[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) Q2 2025 revenue decreased 16% to $94.8 million, yet GAAP net income reached $104.4 million due to asset sales and debt extinguishment, supported by cost reductions and balance sheet restructuring [Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) Q2 2025 revenue decreased 16% to $94.8 million, yet GAAP net income reached $104.4 million due to asset sales and debt extinguishment, supported by cost reductions and balance sheet restructuring Q2 2025 Financial Performance (in millions, except EPS) | Financial Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $94.8M | $113.3M | $189.4M | $216.2M | | Gross Profit Margin (GAAP) | 38.1% | 41.6% | 36.4% | 40.7% | | Operating Loss (GAAP) | ($15.4M) | ($26.4M) | ($52.1M) | ($66.3M) | | Net Income (Loss) (GAAP) | $104.4M | ($27.3M) | $67.5M | ($43.3M) | | Diluted EPS (GAAP) | $0.57 | ($0.21) | $0.37 | ($0.33) | | Adjusted EBITDA | ($5.3M) | ($12.9M) | ($29.3M) | ($33.0M) | | Non-GAAP Diluted EPS | ($0.07) | ($0.14) | ($0.22) | ($0.31) | - Key operational and strategic achievements in Q2 2025 include: - Revenue was led by **double-digit growth** in Medical Technology and Aerospace & Defense markets[5](index=5&type=chunk) - Cost reduction programs resulted in over **$20 million of savings** in operating expenses[5](index=5&type=chunk) - A successful balance sheet restructuring combined debt retirement, refinancing, and a share repurchase[5](index=5&type=chunk) - Net income was significantly boosted by gains on the sale of the Geomagic software platform and gains on the extinguishment of debt[5](index=5&type=chunk) [Management Commentary](index=2&type=section&id=Management%20Commentary) CEO highlighted improved profitability from cost controls despite a 16% YoY revenue decline, with strong growth in Medical Technology and Aerospace & Defense offsetting other market weaknesses, alongside successful balance sheet restructuring - Profitability improved due to an intense focus on cost structure and operational efficiencies, including footprint consolidation and workforce restructuring, which are on track to continue through mid-2026[6](index=6&type=chunk) - Consolidated revenue declined **16% YoY** due to softness in customer capex spending, attributed to tariff volatility, however, excluding the divested Geomagic business, revenue grew roughly **8% sequentially** from Q1[6](index=6&type=chunk) - Strong performance was noted in specific markets: - **Medical Technology**: Personal Health Services grew **13% YoY** and **16% sequentially**[6](index=6&type=chunk) - **Aerospace & Defense**: Revenue grew **84% YoY** and **53% sequentially**, now exceeding **$30 million annually**[6](index=6&type=chunk) - **Dental**: The business was down **3%**, driven by a **19% sequential decline** in the aligner market[6](index=6&type=chunk) - The company bolstered its balance sheet by retiring **$88 million in debt** at a discount, extending maturities on remaining debt to 2030, and repurchasing **8 million shares** of common stock[6](index=6&type=chunk) [Detailed Financial Results](index=3&type=section&id=Detailed%20Financial%20Results) Presents a comprehensive analysis of Q2 2025 performance, including segment results, liquidity, and full financial statements [Q2 2025 Performance Analysis](index=3&type=section&id=Q2%202025%20Performance%20Analysis) Q2 2025 revenue declined 16% to $94.8 million, GAAP gross margin fell to 38.1%, but net income surged to $104.4 million and Adjusted EBITDA loss narrowed to $5.3 million due to lower operating expenses Q2 2025 Revenue and Gross Profit Margin (in millions, except percentages) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $94.8M | $113.3M | -16% | | Gross Profit Margin (GAAP) | 38.1% | 41.6% | -3.5 p.p. | | Non-GAAP Gross Profit Margin | 39.2% | 40.9% | -1.7 p.p. | - Net income attributable to 3D Systems Corporation increased by **$131.7 million** to **$104.4 million** compared to the prior year period[10](index=10&type=chunk) - Adjusted EBITDA improved by **$7.6 million** to a loss of **$5.3 million**, primarily driven by a reduction in operating expenses[10](index=10&type=chunk) [Segment Performance](index=3&type=section&id=Segment%20Performance) Healthcare Solutions revenue decreased 8% to $45.0 million, while Industrial Solutions revenue declined 23% to $49.8 million in Q2 2025 Segment Revenue (in thousands) | Segment Revenue (in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Healthcare Solutions | $45,020 | $48,900 | $86,336 | $94,313 | | Industrial Solutions | $49,818 | $64,352 | $103,042 | $121,844 | | **Total** | **$94,838** | **$113,252** | **$189,378** | **$216,157** | - **Healthcare Solutions**: Revenue decreased **8%** to **$45.0 million YoY**[8](index=8&type=chunk) - **Industrial Solutions**: Revenue decreased **23%** to **$49.8 million YoY**[9](index=9&type=chunk) [Financial Liquidity](index=3&type=section&id=Financial%20Liquidity) Cash and cash equivalents stood at $116.4 million as of June 30, 2025, a $55.0 million decrease from year-end 2024, primarily due to operating and financing outflows offset by investing inflows - Cash and cash equivalents totaled **$116.4 million** at the end of Q2 2025, down **$55.0 million** from December 31, 2024[11](index=11&type=chunk) - The decrease in cash resulted from: - Cash used in operations: **($59.6 million)**[11](index=11&type=chunk) - Cash used in financing activities: **($97.3 million)**[11](index=11&type=chunk) - Cash provided by investing activities: **$112.9 million**[11](index=11&type=chunk) - At June 30, 2025, total debt, net of deferred financing costs, was **$122.6 million**[11](index=11&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) Presents unaudited condensed consolidated financial statements for the period ended June 30, 2025, including Balance Sheets, Statements of Operations, and Cash Flows [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $587.8 million, total liabilities significantly reduced to $344.4 million due to lower debt, and total stockholders' equity increased to $241.2 million Condensed Consolidated Balance Sheets (in thousands) | Balance Sheet Item (in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $116,358 | $171,324 | | Total current assets | $390,122 | $428,830 | | **Total assets** | **$587,844** | **$608,846** | | 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=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 revenue was $94.8 million, with a gross profit of $36.2 million, and a $125.7 million gain on disposition resulted in a net income of $104.4 million and diluted EPS of $0.57 Condensed Consolidated Statements of Operations (in thousands) | Income Statement Item (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total revenue | $94,838 | $113,252 | | Gross profit | $36,150 | $47,098 | | Loss from operations | ($15,350) | ($26,412) | | Gain on disposition | $125,681 | $0 | | **Net income (loss) attributable to 3D Systems** | **$104,436** | **($27,258)** | | **Diluted EPS** | **$0.57** | **($0.21)** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, operating activities used $59.6 million, investing activities provided $112.9 million, and financing activities used $97.3 million, leading to a net cash decrease of $38.9 million Condensed Consolidated Statements of Cash Flows (Six Months Ended) (in thousands) | Cash Flow Item (Six Months Ended) (in thousands) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | 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, cash equivalents and restricted cash** | **($38,935)** | **($138,825)** | [Corporate Governance and Other Information](index=3&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section covers updates on the Board of Directors and details regarding the upcoming conference call for Q2 2025 results [Board of Directors Update](index=4&type=section&id=Board%20of%20Directors%20Update) The Board of Directors unanimously rejected the contingent resignation of Audit Committee chair Ms. Claudia Drayton, citing her critical role in remediating internal control weaknesses - The board of directors unanimously voted to reject the contingent resignation of Audit Committee chair Ms. Claudia Drayton[13](index=13&type=chunk) - The decision was based on the determination that her resignation would not be in the best interests of the company, particularly due to her ongoing leadership in remediating material weaknesses in internal financial reporting controls[13](index=13&type=chunk) [Conference Call Information](index=3&type=section&id=Conference%20Call%20Information) A conference call and webcast to discuss Q2 2025 results is scheduled for Tuesday, August 12, 2025, at 8:30 a.m. Eastern Time - A conference call to discuss Q2 2025 results is scheduled for Tuesday, August 12, 2025, at **8:30 a.m. Eastern Time**[12](index=12&type=chunk) [Non-GAAP Financial Measures](index=10&type=section&id=Non-GAAP%20Financial%20Measures) This section explains the company's use of non-GAAP financial measures and provides detailed reconciliations to their GAAP equivalents [Explanation of Non-GAAP Measures](index=10&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Management utilizes non-GAAP measures like gross profit, operating expense, Adjusted EBITDA, and diluted EPS to offer additional insight into core business trends by excluding variable or infrequent items - Management believes non-GAAP measures provide useful additional insight into underlying business trends and period-over-period comparisons by excluding items that may be highly variable, unusual, or infrequent[25](index=25&type=chunk) - Items excluded from GAAP results to arrive at non-GAAP measures include: - Amortization of intangible assets[26](index=26&type=chunk) - Acquisition and divestiture-related costs[26](index=26&type=chunk) - Stock-based compensation expenses[26](index=26&type=chunk) - Restructuring charges, impairment charges, and divestiture gains/losses[27](index=27&type=chunk) - Costs related to significant or unusual litigation[27](index=27&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures](index=11&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) Provides detailed reconciliations of GAAP to non-GAAP measures for gross profit, operating expense, Adjusted EBITDA, and diluted loss per share for Q2 and YTD 2025 and 2024 [Non-GAAP Gross Profit Reconciliation](index=11&type=section&id=Non-GAAP%20Gross%20Profit%20Reconciliation) Q2 2025 GAAP gross profit was $36.2 million (38.1% margin), adjusted to non-GAAP gross profit of $37.2 million (39.2% margin) after accounting for specific expenses Q2 Gross Profit (in millions) | Q2 Gross Profit (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Gross profit (GAAP) | $36.2 | $47.1 | | Amortization expense | $0.2 | $0.3 | | Restructuring expense | $0.8 | ($1.0) | | **Gross profit (Non-GAAP)** | **$37.2** | **$46.4** | | **Gross Profit Margin (Non-GAAP)** | **39.2%** | **40.9%** | [Non-GAAP Operating Expense Reconciliation](index=12&type=section&id=Non-GAAP%20Operating%20Expense%20Reconciliation) Q2 2025 GAAP operating expenses were $51.5 million, which adjusted to non-GAAP operating expenses of $46.8 million after excluding specific items Operating Expense (in millions) | Operating Expense (in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Operating expense (GAAP) | $51.5 | $73.5 | | Adjustments | ($4.7) | ($9.3) | | **Non-GAAP operating expense** | **$46.8** | **$64.2** | [Adjusted EBITDA Reconciliation](index=12&type=section&id=Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA improved to a loss of $5.3 million in Q2 2025, reconciled from GAAP net income of $104.4 million by adjusting for various items including a $125.7 million gain on disposition Adjusted EBITDA Reconciliation (in millions) | Adjusted EBITDA Reconciliation (in millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income (loss) (GAAP) | $104.4 | ($27.3) | | Adjustments (incl. taxes, D&A, gain on disposition, etc.) | ($109.7) | $14.4 | | **Adjusted EBITDA (Non-GAAP)** | **($5.3)** | **($12.9)** | [Non-GAAP Diluted Loss per Share Reconciliation](index=12&type=section&id=Non-GAAP%20Diluted%20Loss%20per%20Share%20Reconciliation) Q2 2025 GAAP diluted EPS was $0.57, which adjusted to a non-GAAP diluted loss per share of ($0.07) after excluding the gain on disposition and other items Diluted EPS Reconciliation (in dollars) | Diluted EPS Reconciliation (in dollars) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Diluted income (loss) per share (GAAP) | $0.57 | ($0.21) | | Gain on disposition | ($0.69) | $0.00 | | Other adjustments (net) | $0.05 | $0.07 | | **Non-GAAP diluted loss per share** | **($0.07)** | **($0.14)** |

Registration number with the Superintendency of Corporations: 1645890 Exhibit 99.1 Condensed Consolidated Interim Financial Statements At June 30, 2025 presented in comparative format Index Glossary of terms Condensed Consolidated Interim Financial Statements Consolidated Statements of Comprehensive Income Consolidated Statements of Financial Position Consolidated Statements of Changes in Equity Consolidated Statements of Cash Flows Notes to the Condensed Consolidated Interim Financial Statements Summary of ...

[Filing Information](index=1&type=section&id=Filing%20Information) This section provides essential identification and status details for Guardian Pharmacy Services, Inc.'s Form 10-Q filing [Registrant Details](index=1&type=section&id=Registrant%20Details) This section provides the basic identification details for Guardian Pharmacy Services, Inc.'s Form 10-Q filing, including its legal name, state of incorporation, principal executive offices, and telephone number - Registrant: **Guardian Pharmacy Services, Inc.**[2](index=2&type=chunk) - State of Incorporation: **Delaware**[2](index=2&type=chunk) - Principal Executive Offices: **300 Galleria Parkway SE, Suite 800, Atlanta, Georgia 30339**[3](index=3&type=chunk) [Filer Status and Shares Outstanding](index=1&type=section&id=Filer%20Status%20and%20Shares%20Outstanding) Guardian Pharmacy Services, Inc. is classified as a Non-accelerated filer, Smaller reporting company, and Emerging growth company, with specific Class A and Class B common stock shares outstanding as of August 1, 2025 - Filer Status: **Non-accelerated filer, Smaller reporting company, Emerging growth company**[5](index=5&type=chunk) Shares Outstanding as of August 1, 2025 | Class of Stock | Shares Outstanding | | :--------------- | :----------------- | | Class A Common Stock | 22,730,591 | | Class B Common Stock | 40,590,569 | [Special Note Regarding Forward-Looking Statements](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section provides a cautionary note regarding the forward-looking nature of statements within the report and the inherent risks and uncertainties involved [Nature of Forward-Looking Statements](index=4&type=section&id=Nature%20of%20Forward-Looking%20Statements) This section clarifies that the report contains forward-looking statements, which are not historical facts but rather expectations, beliefs, plans, and forecasts about future events or performance - Forward-looking statements are identified by words such as 'aims,' 'anticipates,' 'believes,' 'expects,' 'intends,' 'may,' 'plans,' 'will,' and similar expressions[10](index=10&type=chunk) - These statements are not guarantees of future performance and are subject to change based on various important factors, some beyond the company's control[10](index=10&type=chunk) [Risk Factors Affecting Future Results](index=4&type=section&id=Risk%20Factors%20Affecting%20Future%20Results) The company highlights several factors that could cause actual results to differ from forward-looking statements, including business strategy execution, market competition, and regulatory compliance - Key factors that could cause actual results to differ include the ability to execute business strategies, market and sell services, maintain relationships with pharmaceutical wholesalers and LTCFs, and comply with healthcare laws[11](index=11&type=chunk) - Other risks involve the impact of public health crises, government efforts to lower pharmaceutical costs, consolidation of managed care organizations, retention of management and professionals, legal proceedings, and cybersecurity threats[11](index=11&type=chunk) - The company undertakes no obligation to update forward-looking statements, except as required by law[12](index=12&type=chunk) [Part I. Financial Information](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the unaudited interim consolidated financial statements and management's discussion and analysis of the company's financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=ITEM%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited interim consolidated financial statements for Guardian Pharmacy Services, Inc. and its subsidiaries, including the Balance Sheets, Statements of Operations, Statements of Changes in Stockholders' Equity, and Statements of Cash Flows, along with their accompanying notes [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Consolidated Balance Sheet Highlights (in thousands) | Metric | December 31, 2024 | June 30, 2025 | Change (Absolute) | Change (%) | | :-------------------------- | :------------------ | :-------------- | :---------------- | :--------- | | Total Current Assets | $151,985 | $170,461 | $18,476 | 12.16% | | Total Assets | $320,810 | $356,334 | $35,524 | 11.07% | | Total Current Liabilities | $144,121 | $143,993 | $(128) | -0.09% | | Total Liabilities | $170,834 | $176,663 | $5,829 | 3.41% | | Total Equity | $149,976 | $179,671 | $29,695 | 19.80% | - Cash and cash equivalents increased significantly from **$4.66 million** at December 31, 2024, to **$18.82 million** at June 30, 2025[15](index=15&type=chunk) - Goodwill increased from **$69.30 million** to **$76.16 million**, reflecting recent acquisitions[15](index=15&type=chunk) [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's financial performance over specific periods, outlining revenues, expenses, and net income Consolidated Statements of Operations Highlights (in thousands, except per share) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Change (Absolute) | Change (%) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Change (Absolute) | Change (%) | | :-------------------------------------- | :------------------------------- | :------------------------------- | :---------------- | :--------- | :----------------------------- | :----------------------------- | :---------------- | :--------- | | Revenues | $300,037 | $344,334 | $44,297 | 14.76% | $575,447 | $673,642 | $98,195 | 17.06% | | Gross profit | $61,288 | $68,146 | $6,858 | 11.19% | $116,389 | $132,495 | $16,106 | 13.84% | | Operating income | $17,005 | $12,580 | $(4,425) | -26.02% | $24,938 | $25,585 | $647 | 2.59% | | Net income | $15,848 | $8,827 | $(7,021) | -44.30% | $22,943 | $18,100 | $(4,843) | -21.11% | | Net income attributable to Guardian Pharmacy Services, Inc. | $0 | $9,030 | N/A | N/A | $0 | $18,478 | N/A | N/A |\ | Basic EPS (Class A and B) | N/A | $0.15 | N/A | N/A | N/A | $0.30 | N/A | N/A | | Diluted EPS (Class A and B) | N/A | $0.14 | N/A | N/A | N/A | $0.29 | N/A | N/A | - The company recorded a provision for income taxes of **$3.76 million** for the three months ended June 30, 2025, and **$7.59 million** for the six months ended June 30, 2025, compared to $0 in the prior year periods due to the Corporate Reorganization and IPO[17](index=17&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity and Members' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20and%20Members'%20Equity) This section illustrates the changes in the company's equity over time, reflecting net income, share-based compensation, and stock conversions Changes in Total Equity (in thousands) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------- | :------------------ | :-------------- | | Total Equity | $149,976 | $179,671 | - Total equity increased by **$29.70 million** from December 31, 2024, to June 30, 2025, driven by net income attributable to Guardian Pharmacy Services, Inc. (**$9.03 million** for Q2 2025), share-based compensation expense (**$4.45 million** for Q2 2025), and non-cash equity contributions[21](index=21&type=chunk) - **13,519,946 shares of Class B Common Stock** were converted to Class A Common Stock during the period[21](index=21&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the cash inflows and outflows from operating, investing, and financing activities, showing the overall change in cash position Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands) | Activity | 2024 | 2025 | Change (Absolute) | | :-------------------- | :---------- | :---------- | :---------------- | | Operating Activities | $37,787 | $37,486 | $(301) |\ | Investing Activities | $(16,702) | $(18,549) | $(1,847) |\ | Financing Activities | $(20,299) | $(4,780) | $15,519 | | Net Change in Cash | $786 | $14,157 | $13,371 | | Cash, End of Period | $1,538 | $18,817 | $17,279 | - Net cash provided by operating activities remained relatively stable, decreasing slightly by **$0.3 million**[25](index=25&type=chunk) - Net cash used in investing activities increased by **$1.8 million**, primarily due to higher purchases of property and equipment[25](index=25&type=chunk) - Net cash used in financing activities decreased significantly by **$15.5 million**, mainly due to lower member distributions compared to the prior year, partially offset by proceeds from equity offering and repurchase of Class A common stock in 2025[25](index=25&type=chunk) [Notes to the Unaudited Interim Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the interim consolidated financial statements, clarifying accounting policies and significant events [Note 1. Organization and Background](index=10&type=section&id=Note%201.%20Organization%20and%20Background) This note describes the company's business, its corporate structure, and significant events such as the IPO and Corporate Reorganization - Guardian Pharmacy Services, Inc. provides technology-enabled pharmacy services to residents of long-term health care facilities (LTCFs), including assisted living and behavioral health facilities[27](index=27&type=chunk) - The company completed an IPO on September 27, 2024, issuing **9.2 million shares of Class A common stock** at **$14.00 per share**, generating net proceeds of **$119.78 million**[33](index=33&type=chunk) - A Corporate Reorganization prior to the IPO converted Guardian Pharmacy, LLC into a wholly-owned subsidiary of the Company, with Class B common stock converting to Class A common stock over time[29](index=29&type=chunk)[31](index=31&type=chunk)[34](index=34&type=chunk) - In May 2025, a follow-on offering of **1,440,447 Class A common shares** at **$21.00 per share** was completed, with net proceeds used to repurchase an equal number of Class A shares from converted Class B shares, resulting in no change to outstanding Class A shares[35](index=35&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=11&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the financial statements, including consolidation, revenue recognition, and recent accounting pronouncement adoptions - The financial statements are prepared in conformity with U.S. GAAP for interim financial reporting and include the accounts of the Company and all controlled subsidiaries[38](index=38&type=chunk) - The Corporate Reorganization was accounted for as a combination of entities under common control, with Guardian Pharmacy, LLC considered the accounting predecessor[40](index=40&type=chunk) - The company adopted ASU 2023-07 (Segment Reporting) for annual disclosures on January 1, 2024, and for interim disclosures on January 1, 2025, and ASU 2024-01 (Profits Interest) on January 1, 2025, with no material impact[43](index=43&type=chunk)[47](index=47&type=chunk)[49](index=49&type=chunk) - New accounting standards not yet effective include ASU 2023-09 (Income Taxes), ASU 2024-03 (Expense Disaggregation), and ASU 2025-03 (Business Combinations), which the company is currently evaluating for impact[48](index=48&type=chunk) [Note 3. Acquisitions](index=14&type=section&id=Note%203.%20Acquisitions) This note details the company's acquisition strategy and summarizes the financial impact of business combinations completed in 2024 and 2025 - The company's growth strategy includes acquiring institutional pharmacies serving LTCFs[52](index=52&type=chunk) 2025 Acquisitions Summary (in thousands) | Metric | Fair Value | | :-------------------------- | :--------- | | Total purchase consideration | $11,088 | | Cash consideration | $8,920 | | Contingent earnout payments | Up to $1,700 | | Goodwill | $6,867 | | Intangible Assets | $4,390 | 2024 Acquisitions Summary (in thousands) | Metric | Fair Value | | :-------------------------- | :--------- | | Total purchase consideration | $17,410 | | Cash consideration | $14,710 | | Contingent earnout payments | Up to $2,700 | | Goodwill | $13,250 | | Intangible Assets | $6,236 | - Goodwill from 2025 acquisitions (**$6.87 million**) and 2024 acquisitions (**$13.25 million**) represents future economic benefits from expanded presence, assembled workforce, and expected synergies[58](index=58&type=chunk)[66](index=66&type=chunk) [Note 4. Fair Value Measurements](index=16&type=section&id=Note%204.%20Fair%20Value%20Measurements) This note explains the company's methodology for fair value measurements, particularly for contingent consideration, and its impact on the balance sheet - The company uses a three-level valuation hierarchy for fair value measurements, with Level 3 inputs being unobservable and based on management's best estimates[69](index=69&type=chunk)[71](index=71&type=chunk) Contingent Consideration Payable (in thousands) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------- | :------------------ | :-------------- | | Contingent consideration payable | $2,700 | $2,450 | - The fair value of contingent consideration obligations decreased from **$2.70 million** at December 31, 2024, to **$2.45 million** at June 30, 2025, after accounting for current year acquisitions (**$1.70 million**) and payments (**$1.95 million**)[72](index=72&type=chunk) [Note 5. Commitments and Contingencies](index=17&type=section&id=Note%205.%20Commitments%20and%20Contingencies) This note addresses the company's exposure to legal proceedings and claims, outlining its policy for establishing loss provisions - The company is subject to legal proceedings and claims in the ordinary course of business and establishes loss provisions when losses are probable and estimable[73](index=73&type=chunk) Legal Expenses (Six Months Ended June 30, in thousands) | Year | Legal Expenses | | :--- | :------------- | | 2024 | $4,508 | | 2025 | $2,304 | [Note 6. Basic and Diluted Net Income Per Share](index=17&type=section&id=Note%206.%20Basic%20and%20Diluted%20Net%20Income%20Per%20Share) This note provides details on the calculation of basic and diluted earnings per share for Class A and Class B common stock, highlighting their identical rights - Basic and diluted EPS for Class A and Class B common stock are equal due to identical rights and privileges, except for transfer restrictions on Class B shares[75](index=75&type=chunk) Basic and Diluted Net Income Per Share (Class A and B Common Stock) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :-------------------------------------- | :------------------------------- | :----------------------------- | | Net income attributable to Guardian Pharmacy Services, Inc. | $9,030 thousand | $18,478 thousand | | Basic EPS | $0.15 | $0.30 | | Diluted EPS | $0.14 | $0.29 | | Weighted-average Class A and B common shares outstanding (Basic) | 62,045,901 | 62,044,614 | | Weighted-average Class A and B common shares outstanding (Diluted) | 63,203,003 | 63,055,106 | - EPS information is only presented for periods following the IPO (June 30, 2025), as prior periods' calculations were not meaningful[18](index=18&type=chunk)[76](index=76&type=chunk) [Note 7. Share-based Compensation](index=18&type=section&id=Note%207.%20Share-based%20Compensation) This note describes the company's share-based compensation plans, including the conversion of awards and the recognition of related expenses - Restricted Interest Unit awards were converted into Class B common stock in connection with the Corporate Reorganization and IPO[80](index=80&type=chunk) - On March 28, 2025, **13,519,946 shares of Class B common stock** automatically converted to Class A common stock[81](index=81&type=chunk) Share-based Compensation Expense (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Pre-IPO awards | $(272) | $0 | $5,673 | $0 | | Unvested Class A and B common stock | $0 | $3,383 | $0 | $6,767 | | Restricted stock units | $0 | $1,063 | $0 | $1,647 | | Total share-based compensation expense (income) | $(272) | $4,446 | $5,673 | $8,414 | Unamortized Share-based Compensation Costs (as of June 30, 2025, in thousands) | Award Type | Amount | Weighted Average Remaining Service Period (years) | | :-------------------------- | :----- | :---------------------------------------------- | | Unvested Class A and B common stock | $3,274 | 0.3 | | Restricted stock units | $10,911 | 2.6 | | Total | $14,185 | | [Note 8. Segments](index=20&type=section&id=Note%208.%20Segments) This note clarifies that the company operates as a single operating segment, with revenue derived solely from pharmaceutical and medical product sales within the United States - The company operates as a **single operating segment**, deriving revenue primarily from sales of pharmaceutical and medical products solely within the United States[85](index=85&type=chunk) - The Chief Operating Decision Maker (CODM) assesses performance and allocates resources based on net income and total assets[86](index=86&type=chunk)[87](index=87&type=chunk) Segment Net Income Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $300,037 | $344,334 | $575,447 | $673,642 | | Employee expenses (excluding share-based compensation) | $66,071 | $75,642 | $127,654 | $148,022 | | Share-based compensation expense | $(272) | $4,446 | $5,673 | $8,414 | | Depreciation and amortization | $4,874 | $5,489 | $9,625 | $10,756 | | Interest expense | $1,066 | $172 | $1,831 | $342 | | Income taxes | $0 | $3,760 | $0 | $7,593 | | Segment net income | $15,848 | $8,827 | $22,943 | $18,100 | [Note 9. Income Taxes](index=21&type=section&id=Note%209.