Financial Performance - Net sales for the three months ended March 31, 2025, were $1,604.7 million, a 35% increase from $1,189.4 million in the same period of 2024[16] - Gross profit for the same period was $580.5 million, compared to $474.3 million, reflecting a gross margin improvement[16] - Operating income decreased to $13.2 million from $131.5 million year-over-year, indicating challenges in operational efficiency[16] - The net loss attributable to Somnigroup International Inc. was $33.1 million, compared to a net income of $76.3 million in the prior year[16] - The company reported a comprehensive loss income of $2.8 million for the quarter, down from a comprehensive income of $60.5 million in the previous year[18] - For the three months ended March 31, 2025, Somnigroup reported a net loss of $32.8 million, a significant decline compared to a net income of $76.8 million for the same period in 2024[26] - The company experienced a cash inflow from operating activities of $106.4 million, down from $130.2 million year-over-year[26] - Somnigroup's total stockholders' equity as of March 31, 2025, was $2,741.7 million, a decrease from $3,332.5 million as of March 31, 2024[24] - The company declared dividends of $0.15 per share, totaling $31.5 million for the quarter[26] - The effective tax rate for the three months ended March 31, 2025, was 33.5%, significantly higher than the 21.2% rate for the same period in 2024[82] Acquisition and Integration - The company completed the acquisition of Mattress Firm on February 5, 2025, which operates over 2,200 retail locations and a growing e-commerce platform[29] - Cash used in investing activities totaled $2,858.9 million, primarily due to the Mattress Firm acquisition[26] - The Mattress Firm Acquisition was completed on February 5, 2025, for an aggregate purchase price of approximately $5.2 billion, consisting of $3.1 billion in cash and 34.2 million shares valued at $65.65 each[47] - The company borrowed $625.0 million and $679.5 million under its credit facilities to finance the Mattress Firm Acquisition, along with $1,592.0 million released from escrow[48] - The preliminary purchase price consideration for Mattress Firm totaled $5,418.7 million, netting to $5,151.7 million after accounting for cash acquired[52] - The preliminary fair value of assets acquired in the Mattress Firm Acquisition was $7,107.3 million, while the preliminary fair value of liabilities assumed was $1,955.6 million, resulting in net consideration transferred of $5,151.7 million[55] - The company incurred transaction costs of $50.2 million related to the Mattress Firm Acquisition during the three months ended March 31, 2025[58] - Goodwill resulting from the Mattress Firm Acquisition amounted to $3,473.0 million, reflecting future economic benefits expected from the acquisition[57] - The Mattress Firm Acquisition contributed revenue of $593.7 million and net income of $0.8 million for the three months ended March 31, 2025[59] Debt and Assets - Total assets increased significantly to $11,329.7 million from $5,980.4 million, primarily due to the acquisition of Mattress Firm[20] - Long-term debt rose to $4,920.7 million from $3,740.4 million, reflecting increased leverage following strategic acquisitions[20] - As of March 31, 2025, total debt was $5,069.9 million, an increase from $3,844.5 million as of December 31, 2024[66] - The company was in compliance with all applicable debt covenants as of March 31, 2025[68] - The company reported accrued expenses and other current liabilities of $649.3 million as of March 31, 2025, up from $393.9 million at the end of 2024[79] Inventory and Expenses - Inventory levels increased to $680.8 million, up from $447.0 million, indicating potential overstock or supply chain issues[20] - Inventories increased to $680.8 million as of March 31, 2025, compared to $447.0 million as of December 31, 2024, with finished goods rising from $300.5 million to $530.9 million[35] - The accrued warranty expense balance increased to $58.6 million as of March 31, 2025, from $33.6 million as of December 31, 2024, due to amounts accrued and liabilities assumed from the Mattress Firm Acquisition[36] - Somnigroup's depreciation and amortization expenses increased to $57.7 million in Q1 2025 from $39.2 million in Q1 2024[26] - The total stock-based compensation expense for the three months ended March 31, 2025, was $8.4 million, down from $9.2 million in the same period of 2024[80] - Capital expenditures for the three months ended March 31, 2025, totaled $24.0 million[90] Market Conditions and Future Outlook - The company anticipates ongoing challenges in the macroeconomic environment, including inflation and competition, which may impact future performance[9] - The integration of Mattress Firm is expected to enhance market share and sales growth, although realization of synergies remains uncertain[9] - The company expects no material impact from the OECD's proposed global minimum effective tax of 15.0% on its financial results in 2025[83] - The company had approximately $774.5 million remaining under its share repurchase authorization as of March 31, 2025[75] - There were no material changes to the company's foreign currency exposure for the three months ended March 31, 2025[180]

