosures for the reporting period [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) Spark I Acquisition Corporation reported no legal proceedings as of the filing date - The Company has **no legal proceedings**[148](index=148&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) The Company refers to the risk factors detailed in its Annual Report on Form 10-K for the year ended December 31, 2024, and states there have been no material changes to these factors as of the date of this Quarterly Report - The Company refers to the risk factors detailed in its Annual Report on Form 10-K for the year ended **December 31, 2024**[149](index=149&type=chunk) - As of the date of this Quarterly Report, there have been **no material changes to the previously disclosed risk factors**[149](index=149&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company confirmed the consummation of its Initial Public Offering on October 11, 2023, and stated there has been no material change in the planned use of proceeds from the IPO - The **Initial Public Offering was consummated on October 11, 2023**[150](index=150&type=chunk) - There has been **no material change in the planned use of proceeds from the Initial Public Offering**[150](index=150&type=chunk) [Item 3. Defaults upon Senior Securities](index=39&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) Spark I Acquisition Corporation reported no defaults upon senior securities - The Company has **no defaults upon senior securities**[151](index=151&type=chunk) [Item 4. Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Spark I Acquisition Corporation reported no mine safety disclosures - The Company has **no mine safety disclosures**[152](index=152&type=chunk) [Item 5. Other Information](index=39&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the last fiscal quarter - **No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement** during the last fiscal quarter[153](index=153&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or incorporated by reference into the Quarterly Report on Form 10-Q, including key agreements and certifications - The exhibits include the **Underwriting Agreement**, Amended and Restated Memorandum and Articles of Association, Warrant Agreement, and various other agreements and certifications[156](index=156&type=chunk) [SIGNATURES](index=41&type=section&id=SIGNATURES) Certifies the accuracy and submission of the report by the principal executive and financial officers [SIGNATURES](index=41&type=section&id=SIGNATURES) The report is **signed by James Rhee, Chairman and Chief Executive Officer**, and **Ho Min (Jimmy) Kim, Chief Financial Officer**, on **August 12, 2025**, certifying its submission in accordance with Exchange Act requirements[162](index=162&type=chunk)

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's H1 2025 financial statements show a decline in profitability and liquidity, alongside the reclassification of certain assets as held for sale [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Summary (in thousands) | Balance Sheet Items | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$130,511** | **$128,290** | | Cash | $1,037 | $7,721 | | Inventories | $51,432 | $39,950 | | Assets held for sale | $3,849 | $0 | | **Total Liabilities** | **$71,558** | **$68,890** | | Line of credit | $19,099 | $1,454 | | Customer deposits | $4,341 | $18,037 | | **Total Stockholders' Equity** | **$58,953** | **$59,400** | - Key changes from Dec 31, 2024 to June 30, 2025 include a significant decrease in cash from **$7.7 million** to **$1.0 million**, a substantial increase in inventories by **$11.5 million**, and a large draw on the line of credit, which increased from **$1.5 million** to **$19.1 million** Customer deposits also saw a major reduction from **$18.0 million** to **$4.3 million**[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statement of Operations Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | **$39,235** | **$36,452** | **$76,073** | **$74,068** | | Gross Profit | $3,975 | $5,566 | $8,301 | $12,203 | | Operating (Loss) Income | ($165) | $1,257 | $19 | $3,335 | | **Net (Loss) Income** | **($989)** | **$482** | **($1,359)** | **$1,992** | | **Diluted EPS** | **($0.04)** | **$0.02** | **($0.06)** | **$0.09** | - For the six months ended June 30, the company's performance shifted from a net income of **$2.0 million** in 2024 to a net loss of **$1.4 million** in 2025, despite a slight increase in revenues The decline was primarily driven by a significant increase in the cost of sales, which reduced gross profit by **32%** year-over-year[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($20,498) | ($3,427) | | Net cash used in investing activities | ($2,115) | ($2,375) | | Net cash provided by financing activities | $15,929 | $5,641 | | **Net Decrease in Cash** | **($6,684)** | **($161)** | - The significant increase in cash used in operating activities in H1 2025 was mainly due to an **$11.5 million** increase in inventories and a **$13.7 million** decrease in customer deposits This was partially offset by a **$17.6 million** net draw from the line of credit under financing activities[16](index=16&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company's revenue from the U.S. wind energy industry constituted **52%** of total revenue in the first six months of 2025, up from **40%** in the same period of 2024[21](index=21&type=chunk) Revenue by Segment (in thousands) | Segment | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Heavy Fabrications | $24,989 | $19,611 | $50,236 | $41,628 | | Gearing | $7,284 | $10,454 | $13,251 | $18,791 | | Industrial Solutions | $7,363 | $6,463 | $13,010 | $14,456 | | **Consolidated** | **$39,235** | **$36,452** | **$76,073** | **$74,068** | - On June 4, 2025, the company entered into an agreement to sell certain assets from its industrial fabrication operations in Manitowoc, Wisconsin for up to **$13.8 million** in cash