Product Sales and Market Position - ETUARY® (pirfenidone) generated annual sales of $106.1 million in 2025, maintaining a leading market position in the treatment of pulmonary fibrosis [32]. - Etorel® (nintedanib) was launched in June 2025 and generated $4.6 million in sales in 2025, expanding treatment options for patients with pulmonary fibrosis [34]. - Contiva® (avatrombopag) was launched in March 2025 and generated $5.5 million in sales in 2025, targeting thrombocytopenia associated with chronic liver disease [37]. - Sales of ETUARY® reached $106.1 million in 2025, although its market share has declined due to increased competition [65]. Clinical Trials and Product Development - Hydronidone met its primary endpoint in a Phase 3 trial, with 52.85% of treated patients achieving ≥1-stage fibrosis regression at Week 52 compared to 29.84% in the placebo group (p=0.0002) [46]. - A Phase 1 clinical trial for Hydronidone in the U.S. was completed, with plans to file a U.S. IND in 2026 for a Phase 2 clinical trial in MASH-associated liver fibrosis [48]. - F573, a clinical-stage product candidate for acute liver failure, is currently in a multi-stage Phase 2 clinical trial initiated in March 2023 [54]. - A Phase 1 clinical trial of Hydronidone for MASH-Associated Liver Fibrosis showed no serious adverse events, with treatment-emergent AEs including headache (25.0%) and constipation (16.7%) [93]. - The planned Phase 2 clinical trial of Hydronidone is expected to be initiated in 2026, pending regulatory feedback from the U.S. FDA [94]. - A Phase 3 trial of pirfenidone for the treatment of PD in China enrolled 272 patients across 18 clinical research centers [99]. - The Phase 1 clinical trial of F573 evaluated doses from 0.5 mg/kg to 2.0 mg/kg, with no evidence of drug accumulation observed [101]. - The Phase 2 clinical trial of F573 is designed in three stages, with the first stage completed in December 2024 [102]. Market Trends and Prevalence - The prevalence of Idiopathic Pulmonary Fibrosis (IPF) in China increased from 89,144 patients in 2018 to 161,000 patients in 2024, with a CAGR of 10.24% [63]. - The total market size of IPF in China grew from $23.9 million in 2018 to $196.1 million in 2024, reflecting a CAGR of 42% [63]. - The prevalence of Chronic Obstructive Pulmonary Disease (COPD) is significant, with a need for treatments that may slow long-term disease progression [60]. - The prevalence of RILI in China increased from 69,300 patients in 2018 to 91,800 patients in 2024, with a market size expected to reach $495.6 million by 2032 [71]. - The prevalence of CHB-associated liver fibrosis globally increased from 228.9 million patients in 2018 to 272.2 million patients in 2024, with a projected market growth to $817.2 million by 2032 [73]. - The prevalence of Acute Liver Failure (ALF) in China was 42,440 patients in 2018, expected to decline to 29,020 patients by 2032, with a market size projected to be $191.1 million [83]. - The prevalence of PAH in China increased from 50,600 patients in 2018 to 61,700 patients in 2024, projected to reach 71,300 patients by 2032 [86]. - The market size of PAH in China grew from $310 million in 2018 to $400 million in 2024, expected to reach $480 million by 2032, with a CAGR of 2.28% from 2024 to 2032 [86]. - The prevalence of COPD in China rose from 103.5 million patients in 2018 to 108.4 million patients in 2024, projected to reach 118.7 million patients by 2032 [89]. - The COPD pharmaceutical market in China increased from $880 million in 2018 to $1.13 billion in 2024, expected to reach $1.62 billion by 2032, representing a CAGR of 4.66% from 2024 to 2032 [89]. Regulatory Environment - The FDA requires substantial time and financial resources for obtaining regulatory approvals, which includes preclinical and clinical trials [127]. - The NDA submission process includes a substantial application user fee unless a waiver applies [134]. - The FDA's goal is to review standard applications within ten months and priority reviews within six months after filing [137]. - The company must navigate various regulatory requirements for drug development, including compliance with Good Laboratory Practices and Good Clinical Practices [125][127]. - The FDA may grant orphan drug designation to products intended to treat rare diseases affecting fewer than 200,000 individuals in the U.S. [146]. - Orphan drug exclusivity grants a product seven years of exclusive approval after the first FDA approval for the designated disease, preventing other applications for the same indication [147]. - Products with fast track designation can have more frequent interactions with the FDA review team and may be eligible for priority review, aiming for action within six months [141][144]. - Accelerated approval may be granted if a product shows effects on a surrogate endpoint likely to predict clinical benefit, with post-marketing studies required to verify this [142]. - Breakthrough therapy designation allows for expedited development and review for products showing substantial improvement over existing therapies [143]. - The FDA requires that any changes to approved products, including new indications, undergo prior review and approval [152]. - The FDA enforces strict regulations on marketing and promotion, allowing only claims approved in the product's labeling [155]. - Non-compliance with FDA regulations can lead to severe consequences, including product withdrawal, fines, and potential criminal penalties [156]. - The Hatch-Waxman Amendments allow for the approval of generic drugs through abbreviated new drug applications (ANDAs) once exclusivity periods for the reference listed drug expire [157][158]. - A Paragraph IV certification allows ANDA applicants to challenge existing patents, potentially delaying approval for up to 30 months if a lawsuit is initiated [160]. - The FDA allows 505(b)(2) New Drug Applications to rely on existing studies, potentially reducing the need for new clinical trials [162]. - Patent owners can apply for a patent extension of