Galaxy Gaming, Inc.

Previous wording

The following is a discussion and analysis of our financial condition, results of operations and liquidity and capital resources as of and for the three and six months ended June 30, 2025 and 2024. This discussion should be read together with our audited consolidated financial statements and related notes included in Item 8. Financial Statements and Supplementary Financial Information included in our 2024 Form 10-K.

Current wording

The following is a discussion and analysis of our financial condition, results of operations and liquidity and capital resources as of and for the three and nine months ended September 30, 2025 and 2024. This discussion should be read together with our audited consolidated financial statements and related notes included in Item 8. Financial Statements and Supplementary Financial Information included in our 2024 Form 10-K.

Previous wording

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, as do other materials or oral statements we release to the public. Forward-looking statements are neither historical facts nor assurances of future performance, but instead are based only on our current beliefs, expectations, and assumptions regarding the future of our business, plans and strategies, projections, anticipated events and trends, the economy, and other future conditions, as of the date on which this report is filed. Forward-looking statements often, but do not always, contain words such as “may,” “will,” “should,” “could,” “might,” “expect,” “intend,” "target," “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other similar expressions. These forward-looking statements are only predictions. We have based these forward-looking statements on our current expectations, assumptions and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, the ability to complete the Merger on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary gaming regulatory approvals and satisfaction of other closing conditions to consummate the proposed Merger; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement; risks that the proposed Merger disrupts the Company’s current plans and operations or diverts the attention of the Company’s management or employees from ongoing business operations; the risk that certain restrictions during the pendency of the Merger may impact the Company's ability to pursue certain business opportunities or strategic transactions; the risk of potential difficulties with the Company’s ability to retain and hire key personnel and maintain relationships with customers and other third parties as a result of the proposed Merger, including during the pendency of the Merger; the risk that the proposed Merger may involve unexpected costs and/or unknown or inestimable liabilities; the risk that the Company’s business may suffer as a result of uncertainty surrounding the proposed Merger; the risk that stockholder litigation in connection with the proposed Merger may affect the timing or occurrence of the proposed Merger or result in significant costs of defense, indemnification and liability; effects relating to the announc…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, as do other materials or oral statements we release to the public. Forward-looking statements are neither historical facts nor assurances of future performance, but instead are based only on our current beliefs, expectations, and assumptions regarding the future of our business, plans and strategies, projections, anticipated events and trends, the economy, and other future conditions, as of the date on which this report is filed. Forward-looking statements often, but do not always, contain words such as “may,” “will,” “should,” “could,” “might,” “expect,” “intend,” "target," “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other similar expressions. These forward-looking statements are only predictions. We have based these forward-looking statements on our current expectations, assumptions and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, the ability to complete the Merger on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary gaming regulatory approvals and satisfaction of other closing conditions to consummate the proposed Merger; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement; risks that the proposed Merger disrupts the Company’s current plans and operations or diverts the attention of the Company’s management or employees from ongoing business operations; the risk that certain restrictions during the pendency of the Merger may impact the Company's ability to pursue certain business opportunities or strategic transactions; the risk of potential difficulties with the Company’s ability to retain and hire key personnel and maintain relationships with customers and other third parties as a result of the proposed Merger, including during the pendency of the Merger; the risk that the proposed Merger may involve unexpected costs and/or unknown or inestimable liabilities; the risk that the Company’s business may suffer as a result of uncertainty surrounding the proposed Merger; the risk that stockholder litigation in connection with the proposed Merger may affect the timing or occurrence of the proposed Merger or result in significant costs of defense, indemnification and liability; effects relating to the announc…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We develop, acquire, assemble and market technology and entertainment-based products and services for the gaming industry for placement on casino floors and on legal internet gaming sites. Our products and services primarily relate to licensed casino operators’ table games activities and focus on either increasing their profitability and productivity or expanding their gaming entertainment offerings in the form of proprietary table games, electronically enhanced table game platforms, fully-automated electronic tables and other ancillary equipment. In addition, we license intellectual property to legal internet gaming operators. Our products and services are offered in various highly regulated markets and certain non-regulated (where such is not illegal) markets throughout the world. Our products are assembled at our headquarters in Las Vegas, Nevada, as well as outsourced for certain sub-assemblies in the United States.

