Market Overview - The total addressable market (TAM) in target markets is estimated to be approximately $9.0 billion in 2025, consisting of $6.6 billion in hardware sales and $2.4 billion in software and service sales annually [49]. - The distribution and logistics TAM in 2025 is approximately $3.9 billion, driven by process improvements and increased facility safety regulations [51]. - The manufacturing TAM in 2025 is approximately $2.7 billion, with demand driven by the adoption of data-driven predictive maintenance [52]. - The data center TAM in 2025 is approximately $2.4 billion, supported by the growth of hyperscale computing and the need for real-time monitoring [53]. - The Total Addressable Market (TAM) estimates are subject to uncertainties, and overestimating TAM could limit future growth rates [124]. Company Strategy - The company has realigned its market strategy to focus on distribution and logistics, manufacturing, and data centers in the U.S., Canada, EU, and the UK, deprioritizing oil and gas and metals and mining sectors [44]. - The company aims to expand its market for multi-sensor condition-based monitoring across automation-intensive environments, focusing on increasing investment in its MSAI Connect software platform to drive recurring revenue growth [63]. - The company is focused on expanding its distribution network through strategic partnerships to access additional end customers and geographic regions [72]. - The company is pursuing strategic acquisitions to complement its technology platform and expand capabilities, focusing on targets that enhance access to markets and add differentiated sensing technologies [75]. Product Development and Technology - The MSAI Connect platform is designed to support continuous intelligent condition monitoring, transitioning from manual inspections to automated monitoring [24]. - The platform's capability to transmit radiometric image data enhances its AI/ML capabilities, providing a significant advantage in developing transformative models [36]. - The company has invested significantly in research and development, particularly in advancements in sensing technologies, edge processing, cloud architecture, and AI-driven analytics [86]. - The company is focused on expanding its multi-sensor portfolio to enhance industrial use cases and improve performance [40]. - The company plans to enhance software attachment rates across its existing installed base and introduce new SaaS modules, which represent a significant avenue for revenue expansion [64]. Financial Performance - The company incurred a net loss of approximately $21.5 million for the year ended December 31, 2024, and approximately $11.7 million for the year ended December 31, 2025 [101]. - The top three customers represented approximately 46% and 47% of the company's revenue for the years ended December 31, 2025 and 2024, respectively [161]. - The company may need to raise additional capital in the future to execute its business plan [102]. - The company has been notified by Nasdaq of its failure to comply with certain continued listing requirements [102]. Market Challenges - The company faces competition from large-scale manufacturers and newer entrants in the infrared sensing market, but believes its high-resolution and accurate products offer a competitive edge [79]. - The company may face challenges in gaining market acceptance of its SaaS solutions and maintaining customer relationships [109]. - The company faces challenges in forecasting long-term customer adoption rates and demand due to rapidly evolving markets [123]. - The complexity of the company's products may lead to unforeseen delays or expenses from undetected defects, which could harm market adoption and financial performance [179]. Operational Risks - The company is subject to various regulations affecting trade and manufacturing, which could impact its financial position and operational results [89]. - The company relies on third-party suppliers for key components, and any disruptions could adversely affect its ability to fulfill orders and meet customer demands [171]. - The use of contract manufacturers may reduce control over quality and supply, leading to potential delays and operational challenges [139][140]. - The company is exposed to credit risk on trade accounts receivables, which could adversely affect business if major customers face financial difficulties [164]. Cybersecurity and Compliance - Cybersecurity risks threaten the confidentiality, integrity, and availability of the company's IT systems and confidential information, with potential disruptions to operational systems and loss of proprietary information [199]. - The company has experienced actual and attempted cyberattacks, which, while not materially impacting operations to date, pose a risk for future incidents that could affect production capability and reputation [201]. - The company is subject to the reporting requirements of the Sarbanes-Oxley Act, which necessitates maintaining effective internal controls over financial reporting [186]. - Any failure to maintain effective internal controls could adversely affect the company's operating results and investor confidence [188]. Future Outlook - The company expects to incur substantial research and development costs, which could significantly affect its ability to become profitable [118]. - The company may face limitations on its ability to utilize federal net operating loss carryforwards and certain tax credits due to potential ownership changes, which could adversely affect future net income and cash flows [193]. - The market for products and services that incorporate AI Technology is rapidly evolving and unproven in many industries, leading to uncertainty in market growth and consumer acceptance [220].