up to five years post-NDA approval, with a maximum total patent term of 14 years [164]. - Pharmaceutical companies must comply with various healthcare regulations, including the Anti-Kickback Statute and the False Claims Act, which can lead to significant penalties for violations [165][167]. - The Physician Payments Sunshine Act requires manufacturers to report payments to healthcare professionals, impacting transparency and compliance efforts [170]. Company Operations and Workforce - The company completed a business combination to acquire an indirect controlling interest in Gyre Pharmaceuticals on October 30, 2023 [123]. - As of December 31, 2025, the company has received all material permissions and approvals required for business operations, including a Drug Production License valid from August 2025 to July 2030 [213]. - The company has a dedicated in-house R&D team of 66 employees in the PRC, focusing on drug discovery, chemistry, manufacturing and control, clinical development, medical affairs, and regulatory affairs [215]. - The company is focused on addressing unmet clinical needs through cross-functional collaboration within its R&D organization [215]. - As of December 31, 2025, Gyre Pharmaceuticals had 618 total employees, with a significant portion in sales and marketing roles across the nation [206]. - The company has seven full-time employees in the United States as of December 31, 2025 [121]. - The company is headquartered in San Diego, California, and commenced operations in 2002 [123]. - Gyre Pharmaceuticals has maintained good working relationships with employees, with no material claims or labor disputes reported during the year ended December 31, 2025 [209]. - The company aims to provide competitive salary and benefits to its employees, exceeding local legal requirements [122]. Innovation and Intellectual Property - As of the date of the Annual Report, Gyre owns 18 granted patents globally and has multiple pending patent applications that are material to its business [109]. - As of December 31, 2025, the company owns four registered artwork copyrights, 28 registered software copyrights, and 65 registered trademarks in the PRC [118]. - The company emphasizes the importance of diversifying and expanding its product pipeline through both in-house R&D and external collaboration for long-term competitiveness [214]. - The company has obtained a High-tech Enterprise Certificate valid from October 2025 to October 2028, reflecting its commitment to innovation and technology [213]. - The Zhongguancun High-tech Enterprise status is valid from December 2024 to December 2027, further supporting the company's innovation strategy [213]. Compliance and Legal Risks - Coverage and reimbursement from third-party payors are critical for product acceptance, with significant uncertainty regarding reimbursement levels for approved products [182][184]. - Third-party payors increasingly challenge medical product pricing and may adopt restrictive policies that limit sales of approved products [184]. - Compliance with data privacy laws, such as HIPAA and state-specific regulations, is essential to avoid penalties and protect personal information [174][176]. - The company may face legal risks and compliance costs due to evolving privacy laws, including the California Consumer Privacy Act [179]. - The use of artificial intelligence and machine learning in operations may be subject to regulatory scrutiny regarding data bias and discrimination [180]. - Failure to comply with healthcare laws can result in civil, criminal penalties, and reputational harm, impacting overall business operations [173][181]. Legislative Impact - The Inflation Reduction Act of 2022 allows CMS to negotiate prices for high-spend drugs, with the first ten drugs announced for negotiation on August 29, 2023 [187]. - The IRA introduces an "inflation rebate" for Medicare patients, requiring drug manufacturers to pay rebates if prices increase faster than inflation, effective from 2023 [187]. - The ACA has significantly impacted the pharmaceutical industry, including changes to Medicaid Drug Rebate calculations and the elimination of the "donut hole" in Medicare Part D starting in 2025 [192]. - The IRA's impact on commercialization and competition remains uncertain, with ongoing legislative interest in drug pricing practices [196].

Revenue Performance - Total revenues for Q4 2025 were $2.2 million, up from $1.3 million in Q4 2024, driven by higher product sales and increased engineering services [3]. - For the full year 2025, total revenues reached $6.3 million, a 9% increase from $5.8 million in 2024, with product revenues increasing by 4% to $4.7 million [5]. Net Loss - The net loss attributable to common shareholders for Q4 2025 was $8.7 million, or $0.12 per share, compared to a loss of $13.7 million, or $0.16 per share, in Q4 2024 [4]. - The full year net loss attributable to common shareholders was $32.3 million, or $0.42 per share, significantly improved from a loss of $73.5 million, or $1.08 per share, in 2024 [9]. Expenses - Research and Development expenses increased by 31% to $12.6 million in 2025, primarily due to higher costs associated with LX1 smart glasses and waveguide product development [7]. - Selling and Marketing expenses decreased by 33% to $5.5 million in 2025, attributed to reduced bad debt expense and lower salary costs due to headcount reductions [8]. - General and Administrative expenses decreased by 32% to $11.6 million in 2025, largely due to a reduction in non-cash stock-based compensation [9]. Cash Flow and Position - The company reduced operating cash usage by approximately $5.0 million in 2025, with net cash flows used in operating activities totaling $18.8 million [2][10]. - As of December 31, 2025, the company had cash and cash equivalents of $21.2 million and a working capital position of $22.3 million [10]. Future Outlook - The company anticipates broader growth opportunities in 2026, particularly in OEM smart glasses programs and defense-related initiatives [11].

