What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-12 compared with 2025-08-12 · 77 added, 77 removed, 302 unchanged (34% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References to the “Company,” “Hyliion,” “we,” or “us” in this report refer to Hyliion Holdings Corp.

References to the “Company,” “Hyliion,” “we,” “our,” or “us” in this report refer to Hyliion Holdings Corp.

and its wholly-owned subsidiary Hyliion Inc., unless expressly indicated or the context otherwise requires.

3 unchanged sentences

All statements, other than statements of historical fact, contained in this Quarterly Report on Form 10-Q are forward-looking statements, including, but not limited to, statements regarding our strategy, prospects, plans, objectives, future operations, future revenue and earnings, projected margins and expenses, markets for our services, potential acquisitions or strategic alliances, financial position, and liquidity and anticipated cash needs and availability.

The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” variations of such words and similar expressions or the negatives thereof are intended to identify forward-looking statements.

The words “anticipates,” “believes,” “targets,” “should,” “contemplates,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” “potential,” “remains,” “continues,” “likely,” or variations of such words and similar expressions or the negatives thereof are intended to identify forward-looking statements.

However, not all forward-looking statements contain these identifying words.

5 unchanged sentences

Except as required by law, we do not undertake, and expressly disclaim any duty, to publicly update or revise these statements, whether as a result of new information, new developments, or otherwise and even if experience or future changes make it clear that any projected results expressed in this Quarterly Report on Form 10-Q or future quarterly reports, press releases or company statements will not be realized.

Unless specifically indicated otherwise, the forward-looking statements in this Quarterly Report on Form 10-Q do not reflect the potential impact of any divestitures, mergers, acquisitions or other business combinations that have not been completed as of the date of this filing.

Unless specifically indicated otherwise, the forward-looking statements in this Quarterly Report on Form 10-Q do not reflect the potential impact of any investments, divestitures, mergers, acquisitions or other business combinations that have not been completed as of the date of this filing.

In addition, the inclusion of any statement in this Quarterly Report on Form 10-Q does not constitute an admission by us that the events or circumstances described in such statement are material.

4 unchanged sentences

Hyliion’s primary product offering, the KARNO TM Power Module, is a modular, fully enclosed, fuel-agnostic and fully integrated power generating solution.

The KARNO Power Module is powered by KARNO Core, a heat engine coupled to a linear generator, to produce electricity with significant improvements in efficiency, emissions and lifecycle cost compared to conventional generators.

Hyliion’s KARNO Power Modules enable effective distributed power generation using a wide range of fuel sources, including conventional fuels, waste fuels such as landfill gas, wellhead gas, and zero carbon fuels such as renewable hydrogen and ammonia.

Hyliion is initially targeting the commercial and industrial sectors with a locally-deployable generator designed to meet a wide range of power generation needs.

The Company plans to scale up its Power Module solution to address larger utility-scale power needs and to develop future variants for industrial waste heat, household use and e-mobility applications such as vehicles and marine vessels.

Hyliion’s KARNO Power Modules enable effective power generation using a wide range of fuel sources, including conventional fuels such as natural gas, propane or diesel, waste fuels such as landfill gas, wellhead gas, and zero carbon fuels such as renewable hydrogen and ammonia.

Hyliion is initially targeting the datacenter, commercial and industrial, and defense sectors with a locally-deployable generator designed to meet a wide range of power generation needs.

The Company plans to scale up its Power Module solution to address larger utility-scale power needs and to develop future variants for industrial waste heat, nuclear, household use and e-mobility applications such as vehicles and marine vessels.

Additionally, the Power Module technology is well-suited to provide combined heat and power in various stationary applications.

1 unchanged sentence

The KARNO technology emerged out of General Electric’s long-running R&D investments in aerospace and metal additive manufacturing across multiple industries and in areas such as generator thermal and performance design.

We initially envisioned utilizing the KARNO Core as new range-extending power source for our Hypertruck powertrain system, given its

ability to operate on a wide range of fuel sources, including natural gas and hydrogen.

envisioned utilizing the KARNO Core as new range-extending power source for our Hypertruck powertrain system, given its ability to operate on a wide range of fuel sources, including natural gas and hydrogen.

After the previously-announced wind down of our powertrain operations, we shifted our focus to the development and commercialization of the KARNO Power Module as a standalone product targeting power generation and e-mobility markets, and related R&D services that we have undertaken pursuant to contracts with the United States government.