The transaction is expected to close in Q3 2025 The related assets are now classified as held for sale[42](index=42&type=chunk) Advanced Manufacturing Production (AMP) Credits Recognized (in thousands) | Period | Gross AMP Credits | | :--- | :--- | | Q2 2025 | $3,132 | | Q2 2024 | $1,848 | | Six Months 2025 | $5,904 | | Six Months 2024 | $3,720 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights a challenging financial period, impacted by operational inefficiencies and legislative changes, with liquidity managed through credit facilities and asset sales Key Financial Metrics (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $39,235 | $36,452 | $76,073 | $74,068 | | Net (Loss) Income | ($989) | $482 | ($1,359) | $1,992 | | Adjusted EBITDA | $2,085 | $3,642 | $4,453 | $7,811 | | Total Orders | $20,956 | $18,372 | $49,090 | $47,368 | | Backlog | $95,279 | $139,060 | $95,279 | $139,060 | - The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, eliminates AMP credits for components produced after December 31, 2027 This shortens the benefit period and is expected to adversely impact the profitability of the Heavy Fabrications segment[108](index=108&type=chunk) - The company entered into a definitive agreement to sell assets of its industrial fabrication operations in Manitowoc, Wisconsin for up to **$13.8 million** The transaction is expected to close in Q3 2025[112](index=112&type=chunk) [Results of Operations: Three Months Ended June 30, 2025 vs. 2024](index=28&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Comparison) - Consolidated revenues for Q2 2025 increased by **7.6%** to **$39.2 million**, driven by a **27%** revenue increase in the Heavy Fabrications segment However, gross profit decreased by **28.6%** to **$4.0 million** due to manufacturing inefficiencies and higher fixed costs[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) - The Heavy Fabrications segment saw a **27%** revenue increase, but operating margin declined from **7.9%** to **6.8%** due to inefficiencies with a new, larger wind tower model[119](index=119&type=chunk)[120](index=120&type=chunk) - The Gearing segment experienced a **30%** revenue decline to **$7.3 million**, primarily from reduced shipments to O&G customers, causing operating income to swing from a **$482 thousand** profit to an **$819 thousand** loss[121](index=121&type=chunk)[122](index=122&type=chunk) - The Industrial Solutions segment orders more than tripled to **$13.9 million**, and revenue grew **14%** to **$7.4 million** However, operating income decreased due to a less profitable product mix[123](index=123&type=chunk)[124](index=124&type=chunk) [Results of Operations: Six Months Ended June 30, 2025 vs. 2024](index=30&type=section&id=Results%20of%20Operations%20-%20Six%20Months%20Comparison) - For the first six months of 2025, consolidated revenues increased **2.7%** to **$76.1 million** Despite this, gross profit fell **32%** to **$8.3 million**, and the company recorded a net loss of **$1.4 million** compared to a **$2.0 million** net income in the prior year period[127](index=127&type=chunk)[130](index=130&type=chunk) - Heavy Fabrications segment revenue grew **21%** to **$50.2 million** in H1 2025, driven by a **39%** increase in wind revenue Operating income increased slightly to **$4.0 million** from **$3.6 million**[131](index=131&type=chunk)[132](index=132&type=chunk) - Gearing segment revenue decreased **29%** to **$13.3 million** in H1 2025, leading to an operating loss of **$1.7 million** compared to a **$0.5 million** profit in H1 2024[133](index=133&type=chunk)[134](index=134&type=chunk) - Industrial Solutions segment orders more than doubled to **$24.0 million** in H1 2025 However, revenue decreased **10%** to **$13.0 million**, and operating income fell sharply to **$0.8 million** from **$2.4 million** due to lower sales and a less profitable product mix[135](index=135&type=chunk)[136](index=136&type=chunk) [Liquidity, Financial Position and Capital Resources](index=33&type=section&id=Liquidity%2C%20Financial%20Position%20and%20Capital%20Resources) - As of June 30, 2025, the company had **$1.0 million** in cash, a decrease of **$6.7 million** from year-end 2024 Total debt and finance lease obligations stood at **$31.4 million**[138](index=138&type=chunk) - The company has a **$35 million** senior secured revolving credit facility As of June 30, 2025, **$24.7 million** was outstanding, with an additional **$13.8 million** available for borrowing[138](index=138&type=chunk) - The company utilizes an at-the-market (ATM) equity offering program with approximately **$11.7 million** remaining available for issuance as of June 30, 2025 No shares were issued under this program in H1 2025[142](index=142&type=chunk) Summary of Cash Flows for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Operating activities | ($20,498) | ($3,427) | | Investing activities | ($2,115) | ($2,375) | | Financing activities | $15,929 | $5,641 | | **Net decrease in cash** | **($6,684)** | **($161)** | [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is classified as a smaller reporting company and is therefore not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Broadwind, Inc. is exempt from the requirement to provide information regarding market risk under Item 305I of Regulation S-K[155](index=155&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the quarter ended June 30, 2025[156](index=156&type=chunk) - No material changes were made to the internal control over financial reporting during the three months ended June 30, 2025[157](index=157&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings that arise in the normal course of business, with management not expecting a material adverse effect on financial outcomes - The company is party to various legal proceedings arising in the normal course of business, but management believes the outcomes will not be materially