Current wording

We develop, acquire, assemble and market technology and entertainment-based products and services for the gaming industry for placement on casino floors and on legal internet gaming sites. Our products and services primarily relate to licensed casino operators’ table games activities and focus on either increasing their profitability and productivity or expanding their gaming entertainment offerings in the form of proprietary table games, electronically enhanced table game platforms and other ancillary equipment. In addition, we license intellectual property to legal internet gaming operators. Our products and services are offered in various highly regulated markets and certain non-regulated (where such is not illegal) markets throughout the world. Our products are assembled at our headquarters in Las Vegas, Nevada, as well as outsourced for certain sub-assemblies in the United States.

Previous wording

Consummation of the Merger is subject to the satisfaction or waiver of certain closing conditions, including the receipt of certain gaming regulatory approvals. At the special meeting of the Company’s stockholders held on November 12, 2024, stockholders voted to approve the Merger. The Merger is expected to be completed in the second half of 2025, subject to satisfaction or waiver of the closing conditions. Upon completion of the Merger, the Company will become a privately held company and shares of Company’s common stock will no longer be listed on any public market.

Current wording

Consummation of the Merger is subject to the satisfaction or waiver of certain closing conditions, including the receipt of certain gaming regulatory approvals. At the special meeting of the Company’s stockholders held on November 12, 2024, stockholders voted to approve the Merger. Upon completion of the Merger, the Company will become a privately held company and shares of Company’s common stock will no longer be listed on any public market.

Previous wording

Under the terms of the Merger Agreement, if the Merger has not been consummated by July 18, 2025 (the "Initial Outside Date"), either Galaxy or Evolution may terminate the Merger Agreement; provided that such date shall be automatically extended to October 18, 2025 (the "First Extended Outside Date") if, on the Initial Outside Date, all conditions to the Merger would have been satisfied or waived if the closing had taken place on the Initial Outside Date, other than the closing conditions to the absence of certain legal constraints, or the receipt of certain gaming regulatory approvals (the "Gaming Approval Closing Condition"). As of July 18, 2025, all conditions to the Merger would have been satisfied or waived if the closing occurred on such date, other than the Gaming Approval Closing Condition. In accordance with the foregoing terms, on July 18, 2025, the Initial Outside Date was automatically extended to October 18, 2025.

Current wording

Under the terms of the Merger Agreement, if the Merger has not been consummated by October 18, 2025 (the "First Extended Outside Date"), either Galaxy or Evolution may terminate the Merger Agreement; provided that such date shall be automatically extended to January 18, 2026 (the "Second Extended Outside Date") if, on the First Extended Outside Date, all conditions to the Merger would have been satisfied or waived if the closing had taken place on the First Extended Outside Date, other than the closing conditions related to the absence of certain legal constraints, or the receipt of certain gaming regulatory approvals (the "Gaming Approval Closing Condition"). As of October 18, 2025, all conditions to the Merger would have been satisfied or waived if the closing occurred on such date, other than the Gaming Approval Closing Condition. In accordance with the foregoing terms, on October 18, 2025, the First Extended Outside Date was automatically extended to January 18, 2026.

Previous wording

Recurring core revenue decreased $91,368, or 1.7% for the three months ended June 30, 2025, as compared to the same period in the prior year. This decrease was driven in part by the impact of recent casino closures and to a lesser extent, a decrease in revenue generated from licensed third-party intellectual property. Royalties netted against gross core revenue decreased $45,980 for the three months ended June 30, 2025, as compared to the same period in the prior year. This decrease was attributable to lower royalties paid to third-parties for licensed intellectual property. Perpetual license sales of our progressive gaming systems to customers of $256,421 were down 82.9% percent for the three months ended June 30, 2025, as compared to the same period in the prior year. This decline was primarily driven by a strategic decision by management to prioritize higher-margin, recurring revenue streams, as well as the timing of customer purchases. Gross digital revenues of $4,020,989, were up $492,524, or 14.0% for the three months ended June 30, 2025, as compared to the same period in the prior year. This favorable increase reflects the ongoing expansion of our digital content onto new customer sites and the continued success of offering competitive products with brand recognition. Net of royalties, digital revenues grew to $2,833,416, up 11.5% for the three months ended June 30, 2025, as compared to the same period in the prior year.

