Product Development and Approval - The company has developed two commercial products: Elelyso for Gaucher disease and Elfabrio for Fabry disease, both of which are enzyme replacement therapies (ERTs) approved in over 40 and 20 markets respectively[17][20]. - Elelyso was first approved by the FDA in 2012 and is marketed in more than 40 markets, while Elfabrio received FDA approval in May 2023 and is now available in over 10 additional markets[18][21]. - The company is actively recruiting for a Phase 2 clinical trial of PRX-115 for uncontrolled gout, known as the RELEASE study, following the completion of a Phase 1 trial[16][26]. - The Phase 3 clinical program for Elfabrio included three studies, analyzing two dosing regimens: 1 mg/kg E2W and 2 mg/kg E4W[57]. - In the Phase 1 clinical trial of PRX-115 for uncontrolled gout, 64 subjects were enrolled, with 48 receiving the treatment and 16 receiving placebo[68]. - The pediatric study for Elfabrio is ongoing, assessing safety and efficacy in patients aged 2 to less than 18 years[61]. - The RELEASE study for PRX-115 aims to enroll approximately 150 adult patients across clinical sites in the US, Georgia, and Israel[64]. Clinical Trial Results - PRX-115 demonstrated a dose-dependent increase in exposure, with detectable levels in plasma for up to 12 weeks in higher dose cohorts[69]. - A single dose of PRX-115 rapidly reduced plasma urate levels, maintaining levels below 6.0 mg/dL for up to 12 weeks at the highest doses[72]. - 25% of subjects treated with PRX-115 reported drug-related adverse events, primarily mild to moderate[78]. - Approximately 50% of subjects developed anti-drug antibodies (ADAs), with higher incidence in lower dose cohorts[78]. - The safety and immunogenicity profile of PRX-102 is consistent with other enzyme replacement therapies[60]. - The company has observed serious adverse events during clinical trials of Elfabrio, including treatable anaphylactic reactions, which could impact future product development and approval[209]. Market and Financial Overview - The global market for Gaucher disease therapies is projected to be approximately $1.6 billion in 2026, with a CAGR of 0.5% from 2025 to 2031[45]. - The global market for Fabry disease therapies is forecasted to reach approximately $2.3 billion in 2026, growing at a CAGR of 6.3% from 2025 to 2031, potentially reaching $3.2 billion by 2031[53]. - The company heavily relies on revenues from Elfabrio and Elelyso, with any failure in commercialization having a material adverse effect on business and financial condition[208]. - Significant investment has been made in the development of Elfabrio, with future revenue generation dependent on Chiesi's successful commercialization efforts, which are not under the company's control[208]. - Sales of Elelyso are also dependent on Pfizer's efforts, with the company having no control over these sales except in Brazil, where sales are managed by Fiocruz[208]. Partnerships and Collaborations - The company has partnered with Chiesi for the global commercialization of Elfabrio, which includes upfront payments and potential milestone payments[23]. - Chiesi has made an upfront payment of $25 million for the exclusive license to commercialize Elfabrio outside the US, with potential additional payments up to $270 million[90]. - Protalix Ltd. has licensed global rights to market Elelyso to Pfizer, with fixed-cost sales through 2030[84]. - Protalix Ltd. received a milestone payment of $20 million following FDA approval of Elfabrio, with potential additional payments up to $740 million[92]. Technology and Manufacturing - The ProCellEx platform is utilized for the production of both approved products and ongoing clinical candidates, allowing for the development of complex recombinant proteins[30][31]. - The company’s proprietary ProCellEx technology offers advantages such as biologic optimization and elimination of viral contamination risks, enhancing the production of therapeutic proteins[32][36]. - The manufacturing facility in Carmiel, Israel, spans approximately 1,466 sq/m and is compliant with cGMP standards for drug production[108]. - The facility's current capacity meets all commercial and clinical needs, with plans for expansion to enhance purification capabilities for future product commercialization[109]. - The FDA and other regulatory authorities have conducted successful inspections of the manufacturing facilities, ensuring compliance