Financial Performance - The company incurred net losses of $189.0 million and $255.5 million for the fiscal years ended January 31, 2026, and January 31, 2025, respectively, with an accumulated deficit of $2,149.7 million as of January 31, 2026[92]. - The company’s strategy focuses on long-term growth, which may result in continued operating losses in the near and medium term[94]. - The company has incurred substantial net operating losses (NOLs) and may face limitations on utilizing these NOLs due to ownership changes, impacting future profitability[213]. - The trading price of the company's Class A common stock has been volatile, influenced by various factors including overall market performance and changes in financial projections[217]. - The company’s financial performance may differ from projections due to various risks and uncertainties, with no obligation to update such projections[228]. Revenue Growth Strategies - The company aims to attract new customers and convert free users to paid subscriptions, which is critical for revenue growth[102]. - The company’s subscription-based model means that customer renewal rates are crucial, and any decline could negatively affect revenue growth[105]. - The company offers free and trial subscription plans to promote brand awareness, but if these do not convert to paying customers, it may harm business growth and financial condition[106]. - The flagship product, Asana collaborative work management platform, accounts for substantially all revenue through seat-based licenses, highlighting the dependency on market demand for continued success[107]. - The company plans to expand its sales capabilities and leverage direct sales force and channel partners to increase platform usage and market acceptance[116]. Market and Competitive Landscape - The company operates in a rapidly changing industry characterized by technological innovation and intense competition, which may impact its growth prospects[90]. - The company faces competition from various companies, including those offering productivity suites and vertical solutions, which may impact market share and pricing strategies[111]. - The market for work management solutions is evolving rapidly, with low barriers to entry, leading to potential new competitors and alternative solutions[114]. - The company anticipates that macroeconomic conditions, such as fluctuating interest rates and economic downturns, may impact customer spending and adoption of its platform[105]. Security and Compliance Risks - Security incidents pose significant risks, including potential regulatory actions, reputational harm, and loss of revenue, due to the sensitive nature of the information handled[118]. - Ransomware attacks are increasingly prevalent, potentially disrupting operations and leading to loss of confidential information and income[119]. - The company has experienced security incidents in the past, and there is no assurance that current security measures will be effective in preventing future breaches[122]. - Any security breach could lead to significant legal and financial exposure, including fines and loss of confidence, adversely affecting business operations[128]. - The company is subject to stringent U.S. and foreign laws regarding artificial intelligence, privacy, data protection, and security, which could lead to regulatory investigations and significant penalties for non-compliance[189]. Human Capital and Organizational Challenges - The company faces intense competition for qualified personnel, particularly in the San Francisco Bay Area, which may hinder its ability to execute business strategies and growth plans[150]. - The company has invested substantial resources in maintaining its culture, which is essential for employee engagement and retention as it grows[153]. - The loss of key personnel, including the CEO, could disrupt operations and adversely affect growth potential[149]. - The company must provide efficient customer support globally as its user base expands, necessitating the hiring of additional support personnel[160]. Regulatory and Legal Considerations - Compliance with evolving AI regulations, such as the EU AI Act, may necessitate changes in business practices and could lead to substantial fines[134]. - The company faces risks related to intellectual property claims, which could divert management attention and incur significant legal costs[174]. - Non-compliance with the EU GDPR and UK GDPR can trigger fines of up to €20 million or 4% of global revenues, along with restrictions on data processing[191]. - The evolving landscape of privacy regulations may require the company to adjust its marketing strategies and could impair its ability to reach new customers[194]. Financial Structure and Capital Management - The company has a Senior Secured Credit Facility with a total principal amount of up to $150 million, which includes a term loan of $50 million and a revolving loan of up to $100 million[215]. - Financial covenants in the Senior Secured Credit Facility require the company to maintain a consolidated adjusted quick ratio of 1.25 to 1.00 and a minimum cash adjusted EBITDA, tested quarterly[216]. - The company may issue additional capital stock or convertible securities, which could lead to significant dilution for existing shareholders[227]. - The dual class structure of the company's common stock concentrates voting control with founders and executives, potentially limiting the influence of other shareholders[220]. Currency and Foreign Operations - The company is exposed to fluctuations in foreign currency exchange rates, particularly with the Euro, British Pound, and other currencies[371]. - The company may face adverse effects on revenues and results of operations due to declines in the value of foreign currencies relative to the U.S. dollar[244]. - In the year ended January 31, 2026, 28% of the company's sales were denominated in currencies other than U.S. dollars[372]. - The company does not currently engage in derivative or hedging transactions for foreign currency exposure but may consider it in the future[373].