Revenue Generation and Commercialization - Eve has not generated any revenue to date as it continues to develop its eVTOL aircraft and other UAM solutions, requiring substantial additional capital for future operations [108]. - The company anticipates commercialization of its eVTOL services and support business beginning in 2026, followed by initial revenue generation from eVTOL sales starting in 2027 [115]. - The UAM market remains undeveloped, and future demand for eVTOL services is uncertain, which could impact revenue generation [115]. - The company has incurred net losses since inception and has not generated any revenue, expecting to continue this trend until sustainable commercial operations commence [134]. - The company expects to continue incurring losses and negative operating cash flows until sustainable commercial operations commence [134]. Partnerships and Market Position - Eve has signed non-binding letters of intent to sell approximately 2,800 eVTOL aircraft and has established partnerships with about 30 market-leading companies across various segments [120]. - The company plans to leverage its strategic relationship with Embraer to accelerate development plans and reduce costs [104]. - The company faces competition from focused UAM developers and established aerospace and automotive conglomerates, which may impact its market entry [117]. Research and Development - Eve is developing a next-generation Urban Air Traffic Management software, "Vector," aimed at enabling safe and efficient eVTOL operations in urban airspace [107]. - Research and development expenses increased by $17.3 million, or 63%, for the three months ended March 31, 2025, primarily due to the Master Service Agreement with Embraer [124]. - The company is focused on developing eVTOL aircraft and related technologies, with significant increases in R&D expenses expected as staffing and development efforts expand [123]. - Research and development expenses increased by $17.3 million to $44.7 million for the three months ended March 31, 2025, primarily due to intensified developmental activities with Embraer [124]. Financial Performance - Total operating expenses for the three months ended March 31, 2025, were $52.6 million, an increase of $18.7 million, or 55%, compared to $33.9 million for the same period in 2024 [122]. - Net loss for the three months ended March 31, 2025, was $48.8 million, representing an increase of $23.5 million, or 93%, from a net loss of $25.3 million in the prior year [122]. - Financial investment income rose by $1.6 million, or 67%, for the three months ended March 31, 2025, due to an increase in the average investment balance [128]. - Interest expense increased by $1.8 million for the three months ended March 31, 2025, primarily due to a larger outstanding debt balance compared to the prior period [130]. - The company reported a net loss of $48.8 million for the three months ended March 31, 2025, compared to a net loss of $25.3 million for the same period in 2024, representing a 93% increase in losses [122]. Cash Flow and Liquidity - Net cash used by operating activities decreased by $10.9 million to $24.9 million for the three months ended March 31, 2025, compared to $35.8 million in the prior year [137]. - As of March 31, 2025, the company had cash and cash equivalents of $59.5 million and total liquidity of approximately $410.3 million, sufficient to fund operations for at least the next twelve months [135]. - The company has cash and cash equivalents of $59.5 million and financial investments of $228.1 million as of March 31, 2025, totaling approximately $410.3 million in liquidity [135]. - Net cash related to investing activities increased by $20.6 million for the three months ended March 31, 2025, driven by increased redemptions of financial investments totaling $107.0 million [139]. - Net cash provided by financing activities decreased by $5.5 million for the three months ended March 31, 2025, mainly due to lower debt borrowings [140]. Financing and Debt - The company plans to utilize a combination of equity and debt financing to fund future capital needs, with no specific sources of additional funding currently decided [135]. - As of March 31, 2025, approximately $122.7 million is available to be drawn under the Company's debt arrangements [141]. - The Company entered into a loan agreement with BNDES for R$490 million (approximately $94.1 million) to support the development of the eVTOL [142]. - A financing agreement with BNDES was established for four lines of credit totaling approximately $87.9 million as of March 31, 2025 [143]. - The Company secured a loan agreement with BNDES for R$200 million (approximately $34.8 million) to support the second phase of the eVTOL project [144]. Regulatory and Economic Environment - The company plans to obtain necessary certifications from aviation authorities such as ANAC, FAA, and EASA to launch its commercial services [118]. - The Brazilian economic environment poses risks, including inflation and currency fluctuations, which could adversely affect the company's operations [111]. - The Company is classified as an "emerging growth company," allowing it to delay the adoption of certain accounting standards until they apply to private companies [149]. - The Company will lose its emerging growth company status no later than December 31, 2025, becoming subject to SEC's internal control over financial reporting auditor attestation requirements [151].

