BRUN 10-K & 10-Q changes, risk factors and insider trading

We are a Delaware corporation and the successor reporting entity to Boost Run Holdings, LLC (“Boost Run Holdings”). We provide high-performance computing infrastructure through bare metal Graphics Processing Unit (“GPU”) servers hosted in top-tier certified data centers. Through our Infrastructure as Code (“IaC”) automation platform, we enable customers to access scalable and secure computing resources for artificial intelligence (“AI”), machine learning, large language models (“LLMs”), generative AI, and other high-performance computing workloads.

On May 8, 2026 (the “Closing Date”), we completed the Business Combination (defined below) with Willow Lane Acquisition Corp. (“WLAC”), a special purpose acquisition company (“SPAC”), and became a publicly traded company. As discussed further below and in Note 2 – Business Combination within the accompanying interim condensed consolidated financial statements, the transaction was accounted for as a reverse recapitalization, with Boost Run Holdings determined to be the accounting acquirer and WLAC determined to be the accounting acquiree. Accordingly, the historical financial statements of Boost Run Holdings became our historical financial statements.

On September 15, 2025, WLAC entered into a business combination agreement, as amended on January 13, 2026, with (i) Boost Run, (ii) Benchmark Merger Sub I Inc. (“SPAC Merger Sub”), (iii) Benchmark Merger Sub II LLC (“Company Merger Sub”), (iv) Boost Run Holdings, (v) George Peng and (vi) Andrew Karos, our chief executive officer (the “Business Combination Agreement”). On May 8, 2026, the transactions contemplated by the Business Combination Agreement (collectively, the “Business Combination”) were consummated.

As a result of the Business Combination, WLAC’s outstanding Class A ordinary shares converted into shares of our Class A common stock, and WLAC’s outstanding redeemable warrants and private placement warrants converted into our public warrants (“Public Warrants”) and private warrants (“Private Warrants”), respectively. The converted warrants retained substantially the same terms and conditions existing immediately prior to closing, except that they became exercisable for shares of our Class A common stock.

The outstanding equity interests of Boost Run Holdings were cancelled and converted into the right to receive merger consideration in accordance with the Business Combination Agreement.

The aggregate merger consideration consisted of:

No public shares of WLAC were redeemed in connection with the Business Combination. We received net proceeds of approximately $114.08 million, after giving effect to transaction costs, and other closing-related adjustments.

Earnout Arrangements

Pursuant to the Business Combination Agreement, Andrew Karos was entitled to receive up to 7,875,000 additional shares of our Class A common stock based on the achievement of specified stock price targets during the three-year period following closing of the Business Combination. The earnout was structured in three equal tranches based on the volume weighted average price (“VWAP”) of our Class A common stock equaling or exceeding $12.50, $15.00 and $17.50 per share for at least 20 of 30 consecutive trading days. During the three months ended June 30, 2026, all stock price targets were achieved, and 7,875,000 earnout shares to Andrew Karos were issued.

Pursuant to the earnout agreement dated September 15, 2025, as amended on January 13, 2026, Willow Lane Sponsor, LLC (“Sponsor”) and Goodrich ILMJS LLC (“SPV”) were entitled to receive up to 1,125,000 Sponsor earnout shares and 1,968,750 SPV earnout shares, respectively, upon achievement of the same stock price targets. During the three months ended June 30, 2026, all applicable stock price targets were achieved, and an aggregate of 3,093,750 Sponsor and SPV earnout shares were issued.

The earnout shares attributable to Andrew Karos, Sponsor, and SPV (collectively, the “Earnout Shares”) are freestanding instruments indexed to our own stock and meet the conditions for equity classification under ASC 815, Derivatives and Hedging. Accordingly, the Earnout Shares are classified within permanent equity and are not subject to remeasurement. The Earnout Shares were recognized at the $10.00 per share value established pursuant to the Business Combination Agreement. Upon issuance, the Earnout Shares were recorded as an increase to common stock, at the $0.0001 per share par value of the Company’s Class A Common Stock, with a corresponding reduction to additional paid-in capital, resulting in no net impact to total stockholders’ equity.

Consulting Arrangement

Pursuant to a consulting agreement entered into on January 13, 2026 with B. Luke Weil, we agreed to issue up to 336,000 shares of Class A common stock in three equal tranches upon achievement of specified stock price targets. The arrangement is accounted for as an equity-classified award under ASC 718, Compensation—Stock Compensation. During the three months ended June 30, 2026, all applicable vesting conditions were satisfied associated with the 336,000 share award, and the award became fully vested. Compensation expense of $7.02 million associated with the award was recognized in selling, general and administrative in our interim condensed consolidated statements of operations included elsewhere in this Form 10-Q during June 30, 2026 in accordance with ASC 718.