%20Income%20Taxes) This note explains the company's income tax expense, effective tax rates, and the impact of the Corporate Reorganization and IPO on its tax status - Guardian Pharmacy Services, Inc. became subject to federal and state corporate income taxes starting **September 27, 2024**, following the Corporate Reorganization[91](index=91&type=chunk) Income Tax Expense and Effective Tax Rates | Period | Income Tax Expense (in thousands) | Effective Tax Rate | | :-------------------------------------- | :-------------------------------- | :----------------- | | Three Months Ended June 30, 2024 | $0 | 0% | | Three Months Ended June 30, 2025 | $3,760 | 29.9% | | Six Months Ended June 30, 2024 | $0 | 0% | | Six Months Ended June 30, 2025 | $7,593 | 29.6% | - The effective tax rate for 2025 was primarily influenced by state income taxes (approx. **5.0%**) and non-deductible share-based compensation charges (approx. **3.5%**)[92](index=92&type=chunk) - The company is assessing the impact of the recently enacted H.R. 1 (One Big Beautiful Bill Act) on its consolidated financial statements[93](index=93&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&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 condition and results of operations for the three and six months ended June 30, 2025, compared to the corresponding periods in 2024 [Overview](index=22&type=section&id=Overview) This section provides a high-level description of Guardian Pharmacy Services' business, its market position, and core growth strategies - Guardian Pharmacy Services is a leading pharmacy services company providing technology-enabled services to long-term health care facilities (LTCFs), focusing on assisted living and behavioral health facilities[97](index=97&type=chunk) - As of June 30, 2025, the company's **52 pharmacies** served approximately **195,000 residents** in about **7,400 LTCFs** across **38 states**[97](index=97&type=chunk) - The core growth strategy involves increasing residents served through organic growth (new relationships, increased adoption) and acquired growth (acquiring operating pharmacies)[100](index=100&type=chunk) [Corporate Reorganization and IPO](index=23&type=section&id=Corporate%20Reorganization%20and%20IPO) This section details the company's IPO and the preceding corporate reorganization, including share issuance, proceeds, and stock conversion mechanisms - The company completed its IPO on **September 27, 2024**, issuing **9.2 million Class A common shares** at **$14.00 per share**, raising **$119.8 million net proceeds**[101](index=101&type=chunk) - A Corporate Reorganization preceded the IPO, making the Company a holding company with **100% interest** in Guardian Pharmacy, LLC, and converting certain subsidiary interests into Class B common stock[102](index=102&type=chunk)[104](index=104&type=chunk) - Class B common stock automatically converts to Class A common stock on a one-for-one basis in four equal installments, with the first conversion occurring on **March 28, 2025** (**13,519,946 shares**)[104](index=104&type=chunk)[105](index=105&type=chunk) - A follow-on offering in May 2025 involved the sale of **1,440,447 Class A shares** at **$21.00 per share**, with proceeds used to repurchase an equal number of Class A shares from converted Class B shares, resulting in no net change to outstanding Class A shares[106](index=106&type=chunk) [Factors Affecting Comparability](index=24&type=section&id=Factors%20Affecting%20Comparability) This section highlights that acquisitions completed in 2024 and 2025 significantly impact the comparability of the company's operating results across periods - Acquisitions completed in **2024 and 2025** significantly impacted the comparability of operating results between periods[109](index=109&type=chunk)[110](index=110&type=chunk) [Components of Results of Operations](index=24&type=section&id=Components%20of%20Results%20of%20Operations) This section defines the key components of the company's financial performance, including revenue recognition, cost of goods sold, and selling, general, and administrative expenses - Revenue is recognized upon delivery of prescriptions and pharmacy services to LTCFs[111](index=111&type=chunk) - Cost of goods sold includes prescription fulfillment, pharmacy personnel expenses, delivery charges, and supporting overhead[112](index=112&type=chunk) - Selling, general, and administrative expenses cover personnel, facilities, software, sales and marketing, insurance, professional services, changes in fair value of contingent payments, and depreciation/amortization[113](index=113&type=chunk) - Prior to the IPO, share-based compensation was a liability, but post-IPO, it primarily represents equity-based awards (Class B common stock and restricted stock units)[114](index=114&type=chunk)[116](index=116&type=chunk) [Results of Operations for the Three and Six Months Ended June 30, 2024 and 2025](index=25&type=section&id=Results%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202024%20and%202025) This section provides a detailed comparative analysis of the company's financial performance for the three and six months ended June 30, 2024 and 2025 [Revenue](index=26&type=section&id=Revenue) This section analyzes the drivers of revenue growth, distinguishing between contributions from acquisitions and organic expansion Revenue Performance (in thousands) | Period | 2024 | 2025 | Change (Absolute) | Change (%) | | :-------------------- | :----------- | :----------- | :---------------- | :--------- | | Three Months Ended June 30 | $300,037 | $344,334 | $44,297 | 14.8% | | Six Months Ended June 30 | $575,447 | $673,642 | $98,195 | 17.1% | - The increase in revenue was driven by **$9.9 million** (three months) and **$30.1 million** (six months) from acquisitions, and **$34.4 million** (three months) and **$68.1 million** (six months) from organic growth[123](index=123&type=chunk)[124](index=124&type=chunk) - Organic growth was supported by an increase in residents served (from **174,000 to 195,000**) and prescriptions dispensed (from **6.2 million to 7.0 million** for Q2, and **12.0 million to 13.7 million** for YTD), along with annual drug price inflation[123](index=123&type=chunk)[124](index=124&type=chunk) [Cost of Goods Sold](index=26&type=section&id=Cost%20of%20Goods%20Sold) This section examines the changes in cost of goods sold, attributing increases to both acquisitions and organic growth, and noting its percentage of revenue Cost of Goods Sold Performance (in thousands) | Period | 2024 | 2025 | Change (Absolute) | Change (%) | Percentage of Revenue (2024) | Percentage of Revenue (2025) | | :-------------------- | :----------- | :----------- | :---------------- | :--------- | :--------------------------- | :--------------------------- | | Three Months Ended June 30 | $238,749 | $276,188 | $37,439 | 15.7% | 79.6% | 80.2% | | Six Months Ended June 30 | $459,058 | $541,147 | $82,089 | 17.9% | 79.8% | 80.3% | - The increase in cost of goods sold was due to **$8.6 million** (three months) and **$27.4 million** (six months) from acquisitions, and **$28.8 million** (three months) and **$54.7 million** (six months) from organic growth[126](index=126&type=chunk)[127](index=127&type=chunk) - Cost of goods sold as a percentage of revenue increased slightly from **79.6% to 80.2%** for the three months and from **79.8% to 80.3%** for the six months ended June 30, 2025[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk) [Selling, General, and Administrative Expenses](index=27&type=section&id=Selling%2C%20General%2C%20and%20Administrative%20Expenses) This section analyzes the changes in selling, general, and administrative expenses, attributing increases to employee headcount and share-based compensation Selling, General, and Administrative Expenses (in thousands) | Period | 2024 | 2025 | Change (Absolute) | Change (%) | Percentage of Revenue (2024) | Percentage of Revenue (2025) | | :-------------------- | :----------- | :----------- | :---------------- | :--------- | :--------------------------- | :--------------------------- | | Three Months Ended June 30 | $44,283 | $55,566 | $11,283 | 25.5% | 14.8% | 16.1% | | Six Months Ended June 30 | $91,451 | $106,910 | $15,459 | 16.9% | 15.9% | 15.9% | - The increase for the three months was driven by a **$6.6 million increase in employee headcount** (organic growth **$5.2 million**, acquisitions **$1.4 million**) and a **$4.7 million increase in share-based compensation expense**[128](index=128&type=chunk) - For the six months, the increase was due to a **$12.8 million increase in employee headcount** (organic growth **$8.3 million**, acquisitions **$4.5 million**) and a **$2.7 million increase in share-based compensation expense**[129](index=129&type=chunk) - As a percentage of revenue, SG&A increased from **14.8% to 16.1%** for the three months, primarily due to share-based compensation, but remained stable at **15.9%** for the six months[128](index=128&type=chunk)[129](index=129&type=chunk) [Interest Expense](index=27&type=section&id=Interest%20Expense) This section details the significant decrease in interest expense, primarily due to the absence of outstanding balances under the Credit Facility Interest Expense (in thousands) | Period | 2024 | 2025 | Change (Absolute) | Change (%) | | :-------------------- | :--------- | :--------- | :---------------- | :--------- | | Three Months Ended June 30 | $1,066 | $172 | $(894) | -83.9% | | Six Months Ended June 30 | $1,831 | $342 | $(1,489) | -81.3% | - The significant decrease in interest expense was due to having no outstanding balances under the Credit Facility during the three and six months ended June 30, 2025[130](index=130&type=chunk)[131](index=131&type=chunk) [Provision for Income Taxes](index=28&type=section&id=Provision%20for%20Income%20Taxes) This section explains the new provision for income taxes in 2025, a direct consequence of the company's corporate reorganization and IPO Provision for Income Taxes (in thousands) | Period | 2024 | 2025 | | :-------------------- | :--- | :--- | | Three Months Ended June 30 | $0 | $3,760 | | Six Months Ended June 30 | $0 | $7,593 | - Income tax expense was **$3.8 million** and **$7.6 million** for the three and six months ended June 30, 2025, respectively, compared to $0 in the prior year periods[133](index=133&type=chunk) - This change is due to the company becoming subject to corporate income taxes after the IPO, as prior periods' business was conducted through entities treated as partnerships for tax purposes[133](index=133&type=chunk) [Adjusted EBITDA and Other Non-GAAP Financial Measures](index=28&type=section&id=Adjusted%20EBITDA%20and%20Other%20Non-GAAP%20Financial%20Measures) This section presents non-GAAP financial measures like Adjusted EBITDA and Adjusted EPS, used by management to evaluate core operating performance - The company presents **Adjusted EBITDA, Adjusted EPS, and Adjusted SG&A** as non-GAAP financial measures to evaluate core operating performance[134](index=134&type=chunk)[138](index=138&type=chunk) - Adjusted EBITDA excludes interest, income taxes, depreciation, amortization, share-based compensation, acquisition accounting adjustments, certain legal/regulatory items, and financing-related activities[135](index=135&type=chunk) Adjusted EBITDA and Adjusted EPS (in thousands, except per share) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $15,848 | $8,827 | $22,943 | $18,100 | | EBITDA | $21,788 | $18,008 | $34,399 | $36,379 | | Adjusted EBITDA | $21,676 | $24,952 | $41,931 | $48,385 | | Adjusted EBITDA as a percentage of revenue | 7.2% | 7.2% | 7.3% | 7.2% | | Diluted EPS | N/A | $0.14 | N/A | $0.29 | | Adjusted EPS | N/A | $0.23 | N/A | $0.47 | - Adjusted EBITDA increased by **15.1%** for the three months and **15.4%** for the six months ended June 30, 2025, while remaining stable as a percentage of revenue at approximately **7.2%**[142](index=142&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its financial obligations, detailing cash position, credit facilities, and expected cash flow sufficiency - As of June 30, 2025, the company had **$18.8 million** in cash and cash equivalents[144](index=144&type=chunk) - The Credit Facility with Regions Bank was amended in May 2024, extending its maturity to **April 23, 2027**, and providing a **$40 million line of credit** with the ability to increase to **$75 million**[145](index=145&type=chunk) - As of June 30, 2025, there were no outstanding principal amounts under the Term Loan or borrowings under the line of credit[146](index=146&type=chunk) - Management believes existing cash, expected cash flows from operations, and the Credit Facility are sufficient to meet working capital and capital expenditure needs for the foreseeable future[146](index=146&type=chunk) [Net Cash Flows](index=31&type=section&id=Net%20Cash%20Flows) This section provides a detailed breakdown of cash flows from operating, investing, and financing activities, highlighting significant changes between periods Net Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2024 | 2025 | Change (Absolute) | | :-------------------- | :---------- | :---------- | :---------------- | | Operating activities | $37,787 | $37,486 | $(301) | | Investing activities | $(16,702) | $(18,549) | $(1,847) | | Financing activities | $(20,299) | $(4,780) | $15,519 | - Net cash provided by operating activities decreased slightly by **$0.3 million**, primarily due to decreases in other current liabilities (income tax payments) and accounts payable, offset by increases in accrued compensation[150](index=150&type=chunk) - Net cash used in investing activities increased by **$1.8 million**, mainly due to a **$3.4 million increase in property and equipment purchases**, partially offset by **$1.3 million less cash paid for acquisitions**[152](index=152&type=chunk) - Net cash used in financing activities decreased by **$15.5 million**, primarily due to a **$31.5 million decrease in distributions to equity holders**, partially offset by a **$15.0 million decrease in borrowings from notes payable**[154](index=154&type=chunk) [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section affirms that the company's financial statements adhere to GAAP, involving estimates and judgments, with no material changes to policies since December 31, 2024 - The company's consolidated financial statements are prepared in accordance with GAAP, requiring estimates and judgments that can affect reported amounts[155](index=155&type=chunk) - There were no material changes to critical accounting policies since **December 31, 2024**[156](index=156&type=chunk) [Recent Accounting Pronouncements](index=32&type=section&id=Recent%20Accounting%20Pronouncements) This section directs readers to Note 2 for comprehensive details on recently adopted and not-yet-adopted accounting pronouncements - Refer to **Note 2** of the consolidated financial statements for details on accounting pronouncements adopted and not yet adopted[157](index=157&type=chunk) [JOBS Act Accounting Election](index=33&type=section&id=JOBS%20Act%20Accounting%20Election) This section states the company's election to use the extended transition period for new accounting standards as an Emerging Growth Company under the JOBS Act - The company has elected to use the extended transition period for complying with new or revised accounting standards as an Emerging Growth Company (EGC) under the JOBS Act[159](index=159&type=chunk) - The company could remain an EGC until the fifth anniversary of its IPO, or until certain revenue, market value, or debt issuance thresholds are met[160](index=160&type=chunk) [Item 3. Quantitative and Qualitative Disclosure about Market Risk](index=33&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) This section discusses the company's exposure to market risks, primarily focusing on interest rate sensitivities and their potential impact on financial condition and results of operations [Interest Rate Risk](index=33&type=section&id=Interest%20Rate%20Risk) This section identifies interest rate sensitivity as the company's primary market risk, detailing its cash position and the expected impact of rate changes - The company's primary market risk exposure is interest rate sensitivity, affecting interest income on cash and cash equivalents[161](index=161&type=chunk) - As of June 30, 2025, cash and cash equivalents totaled **$18.8 million**[161](index=161&type=chunk) - A hypothetical **100 basis point increase or decrease** in interest rates is not expected to have a material impact on the company's financial condition or results of operations[161](index=161&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section details the management's evaluation of the effectiveness of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=33&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms management's conclusion that the company's disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance of timely and accurate reporting - As of **June 30, 2025**, management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were designed and effective to provide reasonable assurance of timely and accurate reporting[162](index=162&type=chunk)[163](index=163&type=chunk) - Management acknowledges that no controls can provide absolute assurance and judgment is applied in evaluating benefits versus costs[164](index=164&type=chunk) [Changes in Internal Control over Financial Reporting](index=33&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports that no material changes occurred in internal control over financial reporting during the three and six months ended June 30, 2025 - During the three and six months ended **June 30, 2025**, there were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[165](index=165&type=chunk) [Part II. Other Information](index=33&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers additional information not included in the financial statements, such as legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=33&type=section&id=ITEM%201.%20Legal%20Proceedings) This section addresses the company's involvement in legal proceedings and claims arising in the ordinary course of business - The company is not currently aware of any legal proceedings or claims that are believed to have a material adverse effect on its business, financial condition, or results of operations[167](index=167&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=ITEM%201A.%20Risk%20Factors) This section refers investors to the comprehensive risk factors detailed in the company's Annual Report on Form 10-K and confirms no material changes - Investing in Class A common stock involves a high degree of risk, and investors should carefully consider the risk factors described in the Annual Report on Form 10-K for the year ended **December 31, 2024**[169](index=169&type=chunk) - There have been no material changes to the risk factors described in the Annual Report on Form 10-K[169](index=169&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the use of proceeds from the company's Initial Public Offering (IPO) and the share repurchase activity related to the May 2025 follow-on offering - No recent sales of unregistered securities occurred[170](index=170&type=chunk) - Net proceeds from the **September 2024 IPO** totaled **$119.8 million**, used to fund **$55.2 million** for merger consideration in the Corporate Reorganization and **$20.0 million** to repay credit facility borrowings, with the balance for general corporate purposes[171](index=171&type=chunk) - In **May 2025**, the company repurchased **1,440,447 shares of Class A common stock** at an average price of **$20.16 per share**, using proceeds from a follow-on offering, which were then cancelled, resulting in no change to total outstanding Class A common stock[172](index=172&type=chunk)[173](index=173&type=chunk) [Item 3. Defaults Upon Senior Securities](index=35&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms whether there have been any defaults upon senior securities - There were no defaults upon senior securities[174](index=174&type=chunk) [Item 4. Mine Safety Disclosures](index=35&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section indicates the applicability of mine safety disclosures to the company - Mine safety disclosures are not applicable to the company[175](index=175&type=chunk) [Item 5. Other Information](index=35&type=section&id=ITEM%205.%20Other%20Information) This section provides information on other matters, specifically Rule 10b5-1 trading plans - During the quarter ended **June 30, 2025**, none of the company's directors and officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement[176](index=176&type=chunk) [Item 6. Exhibits](index=36&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including agreements, certifications, and XBRL-related documents - Exhibits include the Agreement and Plan of Merger, Amended and Restated Certificate of Incorporation and Bylaws, Form of Stock Purchase Agreement, and various certifications (e.g., Rule 13a-14(a), 18 U.S.C. Section 1350)[178](index=178&type=chunk) - XBRL Taxonomy documents (Schema, Calculation, Definition, Label, Presentation Linkbase) and the Cover Page Interactive Data File are also included[179](index=179&type=chunk) [Signatures](index=37&type=section&id=SIGNATURES) This section contains the official signatures, certifying the due authorization and filing of the report [Signatures](index=37&type=section&id=Signatures) This section contains the official signatures, certifying the due authorization and filing of the report - The report was signed on **August 11, 2025**, by **David K. Morris**, Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) of Guardian Pharmacy Services, Inc[182](index=182&type=chunk)

[Commonly Used Defined Terms](index=3&type=section&id=Commonly%20Used%20Defined%20Terms) This section provides definitions for key terms and abbreviations used throughout the financial report [PART I – FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part presents the company's comprehensive financial data, including statements, notes, and management's analysis of performance and condition [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Green Plains Inc. and its subsidiaries, including balance sheets, statements of operations, comprehensive loss, and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial items [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Cash and cash equivalents | $108,624 | $173,041 | $(64,417) | | Total current assets | $436,206 | $569,032 | $(132,826) | | Total assets | $1,612,516 | $1,782,174 | $(169,658) | | Total current liabilities | $296,996 | $385,687 | $(88,691) | | Total liabilities | $872,084 | $907,637 | $(35,553) | | Total stockholders' equity | $740,432 | $874,537 | $(134,105) | [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net loss over specific reporting periods | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :----------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenues | $552,829 | $618,825 | $1,154,344 | $1,216,039 | | Total costs and expenses | $581,192 | $636,536 | $1,244,967 | $1,278,639 | | Operating loss | $(28,363) | $(17,711) | $(90,623) | $(62,600) | | Net loss attributable to Green Plains | $(72,238) | $(24,350) | $(145,144) | $(75,762) | | Net loss attributable to Green Plains - basic and diluted (per share) | $(1.09) | $(0.38) | $(2.22) | $(1.19) | [Consolidated Statements of Comprehensive Loss](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) This statement presents the net loss and other comprehensive income or loss components, reflecting total changes in equity from non-owner sources | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net loss | $(72,227) | $(24,038) | $(144,868) | $(75,160) | | Total other comprehensive income (loss), net of tax | $(5,444) | $1,091 | $(7,714) | $353 | | Comprehensive loss attributable to Green Plains | $(77,682) | $(23,259) | $(152,858) | $(75,409) | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement categorizes cash inflows and outflows from operating, investing, and financing activities over specific periods | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by (used in) operating activities | $3,754 | $(65,717) |\n| Net cash used in investing activities | $(32,341) | $(55,507) |\n| Net cash used in financing activities | $(28,088) | $(32,444) |\n| Net change in cash and cash equivalents, and restricted cash | $(56,675) | $(153,668) |\n| Cash and cash equivalents, and restricted cash, end of period | $152,720 | $225,094 | [Notes to Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide essential details and explanations supporting the consolidated financial statements, covering accounting policies, business segments, recent transactions, fair value measurements, debt, equity, and other financial commitments [1. BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=13&type=section&id=1.%20BASIS%20OF%20PRESENTATION%2C%20DESCRIPTION%20OF%20BUSINESS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the foundational principles, business operations, and key accounting policies applied in preparing the financial statements - Green Plains Inc. operates in two segments: (1) ethanol production (ethanol, distillers grains, Ultra-High Protein, renewable corn oil) and (2) agribusiness and energy services (grain handling, commodity marketing, merchant trading)[39](index=39&type=chunk) - The company completed the merger with Green Plains Partners on January 9, 2024, acquiring all publicly held common units not already owned[33](index=33&type=chunk) - Management uses estimates and assumptions in preparing financial statements, particularly for derivative financial instruments and income taxes, which could lead to actual results differing from estimates[38](index=38&type=chunk) [2. REVENUE](index=16&type=section&id=2.%20REVENUE) This note details the company's revenue recognition policies and disaggregates revenue by segment and accounting standard Total Revenues by Segment and Accounting Standard (in thousands) | Segment / Standard | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | **Ethanol Production** | | | | | | ASC 606 | $62,964 | $39,728 | $93,911 | $80,088 | | ASC 815 | $464,189 | $485,715 | $931,014 | $951,014 | | **Agribusiness & Energy Services** | | | | | | ASC 606 | $3,485 | $2,649 | $8,766 | $5,150 | | ASC 815 | $28,046 | $98,300 | $132,594 | $194,795 | | **Total Revenues** | **$552,829** | **$618,825** | **$1,154,344** | **$1,216,039** | - Revenues from Customer A represented **45%** and **21%** of total revenues for the three and six months ended June 30, 2025, respectively, within the ethanol production segment[63](index=63&type=chunk) [3. MERGER AND DISPOSITIONS](index=19&type=section&id=3.%20MERGER%20AND%20DISPOSITIONS) This note describes significant corporate transactions, including recent mergers and asset sales, and their financial impacts - On May 31, 2025, the company sold its **75%** interest in Proventus LLC for **$0.4 million**, recording a pretax loss of **$4.0 million**[64](index=64&type=chunk) - On June 30, 2025, the company sold its **50%** investment in GP Turnkey Tharaldson LLC for **$25.0 million**, resulting in a preliminary pretax loss of **$27.0 million**[65](index=65&type=chunk) - On January 9, 2024, the company completed the merger with Green Plains Partners, issuing approximately **4.7 million shares** of common stock and **$29.2 million** in cash for publicly held common units, accounted for as an equity transaction[66](index=66&type=chunk)[68](index=68&type=chunk) [4. FAIR VALUE DISCLOSURES](index=19&type=section&id=4.%20FAIR%20VALUE%20DISCLOSURES) This note provides information on the fair value measurements of financial instruments, categorized by valuation inputs Fair Value Measurements at June 30, 2025 (in thousands) | Category | Level 1 | Level 2 | Level 3 | Total | | :------- | :------ | :------ | :------ | :---- | | Assets | $152,720 | $25,058 | $5,500 | $183,278 | | Liabilities | $— | $30,377 | $— | $30,377 | - The fair value of the company's debt was approximately **$457.8 million** at June 30, 2025, compared to a book value of **$508.2 million**, estimated using Level 2 inputs[81](index=81&type=chunk) [5. SEGMENT INFORMATION](index=21&type=section&id=5.%20SEGMENT%20INFORMATION) This note presents financial data disaggregated by the company's operating segments, including revenues and operating income Segment Revenues (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Ethanol production | $527,153 | $525,443 | $1,024,925 | $1,031,102 | | Agribusiness and energy services | $31,531 | $100,949 | $141,360 | $199,945 | | Intersegment eliminations | $(5,855) | $(7,567) | $(11,941) | $(15,008) | | **Total Revenues** | **$552,829** | **$618,825** | **$1,154,344** | **$1,216,039** | Segment Operating Income (Loss) (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Ethanol production | $(12,218) | $(2,213) | $(51,768) | $(35,866) | | Agribusiness and energy services | $849 | $2,166 | $3,282 | $8,170 | | Corporate activities | $(16,994) | $(17,664) | $(42,137) | $(34,904) | | **Total Operating Loss** | **$(28,363)** | **$(17,711)** | **$(90,623)** | **$(62,600)** | Adjusted EBITDA Reconciliation (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 | $(72,227) | $(24,038) | $(144,868) | $(75,160) | | EBITDA | $(28,883) | $4,767 | $(70,389) | $(16,753) | | Restructuring costs | $2,520 | $— | $19,106 | $— | | Loss on sale of assets | $4,044 | $— | $4,044 | $— | | Impairment of assets held for sale | $10,724 | $— | $10,724 | $— | | Loss on sale of equity method investment | $26,987 | $— | $26,987 | $— | | **Adjusted EBITDA** | **$16,442** | **$5,038** | **$(7,700)** | **$(16,437)** | [6. INVENTORIES](index=25&type=section&id=6.%20INVENTORIES) This note details the composition of inventories and any related valuation adjustments Inventory Components (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :------------------ | :------------ | :---------------- | | Finished goods | $33,069 | $72,863 | | Commodities held for sale | $18,979 | $48,500 | | Raw materials | $32,987 | $37,334 | | Work-in-process | $11,819 | $13,569 | | Supplies and parts | $59,557 | $55,178 | | **Total Inventories** | **$156,411** | **$227,444** | - A **$2.3 million** inventory lower of cost or net realizable value adjustment was recorded for finished goods in the ethanol production segment for the three and six months ended June 30, 2025[97](index=97&type=chunk) [7. DERIVATIVE FINANCIAL INSTRUMENTS](index=25&type=section&id=7.