3 unchanged sentences

The KARNO Power Module is distinguished from conventional generating systems that rely on reciprocating internal combustion engines or gas turbines to drive a rotating shaft.

Instead, the KARNO Cores that power the Power Modules use an innovative thermal converter to power a linear electricity generating system.

Instead, the KARNO Cores that power the KARNO Power Modules use an innovative thermal converter to power a linear electricity generating system.

The KARNO Core produces linear motion from temperature differences within the system.

17 unchanged sentences

High efficiency is expected to remain relatively consistent across a wide range of output power levels, spanning from tens of kilowatts to multiple megawatts.

In contrast, internal combustion diesel generators typically operate within an efficiency range of 25% to 40% over a similar power spectrum, while the U.S.

In contrast, internal combustion diesel or natural gas generators typically operate within an efficiency range of 25% to 40% over a similar power spectrum, while the U.S.

electrical power grid is estimated to operate at an efficiency between 33% and 40%.

Notably, best-in-class grid-level gas turbine powerplants can obtain efficiencies above 50% but often incur transmission and distribution losses between 5% and 10% which the KARNO Power Module is expected to circumvent by being strategically located near the point of power consumption.

Notably, best-in-class grid-level combined cycle gas turbine powerplants can obtain efficiencies above 50% but often incur transmission and distribution losses between 5% and 10% which the KARNO Power Module is expected to circumvent by being located near the point of power consumption.

Conventional generators emit pollutants because of incomplete combustion of fuel-air mixtures and operating conditions, with the formation of nitrous-oxide (“NOx”) and carbon monoxide (“CO”) compounds being particularly prominent.

1 unchanged sentence

This is achieved partly through the recirculation of exhaust gases, which serves to prolong oxidation, and by pre-heating incoming air.

As a result, the KARNO Power Module is anticipated to achieve ultra-low levels of emissions, with NOx and CO emissions expected to be reduced by over 95% compared to best-in-class diesel engines and targeting California’s Air Resources Board (“CARB”) 2027 standards without the need for aftertreatment.

As a result, the KARNO Power Module is anticipated to achieve ultra-low levels of emissions, with NOx and CO emissions expected to be reduced by over 95% compared to best-in-class diesel or

natural gas engines and meeting South Coast Air Quality Management District (“SCAQMD”) Rule 1110.3 emission standards without the need for aftertreatment.

One of the notable advantages of the KARNO Power Module in comparison to traditional generating units is the expected reduction in maintenance requirements and cost.

Conventional generators typically incur periodic and usage-based maintenance expense that can range between 5% to 20% of their total operating cost throughout their lifespan, influenced by factors such as

utilization and operating parameters.

The KARNO Power Module’s primary advantage arises from having only a single moving linear actuator per shaft (4 shafts per 200 kW KARNO Core), which glides on low friction helium bearings.

This innovative design significantly mitigates efficiency losses attributed to friction, enhancing the system’s operational longevity and eliminating the need for oil-based lubricants.

The KARNO Power Module derives advantages from its expected capability to operate across a diverse spectrum of over 20 available fuel sources and fuel mixtures.

The KARNO Power Module derives advantages from its expected capability to operate across a diverse spectrum of over 20 available fuel sources and fuel blends.

These include natural gas, propane, gasoline, jet fuel, and alternative fuels like biodiesel, hydrogen and ammonia.

Moreover, the KARNO Power Module can transition between these fuels or fuel blends.

Moreover, the KARNO Power Module can seamlessly transition between these fuels or fuel blends.

This versatility enables a single KARNO Power Module to adapt to different use cases.

For example, the KARNO Power Module may operate on natural gas for prime power generation when a pipeline connection is available and on waste gas near a landfill or dairy farm.

For example, the KARNO Power Module may operate on natural gas for prime power generation when a pipeline connection is available and on waste gas near a landfill or dairy farm, and switch to locally stored diesel fuel for continuous generation if primary fuel supply is interrupted.

Furthermore, as hydrogen becomes more widely available, the KARNO Power Module will be able to adapt to this cleaner fuel.

As the energy landscape evolves, the KARNO Power Module’s fuel-agnostic nature positions it as a flexible solution to electricity generation needs.

