What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-06 compared with 2025-05-07 · 104 added, 84 removed, 176 unchanged (52% of the section changed)

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All dollar amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are approximate.

Growth and percentage comparisons made herein generally refer to the three months ended March 31, 2025 compared with the three months ended March 31, 2024 unless otherwise noted.

Growth and percentage comparisons made herein generally refer to the three and six months ended June 30, 2025 compared with the three and six months ended June 30, 2024 unless otherwise noted.

Unless otherwise indicated or unless the context otherwise requires, all references in this document to “we,” “us,” “our,” the “Company,” “Niagen Bioscience” and similar expressions refer to Niagen Bioscience, Inc., and depending on the context, its subsidiaries.

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Recent Developments

Purchase Commitments

On July 25, 2025, we executed a Sales Agreement (the “Supply Agreement”) with W.

Grace & Co.-Conn (“Grace”) with an effective date of April 1, 2025.

In January 2019, Grace was issued patents related to the crystalline form of NR chloride which limit our ability to source alternative suppliers (Grace Patents).

Pursuant to the Supply Agreement, Grace will exclusively supply us with Nicotinamide-beta-Riboside Chloride (“NRCL”) meeting certain specifications as defined in a previously executed Quality Agreement.

In addition, Grace is prohibited from selling NRCL to third parties and must notify us of any new business inquiries relating to the purchase of NRCL.

The Supply Agreement provides for an initial term through April 30, 2029, and will automatically renew for successive twelve (12) month terms unless either party provides written notice of its intent not to renew.

We are required to purchase a minimum quantity of NRCL during each year of the term.

We will also provide monthly rolling forecasts of its purchase needs for a twenty-four (24) month period, with the first twelve (12) months of each forecast binding upon Grace’s acceptance.

We have submitted our initial rolling forecast pursuant to the Supply Agreement, which requires the purchase of approximately $32.6 million in inventory through July 31, 2026.

The parties have further agreed to make a good faith effort to execute a supplemental agreement establishing a process by which we would obtain from Grace a world-wide, royalty-bearing, exclusive, non-transferable and sub-licensable license to Grace’s patents covering NRCL’s manufacture, sufficient to enable the Company to manufacture NRCL for an agreed-upon royalty percentage (“License Agreement”).

The License Agreement would become effective upon proper termination of the Supply Agreement under specified conditions.

There is no guarantee that any such agreement will be entered into, or the timing of any such agreement or its terms.

Lease Amendment

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The amended lease now extends through October 31, 2030.

Purchase Commitments

Effective January 1, 2025, W.R.

Grace (Grace) and the Company began operating under the Tenth Amendment to the Manufacturing and Supply Agreement (the “Grace Manufacturing Agreement”), initially effective in January 2016.

In January 2019, Grace was issued patents related to the crystalline form of NR chloride which limit the Company’s ability to find alternatives for supply (Grace Patents).

Although the Grace Manufacturing Agreement formally expired on March 31, 2025, the Company and Grace continue to operate under the terms of the Tenth Amendment, including a binding six-month rolling forecast that is updated monthly and remains in effect.

This rolling forecast mechanism has ensured continuity of supply while the parties continue to negotiate a potential longer-term supply agreement.

As of March 31, 2025, the rolling forecast obligates the Company to purchase approximately $16.4 million of inventory between April 1, 2025 and September 30, 2025.

While the Company expects to reach a mutually agreeable long-term arrangement with Grace, there can be no assurance that such an agreement will be finalized.

Any failure to reach a new agreement on acceptable terms could have a material adverse effect on the Company’s operations and financial results, as further described in Item 1A.

Risk Factors in Part II of this Quarterly Report on Form 10-Q, "We rely on a single supplier, W.R.

Grace, for NRC and a limited number of third-party suppliers for the raw materials required to produce our products."

Amended Executive Employment Agreement and Executive Market Performance Stock Unit Grant

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Actual results may differ from these estimates under different assumptions or conditions.

As of March 31, 2025, our cash and cash equivalents totaled approximately $55.6 million, of which $55.5 million was unrestricted.

As of June 30, 2025, our cash and cash equivalents totaled approximately $60.5 million, of which $60.3 million was unrestricted.

We anticipate that our current unrestricted cash and cash equivalents and cash to be generated from net sales will be sufficient to meet our financial obligations as they become due over at least the next twelve months.