Revenue and Profitability - Consolidated revenues totaled $40.7 million during the year ended December 31, 2025, representing an increase of $35.8 million, or 739%, compared to the eight-month period ended December 31, 2024[215] - Gross profit was $1.3 million during the 2025 Period, a 195% increase compared to the gross loss of $1.4 million during the Transition Period[216] Expenses - Research and development expenses increased to $17.9 million during the 2025 Period, reflecting an increase of $11.3 million, or 171%, compared to the Transition Period[218] - Sales and marketing costs rose to $13.1 million during the 2025 Period, an increase of $6.8 million, or 107%, compared to the Transition Period[219] - General and administrative expenses totaled $36.9 million during the 2025 Period, a 222% increase compared to the Transition Period[220] Net Loss and Cash Flow - Net loss from continuing operations was $72.1 million during the 2025 Period, a decrease of $28.5 million, or 65%, compared to the Transition Period[222] - Net cash used in operating activities was $89.1 million during the 2025 Period, an increase of $68.6 million compared to the Transition Period[223] - Net cash provided by financing activities was $254.5 million during the 2025 Period, an increase of $235.1 million compared to the Transition Period[226] Current Assets and Future Plans - Current assets totaled $226.9 million and cash was $167.9 million at December 31, 2025[227] - The company plans to continue scaling drone deliveries to the U.S. Army under the SRR program, which has significantly contributed to revenue growth[215]

Revenue and Market Performance - Approximately 50% of the company's revenues are generated from products supporting AI applications, with significant growth expected in the coming years[30]. - Revenues for 2025 reached $496.1 million, a 15.6% increase from $429.2 million in 2024, and a 57.3% increase from $315.4 million in 2023[123]. - The geographical revenue breakdown for 2025 shows China as the largest market at $243.9 million, followed by Asia Pacific at $169.0 million and Korea at $36.9 million[123]. - In 2025, one customer accounted for 11% of total revenues, while three customers accounted for 15%, 10%, and 10% of total revenues in 2024[122]. - The Asia Pacific region accounted for approximately 91% of total revenues in 2025, with significant sales to South Korea, China, and Taiwan[145]. Economic and Industry Risks - The semiconductor industry is subject to significant downturns due to global economic conditions and industry-specific factors, which may lead to reduced demand for the company's products and services[36]. - Recent inflation and rising interest rates have led to global economic instability, impacting the company's financial condition and customer spending behavior[46]. - Geopolitical tensions and changes in global trade policies may adversely impact the company's ability to sell and deliver its systems and services, particularly in China[39]. - The U.S. government has enacted trade restrictions affecting certain Chinese semiconductor manufacturers, which may impact the company's sales in that region[40]. - The company faces significant risks due to political and economic instability in the Asia Pacific region, particularly in China, which may adversely affect future revenues[45]. Operational and Supply Chain Challenges - The company maintains appropriate inventories and production capacity to meet current sales volume and expected demand, having expanded its workforce and made capital expenditures[31]. - Disruptions in supply chains due to regional instabilities may adversely impact the commercialization and manufacturing of product candidates[48]. - The global demand for electronic components has sharply increased, and any supply chain disruptions could adversely affect the company's ability to fulfill customer orders, potentially leading to significant financial impacts[60]. - The company faces risks related to supply chain disruptions from geopolitical conflicts, which could adversely affect its market position and operational capabilities[60]. Financial Performance and Management - Gross profit rose to $250.3 million in 2025 from $210.0 million in 2024, an increase of 19%, with a gross margin of 50.5% compared to 48.9% in 2024[162]. - Net income decreased to $50.7 million in 2025 from $118.5 million in 2024, attributed to other expenses related to the repurchase of Convertible Notes[167]. - Cash and cash equivalents totaled approximately $851.1 million at December 31, 2025, up from $501.2 million at December 31, 2024, due to the issuance of the 2030 Convertible Note and positive operating cash flow[168]. - Cash flow from operating activities increased to $141.9 million in 2025 from $122.2 million in 2024, primarily driven by net income[170]. - Total operating expenses as a percentage of total revenues increased to 24.62% in 2025 from 23.74% in 2024[159]. Cybersecurity and Compliance - Cybersecurity threats have escalated, particularly due to geopolitical tensions, increasing the risk of cyberattacks on the company's systems[56]. - The company has implemented cybersecurity measures and purchased insurance, but cannot guarantee full protection against potential cyber incidents[56]. - The company is subject to various data privacy regulations, including GDPR and CCPA, which could lead to increased compliance costs and potential penalties for noncompliance[58]. - Compliance with environmental, social, and governance regulations is crucial, as failure to comply could lead to significant liabilities and impact financial results[72]. Research and Development - Research and development expenses increased by $10.1 million to $48.3 million in 2025 from $38.3 million in 2024, driven by higher investment in new products and technologies[163]. - The company plans to introduce AI technology for inspection and automatic defect classification in 2026[120]. - Developing and introducing new products involves significant risks, including technical and regulatory challenges, which could adversely affect revenue and competitive position if not managed properly[63]. Shareholder and Governance Issues - Priortech and Chroma collectively hold 38.04% of the company's shares, allowing them to influence shareholder decisions, which may lead to conflicts of interest[79]. - The company is at risk of being classified as a passive foreign investment company (PFIC), which could adversely affect U.S. shareholders' tax situations and the value of shares[81]. - The company maintains written employment agreements with all executive officers, including non-compete and confidentiality provisions[213]. - Directors are compensated with cash fees, reimbursement for expenses, and share options or RSUs, while representatives from Priortech and Chroma do not receive compensation[210]. Executive Compensation - The total compensation for the five most highly compensated office holders amounted to $5.66 million, with the Chief Executive Officer receiving $2.20 million[212]. - The Chief Executive Officer's salary cost was $375,760, with a performance-based bonus of $546,092 and equity-based compensation of $1,111,503[212]. - The Chief Operating Officer received a total compensation of $1.30 million, including a salary of $383,392 and a bonus of $268,121[212]. - The Chief Financial Officer's total compensation was $1.07 million, with a salary of $342,080 and a bonus of $225,638[212].