adverse[82](index=82&type=chunk)[160](index=160&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) The company highlights a significant updated risk factor related to changes in U.S. tax and economic incentives for the wind energy industry, particularly the OBBBA's impact on AMP credits and project eligibility - The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, significantly shortens the eligibility windows for federal tax incentives crucial to the U.S. wind energy industry[162](index=162&type=chunk) - The OBBBA eliminates the Advanced Manufacturing Production (AMP) credits for wind components produced and sold after December 31, 2027, which could materially and adversely affect the company's business in the near term[167](index=167&type=chunk) - Under the OBBBA, wind projects starting construction after July 4, 2026, must be in service by December 31, 2027, to qualify for the Production Tax Credit (PTC) or Investment Tax Credit (ITC) This change may lead to a decrease in new wind projects and lower demand for the company's products[166](index=166&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&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 or use of proceeds to report for the period[171](index=171&type=chunk) [Other Information](index=38&type=section&id=Item%205.%20Other%20Information) During the three months ended June 30, 2025, none of the company's directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement in Q2 2025[174](index=174&type=chunk) [Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications by the CEO and CFO, and agreements related to the asset purchase of the Manitowoc facility - The exhibits filed with this report include the Asset Purchase Agreement and Sublease Agreement related to the sale of the Manitowoc facility, as well as CEO and CFO certifications[175](index=175&type=chunk)[178](index=178&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended June 30, 2025 ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period __________ to __________ Commission File Number: 0-26486 Auburn National Bancorporation, Inc. (Exact Name of Registrant as Specified in Its Charter ...

[Form 10-Q Filing Information](index=1&type=section&id=Form%2010-Q%20Filing%20Information) Details the filing of The York Water Company's Form 10-Q, including registrant information and key company identifiers [Registrant Information](index=1&type=section&id=Registrant%20Information) The York Water Company filed its Form 10-Q for Q2 2025, identifying as a non-accelerated, smaller reporting company with 14.4 million shares outstanding - The York Water Company (**YORW**) filed its Form 10-Q for the quarter ended **June 30, 2025**[2](index=2&type=chunk) - The company is a **non-accelerated filer** and a **smaller reporting company**[5](index=5&type=chunk) Registrant Details | Metric | Value | | :-------------------------------- | :-------------------- | | Commission File Number | 001-34245 | | Trading Symbol | YORW | | Exchange | The Nasdaq Global Select Market | | Common Stock Outstanding (as of Aug 12, 2025) | 14,421,177 Shares | [PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20Financial%20Information) Presents the unaudited interim financial statements and management's discussion and analysis of financial condition and operations [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Includes unaudited interim financial statements: Balance Sheets, Income, Equity, and Cash Flows, with accompanying notes for Q2 2025 [Balance Sheets (Unaudited)](index=3&type=section&id=Balance%20Sheets%20(Unaudited)) Total assets and stockholders' equity increased from December 2024 to June 2025, driven by net utility plant and long-term debt Balance Sheet Summary (in thousands) | Metric (in thousands) | Jun. 30, 2025 | Dec. 31, 2024 | Change | | :-------------------- | :------------ | :------------ | :----- | | Total Assets | $653,731 | $633,473 | +$20,258 | | Net utility plant | $548,715 | $531,007 | +$17,708 | | Total common stockholders' equity | $234,551 | $231,192 | +$3,359 | | Long-term debt | $218,056 | $205,561 | +$12,495 | | Total Stockholders' Equity and Liabilities | $653,731 | $633,473 | +$20,258 | [Statements of Income (Unaudited)](index=5&type=section&id=Statements%20of%20Income%20(Unaudited)) Net income slightly increased for Q2 2025 but decreased for H1 2025, influenced by revenues, interest, and tax expense Income Statement Summary (in thousands) | Metric (in thousands) | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | YoY Change | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | YoY Change | | :-------------------- | :------------------------------ | :------------------------------ | :--------- | :---------------------------- | :---------------------------- | :--------- | | Operating Revenues | $19,199 | $18,750 | +2.4% | $37,655 | $36,378 | +3.5% | | Operating Expenses | $12,113 | $11,688 | +3.6% | $24,286 | $23,101 | +5.1% | | Operating Income | $7,086 | $7,062 | +0.3% | $13,369 | $13,277 | +0.7% | | Interest on debt | $(2,521) | $(2,183) | +15.5% | $(4,940) | $(4,306) | +14.7% | | Income before income taxes | $4,685 | $5,514 | -15.1% | $8,795 | $10,443 | -15.8% | | Income tax expense (benefit) | $(367) | $521 | -170.4% | $105 | $1,123 | -90.7% | | Net Income | $5,052 | $4,993 | +1.2% | $8,690 | $9,320 | -6.8% | | Basic Earnings Per Share | $0.35 | $0.35 | 0.0% | $0.60 | $0.65 | -7.7% | [Statements of Common Stockholders' Equity (Unaudited)](index=6&type=section&id=Statements%20of%20Common%20Stockholders'%20Equity%20(Unaudited)) Common stockholders' equity grew from December 2024 to June 2025, driven by net income and stock issuance, offset by dividends Common Stockholders' Equity (in thousands) | Metric (in thousands) | Balance, Dec 31, 2024 | Net Income | Cash Dividends Declared | Issuance of Common Stock | Stock-based Compensation | Balance, Jun 30, 2025 | | :-------------------- | :-------------------- | :--------- | :---------------------- | :----------------------- | :----------------------- | :-------------------- | | Common