with safety and quality standards[110]. Regulatory Environment - All clinical trials must be conducted under GCP regulations, requiring informed consent from participants and IRB approval before commencement[117]. - The FDA may take one to three years to approve a BLA or NDA, and additional clinical data may be required if regulatory criteria are not met[125]. - Orphan Drug Designation can be granted for drugs treating rare diseases, providing benefits such as funding and tax savings, but does not expedite the regulatory review process[128]. - The FDA's Fast Track and Breakthrough Therapy designations facilitate expedited development and review for drugs addressing serious conditions[132]. - Accelerated Approval allows drugs to be marketed based on surrogate endpoints, contingent on post-approval studies to confirm clinical benefits[137]. - Post-approval requirements include ongoing compliance with FDA regulations, record-keeping, and reporting of adverse effects[138]. - Manufacturers must register with the FDA and are subject to inspections to ensure compliance with cGMP standards throughout the manufacturing process[139]. - The FDA may withdraw product approval if regulatory compliance is not maintained or if new safety issues arise post-approval[140]. Tax and Financial Incentives - Protalix Ltd. benefits from the Israeli government's tax incentives under the Investment Law, with a corporate tax rate of 23% applicable from 2018 onwards[157]. - The company has been granted "Approved Enterprise" status, allowing for a 10-year tax exemption on undistributed income from its facility located in a Zone A area[165]. - The Investment Law provides accelerated depreciation benefits on property and equipment included in approved investment programs, regardless of the benefits program elected[169]. - Protalix Ltd. must comply with specific conditions to maintain its tax benefits, with potential penalties for non-compliance, including refunding benefits received[170]. Competition and Market Challenges - The company faces significant competition in the biotechnology and pharmaceutical industries, with established companies having substantial resources[103]. - In the treatment of Gaucher disease, competition includes Sanofi Genzyme's Cerezyme and Takeda's Vpriv, among others[104]. - For Fabry disease, the primary competitors are Sanofi Genzyme's Fabrazyme and Takeda's Replagal, with other experimental drugs in development[105]. - The company is aware of potential competition to its ProCellEx system from various companies developing alternative expression technologies[107]. - The company faces uncertainty regarding third-party payor coverage and reimbursement, which is critical for the commercialization of its products[147]. - Legislative changes in the U.S. focused on cost containment and price transparency may impact the company's profitability and regulatory burdens[150]. - The company must navigate complex pricing and reimbursement schemes in various countries, which can create high barriers to market entry for new products[152]. Workforce and Employment - As of December 31, 2025, Protalix Ltd. employed 226 full-time employees, an increase from 213 in 2024 and 208 in 2023[185]. - The company has a research and development team of 62 employees as of December 31, 2025, up from 48 in 2024[185]. Risks and Uncertainties - The company has a risk of needing to raise additional capital to operate its business, which may not be available on favorable terms[203]. - Protalix Ltd. may face challenges in obtaining necessary regulatory approvals for its drug candidates, impacting commercialization timelines[197]. - The company’s operations may be adversely affected by military, political, and economic conditions in Israel[205].

Sales Performance - Macy's, Inc. reported fourth quarter net sales of $7.6 billion, a decrease of 1.7% compared to the fourth quarter of 2024, with comparable sales up 1.8%[3] - Bloomingdale's achieved a remarkable 9.9% increase in comparable sales during the fourth quarter[4] - For fiscal year 2025, Macy's, Inc. net sales decreased 2.4% to $21.8 billion, while comparable sales grew 1.5%[8] - Net sales for the 13 weeks ended January 31, 2026, were $7,639 million, a decrease from $7,768 million for the same period in 2025[30] - Total revenue for the 52 weeks ended January 31, 2026, was $22,621 million, compared to $23,006 million for the previous year, reflecting a decline of 1.7%[33] - For