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The results of these segments and our consolidated operations are detailed in the discussion that follows.

Our consolidated net sales, net income (loss) and earnings (loss) per share for the three months ended March 31, 2025 and 2024 are as follows:

Three Months Ended March 31,

Our consolidated net sales, net income (loss) and income (loss) per share for the three and six months ended June 30, 2025 and 2024 are as follows:

Three Months Ended June 30, Six Months Ended June 30,

(In thousands, except per share data) 2025 2024 2025 2024

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The following table sets forth our total net sales by reportable segment:

Three Months Ended March 31,

(In thousands) 2025 2024 % Change

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2025 2024 % Change 2025 2024 % Change

Consumer Products $ 22,699 $ 18,647 22 % $ 44,200 $ 35,998 23 %

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Total net sales $ 31,117 $ 22,739 37 % $ 61,598 $ 44,892 37 %

Total net sales increased by approximately $8.3 million for the three months ended March 31, 2025, compared to the same period in 2024.

Changes in net sales were driven by the following:

• Tru Niagen® sales increased by approximately $4.2 million for the three months ended March 31, 2025, compared to the corresponding period in 2024.

This increase was primarily attributable to a $4.0 million increase in sales through our e-commerce channel, reflecting continued growth in consumer demand and effective digital marketing initiatives.

The remaining increase was driven by higher sales through our distributor partners, including sustained sales with A.S.

• Total ingredient sales increased by approximately $4.1 million for the three months ended March 31, 2025, compared to the same period in 2024.

The increase was primarily driven by higher sales to key food-grade Niagen® partners, which contributed approximately $2.9 million.

These sales can exhibit quarterly variability based on partner ordering patterns and are inherently lumpy in nature.

Additionally, pharmaceutical-grade Niagen® sales contributed $1.0 million during the period.

Pharmaceutical-grade Niagen® was launched in the second half of 2024;

therefore, there were no comparable sales in the prior-year period.

The remaining increase was attributable to growth in sales of other ingredients.

• Our analytical reference standards and services segment constituted the smallest proportion of total sales, growing $0.1 million for the three months ended March 31, 2025 compared to the corresponding period in 2024.

Total net sales increased by $8.4 million and $16.7 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024.

The increase in net sales was primarily attributable to growth within our consumer products and ingredients segments.

Detailed changes in net sales were driven by the following:

• Within our consumer products segment, Tru Niagen® sales increased by $4.1 million and $8.2 million for the three and six months ended June 30, 2025, respectively, compared to the corresponding periods in 2024.

This growth was primarily driven by e-commerce channel performance, which increased by $5.0 million and $9.0 million for the three and six months ended June 30, 2025, respectively, reflecting increased customer acquisition and retention and effective digital marketing efforts.

During the three and six months ended June 30, 2025, sales through our distributor partners increased $0.3 million and $0.6 million, respectively.

These gains were partially offset by a temporary decline in sales to A.S.

Watson, due to reduced replenishment order volumes during the current year periods.

We expect sales trends with A.S.

Watson to stabilize in the second half of 2025.

• Total ingredient sales increased by $4.3 million and $8.4 million for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024.

The increase was primarily driven by higher sales to food-grade Niagen® partners, contributing approximately $2.9 million and $5.7 million for the three and six months ended June 30, 2025, respectively.

These partner orders are subject to timing variability and may fluctuate quarter to quarter.

In addition, pharmaceutical-grade Niagen® sales contributed $1.4 million and $2.4 million during the three and six-month periods, respectively.

Sales of pharmaceutical-grade Niagen® commenced in the second half of 2024, and therefore no comparable sales were recorded in the prior-year periods.

The remaining increase in ingredient sales was attributable to modest growth in other ingredient categories.

• Our analytical reference standards and services segment constituted the smallest proportion of our total net sales and remained relatively stable.

Net sales increased by $0.1 million for the six months ended June 30, 2025, compared to the corresponding period in 2024.

Cost of Sales

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The following table sets forth our total cost of sales by reportable segment:

Three Months Ended March 31,

Amount % of net sales

Three Months Ended June 30, Six Months Ended June 30,

Amount % of net sales Amount % of net sales

(In thousands) 2025 2024 2025 2024 2025 2024 2025 2024

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Total cost of sales $ 10,891 $ 9,046 35 % 40 % $ 22,041 $ 17,743 36 % 40 %

Total cost of sales, as a percentage of net sales, improved by 270 basis points for the three months ended March 31, 2025 compared to the same period in 2024 reflecting enhanced operational efficiency and favorable product mix shifts across our segments.

