[Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20and%20Recent%20Highlights) Bally's reported **$657.5 million** in Q2 2025 revenue, a **5.8% increase** year-over-year, primarily driven by Casinos & Resorts and North America Interactive segments, with adjusted growth in International Interactive Q2 2025 Revenue by Segment (vs. Q2 2024) | Segment | Q2 2025 Revenue (in thousands) | Q2 2024 Revenue (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Casinos & Resorts | $393,333 | $343,051 | +14.7% | | International Interactive | $206,066 | $229,396 | -10.2% | | North America Interactive | $56,502 | $46,500 | +21.5% | | **Total Revenue** | **$657,534** | **$621,657** | **+5.8%** | - The company completed its merger with The Queen Casino & Entertainment on February 7, 2025, which contributed to the revenue growth[5](index=5&type=chunk) - Excluding the impact of the 2024 divestiture of its Asia interactive business, the International Interactive segment's revenue grew by **10.0%** year-over-year[7](index=7&type=chunk) [Management Commentary & Strategic Developments](index=1&type=section&id=Management%20Commentary%20%26%20Strategic%20Developments) Management highlighted progress in "Bally's 2.0" transformation, including Chicago resort construction, the **€2.7 billion** Intralot S.A. agreement, **AUD 200 million** investment in Star Entertainment, and pursuit of a **$4 billion** Bronx resort license - Construction is in full swing at the permanent gaming and entertainment resort in Chicago, which will feature 3,400 slots, 170+ table games, and a 500-room hotel[6](index=6&type=chunk) - Announced a landmark agreement for Intralot S.A. to acquire Bally's International Interactive business for **€2.7 billion** in cash and stock[7](index=7&type=chunk)[8](index=8&type=chunk) - Made an **AUD 200 million** strategic capital investment in Star Entertainment Group Limited, a leading Australian gaming company[10](index=10&type=chunk) - Continuing to pursue a New York City gaming license for a proposed **$4 billion** casino and resort in the Bronx[11](index=11&type=chunk) [Segment Performance Review](index=2&type=section&id=Second%20Quarter%20Financial%20Review) Casinos & Resorts revenue grew **14.7%** to **$393.3 million**, North America Interactive revenue increased **21.5%** to **$56.5 million** with positive EBITDAR, while International Interactive revenue declined but showed underlying growth [Casinos & Resorts](index=2&type=section&id=Casinos%20%26%20Resorts) Casinos & Resorts revenue increased **14.7%** to **$393.3 million** due to the Queen merger, with Segment Adjusted EBITDAR growing **6.2%** to **$106.0 million** Casinos & Resorts Q2 2025 Performance | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $393,333 | $343,051 | +14.7% | | Segment Adjusted EBITDAR | $105,967 | $99,801 | +6.2% | - Growth was primarily driven by the addition of four regional gaming properties from the Queen merger earlier in 2025[12](index=12&type=chunk) - Strong performance was noted in Quad Cities, Vicksburg, and Baton Rouge, while properties in Shreveport, Evansville, and Dover experienced increased competition[12](index=12&type=chunk) [International Interactive](index=2&type=section&id=International%20Interactive) International Interactive revenue declined **10.2%** to **$206.1 million** due to divestiture, but grew **10.0%** on an adjusted basis, with Segment Adjusted EBITDAR up **1.1%** to **$82.2 million** International Interactive Q2 2025 Performance | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $206,066 | $229,396 | -10.2% | | Segment Adjusted EBITDAR | $82,205 | $81,292 | +1.1% | - U.K. online revenue rose **8.8%** (**2.8%** in constant currency) versus Q2 2024, driven by strong player retention and monetization[13](index=13&type=chunk) - Excluding the revenue from the divested Asia business, International Interactive revenue grew **10.0%** year-over-year[13](index=13&type=chunk) [North America Interactive](index=3&type=section&id=North%20America%20Interactive) North America Interactive revenue increased **21.5%** to **$56.5 million**, achieving positive Adjusted EBITDAR of **$2.5 million** from a prior-year loss North America Interactive Q2 2025 Performance | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $56,502 | $46,500 | +21.5% | | Segment Adjusted EBITDAR | $2,484 | ($2,196) | N/A (Turned to profit) | - The company is live with iGaming in New Jersey, Pennsylvania, Rhode Island, and Ontario[14](index=14&type=chunk) - The BallyBet sports offering is live in 13 states, including New Jersey and Ontario[14](index=14&type=chunk) [Financial Statements & Data](index=5&type=section&id=Financial%20Statements%20%26%20Data) This section provides detailed financial tables, including segment revenue, Adjusted EBITDAR, balance sheet data, cash flow information, and supplemental combined financial data for comparability [Revenue and Segment Adjusted EBITDAR](index=5&type=section&id=Revenue%20and%20Segment%20Adjusted%20EBITDAR) This section presents detailed revenue and Segment Adjusted EBITDAR breakdowns for Q2 and six months ended June 30, 2025, comparing Successor, Predecessor, and Pro Forma combined results Revenue & Adjusted EBITDAR (Successor/Predecessor) | (in thousands) | Three Months Ended Jun 30, 2025 (Successor) | Three Months Ended Jun 30, 2024 (Predecessor) | | :--- | :--- | :--- | | **Total Revenue** | **$657,534** | **$621,657** | | Casinos & Resorts Adj. EBITDAR | $105,967 | $99,801 | | International Interactive Adj. EBITDAR | $82,205 | $81,292 | | North America Interactive Adj. EBITDAR | $2,484 | ($2,196) | Pro Forma Combined Revenue & Adjusted EBITDAR (Six Months) | (in thousands) | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :--- | :--- | :--- | | **Total Revenue** | **$1,268,602** | **$1,353,863** | | Casinos & Resorts Adj. EBITDAR | $206,536 | $225,525 | | International Interactive Adj. EBITDAR | $159,340 | $164,824 | | North America Interactive Adj. EBITDAR | ($4,103) | ($4,139) | [Selected Financial Information (Balance Sheet & Cash Flow)](index=6&type=section&id=Selected%20Financial%20Information%20%28Balance%20Sheet%20%26%20Cash%20Flow%29) This section details key balance sheet items as of June 30, 2025, including **$174.6 million** in cash and **$3.58 billion** in long-term debt, alongside post-merger cash flow data Balance Sheet Data (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $174,567 | $171,233 | | Long-term debt, including current portion | $3,581,169 | $3,318,773 | Cash Flow Data (Successor Period: Feb 8 - Jun 30, 2025) | Item | Amount (in thousands) | | :--- | :--- | | Capital Expenditures | $79,422 | | Cash paid for capitalized software | $20,533 | | Cash payments for triple net operating leases | $69,983 | [Supplemental Unaudited Condensed Combined Financial Information](index=7&type=section&id=Supplemental%20Unaudited%20Condensed%20Combined%20Financial%20Information) This section provides supplemental combined financial information, integrating Bally's and Queen's historical results for enhanced comparability, and includes a reconciliation for Adjusted International Interactive revenue - The supplemental information combines historical results of Bally's and Queen to reflect the merger as if it occurred on January 1, 2024, for better comparability[36](index=36&type=chunk) Non-GAAP Adjusted International Interactive Revenue (Q2 2025 vs Q2 2024) | (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | International Interactive revenue (GAAP) | $206,066 | $229,396 | | Less: Revenue from divested markets | $0 | ($48,528) | | Less: Licensing revenue recognized | ($7,046) | $0 | | **Adjusted International Interactive revenue** | **$199,020** | **$180,868** | [Non-GAAP Financial Measures](index=3&type=section&id=Reconciliation%20of%20GAAP%20Measures%20to%20Non-GAAP%20Measures) The company utilizes non-GAAP measures, including Adjusted EBITDA and Segment Adjusted EBITDAR, to provide a clearer understanding of core operating results and facilitate period-to-period comparisons - Defines "Adjusted EBITDA" as earnings before interest, taxes, depreciation, amortization, non-operating income/expense, acquisition costs, share-based compensation, and other certain gains or losses[16](index=16&type=chunk) - Defines "Segment Adjusted EBITDAR" as Adjusted EBITDA plus rent expense associated with triple net operating leases, a key valuation metric for the Casinos & Resorts segment in the gaming industry[17](index=17&type=chunk)[18](index=18&type=chunk)

[Part I: FINANCIAL INFORMATION](index=3&type=section&id=Part%20I%3A%20FINANCIAL%20INFORMATION) [Item 1. Unaudited Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, equity, and cash flows, along with detailed notes explaining accounting policies, investments, fair value measurements, segment information, revenue recognition, debt, commitments, and discontinued operations [Condensed Consolidated Balance Sheets](index=3&type=section&id=A.%20Condensed%20Consolidated%20Balance%20Sheets) | Metric | June 30, 2025 (Millions) | December 31, 2024 (Millions) | Change (Millions) | | :-------------------------------- | :-------------------------- | :--------------------------- | :---------------- | | Total Assets | $1,785.8 | $2,228.9 | $(443.1) | | Total Liabilities | $429.1 | $413.6 | $15.5 | | Total Equity | $1,356.7 | $1,815.3 | $(458.6) | | Cash and cash equivalents | $66.7 | $131.5 | $(64.8) | | Assets of discontinued operations held for sale | $528.0 | $0.0 | $528.0 | | Investments in unconsolidated affiliates | $629.9 | $764.9 | $(135.0) | [Condensed Consolidated Statements of Operations](index=4&type=section&id=B.%20Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | | :-------------------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Total operating revenues | $110.2 | $118.0 | $213.4 | $228.7 | | Operating loss | $(60.9) | $(23.0) | $(82.3) | $(63.6) | | Net loss from continuing operations | $(229.5) | $(148.9) | $(268.2) | $(224.0) | | Net loss from discontinued operations, net of tax | $(11.0) | $(6.1) | $(87.3) | $(22.8) | | Net loss attributable to Cannae Holdings, Inc. common shareholders | $(238.8) | $(155.0) | $(351.8) | $(244.9) | | Basic Net loss per share | $(3.93) | $(2.49) | $(5.72) | $(3.68) | [Condensed Consolidated Statements of Comprehensive (Loss) Earnings](index=5&type=section&id=C.%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Earnings) | Metric | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | | :---------------------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Net loss | $(240.5) | $(155.0) | $(355.5) | $(246.8) | | Other comprehensive earnings (loss), net of tax | $5.8 | $(1.1) | $3.7 | $2.3 | | Comprehensive loss attributable to Cannae Holdings, Inc. common shareholders | $(233.0) | $(156.1) | $(348.1) | $(242.6) | [Condensed Consolidated Statements of Equity](index=6&type=section&id=D.%20Condensed%20Consolidated%20Statements%20of%20Equity) - Total Cannae shareholders' equity decreased from **$1,836.5 million** as of December 31, 2024, to **$1,381.4 million** as of June 30, 2025, a decrease of **$455.1 million**[9](index=9&type=chunk) - Retained earnings decreased significantly from **$567.1 million** to **$200.1 million** in the six months ended June 30, 2025, primarily due to net losses and dividends declared[9](index=9&type=chunk)[20](index=20&type=chunk) - Treasury stock increased from **$724.7 million** to **$838.6 million**, reflecting share repurchases[9](index=9&type=chunk)[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=E.%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | Change (Millions) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :---------------- | | Net cash used in operating activities | $(12.5) | $(46.2) | $33.7 | | Net cash provided by investing activities | $77.5 | $252.5 | $(175.0) | | Net cash used in financing activities | $(129.8) | $(266.8) | $137.0 | | Net decrease in cash and cash equivalents | $(64.8) | $(60.5) | $(4.3) | | Cash and cash equivalents at end of period | $66.7 | $45.7 | $21.0 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=F.