UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from XXXXXXXX XX, XXXX to XXXXXXXX XX, XXXX Commission File Number: 001-35610 ATOSSA THERAPEUTICS, INC. (Address of principal executive offices) (Zip Code) Registrant ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 August 12, 2025 PLDT INC. (Translation of registrant's name into English) Ramon Cojuangco Building Makati Avenue, Makati City Philippines (Address of registrant's principal executive office) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F ☒ Form 40-F ☐ SI ...

Syra Health Announces Second Quarter Financial Results, Advancing Toward Profitability on Margin Gains and Cost Reductions Carmel, Ind., August 12, 2025 / PRNewswire – Syra Health Corp. (OTCQB: SYRA) ("Syra Health" or the "Company"), a healthcare technology company dedicated to powering better health through innovative technology products and services, announced today its financial results for the second quarter ended June 30, 2025. Q2 2025 Financial Highlights 2025 Financial Outlook ● We depend heavily on ...

Exhibit 99.1 Acumen Pharmaceuticals Reports Second Quarter 2025 Financial Results and Business Highlights NEWTON, Mass., August 12, 2025 – Acumen Pharmaceuticals, Inc. (NASDAQ: ABOS) ("Acumen" or the "Company"), a clinical-stage biopharmaceutical company developing novel therapeutics that target toxic soluble amyloid beta oligomers (AβOs) for the treatment of Alzheimer's disease (AD), today reported financial results for the second quarter of 2025 and provided a business update. "Our momentum in the second ...

FDA Provides Positive Feedback, Clears Path for Atossa to File IND for (Z)-Endoxifen in Metastatic Breast Cancer; FDA Indicates No Additional Toxicity Studies Required Exhibit 99.1 Atossa Therapeutics Announces Second Quarter 2025 Financial Results and Provides a Corporate Update Strong I-SPY2 Results Reinforce Ef icacy of Atossa's Monotherapy at 3-weeks SEATTLE, August 12, 2025 — Atossa Therapeutics, Inc. (Nasdaq: ATOS) (Atossa or the Company), a clinical-stage biopharmaceutical company developing innovati ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the period ended June 30, 2025, show a significant increase in total assets to $152.0 million from $109.6 million at year-end 2024, primarily driven by a substantial rise in cash from financing activities. Revenues for the second quarter and first half of 2025 grew dramatically to $6.3 million and $10.5 million, respectively, compared to the prior year, leading to a positive gross profit. However, increased operating expenses resulted in a higher net loss of $24.9 million for the six-month period. Cash flow from financing activities was a strong inflow of $53.9 million, mainly from a public offering and warrant exercises, which significantly improved the company's liquidity position [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, the company's total assets increased to $152.0 million from $109.6 million at December 31, 2024, largely due to a significant rise in cash to $67.6 million. Total liabilities decreased to $39.3 million from $73.7 million, primarily from the repayment of convertible notes. Consequently, total stockholders' equity improved substantially to $90.8 million from $16.6 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $67,568 | $29,958 | | Total current assets | $91,210 | $47,521 | | Total assets | $151,951 | $109,622 | | **Liabilities & Equity** | | | | Total current liabilities | $31,490 | $50,577 | | Total liabilities | $39,293 | $73,678 | | Total stockholders' equity | $90,821 | $16,583 | | **Total liabilities and stockholders' equity** | **$151,951** | **$109,622** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three and six months ended June 30, 2025, revenues significantly increased to $6.3 million and $10.5 million, respectively, compared to the same periods in 2024. This drove a shift from a gross loss to a gross profit of $3.3 million for the quarter and $4.8 million for the six-month period. Despite revenue growth, higher operating and interest expenses led to an increased net loss attributable to common stockholders of $12.0 million for the quarter and $27.4 million for the six months Statement of Operations Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $6,273 | $958 | $10,522 | $1,583 | | Gross profit (loss) | $3,332 | $(191) | $4,821 | $(586) | | Operating loss | $(9,249) | $(8,304) | $(19,560) | $(17,431) | | Net loss | $(10,750) | $(8,270) | $(24,887) | $(18,146) | | Net loss attributable to common stockholders | $(12,019) | $(9,378) | $(27,362) | $(20,227) | | Net loss per share | $(0.08) | $(0.14) | $(0.21) | $(0.31) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities was $15.1 million, a slight improvement from $16.3 million in the prior year period. Investing activities used a minimal $0.3 million. Financing activities provided a substantial $53.9 million in cash, primarily from a $42.7 million public offering and $10.0 million from the exercise of options and warrants. This resulted in a significant increase in cash and restricted cash, which ended the period at $68.6 million Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(15,063) | $(16,275) | | Net cash used in investing activities | $(306) | $(2,315) | | Net cash provided by financing activities | $53,921 | $8,543 | | **Increase (decrease) in cash** | **$38,552** | **$(10,047)** | | Cash, beginning of period | $29,999 | $15,022 | | **Cash, end of period** | **$68,551** | **$4,975** | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's business structure, comprising Ondas Networks and Ondas Autonomous Systems (OAS), and key accounting policies. A significant development is the alleviation of substantial doubt about the company's ability to continue as a going concern, following successful capital raises in Q2 2025. The notes also provide breakdowns of revenue by type and geography, details on debt instruments (many of which were repaid in 2025), equity transactions including a major public offering, segment performance showing strong revenue growth in the OAS segment, and related party transactions - The company operates through two business segments: Ondas Networks (private wireless connectivity) and Ondas Autonomous Systems (OAS), which provides drone and automated data solutions[22](index=22&type=chunk) - Management concluded that substantial doubt about the Company's ability to continue as a going concern no longer exists as of August 12, 2025, following capital raises of approximately **$42.7 million** from a public offering and **$9.0 million** from warrant/option exercises in Q2 2025[34](index=34&type=chunk)[35](index=35&type=chunk) - As of July 18, 2025, the 2022 Convertible Promissory Notes, 2023 Additional Notes, and 2024 Additional Notes have been repaid in full, significantly deleveraging the balance sheet[32](index=32&type=chunk) Disaggregated Revenue by Type (Six Months Ended June 30) | Revenue Type | 2025 | 2024 | | :--- | :--- | :--- | | Product revenue | $6,828,993 | $24,758 | | Service and subscription revenue | $3,304,768 | $608,140 | | Development revenue | $387,809 | $949,962 | | **Total revenue** | **$10,521,570** | **$1,582,860** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the significant revenue growth in the first half of 2025 to the Ondas Autonomous Systems (OAS) segment, which had multi-drone sales with associated services. This led to a substantial improvement in gross profit, turning a loss in H1 2024 into a $4.8 million profit in H1 2025. However, operating expenses also rose by 45% due to increased headcount, stock-based compensation, and R&D investment, resulting in a higher operating loss. The company's liquidity has been significantly strengthened by a $42.7 million public offering and nearly $10 million from warrant exercises, alleviating previous going concern doubts [Results of Operations](index=54&type=section&id=Results%20of%20Operations) Comparing the first six months of 2025 to 2024, revenue surged by $8.9 million to $10.5 million, driven by the OAS segment's product and service sales. This resulted in a gross profit of $4.8 million, a $5.4 million improvement from the prior year's loss. Operating expenses increased by $7.5 million, primarily due to higher human resource costs (including $2.8 million in stock-based compensation), professional fees, and R&D investments. The combination of these factors led to a net loss of $24.9 million, an increase from $18.1 million in the prior year Financial Performance Comparison (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenue, net | $10,521,570 | $1,582,860 | | Gross profit (loss) | $4,820,620 | $(585,877) | | Operating loss | $(19,559,542) | $(17,430,785) | | Net loss | $(24,886,500) | $(18,145,820) | - The increase in revenue was primarily driven by the OAS segment, which grew by **$9.5 million** year-over-year due to multi-drone orders. The Ondas Networks segment saw a revenue decrease of **$0.6 million**[273](index=273&type=chunk) - Operating expenses rose by **45%** (**$7.5 million**), with key drivers being a **$6.5 million** increase in human resource costs (including a **$2.8 million** increase in stock-based compensation) and an **$0.8 million** increase in professional fees[280](index=280&type=chunk) [Liquidity and Capital Resources](index=63&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity position has significantly improved. As of June 30, 2025, cash and restricted cash stood at $68.6 million. This was bolstered by financing activities in the first half of 2025, including approximately $42.7 million net proceeds from a public offering and $10.0 million from the exercise of stock options and warrants. These funds have alleviated the substantial doubt about the company's ability to continue as a going concern, and management believes there is sufficient capital to fund operations for the next twelve months - As of June 30, 2025, the company had cash and restricted cash of approximately **$68.6 million** and working capital of approximately **$59.7 million**[290](index=290&type=chunk) - Key financing activities in H1 2025 included raising **$42.7 million** from a registered public offering and **$10.0 million** from the exercise of stock options and warrants[292](index=292&type=chunk) - Management has concluded that substantial doubt about the Company's ability to continue as a going concern no longer exists[295](index=295&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is a smaller reporting company and is not required to provide information under this item - As a smaller reporting company, Ondas Holdings Inc. is exempt from the requirement to provide quantitative and qualitative disclosures about market risk[303](index=303&type=chunk) [Controls and Procedures](index=65&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. There were no material changes to the company's internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report (June 30, 2025)[304](index=304&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[305](index=305&type=chunk) [PART II - OTHER INFORMATION](index=66&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=66&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings that are expected to have a material adverse effect on its business, financial condition, or operating results - The company states it is not currently involved in any legal proceeding or investigation that it believes will have a material adverse effect on its business[308](index=308&type=chunk) [Risk Factors](index=66&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024, and the Quarterly Report on Form 10-Q for the period ended March 31, 2025 - No material changes to the Risk Factors have occurred since those disclosed in the 2024 Form 10-K and the Q1 2025 Form 10-Q[310](index=310&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) None - There were no unregistered sales of equity securities during the period[312](index=312&type=chunk) [Other Information](index=67&type=section&id=Item%205.%20Other%20Information) On August 11, 2025, the company's Compensation Committee approved an Amended and Restated Non-Employee Director Compensation Policy, which increased the quarterly cash retainer to $12,500 and the annual value of restricted stock units to $100,000 - The company amended its Non-Employee Director Compensation Policy to increase the quarterly cash retainer to **$12,500** and the annual RSU value to **$100,000**[315](index=315&type=chunk) [Exhibits](index=67&type=section&id=Item%206.%20Exhibits) The report lists several exhibits filed, including a Certificate of Amendment, Form of Pre-Funded Warrant, an employment agreement, an amendment to the 2021 Incentive Stock Plan, a letter agreement, the amended director compensation policy, and various officer certifications and XBRL data files

[Company Overview and Highlights](index=1&type=section&id=Company%20Overview%20and%20Highlights) Stratus Properties Inc. achieved a Q2 2025 net income turnaround, fueled by real estate sales, asset gains, and an expanded stock repurchase program [Highlights and Recent Developments](index=1&type=section&id=Highlights%20and%20Recent%20Developments) Q2 2025 highlights include net income turnaround, driven by real estate sales, asset gains, project completions, and an expanded stock repurchase program - **Q2 and Six Months 2025 Financial Highlights** | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Net Income (Loss) Attributable to Common Stockholders | $0.3 million | $(1.7) million | $(2.6) million | $2.8 million | | Diluted Net Income (Loss) Per Share | $0.03 | $(0.21) | $(0.32) | $0.35 | | Total Revenue | $11.6 million | $8.5 million | $16.6 million | $35.0 million | | EBITDA | $(0.2) million | $(1.3) million | $(2.5) million | $3.9 million | - In Q2 2025, the company formed a joint venture with a third-party equity investor to develop the Holden Hills Phase 2 project, receiving a **$47.8 million cash distribution**[3](index=3&type=chunk) - In Q2 2025, the company sold the West Killeen Market retail project, generating approximately **$5.0 million in pre-tax gains**[3](index=3&type=chunk) - As of June 30, 2025, the company held **$59.4 million in cash and cash equivalents**, with its revolving credit facility undrawn[3](index=3&type=chunk) - The board approved increasing the stock repurchase program from **$5.0 million to $25.0 million**, with **$3.0 million in stock repurchased** as of August 8, 2025[3](index=3&type=chunk) [CEO Statement](index=3&type=section&id=CEO%20Statement) CEO highlighted H1 2025 progress: successful joint ventures, asset sales, and project completions, enhancing cash and flexibility - The company successfully formed the Holden Hills Phase 2 joint venture in the first six months of 2025, receiving a **$47.8 million cash distribution**[4](index=4&type=chunk) - The company sold the West Killeen Market retail project and two Amarra Villas homes, totaling **$20.1 million**[4](index=4&type=chunk) - Construction of The Saint George multi-family project and the final two Amarra Villas homes was completed, with Holden Hills Phase 1 infrastructure substantially finished[4](index=4&type=chunk) - An enhanced cash position provides the board flexibility to explore various attractive alternatives to create shareholder value[4](index=4&type=chunk) [Consolidated Financial Performance](index=3&type=section&id=Consolidated%20Financial%20Performance) Q2 2025 saw revenue and net income growth, but H1 revenue and net income declined year-over-year due to prior large land sales, with negative EBITDA [Summary Financial Results](index=3&type=section&id=Summary%20Financial%20Results) Q2 2025 revenue and net income increased, but H1 saw declines due to prior large land sales, with EBITDA turning negative - **Summary of Consolidated Financial Performance (USD thousands)** | Metric (USD thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | **Revenue** | | | | | | Real