Financial Performance - Consolidated net sales for 2025 were $276.2 million, down 5% from $290.3 million in 2024[101] - Gross earnings as a percentage of net sales decreased to 43.2% in 2025 from 45.3% in 2024, primarily due to higher costs from incremental tariffs[105] - Operating earnings fell 20% to $29.2 million in 2025, compared to $36.6 million in 2024[101] - Net earnings decreased by 24% to $23.1 million, or $2.41 per diluted share, down from $30.3 million, or $3.16 per diluted share, in 2024[101] - Retail segment net sales decreased 8% to $35.7 million in 2025, primarily due to lower direct-to-consumer sales[112] Brand Performance - The Florsheim brand achieved record sales of $92.0 million in 2025, a 2% increase over 2024[94] - Nunn Bush sales declined 10% for the year, while Stacy Adams and BOGS saw declines of 9% and 11%, respectively[95][96][97] - Florsheim Australia's net sales were $23.7 million in 2025, showing a 2% increase in local currency compared to $23.6 million in 2024[114] - Gross earnings as a percentage of net sales for Florsheim Australia improved to 61.5% in 2025 from 61.0% in 2024[116] Costs and Expenses - The company paid approximately $16 million in incremental tariffs in 2025 and filed a lawsuit for a refund related to these tariffs[89] - Interest income decreased to $3.0 million in 2025 from $3.7 million in 2024, primarily due to lower interest rates[117] - The effective tax rate increased to 28.0% in 2025 from 23.9% in 2024, influenced by state taxes and a valuation allowance on deferred tax assets[118] Cash Flow and Liquidity - Cash and marketable securities totaled $100.9 million at December 31, 2025, with no debt outstanding on the revolving line of credit[102] - Net cash provided by operating activities was $37.3 million in 2025, down from $37.7 million in 2024, attributed to lower net earnings[120] - The company has approximately $5.9 million in cash and cash equivalents held by foreign subsidiaries, indicating strong liquidity[129] Shareholder Returns and Capital Management - Cash dividends paid in 2025 totaled $7.7 million, compared to $9.7 million in 2024[123] - The company repurchased 176,691 shares for $5.3 million in 2025, a significant increase from 19,841 shares for $0.6 million in 2024[124] - Capital expenditures were $1.8 million in 2025, with expectations for 2026 ranging between $1.0 million and $3.0 million[121] Strategic Decisions - The strategic decision was made to wind down operations of the Forsake brand due to lack of growth and profitability, with no material impact expected on consolidated financial statements[98] - As of December 31, 2025, the unfunded benefit obligation was $8.1 million, down from $10.4 million in 2024[137]

Financial Performance - Fourth quarter 2025 net income was $3.7 million, or $0.14 per share, on total operating revenues of $385.4 million, compared to $20.2 million and $0.77 per share on revenues of $465.1 million in the same period last year[1][2][6] - Operating income for the fourth quarter 2025 was $17.5 million, with an operating margin of 4.5%, down from $38.3 million and 8.2% in the prior year[2][3] - EBITDA for the fourth quarter 2025 was $57.1 million, representing a margin of 14.8%, compared to $73.5 million and 15.8% in the same period last year[3] - Total operating revenues for the company were $385,427,000, down 17.1% from $465,131,000 year-over-year[32] - Adjusted income from operations for the thirteen weeks ended December 31, 2025, was $17,490,000 compared to $38,283,000 for the same period in 2024, a decrease of 54.5%[36] - Adjusted EBITDA for the thirteen weeks ended December 31, 2025, was $57,128,000, down from $73,505,000 in 2024, a decline of 22.3%[36] Segment Performance - Contract logistics segment revenues decreased 12.6% to $268.6 million, primarily due to the absence of $51.3 million from a specialty development project completed in the prior year[7] - Intermodal segment revenues fell 27.9% to $52.7 million, driven by lower load volumes and reduced pricing, with operating losses of $(10.6) million[10][12] - Trucking segment revenues decreased 23.6% to $64.1 million, including $15.3 million from brokerage services, down from $22.8 million in the prior year[13][17] - Contract logistics segment operating revenues decreased to $268,646,000 from $307,357,000, a decline of 12.5% year-over-year[32] - Intermodal segment operating revenues fell to $52,727,000 from $73,095,000, representing a decrease of 28% year-over-year[32] - Trucking segment operating revenues decreased to $64,054,000 from $83,840,000, a decline of 23.8% year-over-year[32] Operational Metrics - Load volumes in the trucking segment declined 25.9% year-over-year, while average operating revenue per load increased 6.7%[17] - Average operating revenue per load in the intermodal segment decreased to $489 from $537, a decline of 8.9%[32] - Average operating revenue per load in the trucking segment increased to $2,330 from $2,183, an increase of 6.8%[32] - The number of loads in the trucking segment decreased to 26,737 from 36,068, a decline of 25.8% year-over-year[32] - The average number of value-added direct employees in the contract logistics segment increased to 7,392 from 7,337, a growth of 0.7%[30] Cash and Debt Position - As of December 31, 2025, the company held $26.8 million in cash and cash equivalents, with total outstanding debt of $802.3 million[19][28] Strategic Focus - The company is focused on driving efficiencies and executing cost-saving initiatives to support profitable growth amid muted market conditions[5] Dividend Declaration - The company declared a quarterly dividend of $0.105 per share, payable on April 3, 2026[18]

Industry Dynamics - The steel industry is highly cyclical and influenced by global economic conditions, with significant volatility in demand and pricing due to factors like trade policies and production overcapacity [28]. - Global conflicts and geopolitical events may negatively impact demand for steel and commodity prices, affecting the company's financial condition [35][36]. - The Brazilian economy remains sensitive to government policies, which could influence Gerdau's operational performance if not effectively implemented [115]. - The Brazilian economy is significantly influenced by international economic conditions, particularly those in the United States, which can affect market prices and access to capital [117][119]. Competition and Market Position - The company faces significant competition from both domestic and foreign steel producers, which may pressure profitability and market share [38]. - The Brazilian government has implemented temporary tariff hikes on certain steel products since 2024, but these measures have proven insufficient to counteract the impact of subsidized imports [45]. - Gerdau is the largest Brazilian producer of steel and the largest recycling company in Latin America, transforming approximately 10 million tonnes of scrap into steel products annually [134]. - Approximately 20% of steel shipments imported to the U.S. were previously subject to tariffs; the new 50% tariffs are expected to enhance Gerdau's competitiveness in the U.S. market [90]. Financial Performance - In 2025, Gerdau's total consolidated net sales reached R$ 69.9 billion, an increase from R$ 67.0 billion in 2024 [183]. - Gerdau's total consolidated