%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) This note describes the company's use of derivative instruments for risk management and their fair value and notional volumes - At June 30, 2025, the company reported **$6.7 million** in net unrealized losses on derivatives in accumulated other comprehensive loss, expected to be reclassified to operating loss over the next **12 months**[98](index=98&type=chunk) Fair Values of Derivative Instruments (in thousands) | Category | June 30, 2025 (Asset Fair Value) | December 31, 2024 (Asset Fair Value) | June 30, 2025 (Liability Fair Value) | December 31, 2024 (Liability Fair Value) | | :------- | :------------------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | | Forwards | $6,079 | $10,154 | $10,399 | $4,791 | | Other liabilities | $— | $— | $38 | $15 | | **Total** | **$6,079** | **$10,154** | **$10,437** | **$4,806** | Notional Volume of Open Commodity Derivative Positions as of June 30, 2025 (in thousands) | Derivative Instrument | Net Long & (Short) (Exchange-Traded) | Long (Non-Exchange-Traded) | (Short) (Non-Exchange-Traded) | Unit of Measure | Commodity | | :-------------------- | :----------------------------------- | :------------------------- | :---------------------------- | :-------------- | :-------- | | Futures | (21,820) | | | Bushels | Corn | | Futures | (35,700) | | | Gallons | Ethanol | | Futures | (3,645) | | | MmBTU | Natural Gas | | Forwards | | 27,363 | — | Bushels | Corn | | Forwards | | 9,135 | (204,355) | Gallons | Ethanol | | Forwards | | 128 | (225) | Tons | Distillers Grains | | Forwards | | — | (48,266) | Pounds | Renewable Corn Oil | | Forwards | | 9,372 | (146) | MmBTU | Natural Gas | [8. DEBT](index=29&type=section&id=8.%20DEBT) This note provides detailed information on the company's various debt instruments, including terms, maturities, and compliance with covenants Long-Term Debt Components (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :-------------------------------------- | :------------ | :---------------- | | 2.25% convertible notes due 2027 | $230,000 | $230,000 | | Junior secured mezzanine notes due 2026 | $127,500 | $125,000 | | Term loan due 2035 | $70,875 | $71,625 | | Other | $10,811 | $11,163 | | **Total book value of long-term debt** | **$439,186** | **$437,788** | Short-Term Notes Payable and Other Borrowings (in thousands) | Borrowing Type | June 30, 2025 | December 31, 2024 | | :------------------------------------------- | :------------ | :---------------- | | $350.0 million revolver | $75,000 | $133,500 | | $20.0 million hedge line | $5,064 | $7,329 | | **Total short-term notes payable and other borrowings** | **$80,064** | **$140,829** | - The Junior Notes were amended on May 7, 2025, extending maturity to May 15, 2026, with a **$2.5 million** amendment fee, and further amended on August 10, 2025, extending maturity to September 15, 2026, with an additional **2.5% fee** and increased interest rates[122](index=122&type=chunk)[123](index=123&type=chunk)[167](index=167&type=chunk) - The company was in compliance with its debt covenants as of June 30, 2025[134](index=134&type=chunk) [9. STOCK-BASED COMPENSATION](index=33&type=section&id=9.%20STOCK-BASED%20COMPENSATION) This note outlines the company's stock-based compensation plans, including activity for non-vested awards and associated costs Non-Vested Restricted Stock Awards and Deferred Stock Units Activity (Six Months Ended June 30, 2025) | Activity | Non-Vested Shares and Deferred Stock Units | | :--------------------------- | :----------------------------------------- | | Non-Vested at December 31, 2024 | 735,513 | | Granted | 1,015,626 | | Forfeited | (106,094) | | Vested | (443,385) | | Non-Vested at June 30, 2025 | 1,201,660 | - Compensation costs for stock-based payment plans increased to **$11.1 million** for the six months ended June 30, 2025, from **$6.6 million** in the prior year, primarily due to accelerated vesting for the former CEO[142](index=142&type=chunk) - As of June 30, 2025, **$11.6 million** of unrecognized compensation costs remain, expected to be recognized over approximately **2.3 years**[142](index=142&type=chunk) [10. EARNINGS PER SHARE](index=35&type=section&id=10.%20EARNINGS%20PER%20SHARE) This note presents the calculation of basic and diluted earnings per share, reflecting the company's profitability on a per-share basis Earnings Per Share (in thousands, except per share amounts) | 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 attributable to Green Plains | $(72,238) | $(24,350) | $(145,144) | $(75,762) | | Weighted average shares outstanding - basic and diluted | 66,491 | 63,933 | 65,287 | 63,637 | | EPS - basic and diluted | $(1.09) | $(0.38) | $(2.22) | $(1.19) | [11. STOCKHOLDERS' EQUITY](index=35&type=section&id=11.%20STOCKHOLDERS'%20EQUITY) This note details changes in the components of stockholders' equity, including stock issuances and other equity transactions - On May 7, 2025, the company issued **1,504,140 stock warrants** at an exercise price of **$0.01 per share** with a **ten-year** exercise period, in connection with a revolving credit facility[145](index=145&type=chunk)[146](index=146&type=chunk) - Warrants previously issued in connection with Junior Notes were repriced from **$22.00 to $0.01** and their maturity extended to December 31, 2029, on May 7, 2025, with the increase in fair value recorded in additional paid-in capital[147](index=147&type=chunk) - The Green Plains Partners Merger on January 9, 2024, resulted in the issuance of approximately **4.7 million shares** of common stock and a **$133.8 million** reduction in non-controlling interest, capitalized within additional paid-in capital[150](index=150&type=chunk) [12. INCOME TAXES](index=37&type=section&id=12.%20INCOME%20TAXES) This note provides information on the company's income tax expense or benefit, deferred tax assets and liabilities, and the impact of tax legislation - The company recorded an income tax expense of **$2.3 million** for the three months ended June 30, 2025, compared to a benefit of **$0.3 million** in 2024, primarily due to an increased valuation allowance against deferred tax assets related to derivatives[158](index=158&type=chunk) - The Inflation Reduction Act (IRA) and the One Big Beautiful Bill Act (OBBB) are expected to benefit the company through expanded clean energy tax credits and extended provisions, though the full impact is not yet estimable[155](index=155&type=chunk)[157](index=157&type=chunk) [13. COMMITMENTS AND CONTINGENCIES](index=38&type=section&id=13.%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses the company's material contractual obligations, future purchase commitments, and potential liabilities from legal matters Aggregate Minimum Lease Payments (in thousands) | Year Ending December 31, | Amount | | :----------------------- | :----- | | 2025 | $14,184 | | 2026 | $22,310 | | 2027 | $17,364 | | 2028 | $8,052 | | 2029 | $4,378 | | Thereafter | $5,610 | | **Total** | **$71,898** | - As of June 30, 2025, the company had contracted future purchases of grain, distillers grains, and natural gas valued at approximately **$178.1 million**, and storage/transportation commitments of **$33.9 million**[163](index=163&type=chunk) - The company has incurred **$82.0 million** in accumulated construction costs for carbon capture and sequestration projects at three Nebraska plants, with an equal and offsetting liability, expected to be completed in 2025[165](index=165&type=chunk) [14. SUBSEQUENT EVENT](index=41&type=section&id=14.%20SUBSEQUENT%20EVENT) This note reports significant events that occurred after the balance sheet date but before the financial statements were issued - On August 10, 2025, the Junior Notes indenture was amended, extending the maturity to September 15, 2026, adding a **2.5% amendment fee**, increasing interest rates, and securing the notes with additional assets[167](index=167&type=chunk) - As part of the August 10, 2025 amendment, the company issued **3,250,000 stock warrants** to BlackRock at a strike price of **$0.01 per share** with a **ten-year** exercise period[167](index=167&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&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 condition and results of operations, highlighting key business activities, recent developments, operational performance, and liquidity, along with an analysis of market dynamics and regulatory impacts [General](index=42&type=section&id=General) This section provides an overview of the company's business model, operating segments, and strategic initiatives, including its transition to value-added agricultural technology - Green Plains is transitioning from a commodity-processing business to a value-added agricultural technology company, focusing on lower-carbon, high-value ingredients[173](index=173&type=chunk) - The company's two operating segments are Ethanol Production (producing ethanol, distillers grains, Ultra-High Protein, renewable corn oil) and Agribusiness and Energy Services (grain procurement, commodity marketing, and trading)[174](index=174&type=chunk)[175](index=175&type=chunk) - Green Plains is deploying carbon capture technology at several facilities to reduce the Carbon Intensity (CI) of its biofuels, with projects anticipated to be completed in Nebraska by **Q4 2025**[175](index=175&type=chunk) - The company is involved in Sustainable Aviation Fuel (SAF) development through a joint venture, Blue Blade Energy, and has commercialized FQT MSC™ technology for Ultra-High Protein (Sequence™) and CST™ for dextrose syrups[176](index=176&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk) [Recent Developments](index=44&type=section&id=Recent%20Developments) This section highlights significant events and strategic actions undertaken by the company, including debt amendments, asset sales, and operational adjustments - The Junior Notes were amended on August 10, 2025, extending maturity to September 15, 2026, with a **2.5% amendment fee** and increased interest rates, and new warrants were issued to BlackRock[182](index=182&type=chunk) - The company sold its **50%** investment in GP Turnkey Tharaldson LLC for **$25.0 million** on June 30, 2025, resulting in a **$27.0 million** pretax loss[184](index=184&type=chunk) - A corporate reorganization and cost reduction initiative launched in early 2025 is expected to yield approximately **$50 million** in annual financial improvement, leading to **$19.1 million** in restructuring costs for the six months ended June 30, 2025[192](index=192&type=chunk) - The company idled its Clean Sugar Technology (CST™) facility in Shenandoah, Iowa, and its **119 million gallon** ethanol plant in Fairmont, Minnesota, to optimize product mix and address margin pressures[194](index=194&type=chunk)[196](index=196&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) This section analyzes the company's operational performance, including ethanol production, market dynamics, and the impact of regulatory changes - Average ethanol production utilization rate was **86.1%** (**99.2%** excluding Fairmont) for Q2 2025, producing **193.6 million gallons** of ethanol[197](index=197&type=chunk) U.S. Ethanol Supply and Demand (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------- | :------ | :------ | :----- | | Domestic ethanol production (million barrels/day) | 1.05 | 1.02 | +2.9% | | Refiner and blender input volume (thousand barrels/day) | 910 | 915 | -0.5% | | Gasoline demand (million barrels/day) | 8.9 | 8.9 | 0% | | U.S. domestic ethanol ending stocks (million barrels) | 24.1 | 23.6 | +2.1% | - Domestic ethanol exports through May 31, 2025, were approximately **890 million gallons**, up from **817 million gallons** for the same period in 2024, with Canada being the largest destination[199](index=199&type=chunk) - The Inflation Reduction Act (IRA) and the One Big Beautiful Bill Act (OBBB) introduce significant changes to clean energy tax credits, including the 45Z Clean Fuel Production Credit and 45Q carbon capture credit, which could impact the company's business[206](index=206&type=chunk)[207](index=207&type=chunk) - Recent U.S. Supreme Court decisions redefining federal agency power and overturning 'Chevron deference' could impact regulatory rules affecting the company's business[217](index=217&type=chunk) [Segment Results](index=49&type=section&id=Segment%20Results) This section provides a detailed breakdown of financial performance for each operating segment, including revenues and operating income Segment Revenues (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Ethanol production | $527,153 | $525,443 | $1,024,925 | $1,031,102 | | Agribusiness and energy services | $31,531 | $100,949 | $141,360 | $199,945 | | Intersegment eliminations | $(5,855) | $(7,567) | $(11,941) | $(15,008) | | **Total Revenues** | **$552,829** | **$618,825** | **$1,154,344** | **$1,216,039** | Segment Operating Income (Loss) (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Ethanol production | $(12,218) | $(2,213) | $(51,768) | $(35,866) | | Agribusiness and energy services | $849 | $2,166 | $3,282 | $8,170 | | Corporate activities | $(16,994) | $(17,664) | $(42,137) | $(34,904) | | **Total Operating Loss** | **$(28,363)** | **$(17,711)** | **$(90,623)** | **$(62,600)** | Adjusted EBITDA Reconciliation (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 | $(72,227) | $(24,038) | $(144,868) | $(75,160) | | EBITDA | $(28,883) | $4,767 | $(70,389) | $(16,753) | | Restructuring costs | $2,520 | $— | $19,106 | $— | | Loss on sale of assets | $4,044 | $— | $4,044 | $— | | Impairment of assets held for sale | $10,724 | $— | $10,724 | $— | | Loss on sale of equity method investment | $26,987 | $— | $26,987 | $— | | **Adjusted EBITDA** | **$16,442** | **$5,038** | **$(7,700)** | **$(16,437)** | [Three Months Ended June 30, 2025 Compared with the Three Months Ended June 30, 2024](index=52&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20with%20the%20Three%20Months%20Ended%20June%2030%2C%202024) This section provides a comparative analysis of the company's financial performance for the three-month periods, highlighting key drivers of change - Consolidated revenues decreased by **$66.0 million**, primarily due to ceasing a third-party ethanol marketing agreement[235](index=235&type=chunk) - Net loss increased by **$48.2 million**, driven by a **$28.3 million** loss on equity method investees, **$10.7 million** impairment of assets held for sale, and a **$4.0 million** loss on asset sales[236](index=236&type=chunk) - Adjusted EBITDA increased by **$11.4 million**, attributed to a change in operating strategy and a one-time sale of accumulated RINs, partially offset by lower margins in the ethanol production segment[236](index=236&type=chunk) Ethanol Production Segment Key Operating Data (Three Months Ended June 30) | Metric | 2025 | 2024 | % Variance | | :-------------------------- | :-------- | :-------- | :--------- | | Ethanol (gallons) | 193,571 | 208,483 | (7.2)% | | Distillers grains (equivalent dried tons) | 413 | 463 | (10.8) | | Renewable corn oil (pounds) | 65,231 | 73,630 | (11.4) | | Corn consumed (bushels) | 65,312 | 71,819 | (9.1) | [Six Months Ended June 30, 2025 Compared with the Six Months Ended June 30, 2024](index=54&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20with%20the%20Six%20Months%20Ended%20June%2030%2C%202024) This section provides a comparative analysis of the company's financial performance for the six-month periods, detailing revenue and loss drivers - Consolidated revenues decreased by **$61.7 million**, primarily due to the termination of a third-party ethanol marketing agreement[244](index=244&type=chunk) - Net loss increased by **$69.7 million**, driven by a **$29.1 million** loss on equity method investees, **$10.7 million** impairment of assets held for sale, **$4.0 million** loss on asset sales, and **$19.1 million** in restructuring costs[245](index=245&type=chunk) - Adjusted EBITDA increased by **$8.7 million**, mainly due to margins from a one-time sale of accumulated RINs, offset by lower margins in agribusiness and energy services and ethanol production segments[245](index=245&type=chunk) Ethanol Production Segment Key Operating Data (Six Months Ended June 30) | Metric | 2025 | 2024 | % Variance | | :-------------------------- | :-------- | :-------- | :--------- | | Ethanol (gallons) | 388,899 | 416,387 | (6.6)% | | Distillers grains (equivalent dried tons) | 830 | 932 | (10.9) | | Renewable corn oil (pounds) | 129,494 | 140,351 | (7.7) | | Corn consumed (bushels) | 131,576 | 143,093 | (8.0) | [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations, including cash position and debt maturities Liquidity Position (in millions) | Metric | June 30, 2025 | | :----------------------------------- | :------------ | | Cash and cash equivalents | $108.6 | | Restricted cash | $44.1 | | Available committed revolving credit | $258.5 | | Available line of credit (Ancora) | $30.0 | | Total corporate liquidity | $93.3 | - The company has **$130.7 million** in Junior Notes due September 15, 2026, and **$230.0 million** in convertible senior notes due March 15, 2027, requiring substantial additional liquidity for repayment[256](index=256&type=chunk) - Net cash provided by operating activities was **$3.8 million** for the six months ended June 30, 2025, an improvement from **$65.7 million** used in the prior year, primarily due to lower receivable and inventory balances[257](index=257&type=chunk) - Capital expenditures were **$27.9 million** for the six months ended June 30, 2025, with an additional **$10.0 million** expected for the remainder of 2025, excluding **$130 million** for carbon capture projects[259](index=259&type=chunk) [Effects of Inflation](index=58&type=section&id=Effects%20of%20Inflation) This section discusses the potential impact of inflationary pressures on the company's operating costs and financial performance - The company has experienced inflationary impacts on labor, wages, components, equipment, and other inputs, which could escalate and materially adversely affect financial performance due to fixed-price arrangements with customers[276](index=276&type=chunk) [Contractual Obligations and Commitments](index=58&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines the company's significant future financial obligations arising from contracts and agreements - As of June 30, 2025, material future obligations include **$71.9 million** in minimum lease payments, **$178.1 million** for future commodity purchases, **$33.9 million** for storage and transportation, and **$82.0 million** for carbon capture equipment construction[277](index=277&type=chunk) [Critical Accounting Policies and Estimates](index=58&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section identifies the accounting policies that require significant judgment and estimation, which could materially affect financial results - Critical accounting policies, particularly those for derivative financial instruments and income taxes, involve significant judgments, assumptions, and estimates that can materially impact financial statements[278](index=278&type=chunk) [Off-Balance Sheet Arrangements](index=58&type=section&id=Off-Balance%20Sheet%20Arrangements) This section discloses any material transactions, agreements, or other contractual arrangements not recognized on the balance sheet - The company does not have any off-balance sheet arrangements[279](index=279&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, primarily interest rate and commodity price risks, and the strategies employed to manage these exposures through financial instruments and hedging activities - The company is exposed to interest rate risk on **$80.1 million** of variable-rate debt; a **10% increase** in interest rates would affect interest cost by approximately **$0.8 million** per year[281](index=281&type=chunk) - Commodity price risk is significant for ethanol, corn, distillers grains, Ultra-High Protein, renewable corn oil, and natural gas, with prices influenced by supply, demand, weather, and government policies[283](index=283&type=chunk)[284](index=284&type=chunk) - The company uses forward fixed-price physical contracts and derivative financial instruments (futures and options) to reduce market risk and lock in favorable operating margins[285](index=285&type=chunk) Estimated Net Income Effect of a Hypothetical 10% Change in Commodity Price (Next 12 Months, in thousands) | Commodity | Estimated Total Volume Requirements | Unit of Measure | Net Income Effect of Approximate 10% Change in Price | | :---------------- | :---------------------------------- | :-------------- | :------------------------------------------------- | | Ethanol | 784,000 | Gallons | $93,389 | | Corn | 264,800 | Bushels | $84,370 | | Distillers grains | 1,850 | Tons | $19,812 | | Renewable corn oil | 258,100 | Pounds | $10,803 | | Natural gas | 22,600 | MmBTU | $4,574 | [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the effectiveness of the company's disclosure controls and procedures, concluding they were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the period - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[293](index=293&type=chunk) - There were no material changes in internal control over financial reporting during the period covered by the report[294](index=294&type=chunk) [PART II – OTHER INFORMATION](index=61&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This part provides additional information not covered in the financial statements, including legal matters, risk factors, and equity security disclosures [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course litigation but does not anticipate any material adverse effects on its financial position, results of operations, or cash flows - The company is currently involved in litigation arising in the ordinary course of business[297](index=297&type=chunk) - Management does not believe any pending litigation will have a material adverse effect on its financial position, results of operations, or cash flows[297](index=297&type=chunk) [Item 1A. Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) This section updates and supplements previously disclosed risk factors, emphasizing credit risk, potential impacts of international trade agreements, commodity price volatility, risks associated with carbon capture projects, and the critical need to refinance or repay upcoming debt maturities - The company is exposed to credit risk from various customers and counterparties, which could lead to losses or affect its ability to make payments[299](index=299&type=chunk) - Withdrawal from or material modification of international trade agreements, including tariffs and retaliatory measures, could materially adversely affect the business, particularly for ethanol and agricultural exports[300](index=300&type=chunk) - Operating results are highly sensitive to volatile commodity prices for corn, ethanol, distillers grains, natural gas, Ultra-High Protein, and renewable corn oil, influenced by supply, demand, weather, and government policies[301](index=301&type=chunk)[302](index=302&type=chunk)[306](index=306&type=chunk)[307](index=307&type=chunk)[308](index=308&type=chunk)[309](index=309&type=chunk) - Carbon Capture and Sequestration (CCS) projects face risks including operational delays, regulatory changes (e.g., CI modeling, tax incentives), market uncertainties for tax credits and carbon credits, and reliance on external infrastructure[310](index=310&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk) - The company faces significant debt maturities of **$130.7 million** (Junior Notes by September 2026) and **$230.0 million** (convertible senior notes by March 2027), requiring substantial additional liquidity for repayment or refinancing[315](index=315&type=chunk)[316](index=316&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on shares withheld for tax obligations related to restricted stock grants and the status of the company's share repurchase program, noting no repurchases in Q2 2025 Shares Withheld for Payroll Tax Withholding Obligations (Q2 2025) | Period | Total Number of Shares Withheld | Average Price Paid per Share | | :-------------- | :------------------------------ | :--------------------------- | | April 1 - April 30 | 16,538 | $4.13 | | May 1 - May 31 | 9,687 | $4.10 | | June 1 - June 30 | 3,354 | $4.17 | | **Total** | **29,579** | **$4.13** | - The company did not repurchase any shares of common stock under its **$200.0 million** share repurchase program during the second quarter of 2025[318](index=318&type=chunk) [Item 3. Defaults Upon Senior Securities](index=64&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[319](index=319&type=chunk) [Item 4. Mine Safety Disclosures](index=64&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the company[320](index=320&type=chunk) [Item 5. Other Information](index=64&type=section&id=Item%205.%20Other%20Information) This section provides details on recent amendments to the Junior Notes and associated warrant agreements, including extensions of maturity dates, changes in principal amounts, and the issuance of new warrants - On May 7, 2025, a First Supplemental Indenture extended the Junior Notes' maturity to May 15, 2026, and increased the principal by **$2.5 million**[321](index=321&type=chunk) - Also on May 7, 2025, outstanding warrant agreements with BlackRock were amended and restated, modifying the exercise price to **$0.01 per share** and extending the exercise period to December 31, 2029[323](index=323&type=chunk) - On August 10, 2025, an Amended and Restated Indenture further extended the Junior Notes' maturity to September 15, 2026, added a **2.5% amendment fee**, increased interest rates, and secured the notes with additional assets[325](index=325&type=chunk) - In connection with the August 10, 2025 amendment, the company issued **3,250,000 stock warrants** to BlackRock at a strike price of **$0.01 per share** with a **ten-year** exercise period[327](index=327&type=chunk) [Item 6. Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including various agreements, indentures, warrant agreements, and certifications - Key exhibits include the Cooperation Agreement with Ancora Holdings Group, LLC, the Ethanol Marketing Agreement with Eco-Energy, LLC, and various amendments to debt and warrant agreements with BlackRock and Ancora Alternatives LLC[331](index=331&type=chunk)[332](index=332&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 are also included[333](index=333&type=chunk) [Signatures](index=69&type=section&id=Signatures) This section contains the official attestations and signatures of the company's principal executive and financial officers - The report is signed by Michelle S. Mapes, Interim Principal Executive Officer, Chief Legal and Administration Officer and Corporate Secretary, and Philip B. Boggs, Chief Financial Officer, on August 11, 2025[337](index=337&type=chunk)