Revenue Performance - Consolidated revenue for Q4 2025 was $121.6 million, up from $102.9 million in Q4 2024, representing a 18.4% increase[4] - Full year 2025 consolidated revenue reached $502.0 million, compared to $425.2 million in 2024, marking a 18.1% growth[4] - The Genie Retail Energy segment (GRE) generated $114.6 million in revenue for Q4 2025, up from $98.4 million in Q4 2024, a 16.5% increase[4] - The Genie Renewables segment (GREW) reported revenue of $7.0 million in Q4 2025, compared to $4.5 million in Q4 2024, a 55.6% increase[4] Income and Expenses - Consolidated income from operations for Q4 2025 was $4.6 million, down from $10.1 million in Q4 2024, a decrease of 54.4%[4] - Adjusted EBITDA for 2025 was below guidance due to challenging energy market conditions and increased acquisition expenses[6] Cash Position - The company had $211.4 million in cash, restricted cash, and cash equivalents as of December 31, 2025, compared to $200.6 million at the end of 2024[4] Future Projections - For 2026, the company projects consolidated Adjusted EBITDA between $40 million and $50 million[5] - The company anticipates that margins for Genie Retail Energy will normalize throughout 2026, contributing positively to overall performance[7] Accounting Adjustments - The company is currently preparing restated financial results for 2023 and 2024 due to accounting errors related to its captive insurance subsidiary[2]

Acquisition and Licensing - BullFrog AI Holdings, Inc. acquired BullFrog AI, Inc. in June 2020, issuing 24,223,975 shares in exchange for 100% of BullFrog AI, Inc.'s outstanding stock, while assuming $330,442 in net liabilities[22]. - The company has signed exclusive worldwide license agreements for cancer drugs targeting glioblastoma and hepatocellular carcinoma, indicating a focus on oncology therapeutics[34]. - The company holds a worldwide, royalty-bearing license for siRNA targeting Beta2-spectrin, currently in preclinical development for treating hepatocellular carcinoma and other metabolic diseases[41]. - The company has entered into a royalty-bearing license agreement with JHU-APL, entitling them to 8% of net sales and minimum annual royalty payments starting at $30,000[73][74]. - The company has a license agreement with George Washington University for rights to use siRNA targeting Beta2-spectrin, with potential milestone costs and royalties on net sales[76][78]. - The company entered into an exclusive, worldwide, royalty-bearing license with Johns Hopkins University (JHU) for an improved formulation of Mebendazole, with a staggered upfront license fee of $250,000, of which $50,000 was paid in 2022 and $200,000 in 2023[82]. - The company also licensed N-substituted prodrugs of Mebendazole from JHU and the Institute of Organic Chemistry and Biochemistry, with an upfront license fee of $100,000 and a 4% royalty on net sales[84]. Financial Performance and Compliance - As of December 31, 2025, the company had approximately $2.3 million in cash and an accumulated deficit of approximately $23.3 million, raising substantial doubt about its ability to continue as a going concern[123]. - The company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain operations, which may require curtailing clinical and research initiatives[124]. - The company received a letter from Nasdaq stating it was no longer in compliance with the minimum stockholders' equity requirement of $2.5 million, and was granted an extension until February 17, 2026, to comply[127]. - The company was notified that the closing bid price for its common stock was below $1.00 per share for 30 consecutive business days, triggering a compliance period until August 10, 2026, to regain compliance[128]. - The company has accrued $300,000 for the 2025 minimum annual royalty payments, which remains unpaid as of the filing date[213]. - The company has raised approximately $2.6 million from the sale of common stock under the ATM Agreement[218]. - The company has raised approximately $2.7 million from a registered direct offering in October 2024[218]. Drug Development and Technology - The bfLEAP™ platform, developed from technology at Johns Hopkins University, aims to reduce the cost and time of therapeutic development by improving data analytics and decreasing failure rates[25]. - Algorithms used in the bfLEAP™ platform outperformed 10 popular clustering algorithms in speed and accuracy, indicating its advanced capabilities in data analysis[26]. - The bfLEAP™ platform, an AI/ML analytics tool, is designed for biotechnology and pharmaceutical companies, enhancing the analysis of preclinical and clinical data[39]. - The BullFrog Data Networks™ solution integrates various data sources to accelerate drug discovery and development, with a collaboration agreement established with Eleison Pharmaceuticals for oncology applications[46]. - The bfPREP™ platform streamlines data preparation for biomedical datasets, enhancing the efficiency of downstream AI models and analytical tools[47]. - A new scenario-based decision engine is set to launch in March 2026, designed to support complex decision-making in drug development by evaluating multiple development scenarios[48]. - The company plans to leverage its proprietary AI/ML platform to improve drug development success rates and conduct late-stage clinical trials for previously failed therapeutic candidates[215]. Strategic Partnerships and Collaborations - The company plans to enter collaborative arrangements with biotechnology and pharmaceutical companies, combining fee-for-service payments and success fees based on milestone achievements[37]. - A partnership with the Lieber Institute for Brain Development allows the company to leverage comprehensive brain data for identifying relationships in neurological disorders, with a focus on developing effective treatments[49]. - The company has entered a commercial agreement with LIBD for the commercialization of products developed under the partnership, including biomarker and target identification[50]. - The company has a strategic relationship with FSHD Society for AI/ML analysis of clinical trial data, and is developing additional strategic relationships in project design[60]. Market Opportunities and Challenges - The estimated market opportunity for rescuing failed drugs is $47.1 billion, with the company actively searching for such opportunities[61]. - The company faces intense competition from larger pharmaceutical and biotechnology firms, which may have greater financial resources and expertise[86]. - The company may not be able to develop or commercialize any product candidates due to the lengthy and complex process involved in new product development[135]. - The company’s ability to conduct clinical trials is contingent upon receiving clearance from the FDA, which can halt trials at any time for safety reasons[136]. - The company’s business model relies on acquiring rights to failed drugs, but there is no guarantee that it will succeed in this endeavor, impacting revenue generation[144]. Operational and Management Considerations - The company has determined that the licensed programs are in early stages and has expensed the license fees and development costs until commercial viability is likely[82][84]. - The company believes its future success will depend on attracting and retaining qualified personnel, particularly in senior management and R&D[116]. - The company does not own or lease any real property, with all employees working virtually[117]. - The company has a limited operating history, which presents risks associated with new enterprises[122]. - The company anticipates an increase in operating expenses in the near future[122]. - The company competes for qualified personnel with other healthcare technology and pharmaceutical companies[116]. - The company is significantly influenced by its CEO, Vininder Singh, who owns approximately 18.7% of the common stock, affecting stockholder decisions[174]. Legal and Compliance Risks - Regulatory compliance is critical, with the FDA overseeing clinical trials and requiring substantial time and financial resources for drug approval processes[94][96]. - The company may face substantial litigation costs related to intellectual property rights, which could adversely affect financial results[166]. - The company is classified as an "emerging growth company," allowing it to take advantage of reduced disclosure requirements, which may affect stock attractiveness[183]. - The company continues to incur significant costs for compliance with U.S. corporate governance and accounting requirements, which are expected to result in substantial legal and financial compliance costs[188]. - The company has established policies for assessing and managing cybersecurity risks, integrating these processes into overall risk management systems[191]. - The company has not encountered cybersecurity challenges that have materially impaired its operations or financial standing[195].

