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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

Commission file number: 000-56238

GUERRILLA RF, INC.

(Exact name of registrant as specified in its charter)

Delaware		85-3837067
(State of Other Jurisdiction of incorporation or Organization)		(I.R.S. Employer Identification No.)

2000 Pisgah Church Road, Greensboro, North Carolina		27455
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (336) 510-7840

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically; every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.0405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☒

Smaller reporting company ☒

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class						Outstanding as of May 8, 2025
Common Stock, $0.0001 par value						10,327,753

Table of Contents

GUERRILLA RF, INC.

Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited).	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Stockholders' Deficit	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	33
Item 4.	Controls and Procedures.	33

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	34
Item 1A.	Risk Factors.	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	34
Item 3.	Defaults Upon Senior Securities.	34
Item 4.	Mine Safety Disclosure.	34
Item 5.	Other Information.	34
Item 6.	Exhibits	35

SIGNATURES

Table of Contents

GLOSSARY OF TERMS AND ABBREVIATIONS

The following is a glossary of technical terms used in this Report:

Design win — Acknowledgment by an end-user customer that a product has been chosen or finalized for use in the customer’s system or application.

Distribution-customer — A customer that purchases Guerrilla RF products to sell to a third-party rather than for its own use.

End-user customer — The ultimate customer that utilizes or incorporates our products into its own products or solutions whether it purchased our products directly from Guerrilla RF or a third party.

Fabless — Semiconductor company that utilizes pure-play or outsourced wafer fabrication partners rather than owning and operating their own wafer foundry.

GaN — Gallium nitride semiconductor process used in high-power amplifier applications.

RF — Radio frequency.

Wafer — Thin slice of semiconductor material used as the substrate for building electronic circuits. Wafers are the output from the semiconductor foundry process before the assembly/packaging processes.

Wireless infrastructure — Systems designed or used by network operators or other professionals to ensure strong communication links to consumers or customers.

Table of Contents

PART I. FINANCIAL INFORMATION.

ITEM 1.

The following unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although Guerrilla RF, Inc. (the "Company") believes that the disclosures made are adequate to make the information not misleading.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K filed with the SEC on March 27, 2025.

GUERRILLA RF, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	*March 31, 2025 (Unaudited)*			*December 31, 2024*

Assets
Cash	$	6,134,709		$	7,974,650
Accounts receivable, net		1,917,718			2,232,696
Inventories, net		1,781,582			1,838,370
Prepaid expenses		490,464			450,293
Total Current Assets		10,324,473			12,496,009

Prepaid expenses and other		123,185			123,185
Intangible assets, net		337,264			346,547
Operating lease right-of-use assets		9,149,202			9,465,427
Property, plant, and equipment, net		2,366,905			2,493,355
Total Assets	$	22,301,029		$	24,924,523

Liabilities, Redeemable Preferred Stock and Stockholders' Deficit
Accounts payable and accrued expenses	$	2,092,533		$	2,040,862
Short-term debt		1,533,616			828,492
Warrant liabilities		1,731,412			1,495,516
Operating lease liability, current portion		601,721			669,001
Finance lease liability, current portion		634,137			667,718
Notes payable - related party, current portion		500,000			500,000
Total Current Liabilities		7,093,419			6,201,589

Long-term debt		388,443			440,879
Operating lease liability		5,505,225			5,636,793
Finance lease liability		674,482			828,171
Notes payable - related party		4,000,000			4,000,000
Total Liabilities		17,661,569			17,107,432

Commitments and Contingencies
Series A convertible preferred stock, $0.0001 par value, 22,000 shares authorized, 22,000 shares issued and outstanding as of March 31, 2025 and December 31, 2024		20,033,555			20,033,555

Stockholders' Deficit
Undesignated preferred stock, $0.0001 par value, 9,978,000 shares authorized, no shares issued and outstanding as of March 31, 2025 and December 31, 2024		-			-
Common stock, $0.0001 par value, 50,000,000 shares authorized, 10,326,940 and 10,240,478 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively		1,033			1,024
Additional paid-in capital		41,940,237			41,575,012
Accumulated deficit		(57,335,365	)		(53,792,500	)
Total Stockholders' Deficit		(15,394,095	)		(12,216,464	)
Total Liabilities, Convertible Preferred Stock and Stockholders' Deficit	$	22,301,029		$	24,924,523

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

GUERRILLA RF, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	*Three Months Ended March 31,*
	*2025*			*2024*
Product	$	4,372,904		$	5,089,773
Royalties and non-recurring engineering		-			1,476
Total Revenue		4,372,904			5,091,249

Direct product costs		1,702,780			1,870,675

Gross Profit		2,670,124			3,220,574

Operating Expenses:
Research and development		2,492,927			2,251,533
Sales and marketing		1,885,465			1,352,909
General and administrative		1,453,560			1,454,695
Total Operating Expenses		5,831,952			5,059,137

Operating Loss		(3,161,828	)		(1,838,563	)

Interest income		65,629			-
Interest expense		(210,770	)		(1,684,787	)
Change in fair value of warrant liabilities		(235,896	)		-
Change in fair value of derivative liabilities		-			158,000
Other expense		-			(7,202	)
Total Other Expenses, net		(381,037	)		(1,533,989	)
Net Loss	$	(3,542,865	)	$	(3,372,552	)

Net loss per share - basic and diluted	$	(0.34	)	$	(0.42	)

Weighted average common shares outstanding - basic and diluted		10,302,895			7,989,471

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

GUERRILLA RF, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

(Unaudited)

	Common Stock		Additional Paid-In-Capital			Accumulated Deficit			Total Stockholders' Deficit
January 1, 2025	$	1,024	$	41,575,012		$	(53,792,500	)	$	(12,216,464	)
Net loss		-		-			(3,542,865	)		(3,542,865	)
Refund of unused offering cost		-		5,173			-			5,173
Net settled RSUs		-		(3,850	)		-			(3,850	)
Share-based compensation		9		363,902			-			363,911
March 31, 2025	$	1,033	$	41,940,237		$	(57,335,365	)	$	(15,394,095	)

	Common Stock		Additional Paid-In-Capital			Accumulated Deficit			Total Stockholders' Deficit
January 1, 2024	$	789	$	36,243,146		$	(43,039,462	)	$	(6,795,527	)
Net loss		-		-			(3,372,552	)		(3,372,552	)
Equity financing, net of issuance costs		202		5,750,870			-			5,751,072
Net settled RSUs		-		(5,872	)		-			(5,872	)
Share-based compensation		4		396,193			-			396,197
March 31, 2024	$	995	$	42,384,337		$	(46,412,014	)	$	(4,026,682	)

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

GUERRILLA RF, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

		*Three Months Ended March 31,*
	*2025*			*2024*
Cash flows from operating activities
Net loss	$	(3,542,865	)	$	(3,372,552	)
Adjustment to reconcile net loss to net cash used in operating activities
Depreciation and amortization		303,228			366,281
Share-based compensation		363,911			396,197
Non-cash interest expense related to debt financing		-			249,597
Accretion of notes payables		-			915,405
Inventory allowance		(14,529	)		-

Change in fair value of warrant liabilities		235,896			-
Change in fair value of derivative liabilities		-			(158,000	)
Loss on extinguishment of debt		-			8,298
Changes in assets and liabilities:
Accounts receivable		314,978			(740,703	)
Inventories		71,317			(240,004	)
Prepaid expenses		(40,171	)		167,009
Accounts payable and accrued expenses		(72,329	)		1,470,810
Operating lease liability		117,377			95,268
Net cash used in operating activities		(2,263,187	)		(842,394	)

Cash flows from investing activities
Purchases of property, plant, and equipment		(47,345	)		(26,000	)
Net cash used in investing activities		(47,345	)		(26,000	)

Cash flows from financing activities
Proceeds from notes payable, derivative liabilities and factoring agreement		2,523,693			4,239,385
Principal payments of notes payable and recourse factoring agreement		(1,761,103	)		(3,219,500	)
Refund of unused offering cost		5,173			-
Proceeds from equity financing, net		-			3,042,829
Principal payments on finance lease		(187,270	)		(238,171	)
Repayment of finance insurance premiums		(109,902	)		(136,757	)
Net cash provided by financing activities		470,591			3,687,786

Net increase (decrease) cash		(1,839,941	)		2,819,392

Cash, beginning of period		7,974,650			781,318
Cash, end of period	$	6,134,709		$	3,600,710

Noncash investing and financing transactions:
Modifications on finance leases	$	-		$	54
Conversion of debt into equity	$	-		$	2,794,243
Property and equipment additions included in accounts payable	$	120,150		$	14,098
Financing of insurance premiums and software	$	-		$	249,607

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

GUERRILLA RF, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. ORGANIZATION AND NATURE OF BUSINESS

Guerrilla RF, Inc. (formerly known as Laffin Acquisition Corp., the “Company”) was incorporated in the State of Delaware on November 9, 2020. On October 22, 2021, the Company's wholly-owned subsidiary, Guerrilla RF Acquisition Corp., a corporation formed in the State of Delaware on October 20, 2021 (“Acquisition Sub”) and privately held Guerrilla RF Operating Corporation (formerly known as Guerrilla RF, Inc.) entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, on October 22, 2021 (the “Closing Date”), Acquisition Sub merged with and into Guerrilla RF Operating Corporation with Guerrilla RF Operating Corporation continuing as the surviving corporation and a wholly-owned subsidiary of the Company (the “Merger”). On May 30, 2023, Guerrilla RF Operating Corporation was merged with and into Guerrilla RF, Inc.