As the energy landscape evolves, the KARNO Power Module’s fuel-agnostic nature positions it as a flexible solution to electricity generation needs, enhancing energy security.

Benefits of the KARNO Power Module Versus Conventional Competitors

22 unchanged sentences

Hyliion’s KARNO Power Module is an innovative solution in the emerging distributed generation space, offering a reliable power generator that combines high efficiency, fuel flexibility, and low emissions.

Designed for both stationary and mobile applications, the KARNO Power Module addresses many of the challenges that have traditionally limited the widespread adoption of onsite power solutions.

Designed for both stationary and mobile applications, the KARNO Power Module addresses many of the challenges that have traditionally limited the widespread

adoption of onsite power solutions.

These include high operating costs, reliability issues, complex maintenance, noise pollution, space constraints, and dependency on limited fuel sources.

2 unchanged sentences

The KARNO Power Module supports fuel switching during operation without power loss, while flexible deployment options allow it to operate in grid-following, grid-forming, or islanded configurations (when paired with an external inverter), making it suitable for a wide range of applications.

Additionally, the

KARNO Power Module features real-time monitoring of over 1,000 operational parameters through its KARNO Cloud ® platform, enabling proactive diagnostics, predictive maintenance, and performance optimization, ensuring maximum uptime.

Additionally, the KARNO Power Module features real-time monitoring of over 1,000 operational parameters through its KARNO Cloud ® platform, enabling proactive diagnostics, predictive maintenance, and performance optimization, ensuring maximum uptime.

With cloud connectivity, users gain instant access to remote monitoring and control features, providing insights into system performance, fuel efficiency, and system health.

9 unchanged sentences

Onsite generation is an emerging solution to power new data center installations.

Hyliion’s 2 MW KARNO product is being designed to address the needs of data center developers by providing a scalable, fuel-flexible onsite power solution with best-in-class power density.

Hyliion’s 2 MW KARNO product is being designed to address the needs of data center developers by providing a scalable, fuel-flexible onsite power solution with best-in-class power density and versatility.

Capable of operating on more than 20 different fuels, the KARNO Power Module enables data center developers to minimize onsite generation infrastructure.

Its ability to easily transition between pipeline-supplied fuels, such as hydrogen or natural gas, and onsite stored fuels, like methanol or diesel, eliminates the need for separate backup generation systems, reducing capital and operational costs.

Furthermore, the KARNO Power Module maintains high efficiency across broad range of load factors.

• Prime Power & Microgrids:

As electricity demand increases and grid infrastructure struggles, microgrids and prime power solutions are becoming essential for industries facing high consumption charges, peak demand pricing, and grid reliability concerns.

As datacenter rack power densities rise to support increased AI workloads, Hyliion’s KARNO Power Module’s native 800V DC architecture simplifies power system design and enhances site resiliency.

• Commercial & Industrial:

As electricity demand increases and grid infrastructure struggles, microgrids and onsite prime power solutions are becoming essential for industries facing high consumption charges, peak demand pricing, and grid reliability concerns.

Businesses, industrial sites, and remote facilities increasingly seek localized power generation to mitigate rising energy costs, monetize assets, and improve operational resilience.

11 unchanged sentences

These vehicles require substantial power for charging, intensifying grid demands.

While Direct Current (“DC”) fast charging technology and infrastructure are evolving to meet this need, many commercial operators cite limited grid capacity and high electricity costs as barriers to scaling their EV fleets.

While Direct Current (“DC”)

fast charging technology and infrastructure are evolving to meet this need, many commercial operators cite limited grid capacity and high electricity costs as barriers to scaling their EV fleets.

Hyliion’s KARNO Power Module offers an advantaged solution for commercial EV charging.

1 unchanged sentence

Additionally, the KARNO Power Module’s compact footprint and quiet operation make it ideal for deployment in space-constrained locations, such as urban charging hubs, fleet depots, and remote charging stations where grid access is limited or expensive.

When paired with

onsite energy storage systems and renewable energy sources like solar or wind, KARNO Power Modules can enable resilient and sustainable microgrids for EV charging.

• Biogas (Landfill, Waste Water & Digester Gas):

When paired with onsite energy storage systems and renewable energy sources like solar or wind, KARNO Power Modules can enable resilient and sustainable microgrids for EV charging.