Current wording

Recurring core revenue totaled $5,186,967 for the three months ended September 30, 2025, representing a modest year-over-year decline of 0.3%. This slight decrease was primarily attributable to the impact of recent casino closures, with a smaller contribution from reduced revenue tied to licensed third-party intellectual property. These declines were partially offset by revenue generated from placements of our new GOS progressive gaming system, which launched earlier this year. Royalties netted against gross core revenue decreased $42,341 for the three months ended September 30, 2025, as compared to the same period in the prior year. This decrease was attributable to lower royalties paid to third-parties for licensed intellectual property. Perpetual license sales of our progressive gaming systems to customers of $68,714 were down 90.3% percent for the three months ended September 30, 2025, as compared to the same period in the prior year. This decline was primarily driven by the timing of customer purchases. Gross digital revenues of $3,947,334, increased $434,140, or 12.4% for the three months ended September 30, 2025, as compared to the same period in the prior year. This favorable increase reflects the ongoing expansion of our digital content onto new customer sites and the continued success of offering competitive products with brand recognition. Net of royalties, digital revenues grew to $2,805,343, up 11.5% for the three months ended September 30, 2025, as compared to the same period in the prior year.

Previous wording

Cost of ancillary products and assembled component expense decreased $410,685, or 68.6% for the three months ended June 30, 2025, as compared to the same period in the prior year. The activity in cost of ancillary products and assembled components reflects the component costs associated with the perpetual license sales of our progressive gaming systems.

Current wording

Cost of ancillary products and assembled component expense decreased $101,726, or 29.7% for the three months ended September 30, 2025, as compared to the same period in the prior year. The activity in cost of ancillary products and assembled components reflects the component costs associated with the perpetual license sales of our progressive gaming systems.

Previous wording

Selling, general and administrative expenses decreased $200,263, or 4.5% for the three months ended June 30, 2025, as compared to the same period in the prior year. This decrease was primarily driven by a $431,362 reduction in costs associated with special projects, most notably legal expenses incurred related to the acquisition by Evolution. Normalized for the impact of special projects and excluding the related fees of $243,682 and $675,044 for the three months ended June 30, 2025 and June 30, 2024, respectively, selling, general, and administrative expenses increased $231,099 for the three months ended June 30, 2025, as compared to the same period in the prior year. This increase was driven primarily by higher compensation and related expenses.

Current wording

Selling, general and administrative expenses decreased $2,239,162, or 35.8% for the three months ended September 30, 2025, as compared to the same period in the prior year. This decrease was primarily driven by a $1,934,107 reduction in costs associated with special projects, most notably legal expenses incurred related to the acquisition by Evolution. Normalized for the impact of special projects and excluding the related fees of $310,778 and $2,244,885 for the three months ended September 30, 2025 and September 30, 2024, respectively, selling, general, and administrative expenses decreased $305,055 for the three months ended September 30, 2025, as compared to the same period in the prior year. The decrease was primarily driven by lower legal, accounting, and consulting expenses unrelated to special projects.

Previous wording

Research and development expenses were down $26,317, or 9.8% for the three months ended June 30, 2025 compared to the comparable period in the prior year. The decrease was due to the decline of the total amount of outside services used for research and development in the period.

Current wording

Research and development expenses decreased $30,948, or 11.8% for the three months ended September 30, 2025 compared to the comparable period in the prior year. The decrease was due to the decline of the total amount of outside services used for research and development in the period.

Previous wording

Depreciation and amortization increased $83,918, or 12.0% for the three months ended June 30, 2025, as compared to the same period in the prior year. This increase was primarily driven by amortization expense for certain intangible assets placed in service and to a lesser extent, an increase in depreciation expense associated with incremental placements of assets deployed at client locations.

Current wording

Depreciation and amortization increased $105,356, or 15.0% for the three months ended September 30, 2025, as compared to the same period in the prior year. This increase was primarily driven by amortization expense for certain intangible assets placed in service and to a lesser extent, an increase in depreciation expense associated with incremental placements of assets deployed at client locations.

Previous wording

Stock-based compensation expenses decreased $41,471, or 21.3% for the three months ended June 30, 2025, as compared to the same period in the prior year. The decrease was primarily due to lower compensation for our Board of Directors in 2025, driven by the vesting of a previously granted equity award and a reduction in the number of board members, both of which contributed to lower stock-based compensation during the current period.

Current wording

Stock-based compensation expenses decreased $82,265, or 40.2% for the three months ended September 30, 2025, as compared to the same period in the prior year. The decrease was primarily due to reduced stock-based compensation for employees as well as lower compensation for our Board of Directors in 2025, as a result of the full vesting of a previously granted equity award and a reduction in the number of board members.

Previous wording

Interest expense decreased $1,374,350, or 60.3% for the three months ended June 30, 2025, as compared to the same period in the prior year. The decrease was due to reduced interest rates and a reduced principal balance as a result of the recent refinancing of our debt. Interest income was down 92.4% compared to the prior year period, primarily due to lower cash balances.

