PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents CarMax's unaudited consolidated financial statements and detailed notes for periods ended August 31, 2025 and 2024 [Consolidated Statements of Earnings (Unaudited)](index=3&type=section&id=Consolidated%20Statements%20of%20Earnings%20(Unaudited)) Consolidated Statements of Earnings (Unaudited) – Key Metrics | Metric | Three Months Ended Aug 31, 2025 (in thousands) | Three Months Ended Aug 31, 2024 (in thousands) | Change (%) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------- | | Net Sales and Operating Revenues | $6,594,684 | $7,013,529 | -6.0% | | Gross Profit | $717,666 | $760,467 | -5.6% | | CARMAX AUTO FINANCE INCOME | $102,638 | $115,580 | -11.2% | | Selling, general and administrative expenses | $601,093 | $610,562 | -1.6% | | Net Earnings | $95,378 | $132,809 | -28.2% | | Diluted Net Earnings Per Share | $0.64 | $0.85 | -24.7% | | Metric | Six Months Ended Aug 31, 2025 (in thousands) | Six Months Ended Aug 31, 2024 (in thousands) | Change (%) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------- | | Net Sales and Operating Revenues | $14,141,225 | $14,126,926 | 0.1% | | Gross Profit | $1,611,289 | $1,552,362 | 3.8% | | CARMAX AUTO FINANCE INCOME | $244,288 | $262,550 | -7.0% | | Selling, general and administrative expenses | $1,260,736 | $1,249,140 | 0.9% | | Net Earnings | $305,759 | $285,249 | 7.2% | | Diluted Net Earnings Per Share | $2.02 | $1.82 | 11.0% | [Consolidated Statements of Comprehensive Income (Unaudited)](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) Consolidated Statements of Comprehensive Income (Unaudited) – Key Metrics | Metric | Three Months Ended Aug 31, 2025 (in thousands) | Three Months Ended Aug 31, 2024 (in thousands) | Change (%) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------- | | Net Earnings | $95,378 | $132,809 | -28.2% | | Other comprehensive loss, net of taxes | $(13,060) | $(52,621) | -75.2% | | TOTAL COMPREHENSIVE INCOME | $82,318 | $80,188 | 2.6% | | Metric | Six Months Ended Aug 31, 2025 (in thousands) | Six Months Ended Aug 31, 2024 (in thousands) | Change (%) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------- | | Net Earnings | $305,759 | $285,249 | 7.2% | | Other comprehensive loss, net of taxes | $(24,386) | $(50,222) | -51.4% | | TOTAL COMPREHENSIVE INCOME | $281,373 | $235,027 | 19.7% | [Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) Consolidated Balance Sheets (Unaudited) – Key Metrics | Metric | As of Aug 31, 2025 (in thousands) | As of Feb 28, 2025 (in thousands) | Change (%) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Cash and cash equivalents | $540,374 | $246,960 | 118.8% | | Inventory | $3,149,570 | $3,934,622 | -20.0% | | Auto loans held for investment, net | $16,386,236 | $17,242,789 | -4.9% | | TOTAL ASSETS | $27,079,644 | $27,404,206 | -1.2% | | TOTAL LIABILITIES | $20,879,122 | $21,161,218 | -1.3% | | TOTAL SHAREHOLDERS' EQUITY | $6,200,522 | $6,242,988 | -0.7% | [Consolidated Statements of Cash Flows (Unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Consolidated Statements of Cash Flows (Unaudited) – Key Metrics (Six Months Ended Aug 31) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :--------------------------------- | :------------------ | :------------------ | :--------- | | NET CASH PROVIDED BY OPERATING ACTIVITIES | $1,085,037 | $501,414 | 116.4% | | NET CASH USED IN INVESTING ACTIVITIES | $(272,466) | $(215,463) | 26.5% | | NET CASH USED IN FINANCING ACTIVITIES | $(467,706) | $(283,067) | 65.9% | | Increase in cash, cash equivalents, and restricted cash | $344,865 | $2,884 | 11865.1% | | CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD | $1,305,175 | $1,253,294 | 4.1% | [Consolidated Statements of Shareholders' Equity (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity%20(Unaudited)) Consolidated Statements of Shareholders' Equity (Unaudited) – Key Metrics (Six Months Ended Aug 31) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :--------------------------------- | :------------------ | :------------------ | :--------- | | Net earnings | $305,759 | $285,249 | 7.2% | | Other comprehensive loss | $(24,386) | $(50,222) | -51.4% | | Share-based compensation expense | $54,328 | $54,036 | 0.5% | | Repurchases of common stock | $(384,873) | $(213,305) | 80.4% | | Balance as of August 31 | $6,200,522 | $6,179,609 | 0.3% | [Notes to Consolidated Financial Statements (Unaudited)](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) [1. Background](index=13&type=section&id=1.%20Background) CarMax operates in two segments: CarMax Sales Operations and CarMax Auto Finance, emphasizing an omni-channel customer experience - CarMax operates in two reportable segments: **CarMax Sales Operations** and **CarMax Auto Finance (CAF)**[25](index=25&type=chunk) - The company offers an **omni-channel experience**, empowering customers to buy vehicles online, in-store, or through a seamless combination[27](index=27&type=chunk) - ASU 2025-05 (credit losses for accounts receivable) is effective for fiscal year beginning **March 1, 2026**, and is not expected to have a material effect[31](index=31&type=chunk)[32](index=32&type=chunk) - ASU 2025-06 (internal-use software costs) is effective for fiscal year beginning **March 1, 2028**, and its effects are currently being evaluated[33](index=33&type=chunk) [2. Revenue](index=15&type=section&id=2.%20Revenue) CarMax recognizes revenue upon transfer of control, primarily from vehicle sales, EPPs, and third-party finance fees - Revenue is recognized when control of the good or service has been transferred to the customer, generally at the time of sale or upon delivery[34](index=34&type=chunk) Disaggregation of Revenue (Three Months Ended August 31) | Revenue Type | 2025 (in millions) | 2024 (in millions) | Change (%) | | :--------------------------------- | :----------------- | :----------------- | :--------- | | Used vehicle sales | $5,270.7 | $5,677.1 | -7.2% | | Wholesale vehicle sales | $1,149.6 | $1,154.5 | -0.4% | | Extended protection plan revenues | $115.1 | $121.4 | -5.2% | | Total net sales and operating revenues | $6,594.7 | $7,013.5 | -6.0% | - Profit-sharing revenues from ESPs are generally not recognized before they are paid due to variable consideration constraints[39](index=39&type=chunk) [3. CarMax Auto Finance](index=16&type=section&id=3.%20CarMax%20Auto%20Finance) CAF provides financing for CarMax retail vehicle purchases, aiming for additional profits and reduced reliance on third-party sources - CAF provides financing to qualified retail customers purchasing vehicles from CarMax to capture additional profits, cash flows, and sales while managing reliance on third-party finance sources[43](index=43&type=chunk) Components of CAF Income (Three Months Ended August 31) | Metric | 2025 (in millions) | 2024 (in millions) | Change (%) | | :--------------------------------- | :----------------- | :----------------- | :--------- | | Interest and fee income | $489.8 | $464.5 | 5.4% | | Interest expense | $(199.2) | $(193.7) | 2.8% | | Total interest margin | $290.6 | $270.8 | 7.3% | | Provision for loan losses | $(142.2) | $(112.6) | 26.3% | | CarMax Auto Finance income | $102.6 | $115.6 | -11.2% | Components of CAF Income (Six Months Ended August 31) | Metric | 2025 (in millions) | 2024 (in millions) | Change (%) | | :--------------------------------- | :----------------- | :----------------- | :--------- | | Interest and fee income | $975.2 | $917.0 | 6.3% | | Interest expense | $(396.7) | $(376.0) | 5.5% | | Total interest margin | $578.5 | $541.0 | 6.9% | | Provision for loan losses | $(243.9) | $(193.8) | 25.8% | | CarMax Auto Finance income | $244.3 | $262.6 | -7.0% | - CAF income does not include any allocation of indirect costs[45](index=45&type=chunk) [4. Auto Loans Held for Investment](index=17&type=section&id=4.%20Auto%20Loans%20Held%20for%20Investment) Auto loans held for investment are customer loans for retail vehicle sales, net of allowance for estimated loan losses Auto Loans Held for Investment, Net (in millions) | Metric | As of Aug 31, 2025 | As of Feb 28, 2025 | Change (%) | | :--------------------------------- | :----------------- | :----------------- | :--------- | | Auto loans held for investment | $16,779.7 | $17,594.6 | -4.6% | | Less: allowance for loan losses | $(507.3) | $(458.7) | 10.6% | | Auto loans held for investment, net | $16,386.2 | $17,242.8 | -4.9% | - The allowance for loan losses as a percent of total auto loans held for investment increased by **41 basis points** during the first six months of fiscal 2026, primarily due to unfavorable loan loss performance in loans originated in **2022 and 2023**[58](index=58&type=chunk) Past Due Loans (As of August 31, 2025, in millions) | Delinquency Status | Total Auto Loans Held for Investment | % of Total | | :--------------------------------- | :--------------------------------- | :--------- | | Current | $15,835.6 | 94.37% | | 31-60 days past due | $530.2 | 3.16% | | 61-90 days past due | $338.6 | 2.02% | | Greater than 90 days past due | $75.3 | 0.45% | | Total past due | $944.1 | 5.63% | | Total auto loans held for investment | $16,779.7 | 100.00% | [5. Derivative Instruments and Hedging Activities](index=21&type=section&id=5.%20Derivative%20Instruments%20and%20Hedging%20Activities) CarMax uses derivative instruments, mainly interest rate swaps, to manage interest rate risks on debt issuances - CarMax uses derivative instruments to manage exposures related to future known receipt or payment of uncertain cash amounts, primarily impacted by interest rates[63](index=63&type=chunk) Interest Rate Swaps Designated as Cash Flow Hedges (Notional Amount) | Date | Notional Amount (in billions) | | :--------------------------------- | :---------------------------- | | As of August 31, 2025 | $4.31 | | As of February 28, 2025 | $3.76 | - An estimated **$20.3 million** will be reclassified from AOCL as an increase to CAF income during the next **12 months**[64](index=64&type=chunk) [6. Fair Value Measurements](index=21&type=section&id=6.%20Fair%20Value%20Measurements) CarMax measures assets and liabilities at fair value using a three-tier hierarchy based on input observability Items Measured at Fair Value on a Recurring Basis (As of August 31, 2025, in thousands) | Category | Level 1 | Level 2 | Total | | :--------------------------------- | :-------- | :-------- | :-------- | | Assets: Money market securities | $1,186,946 | — | $1,186,946 | | Assets: Mutual fund investments | $31,906 | — | $31,906 | | Assets: Derivative instruments designated as hedges | — | $734 | $734 | | Total assets at fair value | $1,218,852 | $734 | $1,219,586 | | Liabilities: Derivative instruments designated as hedges | — | $(11,899) | $(11,899) | Fair Value of Financial Instruments Not Carried at Fair Value (As of August 31, 2025, in thousands) | Instrument | Carrying Value | Fair Value | | :--------------------------------- | :------------- | :----------- | | Auto loans held for sale | $921,928 | $959,724 | | Senior unsecured notes | $400,000 | $395,202 | - Derivative instruments are classified as **Level 2** because their valuation models include inputs other than quoted prices in active markets, such as market-based expectations for interest rates and contractual terms[73](index=73&type=chunk) [7. Cancellation Reserves](index=24&type=section&id=7.%20Cancellation%20Reserves) A refund liability is recorded for estimated contract cancellations of Extended Protection Plan products, based on forecasted curves - A reserve, or refund liability, is recorded for estimated contract cancellations of **EPP products**, recognized on a net basis at the time of sale[80](index=80&type=chunk) Cancellation Reserves (Six Months Ended August 31, in millions) | Metric | 2025 | 2024 | Change (%) | | :--------------------------------- | :--- | :--- | :--------- | | Balance as of beginning of period | $133.9 | $128.3 | 4.4% | | Cancellations | $(39.9) | $(43.9) | -9.1% | | Provision for future cancellations | $41.9 | $49.3 | -15.0% | | Balance as of end of period | $135.9 | $133.7 | 1.6% | - The current portion of estimated cancellation reserves was **$72.3 million** as of **August 31, 2025**[81](index=81&type=chunk) [8. Income Taxes](index=24&type=section&id=8.%20Income%20Taxes) CarMax reported gross unrecognized tax benefits of $20.6 million; recent tax act changes are not expected to materially impact the effective tax rate Gross Unrecognized Tax Benefits (in millions) | Date | Amount | | :--------------------------------- | :----- | | As of August 31, 2025 | $20.6 | | As of February 28, 2025 | $18.0 | - The **One Big Beautiful Bill Act (OBBBA)**, enacted **July 4, 2025**, made **100% bonus depreciation permanent** and modified the business interest expense limitation calculation[83](index=83&type=chunk) - These changes increased deferred tax expense and decreased current tax expense, but are not expected to materially impact the **fiscal 2026 effective tax rate**[83](index=83&type=chunk) [9. Debt](index=24&type=section&id=9.%20Debt) CarMax's total debt was $18.64 billion, primarily non-recourse notes, with a $2.00 billion revolving credit facility available Total Debt (in thousands) | Date | Amount | | :--------------------------------- | :------------- | | As of August 31, 2025 | $18,643,782 | | As of February 28, 2025 | $18,707,207 | - Non-recourse notes payable totaled **$17.06 billion** as of **August 31, 2025**, primarily funding auto loans held for investment[84](index=84&type=chunk) - The **$2.00 billion unsecured revolving credit facility** had **$2.00 billion** of unused capacity fully available as of **August 31, 2025**[85](index=85&type=chunk) - CarMax was in compliance with all financial covenants and non-recourse funding vehicle performance triggers as of **August 31, 2025**[93](index=93&type=chunk) [10. Stock and Stock-Based Incentive Plans](index=26&type=section&id=10.%20Stock%20and%20Stock-Based%20Incentive%20Plans) CarMax has $1.56 billion remaining for common stock repurchases under a $2.0 billion authorization; share-based compensation decreased - As of **August 31, 2025**, **$1.56 billion** remained available for common stock repurchases under a **$2.0 billion** board authorization[94](index=94&type=chunk) Common Stock Repurchases (Three Months Ended August 31) | Metric | 2025 | 2024 | Change (%) | | :--------------------------------- | :--------- | :--------- | :--------- | | Number of shares repurchased (in thousands) | 2,921.0 | 1,376.7 | 112.2% | | Average cost per share | $61.63 | $77.04 | -20.1% | Share-Based Compensation Expense (Before Income Taxes, in thousands) | Period | 2025 | 2024 | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | | Three Months Ended August 31 | $24,813 | $35,221 | -29.5% | | Six Months Ended August 31 | $72,472 | $84,016 | -13.8% | [11. Net Earnings Per Share](index=27&type=section&id=11.%20Net%20Earnings%20Per%20Share) Basic and diluted net earnings per share are computed by dividing net earnings by weighted average common shares outstanding Net Earnings Per Share | Metric | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :--------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Basic Net Earnings Per Share | $0.64 | $0.85 | $2.03 | $1.82 | | Diluted Net Earnings Per Share | $0.64 | $0.85 | $2.02 | $1.82 | - For the three months ended **August 31, 2025**, options to purchase **8,610,659 shares** of common stock were not included in diluted EPS calculation because their inclusion would have been antidilutive[100](index=100&type=chunk) [12. Accumulated Other Comprehensive (Loss) Income](index=28&type=section&id=12.%20Accumulated%20Other%20Comprehensive%20(Loss)%20Income) This section details changes in AOCL, reflecting unrecognized actuarial losses and cash flow hedge gains/losses Accumulated Other Comprehensive (Loss) Income (in thousands) | Date | Amount | | :--------------------------------- | :------- | | Balance as of February 28, 2025 | $3,080 | | Other comprehensive loss (6 months ended Aug 31, 2025) | $(24,386) | | Balance as of August 31, 2025 | $(21,306) | Net Change in Cash Flow Hedge Unrecognized Gains, Net of Tax (Six Months Ended August 31, in thousands) | Year | Amount | | :--------------------------------- | :------- | | 2025 | $(24,538) | | 2024 | $(50,391) | [13. Leases](index=28&type=section&id=13.%20Leases) CarMax's leases include operating and finance leases for stores and equipment, with ROU assets and lease liabilities measured at present value Lease Assets and Liabilities (As of August 31, 2025, in thousands) | Metric | Amount | | :--------------------------------- | :------- | | Operating lease assets | $476,367 | | Finance lease assets | $152,483 | | Total lease assets | $628,850 | | Current portion of operating lease liabilities | $57,948 | | Operating lease liabilities, excluding current portion | $463,844 | | Total lease liabilities | $720,426 | Lease Term and Discount Rate (As of August 31, 2025) | Metric | Operating Leases | Finance Leases | | :--------------------------------- | :--------------- | :------------- | | Weighted Average Remaining Lease Term (in years) | 15.51 | 14.13 | | Weighted Average Discount Rate | 5.28% | 16.67% | Total Lease Cost (Six Months Ended August 31, in thousands) | Year | Amount | | :--------------------------------- | :------- | | 2025 | $70,593 | | 2024 | $66,490 | [14. Supplemental Cash Flow Information](index=30&type=section&id=14.