• Biogas (Landfill, Wastewater & Digester Gas):

Biogas sourced from landfills, wastewater treatment plants, and dairy digesters represents a rapidly growing market as industries and municipalities seek to convert methane-rich waste gases into electricity and prevent methane, a potent greenhouse gas, from escaping into the environment or being flared.

43 unchanged sentences

Validation of essential operating parameters, including efficiency, emissions and reliability, are also part of R&D activities.

To date in 2025, we have delivered two of the ten early adopter customer units planned for the year.

These initial units are undergoing testing under our R&D contract with the ONR and are performing well mechanically, while we address minor software and test equipment issues.

To date in 2025, we have delivered two early adopter customer units planned for the year as well as two additional Power Modules that are used for internal testing and for UL Solutions (“UL”) certification.

The two customer units are undergoing testing under our R&D contract with the ONR and are performing well mechanically, while we address minor software and test equipment issues.

Initial KARNO Power Module deployments, along with our ongoing testing and development efforts, will continue to validate critical design specifications, including projected operating life, maintenance requirements and durability.

5 unchanged sentences

The regenerator part has since been redesigned to increase heat storage and transfer capabilities.

Bench testing of this updated design indicates that it will address the performance shortfalls seen with the earlier configuration.

We are now printing the components needed to upfit a full KARNO Core for validation at full-power operation.

Furthermore, new post-processing techniques have been implemented and verified to effectively remove residual powder after printing.

Testing of this updated design indicates that it will address the performance shortfall seen with the earlier configuration although the improved thermal characteristics revealed other locations where performance is being affected by heat losses within the system.

Design modifications are underway to increase the insulative properties of these components with improved results expected in the coming months.

Furthermore, new post-processing techniques have been implemented and verified to effectively remove residual powder from regenerators after printing.

The updated regenerator can be easily retrofitted into existing KARNO Cores once available.

We recently insourced linear electric motor production after earlier efforts to outsource this work to a contract manufacturer.

This transition will accelerate the ramp-up in motor production capacity and give Hyliion greater control over manufacturing

This transition is accelerating the ramp-up in motor production capacity and enabling greater control over manufacturing

While production challenges and the shift in operations delayed early deployment unit deliveries, output has since increased and is now expected to meet ongoing production needs.

4 unchanged sentences

Upon successful validation and demonstration, the KARNO Power Module could be used as an electric power system in future platforms and for stationary power needs.

In the first quarter of 2025 we delivered the first early deployment generator unit under this contract which we have been testing at our R&D facility in Cincinnati.

We expect to deliver additional KARNO Cores and Power Modules during 2025 and will expand testing to include long duration operation, simulation of ship motion and the ability of the system to operate in extreme temperature environments.

To date in 2025, we have delivered two KARNO Cores under this contract which we have been testing at our R&D facility in Cincinnati.

We expect to deliver additional KARNO Cores and Power Modules during 2026, including a multi-KARNO Power Module system, and will expand testing to include long duration operation, simulation of ship motion and the ability of the system to operate in extreme temperature environments.

We will continue to provide R&D services to third parties under existing contracts and, based on interest from current and prospective customers, anticipate entering into additional R&D agreements in the future.

5 unchanged sentences

Key Factors Affecting Operating Results

We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including but not limited to economic uncertainties, supply chain disruptions, inflation and high interest rates as well as those discussed below and referenced in Part II, Item 1A “Risk Factors”.

We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including but not limited to economic uncertainties, supply chain disruptions, inflation, high interest rates, and other risks discussed below and referenced in Part II, Item 1A “Risk Factors”.

Commercialization of KARNO Power Module

Our focus is on continuing development and testing of our fuel-agnostic KARNO Power Module and the deployment of initial units with customers through 2025.

Our focus is on continuing development and testing of our fuel-agnostic KARNO Power Module and the deployment of initial units with customers.

We anticipate that a substantial portion of our capital resources and efforts in the near future will be focused on these activities.

The amount and timing of our future funding requirements, if any, will depend on many factors, including but not limited to the pace of completing initial KARNO Power Module testing and validation, the pace at which we invest in KARNO Core additive printing capacity, our plans for manufacturing KARNO Power Module components (whether in-house or through outsourcing to third parties), the range of product offerings we plan to bring to market and external market factors beyond our control.