Stock Amount | $138,089 | – | – | $812 | $170 | $139,071 | | Retained Earnings | $93,103 | $8,690 | $(6,313) | – | – | $95,480 | | Total | $231,192 | $8,690 | $(6,313) | $812 | $170 | $234,551 | [Statements of Cash Flows (Unaudited)](index=7&type=section&id=Statements%20of%20Cash%20Flows%20(Unaudited)) Operating cash flow increased for H1 2025, investing cash use rose, and financing cash provided more, mainly from debt issues Cash Flow Summary (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | YoY Change | | :-------------------------------- | :---------------------------- | :---------------------------- | :--------- | | Net cash provided by operating activities | $13,603 | $12,841 | +$762 | | Net cash used in investing activities | $(22,182) | $(20,919) | -$(1,263) | | Net cash provided by financing activities | $8,579 | $8,078 | +$501 | | Net change in cash and cash equivalents | $0 | $0 | $0 | - Utility plant additions, including debt portion of allowance for funds used during construction, were **$22,182 thousand** in 2025, up from **$20,867 thousand** in 2024[23](index=23&type=chunk) - Proceeds from long-term debt issues were **$26,423 thousand** in 2025, compared to **$56,565 thousand** in 2024[23](index=23&type=chunk) [Notes to Interim Financial Statements](index=8&type=section&id=Notes%20to%20Interim%20Financial%20Statements) Provides detailed context for interim financial statements, covering accounting policies, debt, derivatives, revenue, rates, pensions, and taxes [1. Basis of Presentation](index=8&type=section&id=1.%20Basis%20of%20Presentation) Interim financial statements are unaudited, include normal accruals, and should be read with the 2024 10-K; interim results are not indicative of the full year - Interim financial statements are **unaudited** and reflect normal recurring accruals[25](index=25&type=chunk) - Results for the interim period are **not indicative** of full-year performance[26](index=26&type=chunk) [2. Accounts Receivable and Unbilled Revenue](index=8&type=section&id=2.%20Accounts%20Receivable%20and%20Unbilled%20Revenue) Net accounts receivable increased to **$7,484 thousand** by June 2025, primarily due to normal timing differences in customer payments Accounts Receivable and Unbilled Revenue (in thousands) | Metric (in thousands) | Jun. 30, 2025 | Dec. 31, 2024 | Change | | :-------------------- | :------------ | :------------ | :----- | | Accounts receivable – customers | $8,725 | $8,392 | +$333 | | Other receivables | $369 | $467 | -$(98) | | Less: allowance for doubtful accounts | $(1,610) | $(1,610) | $0 | | Accounts receivable, net | $7,484 | $7,249 | +$235 | | Unbilled revenue | $3,493 | $3,604 | -$(111) | - Changes in accounts receivable and unbilled revenue are primarily due to **normal timing differences** between service provision and customer payments[27](index=27&type=chunk) [3. Common Stock and Earnings Per Share](index=8&type=section&id=3.%20Common%20Stock%20and%20Earnings%20Per%20Share) EPS calculations use weighted average shares; no shares were repurchased, with **618,004 shares** remaining authorized for repurchase Weighted Average Common Shares | Metric | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Weighted average common shares, basic | 14,396,648 | 14,340,575 | 14,388,712 | 14,332,727 | | Weighted average common shares, diluted | 14,396,648 | 14,340,832 | 14,388,712 | 14,332,941 | - **No shares** were repurchased during the three or six months ended June 30, 2025 and 2024[30](index=30&type=chunk) - As of June 30, 2025, **618,004 shares** remain authorized for repurchase under the program[30](index=30&type=chunk) [4. Debt](index=9&type=section&id=4.%20Debt) Long-term debt increased to **$218,056 thousand** by June 2025, mainly from line of credit borrowings, with no new long-term debt arrangements Debt Summary (in thousands) | Metric (in thousands) | Jun. 30, 2025 | Dec. 31, 2024 | Change | | :-------------------- | :------------ | :------------ | :----- | | Committed Line of Credit, due September 2026 | $28,539 | $15,808 | +$12,731 | | Total long-term debt | $220,909 | $208,178 | +$12,731 | | Long-term portion | $218,056 | $205,561 | +$12,495 | - The Company **did not enter** into any new long-term debt arrangements or modify its outstanding long-term debt for the six months ended June 30, 2025[31](index=31&type=chunk) [5. Interest Rate Swap Agreement](index=10&type=section&id=5.%20Interest%20Rate%20Swap%20Agreement) An interest rate swap converts **$12,000 thousand** variable-rate debt to a **3.16%** fixed rate, recorded as a **$535 thousand** regulatory liability expiring in 2029 - The Company uses an interest rate swap to convert **$12,000 thousand** variable-rate debt to a fixed rate of **3.16%**[33](index=33&type=chunk) - The swap is recorded at fair value as a **regulatory liability**, deferring unrealized gains and losses[34](index=34&type=chunk)[35](index=35&type=chunk) - The swap was in a liability position of approximately **$535 thousand** as of June 30, 2025, and expires **October 1, 2029**[36](index=36&type=chunk)[37](index=37&type=chunk) [6. Fair Value of Financial Instruments](index=10&type=section&id=6.%20Fair%20Value%20of%20Financial%20Instruments) Interest rate swap liability was **$525 thousand** at fair value (Level 2 inputs); long-term debt's estimated fair value was **$197,000 thousand** versus **$220,909 thousand** carrying value Fair Value of Financial Instruments (in thousands) | Description | Jun. 30, 2025 (Fair Value) | Dec. 31, 2024 (Fair Value) | | :---------- | :------------------------- | :------------------------- | | Interest Rate Swap | $525 | $386 | | Long-term Debt (Carrying Value) | $220,909 | $208,178 | | Long-term Debt (Estimated Fair Value) | ~$197,000 | ~$189,000 | - Fair values are measured using **Level 2 inputs**, such as discounted cash flow techniques incorporating market interest yield curves[41](index=41&type=chunk)[42](index=42&type=chunk) [7. Commitments](index=11&type=section&id=7.