%20Supplemental%20Cash%20Flow%20Information) This section provides supplemental disclosures of non-cash investing and financing activities for the six months ended August 31 Non-Cash Investing and Financing Activities (Six Months Ended August 31, in thousands) | Metric | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Increase in accrued capital expenditures | $8,228 | $816 | | Increase in financing obligations | $6,836 | — | [15. Contingent Liabilities](index=31&type=section&id=15.%20Contingent%20Liabilities) CarMax is involved in legal proceedings and provides a limited warranty; management expects no material adverse effect - CarMax received **$59.3 million** in net recoveries from Takata airbag settlements on **April 21, 2023**, and **$7.9 million** in additional residual funds on **August 9, 2023**[109](index=109&type=chunk) - The company guarantees retail used vehicles with a **90-day/4,000-mile limited warranty**[112](index=112&type=chunk) Liability for Vehicle Warranty (in millions) | Date | Amount | | :--------------------------------- | :----- | | As of August 31, 2025 | $30.3 | | As of February 28, 2025 | $28.8 | - Management believes the ultimate resolution of legal proceedings will not have a **material adverse effect** on financial condition, results of operations, or cash flows[110](index=110&type=chunk) [16. Subsequent Event](index=31&type=section&id=16.%20Subsequent%20Event) CarMax executed a non-prime securitization transaction, selling $930 million of auto loans, expecting a gain on sale and additional CAF income - On **September 24, 2025**, CarMax executed a non-prime securitization transaction, selling approximately **$930 million** of auto loans[113](index=113&type=chunk) - The transaction is expected to result in a **gain on sale** of approximately **$25 million to $30 million** (net of transaction expenses) in the **third quarter of fiscal 2026**[113](index=113&type=chunk) - CarMax expects to receive approximately **$40 million to $45 million** in additional CAF income related to servicing fees and retained beneficial interest over the life of the transaction[113](index=113&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis of CarMax's financial condition and results of operations for periods ended August 31, 2025 [OVERVIEW](index=32&type=section&id=OVERVIEW) CarMax, the largest used vehicle retailer, operates CarMax Sales Operations and CAF, focusing on omni-channel experience and strategic growth - CarMax operates in two reportable segments: **CarMax Sales Operations** and **CarMax Auto Finance (CAF)**[117](index=117&type=chunk) Key Performance Indicators (Six Months Ended August 31) | Metric | 2025 | 2024 | Change (%) | | :--------------------------------- | :--------- | :--------- | :--------- | | Used unit sales | 429,939 | 422,152 | 1.8% | | Wholesale unit sales | 287,819 | 289,143 | -0.5% | | Total vehicle purchases | 629,218 | 613,866 | 2.5% | | Digitally enabled transactions | 80% | 72% | 8% pts | | Omni sales | 67% | 57% | 10% pts | | Online retail sales | 13% | 15% | -2% pts | - Strategic priorities include investing in digital capabilities, expanding CAF's full credit spectrum, pursuing new growth opportunities, and returning excess capital to shareholders, with plans to accelerate **share repurchases in fiscal 2026**[127](index=127&type=chunk) - Initiatives for fiscal 2026 include leveraging data science and AI for digital experiences, improving online vehicle transfer, expanding Skye (AI virtual assistant) functionality, launching a new brand positioning campaign, streamlining online appraisal, and expanding CAF's credit spectrum[131](index=131&type=chunk) - The company achieved **$125 per unit savings** in cost of sales in **fiscal 2025** and anticipates another **$125 per unit** in **fiscal 2026**[132](index=132&type=chunk) - CarMax aims to achieve SG&A as a percent of gross profit in the **mid-70% range annually** and expects at least **$150 million in SG&A expense reductions** over the next **18 months**[133](index=133&type=chunk)[134](index=134&type=chunk) - The earnings model is designed to deliver an earnings per share compound annual growth rate (CAGR) in the **high teens** when used unit growth is in the **mid-single digits**[136](index=136&type=chunk) [Revenues and Profitability](index=33&type=section&id=Revenues%20and%20Profitability) Net sales and operating revenues decreased in Q2 but increased for the first six months, with varied performance across vehicle sales Net Sales and Operating Revenues (in millions) | Period | 2025 | 2024 | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | | Three Months Ended August 31 | $6,594.7 | $7,013.5 | -6.0% | | Six Months Ended August 31 | $14,141.2 | $14,126.9 | 0.1% | Unit Sales | Period | 2025 | 2024 | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | | Used vehicles (3 months) | 199,729 | 211,020 | -5.4% | | Used vehicles (6 months) | 429,939 | 422,152 | 1.8% | | Wholesale vehicles (3 months) | 138,302 | 141,458 | -2.2% | | Wholesale vehicles (6 months) | 287,819 | 289,143 | -0.5% | Average Selling Prices | Period | 2025 | 2024 | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | | Used vehicles (3 months) | $25,993 | $26,245 | -1.0% | | Wholesale vehicles (3 months) | $7,891 | $7,768 | 1.6% | Comparable Store Used Vehicle Sales Changes (Units) | Period | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Three Months Ended August 31 | -6.3% | 4.3% | | Six Months Ended August 31 | 0.9% | 0.1% | Other Sales and Revenues (in millions) | Period | 2025 | 2024 | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | | Three Months Ended August 31 | $174.4 | $182.0 | -4.2% | | Six Months Ended August 31 | $364.8 | $361.5 | 0.9% | Used Vehicle Financing Penetration by Channel (Six Months Ended August 31) | Channel | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | CAF | 42.1% | 42.6% | | Tier 2 | 17.1% | 18.2% | | Tier 3 | 7.7% | 7.1% | | Other | 30.4% | 29.7% | | Total | 100.0% | 100.0% | [GROSS PROFIT](index=38&type=section&id=GROSS%20PROFITS) Total gross profit decreased in Q2 but increased for the first six months, with used vehicle gross profit per unit intentionally lowered Total Gross Profit (in millions) | Period | 2025 | 2024 | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | | Three Months Ended August 31 | $717.7 | $760.5 | -5.6% | | Six Months Ended August 31 | $1,611.3 | $1,552.4 | 3.8% | Gross Profit Per Unit | Metric | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :--------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Used vehicle gross profit per unit | $2,216 | $2,269 | $2,318 | $2,308 | | Wholesale vehicle gross profit per unit | $993 | $975 | $1,021 | $1,020 | | Other gross profit per used unit | $690 | $682 | $746 | $671 | - Used vehicle gross profit per unit was intentionally lowered in **Q2 fiscal 2026** to drive sell-through of inventory in response to depreciation[159](index=159&type=chunk) - Other gross profit increased **13.2%** in the first six months of **fiscal 2026**, primarily driven by increases in service department margins and EPP revenues[163](index=163&type=chunk) - Expect used vehicle gross profit per unit for **Q3 fiscal 2026** to be consistent with historical average but down from the prior year's record high[159](index=159&type=chunk) - Expect wholesale vehicle gross profit per unit for **Q3 fiscal 2026** to be consistent with historical average but down from the prior year's historically strong performance[161](index=161&type=chunk) [SG&A Expenses](index=40&type=section&id=SG%26A%20Expenses) SG&A expenses decreased in Q2 due to lower share-based compensation but increased for the six-month period due to higher compensation Total SG&A Expenses (in millions) | Period | 2025 | 2024 | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | | Three Months Ended August 31 | $601.1 | $610.6 | -1.6% | | Six Months Ended August 31 | $1,260.7 | $1,249.1 | 0.9% | SG&A as a % of Gross Profit | Period | 2025 | 2024 | Change (bps) | | :--------------------------------- | :----- | :----- | :----------- | | Three Months Ended August 31 | 83.8% | 80.3% | 350 | | Six Months Ended August 31 | 78.2% | 80.5% | -230 | - The decrease in SG&A expenses in **Q2 fiscal 2026** was primarily driven by a **$9.7 million decrease** in share-based compensation expense, related to cash-settled restricted stock units and the company's stock price change[167](index=167&type=chunk) - An increase in marketing spend on a per total unit basis is expected for the remainder of **fiscal 2026**, particularly in **Q3**, to support the new brand positioning launch[170](index=170&type=chunk) [Interest Expense](index=42&type=section&id=Interest%20Expense) Interest expense for Q2 and the first six months remained consistent, excluding interest on non-recourse notes payable Interest Expense (in millions) | Period | 2025 | 2024 | Change (%) | | :--------------------------------- | :----- | :----- | :--------- | | Three Months Ended August 31 | $28.5 | $27.0 | 5.6% | | Six Months Ended August 31 | $55.5 | $58.4 | -5.0% | [Other Income](index=42&type=section&id=Other%20Income) Other income for Q2 and the first six months remained relatively consistent with prior year periods Other Income (in millions) | Period | 2025 | 2024 | Change (%) | | :--------------------------------- | :----- | :----- | :--------- | | Three Months Ended August 31 | $3.6 | $3.3 | 9.1% | | Six Months Ended August 31 | $3.9 | $2.9 | 34.5% | [Income Taxes](index=42&type=section&id=Income%20Taxes) The effective income tax rate for Q2 and the first six months was slightly lower than the prior year periods Effective Income Tax Rate | Period | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Three Months Ended August 31 | 25.0% | 25.3% | | Six Months Ended August 31 | 25.5% | 25.8% | [RESULTS OF OPERATIONS – CARMAX AUTO FINANCE](index=42&type=section&id=RESULTS%20OF%20OPERATIONS%20%E2%80%93%20CARMAX%20AUTO%20FINANCE) CAF income decreased due to increased provision for loan losses, partially offset by higher interest margin; CAF penetration is expanding CarMax Auto Finance Income (in millions) | Period | 2025 | 2024 | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | | Three Months Ended August 31 | $102.6 | $115.6 | -11.2% | | Six Months Ended August 31 | $244.3 | $262.6 | -7.0% | Total Interest Margin as a Percent of Average Auto Loans Outstanding | Period | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Three Months Ended August 31 | 6.6% | 6.1% | | Six Months Ended August 31 | 6.5% | 6.1% | Provision for Loan Losses (in millions) | Period | 2025 | 2024 | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | | Three Months Ended August 31 | $142.2 | $112.6 | 26.3% | | Six Months Ended August 31 | $243.9 | $193.8 | 25.8% | - The allowance for loan losses as a percentage of auto loans held for investment was **3.02%** as of **August 31, 2025**, compared with **2.82%** as of **August 31, 2024**[188](index=188&type=chunk) CAF Origination Information (Six Months Ended August 31) | Metric | 2025 | 2024 | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | | Net auto loans originated (in millions) | $4,358.0 | $4,425.5 | -1.5% | | Vehicle units financed | 181,195 | 179,924 | 0.7% | | Net penetration rate | 42.1% | 42.6% | -0.5% pts | | Weighted average contract rate | 11.3% | 11.4% | -0.1% pts | | Weighted average loan-to-value (LTV) | 89.6% | 89.3% | 0.3% pts | | Weighted average term (in months) | 68.5 | 66.9 | 1.6 months | | Weighted average credit score | 723 | 723 | 0 | - CarMax expects CAF income to be **down slightly year-over-year** for **fiscal 2026**[184](index=184&type=chunk) - The company aims to increase CAF penetration to **50%**, with each additional percentage point generating **$10 million to $12 million** in lifetime pre-tax income per year of origination[179](index=179&type=chunk) [PLANNED FUTURE ACTIVITIES](index=46&type=section&id=PLANNED%20FUTURE%20ACTIVITIES) CarMax plans to open three stores and one reconditioning/auction center, with $575 million in capital expenditures for fiscal 2026 - CarMax anticipates opening **three additional store locations** and **one additional stand-alone reconditioning/auction center** for the remainder of **fiscal 2026**[185](index=185&type=chunk) - Estimated capital expenditures will total approximately **$575 million** in **fiscal 2026**, largely for future long-term growth in offsite reconditioning and auction facilities, as well as new stores[185](index=185&type=chunk) [FINANCIAL CONDITION](index=46&type=section&id=FINANCIAL%20CONDITION) CarMax's liquidity is supported by operations, funding vehicles, and credit facility, with increased operating cash flow and strong compliance - Net cash provided by operating activities totaled **$1.09 billion** in the first six months of **fiscal 2026**, compared with **$501.4 million** in the prior year period, an increase of **116.4%**[190](index=190&type=chunk) - Total inventory decreased by **$785.1 million** as of **August 31, 2025**, compared to the start of the fiscal year, due to a strategic reduction in response to lower consumer demand[191](index=191&type=chunk) Cash Flow Activities (Six Months Ended August 31, in millions) | Activity | 2025 | 2024 | | :--------------------------------- | :------- | :------- | | Net cash used in investing activities | $(272.5) | $(215.5) | | Capital expenditures | $(268.2) | $(213.1) | | Net cash used in financing activities | $(467.7) | $(283.1) | | Stock repurchases | $(384.9) | $(213.3) | Total Debt and Cash and Cash Equivalents (in thousands) | Metric | As of August 31, 2025 | As of February 28, 2025 | | :--------------------------------- | :-------------------- | :-------------------- | | Total debt | $18,643,782 | $18,707,207 | | Cash and cash equivalents | $540,374 | $246,960 | - As of **August 31, 2025**, CarMax was in compliance with all financial covenants in its credit facility, term loan, and senior note agreements[198](index=198&type=chunk) [FORWARD-LOOKING STATEMENTS](index=49&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section contains cautionary forward-looking statements about CarMax's future plans, highlighting various risks and uncertainties - Statements about future business plans, operations, challenges, opportunities, or prospects are **forward-looking statements**[206](index=206&type=chunk) - Key risk factors include changes in the competitive landscape, general or regional U.S. economic conditions (**inflation, interest rates**), availability or cost of capital, damage to reputation, significant changes in vehicle prices, and greater credit losses for CAF's auto loan portfolio[206](index=206&type=chunk) - The company disclaims any intent or obligation to update these forward-looking statements after the date they are made[206](index=206&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to CarMax's market risk exposure since February 28, 2025, as referenced in the Annual Report on Form 10-K - There have been **no material changes** to CarMax's market risk since **February 28, 2025**[207](index=207&type=chunk) [Item 4. Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) CarMax's disclosure controls and procedures were effective as of August 31, 2025, with no material changes in internal control - CarMax's disclosure controls and procedures were **effective** as of **August 31, 2025**[208](index=208&type=chunk) - There was **no material change** in internal control over financial reporting during the quarter ended **August 31, 2025**[209](index=209&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) Refer to Note 15 of the consolidated financial statements for a discussion of CarMax's legal proceedings - For a discussion of certain legal proceedings, refer to **Note 15** to the consolidated financial statements[212](index=212&type=chunk) [Item 1A. Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors discussed in CarMax's Form 10-K for fiscal year ended February 28, 2025 - There have been **no material changes** to the risk factors discussed in the Form 10-K for fiscal year ended **February 28, 2025**[213](index=213&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) CarMax's common stock repurchase program had $1.56 billion remaining under a $2.0 billion authorization as of August 31, 2025 - As of **August 31, 2025**, **$1.56 billion** remained available for repurchase under a **$2.0 billion** board authorization for common stock repurchases[214](index=214&type=chunk)[216](index=216&type=chunk) Common Stock Repurchase Activity (Second Quarter of Fiscal 2026) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--------------------------------- | :----------------------------- | :--------------------------- | | June 1 - 30, 2025 | 662,641 | $66.48 | | July 1 - 31, 2025 | 1,007,413 | $63.45 | | August 1 - 31, 2025 | 1,250,905 | $57.60 | | Total | 2,920,959 | $61.63 | [Item 6. Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications and XBRL documents - Exhibits include certifications of the Chief Executive Officer and Chief Financial Officer (**31.1, 31.2, 32.1, 32.2**)[218](index=218&type=chunk) - Various **XBRL Taxonomy Extension Documents** (Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, Presentation Linkbase) are included[218](index=218&type=chunk) [SIGNATURES](index=53&type=section&id=SIGNATURES) The report is duly signed by CarMax's President and CEO and Executive VP and CFO on September 26, 2025 - The report was signed by **William D. Nash**, President and Chief Executive Officer, and **Enrique N. Mayor-Mora**, Executive Vice President and Chief Financial Officer[221](index=221&type=chunk) - The signing date was **September 26, 2025**[221](index=221&type=chunk)