PART I. FINANCIAL INFORMATION This part presents the company's unaudited condensed consolidated financial statements and management's discussion for the quarter ended June 30, 2025 [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements for Apartment Investment and Management Company (Aimco) and Aimco OP L.P. for the quarter ended June 30, 2025, and comparative periods. It includes balance sheets, statements of operations, equity/partners' capital, and cash flows, along with detailed notes explaining the company's organization, accounting policies, commitments, earnings per share, fair value measurements, variable interest entities, lease arrangements, business segments, and subsequent events [Apartment Investment and Management Company: Condensed Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Apartment%20Investment%20and%20Management%20Company:%20Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) This section presents the unaudited condensed consolidated balance sheets for Aimco as of June 30, 2025, and December 31, 2024 Total real estate, net (in thousands) | ASSETS (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Total real estate, net | $1,269,558 | $1,247,833 | | Cash and cash equivalents | $41,385 | $141,072 | | Assets held for sale, net | $275,892 | $276,079 | | Total assets | $1,869,810 | $1,956,910 | | LIABILITIES AND EQUITY (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Total indebtedness | $1,098,432 | $1,070,660 | | Total liabilities | $1,587,362 | $1,644,613 | | Total Aimco equity | $91,650 | $122,957 | | Total equity | $136,342 | $169,366 | [Apartment Investment and Management Company: Condensed Consolidated Statements of Operations (Unaudited)](index=6&type=section&id=Apartment%20Investment%20and%20Management%20Company:%20Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) This section presents Aimco's unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025, and comparative periods Rental and other property revenues (in thousands, except per share data) | (in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Rental and other property revenues | $52,758 | $51,148 | $105,110 | $101,350 | | Total operating expenses | $47,353 | $52,244 | $95,019 | $101,460 | | Net income (loss) attributable to Aimco | $(19,305) | $(60,526) | $(33,221) | $(70,712) | | Net income (loss) attributable to Aimco per common share – basic | $(0.14) | $(0.43) | $(0.24) | $(0.50) | - Net loss attributable to Aimco decreased by **$41.2 million** for the three months ended June 30, 2025, and by **$37.5 million** for the six months ended June 30, 2025, compared to the same periods in 2024[162](index=162&type=chunk) [Apartment Investment and Management Company: Condensed Consolidated Statements of Equity (Unaudited)](index=7&type=section&id=Apartment%20Investment%20and%20Management%20Company:%20Condensed%20Consolidated%20Statements%20of%20Equity%20(Unaudited)) This section presents Aimco's unaudited condensed consolidated statements of equity for the six months ended June 30, 2025, and comparative periods Total Aimco Equity (in thousands) | (in thousands) | Balances at June 30, 2025 | Balances at June 30, 2024 | | :------------- | :------------------------ | :------------------------ | | Total Aimco Equity | $91,650 | $253,536 | | Total Equity | $136,342 | $317,905 | - Aimco's total equity decreased from **$169,366 thousand** at December 31, 2024, to **$136,342 thousand** at June 30, 2025, primarily due to net loss attributable to Aimco[28](index=28&type=chunk) [Apartment Investment and Management Company: Condensed Consolidated Statements of Cash Flows (Unaudited)](index=9&type=section&id=Apartment%20Investment%20and%20Management%20Company:%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) This section presents Aimco's unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025, and comparative periods Net cash provided by operating activities (in thousands) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $13,494 | $29,718 | | Net cash used in investing activities | $(45,737) | $(77,441) | | Net cash provided by (used in) financing activities | $(72,448) | $17,854 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $(104,691) | $(29,869) | | Cash, cash equivalents and restricted cash at end of period | $68,265 | $109,398 | - Net cash provided by operating activities decreased by **$16.2 million** for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to timing of changes in operating assets/liabilities and increased interest expense, partially offset by higher rents[205](index=205&type=chunk) - Net cash used in financing activities significantly changed from a **$17.8 million inflow** in 2024 to a **$72.4 million outflow** in 2025, mainly due to dividend payments and decreased proceeds from non-recourse construction loans[208](index=208&type=chunk) [Aimco OP L.P.: Condensed Consolidated Balance Sheets (Unaudited)](index=10&type=section&id=Aimco%20OP%20L.P.:%20Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) This section presents the unaudited condensed consolidated balance sheets for Aimco OP L.P. as of June 30, 2025, and December 31, 2024 Total real estate, net (in thousands) | ASSETS (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Total real estate, net | $1,269,558 | $1,247,833 | | Cash and cash equivalents | $41,385 | $141,072 | | Assets held for sale, net | $275,892 | $276,079 | | Total assets | $1,869,810 | $1,956,910 | | LIABILITIES AND PARTNERS' CAPITAL (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Total indebtedness | $1,098,432 | $1,070,660 | | Total liabilities | $1,587,362 | $1,644,613 | | Total partners' capital | $136,342 | $169,366 | [Aimco OP L.P.: Condensed Consolidated Statements of Operations (Unaudited)](index=11&type=section&id=Aimco%20OP%20L.P.:%20Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) This section presents Aimco OP L.P.'s unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025, and comparative periods Rental and other property revenues (in thousands, except per unit data) | (in thousands, except per unit data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Rental and other property revenues | $52,758 | $51,148 | $105,110 | $101,350 | | Total operating expenses | $47,353 | $52,244 | $95,019 | $101,460 | | Net income (loss) attributable to Aimco Operating Partnership | $(20,364) | $(63,890) | $(35,045) | $(74,630) | | Net income (loss) attributable to Aimco Operating Partnership per common unit – basic | $(0.14) | $(0.43) | $(0.24) | $(0.50) | [Aimco OP L.P.: Condensed Consolidated Statements of Partners' Capital (Unaudited)](index=12&type=section&id=Aimco%20OP%20L.P.:%20Condensed%20Consolidated%20Statements%20of%20Partners'%20Capital%20(Unaudited)) This section presents Aimco OP L.P.'s unaudited condensed consolidated statements of partners' capital for the six months ended June 30, 2025, and comparative periods Total Partners' Capital (in thousands) | (in thousands) | Balances at June 30, 2025 | Balances at June 30, 2024 | | :------------- | :------------------------ | :------------------------ | | Total Partners' Capital | $136,342 | $317,905 | [Aimco OP L.P.: Condensed Consolidated Statements of Cash Flows (Unaudited)](index=14&type=section&id=Aimco%20OP%20L.P.:%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) This section presents Aimco OP L.P.'s unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025, and comparative periods Net cash provided by operating activities (in thousands) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $13,494 | $29,718 | | Net cash used in investing activities | $(45,737) | $(77,441) | | Net cash provided by (used in) financing activities | $(72,448) | $17,854 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $(104,691) | $(29,869) | | Cash, cash equivalents and restricted cash at end of period | $68,265 | $109,398 | [Notes to Condensed Consolidated Financial Statements of Apartment Investment and Management Company and Aimco OP L.P. (Unaudited)](index=15&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20of%20Apartment%20Investment%20and%20Management%20Company%20and%20Aimco%20OP%20L.P.%20(Unaudited)) This section provides detailed notes to the unaudited condensed consolidated financial statements of Aimco and Aimco OP L.P. [Note 1 — Organization](index=15&type=section&id=Note%201%20%E2%80%94%20Organization) This note describes Aimco's structure as a REIT, its separation from AIR, and its primary business focus on multifamily properties - Aimco is a self-administered and self-managed real estate investment trust (REIT), which completed a separation of its businesses on **December 15, 2020**, creating Aimco and Apartment Income REIT Corp. (AIR)[45](index=45&type=chunk) - As of **June 30, 2025**, Aimco owned **92.4% legal interest** and **94.8% economic interest** in Aimco Operating Partnership, serving as its sole general partner with exclusive control over day-to-day management[46](index=46&type=chunk) - The company's portfolio primarily focuses on the U.S. multifamily sector, including **5,243 apartment homes** across **20 consolidated stabilized operating properties**, several communities in lease-up, a luxury hotel, and land parcels for development[48](index=48&type=chunk) [Note 2 — Basis of Presentation and Summary of Significant Accounting Policies](index=15&type=section&id=Note%202%20%E2%80%94%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the basis of financial statement preparation and summarizes key accounting policies, including consolidation, redeemable noncontrolling interests, and asset classifications - The unaudited condensed consolidated financial statements are prepared in accordance with Form 10-Q and Article 10 of Regulation S-X, with certain GAAP disclosures condensed or omitted[49](index=49&type=chunk) - Aimco consolidates entities where it is the primary beneficiary of a Variable Interest Entity (VIE) or controls through a majority voting interest, including Aimco Operating Partnership[53](index=53&type=chunk) - Redeemable noncontrolling interests, classified as temporary equity, include preferred equity interests with specified preferred returns (**8.0%**, **9.7%**, **14.5%**) in various real estate partnerships[56](index=56&type=chunk) - The Mezzanine Investment, a **$275.0 million loan** to Parkmerced Apartments, was in maturity default as of **June 30, 2025**, but the associated liability from a partial sale in 2023 is not derecognized[59](index=59&type=chunk)[60](index=60&type=chunk) - Income tax expense for the three and six months ended **June 30, 2025**, was **$5.6 million** and **$5.5 million**, respectively, a change from a benefit in 2024, primarily due to a non-cash partial valuation allowance against deferred tax assets of TRS entities[64](index=64&type=chunk) - The Brickell Assemblage was classified as held for sale as of **June 30, 2025**, with a net real estate value of **$273.15 million** and related liabilities of **$159.84 million**[68](index=68&type=chunk) Cash, Cash Equivalents, and Restricted Cash (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $41,385 | $141,072 | | Restricted cash | $26,428 | $31,367 | | Restricted cash held for sale | $452 | $517 | | **Total Cash, Cash Equivalents, and Restricted Cash** | **$68,265** | **$172,956** | - The investment in IQHQ, a life sciences real estate development company, had a carrying value of **$11.07 million** as of **June 30, 2025**, after a non-cash impairment charge of **$48.6 million** in 2024[78](index=78&type=chunk)[79](index=79&type=chunk) - A special cash dividend of **$0.60 per share** was paid in **January 2025**, distributing net proceeds from 2024 asset sales[81](index=81&type=chunk) - The Benson Hotel generated revenues of **$2.1 million** and **$3.5 million** for the three and six months ended **June 30, 2025**, respectively, showing growth from 2024[83](index=83&type=chunk) - New accounting pronouncements, ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Disaggregation of Income Statement Expenses), are being evaluated for potential impact[84](index=84&type=chunk)[85](index=85&type=chunk) [Note 3 — Commitments and Contingencies](index=23&type=section&id=Note%203%20%E2%80%94%20Commitments%20and%20Contingencies) This note details the company's remaining commitments for construction contracts, unfunded investment commitments, and legal proceedings - As of **June 30, 2025**, the company had remaining commitments for construction-related contracts of **$125.1 million**, with **$133.2 million** undrawn on non-recourse construction loans[86](index=86&type=chunk) - Unfunded commitments related to investments in property technology funds totaled **$1.2 million** as of **June 30, 2025**[87](index=87&type=chunk) - No legal proceedings are pending that are believed to have a material effect on the company's financial condition or results of operations[89](index=89&type=chunk) [Note 4 — Earnings per Share and per Unit](index=24&type=section&id=Note%204%20%E2%80%94%20Earnings%20per%20Share%20and%20per%20Unit) This note provides a breakdown of earnings per share and per unit for Aimco and Aimco Operating Partnership for the reported periods Net income (loss) attributable to Aimco common stockholders (in thousands, except per share/unit data) | (in thousands, except per share/unit data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to Aimco common stockholders | $(19,305) | $(60,526) | $(33,221) | $(70,712) | | Earnings (loss) per share - basic | $(0.14) | $(0.43) | $(0.24) | $(0.50) | | Net income (loss) attributable to Aimco Operating Partnership's common unit holders | $(20,364) | $(63,890) | $(35,045) | $(74,630) | | Earnings (loss) per unit - basic | $(0.14) | $(0.43) | $(0.24) | $(0.50) | - Dilutive share equivalents and participating securities were not included in EPS/EPU computations for the periods presented as their effect would have been antidilutive[91](index=91&type=chunk)[92](index=92&type=chunk) [Note 5 — Fair Value Measurements and Disclosures](index=25&type=section&id=Note%205%20%E2%80%94%20Fair%20Value%20Measurements%20and%20Disclosures) This note details the fair value measurements of financial instruments, including interest rate contracts and debt, as of June 30, 2025 - The company uses interest rate caps to protect against increases in variable interest rates, holding instruments with a maximum notional value of **$464.3 million** and a fair value of **$0.5 million** as of **June 30, 2025**[96](index=96&type=chunk)[214](index=214&type=chunk) Fair Value of Financial Instruments (in thousands) | Category | As of June 30, 2025 (Total) | As of December 31, 2024 (Total) | | :------------------------------------ | :-------------------------- | :------------------------------ | | Interest rate contracts | $504 | $862 | | Investments in stock | $890 | $1,573 | | Investments in real estate technology funds | $3,809 | $3,468 | Carrying Value and Fair Value of Debt (in thousands) | Description | As of June 30, 2025 (Carrying Value) | As of June 30, 2025 (Fair Value) | As of December 31, 2024 (Carrying Value) | As of December 31, 2024 (Fair Value) | | :------------------------------ | :----------------------------------- | :------------------------------- | :--------------------------------------- | :------------------------------- | | Non-recourse property debt | $689,155 | $662,778 | $689,885 | $641,563 | | Non-recourse construction loans | $377,251 | $380,557 | $393,750 | $393,756 | | Total | $1,066,406 | $1,043,335 | $1,083,635 | $1,035,319 | [Note 6 — Variable Interest Entities](index=26&type=section&id=Note%206%20%E2%80%94%20Variable%20Interest%20Entities) This note describes Aimco's consolidated and unconsolidated variable interest entities, including its primary beneficiary role in Aimco Operating Partnership - Aimco consolidates Aimco Operating Partnership and **five other VIEs** that own real estate, for which it is the primary beneficiary[103](index=103&type=chunk)[104](index=104&type=chunk)[106](index=106&type=chunk) - The company has **seven unconsolidated VIEs**, including **four real estate partnerships**, the Mezzanine Investment, IQHQ, and land held for development, where it is not the primary decision maker[105](index=105&type=chunk) - Maximum exposure to loss from unconsolidated VIEs is limited to the carrying value of their assets[105](index=105&type=chunk) [Note 7 — Lease Arrangements](index=28&type=section&id=Note%207%20%E2%80%94%20Lease%20Arrangements) This note provides details on the company's lease arrangements, including apartment home leases, commercial space leases, and its role as a lessee - Apartment home leases generally have initial terms of **24 months or less**, while commercial space leases range from **5 to 15 years** and contribute **6% to 7% of total revenue**[107](index=107&type=chunk) Total Lease Income (in thousands) | 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 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Fixed lease income | $46,568 | $45,772 | $92,824 | $91,705 | | Variable lease income | $4,107 | $3,381 | $8,757 | $7,580 | | **Total lease income** | **$50,675** | **$49,153** | **$101,581** | **$99,285** | - Aimco is a lessee for finance leases on land underlying properties (Upton Place, Strathmore Square, Oak Shore) and operating leases for corporate office space[111](index=111&type=chunk) Total Lease Costs, Net of Capitalized Amounts (in thousands) | 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 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease costs | $411 | $383 | $849 | $762 | | Finance lease costs (Amortization + Interest) | $2,180 | $1,861 | $4,354 | $3,104 | | **Total lease costs, net of capitalized amounts** | **$2,591** | **$2,244** | **$5,203** | **$3,866** | [Note 8 — Business Segments](index=30&type=section&id=Note%208%20%E2%80%94%20Business%20Segments) This note outlines the company's three business segments: Development and Redevelopment, Operating, and Other, and their respective financial performance - The company operates in three segments: Development and Redevelopment (**9 properties**, including one under construction, two in lease-up, one stabilizing), Operating (**20 consolidated stabilized operating properties** with **5,243 homes**), and Other (The Benson Hotel and properties not in other segments)[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - Property Net Operating Income (PNOI) is the key measure for evaluating segment performance and allocating resources[119](index=119&type=chunk) Property Net Operating Income (PNOI) by Segment (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Development and Redevelopment | $3,034 | $(149) | $4,757 | $(772) | | Operating | $24,228 | $23,972 | $49,291 | $48,371 | | Other | $(340) | $207 | $(984) | $(365) | | **Total PNOI** | **$26,922** | **$24,030** | **$53,064** | **$47,234** | - Development and Redevelopment PNOI significantly increased due to the lease-up of Upton Place, Strathmore Square, and Oak Shore[174](index=174&type=chunk)[184](index=184&type=chunk) - Operating PNOI increased by **1.1%** for the three months and **1.9%** for the six months, driven by higher rental revenues, partially offset by increased real estate taxes[174](index=174&type=chunk)[184](index=184&type=chunk) Capital Additions by Segment (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Development and Redevelopment | $22,134 | $29,995 | $42,393 | $72,466 | | Operating | $5,455 | $3,855 | $8,151 | $6,099 | | Other | $0 | $0 | $160 | $0 | | Corporate and Amounts Not Allocated to Segments | $105 | $567 | $211 | $1,486 | | **Total capital additions** | **$27,694** | **$34,417** | **$50,915** | **$80,051** | [Note 9 — Subsequent Events](index=34&type=section&id=Note%209%20%E2%80%94%20Subsequent%20Events) This note discloses significant events occurring after the quarter-end, including property sales agreements and credit facility retirement plans - In **July 2025**, the buyer of the Brickell Assemblage exercised its final closing extension, increasing the non-refundable deposit to **$50.0 million**, with closing scheduled for **Q4 2025**[126](index=126&type=chunk) - The suburban Boston portfolio of **five properties** is under contract for **$740.0 million**, with the buyer's **$20.0 million deposit** becoming non-refundable in **August 2025**. **Four sales** are expected in **Q3 2025**, and the final one in **Q4 2025**[127](index=127&type=chunk) - The revolving credit facility, secured by the Boston portfolio, will be retired upon the sale, with proceeds used to repay the **May 2025** borrowings[128](index=128&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=37&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 condition and operating results, including forward-looking statements, an executive overview of its mission and strategy, and a detailed analysis of financial performance for the three and six months ended June 30, 2025. It also covers critical accounting estimates, non-GAAP measures like EBITDAre, and a comprehensive discussion of liquidity and capital resources [Forward Looking Statements](index=37&type=section&id=Forward%20Looking%20Statements) This section highlights forward-looking statements regarding future plans, financial goals, and potential risks and uncertainties - The report contains forward-looking statements regarding future plans, goals, capital returns, pipeline investments, debt maturities, value creation, revenue/expense growth, joint ventures, acquisitions/dispositions, and strategic partnerships[132](index=132&type=chunk) - These statements are subject to risks and uncertainties, including geopolitical conditions, rising interest rates, inflation, real estate market fluctuations, competition, financing risks, and regulatory changes[133](index=133&type=chunk) [Executive Overview](index=38&type=section&id=Executive%20Overview) This section outlines Aimco's mission, strategic goals, financial objectives, and capital allocation strategy for value creation - Aimco's mission is to make real estate investments, primarily in the U.S. multifamily sector, to create substantial value for investors, teammates, and communities[139](index=139&type=chunk) - The primary goal is outsized risk-adjusted returns and accelerating growth for stockholders, mainly through capital appreciation, with no current intent to pay a regular quarterly cash dividend[140](index=140&type=chunk) - Financial objectives are measured by investment period Internal Rate of Return (IRR) and project-level Multiple on Invested Capital (MOIC), with broader performance based on Net Asset Value (NAV) growth[141](index=141&type=chunk) - The capital allocation strategy targets a balanced mix of 'Value Add' and 'Opportunistic' multifamily real estate in Southeast Florida, Washington D.C. Metro Area, and Colorado's Front Range, alongside a diversified portfolio of 'Core' and 'Core-Plus' apartment communities[142](index=142&type=chunk) - The company maintains policies to support its strategy, including holding a sizable portion of net equity in stabilized cash-flowing assets and requiring committed capital for development projects[144](index=144&type=chunk) [Results for the three and six months ended June 30, 2025](index=39&type=section&id=Results%20for%20the%20three%20and%20six%20months%20ended%20June%2030,%202025) This section summarizes Aimco's financial performance and key operational highlights for the three and six months ended June 30, 2025 [Financial Results and Highlights](index=39&type=section&id=Financial%20Results%20and%20Highlights) This section presents key financial results, including net loss per share and significant property sale agreements, for the reported periods - Net loss attributable to Aimco common stockholders per share was **$(0.14)** for the three months and **$(0.24)** for the six months ended **June 30, 2025**[150](index=150&type=chunk) - Net operating income from the Operating segment increased by **1.1%** year-over-year to **$24.2 million** for the three months and by **1.9%** to **$49.3 million** for the six months[150](index=150&type=chunk) - Subsequent to quarter end, Aimco agreed to sell its suburban Boston portfolio for **$740.0 million** and the Brickell Assemblage for **$520.0 million**, with closings expected in **Q3 2025** and **Q4 2025**[150](index=150&type=chunk) - Development properties (Strathmore Square, Upton Place, Oak Shore) are on track to reach stabilized occupancy in 2025[150](index=150&type=chunk) - In **May**, Aimco purchased its development partner's interest in Strathmore Square and used its revolving credit facility to pay off a higher interest rate mezzanine loan for the property[150](index=150&type=chunk) [Operating Property Results](index=40&type=section&id=Operating%20Property%20Results) This section details the financial performance of the Operating segment, including revenue, occupancy, and expense changes - Operating segment revenue increased by **1.9%** year-over-year to **$35.4 million** for the three months ended **June 30, 2025**, with average monthly revenue per apartment home rising by **$57 to $2,349**[157](index=157&type=chunk) - Operating segment occupancy was **95.8%**, a **50 basis point decrease** year-over-year, partly due to a commercial tenant vacancy in New York City[157](index=157&type=chunk) - Operating segment expenses increased by **3.9%** year-over-year to **$11.2 million**, primarily due to higher real estate taxes at the Nashville property[157](index=157&type=chunk) [Value Add and Opportunistic Investments](index=40&type=section&id=Value%20Add%20and%20Opportunistic%20Investments) This section describes the status of multifamily development projects, future pipeline opportunities, and capital investments - The company had one multifamily development project under construction, two substantially completed and in lease-up, and one stabilizing operations as of **June 30, 2025**[152](index=152&type=chunk) - A pipeline of future value-add opportunities totals approximately **7.7 million gross square feet** of development in target markets[153](index=153&type=chunk) - Investments in development and redevelopment activities were **$22.1 million** for the three months and **$42.4 million** for the six months ended **June 30, 2025**, primarily funded by construction loans and preferred equity[154](index=154&type=chunk) - Upton Place (**689 units**) was **69% leased/pre-leased** and **56% occupied**, with **92% of retail space leased** as of **June 30, 2025**[158](index=158&type=chunk) - Strathmore Square (**220 units**) was **75% leased** and **63% occupied** as of **June 30, 2025**[158](index=158&type=chunk) - Oak Shore (**24 single-family homes**) was **96% leased and occupied** as of **June 30, 2025**[158](index=158&type=chunk) - Construction at 34th Street in Miami is on schedule and budget, with first residents expected in **Q3 2027** and stabilization in **Q4 2028**[158](index=158&type=chunk) [Investment and Disposition Activity](index=40&type=section&id=Investment%20and%20Disposition%20Activity) This section outlines recent and planned property sales, including the Boston portfolio and Brickell Assemblage, and a strategic equity purchase - Subsequent to quarter end, Aimco entered a definitive agreement to sell its suburban Boston portfolio (**2,719 units**) for **$740.0 million**, with a **$20.0 million non-refundable deposit**. **Four sales** are expected in **Q3 2025**, and the final one in **Q4 2025**[156](index=156&type=chunk)[159](index=159&type=chunk) - In **December 2024**, an agreement was made to sell the Brickell Assemblage for **$520.0 million**. The buyer increased its non-refundable deposit to **$50.0 million** in **July 2025**, with closing scheduled for **Q4 2025**[168](index=168&type=chunk) - In **May**, Aimco purchased its development partner's **5% common equity interest** in Strathmore Square for **$2.1 million** and the subordinated interest for **$2.9 million**[168](index=168&type=chunk) [Balance Sheet and Financing Activities](index=42&type=section&id=Balance%20Sheet%20and%20Financing%20Activities) This section provides an overview of the company's liquidity, revolving credit facility usage, and collateral arrangements - As of **June 30, 2025**, available liquidity was **$173.5 million**, comprising **$41.4 million cash**, **$26.4 million restricted cash**, and **$105.7 million available** on the **$150.0 million revolving credit facility**[160](index=160&type=chunk)[199](index=199&type=chunk) - Aimco borrowed **$42.8 million** on its revolving credit facility in **May 2025** to pay off a mezzanine loan for Strathmore Square, which had a **13.0% interest rate** (**650 bps** higher than the credit facility)[168](index=168&type=chunk) - The Boston portfolio, under contract for sale, serves as collateral for the revolving credit facility, which will be retired upon the sale's closing[168](index=168&type=chunk) [Financial Results of Operations](index=42&type=section&id=Financial%20Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance, including property results, expenses, and income tax impacts [Property Results](index=42&type=section&id=Property%20Results) This section categorizes properties into Development and Redevelopment, Operating, and Other segments, detailing their composition and performance metrics - Net loss attributable to Aimco common stockholders decreased by **$41.2 million** and **$37.5 million** for the three and six months ended **June 30, 2025**, respectively, compared to the same periods in 2024[162](index=162&type=chunk) - The Development and Redevelopment segment includes **9 properties**, with one under construction, two in lease-up, and one stabilizing operations[164](index=164&type=chunk) - The Operating segment consists of **20 stabilized residential apartment communities** with **5,243 apartment homes**[165](index=165&type=chunk) - The Other segment includes The Benson Hotel and other properties not classified in the other two segments[166](index=166&type=chunk) - Property Net Operating Income (PNOI) is used to assess segment operating performance, excluding utility reimbursements, property management costs, and casualty gains/losses[167](index=167&type=chunk)[169](index=169&type=chunk) [Property Net Operating Income](index=44&type=section&id=Property%20Net%20Operating%20Income) This section presents a detailed breakdown of Property Net Operating Income (PNOI) across the company's business segments Property Net Operating Income (PNOI) by Segment (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Development and Redevelopment | $3,034 | $(149) | $4,757 | $(772) | | Operating | $24,228 | $23,972 | $49,291 | $48,371 | | Other | $(340) | $207 | $(984) | $(365) | | **Total PNOI** | **$26,922** | **$24,030** | **$53,064** | **$47,234** | - Development and Redevelopment PNOI increased by **$3.2 million** (three months) and **$5.5 million** (six months) due to lease-up of Upton Place, Strathmore Square, and Oak Shore[174](index=174&type=chunk)[184](index=184&type=chunk) - Operating PNOI increased by **$0.3 million (1.1%)** for the three months and **$0.9 million (1.9%)** for the six months, driven by higher rental revenues (**$57 to $2,349** increase in average monthly revenue per apartment home), offset by increased real estate taxes[174](index=174&type=chunk)[184](index=184&type=chunk) - Other PNOI decreased by **$0.5 million** (three months) and **$0.6 million** (six months) due to higher real estate taxes from a 2025 property assessment[174](index=174&type=chunk)[184](index=184&type=chunk) [Non-Segment Real Estate Operations](index=45&type=section&id=Non-Segment%20Real%20Estate%20Operations) This section details operating expenses not allocated to specific segments and PNOI from properties sold or held for sale - Other property operating expenses not allocated to segments were **$1.8 million** and **$3.3 million** for the three and six months ended **June 30, 2025**, respectively[176](index=176&type=chunk)[177](index=177&type=chunk) - Properties sold or held for sale generated PNOI of **$4.5 million** (three months) and **$9.1 million** (six months) for the periods ended **June 30, 2025**[176](index=176&type=chunk)[177](index=177&type=chunk) [Depreciation and Amortization](index=45&type=section&id=Depreciation%20and%20Amortization) This section explains the changes in depreciation and amortization expense due to asset dispositions and new property completions - Depreciation and amortization expense decreased by **$5.7 million (26.0%)** for the three months and **$8.8 million (21.2%)** for the six months ended **June 30, 2025**, primarily due to the disposition of The Hamilton and classification of the Brickell Assemblage as held for sale, partially offset by completion of Upton Place, Strathmore Square, and Oak Shore[178](index=178&type=chunk) [General and Administrative Expenses](index=45&type=section&id=General%20and%20Administrative%20Expenses) This section outlines the changes in general and administrative expenses for the three and six months ended June 30, 2025 - General and administrative expenses increased by **$0.2 million (2.9%)** for the three months ended **June 30, 2025**, but decreased by **$0.1 million (0.9%)** for the six months[179](index=179&type=chunk) [Interest Income](index=45&type=section&id=Interest%20Income) This section details the decrease in interest income, primarily attributed to reduced interest earned on invested cash - Interest income decreased by **$1.0 million (39.0%)** for the three months and **$1.5 million (29.8%)** for the six months ended **June 30, 2025**, primarily due to a decrease in interest earned on invested cash[180](index=180&type=chunk) [Interest Expense](index=45&type=section&id=Interest%20Expense) This section explains the increase in interest expense due to construction loan draws and reduced capitalization - Interest expense increased by **$1.2 million (7.0%)** for the three months and **$5.3 million (17.4%)** for the six months ended **June 30, 2025**, mainly due to increased non-recourse construction loan draws and reduced capitalization, partially offset by loan repayments and use of the revolving credit