[Form 8-K Current Report](index=1&type=section&id=Form%208-K) [Results of Operation and Financial Condition](index=2&type=section&id=Item%202.02%20Results%20of%20Operation%20and%20Financial%20Condition) AST SpaceMobile provided supplementary disclosures on July 24, 2025, including preliminary financial information and an ATM program update, related to proposed convertible notes and common stock offerings - The company announced a proposed offering of convertible senior notes due 2032 (the "New Notes Offering") and a registered direct offering of its Class A common stock[6](index=6&type=chunk) - The disclosures in this section are intended to supplement and update information from prior SEC filings[6](index=6&type=chunk) [Liquidity Update](index=2&type=section&id=Liquidity%20Update) As of June 30, 2025, the company reported preliminary cash of **$939.4 million** and total consolidated debt of **$278.6 million**, subject to finalization Preliminary Financial Position as of June 30, 2025 | Metric | Amount (Approx. in USD) | | :--- | :--- | | Total Cash, Cash Equivalents, and Restricted Cash | $939.4 million | | Total Consolidated Indebtedness | $278.6 million | | - Existing Convertible Notes (Principal) | $235.0 million | | - Senior Secured Indebtedness | $43.6 million | - The provided financial information is a preliminary estimate and has not been audited, reviewed, or compiled by independent auditors; the final figures may change[7](index=7&type=chunk) [ATM Program Update](index=2&type=section&id=ATM%20Update) The company terminated its 2025 ATM program on July 23, 2025, having sold approximately **13.6 million shares** for **$488.7 million** in net proceeds - The 2025 ATM Program was terminated on July 23, 2025, after having utilized virtually its entire **$500.0 million** capacity[8](index=8&type=chunk) 2025 ATM Program Results (as of July 16, 2025) | Metric | Value | | :--- | :--- | | Shares Sold | ~13.6 million | | Aggregate Net Proceeds | $488.7 million | [Other Events](index=3&type=section&id=Item%208.01%20Other%20Events) On July 24, 2025, the company announced a proposed **$500.0 million** private offering of convertible notes and a registered direct stock offering to fund a **$135.0 million** note repurchase - Announced a proposed private offering of **$500.0 million** of Convertible Senior Notes due 2032 to qualified institutional buyers[10](index=10&type=chunk)[12](index=12&type=chunk) - Announced a proposed registered direct offering of Class A common stock to fund a concurrent repurchase of up to **$135.0 million** of its Existing Convertible Notes[10](index=10&type=chunk)[12](index=12&type=chunk) [Financial Statements and Exhibits](index=3&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits) This section lists the exhibits filed with the Form 8-K, including press releases on proposed financing activities and the interactive data file Exhibits Filed | Exhibit No. | Description | | :--- | :--- | | 99.1 | Press release on the proposed private offering of $500.0 million of Convertible Senior Notes due 2032 | | 99.2 | Press release on the proposed repurchase of up to $135.0 million of convertible notes funded by a concurrent registered direct offering of Class A common stock | | 104 | Cover Page Interactive Data File |

[Equity Purchase Agreement Overview](index=1&type=section&id=Equity%20Purchase%20Agreement) This section provides a high-level overview of the Equity Purchase Agreement, identifying the parties involved and the core purpose of the transaction [Parties to the Agreement](index=1&type=section&id=Parties%20to%20the%20Agreement) This section identifies the Purchaser, Parent, and the specific Acquired Companies involved in the Equity Purchase Agreement, dated July 23, 2025 - The agreement outlines the sale of all equity interests in the Acquired Companies from the Parent to the Purchaser[8](index=8&type=chunk)[10](index=10&type=chunk) - Key parties involved are: - **Purchaser:** Project Labrador Holdco, LLC - **Parent (Seller):** Bakkt Opco Holdings, LLC - **Acquired Companies:** Bridge2 Solutions, LLC; B2S Resale, LLC; Aspire Loyalty Travel Solutions, LLC; Bridge2 Solutions Canada Ltd[2](index=2&type=chunk)[8](index=8&type=chunk) [Article I: Certain Definitions](index=5&type=section&id=ARTICLE%20I.%20CERTAIN%20DEFINITIONS) This article defines key financial, legal, and operational terms such as Purchase Price, Escrow Amount, Working Capital, and Material Adverse Effect to ensure clarity throughout the agreement Key Financial Definitions | Term | Definition | Source Chunk | | :--- | :--- | :--- | | **Purchase Price** | An amount of cash equal to $1.00 | [62] | | **Escrow Amount** | The sum of the Indemnity Escrow Amount ($1,000,000) and the Adjustment Escrow Amount ($1,500,000), totaling $2,500,000 | [28, 38, 17] | | **Adjustment Escrow Amount** | $1,500,000, held to secure post-closing working capital and indebtedness adjustments | [17] | | **Indemnity Escrow Amount** | $1,000,000, held to secure indemnification claims by the Purchaser | [38] | | **Target Working Capital** | Defined as $0 | [63] | - An "Acquired Companies Material Adverse Effect" is defined as an event having a material adverse effect on the business, results, or financial condition of the Acquired Companies, but excludes a comprehensive list of general economic, market, or political changes, unless they have a disproportionate impact[14](index=14&type=chunk) [Article II: The Transaction](index=18&type=section&id=ARTICLE%20II.%20THE%20TRANSACTION) This article details the acquisition mechanics, including the purchase and sale of Equity Interests, closing procedures, escrow account establishment, and payment and tax withholding protocols - At the closing, the Purchaser will buy all Equity Interests from the Parent in exchange for the Total Consideration, which is the Purchase Price of **$1.00** subject to post-closing adjustments[78](index=78&type=chunk)[66](index=66&type=chunk) - The Parent is required to deposit the Escrow Amount (**$2,500,000**) into an Escrow Account at closing, divided into an Indemnity Escrow and an Adjustment Escrow, securing potential indemnification claims and post-closing financial adjustments[80](index=80&type=chunk)[83](index=83&type=chunk) - At least three business days before closing, the Parent must provide a statement with good faith estimates of Working Capital and Indebtedness to calculate the initial Purchase Price[79](index=79&type=chunk) - The agreement grants the Purchaser and Acquired Companies the right to withhold taxes from payments as required by law, with a provision to notify the Parent five business days prior to withholding[82](index=82&type=chunk) [Article III: Post-Closing Adjustments](index=20&type=section&id=ARTICLE%20III.%20POST-CLOSING%20ADJUSTMENTS) This article details the post-closing purchase price adjustment process, including the determination of final Working Capital and Indebtedness, dispute resolution, and subsequent payments to or from the escrow account - Within **60 days** after closing, the Purchaser must prepare and deliver a Closing Date Balance Sheet to determine the Final Working Capital and Final Indebtedness[85](index=85&type=chunk) - The Parent has a **30-day** "Working Capital Dispute Period" to review and dispute the Purchaser's calculations, with unresolved disputes settled by an independent "Arbitrating Accountant" (Grant Thornton LLP)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) - Final adjustments are made based on determined Final Working Capital and Final Indebtedness, resulting in payments from the Adjustment Escrow Amount to the Purchaser for deficits/surpluses or from the Purchaser to the Parent for surpluses/deficits[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk) - A TTM (Trailing Twelve Month) Working Capital Report will be prepared one year post-closing to calculate any TTM Working Capital Surplus, which would result in a payment from the Purchaser to the Parent[87](index=87&type=chunk)[93](index=93&type=chunk) [Article IV: Representations and Warranties of the Acquired Companies](index=23&type=section&id=ARTICLE%20IV.%20REPRESENTATIONS%20AND%20WARRANTIES%20OF%20THE%20ACQUIRED%20COMPANIES) This article details the Acquired Companies' representations and warranties concerning corporate organization, financial statements, taxes, intellectual property, and compliance, serving as a baseline for due diligence and potential indemnification claims - The Acquired Companies represent that their financial statements are derived from the books of the Public Parent (Bakkt Holdings, Inc.), prepared in accordance with GAAP, and fairly present their financial position as of March 31, 2025[103](index=103&type=chunk)[104](index=104&type=chunk) - Extensive representations are made regarding tax matters, including timely filing of returns, payment of taxes, absence of audits, and proper classification for tax purposes (e.g., Bridge2 Company and Aspire Company as disregarded entities)[110](index=110&type=chunk)[112](index=112&type=chunk)[119](index=119&type=chunk) - The article warrants that the Acquired Companies' Intellectual Property, combined with licensed IP and services under the Transition Services Agreement, is sufficient to operate the Business as it was prior to closing[173](index=173&type=chunk)[195](index=195&type=chunk) - The Acquired Companies disclaim all other warranties not explicitly stated in this article, including any projections or estimates about future performance[197](index=197&type=chunk) [Article V: Representations and Warranties of the Parent](index=44&type=section&id=ARTICLE%20V.%20REPRESENTATIONS%20AND%20WARRANTIES%20OF%20THE%20PARENT) This article outlines the Parent's representations and warranties regarding its legal status, authority to execute the agreement, and clear ownership of the equity interests being transferred - The Parent warrants that it is a duly organized and validly existing limited liability company under Delaware law with the full authority to execute the agreement[199](index=199&type=chunk)[200](index=200&type=chunk) - The Parent represents that it holds **100%** of the issued and outstanding Equity Interests of the Acquired Companies and will transfer good and marketable title to the Purchaser, free of any encumbrances[203](index=203&type=chunk) - The Parent confirms that it has not employed any broker or financial advisor for which the Purchaser or Acquired Entities could become liable for fees[205](index=205&type=chunk) - Similar to the Acquired Companies, the Parent explicitly disclaims any representations or warranties not set forth in this article[208](index=208&type=chunk) [Article VI: Representations and Warranties of Purchaser](index=46&type=section&id=ARTICLE%20VI.%20REPRESENTATIONS%20AND%20WARRANTIES%20OF%20PURCHASER) This article outlines the Purchaser's representations and warranties concerning its legal standing, authority to complete the transaction, financial capability, and investment intent - The Purchaser represents it is a duly organized Delaware LLC with full power and authority to execute the agreement and consummate the transaction[209](index=209&type=chunk)[210](index=210&type=chunk) - The Purchaser warrants that at closing, it will have at least **$15,000,000** in available financing to support the purchase card credit limit under the Outpayce Agreement, pay the Purchase Price, and fund the business for at least **12 months** post-closing[215](index=215&type=chunk) - The Purchaser confirms it is acquiring the Equity Interests for its own investment purposes and not for distribution or resale[217](index=217&type=chunk) - The Purchaser acknowledges that it has conducted its own independent investigation and is relying solely on the representations and warranties expressly set forth in Articles IV and V of the agreement[219](index=219&type=chunk) [Article VII: Covenants](index=49&type=section&id=ARTICLE%20VII.%20COVENANTS) This article details the binding covenants governing the parties' actions before and after closing, including business conduct, tax matters, employee issues, confidentiality, and non-solicitation of alternative transactions - **Conduct of Business:** From the agreement date until closing, the Parent must cause the Acquired Entities to operate in the ordinary course of business and not take certain actions (e.g., amend organizational documents, issue equity, make material changes) without the Purchaser's consent[248](index=248&type=chunk)[249](index=249&type=chunk) - **Tax Matters:** The article specifies how pre-closing tax returns will be handled, allocates responsibility for transfer taxes (**50%** Parent, **50%** Purchaser), and outlines procedures for tax contests and the allocation of the purchase price for tax purposes[235](index=235&type=chunk)[240](index=240&type=chunk)[243](index=243&type=chunk) - **Employee Matters:** Establishes non-solicitation covenants for **one year** post-closing, where neither party will solicit certain employees from the other, and obligates the Purchaser to make employment offers to specified "Available Employees"[228](index=228&type=chunk)[229](index=229&type=chunk) - **No Solicitation:** The Parent agrees not to solicit, negotiate, or entertain any alternative acquisition proposals for the Acquired Entities until the closing or termination of this agreement[259](index=259&type=chunk) [Article VIII: Conditions to the Purchase and Sale](index=60&type=section&id=ARTICLE%20VIII.%20CONDITIONS%20TO%20THE%20PURCHASE%20AND%20SALE) This article outlines the specific conditions that must be satisfied or waived by both the Purchaser and Parent before the transaction can be completed, with failure potentially leading to termination - **Conditions to Purchaser's Obligation:** Key conditions include the accuracy of the Seller's representations and warranties, performance of covenants, execution of the Pre-Closing Assignment, and delivery of various documents like the Escrow and Transition Services Agreements[262](index=262&type=chunk) - A critical financial condition for the Purchaser is that the Cash on Hand of the Acquired Companies at closing must be no less than **$11,000,000**, plus adjustments for Estimated Working Capital and Estimated Indebtedness[263](index=263&type=chunk) - A significant condition for the Purchaser is that at least **80%** of a specified group of "Available Employees" must accept their employment offers[262](index=262&type=chunk)[263](index=263&type=chunk) - **Conditions to Parent's Obligation:** Key conditions for the Parent include the accuracy of the Purchaser's representations, Purchaser's performance of its covenants, and delivery of executed documents such as the Escrow Agreement, Transition Services Agreement, and the Braintree Note[265](index=265&type=chunk)[266](index=266&type=chunk) [Article IX: Survival; Indemnification](index=63&type=section&id=ARTICLE%20IX.%20SURVIVAL%3B%20INDEMNIFICATION) This article defines post-closing remedies for breaches, establishing survival periods for representations and warranties, outlining indemnification obligations, procedures for claims, and crucial limitations like deductibles and caps - **Survival Periods:** General representations and warranties survive for **one year** post-closing, while "Fundamental Representations" (e.g., organization, capitalization, authority) survive until the statute of limitations expires plus **60 days**[268](index=268&type=chunk) - **Indemnification by Parent:** The Parent agrees to indemnify the Purchaser for losses arising from breaches of representations/warranties, breaches of covenants, all "Indemnified Taxes," and claims related to Transaction Expenses or pre-closing Indebtedness[269](index=269&type=chunk) Limitations on Parent's Indemnification for General Representations | Limitation | Amount | Description | | :--- | :--- | :--- | | **De Minimis Threshold** | $15,000 | A single claim must exceed this amount to be considered | | **Aggregate Deductible** | $60,000 | The total of all qualifying claims must exceed this amount before any indemnification is paid Once met, payment is from the first dollar | | **Indemnification Cap** | $1,000,000 | The maximum aggregate amount the Parent will pay for breaches of general representations | - **Exclusive Remedy:** Except in cases of Fraud or for seeking equitable relief (like specific performance), the indemnification process outlined in this article is the sole and exclusive remedy for any breaches of the agreement after closing[285](index=285&type=chunk)[286](index=286&type=chunk) [Article X: Termination](index=68&type=section&id=ARTICLE%20X.