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited condensed consolidated financial statements and notes for Steelcase Inc. for periods ended August 29, 2025 [Condensed Consolidated Statements of Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the three months ended August 29, 2025, net income significantly decreased to $35.0 million, with diluted EPS falling to $0.29 | Metric | August 29, 2025 (in millions) | August 23, 2024 (in millions) | Change (YoY) | | :----------------------------- | :---------------------------- | :---------------------------- | :----------- | | Revenue | $897.1 | $855.8 | +$41.3 (+5%) | | Gross profit | $308.5 | $295.4 | +$13.1 (+4%) | | Operating income | $53.1 | $90.0 | -$36.9 (-41%) | | Net income | $35.0 | $63.1 | -$28.1 (-45%) | | Diluted EPS | $0.29 | $0.53 | -$0.24 (-45%) | | Metric | August 29, 2025 (in millions) | August 23, 2024 (in millions) | Change (YoY) | | :----------------------------- | :---------------------------- | :---------------------------- | :----------- | | Revenue | $1,676.1 | $1,583.1 | +$93.0 (+6%) | | Gross profit | $572.3 | $529.8 | +$42.5 (+8%) | | Operating income | $78.6 | $107.6 | -$29.0 (-27%) | | Net income | $48.6 | $74.0 | -$25.4 (-34%) | | Diluted EPS | $0.41 | $0.62 | -$0.21 (-34%) | - Dividends declared and paid per common share remained constant at **$0.100** for the three months and **$0.200** for the six months ended August 29, 2025 and August 23, 2024[10](index=10&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for the three months ended August 29, 2025, was $41.5 million, down from $71.0 million in the prior year | Metric | August 29, 2025 (in millions) | August 23, 2024 (in millions) | Change (YoY) | | :-------------------------------- | :---------------------------- | :---------------------------- | :----------- | | Net income | $35.0 | $63.1 | -$28.1 (-45%) | | Total other comprehensive income, net | $6.5 | $7.9 | -$1.4 (-18%) | | Comprehensive income | $41.5 | $71.0 | -$29.5 (-42%) | | Metric | August 29, 2025 (in millions) | August 23, 2024 (in millions) | Change (YoY) | | :-------------------------------- | :---------------------------- | :---------------------------- | :----------- | | Net income | $48.6 | $74.0 | -$25.4 (-34%) | | Total other comprehensive income, net | $28.0 | $8.2 | +$19.8 (+241%) | | Comprehensive income | $76.6 | $82.2 | -$5.6 (-7%) | - Foreign currency translation adjustments significantly increased total other comprehensive income for the six months ended August 29, 2025, reaching **$27.9 million** compared to **$8.0 million** in the prior year[13](index=13&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased slightly to $2,352.0 million as of August 29, 2025, while total liabilities decreased, leading to an increase in shareholders' equity | Metric | August 29, 2025 (in millions) | February 28, 2025 (in millions) | Change | | :-------------------------------- | :---------------------------- | :------------------------------ | :------- | | Total assets | $2,352.0 | $2,330.4 | +$21.6 | | Cash and cash equivalents | $216.8 | $346.3 | -$129.5 | | Accounts receivable, net | $369.8 | $323.1 | +$46.7 | | Inventories, net | $288.0 | $245.7 | +$42.3 | | Total current assets | $1,007.1 | $1,029.0 | -$21.9 | | Total liabilities | $1,335.6 | $1,378.7 | -$43.1 | | Total shareholders' equity | $1,016.4 | $951.7 | +$64.7 | - Class B Common Stock converted into Class A Common Stock in 2026, resulting in **114,727,802 shares** of Class A Common Stock and no Class B Common Stock outstanding as of August 29, 2025[15](index=15&type=chunk) [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Total shareholders' equity increased to $1,016.4 million, driven by net income and other comprehensive income, partially offset by dividends and repurchases - Total shareholders' equity increased by **$64.7 million** from **$951.7 million** at February 28, 2025, to **$1,016.4 million** at August 29, 2025[19](index=19&type=chunk) - Net income contributed **$48.6 million** to retained earnings for the six months ended August 29, 2025[19](index=19&type=chunk) - Dividends paid totaled **$24.1 million** for the six months ended August 29, 2025[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was $82.2 million for the six months ended August 29, 2025, a significant shift from cash provided in the prior year | Cash Flow Activity | August 29, 2025 (in millions) | August 23, 2024 (in millions) | Change (YoY) | | :-------------------------------- | :---------------------------- | :---------------------------- | :----------- | | Net cash provided by (used in) operating activities | $(82.2) | $49.0 | -$131.2 | | Net cash used in investing activities | $(19.4) | $(15.9) | -$3.5 | | Net cash used in financing activities | $(29.3) | $(54.3) | +$25.0 | | Net decrease in cash, cash equivalents and restricted cash | $(129.7) | $(22.0) | -$107.7 | - Cash and cash equivalents and restricted cash at the end of the period decreased to **$224.1 million** from **$303.9 million** in the prior year[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes on accounting policies, financial statements, and significant events including the HNI merger [1. BASIS OF PRESENTATION](index=8&type=section&id=1.%20BASIS%20OF%20PRESENTATION) - The financial statements are prepared in accordance with GAAP for interim financial information and Article 10 of Regulation S-X[26](index=26&type=chunk) - Interim results should not be considered indicative of results to be expected for a full year[26](index=26&type=chunk) - References to "Steelcase," "we," "our," "Company" refer to Steelcase Inc. and its subsidiaries, with the fiscal year ending in February[27](index=27&type=chunk) [2. NEW ACCOUNTING STANDARDS](index=8&type=section&id=2.%20NEW%20ACCOUNTING%20STANDARDS) - Adopted ASU No. 2023-07, Segment Reporting, retrospectively in 2025, which modified annual and interim disclosures but had no material effect on consolidated financial statements[29](index=29&type=chunk) - ASU No. 2024-03, Income Statement - Expense Disaggregation Disclosures, effective after December 15, 2026 (annual) and December 15, 2027 (interim), is expected to modify disclosures but not materially affect financial statements[30](index=30&type=chunk) - ASU No. 2023-09, Income Taxes - Improvements to Income Tax Disclosures, effective after December 15, 2024 (annual), is expected to modify disclosures but not materially affect financial statements[31](index=31&type=chunk) [3. PLANNED MERGER](index=9&type=section&id=3.%20PLANNED%20MERGER) - On August 3, 2025, Steelcase entered a Merger Agreement with HNI Corporation, where HNI will acquire Steelcase in a cash and stock transaction[33](index=33&type=chunk) - Steelcase common stock holders will receive consideration in mixed consideration (**0.2192 HNI common shares + $7.20 cash**), all cash, or all HNI common stock, subject to adjustment[34](index=34&type=chunk)[38](index=38&type=chunk) - The merger is subject to shareholder and regulatory approvals and is expected to close by the end of calendar year 2025[36](index=36&type=chunk)[94](index=94&type=chunk) - All Class B Common Stock converted into Class A Common Stock in Q2 2026 due to the Merger Agreement, resulting in **114,727,802 Class A shares** outstanding and no Class B shares as of August 29, 2025[40](index=40&type=chunk) [4. REVENUE](index=10&type=section&id=4.%20REVENUE) | Product Category | Americas (2025) | Americas (2024) | International (2025) | International (2024) | | :------------------------------- | :-------------- | :-------------- | :------------------- | :------------------- | | Desking, benching, systems & storage | $314.5 | $308.9 | $60.9 | $54.8 | | Seating | $192.1 | $189.0 | $73.9 | $65.1 | | Other | $200.5 | $190.1 | $55.2 | $47.9 | | **Total Revenue** | **$707.1** | **$688.0** | **$190.0** | **$167.8** | | Geographic Revenue | August 29, 2025 | August 23, 2024 | | :----------------- | :-------------- | :-------------- | | U.S. | $663.7 | $646.7 | | Foreign locations | $233.4 | $209.1 | | **Total Revenue** | **$897.1** | **$855.8** | - Customer deposits increased to **$58.4 million** as of August 29, 2025, from **$43.0 million** at February 28, 2025[43](index=43&type=chunk) [5. EARNINGS PER SHARE](index=11&type=section&id=5.%20EARNINGS%20PER%20SHARE) - Basic EPS for the three months ended August 29, 2025, was **$0.29** (vs **$0.53** in prior year), and for six months was **$0.41** (vs **$0.63** in prior year)[47](index=47&type=chunk) - Diluted EPS for the three months ended August 29, 2025, was **$0.29** (vs **$0.53** in prior year), and for six months was **$0.41** (vs **$0.62** in prior year)[47](index=47&type=chunk) - The computation uses the two-class method, considering participating securities (restricted stock units with non-forfeitable dividend rights)[46](index=46&type=chunk) [6. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)](index=12&type=section&id=6.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME%20(LOSS)) - Accumulated other comprehensive income (loss) improved from **$(63.5) million** at February 28, 2025, to **$(35.5) million** at August 29, 2025[49](index=49&type=chunk) - This improvement was primarily driven by **$27.9 million** in foreign currency translation adjustments for the six months ended August 29, 2025[49](index=49&type=chunk) [7. FAIR VALUE](index=13&type=section&id=7.%20FAIR%20VALUE) - Managed investment portfolio (short-term investments) fair value was **$41.1 million** as of August 29, 2025, with **$10.4 million** maturing within one year and **$30.7 million** maturing after one year through five years[54](index=54&type=chunk) - Total debt was carried at cost of **$447.4 million** as of August 29, 2025, with a fair value of **$443.7 million**[56](index=56&type=chunk) - The company uses derivative financial instruments (foreign exchange forward contracts) to manage foreign exchange and interest rate exposures, not for speculative purposes[55](index=55&type=chunk) [8. INVENTORIES](index=14&type=section&id=8.%20INVENTORIES) | Inventory Component | August 29, 2025 (in millions) | February 28, 2025 (in millions) | Change | | :-------------------------- | :---------------------------- | :------------------------------ | :------- | | Raw materials and work-in-process | $189.8 | $166.8 | +$23.0 | | Finished goods | $129.2 | $108.1 | +$21.1 | | Revaluation to LIFO | $(31.0) | $(29.2) | -$1.8 | | **Total Inventories, net** | **$288.0** | **$245.7** | **+$42.3** | - The portion of inventories determined by the LIFO method aggregated to **$119.7 million** as of August 29, 2025[57](index=57&type=chunk) [9. SHARE-BASED COMPENSATION](index=14&type=section&id=9.%20SHARE-BASED%20COMPENSATION) - In Q1 2026, **597,600 Performance Units (PSUs)** were issued for 2026-2028, with **478,080** based on performance and **119,520** on market conditions[60](index=60&type=chunk) - Total PSU expense for the six months ended August 29, 2025, was **$7.1 million** (vs **$8.4 million** in prior year)[65](index=65&type=chunk) - Unrecognized compensation expense for nonvested PSUs was **$7.1 million** as of August 29, 2025, expected to be recognized over **1.8 years**[68](index=68&type=chunk) - **1,285,589 Restricted Stock Units (RSUs)** were awarded during the six months ended August 29, 2025, with restrictions lapsing up to three years[69](index=69&type=chunk) - Total RSU expense for the six months ended August 29, 2025, was **$9.9 million** (vs **$9.0 million** in prior year)[70](index=70&type=chunk) - Unrecognized compensation expense for nonvested RSUs was **$12.6 million** as of August 29, 2025, expected to be recognized over **1.9 years**[71](index=71&type=chunk) [10. REPORTABLE SEGMENTS](index=17&type=section&id=10.%20REPORTABLE%20SEGMENTS) - The company's operating segments are Americas, EMEA, and Asia Pacific, aggregated into two reportable segments: Americas and International[73](index=73&type=chunk)[74](index=74&type=chunk) - The Americas segment serves customers in the U.S., Canada, the Caribbean Islands and Latin America with a comprehensive portfolio of furniture, interior architectural, textile and surface imaging products[75](index=75&type=chunk) - The International segment serves customers in EMEA and Asia Pacific with a comprehensive portfolio of furniture and interior architectural products[76](index=76&type=chunk) | Segment | August 29, 2025 (in millions) | August 23, 2024 (in millions) | Change (YoY) | | :-------------- | :---------------------------- | :---------------------------- | :----------- | | Americas | $1,310.7 | $1,242.4 | +$68.3 (+5.5%) | | International | $365.4 | $340.7 | +$24.7 (+7.3%) | | **Consolidated** | **$1,676.1** | **$1,583.1** | **+$93.0 (+5.9%)** | | Segment | August 29, 2025 (in millions) | August 23, 2024 (in millions) | Change (YoY) | | :-------------- | :---------------------------- | :---------------------------- | :----------- | | Americas | $95.7 | $120.5 | -$24.8 (-20.6%) | | International | $(17.1) | $(12.9) | -$4.2 (-32.6%) | | **Consolidated** | **$78.6** | **$107.6** | **-$29.0 (-27.0%)** | [11. RESTRUCTURING ACTIVITIES](index=19&type=section&id=11.%20RESTRUCTURING%20ACTIVITIES) - In Q2 2026, initiated a cost savings plan in EMEA involving **85-95 salaried employee terminations**, expecting **$13-$15 million** in costs, with **$8.5 million** incurred[82](index=82&type=chunk) - In Q2 2026, initiated real estate consolidation in Asia Pacific, involving **35 salaried and 125 hourly employee terminations**, expecting **$6-$7 million** in costs, with **$1.3 million** incurred for terminations and **$0.4 million** for lease asset impairment[83](index=83&type=chunk) - In Q1 2026, initiated restructuring in the Americas to prioritize strategic initiatives, involving **85 salaried employee terminations**, expecting **$10-$12 million** in costs, with **$1.6 million** incurred in Q2 2026 and **$9.1 million** in Q1 2026[84](index=84&type=chunk) - The restructuring reserve balance increased to **$12.3 million** as of August 29, 2025, from **$2.9 million** at February 28, 2025, due to **$20.9 million** in additions and **$11.7 million** in payments[87](index=87&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes Steelcase's Q2 and year-to-date 2026 financial performance, merger impact, segments, and liquidity [Financial Summary](index=20&type=section&id=Financial%20Summary) | Metric | August 29, 2025 | August 23, 2024 | | :-------------------- | :-------------- | :-------------- | | Revenue | $897.1 | $855.8 | | Gross profit | $308.5 | $295.4 | | Operating income | $53.1 | $90.0 | | Net income | $35.0 | $63.1 | | Diluted EPS | $0.29 | $0.53 | | Metric | August 29, 2025 | August 23, 2024 | | :-------------------- | :-------------- | :-------------- | | Revenue | $1,676.1 | $1,583.1 | | Gross profit | $572.3 | $529.8 | | Operating income | $78.6 | $107.6 | | Net income | $48.6 | $74.0 | | Diluted EPS | $0.41 | $0.62 | [Results of Operations](index=20&type=section&id=Results%20of%20Operations) | Segment | Organic Growth $ | Organic Growth % | | :-------------- | :--------------- | :--------------- | | Americas | $19.0 | 3% | | International | $13.7 | 8% | | **Consolidated** | **$32.7** | **4%** | | Segment | Organic Growth $ | Organic Growth % | | :-------------- | :--------------- | :--------------- | | Americas | $69.1 | 6% | | International | $12.8 | 4% | | **Consolidated** | **$81.9** | **5%** | | Metric | August 29, 2025 | August 23, 2024 | | :-------------------- | :-------------- | :-------------- | | Operating income | $53.1 | $90.0 | | Adjusted operating income | $75.3 | $68.5 | | Metric | August 29, 2025 | August 23, 2024 | | :-------------------- | :-------------- | :-------------- | | Operating income | $78.6 | $107.6 | | Adjusted operating income | $114.9 | $96.7 | | Metric | August 29, 2025 | August 23, 2024 | | :-------------------- | :-------------- | :-------------- | | Diluted EPS | $0.29 | $0.53 | | Adjusted diluted EPS | $0.45 | $0.39 | | Metric | August 29, 2025 | August 23, 2024 | | :-------------------- | :-------------- | :-------------- | | Diluted EPS | $0.41 | $0.62 | | Adjusted diluted EPS | $0.65 | $0.55 | [Overview](index=21&type=section&id=Overview) - Steelcase entered a Merger Agreement with HNI Corporation on August 3, 2025, for an acquisition in a cash and stock transaction, expected to close by the end of calendar year 2025[94](index=94&type=chunk) - Q2 2026 orders grew **6%** and revenue grew **5%** year-over-year, driven by demand from large corporate customers in the Americas and strength in the India market internationally[95](index=95&type=chunk) - Additional restructuring actions were initiated in EMEA and Asia Pacific to further reduce the cost structure and improve profitability[95](index=95&type=chunk) - Ongoing investment in business transformation includes the development and configuration of a new enterprise resource planning (ERP) system, with approximately **$78 million** capitalized as of Q2 2026[96](index=96&type=chunk) [Q2 2026 Compared to Q2 