All references in these unaudited interim condensed consolidated financial statements and related Quarterly Report to “Guerrilla RF” refer to: (i) for periods prior to May 30, 2023, Guerrilla RF Operating Corporation; and (ii) for subsequent periods, Guerrilla RF, Inc. Unless otherwise stated or the context otherwise indicates, references to the “Company”, “we”, “our”, “us” or similar terms refer to Guerrilla RF, Inc.

Guerrilla RF designs and manufactures high‐performance Monolithic Microwave Integrated Circuits (MMICs) for the wireless infrastructure market. Guerrilla RF primarily focuses on researching and developing its existing products and building an infrastructure to handle a global distribution network; therefore, it has incurred significant start‐up losses.

Table of Contents

GUERRILLA RF, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Risks and Uncertainties

The Company is subject to several risks associated with companies at a similar stage, including dependence on key individuals, competition from similar products and larger companies, volatility of the industry, ability to obtain adequate financing to support growth, the ability to attract and retain additional qualified personnel to manage the anticipated growth of the Company, and general economic conditions including the current macro-economic conditions impacting the banking and financial markets.

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the rules and regulations for reporting the Quarterly Report on Form 10-Q ("Form 10-Q"), and are presented in U.S. dollars. Accordingly, they do not include all of the information and notes required by GAAP for annual consolidated financial statements. Any reference in these Notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and as amended by Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”). The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company. All intercompany accounts and transactions have been eliminated in consolidation.

The condensed consolidated balance sheet at December 31, 2024 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements. These financial statements have been prepared on a basis that is substantially consistent with the accounting principles applied in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 ("2024 Form 10-K"). This report should be read in conjunction with our 2024 Form 10-K filed with the SEC on March 27, 2025. In our opinion, the accompanying unaudited interim condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates, and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of March 31, 2025 and its results of operations, cash flows, and changes in stockholders' deficit for the three months ended March 31, 2025 and 2024. The results for the three months ended March 31, 2025 are not necessarily indicative of the results expected for any future period or the full year.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the "Securities Act"), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, the "Exchange Act") are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of the extended transition period, which means that when a standard is issued or revised and it has different application dates for public and private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Use of Estimates

The preparation of our unaudited interim condensed consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and related disclosures. The preparation of the unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited interim condensed consolidated financial statements, and reported amounts of revenue and expenses during the reporting period. The Company’s significant estimates and judgments involve derivatives and warrant liabilities and the valuation of equity financing. Accordingly, actual results could differ from those estimates.

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GUERRILLA RF, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Concentrations of Credit Risk and Major Customers

Financial instruments at March 31, 2025, and December 31, 2024 that potentially subject the Company to concentration of credit risk consist primarily of cash and accounts receivable. The Company’s cash is deposited with major financial institutions in the U.S. At times, deposits in financial institutions located in the U.S. may be in excess of the amount of insurance provided on such deposits by the Federal Deposit Insurance Corporation (FDIC). To date, the Company has not experienced any losses on its cash deposits.

The Company’s accounts receivable are derived from revenue earned from customers located inside and outside of the U.S. Major customers are defined as those generating revenue in excess of 10% of the Company’s aggregate annual revenue. The Company had one major distributor customer, Richardson RFPD, Inc. ("RFPD"). RFPD, a large product distributor serving numerous end-user customers, accounted for 72% and 82% of product shipment revenue for the three months ended March 31, 2025 and 2024, respectively. Accounts receivable from RFPD represented 69% and 81% of accounts receivable at March 31, 2025 and December 31, 2024, respectively.

Accounts Receivable

Accounts receivable primarily relate to amounts due from customers, which are typically due within 30 to 45 days. Accounts receivable also include royalty revenue from our one royalty agreement. The Company provides credit to its customers in the ordinary course of business and evaluates the need for a provision to be added to its allowance for expected credit losses. The allowance represents the Company’s best estimate of expected credit losses it may experience in the Company’s accounts receivable portfolio. Management estimates the allowance for expected credit losses based on an ongoing review of existing economic conditions, the financial conditions of the customers, historical trends in credit losses, and the amount and age of past due accounts. The Company does not require collateral or other security for accounts receivable. To reduce credit risk with accounts receivable, the Company performs ongoing evaluations of its customers’ financial condition. The Company establishes an allowance for expected credit losses and other customer claims. Historically, such losses have been immaterial and within management's expectations; therefore, the Company does not currently have an allowance for expected credit losses.

The Company has a loan facility (the 'Spectrum Loan Facility') with a specialty lender, Spectrum Commercial Services Company, L.L.C ('Spectrum'). The Spectrum Loan Facility provides for advance payments up to $3.75 million, calculated, in part, based on the value of eligible accounts receivable assigned to Spectrum as security for advances under the Spectrum Loan Facility. As of March 31, 2025, there were $1.3 million of advances outstanding under the Spectrum Loan Facility. At March 31, 2025, $123 thousand of excess collateral was due from Spectrum, which is included in accounts receivable on the unaudited interim condensed consolidated balance sheets. See Note 5 for additional discussion on the Spectrum Loan Facility.

Revenue Recognition

The Company recognizes product revenue when it satisfies a performance obligation by transferring a product or service to its customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products and services. Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Any shipping and handling fees charged to customers in conjunction with product distribution are reported within revenue. The Company does not have any significant financing components as payment is received at or shortly after the point of sale. The Company provides an assurance-type warranty to its customers as part of its contracts' standard terms and conditions, which does not include a right of return for properly functioning products not deemed obsolete. These warranties do not provide an additional distinct service to the customer and are not deemed a separate performance obligation. Royalty revenue is recognized at the later of when the subsequent sale or usage occurs, or the performance obligation to which some or all the sales-based royalties have been allocated are satisfied.

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GUERRILLA RF, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of March 31, 2025 and 2024, the Company had $0 of revenue from contracts with customers to be recognized over time as the services are delivered to the customer. Certain nonrecurring engineering service revenues are recognized over time as the services are delivered to the customer. As of March 31, 2025 and 2024, the Company did not have any contractual liabilities where performance obligations have not yet been satisfied. During the quarters ended March 31, 2025 and 2024, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods.

The costs incurred by the Company for shipping and handling of materials used in its products are classified as cost of revenue in the unaudited interim condensed consolidated statements of operations. Any incidental items that are immaterial in the context of a sale to a customer are recognized as expense.

Share-Based Compensation

The Company measures and recognizes compensation expense for all stock options, shares of stock, and restricted stock units ("RSU") awarded to employees and nonemployees based on the estimated fair market value of the award on the grant date. The Company uses the Black-Scholes option-pricing model to estimate the fair value of its stock option awards. The Company estimates the fair value of RSUs awarded based upon the known fair market value of the underlying shares on the grant date. The Company recognizes compensation expense on a straight-line basis over the applicable vesting period. In addition, the Company accounts for forfeitures of awards as they occur.

Estimating the fair market value of options requires the input of subjective assumptions, including the expected life of the options, stock price volatility, the risk-free interest rate, and expected dividends. Therefore, the assumptions used in the Company’s Black-Scholes option-pricing model represent management’s best estimates.

The Company applies ASU 2018-7, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Share-based awards issued to non-employees are no longer required to be revalued at each reporting period.

Net Loss Per Share

Basic net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during each period. Diluted net loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as options and warrants, which would result in the issuance of incremental shares of common stock.

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GUERRILLA RF, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following potentially dilutive securities have been excluded from the computation of basic shares for the three months ended March 31, 2025 and 2024 (unaudited), as they would be anti-dilutive:

		*Three Months Ended March 31,*
	*2025*		*2024*
Series A convertible preferred stock		7,213,115		-
Common stock warrants		5,780,955		2,839,633
Restricted stock units		453,927		497,555
Stock options		343,958		570,748
		13,791,955		3,907,936

Convertible Debt Instruments

The Company evaluates agreements, including any convertible debt instruments to determine if those agreements or any embedded components of those agreements qualify as derivative financial instruments to be separately accounted for in accordance with FASB ASC Topic 815 “Derivatives and Hedging” (“ASC 815”). The accounting treatment of derivative financial instruments requires that the Company record any bifurcated embedded features at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded in earnings as non-operating, non-cash income or expense. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the agreement is reclassified as of the date of the event that caused the reclassification. Bifurcated embedded features are recorded at their initial fair values which create additional debt discount to the host instrument. The Company amortizes the respective debt discount over the term of the notes, using the effective interest method.

Convertible Preferred Stock

The Company has 10,000,000 shares of preferred stock authorized for issuance, of which, 22,000 shares have been designated as “Series A convertible preferred stock”, par value $0.0001 per share, which have a stated value of $1,000 per share and are initially convertible into 7,213,115 shares of the Company’s common stock. Holders of the Series A convertible preferred stock are entitled to vote on an as-converted basis with the Company’s common stockholders. The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders’ equity.

The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with Topic 815 of the FASB ASC. The accounting treatment of derivative financial instruments requires that the Company record embedded conversion options and any related freestanding instruments at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. The Company primarily uses the Black-Scholes option pricing model and Monte Carlo simulations to estimate the fair value of its warrants including those issued in connection with preferred stock. The Black-Scholes option pricing model and Monte Carlo simulations include subjective input assumptions that can materially affect the fair value estimates.

Fair Value of Financial Instruments

The Company measures the fair value of financial assets and liabilities based on ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities;

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable; and

Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions).

The carrying amounts of the Company’s financial instruments, such as cash and accounts payable approximate fair values due to the short-term nature of these instruments.

See Note 8 – Derivative Liabilities and Warrant Liabilities for additional details regarding the valuation technique and assumptions used in valuing Level 3 inputs.