Total cost of sales, as a percentage of net sales, improved by 480 basis points and 370 basis points for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024 reflecting enhanced operational efficiency and favorable product mix shifts across our segments.

Changes in cost of sales were primarily driven by the following:

• Cost of sales, as a percentage of net sales, for our consumer products segment can fluctuate due to business mix, product mix, inflationary costs, and optimization efforts in our supply chain, among other factors.

For the three months ended March 31, 2025, our consumer products segment maintained relatively stable cost of sales, as a percentage of net sales, improving a slight 100 basis points compared to the same period in 2024.

• Cost of sales, as a percentage of net sales, in our ingredients segment are influenced by many factors including inventory purchase costs, fixed supply chain overhead costs and transportation and storage costs.

For the ingredients segment, cost of sales, as a percentage of net sales, improved 700 basis points for the three months ended March 31, 2025, compared to the same period in 2024.

This improvement was primarily driven by better labor and overhead utilization as a result of increased sales volume, as well as favorable shifts in product mix following the launch of our pharmaceutical-grade Niagen®.

• Cost of sales, as a percentage of net sales, within our consumer products segment can fluctuate due to changes in business mix, product mix, inflationary pressures, and optimization efforts in our supply chain, among other factors.

For the three and six months ended June 30, 2025, cost of sales as a percentage of net sales improved by approximately 300 basis points and 200 basis points, respectively, compared to the same periods in 2024.

The improvement was attributable to a favorable shift in business mix, with e-commerce representing a greater proportion of segment net sales, which generally carries higher gross margins, the use of lower-cost inventory purchases, and a more favorable product mix.

• Cost of sales, as a percentage of net sales, in our ingredients segment are influenced by several factors including inventory purchase costs, fixed supply chain overhead costs and transportation and storage costs.

For the three and six months ended June 30, 2025, cost of sales, as a percentage of net sales improved approximately 1,000 basis points and 900 basis points, respectively, compared to the same periods in 2024.

This improvement was primarily attributable to enhanced labor and overhead utilization resulting from increased sales volume, the use of lower-cost inventory purchases, and a favorable shift in product mix associated with the launch of pharmaceutical-grade Niagen®.

• Cost of sales, as a percentage of net sales, in our analytical reference standards and services segment are influenced by many factors including inventory purchase costs, fixed supply chain overhead costs and transportation and storage costs.

For the analytical reference standards and services segment, which experienced a slight increase in sales and slightly lower costs of sales for the three months ended March 31, 2025, compared to the same period in 2024, there was an improvement of 2,000 basis points in cost of sales as a percentage of net sales.

Gross profit is net sales less the cost of sales and is affected by business and product mix, competitive pricing and costs of products, labor, overhead, services, delivery, among other factors.

For the three and six months ended June 30, 2025, this segment experienced relatively stable net sales and modest reductions in cost of sales compared to the same periods in 2024.

As a result, cost of sales as a percentage of net sales improved by approximately 1,200 basis points and 1,500 basis points, respectively.

While the percentage improvement appears significant, this segment's smaller scale means that modest changes in dollar amounts can result in outsized percentage fluctuations.

Gross profit is net sales less the cost of sales and is affected by business and product mix, competitive pricing and costs of products, labor, overhead, services, and delivery, among other factors.

The following table sets forth our total gross profit by reportable segment:

Three Months Ended March 31,

(In thousands) 2025 2024 % Change

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2025 2024 % Change 2025 2024 % Change

Gross profit :

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Sales and marketing expenses by reportable segment were as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

($ In thousands) Amount % of

net sales Amount % of

Advertising expenses:

Consumer Products $ 2,882 13 % $ 2,548 14 % $ 5,858 13 % $ 5,035 14 %

Ingredients — — — —

Analytical reference standards and services — — — —

Total advertising expenses $ 2,882 9 % $ 2,548 11 % $ 5,858 10 % $ 5,035 11 %

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Total sales and marketing expenses $ 8,207 26 % $ 6,969 31 % $ 16,324 27 % $ 13,709 31 %

Total sales and marketing expenses increased by $1.4 million, or 20%, to $8.1 million for the three months ended March 31, 2025 compared to the same period in 2024.