2025](index=22&type=section&id=Q2%202026%20Compared%20to%20Q2%202025) - Net income decreased to **$35.0 million** (diluted EPS **$0.29**) in Q2 2026 from **$63.1 million** (diluted EPS **$0.53**) in Q2 2025[97](index=97&type=chunk) - Operating income decreased by **$36.9 million** to **$53.1 million**, impacted by **$11.9 million** in restructuring costs and **$7.1 million** in merger transaction costs, partially offset by a **$1.2 million** gain from land sale[97](index=97&type=chunk) - Adjusted operating income increased to **$75.3 million** (adjusted diluted EPS **$0.45**) in Q2 2026 from **$68.5 million** (adjusted diluted EPS **$0.39**) in Q2 2025[97](index=97&type=chunk) - Revenue increased by **$41.3 million (5%)** to **$897.1 million**, with **3% organic growth** in the Americas and **8% organic growth** in International[98](index=98&type=chunk) - Operating expenses increased by **$42.0 million**, or **360 basis points** as a percentage of revenue, primarily due to lower gains on land sales, merger transaction costs, unfavorable currency translation, and higher non-employee director deferred compensation expense[99](index=99&type=chunk)[102](index=102&type=chunk) [Year-to-date 2026 Compared to Year-to-date 2025](index=22&type=section&id=Year-to-date%202026%20Compared%20to%20Year-to-date%202025) - Net income decreased to **$48.6 million** (diluted EPS **$0.41**) in year-to-date 2026 from **$74.0 million** (diluted EPS **$0.62**) in year-to-date 2025[101](index=101&type=chunk) - Operating income decreased by **$29.0 million** to **$78.6 million**, impacted by **$21.1 million** in restructuring costs and **$7.7 million** in merger transaction costs, partially offset by a **$1.2 million** gain from land sale[101](index=101&type=chunk) - Adjusted operating income increased to **$114.9 million** (adjusted diluted EPS **$0.65**) in year-to-date 2026 from **$96.7 million** (adjusted diluted EPS **$0.55**) in year-to-date 2025[103](index=103&type=chunk) - Revenue increased by **$93.0 million (6%)** to **$1,676.1 million**, with **6% organic growth** in the Americas and **4% organic growth** in International[104](index=104&type=chunk) - Operating expenses increased by **$54.6 million**, or **170 basis points** as a percentage of revenue, primarily due to lower gains on land sales, higher employee costs, merger transaction costs, and unfavorable currency translation effects[106](index=106&type=chunk)[109](index=109&type=chunk) [Interest Expense, Investment Income and Other Income (Expense), Net](index=23&type=section&id=Interest%20Expense,%20Investment%20Income%20and%20Other%20Income%20(Expense),%20Net) | Metric | August 29, 2025 | August 23, 2024 | | :-------------------------------- | :-------------- | :-------------- | | Interest expense | $(6.3) | $(6.4) | | Investment income | $2.3 | $2.9 | | Total other income (expense), net | $3.0 | $(0.6) | | **Total** | **$(1.0)** | **$(4.1)** | | Metric | August 29, 2025 | August 23, 2024 | | :-------------------------------- | :-------------- | :-------------- | | Interest expense | $(12.6) | $(12.6) | | Investment income | $5.2 | $5.3 | | Total other income (expense), net | $(0.3) | $(0.3) | | **Total** | **$(7.7)** | **$(7.6)** | - Equity in income of unconsolidated affiliates increased to **$4.9 million** in Q2 2026 from **$1.7 million** in Q2 2025[108](index=108&type=chunk) [Business Segments](index=24&type=section&id=Business%20Segments) [Americas Segment Performance](index=24&type=section&id=Americas) | Metric | 3 Months 2025 | 3 Months 2024 | 6 Months 2025 | 6 Months 2024 | | :-------------- | :------------ | :------------ | :------------ | :------------ | | Revenue | $707.1 | $688.0 | $1,310.7 | $1,242.4 | | Organic Growth % | 3% | N/A | 6% | N/A | | Metric | 3 Months 2025 | 3 Months 2024 | 6 Months 2025 | 6 Months 2024 | | :-------------------- | :------------ | :------------ | :------------ | :------------ | | Operating income | $67.7 | $102.0 | $95.7 | $120.5 | | Adjusted operating income | $78.0 | $76.1 | $118.8 | $102.0 | - Q2 2026 revenue growth of **3%** was driven by large corporate customers and pricing benefits, partially offset by a decline from education customers[113](index=113&type=chunk) - Operating income decreased by **$34.3 million** in Q2 2026, primarily due to merger transaction costs (**$7.1 million**) and restructuring costs (**$1.6 million**), and lower gains on land sales; Adjusted operating income improved by **$1.9 million**[112](index=112&type=chunk) - Cost of sales as a percentage of revenue improved by **20 basis points** in Q2 2026 and **50 basis points** year-to-date, driven by pricing benefits and cost reduction initiatives[114](index=114&type=chunk) [International Segment Performance](index=25&type=section&id=International) | Metric | 3 Months 2025 | 3 Months 2024 | 6 Months 2025 | 6 Months 2024 | | :-------------- | :------------ | :------------ | :------------ | :------------ | | Revenue | $190.0 | $167.8 | $365.4 | $340.7 | | Organic Growth % | 8% | N/A | 4% | N/A | | Metric | 3 Months 2025 | 3 Months 2024 | 6 Months 2025 | 6 Months 2024 | | :-------------------- | :------------ | :------------ | :------------ | :------------ | | Operating loss | $(14.6) | $(12.0) | $(17.1) | $(12.9) | | Adjusted operating loss | $(2.7) | $(7.6) | $(3.9) | $(5.3) | - Q2 2026 revenue increased by **13% (8% organic)**, driven by growth in India, China, and the UK, including **$8.5 million** of favorable currency translation effects[120](index=120&type=chunk) - Operating loss increased by **$2.6 million** in Q2 2026, primarily due to **$9.8 million** of higher restructuring costs, partially offset by higher volume; Adjusted operating loss improved by **$4.9 million**[117](index=117&type=chunk) - Cost of sales as a percentage of revenue improved by **10 basis points** in Q2 2026 but increased by **20 basis points** year-to-date, primarily due to higher discounts[121](index=121&type=chunk) [Non-GAAP Financial Measures](index=26&type=section&id=Non-GAAP%20Financial%20Measures) - Non-GAAP measures used are organic revenue growth, adjusted operating income (loss), and adjusted earnings per share[124](index=124&type=chunk) - Organic Revenue Growth: Excludes impact of acquisitions/divestitures, foreign currency translation, and additional week in Q4 2025, providing a consistent comparison[125](index=125&type=chunk) - Adjusted Operating Income (Loss) and Adjusted Earnings Per Share: Excludes amortization of purchased intangible assets, restructuring costs (benefits), gains/losses on land sales (net of variable compensation), pension plan settlements, and merger transaction costs, along with related tax effects[126](index=126&type=chunk)[131](index=131&type=chunk) - Management uses these non-GAAP measures to monitor and evaluate financial results and trends, believing they are useful to investors[89](index=89&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) Steelcase's liquidity position as of August 29, 2025, included $216.8 million in cash and cash equivalents and $41.1 million in short-term investments [Cash provided by (used in) operating activities](index=28&type=section&id=Cash%20provided%20by%20(used%20in)%20operating%20activities) - Net cash used in operating activities was **$82.2 million** for the six months ended August 29, 2025, compared to **$49.0 million** provided in the prior year[132](index=132&type=chunk) - This shift was primarily due to increased inventory purchases to mitigate potential supply chain disruptions, higher accounts receivable due to revenue growth, and increased cash tax payments (**$29.7 million** in year-to-date 2026 vs **$10.8 million** in year-to-date 2025)[132](index=132&type=chunk) - Annual payments for accrued variable compensation and retirement plan contributions increased to **$156.1 million** in year-to-date 2026 from **$122.4 million** in the prior year[132](index=132&type=chunk) [Cash used in investing activities](index=28&type=section&id=Cash%20used%20in%20investing%20activities) - Net cash used in investing activities was **$19.4 million** for the six months ended August 29, 2025, compared to **$15.9 million** in the prior year[133](index=133&type=chunk) - Capital expenditures increased to **$32.1 million** from **$24.6 million**, primarily related to investments in manufacturing operations, information technology, and customer-facing facilities and showrooms[133](index=133&type=chunk) - Proceeds from disposal of fixed assets were **$3.1 million** in year-to-date 2026, significantly lower than **$44.3 million** in year-to-date 2025, which primarily related to the sale of land[133](index=133&type=chunk) [Cash used in financing activities](index=28&type=section&id=Cash%20used%20in%20financing%20activities) - Net cash used in financing activities decreased to **$29.3 million** for the six months ended August 29, 2025, from **$54.3 million** in the prior year[134](index=134&type=chunk) - Common stock repurchases decreased significantly to **$5.2 million (456,068 shares)** in year-to-date 2026, primarily for tax withholding obligations, compared to **$30.3 million (2,401,082 shares)** in year-to-date 2025[134](index=134&type=chunk)[135](index=135&type=chunk) - Dividends paid remained consistent at **$24.1 million**[134](index=134&type=chunk) [Liquidity Facilities](index=29&type=section&id=Liquidity%20Facilities) - Total available credit lines were **$323.0 million** as of August 29, 2025, consisting of a **$300.0 million** global committed bank facility (through 2029) and **$23.0 million** in various uncommitted facilities[137](index=137&type=chunk) - No borrowings were outstanding under any facilities as of August 29, 2025, and the company was in compliance with all covenants[137](index=137&type=chunk)[138](index=138&type=chunk) - Total consolidated debt was **$447.4 million**, consisting of unsecured term notes due in 2029 with a **5.6% effective interest rate** and no financial covenants[139](index=139&type=chunk) [Liquidity Outlook](index=29&type=section&id=Liquidity%20Outlook) - Total liquidity (cash, cash equivalents, short-term investments, COLI cash surrender value) aggregated to **$426.8 million** as of August 29, 2025[140](index=140&type=chunk) - Planned discretionary cash usages for 2026 include approximately **$90 million** for capital expenditures and capitalizable cloud computing costs related to the new ERP system[142](index=142&type=chunk) - A quarterly dividend of **$0.10 per share** (approximately **$11.5 million**) was announced for Q3 2026[142](index=142&type=chunk) [Critical Accounting Estimates](index=30&type=section&id=Critical%20Accounting%20Estimates) - No changes in critical accounting estimates during Q2 2026 compared to the Annual Report on Form 10-K for the fiscal year ended February 28, 2025[143](index=143&type=chunk) [Recently Issued Accounting Standards](index=30&type=section&id=Recently%20Issued%20Accounting%20Standards) - Refers to Note 2 of the condensed consolidated financial statements for details on recently issued accounting standards[144](index=144&type=chunk) [Forward-looking Statements](index=30&type=section&id=Forward-looking%20Statements) - The section discusses expectations regarding future events, plans, and objectives, including benefits of the Merger Agreement[145](index=145&type=chunk) - These statements are subject to risks and uncertainties that could cause actual results to differ materially, such as competitive and economic conditions, acts of terrorism, cyberattacks, regulatory changes, input costs, currency fluctuations, and risks related to the HNI merger[145](index=145&type=chunk) - The company undertakes no obligation to update, amend, or clarify forward-looking statements[145](index=145&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risks, including foreign currency exchange, interest rates, commodity prices, and fixed income and equity prices, remained materially unchanged in Q2 2026 [Foreign Exchange Risk](index=31&type=section&id=Foreign%20Exchange%20Risk) - No material change in foreign exchange risk occurred during Q2 2026[148](index=148&type=chunk) [Interest Rate Risk](index=31&type=section&id=Interest%20Rate%20Risk) - No material change in interest rate risk occurred during Q2 2026[149](index=149&type=chunk) [Commodity Price Risk](index=31&type=section&id=Commodity%20Price%20Risk) - No material change in commodity price risk occurred during Q2 2026[150](index=150&type=chunk) [Fixed Income and Equity Price Risk](index=31&type=section&id=Fixed%20Income%20and%20Equity%20Price%20Risk) - No material change in fixed income and equity price risk occurred during Q2 2026[151](index=151&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of August 29, 2025, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed effective as of August 29, 2025[152](index=152&type=chunk) - No material changes in internal control over financial reporting occurred during the second fiscal quarter[153](index=153&type=chunk) PART II. OTHER INFORMATION [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) Discusses risks of the planned HNI merger, including completion, financial impact, and operational uncertainties - The mergers are subject to conditions (shareholder and regulatory approvals) and may not be completed on time or at all, potentially leading to adverse effects on business, financial condition, and stock price[156](index=156&type=chunk)[157](index=157&type=chunk) - If the Merger Agreement is terminated under specified circumstances, Steelcase may owe HNI a termination fee of **$67 million**[157](index=157&type=chunk)[159](index=159&type=chunk) - The Merger Agreement limits Steelcase's ability to solicit, discuss or enter into an agreement with respect to an acquisition proposal for Steelcase and restricts the Board's ability to withdraw its recommendation[158](index=158&type=chunk) - Regulatory approvals may impose conditions that could have an adverse effect on the combined company or delay/prevent completion[161](index=161&type=chunk) - The value of merger consideration for Steelcase shareholders depends on HNI common stock price, which may decline before completion[162](index=162&type=chunk)[163](index=163&type=chunk) - Pending merger can cause business uncertainties, contractual restrictions, and potential loss of management/key employees[166](index=166&type=chunk)[168](index=168&type=chunk) - Potential securities class action and derivative lawsuits related to the merger could result in substantial costs or injunctions[169](index=169&type=chunk)[171](index=171&type=chunk) - Steelcase shareholders will have a significantly reduced ownership (approx. **36%**) and voting interest in the combined company[174](index=174&type=chunk) - The mergers involve substantial non-recurring transaction and regulatory costs[175](index=175&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2026, Steelcase repurchased 24,351 shares of Class A Common Stock at an average price of $12.25 per share to satisfy tax withholding obligations | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :-------------------- | :------------------------------- | :--------------------------- | | 05/31/2025 - 07/04/2025 | 14,754 | $10.13 | | 07/05/2025 - 08/01/2025 | 3,933 | $10.48 | | 08/02/2025 - 08/29/2025 | 5,664 | $16.15 | | **Total** | **24,351** | **$12.25 (approx. weighted avg)** | - All repurchases were to satisfy participants' tax withholding obligations upon issuance of shares under equity awards[177](index=177&type=chunk) - As of August 29, 2025, **$79.9 million** remained available under the **$100 million** share repurchase program approved in October 2023[136](index=136&type=chunk)[177](index=177&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with Form 10-Q, including the HNI Merger Agreement, compensation plan, and certifications - Includes the Agreement and Plan of Merger with HNI Corporation (Exhibit 2.1)[178](index=178&type=chunk) - Lists the Steelcase Inc. Incentive Compensation Plan, as amended and restated (Exhibit 10.1*)[178](index=178&type=chunk) - Contains CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1) and various voting and support agreements (Exhibits 99.1, 99.2, 99.3)[178](index=178&type=chunk) - Includes Inline XBRL documents for financial data[178](index=178&type=chunk) [Signatures](index=37&type=section&id=Signatures) The report is duly signed on behalf of Steelcase Inc. by Nicole C. McGrath, Vice President, Corporate Controller & Chief Accounting Officer, on September 26, 2025 - The report was signed by Nicole C. McGrath, Vice President, Corporate Controller & Chief Accounting Officer, on September 26, 2025[184](index=184&type=chunk)

Table of Contents 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 August 01, 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: 000-25225 Cracker Barrel Old Country Store, Inc. (Exact name of registrant as specified in its charter) Tennessee (State ...

except for number of shares and per share data) | | | As of December 31, | | As of June 30, | | --- | --- | --- | --- | --- | | | Notes | 2024 | 2025 | 2025 | | | | RMB | RMB | US$ | | ASSETS: | | | | | | Current assets: | | | | | | Cash and cash equivalents | | 63,202 | 30,882 | 4,311 | | Restricted cash | | 1,916 | 2,189 | 306 | | Accounts receivable, net | 4 | 295,713 | 345,634 | 48,249 | | Prepayments and other current assets | 5 | 112,044 | 110,900 | 15,479 | | Total current assets | | 472,875 | 489,60 ...

[Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section highlights that the **Form 10-K** contains forward-looking statements subject to risks and uncertainties [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements%20Content) This section highlights that the **Form 10-K** contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from projections - The **Form 10-K** contains forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially from projections[10](index=10&type=chunk)[12](index=12&type=chunk) - Key risks include adverse global economic conditions, inflation, potential recession, geopolitical tensions, product demand and market acceptance, technological difficulties, supply chain availability and cost inflation, and uncertainty in government funding[10](index=10&type=chunk) - The company may be detrimentally affected by changes in federal or state government enforcement regarding cannabis, given the evolving regulatory area and associated uncertainties[11](index=11&type=chunk) PART I [Item 1. Business](index=6&type=section&id=Item%201.%20Business) **Astrotech Corporation** (**ASTC**) commercializes its proprietary **Astrotech Mass Spectrometer Technology™** (**AMS Technology**) and **ATi Gas Chromatography Column** (**GC**) through wholly-owned subsidiaries, focusing on real-time, on-site chemical compound detection - **Astrotech Corporation** (**ASTC**) commercializes its proprietary **Astrotech Mass Spectrometer Technology™** (**AMS Technology**) and **ATi Gas Chromatography Column** (**GC**) through wholly-owned subsidiaries[15](index=15&type=chunk)[16](index=16&type=chunk) - The company's mission is to expand access to mass spectrometry by simplifying operation for real-time testing in diverse environments like airports, border checkpoints, military bases, and industrial locations[16](index=16&type=chunk)[251](index=251&type=chunk)[321](index=321&type=chunk) - Products include **TRACER 1000™**, **BreathTest-1000™**, **AgLAB 1000™**, and **Pro-Control 1000™**, along with related accessories and consumables[15](index=15&type=chunk) [Our Company](index=6&type=section&id=Our%20Company) The company commercializes its proprietary **AMS Technology** through application-specific subsidiaries - **Astrotech Corporation** (**Nasdaq**: **ASTC**) was organized in **1984** in Delaware[15](index=15&type=chunk) - The company is commercializing its **Astrotech Mass Spectrometer Technology™** platform ("**AMS Technology**") through application-specific, wholly-owned subsidiaries[15](index=15&type=chunk) [Our Business Units](index=6&type=section&id=Our%20Business%20Units) This section describes the company's six wholly-owned subsidiaries and their respective focus areas [Astrotech Technologies, Inc. (ATI)](index=7&type=section&id=Astrotech%20Technologies%2C%20Inc.%20(ATI)) **ATI** owns and licenses the **AMS Technology**, designed to be inexpensive, smaller, and easier to use than traditional mass spectrometers - **ATI** owns and licenses the **AMS Technology**, which was originally developed by **1st Detect** and designed to be inexpensive, smaller, and easier to use than traditional mass spectrometers[19](index=19&type=chunk)[322](index=322&type=chunk) - The **AMS Technology** operates under ultra-high vacuum, yielding higher resolution and fewer false alarms, and is protected by **16** granted patents and extensive trade secrets[19](index=19&type=chunk)[56](index=56&type=chunk) [1st Detect Corporation](index=7&type=section&id=1st%20Detect%20Corporation) **1st Detect** developed the **TRACER 1000™**, the world's first **MS**-based **Explosive Trace Detector** (**ETD**) certified by **ECAC** and approved by the **U.S. TSA** for air cargo - **1st Detect** developed the **TRACER 1000™**, the world's first **MS**-based **Explosive Trace Detector** (**ETD**) certified by **ECAC** and approved by the **U.S. TSA** for air cargo[20](index=20&type=chunk)[323](index=323&type=chunk) - The **TRACER 1000** is designed to outperform **IMS**-based **ETDs** by offering a virtually unlimited and easily expandable threat library without degrading detection capabilities, addressing issues of false positives and limited threat libraries in competing technologies[20](index=20&type=chunk)[323](index=323&type=chunk) - As of June **30**, **2025**, **TRACER 1000** units are deployed in approximately **34** locations across **16** countries in the **USA**, Europe, and Asia[21](index=21&type=chunk)[253](index=253&type=chunk) - In June **2024**, **TSA** approved **TRACER 1000** for the Air Cargo Security Technology List, advancing it to Stage II field trials, and in April **2025**, the first **TSA**-approved sale of six **TRACER 1000 ETDs** was made to Intuitive Research and Technology[22](index=22&type=chunk)[27](index=27&type=chunk) - **1st Detect** was awarded a research and development contract with the **DHS** in January **2025** to mature the **TRACER 1000** for next-generation explosives trace detection[25](index=25&type=chunk)[254](index=254&type=chunk) - In March **2025**, the enhanced **TRACER 1000 Narcotic Trace Detector** (**NTD**) was launched to screen for synthetic opiates and novel psychoactive substances, with its first international deployment in Vietnam in June **2025**[26](index=26&type=chunk)[28](index=28&type=chunk)[257](index=257&type=chunk)[258](index=258&type=chunk) [AgLAB Inc.](index=8&type=section&id=AgLAB%20Inc.) **AgLAB** develops the **AgLAB 1000™** series of mass spectrometers for the hemp and cannabis markets, focusing on optimizing yields in distillation processes - **AgLAB** develops the **AgLAB 1000™** series of mass spectrometers for the hemp and cannabis markets, focusing on optimizing yields in distillation processes, using the **Maximum Value Process** solution (**MVP**) for real-time analysis[30](index=30&type=chunk)[324](index=324&type=chunk) - Field trials demonstrated that the **AgLAB 1000-D2™** can improve ending-weight yields by **20%** or more for **THC** and **CBD** oil during distillation[30](index=30&type=chunk)[34](index=34&type=chunk) - In June **2024**, **AgLAB** partnered with **SC Laboratories** for joint marketing of the **AgLAB 1000-D2™** and **MVP** testing method to **SC Labs'** clients[35](index=35&type=chunk) [BreathTech Corporation](index=9&type=section&id=BreathTech%20Corporation) **BreathTech** was developing the **BreathTest-1000™** for breath analysis, but commercialization requires significant investment and regulatory approval - **BreathTech** was developing the **BreathTest-1000™**, a breath analysis tool to screen for **VOC** metabolites indicating compromised health conditions, but commercialization requires significant investment and regulatory approval, leading the company to deploy capital to other subsidiaries[36](index=36&type=chunk)[38](index=38&type=chunk)[325](index=325&type=chunk) - A pilot study with The Cleveland Clinic Foundation for lung and systemic diseases concluded in February **2025**, with no active or anticipated studies under the **CCF JDA**[37](index=37&type=chunk) [Pro-Control, Inc.](index=9&type=section&id=Pro-Control%2C%20Inc.) **Pro-Control** applies **AMS Technology** to industrial process control for chemical distillation, using the **Pro-Control 1000-D2™** mass spectrometer for real-time monitoring - Formed in December **2023**, **Pro-Control** applies **AMS Technology** to industrial process control for chemical distillation outside agriculture, using the **Pro-Control 1000-D2™** mass spectrometer and **Maximum Value Processing** to monitor and control manufacturing processes in real-time[39](index=39&type=chunk)[40](index=40&type=chunk)[327](index=327&type=chunk) - The technology aims to increase reaction intermediates, purity, and percent yields while significantly improving efficiency in industrial processes[39](index=39&type=chunk)[40](index=40&type=chunk) [EN-SCAN, Inc.](index=9&type=section&id=EN-SCAN%20Inc.) **EN-SCAN** develops advanced environmental testing and monitoring solutions, integrating proprietary **ATi Gas Chromatography** and **AMS Technology** into rugged, portable designs - Formed in February **2025**, **EN-SCAN** develops advanced environmental testing and monitoring solutions, integrating proprietary **ATi Gas Chromatography** and **AMS Technology** into rugged, portable designs for on-site, real-time air, water, and soil analysis[41](index=41&type=chunk)[256](index=256&type=chunk)[328](index=328&type=chunk) - Products include **Handheld GC**, **Fenceline Monitor**, and **Rugged Lab GC-MS**, designed to provide instant feedback for accurate contamination source location and migration, reducing testing costs and delays[41](index=41&type=chunk)[50](index=50&type=chunk) [Our Strategy](index=9&type=section&id=Our%20Strategy) The company's strategy leverages its core **AMS Technology** through specialized subsidiaries to address distinct market needs - **Astrotech's** strategy involves leveraging its core **AMS Technology** through specialized subsidiaries to address distinct market needs, focusing on product development, market penetration, and strategic partnerships[18](index=18&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[50](index=50&type=chunk) [1st Detect Corporation](index=9&type=section&id=1st%20Detect%20Corporation_Strategy) **1st Detect's** strategy focuses on marketing the **TRACER 1000 ETD** and **NTD** to countries accepting **ECAC** certification or **TSA** approval for air cargo - **1st Detect's** strategy focuses on marketing the **TRACER 1000 ETD** and **NTD** to countries accepting **ECAC** certification or **TSA** approval for air cargo, targeting markets needing broader compound detection and better accuracy[42](index=42&type=chunk)[43](index=43&type=chunk) - Key target markets include passenger airports, cargo airports, event venues, military bases, government office buildings, courthouses, border checkpoints, law enforcement agencies, and critical infrastructure security checkpoints[46](index=46&type=chunk) [AgLAB Inc.](index=10&type=section&id=AgLAB%20Inc._Strategy) **AgLAB's** strategy targets the hemp and cannabis industry, focusing on maximizing final product quality and yield in distillation processes - **AgLAB's** strategy targets the hemp and cannabis industry, focusing on maximizing final product quality and yield in distillation processes, with initial efforts in the **U.S.** market and future expansion into international markets[43](index=43&type=chunk)[44](index=44&type=chunk) - Agricultural companies involved in plant material harvesting, ingredient processing, oil distillation, contaminate detection, inspection and certification, and formulation and packaging are expected to benefit from increased **MS** use[47](index=47&type=chunk) [BreathTech Corporation](index=10&type=section&id=BreathTech%20Corporation_Strategy) **BreathTech's** strategy involves designing the **BreathTest-1000** as an inexpensive, non-invasive screening device for compromised conditions - **BreathTech's** strategy involves designing the **BreathTest-1000** as an inexpensive, non-invasive screening device for compromised conditions, targeting high-density and critical locations due to the need for quick and painless airborne disease detection[44](index=44&type=chunk) - Target markets include hospitals, military, nursing homes, sporting events, cruise lines, schools, airlines, performing arts venues, hotels, and convention and conference centers[48](index=48&type=chunk) [Pro-Control, Inc.](index=10&type=section&id=Pro-Control%2C%20Inc._Strategy) **Pro-Control** leverages **AgLAB's** technology and processes to offer "process control" methods and solutions, aiming to increase yields and quality - **Pro-Control** leverages **AgLAB's** technology and processes to offer "process control" methods and solutions, aiming to increase yields and quality by integrating **MS** directly into manufacturing lines for real-time analysis[45](index=45&type=chunk) - Markets likely to adopt **Pro-Control's** products include pharmaceutical manufacturing, petroleum refining, industrial chemical manufacturing, food processing, and nutraceutical manufacturing[49](index=49&type=chunk) [EN-SCAN, Inc.](index=11&type=section&id=EN-SCAN%20Inc._Strategy) **EN-SCAN's** strategy focuses on providing ultra-portable, rugged **GC** and **MS** technology for continuous on-site environmental monitoring and immediate response - **EN-SCAN's** strategy focuses on providing ultra-portable, rugged **GC** and **MS** technology for continuous on-site environmental monitoring and immediate response, offering lab-grade accuracy in demanding field conditions[50](index=50&type=chunk)[60](index=60&type=chunk) - Target markets include environmental equipment rental, industrial hygienists, environmental consulting firms, chemical plants, and refineries[58](index=58&type=chunk) [Products and Services](index=11&type=section&id=Products%20and%20Services) The company's products primarily consist of mass spectrometry and gas chromatography equipment - **Astrotech's** products are primarily mass spectrometry and gas chromatography equipment, leveraging its core **AMS Technology** for diverse applications[51](index=51&type=chunk)[57](index=57&type=chunk) [Mass Spectrometry](index=11&type=section&id=Mass%20Spectrometry) Mass spectrometry (**MS**) is an analytical technique measuring mass-to-charge ratio of ions to identify sample composition - Mass spectrometry (**MS**) is an analytical technique measuring mass-to-charge ratio of ions to identify sample composition, offering advantages in speed, specificity, and detection of minute quantities[52](index=52&type=chunk)[53](index=53&type=chunk) - The core **AMS Technology** originated from a device for the International Space Station, designed to be inexpensive, smaller, and easier to use than traditional **MS**, operating under ultra-high vacuum for higher resolution and fewer false alarms[56](index=56&type=chunk) [Gas Chromatography](index=12&type=section&id=Gas%20Chromatography) Gas chromatography (**GC**) separates, analyzes, and quantifies vaporizable compounds, offering real-time, on-site data for various applications - Gas chromatography (**GC**) separates, analyzes, and quantifies vaporizable compounds, offering real-time, on-site data for applications like fence-line monitoring, disaster response, and contamination tracking[59](index=59&type=chunk)[60](index=60&type=chunk) - The combined **GC** and **MS** technology in rugged, portable designs delivers lab-grade accuracy for on-site air, water, and soil analysis[60](index=60&type=chunk) [Customers, Sales, and Marketing](index=12&type=section&id=Customers%2C%20Sales%2C%20and%20Marketing) The company employs direct and channel sales strategies tailored to each business unit's market and regulatory environment - **Astrotech** employs both direct and channel sales strategies across its subsidiaries, adapting to the specific market needs and regulatory environments of each business unit[61](index=61&type=chunk)[62](index=62&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) [1st Detect Corporation](index=12&type=section&id=1st%20Detect%20Corporation_Sales) **1st Detect's** marketing focuses on markets seeking increased uptime, expanded libraries of detectable compounds, and near-zero false alarms - **1st Detect's** marketing focuses on markets seeking increased uptime, expanded libraries of detectable compounds, near-zero false alarms, high uptime, fast cleardown, and confirmatory technology[61](index=61&type=chunk)[66](index=66&type=chunk)[73](index=73&type=chunk) - Sales are conducted through direct sales and distributors, with units deployed in **34** locations across **16** countries, though sales cycles in regulated and government markets are long[61](index=61&type=chunk) [AgLAB Inc.](index=12&type=section&id=AgLAB%20Inc._Sales) **AgLAB** uses direct and channel sales, including a lease program with **SC Labs**, and plans to engage additional channel partners - **AgLAB** uses direct and channel sales, including a lease program with **SC Labs**, and plans to engage additional channel partners with existing distribution in the hemp and cannabis market[62](index=62&type=chunk) [BreathTech Corporation](index=12&type=section&id=BreathTech%20Corporation_Sales) Commercialization of **BreathTech's AMS Technology** is deemed to require significant investment and time due to regulatory requirements - Commercialization of **BreathTech's AMS Technology** is deemed to require significant investment and time due to regulatory requirements, leading to capital deployment to other subsidiaries[63](index=63&type=chunk) [Pro-Control, Inc.](index=12&type=section&id=Pro-Control%2C%20Inc._Sales) **Pro-Control** currently uses direct sales, conducting proof-of-concept and trial engagements near its Austin headquarters - **Pro-Control** currently uses direct sales, conducting proof-of-concept and trial engagements near its Austin headquarters, with intentions to use regional sales teams in manufacturing-dense geographic territories[64](index=64&type=chunk) [EN-SCAN, Inc.](index=12&type=section&id=EN-SCAN%20Inc._Sales) **EN-SCAN** targets industries like environmental consulting, government agencies, and industrial facilities, offering training and data integration - **EN-SCAN** targets industries like environmental consulting, government agencies, industrial facilities, and academic institutions, offering training, data integration, and a centralized portal to enhance customer experience[65](index=65&type=chunk) [Competition](index=13&type=section&id=Competition) The company's subsidiaries differentiate themselves through superior technology attributes against larger competitors - **Astrotech's** subsidiaries face competition from larger, established companies with broader product ranges, but differentiate themselves through superior technology attributes like lower false alarm rates, expanded detection libraries, and real-time, on-site analysis capabilities[67](index=67&type=chunk)[68](index=68&type=chunk)[70](index=70&type=chunk)[72](index=72&type=chunk) [1st Detect Corporation](index=13&type=section&id=1st%20Detect%20Corporation_Competition) Competition for **TRACER 1000** primarily comes from larger **IMS**-based **ETD** manufacturers, but **1st Detect** believes its product offers superior attributes - Competition for **TRACER 1000** primarily comes from larger **IMS**-based **ETD** manufacturers, but **1st Detect** believes its product offers superior attributes such as near-zero false alarms, limitless library expansion, high uptime, fast cleardown, and confirmatory technology[67](index=67&type=chunk)[73](index=73&type=chunk) [AgLAB Inc.](index=13&type=section&id=AgLAB%20Inc._Competition) **AgLAB's MS**-based system competes with **High-Performance Liquid Chromatography** (**HPLC**), offering a more user-friendly interface and quicker results - **AgLAB's MS**-based system competes with **High-Performance Liquid Chromatography** (**HPLC**), offering a more user-friendly interface, quicker results, and future closed-loop process control for maximized yield and quality[68](index=68&type=chunk) [BreathTech Corporation](index=13&type=section&id=BreathTech%20Corporation_Competition) The **BreathTest-1000** is designed to supplement, not compete with, traditional medical tests by providing quick, inexpensive screening - The **BreathTest-1000** is designed to supplement, not compete with, traditional medical tests by providing a quick, inexpensive, and painless screening for **VOC** metabolites indicating compromised conditions[69](index=69&type=chunk) [Pro-Control, Inc.](index=13&type=section&id=Pro-Control%2C%20Inc._Competition) **Pro-Control** competes with legacy **MS** equipment and off-site laboratory testing by simplifying **MS** for factory floor use and real-time analysis - **Pro-Control** competes with legacy, sophisticated **MS** equipment from global **OEMs** and off-site laboratory testing, differentiating itself by simplifying **MS** for factory floor use, enabling real-time analysis in minutes versus hours or days[70](index=70&type=chunk)[71](index=71&type=chunk) [EN-SCAN, Inc.](index=13&type=section&id=EN-SCAN%20Inc._Competition) **EN-SCAN** competes with established environmental testing equipment providers by emphasizing its proprietary **ATi GC** and **AMS Technology** and rugged on-site design - **EN-SCAN** competes with established environmental testing equipment providers, particularly those offering portable **GC**-**MS** devices, by emphasizing its proprietary **ATi GC** and **AMS Technology**, rugged on-site design, and a product lineup spanning handheld, fenceline, and lab-grade instruments for real-time, cost-efficient analysis[72](index=72&type=chunk) [Research and Development](index=14&type=section&id=Research%20and%20Development) The company invests significantly in R&D for new products, system improvements, and cost optimization - **Astrotech** invests significant resources in **R&D**, primarily focused on the cross-platform **AMS Technology** to develop new derivative products, improve system functionality, optimize design, reduce cost, and streamline user experience[74](index=74&type=chunk) [Astrotech Technologies, Inc. (ATI)](index=14&type=section&id=Astrotech%20Technologies%2C%20Inc.