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GUERRILLA RF, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Liquidity and Going Concern

The Company has incurred substantial negative cash flows from operations in nearly every fiscal period since inception. For the three months ended March 31, 2025, the Company incurred a net loss of $3.5 million and used $2.3 million in cash to fund operations. As a result, the Company had an accumulated deficit of $57.3 million as of March 31, 2025. The Company's cash and working capital as of March 31, 2025 was $6.1 million and $3.2 million, respectively. During the quarter ended March 31, 2025, the Company implemented significant cost reduction measures focused on organizational efficiency. These actions are expected to meaningfully improve both the Company's cash position and profit margin going forward. The Company plans to continue to invest in the implementation of its long-term strategic plan and anticipates that it will reduce cash burn from historical levels so that cash reserves will provide the necessary working capital to conclude the Company is a going concern.

Our primary source of liquidity has been from cash raised from private placements and debt financing. We also have a loan facility for up to $3.75 million with a specialty lender (referred to as the Spectrum Loan Facility, described in Note 5 to our unaudited interim condensed consolidated financial statements). As of March 31, 2025, we had drawn down $1.3 million under the Spectrum Loan Facility. As a result of a combination of our recent cost reduction measures, our cash and the additional availability under the Spectrum Loan Facility, the Company believes that its existing cash and cash equivalents will provide sufficient resources to support operations and cover existing contractual obligations and other obligations that may arise through the next 12 months.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Income Tax-Improvements to Income Tax Disclosures (Topic 740), which requires enhanced disclosures, including specific categories and disaggregation of information in the effective tax rate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations. This guidance is effective for annual reporting periods beginning after December 15, 2024. Early adoption is permitted and should be applied on a prospective basis, however retrospective application is permitted. The Company is currently evaluating the impact of adopting this guidance on its consolidated and condensed financial statements and disclosures included within notes to consolidated and condensed financial statements.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to require more detailed disclosures about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement. This guidance is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted and may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements and related disclosures

The Company has reviewed all other recently issued accounting pronouncements and concluded they were either not applicable or not expected to have a material impact on its unaudited interim condensed consolidated financial statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

3. INVENTORIES

Inventories are summarized as follows:

	*March 31, 2025*			*December 31, 2024*
	(unaudited)
Raw materials	$	602,466		$	740,543
Work-in-process		150,841			153,004
Finished goods		1,238,320			1,169,397
Inventory allowance		(210,045	)		(224,574	)
Inventories, net	$	1,781,582		$	1,838,370

4. PROPERTY AND EQUIPMENT

Property and equipment is summarized as follows:

	*March 31, 2025*			*December 31, 2024*
	(unaudited)
Production assets	$	2,417,236		$	2,276,386
Computer equipment and software		993,092			993,092
Lab equipment		3,500,243			3,498,894
Office furniture and fixtures		1,301,411			1,299,856
Leasehold improvements		171,257			171,257
Construction in progress		23,741			-
		8,406,980			8,239,485
Less accumulated depreciation		(6,040,075	)		(5,746,130	)
	$	2,366,905		$	2,493,355

Depreciation and amortization expense was $303,228 and $366,281 for the three months ended March 31, 2025 and 2024, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

5. DEBT

Spectrum Loan Facility

On June 1, 2022 (the "Spectrum Effective Date"), the Company entered into the Spectrum Loan Facility with Spectrum. Pursuant to the terms of the General Credit and Security Agreement (the "Credit Agreement"), the Company could borrow monies to purchase eligible equipment in an amount equal to the lesser of (i) 75% of the cost of such eligible equipment and (ii) $500,000; provided that this maximum eligibility would automatically be reduced by 1/48 ^th each month during the term of the facility. The Credit Agreement also allowed for additional borrowing in an amount equal to the lesser of (i) 50% of the net amount of eligible inventory (as defined in the Credit Agreement), (ii) $350,000, and (iii) 50% of the purchased accounts receivable outstanding under the related Assignment of Accounts and Security Agreement (the “AR Agreement”).

Under the terms of the AR Agreement, Spectrum agreed to advance funds equal to approximately 85% of eligible accounts receivable that are collected by Spectrum under a “lock box” arrangement. On February 20, 2024, Spectrum increased the maximum amount that may be advanced under the AR Agreement from $3.0 million to $3.75 million less any amounts loaned under the Credit Agreement. In addition, the annual facility fee was increased to $37,500.

The initial term of the Spectrum Loan Facility was 24 months from the Spectrum Effective Date. The term of the facility automatically renews for an additional two-year period unless either party provides at least 60 days’ notice prior to the expiration date. The term automatically renewed on June 1, 2024. Subject to certain exceptions, in the event of an early termination of the AR Agreement by the Company or resulting from the Company’s default or other circumstances impacting the Company (including bankruptcy, reorganization, sale of assets, and cessation of business), the Company will be required to pay a prepayment fee.

The Company’s obligations under the Spectrum Loan Facility are secured by first-priority liens on essentially all of the Company’s assets; provided, however, that the Company is permitted to grant purchase money security interests on certain equipment, furniture and similar tangible assets financed by a third party.

In addition to annual facility fees of $37,500 and other quarterly and transaction fees payable to Spectrum, interest accrues on amounts owed under the Spectrum Loan Facility at the prime rate as quoted by the Wall Street Journal plus 3.5%, but in no event lower than 7.0%.

The Spectrum Loan Facility contains various covenants and restrictions on the Company's financial and business operations including restrictions on the purchase or redemption of any Company shares and the declaration or payment of any dividends on the Company's stock. As of March 31, 2025, the Company was in compliance with these covenants and restrictions.

The Company has borrowed $1.3 million under the Spectrum Loan Facility as of March 31, 2025. The Company includes the interest expense of the Spectrum Loan Facility ($30 thousand) as part of its interest expense on its unaudited interim condensed consolidated statements of operations, and the total amount of $1.3 million borrowed under the Spectrum Loan Facility is included as short-term debt on the consolidated balance sheet as of March 31, 2025.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Salem Loan Facility

The Company entered into a loan facility (the “Salem Loan Facility”) with Salem Investment Partners V, Limited Partnership (“Salem”) on August 11, 2022. It was subsequently amended, with the most recent amendment on August 2, 2024. As of March 31, 2025, the principal balance owed under the Salem Loan Facility, is $4.5 million. It accrues interest at a rate of 12% per annum, payable monthly. The principal under the Salem Loan Facility is payable as follows: (i) $0.5 million on or before December 31, 2025, (ii) $1.0 million on or before December 31, 2026, and (iii) $1.5 million on or before each of December 31, 2027 and 2028. As of March 31, 2025, the carrying value of the amount financed under the Salem Loan Facility approximates its fair value as the interest rate is equal to the Company's market rate for equivalent financing terms.

As of March 31, 2025, debt is expected to mature as follows:

2025	$	1,981,181
2026		1,214,904
2027		1,686,449
2028		1,539,525
2029		-
Thereafter		-
	$	6,422,059

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GUERRILLA RF, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

6. COMMON STOCK AND PREFERRED STOCK

Common Stock

The Company is authorized to issue 50,000,000 and 300,000,000 shares of common stock with a par value of $ 0.0001 as of March 31, 2025 and 2024, respectively. Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Subject to preferences that may apply to any outstanding preferred stock, holders of common stock are entitled to receive ratably any dividends that the Company’s Board of Directors may declare out of funds legally available for that purpose on a non-cumulative basis. No dividends had been declared through March 31, 2025.

On March 28, 2024, the Company completed the initial closing of the 2024 Private Placement as it entered into a Unit Purchase Agreement with investors pursuant to which the Company sold 2,015,293 units (the “2024 Units”), each 2024 Unit consisting of one share of the Company’s common stock and one warrant to purchase one share of common stock. The purchase price of each 2024 Unit was $2.50, resulting in gross proceeds at this initial closing of approximately $5.0 million and net cash proceeds of approximately $3.0 million. There were estimated offering expenses of approximately $0.6 million and conversion of convertible debt and accrued interest of approximately $2.8 million. On April 7, 2024, the Company completed a second closing of the 2024 Private Placement. Altogether, the Company sold 2,071,293 2024 Units, resulting in gross proceeds of approximately $5.1 million before the deduction of estimated offering expenses, and net cash proceeds of approximately $3.0 million. On the issuance date the warrants were determined to be equity classified and had an aggregate issuance date relative fair value of $2.1 million using the Black-Scholes option pricing model with the following assumptions: expected volatility of 58%, risk-free rate of 4.21%, expected term of 5.5 years, and expected dividends of 0.00%.

See Note 5 – Debt – Salem Loan Facility for details regarding common stock issued in connection with debt.

See Note 7 – Share-Based Compensation - Restricted Stock Unit ("RSU") Awards for details regarding RSU grants.

Common Stock Warrants

The 2024 Units sold in the 2024 Private Placement included warrants to purchase a total of 2,071,293 shares of common stock, which warrants were issued upon the final closing of the 2024 Private Placement. Each warrant is exercisable for a period of five years beginning six months following the final closing of the 2024 Private Placement. On August 5, 2024, the Company completed a private placement (the “North Run Private Placement”), which included the issuance of warrants to purchase an aggregate of 2,885,246 shares of common stock at an exercise price of $3.05 per share. Each warrant is exercisable for a period of five and a half years beginning on the closing date of the North Run Private Placement and were determined to be classified as liabilities on the issuance date and as of March 31, 2025. As of March 31, 2025, the total amount of outstanding common stock warrants is 5,780,955. See Note 8 – Fair Value Measurement – Warrant Liabilities for additional details regarding the Company’s outstanding warrants.