However, as a percentage of net sales, total sales and marketing expenses improved by 380 basis points to approximately 27% reflecting improved sales efficiency and disciplined investment.

The increase in expenses primarily reflects higher investments in advertising and marketing to support brand growth in our consumer products segment.

Total sales and marketing expenses increased by $1.2 million and $2.6 million during the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024.

However, as a percentage of net sales, total sales and marketing expenses improved by 420 basis points and 400 basis points, respectively, reflecting improved sales efficiency and disciplined investment as well as higher ingredient sales that require minimal additional sales and marketing resources.

The increase in expenses primarily reflects higher investments to support brand growth in our consumer products segment.

Detailed changes in sales and marketing expense were primarily driven by the following:

• For our consumer products segment, sales and marketing expenses increased by $1.3 million to $7.9 million for the three months ended March 31, 2025 compared to $6.6 million for the three months ended March 31, 2024, while slightly improving as a percentage of sales to 37% from 38%.

◦ Advertising expenses increased by $0.5 million to $3.0 million, while remaining stable at 14% of net sales for the three months ended March 31, 2025 compared to the comparable period in 2024

◦ Marketing expenses increased by $0.6 million to $2.5 million also stable at 11% of net sales for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

◦ Selling expenses grew by $0.3 million to $2.5 million, improving slightly as a percentage of net sales by 100 basis points for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

• For our ingredients segment, sales and marketing expense increased to $74,000 for the three months ended March 31, 2025 from $12,000 in the comparable period in 2024 reflecting modest support for growing partner demand.

Expenses remained immaterial as a percentage of net sales.

• For our analytical reference standards and services segment, sales and marketing expense decreased to $107,000 for the three months ended March 31, 2025, or 13% of net sales, down 500 basis points from the comparable period in 2024 primarily due to lower selling costs and more efficient resource allocation.

• For our consumer products segment, sales and marketing expenses increased by $1.3 million and $2.6 million during the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024.

While these expenses rose in absolute terms, they remained steady as a percentage of net sales for the three-month periods ended June 30, 2025 and 2024, and declined slightly to 36% from 37% for the six-month periods.

◦ Advertising expenses rose by $0.3 million to $2.9 million during the three months ended June 30, 2025, and by $0.8 million to $5.9 million during the six months ended June 30, 2025.

As a percentage of net sales, advertising expenses also improved slightly in both periods, declining to 13% from 14% compared to the corresponding periods in 2024.

◦ Marketing expenses totaled $2.5 million and $5.0 million during the three and six months ended June 30, 2025, respectively, representing increases of $0.4 million and $1.0 million compared to the same periods in 2024.

As a percentage of net sales, marketing expenses remained steady at 11% for both the current and prior-year periods shown.

◦ Selling expenses grew by $0.5 million to $2.7 million during the three months ended June 30, 2025, and by $0.8 million to $5.2 million during the six months ended June 30, 2025.

As a percentage of net sales, selling expenses remained steady at 12% for both the current and prior-year periods shown.

• For our ingredients segment, total sales and marketing expense were $52,000 and $126,000 for the three and six months ended June 30, 2025, respectively, compared to $66,000 and $78,000 in the comparable periods in 2024.

While expenses declined $14,000 in the second quarter, the year-to-date increase of $48,000 reflects higher first-quarter investment to support pharmaceutical-grade Niagen® ingredient.

These expenses remained immaterial as a percentage of net sales.

• For our analytical reference standards and services segment, sales and marketing expense decreased to $81,000 and $188,000 for the three and six months ended June 30, 2025, respectively, primarily due to lower selling costs and more efficient resource allocation.

Operating Expenses-Research and Development

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Research and development expenses by reportable segment were as follows:

Three Months Ended March 31,

(In thousands) 2025 2024 % Change

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2025 2024 % Change 2025 2024 % Change

R&D expenses:

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We allocate R&D expenses related to our Niagen® branded ingredient to the consumer products and ingredients segment, based on recorded revenues.

For the three months ended March 31, 2025, R&D expenses were $0.8 million lower compared to the same period in 2024.

During the three months ended March 31, 2024, we accelerated R&D spending to support the successful launch of the Niagen Plus product line, including work on pharmaceutical-grade Niagen®.

As anticipated, spending in the current period normalized following the execution of these initiatives.

Our R&D investment levels continue to vary based on project timelines, clinical activity, and resource allocation.