Financial Performance and Position - As of December 31, 2024, the company's cash and cash equivalents amounted to $2,473,649, a decrease of 28.2% from $3,447,665 in 2023 [661]. - The total accounts payable and accrued liabilities decreased by 48.0% from $283,428 in 2023 to $147,205 in 2024 [661]. - The lease liability increased from $11,510 in 2023 to $38,785 in 2024, indicating a significant rise in obligations [661]. - The derivative warrant liability rose from $531,000 in 2023 to $572,000 in 2024, reflecting a 7.7% increase [661]. - The company's maximum exposure to credit risk as of December 31, 2024, is the carrying value of its financial assets, which is $2,473,649 [662]. - The total financial liabilities due within three months as of December 31, 2024, is $170,329, while the total liabilities for 2023 were $294,938 [665]. - The company is exposed to a net currency risk of $573,336 as of December 31, 2024, with a potential effect of +/- 10% change in currency amounting to $57,334 [667]. - The company has implemented a planning and budgeting process to manage liquidity risk and ensure it can meet its financial obligations [663]. - The fair value of cash and cash equivalents approximates their carrying values due to their short-term nature [660]. - There have been no changes in risk management policies since December 31, 2024 [668]. Clinical Development and Programs - The Company launched a precision medicine program targeting kidney disease, linking genetic factors to the over-expression of XO [333]. - The XRx-008 program for ADPKD is in late clinical stages, with plans for a Phase 3 registration trial to support NDA submission [352]. - The Company is developing a combination therapy for AKI associated with respiratory virus infection, integrating intravenous and oral treatments [355]. - The XRx-026 program aims to decrease chronically high serum uric acid levels by inhibiting the xanthine oxidase enzyme, potentially providing a significant treatment option for gout [383]. - The XRx-008 program aims to decrease chronic kidney disease progression in patients with ADPKD, addressing symptoms like increased kidney volume and hypertension [390]. - XRx-101 is being developed for AKI associated with respiratory virus infections, with 36% of hospitalized COVID-19 patients experiencing AKI [400]. - XRx-101 aims to rapidly decrease SUA concentrations to protect kidney function during hospitalization, targeting a patient group currently without approved treatments for AKI [403]. - XRx-225 has shown potential to significantly decrease proteinuria and improve kidney function by lowering uric acid levels, even in patients receiving standard care [412]. - XRx-225 is currently in non-clinical development stages, with plans to advance to Phase 1 clinical testing pending FDA discussions [413]. Regulatory and Approval Processes - The company plans to pursue FDA approval for XRx-101 under Section 505(b)(2) of the FDCA, leveraging prior research and existing formulations [404]. - The cost of preparing and submitting a New Drug Application (NDA) is substantial, currently over $4.3 million for an NDA with clinical information [448]. - The annual program fee for an approved NDA is currently over $400,000, with fees typically increased annually [448]. - The FDA seeks to review applications for standard review drug products within ten months and priority review drugs within six months [450]. - The FDA may impose clinical holds at any time during the life of an IND due to safety concerns or non-compliance [440]. - The approval process may require substantial post-approval testing and surveillance to monitor the drug's safety or efficacy [454]. - The FDA