the 13 weeks ended January 31, 2026, net sales were $7,639 million, a decrease of 1.7% compared to $7,768 million for the same period in 2025[41] Financial Performance - The company generated operating cash flow of $1.4 billion and free cash flow of $0.8 billion, ending the year with $1.2 billion in cash and cash equivalents[4] - Macy's, Inc. achieved GAAP diluted EPS of $1.84 and adjusted diluted EPS of $1.67, both exceeding guidance[4] - Operating income for the 13 weeks ended January 31, 2026, increased to $745 million, representing 9.4% of total revenue, up from $500 million or 6.2% in the prior year[30] - Net income for the 52 weeks ended January 31, 2026, was $642 million, compared to $582 million for the previous year, marking a year-over-year increase of 10.3%[33] - Basic earnings per share for the 13 weeks ended January 31, 2026, rose to $1.91, up from $1.23 in the same period last year[30] - Adjusted EBITDA for the 13 weeks ended January 31, 2026, was $840 million, compared to $903 million for the same period in 2025, reflecting a decrease of 7%[49] - The company reported net income of $507 million for the 13 weeks ended January 31, 2026, compared to $342 million for the same period in 2025, an increase of 48.3%[49] - Free cash flow for the 52 weeks ended January 31, 2026, was $797 million, an increase from $679 million for the 52 weeks ended February 1, 2025[51] Revenue Sources - Other revenue increased by 20.2% to $857 million, driven by strong performance in credit card revenues and Macy's Media Network[8] - Other revenue sources, including Macy's Media Network, contributed $72 million for the 13 weeks ended January 31, 2026, up from $64 million in the prior year[41] - Credit card revenues for the 13 weeks ended January 31, 2026, increased to $205 million, representing 2.7% of net sales, up from $175 million or 2.3% in the prior year[41] Cost and Expenses - SG&A expenses for fiscal year 2025 decreased by $90 million to $8.2 billion, but as a percentage of total revenue, it increased to 36.4%[9] - Gross margin for the 52 weeks ended January 31, 2026, was $8,267 million, representing 38.0% of net sales, compared to $8,553 million or 38.4% in the previous year[33] - Gross margin for the 52 weeks ended January 31, 2026, was impacted by various costs, with total EBITDA reported at $1,873 million, up from $1,760 million in the previous year[49] Future Outlook - The company plans to expand its strategic initiatives to 75 additional stores under the "Reimagine 200" program for 2026[1] - For fiscal year 2026, Macy's, Inc. expects net sales between $21.4 billion and $21.65 billion, with comparable sales change projected between -0.5% and 0.5%[20] Assets and Liabilities - Total assets as of January 31, 2026, were $16,238 million, a slight decrease from $16,402 million as of February 1, 2025[35] - Current liabilities decreased to $4,493 million as of January 31, 2026, compared to $4,524 million in the previous year[35] - Long-term debt decreased to $2,432 million as of January 31, 2026, down from $2,773 million as of February 1, 2025[35] Taxation - The effective income tax rate for the 13 weeks ended January 31, 2026, was 23.4%, compared to 21.6% for the same period in 2025, primarily due to state and local taxes[41] Losses - The company experienced a net loss from interchange fee settlements of $328 million for the 13 weeks ended January 31, 2026, compared to no such losses in the previous year[49]

Financial Performance - Net sales for the third quarter were $4.4 billion, down 8 percent, with a 6-point headwind from divestitures and acquisitions; organic net sales decreased by 3 percent[5]. - Operating profit for the third quarter was $525 million, down 41 percent, with an operating profit margin of 11.8 percent, a decrease of 660 basis points[6]. - Diluted earnings per share (EPS) for the third quarter were $0.56, down 50 percent; adjusted diluted EPS was $0.64, down 37 percent in constant currency[7]. - Gross margin decreased by 310 basis points to 30.8 percent of net sales, primarily due to higher input costs, partially offset by favorable net price realization[6]. - The company reported net earnings attributable to General Mills of $303.1 million for the quarter ended February 22, 2026, down 52% from $625.6 million in the same quarter last year[37]. - Operating profit for the total segments decreased by 26% to $628.8 million, with North America Retail segment operating profit down 33% to $436.1 million[40]. - Adjusted operating profit for the nine-month period ended February 22, 2026, was $2,106.1 million, down 23% from $2,730.1 million in the prior year[74]. - Adjusted net earnings attributable to General Mills for the quarter were $342.5 million, or 7.7% of net sales, compared to $551.3 million, or 11.4% of net sales in the prior year[79]. Segment Performance - The North America Retail segment reported a 14 percent decline in net sales to $2.6 billion, impacted by a 9-point headwind from yogurt divestitures[15]. - The North America Pet segment saw a 3 percent increase in net sales to $640 million, benefiting from a 6-point contribution from the Whitebridge Pet Brands acquisition[17]. - The International segment's net sales increased by 7 percent to $696 million, with a 6-point benefit from foreign currency exchange; organic net sales were up 1 percent[22]. - North America Retail segment net sales fell by 14% to $2,596.4 million, while International segment net sales increased by 7% to $696.3 million[40]. - North America Retail segment operating profit decreased by 33% for the quarter, while the International segment saw an increase of 87%[84]. Future Outlook - The company reaffirmed its full-year fiscal 2026 outlook, expecting improved organic sales trends and earnings growth in the fourth quarter[3]. - For fiscal 2026, organic net sales are expected to decline by 1.5 to 2 percent, with adjusted operating profit and adjusted diluted EPS projected to decrease by 16 to 20 percent in constant currency[34]. - The Company anticipates a reduction in adjusted operating profit growth by approximately 5 points due to the net impact of divestitures and acquisitions in fiscal 2026[30]. - The company expects net sales growth to be reduced by approximately 4% due to foreign currency exchange rates and completed acquisitions and divestitures[60]. Cash Flow and Investments - Cash provided by operating activities totaled $1.6 billion through nine months of fiscal 2026, down from $2.3 billion a year ago[28]. - The company reported a net cash provided by operating activities of $1,614.2 million for the nine-month period ended February 22, 2026, down from $2,306.6 million in the prior year[46]. - Cash and cash equivalents increased to $785.5 million as of February 22, 2026, compared to $521.3 million a year earlier[43]. - The Company plans to invest significantly in consumer value and innovation, including launching Blue Buffalo into the U.S. fresh pet food sub-category[29]. - Free cash flow conversion is expected to be at least 95% of adjusted after-tax earnings[34]. Restructuring and Charges - Restructuring and transformation costs totaled $24 million in the third quarter, compared to a net recovery of $1 million in the prior year[26]. - Restructuring charges in the third quarter of fiscal 2026 totaled $25 million, with an expected total of approximately $96 million for the multi-year supply chain initiative, including $28 million in cash[49]. - Restructuring and transformation charges for fiscal 2026 are projected to total approximately $175 million to $180 million[60]. - The company anticipates completing restructuring actions related to supply chain initiatives by the end of fiscal 2029[49]. Tax and Shares - The effective tax rate for the third quarter was 24.3 percent, compared to 19.8 percent in the previous year[27]. - The effective tax rate for the third quarter of fiscal 2026 was 24.3%, an increase from 19.8% in the same period last year[55]. - The average number of diluted shares for the quarter is 537.3 million[88]. - Average diluted shares outstanding decreased by 4% to 539 million through nine months of fiscal 2026[28]. Acquisitions and Divestitures - The company completed the acquisition of NX Pet Holding, Inc. for $1 billion, consolidating it into the North America Pet segment[48]. - The company entered into a definitive agreement to sell its business in Brazil for a base purchase price of R$800 million, expecting a pre-tax loss including $622 million in accumulated foreign currency translation losses[49]. - The company recorded a pre-tax gain of $1,046 million from the sale of its United States yogurt business in fiscal 2026[52]. - The company reported a divestiture loss of $1,049.4 million for the nine-month period, impacting net earnings significantly[81]. - The company reported a divestitures loss of $95.9 million for the nine-month period ended February 23, 2025[88].