%20Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the accounting policies, significant estimates, recent developments, and specific financial statement line items, offering crucial context for the unaudited condensed consolidated financial statements [Note A — Basis of Financial Statements](index=9&type=section&id=Note%20A%20%E2%80%94%20Basis%20of%20Financial%20Statements) - Cannae Holdings, Inc. primarily acquires interests in operating companies, actively managing and supporting a core group for the long term, with significant equity ownership stakes in companies like Dun & Bradstreet, Alight, Paysafe, Black Knight Football, CSI, Watkins Holdings, JANA Partners, Minden Mill, AmeriLife, O'Charley's, and 99 Restaurants[25](index=25&type=chunk) - **Dun & Bradstreet (D&B) Sale:** D&B entered a definitive agreement to be acquired by Clearlake Capital Group, L.P. for **$9.15 per share**, expected to close in Q3 2025. Cannae agreed to vote its shares in favor and sold **10.0 million D&B shares** for **$89.5 million** in Q2 2025, reducing its ownership to **59.0 million shares (13.2%)**. D&B is now presented as a discontinued operation and assets held for sale[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - **Black Knight Football (BKFC):** Cannae invested an additional **$25.0 million** in BKFC, increasing its ownership to **42.5%**, with a commitment for another **$25.0 million** in Q3 2025[33](index=33&type=chunk) - **WineDirect Transaction:** Received **$20.4 million** (including **$13.6 million cash** and a **21.6% interest** in WineDirect Fulfillment valued at **$6.8 million**) from the spin-off and sale of WineDirect's divisions, recording a **$15.0 million gain**[34](index=34&type=chunk) - **Stock Repurchase Programs:** Repurchased **2,295,463 shares** for **$42.1 million** under the 2022 program and **3,492,076 shares** for **$69.4 million** under the 2023 program during the six months ended June 30, 2025. A new 2025 Repurchase Program for up to **10.0 million shares** was authorized[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - **JANA Partners Investment:** Agreed to acquire an additional **30% ownership** in JANA Partners for **$67.5 million** upfront and potential further payments, increasing total ownership to **50%** upon Q3 2025 closing[38](index=38&type=chunk) - **Management Services Agreement (MSA) Termination:** The MSA with Trasimene Capital Management, LLC was terminated effective May 12, 2025, with remaining obligations for management and termination fees totaling **$24.7 million**[39](index=39&type=chunk) - **Executive Management Transition:** William P. Foley transitioned from CEO/CIO/Chairman to non-executive Vice Chairman, receiving a **$17.2 million lump-sum payment** and accelerated equity awards. Doug Ammerman was appointed Chairman, and Ryan R. Caswell became CEO[40](index=40&type=chunk)[41](index=41&type=chunk) - **Dividends Declared:** Declared a **$0.12 per share dividend** payable June 30, 2025, and a **$0.15 per share dividend** payable September 30, 2025[42](index=42&type=chunk) - The effective tax rate was **1.3%** and **(12.1)%** for the three and six months ended June 30, 2025, respectively, primarily due to an **$84.8 million valuation allowance** recorded on federal and state net operating loss carryforwards and certain deferred taxes related to investments[50](index=50&type=chunk)[51](index=51&type=chunk) [Note B — Investments](index=13&type=section&id=Note%20B%20%E2%80%94%20Investments) | Affiliate | Ownership at June 30, 2025 | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :-------- | :------------------------- | :----------------------- | :--------------------------- | | Alight | 7.6% | $229.1 | $374.0 | | BKFC | 42.5% | $106.0 | $108.3 | | CSI | 6.4% | $103.9 | $88.2 | | Watkins | 49.3% | $73.6 | $78.5 | | JANA | 19.99% | $56.9 | $56.3 | | Other | various | $60.4 | $59.6 | | **Total** | | **$629.9** | **$764.9** | | Affiliate | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | 6 Months Ended June 30, 2025 (Millions) | 6 Months Ended June 30, 2024 (Millions) | | :------------------ | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Alight | $(81.7) | $2.2 | $(83.6) | $(9.1) | | BKFC | $(12.3) | $(17.9) | $(22.7) | $(25.3) | | CSI | $0.0 | $0.2 | $15.7 | $41.1 | | JANA | $0.4 | $0.5 | $2.8 | $0.0 | | **Total** | **$(95.7)** | **$(14.6)** | **$(97.6)** | **$3.0** | - Recorded a **$59.1 million impairment** in the investment of Alight for the six months ended June 30, 2025, due to the sustained decrease in fair market value below book value[56](index=56&type=chunk) [Note C — Fair Value Measurements](index=14&type=section&id=Note%20C%20%E2%80%94%20Fair%20Value%20Measurements) - The Put Right liability is accounted for at fair value calculated using a Monte Carlo Simulation with Level 2 fair value hierarchy inputs, including the Company's common stock price and growth rate, the two-year duration of the DSA, implied volatility, and a discount rate based on US treasury securities[66](index=66&type=chunk) - As of June 30, 2025, the Put Right liability was **$13.2 million**[66](index=66&type=chunk) [Note D — Variable Interest Entities](index=17&type=section&id=Note%20D%20%E2%80%94%20Variable%20Interest%20Entities) - Cannae holds variable interests in unconsolidated affiliates, primarily BKFC, CSI, and Minden Mill, but is not the primary beneficiary[70](index=70&type=chunk) - Cannae has guaranteed certain payment obligations of BKFC related to investment commitments for football club acquisitions, estimated between **$42.4 million** and **$77.1 million** as of June 30, 2025[71](index=71&type=chunk) [Note E — Segment Information](index=17&type=section&id=Note%20E%20%E2%80%94%20Segment%20Information) - Cannae has identified three reportable segments: Restaurant Group, Alight, and Black Knight Football (BKFC). Dun & Bradstreet is no longer a reportable segment due to its reclassification as a discontinued operation[76](index=76&type=chunk)[77](index=77&type=chunk) - **Restaurant Group:** Consists primarily of the operations of O'Charley's (**65.4% ownership**) and 99 Restaurants (**88.5% ownership**)[80](index=80&type=chunk) - **Alight:** Represents Cannae's **7.6% ownership interest** in Alight, a technology-enabled services company delivering human capital management solutions. Accounted for using the equity method[80](index=80&type=chunk) - **Black Knight Football:** Represents Cannae's **42.5% ownership interest** in BKFC, which owns and operates AFC Bournemouth (English Premier League), holds significant minority interests in FC Lorient (French Ligue 1) and The Hibernian Football Club Limited (Scottish Premiership), and acquired a controlling interest in Moreirense Futebol Clube (Portuguese Primeira Liga) in June 2025. Accounted for using the equity method with a three-month lag[81](index=81&type=chunk) [Note F — Revenue Recognition](index=20&type=section&id=Note%20F%20%E2%80%94%20Revenue%20Recognition) - Total operating revenues decreased by **$7.8 million (6.6%)** for the three months and **$15.3 million (6.7%)** for the six months ended June 30, 2025, compared to the prior year periods[82](index=82&type=chunk) - Restaurant revenue, primarily from food and beverage sales, is the main component and is recognized at the point of sale. Other operating revenue includes income from resort operations, real estate sales, and lodging rentals[82](index=82&type=chunk)[83](index=83&type=chunk) - Deferred revenue, primarily from restaurant gift card sales, was **$13.4 million** as of June 30, 2025, down from **$16.2 million** at December 31, 2024[84](index=84&type=chunk) [Note G — Notes Payable](index=21&type=section&id=Note%20G%20%E2%80%94%20Notes%20Payable) - Total notes payable decreased from **$181.0 million** at December 31, 2024, to **$168.4 million** at June 30, 2025[87](index=87&type=chunk) - **2020 Margin Facility:** Had an outstanding balance of **$101.0 million** at June 30, 2025, incurring interest at **7.65%**. It has **$49.0 million** of unused capacity and an option to increase capacity to **$500.0 million**. The balance is classified as a current liability as it is expected to be repaid upon the closing of the D&B Sale in Q3 2025[90](index=90&type=chunk)[91](index=91&type=chunk) - **FNF Revolver:** Had an outstanding principal of **$47.5 million** at June 30, 2025, with a fixed interest rate of **5.0%** and no available borrowing capacity. The maturity date was extended to November 17, 2030[94](index=94&type=chunk)[95](index=95&type=chunk) | Gross Principal Maturities of Notes Payable (In millions) | | :------------------------ | :---------------- | | 2025 (remaining) | $101.8 | | 2026 | $13.4 | | 2027 | $0.2 | | 2028 | $2.0 | | 2029 | $0.1 | | Thereafter | $51.1 | | **Total** | **$168.6** | [Note H — Commitments and Contingencies](index=22&type=section&id=Note%20H%20%E2%80%94%20Commitments%20and%20Contingencies) - The Company is involved in various pending and threatened legal and regulatory matters, including class action lawsuits, but management does not believe the ultimate resolution will have a material adverse effect on its financial condition, results of operations, or cash flows[96](index=96&type=chunk)[98](index=98&type=chunk) - Unconditional purchase obligations, primarily for the Restaurant Group's food and beverage, totaled **$38.3 million** as of June 30, 2025, with **$24.4 million** due in the remainder of 2025[99](index=99&type=chunk) [Note I — Supplemental Cash Flow Information](index=24&type=section&id=Note%20I%20%E2%80%94%20Supplemental%20Cash%20Flow%20Information) - Cash paid for interest was **$4.0 million** and for income taxes was **$0.2 million** for the six months ended June 30, 2025[101](index=101&type=chunk) - Non-cash investing and financing activities included **$6.8 million equity** in Fulfillment received as consideration in the WD Transaction and a **$12.2 million reduction** of outstanding principal under the FNF Revolver through the exchange of real estate[101](index=101&type=chunk) [Note J — Discontinued Operations](index=24&type=section&id=Note%20J%20%E2%80%94%20Discontinued%20Operations) - Dun & Bradstreet (D&B) was reclassified as a discontinued operation due to its pending sale, resulting in a **$68.1 million impairment** recorded in the six months ended June 30, 2025[102](index=102&type=chunk) - Assets of discontinued operations held for sale (representing the investment in D&B) were **$528.0 million** at June 30, 2025, down from **$691.9 million** at December 31, 2024[103](index=103&type=chunk) - Net loss from discontinued operations (D&B) was **$(11.0) million** for the three months and **$(87.3) million** for the six months ended June 30, 2025[103](index=103&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and future outlook, discussing key factors influencing revenues, expenses, and profitability, as well as liquidity and capital resources. It also highlights critical accounting policies and recent developments [Seasonality and Macroeconomic Conditions](index=26&type=section&id=Seasonality%20and%20Macroeconomic%20Conditions) - The Restaurant Group typically experiences higher average weekly sales and a disproportionate share of earnings in the first half of the year[109](index=109&type=chunk) - Inflationary pressures, particularly on commodity and labor costs, continue to impact the Restaurant Group, leading to menu pricing adjustments to balance cost increases with customer value[110](index=110&type=chunk) - Various macroeconomic factors, including consumer spending, capital market volatility, and inflation, are anticipated to drive uncertainty and instability for the Company in fiscal 2025[111](index=111&type=chunk) [Critical Accounting Policies and Estimates](index=26&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Management continuously monitors investments in unconsolidated affiliates for indications of other-than-temporary declines in fair value below book value[114](index=114&type=chunk) - A **$68.1 million impairment** was recorded for the investment in Dun & Bradstreet in the six months ended June 30, 2025, due to its reclassification as held for sale[116](index=116&type=chunk) - A **$59.1 million impairment** was recorded for the investment in Alight in the six months ended June 30, 2025, due to a sustained decrease in fair market value below book value for over a year[117](index=117&type=chunk) - A **$84.8 million valuation allowance** was recorded on federal and state net operating loss carryforwards and certain deferred taxes in the six months ended June 30, 2025, due to current market and investee-specific conditions impacting the ability to utilize deferred tax assets[119](index=119&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) This section analyzes the consolidated financial performance and the performance of each