%20(ATI)_R%26D) **ATI's R&D** continually works on cross-platform **AMS Technology**, developing new derivative products and improving system functionality - **ATI's R&D** continually works on cross-platform **AMS Technology**, developing new derivative products, improving system functionality and reliability, optimizing design, reducing cost, and simplifying software and user experience[74](index=74&type=chunk) [1st Detect Corporation](index=14&type=section&id=1st%20Detect%20Corporation_R%26D) While **TRACER 1000** is commercialized, **1st Detect** continues to invest in library development, leading to the launch of its narcotics detector - While **TRACER 1000** is commercialized, **1st Detect** continues to invest in library development, leading to the launch of its narcotics detector and ongoing enhancements[75](index=75&type=chunk) [AgLAB Inc.](index=14&type=section&id=AgLAB%20Inc._R%26D) **AgLAB** continues to develop its **AgLAB-1000** series, using core **AMS Technology**, to include other valuable products specific to the hemp and cannabis industry - **AgLAB** continues to develop its **AgLAB-1000** series, using core **AMS Technology**, to include other valuable products specific to the hemp and cannabis industry, with plans for an inline process control unit (**AgLAB-1000-D1**) integrated directly into distillation equipment[76](index=76&type=chunk) [BreathTech Corporation](index=14&type=section&id=BreathTech%20Corporation_R%26D) **BreathTech's R&D** focuses on sample introduction and library development for the **BreathTest-1000** to identify specific compounds in breath - **BreathTech's R&D** focuses on sample introduction and library development for the **BreathTest-1000** to identify specific compounds in breath indicative of compromised conditions, including infections[77](index=77&type=chunk) [Pro-Control, Inc.](index=14&type=section&id=Pro-Control%2C%20Inc._R%26D) **Pro-Control** is in early stages of refining its product line using core **AMS Technology** and developing its library for chemical manufacturers - **Pro-Control** is in early stages of refining its product line using core **AMS Technology** and developing its library for chemical manufacturers[78](index=78&type=chunk) [En-Scan, Inc.](index=14&type=section&id=En-Scan%2C%20Inc._R%26D) **EN-SCAN's R&D** efforts are focused on manufacturing and selling new environmental testing instruments using proprietary **ATi GC** and **AMS Technology** - **EN-SCAN's R&D** efforts are focused on manufacturing and selling new environmental testing instruments using proprietary **ATi GC** and **AMS Technology** for on-site, real-time air, water, and soil analysis, strengthening its competitive edge and opening new market opportunities[79](index=79&type=chunk) [Certain Regulatory Matters](index=15&type=section&id=Certain%20Regulatory%20Matters) The company is subject to extensive federal, state, and local regulations across its business operations - **Astrotech** is subject to extensive **U.S.** federal, state, and local laws and regulations concerning environmental protection, technology transfer, business practices, and federal contracting procedures[80](index=80&type=chunk) - Compliance with these regulations has not had a material effect on capital expenditures, earnings, or competitive position, and is not expected to in the future[80](index=80&type=chunk) [Federal Regulations](index=15&type=section&id=Federal%20Regulations) Key federal regulations impacting operations include the **Foreign Corrupt Practices Act**, **Iran Nonproliferation Act of 2000**, and **Export Administration Regulations** - Key federal regulations impacting operations include the **Foreign Corrupt Practices Act**, **Iran Nonproliferation Act of 2000**, **Federal Acquisition Regulations** (**FAR**), **Truth in Negotiations Act**, **Export Administration Act**, and **Export Administration Regulations**[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) [Medical Device Regulation](index=15&type=section&id=Medical%20Device%20Regulation) Medical devices in the **U.S.** require **FDA** clearance or approval, classified by risk, and are subject to extensive post-market regulations - Medical devices in the **U.S.** require **FDA** clearance (**510(k)**), de novo request, or **Premarket Application** (**PMA**) approval, classified into Class I, II, or III based on risk[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - Post-market regulations include establishment registration, device listing, **Quality System Regulation** (**QSR**) compliance, labeling, marketing, medical device reporting (**MDR**), and recall reporting[98](index=98&type=chunk) - In the **EEA**, medical devices must meet essential requirements of the **Medical Devices Directive**, undergo conformity assessment, and apply the **CE Mark** for market placement[100](index=100&type=chunk)[101](index=101&type=chunk) - The **EU Medical Devices Regulation** (**Regulation 2017/745**), effective May **2021**, strengthens rules on market placement, surveillance, manufacturer responsibilities, traceability, and assessment of high-risk devices[104](index=104&type=chunk)[106](index=106&type=chunk) [Federal, State, and Foreign Fraud and Abuse and Physician Payment Transparency Laws](index=21&type=section&id=Federal%2C%20State%2C%20and%20Foreign%20Fraud%20and%20Abuse%20and%20Physician%20Payment%20Transparency%20Laws) The company is subject to federal and state anti-kickback and false claims laws, and transparency laws regarding payments to healthcare providers - The company is subject to federal and state anti-kickback and false claims laws, and transparency laws regarding payments to healthcare providers, including the federal **Anti-Kickback Statute** and the federal civil **False Claims Act**[110](index=110&type=chunk)[111](index=111&type=chunk)[113](index=113&type=chunk) - Violations can result in significant civil and criminal penalties, exclusion from federal healthcare programs, and "qui tam" whistleblower lawsuits[112](index=112&type=chunk)[114](index=114&type=chunk) [Data Privacy and Security Laws](index=22&type=section&id=Data%20Privacy%20and%20Security%20Laws) The company may be subject to data privacy laws like **GDPR**, **CCPA**, and **HIPAA**, which protect personal and patient health information - The company may be subject to data privacy laws like the **EU General Data Protection Regulation** (**GDPR**) and the **California Consumer Privacy Act** (**CCPA**), and **HIPAA**, which protect personal and patient health information[119](index=119&type=chunk)[120](index=120&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - **HIPAA** mandates privacy and security standards for **Protected Health Information** (**PHI**), breach notification requirements, and can impose civil monetary penalties and criminal penalties for non-compliance[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) [Healthcare Reform](index=23&type=section&id=Healthcare%20Reform) **U.S.** and foreign jurisdictions are considering legislative and regulatory proposals to reform healthcare, which could impact product coverage or reimbursement - **U.S.** and foreign jurisdictions are considering legislative and regulatory proposals to reform healthcare, aiming to contain costs, improve quality, or expand access, which could limit coverage or lower reimbursement for the company's products[126](index=126&type=chunk) [US Government Regulation of the Cannabis Industry](index=23&type=section&id=US%20Government%20Regulation%20of%20the%20Cannabis%20Industry) **AgLAB's** business in the hemp and cannabis industry faces significant regulatory and operational risks due to marijuana's federal controlled substance status - While **Astrotech** does not directly sell cannabis products, its **AgLAB** business serves the hemp and cannabis industry, which is subject to significant regulatory, financial, operational, and reputational risks due to marijuana's Schedule I controlled substance status under federal law[128](index=128&type=chunk)[193](index=193&type=chunk)[195](index=195&type=chunk) - Federal enforcement of the **Controlled Substances Act** could lead to fines, imprisonment, or seizure of property, and any unfavorable change in federal enforcement could significantly damage the industry and indirectly affect **Astrotech**[129](index=129&type=chunk)[195](index=195&type=chunk) - There is a risk that the company's equipment could be deemed to be aiding and abetting illegal activities or considered "drug paraphernalia" under federal law, potentially leading to enforcement actions, though federal authorities have not historically focused on such tangential violations[200](index=200&type=chunk)[201](index=201&type=chunk) - If marijuana is reclassified, the **FDA** could regulate cannabis under the **FDCA**, potentially imposing new rules, manufacturing practices, or facility registration requirements, which could impact the **AgLAB** business[204](index=204&type=chunk)[205](index=205&type=chunk) [Regulatory Compliance and Risk Management](index=25&type=section&id=Regulatory%20Compliance%20and%20Risk%20Management) The company maintains compliance with regulatory requirements and manages risks through a program of compliance, awareness, and insurance - The company maintains compliance with regulatory requirements and manages risks through a program of compliance, awareness, and insurance, with a continued emphasis on safety[137](index=137&type=chunk) [Employees](index=25&type=section&id=Employees) As of June **30**, **2025**, **Astrotech** employed **32** individuals, none of whom were covered by collective bargaining agreements - As of June **30**, **2025**, **Astrotech** employed **32** individuals, none of whom were covered by collective bargaining agreements[138](index=138&type=chunk) [Website](index=25&type=section&id=Website) Additional information on the company's business operations is available on its website, www.astrotechcorp.com - Additional information on the company's business operations is available on its website, www.astrotechcorp.com[139](index=139&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) **Astrotech** faces significant risks, including substantial accumulated losses, uncertain profitability, and the need for additional capital which could dilute existing shareholders - The company has incurred significant losses since inception and anticipates continued losses, with business units in early development stages and uncertain future revenues or profitability[144](index=144&type=chunk)[145](index=145&type=chunk) - There is a need to raise additional capital, which could lead to dilution for existing shareholders, and risks related to obtaining intellectual property protection and defending against infringement claims[147](index=147&type=chunk)[149](index=149&type=chunk)[151](index=151&type=chunk) - Challenges include successful development of new products (e.g., **BreathTest-1000**), operational and regulatory risks in international markets, adverse impacts from inflation, and dependence on a limited number of customers[157](index=157&type=chunk)[159](index=159&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) - Other risks include competition, reliance on third-party suppliers, warranty costs, extensive governmental regulation (especially for medical devices and the cannabis industry), and potential delisting from **Nasdaq**[167](index=167&type=chunk)[173](index=173&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk)[193](index=193&type=chunk)[224](index=224&type=chunk) [Summary Risk Factors](index=26&type=section&id=Summary%20Risk%20Factors) This section summarizes key risks including financial losses, capital needs, **IP**, and regulatory challenges - The company has incurred significant losses since inception and anticipates continued losses, with business units in early development stages and uncertain future revenues or profitability[144](index=144&type=chunk)[145](index=145&type=chunk) - There is a need to raise additional capital, which could lead to dilution for existing shareholders, and risks related to obtaining intellectual property protection and defending against infringement claims[147](index=147&type=chunk)[149](index=149&type=chunk)[151](index=151&type=chunk) - Challenges include successful development of new products (e.g., **BreathTest-1000**), operational and regulatory risks in international markets, adverse impacts from inflation, and dependence on a limited number of customers[157](index=157&type=chunk)[159](index=159&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) - Other risks include competition, reliance on third-party suppliers, warranty costs, extensive governmental regulation (especially for medical devices and the cannabis industry), and potential delisting from **Nasdaq**[167](index=167&type=chunk)[173](index=173&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk)[193](index=193&type=chunk)[224](index=224&type=chunk) [Risks Related to Our Business and Industry](index=28&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) This section details business risks such as accumulated deficits, funding needs, customer concentration, and supply chain issues - **Astrotech** has an accumulated deficit of approximately **$251 million** as of June **30**, **2025**, and reported a net loss of **$13.8 million** for fiscal year **2025**, with uncertainty about future profitability[144](index=144&type=chunk) - Business units are in early development, have limited revenue, and require substantial funding, with no guarantee of product effectiveness, market attractiveness, or regulatory approvals (e.g., **TSA** for **TRACER 1000**, **FDA** for **BreathTest-1000**)[145](index=145&type=chunk)[146](index=146&type=chunk) - The company may need to raise additional capital through equity or debt, which could dilute stockholders or impose significant operational restrictions[147](index=147&type=chunk)[148](index=148&type=chunk) - International sales expose the company to risks such as import/export laws, exchange rate fluctuations, political instability, anti-corruption law violations, and stringent foreign regulations[159](index=159&type=chunk)[161](index=161&type=chunk) - Inflation could adversely affect financial condition by increasing costs, particularly if price increases cannot be passed to customers, and may exacerbate supply chain disruptions and employee retention challenges[162](index=162&type=chunk) - Substantial revenue is generated from a limited number of customers, and the loss of any could materially harm business and financial results[163](index=163&type=chunk)[164](index=164&type=chunk) - Manufacturing operations are highly dependent on third-party and single-source suppliers for critical components, making the company vulnerable to supply shortages, price fluctuations, and production delays[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - Product warranties expose the company to future repair and replacement costs, and unforeseen quality issues or higher sales could lead to costs exceeding current estimates[177](index=177&type=chunk) [Legal and Regulatory Risks](index=35&type=section&id=Legal%20and%20Regulatory%20Risks) This section outlines risks from extensive medical device regulations, cannabis industry laws, and trade policies - The medical technology industry is extensively regulated by governmental authorities like the **FDA**, with complex and stringent regulations that can limit operations, increase costs, or delay product approvals[178](index=178&type=chunk) - Failure to obtain **FDA** clearance or authorization for products like the **BreathTest-1000**, or delays in development, would adversely affect business growth, as clinical testing is likely required[183](index=183&type=chunk) - Non-compliance with regulatory quality standards (e.g., **QSR**) by the company or its suppliers could lead to **FDA** enforcement actions, including warning letters, fines, recalls, and operating restrictions[184](index=184&type=chunk)[185](index=185&type=chunk) - Product modifications to **510(k)**-cleared devices may require new clearances or approvals, and off-label promotion could lead to regulatory actions, fines, and product liability claims[186](index=186&type=chunk)[187](index=187&type=chunk) - Healthcare reforms and disruptions at government agencies (like **FDA** funding shortages) could increase costs, lengthen review times, and negatively impact business[188](index=188&type=chunk)[190](index=190&type=chunk) - The **AgLAB** business's growth is highly dependent on the **U.S.** hemp and cannabis market, which faces risks from evolving federal and state laws, potential reclassification of marijuana, and opposition from other industries[193](index=193&type=chunk)[196](index=196&type=chunk)[207](index=207&type=chunk) - Changes in **U.S.** trade policy, including tariffs and export license processing pauses, could adversely affect international sales, increase costs, and reduce profitability[212](index=212&type=chunk)[213](index=213&type=chunk) [Risks Related to Ownership of Our Common Stock](index=44&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) This section addresses risks related to stock price volatility, potential dilution, and **Nasdaq** listing compliance - The company's stock price has been volatile and may experience rapid and substantial decreases unrelated to operating performance, influenced by factors like investor reaction to strategy, competitive products, regulatory developments, and general economic conditions[214](index=214&type=chunk)[215](index=215&type=chunk) - The company can sell additional shares of common or preferred stock without shareholder consultation, leading to dilution and potential depression of the stock price[217](index=217&type=chunk)[218](index=218&type=chunk) - As a smaller reporting company, reduced disclosure requirements may make its common stock less attractive to investors, potentially leading to a less active trading market and more volatile stock price[223](index=223&type=chunk) - Failure to maintain compliance with **Nasdaq's** listing requirements could result in delisting, significantly reducing liquidity and stock price, and harming the ability to raise capital[224](index=224&type=chunk)[225](index=225&type=chunk) [General Risk Factors](index=47&type=section&id=General%20Risk%20Factors) This section covers general risks including cybersecurity threats, corporate governance costs, and insurance adequacy - Increased cybersecurity threats pose risks to systems, networks, products, services, and data, potentially leading to security breaches, data loss, operational disruptions, reputational damage, and legal actions[226](index=226&type=chunk) - Compliance with corporate governance regulations (e.g., **Sarbanes-Oxley Act**, **Dodd-Frank Act**) incurs significant legal, accounting, and other expenses, requiring substantial management time and potentially increasing general and administrative costs[228](index=228&type=chunk) - The company's insurance coverage may be inadequate to cover all significant risk exposures, potentially forcing it to bear substantial costs for claims or liabilities[229](index=229&type=chunk) [Item 1B. Unresolved Staff Comments](index=49&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - No unresolved staff comments[230](index=230&type=chunk) [Item 1C. Cybersecurity](index=49&type=section&id=Item%201C.