%20TERMINATION) This article specifies the conditions under which the Equity Purchase Agreement can be terminated by either party before closing, outlining the consequences and surviving obligations - The agreement can be terminated by: - Mutual written consent of all parties - Either party if a final, non-appealable court order prohibits the transaction - The Parent if the Purchaser commits a material breach and fails to begin curing it within **20 days** - The Purchaser if the Acquired Companies commit a material breach and fails to begin curing it within **20 days**[288](index=288&type=chunk) - If the agreement is terminated, it becomes void with no further liability, except for certain surviving provisions (like confidentiality) and liability for any fraud or willful and material breach that occurred prior to termination[289](index=289&type=chunk) [Article XI: General Provisions](index=69&type=section&id=ARTICLE%20XI.%20GENERAL%20PROVISIONS) This article contains standard legal clauses governing the agreement's interpretation and enforcement, covering notices, governing law, dispute jurisdiction, jury trial waiver, fees, and legal representation - **Governing Law and Jurisdiction:** The agreement is governed by the laws of the State of Delaware, and the parties submit to the exclusive jurisdiction of the Court of Chancery of the State of Delaware for any disputes[303](index=303&type=chunk)[304](index=304&type=chunk) - **Fees and Expenses:** Generally, each party pays its own costs, but upon closing or termination (unless due to Purchaser's breach), the Parent agrees to pay the Purchaser's counsel fees up to an aggregate amount of **$600,000**[298](index=298&type=chunk) - **Waiver of Jury Trial:** All parties irrevocably waive their right to a trial by jury for any controversy arising under the agreement[305](index=305&type=chunk) - **Legal Representation:** The agreement acknowledges that Wilson Sonsini Goodrich & Rosati, P.C. represented the Parent and Acquired Companies, with the Purchaser waiving conflict of interest and agreeing that attorney-client privilege for pre-closing communications belongs to the Parent[311](index=311&type=chunk)[312](index=312&type=chunk) [Exhibits](index=77&type=section&id=Exhibits) This section includes ancillary documents such as the Braintree Note, Escrow Agreement, and Transition Services Agreement, which are integral to the overall transaction - **Exhibit A - Braintree Note:** This is the form of a promissory note from the Issuer (Project Labrador Holdco, LLC) to the Seller (Bakkt Opco Holdings, LLC), related to the Braintree Loan Amount and specifying terms of payment, interest, and subordination to senior debt[322](index=322&type=chunk)[324](index=324&type=chunk)[325](index=325&type=chunk) - **Exhibit B - Escrow Agreement:** This agreement details the terms under which Acquiom Clearinghouse LLC will act as the Escrow Agent, holding the Escrow Funds and disbursing them according to joint instructions from the Purchaser and Parent or as otherwise specified[340](index=340&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk) - **Exhibit C - Transition Services Agreement (TSA):** This agreement outlines the services that the Seller will provide to the Purchaser (and vice-versa) for a transitional period post-closing to ensure business continuity, covering scope, compensation, performance standards, and term (an initial **ten months**, with a possible **three-month** extension)[368](index=368&type=chunk)[370](index=370&type=chunk)[412](index=412&type=chunk)

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) This section presents the company's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including statements of operations, comprehensive loss, balance sheets, cash flows, and changes in equity, along with detailed notes on accounting policies, discontinued operations, debt, and other financial disclosures [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net loss significantly increased due to discontinued operations and a transaction breakage fee, despite a slight rise in net revenue Condensed Consolidated Statements of Operations (Three and Six Months Ended June 30, in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net revenue | $681,917 | $660,401 | $1,355,801 | $1,298,244 | | Operating (loss) income | $(39,710) | $16,922 | $(19,919) | $23,892 | | Loss from continuing operations, net of tax | $(83,822) | $(6,742) | $(87,632) | $(20,135) | | Loss from discontinued operations, net of tax | $(785,236) | $(25,171) | $(806,408) | $(33,664) | | Net loss | $(869,058) | $(31,913) | $(894,040) | $(53,799) | | Basic loss per common share (Net loss) | $(11.30) | $(0.42) | $(11.60) | $(0.70) | - The significant increase in net loss for both periods was primarily driven by a substantial loss from discontinued operations and an **$80 million transaction breakage fee**[11](index=11&type=chunk)[63](index=63&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Comprehensive loss substantially increased, driven by higher net loss, partially offset by positive currency translation adjustments Condensed Consolidated Statements of Comprehensive Loss (Three and Six Months Ended June 30, in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(869,058) | $(31,913) | $(894,040) | $(53,799) | | Currency translation adjustments | $14,773 | $(5,302) | $20,730 | $(18,568) | | Total other comprehensive income (loss), net of tax | $13,992 | $(5,307) | $19,125 | $(16,926) | | Comprehensive loss | $(855,066) | $(37,220) | $(874,915) | $(70,725) | - Comprehensive loss significantly increased for both periods, primarily reflecting the higher net loss, partially offset by positive currency translation adjustments in 2025[13](index=13&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased while liabilities increased, leading to a shift from positive equity to a deficit position Condensed Consolidated Balance Sheets (as of June 30, 2025 and December 31, 2024, in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total current assets | $2,298,513 | $2,021,017 | | Total assets | $4,154,545 | $4,656,156 | | Total current liabilities | $2,674,523 | $1,852,052 | | Total liabilities | $4,435,555 | $4,069,792 | | Total (deficit) equity | $(281,010) | $586,364 | - Total assets decreased, driven by the reclassification of noncurrent assets held for sale to current assets held for sale, while total liabilities increased, resulting in a shift from positive equity to a **deficit**[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly declined due to net loss, goodwill impairment, and a loss on classification to held for sale Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Cash provided by operating activities | $2,544 | $63,187 | | Cash used for investing activities | $(101,117) | $(37,040) | | Cash provided by (used for) financing activities | $124,477 | $(24,920) | | Net increase in cash, cash equivalents and restricted cash | $27,705 | $545 | - Operating cash flow significantly decreased in 2025, impacted by the net loss, **goodwill impairment charge of $106.4 million**, and a **loss on classification to held for sale of $649.1 million**[18](index=18&type=chunk) [Condensed Consolidated Statements of Changes in Equity (Deficit)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity%20(Deficit)) Total equity transitioned from a positive balance to a significant deficit, primarily due to the period's substantial net loss Condensed Consolidated Statements of Changes in Equity (Deficit) (as of June 30, 2025, in thousands) | Metric | December 31, 2024 | March 31, 2025 | June 30, 2025 | | :-------------------- | :---------------- | :------------- | :------------ | | Total Equity (Deficit) | $586,364 | $570,979 | $(281,010) | - The company's total equity shifted from a positive balance to a significant deficit by June 30, 2025, primarily due to the substantial net loss incurred during the period[19](index=19&type=chunk) - Shares repurchased and retired totaled **826 thousand** for **$6.7 million** during the six months ended June 30, 2025[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies, significant financial events, and segment information [Note 1—Summary of Significant Accounting Policies](index=10&type=section&id=Note%201%E2%80%94Summary%20of%20Significant%20Accounting%20Policies) This note details the company's accounting principles, including the reclassification of the P&HS segment as discontinued operations, correction of a prior period accounting error, and policies for revenue recognition, goodwill, and intangible assets - The P&HS segment has been classified as discontinued operations and held for sale as of June 30, 2025, with its financial results excluded from continuing operations[25](index=25&type=chunk) - A prior period accounting error related to over accrual of accounts payable was corrected, increasing retained earnings and total equity by **$21 million** as of December 31, 2023[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - An **$80 million cash payment** was incurred for the termination of the Rotech Healthcare Holdings Inc. acquisition during the three and six months ended June 30, 2025[63](index=63&type=chunk) [Note 2—Significant Concentration Risks](index=20&type=section&id=Note%202%E2%80%94Significant%20Concentration%20Risks) The company has significant revenue concentration with its two largest commercial payors and government programs, and supplier concentration with three key suppliers Revenue and Supplier Concentration (Six Months Ended June 30, 2025) | Category | Percentage of Net Revenue/Purchases | | :------- | :---------------------------------- | | Two largest commercial payors | 24% and 14% of net revenue | | Medicare and state Medicaid programs | ~19% of net revenue | | Three largest suppliers | ~46% of patient service equipment and supplies purchases | [Note 3—Discontinued Operations and Assets Held-for-Sale](index=20&type=section&id=Note%203%E2%80%94Discontinued%20Operations%20and%20Assets%20Held-for-Sale) The P&HS segment was classified as discontinued operations and held for sale as of June 30, 2025, leading to a $649 million loss on classification and a full impairment of its $106 million goodwill - The P&HS segment was classified as discontinued operations and assets held for sale as of June 30, 2025[66](index=66&type=chunk)[68](index=68&type=chunk) - A **loss of $649 million** was recognized in connection with the classification of assets and liabilities as held-for-sale, based on estimated fair value less costs to sell[70](index=70&type=chunk) - The remaining P&HS goodwill balance of **$106 million** was fully impaired as of June 30, 2025[70](index=70&type=chunk) Financial Results of Discontinued Operations (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :-------------------- | :------------ | :------------ | | Net revenue | $3,937,974 | $3,985,442 | | Loss from discontinued operations, net of taxes | $(806,408) | $(33,664) | [Note 4—Patient Service Equipment and Other Fixed Assets, Net](index=26&type=section&id=Note%204%E2%80%94Patient%20Service%20Equipment%20and%20Other%20Fixed%20Assets,%20Net) Patient service equipment and other fixed assets, net, increased to $259,301k at June 30, 2025, primarily due to an increase in patient service equipment Patient Service Equipment and Other Fixed Assets, Net (in thousands) | Asset Category | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Patient service equipment, gross | $411,769 | $388,445 | | Patient service equipment and other fixed assets, net | $259,301 | $249,283 | [Note 5—Goodwill and Intangible Assets, Net](index=26&type=section&id=Note%205%E2%80%94Goodwill%20and%20Intangible%20Assets,%20Net) Goodwill remained at $1.2 billion, while intangible assets, net, decreased due to amortization and a modified useful life for an asset following a contract termination - Goodwill was **$1.2 billion** (net of **$307 million** accumulated impairment) at June 30, 2025 and December 31, 2024[80](index=80&type=chunk) Intangible Assets, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Intangible assets, net | $194,924 | $210,056 | - Amortization expense for intangible assets was **$15 million** for the six months ended June 30, 2025, down from **$24 million** in the prior year[80](index=80&type=chunk) - The remaining useful life for an intangible asset was modified due to a commercial Payor contract termination[81](index=81&type=chunk) [Note 6—Leases](index=27&type=section&id=Note%206%E2%80%94Leases) Total lease cost decreased for the six months ended June 30, 2025, with a slight reduction in operating lease assets and liabilities, and a shorter weighted average remaining lease term Lease Costs and Balances (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :----------------------------- | :----------------------------- | | Total lease cost | $41,170 | $45,477 | | Operating lease assets (June 30, 2025) | $120,188 | $126,928 (Dec 31, 2024) | | Total operating lease liabilities (June 30, 2025) | $124,686 | $130,683 (Dec 31, 2024) | - The weighted average remaining lease term for operating leases decreased to **3.6 years** from **3.9 years**[84](index=84&type=chunk) - The weighted average discount rate for operating leases increased to **6.5%** from **6.3%**[84](index=84&type=chunk) [Note 7—Exit and Realignment Charges, Net](index=29&type=section&id=Note%207%E2%80%94Exit%20and%20Realignment%20Charges,%20Net) Exit and realignment charges, net, decreased significantly for the six months ended June 30, 2025, primarily due to lower professional fees for strategic initiatives and wind-down costs for Fusion5 Exit and Realignment Charges, Net (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :----------------------------- | :----------------------------- | | Exit and realignment charges, net | $16,166 | $23,547 | - Charges for 2025 primarily included **$8.1 million** in professional fees for strategic initiatives and **$6.8 million** related to Fusion5 wind-down costs[86](index=86&type=chunk) - Accrued exit and realignment costs decreased to **$1.7 million** at June 30, 2025, from **$6.7 million** at December 31, 2024[87](index=87&type=chunk) [Note 8—Debt](index=30&type=section&id=Note%208%E2%80%94Debt) Total debt increased to $1.98 billion at June 30, 2025, driven by increased Revolving Credit Facility borrowings, with a significant portion of debt reclassified to current maturities due to anticipated repayment from the P&HS segment sale Total Debt (Carrying Amount, in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Total debt | $1,977,745 | $1,841,259 | | Current portion of long-term debt | $383,000 | $42,866 | - Outstanding borrowings on the Revolving Credit Agreement were **$135 million** at June 30, 2025, compared to undrawn at December 31, 2024[94](index=94&type=chunk) - The company was in compliance with all debt covenants at June 30, 2025[95](index=95&type=chunk) - Current maturities include **$383 million** in debt anticipated to be repaid within the next twelve months from expected P&HS segment sale proceeds[97](index=97&type=chunk) [Note 9—Share-Based Compensation](index=33&type=section&id=Note%209%E2%80%94Share-Based%20Compensation) Share-based compensation expense increased to $9.3 million for the six months ended June 30, 2025, with approximately 1.7 million common shares available for issuance under the Plan Share-Based Compensation Expense (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :----------------------------- | :----------------------------- | | Share-based compensation expense | $9,300 | $8,400 | - Approximately **1.7 million common shares** were available for issuance under the Plan at June 30, 2025[98](index=98&type=chunk) - Unrecognized compensation cost for nonvested RSAs was **$32 million** (expected over 2.2 years) and for nonvested PSAs was **$12 million** (primarily in 2025-2027)[100](index=100&type=chunk) [Note 