Estate Operations | 6,798 | 3,629 | 6,823 | 25,752 | | Leasing Operations | 4,807 | 4,861 | 9,825 | 9,245 | | **Total Consolidated Revenue** | **11,605** | **8,490** | **16,648** | **34,997** | | **Operating Income (Loss)** | | | | | | Real Estate Operations | (3,536) | (839) | (5,038) | 5,962 | | Leasing Operations | 6,334 | 1,761 | 8,292 | 3,110 | | General and Administrative Expenses | (3,557) | (3,842) | (7,608) | (8,307) | | **Total Consolidated Operating Income (Loss)** | **(759)** | **(2,920)** | **(4,354)** | **765** | | **Net Income (Loss)** | **(2,295)** | **(2,778)** | **(6,052)** | **919** | | Net Income (Loss) Attributable to Common Stockholders | 260 | (1,725) | (2,615) | 2,827 | | Diluted Net Income (Loss) Per Share | 0.03 | (0.21) | (0.32) | 0.35 | | EBITDA | (185) | (1,332) | (2,518) | 3,868 | [Detailed Results of Operations](index=4&type=section&id=Detailed%20Results%20of%20Operations) Q2 2025 total revenue increased year-over-year, driven by real estate sales; leasing revenue stable, with a pre-tax gain from asset sale - Total revenue for Q2 2025 was **$11.6 million**, an increase of **$3.1 million** from **$8.5 million** in Q2 2024[7](index=7&type=chunk) - Real Estate Operations revenue increased by **$3.2 million**, primarily due to the sale of **two Amarra Villas homes ($6.8 million)** in Q2 2025, compared to **one home ($3.6 million)** in Q2 2024[7](index=7&type=chunk) - Leasing Operations revenue remained flat in Q2 2025 compared to the same period in 2024[8](index=8&type=chunk) - Operating income from Leasing Operations includes approximately **$5.0 million in pre-tax gains** from the sale of West Killeen Market[8](index=8&type=chunk) - The Saint George multi-family residential project was completed and commenced leasing operations in Q2 2025[8](index=8&type=chunk) [Financial Position and Capital Management](index=4&type=section&id=Financial%20Position%20and%20Capital%20Management) As of June 30, 2025, cash and equivalents significantly increased from the Holden Hills Phase 2 JV, with slight debt rise and undrawn credit [Debt and Liquidity](index=4&type=section&id=Debt%20and%20Liquidity) As of June 30, 2025, cash and equivalents significantly increased from Holden Hills Phase 2 JV distribution, with slight debt rise and undrawn credit - **Debt and Liquidity Overview (USD thousands)** | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Consolidated Debt | 199,400 | 194,900 | | Consolidated Cash and Cash Equivalents | 59,400 | 20,200 | - Cash and cash equivalents significantly increased, primarily due to a **$47.8 million distribution** received from the Holden Hills Phase 2 joint venture in Q2 2025[9](index=9&type=chunk) - As of June 30, 2025, the company had **$17.7 million available** under its revolving credit facility, with no amounts drawn[10](index=10&type=chunk) [Capital Expenditures and Real Estate Development](index=4&type=section&id=Capital%20Expenditures%20and%20Real%20Estate%20Development) H1 2025 saw reduced real estate development and capital expenditures, focusing on Holden Hills Phase 1 and The Saint George projects - **Capital Expenditures and Real Estate Development (USD thousands)** | Metric | H1 2025 | H1 2024 | | :------------------------------------------------- | :------------ | :------------ | | Purchases and Development of Real Estate Properties and Capital Expenditures (Total) | 21,600 | 32,500 | - Investments primarily focused on the development of Holden Hills Phase 1 and The Saint George[11](index=11&type=chunk) [Share Repurchase Program](index=4&type=section&id=Share%20Repurchase%20Program) Board significantly increased share repurchase authorization to $25.0 million, reflecting enhanced financial flexibility post-asset sales and JV - The stock repurchase program authorization increased from **$5.0 million to $25.0 million**[12](index=12&type=chunk) - As of August 8, 2025, the company repurchased **135,620 shares of common stock** at a total cost of **$3.0 million**, averaging **$22.13 per share**[12](index=12&type=chunk) - An additional **$22.0 million** remains available under the repurchase program[12](index=12&type=chunk) [Business Strategy and Company Profile](index=5&type=section&id=Business%20Strategy%20and%20Company%20Profile) Board is evaluating cash use from Holden Hills Phase 2 JV and asset sales, considering repurchases, deleveraging, reinvestment, or shareholder returns [Strategy](index=5&type=section&id=Strategy) Board explores cash use opportunities: stock repurchases, deleveraging, project reinvestment, and/or other shareholder returns - The board is exploring opportunities for cash utilization, including **stock repurchases, deleveraging, reinvestment in the project pipeline, and/or other cash returns to shareholders**[14](index=14&type=chunk) [About Stratus](index=5&type=section&id=About%20Stratus) Stratus Properties Inc. develops, manages, leases, and sells multi-family, single-family, and commercial real estate in Austin, Texas and other markets - The company's primary business involves the ownership, development, management, leasing, and sale of multi-family, single-family, and commercial real estate in the Austin, Texas area and other specific markets[15](index=15&type=chunk) - The company owns a portfolio of approximately **1,500 acres** of commercial and residential projects under development or held for development[15](index=15&type=chunk) - Revenue and cash flow are primarily generated from the sale of developed and undeveloped properties, leasing of retail, mixed-use, and multi-family properties, and development and asset management fees[15](index=15&type=chunk) [Forward-Looking Statements and Non-GAAP Measures](index=6&type=section&id=Forward-Looking%20Statements%20and%20Non-GAAP%20Measures) This release contains forward-looking statements on future performance, influenced by inflation, interest rates, supply chain, debt, real estate markets, and regulatory risks [Cautionary Statement](index=6&type=section&id=Cautionary%20Statement) Forward-looking statements are subject to risks like inflation, interest rates, supply chain, debt, real estate markets, and regulatory changes; actual results may differ - Forward-looking statements cover expectations regarding **inflation, interest rates, supply chain constraints, debt repayment, bank credit, future cash flows, Austin and Texas real estate markets, development projects (including costs and completion times), asset sale plans, MUD reimbursements, regulatory matters (such as the ETJ bill), leasing activities, tax rates, capital expenditures, joint ventures, and future cash returns to shareholders**[17](index=17&type=chunk) - Under the Comerica Bank debt agreement, the company cannot repurchase more than **$1.0 million** of common stock or pay dividends without written consent, but has obtained consent for the current **$25.0 million** stock repurchase program[18](index=18&type=chunk) - Actual results may differ materially from forward-looking statements due to various important factors, including **ability to implement business strategies, increased operating and construction costs, rising inflation and interest rates, debt repayment capacity, decreased market values, changes in real estate demand, economic and geopolitical conditions, financing availability, loss of key personnel, joint venture risks, public health crises, MUD reimbursement eligibility, industry risks, changes in the regulatory environment, and environmental and litigation risks**[19](index=19&type=chunk) [Non-GAAP Measure: EBITDA Explanation](index=6&type=section&id=Non-GAAP%20Measure%3A%20EBITDA%20Explanation) EBITDA, a non-GAAP measure, helps assess recurring operating performance by excluding financing impacts, but should not supersede GAAP measures and may not be comparable - **EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)** is a non-GAAP financial measure used to assess the company's recurring operating performance, particularly its profitability after excluding the impact of financing and similar decisions[21](index=21&type=chunk) - Management believes EBITDA helps investors evaluate the company's business, but it should not be considered more significant than GAAP measures and may not be comparable[21](index=21&type=chunk) [Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Consolidated%20Financial%20Statements%20%28Unaudited%29) Q2 2025 saw a net income turnaround to $0.3 million, from a $1.7 million loss, though H1 2025 recorded a $2.6 million net loss, down from prior year's $2.8 million net income [Consolidated Statements of Comprehensive Income (Loss)](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Q2 2025 saw a net income turnaround to $0.3 million, from a $1.7 million loss, though H1 2025 recorded a $2.6 million net loss, down from prior year's $2.8 million net income - **Summary of Consolidated Statements of Comprehensive Income (Loss) (USD thousands)** | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------------------------------------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Total Revenue | 11,605 | 8,490 | 16,648 | 34,997 | | Cost of Sales | 13,807 | 7,568 | 18,594 | 25,925 | | Gain on Sale of Assets | (5,000) | — | (5,200) | — | | Operating Income (Loss) | (759) | (2,920) | (4,354) | 765 | | Net Income (Loss) and Total Comprehensive Income (Loss) | (2,295) | (2,778) | (6,052) | 919 | | Net Income (Loss) and Total Comprehensive Income (Loss) Attributable to Common Stockholders | 260 | (1,725) | (2,615) | 2,827 | | Diluted Net Income (Loss) Per Share | 0.03 | (0.21) | (0.32) | 0.35 | [Consolidated Balance Sheets](index=9&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased from year-end 2024, driven by higher cash and investment properties, with slight liability growth and increased equity - **Summary of Consolidated Balance Sheets (USD thousands)** | Metric | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | **Assets** | | | | Cash and Cash Equivalents | 59,386 | 20,178 | | Real Estate Held for Sale | 11,618 | 11,211 | | Real Estate Under Development | 175,916 | 274,105 | | Land Held for Development | 76,620 | 65,009 | | Investment Properties, Net | 228,112 | 136,252 | | **Total Assets** | **574,821** | **532,606** | | **Liabilities** | | | | Debt | 199,434 | 194,853 | | **Total Liabilities** | **236,497** | **235,039** | | **Equity** | | | | Total Stockholders' Equity | 191,908 | 194,705 | | Noncontrolling Interests in Subsidiaries | 146,416 | 102,862 | | **Total Equity** | **338,324** | **297,567** | - Cash and cash equivalents increased from **$20.2 million** at year-end 2024 to **$59.4 million** as of June 30, 2025[27](index=27&type=chunk) - Investment properties, net, increased from **$136.3 million** at year-end 2024 to **$228.1 million** as of June 30, 2025[27](index=27&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) H1 2025 saw increased operating cash outflow, a shift to investing cash inflow, and significant financing cash flow from noncontrolling interests, boosting period-end cash - **Summary of Consolidated Statements of Cash Flows (USD thousands)** | Metric | H1 2025 | H1 2024 | | :--------------------------------------------------------- | :------------ | :------------ | | Net Cash Used in Operating Activities | (15,179) | (1,716) | | Net Cash Provided by (Used in) Investing Activities | 5,811 | (16,542) | | Net Cash Provided by (Used in) Financing Activities | 48,597 | (213) | | Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | 39,229 | (18,471) | | Cash, Cash Equivalents, and Restricted Cash at End of Period | 60,383 | 13,961 | - Cash flow from financing activities significantly increased, primarily including **$59.9 million in project loan borrowings** and **$47.8 million in noncontrolling interest contributions**[29](index=29&type=chunk) - Cash flow from investing activities shifted from a net outflow of **$16.5 million** in the first six months of 2024 to a net inflow of **$5.8 million** in the first six months of 2025, primarily due to **$13.0 million in proceeds from asset sales**[29](index=29&type=chunk) [Business Segments Financial Information](index=11&type=section&id=Business%20Segments%20Financial%20Information) Stratus Properties Inc. operates two segments: Real Estate (ownership, development, sales) and Leasing (investment properties), with CEO assessing performance by segment profit [Business Segments Overview](index=11&type=section&id=Business%20Segments%20Overview) Stratus Properties Inc. has two segments: Real Estate (ownership, development, sales) and Leasing (investment properties), with CEO evaluating performance by segment profit - The company has two reportable operating segments: **Real Estate Operations** and **Leasing Operations**[31](index=31&type=chunk) - Real Estate Operations include properties at various stages of development, involving ownership, development, and sales[31](index=31&type=chunk) - Leasing Operations include real estate assets held for investment and lease, such as The Saint George, The Saint June, and the retail portion of Lantana Place[33](index=33&type=chunk) - The CEO measures segment performance based on segment profit, excluding general and administrative expenses[34](index=34&type=chunk) [Segment Financial Information - Three Months Ended June 30, 2025](index=12&type=section&id=Segment%20Financial%20Information%20-%20Three%20Months%20Ended%20June%2030%2C%202025) Q2 2025: Real Estate Ops had $6.8M revenue but $3.5M loss; Leasing Ops had $4.8M revenue and $6.3M profit, boosted by a $5.0M asset sale gain - **Segment Financial Information - Three Months Ended June 30, 2025 (USD thousands)** | Metric | Real Estate Operations | Leasing Operations | Total | | :----------------------------------------- | :--------------------- | :----------------- | :---- | | Revenue from Unaffiliated Customers | 6,798 | 4,807 | 11,605 | | Cost of Sales | (6,244) | — | (6,244) | | Gain on Sale of Assets | — | 5,000 | 5,000 | | Segment Income (Loss) | (3,536) | 6,334 | 2,798 | | Capital Expenditures and Real Estate Development Purchases | 7,185 | 2,634 | 9,819 | - Real Estate Operations recorded a **$1.0 million accounts receivable write-off expense** in Q2 2025[37](index=37&type=chunk) [Segment Financial Information - Three Months Ended June 30, 2024](index=13&type=section&id=Segment%20Financial%20Information%20-%20Three%20Months%20Ended%20June%2030%2C%202024) Q2 2024: Real Estate Ops generated $3.6M revenue with an $0.8M loss; Leasing Ops reported $4.9M revenue and a $1.8M profit - **Segment Financial Information - Three Months Ended June 30, 2024 (USD thousands)** | Metric | Real Estate Operations | Leasing Operations | Total | | :----------------------------------------- | :--------------------- | :----------------- | :---- | | Revenue from Unaffiliated Customers | 3,629 | 4,861 | 8,490 | | Cost of Sales | (3,173) | — | (3,173) | | Segment Income (Loss) | (839) | 1,761 | 922 | | Capital Expenditures and Real Estate Development Purchases | 7,360 | 8,001 | 15,361 | [Segment Financial Information - Six Months Ended June 30, 2025](index=14&type=section&id=Segment%20Financial%20Information%20-%20Six%20Months%20Ended%20June%2030%2C%202025) H1 2025: Real Estate Ops had $6.8M revenue but $5.0M loss due to costs; Leasing Ops had $9.8M revenue and $8.3M profit, benefiting from asset sales - **Segment Financial Information - Six Months Ended June 30, 2025 (USD thousands)** | Metric | Real Estate Operations | Leasing Operations | Total | | :----------------------------------------- | :--------------------- | :----------------- | :---- | | Revenue from Unaffiliated Customers | 6,823 | 9,825 | 16,648 | | Cost of Sales | (6,244) | — | (6,244) | | Gain on Sale of Assets | — | 5,200 | 5,200 | | Segment Income (Loss) | (5,038) | 8,292 | 3,254 | | Capital Expenditures and Real Estate Development Purchases | 14,397 | 7,161 | 21,558 | - Real Estate