assets were R$ 81.7 billion as of December 31, 2025 [173]. - The company maintained its investment grade rating with S&P (BBB), Fitch (BBB), and Moody's (Baa2) despite a lower local sovereign credit rating [74]. - Gerdau's financial condition could be materially impacted if the Brazilian government does not implement measures against subsidized steel imports [60]. Production and Capacity - The Ouro Branco mill accounted for 55.2% of the total crude steel output in the Brazil Business Segment in 2025, highlighting its significance in the company's operations [48]. - Crude steel production in 2025 was 12.1 million tonnes, up from 11.7 million tonnes in 2024, reflecting a growth of 3.6% [184]. - Gerdau's shipments totaled 11.4 million tonnes in 2025, compared to 11.0 million tonnes in 2024, marking a 3.4% increase [182]. - The North America Business Segment has an annual production capacity of approximately 6.9 million tonnes of crude steel and 6.0 million tonnes of finished steel products [191]. Cost and Pricing Pressures - Rising energy costs and fluctuations in raw material prices, particularly iron ore and coking coal, could adversely affect production costs and profit margins [47][50]. - The company is vulnerable to inflationary cost pressures, especially regarding energy prices, which could adversely affect its financial results [51]. - Compliance costs related to environmental regulations may increase, negatively impacting the company's financial condition if requirements become stricter [91]. - Future laws aimed at reducing greenhouse gas emissions could lead to increased operational costs and affect cash flows and financial performance [93]. Logistics and Operations - Logistics costs are a significant factor in maintaining competitive prices, with Gerdau's mills strategically located to reduce costs and enhance customer service [218]. - Gerdau employs tailored solutions for various transportation modes to monitor and reduce logistic costs, contributing to a reduction in carbon footprint [219]. - The company has a significant interest in MRS Logística, enhancing its logistics capabilities across Brazil's main economic centers [220]. - Gerdau utilizes multiple ports for product delivery, with most exports shipped from the Praia Mole Private Steel Terminal in Vitoria, Espírito Santo [221]. Regulatory and Geopolitical Risks - Gerdau's operations may be adversely affected by regulatory risks related to trade restrictions on steel products, which could increase product prices or limit export capabilities [88]. - Political instability in Brazil may adversely affect investor confidence and economic performance, impacting Gerdau's operations and financial results [113]. - The reinstatement of steel import tariffs by the U.S. administration, initially set at 25% and later increased to 50%, represents a significant shift in trade policy aimed at strengthening domestic steel production [89]. Environmental and Social Factors - Gerdau is involved in several tax, environmental, civil, and labor disputes that may negatively affect its financial condition and results of operations [85]. - Brazil's carbon market regulation, established on December 11, 2024, will implement penalties for non-compliance, impacting operational costs over a phased implementation period [97]. - The company relies on a diverse and inclusive culture to attract and retain senior management, which is crucial for maintaining competitive advantage [123].

Production Capacity and Sales - In 2025, the company had an annual alcohol production capacity of 330 million gallons, including up to 110 million gallons of specialty alcohols[200]. - The company plans to increase production capacity at its Pekin dry mill by approximately 8% in the second half of 2026[222]. - Total gallons of alcohol sold decreased by 35.9 million gallons, or 9%, to 350.1 million gallons in 2025 from 386.0 million gallons in 2024[236]. - Renewable fuel production sales volume decreased by 31.0 million gallons, or 17%, to 155.2 million gallons in 2025 from 186.2 million gallons in 2024[236]. - Net sales of alcohol from the Western production segment declined by $48.1 million, or 42%, to $67.3 million for 2025, with a total volume decrease of 27.9 million gallons, or 46%[250]. Financial Performance - For the fourth quarter, gross profit increased by $16.6 million and net income improved by $63.5 million compared to the same period in 2024[215]. - Consolidated net sales decreased by $47.3 million to $0.9 billion in 2025 from $1.0 billion in 2024[231]. - Net income attributable to common stockholders increased by $72.4 million to $12.1 million in 2025 from a net loss of $60.3 million in 2024[231]. - Gross profit increased by $25.2 million to $34.9 million in 2025 from $9.7 million in 2024 due to stronger commodity crush margins and lower corn costs[236]. - Gross profit improved to $34.9 million, representing a gross margin of 3.8% for 2025, up from $9.7 million and 1.0% in 2024[253]. Costs and Expenses - Average sales price per gallon increased by $0.07, or 4%, to $2.02 in 2025 from $1.95 in 2024, driven by higher renewable fuel prices[232]. - Average cost of corn declined by 1% to $4.68 per bushel in 2025 from $4.72 per bushel in 2024[235]. - Selling, general and administrative expenses decreased by $2.5 million to $27.2 million for 2025, primarily due to lower operating costs[258]. - Interest expense increased by $3.2 million to $10.8 million for 2025, attributed to higher debt balances and interest rates[263]. Cash Flow and Working Capital - Cash generated from operating activities was $13.2 million in 2025, a significant improvement from a cash usage of $3.5 million in 2024, primarily due to a $72.3 million increase in net income[273]. - Cash used in investing activities totaled $7.4 million in 2025, with $4.6 million allocated to property and equipment and $7.3 million for the acquisition of Kodiak Carbonic[275]. - Cash used in financing activities was $16.4 million in 2025, including $10.1 million for paying down Kinergy's line of credit and $5.0 million for principal payments on term debt[276]. - Working capital increased to $96.8 million at December 31, 2025, up from $95.3 million at December 31, 2024, driven by a $2.8 million increase in current assets[270]. - As of December 31, 2025, cash and cash equivalents were $25.7 million, down 29% from $36.2 million in 2024[268]. Investments and Future Commitments - Capital expenditures for 2026 are planned to be approximately $25 million, with 45% allocated for maintenance and 55% for optimization projects[220]. - Future commitments for capital projects totaled $17.5 million, scheduled to be satisfied through 2026[283]. - The company is assessing large-scale CO2 utilization and sequestration opportunities at its Pekin Campus to capture more value[223]. Asset Management and Impairments - The company recorded asset impairments of $0.8 million, $21.4 million, and $0.6 million for the years ended December 31, 2025, 2024, and 2023, respectively[286]. - The company recognized net gains of $8.1 million related to changes in the fair values of derivative contracts for the year ended December 31, 2025[297]. Risk Assessment - A sensitivity analysis estimated that a hypothetical 10% adverse change in ethanol prices could result in a $27.4 million decrease in pre-tax income[299].