10—Derivatives](index=34&type=section&id=Note%2010%E2%80%94Derivatives) The company uses interest rate swaps as cash flow hedges to manage interest rate risk, with a notional amount of $250 million outstanding at June 30, 2025 - Interest rate swaps are used as cash flow hedges to mitigate the risk of increases in benchmark rates on term loans[104](index=104&type=chunk) Interest Rate Swaps (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Notional Amount | $250,000 | $300,000 | | Derivative Assets (Fair Value) | $2,752 | $6,113 | - A **loss of $1.3 million** was recognized in Other Comprehensive Income (Loss) for interest rate swaps for the six months ended June 30, 2025[107](index=107&type=chunk) [Note 11—Income Taxes](index=35&type=section&id=Note%2011%E2%80%94Income%20Taxes) The effective tax rate decreased significantly to 3.0% for the six months ended June 30, 2025, primarily due to the tax treatment of the $80 million transaction breakage fee, leading to an increase in unrecognized tax benefits Income Tax Benefit and Effective Tax Rate (Six Months Ended June 30) | Metric | 2025 | 2024 | | :----- | :------------ | :------------ | | Income tax benefit | $(2,715) | $(8,671) | | Effective tax rate | 3.0% | 30.1% | - The change in effective tax rate was primarily due to the tax treatment associated with the **$80 million Rotech transaction breakage fee**[109](index=109&type=chunk) - The liability for unrecognized tax benefits increased to **$53 million** at June 30, 2025, from **$36 million** at December 31, 2024, largely due to the Rotech transaction breakage fee[110](index=110&type=chunk) - The company owed **$37 million**, including **$10 million** in interest, as of June 30, 2025, related to a final IRS assessment for 2015-2018 tax years[112](index=112&type=chunk) [Note 12—Net Loss per Common Share](index=37&type=section&id=Note%2012%E2%80%94Net%20Loss%20per%20Common%20Share) Basic and diluted net loss per common share significantly increased to $(11.60) for the six months ended June 30, 2025, primarily driven by the substantial loss from discontinued operations Net Loss per Common Share (Six Months Ended June 30) | Metric | 2025 | 2024 | | :----- | :------------ | :------------ | | Basic loss per common share (Net loss) | $(11.60) | $(0.70) | | Diluted loss per common share (Net loss) | $(11.60) | $(0.70) | - Loss from discontinued operations contributed **$(10.46)** to the basic loss per common share for the six months ended June 30, 2025[114](index=114&type=chunk) - Approximately **2.2 million share-based awards** were excluded from diluted EPS calculation as their effect would be anti-dilutive[116](index=116&type=chunk) [Note 13—Shareholders Equity](index=39&type=section&id=Note%2013%E2%80%94Shareholders%20Equity) The Board authorized a $100 million share repurchase program, under which the company repurchased approximately 0.8 million shares for $6.6 million during the six months ended June 30, 2025 - A share repurchase program of up to **$100 million** was authorized by the Board of Directors on February 26, 2025, over the next 24 months[117](index=117&type=chunk) - Approximately **0.8 million shares** of common stock were repurchased and retired for an aggregate of **$6.6 million** during the six months ended June 30, 2025[118](index=118&type=chunk) [Note 14—Accumulated Other Comprehensive (Loss) Income](index=39&type=section&id=Note%2014%E2%80%94Accumulated%20Other%20Comprehensive%20(Loss)%20Income) Accumulated other comprehensive loss improved to $(30,219)k at June 30, 2025, from $(49,344)k at December 31, 2024, primarily due to positive currency translation adjustments Accumulated Other Comprehensive (Loss) Income (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Accumulated other comprehensive (loss) income | $(30,219) | $(49,344) | - Currency translation adjustments contributed **$20.7 million** in income for the six months ended June 30, 2025, compared to a **loss of $18.6 million** in the prior year[120](index=120&type=chunk) [Note 15—Commitments, Contingent Liabilities, and Legal Proceedings](index=42&type=section&id=Note%2015%E2%80%94Commitments,%20Contingent%20Liabilities,%20and%20Legal%20Proceedings) The company terminated the Rotech Merger Agreement with an $80 million cash payment and maintains sufficient accruals for various ordinary legal claims - The Merger Agreement with Rotech was terminated on June 3, 2025, resulting in an **$80 million cash payment**[122](index=122&type=chunk) - Accruals for currently pending legal matters considered probable of loss are deemed sufficient[125](index=125&type=chunk) [Note 16—Segment Information](index=42&type=section&id=Note%2016%E2%80%94Segment%20Information) Following the reclassification of the P&HS segment as discontinued operations, the company now operates as a single operating and reporting segment - The company's business activities now comprise a single operating and reporting segment, with net income (loss) from continuing operations as the primary profitability measure[126](index=126&type=chunk) [Note 17—Recent Accounting Pronouncements](index=42&type=section&id=Note%2017%E2%80%94Recent%20Accounting%20Pronouncements) The company is assessing the impact of new ASUs on income tax and expense disclosures, expecting only disclosure impacts without affecting financial results or cash flows - ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) are expected to impact only disclosures, with no effect on results of operations, financial condition, or cash flows[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of the company's financial performance, including the impact of the P&HS segment sale, Rotech acquisition termination, and a commercial payor contract termination, detailing changes in revenue, costs, operating and non-operating expenses, income taxes, and liquidity, highlighting key drivers and future outlook [Overview](index=44&type=section&id=Overview) The company, now a single segment, experienced significant financial impacts from a transaction breakage fee and financing fees related to a terminated acquisition - The company is a leading provider of integrated equipment, supplies, and services for home-based care in the US, now operating as a single segment[131](index=131&type=chunk) Net Loss from Continuing Operations per Common Share | Period | 2025 | 2024 | | :----- | :------------ | :------------ | | Three months ended June 30 | $(1.09) | $(0.09) | | Six months ended June 30 | $(1.14) | $(0.26) | - Financial results were significantly impacted by an **$80 million transaction breakage fee** and **$18 million in transaction financing fees** related to the terminated Rotech acquisition[132](index=132&type=chunk)[133](index=133&type=chunk) [Contemplated Sale of Products & Healthcare Services Segment](index=44&type=section&id=Contemplated%20Sale%20of%20Products%20%26%20Healthcare%20Services%20Segment) The company is nearing the sale of its P&HS segment, which has been reclassified as discontinued operations and held for sale - The company is in the final stages of discussions for the contemplated sale of its P&HS segment, which has been classified as discontinued operations and held for sale as of June 30, 2025[135](index=135&type=chunk) [Termination of Acquisition of Rotech](index=44&type=section&id=Termination%20of%20Acquisition%20of%20Rotech) The Rotech acquisition merger agreement was mutually terminated, resulting in an $80 million cash payment - The Merger Agreement to acquire Rotech was mutually terminated on June 3, 2025, resulting in an **$80 million cash payment** to Rotech[136](index=136&type=chunk) [Notice of Contract Termination with a Commercial Payor](index=46&type=section&id=Notice%20of%20Contract%20Termination%20with%20a%20Commercial%20Payor) A commercial payor's contract termination, affecting 12% of net revenue, is expected to have a net neutral financial impact through 2025 - A commercial Payor intends to terminate certain contracts, which represented approximately **$160 million** or **12% of net revenue** and nearly all capitation revenue for the six months ended June 30, 2025[137](index=137&type=chunk) - Net neutral financial impacts are expected through the end of 2025, with transitions of agreements and services anticipated to start late in Q4 2025 and continue through H1 2026[137](index=137&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) This section analyzes the company's revenue, cost of revenue, operating expenses, non-operating expenses, income taxes, and Adjusted EBITDA [Net revenue](index=46&type=section&id=Net%20revenue) Net revenue increased by 3.3% for Q2 2025 and 4.4% for YTD 2025, driven by growth in sleep therapy, ostomy, and urology, despite headwinds in diabetes revenue Net Revenue by Product Category (in thousands) | Product Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Diabetes | $191,056 | $194,361 | $378,416 | $374,351 | | Sleep therapy | $181,622 | $170,237 | $363,481 | $342,274 | | Ostomy | $51,893 | $47,059 | $101,392 | $91,626 | | Urology | $28,696 | $25,645 | $56,839 | $50,634 | | Net revenue | $681,917 | $660,401 | $1,355,801 | $1,298,244 | - The increase in net revenue was driven by sales growth in **sleep therapy (+6.7% Q2, +6.2% YTD)**, **ostomy (+10.3% Q2, +10.7% YTD)**, and **urology (+11.9% Q2, +12.3% YTD)**[138](index=138&type=chunk)[139](index=139&type=chunk) - Diabetes revenue growth was hindered by market shifts into the pharmacy channel and modified customer ordering quantities due to supplier disruptions[139](index=139&type=chunk) [Cost of net revenue](index=46&type=section&id=Cost%20of%20net%20revenue) Cost of net revenue increased by 3.8% for Q2 2025 and 4.3% for YTD 2025, reflecting the higher costs associated with increased sales volume Cost of Net Revenue (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of products sold | $319,517 | $305,496 | $636,906 | $603,864 | | Cost of net revenue | $357,315 | $344,372 | $711,957 | $682,623 | - The increase in cost of net revenue was primarily due to the increased cost of products sold, reflecting higher sales volume[142](index=142&type=chunk) [Operating expenses](index=48&type=section&id=Operating%20expenses) Operating expenses were significantly impacted by an $80 million transaction breakage fee, SG&A expenses decreased due to efficiencies, while acquisition-related charges increased and exit and realignment charges decreased Operating Expenses (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Selling, general and administrative expenses | $267,853 | $269,919 | $530,223 | $540,132 | | Transaction breakage fee | $80,000 | — | $80,000 | — | | Acquisition-related charges and intangible amortization | $13,918 | $13,761 | $37,374 | $28,050 | | Exit and realignment charges, net | $2,541 | $15,427 | $16,166 | $23,547 | - SG&A expenses decreased due to operating efficiencies in revenue cycle and IT, and lower benefit costs, partially offset by inflationary increases[143](index=143&type=chunk) - Acquisition-related charges increased due to costs for the terminated Rotech acquisition, while intangible amortization decreased as certain assets were fully amortized in 2024[145](index=145&type=chunk) [Non-operating expenses](index=50&type=section&id=Non-operating%20expenses) Non-operating expenses included $18.3 million in transaction financing fees related to the terminated Rotech acquisition, while interest expense remained relatively stable Non-Operating Expenses (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest expense, net | $26,009 | $25,588 | $50,223 | $50,997 | | Transaction financing fees, net | $18,288 | — | $18,288 | — | - Transaction financing fees, net, of **$18.3 million** were incurred for debt financing associated with the terminated Rotech acquisition[148](index=148&type=chunk) - Interest expense, net, for the six months ended June 30, 2025, decreased due to a lower effective interest rate and average outstanding borrowings, partially offset by a decrease in interest income[147](index=147&type=chunk) [Income taxes](index=50&type=section&id=Income%20taxes) The income tax benefit decreased significantly, and the effective tax rate dropped to 3.0% for YTD 2025, primarily due to the tax treatment of the $80 million transaction breakage fee Income Tax Benefit and Effective Tax Rate | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax benefit | $(1,127) | $(2,740) | $(2,715) | $(8,671) | | Effective tax rate | 1.3% | 28.9% | 3.0% | 30.1% | - The change in tax rates was primarily driven by the tax treatment associated with the **$80 million transaction breakage fee**[150](index=150&type=chunk) [Adjusted EBITDA](index=50&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA increased for both Q2 and YTD 2025, reflecting adjustments for non-GAAP items such as the transaction breakage fee, acquisition-related charges, and exit and realignment charges Adjusted EBITDA (non-GAAP, in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Adjusted EBITDA | $96,635 | $91,080 | $192,653 | $160,300 | - Key exclusions from GAAP net loss to arrive at Adjusted EBITDA include the **$80 million transaction breakage fee**, acquisition-related charges, exit and realignment charges, and transaction financing fees[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=54&type=section&id=Financial%20Condition,%20Liquidity%20and%20Capital%20Resources) This section reviews the company's financial position, liquidity sources, capital expenditures, and capital structure [Financial condition](index=54&type=section&id=Financial%20condition) Cash and cash equivalents increased, while accounts receivable decreased and Days Sales Outstanding (DSO) improved, indicating better working capital management Key Financial Condition Metrics (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Cash and cash equivalents | $38,258 | $27,572 | | Accounts receivable | $196,379 | $218,270 | | DSO (days) | 26.2 | 28.9 | | Inventories | $69,227 | $67,581 | | Inventory days | 17.6 | 17.2 | - A hypothetical one-day increase (decrease) in DSO would result in a **$7.5 million decrease (increase)** in cash balances or an increase (decrease) in Revolving Credit Agreement borrowings[162](index=162&type=chunk) [Liquidity and capital expenditures](index=56&type=section&id=Liquidity%20and%20capital%20expenditures) Cash provided by operating activities significantly decreased for YTD 2025, impacted by the Rotech termination payment and financing fees, while cash used for investing activities increased due to higher capital expenditures Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | | :------- | :------------ | :------------ | | Operating activities | $2,544 | $63,187 | | Investing activities | $(101,117) | $(37,040) | | Financing activities | $124,477 | $(24,920) | - Operating cash flow in 2025 was impacted by an **$80 million Rotech termination payment**, **$18 million in transaction financing fees**, and a **$130 million benefit** from the Receivables Sale Program[165](index=165&type=chunk) - Capital expenditures increased to **$134 million** in YTD 2025 from **$95 million** in YTD 2024, primarily for patient service equipment and strategic initiatives[166](index=166&type=chunk) [Capital Resources](index=58&type=section&id=Capital%20Resources) The company's liquidity is supported by cash, the Receivables Sale Program, and the Revolving Credit Agreement, a $1.0 billion Senior Secured Notes offering for the Rotech acquisition was terminated and redeemed, and a $100 million share repurchase program is underway - Primary sources of liquidity include cash and cash equivalents, the Receivables Sale Program, and the Revolving Credit Agreement[170](index=170&type=chunk) - The Revolving Credit Agreement has a **$450 million capacity**, with **$135 million outstanding** and **$286 million available** for borrowing at June 30, 2025[172](index=172&type=chunk)[173](index=173&type=chunk) - A **$1.0 billion Senior Secured Notes offering**, initially for the Rotech acquisition, was completed but subsequently terminated and redeemed on June 10, 2025, following the merger agreement termination[175](index=175&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk) - The Board authorized a **$100 million share repurchase program**, under which approximately **0.8 million shares** were repurchased