has 60 days to determine whether an NDA will be accepted for filing, followed by an in-depth review [450]. - The FDA may issue a Complete Response Letter (CRL) detailing deficiencies in the NDA, which could require additional clinical trials [452]. - Regulatory agencies require extensive monitoring and auditing of all clinical activities and data throughout the clinical development phases [445]. - The requirement for a Risk Evaluation and Mitigation Strategy (REMS) can materially affect the potential market and profitability of the drug [454]. Market and Competitive Landscape - The competitive landscape includes major pharmaceutical and biotechnology companies, with the company facing challenges in securing market position against established therapies [429]. - The company’s commercial opportunity may be impacted if competitors develop safer or more effective therapies, or if they obtain regulatory approval more rapidly [432]. - Third-party payors may deny coverage or reimbursement if products are deemed not medically necessary, affecting sales potential [496]. - The pharmaceutical industry faces pricing pressures due to managed healthcare trends and legislative proposals, impacting reimbursement rates from third-party payors [497]. - Legislative changes at the state level may impose additional pricing constraints and affect demand for approved products [505]. Intellectual Property and Patent Strategy - The company aims to secure patent protection for its product candidates and expand its intellectual property holdings through in-licensing and new compositions [414]. - The patent portfolio includes five active patent families, with claims covering various therapeutic applications including diabetic nephropathy and insulin resistance [418]. - Owners of relevant drug patents may apply for up to a five-year patent term extension after NDA approval [462]. - The Orphan Drug Act allows for a seven-year exclusivity period for drugs approved for rare diseases affecting fewer than 200,000 individuals in the U.S. [466]. Healthcare Regulations and Compliance - The company is subject to various healthcare laws and regulations that could impact marketing and sales of approved products [506]. - The company must ensure compliance with the federal Anti-Kickback Statute and other healthcare laws to avoid significant liabilities [507]. - Compliance with evolving EU data export laws is critical, especially following the Schrems II decision, which complicates data transfers to the U.S. [495]. - Non-compliance with foreign regulatory requirements may result in fines, suspension of clinical trials, or withdrawal of regulatory approvals [493]. - The FDA and other agencies enforce laws prohibiting the promotion of off-label uses, with significant penalties for violations [475]. Research and Development Insights - Key findings from a study on Polycystic Kidney Disease indicated that elevated serum uric acid worsens kidney conditions, while XO inhibitors can reduce uric acid levels and cyst growth [335]. - Approximately 2-4% of patients treated with allopurinol develop adverse reactions, creating an unmet medical need for alternative treatments for chronic gout [367]. - Oxypurinol has the potential to benefit approximately 70-75% of allopurinol-intolerant patients, estimated to be between 120,000 to 150,000 patients in the U.S. [367]. - Clinical findings suggest that the proprietary formulation of oxypurinol, XORLOTM, may reduce adverse events and improve tolerability compared to allopurinol [386]. - Over 600 patients have been treated with oxypurinol, showing a reduced rate of adverse events compared to allopurinol, suggesting superior tolerability [395].