Operations recorded a **$1.0 million accounts receivable write-off expense** in the first six months of 2025[42](index=42&type=chunk) - Leasing Operations' gain on asset sales includes a **$5.0 million pre-tax gain** from West Killeen Market and a **$0.2 million deferred gain** from The Oaks at Lakeway[43](index=43&type=chunk) [Segment Financial Information - Six Months Ended June 30, 2024](index=15&type=section&id=Segment%20Financial%20Information%20-%20Six%20Months%20Ended%20June%2030%2C%202024) H1 2024: Real Estate Ops generated $25.8M revenue and $6.0M profit from land sales; Leasing Ops reported $9.2M revenue and $3.1M profit - **Segment Financial Information - Six Months Ended June 30, 2024 (USD thousands)** | Metric | Real Estate Operations | Leasing Operations | Total | | :----------------------------------------- | :--------------------- | :----------------- | :---- | | Revenue from Unaffiliated Customers | 25,752 | 9,245 | 34,997 | | Cost of Sales | (17,122) | — | (17,122) | | Segment Income (Loss) | 5,962 | 3,110 | 9,072 | | Capital Expenditures and Real Estate Development Purchases | 16,317 | 16,142 | 32,459 | [Total Assets by Segment](index=15&type=section&id=Total%20Assets%20by%20Segment) As of June 30, 2025, Leasing Operations' total assets significantly increased, while Real Estate Operations' assets decreased, reflecting asset allocation shifts - **Total Assets by Segment (USD thousands)** | Segment | June 30, 2025 | June 30, 2024 | | :----------------------- | :------------ | :------------ | | Real Estate Operations | 271,985 | 342,089 | | Leasing Operations | 246,214 | 159,314 | | Corporate and Other | 56,622 | 12,613 | | **Total Assets** | **574,821** | **514,016** | - Leasing Operations assets increased from **$159.3 million** as of June 30, 2024, to **$246.2 million** as of June 30, 2025[46](index=46&type=chunk) - Real Estate Operations assets decreased from **$342.1 million** as of June 30, 2024, to **$272.0 million** as of June 30, 2025[46](index=46&type=chunk) [Reconciliation of Non-GAAP Measure](index=15&type=section&id=Reconciliation%20of%20Non-GAAP%20Measure) The company reconciles net income (loss) to EBITDA, showing negative EBITDA for Q2 and H1 2025, reflecting operating performance before interest, taxes, depreciation, and amortization [EBITDA Reconciliation](index=15&type=section&id=EBITDA%20Reconciliation) The company reconciles net income (loss) to EBITDA, showing negative EBITDA for Q2 and H1 2025, reflecting operating performance before interest, taxes, depreciation, and amortization - **EBITDA Reconciliation (USD thousands)** | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Net Income (Loss) | (2,295) | (2,778) | (6,052) | 919 | | Depreciation and Amortization | 1,376 | 1,402 | 2,770 | 2,803 | | Net Interest Expense | 277 | — | 277 | — | | Provision for Income Taxes | 457 | 44 | 487 | 146 | | **EBITDA** | **(185)** | **(1,332)** | **(2,518)** | **3,868** |

[EXPLANATORY NOTE REGARDING REVERSE STOCK SPLIT](index=2&type=section&id=EXPLANATORY%20NOTE%20REGARDING%20REVERSE%20STOCK%20SPLIT) Hydrofarm Holdings Group, Inc. completed a 1-for-10 reverse stock split effective February 12, 2025, with all financial statements retroactively adjusted - Hydrofarm Holdings Group, Inc. completed a **1-for-10 reverse stock split** effective February 12, 2025, with trading on Nasdaq Capital Market beginning February 13, 2025, under symbol "HYFM"[7](index=7&type=chunk) - The reverse stock split was approved by stockholders on June 6, 2024, and the board of directors approved the **1-for-10 ratio** on February 6, 2025[8](index=8&type=chunk) - No fractional shares were issued; stockholders received cash payments in lieu of fractional shares. The number of authorized shares and par value remained unchanged[9](index=9&type=chunk) - All periods in the condensed consolidated financial statements, including net loss per share, have been retroactively adjusted to reflect the reverse stock split[10](index=10&type=chunk) [SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This report contains forward-looking statements subject to various risks, including industry oversupply, price decreases, and regulatory changes, with no obligation to update - The report contains forward-looking statements regarding business strategy, future operating results, and financial position, identifiable by terms like "believe," "may," "will," "estimate," "expect," etc[14](index=14&type=chunk)[15](index=15&type=chunk) - Key risks include industry oversupply, decreasing product prices, potential tariffs, asset impairment charges, liquidity concerns, ability to meet Nasdaq listing standards, and impacts of restructuring activities[15](index=15&type=chunk) - Other risks involve customer conditions, supply chain interruptions, regulatory changes (cannabis), public perception, lease obligations, reliance on key suppliers, technological advances, e-commerce execution, public company costs, acquisition success, marketing effectiveness, IT system breaches, indebtedness, third-party dependence, reputation, product price fluctuations, and competitive pressures[15](index=15&type=chunk)[20](index=20&type=chunk) - Forward-looking statements are based on current expectations and projections and are subject to risks and uncertainties detailed in the "Risk Factors" section of the 2024 Annual Report; the company disclaims any obligation to update them[16](index=16&type=chunk) [SPECIAL NOTE REGARDING USE OF TRADE NAMES AND TRADEMARKS](index=5&type=section&id=SPECIAL%20NOTE%20REGARDING%20USE%20OF%20TRADE%20NAMES%20AND%20TRADEMARKS) The report uses "Hydrofarm" and other company trademarks, with third-party names not implying endorsement or relationship - "Hydrofarm" and other trade names/trademarks in the report are the company's property[18](index=18&type=chunk) - Use of other companies' trade names/trademarks does not imply endorsement, sponsorship, or any relationship with those companies[18](index=18&type=chunk) [SPECIAL NOTE REGARDING CERTAIN TERMINOLOGY IN THIS ANNUAL REPORT ON FORM 10-Q](index=5&type=section&id=SPECIAL%20NOTE%20REGARDING%20CERTAIN%20TERMINOLOGY%20IN%20THIS%20ANNUAL%20REPORT%20ON%20FORM%2010-Q) The terms "Hydrofarm," "the Company," "we," "our," and "us" refer to Hydrofarm Holdings Group, Inc. and its subsidiaries - The terms "Hydrofarm," "the Company," "we," "our," and "us" refer to Hydrofarm Holdings Group, Inc. and its subsidiaries[19](index=19&type=chunk) [PART I - FINANCIAL INFORMATION](index=6&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This item includes the unaudited condensed consolidated financial statements, comprising the balance sheets, statements of operations, comprehensive loss, changes in stockholders' equity, and cash flows, along with their accompanying notes, providing a detailed financial overview for the reported periods [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section details the company's financial position, presenting assets, liabilities, and stockholders' equity as of June 30, 2025, and December 31, 2024 | Metric | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | Change (2025 vs 2024) ($ in thousands) | | :-------------------------------- | :-------------- | :---------------- | :-------------------- | | **Assets** | | | | | Cash and cash equivalents | $10,991 | $26,111 | $(15,120) | | Accounts receivable, net | $14,304 | $14,756 | $(452) | | Inventories | $44,164 | $50,633 | $(6,469) | | Total current assets | $73,040 | $95,212 | $(22,172) | | Total assets | $389,875 | $426,104 | $(36,229) | | **Liabilities** | | | | | Total current liabilities | $31,479 | $34,987 | $(3,508) | | Total liabilities | $194,866 | $202,382 | $(7,516) | | **Stockholders' Equity** | | | | | Total stockholders' equity | $195,009 | $223,722 | $(28,713) | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's financial performance, including net sales, gross profit, operating expenses, and net loss for the three and six months ended June 30, 2025 and 2024 | Metric | 3 Months Ended June 30, 2025 ($ in thousands) | 3 Months Ended June 30, 2024 ($ in thousands) | Change (YoY) ($ in thousands) | 6 Months Ended June 30, 2025 ($ in thousands) | 6 Months Ended June 30, 2024 ($ in thousands) | Change (YoY) ($ in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :----------- | :----------------------------- | :----------------------------- | :----------- | | Net sales | $39,245 | $54,793 | $(15,548) (-28.4%) | $79,779 | $108,965 | $(29,186) (-26.8%) | | Cost of goods sold | $36,451 | $43,942 | $(7,491) (-17.0%) | $70,108 | $87,189 | $(17,081) (-19.6%) | | Gross profit | $2,794 | $10,851 | $(8,057) (-74.3%) | $9,671 | $21,776 | $(12,105) (-55.6%) | | Selling, general and administrative | $16,140 | $18,659 | $(2,519) (-13.5%) | $34,003 | $38,280 | $(4,277) (-11.2%) | | Loss on asset disposition | $0 | $11,520 | $(11,520) (-100.0%) | $0 | $11,520 | $(11,520) (-100.0%) | | Loss from operations | $(13,346) | $(19,328) | $5,982 (30.9%) | $(24,332) | $(28,024) | $3,692 (13.2%) | | Net loss | $(16,861) | $(23,450) | $6,589 (28.1%) | $(31,246) | $(36,058) | $4,812 (13.3%) | | Basic net loss per share | $(3.63) | $(5.10) | $1.47 | $(6.75) | $(7.86) | $1.11 | | Diluted net loss per share | $(3.63) | $(5.10) | $1.47 | $(6.75) | $(7.86) | $1.11 | [Condensed Consolidated Statements of Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This section details the company's comprehensive loss, including net loss and other comprehensive income/loss components such as foreign currency translation adjustments | Metric | 3 Months Ended June 30, 2025 ($ in thousands) | 3 Months Ended June 30, 2024 ($ in thousands) | Change (YoY) ($ in thousands) | 6 Months Ended June 30, 2025 ($ in thousands) | 6 Months Ended June 30, 2024 ($ in thousands) | Change (YoY) ($ in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :----------- | :----------------------------- | :----------------------------- | :----------- | | Net loss | $(16,861) | $(23,450) | $6,589 | $(31,246) | $(36,058) | $4,812 | | Foreign currency translation gain (loss) | $1,665 | $(341) | $2,006 | $1,802 | $(1,070) | $2,872 | | Total comprehensive loss | $(15,196) | $(23,791) | $8,595 | $(29,444) | $(37,128) | $7,684 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This section presents changes in stockholders' equity, reflecting movements in common stock, additional paid-in capital, accumulated other comprehensive loss, and accumulated deficit | Metric | Balance, Dec 31, 2024 ($ in thousands) | Issuance of stock awards ($ in thousands) | Shares repurchased ($ in thousands) | Stock-based comp. expense ($ in thousands) | Net loss ($ in thousands) | FX translation gain ($ in thousands) | Balance, June 30, 2025 ($ in thousands) | | :-------------------------- | :-------------------- | :----------------------- | :----------------------- | :------------------------ | :--------- | :-------------------- | :--------------------- | | Common Stock Shares | 4,614,279 (Shares) | 59,210 (Shares) | (14,469) (Shares) | — | — | — | 4,659,020 (Shares) | | Additional Paid-In Capital | $790,094 | — | $(27) | $758 | — | — | $790,825 | | Accumulated Other Comp. Loss | $(8,911) | — | — | — | — | $1,802 | $(7,109) | | Accumulated Deficit | $(557,461) | — | — | — | $(31,246) | — | $(588,707) | | Total Stockholders' Equity | $223,722 | — | $(27) | $758 | $(31,246) | $1,802 | $195,009 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | Metric | 6 Months Ended June 30, 2025 ($ in thousands) | 6 Months Ended June 30, 2024 ($ in thousands) | Change (YoY) ($ in thousands) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------- | | Net cash (used in) from operating activities | $(10,047) | $1,487 | $(11,534) | | Net cash (used in) from investing activities | $(501) | $2,280 | $(2,781) | | Net cash used in financing activities | $(5,121) | $(3,576) | $(1,545) | | Effect of exchange rate changes on cash | $549 | $(189) | $738 | | Net (decrease) increase in cash | $(15,120) | $2 | $(15,122) | | Cash and cash equivalents at beginning of period | $26,111 | $30,312 | $(4,201) | | Cash and cash equivalents at end of period | $10,991 | $30,314 | $(19,323) | [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides supplementary information and detailed explanations for the figures presented in the condensed consolidated financial statements [1. DESCRIPTION OF THE BUSINESS](index=11&type=section&id=1.%20DESCRIPTION%20OF%20THE%20BUSINESS) The company is a leading manufacturer and distributor of hydroponics equipment and supplies for controlled environment agriculture in the U.S. and Canada - The Company, founded in 1977, is a leading independent manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture (CEA)[35](index=35&type=chunk) - Products include grow lights, climate control solutions, grow media, nutrients, and proprietary branded products used for cultivating cannabis, flowers, fruits, plants, vegetables, grains, and herbs in controlled environments[35](index=35&type=chunk) [2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=2.%20BASIS%20OF%20PRESENTATION%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the accounting principles and policies used in preparing financial statements, covering presentation, estimates, and segment information [Basis of presentation](index=11&type=section&id=Basis%20of%20presentation) Financial statements are prepared under U.S. GAAP and SEC requirements, with all periods retroactively adjusted for the 1-for-10 reverse stock split - Financial statements are prepared in accordance with U.S. GAAP and SEC requirements for interim reporting, including all normal and recurring adjustments[36](index=36&type=chunk) - A **1-for-10 reverse stock split** was effective February 12, 2025, with all periods retroactively adjusted, including net loss per share[38](index=38&type=chunk) [Use of estimates](index=11&type=section&id=Use%20of%20estimates) Management relies on significant estimates and assumptions for financial statement preparation, covering various valuations and liabilities, subject to ongoing review - Management relies on estimates and assumptions for financial statement preparation, including sales returns, accounts receivable, inventory realization, asset/liability valuation, useful lives, stock-based compensation, and deferred taxes[39](index=39&type=chunk) - Significant estimates also cover debt classification, commitments, contingencies, asset retirement obligations, and valuation allowances, with ongoing review to reflect business changes[39](index=39&type=chunk)[40](index=40&type=chunk) [Segment and entity-wide information](index=12&type=section&id=Segment%20and%20entity-wide%20information) The company operates as a single segment for CEA equipment and supplies, with the CEO reviewing consolidated metrics for performance and resource allocation - The Company operates as one operating and reportable segment: the manufacture and distribution of CEA equipment and supplies[41](index=41&type=chunk) - The CEO, as CODM, reviews consolidated metrics like net sales, gross profit, SG&A, net loss, total assets, and significant components for performance assessment and resource allocation[42](index=42&type=chunk) | Geography | 3 Months Ended June 30, 2025 ($ in thousands) | 3 Months Ended June 30, 2024 ($ in thousands) | 6 Months Ended June 30, 2025 ($ in thousands) | 6 Months Ended June 30, 2024 ($ in thousands) | | :---------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | United States | $31,316 | $44,096 | $63,593 | $84,551 | | Canada | $8,286 | $11,603 | $17,308 | $26,028 | | Eliminations | $(357) | $(906) | $(1,122) | $(1,614) | | **Total consolidated net sales** | **$39,245** | **$54,793** | **$79,779** | **$108,965** | | Geography | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :---------- | :-------------- | :---------------- | | United States | $46,270 | $50,928 | | Canada | $31,828 | $29,513 | | **Total** | **$78,098** | **$80,441** | [Fair value measurements](index=12&type=section&id=Fair%20value%20measurements) Fair value is defined as an orderly transaction price, with financial instruments classified into a three-level hierarchy based on input observability - Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between market participants[45](index=45&type=chunk) - Financial instruments are classified into a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (significant unobservable market inputs)[45](index=45&type=chunk)[46](index=46&type=chunk) - Non-financial assets and liabilities, including long-lived and intangible assets, are measured at fair value on a nonrecurring basis[47](index=47&type=chunk) [Inventories](index=13&type=section&id=Inventories) Inventories are valued at the lower of cost or net realizable value using FIFO, with an allowance for excess and obsolete items based on demand assumptions - Inventories (finished goods, work-in-process, raw materials) are stated at the lower of cost or net realizable value, primarily using the FIFO method[48](index=48&type=chunk) - An allowance for excess and obsolete inventory is maintained, based on assumptions about current and anticipated demand, customer preferences, business strategies, and market conditions[48](index=48&type=chunk) [Revenue recognition](index=13&type=section&id=Revenue%20recognition) Revenue is recognized when control of goods transfers to customers, net of variable consideration, from the single category of CEA equipment and supplies - Revenue is recognized when control of promised goods transfers to customers, generally upon receipt at their locations, and is reported net of variable consideration (rebates, discounts, returns)[50](index=50&type=chunk) - The company's revenue is generated from a single category: the manufacture and distribution of CEA equipment and supplies[49](index=49&type=chunk) | Period | 2025 ($ in thousands) | 2024 ($ in thousands) | | :-------------------------------- | :----- | :----- | | Three months ended June 30, | $1,179 | $2,270 | | Six months ended June 30, | $2,582 | $5,209 | - Contract liabilities (customer deposits/deferred revenue) totaled **$2,097 thousand** as of June 30, 2025, and **$2,611 thousand** as of December 31, 2024[51](index=51&type=chunk) [Income taxes](index=13&type=section&id=Income%20taxes) Interim income tax provision is calculated using an estimated annual effective tax rate, with discrete items recognized as they occur - Interim income tax provision is calculated by applying an estimated annual effective tax rate to year-to-date ordinary income/loss, with discrete items recognized as they occur[52](index=52&type=chunk)[53](index=53&type=chunk) [Recent accounting pronouncements](index=14&type=section&id=Recent%20accounting%20pronouncements) New FASB ASUs require greater disaggregation of effective tax rate reconciliation, income taxes paid by jurisdiction, and specific expense categories - FASB ASU No. 2023-09 (Income Taxes) requires greater disaggregation of effective tax rate reconciliation and income taxes paid by jurisdiction, effective for fiscal years beginning after December 15, 2024[54](index=54&type=chunk) - FASB ASU 2024-03 (Expense Disaggregation Disclosures) requires public entities to disclose additional information about specific expense categories annually and interim, effective for annual periods beginning after December 15, 2026[55](index=55&type=chunk) [3. RESTRUCTURING AND ASSET SALES](index=14&type=section&id=3.%20RESTRUCTURING%20AND%20ASSET%20SALES) This section details the 2023 and 2025 Restructuring Plans, including facility consolidations, product portfolio reductions, and the IGE asset sale [Restructuring](index=14&type=section&id=Restructuring) The company completed its 2023 Restructuring Plan in Q1 2025 and initiated a new 2025 plan to optimize its product portfolio, distribution, manufacturing, and headcount - The 2023 Restructuring Plan, completed in Q1 2025, involved U.S. manufacturing facility consolidations, resulting in **$9.7 million** in non-cash inventory markdowns and **$2.0 million** in cash charges[56](index=56&type=chunk)[57](index=57&type=chunk) - A new 2025 Restructuring Plan was initiated in Q2 2025 to reduce product portfolio (underperforming brands), distribution network, manufacturing footprint, and headcount[61](index=61&type=chunk) - The 2025 Restructuring Plan incurred estimated costs of **$3.3 million** in Q2 2025, primarily non-cash inventory write-downs, and is expected to result in additional charges of approximately **$2 million** and annual cost savings exceeding **$3 million**[61](index=61&type=chunk)[130](index=130&type=chunk) [Asset Sales](index=15&type=section&id=Asset%20Sales) The company completed the sale of Innovative Growers Equipment (IGE) durable equipment assets for **$8.66 million**, resulting in an **$11.52 million** loss on disposition in Q2 2024 - On May 10, 2024, the Company entered into an agreement to sell assets related to Innovative Growers Equipment (IGE) durable equipment products for **$8.66 million**, closing on May 31, 2024[63](index=63&type=chunk) - The IGE Asset Sale resulted in a loss on asset disposition of **$11.52 million** for the three and six months ended June 30, 2024, and included the derecognition of inventories, property, plant and equipment, and technology intangible assets[64](index=64&type=chunk) - The company retained the IGE brand and customer relationships and entered an exclusive supply agreement with the buyer for contract manufacturing, aiming for a more efficient cost model[63](index=63&type=chunk) - Net cash proceeds of approximately **$6.3 million** from the IGE Asset Sale were subject to reinvestment into certain investments or prepayment against the Term Loan principal[66](index=66&type=chunk) [4. INTANGIBLE ASSETS, NET](index=16&type=section&id=4.%20INTANGIBLE%20ASSETS%2C%20NET) This section breaks down the company's intangible assets, including software, customer relationships, technology, and trade names, along with their amortization | Category | June 30, 2025 Net Book Value ($ in thousands) | December 31, 2024 Net Book Value ($ in thousands) | Change ($ in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :------- | | Computer software | $233 | $357 | $(124) | | Customer relationships | $56,902 | $60,576 | $(3,674) | | Technology, formulations and recipes | $72,327 | $76,980 | $(4,653) | | Trade names and trademarks | $104,714 | $108,060 | $(3,346) | | Other finite-lived | $152 | $228 | $(76) | | Total finite-lived intangible assets, net | $234,328 | $246,201 | $(11,873) | | Indefinite-lived intangible asset: Trade name | $2,801 | $2,801 | $0 | | **Total Intangible assets, net** | **$237,129** | **$249,002** | **$(11,873)** | | Period | 2025 ($ in thousands) | 2024 ($ in thousands) | | :-------------------------------- | :----- | :----- | | Three months ended June 30, | $5,931 | $6,036 | | Six months ended June 30, | $11,864 | $12,120 | | Period | Estimated Future Amortization Expense ($ in thousands) | | :------------------------------------ | :------------------------------------ | | For the period of July 1, 2025 to Dec 31, 2025 | $11,864 | | Year ending December 31, 2026 | $23,526 | | Year ending December 31, 2027 | $23,353 | | Year ending December 31, 2028 | $22,715 | | Year ending December 31, 2029 | $21,583 | | Year ending December 31, 2030 | $21,395 | | Thereafter | $109,892 | | **Total** | **$234,328** | [5. LOSS PER COMMON SHARE](index=17&type=section&id=5.%20LOSS%20PER%20COMMON%20SHARE) This section details the calculation of basic and diluted loss per common share, considering net loss and weighted-average shares outstanding | Metric | 3 Months Ended June 30, 2025 ($ in thousands) | 3 Months Ended June 30, 2024 ($ in thousands) | 6 Months Ended June 30, 2025 ($ in thousands) | 6 Months Ended June 30, 2024 ($ in thousands) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(16,861) | $(23,450) | $(31,246) | $(36,058) | | Weighted-average shares outstanding (Basic) | 4,646,096 (Shares) | 4,597,720 (Shares) | 4,630,390 (Shares) | 4,589,471 (Shares) | | Dilutive effect of share based compensation awards using the treasury stock method | — | — | — | — | | Diluted weighted-average shares outstanding | 4,646,096 (Shares) | 4,597,720 (Shares) | 4,630,390 (Shares) | 4,589,471 (Shares) | | Basic loss per common share | $(3.63) (per share) | $(5.10) (per share) | $(6.75) (per share) | $(7.86) (per share) | | Diluted loss per common share | $(3.63) (per share) | $(5.10) (per share) | $(6.75) (per share) | $(7.86) (per share) | - The computation of diluted loss per common share excludes **357,796** unvested/deferred RSUs/PSUs and **34,045** stock options as of June 30, 2025, due to their anti-dilutive effect[74](index=74&type=chunk) [6. ACCOUNTS RECEIVABLE, NET, AND INVENTORIES](index=18&type=section&id=6.%20ACCOUNTS%20RECEIVABLE%2C%20NET%2C%20AND%20INVENTORIES) This section details accounts receivable, net of doubtful accounts, and inventories, net of obsolescence allowances | Metric | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | Change ($ in thousands) | | :-------------------------- | :-------------- | :---------------- | :----- | | Trade accounts receivable | $13,720 | $14,112 | $(392) | | Allowance for doubtful accounts | $(629) | $(706) | $77 | | Other receivables | $1,213 | $1,350 | $(137) | | **Total accounts receivable, net** | **$14,304** | **$14,756** | **$(452)** | | Metric | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | Change ($ in thousands) | | :-------------------------- | :-------------- | :---------------- | :------- | | Finished goods | $36,677 | $44,372 | $(7,695) | | Work-in-process | $913 | $1,137 | $(224) | | Raw materials | $11,727 | $12,398 | $(671) | | Allowance for inventory obsolescence | $(5,153) | $(7,274) | $2,121 | | **Total inventories** | **$44,164** | **$50,633** | **$(6,469)** | [7. LEASES](index=18&type=section&id=7.%20LEASES) The company leases distribution centers, manufacturing facilities, and equipment under operating and finance leases, with associated costs and liabilities - The Company leases distribution centers and manufacturing facilities under non-cancelable operating leases expiring through 2038, and some property, plant, and equipment under finance leases[76](index=76&type=chunk) | Metric | 3 Months Ended June 30, 2025 ($ in thousands) | 3 Months Ended June 30, 2024 ($ in thousands) | 6 Months Ended June 30, 2025 ($ in thousands) | 6 Months Ended June 30, 2024 ($ in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Operating lease costs | $2,415 | $2,611 | $4,799 | $5,361 | | Sublease and logistics income | $1,110 | $785 | $2,298 | $1,523 | | Metric | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :-------------------------- | :-------------- | :---------------- | | Total lease assets | $48,777 | $50,148 | | Total lease liabilities | $52,450 | $53,573 | | Period | Operating Lease Payments ($ in thousands) | Finance Lease Payments ($ in thousands) | | :------------------------------------ | :----------------------- | :--------------------- | | For the period of July 1, 2025 to Dec 31, 2025 | $4,787 | $448 | | Year ending December 31, 2026 | $9,055 | $845 | | Year ending December 31, 2027 | $9,278 | $853 | | Year ending December 31, 2028 | $8,739 | $805 | | Year ending December 31, 2029 | $5,872 | $822 | | Year ending December 31, 2030 | $4,752 | $838 | | Thereafter | $7,869 | $6,379 | | **Total lease payments** | **$50,352** | **$10,990** | [8. PROPERTY, PLANT AND EQUIPMENT, NET](index=20&type=section&id=8.%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT%2C%20NET) This section details the company's property, plant, and equipment, including machinery, peat bogs, buildings, and land, net of accumulated depreciation | Metric | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | Change ($ in thousands) | | :-------------------------------- | :-------------- | :---------------- | :------- | | Machinery and equipment | $24,178 | $23,531 | $647 | | Peat bogs and related development | $12,634 | $11,895 | $739 | | Building and improvements | $10,370 | $10,313 | $57 | | Land | $5,659 | $5,630 | $29 | | Furniture and fixtures | $4,286 | $4,239 | $47 | | Computer equipment | $3,212 | $3,152 | $60 | | Leasehold improvements | $3,333 | $3,185 | $148 | | Gross property, plant and equipment | $63,672 | $61,945 | $1,727 | | Less: accumulated depreciation | $(27,426) | $(24,400) | $(3,026) | | **Total property, plant and equipment, net** | **$36,246** | **$37,545** | **$(1,299)** | | Period | 2025 ($ in thousands) | 2024 ($ in thousands) | | :-------------------------------- | :----- | :----- | | Three months ended June 30, | $1,481 | $1,740 | | Six months ended June 30, | $2,857 | $3,541 | - The Company operates peat bogs in Alberta, Canada, and is subject to Asset Retirement Obligations (AROs) for site remediation[81](index=81&type=chunk) - AROs totaled **$4,847 thousand** as of June 30, 2025, and **$4,516 thousand** as of December 31, 2024[82](index=82&type=chunk) [9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES](index=21&type=section&id=9.%20ACCRUED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) This section breaks down accrued expenses and other current liabilities, including compensation, interest, freight, and asset retirement obligations | Metric | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | Change ($ in thousands) | | :-------------------------------- | :-------------- | :---------------- | :------- | | Accrued compensation and benefits | $1,703 | $1,987 | $(284) | | Interest accrual | $1,990 | $2,141 | $(151) | | Freight, custom and duty accrual | $753 | $1,130 | $(377) | | Goods in transit accrual | $485 | $574 | $(89) | | Income tax accrual | $215 | $127 | $88 | | Asset retirement obligations | $272 | $284 | $(12) | | Other accrued liabilities | $3,055 | $4,404 | $(1,349) | | **Total accrued expenses and other current liabilities** | **$8,473** | **$10,647** | **$(2,174)** | [10. DEBT](index=21&type=section&id=10.%20DEBT) This section details the company's debt obligations, including the Term Loan and Revolving Credit Facility, along with their terms and outstanding balances [Term Loan](index=21&type=section&id=Term%20Loan) The Term Loan, originally **$125 million**, matures in October 2028 with variable interest rates, and a **$4.5 million** prepayment was made in Q2 2025 - The Term Loan, originally **$125 million**, was entered into on October 25, 2021, and matures on October 25, 2028[85](index=85&type=chunk)[86](index=86&type=chunk) - Interest rates are variable, based on SOFR, with an effective interest rate of **10.89%** for Q2 2025 and **10.91%** for the six months ended June 30, 2025[85](index=85&type=chunk)[86](index=86&type=chunk) - A **$4.5 million** prepayment was made in Q2 2025 from IGE Asset Sale proceeds, which eliminated all remaining **0.25%** quarterly principal installments for the Term Loan's remaining term[88](index=88&type=chunk) - The outstanding principal balance on the Term Loan was **$114.5 million** as of June 30, 2025, and the company was in compliance with all debt covenants[160](index=160&type=chunk) [Revolving Credit Facility](index=22&type=section&id=Revolving%20Credit%20Facility) The Revolving Credit Facility's maximum commitment was reduced to **$22 million** and maturity extended to June 2027, with no amounts borrowed as of June 30, 2025 - The Seventh Amendment to the Revolving Credit Facility, effective May 9, 2025, extended the maturity to June 30, 2027, and reduced the maximum commitment from **$35 million** to **$22 million**[91](index=91&type=chunk)[92](index=92&type=chunk) - As of June 30, 2025, the company had zero borrowed under the facility and approximately **$9 million** was available before triggering the minimum fixed charge coverage ratio covenant of **1.1x**[97](index=97&type=chunk)[165](index=165&type=chunk) - The facility is asset-based, secured by a first priority lien on working capital assets and a second priority lien on non-working capital assets, and the company was in compliance with all covenants[94](index=94&type=chunk)[95](index=95&type=chunk) [Other Debt](index=23&type=section&id=Other%20Debt) Other debt of **$89 thousand** primarily consists of an immaterial revolving line of credit and a mortgage from a foreign subsidiary - Other debt of **$89 thousand** as of June 30, 2025, primarily comprises an immaterial revolving line of credit and mortgage from a foreign subsidiary[98](index=98&type=chunk) [Aggregate future principal payments](index=24&type=section&id=Aggregate%20future%20principal%20payments) This section outlines the aggregate future principal payments for the company's debt obligations, primarily the Term Loan | Period | Debt ($ in thousands) | | :------------------------------------ | :------- | | For the period of July 1, 2025 to Dec 31, 2025 | $19 | | Year ending December 31, 2026 | $21 | | Year ending December 31, 2027 | $21 | | Year ending December 31, 2028 and thereafter | $114,480 | | **Total** | **$114,541** | [11. STOCKHOLDERS' EQUITY](index=24&type=section&id=11.