A summary of the warrant activity during the three months ended March 31, 2025 is presented below:

	Number of Warrants		Weighted Average Exercise Price		Weighted Average Remaining Life in Years		Intrinsic Value
Outstanding, January 1, 2025		5,780,955	$	4.00
Issued		-		-
Exercised		-		-
Expired		-		-
Canceled		-		-
Outstanding, March 31, 2025		5,780,955	$	4.00		4.5	$	-

Exercisable, March 31, 2025		5,780,955	$	4.00		4.5	$	-

The following table presents information related to stock warrants at March 31, 2025:

Warrants Outstanding				Warrants Exercisable

Exercise Price		Outstanding Number of Warrants		Weighted Average Remaining Life in Years		Exercisable Number of Warrants
$	2.50		2,071,293		4.5		2,071,293
$	3.05		2,885,246		4.9		2,885,246
$	7.80		177,490		3.4		177,490
$	12.00		646,926		3.3		646,926
			5,780,955		4.5		5,780,955

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GUERRILLA RF, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Preferred Stock

The Company’s Board of Directors is authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series, and to fix the designation, powers, preferences, and rights of the shares of each series. There were 22,000 issued and outstanding shares of preferred stock as of March 31, 2025 and December 31, 2024.

On August 5, 2024, the Company completed the North Run Private Placement, selling (i) an aggregate of 22,000 shares of Series A convertible preferred stock (the “Preferred Shares”), which are initially convertible into 7,213,115 shares (the “Conversion Shares”) of the Company’s common stock, and (ii) warrants to purchase an aggregate of 2,885,246 shares of common stock at an exercise price of $3.05 per share (the 'North Run Warrants') for an aggregate gross purchase price of $22.0 million. The securities were sold to NR-PRL Partners, LP, a Delaware limited partnership and an affiliate of North Run Capital, LP (the “Buyer”) pursuant to a Securities Purchase Agreement entered into by the Company and the Buyer on August 2, 2024 (the “Purchase Agreement”). The net proceeds from the North Run Private Placement was approximately $21.6 million after transaction expenses.

For so long as the Buyer of the Preferred Shares beneficially owns at least 20% of the Conversion Shares underlying the Preferred Shares issued pursuant to the Purchase Agreement (the “Buyer Ownership Condition”), the Company may not, without the consent of Buyer, create, authorize, or issue shares of capital stock that are senior or pari passu to the Preferred Shares; incur aggregate indebtedness for borrowed money (subject to certain exceptions) in excess of $10.0 million; change its line of business; or amend, alter or repeal any provision of the Amended and Restated Certificate of Incorporation or bylaws in a manner that adversely affects the special rights, powers and preferences of the Preferred Shares. In addition, the Purchase Agreement provides that, for so long as the Buyer Ownership Condition is satisfied, the Company may not, without the consent of Buyer, issue more than 10% of its outstanding shares of common stock as of August 2, 2024 (subject to exceptions for stock plans and acquisitions) or within 120 days of the closing of the offering issue any equity securities (subject to exceptions for stock plans and acquisitions).

The Purchase Agreement required that the Board of Directors of the Company increase the size of the Board from eight to ten directors and appoint each of Thomas B. Ellis and Todd B. Hammer (the “Board Designees”) to the Board effective immediately following the closing of the offering. The Purchase Agreement further provides that, at any stockholders’ meeting at which directors are to be elected and for so long as the Buyer satisfies the Buyer Ownership Condition, the Board will nominate and recommend the reelection of any Board Designees whose terms of office expire at such stockholder meeting.

Under the Purchase Agreement, the Company has agreed that for so long as the Buyer Ownership Condition is satisfied, the Buyer will have a right to participate on a pro rata basis in equity financings or issuances of securities convertible, exercisable, or exchangeable into equity securities of the Company or any subsidiaries (including debt securities with an equity component), subject to certain exceptions.

The Series A convertible preferred stock is subject to automatic redemption for cash upon a “Fundamental Transaction” by the Company, which includes a merger, sale of all or substantially all the assets of the Company, recapitalization, or the sale of more than 50% of the voting stock of the Company which results in the Series A convertible preferred stock being classified as temporary equity. In such event, the redemption price would be equal to the greater of the stated value of the Series A convertible preferred stock or the consideration per share of common stock in the Fundamental Transaction (or in the absence of such consideration, the volume-weighted average price of the Company’s common stock immediately preceding the closing of the Fundamental Transaction). Additionally, after analyzing the cashless exercise provision within the North Run Warrants, the Company has determined that the North Run Warrants are classified as liabilities to be carried at fair value (See Note 8 – Fair Value Measurement – Warrant Liabilities for additional details). As a result, the Company allocated the gross proceeds and offering costs to the Preferred Shares and the North Run Warrants on a fair value basis. As a result, the Company recorded approximately $20.4 million of gross proceeds, which was partially offset by $403 thousand of offering costs, with a credit to temporary equity to account for the Preferred Shares. Additionally, the Company initially recorded a warrant liability of approximately $1.6 million to account for the North Run Warrants, and expensed approximately $31 thousand of offering costs which were allocated to the North Run Warrants. The Company has not made any adjustments to the carrying value of the Series A convertible preferred stock to reflect the redemption value of the shares upon a change of control because the Company has determined that a change of control event is not probable of occurring.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

7. SHARE-BASED COMPENSATION

In 2014, the Company adopted the Long‐Term Stock Incentive Plan (the “2014 Plan”), with 94,667 shares of common stock authorized for issuance under the 2014 Plan. Subsequently, stockholders approved an increase in the number of shares available under the 2014 Plan to 210,000 shares. Exercise prices range from $4.20 to $9.42 per share, depending on the date of the award. No further awards may be made under the 2014 Plan.

In 2021, the Board adopted the Equity Incentive Plan (the “2021 Plan”), which authorizes the award of stock options, restricted stock awards, stock appreciation rights, RSUs, performance awards, cash awards, and stock bonus awards. The Company initially reserved 37,166 shares of common stock, plus any reserved shares not issued or subject to outstanding grants under the 2014 Plan on the effective date of the 2021 Plan, for issuance pursuant to awards granted under the 2021 Plan. The number of shares reserved for issuance under the 2021 Plan will increase automatically on January 1 each year until 2031 by the number of shares equal to the lesser of 5% of the total number of outstanding shares of our common stock as of the immediately preceding December 31, or a number as may be determined by our Board.

The general purpose of the 2014 Plan and the 2021 Plan is to allow the Company to attract and motivate key employees and directors to align their interests with those of the Company’s shareholders.

Stock Option Awards

No stock options were granted in the three months ended March 31, 2025 and 2024.

The value of stock options is recognized as compensation expense by the straight-line method over the vesting period. Unrecognized compensation costs related to non‐vested options at March 31, 2025 amounted to $128,157, which are expected to be recognized over a weighted average term of 1.09 years.

Stock option activity by share is summarized as follows for the three months ended March 31, 2025 (unaudited):

	*Number of Shares*			*Weighted-Average Exercise Price Per Option*		*Weighted- Average Remaining Contractual Life (in years)*		*Intrinsic Value*
Shares underlying outstanding awards at January 1, 2025		348,467		$	4.55		3.59
Granted		-			-
Exercised		-			-
Expired		(1,625	)		3.19
Cancelled/forfeited		(2,884	)		10.52
Shares underlying outstanding awards at March 31, 2025		343,958		$	4.50		4.60		5,960
Exercisable options at March 31, 2025		317,949		$	3.90		4.37		5,960

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GUERRILLA RF, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Restricted Stock Unit Awards

There were 0 and 88,444 RSUs awarded to employees during the three months ended March 31, 2025 and 2024, respectively. The RSUs are subject to the recipient’s continued service through the applicable vesting dates. Unrecognized compensation costs related to non‐vested RSUs at March 31, 2025 amounted to $940,768, which are expected to be recognized over a weighted average term of 1.24 years.

The fair value of each RSU was estimated on the date of grant, based on the weighted average price of the Company's stock. The Company will issue new shares of common stock to satisfy RSUs upon vesting. The following table summarizes the RSU activity and weighted averages for share-based awards granted under the terms of the 2021 Plan:

	*Three Months Ended March 31, 2025*
	Number of RSUs			Weighted Average Grant Date Fair Value
Outstanding at January 1, 2025		575,042		$	5.44
Granted		-
Vested		(88,638	)		7.29
Cancelled/forfeited		(32,477	)		3.86
Outstanding at March 31, 2025		453,927		$	3.54

Pursuant to awards made under the 2014 Plan and the 2021 Plan, the Company recorded stock-based compensation expense in the following expense categories in the unaudited interim condensed consolidated statements of operations for the three months ended March 31, 2025 and 2024:

		*Three Months Ended March 31,*
	*2025*		*2024*
Direct product costs	$	27,047	$	24,982
Research and development		83,402		126,344
Sales and marketing		47,462		65,692
General and administrative		206,000		179,179
	$	363,911	$	396,197

No income tax benefits have been recognized in the unaudited interim condensed consolidated statements of operations for stock-based compensation arrangements, and no stock-based compensation costs have been capitalized as property and equipment through March 31, 2025.

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GUERRILLA RF, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

8. FAIR VALUE MEASUREMENT

Warrant Liabilities

The Company determined that the North Run Warrants should be accounted for as Level 3 warrant liabilities and carried at their fair value computed using a Black-Scholes call option model.

In connection with the North Run Private Placement, the Company determined it should reclassify warrants to purchase an aggregate 2,895,709 shares of common stock (the “Historical Warrants”) as Level 3 warrant liabilities and carried at fair value using a Black-Scholes call option model pursuant to the analysis of a certain tender offer provision (the “Tender Offer Provision”) within the Historical Warrants wherein, in the event of a cash tender or exchange offer made to and accepted by holders of more than 50% of the outstanding shares of the Company’s common shares, all holders of the warrants would be entitled to receive cash for their warrants.