Production and Sales - Empire Petroleum Corporation's net production volumes for 2025 included 524,646 barrels of oil, 860,599 Mcf of natural gas, and 150,224 barrels of natural gas liquids, totaling 818,303 Boe[59]. - The average price per barrel of oil in 2025 was $60.32, down from $71.44 in 2024, while natural gas prices increased to $1.04 per Mcf from $0.37[59]. - For 2025, 66% of revenues from oil, natural gas, and NGLs sales were generated from three customers, down from 78% from four customers in 2024[71]. - The company sold 66% of its oil, natural gas, and NGLs revenues to three customers, with no other customer accounting for more than 10%[120]. - Oil sales dropped by $9.87 million, or 24%, from $41.52 million in 2024 to $31.65 million in 2025[234]. - Gas sales increased significantly by 161%, from $0.34 million in 2024 to $0.90 million in 2025[234]. - NGLs sales decreased by 24%, from $2.13 million in 2024 to $1.62 million in 2025[234]. Reserves and Production Capacity - Proved developed reserves at December 31, 2025, were 5,878 MBbls of oil, 4,300 MMcf of natural gas, and 1,030 MBbls of NGLs, totaling 7,625 MBoe, a decrease from 9,227 MBoe in 2024[62]. - The company operates approximately 1,077 gross (753 net) wells as of December 31, 2025[60]. - The company has logged five vertical pilot wells in the Starbuck Field, confirming three additional primary zones of interest and two secondary zones of interest for future development[54]. - In 2024, Empire completed a program for enhanced oil recovery (EOR) in the Starbuck Field, resulting in increased production anticipated to continue into 2026[53]. Financial Performance - Total product revenues for 2025 decreased to $34.16 million from $43.99 million in 2024, a decline of approximately 22%[234]. - The operating loss for 2025 was $71.32 million, compared to a loss of $13.67 million in 2024, indicating a substantial deterioration in performance[234]. - The company recorded a total impairment loss of $51.3 million for the year ended December 31, 2025, due to annual analysis of oil and natural gas properties[124]. - Impairment charges of $51.29 million were recorded in 2025, a significant increase from zero in 2024[234]. - The average price per barrel of oil in 2025 was $60.32, down 15.5% from $71.44 in 2024[232]. - The company experienced a negative working capital of approximately $16.2 million as of December 31, 2025, a decrease of $7.2 million from the prior year[217]. Operational Costs and Expenses - Empire's total lease operating expenses per Boe were $30.83 in 2025, slightly down from $31.16 in 2024[59]. - Lease operating expenses decreased by 8%, from $27.55 million in 2024 to $25.22 million in 2025[234]. - Production and ad valorem taxes decreased by 24%, from $3.77 million in 2024 to $2.85 million in 2025[234]. - Depreciation, depletion, amortization, and accretion increased by 13%, from $11.26 million in 2024 to $12.73 million in 2025[234]. Debt and Financial Obligations - Total indebtedness as of December 31, 2025, was approximately $16.2 million, including a $16.8 million revolving loan agreement, with $2.5 million unused[94]. - The company may be required to restructure or refinance its existing debt if unable to service its indebtedness and other obligations[111]. - The company may not be able to generate sufficient cash flow to service its debt obligations, potentially leading to asset sales or additional equity financing[104]. - The company has $2.5 million available remaining on its Credit Facility, decreasing by $0.25 million monthly[110]. Market and Regulatory Risks - The company faces significant competition in acquiring properties and contracting for oil field services, with many competitors having larger financial and technical resources[72]. - The oil and natural gas industry is subject to extensive regulations that increase operational costs and affect profitability[76]. - The company may face substantial liabilities related to environmental regulations and clean-up costs[78]. - Legislative changes regarding greenhouse gas emissions could impose additional costs and affect the company's financial performance[159]. - The company is subject to various environmental regulations that could increase operating costs and potential liabilities associated with hazardous materials[128]. Strategic Initiatives and Future Outlook - Empire initiated a return-to-production program on four wells in the fourth quarter of 2024, focusing on facility work, which was completed in 2025[56]. - The company relies on capital from its two largest stockholders, which is critical for funding growth and drilling programs[100]. - The company has implemented a cybersecurity strategy that includes various security tools and employee training to manage cybersecurity risks[191]. - The company intends to retain future earnings for business development and debt repayment, rather than distributing dividends[175]. Environmental and Climate Risks - The company faces risks from climate change that could increase operating costs and limit exploration and production activities[137]. - The company may incur significant costs related to compliance with new or more stringent regulations on GHG emissions, which could adversely affect financial condition and results of operations[141]. - The company is exposed to risks associated with operating in limited geographic areas, as all proved reserves are concentrated in New Mexico, North Dakota, Montana, Texas, and Louisiana[119]. Stockholder and Corporate Governance - Approximately 55.3% of the company's common stock is held by two stockholders, which may influence corporate decisions[186]. - The company has not declared or paid any dividends on its common stock and does not anticipate doing so in the foreseeable future[174]. - The company is classified as a "smaller reporting company" with annual revenues of less than $100 million and a public float of less than $700 million[177].