Current wording

Interest expense decreased $1,421,138, or 62.0% for the three months ended September 30, 2025, as compared to the same period in the prior year. The decrease was due to reduced interest rates and a reduced principal balance as a result of the refinancing of our debt in January 2025. Interest income decreased $202,699, or 97.7% compared to the prior year period, primarily due to lower cash balances.

Previous wording

Provision for income taxes was $93,912 for the three months ended June 30, 2025, compared to provision for income taxes of $28,293 for the comparable prior-year period. The increase in expense is primarily driven by the increased income before provision for income taxes.

Current wording

Benefit for income taxes was $23,983 for the three months ended September 30, 2025, compared to provision for income taxes of $7,197 for the comparable prior-year period. The change primarily reflects the impact of provisions recorded earlier in the year and the full-year forecasted income before provision for income taxes.

Previous wording

Primarily as a result of the factors described above, we had net income of $950,357 for the three months ended June 30, 2025, as compared to net income of approximately $242,697 for the same period in the prior year.

Current wording

Primarily as a result of the factors described above, we had net income of $1,039,139 for the three months ended September 30, 2025, as compared to net loss of approximately $2,197,914 for the same period in the prior year.

Previous wording

Results of operations for the six months ended June 30, 2025 and 2024.

Current wording

Results of operations for the nine months ended September 30, 2025 and 2024.

Previous wording

Recurring core revenue decreased $236,835, or 2.2% for the six months ended June 30, 2025, as compared to the same period in the prior year. The decrease was primarily driven by the absence of a one-time payment of approximately $140,000 received in the prior year, the impact of recent casino closures and a decrease in revenue generated from licensed third-party intellectual property. Royalties netted against gross core revenue decreased $110,112 for the six months ended June 30, 2025, as compared to the same period in the prior year. This decrease was due to lower royalties paid to third-parties for licensed intellectual property. Perpetual license sales of our progressive gaming systems to customers of $761,541 were down 66.9% percent for the six months ended June 30, 2025, as compared to the same period in the prior year. This decline was primarily driven by a strategic decision by management to prioritize higher-margin, recurring revenue streams, as well as the timing of customer purchases. Gross digital revenues of $7,856,574 were up $872,156, or 12.5% for the six months ended June 30, 2025, as compared to the same period in the prior year. This favorable increase reflects the ongoing expansion of our digital content onto new customer sites and the continued success of offering competitive products with brand recognition. Net of royalties, digital revenues grew to $5,602,116, up 8.9% for the six months ended June 30, 2025, as compared to the same period in the prior year.

Current wording

Recurring core revenue totaled $15,620,361 for the nine months ended September 30, 2025, representing a modest year-over-year decline of 1.6%. This slight decrease was primarily attributable to the impact of casino closures, with a smaller contribution from reduced revenue tied to licensed third-party intellectual property. These declines were partially offset by revenue generated from placements of our new GOS progressive gaming system, which launched earlier this year. Royalties netted against gross core revenue decreased $152,453 for the nine months ended September 30, 2025, as compared to the same period in the prior year. This decrease was due to lower royalties paid to third-parties for licensed intellectual property. Perpetual license sales of our progressive gaming systems to customers of $830,255 decreased 72.4% percent for the nine months ended September 30, 2025, as compared to the same period in the prior year. This decline was primarily driven by the timing of customer purchases. Gross digital revenues of $11,803,908 increased $1,306,295, or 12.4% for the nine months ended September 30, 2025, as compared to the same period in the prior year. This favorable increase reflects the ongoing expansion of our digital content onto new customer sites and the continued success of offering competitive products with brand recognition. Net of royalties, digital revenues grew to $8,407,459, up 9.7% for the nine months ended September 30, 2025, as compared to the same period in the prior year.

Previous wording

Cost of ancillary products and assembled component expense decreased $629,063, or 62.6% for the six months ended June 30, 2025, as compared to the same period in the prior year. The activity in Cost of ancillary products and assembled components reflects the component costs associated with the perpetual license sales of our progressive gaming systems.

Current wording

Cost of ancillary products and assembled component expense decreased $730,789, or 54.2% for the nine months ended September 30, 2025, as compared to the same period in the prior year. The activity in cost of ancillary products and assembled components reflects the component costs associated with the perpetual license sales of our progressive gaming systems.