%20Commitments) PPUC approved replacing **400 lead service lines** annually; **$2,018 thousand** incurred by June 2025, recorded as a regulatory asset for recovery - PPUC approved tariff modification to replace up to **400 lead customer-owned service lines** annually over nine years[44](index=44&type=chunk) - Costs are recorded as a **regulatory asset** to be recovered in future base rates over a four-year period[44](index=44&type=chunk) Lead Service Line Replacement Costs (in thousands) | Metric (in thousands) | Jun. 30, 2025 | Dec. 31, 2024 | | :-------------------- | :------------ | :------------ | | Cost for lead service line replacements | $2,018 | $1,961 | | Estimated total cost | $2,100 | N/A | [8. Revenue](index=12&type=section&id=8.%20Revenue) Total operating revenue increased to **$19,199 thousand** for Q2 2025 and **$37,655 thousand** for H1 2025, mainly from utility services Revenue by Source (in thousands) | Revenue Source (in thousands) | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :---------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Water utility service | $17,054 | $16,654 | $33,430 | $32,235 | | Wastewater utility service | $1,963 | $1,854 | $3,890 | $3,644 | | Billing and revenue collection services | $17 | $122 | $43 | $252 | | Collection services | $30 | $0 | $33 | $3 | | Other revenue | $19 | $6 | $29 | $16 | | Total Revenue from Contracts with Customers | $19,083 | $18,636 | $37,425 | $36,150 | | Rents from regulated property | $116 | $114 | $230 | $228 | | Total Operating Revenue | $19,199 | $18,750 | $37,655 | $36,378 | - Utility service revenue is recognized **over time** using an output method, based on fixed charges and per-unit rates[48](index=48&type=chunk) - Billing and revenue collection services, and collection services, are satisfied **at a point in time** when bills are sent or services are completed[49](index=49&type=chunk)[51](index=51&type=chunk) [9. Rate Matters](index=13&type=section&id=9.%20Rate%20Matters) A rate increase request was filed for **28.9%** water and **44.5%** wastewater rates, effective by March 2026; DSIC revenue significantly increased - Filed a rate increase request on **May 30, 2025**, seeking a **28.9%** increase in water rates and a **44.5%** increase in wastewater rates[53](index=53&type=chunk) - Any approved rate increase will be effective no later than **March 1, 2026**[53](index=53&type=chunk) DSIC Revenue (in thousands) | DSIC Revenue (in thousands) | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :-------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | DSIC provided revenues | $531 | $34 | $917 | $34 | [10. Pensions](index=14&type=section&id=10.%20Pensions) Net periodic pension cost was **zero** for H1 2025, with no employer contributions made or expected for the remainder of 2025 Net Periodic Pension Cost (in thousands) | Metric (in thousands) | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :-------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net periodic pension cost | $0 | $(278) | $0 | $111 | - **No employer contributions** were made to pension plans for the six months ended June 30, 2025, and none are expected for the rest of 2025[57](index=57&type=chunk) [11. Stock-Based Compensation](index=14&type=section&id=11.%20Stock-Based%20Compensation) The 2025 LTIP added **150,000 shares**; stock-based compensation was **$170 thousand** for H1 2025, with **$349 thousand** unrecognized - The 2025 LTIP was amended to add **150,000 shares** for awards over ten years[58](index=58&type=chunk) Stock-Based Compensation (in thousands) | Metric (in thousands) | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :-------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Stock-based compensation | $98 | $97 | $170 | $140 | | Related recognized tax benefits | $26 | $27 | $46 | $39 | - Total unrecognized stock-based compensation for nonvested awards is **$349 thousand** as of June 30, 2025, to be recognized over three years[63](index=63&type=chunk) [12. Income Taxes](index=15&type=section&id=12.%20Income%20Taxes) Effective tax rate was **(7.8)%** for Q2 and **1.2%** for H1 2025, significantly lower due to IRS TPR deductions; OBBBA is not expected to materially impact Effective Tax Rate | Metric | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :----- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Effective tax rate | (7.8)% | 9.4% | 1.2% | 10.8% | - The reduction in effective tax rate is due to deductions for asset improvements under **IRS tangible property regulations (TPR)**[64](index=64&type=chunk)[65](index=65&type=chunk) - The One Big Beautiful Bill Act (OBBBA), signed **July 4, 2025**, is **not expected to materially impact** the Company[66](index=66&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operations, liquidity, and capital resources, including forward-looking statements, acquisitions, and capital expenditures [Forward-looking Statements](index=16&type=section&id=Forward-looking%20Statements) Forward-looking statements on strategy, prospects, and growth are subject to material differences due to weather, rate relief, and economic conditions - **Forward-looking statements** cover business strategy, future prospects, profitability, growth, and regulatory matters[68](index=68&type=chunk) - Actual results may **differ materially** due to factors like rate changes, weather, natural disasters, economic conditions, and changes in government policies[69](index=69&type=chunk)[70](index=70&type=chunk) [General Information](index=17&type=section&id=General%20Information) The York Water Company provides water and wastewater services across 57 PA municipalities, regulated by PPUC, with growth driven by rates, customers, and acquisitions - Primary business is **water impoundment, purification, and distribution**, along with **wastewater collection