reportable segment (Restaurant Group, Alight, Black Knight Football) and the Corporate and Other segment, detailing revenue and expense fluctuations and their impact on net earnings or loss for the three and six months ended June 30, 2025, compared to 2024 [Consolidated Results of Operations](index=28&type=section&id=Consolidated%20Results%20of%20Operations) - Total operating revenues decreased by **$7.8 million (6.6%)** for the three months and **$15.3 million (6.7%)** for the six months ended June 30, 2025, compared to the prior year periods[121](index=121&type=chunk) - Operating loss increased from **$(23.0) million** to **$(60.9) million** for the three months and from **$(63.6) million** to **$(82.3) million** for the six months ended June 30, 2025[121](index=121&type=chunk) - Net loss attributable to common shareholders increased from **$(155.0) million** to **$(238.8) million** for the three months and from **$(244.9) million** to **$(351.8) million** for the six months ended June 30, 2025[121](index=121&type=chunk) - Equity in (losses) earnings of unconsolidated affiliates shifted from **$(14.6) million loss** to **$(95.7) million loss** for the three months and from **$3.0 million earnings** to **$(97.6) million loss** for the six months ended June 30, 2025, primarily due to Alight's goodwill impairment[130](index=130&type=chunk)[135](index=135&type=chunk) [Restaurant Group Segment Analysis](index=30&type=section&id=Restaurant%20Group%20Segment%20Analysis) - Total revenues for the Restaurant Group segment decreased by **$5.7 million (5.3%)** for the three months and **$13.1 million (6.1%)** for the six months ended June 30, 2025, compared to the corresponding prior year periods[137](index=137&type=chunk)[141](index=141&type=chunk) - Comparable store sales for O'Charley's decreased by **12.1%** (three months) and **13.6%** (six months), while 99 Restaurants decreased by **0.1%** (three months) and **0.2%** (six months), primarily due to reduced guest counts[138](index=138&type=chunk)[142](index=142&type=chunk) - Cost of restaurant revenue as a percentage of Restaurant revenue increased to **89.1%** (three months) and **90.4%** (six months) in 2025, up from **85.6%** and **87.0%** in 2024, mainly due to increased spending on beef and poultry[140](index=140&type=chunk)[143](index=143&type=chunk) [Alight Segment Analysis](index=31&type=section&id=Alight%20Segment%20Analysis) - Cannae's equity in Alight's losses was **$(81.7) million** for the three months and **$(83.6) million** for the six months ended June 30, 2025, primarily driven by Alight's goodwill impairment of **$983.0 million**[130](index=130&type=chunk)[135](index=135&type=chunk) - Alight's total revenues were **$528.0 million** (3 months) and **$1,076.0 million** (6 months) in 2025, slightly down from **$538.0 million** and **$1,097.0 million** in 2024[145](index=145&type=chunk) [Black Knight Football Segment Analysis](index=31&type=section&id=Black%20Knight%20Football%20Segment%20Analysis) - Total revenues for Black Knight Football increased by **$11.8 million (23.9%)** for the three months and **$30.4 million (29.8%)** for the six months ended March 31, 2025 (reported with a three-month lag), primarily due to AFC Bournemouth's higher league placement and increased player loan revenue[148](index=148&type=chunk) - Operating loss decreased by **$7.5 million** (three months) and **$21.0 million** (six months) in the periods ended March 31, 2025, compared to the corresponding periods in 2024, driven by increased revenue partially offset by higher player salaries[149](index=149&type=chunk) [Corporate and Other Segment Analysis](index=32&type=section&id=Corporate%20and%20Other%20Segment%20Analysis) - Personnel costs increased by **$17.6 million** for the three months and **$10.5 million** for the six months ended June 30, 2025, primarily due to a **$17.2 million cash payment** and **$8.3 million** in accelerated stock vesting related to executive management transition[151](index=151&type=chunk)[155](index=155&type=chunk) - Other operating expenses increased by **$14.5 million** for the three months ended June 30, 2025, primarily due to accelerated fees incurred with Trasimene related to the MSA Termination Agreement[152](index=152&type=chunk) - Recognized (losses) gains, net for the three months ended June 30, 2025, included a **$(59.1) million Alight impairment**, **$(7.6) million Paysafe fair value adjustments**, and **$(13.2) million Put Right fair value adjustments**[153](index=153&type=chunk) - Recognized (losses) gains, net for the six months ended June 30, 2025, included a **$(59.1) million Alight impairment**, **$15.0 million WD Transaction gain**, **$(11.0) million Paysafe fair value adjustments**, and **$(13.2) million Put Right fair value adjustments**[156](index=156&type=chunk) [Discontinued Operations Analysis](index=33&type=section&id=Discontinued%20Operations%20Analysis) - The financial results of Dun & Bradstreet have been reclassified to discontinued operations due to its pending sale[154](index=154&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the Company had **$66.7 million** in cash and cash equivalents, with **$54.3 million** held by the corporate holding company[158](index=158&type=chunk) - The Company had **$49.0 million** of immediate borrowing capacity under existing credit facilities, with the ability to add an additional **$350.0 million** by amending its 2020 Margin Facility. An additional **$40.0 million** was borrowed under the 2020 Margin Facility after June 30, 2025[158](index=158&type=chunk)[159](index=159&type=chunk) - Due to its unconsolidated holdings, the Company expects to generate a material portion of its cash inflow from investing activities (e.g., distributions from unconsolidated affiliates, sales of investment securities) rather than regular positive operating cash flows[162](index=162&type=chunk) - Cash used in operating activities decreased by **$33.7 million** to **$(12.5) million** for the six months ended June 30, 2025, primarily due to tax refunds received and lower operating expenses[163](index=163&type=chunk) - Cash provided by investing activities decreased by **$175.0 million** to **$77.5 million** for the six months ended June 30, 2025, mainly due to **$208.0 million less proceeds** from sales of Dayforce shares[164](index=164&type=chunk) - Cash used in financing activities decreased by **$137.0 million** to **$(129.8) million** for the six months ended June 30, 2025, primarily due to reduced treasury stock repurchases and a prior year debt repayment, partially offset by increased dividends paid[165](index=165&type=chunk) | Obligation | 2025 (remaining) | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | | :------------------------------ | :--------------- | :----- | :----- | :----- | :----- | :--------- | :------ | | Operating lease payments | $12.3 | $24.3 | $22.6 | $20.6 | $17.6 | $111.0 | $208.4 | | Unconditional purchase obligations | $24.4 | $7.7 | $4.1 | $2.1 | $0.0 | $0.0 | $38.3 | | Notes payable | $101.8 | $13.4 | $0.2 | $2.0 | $0.1 | $51.1 | $168.6 | | Fees payable to Manager | $9.4 | $17.0 | $0.0 | $0.0 | $0.0 | $0.0 | $26.4 | | Restaurant Group financing obligations | $0.2 | $0.4 | $0.4 | $0.3 | $0.3 | $0.0 | $1.6 | | **Total** | **$148.1** | **$62.8** | **$27.3** | **$25.0** | **$18.0** | **$162.1** | **$443.3** | - **2022 Repurchase Program:** Completed, with **10.0 million shares** repurchased for approximately **$193.1 million**[172](index=172&type=chunk) - **2023 Repurchase Program:** As of June 30, 2025, **3,492,076 shares** were repurchased for approximately **$69.4 million**, with **6,507,924 shares** remaining available[174](index=174&type=chunk) - **2025 Repurchase Program:** Authorized for up to **10.0 million shares**, with no purchases made as of June 30, 2025[175](index=175&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) This section states that there have been no material changes in the market risks from those described in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in market risks were identified during the three months ended June 30, 2025, compared to the disclosures in the Annual Report on Form 10-K for the year ended December 31, 2024[176](index=176&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=36&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[178](index=178&type=chunk) [Changes in Internal Control over Financial Reporting](index=37&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - There were no changes in the Company's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting during the quarter ended June 30, 2025[179](index=179&type=chunk) [Part II: OTHER INFORMATION](index=37&type=section&id=Part%20II%3A%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note H of the Condensed Consolidated Financial Statements for a comprehensive discussion of legal proceedings - Discussion of legal proceedings is incorporated by reference from Note H - Commitments and Contingencies to the Condensed Consolidated Financial Statements[180](index=180&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section incorporates by reference the risk factors from the Annual Report on Form 10-K and highlights an additional risk related to a proxy contest - The risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024, are incorporated by reference[181](index=181&type=chunk) - An additional risk identified is that the Company is currently the subject of a proxy contest, which could distract management, disrupt operations, result in incremental costs, and adversely affect its results of operations, financial condition, and stock price[182](index=182&type=chunk)[184](index=184&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides a table summarizing the repurchases of equity securities under authorized programs during the three months ended June 30, 2025 | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (as of last day of month) | | :-------------------- | :----------------------------- | :--------------------------- | :-------------------------------------------------------------------------- | :---------------------------------------------------------------------------------------------------- | | 4/1/2025 - 4/30/2025 | 0 | $0.00 | 0 | 22,295,463 | | 5/1/2025 - 5/31/2025 | 2,280,481 | $18.33 | 2,280,481 | 20,014,982 | | 6/1/2025 - 6/30/2025 | 3,507,058 | $19.87 | 3,507,058 | 16,507,924 | | **Total** | **5,787,539** | **$19.26** | **5,787,539** | | - The Company has three active stock repurchase programs (2022, 2023, and 2025 Repurchase Programs), each authorizing the repurchase of up to **10.0 million shares** of common stock[192](index=192&type=chunk) [Item 3. Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reported period - There were no defaults upon senior securities during the three months ended June 30, 2025[189](index=189&type=chunk) [Item 4. Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that the disclosure requirement for mine safety is not applicable to the Company - The disclosure requirement for mine safety is not applicable to the Company[190](index=190&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information) This section reports that no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - No director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025[191](index=191&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section provides a list of exhibits filed with the Quarterly Report, including various agreements, certifications, and XBRL documents - Management Services Agreement Termination Agreement (effective May 12, 2025) - Director Services Agreement between Cannae Holdings, Inc. and William P. Foley II (effective May 12, 2025) - Certifications of Principal Executive Officer and Chief Financial Officer pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002 - Inline XBRL Instance Document and related Taxonomy Extension Documents[195](index=195&type=chunk)

Exhibit 99.1 Kayne Anderson BDC, Inc. Announces June 30, 2025 Financial Results and Declares Third Quarter 2025 Dividend of $0.40 Per Share CHICAGO--(BUSINESS WIRE)-- Kayne Anderson BDC, Inc. (NYSE: KBDC) ("KBDC or the Company"), a business development company externally managed by its investment adviser, KA Credit Advisors, LLC, today announced its financial results for the second quarter ended June 30, 2025. Financial Highlights for the Quarter Ended June 30, 2025 "During the second quarter when lending a ...