%20Cybersecurity) **Astrotech's** cybersecurity program, overseen by the Board's audit committee and managed by the **IT Manager** and **COO**, focuses on identifying, assessing, and managing risks - **Astrotech's** cybersecurity program, informed by **CIS** standards, includes processes for identification, assessment, and management of cybersecurity risks, supported by periodic risk assessments and security testing[235](index=235&type=chunk) - The Board of Directors, through its audit committee, provides overall oversight for cybersecurity risk management, while day-to-day administration is handled by the **IT Manager** and executive management (**COO**)[231](index=231&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk) - The company assesses third-party vendor cybersecurity practices and has an incident response plan, but has not identified any cybersecurity incidents that have materially affected its business to date[237](index=237&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk) [Board of Directors Oversight](index=49&type=section&id=Board%20of%20Directors%20Oversight) The Board's audit committee oversees cybersecurity risk management, leveraging diverse expertise - The Board of Directors, through its audit committee, holds overall oversight responsibility for cybersecurity risk management, with committee members possessing diverse expertise in risk management and technology[231](index=231&type=chunk) [Management's Role](index=49&type=section&id=Management%27s%20Role) Management, led by the **IT Manager** and **COO**, administers the cybersecurity program and incident response - Day-to-day cybersecurity program administration is supervised by the **IT Manager** and executive management (**CFO** until August **12**, **2025**, then **COO**), who inform the audit committee and conduct annual reviews[232](index=232&type=chunk) - The **COO** and **IT** team are responsible for assessing, monitoring, and managing cybersecurity risks, testing compliance with **CIS version 8 standards**, remediating risks, and leading employee training[233](index=233&type=chunk) - An incident response plan is in place for cybersecurity incidents, including escalation to executive management and the audit committee[234](index=234&type=chunk) [Cybersecurity Risk Management and Strategy](index=49&type=section&id=Cybersecurity%20Risk%20Management%20and%20Strategy) The cybersecurity program identifies, assesses, and manages risks through periodic assessments and testing - The cybersecurity program, informed by **CIS**, includes processes for identification, assessment, and management of risks, with periodic risk assessments (including external support) and regular security testing[235](index=235&type=chunk) [Third-Party Risk](index=49&type=section&id=Third-Party%20Risk) The company assesses and reviews cybersecurity practices of external experts and major third-party vendors - **Astrotech** engages external experts for cybersecurity evaluation and testing and assesses and reviews the cybersecurity practices of major third-party vendors and service providers[236](index=236&type=chunk)[237](index=237&type=chunk) [Risks from Cybersecurity Threats](index=50&type=section&id=Risks%20from%20Cybersecurity%20Threats) The company monitors cybersecurity risks, with no material incidents affecting business to date - The company monitors cybersecurity risks through managed security service providers, third-party security software, and internal/external technologies for network monitoring and data loss prevention[238](index=238&type=chunk) - No cybersecurity incidents or threats have materially affected the company's business strategy, results of operations, or financial condition to date[240](index=240&type=chunk) [Item 2. Properties](index=50&type=section&id=Item%202.%20Properties) **Astrotech** leases two facilities in Austin, Texas, and has entered a new lease for a larger **17,628** square foot **Metric facility** commencing July **1**, **2025** - **Astrotech** leases an **R&D** facility (**5,960** sq ft) and an adjacent subleased facility (**3,900** sq ft) in Austin, Texas, collectively known as the "**Donley Facilities**"[241](index=241&type=chunk)[242](index=242&type=chunk) - The **Donley Facilities** leases were extended on a month-to-month basis effective May **1**, **2025**, with a monthly rent of **$14,186**[242](index=242&type=chunk) - A new **89**-month lease for a **17,628** sq ft **Metric facility** in Austin was signed on January **29**, **2025**, commencing July **1**, **2025**, with a total contractual base rent obligation of approximately **$3.0 million**[243](index=243&type=chunk) - The company expects to relocate to the **Metric facility** during fiscal year **2026**, consolidating all Austin-based functions[244](index=244&type=chunk) [Item 3. Legal Proceedings](index=51&type=section&id=Item%203.%20Legal%20Proceedings) **Astrotech** is periodically involved in legal and administrative proceedings, but management does not believe any individual or aggregate matters will have a material adverse effect on the company's financial position or results of operations - The company is subject to legal and administrative proceedings, settlements, investigations, claims, and actions from time to time[245](index=245&type=chunk) - Management assesses the likely outcome of litigation based on various factors and does not believe any current matters will have a material adverse effect on the company's financial position or results of operations[245](index=245&type=chunk) [Item 4. Mine Safety Disclosures](index=51&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[246](index=246&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=51&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) **Astrotech's** common stock trades on The **Nasdaq Capital Market** under **ASTC**, with **1,758,953** shares outstanding as of September **24**, **2025**, and no cash dividends paid or intended - Common stock is traded on The **Nasdaq Capital Market** under the symbol **ASTC**[3](index=3&type=chunk)[248](index=248&type=chunk) - As of September **24**, **2025**, **1,758,953** shares of common stock were issued and outstanding, held by approximately **28** record holders[5](index=5&type=chunk)[249](index=249&type=chunk) - The closing sale price on September **24**, **2025**, was **$5.14** per share[249](index=249&type=chunk) - The company has never paid cash dividends and has no intention of paying dividends in the future[248](index=248&type=chunk) [Item 6. Reserved](index=51&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information - Item **6** is reserved[250](index=250&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) **Astrotech's MD&A** provides an overview of its financial condition and results of operations for fiscal years **2025** and **2024**, noting decreased revenue, increased net loss, and the need for additional funding - **Astrotech's MD&A** covers financial condition and results of operations for fiscal years ended June **30**, **2025** and **2024**[250](index=250&type=chunk) - The company experienced a decrease in total revenue and an increased net loss in fiscal year **2025**, primarily due to fewer **TRACER 1000** unit sales[274](index=274&type=chunk) - **R&D** expenses increased, contributing to higher operating expenses, while liquidity is supported by cash and short-term investments, though additional funding may be needed for future growth[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk) [Overview](index=51&type=section&id=Overview) **Astrotech's** mission is to advance mass spectrometry and gas chromatography for precise chemical compound detection in high-demand environments - **Astrotech's** mission is to advance mass spectrometry and gas chromatography for precise chemical compound detection in high-demand environments[251](index=251&type=chunk)[321](index=321&type=chunk) - The company aims to simplify operation and ruggedize devices for real-time, on-site testing in various sectors like security, industrial, and environmental[251](index=251&type=chunk)[321](index=321&type=chunk) [Fiscal Year 2025 Business Highlights](index=52&type=section&id=Fiscal%20Year%202025%20Business%20Highlights) Key business highlights for fiscal year **2025** include **TRACER 1000** deployments, **DHS R&D** contract, and the launch of the **TRACER 1000 Narcotic Trace Detector** - As of June **30**, **2025**, **TRACER 1000** units are deployed in approximately **34** locations across **16** countries[253](index=253&type=chunk) - **1st Detect Corporation** was awarded a **DHS R&D** contract in January **2025** for next-generation explosives trace detection[254](index=254&type=chunk) - **Astrotech** received and fulfilled a **$429,000** purchase order for six **TRACER 1000 ETDs** from a **TSA**-approved contractor in January **2025**, marking the first **TSA**-approved sale[255](index=255&type=chunk) - **EN-SCAN, Inc.** was created in February **2025** to manufacture environmental testing instruments using proprietary **GC** and **MS** technology[256](index=256&type=chunk) - The enhanced **TRACER 1000 Narcotic Trace Detector** was launched in March **2025**, with its first international deployment in Vietnam in June **2025**[257](index=257&type=chunk)[258](index=258&type=chunk) - The company has initiated **TSA** checkpoint testing for the **TRACER 1000**[259](index=259&type=chunk) [Critical Accounting Estimates](index=53&type=section&id=Critical%20Accounting%20Estimates) The preparation of financial statements requires significant management judgments and estimates, including those for revenue recognition and inventory valuation - The preparation of financial statements requires significant management judgments and estimates, including those for long-lived assets recoverability, revenue recognition, inventory valuation, and loss contingencies[262](index=262&type=chunk) [Revenue Recognition](index=53&type=section&id=Revenue%20Recognition_Critical) **Astrotech** recognizes revenue following **ASC Topic 606**, a five-step process based on contract type and product/service delivery - **Astrotech** recognizes revenue following **ASC Topic 606**, a five-step process based on contract type and product/service delivery, with revenue sources including product sales, grant revenue, and recurring maintenance/warranty services[263](index=263&type=chunk)[264](index=264&type=chunk)[330](index=330&type=chunk) - Revenue from product sales is recognized upon shipment or delivery when control transfers to the customer and collection is probable, with specific criteria for subjective customer acceptance[267](index=267&type=chunk)[336](index=336&type=chunk) - For the year ended June **30**, **2025**, approximately **$1.0 million** in revenue was generated from nine customers, and for **2024**, **$1.7 million** from three customers, comprising a significant portion of total revenue[264](index=264&type=chunk)[331](index=331&type=chunk) Revenue by Recognition Method (in thousands) | Type | 2025 | 2024 | | :--- | :--- | :--- | | Point in Time | **$920** | **$1,560** | | Over Time | **$130** | **$88** | | **Total Revenue** | **$1,049** | **$1,664** | [Valuation of Inventory](index=54&type=section&id=Valuation%20of%20Inventory_Critical) Inventories are valued at the lower of cost or net realizable value, with reserves for estimated obsolescence or excess inventory - Inventories are valued at the lower of cost (standard cost, approximating **FIFO**) or net realizable value, with reserves or write-downs for estimated obsolescence, excess, or unmarketable inventory based on future demand and market conditions[272](index=272&type=chunk)[350](index=350&type=chunk) Inventory Reserves (in thousands) | Year Ended June 30, | Inventory Reserves | | :--- | :--- | | 2025 | **$346** | | 2024 | **$296** | [Warranty Provision](index=54&type=section&id=Warranty%20Provision_Critical) The company provides product warranties for repairs and maintenance, recording an estimated warranty expense provision at the time of sale - The company provides product warranties for repairs and maintenance, recording an estimated warranty expense provision at the time of sale, which is adjusted periodically based on historical experience and anticipated expenses[273](index=273&type=chunk)[342](index=342&type=chunk) Warranty Provision Activity (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Balance as of June 30, | **$197** | **$184** | | Accruals for new warranties issued | **$75** | **$172** | | Settlements made | **$(62)** | **$(76)** | [Results of Operations for the Years Ended June 30, 2025 and 2024](index=55&type=section&id=Results%20of%20Operations%20for%20the%20Years%20Ended%20June%2030%2C%202025%20and%202024) This table presents the company's revenue, expenses, and net loss for the fiscal years Consolidated Statements of Operations (in thousands) | Metric | 2025 | 2024 | Variance | | :--- | :--- | :--- | :--- | | Revenue | **$1,049** | **$1,664** | **$(615)** | | Cost of revenue | **$574** | **$913** | **$(339)** | | Gross profit | **$475** | **$751** | **$(276)** | | Gross margin | **45.3%** | **45.1%** | **0.2%** | | Selling, general and administrative | **$7,067** | **$7,241** | **$174** | | Research and development | **$8,142** | **$6,790** | **$(1,352)** | | Total operating expenses | **$15,209** | **$14,031** | **$(1,178)** | | Loss from operations | **$(14,734)** | **$(13,280)** | **$(1,454)** | | Other income and expense, net | **$886** | **$1,616** | **$(730)** | | Income tax expense | **$(2)** | **$(2)** | **$0** | | Net loss | **$(13,850)** | **$(11,666)** | **$(2,184)** | | Net unrealized gain | **$313** | **$276** | **$37** | | Total comprehensive loss | **$(13,537)** | **$(11,390)** | **$(2,147)** | - Total revenue decreased by **$615 thousand** (**37.0%**) to **$1.0 million** in fiscal year **2025**, primarily due to fewer **TRACER 1000** units sold compared to the prior year[274](index=274&type=chunk) - Gross profit decreased by **$276 thousand**, but gross margin slightly increased by **0.2%** to **45.3%** in fiscal year **2025** due to higher margins on device sales[275](index=275&type=chunk) - Total operating expenses increased by **$1.2 million** (**8.4%**), driven by a **$1.4 million** (**19.9%**) increase in **R&D** expenses for mass spectrometry and gas chromatography offerings, partially offset by a **$174 thousand** (**2.4%**) decrease in **SG&A**[276](index=276&type=chunk)[278](index=278&type=chunk) - Net loss increased by **$2.2 million** to **$(13.85) million** in fiscal year **2025**, compared to **$(11.67) million** in fiscal year **2024**[274](index=274&type=chunk)[311](index=311&type=chunk) [Liquidity and Capital Resources](index=56&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily financed through public offerings of common stock, with short-term and long-term requirements for working capital and expansion - The company's liquidity is primarily financed through public offerings of common stock, historically raising approximately **$67.6 million** in net proceeds[279](index=279&type=chunk) - Short-term and long-term liquidity requirements include working capital, general corporate expenses, scaling operations, increasing manufacturing capacity, sales and marketing, **R&D**, and public company costs[279](index=279&type=chunk) [Sources of Liquidity](index=56&type=section&id=Sources%20of%20Liquidity) Liquidity is primarily from cash, cash equivalents, and short-term investments, funding operations for at least twelve months Cash and Cash Equivalents (in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | **$3,100** | **$10,442** | | Short-term investments | **$15,108** | **$21,474** | | Net working capital | **$19,500** | **$32,200** | - Cash and cash equivalents decreased by **$7.3 million** to **$3.1 million** at June **30**, **2025**, from **$10.4 million** at June **30**, **2024**, due to funding operating expenses[279](index=279&type=chunk)[291](index=291&type=chunk) - The company believes its cash, cash equivalents, and investments will fund operating expenses and capital expenditures for at least twelve months[279](index=279&type=chunk) [Funding Requirements](index=56&type=section&id=Funding%20Requirements) Future capital needs for **R&D** and expansion may require additional equity or debt financing - Expenses are expected to increase due to **R&D** efforts, business expansion, and public company costs, necessitating additional funding[280](index=280&type=chunk) - Future capital requirements depend on **R&D** efforts, collaborations, sales/marketing/manufacturing costs, headcount growth, intellectual property costs, and public company operating costs[281](index=281&type=chunk) - Additional cash needs are expected to be financed through equity offerings, debt financing, or strategic partnerships, which could lead to stockholder dilution or restrictive covenants[281](index=281&type=chunk)[282](index=282&type=chunk) [Trends and Uncertainties](index=57&type=section&id=Trends%20and%20Uncertainties) Inflation and changing prices have not materially impacted historical or anticipated future results - Inflation and changing prices have not materially impacted historical results and are not anticipated to materially impact future results of operations[284](index=284&type=chunk) [Consolidated Balance Sheet](index=57&type=section&id=Consolidated%20Balance%20Sheet) Total assets decreased due to cash usage, while liabilities increased from new lease obligations Consolidated Balance Sheet (in thousands) | Assets | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | **$3,100** | **$10,442** | | Short-term investments | **$15,108** | **$21,474** | | Accounts receivable | **$485** | **$77** | | Inventory, net | **$2,929** | **$2,474** | | Prepaid expenses and other current assets | **$353** | **$261** | | **Total current assets** | **$21,975** | **$34,728** | | Property and equipment, net | **$2,395** | **$2,763** | | Intangible assets, net | **$48** | **$0** | | Operating lease right-of-use assets, net | **$2,225** | **$119** | | Other assets, net | **$346** | **$30** | | **Total Assets** | **$26,989** | **$37,640** | | **Liabilities** | | | | Accounts payable | **$1,066** | **$373** | | Payroll related accruals | **$529** | **$1,174** | | Accrued expenses and other liabilities | **$451** | **$754** | | Lease liabilities, current | **$405** | **$227** | | **Total current liabilities** | **$2,451** | **$2,528** | | Accrued expenses and other liabilities, net of current portion | **$164** | **$232** | | Lease liabilities, net of current portion | **$2,274** | **$73** | | **Total Liabilities** | **$4,889** | **$2,833** | | Stockholders' equity | **$22,100** | **$34,807** | | **Total Liabilities and Stockholders' Equity** | **$26,989** | **$37,640** | - Total assets decreased by **$10.7 million** to **$27.0 million** at June **30**, **2025**, primarily due to a **$12.8 million** decrease in current assets (cash used for operating expenses) and a **$0.3 million** decrease in property and equipment, partially offset by a **$2.1 million** increase in operating lease right-of-use assets due to the **Metric facility** lease[285](index=285&type=chunk)[286](index=286&type=chunk)[287](index=287&type=chunk) - Total liabilities increased by **$2.1 million** to **$4.9 million**, mainly driven by a **$2.2 million** increase in lease liabilities due to the **Metric facility** lease[287](index=287&type=chunk)[308](index=308&type=chunk) - Stockholders' equity decreased by **$12.7 million** to **$22.1 million**, reflecting the net loss and changes in other comprehensive loss[285](index=285&type=chunk)[308](index=308&type=chunk) [Cash Flows](index=58&type=section&id=Cash%20Flows) Net cash used in operating activities increased, while investing activities provided cash from investments Summary of Cash Flows (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | **$(12,952)** | **$(9,725)** | | Net cash provided by (used in) investing activities | **$5,795** | **$6,140** | | Net cash used in financing activities | **$(185)** | **$(181)** | | Net change in cash and cash equivalents | **$(7,342)** | **$(3,766)** | | Cash and cash equivalents at end of period | **$3,100** | **$10,442** | [Cash and Cash Equivalents](index=58&type=section&id=Cash%20and%20Cash%20Equivalents_CashFlows) Cash and cash equivalents decreased by **$7.3 million** to **$3.1 million** at June **30**, **2025**, primarily due to funding operating expenses - Cash and cash equivalents decreased by **$7.3 million** to **$3.1 million** at June **30**, **2025**, from **$10.4 million** at June **30**, **2024**, primarily due to funding continuing operating expenses[291](index=291&type=chunk) - Net working capital was approximately **$19.5 million** at June **30**, **2025**, down from **$32.2 million** at June **30**, **2024**[291](index=291&type=chunk) [Operating Activities](index=58&type=section&id=Operating%20Activities) Net cash used in operating activities increased by **$3.2 million** to **$13.0 million** in fiscal year **2025**, driven by increases in recurring operating expenses - Net cash used in operating activities increased by **$3.2 million** to **$13.0 million** in fiscal year **2025**, compared to **$9.7 million** in fiscal year **2024**, driven by increases in recurring operating expenses and accounts payable[292](index=292&type=chunk) [Investing Activities](index=58&type=section&id=Investing%20Activities) Net cash provided by investing activities decreased by **$0.3 million** to **$5.8 million** in fiscal year **2025**, due to purchases of property, plant, and equipment - Net cash provided by investing activities decreased by **$0.3 million** to **$5.8 million** in fiscal year **2025**, compared to **$6.1 million** in fiscal year **2024**, due to purchases of property, plant, and equipment, offset by proceeds from short-term investments[293](index=293&type=chunk) [Financing Activities](index=58&type=section&id=Financing%20Activities) Cash used in financing activities was consistent, at **$185 thousand** in fiscal year **2025** compared to **$181 thousand** in fiscal year **2024** - Cash used in financing activities was consistent, at **$185 thousand** in fiscal year **2025** compared to **$181 thousand** in fiscal yea