for **$6.6 million** during the six months ended June 30, 2025[179](index=179&type=chunk) [Contractual Obligations](index=60&type=section&id=Contractual%20Obligations) Material contractual obligations are referenced in the Annual Report on Form 10-K and Note 15 of this Quarterly Report - Material contractual obligations are disclosed in the Annual Report on Form 10-K for December 31, 2024, and Note 15 of this Quarterly Report[182](index=182&type=chunk) [Recent Accounting Pronouncements](index=60&type=section&id=Recent%20Accounting%20Pronouncements) Recent accounting pronouncements are detailed in the Annual Report on Form 10-K and Note 17 of this Quarterly Report - Recent accounting pronouncements are discussed in the Annual Report on Form 10-K for December 31, 2024, and Note 17 of this Quarterly Report[183](index=183&type=chunk) [Forward-looking Statements](index=60&type=section&id=Forward-looking%20Statements) Forward-looking statements are subject to known and unknown risks and uncertainties, and actual results may differ materially from projections - Forward-looking statements involve known and unknown risks and uncertainties, and actual results could differ materially from projections[184](index=184&type=chunk) - Key risks include the ability to complete the P&HS segment sale, competitive pressures, dependence on customers and suppliers, regulatory changes, and financing costs[186](index=186&type=chunk)[190](index=190&type=chunk) - The company does not undertake to update or revise any forward-looking statements, except as required by applicable law[187](index=187&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=64&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes in the company's quantitative and qualitative market risk disclosures since the Annual Report on Form 10-K for December 31, 2024 - No material changes in market risk disclosures were reported through June 30, 2025, compared to the Annual Report on Form 10-K for December 31, 2024[188](index=188&type=chunk) [Item 4. Controls and Procedures](index=64&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the period - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of June 30, 2025[189](index=189&type=chunk) - There was no change in internal control over financial reporting that materially affected, or is reasonably likely to materially affect, internal control over financial reporting during the period[189](index=189&type=chunk) [Part II. Other Information](index=66&type=section&id=Part%20II.%20Other%20Information) This section covers legal proceedings, risk factors, equity security sales, exhibits, and official signatures [Item 1. Legal Proceedings](index=66&type=section&id=Item%201.%20Legal%20Proceedings) No material developments in legal proceedings were reported through June 30, 2025, beyond those previously disclosed in the Annual Report on Form 10-K and Management's Discussion and Analysis - No material developments in legal proceedings were reported through June 30, 2025, other than those described in the Annual Report on Form 10-K and Management's Discussion and Analysis[191](index=191&type=chunk) [Item 1A. Risk Factors](index=66&type=section&id=Item%201A.%20Risk%20Factors) New and revised risk factors include the potential negative impact of a commercial payor contract termination, reduced reimbursement for non-invasive ventilation products by CMS, and various risks associated with the contemplated sale of the P&HS segment, such as business disruption and reduced diversification - A commercial Payor's notice of contract termination could negatively impact financial condition, as affected agreements represented approximately **12% of net revenue** for the six months ended June 30, 2025[193](index=193&type=chunk) - A June 2025 CMS determination may reduce reimbursement qualification for non-invasive ventilation products, potentially adversely affecting the business[194](index=194&type=chunk) - Risks related to the contemplated sale of the P&HS segment include potential delays, business disruptions, reduced diversification, significant costs, and the possibility of retained liabilities[195](index=195&type=chunk)[196](index=196&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=70&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Board authorized a $100 million share repurchase program, under which approximately 0.8 million shares were repurchased for $6.6 million during the six months ended June 30, 2025 - The Board of Directors authorized a share repurchase program of up to **$100 million** over the next 24 months, starting February 26, 2025[205](index=205&type=chunk)[208](index=208&type=chunk) Share Repurchase Activity (in thousands, except per share data) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares That May Yet be Purchased Under the Program | | :----- | :------------------------------- | :--------------------------- | :--------------------------------------------------------------------------- | | Year-to-date (June 30, 2025) | 826 | $8.07 | $93,360 | [Item 6. Exhibits](index=72&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the 10-Q report, including the Termination Agreement for the Rotech acquisition, CEO/CFO certifications, and XBRL-related documents - Key exhibits include the Termination Agreement for the Rotech acquisition, CEO/CFO certifications (Rule 13a-14(a) and 18 U.S.C. Section 1350), and Inline XBRL documents[211](index=211&type=chunk) [Signatures](index=73&type=section&id=Signatures) The report was signed by Edward A. Pesicka, President, Chief Executive Officer & Director, and Jonathan A. Leon, Executive Vice President & Chief Financial Officer, on August 11, 2025 - The report was signed by Edward A. Pesicka (President, CEO & Director) and Jonathan A. Leon (Executive Vice President & CFO) on August 11, 2025[213](index=213&type=chunk)

[Part I - Financial Information](index=4&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited financial statements for Q2 2025 show **$104.4 million** net income, driven by a **$125.7 million** gain from the Geomagic divestiture, despite revenue decline and negative operating cash flow [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $116,358 | $171,324 | | Total current assets | $390,122 | $428,830 | | Total assets | $587,844 | $608,846 | | **Liabilities & Equity** | | | | Total current liabilities | $141,306 | $139,096 | | Long-term debt, net | $122,643 | $211,995 | | Total liabilities | $344,405 | $430,695 | | Total stockholders' equity | $241,246 | $176,193 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details the company's revenues, expenses, and net income or loss for the three and six months ended June 30, 2025 and 2024 - A significant gain on disposition of **$125.7 million** in Q2 2025 turned an operating loss into a substantial net income of **$104.4 million**, compared to a net loss of **$27.3 million** in the same period last year[14](index=14&type=chunk) Statement of Operations Summary (in thousands, except per share amounts) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | H1 2025 (in thousands) | H1 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $94,838 | $113,252 | $189,378 | $216,157 | | Gross profit | $36,150 | $47,098 | $68,839 | $88,020 | | Loss from operations | ($15,350) | ($26,412) | ($52,113) | ($66,274) | | Gain on disposition | $125,681 | $— | $125,681 | $— | | Net income (loss) attributable to 3D Systems | $104,436 | ($27,258) | $67,450 | ($43,259) | | Diluted EPS | $0.57 | ($0.21) | $0.37 | ($0.33) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | ($59,630) | ($36,308) | | Net cash provided by (used in) investing activities | $112,931 | ($9,505) | | Net cash used in financing activities | ($97,340) | ($90,380) | | **Net decrease in cash** | **($38,935)** | **($138,825)** | - Investing activities provided **$112.9 million** in cash, primarily from the **$119.4 million** in proceeds from the sale of assets and businesses, which offset cash used in operations and financing[20](index=20&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements, including significant transactions and accounting policies - On April 1, 2025, the company completed the sale of its Geomagic software business for **$119.4 million** in cash, recording a pre-tax gain of **$125.7 million**[50](index=50&type=chunk) - In June 2025, the company issued **$92.0 million** of 5.875% convertible senior secured notes due 2030 and used the proceeds, along with cash on hand, to repurchase **$179.7 million** of its 0% convertible senior notes due 2026, resulting in a gain on debt extinguishment of **$8.2 million**[60](index=60&type=chunk)[70](index=70&type=chunk) - The company initiated a new restructuring plan in 2025, expecting to incur **$11 million to $20 million** in pre-tax charges, primarily for employee severance, to deliver cost savings and improve cash flows[114](index=114&type=chunk)[116](index=116&type=chunk) - The company is subject to several legal matters, including an ongoing SEC investigation, a dispute with former owners of Volumetric regarding earnout payments, and a new securities class action lawsuit filed in June 2025[97](index=97&type=chunk)[99](index=99&type=chunk)[106](index=106&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2025 revenue decline of **16.3%** due to lower sales and divestiture, with operating loss narrowing from cost reductions, and liquidity impacted by cash flow and the Geomagic sale [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, including revenue, gross profit, and operating expenses, for the periods presented Revenue Change Analysis - Q2 2025 vs Q2 2024 (in thousands) | Category | Change (in thousands) | % Change | | :--- | :--- | :--- | | **Total Revenue** | **($18,414)** | **(16.3)%** | | Products Revenue | ($17,932) | (25.0)% | | Services Revenue | ($482) | (1.1)% | - The decrease in revenue was primarily driven by a **24.8% decline** in product sales volume, particularly in materials for dental, service bureaus, and jewelry markets, along with the impact of the Geomagic divestiture[137](index=137&type=chunk) - SG&A expenses decreased by **$17.4 million (33.7%)** YoY in Q2 2025, mainly due to a **$16.3 million reduction** in compensation and benefits expense resulting from restructuring actions and lower incentive compensation[143](index=143&type=chunk)[146](index=146&type=chunk) - R&D expenses decreased by **$4.7 million (21.1%)** YoY in Q2 2025, primarily due to improved operating efficiency and cost reductions from restructuring activities[144](index=144&type=chunk) [Segment Results](index=32&type=section&id=Segment%20Results) Provides a breakdown of financial performance by the company's key operating segments, Healthcare Solutions and Industrial Solutions Segment Performance - Q2 2025 vs Q2 2024 (in thousands) | Segment | Revenue Q2 2025 (in thousands) | Revenue Q2 2024 (in thousands) | % Change | Gross Profit Q2 2025 (in thousands) | Gross Profit Q2 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Healthcare Solutions | $45,020 | $48,900 | (7.9)% | $20,382 | $22,435 | (9.2)% | | Industrial Solutions | $49,818 | $64,352 | (22.6)% | $15,768 | $24,663 | (36.1)% | - Healthcare Solutions revenue declined primarily due to lower materials sales in the dental market, including reduced volume with a key customer[147](index=147&type=chunk) - Industrial Solutions revenue and gross profit decreased significantly due to the impact of the Geomagic divestiture, lower materials sales to service bureaus and jewelry markets, and unfavorable price/mix[150](index=150&type=chunk)[152](index=152&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's ability to meet its short-term and long-term financial obligations, including cash position, debt, and capital expenditures - Cash and cash equivalents decreased by **$55.0 million** since December 31, 2024, to a total of **$116.4 million** at June 30, 2025[164](index=164&type=chunk) - The cash decrease was driven by **$59.6 million** used in operations, **$97.3 million** used in financing (including debt and stock repurchases), partially offset by **$119.4 million** in proceeds from the Geomagic sale[164](index=164&type=chunk) - Material cash requirements include **$126.7 million** in outstanding long-term debt, **$19.8 million** in purchase commitments, and **$95.2 million** in lease obligations[176](index=176&type=chunk)[177](index=177&type=chunk)[178](index=178&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) No material changes to market risk exposures, including interest rate and foreign currency risks, were reported for the six months ended June 30, 2025 - There were no material changes to the market risk assessment performed as of December 31, 2024[190](index=190&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were ineffective as of June 30, 2025, due to previously identified material weaknesses, with a remediation plan actively in progress - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to the material weaknesses discussed in the 2024 Annual Report on Form 10-K[191](index=191&type=chunk) - A remediation plan is in progress to address the identified material weaknesses, including increased training, enhanced documentation, and talent enhancements[192](index=192&type=chunk) [Part II - Other Information](index=41&type=section&id=Part%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings, including an SEC investigation, Volumetric earnout dispute, and a new securities class action, are incorporated by reference from Note 12 - Information regarding legal proceedings is incorporated by reference from Note 12 to the condensed consolidated financial statements[195](index=195&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported for the three months ended June 30, 2025 - There were no material changes during the three months ended June 30, 2025 to the risk factors previously reported[196](index=196&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q2 2025, the company repurchased **8.16 million** shares of common stock, including **8.0 million** shares in June at **$1.87** per share, as part of financing transactions - On June 24, 2025, the company repurchased **8.0 million** shares of its common stock at a price of **$1.87** per share in privately negotiated transactions[199](index=199&type=chunk) Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 154,194 | $2.03 | | May 2025 | 2,387 | $1.69 | | June 2025 | 8,001,631 | $1.87 | | **Total** | **8,158,212** | **$1.87** | [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) The Board rejected Audit Committee Chair Ms. Drayton's resignation, citing her crucial financial expertise for overseeing remediation of internal control weaknesses - The Board of Directors rejected the contingent resignation of Audit Committee Chair Ms. Drayton, determining that her continued service is in the best interests of the company and its stockholders, particularly for overseeing the remediation of internal control weaknesses[203](index=203&type=chunk)