Previous wording

Selling, general and administrative expenses decreased $92,310, or 1.1% for the six months ended June 30, 2025, as compared to the same period in the prior year. This decrease was primarily driven by a $223,089 reduction in costs associated with special projects, most notably legal expenses incurred related to the acquisition by Evolution. Normalized for the impact of special projects and excluding the related fees of $451,955 and $675,044 for the six months ended June 30, 2025 and June 30, 2024, respectively, selling, general, and administrative expenses increased $130,779 for the six months ended June 30, 2025, as compared to the same period in the prior year. The increase was primarily driven by higher compensation and related expenses, partially offset by reductions in legal expenses unrelated to special projects, as well as lower taxes and licensing costs.

Current wording

Selling, general and administrative expenses decreased $2,331,472, or 15.7% for the nine months ended September 30, 2025, as compared to the same period in the prior year. This decrease was primarily driven by a $2,157,196 reduction in costs associated with special projects, most notably legal expenses incurred related to the acquisition by Evolution. Normalized for the impact of special projects and excluding the related fees of $762,733 and $2,919,929 for the nine months ended September 30, 2025 and September 30, 2024, respectively, selling, general, and administrative expenses decreased $174,276 for the nine months ended September 30, 2025, as compared to the same period in the prior year. The decrease was primarily driven by lower legal, accounting, and investor relations expenses unrelated to special projects, partially offset by higher employee compensation costs.

Previous wording

Research and development expenses were up $84,573, or 16.2% for the six months ended June 30, 2025, as compared to the same period in the prior year. This increase was driven by higher payroll costs due to increased headcount and the ongoing development of internal software placed in service.

Current wording

Research and development expenses increased $53,625, or 6.8% for the nine months ended September 30, 2025, as compared to the same period in the prior year. This increase was due to higher employee compensation costs primarily driven by increased headcount as well as the ongoing development of internal software placed in service.

Previous wording

Depreciation and amortization increased $177,542, or 12.8% for the six months ended June 30, 2025, as compared to the same period in the prior year. This increase was primarily driven by amortization expense for certain intangible assets placed in service and to a lesser extent, depreciation expense associated with incremental placements of assets deployed at client locations.

Current wording

Depreciation and amortization increased $282,898, or 13.5% for the nine months ended September 30, 2025, as compared to the same period in the prior year. This increase was primarily driven by amortization expense for certain intangible assets placed in service and to a lesser extent, depreciation expense associated with incremental placements of assets deployed at client locations.

Previous wording

Stock-based compensation expenses decreased $16,452, or 4.9% for the six months ended June 30, 2025, as compared to the same period in the prior year. The decrease was primarily driven by lower compensation for our Board of Directors in 2025, resulting from the full vesting of a previously granted equity award and a reduction in the number of board members. These factors led to a decline in stock-based compensation during the current period, partially offset by an increase in stock-based compensation for employees.

Current wording

Stock-based compensation expenses decreased $98,717, or 18.3% for the nine months ended September 30, 2025, as compared to the same period in the prior year. The decrease was primarily driven by lower compensation for our Board of Directors in 2025, as a result of the full vesting of a previously granted equity award and a reduction in the number of board members.

Previous wording

Interest expense decreased $2,660,347, or 58.2% for the six months ended June 30, 2025, as compared to the same period in the prior year. The decrease was due to reduced interest rates and a reduced principal balance as a result of the recent refinancing of our debt. Interest income was down $371,628, or 90.6% compared to the prior year period, primarily due to lower cash balances.

Current wording

Interest expense decreased $4,081,485, or 59.5% for the nine months ended September 30, 2025, as compared to the same period in the prior year. The decrease was due to reduced interest rates and a reduced principal balance as a result of the refinancing of our debt in January 2025. Interest income decreased $574,327, or 93.0% compared to the prior year period, primarily due to lower cash balances.

Previous wording

The Company recognized a loss on extinguishment of debt of $2,969,585 for the six months ended June 30, 2025 related to the refinancing of our debt from Fortress to BMO.

Current wording

The Company recognized a loss on extinguishment of debt of $2,969,585 for the nine months ended September 30, 2025 related to the refinancing of our debt from Fortress to BMO.

Previous wording

Provision for income taxes was $130,333 for the six months ended June 30, 2025, compared to provision for income taxes of $54,618 for the comparable prior-year period. The increase was due to a higher adjusted pre-tax book income offset by discrete items, primarily the loss on extinguishment of debt.

Current wording

Provision for income taxes was $106,350 for the nine months ended September 30, 2025, compared to provision for income taxes of $61,815 for the comparable prior-year period. The increase was due to a higher adjusted pre-tax book income offset by discrete items, primarily the loss on extinguishment of debt.