Revenue Growth - Total revenues for the year ended December 31, 2025, reached $165,447,000, representing a 30% increase compared to $127,182,000 in 2024[310] - Marketing revenue increased to $124,320,000 in 2025, up 18% from $118,815,000 in 2024, accounting for 75% of total revenue[310] - Data revenue surged by 392% to $41,127,000 in 2025, compared to $8,367,000 in 2024, making up 25% of total revenue[310] - North America revenue grew significantly to $87,235,000 in 2025, a 57% increase from $55,500,000 in 2024[319] - The U.K. and Ireland revenue increased by 6% to $41,660,000 in 2025, while Other Europe saw a 16% growth to $26,102,000[319] - Performance marketing revenue for 2025 was $103,567,000, a 2% increase from $101,078,000 in 2024, representing 62% of total revenue[322] - Subscription revenue skyrocketed to $41,127,000 in 2025, a 392% increase from $8,367,000 in 2024, accounting for 25% of total revenue[322] Operating Expenses - Cost of sales rose by $7.7 million, or 103%, in 2025, primarily due to higher costs from new partnership channels and the OddsJam Acquisition[331] - Total operating expenses increased in 2025 due to fair value movements related to acquisitions and increased personnel costs[332] - Total sales and marketing expenses increased by 50% to $63.0 million for the year ended December 31, 2025, compared to $41.9 million in 2024[336] - People costs rose by 27% to $32.7 million in 2025, primarily due to the OddsJam and Spotlight.Vegas acquisitions[337] - External marketing expenses increased by 75% to $11.5 million in 2025, driven by heightened marketing activities beyond SEO[336] - Total technology expenses grew by 78% to $24.8 million in 2025, with significant increases in people costs and amortization of intangible assets[340] - General and administrative expenses rose by 16% to $32.2 million in 2025, influenced by higher legal and consultancy fees and increased SAAS subscriptions[347] Impairments and Losses - An impairment loss of $14.0 million was recognized for three domains targeting the Finnish market due to adverse regulatory changes[353] - Fair value movements on contingent consideration resulted in a loss of $48.5 million and a gain of $0.8 million for the year ended December 31, 2025, related to the OddsJam and Spotlight.Vegas acquisitions[355] - Restructuring costs of $0.4 million were incurred in 2025 due to the voluntary winding up of the Group's Finnish subsidiary, GDC Finland Oy[337] - The company reported an impairment loss on intangible assets of $14.01 million in 2025, reflecting a significant adjustment[383] Financial Performance - Adjusted net income for the year attributable to shareholders was $51,790 thousand for 2025, reflecting a 23% increase compared to 2024[369] - Adjusted EBITDA for the year ended December 31, 2025, was $58,010 thousand, representing a 19% increase from 2024[369] - The adjusted net income per diluted share for 2025 was $1.26, a 9% increase from 2024[369] - Net loss attributable to shareholders for 2025 was $(32.93) million, a decrease of 207% compared to a profit of $30.68 million in 2024[383] - Adjusted EBITDA margin decreased from 38% in 2024 to 35% in 2025 due to rising costs outpacing revenue growth[386] Cash Flow and Financing - Cash flows generated by operating activities decreased by 49% to $19,104 thousand in 2025 compared to 2024[369] - Cash flows used in investing activities totaled $98.9 million for the year ended December 31, 2025, primarily due to the OddsJam Acquisition and other related payments[418] - Cash flows generated from financing activities were $81.5 million for the year ended December 31, 2025, compared to cash used in financing activities of $5.2 million in 2024[414] - The company has borrowed the full amount of the Term Loan of $75 million and $57.5 million under the Revolving Credit Facility as of December 31, 2025[408] - The company was in compliance with the debt covenants set forth in the Wells Fargo Amended and Restated Credit Agreement as of December 31, 2025[412] Customer Metrics - New Depositing Customers (NDCs) decreased by 5% to 454 for the year ended December 31, 2025, compared to 479 in 2024, primarily due to Google algorithmic updates affecting visibility in organic search results[399] Intellectual Property and Compliance - The company holds rights to critical domain names including Gambling.com, Casinos.com, and Freebets.com, and owns 23 trademarks and over 1,800 domains[426][427] - The company relies on a combination of intellectual property laws and contractual restrictions to protect its proprietary rights[426] - The company’s financial statements are prepared in accordance with IFRS, requiring management to make significant judgments and estimates that may affect reported amounts[429] - Revisions to accounting estimates are recognized in the period of revision, impacting both current and future periods if necessary[430]