Loan Portfolio - As of December 31, 2025, the total loans receivable amounted to $1.81 billion, with commercial real estate and multi-family loans constituting $1.34 billion, or 73.9% of the total [31]. - The commercial real estate portfolio decreased by $41.6 million, or 3.0%, from December 31, 2024, when it was $1.39 billion, or 76.1% of the total [31]. - Construction loans totaled $209.5 million, representing 11.5% of total loans receivable, and decreased by $47.7 million, or 18.5%, since December 31, 2024 [40]. - Residential first-lien mortgage loans increased significantly to $163.8 million, or 9.0% of the total portfolio, reflecting a rise of $95.8 million, or 140.8%, since December 31, 2024 [41]. - Commercial and industrial loans amounted to $76.6 million, or 4.2% of the total loan portfolio, decreasing by $16.3 million, or 17.6%, since December 31, 2024 [36]. - Loans receivable remained consistent at $1.82 billion for both December 31, 2024, and December 31, 2025 [44]. - The Bank's loan portfolio included approximately $1.34 billion in commercial real estate loans, representing 73.9% of the total loan portfolio, and $209.5 million in construction loans, accounting for 11.5% [141]. Credit Losses and Nonperforming Assets - As of December 31, 2025, the allowance for credit losses on loans was $20.3 million, a decrease from $23.7 million as of December 31, 2024 [57]. - Nonperforming assets totaled $16.6 million as of December 31, 2025, a decrease of $10.6 million compared to December 31, 2024 [58]. - The allowance for credit losses to total loans outstanding was 1.12% as of December 31, 2025, down from 1.30% in 2024 [60]. - Total nonaccrual loans were $16.6 million, representing 0.91% of total loans outstanding as of December 31, 2025 [60]. - Net charge-offs during the period were $9.9 million, compared to $353,000 in the previous year [60]. - The commercial real estate segment accounted for 73.9% of the allowance for credit losses as of December 31, 2025 [61]. - The allowance for credit losses may not be sufficient to cover actual losses, which could adversely affect earnings if regulators require increases [152]. Regulatory Environment - The company is subject to various federal and state banking regulations, including maintaining reserves against deposits and restrictions on loan types and amounts [90]. - The company met all capital adequacy requirements on a fully phased-in basis as of December 31, 2025 [106]. - Under the risk-based capital requirements, total capital must equal at least 8.0% of risk-weighted assets, with a common equity Tier 1 capital requirement of at least 4.5% [104]. - The company qualifies as a "small bank holding company" with less than $3 billion in consolidated assets, exempting it from certain consolidated capital requirements [109]. - The Community Reinvestment Act (CRA) rating is "satisfactory" as of December 31, 2025, which is considered in applications for branch approvals and mergers [113]. - The company is prohibited from paying dividends if it would result in being undercapitalized or in default of any assessment due to the FDIC [99]. - Noncompliance with laws such as the USA PATRIOT and Bank Secrecy Acts could result in fines or sanctions, impacting the company’s ability to conduct acquisitions or establish new branches [209]. Financial Performance - Total deposits decreased by $56.4 million, or 2.78%, from $2.03 billion at December 31, 2024, to $1.98 billion at December 31, 2025 [80]. - Total stockholders' equity increased by $8.7 million, or 3.31%, to $271.5 million at December 31, 2025, driven by an increase in retained earnings of $9.8 million [84]. - The ratio of equity to total assets improved from 11.2% at December 31, 2024, to 11.9% at December 31, 2025 [84]. - Average total deposits for the year ended December 31, 2025, were $1.98 billion, an increase of $151.9 million compared to $1.83 billion for the year ended December 31, 2024 [178]. Competition and Market Risks - The company faces substantial competition in both loan origination and deposit attraction, which could impact net interest income and overall profitability [25][26]. - Increased competition for deposits may lead to higher interest rates on deposit accounts, impacting the cost of funds and net interest margin [175]. - The company faces substantial competition in originating loans from banks, credit unions, and non-bank financial service providers, which could reduce net income [174]. - The concentration of commercial real estate loans exposes the Bank to higher credit risk, as these loans depend on the successful operation of businesses for repayment [142]. Economic and Operational Risks - A recession in the local economy may lead to increased nonperforming loans, negatively impacting net income and potentially increasing provisions for loan losses [147]. - Small to mid-sized businesses, the primary borrowers, may struggle during economic downturns, impacting their ability to repay loans and harming the company's operating results [150]. - Disruptions in customers' supply chains could negatively impact their business operations and ability to repay loans [169]. - Global economic instability and geopolitical matters could materially affect the company's financial condition and results of operations [168]. Cybersecurity and Technology Risks - The Bank's cybersecurity measures include multiple layers of security controls and employee training to mitigate risks associated with cyber-attacks [131]. - The Bank has not experienced significant data loss or material financial losses related to cybersecurity attacks, but risks are expected to remain high due to evolving threats [133]. - Cybersecurity risks have increased due to the proliferation of new technologies, including AI, and the sophistication of cyber threat actors, which may require significant additional resources to enhance protective measures [194]. - The perception of a successful cyber-attack could damage the company’s reputation, leading to loss of customers and significant business disruption [197]. Growth and Strategic Challenges - The company’s growth strategy has substantially increased expenses, impacting results of operations, and it must attract cost-efficient deposits to ensure long-term profitability [201]. - The ability to attract and retain skilled employees is critical for managing growth and implementing the company’s long-term business strategy [202]. - Regulatory changes could significantly affect the company’s business practices, including the ability to offer new products and could lead to increased compliance costs [207]. - The company cannot guarantee that its capital allocation strategies will enhance long-term shareholder value, which may constrain growth in earnings and return on equity [204].