[Q2 2025 Financial and Operating Results](index=1&type=section&id=Hallador%20Energy%20Company%20Reports%20Second%20Quarter%202025%20Financial%20and%20Operating%20Results) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management reported strong Q2 results with increased revenue and net income, driven by improved coal cost efficiency and active pursuit of a long-term PPA - The company delivered strong Q2 results, including increased revenue and net income, despite a scheduled outage at a generating unit and seasonal softness in the energy market[2](index=2&type=chunk) - Coal operations benefited from improved cost efficiency and stronger recovery rates, leading to higher inventory levels that position the company for a strong second half[2](index=2&type=chunk) - Hallador is seeing increased momentum in its strategy to secure a long-term PPA, engaging with a broad range of potential partners, including utilities, in a market with ramping demand for accredited capacity and baseload power[2](index=2&type=chunk) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Q2 2025 highlights include **10% revenue growth** to **$102.9 million**, **$8.2 million net income**, and **$11.4 million operating cash flow** Q2 2025 Key Financial Metrics (YoY, $ in Millions) | Metric | Q2 2025 | Change (YoY) | | :--- | :--- | :--- | | Total Revenue | $102.9 Million | +10% | | Net Income | $8.2 Million | Increase from loss | | Adjusted EBITDA | $3.4 Million | Increase from loss | | Operating Cash Flow | $11.4 Million | - | Debt and Liquidity (as of June 30, 2025, $ in Millions) | Metric | Q2 2025 | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | :--- | | Total Bank Debt | $45.0 Million | $23.0 Million | $44.0 Million | | Total Liquidity | $42.0 Million | $69.0 Million | $37.8 Million | - In June 2025, the company amended its credit agreement to enhance operating flexibility by redefining covenants and deferring a debt repayment from October 2025 to January 2026[5](index=5&type=chunk) - Capital expenditures for Q2 2025 were **$13.1 million**, nearly flat compared to **$13.2 million** in the same period last year[6](index=6&type=chunk) [Financial Summary and Outlook](index=2&type=section&id=Financial%20Summary%20and%20Outlook) [Financial Summary](index=2&type=section&id=Financial%20Summary) Q2 2025 saw total revenue rise to **$102.9 million**, a turnaround to **$8.2 million net income**, and positive **$3.4 million Adjusted EBITDA** Q2 Financial Summary ($ in Millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Electric Sales | $60.0 | $60.0 | | Coal Sales - 3rd Party | $38.1 | $32.8 | | **Total Sales and Operating Revenue** | **$102.9** | **$93.8** | | **Net Income (Loss)** | **$8.2** | **($10.2)** | | Operating Cash Flow | $11.4 | $23.5 | | **Adjusted EBITDA** | **$3.4** | **($5.8)** | [Reconciliation of GAAP to non-GAAP "Adjusted EBITDA"](index=3&type=section&id=Reconciliation%20of%20GAAP%20to%20non-GAAP%20Adjusted%20EBITDA) This section reconciles GAAP Net Income to non-GAAP Adjusted EBITDA, showing a positive **$3.4 million** in Q2 2025 from **$8.2 million net income** Adjusted EBITDA Reconciliation - Q2 (In $ Thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **NET INCOME (LOSS)** | **$8,248** | **($10,204)** | | Interest expense | $3,819 | $3,735 | | Income tax expense (benefit) | — | ($3,011) | | Depreciation, depletion and amortization | $5,542 | $13,649 | | EBITDA | $17,609 | $4,169 | | Other Adjustments | ($14,211) | ($9,965) | | **Adjusted EBITDA** | **$3,398** | **($5,796)** | [Forward Sales Position](index=2&type=section&id=Solid%20Forward%20Sales%20Position) Hallador holds a strong forward sales position with **$1.0 billion** in total contracted third-party revenues through 2029 - At quarter-end, Hallador had total forward energy, capacity, and coal sales to 3rd party customers of **$1.0 billion** through 2029[7](index=7&type=chunk) Total Contracted Revenue (Consolidated, in Millions) | Year | 2025 | 2026 | 2027 | 2028 | 2029 | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $197.33 | $361.59 | $290.53 | $124.58 | $17.24 | $991.27 | [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$409.5 million**, total liabilities to **$287.4 million**, and equity to **$122.2 million** Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets | $139,874 | $104,858 | | Total assets | $409,513 | $369,120 | | Total current liabilities | $209,255 | $152,903 | | Total liabilities | $287,360 | $264,835 | | Total stockholders' equity | $122,153 | $104,285 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 total revenues reached **$102.9 million**, resulting in **$8.2 million net income** or **$0.19 diluted EPS**, a significant improvement year-over-year Statement of Operations Summary - Q2 (in thousands) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total sales and operating revenues | $102,889 | $93,825 | | Total operating expenses | $91,019 | $101,111 | | Income (Loss) from Operations | $11,870 | ($7,286) | | **Net Income (Loss)** | **$8,248** | **($10,204)** | | **Diluted EPS** | **$0.19** | **($0.27)** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For H1 2025, operating cash flow was **$49.8 million**, with **$24.9 million** used in investing and **$4.7 million** in financing, ending with **$32.4 million** cash Cash Flow Summary - Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $49,783 | $39,891 | | Net cash used in investing activities | ($24,897) | ($25,570) | | Net cash used in financing activities | ($4,669) | ($10,716) | | **Cash, cash equivalents, and restricted cash, end of period** | **$32,370** | **$10,728** | [Other Information](index=4&type=section&id=Other%20Information) [About Hallador Energy Company & Contact Information](index=4&type=section&id=About%20Hallador%20Energy%20Company%20%26%20Contact%20Information) Hallador Energy is an Indiana-based vertically-integrated IPP, operating the Merom Generating Station and Sunrise Coal for power and fuel production - Hallador Energy is a vertically-integrated IPP with two core businesses: Hallador Power Company, LLC (electricity production) and Sunrise Coal, LLC (fuel production and supply)[14](index=14&type=chunk) [Conference Call and Forward-Looking Statements](index=4&type=section&id=Conference%20Call%20and%20Forward-Looking%20Statements) A conference call is scheduled for August 11, 2025, to discuss results, with the report also containing forward-looking statements - Management will host a conference call and webcast on August 11, 2025, at 5:00 p.m. Eastern time to discuss the financial and operational results[13](index=13&type=chunk) - The press release includes forward-looking statements concerning the company's ability to secure a long-term PPA and unlock asset value, which are subject to risks and uncertainties[12](index=12&type=chunk)

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Tonix Pharmaceuticals' unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, with detailed notes for the periods ended June 30, 2025 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2025, reflects increased cash and equity, and decreased liabilities due to term loan repayment Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $125,331 | $98,776 | +$26,555 | | Total current assets | $143,535 | $119,002 | +$24,533 | | Total assets | $187,359 | $162,890 | +$24,469 | | Term loan payable (short & long term) | $0 | $7,487 | -$7,487 | | Total liabilities | $19,358 | $23,332 | -$3,974 | | Total stockholders' equity | $168,001 | $139,558 | +$28,443 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net loss significantly decreased for the three and six months ended June 30, 2025, primarily due to the absence of a 2024 asset impairment charge Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Product revenue, net | $1,998 | $2,208 | $4,427 | $4,690 | | Research and development | $10,820 | $9,698 | $18,256 | $22,561 | | Selling, general and administrative | $16,202 | $7,502 | $26,306 | $16,812 | | Asset impairment charges | $0 | $58,957 | $0 | $58,957 | | Operating loss | $(28,296) | $(77,316) | $(44,350) | $(98,667) | | Net loss | $(28,272) | $(78,776) | $(45,101) | $(93,715) | | Net loss per share | $(3.86) | $(1,920.85) | $(6.80) | $(2,720.40) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash increased by **$26.6 million** for the six months ended June 30, 2025, driven by **$60.5 million** in financing activities Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(31,412) | $(27,494) | | Net cash used in investing activities | $(2,545) | $(108) | | Net cash provided by financing activities | $60,526 | $6,813 | | **Net increase (decrease) in cash** | **$26,556** | **$(20,792)** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail business operations, accounting policies, and financial items, including a going concern warning, equity transactions, and subsequent events - The company's priority is advancing TNX-102 SL for fibromyalgia, with a PDUFA goal date of **August 15, 2025**, and Fast Track designation[21](index=21&type=chunk) - Recurring losses and negative cash flows raise substantial doubt about the company's ability to continue as a going concern, though current cash is expected to fund operations into **Q3 2026**[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - The company effected a **1-for-100 reverse stock split** on February 5, 2025, and a **1-for-32 reverse stock split** on June 10, 2024, with all share data retrospectively adjusted[32](index=32&type=chunk) - In Q1 2025, the company fully repaid its term loan, incurring a **$2.1 million** loss on extinguishment of debt for the six-month period[116](index=116&type=chunk) - Subsequent to June 30, 2025, the company raised approximately **$49.8 million** in net proceeds from ATM common stock sales[180](index=180&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, liquidity, and operational developments, highlighting the TNX-102 SL program, decreased net loss, increased SG&A, and ongoing financing efforts [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Operating results show a significant decrease in net loss due to the absence of 2024 impairment charges, alongside increased SG&A and fluctuating R&D expenses Comparison of Operating Results (in thousands) | Metric | Q2 2025 | Q2 2024 | Change | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Product revenue, net | $1,998 | $2,208 | -9.5% | $4,427 | $4,690 | -5.6% | | R&D Expenses | $10,820 | $9,698 | +11.6% | $18,256 | $22,561 | -19.1% | | SG&A Expenses | $16,202 | $7,502 | +116.0% | $26,306 | $16,812 | +56.5% | | Asset Impairment | $0 | $58,957 | N/A | $0 | $58,957 | N/A | | Net Loss | $(28,272) | $(78,776) | -64.1% | $(45,101) | $(93,715) | -51.9% | - The increase in SG&A expenses is primarily due to higher sales and marketing costs (**$5.3 million** in Q2), employee-related expenses, and professional fees for migraine assets and TNX-102 SL launch preparation[197](index=197&type=chunk)[206](index=206&type=chunk) - Significant 2024 asset impairment charges included **$48.8 million** for the decommissioned ADC facility, **$1.0 million** for goodwill, and **$9.2 million** for developed technology intangible assets[198](index=198&type=chunk)[207](index=207&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had **$125.3 million** in cash, with financing activities expected to fund operations into Q3 2026, despite ongoing going concern doubts - The company's cash resources, supplemented by Q3 2025 equity offerings, are expected to fund operations into the **third quarter of 2026**[215](index=215&type=chunk) - Recurring losses and future funding needs raise substantial doubt about the company's ability to continue as a going concern, despite recent financing[216](index=216&type=chunk) Recent Financing Activities (2024-2025) | Program | Total Facility Size | Net Proceeds (YTD 2025) | Status | | :--- | :--- | :--- | :--- | | 2024 ATM Offering | $250.0M | $75.4M | Completed/Fully Utilized | | 2025 ATM Offering | $150.0M | $0 (in Q2) | Active | | 2025 Lincoln Park Agreement | $75.0M | N/A | Active | - During the six months ended June 30, 2025, the company repurchased **400,000 shares** of common stock for approximately **$5.9 million** under its 2024 share repurchase program[245](index=245&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=54&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is noted as not applicable for the company - The company states that this item is not applicable[275](index=275&type=chunk) [Item 4. Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - Management concluded that as of **June 30, 2025**, the company's disclosure controls and procedures were effective at a reasonable assurance level[277](index=277&type=chunk) - No material changes occurred in the company's internal control over financial reporting during the quarter ended **June 30, 2025**[278](index=278&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no involvement in any material legal proceedings or claims - As of the filing date, the company is not involved in any material legal proceedings[280](index=280&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the 2024 Form 10-K, except for a new risk concerning the 'One Big Beautiful Bill Act' (OBBBA) - A new risk factor relates to the 'One Big Beautiful Bill Act' (OBBBA), enacted on **July 4, 2025**, which could adversely affect the company's business and financial condition, with impact currently being assessed[282](index=282&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section discloses the issuance of **48,708 shares** to Lincoln Park as a commitment fee and details the repurchase of **150,000 shares** during Q2 2025 - On **June 11, 2025**, the company issued **48,708 shares** of common stock to Lincoln Park as a commitment fee for a purchase agreement[283](index=283&type=chunk) Share Repurchase Activity for Q2 2025 | Month | Total Shares Purchased | Average Price Paid Per Share | Total Cost (in thousands) | | :--- | :--- | :--- | :--- | | April 2025 | 0 | N/A | $0 | | May 2025 | 150,000 | $19.31 | $2,902 | | June 2025 | 0 | N/A | $0 | | **Q2 Total** | **150,000** | **$19.31** | **$2,902** | [Item 5. Other Information](index=55&type=section&id=Item%205.%20Other%20Information) The company discloses the adoption of Rule 10b5-1 trading plans by two executive officers for the sale of common stock, with sales commencing in February 2026 - On **June 20, 2025**, CFO Bradley Saenger adopted a Rule 10b5-1 plan for selling up to **51,584 shares**[287](index=287&type=chunk) - On **June 18, 2025**, COO Jessica Morris adopted a Rule 10b5-1 plan for selling up to **19,520 shares**[288](index=288&type=chunk)

Part I—Financial Information [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The company reported a Q2 2025 net loss of $206.0 million and holds $1.72 billion in cash from financing activities [Consolidated Condensed Balance Sheets](index=5&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) Total assets grew to $1.94 billion by June 2025, driven by a significant increase in cash to $1.72 billion Consolidated Condensed Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $1,724.0 | $834.5 | | Total current assets | $1,757.0 | $858.4 | | Total assets | $1,938.3 | $1,001.2 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $78.8 | $71.1 | | Total liabilities | $257.4 | $248.6 | | Total stockholders' equity | $1,680.9 | $752.6 | | Accumulated deficit | $(1,985.0) | $(1,685.6) | [Consolidated Condensed Statements of Operations](index=6&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations) The Q2 2025 net loss widened to $206.0 million from $106.9 million year-over-year due to higher operating expenses Statements of Operations Summary (in millions) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $122.4 | $89.8 | $226.1 | $173.3 | | General and administrative | $53.7 | $31.4 | $94.0 | $90.1 | | Total operating expenses | $176.1 | $121.2 | $320.1 | $263.4 | | Loss from operations | $(176.1) | $(121.2) | $(320.1) | $(263.4) | | Net loss | $(206.0) | $(106.9) | $(299.4) | $(223.4) | | Net loss per share | $(0.36) | $(0.32) | $(0.53) | $(0.68) | [Consolidated Condensed Statements of Cash Flows](index=10&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Financing activities provided $1.12 billion in cash, offsetting operational and investing outflows for H1 2025 Cash Flow Summary for Six Months Ended June 30 (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(198.0) | $(167.0) | | Net cash used in investing activities | $(34.1) | $(38.2) | | Net cash provided by financing activities | $1,121.3 | $100.8 | | **Net increase (decrease) in cash** | **$889.2** | **$(104.4)** | - Financing activities in the first six months of 2025 were primarily driven by **$1,151.8 million in proceeds from a registered direct offering** and $10.0 million from a PIPE financing[36](index=36&type=chunk) [Notes to Consolidated Condensed Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) Notes detail the eVTOL business, confirm liquidity for 12 months, and disclose financing, litigation, and loan details - The company is developing an electric vertical take-off and landing (eVTOL) aircraft and plans to operate in two business lines: **Commercial and Defense**[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - As of June 30, 2025, the company had cash and cash equivalents of **$1,724.0 million**, which management believes is sufficient to fund operations for at least the next 12 months[41](index=41&type=chunk) - The company has a **$65.0 million credit agreement** with Synovus Bank for the construction of its manufacturing facility in Covington, Georgia, which has been fully drawn down[77](index=77&type=chunk)[81](index=81&type=chunk) - The company is involved in a **consolidated class action lawsuit** alleging breaches of fiduciary duties in connection with its merger, though the court has narrowed the claims[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - Significant financing was raised through registered direct offerings, including **$289.5 million in February 2025** and **$816.8 million in June 2025**[103](index=103&type=chunk)[105](index=105&type=chunk) - Total stock-based compensation expense was **$81.9 million for the six months ended June 30, 2025**, a notable increase from $63.5 million in the same period of 2024[134](index=134&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses rising operating expenses for eVTOL development and a strong liquidity position of $1.72 billion [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Q2 2025 operating expenses rose 45.3% to $176.1 million, driven by increased R&D and G&A costs Comparison of Operating Results (in millions) | Expense Category | Q2 2025 | Q2 2024 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Research and development | $122.4 | $89.8 | $32.6 | 36.3% | | General and administrative | $53.7 | $31.4 | $22.3 | 71.0% | | **Total operating expenses** | **$176.1** | **$121.2** | **$54.9** | **45.3%** | | **Net loss** | **$206.0** | **$106.9** | **$99.1** | **92.7%** | - The increase in R&D expenses for Q2 2025 was driven by an **$11.8 million increase in stock-based compensation** and a $10.1 million increase in personnel costs[173](index=173&type=chunk) - The increase in G&A expenses for Q2 2025 was primarily due to a **$21.2 million increase in stock-based compensation**[175](index=175&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) The company holds $1.72 billion in cash, sufficient for the next 12 months, bolstered by over $1.1 billion from recent offerings - Principal sources of liquidity as of June 30, 2025, were **cash and cash equivalents of $1,724.0 million**[179](index=179&type=chunk) - The company closed a registered direct offering on June 16, 2025, selling 85,000,000 shares for **net proceeds of approximately $816.8 million**[184](index=184&type=chunk) - The company closed another registered direct offering on February 12, 2025, selling 35,500,000 shares for **net proceeds of approximately $289.5 million**[183](index=183&type=chunk) - In July 2025, subsequent to the reporting period, the company sold 3,921,875 shares under its ATM Program for **net proceeds of $46.3 million**[159](index=159&type=chunk)[181](index=181&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk from its variable-rate debt and investments, and credit risk from cash deposits - The company is exposed to interest rate risk from its **variable-rate loan (SOFR + 2.0%)** and its cash equivalent investments in money market funds[198](index=198&type=chunk) - Credit risk is concentrated in cash and cash equivalents held at several U.S. financial institutions, where **balances may exceed FDIC insurance limits**[199](index=199&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in internal controls - The CEO and CFO concluded that as of June 30, 2025, the company's **disclosure controls and procedures were effective**[200](index=200&type=chunk) - **No material changes** were made during the quarter ended June 30, 2025, that are reasonably likely to materially affect the company's internal control over financial reporting[202](index=202&type=chunk) Part II—Other Information [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in a class action lawsuit related to its merger, with details in Note 7 of the financials - A description of material pending legal proceedings can be found in **Note 7 - Commitments and Contingencies**, which details the Delaware Class Action Litigation[204](index=204&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the company's Form 10-K and Form 8-K for a comprehensive overview of investment risks - The company refers to its **Annual Report on Form 10-K** and a **Current Report on Form 8-K** (filed June 13, 2025) for a full description of risk factors[205](index=205&type=chunk) [Other Information](index=44&type=section&id=Item%205.%20Other%20Information) The company plans to issue $28.0 million in stock to vendors and a warrant for 314,760 shares in August 2025 - On or about August 11, 2025, the company will issue **$28.0 million of Class A common stock** to vendors for services and goods[211](index=211&type=chunk) - On or about August 11, 2025, the company will issue a **warrant to purchase 314,760 shares** of Class A common stock at an exercise price of $0.01 per share[212](index=212&type=chunk) - During Q2 2025, **no directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement**[214](index=214&type=chunk) [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists key filed exhibits, including agreements, legal opinions, and required officer certifications - Key exhibits filed include the **Form of Warrant to Purchase Shares (4.1)**, Opinion of Fenwick & West LLP (5.1), a Securities Purchase Agreement (10.1), and CEO/CFO certifications[215](index=215&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q x 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 Viant Technology Inc. (Exact name of registrant as specified in its charter) ______________________________________________________________________________________________________________________________________________________ (State or other jurisdiction of incorporation or organization) D ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number: 001-40955 Aris Water Solutions, Inc. (Exact name of registrant as specified in its charter) Delaware 87-1022110 ...