Previous wording

Primarily as a result of the factors described above, we had net loss of $1,070,925 for the six months ended June 30, 2025, as compared to net income of approximately $451,605 for the same period in the prior year.

Current wording

Primarily as a result of the factors described above, we had net loss of $31,786 for the nine months ended September 30, 2025, as compared to net loss of approximately $1,746,309 for the same period in the prior year.

Previous wording

As of June 30, 2025, we had total current assets of $10,452,127 and total assets of $26,603,798. As of December 31, 2024, we had total current assets of $24,171,920 and total assets of $41,010,731. The decrease in current assets as of June 30, 2025 compared to December 31, 2024 was primarily due to the decreased cash and cash equivalents driven by cash used in the refinancing of our debt. The decrease in total assets as of June 30, 2025 compared to December 31, 2024 was primarily due to the decrease of current assets noted above.

Current wording

As of September 30, 2025, we had total current assets of $10,124,100 and total assets of $26,402,539. As of December 31, 2024, we had total current assets of $24,171,920 and total assets of $41,010,731. The decrease in current assets as of September 30, 2025 compared to December 31, 2024 was primarily due to the decreased cash and cash equivalents driven by cash used in the refinancing of our debt. The decrease in total assets as of September 30, 2025 compared to December 31, 2024 was primarily due to the decrease of current assets noted above.

Previous wording

Our total current liabilities as of June 30, 2025 compared to December 31, 2024 increased to $7,527,390 from $6,602,744. This increase was primarily due to an increase in the current portion of our long term debt as a result of the refinancing of our debt from Fortress to BMO.

Current wording

Our total current liabilities as of September 30, 2025 compared to December 31, 2024 increased to $7,923,720 from $6,602,744. This increase was primarily due to an increase in the current portion of our long term debt as a result of the refinancing of our debt from Fortress to BMO.

Previous wording

Our operating activities provided cash of $4,345,791 for the six months ended June 30, 2025, compared to $3,873,347 provided for the comparable prior year period. This change is mainly attributable to the net loss in the current period and a variance of $632,929 in use of assets and liabilities that relate to operations. Additionally, the Company recognized a loss on extinguishment of debt of $2,969,585 due to the refinancing of the Fortress loan to BMO, depreciation and amortization increased $177,542 primarily driven by amortization related to intangible assets placed in service and to a lesser extent, depreciation related to assets deployed at client locations, $16,452 decline in stock-based compensation and an increase in bad debt of $89,019.

Current wording

Our operating activities provided cash of $5,469,738 for the nine months ended September 30, 2025, compared to $3,027,456 provided for the comparable prior year period. This change is mainly attributable to a smaller net loss in the current period versus the prior period and a variance of $1,492,478 in use of assets and liabilities that relate to operations. Additionally, the Company recognized a loss on extinguishment of debt of $2,969,585 due to the refinancing of the Fortress loan to BMO, depreciation and amortization increased $282,898 primarily driven by amortization related to intangible assets placed in service and to a lesser extent, depreciation related to assets deployed at client locations, $98,717 decline in stock-based compensation and an increase in bad debt of $62,013.

Previous wording

Investing activities used cash of $1,161,744 for the six months ended June 30, 2025, compared to cash used of $676,315 for the six months ended June 30, 2024. This increase in cash used was primarily due to the decrease in the transfer of title of assets deployed at client locations to perpetual license customers and an increase in investment in internally developed software and acquisition of property and equipment.

Current wording

Investing activities used cash of $2,214,355 for the nine months ended September 30, 2025, compared to cash used of $1,181,403 for the nine months ended September 30, 2024. This increase in cash used was primarily due to the decrease in the transfer of title of assets deployed at client locations to perpetual license customers, along with higher spending on assemblies in process, increased investment in internally developed software, and additional acquisitions of property and equipment.

Previous wording

Cash used in financing activities during the six months ended June 30, 2025, was $16,493,898. This compares to $465,317 cash used by financing activities for the six months ended June 30, 2024. The increase in cash used was due to the refinancing of our debt from Fortress to BMO and additional principal payments made on the debt in the current year.

Current wording

Cash used in financing activities during the nine months ended September 30, 2025, was $18,224,567. This compares to $648,038 cash used by financing activities for the nine months ended September 30, 2024. The increase in cash used was due to the refinancing of our debt from Fortress to BMO and additional principal payments of $3,125,000 made on the debt in the current year.