[Q2 2025 Earnings Release](index=1&type=section&id=Synchronoss%20Technologies%20Reports%20Second%20Quarter%202025%20Results) [Second Quarter 2025 Performance and Highlights](index=1&type=section&id=Second%20Quarter%20and%20Recent%20Operational%20Highlights) Synchronoss reported solid Q2 2025 financial results with **$42.5 million** revenue and **$12.8 million** adjusted EBITDA, despite a net loss, while strengthening its capital structure and reaffirming full-year guidance Q2 2025 Financial Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $42.5M | $43.5M | -2.3% | | Recurring Revenue % | 92.6% | 90.5% | +2.1 p.p. | | Net (Loss) Income | ($19.6M) | $78k | N/A | | Adjusted EBITDA | $12.8M | $13.0M | -1.4% | | Adjusted EBITDA Margin | 30.2% | 29.9% | +0.3 p.p. | - Received the full CARES Act tax refund of **$33.9 million**, using **$25.4 million** to pay down debt, which is expected to save **$2.9 million** in annual interest expenses[1](index=1&type=chunk)[3](index=3&type=chunk)[5](index=5&type=chunk) - The net loss of **$19.6 million** was primarily driven by a **$12.5 million** non-cash foreign exchange loss and a **$6.4 million** combined debt modification expense and loss on debt extinguishment[5](index=5&type=chunk)[9](index=9&type=chunk) - Strengthened the capital structure by closing a new **$200 million**, four-year term loan, which retired **$73.6 million** of the prior term loan and **$121.4 million** in senior notes[5](index=5&type=chunk) - Signed an agreement with SoftBank to integrate its personal cloud solution into SoftBank's native customer application, which is expected to increase subscriber uptake in 2026[5](index=5&type=chunk) [2025 Financial Outlook](index=3&type=section&id=2025%20Financial%20Outlook) The company reaffirmed its full-year 2025 financial guidance, projecting revenues between **$170 million** and **$180 million** and adjusted EBITDA of **$52 million** to **$56 million**, with specific free cash flow exclusions Full Year 2025 Guidance | Guidance Metric | Full Year 2025 Outlook | | :--- | :--- | | Revenue | $170M - $180M | | Recurring Revenue | At least 90% of total revenue | | Adjusted Gross Margin | 78% - 80% | | Adjusted EBITDA | $52M - $56M (at least 30% margin) | | Free Cash Flow | $11M - $16M | - The Free Cash Flow guidance for 2025 explicitly excludes proceeds from the federal tax refund and approximately **$4.4 million** in transaction fees related to the new term loan[9](index=9&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2025, the balance sheet reported **$291.4 million** in total assets and **$241.9 million** in total liabilities, with cash decreasing to **$24.6 million** and total debt at **$186.2 million** Condensed Consolidated Balance Sheets (in thousands) | Balance Sheet Item (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $24,622 | $33,375 | | Total assets | $291,418 | $293,825 | | Total Debt (Current + Non-current) | $186,215 | $186,715 | | Total liabilities | $241,985 | $264,050 | | Stockholders' equity | $49,433 | $29,775 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) In Q2 2025, net revenues were **$42.5 million**, with income from operations improving to **$6.9 million**, but significant foreign exchange and debt expenses led to a **$19.6 million** net loss, or **($1.87)** per share Condensed Consolidated Statements of Operations (in thousands) | Income Statement (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net revenues | $42,486 | $43,458 | | Income from operations | $6,860 | $4,297 | | Foreign exchange (loss) gain | ($12,531) | $1,220 | | Net (loss) income attributable to Synchronoss | ($19,604) | $78 | | Diluted (loss) per share | ($1.87) | $0.01 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the six months ended June 30, 2025, net cash from operating activities decreased significantly to **$2.6 million**, resulting in an **$8.8 million** net decrease in cash and cash equivalents, ending at **$24.6 million** Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,578 | $11,840 | | Net cash used in investing activities | ($6,685) | ($7,510) | | Net cash used in financing activities | ($4,884) | ($5,105) | | Net decrease in cash and cash equivalents | ($8,753) | ($924) | | Ending cash and cash equivalents | $24,622 | $23,648 | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=10&type=section&id=RECONCILIATION%20OF%20GAAP%20TO%20NON-GAAP%20FINANCIAL%20MEASURES) [Gross Profit Reconciliation](index=10&type=section&id=Gross%20Profit%20Reconciliation) In Q2 2025, GAAP gross profit was **$29.4 million** (69.3% margin), which, after adjustments, resulted in a non-GAAP adjusted gross profit of **$33.7 million** (79.3% margin), remaining flat year-over-year Gross Profit Reconciliation (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | GAAP Gross Profit | $29,443 | $29,334 | | GAAP Gross Margin | 69.3% | 67.5% | | Adjustments | $4,247 | $4,326 | | **Adjusted Gross Profit** | **$33,690** | **$33,660** | | **Adjusted Gross Margin** | **79.3%** | **77.5%** | [Net Income and EPS Reconciliation](index=11&type=section&id=Net%20Income%20and%20EPS%20Reconciliation) In Q2 2025, the company reconciled a GAAP Net Loss of **$19.6 million** to a Non-GAAP Net Income of **$1.1 million**, primarily by adjusting for **$12.5 million** foreign exchange impact and **$6.4 million** in debt-related expenses Net Income and EPS Reconciliation (in thousands) | Reconciliation (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | GAAP Net (loss) income | ($19,604) | $78 | | Foreign exchange impact | $12,531 | ($1,220) | | Debt modification expense | $4,384 | $0 | | Loss on debt extinguishment | $1,993 | $0 | | Other adjustments | $1,828 | $4,948 | | **Non-GAAP Net income** | **$1,132** | **$3,806** | | **Non-GAAP Diluted EPS** | **$0.10** | **$0.37** | [Adjusted EBITDA Reconciliation](index=12&type=section&id=Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA for Q2 2025 was **$12.8 million**, nearly flat year-over-year, derived from a GAAP net loss of **$19.6 million** by adding back significant non-cash and non-recurring items like **$12.5 million** foreign exchange impact Adjusted EBITDA Reconciliation (in thousands) | Reconciliation (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net (loss) income | ($19,604) | $78 | | Add back: Taxes, Interest, D&A | $12,230 | $10,222 | | Add back: Foreign exchange impact | $12,531 | ($1,220) | | Add back: Debt related expenses | $6,377 | $0 | | Other adjustments | $1,283 | $3,920 | | **Adjusted EBITDA** | **$12,817** | **$13,000** | [Free Cash Flow Reconciliation](index=12&type=section&id=Free%20Cash%20Flow%20Reconciliation) In Q2 2025, free cash flow was negative **$1.1 million**, a significant decrease from **$7.6 million** in Q2 2024, with adjusted free cash flow at **$0.5 million** after specific adjustments Free Cash Flow Reconciliation (in thousands) | Reconciliation (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $2,285 | $11,313 | | Less: Capital Expenditures | ($3,375) | ($3,707) | | **Free cashflow** | **($1,090)** | **$7,606** | | Add: Adjustments | $1,624 | $1,319 | | **Adjusted free cashflow** | **$534** | **$8,925** | [Supplementary Information](index=4&type=section&id=Supplementary%20Information) [Non-GAAP Financial Measures Definitions](index=4&type=section&id=Non-GAAP%20Financial%20Measures) This section defines key non-GAAP metrics like Adjusted EBITDA, Free Cash Flow, and Recurring Revenue, which provide a normalized view of operating performance by excluding specific non-recurring or non-cash items - Adjusted EBITDA is calculated by taking GAAP Net (loss) income and adding back items such as stock-based compensation, restructuring costs, depreciation and amortization, interest expense, foreign exchange impact, and debt-related expenses[14](index=14&type=chunk)[15](index=15&type=chunk) - Free Cash Flow is defined as operating cash flow minus capital expenditures. Adjusted Free Cash Flow further excludes net cash related to litigation, remediation, and restructuring activities[17](index=17&type=chunk) - Recurring Revenue is calculated as the sum of Subscription revenue and Transaction revenue[17](index=17&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section includes standard forward-looking statements regarding future expectations and financial performance, which are subject to risks and uncertainties that could cause actual results to differ materially - The document contains forward-looking statements that are not guarantees of future performance and are subject to risks, assumptions, and uncertainties[18](index=18&type=chunk) - Investors are directed to the "Risk Factors" section of the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q for a detailed description of potential risks[18](index=18&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 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 001-33307 Not Applicable (Former name, former address and former fiscal year, if changed since last report) Securiti ...

PART I - FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's interim financials reflect decreased sales and operating profit, offset by a significant tax benefit that boosted net earnings, amid increased assets and debt Consolidated Statements of Operations Highlights (Q2 & H1 2025 vs 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $2,532M | $2,651M | $4,921M | $5,262M | | **Gross profit** | $535M | $641M | $1,011M | $1,195M | | **Operating profit** | $233M | $250M | $401M | $460M | | **Net earnings attributable to Celanese** | $199M | $155M | $178M | $276M | | **Diluted EPS** | $1.81 | $1.41 | $1.62 | $2.52 | Consolidated Balance Sheet Highlights (as of June 30, 2025) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $1,173M | $962M | | **Total current assets** | $5,675M | $5,145M | | **Total assets** | $23,713M | $22,857M | | **Long-term debt, net** | $12,689M | $11,078M | | **Total equity** | $5,704M | $5,580M | Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash from operating activities** | $447M | $393M | | **Net cash used in investing activities** | ($186M) | ($242M) | | **Net cash used in financing activities** | ($71M) | ($748M) | | **Net increase (decrease) in cash** | $211M | ($620M) | [Notes to the Unaudited Interim Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Consolidated%20Financial%20Statements) The notes detail significant events including a planned divestiture, major debt refinancing, a dividend reduction, and a favorable tax settlement - On May 5, 2025, the Company announced its intent to **divest its Micromax® portfolio** of products as part of its strategy for cash generation and deleveraging[33](index=33&type=chunk) - In March 2025, the company completed a public offering of senior unsecured notes totaling approximately **$2.55 billion equivalent** to fund tender offers for existing notes and repay other debt[56](index=56&type=chunk)[57](index=57&type=chunk) - The company **reduced its quarterly dividend by approximately 95%** starting in Q1 2025, with a dividend of $0.03 per share declared on July 16, 2025[81](index=81&type=chunk) - The effective income tax rate was a **57% benefit for Q2 2025**, compared to a 16% expense in Q2 2024, due to deferred tax benefits and a German tax settlement[87](index=87&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=38&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses decreased sales and profits due to weak demand, with a strategic focus on deleveraging through cost controls and capital management Consolidated Financial Highlights (Q2 & H1 2025 vs 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $2,532M | $2,651M | $4,921M | $5,262M | | **Operating profit** | $233M | $250M | $401M | $460M | | **Net earnings attributable to Celanese** | $199M | $155M | $178M | $276M | - The company is experiencing **demand challenges** in key end-markets like automotive, paints, coatings, and construction due to tepid global macroeconomic conditions[216](index=216&type=chunk) - **Deleveraging is a key priority**, leading the company to pause its share repurchase program and reduce its quarterly dividend by approximately 95%[173](index=173&type=chunk) [Business Segments Analysis](index=44&type=section&id=MD&A%20-%20Business%20Segments) Engineered Materials' profit rose on cost savings despite lower sales, while Acetyl Chain's profit fell sharply due to pricing and volume declines Engineered Materials Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $1,442M | $1,467M | (1.7)% | | **Operating Profit** | $165M | $138M | 19.6% | - Engineered Materials' operating profit increased due to a **favorable $27 million impact** from non-recurring prior-year restructuring costs and reduced spending[161](index=161&type=chunk) Acetyl Chain Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $1,115M | $1,202M | (7.2)% | | **Operating Profit** | $154M | $242M | (36.4)% | - Acetyl Chain's operating profit decreased due to lower net sales, driven by a **7% price decline and 2% volume decline**, and $16 million in higher plant turnaround costs[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=MD&A%20-%20Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity through cash and credit facilities, prioritizing deleveraging with reduced dividends and managed capital expenditures - Primary liquidity sources are cash from operations, **$1.2 billion in cash** and cash equivalents, and **$1.82 billion available** under revolving credit facilities as of June 30, 2025[172](index=172&type=chunk) - Capital expenditures for 2025 are expected to be approximately **$300 million to $350 million**, reflecting a focus on required maintenance and productivity improvements[175](index=175&type=chunk) Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash from operating activities** | $447M | $393M | | **Net cash used in investing activities** | ($186M) | ($242M) | | **Net cash used in financing activities** | ($71M) | ($748M) | [Quantitative and Qualitative Disclosures about Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) There have been no material changes to the company's market risks since its 2024 Annual Report - Market risk for the Company has **not changed materially** from the foreign exchange, interest rate and commodity risks disclosed in the 2024 Form 10-K[220](index=220&type=chunk) [Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are **effective as of June 30, 2025**[221](index=221&type=chunk) - **No changes in internal control** over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[222](index=222&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) There have been no significant developments in legal proceedings since the 2024 Form 10-K filing - The Company is involved in various legal proceedings incidental to its business, and there have been **no significant developments** beyond what was reported in the 2024 Form 10-K[225](index=225&type=chunk) [Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) The company refers to its 2024 Annual Report for a discussion of risk factors, noting no material changes - Readers are referred to the **Risk Factors section in the company's 2024 Form 10-K** for a detailed description of potential risks[226](index=226&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=57&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any common stock during the quarter, with $1.1 billion remaining under its repurchase authorization - The company **did not repurchase any Common Stock** during the three months ended June 30, 2025[227](index=227&type=chunk) - As of June 30, 2025, approximately **$1.1 billion remained available** for share repurchases under the board-authorized program[227](index=227&type=chunk) [Other Information](index=57&type=section&id=Item%205.%20Other%20Information) The company filed to eliminate a class of preferred stock and reported no new officer trading plans - On May 15, 2025, the Company filed a **Certificate of Elimination** to remove provisions for a previously redeemed class of Preferred Stock[230](index=230&type=chunk) - **No director or Section 16 officer** adopted or terminated any Rule 10b5-1 trading plans during the quarter ended June 30, 2025[231](index=231&type=chunk) [Exhibits](index=58&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including required certifications and corporate documents

[Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) [Key Financial and Operational Metrics](index=1&type=section&id=Key%20Financial%20and%20Operational%20Metrics) Proficient Auto Logistics reported significant sequential and year-over-year growth in total operating revenue and units delivered for Q2 2025, with GAAP operating income declining year-over-year but adjusted operating income improving sequentially Q2 2025 Key Financial and Operational Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | Q-o-Q Change (vs Q1 2025) | Y-o-Y Change (vs Q2 2024) | | :---------------------- | :-------- | :-------- | :-------- | :----------------------- | :----------------------- | | Total Operating Revenue | $115.5 million | N/A | N/A | +21.4% | +8.4% | | Total Operating Income (Loss) | $0.1 million | ($2.4) million | $7.0 million | N/A (from loss to income) | -98.6% | | Adjusted Operating Income | $3.8 million | $1.2 million | $8.7 million | +216.7% | -56.4% | | Adjusted Operating Ratio | 96.7% | 98.7% | 91.8% | -2.0 pp | +4.9 pp | | Total Units delivered | 631,426 | N/A | N/A | +28% | +24% | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Rick O'Dell highlighted stronger Q2 revenue from market share gains and the Brothers acquisition, noting improved sequential profitability while emphasizing ongoing cost control amidst a weaker base market and volatile automotive sales - Stronger Q2 revenue attributed to market share gains and the Brothers acquisition, demonstrating strategic execution in an uncertain environment[3](index=3&type=chunk) - Improved profitability sequentially, but further work is needed to control costs in a base market that continues to be weaker than expected[3](index=3&type=chunk) - Automotive sales rates have been volatile due to changing tariff policy and cautious large purchase behavior by consumers[3](index=3&type=chunk) [Company Background and Context](index=1&type=section&id=Company%20Background%20and%20Context) [Business Description](index=4&type=section&id=About%20Proficient%20Auto%20Logistics) Proficient Auto Logistics is a leading North American specialized freight company providing comprehensive auto transportation and logistics, primarily delivering finished vehicles to dealerships - Proficient Auto Logistics is a leading specialized freight company focused on providing auto transportation and logistics services in North America[16](index=16&type=chunk) - Services primarily involve transporting finished vehicles from automotive production facilities, marine ports of entry, or regional rail yards to auto dealerships[16](index=16&type=chunk) [IPO and Acquisition Overview](index=1&type=section&id=IPO%20and%20Acquisition%20Overview) Proficient completed its IPO and acquired five Founding Companies in May 2024, subsequently expanding operations through ATG and BAT acquisitions to establish one of North America's largest auto transportation fleets - Proficient completed its IPO and acquired five Founding Companies (Delta Auto Transport, Deluxe Auto Carriers, Sierra Mountain Group, Proficient Auto Transport, and Tribeca Automotive Inc.) on **May 13, 2024**[4](index=4&type=chunk) - Subsequent acquisitions include Auto Transport Group (ATG) on **August 16, 2024**, and Brothers Auto Transport (BAT) on **April 1, 2025**[7](index=7&type=chunk)[9](index=9&type=chunk) - Through these combinations, the company operates one of the largest auto transportation fleets in North America[16](index=16&type=chunk) [Unaudited Combined Financial Results](index=1&type=section&id=Unaudited%20Combined%20Financial%20Results) [Summary Financial Performance](index=1&type=section&id=Summary%20Financial%20Performance) Proficient's Q2 2025 saw significant sequential increases in total operating revenue and a return to positive operating income, though Adjusted Operating Income and Adjusted EBITDA were lower year-over-year due to increased non-cash acquisition expenses Summary Unaudited Combined Financial Information ($000s) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | Q-o-Q Change | Y-o-Y Change | | :---------------------- | :------ | :------ | :------ | :----------- | :----------- | | Total Operating Revenue | $115,547 | $95,206 | $106,607 | +21.4% | +8.4% | | Total Operating (Loss) Income | $125 | ($2,363) | $7,041 | N/A | -98.2% | | Adjusted Operating Income | $3,801 | $1,236 | $8,730 | +207.5% | -56.4% | | Adjusted Operating Ratio | 96.7% | 98.7% | 91.8% | -2.0 pp | +4.9 pp | | (Loss) Income before income taxes | ($1,882) | ($3,894) | $5,793 | N/A | N/A | | Adjusted EBITDA | $11,279 | $7,764 | $12,414 | +45.3% | -9.2% | | Adjusted EBITDA Margin | 9.8% | 8.2% | 11.6% | +1.6 pp | -1.8 pp | [Select Operating Metrics](index=3&type=section&id=Revenue%20and%20Profitability) Unit volumes increased significantly sequentially and year-over-year, but revenue per unit declined due to customer mix and fewer spot buy opportunities, while company deliveries revenue proportion increased and dedicated fleet revenue decreased Select Operating Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | Q-o-Q Change (vs Q1 2025) | Y-o-Y Change (vs Q2 2024) | | :-------------------------- | :-------- | :-------- | :-------- | :----------------------- | :----------------------- | | Unit Volume - Company Deliveries | 220,578 | 163,754 | 152,714 | +34.7% | +44.4% | | Revenue / Unit - Company Deliveries | $178.82 | $185.38 | $212.25 | -3.5% | -15.8% | | Unit Volume - Subhaulers | 410,848 | 330,755 | 354,998 | +24.2% | +15.7% | | Revenue / Unit - Subhaulers | $166.50 | $173.14 | $190.77 | -3.8% | -12.7% | | Percent Revenue, Company Deliveries | 37% | 35% | 32% | +2 pp | +5 pp | | Percent Revenue, Subhaulers | 63% | 65% | 68% | -2 pp | -5 pp | - Total revenue increased **$20.3 million (21%)** sequentially and **$8.9 million (8.4%)** year-over-year, while unit volumes were up approximately **28%** sequentially and **24%** year-over-year[10](index=10&type=chunk) - The dedicated fleet portion of Proficient's revenue was **$3.8 million** in Q2 2025, a decrease from **$4.3 million** in Q1 2025 and **$7.3 million** in Q2 2024[10](index=10&type=chunk) [Balance Sheet and Liquidity](index=3&type=section&id=Balance%20Sheet) Proficient ended Q2 2025 with **$13.6 million** cash, **$90.2 million** total debt, **$76.6 million** net debt, and a **2.2x** net leverage ratio, having fully utilized its term debt facility for the BAT acquisition Key Balance Sheet and Liquidity Metrics (as of June 30, 2025) | Metric | Amount | | :-------------------- | :----------- | | Cash | $13.6 million | | Total Debt | $90.2 million | | Line of Credit Drawn | $5.0 million | | Net Debt | $76.6 million | | Net Leverage Ratio (TTM Adj. EBITDA) | 2.2x | - The **$25.0 million** term debt facility was fully utilized during the quarter to fund the cash portion of the BAT acquisition[13](index=13&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Balance Sheets](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2025, Proficient reported total assets of **$520.5 million**, an increase from December 31, 2024, driven by accounts receivable, property, equipment, and goodwill, with total liabilities also increasing and stockholders' equity modestly rising Condensed Consolidated Balance Sheets Summary | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------- | :-------------- | :---------------- | :------- | | Total Current Assets | $71,946,946 | $67,687,442 | +$4,259,504 | | Property and equipment, net | $127,655,334 | $122,636,636 | +$5,018,698 | | Goodwill | $174,090,117 | $169,056,675 | +$5,033,442 | | Intangible assets, net | $129,840,169 | $132,490,640 | -$2,650,471 | | Total Assets | $520,458,060 | $508,086,944 | +$12,371,116 | | Total Current Liabilities | $62,170,001 | $52,623,931 | +$9,546,070 | | Total Liabilities | $180,929,753 | $170,107,421 | +$10,822,332 | | Total Stockholders' Equity | $339,528,307 | $337,979,523 | +$1,548,784 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For Q2 2025, Proficient reported total operating revenue of **$115.5 million** and a net loss of **$1.56 million** or **($0.06)** per share, with the six-month period showing a net loss of **$4.75 million** or **($0.17)** per share, primarily due to significant purchased transportation and depreciation expenses Condensed Consolidated Statements of Operations Summary | Metric | Three months ended June 30, 2025 | Six months ended June 30, 2025 | | :-------------------------------- | :------------------------------- | :----------------------------- | | Total operating revenue | $115,546,586 | $210,752,607 | | Total Operating Expenses | $115,421,228 | $212,989,755 | | Operating (loss) income | $125,358 | ($2,237,148) | | Loss before income taxes | ($1,882,154) | ($5,776,460) | | Net loss | ($1,556,833) | ($4,748,518) | | Loss Per Share (Basic & Diluted) | ($0.06) | ($0.17) | | Weighted Average Shares (Basic & Diluted) | 27,611,515 | 27,341,813 | - Key operating expenses for the three months ended June 30, 2025, included purchased transportation (**$58.9 million**), salaries, wages and benefits (**$22.5 million**), and depreciation (**$7.6 million**)[27](index=27&type=chunk) [Non-GAAP Financial Measures](index=1&type=section&id=Non-GAAP%20Financial%20Measures) [Definition and Purpose](index=5&type=section&id=Non-GAAP%20Financial%20Measure) Proficient's management uses non-GAAP measures like Adjusted Operating Income, Adjusted Operating Ratio, and Adjusted EBITDA to assess performance, facilitate comparisons, and inform strategic decisions by excluding non-cash and non-recurring items - Adjusted Operating Income and Adjusted Operating Ratio are used to compare financial reporting periods by excluding non-cash stock-based compensation and amortization of intangibles resulting from acquisitions[8](index=8&type=chunk) - Adjusted EBITDA and Adjusted EBITDA Margin are reviewed by management to measure operating performance, financial condition, and make strategic decisions, providing useful information by excluding certain non-recurring items[8](index=8&type=chunk)[19](index=19&type=chunk) - Adjusted EBITDA is defined as net income (loss) for the period adjusted for interest expense, net, income tax expense (benefit), depreciation and amortization expense, and stock compensation expense[21](index=21&type=chunk) [Adjusted Operating Income Reconciliation](index=2&type=section&id=Adjusted%20Operating%20Income%20Reconciliation) For Q2 2025, Adjusted Operating Income of **$3.8 million** was derived by adding back **$2.46 million** in amortization of intangibles and **$1.22 million** in stock compensation expense to the Total Operating Income of **$0.1 million** Adjusted Operating Income Reconciliation ($000s) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------- | :------ | :------ | :------ | | Total Operating (Loss) Income | $125 | ($2,363) | $7,041 | | Addback: Amortization of Intangibles | $2,455 | $2,416 | $1,076 | | Addback: Stock Compensation expense | $1,221 | $1,183 | $613 | | Adjusted Operating Income | $3,801 | $1,236 | $8,730 | [Adjusted EBITDA Reconciliation](index=2&type=section&id=Adjusted%20EBITDA%20Reconciliation) For Q2 2025, Adjusted EBITDA was **$11.3 million**, calculated by adding back depreciation & amortization, stock compensation, and interest expense to Loss before income taxes, with trailing twelve months Adjusted EBITDA at **$35.2 million** Adjusted EBITDA Reconciliation (Quarterly, $000s) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------- | :------ | :------ | :------ | | (Loss) Income before income taxes | ($1,882) | ($3,894) | $5,793 | | Addback: Depreciation & Amortization | $10,102 | $8,904 | $4,761 | | Addback: Stock Compensation Expense | $1,221 | $1,183 | $613 | | Addback: Interest Expense | $1,838 | $1,571 | $1,247 | | Adjusted EBITDA | $11,279 | $7,764 | $12,414 | Adjusted EBITDA Reconciliation (Trailing Twelve Months, $000s) | Metric | Twelve months ending 6/30/2025 | | :-------------------------- | :----------------------------- | | (Loss) Income before income taxes | ($12,105) | | Addback: Depreciation & Amortization | $35,918 | | Addback: Stock Compensation Expense | $4,611 | | Addback: Interest Expense | $6,777 | | Adjusted EBITDA | $35,201 | [Corporate Information](index=4&type=section&id=Corporate%20Information) [Conference Call Information](index=4&type=section&id=Conference%20Call) Proficient Auto Logistics will host an investor conference call on August 11, 2025, at 5:00 p.m. EDT to discuss Q2 2025 financial results, offering registration and webcast options - An investor conference call is scheduled for **August 11, 2025, at 5:00 p.m. EDT** to discuss the Q2 2025 financial results[15](index=15&type=chunk) - Investors can join the conference call by registering through a provided link or access a listen-only webcast[15](index=15&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) This press release contains forward-looking statements about future business results and financial conditions, subject to substantial risks and uncertainties detailed in the company's Annual Report on Form 10-K, with no obligation to update unless legally required - The press release includes forward-looking statements concerning possible future results of the business, financial condition, and operations, which involve substantial risks and uncertainties[17](index=17&type=chunk) - Readers should not place undue reliance on these statements, as actual results, events, or circumstances could differ materially from those projected, and the company undertakes no obligation to update them except as required by law[17](index=17&type=chunk)[18](index=18&type=chunk)

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's financial statements, management's analysis of financial condition and operations, market risk disclosures, and internal controls and procedures [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The financial statements reflect a significant transformation from the Red Trail Energy acquisition, impacting assets, liabilities, and shifting Q2 2025 to net income [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$702.1 million** by June 30, 2025, primarily due to the Red Trail Energy acquisition, while cash decreased by **$132.1 million** and total liabilities rose to **$222.3 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $57,257 | $189,389 | | Total current assets | $170,441 | $203,711 | | Property, plant and equipment, net | $344,914 | $221,642 | | Intangible assets, net | $70,327 | $8,129 | | Goodwill | $43,558 | $3,740 | | **Total assets** | **$702,117** | **$583,941** | | **Liabilities & Equity** | | | | Total current liabilities | $73,233 | $24,361 | | Loans payable | $99,966 | $0 | | **Total liabilities** | **$222,349** | **$94,453** | | **Total stockholders' equity** | **$474,104** | **$489,488** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a **$2.7 million** net income in Q2 2025, a significant improvement from a **$21.0 million** net loss in Q2 2024, driven by a surge in operating revenues to **$43.4 million** Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $43,413 | $5,260 | $72,522 | $9,250 | | Income (loss) from operations | $5,796 | $(24,029) | $(14,343) | $(47,170) | | Net income (loss) | $2,729 | $(21,002) | $(19,044) | $(39,877) | | Net income (loss) per share - diluted | $0.01 | $(0.09) | $(0.08) | $(0.17) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in investing activities totaled **$209.5 million** for the six months ended June 30, 2025, primarily for the Red Trail Energy acquisition, resulting in a **$132.1 million** net decrease in cash Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(26,570) | $(27,520) | | Net cash used in investing activities | $(209,538) | $(26,708) | | Net cash provided by (used in) financing activities | $103,976 | $(6,049) | | **Net decrease in cash and cash equivalents** | **$(132,132)** | **$(60,277)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the **$210.3 million** Red Trail Energy acquisition, the recognition of **$21.5 million** in Section 45Z tax credits, the establishment of four reportable segments, and new **$105 million** debt facilities - On January 31, 2025, Gevo completed the acquisition of Red Trail Energy for a purchase price of **$210.3 million**, funded by cash, a **$105 million** term loan, and **$5 million** in equity from OIC[35](index=35&type=chunk)[62](index=62&type=chunk)[64](index=64&type=chunk) - The company recognized **$21.5 million** in Section 45Z federal tax credits for the first six months of 2025, recorded as a reduction to Cost of Goods Sold (COGS)[76](index=76&type=chunk) - The company now has four reportable segments: Gevo, GevoFuels, GevoRNG, and GevoND, with the new GevoND segment generating **$59.9 million** in revenue for the first six months of 2025[179](index=179&type=chunk)[188](index=188&type=chunk) - A new **$105 million** senior secured term loan was obtained in January 2025 to partially fund the Red Trail Energy acquisition, with an initial interest rate of **11.50%** per annum[124](index=124&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the strategic impact of the Red Trail Energy acquisition on revenue growth, operational improvements, and liquidity, emphasizing carbon abatement and SAF initiatives [Company Overview](index=47&type=section&id=Company%20Overview) Gevo is a carbon abatement company focused on producing renewable hydrocarbon fuels, particularly Sustainable Aviation Fuel (SAF), with the Red Trail Energy acquisition