The following table summarizes the Black-Scholes assumptions used during the three months ended March 31, 2025:

	*For the Three Months Ended March 31, 2025*
Risk free interest rate		3.89% - 3.96%
Expected term (years)		2.07 - 4.9
Expected volatility		40.56% - 42.71%
Expected dividends		0.00%

The following table sets forth a summary of the changes in the fair value of Level 3 warrant liabilities that are measured at fair value on a recurring basis:

Beginning balance as of January 1, 2025	$	1,495,516
Change in fair value of warrant liabilities		235,896
Ending balance on March 31, 2025	$	1,731,412

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GUERRILLA RF, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

9. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company determines whether an arrangement is an operating lease or financing lease at inception. Lease assets and obligations are recognized at the lease commencement date based on the present value of lease payments over the term of the lease. The Company generally uses its incremental borrowing rate, which is based on information available at the lease commencement date, to determine the present value of lease payments.

The Company has entered into leases primarily for real estate and equipment used in research and development. Operating lease expense is recognized in continuing operations by amortizing the amount recorded as an asset on a straight-line basis over the lease term. Financing lease expense is comprised of both interest expense, which will be recognized using the effective interest method, and amortization of the right-of-use assets. These expenses are presented consistently with other interest expense and amortization or depreciation of similar assets. In determining lease asset values, the Company considers fixed and variable payment terms, prepayments, incentives, and options to extend, terminate or purchase. Renewal, termination, or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised.

Balance sheet information related to right-of-use assets and liabilities is as follows:

	*Balance Sheet Location*	*March 31, 2025*
Operating Leases:
Operating lease right-of-use assets	Operating lease right-of-use assets	$	9,149,202

Current portion of operating lease liabilities	Operating lease, current portion		601,721
Noncurrent portion of operating lease liabilities	Operating lease		5,505,225
Total operating lease liabilities		$	6,106,946

Finance Leases:
Finance lease right-of-use assets	Property, plant, and equipment	$	1,181,750

Current portion of finance lease liabilities	Finance lease, current portion		634,137
Noncurrent portion of finance lease liabilities	Finance lease		674,482
Total finance lease liabilities		$	1,308,619

Lease cost recognized in the unaudited interim condensed consolidated statements of operations is summarized as follows:

	*For the Three Months Ended March 31,*
	*2025*		*2024*
Operating lease cost	$	482,877	$	476,891

Finance lease cost:
Amortization of lease assets		188,546		265,969
Interest on lease liabilities		28,387		45,809
Total finance lease costs	$	216,933	$	311,778

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GUERRILLA RF, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Other supplemental information related to leases is summarized as follows:

	*March 31, 2025*
Weighted average remaining lease term (in years):
Operating leases		7.76
Finance leases		2.17

Weighted average discount rate:
Operating leases		11.02	%
Finance leases		8.36	%

Cash paid for amounts included in the measurement of lease liabilities for the three months ended March 31, 2025:
Operating cash flows from operating leases	$	365,497
Operating cash flows from finance leases	$	28,133
Financing cash flows from finance leases	$	187,270

The following table summarizes our future minimum payments under contractual obligations for operating and financing liabilities as of March 31, 2025 :

	Payments Due by Period
	2025⁽¹⁾		2026		2027		2028		2029		Thereafter		Total
Operating leases	$	949,865	$	1,117,942	$	1,076,140	$	1,096,206	$	1,116,675	$	3,773,474	$	9,130,302
Less present value adjustment		479,712		583,434		524,555		460,933		384,684		590,038		3,023,356
Operating lease liabilities	$	470,153	$	534,508	$	551,585	$	635,273	$	731,991	$	3,183,436	$	6,106,946

Finance leases	$	547,489	$	670,301	$	157,033	$	49,836	$	13,418	$	-	$	1,438,077
Less interest		67,697		45,800		11,677		4,100		184		-		129,458
Finance lease liabilities	$	479,792	$	624,501	$	145,356	$	45,736	$	13,234	$	-	$	1,308,619

⁽¹⁾ Amounts are for the remaining nine months ending December 31, 2025.

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GUERRILLA RF, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Legal

In the ordinary course of business, the Company may become involved in legal disputes. In the opinion of management, any potential liabilities resulting from any disputes would not have a material adverse effect on the Company’s unaudited interim condensed consolidated financial statements. As a result, no liability related to any such disputes has been recorded at March 31, 2025, or December 31, 2024.

Indemnification Agreements

From time to time, in the ordinary course of business, the Company may indemnify other parties when it enters into contractual relationships, including members of the Board of Directors, employees, customers, lessors, lenders, and parties to other transactions with the Company. In addition, the Company may agree to hold other parties harmless against specific losses, such as those that could arise from a breach of representation, covenant, or third-party infringement claims. It may not be possible to determine the maximum potential amount of liability under such indemnification agreements due to the unique facts and circumstances likely to be involved in each particular claim and indemnification provision. Management believes any liability arising from these agreements will not be material to the unaudited interim condensed consolidated financial statements. As a result, no liability for these agreements has been recorded at March 31, 2025, or December 31, 2024.

10. SEGMENT INFORMATION

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company has one operating segment which develops high-performance MMIC products for wireless connectivity. The Company’s Chief Executive Officer, Ryan Pratt, is the Chief Decision Maker and reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. The Company does not assess the performance of its individual product lines on measures of profit or loss, or asset-based metrics.

The table below presents the Company’s consolidated operating results including significant segment expenses for the three months ended March 31, 2025 and 2024:

	*For the Three Months Ended March 31,*
	*2025 (unaudited)*			*2024 (unaudited)*
Revenue	$	4,372,904		$	5,091,249
Less:
Direct materials		1,179,652			1,307,657
Other direct product costs (a)		523,128			563,018
Gross Profit		2,670,124			3,220,574
Operating Expenses:
Research and development		2,492,927			2,251,533
Sales and marketing		1,885,465			1,352,909
General and administrative		1,453,560			1,454,695
Total Operating Expenses		5,831,952			5,059,137

Segment Operating Loss		(3,161,828	)		(1,838,563	)

Total Other Expense, net		(381,037	)		(1,533,989	)
Net Loss	$	(3,542,865	)	$	(3,372,552	)

(a)	Includes shipping costs, intangible amortization and overhead.

11. RELATED PARTY TRANSACTIONS

As of March 31, 2025 and December 31, 2024, Salem is identified as a related party as a result of having in excess of a 10% beneficial ownership interest in the Company’s common stock. See Note 5 – Debt – for additional details regarding the Salem Loan Facility.

12. EMPLOYEE BENEFIT PLAN

The Company has a 401(k) plan to provide defined contribution retirement benefits for all eligible employees. Participants may contribute a portion of their compensation to the plan, subject to the limitations under the Code. The Company’s contributions to the plan are at the discretion of executive management with board of directors advisement. Under the 401(k) plan, the Company may contribute up to four percent (4%) of eligible employee salaries. The Company made $83,324 and $82,621 of contributions to the plan in the three months ended March 31, 2025 and 2024, respectively.

13. SUBSEQUENT EVENTS

None.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our financial condition and results of operations, as well as other sections in this Quarterly Report on Form 10-Q, should be read together with the unaudited interim condensed consolidated financial statements and related notes included elsewhere in Item 1 of Part I of this Quarterly Report on Form 10-Q and with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 as filed with the SEC on March 27, 2025.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the exhibits hereto and the information incorporated by reference herein, sections entitled “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business”, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to risks and uncertainties. Information regarding activities, events, and developments that we expect or anticipate will or may occur in the future, including, but not limited to, information relating to our future growth and profitability targets and strategies designed to increase total shareholder value, are forward-looking statements based on management’s estimates, assumptions and projections. Forward-looking statements also include, but are not limited to, statements regarding our future economic and financial condition and results of operations, the plans and objectives of management and our assumptions regarding our performance and such plans and objectives, as well as the amount and timing of other uses of cash flows. Forward-looking statements generally can be identified through the use of words such as “guidance,” "believe,” “could,” “potential,” “continue,” “outlook,” “project,” “believe,” “target,” “predict,” “estimate,” “forecast,” “strategy,” “may,” “goal,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” “should” and other similar expressions that do not relate solely to historical matters. Forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management. Although we believe that the expectations reflected in forward-looking statements are reasonable, such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by forward-looking statements.

Forward-looking statements contained in this Quarterly Report on Form 10-Q are predictions only, and actual results could differ materially from management’s expectations due to a variety of factors, including those described below. All forward-looking statements are expressly qualified in their entirety by such risk factors.

The forward-looking statements that we make in this Quarterly Report on Form 10-Q are based on management’s current views and assumptions regarding future events and speak only as of their dates. We disclaim any obligation to update developments of these risk factors or to announce publicly any revisions to any of the forward-looking statements that we make, or to make corrections to reflect future events or developments, except as required by the federal securities laws.