and treatment**[71](index=71&type=chunk) - Operates in **57 municipalities** across four counties in south-central Pennsylvania, regulated by the **PPUC**[71](index=71&type=chunk) - Water business is **vulnerable to weather conditions**, especially in summer, but minimum customer charges mitigate some fixed cost risks[73](index=73&type=chunk) - **Growth strategies** include timely rate increases, increased water volumes, customer growth, and water/wastewater system acquisitions[74](index=74&type=chunk) [Results of Operations](index=18&type=section&id=Results%20of%20Operations) Q2 2025 net income increased **1.2%** YoY, while H1 2025 net income decreased **6.8%**, influenced by revenues, expenses, and interest Results of Operations Summary (in thousands) | Metric (in thousands) | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | YoY Change | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | YoY Change | | :-------------------- | :------------------------------ | :------------------------------ | :--------- | :---------------------------- | :---------------------------- | :--------- | | Net Income | $5,052 | $4,993 | +1.2% | $8,690 | $9,320 | -6.8% | | Operating Revenues | $19,199 | $18,750 | +2.4% | $37,655 | $36,378 | +3.5% | | Operating Expenses | $12,113 | $11,688 | +3.6% | $24,286 | $23,101 | +5.1% | | Interest on debt | $(2,521) | $(2,183) | +15.5% | $(4,940) | $(4,306) | +14.7% | | Income tax expense (benefit) | $(367) | $521 | -170.4% | $105 | $1,123 | -90.7% | - Operating revenue increases were primarily due to customer base growth and increased DSIC revenues (**$497 thousand** for Q2, **$883 thousand** for H1)[78](index=78&type=chunk)[84](index=84&type=chunk) - **Operating expense increases** were driven by higher depreciation and amortization, wages and benefits, water treatment, and insurance costs[79](index=79&type=chunk)[85](index=85&type=chunk) [Rate Matters](index=19&type=section&id=Rate%20Matters_MD%26A) Effective July 1, 2025, the tariff includes a **3.90%** DSIC on revenues, allowing recovery of infrastructure replacement costs - Effective **July 1, 2025**, the Company's tariff includes a DSIC on revenues of **3.90%**[90](index=90&type=chunk) [Acquisitions and Growth](index=20&type=section&id=Acquisitions%20and%20Growth) Agreements for four wastewater and water system acquisitions are expected to add **485 customers** by early 2026, supporting growth - Signed agreements to acquire wastewater and water assets from Pine Run Retirement Community (**100 wastewater customers**, H1 2026 close), Eagle View Manufactured Housing Community (**140 water customers**, H2 2025 close), CMV Sewage Co., Inc. (**280 wastewater customers**, H2 2025 close), and Margaretta Mobile Home Park (**65 wastewater customers**, H2 2025 close)[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - These acquisitions are expected to be **immaterial** to Company results but support growth and offset consumption declines[96](index=96&type=chunk) [Capital Expenditures](index=20&type=section&id=Capital%20Expenditures) Invested **$22,182 thousand** in Q2 2025 construction expenditures; **$23,800 thousand** anticipated for H2 2025, funded by internal funds and credit - Invested **$22,182 thousand** in construction expenditures for Q2 2025, including main extensions, software upgrades, and infrastructure improvements[97](index=97&type=chunk) - Anticipates approximately **$23,800 thousand** in construction expenditures for the remainder of 2025[98](index=98&type=chunk) - Funding sources include internally-generated funds, line of credit, stock purchase plans, and customer advances/contributions (**5-10%** of funding)[98](index=98&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is managed via a credit line; internally-generated funds increased, and capitalization ratios for equity (**51.5%**) and debt (**48.5%**) are within target ranges - Cash management account linked to line of credit provides liquidity; **$28,539 thousand** borrowed on line of credit as of June 30, 2025[100](index=100&type=chunk)[105](index=105&type=chunk) - Internally-generated funds from operations increased to **$13,603 thousand** for the first six months of 2025, up from **$12,841 thousand** in 2024[102](index=102&type=chunk) Capitalization Ratios | Metric | Jun. 30, 2025 | Dec. 31, 2024 | | :-------------------------------- | :------------ | :------------ | | Common stockholders' equity as % of total capitalization | 51.5% | 52.6% | | Long-term debt as % of total capitalization | 48.5% | 47.4% | - The Company expects to extend the maturity of its **$50,000 thousand** committed line of credit into 2027[105](index=105&type=chunk) [Cash](index=21&type=section&id=Cash) Cash management account linked to credit line provides liquidity; **$28,539 thousand** borrowed on credit line with a **$1,035 thousand** cash overdraft as of June 2025 - Cash management account is **directly connected** to the line of credit for automatic cash management[100](index=100&type=chunk) - As of June 30, 2025, the Company had **$28,539 thousand** borrowed on its line of credit and a cash overdraft of **$1,035 thousand**[100](index=100&type=chunk) [Accounts Receivable](index=21&type=section&id=Accounts%20Receivable_MD%26A) Accounts receivable align with revenue and payment timeliness; a reserve for doubtful accounts is maintained based on historical and forecasted factors - Accounts receivable balance follows revenue changes and is affected by payment timeliness and **reserve for doubtful accounts**[101](index=101&type=chunk) - Reserve for doubtful accounts is based on **historical write-offs, current conditions, and reasonable forecasts**[101](index=101&type=chunk) [Internally-generated Funds](index=21&type=section&id=Internally-generated%20Funds) Internally-generated funds increased to **$13,603 thousand** for H1 2025, influenced by rate relief, water usage, customer growth, and expenses - **Internally-generated funds** are