facility[181](index=181&type=chunk) [Realized and Unrealized Gains (Losses) on Interest Rate Contracts](index=45&type=section&id=Realized%20and%20Unrealized%20Gains%20(Losses)%20on%20Interest%20Rate%20Contracts) This section reports realized gains and unrealized losses on interest rate contracts for the reported periods - Unrealized losses on interest rate contracts were **$0.3 million** (three months) and **$0.8 million** (six months) for **June 30, 2025**, compared to losses of **$1.3 million** and **$1.5 million** in 2024[182](index=182&type=chunk) - Realized gains were **$0.2 million** (three months) and **$0.5 million** (six months) for **June 30, 2025**, down from **$1.9 million** and **$3.8 million** in 2024[182](index=182&type=chunk) [Realized and Unrealized Gains (Losses) on Equity Investments](index=45&type=section&id=Realized%20and%20Unrealized%20Gains%20(Losses)%20on%20Equity%20Investments) This section details unrealized gains and losses on equity investments, including a significant impairment charge in 2024 - Unrealized losses on equity investments were **$0.2 million** (three months) and **$0.6 million** (six months) for **June 30, 2025**[185](index=185&type=chunk) - This compares to significant unrealized losses of **$47.3 million** (three months) and **$47.5 million** (six months) in 2024, primarily due to a **$47.0 million non-cash impairment** on the IQHQ investment[185](index=185&type=chunk) [Other Income (Expense), Net](index=47&type=section&id=Other%20Income%20(Expense),%20Net) This section explains the changes in other income and expense, net, driven by the Mezzanine Investment and strategic review costs - Other income (expense), net, changed by **$1.2 million (94.4%)** for the three months and **$2.3 million (80.8%)** for the six months ended **June 30, 2025**, primarily due to increased income from the Mezzanine Investment, offset by strategic review costs[186](index=186&type=chunk) [Income Tax Benefit (Expense)](index=47&type=section&id=Income%20Tax%20Benefit%20(Expense)) This section details the income tax expense, primarily due to a valuation allowance against deferred tax assets and reduced depreciation - Income tax expense was **$5.6 million** (three months) and **$5.5 million** (six months) for **June 30, 2025**, compared to a benefit in 2024[190](index=190&type=chunk) - The change is mainly due to a non-cash partial valuation allowance against deferred tax assets of TRS entities and reduced depreciation[190](index=190&type=chunk) - The company is evaluating the tax consequences of the recently signed One Big Beautiful Bill Act (OBBBA)[191](index=191&type=chunk) [Critical Accounting Estimates](index=48&type=section&id=Critical%20Accounting%20Estimates) This section confirms no significant changes to critical accounting estimates from the prior annual report - No significant changes have occurred in critical accounting estimates from those reported in the Annual Report on Form 10-K for the year ended **December 31, 2024**[192](index=192&type=chunk) [Non-GAAP Measures](index=48&type=section&id=Non-GAAP%20Measures) This section defines and presents non-GAAP financial measures, including EBITDAre and Adjusted EBITDAre, used for performance assessment [Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization for Real Estate ("EBITDAre")](index=48&type=section&id=Earnings%20Before%20Interest%20Expense,%20Income%20Taxes,%20Depreciation%20and%20Amortization%20for%20Real%20Estate%20(%22EBITDAre%22)) This section provides a reconciliation and explanation of EBITDAre and Adjusted EBITDAre as non-GAAP performance indicators - EBITDAre and Adjusted EBITDAre are non-GAAP measures used to assess the company's ability to incur and service debt, providing comparability within the real estate industry[194](index=194&type=chunk) EBITDAre and Adjusted EBITDAre (in thousands) | 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 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(16,976) | $(61,103) | $(28,688) | $(68,299) | | **EBITDAre** | **$23,207** | **$(24,144)** | **$45,580** | **$(1,016)** | | **Adjusted EBITDAre** | **$18,894** | **$19,100** | **$38,628** | **$37,064** | [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's available liquidity, leverage, capital resources, and changes in cash flows [Liquidity](index=49&type=section&id=Liquidity) This section details the company's available cash, restricted cash, and revolving credit facility, assessing sufficiency for future operations - As of **June 30, 2025**, available liquidity was **$173.5 million**, consisting of **$41.4 million cash**, **$26.4 million restricted cash**, and **$105.7 million available** on the revolving secured credit facility[198](index=198&type=chunk)[199](index=199&type=chunk) - The company believes current liquidity sources are sufficient for operational needs for the next **twelve months**, with additional liquidity generation options available if needed[200](index=200&type=chunk) - The revolving secured credit facility, maturing in **December 2025**, will be retired upon the sale of the Boston portfolio[200](index=200&type=chunk) [Leverage and Capital Resources](index=50&type=section&id=Leverage%20and%20Capital%20Resources) This section outlines the company's debt structure, interest rates, credit facility status, and compliance with financial covenants - All outstanding non-recourse property debt had a fixed interest rate as of **June 30, 2025**, with a weighted-average contractual rate of **4.4%** and an average remaining term to maturity of **6.3 years**[202](index=202&type=chunk) - The **$150.0 million revolving secured credit facility** had **$42.8 million outstanding borrowings** and **$1.5 million in letters of credit** as of **June 30, 2025**[203](index=203&type=chunk) - The company is in compliance with credit facility covenants, including a fixed charge coverage ratio of **1.25X**, minimum tangible net worth of **$625.0 million**, and maximum leverage of **60.0%**[203](index=203&type=chunk) [Changes in Cash, Cash Equivalents, and Restricted Cash](index=50&type=section&id=Changes%20in%20Cash,%20Cash%20Equivalents,%20and%20Restricted%20Cash) This section analyzes the changes in cash flows from operating, investing, and financing activities for the reported periods [Operating Activities](index=50&type=section&id=Operating%20Activities) This section details the decrease in net cash provided by operating activities, influenced by operating assets/liabilities and interest expense - Net cash provided by operating activities was **$13.5 million** for the six months ended **June 30, 2025**, a decrease of **$16.2 million** compared to 2024, primarily due to timing of changes in operating assets/liabilities and increased interest expense, partially offset by higher rents[205](index=205&type=chunk) [Investing Activities](index=50&type=section&id=Investing%20Activities) This section explains the decrease in net cash used in investing activities, primarily due to reduced capital expenditures - Net cash used in investing activities was **$45.7 million** for the six months ended **June 30, 2025**, a decrease of **$31.7 million** compared to 2024, primarily due to decreased capital expenditures[206](index=206&type=chunk) [Financing Activities](index=51&type=section&id=Financing%20Activities) This section outlines the significant shift to net cash used in financing activities, driven by dividends and construction loan changes - Net cash used in financing activities was **$72.4 million** for the six months ended **June 30, 2025**, a change of **$90.3 million** compared to 2024, primarily due to dividend payments and decreased proceeds from non-recourse construction loans, partially offset by increased contributions from redeemable noncontrolling interests[208](index=208&type=chunk) [Future Capital Needs](index=51&type=section&id=Future%20Capital%20Needs) This section discusses the expected funding sources for future capital needs, including operating cash flows and debt/equity financing - Future capital needs are expected to be funded by operating cash flows, short-term borrowings, and debt/equity financing, with no current plans for equity issuance[209](index=209&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=52&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section outlines the company's primary market risks, including refunding risk and repricing risk, and describes its strategies for managing these risks, such as using long-dated, fixed-rate debt and derivative financial instruments [Market Risk](index=52&type=section&id=Market%20Risk) This section identifies primary market risks, such as refunding and repricing risk, and the strategies employed to mitigate them - Primary market risks are refunding risk (availability of debt to refund maturing debt) and repricing risk (increases in interest rates and credit risk spreads)[211](index=211&type=chunk) - The company uses long-dated, fixed-rate, non-recourse property debt on stabilized properties and derivative financial instruments (interest rate caps) to manage these risks[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - As of **June 30, 2025**, there was no variable-rate property-level debt, but **$155.8 million** in variable-rate construction loans were outstanding, with interest rate caps providing protection[213](index=213&type=chunk) - An estimated **100 basis point increase** or decrease in variable rate indices would have no material impact on interest expense as of **June 30, 2025**[213](index=213&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=52&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting for both Apartment Investment and Management Company (Aimco) and Aimco OP L.P. for the quarter ended June 30, 2025 [Aimco](index=52&type=section&id=Aimco) This section confirms the effectiveness of Aimco's disclosure controls and internal control over financial reporting - Aimco's disclosure controls and procedures were evaluated as effective as of **June 30, 2025**[215](index=215&type=chunk) - No material changes in Aimco's internal control over financial reporting occurred during the quarter ended **June 30, 2025**[216](index=216&type=chunk) [Aimco Operating Partnership](index=52&type=section&id=Aimco%20Operating%20Partnership) This section confirms the effectiveness of Aimco Operating Partnership's disclosure controls and internal control over financial reporting - Aimco Operating Partnership's disclosure controls and procedures were evaluated as effective as of **June 30, 2025**[217](index=217&type=chunk) - No material changes in Aimco Operating Partnership's internal control over financial reporting occurred during the quarter ended **June 30, 2025**[218](index=218&type=chunk) PART II. OTHER INFORMATION This part provides additional information including risk factors, equity security activities, dividend policies, and required exhibits [ITEM 1A. RISK FACTORS](index=53&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section confirms no material changes to the risk factors previously disclosed in the company's annual report - No material changes to risk factors have occurred since the **December 31, 2024**, Annual Report on Form 10-K[220](index=220&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES](index=53&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES,%20USE%20OF%20PROCEEDS,%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) This section details equity security activities for Aimco and Aimco Operating Partnership, including outstanding shares/units and repurchases [Aimco](index=53&type=section&id=Aimco) This section provides details on Aimco's outstanding common stock, unregistered sales, and share repurchase program - As of **August 8, 2025**, there were **142,331,227 shares** of Class A Common Stock outstanding, held by **888 stockholders** of record[6](index=6&type=chunk)[222](index=222&type=chunk) - No shares of Common Stock were issued in exchange for OP Units or through other unregistered sales during the three months ended **June 30, 2025**[224](index=224&type=chunk) - Aimco did not repurchase any shares of its outstanding Common Stock during the three months ended **June 30, 2025**[226](index=226&type=chunk) - As of **June 30, 2025**, Aimco was authorized to repurchase up to an additional **16.2 million shares** of its outstanding Common Stock under a program with no expiration date[225](index=225&type=chunk) [Aimco Operating Partnership](index=53&type=section&id=Aimco%20Operating%20Partnership) This section provides details on Aimco Operating Partnership's outstanding OP Units, unregistered issuances, and unit redemptions - As of **August 8, 2025**, there were **153,192,728 OP Units** and equivalents outstanding, with **142,331,227** held by Aimco[227](index=227&type=chunk) - No unregistered OP Units were issued during the three months ended **June 30, 2025**[228](index=228&type=chunk) - **8,609 OP Units** were redeemed for cash at an aggregate weighted average price of **$8.10 per unit** during the three months ended **June 30, 2025**[229](index=229&type=chunk)[230](index=230&type=chunk) [Dividend and Distribution Payments](index=55&type=section&id=Dividend%20and%20Distribution%20Payments) This section outlines Aimco's REIT dividend distribution requirements and the factors influencing dividend determinations - As a REIT, Aimco must distribute at least **90.0%** of its 'real estate investment trust taxable income' annually to common stockholders[231](index=231&type=chunk) - Dividend determinations by Aimco's Board consider REIT distribution requirements, market conditions, liquidity needs, and other cash uses like deleveraging and accretive investments[231](index=231&type=chunk) [ITEM 6. EXHIBITS](index=56&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q report, including corporate charters, bylaws, partnership agreements, purchase and sale contracts, and certifications required by the Securities Exchange Act of 1934 and Sarbanes-Oxley Act of 2002 - Exhibits include corporate governance documents (Charter, Bylaws), partnership agreements, a Purchase and Sale Contract for Royal Crest Estates, and various certifications (CEO/CFO certifications under Sections 302 and 906 of Sarbanes-Oxley)[233](index=233&type=chunk) - The report also includes financial statements formatted in iXBRL (Inline Extensible Business Reporting Language) and the Cover Page Interactive Data File[234](index=234&type=chunk) [SIGNATURES](index=57&type=section&id=SIGNATURES) This section contains the official signatures of authorized representatives for Apartment Investment and Management Company and Aimco OP L.P., certifying the filing of the report pursuant to the Securities Exchange Act of 1934 - The report is signed by H. Lynn C. Stanfield, Executive Vice President and Chief Financial Officer, and Kellie E. Dreyer, Senior Vice President and Chief Accounting Officer, for both Aimco and Aimco OP L.P. (via its General Partner, Aimco OP GP, LLC)[237](index=237&type=chunk)[238](index=238&type=chunk) - The filing date for the report is **August 11, 2025**[238](index=238&type=chunk)

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements of Palisade Bio, Inc. for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's organization, accounting policies, and specific financial items [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------ | :---------------- | :--------- | :--------- | | Cash and cash equivalents | $5,417 | $9,821 | $(4,404) | (44.8%) | | Total current assets | $6,447 | $10,494 | $(4,047) | (38.6%) | | Total assets | $6,667 | $10,880 | $(4,213) | (38.7%) | | Total current liabilities | $3,970 | $3,236 | $734 | 22.7% | | Total liabilities | $4,047 | $3,388 | $659 | 19.5% | | Total stockholders' equity | $2,620 | $7,492 | $(4,872) | (65.0%) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance, presenting revenues, expenses, and net loss for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations (in thousands) | Metric (3 Months Ended June 30) | 2025 | 2024 | Change ($) | Change (%) | | :------------------------------ | :-------- | :-------- | :--------- | :--------- | | Research and development | $1,675 | $2,628 | $(953) | (36)% | | General and administrative | $1,168 | $1,583 | $(415) | (26)% | | Total operating expenses | $2,843 | $4,211 | $(1,368) | (32)% | | Net loss | $(2,784) | $(4,080) | $1,296 | (32)% | | Basic and diluted net loss per common share | $(0.58) | $(3.32) | $2.74 | (82.5)% | | Metric (6 Months Ended June 30) | 2025 | 2024 | Change ($) | Change (%) | | :------------------------------ | :-------- | :-------- | :--------- | :--------- | | Research and development | $2,625 | $4,842 | $(2,217) | (46)% | | General and administrative | $2,528 | $3,042 | $(514) | (17)% | | Total operating expenses | $5,153 | $7,884 | $(2,731) | (35)% | | Net loss | $(5,014) | $(7,607) | $2,593 | (34)% | | Basic and diluted net loss per common share | $(1.05) | $(7.60) | $6.55 | (86.2)% | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in the company's equity, including net loss, stock-based compensation, and stock issuances for the six months ended June 30, 2025 Changes in Stockholders' Equity (in thousands, except share amounts) | Metric (Six Months Ended June 30, 2025) | Preferred Stock Shares | Preferred Stock Amount | Common Stock Shares | Common Stock Amount | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders' Equity | | :-------------------------------------- | :--------------------- | :--------------------- | :------------------ | :------------------ | :------------------------- | :------------------ | :------------------------- | | Balance, December 31, 2024 | 200,000 | $2 | 2,768,646 | $27 | $143,407 | $(135,944) | $7,492 | | Net loss | — | — | — | — | — | $(5,014) | $(5,014) | | Stock-based compensation expense | — | — | — | — | $138 | — | $138 | | Issuance of common stock (ESPP) | — | — | 4,601 | — | $3 | — | $3 | | Issuance of common stock (warrant exercise) | — | — | 2,027,000 | $21 | $(20) | — | $1 | | Balance, June 30, 2025 | 200,000 | $2 | 4,800,247 | $48 | $143,528 | $(140,958) | $2,620 | - The company's common stock shares outstanding increased from **2,768,646** at December 31, 2024, to **4,800,247** at June 30, 2025, primarily due to the exercise of warrants[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (Six Months Ended June 30) | 2025 | 2024 | Change ($) | | :-------------------------------------------- | :-------- | :-------- | :--------- | | Net cash used in operating activities | $(4,150) | $(6,679) | $2,529 | | Net cash (used in) provided by financing activities | $(254) | $5,600 | $(5,854) | | Net decrease in cash, cash equivalents and restricted cash | $(4,404) | $(1,079) | $(3,325) | | Cash, cash equivalents and restricted cash, end of period | $5,443 | $11,379 | $(5,936) | - Cash used in operating activities decreased by **$2.5 million**, while financing activities shifted from providing **$5.6 million** in cash in 2024 to using **$0.25 million** in 2025[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, specific financial items, and significant events [1. Organization, Business and Financial Condition](index=9&type=section&id=1.%20Organization,%20Business%20and%20Financial%20Condition) This note describes Palisade Bio's business, its focus on developing novel therapeutics, and its financial condition, including accumulated deficit and going concern considerations - Palisade Bio is a clinical-stage biopharmaceutical company focused on developing novel therapeutics for autoimmune, inflammatory, and fibrotic diseases, with PALI-2108 as its lead product candidate for IBD[25](index=25&type=chunk) - As of June 30, 2025, the Company had an accumulated deficit of **$141.0 million** and cash and cash equivalents of approximately **$5.4 million**[26](index=26&type=chunk) - Management has identified substantial doubt about the Company's ability to continue as a going concern for a period of one year following the issuance date of these financial statements[27](index=27&type=chunk) [2. Basis of Presentation and Summary of Significant Accounting Policies](index=9&type=section&id=2.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the basis for preparing the unaudited consolidated financial statements, including consolidation principles, significant accounting policies, and the impact of recent accounting pronouncements - The condensed consolidated financial statements are unaudited, include normal recurring adjustments, and consolidate the Company's wholly-owned subsidiaries, LBS and Suzhou Neuralstem Biopharmaceutical Co., Ltd[29](index=29&type=chunk)[31](index=31&type=chunk) - A **1-for-15 reverse stock split** was effected on April 5, 2024, retrospectively adjusting all common stock shares and per share data for all periods presented[32](index=32&type=chunk) - The recently enacted One Big Beautiful Bill Act (OBBBA) is not anticipated to have a material impact on the Company's income tax provision in the near term due to a full valuation allowance against its U.S. federal and state deferred tax assets[37](index=37&type=chunk)[38](index=38&type=chunk) [3. Balance Sheet Details](index=12&type=section&id=3.%20Balance%20Sheet%20Details) This note provides a detailed breakdown of specific balance sheet accounts, including prepaid expenses, other current assets, and accrued liabilities Prepaid expenses and other current assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Prepaid insurance | $531 | $384 | | Prepaid subscriptions and fees | $174 | $116 | | Deferred equity issuance costs | $288 | $75 | | Total | $1,030 | $673 | Accrued liabilities (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Accrued accounts payable | $411 | $109 | | Accrued clinical trial expenses | $1,077 | — | | Accrued chemistry, manufacturing and controls ("CMC") expenses | $90 | $606 | | Accrued joint development expenses (Note 7) | $103 | $223 | | Current portion of contingent consideration obligation (Note 4) | $66 | — | | Total | $2,066 | $1,240 | [4. Fair Value Measurements](index=12&type=section&id=4.%20Fair%20Value%20Measurements) This note describes the fair value hierarchy and measurements for financial assets and liabilities, including cash and cash equivalents and the contingent consideration obligation - Cash and cash equivalents, classified as Level 1, had a fair value of **$5.4 million** as of June 30, 2025, down from **$9.8 million** at December 31, 2024[42](index=42&type=chunk) - The contingent consideration obligation, a Level 3 measurement, decreased from **$150 thousand** at December 31, 2024, to **$141 thousand** at June 30, 2025, with **$66 thousand** now classified as a current liability[46](index=46&type=chunk) [5. Stockholders' Equity](index=14&type=section&id=5.%20Stockholders'%20Equity) This note details changes in stockholders' equity, including the impact of a reverse stock split, recent equity offerings, warrant exercises, and outstanding common stock warrants - A **1-for-15 reverse stock split** was effected on April 5, 2024, reducing outstanding common stock from **12,771,015** to **851,302** shares[48](index=48&type=chunk)[49](index=49&type=chunk) - Recent equity offerings include the December 2024 Offering (**$4.1 million** net cash proceeds) and the May 2024 Offering (**$3.5 million** net cash proceeds)[51](index=51&type=chunk)[52](index=52&type=chunk) - A February 2024 warrant inducement generated approximately **$2.2 million** in net cash proceeds from the exercise of **228,162** existing warrants[55](index=55&type=chunk) Common Stock Warrants Outstanding (June 30, 2025) | Common Stock Warrants | Classification | Number of Warrants Outstanding | Weighted Average Exercise Price | | :------------------------------------ | :---------------- | :----------------------------- | :------------------------------ | | December 2024 Offering Common Stock Warrants | Equity-classified | 3,278,688 | $1.40 | | May 2024 Offering Common Stock Warrants | Equity-classified | 922,863 | $1.40 | | February 2024 Warrant Inducement Replacement Common Stock Warrants | Equity-classified | 228,158 | $6.17 | | Total Warrants Outstanding | | 4,717,538 | $5.64 | [6. Equity Incentive Plans](index=16&type=section&id=6.%20Equity%20Incentive%20Plans) This note provides details on the company's equity incentive plans, including stock option and RSU grants, and the associated share-based compensation expense - During the six months ended June 30, 2025, the Company granted **108,600** stock options (weighted-average fair value **$1.02**) and **89,400** RSUs (weighted-average fair value **$1.13**)[65](index=65&type=chunk) Share-Based Compensation Expense (in thousands) | Expense 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 | | :---------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development expense | $25 | $162 | $48 | $209 | | General and administrative expense | $35 | $196 | $69 | $262 | | Total | $60 | $358 | $117 | $471 | - Total share-based compensation expense decreased by **$354 thousand (75%)** for the six months ended June 30, 2025, compared to 2024, partly due to accelerated vesting of RSUs in Q2 2024 that did not repeat[67](index=67&type=chunk) [7. Collaborations and License Agreements](index=17&type=section&id=7.%20Collaborations%20and%20License%20Agreements) This note outlines key terms and financial impacts of the company's collaboration and license agreements, including those for PALI-2108, LB1148, and NSI-189 - Under the Giiant License Agreement for PALI-2108, the Company assumed all development, manufacturing, regulatory, and commercialization costs after Proof of Concept in October 2024[69](index=69&type=chunk)[71](index=71&type=chunk) - Joint development expenses related to Giiant decreased significantly to **$41 thousand** for the six months ended June 30, 2025, from **$3.5 million** in 2024, with a **$0.7 million** reduction in net R&D expenses from funds received from Giiant in 2025[73](index=73&type=chunk)[74](index=74&type=chunk) - Newsoara Co-Development Agreement for LB1148 includes a **$1.0 million** upfront fee and up to **$6.75 million** in milestones, with no license revenue recognized in 2025 or 2024[79](index=79&type=chunk)[80](index=80&type=chunk) - Alto Neuroscience is developing NSI-189 (ALTO-100), with potential milestone payments up to **$4.5 million**, including **$1.5 million** upon Phase 3 enrollment, despite a Phase 2b MDD study not meeting its primary endpoint[86](index=86&type=chunk)[87](index=87&type=chunk) [8. Net Loss Per Share](index=20&type=section&id=8.%20Net%20Loss%20Per%20Share) This note details the calculation of basic and diluted net loss per common share, including the impact of potentially dilutive securities for the periods presented Basic and Diluted Net Loss Per Common Share | Metric (3 Months Ended June 30) | 2025 | 2024 | | :------------------------------ | :---------- | :---------- | | Net loss available to common stockholders | $(2,784) | $(4,080) | | Weighted average shares | 4,797,196 | 1,228,453 | | Basic and diluted net loss per common share | $(0.58) | $(3.32) | | Metric (6 Months Ended June 30) | 2025 | 2024 | | :------------------------------ | :---------- | :---------- | | Net loss available to common stockholders | $(5,014) | $(7,607) | | Weighted average shares | 4,796,434 | 1,000,367 | | Basic and diluted net loss per common share | $(1.05) | $(7.60) | - For all periods presented, basic and diluted net loss per common share were the same because the Company was in a net loss position, making most common stock equivalents anti-dilutive[93](index=93&type=chunk) - As of June 30, 2025, **4,969,159** potentially dilutive securities (stock options, RSUs, warrants, Series A Convertible Preferred Stock) were excluded from the diluted EPS calculation as their effects would be anti-dilutive[94](index=94&type=chunk) [9. Commitments and Contingencies](index=21&type=section&id=9.%20Commitments%20and%20Contingencies) This note discloses the company's contractual obligations, including lease agreements, insurance financing, and the completion of a prior reduction-in-workforce - The Corporate Office Lease expires on August 31, 2025, and the Company will not exercise its renewal option, with approximately **$24 thousand** in remaining payments due in 2025[95](index=95&type=chunk)[97](index=97&type=chunk) - A new insurance financing arrangement was entered in June 2025, with an aggregate remaining balance of approximately **$0.3 million** as of June 30, 2025, payable over 9 months at **7.82%** interest[99](index=99&type=chunk) - The 2023 reduction-in-workforce (RIF), which involved a **25%** reduction in employees, was completed in Q2 2024, with all related restructuring expenses recognized in 2023[100](index=100&type=chunk)[101](index=101&type=chunk) [10. Segment Information](index=22&type=section&id=10.%20Segment%20Information) This note clarifies that the company operates as a single reportable segment focused on research and development, providing a breakdown of operating expenses by program - The Company operates as one operating and reportable segment, focused on the research and development of novel therapeutics, with its Chief Executive Officer serving as the chief operating decision maker (CODM)[103](index=103&type=chunk) Operating Expenses by Program (in thousands) | Expense Category (Six Months Ended June 30) | 2025 | 2024 | Change ($) | | :------------------------------------------ | :-------- | :-------- | :--------- | | PALI-2108 program expenses | $1,823 | $3,720 | $(1,897) | | Legacy program (expense reimbursements) expenses | $(58) | $99 | $(157) | | Other research and development expenses | $897 | $1,211 | $(314) | | Other general and administrative expenses | $2,491 | $2,854 | $(363) | | Total operating expenses | $5,153 | $7,884 | $(2,731) | [11. Subsequent Events](index=23&type=section&id=11.