Our business is subject to numerous risks and uncertainties, including the following:

● we may not be able to generate sufficient cash to service all of our debt or meet our operating needs;

● we may not be able to achieve profitability or raise sufficient equity capital to support our operating needs and fund our strategic plans;

● international trade policies, including tariffs, sanctions and trade barriers may adversely affect our business, financial condition, results of operations and prospects;

● those relating to fluctuations in our operating results;

● our dependence on developing new products, achieving design wins, and several large customers for a substantial portion of our revenue;

● a loss of revenue if purchase contracts are canceled or delayed;

● our dependence on third parties such as suppliers, product manufacturers, and product assemblers and testers;

● risks related to sales through independent sales representatives and distributors;

● risks associated with the operation of our third-party manufacturing providers;

● anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;

● our ability to further penetrate our existing customer base;

● our estimates regarding future revenues, capital requirements, general and administrative expenses, sales and marketing expenses, research and development expenses, and our need for or ability to obtain additional financing to fund our operations;

● developments and projections relating to our competitors and our industry, including semiconductor availability, which has affected the automotive industry, impacting vehicle production and thereby demand irregularities for our business;

● business disruptions;

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● poor manufacturing yields;

● increased inventory risks and costs due to the timing of customer forecasts;

● our ability to continue to innovate in a very competitive industry;

● unfavorable changes in interest rates, pricing of certain precious metals, utility rates, and shipping and freight costs;

● our strategic investments failing to achieve financial or strategic objectives;

● our ability to attract, retain, and motivate key employees;

● warranty claims, product recalls, and product liability;

● changes in our effective tax rate and the enactment of international or domestic tax legislation, or changes in regulatory guidance;

● risks associated with environmental, health and safety regulations, and climate change;

● risks from international sales and third-party vendor operations;

● the impact of, and our expectations regarding, changes in current and future laws and regulations;

● changes in government trade policies, including the imposition of tariffs and export restrictions;

● our ability to protect and enforce our intellectual property protection and the scope and duration of such protection;

● claims of infringement of third-party intellectual property rights;

● security breaches and other similar disruptions compromising our information;

● theft, loss, or misuse of personal data by or about our employees, customers, or third parties;

● our inability to remediate the material weakness identified in internal controls over financial reporting relating to certain control processes;

● provisions in our governing documents and Delaware law may discourage takeovers and business combinations that our stockholders might consider to be in their best interests; and,

● volatility in the price of our common stock.

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These and other risks and uncertainties, which are described in more detail in our most recent Annual Report on Form 10-K that we filed with the SEC and those listed under the caption "Risk Factors" within this Quarterly Report on Form 10-Q, could cause actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make.

You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or revised expectations, except as required by law.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q as exhibits with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect.

Overview

Guerrilla RF is a fabless semiconductor company based in Greensboro, NC. Guerrilla RF was founded in 2013 with a mission to employ RF semiconductor technology to deliver RF solutions to customers in underserved markets. Over the past several years, Guerrilla RF has become a leader in developing high-performance MMIC products for wireless connectivity. It continues to target underserved markets and customers, delivering a range of high-performance MMIC products and associated technical support to a diverse set of customers that enable a more connected world.

Guerrilla RF possesses in-house design, applications, sales, and customer support functions as a fabless semiconductor company. We outsource the manufacture and production of our MMIC products to subcontractors, providing access to multiple semiconductor process technologies. Guerrilla RF’s primary external wafer foundries are located in Taiwan and Singapore, and our primary assembly and test suppliers are located in Malaysia and the Philippines.

FIRST QUARTER FISCAL 2025 FINANCIAL HIGHLIGHTS

● Total revenues for the first quarter of fiscal 2025 declined 14% to $4.4 million, compared to $5.1 million in Q1 2024. A $1.4 million decline in wireless infrastructure shipments was primarily responsible, partially offset by a 72% increase in automotive revenue and modest gains in catalog sales for military, aerospace, and navigation products. The overall shift in the sales mix reflects weaker infrastructure sales and stronger automotive sales.

● Gross profit margin decreased to 61.1% in the first quarter of fiscal 2025, down from 63.3% in the first quarter of fiscal 2024. Contribution margin declined to 73.0% from 74.3% over the same period. This margin compression was primarily driven by a product‐mix shift from higher‑margin wireless infrastructure products to lower‑margin automotive business. Overhead costs were slightly down in the first quarter but as a percentage of sales they increased from 11% in first quarter 2024 to 12% in the first quarter 2025.

● Operating loss was $3.2 million in the first quarter of 2025, compared with $1.8 million in the first quarter of 2024. The $1.4 million increase resulted from a ($0.6 million) decline in gross profit driven by lower revenues and mix shift, ($0.4 million) in additional consulting fees, and ($0.4 million) of severance costs related to organizational rationalization. Operating expenses rose $0.7 million from $5.1 million in the quarter ended March 31, 2024, to $5.8 million in the quarter ended March 31, 2025 reflecting the same one‑time consulting and severance costs. The severance costs are a one-time occurrence, and are part of significant cost reduction measures focused on organizational efficiency that were executed in the quarter. These actions are expected to meaningfully improve both our cash position and profit margin going forward.

● Net loss per share was $0.34 and $0.42 for the first quarter of fiscal 2025 and 2024, respectively.

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Key Metrics (Non-GAAP Measures)

These non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of Company results as reported under GAAP. The Company compensates for such limitations by relying primarily on GAAP results and using non-GAAP measures only as supplemental data. In addition, because these non-GAAP measures are not measures of financial performance under GAAP and are susceptible to varying calculations, these measures, as defined by us, may differ from and may not be comparable to similarly titled measures used by other companies.

We regularly review the following key metrics to measure our performance, identify trends affecting our business, formulate financial projections, make strategic business decisions, and assess working capital needs.

	Three Months Ended March 31,
	2025 (unaudited)		2024 (unaudited)
Key Metrics
Number of products released		8		2
Number of total products		171		133
Number of products with lifetime revenue exceeding $100 thousand		76		67
Product backlog (in millions)	$	6.7	$	8.3

Number of products released: The total number of distinct new products released into production (products that have completed design, quality, and supply chain readiness) during the period.

Number of total products: The cumulative number of production-released products since our inception through the end of the period.

Number of products with lifetime revenue exceeding $100 thousand: The number of products that have achieved the threshold of cumulative sales of $100,000 since our inception through the end of the period.

Product backlog: The amount of product sales that have been committed to by customers, but have not yet been completed, shipped, or invoiced. The Company's product backlog can be materially impacted by supply chain constraints, a shift in customer ordering patterns whereby customers place orders in anticipation of extended product delivery lead times, or other customer order delivery request modifications. Furthermore, because the Company partners closely with a number of its customers to produce high-performance, quality components that are often designed into customers’ end products, immediate substitution of the Company’s products is neither typically desired by customers nor necessarily feasible. As such, the Company has not historically experienced significant order cancellations, and the Company does not expect significant order cancellations in the future. The Company closely monitors product backlog and its potential impact on the Company’s financial performance.

Components of Results of Operations

Revenues

We derive our revenue from sales of high-performance RF semiconductor products. We design, integrate, and package differentiated, semiconductor-based products that we sell to customers through our direct sales organization, a network of independent sales representatives, and distributors. We generate revenue from customers located within and outside the U.S. In addition to sales to customers, we generate royalty revenue under a royalty agreement with one semiconductor manufacturer.

Direct Product Costs and Gross Profit

Direct Product Costs. Our direct product costs consist of actual direct product expenses, salaries and related expenses, overhead, third-party services vendors, and depreciation expense related to the equipment and information technology costs incurred directly in the Company’s revenue-generating activities.

Gross Profit. Our gross profit is calculated by subtracting our cost of revenues from revenues. Gross margin is expressed as a percentage of total revenues. Our gross profit may fluctuate from period to period as revenues fluctuate due to the mix of products we sell to customers, royalty revenue volume, operational efficiencies, and changes to our technology expenses and customer support.

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We plan to focus on and grow the sales volume of new and existing products with the highest gross margin. We intend to continue investing additional resources in our engineering and design capabilities, which drive our research and development efforts and, in turn, drive additional revenue streams and enable us to improve our gross margin over time. The level and timing of investment in these areas could affect our cost of revenues in the future.

Operating Expenses

Operating expenses consist primarily of research and development expenses (R&D), sales and marketing expenses, and employee compensation costs for operations management, finance, accounting, information technology, compliance, and human resources personnel. In addition, general and administrative expenses include non-personnel costs, such as facilities, legal, accounting, and other professional fees, and other supporting corporate expenses not allocated to other departments. We expect our general and administrative expenses will increase in absolute dollars as our business grows, but we expect general and administrative expenses to decrease as a percent of revenues in the coming years.

R&D expenses consist of costs for the design, development, testing, and enhancement of our products and are generally expensed as incurred. These costs consist primarily of personnel costs, including salaries, benefits, bonuses, and share-based compensation for our product development personnel. Research and development expenses also include training costs, product management, third-party partner fees, and third-party consulting fees. We expect our research and development expenses to increase in absolute dollars as our business grows, but as a percent of revenues, R&D expenses are expected to decrease.

Sales and marketing expenses consist primarily of employee compensation costs related to sales and marketing, including salaries, benefits, bonuses, and share-based compensation, costs of general marketing activities and promotional activities, travel-related expenses, and allocated overhead. Sales and marketing expenses also include costs for advertising and other marketing activities. Advertising is expensed as incurred. As we expand our sales and marketing efforts, we expect our sales and marketing expenses will increase in absolute dollars.

Non-income taxes include excise taxes, sales and use taxes, capital stock and franchise taxes, and property taxes. Capital stock and franchise taxes are taxes that states charge the Company for the privilege of incorporating or doing business in a state.

Interest Expense

Interest expense consists primarily of the interest incurred on our debt obligations, our factoring arrangement expense, the non-cash interest expense associated with the amortization of common shares issued to certain of our debtholders, and lease expense related to our capital leases.