Financial Performance - Elutia divested its cardiac implantable electronic device (CIED) product family for an aggregate purchase price of up to $88.0 million in cash, with $80.4 million received at closing[26]. - The sale of the CIED business resulted in a net gain of $76.1 million for Elutia in 2025[32]. - The company reported losses from continuing operations of $26.9 million and $30.7 million for the years ended December 31, 2025, and 2024, respectively[139]. - The company completed the sale of its cardiac implantable electronic device (CIED) business on October 1, 2025, which may impact future financial contributions[135]. - The sale of the Orthobiologics Business generated approximately $14.6 million, with potential additional earn-out payments of up to $20.0 million[34]. - The sale of the Orthobiologics Business to Berkeley on November 8, 2023, resulted in an initial payment of $14.6 million, with potential additional earn-out payments of up to $20.0 million based on future revenues[166]. - The indemnity holdback from the sale to Berkeley amounts to $1.5 million, which will be retained for 24 months post-transaction[166]. Product Development and Market Opportunities - Elutia's lead development programs include NXT-41 and NXT-41x, aimed at addressing complications in reconstructive procedures, with a focus on local antibiotic drug delivery[28]. - The U.S. market opportunity for Elutia's next-generation antibiotic-eluting biomatrix products is estimated at approximately $1.5 billion[42]. - EluPro, the first antibiotic-eluting biologic matrix envelope, achieved annualized revenues of approximately $19 million, with EluPro contributing about $14 million[41]. - The U.S. market opportunity for biologic matrices is estimated at $1.5 billion, accounting for over 60% of reconstruction spending[75]. - The lead development programs, NXT-41 and NXT-41x, are expected to receive FDA clearance in the second half of 2026 and mid-2027, respectively[77]. - The Cook License Agreement allows the company to use porcine SIS-ECM technologies in specified cardiovascular applications, with a supply agreement in effect until December 31, 2028[87]. Regulatory and Compliance - The company’s products are subject to extensive regulation by the FDA and other authorities, ensuring safety and effectiveness for intended uses[89]. - Medical devices are classified into three categories based on risk, with Class I devices being low-risk and usually exempt from premarket notification, while Class III devices require more rigorous PMA approval[90]. - The 510(k) clearance process typically takes three to twelve months, but may extend longer if additional information is required by the FDA[93]. - Significant modifications to a device after 510(k) clearance necessitate a new clearance or PMA approval, with non-compliance potentially leading to regulatory fines[94]. - The PMA process requires extensive pre-clinical and clinical data, with FDA having 180 days for review, often extending beyond that[95]. - Clinical studies must adhere to FDA's IDE regulations, requiring approval from an Institutional Review Board (IRB) before commencing human trials[98]. - Regulatory compliance failures could lead to enforcement actions, impacting the company's ability to manufacture and sell products effectively[211]. Market Challenges and Competition - Approximately 15 to 20 percent of surgical site infections occur in certain settings, highlighting the unmet medical need for improved solutions[37]. - SimpliDerm competes against products like AbbVie's AlloDerm and various synthetic mesh products, with significant competition in the soft tissue repair market[63]. - Competitive pressures from other companies with greater resources and established products could hinder the company's market penetration and profitability[185]. - Pricing pressures from cost-containment efforts by customers and third-party payors may adversely affect sales and profitability[189]. - The healthcare industry is experiencing consolidation, which may exert downward pressure on product prices and affect the company's financial performance[193]. - The reimbursement landscape for the company's products is complex, with variations in coverage and reimbursement policies among U.S. payors[118]. - The healthcare industry trend towards cost containment may impact the company's ability to sell products profitably if reimbursement levels decrease[206]. Operational Risks - The company faces ongoing litigation related to the FiberCel and VBM recalls, with 110 separate lawsuits or claims received since September 2021[143]. - The company has recorded a total estimated contingent liability of $11.2 million related to the resolution of lawsuits from the FiberCel and VBM recalls[141]. - As of December 31, 2025, the company has no insurance coverage for the FiberCel recall liability, which may adversely affect its cash flow and financial position[142]. - The company may struggle to pass on cost increases to customers, potentially leading to lower margins and profitability[198]. - Warranty claims and product recalls could result in significant costs and negatively affect the company's financial condition[207][212]. - The company relies on a limited number of suppliers, which poses risks of significant product development costs and delivery delays if any key supplier is lost[168]. - The current volatility in capital and credit markets could impede the company's access to financing, potentially leading to deferred capital expenditures[160]. - The company may face challenges in maintaining adequate product liability insurance coverage, which could expose it to significant liabilities[149]. - Increased prices for raw materials and supplies could negatively impact the company's profitability and financial condition[196][197]. - Inaccurate demand forecasting and inventory management could result in lost sales and decreased margins, adversely affecting financial results[199]. - The company faces risks of inventory obsolescence due to the shelf life of products, which could lead to material adverse effects on profitability[200]. Human Resources and Cybersecurity - The company has 26 employees as of December 31, 2025, with 25 employed full-time, indicating a stable workforce[126]. - Company faces increasing risks from cyberattacks, with sophisticated groups targeting sensitive data and IT systems[218]. - Potential financial impacts from unauthorized access or data breaches could lead to legal claims and damage to reputation[221]. - Company may experience challenges in attracting and retaining skilled personnel due to intense competition in the healthcare industry[224]. - Cybersecurity insurance may not cover all claims, which could adversely affect financial condition if significant claims arise[223]. - The evolving nature of cyber threats complicates prevention and detection efforts, increasing operational risks[218]. - Retaining key management personnel is essential for navigating business challenges and achieving growth objectives[224].