%20Subsequent%20Events) This note discloses significant events occurring after the balance sheet date, specifically a warrant inducement agreement that generated additional cash proceeds - On July 23, 2025, the Company entered into a warrant inducement agreement, which closed on July 25, 2025, resulting in the exercise of **4,318,905** existing common stock warrants[109](index=109&type=chunk) - The transaction generated approximately **$3.9 million** in gross cash proceeds and led to the issuance of **8,637,810** new unregistered replacement warrants[109](index=109&type=chunk)[110](index=110&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=25&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 condition, results of operations, and cash flows. It covers the executive overview of the business, a detailed comparison of operating results for the three and six months ended June 30, 2025 and 2024, an analysis of liquidity and capital resources, and a discussion of critical accounting policies and recent accounting pronouncements [Executive Overview](index=25&type=section&id=Executive%20Overview) This section provides a high-level summary of Palisade Bio's business, its lead product candidate PALI-2108, recent clinical trial results, future development plans, and key financing activities - Palisade Bio is a clinical-stage biopharmaceutical company focused on developing novel therapeutics for autoimmune, inflammatory, and fibrotic diseases, with PALI-2108 as its lead product candidate for IBD[114](index=114&type=chunk) - The company is developing a biomarker-based patient selection approach for PALI-2108 to improve clinical response by identifying PDE4-related biomarkers[115](index=115&type=chunk) - Positive results from the Phase 1 clinical study of PALI-2108 in healthy volunteers (May 27, 2025) and UC patients (August 7, 2025) met primary endpoints of safety, tolerability, and PK[121](index=121&type=chunk) - Plans include initiating a Phase 1b cohort in FSCD and subsequent Phase 2 clinical programs for FSCD and moderate to severe UC, with an IND submission to the FDA anticipated for U.S. trials in H1 2026[121](index=121&type=chunk)[122](index=122&type=chunk) - A warrant inducement transaction closed on July 25, 2025, generating approximately **$3.9 million** in gross cash proceeds for working capital and PALI-2108 development[123](index=123&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section analyzes the company's operating expenses and net loss for the three and six months ended June 30, 2025 and 2024, highlighting key drivers of change Operating Expenses and Net Loss (in thousands) | Metric (3 Months Ended June 30) | 2025 | 2024 | Change ($) | Change (%) | | :------------------------------ | :-------- | :-------- | :--------- | :--------- | | Research and Development | $1,675 | $2,628 | $(953) | (36)% | | General and Administrative | $1,168 | $1,583 | $(415) | (26)% | | Net Loss | $(2,784) | $(4,080) | $1,296 | (32)% | | Metric (6 Months Ended June 30) | 2025 | 2024 | Change ($) | Change (%) | | :------------------------------ | :-------- | :-------- | :--------- | :--------- | | Research and Development | $2,625 | $4,842 | $(2,217) | (46)% | | General and Administrative | $2,528 | $3,042 | $(514) | (17)% | | Net Loss | $(5,014) | $(7,607) | $2,593 | (34)% | - The decrease in R&D expenses for both periods was primarily due to a significant reduction in preclinical joint development expenses for PALI-2108 (approx. **$1.9 million** for 3 months, **$4.1 million** for 6 months), partially offset by increased clinical trial and CMC expenses[131](index=131&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) - G&A expenses decreased mainly due to a non-cash share-based compensation expense (accelerated RSU vesting) in 2024 that did not recur in 2025, and lower consultant/contract labor costs[135](index=135&type=chunk)[142](index=142&type=chunk) - Other income, net, decreased due to a reduction in the cash balance invested in money market funds[136](index=136&type=chunk)[143](index=143&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet its financial obligations, its historical funding sources, current cash position, and future capital needs, including going concern considerations - The Company has historically funded operations through equity financings and expects to incur substantial operating losses, requiring additional capital through various financing methods[145](index=145&type=chunk)[146](index=146&type=chunk) - As of June 30, 2025, cash, cash equivalents, and restricted cash totaled **$5.4 million**[149](index=149&type=chunk) - A warrant inducement transaction closed on July 25, 2025, generating approximately **$3.9 million** in gross cash proceeds, which, combined with existing cash, is expected to fund operations into Q1 2026[147](index=147&type=chunk)[148](index=148&type=chunk)[158](index=158&type=chunk) - Management has expressed substantial doubt about the Company's ability to continue as a going concern for one year from the report's issuance date[128](index=128&type=chunk)[145](index=145&type=chunk)[236](index=236&type=chunk) Summary of Cash Flows (in thousands) | Cash Flow Activity (Six Months Ended June 30) | 2025 | 2024 | | :-------------------------------------------- | :-------- | :-------- | | Net cash used in operating activities | $(4,150) | $(6,679) | | Net cash (used in) provided by financing activities | $(254) | $5,600 | [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section identifies the company's critical accounting estimates that require significant judgment, primarily related to accrued research and development expenses and contingent consideration - The Company's critical accounting estimates, which require significant judgment, primarily relate to accrued research and development expenses and its contingent consideration obligation[160](index=160&type=chunk) - There have been no significant changes in critical accounting policies or estimates since the most recently filed Annual Report on Form 10-K[160](index=160&type=chunk) [Recently Issued or Adopted Accounting Pronouncements](index=32&type=section&id=Recently%20Issued%20or%20Adopted%20Accounting%20Pronouncements) This section confirms that no new accounting pronouncements materially impacted the company's financial statements during the reporting period - No new accounting pronouncements issued or adopted during the three and six months ended June 30, 2025, had or are expected to have a material impact on the Company's condensed consolidated financial statements or disclosures[36](index=36&type=chunk)[161](index=161&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=32&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, Palisade Bio, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is considered a smaller reporting company and is therefore not required to provide quantitative and qualitative disclosures about market risk[162](index=162&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=32&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section addresses the effectiveness of the company's disclosure controls and procedures and internal control over financial reporting. Management concluded that disclosure controls were not effective due to a material weakness, but the financial statements fairly present the company's position. Remediation efforts for the material weakness are ongoing, with no material changes to internal control over financial reporting during the quarter [Evaluation of Disclosure Controls and Procedures](index=32&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section details management's conclusion on the effectiveness of disclosure controls and procedures, noting a material weakness but affirming the fair presentation of financial statements - Management concluded that the Company's disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting[164](index=164&type=chunk) - Despite the material weakness, management believes the condensed consolidated financial statements in this report fairly present the Company's financial position, results of operations, and cash flows in all material respects, in conformity with U.S. GAAP[165](index=165&type=chunk) [Material Weakness in Internal Control over Financial Reporting](index=33&type=section&id=Material%20Weakness%20in%20Internal%20Control%20over%20Financial%20Reporting) This section describes the persistent material weakness in internal control over financial reporting, specifically regarding the financial closing and reporting process - A material weakness, identified in Q2 2021, persists as of June 30, 2025, stemming from a lack of controls in the financial closing and reporting process, including segregation of duties and formalized procedures for journal entries and account reconciliations[167](index=167&type=chunk)[168](index=168&type=chunk) [Remediation Efforts related to the Material Weakness](index=33&type=section&id=Remediation%20Efforts%20related%20to%20the%20Material%20Weakness) This section outlines the ongoing actions management is taking to address the identified material weakness, including personnel additions, software implementation, and policy updates - Management is actively engaged in remediation efforts, including hiring additional finance/accounting personnel, implementing new accounting software, updating policies and procedures, addressing segregation of duties, and implementing additional key internal controls[169](index=169&type=chunk)[172](index=172&type=chunk) - Remediation efforts are ongoing and require additional time to complete design, implementation, and demonstrate operating effectiveness[170](index=170&type=chunk) [Changes in Internal Control Over Financial Reporting](index=33&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section confirms that no material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025 - 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, the Company's internal control over financial reporting[171](index=171&type=chunk) [PART II - OTHER INFORMATION](index=34&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [ITEM 1. LEGAL PROCEEDINGS](index=34&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company reports no material legal proceedings or claims pending against it as of June 30, 2025 - Management believes there are no claims or actions pending against the Company through June 30, 2025, which will have a material adverse effect on its business, liquidity, financial position, or results of operations[102](index=102&type=chunk)[174](index=174&type=chunk) [ITEM 1A. RISK FACTORS](index=34&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section outlines the significant risks and uncertainties that could materially affect the company's business, financial condition, and results of operations. These risks are categorized into development, commercialization, and regulatory approval of product candidates, general business operations, dependence on third parties, financial operations, intellectual property, and risks related to the company's securities and broader economic conditions [RISK FACTOR SUMMARY](index=34&type=section&id=RISK%20FACTOR%20SUMMARY) This section provides a concise overview of the primary risks facing the company, including those related to product development, financial stability, third-party reliance, and intellectual property - Key risks include dependence on successful clinical development and regulatory approval of PALI-2108, substantial risks in drug development, and reliance on the Giiant license agreement[176](index=176&type=chunk) - Financial risks include substantial doubt about the ability to continue as a going concern, a history of net operating losses, and failure to remediate a material weakness in internal controls[180](index=180&type=chunk) - Other significant risks involve dependence on third-party CROs and suppliers, challenges in obtaining and enforcing intellectual property rights, and potential delisting from Nasdaq[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) [Risks Related to Our Development, Commercialization and Regulatory Approval of Our Product Candidates](index=36&type=section&id=Risks%20Related%20to%20Our%20Development,%20Commercialization%20and%20Regulatory%20Approval%20of%20Our%20Product%20Candidates) This section details risks associated with the clinical development, regulatory approval, and market commercialization of the company's product candidates, particularly PALI-2108 - The business depends on the successful clinical development, regulatory approval, and commercialization of PALI-2108, which is subject to risks like timely completion of trials, funding, and regulatory acceptance of foreign data[182](index=182&type=chunk)[187](index=187&type=chunk) - Drug development is expensive, time-consuming, and uncertain, with no guarantee that PALI-2108 will reach commercialization or obtain regulatory approval[184](index=184&type=chunk)[197](index=197&type=chunk) - Challenges include difficulty enrolling patients in clinical trials, the need for substantially more capital, potential for undesirable side effects, and dependence on adequate reimbursement and market adoption for commercial success[189](index=189&type=chunk)[191](index=191&type=chunk)[194](index=194&type=chunk)[203](index=203&type=chunk)[209](index=209&type=chunk) [Risks Related to Our Business](index=42&type=section&id=Risks%20Related%20to%20Our%20Business) This section covers general business risks, including limited operating history, dependence on key personnel, challenges in acquiring new product candidates, and potential disruptions from government agencies - The Company has a limited operating history and has never generated revenues from product sales, making its business model and prospects difficult to evaluate[213](index=213&type=chunk)[214](index=214&type=chunk) - Success depends on attracting and retaining senior management and scientists with relevant expertise, as competition for qualified employees in the pharmaceutical industry is high[216](index=216&type=chunk) - The Company may choose to discontinue development of product candidates or may be unable to successfully in-license or acquire additional product candidates, impairing business growth[218](index=218&type=chunk)[219](index=219&type=chunk) - Changes in funding or disruptions at government agencies like the FDA could hinder their ability to review and approve new products, negatively impacting the Company's business[222](index=222&type=chunk)[223](index=223&type=chunk) [Risks Related to Our Dependence on Third Parties](index=44&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) This section addresses risks arising from the company's reliance on third-party contract research organizations, suppliers, manufacturers, and collaborators for development and commercialization activities - The Company relies on third-party Contract Research Organizations (CROs) to conduct clinical trials; failure to meet requirements or comply with regulations could delay or prevent regulatory approval[224](index=224&type=chunk) - Dependence on two qualified suppliers for PALI-2108's active pharmaceutical ingredient (API) and third-party manufacturers for drug supplies exposes the Company to risks of supply shortages, quality concerns, and manufacturing disruptions[225](index=225&type=chunk)[226](index=226&type=chunk)[231](index=231&type=chunk) - Reliance on collaborations with third parties for development and commercialization carries risks such as partners' inability to execute responsibilities, price increases, and quality incidents[229](index=229&type=chunk) - Relationships with foreign third-party manufacturers are subject to risks from U.S. legislation, tariffs, sanctions, and trade restrictions, potentially impacting supply and costs[233](index=233&type=chunk)[235](index=235&type=chunk) [Risks Related to Our Financial Operations](index=46&type=section&id=Risks%20Related%20to%20Our%20Financial%20Operations) This section highlights financial risks, including going concern doubts, a history of operating losses, and the potential impact of failing to remediate material weaknesses in internal controls - Management has expressed substantial doubt about the Company's ability to continue as a going concern for one year due to insufficient cash to fund anticipated operations[236](index=236&type=chunk) - The Company has a history of net operating losses and expects them to continue, with no assurance of achieving profitability[238](index=238&type=chunk) - Failure to remediate a material weakness in internal controls over financial reporting could result in material misstatements in consolidated financial statements and a failure to meet reporting obligations[239](index=239&type=chunk)[240](index=240&type=chunk) [Risks Related to Our Intellectual Property](index=46&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) This section addresses risks concerning the company's ability to obtain, maintain, and enforce patent rights globally, protect trade secrets, and defend against infringement claims - The Company may not be able to obtain, maintain, or enforce global patent rights of sufficient breadth to prevent third parties from competing, as the patent application process is expensive, time-consuming, and uncertain[241](index=241&type=chunk)[242](index=242&type=chunk) - Patents may be challenged, narrowed, invalidated, or held unenforceable, and foreign jurisdictions may not provide the same extent of intellectual property protection as the U.S.[245](index=245&type=chunk)[246](index=246&type=chunk)[248](index=248&type=chunk) - Proprietary trade secrets and unpatented know-how are vulnerable to breach of confidentiality agreements, inadvertent disclosure, or independent discovery by competitors[247](index=247&type=chunk) - The Company may be subject to patent infringement claims, resulting in substantial costs and liabilities, and claims that employees or consultants wrongfully used or disclosed trade secrets of former employers[252](index=252&type=chunk)[254](index=254&type=chunk) [Other Risks Related to Our Securities](index=49&type=section&id=Other%20Risks%20Related%20to%20Our%20Securities) This section covers risks related to the company's common stock, including the need for additional financing, stock price volatility, potential delisting from Nasdaq, and future stock sales - The Company will need additional financing, which may not be available on favorable terms and could result in significant dilution for existing stockholders[255](index=255&type=chunk)[271](index=271&type=chunk) - The common stock price is highly volatile and subject to fluctuations based on clinical trial results, regulatory approvals, financing announcements, and other factors[256](index=256&type=chunk)[258](index=258&type=chunk) - There is a risk of delisting from the Nasdaq Stock Market if the Company fails to maintain compliance with the minimum bid price requirement[260](index=260&type=chunk)[261](index=261&type=chunk) - The Company does not anticipate paying any dividends in the foreseeable future, and future sales of substantial amounts of common stock could adversely affect the market price[263](index=263&type=chunk)[266](index=266&type=chunk) [General Risk Factors](index=52&type=section&id=General%20Risk%20Factors) This section addresses broad risks such as health pandemics, global economic conditions, government agency disruptions, and cybersecurity threats that could impact the company's operations - Health pandemics or epidemics, such as COVID-19, could cause significant disruptions in operations, R&D programs, supply chains, and clinical trials[273](index=273&type=chunk) - Global economic conditions, including inflation, rising interest rates, trade restrictions, and geopolitical conflicts, may adversely affect operating costs, liquidity, and access to capital[274](index=274&type=chunk)[275](index=275&type=chunk) - Inadequate funding or disruptions at government agencies (e.g., FDA, SEC) could hinder regulatory processes and impact the ability to access public markets[276](index=276&type=chunk)[278](index=278&type=chunk) - The Company faces risks from system failures, cyber-attacks, and data compromises, which could lead to business disruptions, reputational harm, and legal liabilities, especially concerning patient data in clinical trials[279](index=279&type=chunk)[280](index=280&type=chunk)[283](index=283&type=chunk)[285](index=285&type=chunk)[287](index=287&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=55&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company reports no unregistered sales of equity securities or use of proceeds for the period - None[289](index=289&type=chunk) [ITEM 3. DEFAULT UPON SENIOR SECURITIES](index=55&type=section&id=ITEM%203.%20DEFAULT%20UPON%20SENIOR%20SECURITIES) The company reports no defaults upon senior securities for the period - None[290](index=290&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURE](index=55&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURE) This item is not applicable to the company - Not Applicable[291](index=291&type=chunk) [ITEM 5. OTHER INFORMATION](index=55&type=section&id=ITEM%205.%20OTHER%20INFORMATION) The company reports no other information for the period - None[292](index=292&type=chunk) [ITEM 6. EXHIBITS](index=55&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed as part of the Form 10-Q, including various certifications and XBRL documents - Exhibits include Certification of Principal Executive Officer (31.1), Certification of Principal Financial Officer (31.2), Certification of Principal Executive Officer and Principal Financial Officer (32.1), Inline XBRL Instance Document (101.INS), and Cover Page Interactive Data File (104)[293](index=293&type=chunk) [SIGNATURES](index=56&type=section&id=SIGNATURES) This section confirms the official signing of the report by the company's Chief Executive Officer and Chief Financial Officer - The report was signed by J.D. Finley, Chief Executive Officer and Chief Financial Officer, on August 11, 2025[298](index=298&type=chunk)

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Denali Therapeutics Inc. as of June 30, 2025, show a decrease in total assets to $1.17 billion from $1.37 billion at year-end 2024, primarily due to cash used in operations [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, the company's total assets were $1.17 billion, a decrease from $1.37 billion at December 31, 2024, driven by a reduction in cash and long-term marketable securities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $141,207 | $174,960 | | Total current assets | $934,706 | $864,436 | | **Total assets** | **$1,166,241** | **$1,374,180** | | Total current liabilities | $91,057 | $102,208 | | **Total liabilities** | **$139,188** | **$144,496** | | **Total stockholders' equity** | **$1,027,053** | **$1,229,684** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the three months ended June 30, 2025, Denali reported a net loss of $124.1 million, compared to a $99.0 million loss in the same period of 2024, primarily due to increased research and development expenses Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $102,696 | $91,399 | $218,923 | $198,415 | | General and administrative | $32,267 | $25,194 | $61,620 | $50,430 | | Loss from operations | $(134,963) | $(116,593) | $(280,543) | $(234,308) | | **Net loss** | **$(124,119)** | **$(99,026)** | **$(257,089)** | **$(200,828)** | | Net loss per share | $(0.72) | $(0.59) | $(1.50) | $(1.26) | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity decreased from $1.23 billion at the end of 2024 to $1.03 billion as of June 30, 2025, primarily driven by the net loss for the six-month period - Total stockholders' equity declined by approximately **$202.6 million** in the first six months of 2025, from **$1,229,684 thousand** to **$1,027,053 thousand**[15](index=15&type=chunk) - The primary driver of the decrease in equity was the net loss of **$257,089 thousand** for the six months ended June 30, 2025[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities was $206.8 million, while net cash provided by investing activities was $176.7 million, resulting in a net decrease in cash of $32.2 million Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(206,766) | $(204,840) | | Net cash provided by (used in) investing activities | $176,683 | $(354,618) | | Net cash (used in) provided by financing activities | $(2,139) | $507,031 | | **Net decrease in cash, cash equivalents and restricted cash** | **$(32,222)** | **$(52,427)** | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies, fair value measurements, collaboration agreements, and commitments, including the termination of several collaboration programs and a research and development funding agreement - In July 2024, Biogen terminated its license to the ATV:Abeta program for Alzheimer's disease, ending future milestone or royalty payments for this program[51](index=51&type=chunk) - In February 2025, Sanofi terminated its license to the CNS Products program (SAR443820/DNL788), and Takeda terminated the ATV:TREM2 collaboration program[54](index=54&type=chunk)[58](index=58&type=chunk) - The company entered into an R&D funding agreement in January 2024, receiving **$25.0 million** in 2024 and another **$25.0 million** in Q1 2025 to support a Phase 2a study of BIIB122/DNL151 in Parkinson's disease[48](index=48&type=chunk)[49](index=49&type=chunk) - In March 2024, the company divested certain preclinical small molecule programs to Tenvie Therapeutics, Inc. in exchange for **$15.0 million** in equity, recognizing a gain of approximately **$14.5 million**[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial results, highlighting an increase in operating expenses driven by advancing clinical programs and operating a new manufacturing facility, with sufficient cash to fund operations for at least the next twelve months [Overview and Key Milestones](index=23&type=section&id=Overview%20and%20Key%20Milestones) The company highlights its strategy focused on its Transport Vehicle (TV) platform and key operational milestones in 2025, including BLA submission for tividenofusp alfa and alignment with the FDA on an accelerated approval pathway for DNL126 - Completed a rolling Biologics License Application (BLA) submission for tividenofusp alfa (DNL310) for MPS II under the accelerated approval pathway in May 2025[94](index=94&type=chunk) - The FDA accepted the BLA for tividenofusp alfa for priority review, with a PDUFA target action date of January 5, 2026[94](index=94&type=chunk) - Reached alignment with the FDA that cerebrospinal fluid heparan sulfate (CSF HS) may be used as a surrogate endpoint to support accelerated approval of DNL126 for MPS IIIA[94](index=94&type=chunk) - Opened a new clinical biomanufacturing facility in Salt Lake City, Utah, in March 2025 to expand manufacturing capabilities[94](index=94&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) For the six months ended June 30, 2025, R&D expenses increased by $20.5 million (10%) and G&A expenses rose by $11.2 million (22%), primarily due to TV programs, the new manufacturing facility, and commercial launch preparations Change in Operating Expenses (Six Months Ended June 30, in thousands) | Expense Category | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $218,923 | $198,415 | $20,508 | 10% | | General and administrative | $61,620 | $50,430 | $11,190 | 22% | | **Total operating expenses** | **$280,543** | **$248,845** | **$31,698** | **13%** | - The increase in R&D expenses was primarily due to an **$18.1 million** increase in TV program external costs and a **$12.3 million** increase in other R&D expenses related to the new Salt Lake City facility[113](index=113&type=chunk) - The increase in G&A expenses was primarily driven by activities related to preparations for a potential commercial launch for tividenofusp alfa[114](index=114&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had $977.4 million in cash, cash equivalents, and marketable securities, which management believes is sufficient to support projected operations for at least the next twelve months - The company held **$977.4 million** in cash, cash equivalents, and marketable securities as of June 30, 2025[116](index=116&type=chunk) - In February 2024, the company received net proceeds of approximately **$499.3 million** from a private placement of common stock and pre-funded warrants[118](index=118&type=chunk) - Management believes existing cash is sufficient to fund operations for at least the next twelve months from the filing date of this report[124](index=124&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) The company is exposed to market risks primarily from interest rate and foreign currency sensitivities on its $977.4 million investment portfolio, though a hypothetical 10% change in interest rates is not expected to have a material impact - The company's primary market risk exposures are interest rate sensitivity on its **$977.4 million** portfolio of cash and marketable securities and foreign currency risk[135](index=135&type=chunk)[136](index=136&type=chunk) - The investment portfolio is designed to preserve capital and consists of high-credit-quality, short-term duration securities. A hypothetical **10%** change in interest rates is not expected to have a material impact[137](index=137&type=chunk) - Foreign currency risk arises from transactions denominated in the Euro, Swiss Franc, and British Pound related to preclinical, clinical, and manufacturing activities[138](index=138&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[141](index=141&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[142](index=142&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any litigation or legal proceedings that management believes are likely to have a material adverse effect on its business - Denali is not currently involved in any legal proceedings expected to have a material adverse effect on the business[144](index=144&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks that could harm the company's business, financial condition, and growth prospects, including its history of net losses, dependence on its TV platform, drug development uncertainty, regulatory hurdles, reliance on third parties, and intellectual property challenges [Risks Related to Business, Financial Condition and Capital Requirements](index=40&type=section&id=Risks%20Related%20to%20Our%20Business,%20Financial%20Condition%20and%20Capital%20Requirements) The company has a limited operating history, no approved products, and a history of significant net losses, with future profitability uncertain and potential need for additional dilutive capital - The company has incurred significant net losses since inception, with an accumulated deficit of **$1.80 billion** as of June 30, 2025, and expects to continue incurring losses[154](index=154&type=chunk) - As a clinical-stage company with no approved products, its business is difficult to evaluate and subject to the high risks of drug development[153](index=153&type=chunk) - The company may require additional financing to complete development and commercialization, and failure to obtain it could force delays or discontinuation of