The amount and timing of our future funding requirements will depend on many factors, including but not limited to the pace of completing initial KARNO Power Module testing and validation, the pace at which we invest in KARNO Core additive printing capacity, our plans for manufacturing KARNO Power Module components (whether in-house or through outsourcing to third parties), the range of product offerings we plan to bring to market and external market factors beyond our control.

Key Components of Statements of Operations

12 unchanged sentences

Selling, General and Administrative Expense

Selling, general and administrative expenses consist of personnel-related expenses for our corporate, executive, finance, sales, marketing and other administrative functions, expenses for outside professional services, including legal, audit and accounting services, as well as expenses for facilities, depreciation, amortization, travel, sales and marketing costs.

Selling, general and administrative expenses consist of personnel-related expenses for our corporate, executive, finance, information technology, sales, marketing and other administrative functions, expenses for outside professional services, including legal, audit and accounting services, as well as expenses for facilities, software licenses, depreciation, amortization, travel, sales and marketing costs.

Personnel-related expenses consist of salaries, benefits and share-based compensation.

8 unchanged sentences

Results of Operations

Comparison of Three Months Ended June 30, 2025 to Three Months Ended June 30, 2024

Our results of operations for the three months ended June 30, 2025 (the “current quarter”) and 2024 on a consolidated basis are summarized as follows (in thousands, except share and per share data):

Three Months Ended June 30,

Comparison of Three Months Ended September 30, 2025 to Three Months Ended September 30, 2024

Our results of operations for the three months ended September 30, 2025 (the “current quarter”) and 2024 on a consolidated basis are summarized as follows (in thousands, except share and per share data):

Three Months Ended September 30,

2025 2024 $ Change % Change

4 unchanged sentences

Total cost of revenues 806 — 806 N/A

Gross profit 131 — 131 N/A

Gross loss (47) — (47) N/A

Operating expenses

1 unchanged sentence

Selling, general and administrative expenses 5,184 5,648 (464) (8.2) %

Exit and termination costs (benefits) (346) (556) 210 (37.8) %

Exit and termination benefits (70) (929) 859 (92.5) %

Total operating expenses 15,250 14,181 1,069 7.5 %

1 unchanged sentence

Interest income 1,960 2,979 (1,019) (34.2) %

Other income, net — 32 (32) (100.0) %

Net loss $ (13,337) $ (11,202) $ (2,135) 19.1 %

5 unchanged sentences

Research and Development

R&D expenses increased $1.8 million due to higher spending related to the design and testing of our KARNO Power Module, growth in the production of additive components, and the procurement of parts for our initial KARNO Power Module deployments later in 2025.

Selling, General and Administrative

R&D expenses increased $0.7 million due to higher spending related to the design and testing of our KARNO Power Module, growth in the production of additive components, and the procurement of parts for our initial KARNO Power Module deployments planned to occur later in 2025.

Selling, General and Administrative Expenses

Selling, general, and administrative expenses decreased $0.5 million primarily due to:

• a decrease of $0.3 million in insurance;

• a decrease of $0.3 million in facilities costs;

• a decrease of $0.1 million in professional services;

• a decrease of $0.2 million in insurance;

partially offset by

• an increase of $0.2 million in personnel and benefits.

Exit and Termination Costs (Benefits)

Exit and Termination Benefits

Exit and termination benefits decreased by $0.9 million as a result of the adoption of the Plan and items discussed in Note 2 of the notes to the condensed consolidated financial statements, including recoveries from assets sold.

Interest Income

Interest income decreased $0.9 million primarily due to the decline in our investment balance.

Comparison of Six Months Ended June 30, 2025 to Six Months Ended June 30, 2024

The following table summarizes our results of operations on a consolidated basis for the six months ended June 30, 2025 (the “current six months”) and 2024 (in thousands, except share and per share data):

Six Months Ended June 30,

Interest income decreased $1.0 million primarily due to the decline in our investment balance and lower interest rates.

Comparison of Nine Months Ended September 30, 2025 to Nine Months Ended September 30, 2024

The following table summarizes our results of operations on a consolidated basis for the nine months ended September 30, 2025 (the “current nine months”) and 2024 (in thousands, except share and per share data):

Nine Months Ended September 30,

2025 2024 $ Change % Change

21 unchanged sentences

Research and Development

R&D expenses increased $6.1 million due to higher spending related to the design and testing of our KARNO Power Module, growth in the production of additive components, and the procurement of parts for our initial KARNO Power Module deployments later in 2025.