Revenue Performance - Revenues from selling goods for the fiscal year 2025 were $51.8 million, a decrease of 2% compared to $53.0 million in 2024, primarily due to a $6.8 million decline in sales to Chiesi[12]. - Total revenue for 2023 was $65.494 million, with a projected decrease to $53.399 million in 2024 and further to $52.744 million in 2025[27]. - Full-year 2026 revenues from sales of Elfabrio are expected to range from approximately $33.0 million to $35.0 million[10]. Financial Position - The company has a strong cash position with cash, cash equivalents, and short-term bank deposits totaling $30.3 million as of December 31, 2025[19]. - Cash and cash equivalents decreased from $19.760 million in 2024 to $14.680 million in 2025[26]. - Total current assets increased from $60.078 million in 2024 to $66.673 million in 2025[26]. - The company has no outstanding debt or warrants, positioning it for durable growth and long-term value[8]. Expenses and Losses - Research and development expenses increased by 51% to $19.6 million in 2025, driven by preparations for the RELEASE Phase 2 study of PRX-115[12]. - Research and development expenses are projected to rise from $12.970 million in 2024 to $19.569 million in 2025[27]. - The company reported a net loss of approximately $6.6 million for the year ended December 31, 2025, compared to a net income of $2.9 million in 2024[19]. - Operating income is expected to decline from $3.917 million in 2024 to a loss of $5.500 million in 2025[27]. - Net income for 2023 was $8.312 million, expected to decline to $2.932 million in 2024 and result in a loss of $6.604 million in 2025[27]. Clinical Development - The Phase 2 clinical trial of PRX-115 is actively enrolling, with top-line results anticipated in the second half of 2027[9]. - Management expects total revenues in 2026 to range from approximately $78.0 million to $83.0 million, including the $25.0 million milestone payment[10]. Strategic Focus - The company is focusing on rare renal diseases with PRX-119 and advancing its RNA-based discovery collaboration with Secarna[2]. - The European Commission approved the 2mg/kg every-4-weeks dosing regimen for Elfabrio, which triggered a $25.0 million milestone payment from Chiesi, strengthening the company's cash position[3]. Risks and Challenges - The company anticipates risks related to the commercialization of its product Elfabrio® and potential regulatory challenges[21]. - Total liabilities are expected to rise from $30.206 million in 2024 to $34.116 million in 2025[26]. - Accounts receivable increased significantly from $2.909 million in 2024 to $8.840 million in 2025[26].

Corporate Updates - XOMA Royalty Corporation updated its corporate presentation on March 2, 2026, which includes key financial results and operational insights[5]. - The updated presentation is referenced in Item 2.02, indicating significant financial data is available on pages 10-11 of the document[4]. Stock Information - The company is listed on the Nasdaq Global Market under the ticker symbol XOMA, with a par value of $0.0075 per share for common stock[2]. Financial Reporting - The company has not elected to use the extended transition period for complying with new financial accounting standards, indicating a commitment to timely reporting[3]. - The report does not include specific financial metrics or performance indicators, suggesting further details may be found in the attached corporate presentation[6].

Merger and Acquisition - The Company completed a merger with Vyome Therapeutics, Inc. on August 15, 2025, resulting in the renaming to Vyome Holdings, Inc. [534] - A 1-for-4 reverse stock split was executed on August 15, 2025, to comply with Nasdaq listing requirements [551] - Transactional fees related to the Merger amounted to approximately $7,705,533 in 2025, with $5.9 million in shares issued to advisors and $1.8 million in cash payments [585] - General and administrative expenses increased significantly to $2,365,565 in 2025, a rise of $1,466,993 (163.5%) from $898,572 in 2024, driven by legal and professional fees related to the Merger [582] Financial Performance - Revenue for the year ended December 31, 2025, was $319,714, an increase of $62,770 (24.4%) compared to $256,944 in 2024 [578] - The net loss for the year ended December 31, 2025, was $10,477,713, compared to a net loss of $1,447,461 in 2024, reflecting an increase of $9,030,252 (623.5%) [578] - Cash used in operating activities for 2025 was $3,748,853, a significant increase of $3,134,717 compared to $614,136 in 2024 [588] - The Company reported a net increase in cash and cash equivalents of $4,880,429 for the year ended December 31, 2025, compared to an increase of $85,257 in 2024 [587] Research and Development - The lead program, VT-1953, is a topical gel for treating malignant fungating wounds, with discussions planned with the FDA for a pivotal trial in Q2 2026 [535] - Research and development expenses rose to $588,258 in 2025, up $302,867 (106.1%) from $285,391 in 2024, primarily due to resumed R&D activities post-Merger [581] - The Company has a development and licensing agreement for MRT technology-based Luliconazole topical cream, generating revenues from milestone payments and royalties [563] Funding and Capital Requirements - A private placement raised $5.75 million through the sale of 520,514 shares at $11.02 per share [550] - The company raised net proceeds of approximately $5,291,868 from the sale of common stock from January 1, 2026, through March 12, 2026 [596] - Future capital requirements will depend on various factors, including the costs of clinical trials, manufacturing, and commercialization activities [599] - The company believes existing cash and proceeds from financing will fund operating expenses for at least 15 months, but not sufficient to complete pivotal trials or develop other product candidates [596] - The company may need substantial additional funding to support operations and growth strategy, potentially through equity offerings, debt financings, or collaboration agreements [595] Operational Aspects - The Company operates in two segments: biotechnology (VT-1953, VT-1908, VB-1953) and pharmaceutical products (anti-fungal products) [538] - The Company has not generated revenue from its biotechnology segment, while the pharmaceutical segment is based on legacy licensing agreements [539] - The company has entered into agreements for sponsored research and clinical trials, which are generally cancellable upon written notice [601] - The company leases office and laboratory space in India with monthly payments ranging from $2,500 to $2,900, extended until December 2026 [602] Economic Conditions - Inflation has not had a material effect on the company's business or financial condition during the years ended December 31, 2025, or 2024 [610] - The Company expects general and administrative expenses to continue increasing as it expands to support growth in research and development activities [572] - The company expects to incur significant and increasing expenses and operating losses for the foreseeable future as it advances product candidates through development and regulatory approval [592]

Financial Performance and Revenue - The eCommerce sales channel represented approximately 15% of total net revenue in fiscal year 2025, indicating a significant growth opportunity for the company[144]. - The company’s ability to pay interest on debt obligations depends on future operating performance, which is influenced by economic conditions beyond its control[139]. - The company has approximately $70.7 million in customer deposits as of December 28, 2025, which could be at risk due to potential disruptions in financial markets[165]. - Changes in tax laws, such as the "One Big Beautiful Bill Act" signed on July 4, 2025, may adversely affect the company's effective tax rate and overall financial condition[160]. - The company's estimated total addressable market is subject to significant uncertainty, which could limit future growth opportunities if overestimated[161]. - The company plans to grow its store base by opening new stores in areas with existing home furnishings demand, but profitability will depend on lease rates and retail sales[162]. - The company may incur charges for impairment of long-lived assets if sales or earnings expectations for remodeled or relocated stores are not met[162]. - The company may experience fluctuations in stock price due to various factors, including changes in customer preferences and economic conditions[208]. - The company is engaged in ongoing legal proceedings that could divert management resources and incur additional costs[202]. Marketing and Customer Relations - The company relies on third parties for digital marketing, which may negatively impact business if algorithms or policies change, potentially increasing marketing costs[142]. - The company’s marketing initiatives may become increasingly expensive, and generating a return on these initiatives may be challenging[142]. - The company’s brand may be adversely affected by various incidents, including social and environmental issues, which could diminish customer demand[141]. Compliance and Regulatory Risks - The company must comply with Section 404 of the Sarbanes-Oxley Act, requiring an assessment of internal control effectiveness, which could impact stock value if weaknesses are identified[155]. - The company is in the early stages of establishing internal controls over financial reporting, which may affect investor confidence if not managed effectively[154]. - Compliance with evolving data privacy and security laws, such as the California Consumer Privacy Act, may impose significant costs and operational changes on the company[171]. - The company is subject to various federal and state laws regarding the processing of personal information, which could result in legal actions and financial penalties if not complied with[169]. - Compliance with evolving data protection regulations may result in additional costs and potential fines for the company[185]. - The company incurred significant legal, accounting, and compliance costs as a public entity, which are expected to increase due to regulatory requirements[209]. Operational Risks - The company faces risks related to personal injury and product liability claims, which could harm its reputation and financial condition[146]. - The company maintains a reserve for warranty claims, but there is no assurance that this reserve will be adequate, which could lead to significant costs[148]. - The company must effectively manage inventory levels to avoid excess or shortages, which could materially affect financial performance[152]. - Disruptions in the company's information systems, including its website, could lead to reduced net revenues and reputational damage[177]. - The company relies on its information systems for transaction processing and business management, making their reliability critical for operations[177]. - The successful execution of growth strategies, particularly in online capabilities, depends on the implementation of new information technology systems[178]. - The company experienced a cybersecurity incident in September 2024, resulting in an operating results impact, particularly on comparable sales for Q3 FY 2024[183]. - The company received $5.1 