influenced by rate relief, regulations, water usage, customer growth, and expenses[102](index=102&type=chunk) Internally-generated Funds (in thousands) | Metric (in thousands) | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | YoY Change | | :-------------------- | :---------------------------- | :---------------------------- | :--------- | | Internally-generated funds from operations | $13,603 | $12,841 | +$762 | [Common Stock](index=21&type=section&id=Common%20Stock_MD%26A) Common stockholders' equity was **51.5%** of total capitalization, within the **50-55%** target range, with future financing expected from long-term debt Common Stockholders' Equity as % of Total Capitalization | Metric | Jun. 30, 2025 | Dec. 31, 2024 | | :-------------------------------- | :------------ | :------------ | | Common stockholders' equity as % of total capitalization | 51.5% | 52.6% | - The Company targets equity between **50%** and **55%** of total capitalization[103](index=103&type=chunk) - An effective 'shelf' Registration Statement on Form S-3 allows for offering up to **$60,000 thousand** of common stock or debt securities[104](index=104&type=chunk) [Credit Line](index=21&type=section&id=Credit%20Line) Maintains a **$50,000 thousand** unsecured credit line, with **$28,539 thousand** borrowed at **5.49%**; maturity expected to extend to 2027 - Maintains a **$50,000 thousand** unsecured line of credit, with **$28,539 thousand** borrowed as of June 30, 2025[105](index=105&type=chunk) - Interest rate on the line of credit borrowing was **5.49%** as of June 30, 2025[105](index=105&type=chunk) - Expects to extend the line of credit maturity into **2027** and believes adequate capacity exists through **2026**[105](index=105&type=chunk)[107](index=107&type=chunk) [Long-term Debt](index=22&type=section&id=Long-term%20Debt_MD%26A) Long-term debt as a percentage of total capitalization increased to **48.5%**, targeting a **45-50%** ratio acceptable to the PPUC Long-term Debt as % of Total Capitalization | Metric | Jun. 30, 2025 | Dec. 31, 2024 | | :-------------------------------- | :------------ | :------------ | | Total long-term debt as % of total capitalization | 48.5% | 47.4% | - The Company aims for a debt to total capitalization ratio between **45%** and **50%**[109](index=109&type=chunk) [Income Taxes, Deferred Income Taxes and Uncertain Tax Positions](index=22&type=section&id=Income%20Taxes%2C%20Deferred%20Income%20Taxes%20and%20Uncertain%20Tax%20Positions) IRS TPR deductions reduce the effective tax rate, increasing deferred tax liabilities; the rate is expected to rise in H2 2025, with no material OBBBA impact or uncertain tax positions - Ongoing deduction of asset improvements under **IRS TPR** reduces effective tax rate and increases deferred tax liabilities and regulatory assets[110](index=110&type=chunk) - Effective tax rate for the remainder of 2025 is **expected to increase** due to a lower level of eligible asset improvements expensed[111](index=111&type=chunk)[89](index=89&type=chunk) - **No uncertain tax positions** require recognition as of June 30, 2025[115](index=115&type=chunk) [Credit Rating](index=22&type=section&id=Credit%20Rating) S&P affirmed the Company's credit rating at **A-** with a **stable outlook** on **July 30, 2025**, contingent on rate relief and cash flow - Standard & Poor's affirmed credit rating at **A-** with a **stable outlook** and adequate liquidity on **July 30, 2025**[116](index=116&type=chunk) - Credit rating maintenance relies on **adequate rate relief, balanced capital expenditure funding, and strong cash flow**[116](index=116&type=chunk) [Physical and Cyber Security](index=23&type=section&id=Physical%20and%20Cyber%20Security) The Company maintains physical and cyber security measures, with costs recoverable; IT reliance creates cyber risk despite robust controls and insurance - Maintains security measures at facilities and collaborates with authorities on threats; costs are **expected to be recoverable** in rates[118](index=118&type=chunk) - Relies on IT systems for customer service, billing, accounting, and operational monitoring, making it **vulnerable to cyber security attacks**[119](index=119&type=chunk) - Implemented processes, procedures, and controls, and maintains insurance, but **cannot guarantee** full coverage or prevention of adverse effects from cyber incidents[121](index=121&type=chunk) [Environmental Matters](index=23&type=section&id=Environmental%20Matters) PPUC approved replacing **400 lead service lines** annually; **$2,018 thousand** incurred by June 2025, recorded as a regulatory asset for recovery - PPUC approved tariff modification to replace up to **400 lead customer-owned service lines** annually over nine years[122](index=122&type=chunk) - Costs are recorded as a **regulatory asset** to be recovered in future base rates over a four-year period[122](index=122&type=chunk) Lead Service Line Replacement Costs (in thousands) | Metric (in thousands) | Jun. 30, 2025 | Dec. 31, 2024 | | :-------------------- | :------------ | :------------ | | Cost for lead service line replacements | $2,018 | $1,961 | | Estimated total cost | $2,100 | N/A | [Drought](index=23&type=section&id=Drought) Adams, York, Lancaster, and Franklin Counties returned to normal drought status in June and July 2025, with no current restrictions - Adams, York, and Lancaster Counties returned to **normal drought status** on **June 9, 2025**[123](index=123&type=chunk) - Franklin County returned to **normal drought status** on **July 2, 2025**[123](index=123&type=chunk) - Drought measures could **impact future revenues, operating expenses, and net income** depending on severity and length[123](index=123&type=chunk) [Critical Accounting Estimates](index=24&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates include regulatory assets, revenue, pensions, and income taxes, with no significant changes during Q2 2025 - **Critical accounting