Investment Strategy - The company acquired or originated investments totaling $83,484,103 during the three months ended March 31, 2025, with a focus on life sciences, self-storage, and multifamily properties [196]. - The company aims to generate attractive, risk-adjusted returns for stockholders over the long term through a flexible investment strategy [189]. - The company has a target focus on investments in the top 50 MSAs, particularly in stabilized properties or those with light-transitional business plans [188]. - The company’s investment strategy includes reallocating capital periodically among target investment classes to manage risk effectively [189]. - The company is focused on expanding its portfolio through various types of loans and investments, including multifamily properties and preferred equity investments [230]. Financial Performance - Net interest income for Q1 2025 was $11.5 million, a significant increase of approximately $24.3 million compared to a net interest loss of $12.8 million in Q1 2024, representing a change of (189.8)% [211][212]. - Other income rose to $22.7 million in Q1 2025 from $9.2 million in Q1 2024, marking an increase of approximately $13.5 million or 147.2% [213]. - Operating expenses decreased to $8.3 million in Q1 2025 from $11.0 million in Q1 2024, a reduction of approximately $2.7 million or (24.9)% [211]. - Net income attributable to common stockholders for Q1 2025 was $16.5 million, compared to a net loss of $14.3 million in Q1 2024, reflecting a change of 215.6% [219]. - Earnings Available for Distribution (EAD) for Q1 2025 was $9.7 million, a significant improvement from a loss of $11.5 million in Q1 2024, representing a change of 184.5% [228]. - Cash Available for Distribution (CAD) decreased to $10.5 million in Q1 2025 from $14.9 million in Q1 2024, a decline of (29.5)% [228]. - Net income per share, basic, was $0.94 in Q1 2025 compared to a loss of $0.83 in Q1 2024, indicating a change of 213.0% [219]. - The weighted-average number of diluted common shares outstanding increased to 36,049 in Q1 2025 from 24,862 in Q1 2024, a rise of 45.0% [219]. Expenses and Management Fees - The company’s management fees and G&A expenses are capped at 2.5% of equity book value, ensuring cost control [207]. - Management fees increased to $1.4 million in Q1 2025 from $0.8 million in Q1 2024, primarily due to an increase in Equity as defined by the Management Agreement [216]. - Expenses from consolidated real estate owned decreased to $4.0 million in Q1 2025 from $5.4 million in Q1 2024, a reduction of approximately $1.4 million or (25.9)% [217]. Liquidity and Capital Resources - The company expects to meet its short-term liquidity requirements through available cash, expected operating cash flows, and potential debt or equity financings [235]. - Long-term liquidity requirements will be met through various capital sources, including future debt or equity issuances and net cash from operations [236]. - The company has a total of $788.8 million borrowed under the Freddie Mac Credit Facility, with an outstanding balance of $109.7 million as of March 31, 2025 [239]. Shareholder Returns - The company intends to make regular quarterly dividend payments to holders of common stock and has declared a quarterly dividend of $0.50 per share on February 24, 2025 [254]. - As of March 31, 2025, the company has sold 531,728 shares of common stock for total gross sales of $12.6 million under its ATM Program [244]. - The company launched a continuous public offering of up to 16,000,000 shares of Series B Preferred Stock at a price of $25.00 per share, aiming for gross proceeds of $400.0 million [245]. - As of March 31, 2025, the company has sold 8,485,120 shares of Series B Preferred Stock for total gross proceeds of $207.3 million [247]. Market Conditions and Risks - The company has experienced uncertainties regarding the impact of recently announced tariffs on construction materials, which could affect operational costs [192]. - The macroeconomic environment remains challenging due to high interest rates and limited credit availability, impacting commercial real estate financing [285]. Legal and Regulatory Matters - The company is currently involved in ongoing litigation, including the Bankruptcy Trust Lawsuit and the UBS Lawsuit, but does not expect these to materially affect its business [193]. - The company intends to maintain its REIT status for U.S. federal income tax purposes, which commenced with the taxable year ended December 31, 2020 [191]. - The Company elected to be treated as a REIT for U.S. federal income tax purposes, requiring it to distribute at least 90% of its REIT taxable income to stockholders [286]. Investment Portfolio - The company's portfolio consists of assets with a combined unpaid principal balance of $1.5 billion as of March 31, 2025 [230]. - The current yield on senior loans in the portfolio averages 10.16% with a remaining term of 2.15 years [230]. - The highest coupon rate for a senior loan in the portfolio is 14.00% for a loan amount of $151.263 million [230]. - The total net equity for senior loans in the portfolio is $164.874 million [230]. - The company holds CMBS B-Pieces with a total investment of $108.303 million, with a current