Results of Operations

The following table summarizes the results of our operations for the periods presented:

	Three Months Ended March 31,
	2025			2024
	(unaudited)			(unaudited)
Revenues	$	4,372,904		$	5,091,249
Direct product costs		1,702,780			1,870,675
Gross profit		2,670,124			3,220,574
Operating expenses:
Research and development		2,492,927			2,251,533
Sales and marketing		1,885,465			1,352,909
General and administrative		1,453,560			1,454,695
Total operating expenses		5,831,952			5,059,137
Operating loss		(3,161,828	)		(1,838,563	)
Other income (expenses):
Interest income		65,629			—
Interest expense		(210,770	)		(1,684,787	)
Change in fair value of warrant liabilities		(235,896	)		—
Change in fair value of derivative liabilities		—			158,000
Other income (expenses)		—			(7,202	)
Total other income (expenses), net		(381,037	)		(1,533,989	)
Net loss	$	(3,542,865	)	$	(3,372,552	)

Comparison of the three months ended March 31, 2025 and 2024 (unaudited):

	Three Months Ended March 31,
	2025		2024		$ Change			% Change
Revenues	$	4,372,904	$	5,091,249		(718,345	)		(14	)%

Revenues decreased $0.7 million to $4.4 million for the three months ended March 31, 2025, compared to $5.1 million for the three months ended March 31, 2024. A $1.4 million decline in wireless infrastructure shipments was primarily responsible for the decrease. This decline was partially offset by increases in automotive revenue of $0.9 million. All other product categories remained relatively consistent with the prior year period, with modest gains in catalog sales for military, aerospace and navigation products.

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Major customers; those responsible for more than 10% of annual product shipment revenue; accounted for a significant portion of sales in both periods. For the three months ended March 31, 2025 and 2024, RFPD, a large product distributor, represented 72% and 82% of product revenue, respectively. The year-over-year decrease in RFPD’s share reflects a higher proportion of sales transacted directly with end customers.

Our existing product sales declined from $4.4 million in the first quarter of 2024 to $3.4 million in the first quarter of 2025. New product sales increased from $0.6 million to $1.0 million over the same period. Revenue decreased in part because of a $1.5 million initial shipment to a new customer in the prior year, which did not repeat this year.

International shipments increased 63%, rising from $0.7 million in the first quarter of 2024 to $1.1 million in the first quarter of 2025, and accounted for approximately 26% of total revenues in Q1 2025.

Direct Product Costs and Gross Profit

	Three Months Ended March 31,
	2025		2024		$ Change			% Change
Direct product costs	$	1,702,780	$	1,870,675		(167,895	)		(9	)%
Gross profit	$	2,670,124	$	3,220,574		(550,450	)		(17	)%

Direct product costs decreased ($0.2 million) to $1.7 million for the three months ended March 31, 2025, compared to $1.9 million for the three months ended March 31, 2024. The 9% decrease was driven by a sales volume decrease of 14%. The lower drop in product costs when compared to sales resulted in gross profit compression due to lower volume and changes in product mix. Gross profit as a percentage of sales decreased from 63.3% for the first quarter of 2024, to 61.1% for the first quarter of 2025 driven by lower contribution margins from product mix shifts.

Research and Development Expenses

	Three Months Ended March 31,
	2025		2024		$ Change		% Change
Research and development	$	2,492,927	$	2,251,533		241,394		11	%

Research and development expenses increased $0.2 million to $2.5 million for the three months ended March 31, 2025, compared to $2.3 million for the three months ended March 31, 2024. This increase primarily reflects $0.1 million of severance expenses related to headcount rationalization and $0.1 million of higher facilities, IT support, and laboratory costs.

Sales and Marketing Expenses

	Three Months Ended March 31,
	2025		2024		$ Change		% Change
Sales and marketing	$	1,885,465	$	1,352,909		532,556		39	%

Sales and marketing expenses increased $0.5 million to $1.9 million for the three months ended March 31, 2025 compared to $1.4 million for the three months ended March 31, 2024. The increase reflects a $0.3 million increase in staffing costs to promote international market expansion, $0.3 million of severance from headcount rationalization, and $0.1 million of consulting fees for CRM implementation, partially offset by a $0.2 million reduction in facilities and support allocations.

General and Administrative Expenses

	Three Months Ended March 31,
	2025		2024		$ Change			% Change
General and administrative expenses	$	1,453,560	$	1,454,695		(1,135	)		(0	)%

General and administrative expenses remained flat at $1.5 million for the three months ended March 31, 2025 and 2024; a $0.2 million increase in consulting fees was offset by a $0.2 million decrease in franchise tax due to a 2024 overpayment.

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Other Income (Expenses)

	Three Months Ended March 31,
	2025			2024			$ Change			% Change
Interest income	$	65,629		$	—		$	65,629			100	%
Interest expense	$	(210,770	)	$	(1,684,787	)	$	1,474,017			(87	)%
Change in fair value of warrant liabilities	$	(235,896	)	$	—		$	(235,896	)		100	%
Change in fair value of derivative liabilities	$	—		$	158,000		$	(158,000	)		(100	)%
Other expense	$	-		$	(7,202	)	$	7,202			(100	)%
Total other expenses, net	$	(381,037	)	$	(1,533,989	)	$	1,152,952			(75	)%

Interest expense decreased $1.5 million to $0.2 million for the three months ended March 31, 2025, compared to $1.7 million for the three months ended March 31, 2024. The decrease was attributable to a significant paydown of two debt facilities. On August 5, 2024 the Company paid down the Salem Loan Facility by $7.5 million, leaving a remaining balance of $4.5 million. In addition, the Company utilized less of its asset-based loan during the first quarter of 2025. As of March 31, 2025, the amount drawn under the Spectrum Loan Facility was $1.3 million compared to $2.2 million on March 31, 2024.

The change in fair value of warrant liabilities increased by $0.2 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was the result of the remeasurement of the Historical Warrants and the North Run Warrants that are accounted for as liabilities and carried at fair value at March 31, 2025.

In addition, the Company had other contributors to other income including $0.1 million in interest income earned on funds deposited in a money market account which it did not have in the first quarter of 2024, and a change in its derivative liabilities, reflecting an decrease in fair value of $0.2 million.

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Liquidity and Capital Resources

Our primary source of liquidity has been cash raised from private placements and debt financing. As of March 31, 2025, we had cash resources of $6.1 million. We also have two loan facilities, one of which is for up to $3.75 million with a specialty lender (referred to as the Spectrum Loan Facility, described in Note 5 to our unaudited condensed consolidated financial statements), and the other of which is a $4.5 million term loan with a different lender (referred to as the Salem Loan Facility, also described in Note 5 to our unaudited condensed consolidated financial statements). As of March 31, 2025, we had drawn down $1.3 million under the Spectrum Loan Facility and had an outstanding balance of $4.5 million under the Salem Loan Facility.

On August 5, 2024, the Company completed the North Run Private Placement, raising cash proceeds of approximately $21.6 million, net of transaction expenses. Additionally, on August 2, 2024, the Company initiated the amendment of the Salem Loan Facility to (i) reduce the outstanding principal balance from $12.0 million to $4.5 million, (ii) extend the maturity date from January 31, 2026 to December 31, 2028, and (iii) reduce the interest rate from 14% (comprising 3% payment-in-kind (deferred) and 11% cash) to 12% cash. The amendment was effective on August 5, 2024 after the principal balance was reduced from $12.0 million to $4.5 million by using a portion of the proceeds from the North Run transaction.

The Company believes that its existing cash and cash equivalents will provide sufficient resources to support operations and cover existing contractual obligations and other obligations that may arise through the next 12 months.

We have incurred recurring losses and negative cash flows from operations since inception and have an accumulated deficit at March 31, 2025 of $57.3 million. We expect losses and negative cash flows to continue in the near term, primarily due to continued investment in research and development, sales and marketing efforts, and increased administration expenses as our Company grows. We plan to continue to invest in the implementation of our long-term strategic plan and we anticipate that we will continue to narrow cash burn from historical levels so that over time cash reserves will provide the necessary working capital to operate the Company.

Cash (used in) provided by:

	Three Months Ended March 31,
	2025			2024

Operating activities	$	(2,263,187	)	$	(842,394	)
Investing activities		(47,345	)		(26,000	)
Financing activities		470,591			3,687,786
Net increase (decrease) in cash	$	(1,839,941	)	$	2,819,392

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Operating Activities

Cash used in operating activities was $2.3 million for the three months ended March 31, 2025. Cash used in operating activities for the three months ended March 31, 2025 was principally due to our net loss of $3.6 million, non-cash items of $0.9 million, decrease in accounts receivables of $0.3 million and inventories of $0.1 million. For the three months ended March 31, 2025, non-cash items that were a part of the net operating loss included depreciation and amortization of $0.3 million, stock-based compensation of $0.4 million, and non-cash and change in fair value of warrant liabilities of $0.2 million.

Cash used in operating activities was $0.8 million for the three months ended March 31, 2024. Cash used in operating activities for the three months ended March 31, 2024 was principally due to our net loss of $3.4 million, non-cash items of $1.9 million, increase in accounts receivables of $0.7 million, inventories of $0.2 million, and offset by payable and accrued liabilities increase of $1.4 million. For the three months ended March 31, 2024, non-cash items that were a part of the net operating loss included depreciation and amortization of $0.4 million, stock-based compensation of $0.4 million, and non-cash and accretion of notes payable of $1.2 million.

Investing Activities

Cash used in investing activities was $47 thousand and $26 thousand for the three months ended March 31, 2025 and 2024, respectively. Cash used in investing activities resulted from the purchase of capital expenditures on property and equipment for all periods presented.

Financing Activities

Cash provided by financing activities for the three months ended March 31, 2025 of $0.5 million was due to $0.8 million of additional net debt financing and $0.3 million of payments related to finance leases and insurance premiums.

Cash provided by financing activities for the three months ended March 31, 2024 of $3.7 million was primarily attributable to net proceeds of $3.0 million from private placement equity financing, $1.0 million of additional net debt financing, and $0.3 million of payments related finance leases and insurance premiums.