Selling, General and Administrative

R&D expenses increased $6.8 million due to higher spending related to the design and testing of our KARNO Power Module, growth in the production of additive components, and the procurement of parts for our initial KARNO Power Module deployments planned to occur later in 2025.

Selling, General and Administrative Expenses

Selling, general, and administrative expenses decreased $1.3 million primarily due to:

7 unchanged sentences

Interest Income

Interest income decreased $1.8 million primarily due to the decline in our investment balance.

Interest income decreased $2.9 million primarily due to the decline in our investment balance and lower interest rates.

Liquidity and Capital Resources

At June 30, 2025, our current assets were $114.5 million, consisting primarily of cash and cash equivalents of $15.6 million, short-term investments of $93.0 million and prepaid expenses of $4.8 million.

Our current liabilities were $10.3 million and were primarily comprised of accounts payable, accrued expenses and operating lease liabilities.

At September 30, 2025, our total current assets were $110.0 million, consisting primarily of cash and cash equivalents of $17.9 million, short-term investments of $87.1 million and prepaid expenses of $4.2 million.

Our total current liabilities were $10.0 million and were primarily comprised of accounts payable, accrued expenses and operating lease liabilities.

We also had $59.7 million of investments in longer-term liquid securities which we maintain to generate higher income on capital that we do not expect to spend in the next 12 months.

We believe the credit quality and liquidity of our investment portfolio at June 30, 2025 is strong and will provide sufficient liquidity to satisfy operating requirements , working capital purposes and strategic initiatives.

We believe the credit quality and liquidity of our investment portfolio at September 30, 2025 is strong and will provide sufficient liquidity to satisfy operating requirements , working capital purposes and strategic initiatives.

The unrealized gains and losses of the portfolio may remain volatile as changes in the general interest rate environment and supply and demand fluctuations of the securities within our portfolio impact daily market valuations.

9 unchanged sentences

Based on current projections of operating expenses, capital spending, working capital growth and historical share repurchases, we expect to have approximately $155 million in cash, short-term and long-term investments remaining on our balance sheet at the end of 2025.

We expect to continue to incur net losses in the short term as we continue to execute on our strategic initiatives by completing the development and commercialization of the KARNO Power Module with anticipated initial customer deployments throughout 2025.

This projection assumes the completion of about $10 million in equipment-backed financing or debt before the end of the year.

It is possible that this financing could be delayed into 2026 or may not occur at all if acceptable terms cannot be obtained.

We expect to continue to incur net losses in the short term as we execute on our strategic initiatives by completing the development and commercialization of the KARNO Power Module with anticipated initial customer deployments through the end of 2025 and into early 2026.

However, actual results could vary materially and adversely as a result of a number of factors including, but not limited to, those discussed in Part II, Item 1A.

“Risk Factors.”

The amount and timing of our future funding requirements, if any, will depend on many factors, including the scope and results of our R&D efforts, the breadth of product offerings we plan to commercialize, the growth of sales, working capital needs, and our long-term manufacturing plan for the KARNO Power Module including the pace of investments in additive manufacturing assets, methods of financing these investments, as well as factors that are outside of our control.

The amount and timing of our future funding requirements will depend on many factors, including the scope and results of our R&D efforts, the breadth of product offerings we plan to commercialize, the growth of sales, working capital needs, and our long-term manufacturing plan for the KARNO Power Module including the pace of investments in additive manufacturing assets, methods of financing these investments, as well as factors that are outside of our control.

We regularly evaluate our funding needs and sources of capital and may seek external funding in the appropriate circumstances.

While we expect that we have sufficient capital to get through commercialization of the KARNO Power Module, we do anticipate that at some time we will seek additional sources of capital to accelerate investments in assets needed for growth following commercialization, primarily additive printing machines and related assets.

With our current cash and investments, we are well positioned to be deliberate and opportunistic in determining the timing and structure of a capital raise.

During the periods presented, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, which were established for the purpose of facilitating off-balance sheet arrangements.