strengthening its operational and carbon capture capabilities - Gevo's primary market focus is on carbon-abated hydrocarbon fuels, particularly **Sustainable Aviation Fuel (SAF)**, produced via a carbohydrate-to-alcohol process[199](index=199&type=chunk) - The acquisition of Red Trail Energy (now GevoND) on January 31, 2025, for **$210 million** added an operational ethanol plant and carbon capture and sequestration (CCS) assets, strengthening Gevo's growth and SAF strategy[206](index=206&type=chunk)[207](index=207&type=chunk) - The company is developing modular Alcohol-to-Jet (ATJ) projects, including ATJ-60 in Lake Preston, SD, which has received a conditional commitment for a **~$1.6 billion** DOE loan guarantee, and an ATJ-30 project planned for the GevoND site[205](index=205&type=chunk)[209](index=209&type=chunk)[212](index=212&type=chunk) - The Verity subsidiary is developing a platform for carbon accounting and monetization, and has signed agreements with five external ethanol producers[218](index=218&type=chunk)[225](index=225&type=chunk) [Results of Operations](index=63&type=section&id=Results%20of%20Operations) Q2 2025 saw a **725%** increase in total operating revenues to **$43.4 million** and a shift to **$5.8 million** operating income, primarily driven by **$37.2 million** from GevoND operations and Section 45Z tax credits Comparison of Three Months Ended June 30, 2025 and 2024 (in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $43,413 | $5,260 | $38,153 | 725% | | Cost of production | $17,265 | $3,423 | $13,842 | 404% | | Income (loss) from operations | $5,796 | $(24,029) | $29,825 | (124)% | | Net income (loss) attributable to Gevo, Inc. | $2,144 | $(21,002) | $23,146 | (110)% | Comparison of Six Months Ended June 30, 2025 and 2024 (in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $72,522 | $9,250 | $63,272 | 684% | | Loss from operations | $(14,343) | $(47,170) | $32,827 | (70)% | | Net loss attributable to Gevo, Inc. | $(19,584) | $(39,877) | $20,293 | (51)% | - The increase in revenue was primarily due to **$37.2 million** from the GevoND operations in Q2 2025[244](index=244&type=chunk) - Cost of production in Q2 2025 was partially offset by a **$20.8 million** benefit from the 45Z tax credit[245](index=245&type=chunk) [Liquidity and Capital Resources](index=68&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company held **$126.9 million** in cash and restricted cash, with **$198.5 million** used for the Red Trail Energy acquisition, partially offset by **$105 million** in new loan proceeds - As of June 30, 2025, the company had cash and cash equivalents of **$57.3 million** and current restricted cash of **$69.6 million**, totaling **$126.9 million**[269](index=269&type=chunk) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(26,570) | $(27,520) | | Net cash used in investing activities | $(209,538) | $(26,708) | | Net cash provided by (used in) financing activities | $103,976 | $(6,049) | - The company did not repurchase any shares in H1 2025, with approximately **$20.3 million** remaining available under the stock repurchase program[284](index=284&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=71&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Gevo is not required to provide detailed market risk disclosures, noting no material changes to its primary risks including environmental attribute and commodity pricing, interest rates, and credit risk - The company is a smaller reporting company and is not required to provide detailed information for this item[285](index=285&type=chunk) - Key market risks include environmental attribute pricing, commodity pricing, interest rates, and credit risk, with no material changes reported since the 2024 Annual Report[285](index=285&type=chunk) [Controls and Procedures](index=71&type=section&id=Item%204.%20Controls%20and%20Procedures) Management identified material weaknesses in internal control over financial reporting, including insufficient technical accounting expertise and inadequate controls at the newly acquired GevoND operations, with remediation efforts ongoing through 2025 - A material weakness was identified due to an insufficient complement of personnel with the necessary technical accounting expertise for complex transactions[287](index=287&type=chunk) - Post-acquisition, additional material weaknesses were discovered at GevoND related to a failure to design effective segregation of duties and inadequate user access controls[288](index=288&type=chunk) - Remediation efforts are underway, including hiring additional personnel, providing training, and improving system access controls, with completion expected through 2025[290](index=290&type=chunk)[294](index=294&type=chunk) [PART II. OTHER INFORMATION](index=74&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides disclosures on legal proceedings, risk factors, equity security sales, and a list of exhibits filed with the report [Legal Proceedings](index=74&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business, financial condition, or operations - The company is not presently a party to any litigation that it believes could have a material adverse effect on its business[142](index=142&type=chunk)[296](index=296&type=chunk) [Risk Factors](index=74&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred in the company's risk factors since the filing of its 2024 Annual Report - No material changes have occurred in the company's risk factors since the filing of its 2024 Annual Report[297](index=297&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=74&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company reported no unregistered sales of equity securities during the period [Exhibits](index=75&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act, and interactive data files (XBRL)

PART I – FINANCIAL INFORMATION [Item 1. Interim Financial Statements](index=4&type=section&id=Item%201.%20Interim%20Financial%20Statements) This section presents the unaudited condensed financial statements of Cohen Circle Acquisition Corp. I, including balance sheets, statements of operations, changes in shareholders' deficit, and cash flows, along with detailed notes explaining the company's business, accounting policies, and significant transactions [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) This section details the company's financial position, showing changes in assets, liabilities, and shareholders' deficit over time - Marketable securities held in the Trust Account increased by approximately **$4.9 million** from December 31, 2024, to June 30, 2025[11](index=11&type=chunk) - Total liabilities increased significantly from **$9.96 million** to **$12.39 million**, driven by accrued expenses and a new promissory note[11](index=11&type=chunk) - The company's shareholders' deficit deepened from **$(8.91) million** to **$(12.11) million** over the six-month period[11](index=11&type=chunk) Condensed Balance Sheet Data | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :----------------------------------- | :------------------------ | :------------------ | | Cash | $33,784 | $699,511 | | Prepaid expenses | $203,407 | $256,058 | | Total current assets | $237,191 | $955,569 | | Long-term prepaid insurance | $35,701 | $101,951 | | Marketable securities held in Trust Account | $238,271,514 | $233,369,247 | | **TOTAL ASSETS** | **$238,544,406** | **$234,426,767** | | Accrued offering costs | $82,462 | $82,462 | | Accrued expenses | $1,979,207 | $81,878 | | Promissory note - related party | $525,000 | — | | Total current liabilities | $2,586,669 | $164,340 | | Deferred underwriting fee | $9,800,000 | $9,800,000 | | **Total liabilities** | **$12,386,669** | **$9,964,340** | | Class A ordinary shares subject to possible redemption | $238,271,514 | $233,369,247 | | Total shareholders' deficit | $(12,113,777) | $(8,906,820) | [Unaudited Condensed Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Statements%20of%20Operations) This section presents the company's financial performance, outlining income, expenses, and net profit or loss for specific periods - The company reported net income of **$1,456,466** for the three months ended June 30, 2025, a significant improvement from a net loss of **$(29,487)** in the prior year period[13](index=13&type=chunk) - Interest earned on marketable securities held in the Trust Account was the primary driver of income in 2025, totaling **$2,458,506** for the three months and **$4,902,267** for the six months[13](index=13&type=chunk) - General and administrative costs increased substantially to **$1,002,040** for the three months and **$3,206,957** for the six months ended June 30, 2025, compared to minimal costs in 2024[13](index=13&type=chunk) Unaudited Condensed Statements of Operations Data | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | General and administrative costs | $1,002,040 | $29,487 | $3,206,957 | $34,655 | | Loss from operations | $(1,002,040) | $(29,487) | $(3,206,957) | $(34,655) | | Interest earned on marketable securities held in Trust Account | $2,458,506 | — | $4,902,267 | — | | Total other income | $2,458,506 | — | $4,902,267 | — | | **NET INCOME (LOSS)** | **$1,456,466** | **$(29,487)** | **$1,695,310** | **$(34,655)** | | Basic and diluted net income per Class A redeemable ordinary share | $0.05 | — | $0.05 | — | | Basic and diluted net income (loss) per Class A and B non redeemable ordinary share | $0.05 | $(0.00) | $0.05 | $(0.00) | [Unaudited Condensed Statements of Changes in Shareholders' Deficit](index=6&type=section&id=Unaudited%20Condensed%20Statements%20of%20Changes%20in%20Shareholders'%20Deficit) This section tracks the evolution of shareholders' deficit, reflecting the impact of net income, losses, and equity adjustments - The total shareholders' deficit increased from **$(8,906,820)** at January 1, 2025, to **$(12,113,777)** at June 30, 2025[16](index=16&type=chunk) - Accretion for Class A ordinary shares to redemption amount was a significant factor, contributing **$(2,443,761)** in Q1 2025 and **$(2,458,506)** in Q2 2025 to the deficit[16](index=16&type=chunk) - Net income for the periods in 2025 partially offset the accretion, while net losses in 2024 contributed to the deficit[16](index=16&type=chunk)[18](index=18&type=chunk) Unaudited Condensed Statements of Changes in Shareholders' Deficit Data (January 1, 2025 to June 30, 2025) | Metric | Balance — January 1, 2025 | Accretion for Class A ordinary shares to redemption amount | Net income | Balance — June 30, 2025 | | :------------------------------------------- | :------------------------ | :------------------------------------------------------- | :--------- | :------------------------ | | Total Shareholders' Deficit | $(8,906,820) | $(4,902,267) | $1,695,310 | $(12,113,777) | Unaudited Condensed Statements of Changes in Shareholders' Deficit Data (January 1, 2024 to June 30, 2024) | Metric | Balance as of January 1, 2024 | Net loss | Balance as of June 30, 2024 | | :------------------------------------------- | :-------------------------- | :--------- | :-------------------------- | | Total Shareholder's Deficit | $(419,507) | $(34,655) | $(454,162) | [Unaudited Condensed Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Statements%20of%20Cash%20Flows) This section details the company's cash movements from operating, investing, and financing activities over specific periods - Net cash used in operating activities for the six months ended June 30, 2025, was **$(1,190,727)**, primarily due to non-cash interest income and changes in operating assets and liabilities[20](index=20&type=chunk) - Cash flows from financing activities provided **$525,000**, stemming from proceeds of a promissory note from a related party[20](index=20&type=chunk) - The company's cash balance decreased significantly from **$699,511** at the beginning of the period to **$33,784** at June 30, 2025[20](index=20&type=chunk) Unaudited Condensed Statements of Cash Flows Data | Metric | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :------------------------------------------- | :------------------------------------- | :------------------------------------- | | Net income (loss) | $1,695,310 | $(34,655) | | Interest earned on marketable securities held in Trust Account | $(4,902,267) | — | | Net cash used in operating activities | $(1,190,727) | — | | Proceeds from promissory note - related party | $525,000 | — | | Net cash provided by (used in) financing activities | $525,000 | — | | Net Change in Cash | $(665,727) | — | | Cash – Beginning of period | $699,511 | $100 | | Cash – End of period | $33,784 | $100 | [Notes to Condensed Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20Condensed%20Financial%20Statements%20(Unaudited)) This section provides detailed explanations and disclosures for the financial statements, covering accounting policies and significant events [NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS](index=8&type=section&id=NOTE%201.%20DESCRIPTION%20OF%20ORGANIZATION%20AND%20BUSINESS%20OPERATIONS) This note describes the company's SPAC formation, IPO, business combination plans, and current financial condition - The Company was incorporated on October 26, 2021, as a blank check company (SPAC) to effect a business combination[23](index=23&type=chunk) - The Initial Public Offering (IPO) was consummated on October 15, 2024, raising **$230,000,000** from **23,000,000 units** at **$10.00 per unit**[26](index=26&type=chunk) - A concurrent private placement of **715,000 units** generated **$7,150,000** from the Sponsor and underwriters[27](index=27&type=chunk) - Following the IPO, **$231,150,000** was placed in a Trust Account, invested in U.S. government securities or money market funds[30](index=30&type=chunk) - On March 18, 2025, the Company entered into a Business Combination Agreement to acquire VEON Holdings B.V. through a merger with Kyivstar Group Ltd. (PubCo)[42](index=42&type=chunk)[43](index=43&type=chunk) - As of June 30, 2025, the Company had cash of **$33,784** outside the Trust Account and a working capital deficit of **$2,349,478**, raising substantial doubt about its ability to continue as a going concern[46](index=46&type=chunk)[48](index=48&type=chunk) - A promissory note for up to **$2,000,000** was issued to the Sponsor on April 2, 2025, with **$525,000** borrowed as of June 30, 2025, to address liquidity needs[47](index=47&type=chunk)[48](index=48&type=chunk) [NOTE 2. SIGNIFICANT ACCOUNTING POLICIES](index=13&type=section&id=NOTE%202.%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines key accounting principles and methods for financial statements, including fair value and tax treatment - The unaudited condensed financial statements are prepared in accordance with GAAP for interim financial information and SEC Regulation S-X[50](index=50&type=chunk) - The Company is an 'emerging growth company' and has elected not to opt out of the extended transition period for new or revised financial accounting standards[52](index=52&type=chunk)[53](index=53&type=chunk) - Marketable securities held in the Trust Account are primarily money market funds invested in Treasury securities and are presented at fair value[58](index=58&type=chunk) - The Company is an exempted Cayman Islands company and is not subject to income taxes in the Cayman Islands or the United States, resulting in a zero tax provision[63](index=63&type=chunk) [NOTE 3. INITIAL PUBLIC OFFERING](index=18&type=section&id=NOTE%203.%20INITIAL%20PUBLIC%20OFFERING) This note details the terms and proceeds of the company's Initial Public Offering, including units sold and composition - On October 15, 2024, the Company sold **23,000,000 Units** in its IPO, including the full exercise of the over-allotment option[75](index=75&type=chunk) - Each Unit was priced at **$10.00** and consisted of one Class A ordinary share and one-third of one redeemable Public Warrant[75](index=75&type=chunk) [NOTE 4. PRIVATE PLACEMENT](index=18&type=section&id=NOTE%204.