Revenue Sources - The United States Department of Veterans Affairs accounted for 71.2% of the company's revenue during the year ended December 31, 2025[29]. - Sales under the U.K. MedTech Funding Mandate for cluster headache comprised 4.4% of revenue during the year ended December 31, 2025[32]. - Sales of gammaCore in the UK and EEA currently represent an immaterial portion of the company's total revenue[81]. Legal and Regulatory Issues - The company is currently engaged in an intellectual property lawsuit that may adversely affect its financial position and operations[18]. - The company has identified a material weakness in its internal control over financial reporting, which could impact the accuracy of its financial reports[18]. - The company is subject to Federal Trade Commission (FTC) regulatory oversight, which includes preventing unfair competition and deceptive practices[84]. - The FDA has classified the company's medical devices as Class II, moderate-risk devices, requiring 510(k) review and clearance[69]. - The pre-market notification process for Class II devices typically takes about three months for FDA clearance, but can be longer[71]. - The PMA application process for Class III devices can take one to three years or longer, requiring extensive pre-clinical and clinical trial data[76]. - Post-marketing compliance obligations include adherence to the FDA's quality management system regulation and reporting requirements for device recalls[78]. - The EU Medical Devices Regulation 2017/745 (MDR) imposes additional compliance requirements, with a transition period extended until June 30, 2028 for Class IIa devices, including gammaCore products[82]. Product Development and Technology - The company has a limited history of commercializing its Quell platform and general wellness products in the U.S., with market acceptance being uncertain[13]. - The company plans to continue utilizing distribution partners to commercialize its nVNS technology in selected territories outside the U.S. and U.K.[32]. - The company is developing future iterations of bioelectronic technology, including smartphone-integrated therapies[34]. - The prescription gammaCore device has received FDA clearance for multiple indications, including the acute treatment of migraine and cluster headaches[55]. - Quell technology received FDA Breakthrough Device designation for fibromyalgia and chronic Chemotherapy Induced Peripheral Neuropathy (CIPN)[60][61]. - The Quell OTC device received 510(k) clearance for over-the-counter use in 2014, with additional features added in 2016[62]. - Truvaga and TAC-STIM are marketed as general wellness products under FDA's low-risk device policy[70]. - The company received CE Certificate of Conformity in the European Economic Area (EEA) for its prescription gammaCore therapy, which treats primary headaches and has been extended to additional indications[80]. - The company holds more than 215 patents and patent applications, with all current issued patents projected to expire between 2026 and 2039[64]. Financial Position and Investment - The company does not currently intend to pay dividends on its common stock, affecting potential returns for investors[18]. - The company's investment policy focuses on capital preservation, liquidity fulfillment, and fiduciary control of cash and investments[548]. - The investment portfolio consists of cash equivalents and high credit quality securities, with minimal interest rate risk due to short-term maturities[548]. - There is no hedging against interest rate exposure, and an increase in market rates is not expected to materially impact interest income[548]. - The company has no investments in foreign currencies, thus avoiding foreign currency exchange risk[548]. - Payments from license agreements are denominated in Japanese Yen, exposing the company to fluctuations in foreign currency rates[548]. - The company's financial results could be affected by foreign currency exchange rates, particularly as most sales in Europe are denominated in British Pound Sterling and a license agreement is in Japanese Yen[546]. - A uniform increase or decrease of 15% in the U.S. dollar's strength relative to foreign currencies would have an immaterial impact on net income for the year ended December 31, 2025[547]. - Sensitivity analyses were performed on the financial position as of December 31, 2025, to assess potential changes[549]. Market Insights - The annual economic burden of migraine in the United States is approximately $78 billion, with individual patient costs estimated between $8,500 and $9,500 for chronic migraine[42]. - Chronic pain affects nearly 20% of adults in the United States, with an estimated incremental impact on healthcare costs exceeding $250 billion annually[48]. - The global wellness economy was valued at about $6.8 trillion in 2024 and is projected to grow toward nearly $10 trillion by the end of 2030[52]. - The U.S. stress management market was valued at $2.4 billion in 2022 and is expected to grow at a CAGR of 5.3% from 2023 to 2030[53]. Employment and Operations - The company completed the acquisition of NeuroMetrix on May 1, 2025, with NeuroMetrix now operating as a wholly-owned subsidiary[94]. - The company employs 83 full-time employees as of February 1, 2026, with no employees represented by a labor union[90].