PART I FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities increased as of June 30, 2025, driven by higher cash and contract liabilities, leading to a rise in total equity Balance Sheet Summary (as of June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$257,503,568** | **$243,313,181** | | Cash and cash equivalents | $112,246,599 | $99,350,121 | | Accounts receivable, net | $41,952,382 | $39,580,982 | | **Total Liabilities** | **$35,296,128** | **$28,003,534** | | Contract liabilities | $12,898,666 | $9,126,654 | | **Total Equity** | **$222,207,440** | **$215,309,647** | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q2 2025 revenue and net income increased, whereas H1 2025 revenue decreased with a corresponding decline in net income from continuing operations Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $33,591,079 | $32,479,158 | | Gross Profit | $12,831,985 | $11,620,214 | | Net Income from Continuing Operations (to Stockholders) | $5,178,761 | $4,242,411 | | Diluted EPS from Continuing Operations | $0.32 | $0.26 | H1 2025 vs H1 2024 Performance | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Revenue | $67,306,464 | $72,168,548 | | Gross Profit | $25,138,272 | $25,498,237 | | Net Income from Continuing Operations (to Stockholders) | $10,102,871 | $11,183,825 | | Diluted EPS from Continuing Operations | $0.63 | $0.70 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased, with cash used in investing and financing activities, resulting in an overall increase in cash and cash equivalents Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $20,523,005 | $26,905,891 | | Net Cash from Investing Activities | ($4,177,011) | $31,539,511 | | Net Cash from Financing Activities | ($3,566,383) | ($3,133,273) | | **Net Increase in Cash** | **$12,779,611** | **$55,312,129** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail business activities, accounting policies, segment performance, the Mexico project, and significant contingencies like license renegotiation and accounts receivable - The company's principal activity is supplying potable water, treating wastewater, and providing water-related products and services in the Cayman Islands, The Bahamas, the United States, and the British Virgin Islands[19](index=19&type=chunk) Revenue by Source (Six Months Ended June 30) | Revenue Source | 2025 | 2024 | | :--- | :--- | :--- | | Retail | $18,049,368 | $16,806,822 | | Bulk | $16,686,532 | $16,790,052 | | Services | $21,526,470 | $29,340,080 | | Manufacturing | $11,044,094 | $9,231,594 | | **Total Revenue** | **$67,306,464** | **$72,168,548** | - The company settled its dispute regarding the terminated Mexico project in May 2024, receiving **US$31.96 million** for the sale of land and project documentation, resulting in a significant gain from discontinued operations in Q2 2024[76](index=76&type=chunk)[77](index=77&type=chunk)[79](index=79&type=chunk) - Significant contingencies include the ongoing renegotiation of the Cayman Water retail license with OfReg, which could materially impact future operating income, and delinquent accounts receivable from the Water and Sewerage Corporation of The Bahamas (WSC) totaling **$29.3 million** as of June 30, 2025[94](index=94&type=chunk)[95](index=95&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, condition, liquidity, and capital resources, analyzing consolidated and segment results, and highlighting key risks [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Q2 2025 saw consolidated revenue and gross profit increases, while H1 2025 revenue decreased due to lower services, with an improved gross profit margin - Q2 2025 revenue increased to **$33.6 million** from **$32.5 million** in Q2 2024, with gross profit rising to **$12.8 million** (**38% margin**) from **$11.6 million** (**36% margin**)[138](index=138&type=chunk) - H1 2025 revenue decreased to **$67.3 million** from **$72.2 million** in H1 2024, mainly due to a **$7.8 million** decline in services revenue. Gross profit was stable at approximately **$25 million**[159](index=159&type=chunk) - Retail revenue grew **7%** in Q2 and **10%** in H1 2025 due to increased water sales volume, attributed to lower rainfall in Grand Cayman[141](index=141&type=chunk)[162](index=162&type=chunk) - Manufacturing revenue increased significantly in both Q2 (**33%**) and H1 (**20%**) 2025 due to higher production activity and a better product mix, boosting the segment's gross profit[150](index=150&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=34&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity, but faces significant risk from delinquent accounts receivable in The Bahamas, with planned capital expenditures - As of June 30, 2025, the company had cash and cash equivalents of **$112.2 million** and working capital of **$137.4 million**[183](index=183&type=chunk) - A significant liquidity concern is the **$29.3 million** in accounts receivable due from the WSC in The Bahamas, of which approximately **81%** was delinquent as of June 30, 2025[184](index=184&type=chunk) - Projected capital expenditures for the rest of 2025 are approximately **$8.5 million**, including projects in The Bahamas and the expansion of Aerex's manufacturing facility[182](index=182&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=39&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company reports no material changes in its market risk exposure since year-end 2024 - There were no material changes in the company's market risk exposure since year-end 2024[210](index=210&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[212](index=212&type=chunk) - No changes in internal control over financial reporting occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[215](index=215&type=chunk) PART II OTHER INFORMATION [Item 1A. Risk Factors](index=41&type=section&id=Item%201A%20Risk%20Factors) This section highlights significant risks, including Cayman Islands license renegotiation, Bahamas accounts receivable delays, and contract profitability estimation challenges - The renegotiation of the Cayman Islands retail license with OfReg could result in a material reduction of operating income and cash flows historically generated from these operations[218](index=218&type=chunk)[223](index=223&type=chunk) - The Bahamas subsidiary (CW-Bahamas) faces substantial delays in collecting accounts receivable from the WSC, with **$29.3 million** outstanding and **81%** delinquent as of June 30, 2025, posing a liquidity risk[224](index=224&type=chunk)[225](index=225&type=chunk) - The profitability of construction, manufacturing, and operations contracts is highly dependent on the company's ability to accurately estimate costs, as significant overruns could materially impact financial results[229](index=229&type=chunk)[230](index=230&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In June 2025, the company issued preferred stock to employees for services and option exercises, exempt from SEC registration - In June 2025, the company issued a total of **9,083 shares** of preferred stock to employees for services and through stock option exercises, which were exempt from SEC registration[233](index=233&type=chunk)[234](index=234&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205%20Other%20Information) No directors or officers adopted or terminated any pre-arranged stock trading plans during the second quarter of 2025 - No directors or officers adopted or terminated any pre-arranged stock trading plans during the second quarter of 2025[235](index=235&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data

[Condensed Consolidated Interim Financial Statements - Unaudited](index=1&type=section&id=Condensed%20Consolidated%20Interim%20Financial%20Statements%20-%20Unaudited) [Condensed Consolidated Interim Statements of Financial Position - Unaudited](index=2&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Financial%20Position%20-%20Unaudited) The company's total assets significantly increased from $10.20 million at December 31, 2024, to $28.45 million at June 30, 2025, primarily driven by a substantial increase in cash and current assets, while total liabilities remained relatively stable and shareholders' equity saw a significant increase from $4.62 million to $22.99 million Key Financial Position Data | As at | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | **ASSETS** | | | | Cash | $22,571,059 | $6,252,409 | | Receivables | $1,129,974 | $573,390 | | Inventory | $2,576,266 | $1,532,263 | | Prepaids and Deposits | $1,324,529 | $724,513 | | **TOTAL ASSETS** | **$28,452,735** | **$10,200,088** | | **LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)** | | | | TOTAL LIABILITIES | $5,467,204 | $5,578,305 | | TOTAL SHAREHOLDERS' EQUITY (DEFICIT) | $22,985,531 | $4,621,783 | | **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)** | **$28,452,735** | **$10,200,088** | [Condensed Consolidated Interim Statements of Comprehensive loss - Unaudited](index=3&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Comprehensive%20loss%20-%20Unaudited) For the six months ended June 30, 2025, total revenue increased to $3.66 million from $3.06 million in the prior year period, and despite the revenue growth, the company reported a net loss of $8.19 million, an improvement from the $8.96 million loss in the same period of 2024, with basic and diluted net loss per share improving significantly from $(3.57) to $(1.23) Key Comprehensive Loss Data (Six Months Ended June 30) | Metric | 2025 | 2024 | Change (YoY) | | :-------------------------------- | :----------- | :----------- | :----------- | | Sales of goods | $3,443,396 | $2,625,298 | +31.16% | | Provision of services | $219,574 | $437,273 | -49.80% | | **TOTAL REVENUE** | **$3,662,970** | **$3,062,571** | **+19.61%** | | COST OF SALES | $(2,848,291) | $(2,320,886) | +22.72% | | **GROSS PROFIT** | **$814,679** | **$741,685** | **+9.84%** | | OPERATING EXPENSES | $(8,885,349) | $(7,926,857) | +12.09% | | OTHER INCOME (EXPENSE) | $(116,316) | $(1,770,185) | -93.43% | | **NET INCOME (LOSS)** | **$(8,186,986)** | **$(8,955,357)** | **-8.58%** | | Net Income (Loss) per share – Basic & diluted | $(1.23) | $(3.57) | -65.55% | - Operating expenses for the six months ended June 30, 2025, increased by **12.09%** to **$8,885,349**, primarily driven by increases in employee and management expenses (**+14.3%**) and office and miscellaneous expenses (**+87.3%**), while professional fees decreased by **31.2%**[5](index=5&type=chunk) [Condensed Consolidated Interim Statements of Changes in Shareholders' Equity](index=4&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity significantly increased from $4.62 million at December 31, 2024, to $22.99 million at June 30, 2025, primarily driven by substantial proceeds from share issuances for financing ($22.63 million) and warrant exercises ($4.18 million), despite a net loss of $8.19 million for the period Shareholders' Equity Changes (Six Months Ended June 30, 2025) | Item | Amount (CAD$) | | :------------------------------------ | :-------------- | | Balance at December 31, 2024 | $4,621,783 | | Shares issued for financing | $22,628,469 | | Share issue costs | $(2,263,282) | | Warrants issued | $1,103,825 | | Shares issued for exercise of overallotment | $265,971 | | Share issue costs – overallotment | $(28,030) | | Shares issued for the exercise of warrants | $4,175,807 | | Shares issued for the exercise of RSUs | $0 | | Share-based payments | $664,334 | | Net loss | $(8,186,986) | | Change in fair value of equity investments at FVOCI | $14,285 | | Translation of foreign operations | $(10,645) | | Balance at June 30, 2025 | $22,985,531 | - The increase in shareholders' equity was largely due to significant financing activities, including **$22,628,469** from shares issued for financing and **$4,175,807** from warrant exercises[7](index=7&type=chunk) [Condensed Consolidated Interim Statements of Cash Flows - Unaudited](index=6&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Cash%20Flows%20-%20Unaudited) For the six months ended June 30, 2025, cash used in operating activities increased to $9.43 million from $6.40 million in the prior year, but cash provided by financing activities significantly increased to $25.78 million (from $8.58 million in 2024), primarily due to proceeds from common share issuances, resulting in a substantial increase in cash and cash equivalents at the end of the period to $22.57 million Key Cash Flow Data (Six Months Ended June 30) | Metric | 2025 | 2024 | Change (YoY) | | :------------------------------------------ | :----------- | :----------- | :----------- | | Cash used in operating activities | $(9,431,522) | $(6,401,347) | +47.34% | | Cash provided by (used in) investing activities | $(19,156) | $36,336 | -152.71% | | Cash provided by (used in) financing activities | $25,779,973 | $8,578,967 | +200.50% | | Effects of exchange rate changes on cash | $(10,645) | $(17,021) | -37.46% | | Change in cash | $16,329,295 | $2,213,956 | +637.56% | | Cash and cash equivalents, end of period | $22,571,059 | $5,290,547 | +326.63% | - Proceeds from issuance of common shares for financing significantly increased to **$23,998,265** in 2025 from **$9,759,643** in 2024, driving the substantial increase in cash from financing activities[9](index=9&type=chunk) [Notes to Condensed Consolidated Interim Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Interim%20Financial%20Statements) [1. NATURE AND CONTINUANCE OF OPERATIONS](index=7&type=section&id=1.