Net cash, cash equivalents and restricted cash provided by or used in operating activities, investing activities and financing activities for the six months ended June 30, 2025 and 2024 is summarized as follows (in thousands):

Six Months Ended June 30,

Net cash, cash equivalents and restricted cash provided by or used in operating activities, investing activities and financing activities for the nine months ended September 30, 2025 and 2024 is summarized as follows (in thousands):

Nine Months Ended September 30,

Cash from operating activities $ (34,691) $ (43,291)

3 unchanged sentences

Cash from Operating Activities

For the six months ended June 30, 2025, cash flows used in operating activities were $24.0 million.

For the nine months ended September 30, 2025, cash flows used in operating activities were $34.7 million.

Cash used primarily related to a net loss of $44.0 million, adjusted for a $0.1 million change in working capital accounts and $9.2 million in non-cash expenses (including $4.1 million related to share-based compensation, $4.1 million related to depreciation and amortization, $2.5 million related to prepaid expenses and other current assets, and $1.6 million in assets held for sale carrying value adjustments, partially offset by $1.8 million related to accounts payable, accrued expenses and other liabilities and $0.7 million related to gain on asset sales).

For the six months ended June 30, 2024, cash flows used in operating activities were $33.4 million.

Cash used primarily related to a net loss of $26.4 million, adjusted for a $14.2 million change in working capital accounts and $7.2 million in non-cash expenses (including $7.7 million related to accounts payable, accrued expenses and other liabilities and $5.1 million related to prepaid expenses and other current assets, partially offset by $5.6 million in assets held for sale carrying value adjustments and $2.4 million related to share-based compensation).

For the nine months ended September 30, 2024, cash flows used in operating activities were $43.3 million.

Cash used primarily related to a net loss of $37.7 million, adjusted for a $13.6 million change in working capital accounts and $7.9 million in non-cash expenses (including $6.7 million related to accounts payable, accrued expenses and other liabilities, $5.2 million related to prepaid expenses and other current assets, and $2.1 million related to gain on asset sales, partially offset by $5.6 million in assets held for sale carrying value adjustments and $3.5 million related to share-based compensation).

Cash from Investing Activities

For the six months ended June 30, 2025, cash flows provided by investing activities were $30.9 million.

For the nine months ended September 30, 2025, cash flows provided by investing activities were $43.9 million.

Cash provided related to the sale or maturity of investments of $101.0 million and the proceeds from sale of assets of $1.2 million, offset by the purchase of investments of $36.3 million and acquired property and equipment of $22.0 million.

For the six months ended June 30, 2024, cash flows provided by investing activities were $46.0 million.

For the nine months ended September 30, 2024, cash flows provided by investing activities were $64.9 million.

Cash provided related to the sale or maturity of investments of $126.7 million and the proceeds from sale of assets of $4.1 million, partially offset by the purchase of investments of $55.4 million and acquired property and equipment of $10.5 million.

Cash from Financing Activities

For the six months ended June 30, 2025, cash flows used in financing activities were $0.5 million, primarily due to taxes paid related to the net share settlement of equity awards.

For the six months ended June 30, 2024, cash flows used in financing activities were $14.3 million, primarily due to treasury stock repurchases.

For the nine months ended September 30, 2025, cash flows used in financing activities were $0.6 million, primarily due to taxes paid related to the net share settlement of equity awards.

For the nine months ended September 30, 2024, cash flows used in financing activities were $14.3 million, primarily due to treasury stock repurchases.

Critical Accounting Policies and Estimates

1 unchanged sentence

Share-Based Compensation

We account for share-based payments that involve the issuance of shares of our common stock to employees and nonemployees and meet the criteria for share-based awards as share-based compensation expense based on the grant-date fair value of the award.

We account for share-based payments that involve the issuance of shares of our common stock to employees and non-employees and meet the criteria for share-based awards as share-based compensation expense based on the grant-date fair value of the award.

The Company has elected to recognize the adjustment to share-based compensation expense in the period in which forfeitures occur.

3 unchanged sentences

If we were to utilize different assumptions including the estimate of underlying share volatility of our market-conditioned awards, share-based compensation cost could be under or overstated.

If there are any modifications or cancellations of the

underlying unvested securities, we may be required to accelerate any remaining unearned share-based compensation cost or incur incremental cost.

If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate any remaining unearned share-based compensation cost or incur incremental cost.

Share-based compensation cost affects our research and development and selling, general and administrative expenses.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis