Niagen Bioscience, Inc. 10-Q

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and accompanying notes, which appear elsewhere in this Quarterly Report on Form 10-Q. We urge you to carefully review and consider the various disclosures made by us in this Quarterly Report and in our other reports filed with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2024 , as well as subsequent reports we may file from time to time on Form 10-Q and Form 8-K, for additional information. 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. 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. Special Note Regarding Forward Looking Statements Certain statements in this MD&A, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “expects,” “anticipates,” “intends,” “estimates,” “plans,” “potential,” “possible,” “probable,” “believes,” “seeks,” “may,” “will,” “should,” “could,” “predicts,” “projects,” “continue,” “would” or the negative of such terms or other similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers should carefully review the risk factors set forth below in Part II, Item 1A, “Risk Factors” and our financial statements and related notes included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on March 4, 2025 (Annual Report). Company Overview We are a global bioscience company dedicated to healthy aging. Our team, which includes world-renowned scientists, is pioneering research on nicotinamide adenine dinucleotide (NAD+), an essential coenzyme that is a key regulator of cellular metabolism and is found in every cell of the human body. NAD+ levels in humans have been shown to decline by up to 65% between ages 30 and 70. In addition to age, other factors linked to NAD+ depletion include poor diet, excess alcohol consumption and a number of disease states. NAD+ levels may be increased with administration of NAD+ precursors, calorie restriction and moderate exercise. We are at the forefront of exploring effective methods to increase NAD+ levels and support healthy aging. In 2013, we commercialized food-grade Niagen®, a proprietary form of nicotinamide riboside chloride (NRC), a novel form of vitamin B3, as both a dietary and food ingredient. In 2017, we expanded our offerings by launching Tru Niagen®, a finished dietary supplement featuring Niagen® which was made available directly to consumers. In 2024, we launched Niagen Plus, a product line for healthcare practitioners and clinics, featuring pharmaceutical-grade Niagen®. We supply pharmaceutical-grade Niagen® to U.S. FDA-registered 503B outsourcing facilities who are able to compound and distribute Niagen® intravenous (Niagen IV) and injectable Niagen®. These pharmaceutical-grade Niagen® products are available exclusively at clinics with a prescription. Food-grade Niagen® is authorized for human consumption as a dietary supplement and generally recognized as safe as a food ingredient. Pharmaceutical-grade Niagen® is authorized by the FDA for compounding by 503B outsourcing facilities. NRC remains one of the most well-studied and efficient NAD+ precursors on the market. Data from numerous preclinical studies and human clinical trials show that orally administered food-grade NRC is a highly efficient NAD+ precursor that significantly raises NAD+ levels in blood and tissue. Food-grade Niagen® has twice been successfully reviewed under the U.S. FDA new dietary ingredient (NDI) notification program, it has been successfully notified to the FDA as generally recognized as safe (GRAS), and has been approved by Health Canada, the European Commission, the Turkish Ministry of Agriculture and the Therapeutic Goods Administration (TGA) of Australia. Food-grade Niagen® has also been approved for inclusion in medical foods by both the Brazilian Health Regulatory Agency (ANVISA) and the Food Standards Australia New Zealand (FSANZ). Clinical studies of oral, food-grade Niagen® have demonstrated a variety of outcomes including increased NAD+ levels, altered body composition, increased cellular metabolism and increased energy production. Food-grade Niagen®, pharmaceutical-grade Niagen® and other NAD+ precursors are protected by patents to which we are the owner or have exclusive rights. 22 Table of Contents While best known for its role in cellular energy production, NAD+ is also thought to play an important role in healthy aging. Many cellular functions related to health and healthy aging are sensitive to levels of locally available NAD+ and this represents an active area of research in the field of NAD+. To date, there are over 500 published human clinical studies related to NAD+ and its impact on health. These areas of study include understanding NAD+’s role in Alzheimer’s disease, Parkinson’s disease, neuropathy, sarcopenia, liver disease and heart failure. We are among the world leaders in the emerging NAD+ space. Through our ChromaDex External Research Program (CERP™), we have amassed more than 300 research partnerships with leading universities and research institutions around the world including the National Institutes of Health, Cornell, Dartmouth, Harvard, Massachusetts Institute of Technology, University of Cambridge, the Mayo Clinic, Chiba University and Sun Yat-sen University. The results of the 300+ research partnerships have allowed CERP® to help produce the trusted science behind Niagen® and continue to advance the understanding of NAD+ in health, diseases, and aging. We value and encourage strong scientific rigor behind our products and seek to continually develop additional relationships in pursuit of this. CERP® is a vital component of our research and development platform along with our scientific advisory board. Our scientific advisory board supports the technical and intellectual property needs of investigators, presents research at conferences, and helps build and support the NAD+ and healthy aging research community. Our scientific advisory board is led by Chairman Dr. Roger Kornberg, Nobel Laureate and Stanford Professor. Other distinguished members include Dr. Charles Brenner, Alfred E Mann Family Foundation Chair in the Department of Diabetes & Cancer Metabolism at City of Hope and one of the world’s recognized experts in NAD+ and discoverer of NR as a NAD+ precursor; Dr. Rudy Tanzi, co-chair of the department of neurology at Harvard Medical School; Dr. Bruce German, Chairman of Food, Nutrition and Health at the University of California, Davis; Dr. Pinchas Cohen, MD, Distinguished Professor of Gerontology, Medicine and Biological Sciences and Dean of the USC Leonard Davis School of Gerontology; Dr. Brunie Felding, Associate Professor in the Department of Molecular Medicine at Scripps Research Institute, California Campus; and Dr. Vilhelm (Will) Bohr, M.D., Ph.D., D.Sc., former Chief of the Laboratory of Molecular Genetics at the National Institute on Aging of the National Institutes of Health. Recent Developments Lease Amendment During the first quarter of 2025, we amended our existing lease in Longmont, Colorado. In accordance with Accounting Standards Codification (ASC) 842, the amended lease agreement is considered to be modified and subject to lease modification guidance. The right-of-use (ROU) asset and lease liability related to the agreement were remeasured based on the change in the lease conditions such as rent payment and lease terms. The fair value of the increase in related lease liability and ROU asset is estimated to be approximately $1.1 million. 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." 23 Table of Contents Amended Executive Employment Agreement and Executive Market Performance Stock Unit Grant As previously disclosed, on February 25, 2025 the Company granted to Robert Fried, our Chief Executive Officer, 1,518,600 market performance stock units (“PSUs”) under the Company’s 2017 Equity Incentive Plan and subject to performance conditions during a seven year performance period. Additionally, Mr. Fried’s base salary and target performance bonus opportunity increased to $650,000 and 75% of his base salary, respectively. Financial Condition and Results of Operations The discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these financial statements requires making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported net sales and expenses during the reporting periods. On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. 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. 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. We may, however, seek additional capital in the next twelve months, both to meet our projected operating plans after the next twelve months and/or to fund our longer-term strategic objectives. We currently have three operating segments that offer differentiated services. Through our Consumer Products segment, we provide finished dietary supplement products containing our proprietary ingredients directly to consumers and distributors, as well as NAD+ test kits exclusively to healthcare practitioners. We deliver food-grade Niagen® as the sole or principal dietary ingredient in our consumer product line Tru Niagen®. Our Ingredients segment develops and commercializes proprietary-based ingredient technologies, including food-grade Niagen® and pharmaceutical-grade Niagen®, and supplies these ingredients as raw materials to the manufacturers of consumer products and U.S. FDA-registered 503B outsourcing facilities, respectively. Our Analytical Reference Standards and Services segment focuses on natural product fine chemicals, known as phytochemicals, and related research and development services. The results of these segments and our consolidated operations are detailed in the discussion that follows. 24 Table of Contents 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, (In thousands, except per share data) 2025 2024 Net sales $ 30,481 $ 22,153 Net income (loss) 5,063 (492) Income (Loss) Per Share: Basic income (loss) per common share $ 0.07 $ (0.01) Diluted income (loss) per common share $ 0.06 $ (0.01) Net Sales Net sales consist of gross sales less discounts and returns. The following table sets forth our total net sales by reportable segment: Three Months Ended March 31, (In thousands) 2025 2024 % Change Net sales: Consumer Products $ 21,501 $ 17,351 24 % Ingredients 8,169 4,088 100 % Analytical reference standards and services 811 714 14 % Total net sales $ 30,481 $ 22,153 38 % 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. Watson’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. 25 Table of Contents Cost of Sales Cost of sales include raw materials, labor, overhead, and delivery costs. The following table sets forth our total cost of sales by reportable segment: Three Months Ended March 31, Amount % of net sales (In thousands) 2025 2024 2025 2024 Cost of sales: Consumer Products $ 7,407 $ 6,154 34 % 35 % Ingredients 3,101 1,837 38 45 Analytical reference standards and services 642 706 79 99 Total cost of sales $ 11,150 $ 8,697 37 % 39 % 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. 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, 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 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. The following table sets forth our total gross profit by reportable segment: Three Months Ended March 31, (In thousands) 2025 2024 % Change Gross profit : Consumer Products $ 14,094 $ 11,197 26 % Ingredients 5,068 2,251 125 Analytical reference standards and services 169 8 2,013 Total gross profit $ 19,331 $ 13,456 44 % For details supporting the changes in gross profit, refer to the preceding discussions outlining the changes in both our net sales and cost of sales for each respective segment. 26 Table of Contents Operating Expenses-Sales and Marketing Sales and marketing expenses consist of salaries, advertising, public relations and marketing expenses. Sales and marketing expenses by reportable segment were as follows: Three Months Ended March 31, 2025 2024 ($ In thousands) Amount % of net sales Amount % of net sales Advertising expenses: Consumer Products $ 2,976 14 % $ 2,487 14 % Ingredients — — — — Analytical reference standards and services — — — — Total advertising expenses $ 2,976 10 % $ 2,487 11 % Marketing expenses: Consumer Products $ 2,453 11 % $ 1,897 11 % Ingredients 25 — 12 — Analytical reference standards and services — — 1 — Total marketing expenses $ 2,478 8 % $ 1,910 9 % Selling expenses: Consumer Products $ 2,507 12 % $ 2,212 13 % Ingredients 49 1 — — Analytical reference standards and services 107 13 131 18 Total selling expenses $ 2,663 9 % $ 2,343 11 % Total sales and marketing expenses: Consumer Products $ 7,936 37 % $ 6,596 38 % Ingredients 74 1 12 — Analytical reference standards and services 107 13 132 18 Total sales and marketing expenses $ 8,117 27 % $ 6,740 30 % 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. 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. 27 Table of Contents Operating Expenses-Research and Development Research and development (R&D) expenses consist primarily of headcount, clinical trials, product development and process development expenses. Research and development expenses by reportable segment were as follows: Three Months Ended March 31, (In thousands) 2025 2024 % Change R&D expenses: Consumer Products $ 912 $ 1,695 (46) % Ingredients 346 400 (14) Total R&D expenses $ 1,258 $ 2,095 (40) % 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. Operating Expenses-General and Administrative General and administrative expense consists of general company administration, legal, royalties, IT, accounting and executive management expenses. General and administrative expenses are not allocated by segment and instead are classified under our Corporate and Other category. General and administrative expense for the periods indicated were as follows: Three Months Ended March 31, (In thousands) 2025 2024 % Change General and administrative $ 5,184 $ 5,352 (3) % 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. 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. Income Taxes 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. 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 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. 28 Table of Contents Depreciation and Amortization Depreciation expense was approximately $158,000 and $178,000 for the three months ended March 31, 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. We amortize intangible assets using a straight-line method, generally over 10 years. For licensed patent rights, the useful lives are 10 years or the remaining term of the patents underlying licensing rights, whichever is shorter. 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. Liquidity and Capital Resources From inception through March 31, 2025, we have incurred aggregate losses of approximately $176.8 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. Historically, these operations have been financed through capital contributions, primarily through the issuance of common stock in private placements, and cash generated from sales. Our board of directors periodically reviews our capital requirements in light of our proposed business plan. Our future capital requirements will be influenced by several factors, including cash flows from operations, sales growth, optimized gross profit margins, reduced selling and marketing expense as a percentage of net sales, continued customer relationship development, and the ability to successfully market new and existing products. However, based on our results from operations, we may determine that we need additional financing to implement our long-term business plan. 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. 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 and beyond. However, we may seek additional funds to support both our short-term and long-term operating objectives, either through additional equity or debt financings or collaborative agreements or from other sources. Net cash provided by operating activities: 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. The increase of approximately $7.6 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. These increases were partially offset by a decrease in credit loss expense due to a recovery of previously written-off amounts and higher inventory purchases associated with scaling our inventory reserves. We expect operating cash flows to continue to fluctuate significantly from period to period due to a variety of factors, including changes in operating results, shipment timing, the pace of trade receivable collections, inventory management practices, and the timing of payments to vendors, among other factors. 29 Table of Contents Cash used in investing activities: 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: 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. Critical Accounting Estimates There have been no material changes to critical accounting estimates from those disclosed in our 2024 Form 10-K. ITEM 3. Quantitative and Qualitative Disclosures About Market Risk Not applicable.