%20STOCKHOLDERS%27%20EQUITY) This section details the company's common stock, including shares outstanding, authorized shares, voting rights, and liquidation provisions - As of June 30, 2025, there were **4,659,020** shares of common stock outstanding and **300,000,000** shares authorized[101](index=101&type=chunk) - Each common stock share entitles the holder to one vote, with no pre-emptive, redemption, subscription, or conversion rights[101](index=101&type=chunk) - In liquidation, stockholders share pro rata in corporate assets after all liabilities and preferred stock provisions are met. Dividends are at the board's discretion[101](index=101&type=chunk) [12. STOCK-BASED COMPENSATION](index=24&type=section&id=12.%20STOCK-BASED%20COMPENSATION) This section describes the company's stock-based compensation plans, including Restricted Stock Units (RSUs), Performance Stock Units (PSUs), and stock options [Stock-based compensation plan overview](index=24&type=section&id=Stock-based%20compensation%20plan%20overview) The 2020 Equity Incentive Plan provides various stock-based awards, with **286,112** shares available for grant to employees, directors, and consultants as of June 30, 2025 - The 2020 Equity Incentive Plan is the successor to the 2018 and 2019 plans, providing for ISOs, nonqualified stock options, stock grants, and stock-based awards to employees, directors, and consultants[102](index=102&type=chunk) - As of June 30, 2025, **286,112** shares were available for grant under the 2020 Plan[102](index=102&type=chunk) - The number of shares available for issuance under the 2020 Plan may increase annually by the lesser of **4%** of outstanding common stock or a number determined by the Plan Administrator[104](index=104&type=chunk) [Restricted Stock Unit Activity](index=25&type=section&id=Restricted%20Stock%20Unit%20Activity) This section details the activity of Restricted Stock Units (RSUs), including grants, vesting, forfeitures, and unamortized compensation cost | Metric | Number of RSUs (Units) | Weighted average grant date fair value ($) | | :-------------------------- | :--------------- | :----------------------------- | | Balance, December 31, 2024 | 102,030 | $13.82 | | Granted | 211,618 | $4.68 | | Vested | (82,527) | $12.18 | | Forfeited | (34) | $157.40 | | **Balance, June 30, 2025** | **231,087** | **$6.01** | - As of June 30, 2025, total unamortized stock-based compensation cost for unvested RSUs was **$977 thousand**, with an expected recognition period of approximately one year[108](index=108&type=chunk) - The company recognized **$278 thousand** and **$636 thousand** in stock-based compensation expense for RSUs for the three and six months ended June 30, 2025, respectively[108](index=108&type=chunk) [Performance Stock Unit Activity](index=25&type=section&id=Performance%20Stock%20Unit%20Activity) This section outlines the activity of Performance Stock Units (PSUs), including vesting and forfeitures due to performance conditions or terminations | Metric | Number of PSUs (Units) | Weighted average grant date fair value ($) | | :-------------------------- | :--------------- | :----------------------------- | | Balance, December 31, 2024 | 125,783 | $9.89 | | Vested | (40,871) | $9.89 | | Forfeited | (84,912) | $9.89 | | **Balance, June 30, 2025** | **—** | **—** | - PSU forfeitures were due to employee terminations and performance conditions not being satisfied[110](index=110&type=chunk) - As of June 30, 2025, there was no unamortized stock-based compensation cost related to unvested PSUs[110](index=110&type=chunk) [Stock Options](index=26&type=section&id=Stock%20Options) This section provides details on stock option activity, including outstanding and exercisable options, with no grants or exercises during the six months ended June 30, 2025 - No stock options were granted or exercised during the six months ended June 30, 2025[111](index=111&type=chunk) | Metric | Number (Units) | Weighted average exercise price ($) | Weighted average grant date fair value ($) | Weighted average remaining contractual term (years) | | :------------------------------------------ | :------- | :------------------------------ | :------------------------------------- | :-------------------------------------------------- | | Outstanding and exercisable as of Dec 31, 2024 | 40,654 | $96.36 | $22.76 | 3.67 | | Cancelled | (6,609) | $95.86 | $13.78 | | | **Outstanding and exercisable as of June 30, 2025** | **34,045** | **$96.46** | **$24.50** | **3.71** | - As of June 30, 2025, there were no unvested stock awards and no unrecognized compensation cost related to options[111](index=111&type=chunk) [13. INCOME TAXES](index=26&type=section&id=13.%20INCOME%20TAXES) This section presents the company's income tax benefit/expense and effective tax rates, which differ from the statutory rate due to full valuation allowances | Period | Income Tax Benefit (Expense) ($ in thousands) | Effective Tax Rate | | :-------------------------------- | :--------------------------- | :----------------- | | 3 Months Ended June 30, 2025 | $98 | 0.6% | | 6 Months Ended June 30, 2025 | $16 | 0.1% | | 3 Months Ended June 30, 2024 | $(390) | (1.7)% | | 6 Months Ended June 30, 2024 | $(586) | (1.7)% | - The effective tax rates for 2025 and 2024 differ from the **21%** federal statutory rate primarily due to full valuation allowances in U.S. and foreign jurisdictions[112](index=112&type=chunk)[113](index=113&type=chunk) - The 2025 income tax benefit was mainly from Canadian jurisdictions, partially offset by foreign taxes in Spain and U.S. state taxes[112](index=112&type=chunk) - The company is evaluating the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) but does not expect a material impact on its results of operations[114](index=114&type=chunk) [14. COMMITMENTS AND CONTINGENCIES](index=26&type=section&id=14.%20COMMITMENTS%20AND%20CONTINGENCIES) This section addresses the company's purchase commitments and ongoing legal proceedings, which are not expected to have a material adverse effect [Purchase commitments](index=26&type=section&id=Purchase%20commitments) The company enters into agreements with suppliers, committing to minimum inventory purchases in exchange for favorable pricing - The company enters into agreements with suppliers for favorable pricing in return for commitments to purchase minimum inventory amounts over defined periods[115](index=115&type=chunk) [Contingencies](index=26&type=section&id=Contingencies) The company is involved in routine legal proceedings, but management does not anticipate a material adverse effect on its financial position or results - The company is involved in various lawsuits and legal proceedings in the ordinary course of business[116](index=116&type=chunk) - Management does not expect the outcome of any current matters, individually or in aggregate, to have a material adverse effect on the company's financial position, results of operations, cash flows, or future earnings[117](index=117&type=chunk) [15. FAIR VALUE MEASUREMENTS](index=27&type=section&id=15.%20FAIR%20VALUE%20MEASUREMENTS) This section discusses the company's fair value measurements for assets and liabilities, including recurring and nonrecurring measurements and other disclosures [Recurring and Nonrecurring](index=27&type=section&id=Recurring%20and%20Nonrecurring) In 2024, the company sold excess land measured at Level 2 fair value, with no other assets or liabilities remeasured during the periods presented - In 2024, the company sold **20 acres** of excess land, measured at Level 2 fair value, with no gain or loss recorded as the sale price was consistent with carrying value[118](index=118&type=chunk) - No other assets or liabilities were remeasured to fair value on a recurring or nonrecurring basis during the periods presented[119](index=119&type=chunk) [Other Fair Value Measurements](index=27&type=section&id=Other%20Fair%20Value%20Measurements) This section provides estimated fair values for cash, finance leases, and the Term Loan, with methodologies based on market quotes and discounted cash flows | Metric | Fair Value Hierarchy Level | Carrying Amount (June 30, 2025) ($ in thousands) | Estimated Fair Value (June 30, 2025) ($ in thousands) | Carrying Amount (Dec 31, 2024) ($ in thousands) | Estimated Fair Value (Dec 31, 2024) ($ in thousands) | | :-------------------------- | :------------------------- | :------------------------------ | :----------------------------------- | :------------------------------ | :----------------------------------- | | Cash and cash equivalents | Level 1 | $10,991 | $10,991 | $26,111 | $26,111 | | Finance leases | Level 3 | $8,072 | $8,303 | $8,289 | $8,437 | | Term Loan | Level 2 | $114,452 | $93,851 | $119,303 | $95,442 | - Fair values of cash and cash equivalents, other current assets, and liabilities approximated carrying values due to short-term maturities[120](index=120&type=chunk) - Finance leases' fair values (Level 3) were calculated using the present value of future cash outflows discounted at an estimated borrowing rate. The Term Loan's fair value (Level 2) was based on bank quotes[121](index=121&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, discussing the adverse impact of market oversupply, restructuring initiatives, and detailed comparisons of operating results for the three and six months ended June 30, 2025 and 2024, along with liquidity and capital resources [Company Overview](index=28&type=section&id=Company%20Overview) Hydrofarm is a leading independent manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture (CEA) in the U.S. and Canadian markets - Hydrofarm is a leading independent manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture (CEA) in the U.S. and Canadian markets[124](index=124&type=chunk) - The company's mission is to empower growers with products that enable greater quality, efficiency, consistency, and speed in their grow projects[124](index=124&type=chunk) - Products are used for cultivating various plants, including cannabis, flowers, fruits, and vegetables, in controlled settings, allowing for efficient use of space, water, and resources, and year-round growing[125](index=125&type=chunk) - The company reaches commercial farmers and consumers through over **2,000** wholesale customer accounts, including specialty hydroponic retailers, commercial resellers, garden centers, hardware stores, and e-commerce retailers[125](index=125&type=chunk) [Market Conditions](index=28&type=section&id=Market%20Conditions) Adverse financial results stem from agricultural oversupply, decreasing cultivation, and slow U.S. federal cannabis regulation, impacting product demand and leading to restructuring - Adverse financial results are primarily due to agricultural oversupply impacting the market and decreasing indoor and outdoor cultivation[126](index=126&type=chunk) - Demand for products has been negatively impacted by the slow enactment of U.S. federal cannabis regulations, leading operators to reduce investments, particularly in durable goods[126](index=126&type=chunk) - The 2023 Restructuring Plan, completed in Q1 2025, involved U.S. manufacturing facility consolidations, resulting in **$9.7 million** in non-cash inventory markdowns and **$2.0 million** in cash charges[128](index=128&type=chunk) - The 2025 Restructuring Plan, initiated in Q2 2025, aims to reduce the product portfolio (underperforming brands), distribution network, manufacturing footprint, and headcount, incurring **$3.3 million** in Q2 2025 for inventory write-downs[130](index=130&type=chunk) - The company continues to evaluate its product portfolio, supply chain, and opportunities to sell excess land or pursue outsourcing to improve efficiency and cash position[131](index=131&type=chunk) [Results of Operations—Comparison of three and six months ended June 30, 2025 and 2024](index=30&type=section&id=Results%20of%20Operations%E2%80%94Comparison%20of%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) This section compares the company's operating results for the three and six months ended June 30, 2025 and 2024, analyzing key financial metrics and their drivers [Net sales](index=30&type=section&id=Net%20sales) Net sales decreased significantly for both periods, primarily due to reduced volume, mix, and price, driven by industry oversupply | Period | 2025 ($ in thousands) | 2024 ($ in thousands) | Change (YoY) ($ in thousands) | | :-------------------------------- | :----- | :----- | :----------- | | Three months ended June 30, | $39,245 | $54,793 | $(15,548) (-28.4%) | | Six months ended June 30, | $79,779 | $108,965 | $(29,186) (-26.8%) | - The decrease in net sales was primarily due to a **27.9%** reduction in volume and mix of products sold and a **0.4%** decrease in price for the three months, and a **25.4%** reduction in volume/mix and **1.0%** decrease in price for the six months, largely driven by industry oversupply[135](index=135&type=chunk) [Gross profit](index=30&type=section&id=Gross%20profit) Gross profit and margin decreased substantially for both periods, attributed to lower net sales, a reduced proportion of proprietary brand products, and restructuring charges | Period | 2025 ($ in thousands) | 2024 ($ in thousands) | Change (YoY) ($ in thousands) | | :-------------------------------- | :----- | :----- | :----------- | | Three months ended June 30, | $2,794 | $10,851 | $(8,057) (-74.3%) | | Six months ended June 30, | $9,671 | $21,776 | $(12,105) (-55.6%) | | Period | 2025 (Gross Margin %) | 2024 (Gross Margin %) | Change (YoY) (pp) | | :-------------------------------- | :----- | :----- | :----------- | | Three months ended June 30, | 7.1% | 19.8% | (12.7 pp) | | Six months ended June 30, | 12.1% | 20.0% | (7.9 pp) | - Gross profit and margin decreased due to lower net sales, a lower proportion of proprietary brand products sold, and restructuring charges (primarily inventory markdowns) of **$3.3 million** for three months and **$3.7 million** for six months ended June 30, 2025[138](index=138&type=chunk) [Selling, general and administrative expenses](index=31&type=section&id=Selling%2C%20general%20and%20administrative%20expenses) Selling, general, and administrative expenses decreased for both periods, primarily due to reductions in employee compensation, facility costs, and insurance expenses | Period | 2025 ($ in thousands) | 2024 ($ in thousands) | Change (YoY) ($ in thousands) | | :-------------------------------- | :----- | :----- | :----------- | | Three months ended June 30, | $16,140 | $18,659 | $(2,519) (-13.5%) | | Six months ended June 30, | $34,003 | $38,280 | $(4,277) (-11.2%) | - The decrease in SG&A for the