For the three months ended June 30, 2025, R&D expenses increased by $0.3 million compared to the same period in 2024, primarily due to higher professional and consulting fees, as well as higher employee wage expenses.

For the six months ended June 30, 2025, R&D expenses declined by $0.6 million compared to the prior year period.

This decrease is primarily due to elevated R&D investments in the first quarter of 2024 to support the successful launch of the Niagen Plus product line, including advancement of pharmaceutical-grade Niagen®.

The year-over-year decline was partially offset by higher employee wage expenses in 2025.

As expected, R&D spending has returned to more normalized levels following these initiatives.

We continue to anticipate fluctuations in R&D investment based on the timing and scope of specific projects, clinical development activities, and internal resource allocation.

Operating Expenses-General and Administrative

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General and administrative expense for the periods indicated were as follows:

Three Months Ended March 31,

(In thousands) 2025 2024 % Change

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2025 2024 % Change 2025 2024 % Change

General and administrative $ 7,267 $ 5,664 28 % $ 12,451 $ 11,016 13 %

Total general and administrative expense were relatively flat, decreasing by $0.2 million during the three months ended March 31, 2025, compared to the corresponding period in 2024.

The decline was driven by a $1.4 million reduction in credit loss expense resulting from a recovery of credit losses compared to provisions in the prior year.

This reduction was partially offset by a $0.7 million increase in professional and consulting service expenses and $0.3 million increase in employee related expenses.

Total general and administrative expenses increased by $1.6 million and $1.4 million during the three and six months ended June 30, 2025, respectively, compared to the corresponding periods in 2024.

During the three months ended June 30, 2025, the increase was primarily driven by $0.8 million in higher employee-related expenses and share-based compensation, $0.5 million in increased professional and consulting fees, and $0.1 million in higher royalty expense, with the remainder attributable to various general and administrative costs.

During the six months ended June 30, 2025, the increase reflects $1.1 million in higher employee-related expenses and share-based compensation, $1.2 million in professional and consulting fees, and $0.1 million in royalty expense, partially offset by a $1.3 million reduction in credit loss expense due to a recovery of previously recognized credit losses.

The remaining increase was attributable to other general and administrative costs.

For additional details regarding the recovery of credit losses see Note 10, Commitments and Contingencies , under the heading Legal Proceedings , respectively in the Notes to the Consolidated Financial Statements, included in Part I, Item 1 of this Form 10-Q.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

As of March 31, 2025 and December 31, 2024, we maintained a full valuation allowance against the entire deferred income tax balance.

As of June 30, 2025 and December 31, 2024, we maintained a full valuation allowance against the entire deferred income tax balance.

In accordance with ASC 740, Income Taxes, future realization of deferred tax assets depends on the existence of sufficient taxable income, including the expectation of future profitability.

The Company recorded income tax expense of $168,000 during the three months ended March 31, 2025, representing 3.2% of earnings before income taxes for the period.

During the three months ended March 31, 2024, the Company incurred a net loss and therefore did not record income tax expense.

The Company recorded income tax expense of $128,000 and $296,000 during the three and six months ended June 30, 2025, respectively, representing 3.4% and 3.3% of earnings before income taxes for the respective periods.

During the three and six months ended June 30, 2024, the Company incurred a net loss and therefore did not record income tax expense.

The Company is not currently under examination by the Internal Revenue Service or any other major income tax jurisdiction.

As of March 31, 2025 and December 31, 2024, the Company has not identified any material uncertain tax positions requiring a reserve.

As of June 30, 2025 and December 31, 2024, the Company has not identified any material uncertain tax positions requiring a reserve.

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, makes permanent many of the corporate and individual tax provisions originally introduced under the Tax Cuts and Jobs Act of 2017 and introduces a range of new provisions such as extended bonus depreciation, enhanced R&D expensing, and changes affecting international tax rules, interest deductibility, and startup stock exemptions.

While the OBBBA may have broad implications for corporate taxpayers, the Company has evaluated the relevant provisions and does not anticipate a significant impact on its consolidated income tax position, effective tax rate, or valuation allowance as a result of the legislation.

Management will continue to monitor the implementation of the Act and evaluate any future guidance or rulemaking that may affect the Company’s tax profile.

Depreciation and Amortization

Depreciation expense was approximately $158,000 and $178,000 for the three months ended March 31, 2025 and 2024, respectively.