programs[164](index=164&type=chunk)[167](index=167&type=chunk) [Risks Related to Discovery, Development, and Commercialization](index=43&type=section&id=Risks%20Related%20to%20the%20Discovery,%20Development%20and%20Commercialization%20of%20Our%20Product%20Candidates) The company's success is heavily dependent on its TV platform and clinical-stage candidates, facing high failure rates in neurodegenerative diseases, risks of clinical trial delays, and challenges in manufacturing, competition, and market acceptance - The company is heavily dependent on the success of its TV technology and its pipeline candidates, which are still in development and may not receive regulatory approval[169](index=169&type=chunk) - The company's focus on neurodegenerative and lysosomal storage diseases is a high-risk field with a history of limited drug development success[175](index=175&type=chunk) - Clinical trials may be substantially delayed or fail, as exemplified by the Phase 2/3 HEALEY ALS Platform Trial for DNL343, which did not meet its primary endpoints[171](index=171&type=chunk)[177](index=177&type=chunk) [Risks Related to Regulatory Approval and Legal Compliance](index=57&type=section&id=Risks%20Related%20to%20Regulatory%20Approval%20and%20Other%20Legal%20Compliance%20Matters) The regulatory approval process is lengthy, costly, and unpredictable, with no guarantee of success, and products will be subject to extensive ongoing scrutiny and compliance with complex healthcare and data privacy laws - The regulatory approval process is lengthy and unpredictable, and there is no guarantee that any product candidates will be approved[224](index=224&type=chunk) - Even if accelerated approval is granted for DNL310, the FDA will require a confirmatory study, and failure of this study could lead to withdrawal of the approval[235](index=235&type=chunk) - The business is subject to complex and evolving U.S. and foreign laws regarding data privacy (GDPR, CCPA) and healthcare fraud and abuse, with non-compliance risking significant penalties[243](index=243&type=chunk)[245](index=245&type=chunk) [Risks Related to Reliance on Third Parties](index=66&type=section&id=Risks%20Related%20to%20Our%20Reliance%20on%20Third%20Parties) Denali depends heavily on collaborations with partners for development and commercialization, and on third-party CROs and CDMOs for clinical trials and manufacturing, introducing risks related to performance, regulatory compliance, and supply chain continuity - The company depends on collaborations with third parties (e.g., Biogen, Sanofi, Takeda) for R&D and commercialization, and the success of these programs depends on the collaborators' performance[257](index=257&type=chunk) - Denali relies on third-party CROs to conduct clinical trials and third-party manufacturers for most of its materials, creating risks related to quality, timeliness, and regulatory compliance[262](index=262&type=chunk)[267](index=267&type=chunk) [Risks Related to Intellectual Property](index=70&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) The company's success depends on obtaining and maintaining patent protection for its TV platform and product candidates, which is challenging and subject to risks of invalidation, non-compliance with license agreements, and third-party infringement claims - The company's ability to commercialize its products depends on obtaining and maintaining patent protection for its TV platform and candidates, which is uncertain[275](index=275&type=chunk)[277](index=277&type=chunk) - The company relies on licenses from third parties (e.g., Genentech, F-star) and could lose important rights if it fails to comply with its obligations under these agreements[285](index=285&type=chunk)[289](index=289&type=chunk) - The company may face third-party claims of intellectual property infringement, which could be expensive to defend and could prevent or delay the commercialization of its products[318](index=318&type=chunk)[322](index=322&type=chunk) [Risks Related to Operations](index=84&type=section&id=Risks%20Related%20to%20Our%20Operations) The company is highly dependent on key personnel and faces challenges in managing growth, with internal computer systems vulnerable to cyberattacks and operations subject to disruption from external events - Denali is highly dependent on its key managerial and scientific personnel, and the inability to attract and retain them could harm the business[328](index=328&type=chunk)[329](index=329&type=chunk) - Internal computer systems are vulnerable to security breaches and cyberattacks, which could lead to data loss, disruption of development programs, and liability[338](index=338&type=chunk)[340](index=340&type=chunk) - Business operations are subject to risks from international operations, economic instability, and disruptions like natural disasters or public health crises[343](index=343&type=chunk)[345](index=345&type=chunk) [Risks Related to Ownership of Common Stock](index=90&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) The market price of the company's common stock is highly volatile, future capital raises may cause significant dilution, and principal stockholders and management can exercise substantial influence - The trading price of the company's common stock is highly volatile and subject to wide fluctuations[350](index=350&type=chunk) - Raising additional capital may cause dilution to existing stockholders or require relinquishing rights to technologies or product candidates[356](index=356&type=chunk)[358](index=358&type=chunk) - Principal stockholders and management own a significant percentage of stock, enabling them to exercise significant influence over matters requiring stockholder approval[360](index=360&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=95&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In February 2024, the company completed a private placement of common stock and pre-funded warrants, raising approximately $499.3 million for R&D, TV technology expansion, and general corporate purposes - On February 29, 2024, the company closed a private placement of **3,244,689** shares of common stock and pre-funded warrants to purchase **26,046,065** shares, receiving net proceeds of approximately **$499.3 million**[375](index=375&type=chunk) - The proceeds will be used to support R&D, accelerate the BBB-crossing TV technology, and for general corporate purposes[375](index=375&type=chunk) [Item 5. Other Information](index=95&type=section&id=Item%205.%20Other%20Information) Co-founder Marc Tessier-Lavigne will step down from the Board effective September 1, 2025, and no officers or directors adopted or terminated a Rule 10b5-1 trading plan during the second quarter of 2025 - Co-founder and Board member Marc Tessier-Lavigne will step down from the Board effective September 1, 2025[383](index=383&type=chunk) - No officers or directors adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter ended June 30, 2025[384](index=384&type=chunk)

[Cover Page & Filer Information](index=1&type=section&id=Cover%20Page%20%26%20Filer%20Information) This section provides essential identification details for the quarterly report, including the company's filer status and outstanding common shares - The document is a **Quarterly Report on Form 10-Q** for MEDICUS PHARMA LTD. for the quarterly period ended **June 30, 2025**[2](index=2&type=chunk) - The company's securities (Common shares and Warrants) are registered on The Nasdaq Capital Market under symbols MDCX and MDCXW, respectively[3](index=3&type=chunk) Filer Status | Filer Status | Status | | :---------------------- | :---------- | | Large accelerated filer | ☐ | | Accelerated filer | ☐ | | Non-accelerated filer | ☒ | | Smaller reporting company | ☒ | | Emerging growth company | ☒ | - As of **August 11, 2025**, there were **17,816,266 common shares**, no par value, issued and outstanding[6](index=6&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section warns that the report contains forward-looking statements subject to substantial risks and uncertainties, which may cause actual results to differ materially - This Quarterly Report on Form 10-Q contains **forward-looking statements** that involve **substantial risks and uncertainties**, which may cause actual results, performance, or achievements to be materially different from those expressed or implied[9](index=9&type=chunk) - **Forward-looking statements include** those related to financial results, R&D progress, market acceptance, financing needs, market risks, intellectual property protection, product quality issues, product liability claims, and regulatory/legal risks[11](index=11&type=chunk) - The company undertakes no obligation to update or revise any **forward-looking statements**, except as required under applicable securities laws[10](index=10&type=chunk) [Part I. Financial Information](index=5&type=section&id=Part%20I.%20Financial%20Information) This section presents the unaudited condensed consolidated financial information of Medicus Pharma Ltd. for the reported periods [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of Medicus Pharma Ltd. for the quarter ended June 30, 2025, including balance sheets, statements of operations and comprehensive loss, statements of changes in shareholders' equity, statements of cash flows, and accompanying notes detailing significant accounting policies, financial instrument fair values, share capital activities, and liquidity [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and shareholders' equity at specific reporting dates Condensed Consolidated Balance Sheet Highlights (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 | December 31, 2024 | Change (Absolute) | | :-------------------------- | :------------ | :---------------- | :---------------- | | Cash and cash equivalents | $9,669,546 | $4,164,323 | +$5,505,223 | | Total current assets | $10,996,731 | $5,378,307 | +$5,618,424 | | Total assets | $11,934,628 | $5,646,878 | +$6,287,750 | | Total current liabilities | $8,544,165 | $2,306,229 | +$6,237,936 | | Debentures | $4,700,000 | $- | +$4,700,000 | | Total liabilities | $8,685,918 | $2,512,174 | +$6,173,744 | | Total shareholders' equity | $3,248,710 | $3,134,704 | +$114,006 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section outlines the company's financial performance, reporting operating expenses, net loss, and comprehensive loss over specified periods Statements of Operations Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | Change (Absolute) | | :---------------------------------------- | :------------ | :------------ | :---------------- | | Total operating expenses | $6,016,088 | $3,553,834 | +$2,462,254 | | Loss from operations | $(6,016,088) | $(3,553,834) | $(2,462,254) | | Net loss and comprehensive loss | $(6,176,084) | $(3,632,859) | $(2,543,225) | | Net loss per share (basic and diluted) | $(0.43) | $(0.44) | +$0.01 | | Weighted average common shares outstanding| 14,284,261 | 8,167,993 | +6,116,268 | Statements of Operations Highlights (Six Months Ended June 30) | Metric | 2025 | 2024 | Change (Absolute) | | :---------------------------------------- | :------------- | :------------ | :---------------- | | Total operating expenses | $11,142,362 | $5,261,192 | +$5,881,170 | | Loss from operations | $(11,142,362) | $(5,261,192) | $(5,881,170) |\ | Net loss and comprehensive loss | $(11,278,492) | $(5,340,217) | $(5,938,275) | | Net loss per share (basic and diluted) | $(0.81) | $(0.66) | $(0.15) | | Weighted average common shares outstanding| 13,853,305 | 8,122,333 | +5,730,972 | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) This section details the changes in the company's shareholders' equity, including share issuances, stock-based compensation, and net loss Shareholders' Equity Changes (Six Months Ended June 30, 2025) | Item | Shares | Common Shares Amount | Additional Paid-in Capital | Accumulated Deficit | Total Equity |\ | :---------------------------------------------------------------- | :----------- | :------------------- | :------------------------- | :------------------ | :----------- |\ | Balance as of December 31, 2024 | 11,816,721 | $30,518,195 | $1,520,412 | $(28,903,903) | $3,134,704 |\ | Issuance of common shares and warrants (Regulation A) | 1,490,000 | $2,076,507 | $1,612,474 | $- | $3,688,981 |\ | Issuance of common shares (SEPA offering costs) | 105,840 | $300,000 | $- | $- | $300,000 |\ | Issuance of common shares (warrant exercise) | 5,000 | $14,000 | $- | $- | $14,000 |\ | Stock-based compensation | - | $- | $112,277 | $- | $112,277 |\ | Net loss and comprehensive loss (Q1 2025) | - | $- | $- | $(5,102,408) | $(5,102,408) |\ | Issuance of common shares (equity financing, June 2025 Public Offering) | 2,260,000 | $3,961,899 | $2,234,495 | $- | $6,196,394 |\ | Issuance of common shares (warrant exercise) | 258,705 | $963,398 | $- | $- | $963,398 |\ | Stock-based compensation | - | $- | $117,448 | $- | $117,448 |\ | Net loss and comprehensive loss (Q2 2025) | - | $- | $- | $(6,176,084) | $(6,176,084) |\ | **Balance as of June 30, 2025** | **15,936,266** | **$37,833,999** | **$5,597,106** | **$(40,182,395)** | **$3,248,710** | Shareholders' Equity Changes (Six Months Ended June 30, 2024) | Item | Shares | Common Shares Amount | Additional Paid-in Capital | Accumulated Deficit | Total Equity |\ | :-------------------------------------- | :----------- | :------------------- | :------------------------- | :------------------ | :----------- |\ | Balance as of December 31, 2023 | 8,076,673 | $18,761,250 | $98,585 | $(17,748,387) | $1,111,448 |\ | Stock-based compensation | - | $- | $35,953 | $- | $35,953 |\ | Net loss and comprehensive loss (Q1 2024) | - | $- | $- | $(1,707,358) | $(1,707,358) |\ | Conversion of debt | 1,307,798 | $5,210,962 | $- | $- | $5,210,962 |\ | Issuance of common shares | 1,461,250 | $5,470,000 | $- | $- | $5,470,000 |\ | Stock-based compensation | - | $- | $585,442 | $- | $585,442 |\ | Net loss and comprehensive loss (Q2 2024) | - | $- | $- | $(3,632,859) | $(3,632,859) |\ | **Balance as of June 30, 2024** | **10,846,721** | **$29,442,212** | **$719,980** | **$(23,088,604)** | **$7,073,588** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities for the reporting periods Cash Flow Highlights (Six Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | Change (Absolute) | | :---------------------------------- | :------------- | :------------ | :---------------- |\ | Net cash used in operating activities | $(9,409,825) | $(3,953,639) | $(5,456,186) |\ | Net cash provided by financing activities | $14,915,048 | $10,642,500 | +$4,272,548 |\ | Net increase in cash and cash equivalents | $5,505,223 | $6,688,861 | $(1,183,638) |\ | Cash and cash equivalents, end of period | $9,669,546 | $8,408,199 | +$1,261,347 | - Operating cash outflows **significantly increased** in **2025** **due to** higher R&D spending for the SKNJCT-003 study and **increased** general and administrative expenses related to IPO and U.S. reporting obligations[139](index=139&type=chunk) - Financing activities in **2025** were **primarily driven by** proceeds from common share and warrant issuances (**$9.79M**), Debenture issuance (**$4.5M**), and warrant exercises (**$0.98M**)[140](index=140&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. Description of business](index=9&type=section&id=Note%201.%20Description%20of%20business) This note describes Medicus Pharma Ltd.'s core business as a clinical-stage biotech company and its corporate structure - Medicus Pharma Ltd. is a **clinical stage**, **multi-strategy life sciences**, biotech company **focused on investing in and accelerating clinical development programs** of novel therapeutic assets[23](index=23&type=chunk) - The company was incorporated on **April 30, 2008**, in Ontario, Canada, and its head office is in W. Conshohocken, PA[24](index=24&type=chunk) - A **1-for-2 reverse share split** was completed on **October 28, 2024**, **reducing outstanding common shares** from **21,693,560** to **10,846,721**, in preparation for a U.S. national securities exchange listing[25](index=25&type=chunk)[26](index=26&type=chunk) [Note 2. Summary of significant accounting policies](index=10&type=section&id=Note%202.%20Summary%20of%20significant%20accounting%20policies) This note outlines the key accounting principles and estimates used in preparing the financial statements, including R&D expensing - The financial statements are prepared in conformity with US GAAP and SEC interim reporting rules, including normal recurring adjustments[27](index=27&type=chunk) - **Key estimates include** valuation of stock-based awards, incremental borrowing rates for operating lease liabilities, fair value of Debentures and Warrants, and valuation allowance for deferred tax assets[28](index=28&type=chunk) - All research and development costs are **expensed as incurred**, including salaries, benefits, and costs for preclinical studies and clinical trials[30](index=30&type=chunk) - The company operates as **one reportable segment**, **focusing on advancing clinical development programs** and opportunistically acquiring accretive assets[40](index=40&type=chunk)[75](index=75&type=chunk) [Note 3. Balance sheet components](index=14&type=section&id=Note%203.%20Balance%20sheet%20components) This note provides a detailed breakdown of specific balance sheet accounts, such as prepaid expenses and accrued liabilities Prepaid Expenses and Other Current Assets | Category | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Insurance | $244,105 | $583,561 | | Contract research organizations | $375,810 | $455,810 | | Professional services | $659,387 | $144,643 | | Prepaid services | $47,883 | $29,970 | | **Total** | **$1,327,185**| **$1,213,984** | Accrued Expenses and Other Current Liabilities | Category | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | Accrued legal fees | $1,040,620 | $495,016 | | Accrued compensation and benefits | $421,294 | $140,989 | | Accrued other | $366,398 | $126,830 | | **Total** | **$1,828,312**| **$762,835** | [Note 4. Leases](index=14&type=section&id=Note%204.%20Leases) This note details the company's operating lease arrangements, including right-of-use assets and lease liabilities - As of **June 30, 2025**, the Company had one operating lease for its corporate office, with a right-of-use asset of **$220,999** and total lease liabilities of **$266,155**[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) Lease Information (Six Months Ended June 30, 2025) | Metric | Value | | :-------------------------- | :---------- | | Operating lease cost | $61,889 | | Operating cash flows used | $70,080 | | Remaining lease term (years)| 1.92 | | Discount rate | 10% | [Note 5. Share capital](index=15&type=section&id=Note%205.%20Share%20capital) This note describes the company's authorized and issued share capital, including details on various equity offerings and outstanding warrants - The Company has an unlimited number of authorized common shares with no par value, each entitled to one vote[50](index=50&type=chunk) - On **June 28, 2024**, all convertible notes (principal **$5,172,500** plus accrued interest) were converted into **1,308,798 common shares**[54](index=54&type=chunk) - A Tier II Regulation A offering closed on **March 10, 2025**, **issuing 1,490,000 units** (common shares + warrants) for gross proceeds of **$4,172,000**. Warrants have an **exercise price of $2.80** and **expire March 10, 2030**[56](index=56&type=chunk) - A public offering closed on **June 2, 2025**, **issuing 2,260,000 units** (common shares + warrants) for gross proceeds of **$7,006,000**. Warrants have an **exercise price of $3.10** and **expire June 3, 2030**[57](index=57&type=chunk) - The IPO **completed on November 14, 2024**, involved the sale of **970,000 units** (common shares + warrants) at **$4.125 per unit**, **generating $4,002,705 in gross proceeds**. Public Warrants have an **exercise price of $4.64** and **expire November 15, 2029**[59](index=59&type=chunk)[60](index=60&type=chunk) Warrants Outstanding as of June 30, 2025 | Expiry Date | Exercise Price | Number Outstanding | | :---------------- | :------------- | :----------------- | | November 15, 2029 | $4.64 | 985,595 | | March 10, 2030 | $2.80 | 1,351,200 | | June 2, 2030 | $3.10 | 2,260,000 | - On **February 10, 2025**, the Company **entered into a Standby Equity Purchase Agreement (SEPA)** with YA II PN, Ltd. (Yorkville) to **sell up to $15,000,000 of common shares** over **36 months** at **97% of market price**. No sales were made under SEPA as of **June 30, 2025**[63](index=63&type=chunk) [Note 6. Stock-based compensation](index=17&type=section&id=Note%206.%20Stock-based%20compensation) This note explains the accounting for stock-based compensation, including the valuation methodology and expense recognition - The Company **expenses stock-based compensation** over the requisite service period based on the estimated grant-date fair value of awards, using the **Black-Scholes option pricing model**[32](index=32&type=chunk)[148](index=148&type=chunk) Stock Option Transactions (as of June 30, 2025) | Metric | Value | | :------------------------------------ | :---------- | | Outstanding at December 31, 2024 | 1,185,000 | | Granted | 100,000 | | Outstanding at June 30, 2025 | 1,285,000 | | Exercisable at June 30, 2025 | 980,000 | | Unvested at June 30, 2025 | 305,000 | | Unrecognized compensation cost | $541,867 | | Weighted-average recognition period | 3.25 years | Stock-based Compensation Expense | Period | 2025 | 2024 | | :------------------------------------ | :---------- | :---------- | | Three months ended June 30 | $117,448 | $585,442 | | Six months ended June 30 | $229,725 | $621,395 | [Note 7. Net loss per share](index=18&type=section&id=Note%207.%20Net%20loss%20per%20share) This note presents the basic and diluted net loss per share, along with the treatment of potentially dilutive securities Net Loss Per Share (Basic and Diluted) | Period | 2025 | 2024 | | :---------------------------------------- | :------------ | :------------ | | Three months ended June 30 | $(0.43) | $(0.44) | | Six months ended June 30 | $(0.81) | $(0.66) | - Potentially dilutive securities (stock options, warrants, notes payable) were excluded from diluted net loss per share calculation as their inclusion would have been anti-dilutive[67](index=67&type=chunk) [Note 8. Related party transactions](index=18&type=section&id=Note%208.%20Related%20party%20transactions) This note discloses transactions and agreements with related parties, including compensation arrangements with key management - The Company has an agreement with RBx Capital, LP, a family office controlled by the Executive Chairman and CEO, for managerial positions[68](index=68&type=chunk) Related Party Transactions with RBx Capital, LP | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 |\ | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- |\ | Reimbursable salaries paid to RBx | $300,000 | $375,000 | $600,000 | $675,000 |\ | Additional expenses incurred by RBx | $64,046 | $38,770 | $104,911 | $124,178 |\ | Accounts payable to RBx (period end) | $121,273 (June 30, 2025) | N/A | N/A | $142,459 (Dec 31, 2024) | [Note 9. Fair value measurements](index=20&type=section&id=Note%209.%20Fair%20value%20measurements) This note describes the company's fair value measurement hierarchy and the valuation of financial instruments like money market funds and debentures - Fair value is defined as an exit price in an orderly transaction between market participants, categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[70](index=70&type=chunk) Fair Value Measurements (June 30, 2025) | Category | Level 1 | Level 2 | Level 3 | Total | | :------------------------ | :------------ | :------ | :------------ | :------------ | | Money market funds | $8,273,495 | $- | $- | $8,273,495 | | Debentures | $- | $- | $4,700,000 | $4,700,000 | | **Total measured at fair value** | **$8,273,495**| **$-** | **$4,700,000**| **$12,973,495**| Fair Value Measurements (December 31, 2024) | Category | Level 1 | Level 2 | Level 3 | Total | | :------------------------ | :------------ | :------ | :------ | :------------ | | Money market funds | $4,164,323 | $- | $- | $4,164,323 | | **Total measured at fair value** | **$4,164,323**| **$-** | **$-** | **$4,164,323**| [Note 10. Commitment and contingencies](index=21&type=section&id=Note%2010.%20Commitment%20and%20contingencies) This note addresses the company's long-term commitments and potential contingent liabilities from legal claims - As of **June 30, 2025**, the Company had **no long-term commitments**[73](index=73&type=chunk) - Management does not consider the Company's exposure to various claims in the ordinary course of business to be material to the consolidated financial statements[74](index=74&type=chunk) [Note 11. Segment reporting](index=21&type=section&id=Note%2011.%20Segment%20reporting) This note clarifies that the company operates as a single reportable segment, with the CEO as the chief operating decision-maker - The Company manages its business activities on a consolidated basis and operates as **one reportable segment**, **focused on advancing clinical development** and opportunistically acquiring assets[75](index=75&type=chunk) - The Chief Executive Officer serves as the chief operating decision-maker (CODM) and uses consolidated net loss to measure segment loss and allocate resources[75](index=75&type=chunk) [Note 12. Debentures](index=21&type=section&id=Note%2012.%20Debentures) This note details the issuance and terms of the company's debentures, including interest rates and fair value accounting - On **May 2, 2025**, the Company **issued three debentures totaling $5,000,000 in principal amount** to Yorkville, at a **discounted price of 90%** for proceeds of **$4,500,000**[76](index=76&type=chunk) - The debentures **accrue interest at an annual rate of 8%** (**potentially 18% upon default**), **mature on February 2, 2026**, and are to be **repaid using proceeds from the SEPA**[76](index=76&type=chunk) - The Company elected the fair value option for the Debentures, initially recording them at fair value. A **change in fair value of $200,000 was recognized as an expense** in the statements of operations for the three and six months ended **June 30, 2025**[77](index=77&type=chunk) [Note 13. Antev Agreement](index=21&type=section&id=Note%2013.%20Antev%20Agreement) This note describes the definitive agreement to acquire Antev Limited, including the consideration and contingent payments - On **June 29, 2025**, the Company **entered into a definitive agreement to acquire Antev Limited**, a **clinical stage** biotech company, in exchange for **2,666,600** (approximately **17%**) of the Company's common shares[78](index=78&type=chunk) - Antev is developing Teverelix, a next-generation GnRH antagonist, for cardiovascular high-risk prostate cancer patients and those with acute urinary retention due to enlarged prostate[78](index=78&type=chunk) - Antev shareholders are entitled to receive up to approximately **$65,000,000 in additional contingent consideration** upon achievement of certain FDA Phase 2 and New Drug Administration approvals[78](index=78&type=chunk) [Note 14. Liquidity](index=21&type=section&id=Note%2014.%20Liquidity) This note discusses the company's liquidity position, history of operating losses, and ongoing need for additional capital to fund operations - The Company has incurred operating losses and negative cash flows since inception, with an accumulated deficit of **$40,182,395** as of **June 30, 2025**[79](index=79&type=chunk) - **Substantial doubt exists** about the Company's ability to continue as a going concern due to its history of losses and need for additional capital[85](index=85&type=chunk) - The Company has funded operations **primarily through equity and debt financings**, including a **$15M Standby Equity Purchase Agreement (SEPA)** with Yorkville, a **$4.17M Regulation A offering**, **$4.5M from Debentures**, and a **$7.0M public offering** in **June 2025**[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) - Subsequent to **June 30, 2025**, the Company sold **490,000 common shares** under the SEPA for approximately **$1.52M** and received **$3.752M** from the exercise of **1,340,000 Regulation A Warrants**[80](index=80&type=chunk)[84](index=84&type=chunk) [Note 15. Subsequent Events](index=22&type=section&id=Note%2015.