three months was driven by a **$1.8 million** reduction in employee compensation, **$0.3 million** in facility costs, and **$0.3 million** in insurance expenses[140](index=140&type=chunk) - For the six months, the decrease was primarily due to a **$3.1 million** reduction in employee compensation and a **$0.7 million** decrease in facility costs[140](index=140&type=chunk) [Loss on asset disposition](index=31&type=section&id=Loss%20on%20asset%20disposition) A **$11.5 million** loss on asset disposition was recorded for the three and six months ended June 30, 2024, due to the IGE Asset Sale, with no such loss in 2025 - A loss on asset disposition of **$11.5 million** was recorded for the three and six months ended June 30, 2024, due to the IGE Asset Sale[141](index=141&type=chunk) - No loss on asset disposition was recorded for the three and six months ended June 30, 2025[133](index=133&type=chunk) [Interest expense](index=31&type=section&id=Interest%20expense) Interest expense decreased for both periods, primarily due to lower outstanding debt from principal repayments and reduced variable interest rates on the Term Loan | Period | 2025 ($ in thousands) | 2024 ($ in thousands) | Change (YoY) ($ in thousands) | | :-------------------------------- | :----- | :----- | :----------- | | Three months ended June 30, | $3,391 | $3,811 | $(420) (-11.0%) | | Six months ended June 30, | $6,768 | $7,742 | $(974) (-12.6%) | - The decrease in interest expense was primarily due to lower debt outstanding from principal repayments and lower variable interest rates on the Term Loan[142](index=142&type=chunk) [Other (expense) income, net](index=31&type=section&id=Other%20(expense)%20income%2C%20net) The shift to other expense in 2025 was primarily due to a loss on debt extinguishment recorded in conjunction with the Term Loan prepayment | Period | 2025 ($ in thousands) | 2024 ($ in thousands) | Change (YoY) ($ in thousands) | | :-------------------------------- | :----- | :----- | :----------- | | Three months ended June 30, | $(222) | $79 | $(301) (-381.0%) | | Six months ended June 30, | $(162) | $294 | $(456) (-155.1%) | - The shift to other expense in 2025 was primarily due to a loss on debt extinguishment recorded in conjunction with the Term Loan prepayment[143](index=143&type=chunk) [Income taxes](index=31&type=section&id=Income%20taxes) The company reported an income tax benefit in 2025, differing from the federal statutory rate primarily due to full valuation allowances in U.S. and foreign jurisdictions | Period | Income Tax Benefit (Expense) ($ in thousands) | Effective Tax Rate | | :-------------------------------- | :--------------------------- | :----------------- | | 3 Months Ended June 30, 2025 | $0.1 | 0.6% | | 6 Months Ended June 30, 2025 | < $0.1 | 0.1% | | 3 Months Ended June 30, 2024 | $(0.4) | (1.7)% | | 6 Months Ended June 30, 2024 | $(0.6) | (1.7)% | - Effective tax rates differ from the **21%** federal statutory rate primarily due to full valuation allowances in U.S. and foreign jurisdictions[144](index=144&type=chunk)[145](index=145&type=chunk) - The 2025 income tax benefit was primarily due to benefits in Canadian jurisdictions, partially offset by foreign and U.S. state taxes[144](index=144&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to generate and manage cash, including cash flows from operating, investing, and financing activities, and its available capital resources [Cash Flow from Operating, Investing, and Financing Activities](index=32&type=section&id=Cash%20Flow%20from%20Operating%2C%20Investing%2C%20and%20Financing%20Activities) Net cash used in operating activities increased significantly in H1 2025, while investing activities shifted to a net use, and financing activities continued to use cash for debt repayments | Metric | 6 Months Ended June 30, 2025 ($ in thousands) | 6 Months Ended June 30, 2024 ($ in thousands) | Change (YoY) ($ in thousands) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------- | | Net cash (used in) from operating activities | $(10,047) | $1,487 | $(11,534) | | Net cash (used in) from investing activities | $(501) | $2,280 | $(2,781) | | Net cash used in financing activities | $(5,121) | $(3,576) | $(1,545) | | Effect of exchange rate changes on cash | $549 | $(189) | $738 | | Net (decrease) increase in cash | $(15,120) | $2 | $(15,122) | | Cash and cash equivalents at beginning of period | $26,111 | $30,312 | $(4,201) | | Cash and cash equivalents at end of period | $10,991 | $30,314 | $(19,323) | - Net cash used in operating activities for H1 2025 was **$10.0 million**, primarily due to a **$31.2 million** net loss and a **$3.8 million** working capital outflow, partially offset by **$25.0 million** in non-cash items[147](index=147&type=chunk) - Net cash used in investing activities for H1 2025 was **$0.5 million**, mainly for capital expenditures, contrasting with a **$2.3 million** inflow in H1 2024 due to IGE Asset Sale proceeds[150](index=150&type=chunk) - Net cash used in financing activities for H1 2025 was **$5.1 million**, driven by **$4.9 million** in Term Loan repayments and **$0.2 million** in finance lease principal payments[151](index=151&type=chunk) [Availability and Use of Cash](index=33&type=section&id=Availability%20and%20Use%20of%20Cash) Management believes current cash, operating cash flows, and the Revolving Credit Facility will adequately support operations, debt service, and capital expenditures for the next twelve months - Management believes cash flows from operating activities, current cash levels, and Revolving Credit Facility availability will be adequate to support operations and fund debt service, capital expenditures, lease obligations, and working capital for the next twelve months[153](index=153&type=chunk) - A **$4.5 million** prepayment was made on the Term Loan in Q2 2025 using IGE Asset Sale proceeds, with **$0.8 million** in remaining contractual commitments[154](index=154&type=chunk) - The company is evaluating additional asset sales (e.g., excess land) or divestitures of brands/lines of business to supplement its cash position, which may be subject to debt provisions[155](index=155&type=chunk) [Term Loan](index=33&type=section&id=Term%20Loan) The Term Loan, with an outstanding principal balance of **$114.5 million** as of June 30, 2025, had a **$4.5 million** prepayment in Q2 2025, eliminating future quarterly installments - The Term Loan, originally **$125 million**, was entered into on October 25, 2021, and matures on October 25, 2028, with variable interest rates based on SOFR[156](index=156&type=chunk) - A **$4.5 million** prepayment was made in Q2 2025 from IGE Asset Sale proceeds, which reduced required quarterly installment amounts to zero for the remaining term[158](index=158&type=chunk)[159](index=159&type=chunk) - The outstanding principal balance was **$114.5 million** as of June 30, 2025, and the company was in compliance with all debt covenants[160](index=160&type=chunk) [Revolving Credit Facility](index=34&type=section&id=Revolving%20Credit%20Facility) The Revolving Credit Facility's maximum commitment was reduced to **$22 million** and maturity extended to June 2027, with **$9 million** available before triggering the fixed charge coverage ratio covenant - The Seventh Amendment, dated May 9, 2025, reduced the maximum commitment under the Revolving Credit Facility from **$35 million** to **$22 million** and extended the maturity date to June 30, 2027[161](index=161&type=chunk) - As of June 30, 2025, no amounts were borrowed, and approximately **$9 million** was available before triggering the minimum fixed charge coverage ratio covenant of **1.1x**[165](index=165&type=chunk) - The facility is secured by a first priority lien on working capital assets and a second priority lien on non-working capital assets, and the company was in compliance with all debt covenants[162](index=162&type=chunk)[164](index=164&type=chunk) [Cash and Cash Equivalents](index=35&type=section&id=Cash%20and%20Cash%20Equivalents) Total cash and cash equivalents decreased by **$15.1 million** to **$11.0 million** as of June 30, 2025, with **$6.6 million** held by foreign subsidiaries | Metric | June 30, 2025 ($ in millions) | December 31, 2024 ($ in millions) | Change ($ in millions) | | :-------------------------- | :-------------- | :---------------- | :------- | | Total cash and cash equivalents | $11.0 | $26.1 | $(15.1) | | Held by foreign subsidiaries | $6.6 | $11.9 | $(5.3) | [Material Cash Requirements](index=35&type=section&id=Material%20Cash%20Requirements) Material cash requirements include interest payments on long-term debt, lease payments, Term Loan reinvestment balances, and purchase obligations, exposing the company to interest rate risk - Material cash requirements include interest payments on long-term debt, finance lease payments, operating lease payments, Term Loan reinvestment provision balances, and purchase obligations[168](index=168&type=chunk) - Variable rates on the Term Loan are subject to change, exposing the company to interest rate risk[168](index=168&type=chunk) [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies and estimates involve significant judgments, particularly for indefinite-lived intangible assets, long-lived assets, and inventory valuation, where actual results may differ - Critical accounting policies and estimates involve significant judgments and assumptions, particularly for indefinite-lived intangible assets, long-lived tangible and finite-lived intangible assets, and inventory valuation[169](index=169&type=chunk) - Actual results could differ materially from the amounts reported based on these estimates[169](index=169&type=chunk) [Recent Accounting Pronouncements](index=35&type=section&id=Recent%20Accounting%20Pronouncements) Information regarding recent accounting pronouncements is provided in Note 2 – Basis of Presentation and Significant Accounting Policies - Information on recent accounting pronouncements is detailed in Note 2 – Basis of Presentation and Significant Accounting Policies[170](index=170&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item discusses the company's exposure to market risks, primarily interest rate risk from variable-rate debt, foreign currency risk from operations in CAD and Euro, and inflation risk, noting that the company does not currently hedge these risks [Interest Rate Risk](index=36&type=section&id=Interest%20Rate%20Risk) The company is exposed to interest rate risk due to its **$114.5 million** variable-rate Term Loan, with a 100 basis point increase potentially raising annual interest expense by **$1.2 million** - The company is exposed to interest rate risk due to its **$114.5 million** variable-rate Term Loan as of June 30, 2025[173](index=173&type=chunk) - A **100 basis point** increase in interest rates would increase annual interest expense by an average of **$1.2 million**[173](index=173&type=chunk) - The company does not currently hedge its interest rate risks[173](index=173&type=chunk) [Foreign Currency Risk](index=36&type=section&id=Foreign%20Currency%20Risk) Operations in CAD and Euro expose the company to foreign currency risk, impacting sales, purchasing, and labor, though no hedging contracts are currently used - The functional currencies of foreign subsidiary operations are predominantly CAD and Euro, exposing the company to foreign currency risk[174](index=174&type=chunk) - Fluctuations in exchange rates impact sales, purchasing transactions, and labor, affecting results of operations and cash flows[174](index=174&type=chunk) - The company does not currently use foreign currency exchange contracts for trading or speculative purposes[174](index=174&type=chunk) [Inflation Risk](index=36&type=section&id=Inflation%20Risk) The company's financial results are based on historical costs, and future inflation could materially impact its operations and financial condition - The company's financial results are based on historical costs, and there is no assurance that future inflation will not materially impact its operations and financial condition[175](index=175&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, concluding they were effective. There were no material changes in internal controls over financial reporting during the period [Evaluation of Disclosure Controls and Procedures](index=37&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025, ensuring timely and accurate information reporting - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of June 30, 2025[177](index=177&type=chunk) - Disclosure controls are designed to ensure timely recording, processing, summarizing, and reporting of information required under the Exchange Act[178](index=178&type=chunk) [Changes in Internal Controls over Financial Reporting](index=37&type=section&id=Changes%20in%20Internal%20Controls%20over%20Financial%20Reporting) No material changes in internal controls over financial reporting occurred during the period covered by this report - No material changes in internal controls over financial reporting occurred during the period covered by this report[179](index=179&type=chunk) [PART II - OTHER INFORMATION](index=38&type=section&id=Part%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently aware of any material pending legal proceedings or claims beyond routine litigation incidental to its business - The company is not aware of any material pending legal proceedings or claims, other than routine litigation incidental to business[181](index=181&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) The risk factors discussed in the 2024 Annual Report remain relevant, with no material changes as of the date of this Quarterly Report - Risk factors from the 2024 Annual Report remain relevant, and no material changes have occurred as of the date of this Quarterly Report[182](index=182&type=chunk) [Item 2. 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) There were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[183](index=183&type=chunk) [Item 3. Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report for the period - No defaults upon senior securities to report[184](index=184&type=chunk) [Item 4. Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[185](index=185&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information) This item states that sections (a) and (b) are not applicable, and no director or officer adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the quarter ended June 30, 2025 - Sections (a) and (b) are not applicable[186](index=186&type=chunk) - No director or officer adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the quarter ended June 30, 2025[186](index=186&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents, credit agreement amendments, compensation policies, and CEO/CFO certifications - The section lists all exhibits filed with the Form 10-Q, including corporate governance documents, credit agreement amendments, compensation policies, and CEO/CFO certifications[192](index=192&type=chunk) [SIGNATURES](index=40&type=section&id=SIGNATURES) The Quarterly Report on Form 10-Q was signed by B. John Lindeman, CEO, and Kevin O'Brien, CFO, on August 12, 2025 - The Quarterly Report on Form 10-Q was signed by B. John Lindeman, Chief Executive Officer, and Kevin O'Brien, Chief Financial Officer, on August 12, 2025[196](index=196&type=chunk)

Exhibit 99.1 Silexion Therapeutics Reports Second Quarter 2025 Financial Results and Provides Business Update Continued advancement of SIL204 preclinical program with strong ef icacy data across multiple KRAS-driven cancer types; company strengthened financial position and maintains progress toward clinical trials GRAND CAYMAN, Cayman Islands, August 12, 2025 - Silexion Therapeutics Corp. (NASDAQ: SLXN) ("Silexion" or the "Company"), a clinical-stage biotechnology company developing RNA interference (RNAi) ...