Depreciation expense was approximately $316,000 and $348,000 for the six months ended June 30, 2025 and 2024, respectively.

We depreciate our assets on a straight-line basis, based on the estimated useful lives of the respective assets.

Amortization expense of intangible assets was approximately $37,000 and $38,000 for the three months ended March 31, 2025 and 2024, respectively.

Amortization expense of intangible assets was approximately $75,000 for each of the six months ended June 30, 2025 and 2024.

We amortize intangible assets using a straight-line method, generally over 10 years.

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The useful lives of subsequent milestone payments that are capitalized are the remaining useful life of the initial licensing payment that was capitalized.

Noncash lease expense for the three months ended March 31, 2025 was approximately $173,000 compared to $174,000 for the three months ended March 31, 2024.

Noncash lease expense for the six months ended June 30, 2025 was approximately $332,000 compared to $337,000 for the six months ended June 30, 2024.

Liquidity and Capital Resources

From inception through March 31, 2025, we have incurred aggregate losses of approximately $176.8 million.

From inception through June 30, 2025, we have incurred aggregate losses of approximately $173.2 million.

These losses are primarily due to expenses associated with the development and expansion of our operations and investments to protect our intellectual property, including litigation-related expenses.

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There can be no assurance that any such financing will be available on terms favorable to us or at all.

Without adequate financing we may have to delay or terminate product and service expansion and curtail certain selling, general and administrative expenses.

Any inability to raise additional financing would have a material adverse effect on us.

As of March 31, 2025, we had cash and cash equivalents of $55.6 million, including $152,000 of restricted cash, no material off-balance sheet arrangements and no outstanding borrowings under our line of credit with Western Alliance Bank.

Our cash and cash equivalents as of March 31, 2025 consisted of bank deposits and short-term investments of highly liquid investment-grade debt instruments with an original maturity of three months or less.

Additionally, as of March 31, 2025, we had purchase obligations of $16.4 million related to inventory purchase commitments to be paid during the six-month period from April 1, 2025 to September 30, 2025, as well as future minimum lease obligations of $4.0 million to be paid over approximately six years.

As of June 30, 2025, we had cash and cash equivalents of $60.5 million, including $152,000 of restricted cash, no material off-balance sheet arrangements and no outstanding borrowings under our line of credit with Western Alliance Bank.

Our cash and cash equivalents as of June 30, 2025 consisted of bank deposits and short-term investments of highly liquid investment-grade debt instruments with an original maturity of three months or less.

Additionally, as of June 30, 2025, we had purchase obligations of $32.6 million related to inventory purchase commitments to be paid during the six-month period from July 1, 2025 to December 31, 2025, as well as future minimum lease obligations of $3.9 million to be paid over approximately five years.

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Cash provided by operating activities is net loss adjusted for certain non-cash items and changes in operating assets and liabilities.

For the three months ended March 31, 2025, net cash provided by operating activities was approximately $7.9 million, compared to approximately $0.3 million for the three months ended March 31, 2024.

For the six months ended June 30, 2025, net cash provided by operating activities was approximately $9.1 million, compared to approximately $31,000 for the six months ended June 30, 2024.

The increase of approximately $9.1 million was primarily driven by improvements in net income (loss), higher collections on trade receivables relative to the increase in trade receivables, and an increase in accounts payable compared to a reduction in the prior-year period.

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Investing cash flows consist primarily of capital expenditures.

Cash used in investing activities was $32,000 and $41,000 for the three months ended March 31, 2025 and 2024, respectively.

Net cash provided by ( used in) financing activities:

Cash used in investing activities was $167,000 and $53,000 for the six months ended June 30, 2025 and 2024, respectively.

Net cash provided by financing activities:

Financing cash flows primarily consists of the repayment of short-term and long-term debt and proceeds from the exercise of stock options.

For the three months ended March 31, 2025, cash provided by financing activities was $3.1 million, compared to a use of cash of $14,000 for the same period in 2024.

This increase of $3.1 million was driven by proceeds from the exercise of stock options whereas no such exercises occurred in the same period of 2024.

For the six months ended June 30, 2025, cash provided by financing activities was $6.8 million, compared to $582,000 for the same period in 2024.

This increase of $6.3 million was driven by higher proceeds from the exercise of stock options compared to the same period in 2024.

Critical Accounting Estimates

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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