estimates** include regulatory assets and liabilities, revenue recognition, pension plans, and income taxes[125](index=125&type=chunk) - **No significant changes** in accounting estimates or methods occurred during the quarter ended June 30, 2025[125](index=125&type=chunk) [Off-Balance Sheet Arrangements](index=24&type=section&id=Off-Balance%20Sheet%20Arrangements) The Company does not use off-balance sheet arrangements, securitization, or unconsolidated entities, with an interest rate swap as its only derivative - The Company **does not use** off-balance sheet transactions, securitization of receivables, or unconsolidated entities[126](index=126&type=chunk) - The **only derivative financial instrument** used is an interest rate swap agreement for risk management, as discussed in Note 5[126](index=126&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Item 3, Quantitative and Qualitative Disclosures About Market Risk, is stated as **not applicable** by the Company - The Company states that Item 3, Quantitative and Qualitative Disclosures About Market Risk, is **not applicable**[127](index=127&type=chunk) [Item 4. Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were **effective** as of June 30, 2025, with no material changes in internal control - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were **effective** as of June 30, 2025[128](index=128&type=chunk) - **No material changes** in internal control over financial reporting occurred during the most recent fiscal quarter[129](index=129&type=chunk) [PART II - OTHER INFORMATION](index=25&type=section&id=PART%20II%20Other%20Information) Presents other information not covered in Part I, including trading arrangements, exhibits, and official signatures [Item 5. Other Information](index=25&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by the Company or its officers/directors in Q2 2025 - **No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements** were adopted or terminated by the Company, its directors, or officers during the quarter ended June 30, 2025[132](index=132&type=chunk) [Item 6. Exhibits](index=26&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including corporate governance documents, CEO/CFO certifications, and Inline XBRL documents - Exhibits include **Amended and Restated Articles of Incorporation and By-Laws, Change in Control Agreement, CEO and CFO certifications** (pursuant to Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Section 1350), and **Inline XBRL documents**[135](index=135&type=chunk) [Signatures](index=27&type=section&id=Signatures) The report was signed by Joseph T. Hand, Principal Executive Officer, and Matthew E. Poff, Principal Financial and Accounting Officer, on August 12, 2025 - The report was signed by **Joseph T. Hand**, Principal Executive Officer, and **Matthew E. Poff**, Principal Financial and Accounting Officer, on **August 12, 2025**[139](index=139&type=chunk)

[FORM 8-K Filing Information](index=1&type=section&id=FORM%208-K%20Filing%20Information) This section provides essential details regarding the Form 8-K filing, including registrant information and filing specifics [Registrant Information](index=1&type=section&id=Registrant%20Information) This section details The York Water Company as the registrant, including its incorporation jurisdiction and principal executive offices - Registrant: The York Water Company, incorporated in Pennsylvania[2](index=2&type=chunk) - Principal Executive Offices: 130 East Market Street, York, Pennsylvania 17401-1219[2](index=2&type=chunk) [Filing Details](index=1&type=section&id=Filing%20Details) This section outlines the Form 8-K filing date, relevant Securities Exchange Act sections, and registered securities information - Date of Report: August 12, 2025[2](index=2&type=chunk) Securities Registered | Title of Class | Trading Symbol | Name of Each Exchange on Which Registered | | :--------------- | :------------- | :---------------------------------------- | | COMMON STOCK, NO PAR VALUE | YORW | The Nasdaq Global Select Market | - The registrant is not an emerging growth company[3](index=3&type=chunk) [Item 2.02 Results of Operations and Financial Condition](index=2&type=section&id=Item%202.02%20Results%20of%20Operations%20and%20Financial%20Condition) This section addresses the announcement of the company's financial results for the second quarter and first six months of 2025 [Announcement of Financial Results](index=2&type=section&id=Announcement%20of%20Financial%20Results) The York Water Company announced its Q2 and first six months 2025 financial results via a press release furnished as Exhibit 99.1 - The York Water Company issued a press release on August 12, 2025, announcing its second quarter and first six months 2025 financial results[5](index=5&type=chunk) - The press release is furnished as Exhibit 99.1 with this Current Report on Form 8-K[5](index=5&type=chunk) [Item 9.01 Financial Statements and Exhibits](index=2&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits) This section provides a comprehensive list of financial statements and exhibits accompanying the Form 8-K filing [List of Exhibits](index=2&type=section&id=List%20of%20Exhibits) This section enumerates the exhibits included with the Form 8-K filing, specifically detailing the financial results press release Exhibits | Exhibit No. | Description of Exhibit | | :------------ | :--------------------------------- | | 99.1 | Press Release, August 12, 2025, issued by The York Water Company | [SIGNATURES](index=3&type=section&id=SIGNATURES) This section contains the official authorization and signatory details for the Form 8-K report [Authorization and Signatory](index=3&type=section&id=Authorization%20and%20Signatory) The report is officially signed by Matthew E. Poff, Chief Financial Officer of The York Water Company, on August 12, 2025 - The report was signed by Matthew E. Poff, Chief Financial Officer, on August 12, 2025[10](index=10&type=chunk)