Contractual Obligations and Commitments

The following summarizes our significant contractual obligations as of March 31, 2025 (unaudited).

	Payments due by period
	Total		Less than 1 year		1 – 3 years		4 – 5 years		More than 5 years
Purchase order obligations	$	782,724	$	782,724	$	—	$	—	$	—
Short-term notes		500,000		500,000		—		—		—
Long-term notes		4,000,000		—		4,000,000		—		—
Long-term debt		388,443		—		388,443		—		—
Short-term debt		1,533,616		1,533,616		—		—		—
Operating lease obligations		6,106,946		601,721		1,589,798		3,915,427		—
Finance lease obligations		1,308,619		634,137		661,248		13,234		—
Total	$	14,620,348	$	4,052,198	$	6,639,489	$	3,928,661	$	—

Off-Balance Sheet Arrangements

As of March 31, 2024 and December 31, 2024, we do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

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Critical Accounting Policies and Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires us to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet date and reported amounts of revenue and expenses during the reporting period. Our most significant estimates and judgments in the preparation of our unaudited interim condensed consolidated financial statements involve derivative and warrant liabilities and the valuation of equity financing. Accordingly, actual results may differ from these estimates. To the extent that there are differences between our estimates and actual results, our future consolidated financial statement presentation, financial condition, results of operations, and cash flows will be affected.

Other than as described under Note 2 to our audited consolidated financial statements and as described above, the Critical Accounting Policies and Significant Judgments and Estimates included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 27, 2025, have not materially changed.

We believe that the accounting policies described below involve a greater degree of judgment and complexity. Accordingly, these are the policies we think are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

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Recently Adopted Accounting Standards

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our unaudited interim condensed consolidated financial statements appearing elsewhere in this Quarterly Report.

JOBS Act Accounting Election

We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we are no longer an emerging growth company, or affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. We have not elected to early adopt certain new accounting standards, as described in Note 2 to our unaudited interim condensed consolidated financial statements. As a result, our unaudited interim condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 4. CONTROLS AND PROCEDURES.

Management’s Evaluation of our Disclosure Controls and Procedures

Under the supervision of and with the participation of our management, including our principal executive officer and our principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of March 31, 2025, the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as set forth in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act, means controls and other procedures of a company that are designed to provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms promulgated by the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.

Based on this evaluation, as a result of the material weakness in internal controls over financial reporting disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, management concluded that our disclosure controls and procedures were not effective as of March 31, 2025. While the existence of the material weakness did not result in a material misstatement to the financial statements, it presented a reasonable possibility that a material misstatement in the financial statements could have occurred.

Status of Remediation of Previously Identified Material Weaknesses in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis.

To respond to the material weakness disclosed within our Annual Report on Form 10-K for the year ended December 31, 2024, we have devoted, and plan to continue to devote, significant effort and resources to the remediation and improvement of our internal control over financial reporting. Our remediation efforts are ongoing and we have designed control procedures to address the material weakness. The actions taken by management include, but are not limited to:

●

Hiring of Mike-John Williams as Chief Financial Officer effective January 8, 2025;

●

Formalization of separate policies and procedures surrounding significant unusual transactions;

●

Enhancement of management review controls of significant unusual transactions; and

●

Establishment of controls surrounding detailed ledgers related to equity-linked instruments;

We can offer no assurance that these remediation steps will prevent any future deficiencies in our internal control over financial reporting. Any failure to maintain adequate internal control over financial reporting could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. Furthermore, we can give no assurance that the measures we have taken will remediate the outstanding material weakness, or will prevent any future material weaknesses, or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, our strengthened controls and procedures may not be adequate to prevent or identify irregularities or errors, which could affect the fair presentation of our consolidated financial statements.

Changes in Internal Control over Financial Reporting

During the quarter ended March 31, 2025, there have been changes in our internal control over financial reporting as such term is defined in Rule 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. These changes are a result of our above-noted actions taken to remedy the material weakness in internal controls over financial reporting disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We are not a party to any material pending legal proceedings. From time to time, we may become involved in lawsuits and legal proceedings that arise in the ordinary course of business.

ITEM 1A. RISK FACTORS.

The risks set out below represent updates to risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 27, 2025. The information in this Quarterly Report on Form 10-Q should be read in conjunction with the other factors described in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.

International trade policies, including tariffs, sanctions and trade barriers may adversely affect our business, financial condition, results of operations and prospects.

The recent announcements of substantial new tariffs and other restrictive trade policies have created a dynamic and unpredictable trade landscape, which may adversely impact our business.

Current or future tariffs or other restrictive trade measures may raise the costs of raw materials, components or finished goods, which may adversely impact both our product offerings and our operational expenses. Such cost increases may reduce our margins and require us to increase prices, which could harm our competitive position, reduce customer demand and damage customer relationships.

Trade disputes, trade restrictions, tariffs and other political tensions between the U.S. and other countries may also exacerbate unfavorable macroeconomic conditions including inflationary pressures, foreign exchange volatility, financial market instability, and economic recessions or downturns, which may also negatively impact customer demand for our products or services, delay purchases or renewals, limit expansion opportunities with customers, limit our access to capital, or otherwise negatively impact our business and operations. Ongoing tariff, trade restrictions and macroeconomic uncertainty has and may continue to contribute to volatility in the price of our common stock.

While we continue to monitor trade developments, the ultimate impact of these risks remains uncertain and any prolonged economic downturn, escalation in trade tensions, or deterioration in international perception of U.S.-based companies could materially and adversely affect our business, results of operations, financial condition and prospects. In addition, tariffs and other trade developments have and may continue to heighten the risks related to the other risk factors described in our Annual Report on Form 10-K for our fiscal year ended December 31, 2024.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

Trading Arrangements of Section 16 Reporting Persons

During the quarter ended March 31, 2025 no person who is required to file reports pursuant to Section 16(a) of the Securities and Exchange Act of 1934, as amended, with respect to holdings of, and transactions in, the Company’s common stock (i.e. directors, certain large shareholders and certain officers of the Company) maintained, adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1(c) arrangement”, as those terms are defined in Section 229.408 of the regulations of the SEC.

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ITEM 6. EXHIBITS.

The following is a list of exhibits filed as part of this Quarterly Report on Form 10-Q. Where so indicated, exhibits that were previously filed are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated.

Exhibit	Description	Form	File No.	Exhibit	Filing Date	Filed Herewith
2.1	Agreement and Plan of Merger and Reorganization among Laffin Acquisition Corp., Guerrilla RF Acquisition Co. and Guerrilla RF, Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on October 27, 2021).	8-K	000-56238	2.1	October 27, 2021
3.1	Certificate of Merger relating to the merger of Guerrilla RF Acquisition Co. with and into Guerrilla RF, Inc., filed with the Secretary of State of the State of Delaware on October 22, 2021 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on October 27, 2021).	8-K	000-56238	3.1	October 27, 2021
3.2	Amended and restated certificate of incorporation, filed with the Secretary of State of the State of Delaware on October 22, 2021 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the SEC on October 27, 2021).	8-K	000-56238	3.2	October 27, 2021
3.3	Amended and restated certificate of incorporation, filed with the Secretary of State of the State of Delaware on April 14, 2023 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on April 14, 2023).	8-K	000-56238	3.1	April 14, 2023
3.4	Amended and restated certificate of incorporation, filed with the Secretary of State of the State of Delaware on May 2, 2024 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on May 3, 2024).	8-K	000-56238	3.1	May 3, 2024
3.5	Amended and restated bylaws (incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K filed with the SEC on October 27, 2021).	8-K	000-56238	3.3	October 27, 2021
3.6	Certificate of Designations, Preferences, and Rights of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on August 6, 2024).	8-K	000-56238	3.1	August 6, 2024
4.1	Form of Lock Up Agreement (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the SEC on April 1, 2024).	8-K	000-56238	10.3	April 1, 2024
4.2	Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the SEC on October 27, 2021).	8-K	000-56238	4.2	October 27, 2021
4.3	Form of Warrant (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on January 3, 2023)	8-K	000-56238	10.2	January 3, 2023
4.4	Form of Warrant (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on April 1, 2024).	8-K	000-56238	10.2	April 1, 2024
4.5	Form of Warrant (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on August 6, 2024).	8-K	000-56238	4.1	August 6, 2024
10.1	First Amendment to Executive Employment Agreement dated January 15, 2025, by and between Ryan Pratt and the Company (incorporated by reference to Exhibit 10.23 to the Annual Report on Form 10-K filed with the SEC on March 27, 2025).	10-K	000-56238	10.23	March 27, 2025
10.2	Form of Clawback Agreement dated March 25, 2025, by and between Mike John-Williams, Mark Mason, Kellie Chong, John Berg and the Company (incorporated by reference to Exhibit 10.24 to the Annual Report on Form 10-K filed with the SEC on March 27, 2025).	10-K	000-56238	10.24	March 27, 2025

31.1	Certification of Ryan Pratt, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
31.2	Certification of Mike John-Williams, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
32.1	Certification of Ryan Pratt, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X
32.2	Certification of Mike John-Williams, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	X
101.SCH	Inline XBRL Taxonomy Extension Schema Document.	X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.	X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.	X
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document.	X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.	X
104	Cover Page Interactive Data File - the cover page from the Registrant’s from Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in Inline XBRL and contained in Exhibit 101.	X

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GUERRILLA RF, INC.

Date: May 13, 2025	By:	/s/ Ryan Pratt
		Ryan Pratt Chief Executive Officer (principal executive officer)

	GUERRILLA RF, INC.

Date: May 13, 2025	By:	/s/ Mike John-Williams
		Mike John-Williams Chief Financial Officer (principal financial officer)

Guerrilla RF, Inc. 10-Q