yield of 9.08% [230]. - The average coupon rate for CMBS B-Pieces is 10.57% with a remaining term of 5.91 years [230]. Commitments and Off-Balance Sheet Arrangements - The Company has one off-balance sheet arrangement that may affect its financial condition as of March 31, 2025 [256]. - The Company committed to fund $24.0 million of preferred equity for a construction project in Phoenix, Arizona, with $6.5 million remaining unfunded as of March 31, 2025 [259]. - The Company fully funded $30.3 million of preferred units for a multifamily property development in Forney, Texas, and committed an additional $4.3 million in common equity, of which $1.3 million was unfunded as of March 31, 2025 [259]. - The Company has an unfunded commitment balance of $105.0 million under the IQHQ Subscription Agreement as of March 31, 2025, having funded $55.0 million [273]. Credit Losses and Valuation - The cumulative effect of adopting ASU 2016-13 as of January 1, 2023, resulted in a $1.6 million reduction in retained earnings [278]. - The beginning allowance for credit loss as of January 1, 2025, was $1.4 million, with a provision for credit losses of $3.6 million for the three months ended March 31, 2025, leading to an ending allowance for credit loss of $5.0 million [278]. - The unrealized loss related to the change in fair value estimate for NSP was $1.2 million for the three months ended March 31, 2025 [281]. - The unrealized loss related to the change in fair value estimate for the Private REIT was $0.2 million for the three months ended March 31, 2025 [282]. - Significant judgment is required in determining impairment and estimating the resulting loss allowance, with actual losses potentially differing from estimates [279].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-36429 ARES MANAGEMENT CORPORATION (Exact name of Registrant as specified in its charter) (State or other jurisdiction of inc ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10−Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2024 | Nevada | 81-5360128 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Employer | | incorporation or organization) | Identification No.) | | 990 Biscayne Blvd., Suite 505, Miami, FL | 33132 | | (Address of principal executive offices) | (Zip Code) | | (786) 749-1221 | | ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ___________________ FORM 10-Q ___________________ ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended: March 31, 2025 ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to Commission File Number: 000-10661 ___________________ (Exact Name of Registrant as Specified in Its Charter) _ ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number 333-259554 Delaware 37-1827430 (State or other jurisdiction of incorporation or organization) (I.R.S. Emplo ...

Company Classification and Growth - The company is classified as an "emerging growth company" and will remain so until total annual gross revenue reaches $1.235 billion or other specified conditions are met[117]. Geopolitical Risks - The ongoing military conflict in Ukraine may adversely affect the company's operations and expansion plans in the European Union, leading to market disruptions and increased commodity price volatility[120]. - The conflict between Israel and Hamas has negatively impacted the global economy, which could affect the company's financial performance despite limited direct exposure to the Middle East[122]. - The company faces risks from the conflict between China and Taiwan, particularly regarding semiconductor supply chain disruptions that could increase costs and delay product deliveries[124]. Economic and Market Conditions - Inflationary pressures and market fluctuations, including tariffs, could increase operational costs and affect the company's ability to pass these costs onto customers[126][127]. - Economic instability and fluctuations in currency exchange rates may adversely affect consumer demand and operational costs, impacting the company's financial performance[130]. - Market opportunity estimates for the EV and battery storage market are subject to significant uncertainty, which could impact the company's growth forecasts[134]. Demand and Adoption of Electric Vehicles - The demand for electric vehicles (EVs) is influenced by various factors, including fuel economy standards and consumer acceptance, which could affect the company's product demand[135]. - The company’s future growth is dependent on the rapid adoption of EVs, which is influenced by changing technologies, government regulations, and consumer behavior[138]. - Future growth is dependent on the rapid adoption of decentralized renewable energy, with market demand for battery energy storage systems being uncertain[148]. - The EV and battery energy storage market relies on government incentives, and any reduction or elimination of these benefits could adversely affect demand[150]. Product Development and Innovation - The company must continuously innovate and develop new products to keep pace with rapid technological changes in the market[151]. - The company incurred research and development costs of EUR 1.7 million, EUR 2.8 million, and EUR 9.0 million for the fiscal years ended December 31, 2022, 2023, and 2024 