Financial Performance - Fourth-quarter 2025 operating profit increased 95% year-over-year to $7.6 million, despite a net loss of $3.8 million due to a $6.0 million after-tax pension settlement charge[3][4] - Gross profit for Q4 2025 was $12.0 million, a 42% increase from Q4 2024, on 5% lower revenue of $66.8 million[3][4] - Adjusted EBITDA for Q4 2025 improved 59% year-over-year to $14.3 million, and consolidated adjusted EBITDA for the full year was $48.9 million, down from $59.4 million in 2024[3][4] - Revenues for the year ended December 31, 2025, increased to $277.2 million, up 16.6% from $237.7 million in 2024[36] - Gross profit for the year ended December 31, 2025, was $38.5 million, representing a 29.3% increase from $29.8 million in 2024[36] - Operating profit for the year ended December 31, 2025, decreased to $22.0 million, down 38.0% from $35.7 million in 2024[36] - Consolidated Adjusted EBITDA for the year ended December 31, 2025, was $48.9 million, down 17.7% from $59.4 million in 2024[38] - Basic earnings per share for the year ended December 31, 2025, was $2.37, down from $4.58 in 2024[36] Segment Performance - The Utility Coal Mining segment delivered 6.2 million tons of coal in 2025, with operating profit of $7.2 million, up from $2.0 million in 2024[8][11] - The Contract Mining segment's revenues decreased to $32.2 million in 2025 from $34.9 million in 2024, but operating profit increased slightly to $858,000[11][12] - The Minerals and Royalties segment reported revenues of $10.1 million in 2025, up from $9.7 million in 2024, with operating profit increasing to $8.0 million[14][24] - Segment Adjusted EBITDA for the year ended December 31, 2025, was $47,258,000, compared to $60,357,000 in 2024, reflecting a decrease of approximately 21.7%[42] - Segment Adjusted EBITDA for the Utility Coal segment for the year ended December 31, 2025, was $25,970,000, compared to $33,787,000 in 2024, a decrease of approximately 23.2%[42] Expenses and Losses - Selling, general and administrative expenses for the year ended December 31, 2025, increased to $77.9 million, up 11.6% from $69.8 million in 2024[36] - Interest expense for the year ended December 31, 2025, was $5.8 million, compared to $5.6 million in 2024[36] - The company reported a pension settlement charge of $7.8 million for the three months ended December 31, 2025[38] - The company reported a gross loss in the Utility Coal segment for the year ended December 31, 2025, amounting to $5,967,000, compared to a gross loss of $10,764,000 in 2024, showing improvement[42] Future Outlook - NACCO anticipates total capital expenditures of up to $89 million in 2026, primarily for business development opportunities[25] - The company expects continued momentum into 2026, with improvements in consolidated operating profit, net income, and EBITDA driven by long-term contracts and operational efficiencies[20][21] - The re-establishment of the National Coal Council is expected to reinforce coal's strategic role in U.S. energy policy, positively impacting NACCO's business outlook[26] - The company anticipates potential risks including demand reduction and supply chain disruptions that could impact future performance[32] Cash and Liquidity - Total liquidity as of December 31, 2025, was $124.2 million, consisting of $49.7 million in cash and $74.5 million available under the revolving credit facility[6] Other Financial Metrics - Total revenues for the three months ended December 31, 2025, were $66,778,000, an increase from $70,418,000 in the same period of 2024[39] - Operating profit for the three months ended December 31, 2025, was $7,573,000, compared to $3,883,000 for the same period in 2024, indicating a significant improvement[39] - Gross profit for the year ended December 31, 2025, was $38,473,000, compared to $29,756,000 in 2024, showing an increase of approximately 29.3%[42] - Cost of sales for the year ended December 31, 2025, was $238,725,000, up from $207,952,000 in 2024, representing an increase of about 14.8%[42] - Earnings from unconsolidated operations for the year ended December 31, 2025, were $61,823,000, compared to $57,476,000 in 2024, reflecting a growth of approximately 7.9%[42] - Operating expenses for the year ended December 31, 2025, totaled $78,601,000, compared to $70,285,000 in 2024, indicating an increase of about 11.9%[42] - The company experienced a gain on the sale of assets totaling $286,000 for the year ended December 31, 2025, compared to a loss of $5,146,000 in 2024, indicating a positive turnaround[42]

Project Development - The Kellyton Graphite Plant construction has incurred cumulative project costs of approximately $128.2 million as of December 31, 2025, with an optimized Phase I budget reduced to approximately $245 million[50]. - The Kellyton Graphite Plant is expected to produce a total capacity of approximately 26,500 metric tons (mt) per year in Phase I, increasing to approximately 106,000 mt per year upon completion of Phase II[54]. - The Company has all necessary permits to complete the construction of Phase I of the Kellyton Graphite Plant, ensuring compliance with environmental regulations[67]. Financial Performance - The Company raised approximately $67 million in 2025 through Convertible Notes offerings and its at-the-market (ATM) and equity line of credit (ELOC) programs, ending the year with a cash balance of approximately $49 million[50]. - The Company has paused efforts to syndicate a secured debt facility following the termination of the Offtake Agreement with FCA, while pursuing other financing sources including governmental financing[50]. Production and Capacity - The Company produced more than one metric ton of CSPG during 2025 at the Kellyton Graphite Plant qualification line, with expectations for larger sample batches for customer qualification[50]. - The Coosa Graphite Deposit is projected to have an average grade of approximately 3.04% Cg, with impurities that can be removed during flotation processing[61]. Innovation and Patents - The Company has received its first U.S. Patent related to its graphite purification method on September 17, 2025, with an additional patent application pending[50]. Customer Engagement - The Company is in active discussions with potential customers, including battery and automobile manufacturers, aiming to execute multi-year supply agreements for Phase II[64]. Community and Employee Engagement - The company has executed agreements with local organizations to support community hiring and purchasing from local contractors[83]. - Westwater has a strong history of community engagement, including service projects and scholarships for local families[79]. - The company is committed to providing safe and healthy working conditions and professional development opportunities for employees[82]. - Westwater has participated in townhall meetings to maintain open communication with the local community[77]. - As of December 31, 2025, Westwater employed 20 full-time employees[81]. Governance and Oversight - Westwater's Board of Directors held twelve meetings in 2025, with all directors attending all meetings[85]. - The Safety and Sustainability Committee held three meetings in 2025, focusing on ISO 14001 Environmental Management Systems[87]. - The Audit Committee held four meetings in 2025, overseeing compliance with regulations and internal controls[88]. - The Compensation Committee held five meetings in 2025 to set compensation for directors and executive officers[91]. - The Nominating and Corporate Governance Committee held two meetings in 2025 to identify director candidates and oversee corporate governance[92]. Environmental Responsibility - The Kellyton Graphite Plant is designed to recycle approximately 70% of the chemicals used in its purification process, resulting in reduced greenhouse gas emissions compared to traditional methods[73].