%20PRIVATE%20PLACEMENT) This note describes the concurrent private placement of units, including participants, proceeds, and conditions for their value - Simultaneously with the IPO, **715,000 Placement Units** were sold at **$10.00 per unit** to Cohen Circle Sponsor I, LLC and Cantor Fitzgerald & Co., generating **$7,150,000**[76](index=76&type=chunk) - Each Placement Unit includes one Class A ordinary share and one-third of one Placement Warrant[76](index=76&type=chunk) - Placement Units and underlying securities will expire worthless if a Business Combination is not completed within the Combination Period[76](index=76&type=chunk) [NOTE 5. RELATED PARTY TRANSACTIONS](index=19&type=section&id=NOTE%205.%20RELATED%20PARTY%20TRANSACTIONS) This note discloses related party transactions, including founder shares, administrative services, and promissory notes - The Sponsor holds **7,905,000 Class B ordinary shares** (Founder Shares) acquired for **$25,000**[78](index=78&type=chunk) - The Company pays an affiliate of the Sponsor **$25,000 per month** for administrative support services[80](index=80&type=chunk) - The Chief Financial Officer receives **$12,500 per month** for services[81](index=81&type=chunk) - A promissory note was issued to the Sponsor on April 2, 2025, for up to **$2,000,000**, with **$525,000** borrowed as of June 30, 2025; it is non-interest bearing and due upon Business Combination[83](index=83&type=chunk) - The Sponsor or its affiliates may provide additional Working Capital Loans, which can be repaid or converted into units upon a Business Combination[85](index=85&type=chunk) [NOTE 6. COMMITMENTS AND CONTINGENCIES](index=21&type=section&id=NOTE%206.%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines potential future obligations and uncertain events, including geopolitical risks and deferred fees - Geopolitical instability, including the Russia-Ukraine and Israel-Hamas conflicts, poses risks that could adversely affect the Company's search for a business combination[87](index=87&type=chunk)[88](index=88&type=chunk) - Holders of Founder Shares, Placement Units, and Working Capital Loan units are entitled to registration rights for their securities[89](index=89&type=chunk) - Underwriters are entitled to a deferred fee of **$9,800,000**, payable from the Trust Account solely upon the completion of a Business Combination[91](index=91&type=chunk) - The Business Combination Agreement with Kyivstar Group Ltd. was amended on June 24, 2025, and July 10, 2025, to adjust share par value, board composition, equity plan timing, and share allocation[96](index=96&type=chunk)[97](index=97&type=chunk) [NOTE 7. SHAREHOLDERS' DEFICIT](index=23&type=section&id=NOTE%207.%20SHAREHOLDERS'%20DEFICIT) This note details shareholders' deficit components, including authorized shares, outstanding shares, and warrant characteristics - The Company is authorized to issue **5,000,000 preference shares** and **500,000,000 Class A ordinary shares**; **715,000 Class A shares** are issued and outstanding (excluding **23,000,000** subject to redemption)[98](index=98&type=chunk)[99](index=99&type=chunk) - **7,905,000 Class B ordinary shares** are issued and outstanding, which convert to Class A shares upon a Business Combination[101](index=101&type=chunk)[103](index=103&type=chunk) - There are **7,905,000 warrants** outstanding (**7,666,667 Public Warrants** and **238,333 Placement Warrants**)[104](index=104&type=chunk) - Public Warrants become exercisable 30 days after a Business Combination or 12 months from the IPO closing, expiring five years after a Business Combination[104](index=104&type=chunk) - The Company may redeem warrants at **$0.01** if the Class A ordinary share price equals or exceeds **$18.00** for 20 trading days within a 30-day period[107](index=107&type=chunk) - Placement Warrants are non-transferable for 30 days post-Business Combination, exercisable on a cashless basis, and non-redeemable[111](index=111&type=chunk) [NOTE 8. FAIR VALUE MEASUREMENTS](index=26&type=section&id=NOTE%208.%20FAIR%20VALUE%20MEASUREMENTS) This note explains valuation methodologies and classifications for financial instruments like marketable securities and warrants - The fair value of marketable securities held in the Trust Account is classified as Level 1, using quoted prices in active markets[113](index=113&type=chunk)[114](index=114&type=chunk) - Public Warrants were valued using the Binomial / Lattice Model and classified within shareholders' deficit, with no subsequent remeasurement[116](index=116&type=chunk) Fair Value Measurement Data | Asset | Level | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :---- | :-------------- | :------------------ | | Marketable securities held in Trust Account | 1 | $238,271,514 | $233,369,247 | Public Warrants Valuation Inputs | Valuation Input | October 15, 2024 | | :---------------- | :--------------- | | Share price | $9.94 | | Term (years) | 5.5 | | Risk-free rate | 3.9% | | Volatility | 5.0% | [NOTE 9. SEGMENT INFORMATION](index=28&type=section&id=NOTE%209.%20SEGMENT%20INFORMATION) This note clarifies the company operates as a single reportable segment, with key metrics reviewed by the CODM - The Company operates as a single reportable segment, with the Chief Financial Officer acting as the Chief Operating Decision Maker (CODM)[118](index=118&type=chunk) - The CODM reviews key metrics such as Trust Account balance, cash, general and administrative costs, and interest earned on marketable securities to assess performance and allocate resources[119](index=119&type=chunk)[120](index=120&type=chunk) [NOTE 10. SUBSEQUENT EVENTS](index=28&type=section&id=NOTE%2010.%20SUBSEQUENT%20EVENTS) This note discloses significant events that occurred after the balance sheet date but before financial statements were issued - On July 10, 2025, Amendment No. 2 to the Business Combination Agreement was executed, adjusting the allocation of Kyivstar Group Ltd. Common Shares[123](index=123&type=chunk) - A conforming Amendment No. 1 to the Sponsor Agreement was also entered on July 10, 2025[123](index=123&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, emphasizing its status as a blank check company focused on completing a business combination. It details the Business Combination Agreement, financial results, liquidity challenges, and going concern issues, along with key accounting policies [Overview](index=30&type=section&id=Overview) This section introduces the company as a blank check entity focused on completing a business combination - The Company is a blank check company incorporated on October 26, 2021, with the purpose of effecting a business combination[126](index=126&type=chunk) - It expects to incur significant costs in pursuing acquisition plans and cannot assure the successful completion of a Business Combination[127](index=127&type=chunk) [Business Combination Agreement](index=30&type=section&id=Business%20Combination%20Agreement) This section details the key terms and amendments of the agreement to acquire VEON Holdings B.V. through a merger - On March 18, 2025, the Company entered into a Business Combination Agreement with VEON Amsterdam B.V., VEON Holdings B.V., Kyivstar Group Ltd. (PubCo), and Varna Merger Sub Corp[128](index=128&type=chunk) - The transaction involves the Seller selling VEON Holdings equity to PubCo and Merger Sub merging into the Company, making the Company a wholly-owned subsidiary of PubCo[129](index=129&type=chunk)[130](index=130&type=chunk) - Amendment No. 1 (June 24, 2025) changed PubCo's common share par value, adjusted board size, and revised the timing for an equity incentive plan[131](index=131&type=chunk) - Amendment No. 2 (July 10, 2025) adjusted the allocation of Kyivstar Group Ltd. Common Shares to the Seller and Sponsor[132](index=132&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, highlighting income sources and trends in administrative costs - The Company has not generated operating revenues to date, with income primarily from interest on marketable securities in the Trust Account[133](index=133&type=chunk) - For the three months ended June 30, 2025, net income was **$1,456,466**, compared to a net loss of **$(29,487)** for the same period in 2024[134](index=134&type=chunk)[135](index=135&type=chunk) - For the six months ended June 30, 2025, net income was **$1,695,310**, compared to a net loss of **$(34,655)** for the same period in 2024[134](index=134&type=chunk)[136](index=136&type=chunk) - Interest earned on marketable securities in the Trust Account was **$2,458,506** (Q2 2025) and **$4,902,267** (H1 2025), while general and administrative costs were **$1,002,040** (Q2 2025) and **$3,206,957** (H1 2025)[134](index=134&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet obligations, including IPO proceeds, trust account balance, and funding - The Company consummated its IPO on October 15, 2024, generating **$230,000,000**, and a private placement generating **$7,150,000**[138](index=138&type=chunk) - A total of **$231,150,000** was placed in the Trust Account, which held **$238,271,514** as of June 30, 2025[139](index=139&type=chunk)[143](index=143&type=chunk) - Transaction costs amounted to **$14,373,989**, including a **$9,800,000** deferred underwriting fee[139](index=139&type=chunk) - On April 2, 2025, a promissory note for up to **$2,000,000** was issued to the Sponsor, with **$525,000** borrowed as of June 30, 2025, to fund working capital[140](index=140&type=chunk) - Net cash used in operating activities for the six months ended June 30, 2025, was **$1,190,727**[141](index=141&type=chunk) - The Sponsor or its affiliates may provide additional Working Capital Loans, repayable upon Business Combination or convertible into units[144](index=144&type=chunk) [Going Concern](index=33&type=section&id=Going%20Concern) This section addresses the company's ability to continue operations, noting its working capital deficit and capital needs - As of June 30, 2025, the Company had cash of **$33,784** outside the Trust Account and a working capital deficit of **$2,349,478**[146](index=146&type=chunk) - The Company will need to raise additional capital through loans or investments from its Sponsor[147](index=147&type=chunk) - The liquidity condition raises substantial doubt about the Company's ability to continue as a going concern for a period within one year[147](index=147&type=chunk) - Management plans to address this uncertainty through the consummation of a Business Combination[147](index=147&type=chunk) [Off-Balance Sheet Arrangements](index=34&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of material off-balance sheet arrangements impacting the company's financial position - The Company has no obligations, assets, or liabilities considered off-balance sheet arrangements as of June 30, 2025[148](index=148&type=chunk) [Contractual Obligations](index=34&type=section&id=Contractual%20Obligations) This section outlines the company's financial commitments, including administrative support and deferred underwriting fees - The Company has no long-term debt, capital lease obligations, operating lease obligations, or long-term liabilities[149](index=149&type=chunk) - Contractual obligations include **$25,000 per month** for administrative support and **$12,500 per month** for the Chief Financial Officer's services[149](index=149&type=chunk) - A deferred underwriting fee of **$9,800,000** is payable to underwriters only upon the completion of a Business Combination[150](index=150&type=chunk) [Critical Accounting Estimates and Policies](index=34&type=section&id=Critical%20Accounting%20Estimates%20and%20Policies) This section describes significant accounting judgments and policies applied, including those for redeemable shares and warrants - Management makes estimates and assumptions in preparing financial statements, but as of June 30, 2025, there were no critical accounting estimates to be disclosed[151](index=151&type=chunk) - Ordinary Shares subject to possible redemption are classified as temporary equity due to redemption features outside the Company's control[152](index=152&type=chunk) - Warrant instruments are accounted for under equity treatment at fair value and are not remeasured after initial issuance[153](index=153&type=chunk) - Net income (loss) per Ordinary Share is computed by dividing net income (loss) by the weighted average number of Ordinary Shares outstanding, excluding accretion associated with redeemable shares[154](index=154&type=chunk) - Management does not believe recently issued, but not yet effective, accounting standards would materially affect the financial statements[155](index=155&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Cohen Circle Acquisition Corp. I is exempt from providing detailed quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide the information otherwise required under this item[155](index=155&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the Chief Executive Officer and Chief Financial Officer, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, and reported no material changes in internal control over financial reporting during the quarter - The Certifying Officers concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[157](index=157&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[158](index=158&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings - There are no legal proceedings to report[160](index=160&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) The company refers to the risk factors previously disclosed in its Annual Report on Form 10-K, stating that there have been no material changes as of the date of this Quarterly Report - Risk factors are described in the Annual Report on Form 10-K filed on March 26, 2025[161](index=161&type=chunk) - As of the date of this Quarterly Report, there have been no material changes to the previously disclosed risk factors[161](index=161&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Initial Public Offering and the concurrent private placement, including the number of units sold, the gross proceeds generated, and how these funds were allocated to the Trust Account and transaction costs - The Initial Public Offering on October 15, 2024, involved the sale of **23,000,000 Units** at **$10.00 per unit**, generating gross proceeds of **$230,000,000**[162](index=162&type=chunk) - A private placement concurrently sold **715,000 Placement Units** at **$10.00 per unit**, generating gross proceeds of **$7,150,000**[163](index=163&type=chunk) - An aggregate of **$231,150,000** from the IPO and private placement was placed in the Trust Account[164](index=164&type=chunk) - Total transaction costs were **$14,373,989**, including a **$4,000,000** cash underwriting fee and a **$9,800,000** deferred underwriting fee[165](index=165&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - There are no defaults upon senior securities[167](index=167&type=chunk) [Item 4. Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures - There are no mine safety disclosures[168](index=168&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) The company reported no other information - There is no other information to report[169](index=169&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with or incorporated by reference into the Quarterly Report, including the Business Combination Agreement and its amendments, a promissory note, and various certifications - Exhibit 2.1(a) and 2.1(b) include the Business Combination Agreement (March 18, 2025) and Amendment No. 1 (June 24, 2025), incorporated by reference[171](index=171&type=chunk) - Exhibit 10.1 is the Promissory Note dated April 2, 2025, from Cohen Circle Acquisition Corp. I to Cohen Circle Sponsor I, LLC, incorporated by reference[171](index=171&type=chunk) - Exhibits 31.1*, 31.2*, 32.1**, and 32.2** are certifications of the Principal Executive Officer and Principal Financial Officer[171](index=171&type=chunk) [Signatures](index=38&type=section&id=Signatures) The report is signed by Betsy Z. Cohen, Chairman of the Board of Directors, President, and Chief Executive Officer, and R. Maxwell Smeal, Chief Financial Officer, on August 11, 2025 - The report was signed by Betsy Z. Cohen, Chairman of the Board of Directors, President, and Chief Executive Officer[175](index=175&type=chunk) - The report was also signed by R. Maxwell Smeal, Chief Financial Officer[175](index=175&type=chunk) - The signing date for the report was August 11, 2025[175](index=175&type=chunk)