%20NATURE%20AND%20CONTINUANCE%20OF%20OPERATIONS) Draganfly Inc. specializes in unmanned and remote data collection and analysis platforms, has an accumulated deficit of $125.65 million, and its ability to continue as a going concern is dependent on securing additional financing or achieving profitability - Draganfly Inc. creates quality, cutting-edge unmanned and remote data collection and analysis platforms and systems[10](index=10&type=chunk) - The Company has an accumulated deficit of **$125,652,815** and has not been profitable, raising substantial doubt about its ability to continue as a going concern without additional financing or profitable operations[11](index=11&type=chunk) [2. BASIS OF PREPARATION](index=7&type=section&id=2.%20BASIS%20OF%20PREPARATION) These interim financial statements are prepared in accordance with IAS 34 and include all necessary interim disclosures, but should be read in conjunction with the annual financial statements for the year ended December 31, 2024, and are authorized by the Board of Directors and consolidate wholly-owned subsidiaries - These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34, "Interim Financial Reporting"[12](index=12&type=chunk) - The financial statements include the accounts and results of operations of the Company and its wholly-owned subsidiaries: Draganfly Innovations Inc. (Canada), Draganfly Innovations USA, Inc. (US), and Dronelogics Systems Inc. (Canada)[14](index=14&type=chunk) - Certain prior year amounts were reclassified within Operating Expenses to conform to the fiscal 2025 presentation, without impacting overall results[15](index=15&type=chunk) [3. MATERIAL ACCOUNTING POLICY INFORMATION, ESTIMATES, AND JUDGEMENTS](index=8&type=section&id=3.%20MATERIAL%20ACCOUNTING%20POLICY%20INFORMATION%2C%20ESTIMATES%2C%20AND%20JUDGEMENTS) The interim financial statements follow the same accounting principles and methods as the 2024 annual financial statements, and management's significant estimates and judgments, which are inherently uncertain, remained unchanged from those disclosed in the prior annual report - These condensed consolidated interim financial statements have been prepared following the same accounting principles and methods of computation as outlined in the Company's consolidated financial statements for the year ended December 31, 2024[16](index=16&type=chunk) - Significant estimates and judgements used in the preparation of these condensed consolidated interim financial statements remained unchanged from those disclosed in the Company's annual consolidated financial statements for the year ended December 31, 2024[17](index=17&type=chunk) [4. RECEIVABLES](index=8&type=section&id=4.%20RECEIVABLES) Total receivables increased from $729,590 at December 31, 2024, to $1,129,974 at June 30, 2025, primarily due to an increase in trade accounts receivable, and the provision for doubtful accounts increased by $63,256 during the six months ended June 30, 2025 Receivables Breakdown | As at | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Trade accounts receivable | $1,027,593 | $674,998 | | Sales tax receivable | $102,381 | $54,592 | | **Total Receivables** | **$1,129,974** | **$729,590** | | Current portion | $1,129,974 | $573,390 | | Long term portion | $0 | $156,200 | Provision for Doubtful Accounts | Metric | Amount (CAD$) | | :-------------------------- | :-------------- | | Balance at December 31, 2024 | $429,506 | | Increase during the period | $63,256 | | Balance at June 30, 2025 | $492,762 | - The Company applies a direct customer analysis approach to measure expected credit losses, assessing collectability on an individual basis using quantitative and qualitative information[21](index=21&type=chunk) [5. INVENTORY](index=9&type=section&id=5.%20INVENTORY) Inventory increased from $1.53 million at December 31, 2024, to $2.58 million at June 30, 2025, with finished goods and parts both showing increases, and cost of sales for the six months ended June 30, 2025, was $2.85 million, including a recovery of $28,246 for obsolete and slow-moving inventory Inventory Breakdown | As at | June 30, 2025 | December 31, 2024 | | :------------ | :------------ | :---------------- | | Finished goods | $1,372,229 | $954,453 | | Parts | $1,204,037 | $577,810 | | **Total Inventory** | **$2,576,266** | **$1,532,263** | Cost of Sales Components (Six Months Ended June 30) | Component | 2025 | 2024 | | :------------------ | :----------- | :----------- | | Inventory | $2,481,257 | $2,144,150 | | Consulting and services | $204,936 | $138,437 | | Other | $162,098 | $38,299 | | **Total Cost of Sales** | **$2,848,291** | **$2,320,886** | - During the six months ended June 30, 2025, a recovery of **$28,246** was recognized for obsolete and slow-moving inventory, compared to a provision of **$283,169** in the prior year period[23](index=23&type=chunk) [6. PREPAIDS AND DEPOSITS](index=9&type=section&id=6.%20PREPAIDS%20AND%20DEPOSITS) Prepaids and deposits increased from $724,513 at December 31, 2024, to $1,324,529 at June 30, 2025, primarily due to a significant increase in deposits for vendor manufacturing/supply goods Prepaids and Deposits Breakdown | As at | June 30, 2025 | December 31, 2024 | | :------------ | :------------ | :---------------- | | Insurance | $68,518 | $370,609 | | Prepaid other | $124,333 | $112,439 | | Deposits | $1,131,678 | $241,465 | | **Total** | **$1,324,529** | **$724,513** | - Deposits primarily consist of amounts required to be pre-paid for vendors to manufacture or supply goods[25](index=25&type=chunk) [7. EQUIPMENT](index=10&type=section&id=7.%20EQUIPMENT) The net book value of equipment decreased slightly from $529,542 at December 31, 2024, to $480,729 at June 30, 2025, with additions totaling $91,606 and disposals amounting to $53,389 for the six months ended June 30, 2025 Equipment Net Book Value | As at | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Net Book Value | $480,729 | $529,542 | - Additions to equipment for the six months ended June 30, 2025, totaled **$91,606**, while disposals amounted to **$53,389**[26](index=26&type=chunk) [8. RIGHT OF USE ASSETS](index=10&type=section&id=8.%20RIGHT%20OF%20USE%20ASSETS) Right of use assets, primarily buildings, decreased from $372,344 at December 31, 2024, to $300,980 at June 30, 2025, due to depreciation, with no additions to right of use assets during the period Right of Use Assets | As at | June 30, 2025 | December 31, 2024 | | :---------- | :------------ | :---------------- | | Buildings | $300,980 | $372,344 | | Land | $0 | $0 | | **Total** | **$300,980** | **$372,344** | - Depreciation for the six months ended June 30, 2025, was **$(71,364)**, and no additions to right of use assets occurred during the three and six months ended June 30, 2025[27](index=27&type=chunk) [9. LEASE LIABILITIES](index=11&type=section&id=9.%20LEASE%20LIABILITIES) Total lease liabilities decreased from $428,021 at December 31, 2024, to $352,847 at June 30, 2025, as the company leases facilities and vehicles with terms ranging from one to five years, using incremental borrowing rates between 11.7% and 13.3% Lease Liabilities Breakdown | As at | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Current lease liability | $158,250 | $154,147 | | Non-current lease liability | $194,597 | $273,874 | | **Ending balance** | **$352,847** | **$428,021** | - The Company leases facilities and vehicles with terms ranging from **one to five years**, calculated using incremental borrowing rates from **11.7% to 13.3%**[28](index=28&type=chunk) Maturity Analysis of Undiscounted Lease Liabilities | Maturity Period | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Less than one year | $187,166 | $190,856 | | One to three years | $207,619 | $282,419 | | Four to five years | $7,183 | $71,836 | | **Total undiscounted lease liabilities** | **$401,968** | **$545,111** | [10. TRADE PAYABLES AND ACCRUED LIABILITIES](index=11&type=section&id=10.%20TRADE%20PAYABLES%20AND%20ACCRUED%20LIABILITIES) Total trade payables and accrued liabilities increased from $2,399,187 at December 31, 2024, to $2,570,010 at June 30, 2025, primarily driven by an increase in trade accounts payable Trade Payables and Accrued Liabilities | As at | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Trade accounts payable | $1,212,942 | $609,869 | | Accrued liabilities | $1,357,068 | $1,789,318 | | **Total** | **$2,570,010** | **$2,399,187** | [11. DEFERRED INCOME](index=12&type=section&id=11.%20DEFERRED%20INCOME) Total deferred income increased from $86,681 at December 31, 2024, to $135,314 at June 30, 2025, with the current portion of deferred income, expected to be recognized within one year, being $80,106 Deferred Income Balance | As at | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Deferred, revenue beginning | $86,681 | $107,674 | | Revenue recognized | $(12,151) | $(21,852) | | Unearned revenues received | $66,555 | $1,744 | | Foreign exchange | $(5,771) | $(885) | | **Total Deferred Income** | **$135,314** | **$86,681** | | Current portion | $80,106 | $18,542 | | Long term portion | $55,208 | $68,139 | - The current portion of deferred income (**$80,106**) is expected to be recognized as revenue within one year, while the remaining long-term portion (**$55,208**) relates to support and maintenance arrangements recognized over the next **2.67 years**[32](index=32&type=chunk) [12. SHARE CAPITAL](index=12&type=section&id=12.