million in insurance recoveries for lost profits and additional costs related to the cybersecurity incident in FY 2025[183]. - The company relies on various payment methods, which expose it to compliance requirements and potential fraud risks, potentially increasing operating costs[180]. - The company faces risks related to the adoption of new technologies, particularly artificial intelligence, which may require substantial resources and could impact financial performance if not integrated effectively[179]. - Unauthorized disclosure of sensitive information could lead to significant financial losses and reputational damage for the company[185]. - The company is exposed to potential legal claims regarding intellectual property rights, which could result in costly litigation and operational disruptions[193]. - The company is exposed to risks from litigation related to product safety and employment matters, which could lead to financial liabilities[200]. Corporate Governance and Ownership - Bain Capital owns approximately 73% of the company's common stock, controlling major corporate decisions and potentially conflicting with other shareholders' interests[212]. - The company is classified as a "controlled company," allowing it to rely on exemptions from certain corporate governance requirements, potentially making its stock less attractive to some investors[216]. - Bain Capital has the right to nominate a varying percentage of directors based on its ownership stake, ranging from 50% to 3% of shares[217]. - Approximately 73% of outstanding common stock holders have rights to require the company to file registration statements for public sale of their shares[226]. Financial Instruments and Market Risks - The company is subject to restrictive covenants under the ABL Credit Agreement, which may limit its ability to incur additional indebtedness or execute business strategies[196]. - The amount of borrowings permitted under the Revolving Credit Facility may fluctuate significantly, affecting the company's financial condition and liquidity[198]. - The company is exposed to foreign currency exchange risk, but the impact was not significant for fiscal years 2025, 2024, and 2023[347]. - Interest rate risk is primarily associated with borrowings under the credit facility, with previous interest rate cap agreements having expired[348]. - Higher inflation periods may reduce discretionary consumer spending and increase costs, impacting profitability, particularly in ocean freight[349].

Customer Agreements and Revenue - The company signed a long-term agreement with its largest customer for AI-enabled computer racks, with a minimum expected monthly volume[21]. - The long-term agreement includes provisions for pricing updates to reflect increased power demands and capital expenditures[21]. - The company signed a long-term agreement with its largest customer for systems integration services for AI-enabled computer racks, with an expected minimum monthly volume[21]. - Revenues from the primary OEM customer comprised approximately 99%, 99%, and 96% of total revenues for the years ended December 31, 2025, 2024, and 2023, respectively[46]. - The long-term agreement with the largest customer includes updated pricing to reflect increased power demands and capital expenditures, extending the term by an additional two years[22]. Capital Expenditures and Facility Enhancements - Capital expenditures of approximately $40 million were completed in 2025 to enhance the new facility's electrical power and cooling capabilities[21]. - The company has invested over $40 million in a new integration facility in Georgetown, Texas, significantly increasing electrical power and cooling capabilities[47]. - Capital expenditures of approximately $40 million were completed for improvements to the new headquarters and production facility, primarily to increase electrical power and cooling capabilities[21]. Operational Capabilities and Services - The company has integrated over 500 modular data centers (MDCs) and currently maintains over 100, indicating strong operational capabilities[27]. - The company provides 24x7 network operations support, monitoring critical systems to prevent outages and ensure operational efficiency[31]. - The company’s systems integration services are designed to accelerate the assembly and delivery of complex IT solutions, enhancing competitive advantage[25]. - The company continues to adapt its systems integration business to support new power and cooling technologies, including direct liquid-cooled IT solutions[17]. - The company aims to expand its service offerings and maximize market opportunities through selective strategic partnerships and acquisitions[47]. Market Demand and Strategic Focus - The strategic procurement services volume grew significantly in 2024 and 2025, reflecting increased customer demand for integrated IT solutions[23]. - The company anticipates increased demand for MDCs as enterprises seek efficient deployment of AI-enabled servers without the costs of traditional data center construction[27]. - The company is pursuing diversification of its customer base through expanded procurement services and AI rack integration for additional OEMs and value-added resellers[49]. - The company’s operational focus is to maintain strong relationships with key OEM customers to mitigate risks associated with volume declines[17]. - The company is focused on enhancing customer relationships and increasing net sales, operating performance, and market share through cost-effective systems integration and lifecycle management[47]. Labor and Employment Challenges - The company’s relationship with employees is considered satisfactory, with 286 full-time employees and approximately 64 temporary workers as of December 31, 2025[44]. - The company faces challenges in hiring and retaining qualified personnel, which could increase costs and limit growth opportunities[57]. - Labor market conditions have led to increased labor costs, and the company is investing in HR automation tools to manage these challenges[58]. - From 2023 to 2025, the company plans changes to its executive leadership team and has faced increased wage pressure in the Austin, Texas market, necessitating higher wages and improved employee benefits[58]. Financial and Operational Risks - Supply chain challenges could negatively affect the integration business by delaying the supply of parts needed for services, impacting revenue recognition and profitability[56]. - The procurement business requires significant working capital, and disruptions in vendor credit could materially affect liquidity and operating results[62]. - A prolonged U.S. federal government shutdown could materially impact revenues and cash flows from the procurement segment, affecting overall business operations[54]. - The competitive landscape in the mission-critical IT industry is intensifying, leading to price pressure and reduced growth opportunities[66]. - Most contracts are cancelable on short notice, which could prevent the company from recognizing potential revenue and profit[67]. - The majority of revenue comes from fixed-price contracts, and inaccurate cost estimates could impair financial performance[70]. - A material weakness in internal controls over financial reporting has been identified, which could lead to misstatements in financial statements[80]. - The company continues to face cybersecurity threats that could disrupt operations and require public disclosure under SEC rules[79]. Strategic Partnerships and Market Positioning - The company aims to expand its services portfolio penetration with new and existing customers through direct selling resources and co-selling with partners[47]. - The company has a selective hiring strategy in sales and marketing to align skill sets with evolving service offerings and increase consultative capabilities[40]. - The company is focused on maintaining key alliances and creating new partnerships with various technology and engineering firms to expand service offerings[41]. - The company’s operational excellence and cost competitiveness are critical for enhancing manufacturing capabilities and optimizing production capacity[47].

Casino Operations - Casinos Poland operates six casino licenses in Poland, with a 66.6% ownership by the subsidiary CRM[30]. - The company is exploring additional gaming projects and acquisition opportunities, acknowledging various risks that could affect project feasibility[32]. - A comprehensive strategic review was initiated in August 2025 to explore alternatives for enhancing shareholder value, including potential mergers and divestments[33]. Partnerships and New Ventures - In May 2025, the company partnered with BetMGM to operate a sports book in Cape Girardeau, with online betting starting on December 1, 2025, including a guaranteed minimum percentage of net gaming revenue[31]. Financial Performance - Earnings from operations in 2025 were reported at $51.3 million[287]. - As of December 31, 2025, the company has a total debt of $337.7 million, with the majority being variable-rate debt[283]. - A 1% change in the variable-rate debt would result in a $3.4 million change in annual cash interest expenses[283]. Competition and Market Dynamics - The company faces intense competition from larger casinos, utilizing targeted marketing efforts and a proprietary database to enhance customer loyalty[34]. - The company anticipates increased competition from online gaming in Alberta following the passage of Bill 48, which will create an open market for online sports betting and iGaming[42]. - The company operates in highly competitive markets, with specific competitors identified in various regions, including 11 competitors within a half mile of Cripple Creek and Central City casinos[38]. Employee and Operational Insights - As of December 31, 2025, the company employed 2,911 full-time and 845 part-time employees, with a focus on employee development and training programs[55][57]. - Seasonal trends affect customer influx, with winter weather impacting business levels and specific months attracting more visitors due to events and outdoor activities[45][46]. Currency and Financial Risks - The company is exposed to foreign currency exchange risk, particularly with the US dollar against the Canadian dollar and the Polish zloty[285]. - In 2025, the change in the relative value of the US dollar resulted in a $1.3 million decrease in accumulated other comprehensive loss, while in 2024, it resulted in a $2.4 million increase[285]. - A 10% depreciation of the US dollar relative to the Canadian dollar and Polish zloty would have increased earnings from operations by $1.6 million[287]. - The company has not hedged against foreign currency exchange rate changes related to its international operations[284]. - Foreign subsidiaries hold the majority of their assets and liabilities in their local currencies, leading to volatility in earnings[284]. - Revenue and expenses are translated at each period's average exchange rate, affecting the results of operations[286]. - As of December 31, 2025, the company's debt is primarily held in US dollars[288].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-40608 ESTRELLA IMMUNOPHARMA, INC. (Exact name of Registrant as specified in its Charter) | Delaware | | 86-1314502 | | --- | --- | -- ...