Financial Performance - Comparable sales increased by 12.8% in fiscal 2025, decreased by 2.7% in fiscal 2024, and increased by 2.8% in fiscal 2023[27]. - Net sales grew from $3.6 billion in fiscal 2023 to $4.8 billion in fiscal 2025, representing a compounded annual growth rate of 15.7%[27]. - Operating income increased from $385.6 million in fiscal 2023 to $457.4 million in fiscal 2025, reflecting a compounded annual growth rate of 8.9%[27]. Store Expansion - The store base expanded from 1,544 stores at the end of fiscal 2023 to 1,921 stores at the end of fiscal 2025, with a compounded annual growth rate of 11.5%[27]. - The company plans to open approximately 150 net new stores in fiscal 2026, following the addition of 150 net new stores in fiscal 2025[23]. - In fiscal 2025, the company opened 150 net new stores, bringing the total to 1,921 stores as of January 31, 2026[41][49]. Store Economics - The average payback period for new stores is approximately one year, indicating strong store economics[31]. - The new store model targets approximately $2 million in sales during the first full year of operation with an average cash investment of $0.4 million[50]. - The average payback period for new store investments is targeted at approximately one year[50]. Distribution and Logistics - Approximately 85% of merchandise is distributed from five major shipcenters, with a total distribution area exceeding 5 million square feet[59]. - The company has expanded its distribution network, including a new 1,100,000 square foot shipcenter in Forsyth, Georgia, and plans for additional centers, which are critical for future growth[119]. - The company has ceased operations at certain shipcenters due to the expansion of its distribution network, optimizing logistics and reducing costs[66]. Marketing and Merchandising - The company maintains a dynamic merchandising strategy with most products priced at $5 and below, appealing to a broad customer demographic[22]. - The marketing strategy focuses on digital advertising, influencer partnerships, and community outreach to enhance brand awareness and drive traffic[68]. Workforce and Crew Management - The company employs approximately 7,800 full-time and 16,800 part-time crew members, with a total crew count of around 23,000 in stores[86]. - The company has a comprehensive suite of benefits for crew, including medical, dental, vision, and a 401(k) retirement savings option[88]. - The company monitors crew turnover, particularly at management levels, and employs strategies to improve retention rates[94]. Economic and Regulatory Risks - The company has experienced inflationary pressures that could impact net sales and earnings, with recent inflation levels higher than historical averages[104]. - Recent U.S. tariffs on imports from China and other countries could lower gross margins unless the company successfully negotiates lower costs or transitions to vendors in countries with no or lower tariffs[113]. - The company may be adversely affected by changes in tax legislation, which could impact financial results significantly[150]. Cybersecurity and IT Risks - The company has a dedicated cybersecurity function led by the Chief Information Security Officer, with annual threat assessments aligned to ISO 27001/02 and NIST frameworks[175]. - Cybersecurity threats pose risks to customer data, and any breach could result in negative publicity and financial repercussions[125]. - The reliance on third-party IT systems and cloud services poses risks; disruptions could materially affect operations and financial condition[145]. Legal and Compliance Issues - The company is subject to various legal proceedings, including a class action lawsuit filed on August 1, 2024, alleging violations of the Securities Exchange Act[190]. - The company has formed a Special Litigation Committee to investigate shareholder demands related to the class action allegations, concluding it would not be in the company's best interests to pursue litigation[191]. Seasonal Trends - The company anticipates seasonal fluctuations in net sales and income, with the highest levels typically occurring in the fourth fiscal quarter due to the holiday season[99]. - Approximately 40% of total annual sales occurred during the fourth fiscal quarter, highlighting the seasonality of the business and the potential impact of adverse events during the holiday season on financial results[141].