PART I — FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and detailed notes for periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased from $6.2 million to $17.9 million, driven by cash, while liabilities decreased and equity surged | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Cash and cash equivalents | $11,793,028 | $2,193,573 | | Total current assets | $16,549,821 | $5,066,152 | | Total assets | $17,936,815 | $6,226,503 | | Total current liabilities | $3,632,039 | $4,636,803 | | Total liabilities | $4,116,916 | $6,185,742 | | Total stockholders' equity | $13,819,899 | $40,761 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net loss improved significantly for the six months ended June 30, 2025, to $6.4 million, despite decreased revenue, due to reduced costs | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue | $702,936 | $940,863 | $1,438,985 | $1,974,411 | | Cost of goods sold | $(851,476) | $(3,113,429) | $(1,632,859) | $(4,735,009) | | Gross margin | $(148,540) | $(2,172,566) | $(193,874) | $(2,760,598) | | Loss from operations | $(3,871,806) | $(5,529,301) | $(6,378,277) | $(9,773,636) | | Net loss | $(3,899,897) | $(606,418) | $(6,360,327) | $(26,654,462) | | Net loss per common share – basic | $(7.57) | $(96.59) | $(14.88) | $(7,085.18) | [Condensed Consolidated Statements of Stockholders Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%20Equity) Stockholders' equity dramatically increased to $13.8 million by June 30, 2025, primarily from over $19.5 million in common stock issuances | Item | January 1, 2025 | June 30, 2025 | | :--- | :-------------- | :------------ | | Common Stock (Shares) | 78,859 | 533,008 | | Common Stock (Amount) | $1 | $6 | | Treasury Stock (Shares) | – | 65,348 | | Treasury Stock (Amount) | – | $(510,907) | | Additional Paid-in Capital | $166,357,207 | $187,007,574 | | Accumulated Deficit | $(166,316,447) | $(172,676,774) | | Total Stockholders' Equity | $40,761 | $13,819,899 | - Issuance of common stock from At the Market offering generated net proceeds of **$8,846,761**[15](index=15&type=chunk) - Issuance of common stock and pre-funded warrants generated net proceeds of **$10,703,882**[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash increased by $9.6 million for the six months ended June 30, 2025, driven by $19.0 million in financing activities | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(7,230,924) | $(8,198,103) | | Net cash used in investing activities | $(2,204,927) | $(182,539) | | Net cash provided by financing activities | $19,035,306 | $2,344,471 | | NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | $9,599,455 | $(6,036,171) | | CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $11,898,028 | $2,157,175 | - Financing activities were significantly boosted by **$10.7 million** from public offering of common stock and pre-funded warrants, and **$8.8 million** from At the Market offering[20](index=20&type=chunk) - Investing activities included a **$2.0 million** purchase of a certificate of deposit[20](index=20&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Detailed explanations of financial position, operations, and cash flows, including Bitcoin strategy, going concern, and financing [NOTE 1 – ORGANIZATION, NATURE OF OPERATIONS AND GOING CONCERN](index=12&type=section&id=NOTE%201%20%E2%80%93%20ORGANIZATION,%20NATURE%20OF%20OPERATIONS%20AND%20GOING%20CONCERN) Company renamed Empery Digital Inc., adopted a Bitcoin treasury strategy, and addressed Nasdaq compliance and tariff impacts - Company renamed Empery Digital Inc. on July 30, 2025, and changed Nasdaq ticker from VLCN to EMPD[22](index=22&type=chunk) - Adopted a Bitcoin treasury strategy effective July 17, 2025, with the goal of becoming a leading, low-cost, capital-efficient aggregator of Bitcoin[23](index=23&type=chunk) - Management anticipates cash on hand plus proceeds from Private Placements will be sufficient to fund operations beyond one year[32](index=32&type=chunk) - Nasdaq compliance issues regarding minimum bid price were regained on July 17, 2024, and again on July 17, 2025, after a 1-for-8 reverse stock split on June 11, 2025[36](index=36&type=chunk)[37](index=37&type=chunk) - Tariffs on imports from Vietnam are set at **20%**, and China at **30%**, impacting product costs and potentially reducing margins[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) [NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=14&type=section&id=NOTE%202%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Unaudited interim statements, retroactive 1-for-8 reverse stock split, and concentration risk from outsourced manufacturing - Interim consolidated financial statements are unaudited and prepared in accordance with U.S. GAAP[42](index=42&type=chunk) - On June 11, 2025, the Company completed a reverse **1-for-8** stock split, with all share and per share amounts updated to reflect this[44](index=44&type=chunk) - The Company outsources product design, development, and manufacturing to third parties, leading to concentration risk[46](index=46&type=chunk) - Settlement agreements with manufacturers resulted in a **$700,000** reduction of expense in 2024 and a recorded expense of **$1,091,308** for excess raw materials[48](index=48&type=chunk)[49](index=49&type=chunk) [NOTE 3 – SEGMENT REPORTING](index=16&type=section&id=NOTE%203%20%E2%80%93%20SEGMENT%20REPORTING) The company operates as a single segment, with Co-CEOs as chief operating decision makers - The Company operates as one operating segment[52](index=52&type=chunk) - Co-CEOs are the chief operating decision makers, using consolidated statements of operations to assess financial performance and allocate resources[52](index=52&type=chunk) [NOTE 4 – NOTES PAYABLE](index=16&type=section&id=NOTE%204%20%E2%80%93%20NOTES%20PAYABLE) Total notes payable of $32,225 as of June 30, 2025, primarily from vehicle financing | Maturity Period | Amount | | :-------------- | :----- | | Remainder of 2025 | $5,450 | | 2026 | $10,898 | | 2027 | $10,898 | | 2028 | $10,898 | | 2029 | $1,816 | | Total future payments | $39,960 | | Less: Interest | $(7,735) | | Total notes payable | $32,225 | | Less current portion | $(7,602) | | Long-term notes payable | $24,623 | [NOTE 5 - CONVERTIBLE NOTES](index=16&type=section&id=NOTE%205%20-%20CONVERTIBLE%20NOTES) Remaining $24.7 million principal of May 2023 Convertible Notes exchanged for Series A Preferred Stock in March 2024 - In March 2024, **$7,414,025** of May 2023 Notes principal converted into **622** shares of common stock, resulting in a **$333,544** loss[63](index=63&type=chunk) - On March 4, 2024, the remaining **$24,716,118** principal of May 2023 Notes was exchanged for **24,698** shares of Series A Convertible Preferred Stock, leading to a **$1,314,065** loss on exchange[63](index=63&type=chunk) [NOTE 6 - MAY 2024 SENIOR NOTES](index=18&type=section&id=NOTE%206%20-%20MAY%202024%20SENIOR%20NOTES) $2.9 million Senior Notes issued in May 2024, fully repaid in July 2024, resulting in a $1.5 million loss on extinguishment - Issued Senior Notes with **$2,942,170** principal on May 22, 2024, for net proceeds of **$2,255,851**[65](index=65&type=chunk) - Notes were fully repaid on July 12, 2024, resulting in a **$1,470,554** loss on early extinguishment[65](index=65&type=chunk) [NOTE 7 - WARRANT LIABILITIES](index=18&type=section&id=NOTE%207%20-%20WARRANT%20LIABILITIES) Warrant liability for Series A Warrants is $146,468, with Series B Warrants reclassified to equity in May 2024 | Metric | Amount | | :----- | :----- | | Fair value on January 1, 2025 | $111,658 | | Loss on changes in fair value | $34,810 | | Balance at June 30, 2025 | $146,468 | - Series B Warrants were reclassified to equity on May 17, 2024, after an amendment introduced a cashless exercise provision, with a fair value of **$3,405,662**[68](index=68&type=chunk) [NOTE 8 – RELATED PARTY TRANSACTIONS](index=19&type=section&id=NOTE%208%20%E2%80%93%20RELATED%20PARTY%20TRANSACTIONS) Engaged in consulting agreements, executive employment, and terminated a Highbridge agreement for a $2.0 million fee - Paid **$45,000** to ThankYou Studios, an entity owned by Board member Orn Olason, for marketing and brand assessment[70](index=70&type=chunk) - CEO John Kim's salary was **$800,000** with a **$250,000** annual bonus and **10%** equity award (approved **180,375** stock options)[72](index=72&type=chunk) - CFO Greg Endo's salary was **$300,000** with up to **50%** bonus and **4%** equity award (approved **72,150** stock options)[73](index=73&type=chunk) - Terminated Highbridge Consulting Agreement on July 11, 2025, for a **$2.0 million** termination fee, releasing obligations for potential future milestone payments[78](index=78&type=chunk)[79](index=79&type=chunk) [NOTE 9 – STOCKHOLDERS' EQUITY](index=20&type=section&id=NOTE%209%20%E2%80%93%20STOCKHOLDERS%27%20EQUITY) Executed a 1-for-8 reverse stock split, repurchased shares, and raised significant capital through ATM and public offerings - Completed a **1-for-8** reverse stock split on June 11, 2025[81](index=81&type=chunk) - Repurchased **65,348** shares of common stock for **$510,907** under a stock buyback program through June 30, 2025[87](index=87&type=chunk) - Raised net proceeds of **$8,846,761** from the sale of **220,515** shares of common stock through the ATM program during the six months ended June 30, 2025[84](index=84&type=chunk) - Received net proceeds of **$10,703,882** from an underwritten public offering of **53,750** common stock units and **696,250** pre-funded warrant units on February 6, 2025[85](index=85&type=chunk) Common Stock Warrants | Warrant Type | Outstanding at Jan 1, 2025 | Granted | Exercised | Outstanding at June 30, 2025 | Weighted Average Exercise Price at June 30, 2025 | | :----------- | :------------------------- | :------ | :-------- | :--------------------------- | :--------------------------------------------- | | Common Stock Warrants | 25,067 | 1,456,527 | (226,117) | 1,255,477 | $58.69 | [NOTE 10 – STOCK-BASED COMPENSATION](index=25&type=section&id=NOTE%2010%20%E2%80%93%20STOCK-BASED%20COMPENSATION) Recognized $1.1 million in stock-based compensation for six months ended June 30, 2025, primarily for CEO and CFO options - Recognized **$1,100,670** in total stock-based compensation for the six months ended June 30, 2025[114](index=114&type=chunk) - Fully vested stock options granted to CEO and CFO to purchase **252,525** shares at **$4.56** per share resulted in **$1,125,802** in share-based compensation for the six months ended June 30, 2025[111](index=111&type=chunk) - No shares are available for issuance under the 2021 Plan as of June 30, 2025[110](index=110&type=chunk) Stock Option Activity | Stock Option Activity | Shares | Weighted Average Exercise Price | | :-------------------- | :----- | :---------------------------- | | Outstanding at January 1, 2025 | 816 | $14,203.20 | | Granted | 252,525 | $4.56 | | Canceled | (782) | $104.32 | | Outstanding at June 30, 2025 | 252,559 | $576.03 | [NOTE 11 – LOSS PER COMMON SHARE](index=26&type=section&id=NOTE%2011%20%E2%80%93%20LOSS%20PER%20COMMON%20SHARE) Basic and diluted net loss per common share improved to $(14.88) for six months ended June 30, 2025, due to more shares outstanding | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(3,899,897) | $(606,418) | $(6,360,327) | $(26,654,462) | | Weighted average common shares outstanding – basic | 515,490 | 6,278 | 427,361 | 3,762 | | Basic and diluted net loss per common share | $(7.57) | $(96.59) | $(14.88) | $(7,085.18) | Potentially Dilutive Shares | Potentially Dilutive Shares | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Warrants | 1,255,477 | 1,708 | | Stock options | 252,559 | 34 | | Preferred Stock | – | 988,069 | | Total | 1,508,036 | 989,811 | [NOTE 12 – INCOME TAXES](index=27&type=section&id=NOTE%2012%20%E2%80%93%20INCOME%20TAXES) No income tax benefit or expense recognized due to recurring losses, with a full valuation allowance established - No income tax benefit or expense recognized due to recurring losses since inception[118](index=118&type=chunk) - A full valuation allowance has been established for any tax benefit[118](index=118&type=chunk) [NOTE 13 - SUBSEQUENT EVENTS](index=27&type=section&id=NOTE%2013%20-%20SUBSEQUENT%20EVENTS) Post-quarter, company entered Gemini agreements, completed $501 million private placements, and approved new stock options and buyback program - Entered into Strategic Digital Assets Services Agreement and Custodial Services Agreement with Gemini on July 13, 2025[120](index=120&type=chunk)[121](index=121&type=chunk) - Completed Private Placements on July 21, 2025, raising over **$501 million** gross proceeds (including **$28 million** in Bitcoin), with net proceeds of **$481 million**[123](index=123&type=chunk) - Intends to use net proceeds from Private Placements to purchase Bitcoin under its treasury strategy; purchased approximately **$472 million** in Bitcoin through August 8, 2025[130](index=130&type=chunk) - Appointed new directors (Ryan Lane, Ian Read, Rohan Chauhan, Matthew Homer) and executive officers (Ryan Lane as Co-CEO, Timothy Silver as COO, Brett Director as VP Legal)[131](index=131&type=chunk)[132](index=132&type=chunk) - Approved stock option grants for **6,727,188** shares at **$10.00** exercise price under the 2025 Stock Plan (subject to shareholder approval), with **80%** vested as of August 8, 2025[134](index=134&type=chunk) - Increased ATM program capacity by **$1 billion** and approved a **$100 million** common stock repurchase program effective through July 24, 2027[135](index=135&type=chunk)[136](index=136&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Reviews financial condition, operations, liquidity, and capital resources, emphasizing the digital asset strategy [Special Note Regarding Forward-Looking Statements](index=31&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) Report contains forward-looking statements subject to risks, including digital asset strategy and market volatility, with no obligation to update - Forward-looking statements are subject to risks and uncertainties, including the ability to change company direction, keep pace with technology, successful implementation of digital asset strategy, and highly volatile cryptocurrency prices[139](index=139&type=chunk) - Company disclaims any obligation to update forward-looking statements, except as required by law[140](index=140&type=chunk) [Overview](index=31&type=section&id=Overview) Company pivoted to a digital asset treasury strategy while continuing its electric powersports vehicle business, facing tariff and supply chain challenges - Company launched a digital asset treasury strategy, using **$501 million** from Private Placements to acquire Bitcoin and other digital assets[141](index=141&type=chunk) - Operates an all-electric, off-road powersports vehicle business, selling E-Bikes (Brat) and UTVs (HF1, MN1 Adventurer/Tradesman)[142](index=142&type=chunk)[146](index=146&type=chunk)[150](index=150&type=chunk) - Discontinued Grunt EVO off-road motorcycle manufacturing due to cost and sold all remaining units by March 31, 2025[144](index=144&type=chunk) - Signed exclusive distribution agreement with Super Sonic for golf carts in the U.S. and a supply agreement with Venom-EV LLC for up to **$2.0 million** in golf carts[152](index=152&type=chunk)[153](index=153&type=chunk) - Outsourcing all vehicle and accessory manufacturing to third-party international manufacturers, leading to potential delays and increased costs due to tariffs[157](index=157&type=chunk) [Digital Asset Treasury Strategy](index=31&type=section&id=Digital%20Asset%20Treasury%20Strategy) Launched digital asset treasury strategy, using $501 million from private placements to acquire Bitcoin and establish crypto operations - Launched digital asset treasury strategy to acquire Bitcoin and other digital assets[141](index=141&type=chunk) - Used net proceeds from **$501 million** Private Placements to purchase Bitcoin and establish cryptocurrency treasury operations[141](index=141&type=chunk) [Electric Vehicle](index=32&type=section&id=Electric%20Vehicle) Operates an all-electric, off-road powersports vehicle business, selling E-Bikes and UTVs, and entered a golf cart distribution agreement - Operates an all-electric, off-road powersports vehicle business[142](index=142&type=chunk) - Sells E-Bike (Brat) and UTVs (HF1, MN1 Adventurer/Tradesman)[142](index=142&type=chunk) - Entered distribution agreement with Super Sonic Company Ltd. for golf carts in January 2025[143](index=143&type=chunk) [Two-Wheeled