respectively, indicating a significant increase in investment for future product development[172]. Operational Risks - The company faces risks related to lithium-ion battery safety, including potential fires and adverse publicity that could impact business prospects[142]. - Expansion into battery energy storage systems introduces asset, operational, and financing risks that may affect revenue and earnings[143]. - Changes in energy storage standards or the success of alternative technologies could negatively impact demand for the company's products and services[144]. - The company faces risks related to defects in its High-Power-Charger and battery storage systems, which could lead to product liability claims and adversely affect its business and reputation[168]. - The complexity of the company's software platform, developed over a decade, may lead to undetected defects or errors that could impact market adoption and customer satisfaction[169]. Customer Relationships and Sales Strategy - The company is substantially dependent on its direct sales force for customer acquisition and plans to expand this force, but faces challenges in recruiting and training sufficient personnel[176]. - The company anticipates fluctuations in financial results due to concentrated customer relationships, which could lead to significant risks if major customers reduce or cancel orders[183]. - In 2024, the company aims to diversify its customer base, with a goal of having four customers each accounting for about 10% of total revenue, as opposed to previous concentrations where two major customers accounted for approximately 55% of revenue[178]. Financial Reporting and Internal Controls - The company has identified material weaknesses in its internal control over financial reporting, which could impair compliance with financial reporting requirements for publicly traded companies[190]. - Management is responsible for maintaining adequate internal control over financial reporting, with several material weaknesses identified in disclosure and internal controls[192]. - A remediation plan is in place to improve internal control over financial reporting, including hiring additional staff and engaging external accounting experts[193]. - Even after remediation, management does not expect internal controls to prevent all errors and fraud, providing only reasonable assurance[196]. - Failure to comply with Section 404(a) of the Sarbanes-Oxley Act could harm the company's ability to produce timely and accurate financial statements[197]. - EUSG restated its previously issued financial statements due to improper valuation of Public Shares, indicating a material weakness in internal control[200]. Legal and Compliance Risks - The company faces potential litigation or disputes arising from restatements and material weaknesses in internal control over financial reporting[203]. - Being subject to U.S. reporting requirements incurs significant legal and accounting expenses, impacting operating results[211]. Shareholder and Equity Considerations - The concentration of ownership by two shareholders, who own approximately 59.8% of the outstanding Ordinary Shares, may influence corporate governance and strategic decisions[218]. - The Company may issue additional Ordinary Shares or equity securities without shareholder approval, potentially diluting existing ownership interests[223]. - The market price of the Ordinary Shares may decline if a significant number of shares are sold following the exercise of registration rights by certain shareholders[214]. - The Company does not intend to pay dividends on Ordinary Shares in the foreseeable future, and if dividends are declared, they may be subject to a 25% Irish dividend withholding tax[244]. Financing and Capital Structure - The Company issued a total of 1,716,667 May 2023 Financing Warrants, 1,500,000 August 2023 Financing Warrants, and 4,633,335 August 2024 Financing Warrants, with 143,333 of these warrants exercised as of the report date[214]. - The Company agreed to issue senior secured convertible notes totaling $53,763,441 and warrants to purchase up to 1,116,072 Ordinary Shares as part of the May 2025 Offering[215]. - The issuance of Ordinary Shares for the conversion of 2025 Convert Notes may lead to significant dilution for existing shareholders[265]. - The company received $15 million from the May 2025 Offering, with an additional $35 million contingent on achieving specific milestones[263]. Tax and Regulatory Risks - Future changes in U.S. and foreign tax laws could adversely affect the Company's financial performance and operations[230]. - The Company is subject to the Irish Takeover Rules, which regulate takeovers and ensure fairness among bidders[256]. Miscellaneous Risks - The company has granted a first priority security interest in substantially all of its assets, which could adversely affect its ability to operate[268]. - If the company fails to generate sufficient cash flow, it may need to seek alternative financing, potentially leading to bankruptcy or liquidation[269].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-42268 Andretti Acquisition Corp. II (Exact Name of Registrant as Specified in Its Charter) | Cayman Islands | 98-1792547 | | --- | --- | | ...