%20Subsequent%20Events) This note reports significant events that occurred after the balance sheet date, impacting the company's financial position and operations - On **July 9 and July 14, 2025**, the Company sold **155,000** and **335,000 common shares** to Yorkville under the SEPA, **generating approximately $509,000** and **$1,012,000 in proceeds**, respectively[87](index=87&type=chunk) - On **July 14, 2025**, an inducement agreement led to the exercise of **1,340,000 Regulation A Warrants**, providing **$3,752,000** to the Company and issuing new unregistered warrants to purchase up to **2,680,000 common shares**[88](index=88&type=chunk) - Subsequent to **June 30, 2025**, the Company paid down a total of **$1,802,468** on the Debentures[89](index=89&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Medicus Pharma Ltd.'s financial condition and results of operations for the three and six months ended June 30, 2025, compared to the prior year. It covers the company's business overview, recent financing activities, detailed analysis of operating expenses, and a discussion of liquidity and capital resources, highlighting the company's clinical stage status and ongoing need for financing [Company Overview](index=23&type=section&id=Company%20Overview) This section provides an overview of Medicus Pharma Ltd.'s business, clinical development programs, and strategic acquisitions - Medicus Pharma Ltd. is a **clinical stage**, **multi-strategy life sciences**, biotech company **focused on accelerating clinical development** of novel therapeutic assets and expanding its pipeline through acquisitions and partnerships[91](index=91&type=chunk) - The Company's **wholly-owned subsidiary**, SkinJect, Inc., is developing doxorubicin-containing dissolvable microneedle arrays (D-MNAs) for skin cancers, with the SKNJCT-003 Phase 2 clinical study for Basal Cell Carcinoma (BCC) **currently underway** in the US and expanding to Europe[93](index=93&type=chunk)[97](index=97&type=chunk) - In **May 2025**, the Company **received approval to commence clinical study** (SKNJCT-004) in the UAE for non-invasive treatment of BCC, randomizing **36 patients** across four clinical sites[98](index=98&type=chunk) - In **June 2025**, the Company **submitted a product development plan** to the FDA to treat external Squamous Cell Carcinoma (SCC) in horses, having received a Minor Use in Major Species (MUMS) designation[99](index=99&type=chunk) - In **June 2025**, the Company **agreed to acquire Antev Limited**, a UK-based **clinical biotech company** developing Teverelix for cardiovascular high-risk prostate cancer patients[100](index=100&type=chunk) [The Share Consolidation](index=25&type=section&id=The%20Share%20Consolidation) This section explains the 1-for-2 reverse share split completed in October 2024 in preparation for a U.S. listing - On **October 28, 2024**, the Company completed a **1-for-2 reverse share split**, **reducing outstanding common shares** from **21,693,560** to **10,846,721**, in preparation for a U.S. listing[102](index=102&type=chunk)[103](index=103&type=chunk) [Initial Public Offering](index=25&type=section&id=Initial%20Public%20Offering) This section details the company's IPO in November 2024, including gross proceeds and issuance costs - The Company **completed its IPO on November 14, 2024**, selling **970,000 units** (common share + warrant) at **$4.125 per unit**, **generating $4.0 million in gross proceeds**[104](index=104&type=chunk)[105](index=105&type=chunk) - **Total issuance costs** for the IPO were **$2.1 million**, **including underwriter and professional fees**[105](index=105&type=chunk) [Regulation A Offering](index=25&type=section&id=Regulation%20A%20Offering) This section describes the Tier II Regulation A offering completed in March 2025, including units issued and proceeds - On **March 10, 2025**, the Company **completed a Tier II Regulation A offering**, **issuing 1,490,000 units** at **$2.80 per unit** for gross proceeds of **$4.2 million**[106](index=106&type=chunk) - Each unit consisted of **one common share and one warrant** (**exercise price $2.80**, **expiry March 10, 2030**). As of **June 30, 2025**, **133,800 Regulation A Warrants** were exercised for **$374,640**[106](index=106&type=chunk) [Debentures](index=25&type=section&id=Debentures) This section outlines the issuance and terms of the $5,000,000 debentures issued in May 2025 - On **May 2, 2025**, the Company **issued three debentures totaling $5,000,000 in principal amount** at a **discounted price of 90%**, **yielding $4,500,000 in proceeds**[107](index=107&type=chunk) - The debentures **accrue 8% annual interest** (up to **18% upon default**), **mature on February 2, 2026**, and are to be **repaid using proceeds from the SEPA**[107](index=107&type=chunk) [June 2025 Public Offering](index=25&type=section&id=June%202025%20Public%20Offering) This section details the public offering closed in June 2025, including gross proceeds and units issued - On **June 2, 2025**, the Company **closed a public offering** with gross proceeds of **$7.0 million**, **issuing 2,260,000 units** at **$3.10 per unit**[108](index=108&type=chunk) - Each unit **included one common share and one warrant** (**exercise price $3.10**, **expiry June 2, 2030**). No warrants from this offering were exercised as of **June 30, 2025**[108](index=108&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, focusing on changes in operating expenses and other income/expense [General and administrative](index=26&type=section&id=General%20and%20administrative) This section analyzes the changes in general and administrative expenses, including professional fees, salaries, and business development costs General and Administrative Expenses (Three Months Ended June 30) | Category | 2025 | 2024 | Change (Absolute) | | :-------------------------------------- | :------------ | :------------ | :---------------- | | Professional fees | $1,944,559 | $621,040 | +$1,323,519 | | Consulting fees | $383,270 | $483,380 | $(100,110) | | Salaries, benefits, and compensation | $908,599 | $303,390 | +$605,209 | | General office, insurance, administrative | $724,800 | $716,422 | +$8,378 | | Business development, investor relations| $615,296 | $152,444 | +$462,852 | | **Total** | **$4,576,524**| **$2,276,676**| **+$2,299,848** | General and Administrative Expenses (Six Months Ended June 30) | Category | 2025 | 2024 | Change (Absolute) | | :-------------------------------------- | :------------ | :------------ | :---------------- | | Professional fees | $3,305,037 | $1,059,342 | +$2,245,695 | | Consulting fees | $668,216 | $939,194 | $(270,978) | | Salaries, benefits, and compensation | $1,378,393 | $540,359 | +$838,034 | | General office, insurance, administrative | $1,264,698 | $894,232 | +$370,466 | | Business development, investor relations| $1,080,240 | $229,530 | +$850,710 | | **Total** | **$7,696,584**| **$3,662,657**| **+$4,033,927** | - Professional fees **increased significantly** **due to increased** legal and accounting fees **related to regulatory requirements**, U.S. domestic issuer status, **multiple financing transactions**, and the **Antev acquisition**[112](index=112&type=chunk) - Consulting fees **decreased due to reduced business activity** compared to the prior year's focus on the IPO[113](index=113&type=chunk) - Salaries, wages, and benefits **increased due to an increase in headcount**[114](index=114&type=chunk) - Business development and investor relations expenses **rose due to increased marketing efforts** as a **Nasdaq-listed public entity**[116](index=116&type=chunk) [Research and development](index=28&type=section&id=Research%20and%20development) This section discusses the trends and drivers behind the company's research and development expenses Research and Development Expenses | Period | 2025 | 2024 | Change (Absolute) | | :-------------------------- | :------------ | :------------ | :---------------- | | Three months ended June 30 | $1,439,564 | $1,277,158 | +$162,406 | | Six months ended June 30 | $3,445,778 | $1,598,535 | +$1,847,243 | - R&D expenses **increased primarily due to heightened clinical trial activity** for the SKNJCT-003 study[120](index=120&type=chunk) - The Company **expects R&D expenses to increase substantially** as the SKNJCT-003 study and other trials continue[120](index=120&type=chunk) [Other income (expense)](index=28&type=section&id=Other%20income%20(expense)) This section details the components of other income and expense, including interest and changes in fair value of debentures Other Income (Expense) | 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 income (expense) | $40,004 | $(79,025) | $63,870 | $(79,025) |\ | Change in fair value of Debentures| $(200,000) | $- | $(200,000) | $- |\ | **Total other income (expense)** | **$(159,996)** | **$(79,025)** | **$(136,130)** | **$(79,025)** | - Interest income in **2025 resulted from short-term money market investments**, while **2024 interest expense was related to convertible note payables**[122](index=122&type=chunk) - A **$200,000 change in the fair value of Debentures was recognized as an expense** for both the three and six months ended **June 30, 2025**, **due to remeasurement at the reporting date**[123](index=123&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations, highlighting funding sources and going concern risks - The Company is a **clinical stage development company** with **no current revenues** from preclinical programs, **relying on equity and debt financings** for operations[124](index=124&type=chunk) - The Company **expects to continue incurring significant operating losses**, leading to **substantial doubt** about its ability to continue as a going concern within one year[127](index=127&type=chunk) - As of **June 30, 2025**, cash and cash equivalents were **$9,669,546**, up from **$4,164,323** at **December 31, 2024**, with a **working capital surplus of $2,452,566**[129](index=129&type=chunk) - Financing activities during the six months ended **June 30, 2025**, **included $9.79M from common shares and warrants**, **$4.5M from Debentures**, and **$0.98M from warrant exercises**[129](index=129&type=chunk) [Standby Equity Purchase Agreement](index=29&type=section&id=Standby%20Equity%20Purchase%20Agreement) This section describes the agreement with Yorkville for selling up to $15,000,000 of common shares over 36 months - The Company **entered into a Standby Equity Purchase Agreement (SEPA)** with YA II PN, Ltd. (Yorkville) on **February 10, 2025**, allowing the Company to **sell up to $15,000,000 of common shares** over **36 months**[134](index=134&type=chunk) - Shares under the SEPA will be **priced at 97% of the market price** during a specified three-day pricing period, **subject to certain conditions** including SEC registration statement effectiveness and beneficial ownership limitations[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) [Cash flows](index=30&type=section&id=Cash%20flows) This section provides a summary and analysis of the company's cash flows from operating, investing, and financing activities Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 | 2024 | Change (Absolute) | | :-------------------------------- | :------------- | :------------ | :---------------- |\ | Cash used in operating activities | $(9,409,825) | $(3,953,639) | $(5,456,186) |\ | Cash provided by financing activities | $14,915,048 | $10,642,500 | +$4,272,548 |\ | Net change in cash | $5,505,223 | $6,688,861 | $(1,183,638) |\ | Cash, end of period | $9,669,546 | $8,408,199 | +$1,261,347 | - **Increased cash used in operating activities** in **2025** was **primarily due to** higher R&D spending for SKNJCT-003 and **increased** general and administrative expenses related to IPO and U.S. reporting obligations[139](index=139&type=chunk) - Cash provided by financing activities in **2025** was **driven by $9.79M from common shares/warrants**, **$4.5M from Debentures**, and **$0.98M from warrant exercises**[140](index=140&type=chunk) [Contractual Obligations](index=30&type=section&id=Contractual%20Obligations) This section identifies any significant contractual arrangements the company is committed to - The Company has **no significant contractual arrangements** other than those noted in its financial statements[141](index=141&type=chunk) [Off-Balance Sheet Arrangements](index=30&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any off-balance sheet arrangements as of the reporting date - As of **June 30, 2025**, the Company has **not entered into any off-balance sheet arrangements**[142](index=142&type=chunk) [Critical Accounting Policies](index=30&type=section&id=Critical%20Accounting%20Policies) This section outlines the accounting policies that require significant judgment and estimates from management [Significant accounting judgments and estimates](index=31&type=section&id=Significant%20accounting%20judgments%20and%20estimates) This section details the key judgments and estimates made by management, including going concern assessment and stock-based compensation valuation - Management's assessment of the Company's ability to continue as a going concern involves **significant judgment** about future outcomes and events[144](index=144&type=chunk) - Other **important estimates include** assumptions used in determining the valuation of stock-based compensation[145](index=145&type=chunk) [Research and development](index=31&type=section&id=Research%20and%20development) This section reiterates the accounting policy for research and development costs, expensing them as incurred - All research and development costs are **expensed as incurred**, including salaries, employee benefits, and costs for preclinical studies and clinical trials[146](index=146&type=chunk) - **Accruals for estimated R&D costs are recorded** for work performed by third-party contractors, laboratories, and clinical trial sites, **expensing upfront costs immediately**[147](index=147&type=chunk) [Stock-based compensation](index=31&type=section&id=Stock-based%20compensation) This section describes the accounting treatment for stock-based compensation, including valuation and expense recognition - **Stock-based compensation is expensed over the requisite service period** based on the estimated grant-date fair value of awards, using the **Black-Scholes option pricing model**[148](index=148&type=chunk) - The Company **accounts for forfeitures as they occur**, and all **stock-based compensation costs are recorded in the statements of operations and comprehensive loss**[148](index=148&type=chunk) [Fair Value Measurements](index=31&type=section&id=Fair%20Value%20Measurements) This section explains the company's approach to fair value measurements for financial instruments - **Recurring fair value measurements primarily include** cash and cash equivalents and Debentures, for which the **fair value option was elected**[149](index=149&type=chunk) - The fair value of Debentures is **determined using a discounted cash flow approach** and **subsequently remeasured at each reporting period**, with **gains or losses recognized in the statements of operations**[150](index=150&type=chunk) [Updated share information](index=31&type=section&id=Updated%20share%20information) This section provides the latest figures for issued and outstanding common shares, stock options, and warrants - As of **June 30, 2025**, the Company had **15,936,266 common shares issued and outstanding**[152](index=152&type=chunk) - Additionally, there were **1,285,000 common shares issuable upon the exercise of outstanding stock options** and **4,596,795 common shares issuable upon the exercise of three outstanding classes of warrants**[152](index=152&type=chunk) [Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20Regarding%20Market%20Risk) As a smaller reporting company, Medicus Pharma Ltd. is not required to provide detailed quantitative and qualitative disclosures regarding market risk in this Quarterly Report on Form 10-Q - The Company is **not required to provide information** on market risk disclosures as it is a **smaller reporting company**[153](index=153&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of Medicus Pharma Ltd.'s disclosure controls and procedures, identifying material weaknesses in internal control over financial reporting as of June 30, 2025. It also outlines management's commitment to remediation efforts and reports on changes in internal control during the quarter [Evaluation of Disclosure Controls and Procedures](index=32&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section details the assessment of the company's disclosure controls and procedures, noting identified material weaknesses - As of **June 30, 2025**, the Company's disclosure controls and procedures were **deemed not effective** **due to identified material weaknesses** in internal control over financial reporting[154](index=154&type=chunk) - **Material weaknesses include a lack of precision** in reviewing materials for US GAAP transaction recording and a **lack of formalized policies** for the overall IT system environment (security, patches, user access)[156](index=156&type=chunk) - Management is **committed to remediating these weaknesses** by **improving review procedures** for financial reporting and **implementing IT system environment policies**[157](index=157&type=chunk) [Changes in Internal Control over Financial Reporting](index=32&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports on measures implemented to enhance internal control over financial reporting and their ongoing evaluation - During the quarter ended **June 30, 2025**, the Company **implemented measures to enhance internal control** over financial reporting, but their **operating effectiveness is still being evaluated**[158](index=158&type=chunk) - The **material weaknesses cannot be considered fully remediated** until these enhancements have operated for a sufficient period to confirm their effectiveness[158](index=158&type=chunk) [Part II. Other Information](index=33&type=section&id=Part%20II.%20Other%20Information) This section provides additional disclosures not covered in the financial statements, including legal proceedings, risk factors, and equity sales [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms that Medicus Pharma Ltd. is not currently involved in any material litigation, arbitration, or governmental proceedings, nor have its management team members been subject to such proceedings in their capacity as such during the preceding 12 months - There is **no material litigation**, arbitration, or governmental proceeding currently pending against the Company or its management team[160](index=160&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the risk factors detailed in the Company's 2024 Annual Report on Form 10-K, stating that these factors could significantly impact the business, financial condition, and results of operations. It also notes that no material changes to these risk factors have occurred as of the date of this Quarterly Report - Risk factors described in the Company's **2024 Annual Report on Form 10-K** could materially affect the business, financial condition, and results of operations[161](index=161&type=chunk) - As of the date of this Quarterly Report, there have been **no material changes** to the disclosed risk factors[161](index=161&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the unregistered sales of equity securities, specifically the issuance of common shares upon the exercise of Regulation A Warrants, and confirms no material change in the use of proceeds from the Regulation A offering - The Company issued **128,800 common shares** upon the exercise of **128,800 Regulation A Warrants** during the period covered by this Form 10-Q[162](index=162&type=chunk) - There has been **no material change in the use of proceeds** described in the final offering circular for the Regulation A offering[162](index=162&type=chunk) [Item 3. Defaults Upon Senior Securities](index=33&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there have been no defaults upon senior securities during the reporting period - There are **no defaults upon senior securities** to report[164](index=164&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to Medicus Pharma Ltd.'s operations - Mine safety disclosures are **not applicable** to the Company[165](index=165&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) This section confirms that there is no other information to report under this item - There is **no other information to report** under this item[166](index=166&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q, including various agreements, bylaws, certifications, and XBRL documents - **Exhibits include the Share Exchange Agreement** with Antev Limited, Bylaws, Articles of Amendment, **various forms of Debentures and Warrants**, Securities Purchase Agreement with YA II PN, Ltd., Employment Agreement, and **certifications from executive officers**[168](index=168&type=chunk) - The report also **includes Inline XBRL Instance Document**, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, Presentation Linkbase, and Cover Page Interactive Data File[168](index=168&type=chunk) [Part III. Signatures](index=35&type=section&id=Part%20III.%20Signatures) This section contains the required signatures from the company's principal executive and financial officers, certifying the report's accuracy - The report is **signed by Dr. Raza Bokhari, Executive Chairman and Chief Executive Officer (Principal Executive Officer)**, and **James Quinlan, Chief Financial Officer (Principal Financial and Accounting Officer)**, on **August 11, 2025**[172](index=172&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________________ to _______________________. 6325 South Rainbow Boulevard, Suite 420, Las Vegas, NV 89118 (Address of principal executive offices) (Zip Cod ...

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Green Dot Corporation's unaudited consolidated financial statements as of June 30, 2025, detailing assets, liabilities, equity, and cash flows, with a **$47.0 million** net loss for the quarter [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$5.58 billion**, driven by a rise in unrestricted cash to **$2.31 billion**, with total liabilities at **$4.66 billion** and equity at **$920.9 million** Consolidated Balance Sheet Highlights (in thousands of US dollars) | Account | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Unrestricted cash and cash equivalents | $2,312,518 | $1,592,391 | | Investment securities available-for-sale | $1,537,658 | $2,008,650 | | Total assets | $5,583,464 | $5,434,282 | | **Liabilities & Equity** | | | | Deposits | $4,096,701 | $4,010,520 | | Total liabilities | $4,662,582 | $4,560,697 | | Total stockholders' equity | $920,882 | $873,585 | | Total liabilities and stockholders' equity | $5,583,464 | $5,434,282 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2025, total operating revenues increased **23.8%** to **$504.2 million**, but the company reported a wider net loss of **$47.0 million**, primarily due to increased 'Other (expense), net' Consolidated Statements of Operations Highlights (in thousands of US dollars, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $504,176 | $407,121 | $1,063,050 | $859,109 | | Operating income (loss) | $13,399 | $(23,667) | $74,144 | $(13,113) | | Net loss | $(47,025) | $(28,715) | $(21,252) | $(23,965) | | Diluted loss per common share | $(0.85) | $(0.54) | $(0.39) | $(0.45) | [Consolidated Statements of Comprehensive Income And Loss](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20And%20Loss) In Q2 2025, the company reported a comprehensive loss of **$34.9 million**, including a net loss of **$47.0 million** offset by **$12.1 million** in other comprehensive income from unrealized gains Consolidated Statements of Comprehensive Income and Loss (in thousands of US dollars) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(47,025) | $(28,715) | $(21,252) | $(23,965) | | Other comprehensive (loss) income | $12,079 | $18,414 | $59,792 | $17,735 | | Comprehensive (loss) income | $(34,946) | $(10,301) | $38,540 | $(6,230) | [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Total stockholders' equity increased to **$920.9 million** as of June 30, 2025, primarily due to **$59.8 million** in other comprehensive income, offsetting a **$21.3 million** net loss - For the six months ended June 30, 2025, stockholders' equity increased from **$873.6 million** to **$920.9 million**, mainly due to **$59.8 million** in other comprehensive income offsetting the **$21.3 million** net loss[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash from operating activities was **$177.7 million**, investing activities provided **$501.7 million**, and financing activities provided **$40.8 million**, leading to **$2.31 billion** in unrestricted cash Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in thousands of US dollars) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $177,701 | $120,674 | | Net cash provided by investing activities | $501,664 | $7,783 | | Net cash provided by financing activities | $40,762 | $502,258 | | **Net increase in unrestricted cash** | **$720,127** | **$630,715** | | Unrestricted cash, end of period | $2,312,562 | $1,317,217 | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail accounting policies, revenue disaggregation, investment portfolio, and segment performance, highlighting a **$70 million** incentive payment related to the Walmart agreement recorded as an equity loss - In April 2025, the company amended its agreement with Walmart, extending the term to January 2033, with the TailFin Labs joint venture making a one-time **$70 million** incentive payment recorded as an equity loss[55](index=55&type=chunk) - A single BaaS partner generated approximately **63%** and **59%** of total operating revenues for the three and six months ended June 30, 2025, respectively, indicating significant partner concentration[118](index=118&type=chunk) Segment Profit (in thousands of US dollars) | Segment | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Consumer Services | $33,094 | $34,449 | $66,726 | $67,708 | | B2B Services | $27,980 | $19,078 | $55,132 | $37,361 | | Money Movement Services | $34,112 | $35,291 | $110,938 | $101,138 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, noting a **24%** revenue increase driven by B2B Services, a wider Q2 net loss due to a **$70 million** Walmart incentive payment, and ongoing exploration of strategic alternatives - Total operating revenues increased by **24%** for both the three and six months ended June 30, 2025, driven by **38%** and **40%** growth in the B2B Services segment respectively[137](index=137&type=chunk)[139](index=139&type=chunk) - Other expense increased significantly due to a **$70 million** incentive payment by the TailFin Labs joint venture for the Walmart MoneyCard agreement extension[146](index=146&type=chunk) - In March 2025, the company initiated a process to explore potential strategic alternatives, with no assurances regarding outcome or timing[150](index=150&type=chunk) [Consolidated Key Metrics](index=35&type=section&id=Consolidated%20Key%20Metrics) In Q2 2025, Gross Dollar Volume grew **20.0%** to **$38.5 billion**, and active accounts increased **2.1%** to **3.48 million**, though purchase volume and cash transfers declined Consolidated Key Metrics (in millions, except percentages) | Metric (in millions) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Gross dollar volume | $38,545 | $32,130 | 20.0% | | Number of active accounts | 3.48 | 3.41 | 2.1% | | Purchase volume | $4,991 | $5,012 | (0.4)% | | Number of cash transfers | 7.52 | 8.15 | (7.7)% | | Number of tax refunds processed | 3.73 | 4.20 | (11.1)% | [Segment Results](index=43&type=section&id=Segment%20Results) Segment performance varied, with B2B Services profit growing **46.7%** due to BaaS programs, while Consumer Services profit declined **3.9%**, and Money Movement Services profit fell **3.3%** - **Consumer Services:** Segment profit decreased by **3.9%** in Q2 2025 YoY, with active accounts declining **5.1%** and gross dollar volume falling **2.2%**[202](index=202&type=chunk)[205](index=205&type=chunk) - **B2B Services:** Segment profit grew **46.7%** in Q2 2025 YoY, driven by a **23.1%** increase in gross dollar volume and a **9.7%** increase in active BaaS accounts[207](index=207&type=chunk)[211](index=211&type=chunk) - **Money Movement Services:** Segment profit declined **3.3%** in Q2 2025 YoY, impacted by an **11.1%** decrease in tax refunds and a **7.7%** drop in cash transfers[213](index=213&type=chunk)[215](index=215&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, primary liquidity was **$2.3 billion** in unrestricted cash, with **$177.7 million** generated from operations, and both entities are 'well-capitalized' under regulatory standards - Primary liquidity source as of June 30, 2025, was **$2.3 billion** in unrestricted cash and cash equivalents[222](index=222&type=chunk) - In 2024 and 2025, the company issued **$65 million** in senior unsecured notes maturing in 2029 with a fixed rate of **8.75%**[230](index=230&type=chunk) Capital Ratios as of June 30, 2025 | Entity / Ratio | Actual Ratio | Regulatory Minimum | 'Well-capitalized' Minimum | | :--- | :--- | :--- | :--- | | **Green Dot Corporation** | | | | | Tier 1 leverage | 14.0% | 4.0% | n/a | | Total risk-based capital | 48.1% | 8.0% | 10.0% | | **Green Dot Bank** | | | | | Tier 1 leverage | 7.7% | 4.0% | 5.0% | | Total risk-based capital | 35.7% | 8.0% | 10.0% | [Quantitative and Qualitative Disclosures about Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks are interest rate, inflation, and credit/liquidity, with recent Federal Reserve rate cuts expected to negatively impact net interest income due to BaaS partner agreements - The company is exposed to interest rate risk, with recent Federal Reserve rate cuts expected to have a net negative impact due to interest-sharing agreements with BaaS partners[242](index=242&type=chunk) - Inflation risk is believed to be largely offset by higher interest yields on cash/investments and increased interchange revenue from higher consumer spending[245](index=245&type=chunk) - Credit and liquidity risks are managed through a restrictive investment policy and by monitoring settlement exposure with retail distributors and partners[246](index=246&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) [Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[249](index=249&type=chunk) - There were no material changes in internal control over financial reporting during the three months ended June 30, 2025[250](index=250&type=chunk) [PART II – OTHER INFORMATION](index=53&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, with detailed information provided in Note 17 of the financial statements - For information regarding legal proceedings, the report refers to Note 17 — Commitments and Contingencies in the Notes to Consolidated Financial Statements[254](index=254&type=chunk) [Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks, including uncertainties from strategic alternatives, heavy reliance on key partners, intense competition, fraud potential, operational risks, and extensive regulatory oversight, including a recent Consent Order - The company's exploration of strategic alternatives, announced in March 2025, creates uncertainty and could adversely affect the business and stock price[255](index=255&type=chunk) - A single BaaS partner accounted for **63%** of total operating revenues in Q2 2025, and Walmart accounted for **8%**, representing significant concentration risk[256](index=256&type=chunk) - As a bank holding company, Green Dot is subject to extensive regulation, including a July 2024 Consent Order with the Federal Reserve Board and a **$44 million** civil money penalty for compliance risk management[292](index=292&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=67&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 - There were no unregistered sales of equity securities in the quarter[325](index=325&type=chunk) [Other Information](index=67&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[326](index=326&type=chunk) [Exhibits](index=68&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including amendments to the Walmart MoneyCard Program Agreement and CEO/CFO certifications - Exhibits filed with the report include amendments to the Walmart MoneyCard agreement and officer certifications pursuant to the Sarbanes-Oxley Act[328](index=328&type=chunk)