Financial Summary for the six months ended June 30, 2026 and 2025

Gross profit. Gross profit was $38.80 million for the six months ended June 30, 2026 compared to $11.32 million for the six months ended June 30, 2025, an increase of $27.48 million, or 243%. The increase primarily reflects higher GPU utilization rates, expansion of customer contracts in the enterprise AI vertical, and incremental pricing adjustments. Revenue outpaced cost of revenue as we gained efficiencies in operations period over period.

Gross profit margin. Gross profit margin was 92.2% for the six months ended June 30, 2026 compared to 90.1% for the six months ended June 30, 2025, an increase of 2.1%. We attribute the increase in gross profit margin to greater efficiencies in operations.

Capital Expenditure on GPU acquisitions. Capital expenditures on GPU equipment was $29.62 million for the six months ended June 30, 2026 compared to $2.90 million for the six months ended June 30, 2025, an increase of $26.72 million, or 922%. We primarily attribute the increase in capital expenditure to larger upfront purchases attributable to certain contracts and financing lease arrangements entered into during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

There have been no material changes to our critical accounting policies and estimates as disclosed in our amendment number 3 to Form S-4 filed on March 27, 2026, other than Restricted Cash, Fixed Assets Not In Service, Intangible Assets, and Income Taxes as described under Note 3 of our interim condensed consolidated financial statements. The preparation of financial statements in conformity with U.S. GAAP continues to require us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements. Actual results could differ materially from those estimates.

The critical accounting policies adopted and updated by us for the six months ended June 30, 2026 are as follows:

Restricted Cash

Restricted cash primarily consists of funds held in segregated accounts pursuant to contractual arrangements and is not available for general corporate purposes. The restrictions are expected to lapse upon the satisfaction of specified contractual requirements. Amounts expected to be released within one year are classified as current assets, while amounts expected to remain restricted beyond one year are classified as noncurrent assets.

Fixed Assets Not In Service

Fixed assets not yet placed into service consist of costs incurred to acquire, construct, or develop long-lived assets that are not yet ready for their intended use and are recorded within equipment, net. Capitalized costs include direct materials and services, payroll and related costs for employees directly involved in the project, and other costs necessary to bring the assets to a condition and location for their intended use. Interest is capitalized for qualifying assets in accordance with ASC 835-20.

Assets not in service are not depreciated until they are substantially complete and ready for their intended use, at which time they are placed into service and reclassified to the appropriate equipment category. We evaluate these assets for impairment in accordance with ASC 360 when events or changes in circumstances indicate the carrying amount may not be recoverable, including instances of project delays, changes in scope, or abandonment. Capitalized costs associated with abandoned projects are written off in the period such determination is made.

Intangible Assets, net

Our intangible assets consist primarily of software licenses and IP addresses. Intangible assets are recognized when acquired and are measured at cost. Intangible assets are evaluated to determine whether they are definite-lived or indefinite-lived based on legal, regulatory, contractual, economic, and other relevant factors.

Definite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. Software license assets are amortized over the contractual license period, which we have concluded represents the estimated useful life of the underlying licenses. Indefinite-lived intangible assets are not amortized.

We may also enter into arrangements that contain software licenses, support services, subscription offerings, implementation services, and financing components. Consideration allocated to software licenses is capitalized as an intangible asset and amortized over the applicable license term. Amounts allocated to support services and subscription offerings are recorded as other assets and recognized as expense over the period the related benefits are received. Amounts allocated to implementation services are recognized as expense as the services are performed.

Intangible assets are evaluated for impairment in accordance with ASC 350, Intangibles—Goodwill and Other, for indefinite-lived intangible assets and ASC 360, Property, Plant and Equipment, for definite-lived intangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment losses, if any, are recognized in the interim condensed consolidated statements of operations included elsewhere in this Form 10-Q. As of June 30, 2026, there have been no impairment losses.

Income Taxes

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates, or a change in the tax status of an entity, on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date or the date the change in tax status becomes effective, as applicable. See Notes 3 and 19 of accompanying interim condensed consolidated financial statements included elsewhere in this Form 10-Q for information related to the change in tax status of Boost Run in connection with the Business Combination.

We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.