Products](index=32&type=section&id=Two-Wheeled%20Products) Discontinued Grunt EVO, continues Brat E-Bike sales, and is developing a new electric motorcycle for 2026 - Discontinued Grunt EVO off-road motorcycle manufacturing in December 2024 due to cost, with all remaining units sold by March 31, 2025[144](index=144&type=chunk) - Continues to sell the Brat E-Bike, a Class 2 E-Bike for on-road or off-road use[146](index=146&type=chunk) - Developing a new electric motorcycle model with prototypes received in February 2025, with expected sales in 2026[145](index=145&type=chunk) [Utility Terrain Vehicles (UTVs)](index=32&type=section&id=Utility%20Terrain%20Vehicles%20(UTVs)) Distributes VLCN HF1 and MN1 UTVs, which are subject to tariffs due to foreign manufacturing - Distributes VLCN HF1 UTV in North America under a five-year agreement[149](index=149&type=chunk) - Distributes VLCN MN1 UTV models (Adventurer and Tradesman) in the United States[150](index=150&type=chunk) - UTVs manufactured outside the U.S. are subject to potential tariffs, leading the company to evaluate international sales through distributors[151](index=151&type=chunk) [Distribution and Supplier Agreements](index=33&type=section&id=Distribution%20and%20Supplier%20Agreements) Signed exclusive distribution agreement for golf carts with Super Sonic and a supply agreement with Venom-EV LLC - Signed exclusive distribution agreement with Super Sonic in January 2025 for golf carts in the U.S., requiring a procurement plan by June 2025 (not yet provided as of August 8, 2025)[152](index=152&type=chunk) - Entered supply agreement with Venom-EV LLC in February 2025 to supply up to **$2.0 million** of golf carts with a **5%** margin[153](index=153&type=chunk) [Customers](index=33&type=section&id=Customers) Sells through 93 powersports dealers, 23 bicycle retailers, 16 golf cart dealers, direct-to-consumer, and international importers - Sells products through **93** active powersports dealers, **23** active bicycle dealers, and **16** golf cart dealers[154](index=154&type=chunk) - Offers **30-90** day payment terms for qualified dealers and floor plan financing of **$3.5 million**[154](index=154&type=chunk) - Sells two-wheel products internationally through importers in Latin America, the Caribbean, New Zealand, Australia, and Japan, with plans to expand global sales to include four-wheel products[156](index=156&type=chunk) [Manufacturers](index=34&type=section&id=Manufacturers) Relies entirely on third-party international manufacturers, facing supply chain delays, tariff costs, and financial hardship risks - Outsourcing all vehicle and accessory manufacturing to third-party international manufacturers[157](index=157&type=chunk) - Faces risks of supply chain delays, increased costs due to tariffs, and potential sales harm if manufacturers experience financial hardship[157](index=157&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Revenue decreased, but gross margin improved, and operating losses reduced due to lower cost of goods sold, with G&A increasing | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue | $702,936 | $940,863 | $1,438,985 | $1,974,411 | | Cost of goods sold | $(851,476) | $(3,113,429) | $(1,632,859) | $(4,735,009) | | Gross margin | $(148,540) | $(2,172,566) | $(193,874) | $(2,760,598) | | Loss from operations | $(3,871,806) | $(5,529,301) | $(6,378,277) | $(9,773,636) | | Net loss | $(3,899,897) | $(606,418) | $(6,360,327) | $(26,654,462) | [Revenue](index=35&type=section&id=Revenue) Decreased by 25.3% for Q2 2025 and 27.1% for six months, primarily due to lower finished goods inventory | Product | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2024 | | :------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Brats | $202,998 | $302,456 | $240,750 | $773,556 | | HF1s | $307,198 | $449,319 | – | – | | MN1-Adventurers | $74,461 | $166,178 | – | – | | MN1-Tradesman | $123,884 | $157,683 | – | – | | Grunt EVOs | – | $304,905 | $284,147 | $613,764 | | Stags | – | – | $194,887 | $234,886 | | Volcon Youth | – | – | $192,924 | $286,680 | | Accessories & Parts | $26,992 | $51,337 | $52,696 | $86,800 | | Total Revenue | $702,936 | $1,438,985 | $940,863 | $1,974,411 | - Expects revenue to decrease in Q3 2025 due to lower finished goods inventory[162](index=162&type=chunk) [Cost of Goods Sold](index=35&type=section&id=Cost%20of%20Goods%20Sold) Significantly decreased by 72.7% for Q2 2025 and 65.5% for six months, driven by lower product costs and inventory adjustments | Metric | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Cost of Goods Sold | $(851,476) | $(1,632,859) | $(3,113,429) | $(4,735,009) | | Payroll costs | $122,415 | $208,668 | $72,466 | $166,786 | | Facilities costs | $121,279 | $245,143 | $104,976 | $210,926 | | Inventory adjustments | $76,573 | $84,822 | – | – | | Warranty expense (benefit) | $(69,371) | $(74,184) | – | – | | Product costs (Grunt EVOs) | $41,339 | $265,620 | $292,561 | $636,542 | | Product costs (Brats) | $190,072 | $309,861 | $221,624 | $804,174 | | Product costs (HF1s) | $206,684 | $332,785 | – | – | | Product costs (MN1s) | $225,186 | $356,623 | – | – | | Loss on disposal of Stag tooling | – | – | $466,481 | $466,481 | | Loss on disposal of Grunt EVO tooling | – | – | – | $155,621 | | Settlement with vendor (Stag suspension) | – | – | $1,117,429 | $1,117,429 | | Youth finished goods write-off | – | – | $57,262 | $57,262 | - Expects cost of goods sold to decrease for the remainder of 2025 due to lower expected revenue[167](index=167&type=chunk) [Sales and Marketing Expense](index=36&type=section&id=Sales%20and%20Marketing%20Expense) Increased by 14.5% for Q2 2025 but decreased by 13.1% for six months, with future increases expected for brand promotion and stock options | Metric | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Sales and marketing expenses | $622,772 | $1,133,729 | $543,671 | $1,304,235 | | Brand promotion | $259,524 | $361,041 | $193,344 | $408,773 | | Employee payroll costs | $167,318 | $365,637 | $121,187 | $574,378 | | Professional fees | $59,069 | $131,620 | $64,412 | $84,336 | | Depreciation expense | $92,511 | $103,555 | $27,674 | $49,935 | | Stock-based compensation (benefit) | $(35,184) | $(25,132) | $67,001 | $11,930 | - Expects sales and marketing expenses to increase for the remainder of 2025 due to increased spending on the Empery Digital brand and stock-based compensation for new grants[173](index=173&type=chunk) [Product Development Expense](index=36&type=section&id=Product%20Development%20Expense) Decreased significantly by 72.5% for Q2 2025 and 62.4% for six months due to lower payroll and prototype costs | Metric | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Product development expenses | $221,159 | $609,681 | $805,550 | $1,620,495 | | Employee payroll costs | $140,522 | $389,876 | $394,632 | $831,534 | | Facilities costs | $47,432 | $104,214 | $60,212 | $124,067 | | Prototype costs | – | – | $114,781 | $206,706 | | Stock-based compensation | – | – | $83,733 | $126,337 | - Expects product development employee costs to decrease due to fewer products in development, offset by an increase in stock-based compensation for new grants[178](index=178&type=chunk) [General and Administrative Expense](index=37&type=section&id=General%20and%20Administrative%20Expense) Increased by 43.4% for Q2 2025 and 8.6% for six months, driven by stock-based compensation, insurance, and professional fees | Metric | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | General and administrative expenses | $2,879,335 | $4,440,993 | $2,007,514 | $4,088,308 | | Employee payroll costs | $541,424 | $1,091,826 | $527,052 | $1,106,415 | | Stock-based compensation | $1,125,802 | $1,125,802 | $138,203 | $159,390 | | Professional fees | $190,954 | $451,142 | $190,059 | $602,774 | | Insurance costs | $454,371 | $904,759 | $656,288 | $1,319,215 | - Expects general and administrative expenses to increase for the remainder of 2025 due to stock-based compensation for new grants and increased legal/professional fees related to the digital asset strategy[184](index=184&type=chunk) [Interest and Other Expenses](index=38&type=section&id=Interest%20and%20Other%20Expenses) Insignificant for 2025 periods, contrasting with significant gains/losses in 2024 from warrant liabilities and convertible notes - Interest and other income/expenses were insignificant for the three and six months ended June 30, 2025[185](index=185&type=chunk)[186](index=186&type=chunk) - For Q2 2024, interest and other income/expenses was **$4,922,883**, including a **$5,111,291** gain on change in fair value of Series A and B Warrant liabilities[187](index=187&type=chunk) - For the six months ended June 30, 2024, interest and other income/expenses was **$(16,880,826)**, including a **$(14,727,696)** loss on change in fair value of Series A and B Warrant liabilities and losses on conversion/exchange of convertible notes totaling **$1,647,609**[188](index=188&type=chunk) [Net Loss](index=38&type=section&id=Net%20Loss) Net loss for six months ended June 30, 2025, was $6.4 million, a significant improvement from $26.7 million in 2024 | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(3,899,897) | $(606,418) | $(6,360,327) | $(26,654,462) | [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and equivalents were $11.9 million, with $19.0 million from financing activities, and post-quarter private placements raised $481 million net proceeds | Metric | June 30, 2025 | | :----- | :------------ | | Cash, cash equivalents and restricted cash | $11.9 million | | Working capital | $13.0 million | | Accumulated deficit | $172.7 million | | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(7.2 million) | $(8.2 million) | | Net cash used in investing activities | $(2.2 million) | $(0.2 million) | | Net cash provided by financing activities | $19.0 million | $2.3 million | - Post-quarter, Private Placements generated **$481 million** in net proceeds, intended for Bitcoin purchases and funding operations[199](index=199&type=chunk) - Management anticipates sufficient liquidity to fund planned operations beyond one year[200](index=200&type=chunk) [JOBS Act Accounting Election](index=39&type=section&id=JOBS%20Act%20Accounting%20Election) Irrevocably elected not to use the extended transition period for new accounting standards under the JOBS Act - Irrevocably elected not to use the extended transition period under the JOBS Act for new accounting standards[201](index=201&type=chunk) - Adopts new or revised accounting standards on the same dates as other public companies[201](index=201&type=chunk) [Critical Accounting Policies](index=39&type=section&id=Critical%20Accounting%20Policies) No critical accounting policies to discuss in this section - No critical accounting policies to report[203](index=203&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk[205](index=205&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Addresses effectiveness of disclosure controls, concluding ineffectiveness due to past missed filings, but no material changes to internal control [Evaluation of Disclosure Controls and Procedures](index=40&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Disclosure controls and procedures were ineffective as of June 30, 2025, due to past missed filings, but financial statements are fairly presented - Co-Chief Executive Officers and Chief Financial Officer concluded that disclosure controls and procedures were not effective as of June 30, 2025[207](index=207&type=chunk) - Deficiency attributed to past missed timely filings and unaddressed control implementation/testing[207](index=207&type=chunk) - Management believes unaudited consolidated financial statements fairly present financial position, results of operations, and cash flows in all material respects[207](index=207&type=chunk) [Changes in Internal Control over Financial Reporting](index=40&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes to internal control over financial reporting during the three months ended June 30, 2025 - No material changes to internal control over financial reporting during the three months ended June 30, 2025[208](index=208&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) Company may be involved in ordinary course legal proceedings with unpredictable outcomes, and cannot estimate potential losses - Company may be involved in ordinary course legal proceedings with unpredictable outcomes[209](index=209&type=chunk) - Cannot estimate aggregate amount or range of reasonably possible losses for matters where losses are not probable and estimable[209](index=209&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) Faces significant risks including Nasdaq delisting, reliance on foreign manufacturing, tariffs, and high volatility/regulatory uncertainty of digital asset strategy - Risk of delisting from Nasdaq if minimum bid price compliance is not maintained through November 10, 2025[212](index=212&type=chunk) - High reliance on foreign manufacturing and imports from Asia (China, Vietnam) exposes the company to risks from trade laws, tariffs (e.g., **20%** for Vietnam, **30%** for China), and supply chain disruptions[214](index=214&type=chunk)[216](index=216&type=chunk) - Digital asset treasury strategy exposes the company to highly volatile Bitcoin prices, with potential for significant fluctuations in operating results and share price[218](index=218&type=chunk) - Significant legal, commercial, regulatory, and technical uncertainty surrounds Bitcoin and other digital assets, including potential classification as securities or commodities, which could lead to increased compliance costs or operational shutdowns[219](index=219&type=chunk)[228](index=228&type=chunk)[233](index=233&type=chunk) - Risks related to custody of digital assets, including security breaches, loss of private keys, and counterparty risk with custodians, could lead to total loss of assets[244](index=244&type=chunk) - Digital asset transactions are irreversible, exposing the company to risks of theft, loss, and human error without legal recourse or insurance[243](index=243&type=chunk)[246](index=246&type=chunk) - Faces significant competition in the digital asset industry and risks from the emergence or growth of other digital assets (e.g., stablecoins, CBDCs) that could negatively impact Bitcoin's price[250](index=250&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales, repurchased 65,348 shares, and later expanded stock repurchase program to $100 million - No unregistered equity securities sold during the period, except as previously reported[254](index=254&type=chunk) | Period | Total Shares Purchased | Average Price Paid per Share ($) | Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plan or Program | | :----- | :--------------------- | :------------------------------- | :-------------------------------------------------------- | :----------------------------------------------------------- | | April 1, 2025 – April 30, 2025 | – | – | – | 1,598,194 | | May 1, 2025 – May 31, 2025 | 17,463 | 6.25 | 17,463 | 1,492,875 | | June 1, 2025 – June 30, 2025 | – | – | – | 1,492,875 | | Three Month period ended June 30, 2025 | 65,348 | N/A | 65,348 | $1,492,875 | - On July 24, 2025, the Board approved a **$100 million** common stock repurchase program, effective through July 24, 2027[254](index=254&type=chunk) [Item 3. Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities - No defaults upon senior securities[255](index=255&type=chunk) [Item 4. Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[256](index=256&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated any Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - No director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[257](index=257&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including various amendments to the Certificate of Incorporation, Bylaws, and agreements, along with certifications required by the Securities Exchange Act - Includes various amendments to the Certificate of Incorporation and Bylaws[260](index=260&type=chunk) - Contains certifications from Co-Chief Executive Officers and Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) and 18 U.S.C. Section 1350[260](index=260&type=chunk) Signatures [Signatures](index=51&type=section&id=Signatures) The report is signed by Ryan Lane (Co-Chief Executive Officer and Director), John Kim (Co-Chief Executive Officer and Director), and Greg Endo (Chief Financial Officer) on August 12, 2025 - Report signed by Ryan Lane (Co-CEO), John Kim (Co-CEO), and Greg Endo (CFO) on August 12, 2025[264](index=264&type=chunk)