%20SHARE%20CAPITAL) During the six months ended June 30, 2025, the company significantly increased its issued share capital through multiple financing rounds, issuing 7,215,000 common shares for financing and 1,184,167 shares for warrant exercises, resulting in a substantial increase in share capital and warrants outstanding - The Company's authorized share capital consists of an unlimited number of common shares without par value[33](index=33&type=chunk) - During the six months ended June 30, 2025, the Company issued **7,215,000 common shares** for financing, generating **$22,628,469**, and **1,184,167 shares** for the exercise of warrants, generating **$4,304,475**[7](index=7&type=chunk) - Key financing activities included the issuance of **1,715,000 units** on May 5, 2025, for **$4,973,404**, and **5,500,000 units** on June 12, 2025, for **$18,758,889**, both consisting of common shares and warrants[35](index=35&type=chunk) [Stock Options](index=13&type=section&id=Stock%20Options) Stock Options Outstanding and Exercisable (June 30, 2025) | Grant Date | Expiry Date | Exercise Price | Remaining Contractual Life (years) | Number of Options Outstanding | Number of Options Exercisable | | :---------------- | :---------------- | :------------- | :--------------------------------- | :---------------------------- | :---------------------------- | | October 30, 2019 | October 30, 2029 | $62.50 | 4.57 | 10,464 | 10,464 | | April 30, 2020 | April 30, 2030 | $62.50 | 5.07 | 240 | 240 | | April 30, 2020 | April 30, 2030 | $96.25 | 5.07 | 4,400 | 4,400 | | July 3, 2020 | July 3, 2025 | $80.00 | 0.26 | 4,000 | 4,000 | | November 24, 2020 | November 24, 2030 | $62.50 | 5.64 | 1,280 | 1,280 | | February 2, 2021 | February 2, 2031 | $330.00 | 5.83 | 1,200 | 1,200 | | March 8, 2021 | March 8, 2026 | $347.50 | 0.93 | 400 | 400 | | April 27, 2021 | April 27, 2031 | $253.75 | 6.06 | 3,640 | 3,640 | | September 9, 2021 | September 9, 2026 | $121.00 | 1.44 | 1,034 | 1,034 | | November 9, 2023 | November 9, 2033 | $15.75 | 8.59 | 1,200 | 800 | | **Total** | | | | **27,858** | **27,458** | - No options were granted by the Company during the six months ended June 30, 2025[40](index=40&type=chunk) - Stock-based compensation related to the vesting of stock options for the six months ended June 30, 2025, was **$2,027**, a decrease from **$53,379** in the prior year[40](index=40&type=chunk) [Restricted Share Units](index=14&type=section&id=Restricted%20Share%20Units) Restricted Share Units (RSUs) Outstanding | Metric | Number of RSUs | Average Price | | :-------------------------- | :------------- | :------------ | | Outstanding, December 31, 2024 | 188,100 | $10.74 | | Vested | (79,682) | $13.10 | | Issued | 450,964 | $2.55 | | Forfeited | (1,001) | $10.78 | | **Outstanding, June 30, 2025** | **558,381** | **$3.86** | - The Company recorded share-based payment expense of **$662,307** for RSUs during the six months ended June 30, 2025, based on the closing price of the Company's stock on the day prior to grant[41](index=41&type=chunk) - RSUs have a **3-year vesting period** following the award date, and the total number of common shares reserved for this plan shall not exceed **15%** of issued and outstanding common shares[42](index=42&type=chunk) [Warrants](index=14&type=section&id=Warrants) Warrants Outstanding (June 30, 2025) | Issue Date | Expiry Date | Exercise Price | Number of Warrants Outstanding | | :---------------- | :---------------- | :------------- | :----------------------------- | | October 30, 2023 | October 30, 2026 | CAD$ 23.20 | 12,800 | | October 30, 2023 | October 30, 2028 | CAD$ 3.3086 | 256,000 | | February 26, 2024 | February 26, 2027 | US$ 8.44 | 26,800 | | February 26, 2024 | February 26, 2029 | US$ 4.4025 | 474,332 | | April 29, 2024 | April 29, 2029 | CAD$ 3.3086 | 540,541 | | April 29, 2024 | April 29, 2027 | CAD$ 11.06 | 27,028 | | August 21, 2024 | August 21, 2027 | CAD$ 5.12 | 33,334 | | November 19, 2024 | November 19, 2029 | CAD$ 3.3086 | 1,600,000 | | November 19, 2024 | November 19, 2027 | CAD$ 4.1357 | 80,000 | | May 5, 2025 | May 5, 2030 | CAD$ 3.9779 | 1,297,500 | | May 5, 2025 | May 5, 2028 | CAD$ 3.632 | 90,750 | | June 12, 2025 | June 12, 2030 | CAD$ 5.0768 | 5,500,000 | | June 12, 2025 | June 12, 2028 | CAD$ 4.276 | 275,000 | | **Total** | | | **10,214,085** | - The weighted average remaining contractual life of warrants outstanding as of June 30, 2025, was **4.60 years**[51](index=51&type=chunk) - On August 7, 2024, the exercise price of certain warrants was amended, and warrant agreements were further amended to remove cashless exercise features and anti-dilution clauses, allowing for equity classification[45](index=45&type=chunk) [Warrant Derivative Liability](index=15&type=section&id=Warrant%20Derivative%20Liability) Warrant Derivative Liability | As at | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Balance at period end | $2,220,610 | $2,198,121 | | Change in fair value of warrants outstanding | $22,489 | $(1,842,618) | - Warrants denominated in a foreign currency or containing clauses that do not meet the fixed-for-fixed test are recorded as a financial liability and revalued quarterly to fair market value, with changes recorded in profit or loss[44](index=44&type=chunk) - The fair value of the warrant derivative liability is calculated using the Black-Scholes Option Pricing Model, with expected volatility being a key unobservable input[46](index=46&type=chunk)[72](index=72&type=chunk) [13. SEGMENTED INFORMATION](index=17&type=section&id=13.%20SEGMENTED%20INFORMATION) The company operates in two reportable segments: Drones and Corporate, and for the six months ended June 30, 2025, the Drones segment generated all of the company's $3.66 million in revenue, while both segments contributed to the overall net loss of $8.19 million - The Company operates in two reportable segments: Drones and Corporate, with the Drones segment deriving revenue from the sale of unmanned aerial vehicles (UAV) products and services[52](index=52&type=chunk) Revenue by Segment (Six Months Ended June 30, 2025) | Segment | Sales of goods | Provision of services | Total revenue | | :------ | :------------- | :-------------------- | :------------ | | Drones | $3,443,396 | $219,574 | $3,662,970 | | Corporate | $0 | $0 | $0 | | **Total** | **$3,443,396** | **$219,574** | **$3,662,970** | Net Loss by Segment (Six Months Ended June 30, 2025) | Segment | Net loss for the period | | :-------- | :---------------------- | | Drones | $4,465,109 | | Corporate | $3,721,877 | | **Total** | **$8,186,986** | Geographic Revenue (Six Months Ended June 30) | Country | 2025 | 2024 | | :------------ | :----------- | :----------- | | Canada | $3,655,834 | $3,053,493 | | United States | $7,136 | $9,078 | | **Total** | **$3,662,970** | **$3,062,571** | [14. OFFICE AND MISCELLANEOUS](index=18&type=section&id=14.%20OFFICE%20AND%20MISCELLANEOUS) Office and miscellaneous expenses for the six months ended June 30, 2025, increased significantly to $1,879,161 from $1,003,253 in the prior year, primarily driven by increases in advertising, marketing, investor relations, compliance fees, and general office expenses Office and Miscellaneous Expenses (Six Months Ended June 30) | Expense Category | 2025 | 2024 | Change (YoY) | | :----------------------------------- | :----------- | :----------- | :----------- | | Advertising, Marketing, and Investor Relations | $546,366 | $342,758 | +59.41% | | Compliance fees | $298,953 | $138,999 | +115.10% | | Business development | $292,558 | $132,593 | +120.65% | | General freight | $196,741 | $45,592 | +331.54% | | General office | $544,543 | $343,311 | +58.61% | | **Total** | **$1,879,161** | **$1,003,253** | **+87.31%** | [15. OTHER EXPENSE](index=20&type=section&id=15.%20OTHER%20EXPENSE) Other expenses for the six months ended June 30, 2025, decreased significantly to $67,794 from $1,139,888 in the prior year, mainly due to the absence of share issue costs which were a major component in 2024 Other Expense (Six Months Ended June 30) | Expense Category | 2025 | 2024 | Change (YoY) | | :----------------------------- | :----------- | :----------- | :----------- | | Share issue costs | $0 | $1,194,450 | -100.00% | | Write off of accounts (payable) receivable | $71,614 | $(48,833) | N/A | | Other | $(3,820) | $(5,729) | -33.33% | | **Total** | **$67,794** | **$1,139,888** | **-94.05%** | [16. RELATED PARTY TRANSACTIONS](index=20&type=section&id=16.%20RELATED%20PARTY%20TRANSACTIONS) The company engaged in various related party transactions, including business services and executive consulting agreements with companies controlled by or having material interest from the CEO and a director, with total key management compensation for the six months ended June 30, 2025, increasing to $1,126,657 from $817,347 in the prior year - The Company incurred fees of **$165,345** for business services from Business Instincts Group (BIG), a company in which the CEO has a material interest, for the six months ended June 30, 2025[58](index=58&type=chunk) - Fees for executive consulting services from a company controlled by the CEO amounted to **$414,419** for the six months ended June 30, 2025[59](index=59&type=chunk) Key Management Compensation (Six Months Ended June 30) | Compensation Type | 2025 | 2024 | Change (YoY) | | :-------------------- | :----------- | :----------- | :----------- | | Director fees | $271,838 | $243,900 | +11.45% | | Salaries | $455,256 | $269,586 | +68.88% | | Share-based payments | $399,563 | $303,861 | +31.50% | | **Total** | **$1,126,657** | **$817,347** | **+37.00%** | [17. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT](index=21&type=section&id=17.%20FINANCIAL%20INSTRUMENTS%20AND%20FINANCIAL%20RISK%20MANAGEMENT) The company is exposed to credit risk on its cash and receivables, managed by using high credit quality financial institutions and direct customer analysis for expected credit losses, and fair values of financial assets and liabilities are categorized into a three-level hierarchy, with derivative liabilities measured using Level 3 techniques (Black-Scholes Option Pricing Model) - Credit risk on cash is managed by using major banks that are high credit quality financial institutions, and for receivables, the Company assesses collectability on an individual basis and applies a direct customer analysis approach to measure expected credit losses[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) - Fair values are categorized into a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[68](index=68&type=chunk)[69](index=69&type=chunk) Fair Value Hierarchy of Financial Assets and Liabilities | June 30, 2025 | Level 1 | Level 3 | Total | | :-------------------------- | :-------- | :---------- | :---------- | | Equity securities in investee companies | $28,571 | $0 | $28,571 | | Derivative liability | $0 | $(2,220,610) | $(2,220,610) | | **Total** | **$28,571** | **$(2,220,610)** | **$(2,192,039)** | | December 31, 2024 | Level 1 | Level 3 | Total | | :-------------------------- | :-------- | :---------- | :---------- | | Equity securities in investee companies | $14,286 | $0 | $14,286 | | Derivative liability | $0 | $(2,198,121) | $(2,198,121) | | **Total** | **$14,286** | **$(2,198,121)** | **$(2,183,835)** | - The fair value of the warrant derivative liability (Level 3) is calculated using the Black-Scholes Option Pricing Model, with expected volatility being a significant unobservable input[72](index=72&type=chunk) [18. SUBSEQUENT EVENTS](index=22&type=section&id=18.%20SUBSEQUENT%20EVENTS) Subsequent to June 30, 2025, the company closed a financing round on July 21, 2025, raising CAD$34.28 million (US$25.00 million) gross proceeds through the issuance of 4,672,895 units (common share + warrant), and additionally, 3,168,463 warrants and 388,334 broker warrants were exercised, generating total proceeds of CAD$16.25 million - On July 21, 2025, the Company closed a financing of **4,672,895 units** (consisting of one common share and one warrant) for gross proceeds of **CAD$34,279,247 (US$24,999,998)**[73](index=73&type=chunk) Warrants and Broker Warrants Exercised (Subsequent to June 30, 2025) | Type | Number Exercised | Proceeds (CAD$) | | :------------------ | :--------------- | :-------------- | | Warrants | 3,168,463 | $14,580,351 | | Broker Warrants | 388,334 | $1,668,087 | | **Total Exercises** | **3,556,797** | **$16,248,438** |