[PART I](index=3&type=section&id=PART%20I) [Item 1. Business](index=3&type=section&id=Item%201.%20Business) LightPath is transitioning from component supplier to imaging subsystem and system provider, leveraging acquisitions and BlackDiamond materials - LightPath Technologies is transitioning from a pure optical component manufacturer to a supplier of imaging subsystems and systems, driven by **organic growth and strategic acquisitions**[19](index=19&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - Key acquisitions include **Visimid (July 2023)** for thermal imaging and night vision cores, and **G5 Infrared (February 2025)** for high-performance cooled infrared camera systems and advanced infrared coatings, strengthening vertical integration[19](index=19&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - The company's strategic direction leverages core technological differentiators such as **BlackDiamond glass and proprietary molding technologies**, aiming for **significant growth and higher profitability** by moving up the value chain[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - Average Selling Prices (ASPs) have **significantly increased** with the shift to assemblies (LightPath 2.0) and cameras/systems (LightPath 3.0), from **single/tens of dollars** to **hundreds or even tens/hundreds of thousands of dollars**[33](index=33&type=chunk) [General](index=3&type=section&id=General) LightPath Technologies, Inc. was incorporated in Delaware in 1992 and operates globally with facilities in the United States, China, and Latvia, with corporate headquarters in Orlando, Florida - LightPath Technologies, Inc. was incorporated in **Delaware in 1992** and operates globally with facilities in the **United States, China, and Latvia**, with corporate headquarters in **Orlando, Florida**[18](index=18&type=chunk) [Subsidiaries](index=4&type=section&id=Subsidiaries) LightPath's subsidiaries include LPOIZ, ISP, Visimid (2023), and G5 Infrared (2025), enhancing infrared imaging capabilities - LightPath's subsidiaries include **LPOIZ (China)** for manufacturing, **ISP and ISP Latvia** for infrared optical components, **Visimid (acquired July 2023)** for thermal imaging and night vision design, and **G5 Infrared (acquired February 2025)** for high-performance infrared camera systems[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) [Industry](index=4&type=section&id=Industry) The company serves diverse industries, with infrared photonics shifting from specialty to mainstream, increasing demand for engineered solutions - The company serves diverse industries including **defense, public safety, industrial, commercial, telecom, and medical**, all utilizing photonics as an enabling technology[26](index=26&type=chunk) - There's a **pivotal shift** in infrared photonics adoption, moving from **specialty applications to mainstream integration**, with customers increasingly seeking **'optical engineered solutions'** from suppliers like LightPath[27](index=27&type=chunk)[29](index=29&type=chunk) [Growth Strategy](index=5&type=section&id=Growth%20Strategy) LightPath's strategy is to transition from component manufacturing to imaging subsystems and systems, driven by proprietary technologies and strategic acquisitions - The company's strategy, initiated in 2020, is to **transition from a component manufacturer to a supplier of imaging subsystems and systems**, leveraging **BlackDiamond glass and proprietary molding technologies**[30](index=30&type=chunk)[31](index=31&type=chunk) - Acquisitions like **Visimid and G5 Infrared** are key to this strategy, adding technologies such as **video processing and long-range imaging with cooled midwave cameras**[31](index=31&type=chunk) - This strategic shift has led to a **significant increase in average selling prices (ASPs)** for products, with assemblies (LightPath 2.0) in **hundreds of dollars** and cameras/systems (LightPath 3.0) in **tens to hundreds of thousands of dollars**[33](index=33&type=chunk) [Organizational Alignment](index=6&type=section&id=Organizational%20Alignment) The organization aligns global manufacturing and technical capabilities to support its strategic plan, focusing on photonics expertise for subsystem development - The organization is **aligning its manufacturing and technical capabilities globally** to support the new strategic plan, focusing on **domain expertise in photonics** from design to manufacturing and testing of subsystems[34](index=34&type=chunk)[35](index=35&type=chunk) - Recent acquisitions, such as **G5 Infrared**, have brought new capabilities like **long-range cooled infrared cameras and optical coating services**, leading to collaborative development of new products like **Germanium-free cameras**[37](index=37&type=chunk) [Technologies](index=6&type=section&id=Technologies) LightPath develops innovative technologies across engineering and manufacturing, focusing on infrared imaging with proprietary BlackDiamond materials and precision molding - LightPath focuses on developing, acquiring, and licensing **innovative technologies** across engineering and manufacturing, including **systems design, optical fabrication, material production, optical coatings, and electromechanical design**[41](index=41&type=chunk) - Infrared Imaging Technologies: The company is **expanding its infrared imaging portfolio**, integrating **proprietary BlackDiamond materials** into camera designs to **mitigate supply chain risks associated with Germanium** and improve system performance[42](index=42&type=chunk) - Materials: BlackDiamond glasses (BDNL type) are **exclusive to LightPath**, offering advantages over Germanium (e.g., **U.S.-produced, secure supply chain, multispectral performance, low thermo-optic coefficients**)[43](index=43&type=chunk)[44](index=44&type=chunk) - Optical Assemblies and Testing: **Expansion into complex optical assemblies**, leveraging **BlackDiamond materials** for **faster lead times and superior performance** in defense and security markets[42](index=42&type=chunk) - Precision molded lenses: LightPath maintains a **leadership position in precision molding**, continuously investing in advancements for materials, shapes, and sizes, including **non-symmetric and freeform optical components**[49](index=49&type=chunk) - Optical coatings: Capabilities across all facilities for **efficient, high-quality anti-reflective, reflective, and protective coatings**, including **advanced Diamond Like Carbon** for environmental protection[49](index=49&type=chunk) [New Product Development](index=8&type=section&id=New%20Product%20Development) New product development in FY2024-2025 focused on thermal imaging, including BlackDiamond glass, assemblies, and Germanium-free camera systems - Development efforts in FY2024 and FY2025 focused on **thermal imaging products**, including **BlackDiamond glass, assemblies, and camera systems**[47](index=47&type=chunk) - New products include **multispectral cameras like Mantis**, and **Germanium-free midwave cameras leveraging BlackDiamond materials**[49](index=49&type=chunk)[51](index=51&type=chunk) New Product Development Expenditures | Fiscal Year | Expenditure (Millions) | | :------------ | :--------------------- | | 2025 | $3.1 | | 2024 | $2.4 | [Product Groups and Markets](index=9&type=section&id=Product%20Groups%20and%20Markets) LightPath categorizes products into infrared, visible, assemblies/modules, and engineering services, with G5 Infrared revenue primarily in infrared and assemblies - LightPath categorizes products into four groups: **infrared components, visible components, assemblies and modules, and engineering services**. G5 Infrared's revenue primarily falls under infrared components and assemblies/modules[55](index=55&type=chunk) - Infrared Components: Includes **molded and turned lenses, BlackDiamond glass materials**, and G5's optical component and coating business. Anticipates **moderate growth due to Germanium alternatives**[56](index=56&type=chunk)[58](index=58&type=chunk)[60](index=60&type=chunk) - Assemblies and Modules: Dominated by **infrared cameras and assemblies**, including **uncooled systems** from Texas, **cooled cameras** from New Hampshire (G5 Infrared), and **custom lens assemblies** from Orlando[62](index=62&type=chunk) - Engineering Services: Focuses on **developing new products and applications** for customers, often leading to **manufacturing contracts**[63](index=63&type=chunk) [Sales and Marketing](index=10&type=section&id=Sales%20and%20Marketing) LightPath's global marketing shifts from technical components to end-user solutions, supported by a unified direct sales team and trade show participation - Marketing efforts are **global and unified**, utilizing **digital advertising, social media, and direct marketing**, shifting focus from technical aspects of components to **use cases and end-user benefits of solutions**[64](index=64&type=chunk) - The sales organization is aligned with the **solution strategy**, featuring a **technical project management function** and a **unified global direct sales team** focused on problem-solving and needs analysis[65](index=65&type=chunk)[66](index=66&type=chunk) - LightPath participates in **numerous trade shows across North America, Europe, and Asia** to expand brand presence, network, and gain insights into technological trends[67](index=67&type=chunk)[68](index=68&type=chunk) [Competition](index=11&type=section&id=Competition) LightPath faces competition across the supply chain, leveraging unique technologies, precision molded optics, vertical integration, and BlackDiamond materials as advantages - LightPath faces competition across **all levels of the supply chain** (raw materials, semi-finished goods, finished goods) and sometimes acts as both supplier and competitor[69](index=69&type=chunk) - Competitive advantages include **unique technologies, leadership in precision molded optics, vertical integration in infrared optics**, and the use of **BlackDiamond materials for supply chain risk mitigation and price consistency**[70](index=70&type=chunk)[71](index=71&type=chunk) - In engineered solutions and assemblies, competition comes from **direct competitors offering design-to-production services, standard product vendors, and internal customer engineering groups** (which are declining)[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk) - For infrared components, LightPath competes with traditional fabrication, diamond turning, and other molded optics manufacturers, differentiating with **lower-cost synthetic chalcogenide glass (BD6) and vertical integration**[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) [Manufacturing](index=12&type=section&id=Manufacturing) LightPath operates manufacturing facilities globally in Florida, New Hampshire, China, and Latvia, equipped for various optical processes and holding key certifications - LightPath operates manufacturing facilities in **Orlando, Florida (58,500 sq ft)**, **Hudson, New Hampshire (27,000 sq ft, G5 Infrared)**, **Zhenjiang, China (39,500 sq ft, LPOIZ)**, and **Riga, Latvia (29,000 sq ft, ISP Latvia)**[84](index=84&type=chunk)[172](index=172&type=chunk) - Facilities are equipped for various processes including **coating, diamond turning, precision glass molding, integrated assembly, CNC grinding, and traditional polishing**[85](index=85&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) - Certifications include **ISO 9001:2015** (Orlando, Zhenjiang, Riga), **ISO9001/AS9100** (Hudson for aerospace/defense), and **ISO/TS 1649:2009** (Zhenjiang for automotive). U.S. facilities are **ITAR compliant**[91](index=91&type=chunk) - The company uses **subcontractors** for specialized processing steps and **sources materials globally**, with internal BD6 glass manufacturing providing a **low-cost alternative to Germanium**[93](index=93&type=chunk)[94](index=94&type=chunk) [Intellectual Property](index=13&type=section&id=Intellectual%20Property) LightPath protects its technology through trade secrets, patents, trademarks, and copyrights, aggressively pursuing patents for new products and features - LightPath protects its technology through **trade secrets, patents, trademarks, and copyrights**, with a focus on **aggressive patent pursuit** for new products and features[98](index=98&type=chunk)[99](index=99&type=chunk) - Recent patent applications cover innovations in **midwave thermal imaging, flame detection, optical elements with transparent heating layers, LWIR imaging with eSWIR light sources, signaling laser detection, and shutterless calibration**[99](index=99&type=chunk) Registered and Unregistered Marks | Mark | Type | Registered | Country | Renewal Date | | :--- | :--- | :--- | :--- | :--- | | LightPath® | Wordmark | Yes | United States | October 21, 2027 | | LightPath® | Combination mark | Yes | United States | August 27, 2030 | | GRADIUM™ | Trademark | Yes | United States | April 29, 2027 | | Circulight | Trademark | No | - | - | | BLACK DIAMOND | Trademark | No | - | - | | GelTech | Trademark | No | - | - | | Oasis | Trademark | No | - | - | | LightPath® | Service mark | Yes | People's Republic of China | September 13, 2025 (Renewal pending) | | ISP Optics® | Wordmark | Yes | United States | August 14, 2034 | | ISP Optics® | Combination mark | Yes | United States | Pending | | EdgeIR® | Trademark | Yes | United States | May 6, 2035 | | Mantis | Trademark | Yes | Europe | December 21, 2032 | | Mantis | Trademark | No | United States | - | [Environmental and Governmental Regulation](index=14&type=section&id=Environmental%20and%20Governmental%20Regulation) LightPath complies with environmental regulations and 'conflict minerals' disclosure, with future growth potentially requiring additional permits - Emissions and waste are currently **low**, requiring **no special environmental permits**, but **future growth may necessitate permits** for increased waste by-products[102](index=102&type=chunk) - The company is in **compliance with material federal, state, and local laws and regulations**, and holds necessary licenses and permits[102](index=102&type=chunk)[103](index=103&type=chunk) - Subject to **Dodd-Frank Act's 'conflict minerals' disclosure requirements**, striving to use **conflict-free suppliers**, which may **incur compliance costs and affect material sourcing**[105](index=105&type=chunk)[106](index=106&type=chunk) [Major Customers](index=15&type=section&id=Major%20Customers) Customer concentration is not static, with international sales contributing significantly, indicating diversification efforts Major Customer Sales Concentration | Fiscal Year | Top 3 Customers (% of Revenue) | Largest Customer (% of Revenue) | Second Largest Customer (% of Revenue) | Third Largest Customer (% of Revenue) | | :------------ | :----------------------------- | :------------------------------ | :------------------------------------ | :----------------------------------- | | 2025 | 23% | 9% | 7% | 6% | | 2024 | 25% | 12% | 7% | 6% | - The company's customer concentration is **not static**, with the largest customer in FY2024 not being among the top three in FY2023, indicating **diversification efforts**[107](index=107&type=chunk) International Sales Contribution | Fiscal Year | Net Revenue from Outside U.S. (%) | Foreign Sales from Europe and Asia (%) | | :------------ | :---------------------------- | :--------------------------------- | | 2025 | 38% | 91% | | 2024 | 39% | 94% | [Employees](index=15&type=section&id=Employees) LightPath had 350 global employees as of June 30, 2025, offering competitive compensation and benefits, and committed to diversity and inclusion - As of June 30, 2025, LightPath had **350 employees globally** (345 full-time, 5 part-time), with **153 in the U.S., 98 in Riga, Latvia, and 99 in Zhenjiang, China**[109](index=109&type=chunk) - The company offers **competitive compensation and benefits**, focuses on **sourcing top talent**, and is committed to **diversity and inclusion**[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) [Available Information](index=15&type=section&id=Available%20Information) LightPath makes its annual, quarterly, and current reports available free of charge on its website after filing with the SEC - LightPath makes its **annual, quarterly, and current reports**, and amendments, available **free of charge on its website** (www.lightpath.com) after filing with the SEC[114](index=114&type=chunk) [Item 1A. Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) LightPath faces significant risks including a history of net losses and the need for additional capital. International operations expose the company to political, economic, and supply chain disruptions, particularly from China's export restrictions on Germanium and Gallium. Dependence on single/limited suppliers, fluctuating currency exchange rates, and reliance on a few key customers also pose financial risks. The company is vulnerable to intense competition, declining average selling prices for some products, and the need to protect its intellectual property from infringement and data breaches - LightPath has a **history of net losses**, with an **accumulated deficit of approximately $231 million** as of June 30, 2025, and may **require additional capital** to sustain operations and repay indebtedness[116](index=116&type=chunk)[132](index=132&type=chunk) - International sales (**38% of net revenue in FY2025**) expose the company to **political risks, trade tariffs**, and **currency fluctuations**[119](index=119&type=chunk)[124](index=124&type=chunk)[128](index=128&type=chunk) - **China's export ban on Germanium, Gallium, and antimony** to the U.S. (effective **December 3, 2024**) **significantly disrupts the supply chain** for critical infrared optical materials, leading to **price increases and availability issues**[120](index=120&type=chunk) - Dependence on **single or limited source suppliers** for key materials (including Germanium and sensors) and process steps makes the company susceptible to **shortages, poor performance, or price fluctuations**[123](index=123&type=chunk) - The company relies on a **few key customers**, with the **top three comprising 23% of annual revenue in FY2025**, and the loss of any could **significantly impact revenues**[130](index=130&type=chunk) - **Significant competition** in optical markets from **larger companies with greater resources**, coupled with **reductions in average selling prices** for some products, necessitates **increased sales volumes, cost reductions, or higher-margin product introductions**[144](index=144&type=chunk)[145](index=145&type=chunk) - Risks related to intellectual property include the **inability to protect and enforce rights**, potential **loss of ownership of formulas/processes**, and involvement in **costly intellectual property disputes and litigation**[156](index=156&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[163](index=163&type=chunk) - **Data breach and breakdown of information and communication technologies** pose risks of **disruption, unauthorized access, and misappropriation of sensitive data**, despite security initiatives[161](index=161&type=chunk)[162](index=162&type=chunk) [Item 1B. Unresolved Staff Comments](index=23&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - **No unresolved staff comments**[164](index=164&type=chunk) [Item 1C. Cybersecurity](index=23&type=section&id=Item%201C.%20Cybersecurity) LightPath has a comprehensive cybersecurity risk management program, integrated into its enterprise risk management framework and guided by the NIST CSF. The program includes incident response, continuous vulnerability management, third-party consultant engagement, employee training, and risk management for third-party providers. The executive team and CIO oversee cybersecurity governance, with regular reporting to the Board of Directors. To date, no cybersecurity risks have been identified that could materially impact the company's operations or financial performance - LightPath has a **comprehensive cybersecurity risk management program**, integrated into its enterprise risk management framework, leveraging **NIST CSF** for identification, prioritization, and management of risks[165](index=165&type=chunk)[166](index=166&type=chunk) - Key components include a **Cybersecurity Incident Response Plan (CIRP)**, **continuous vulnerability management**, engagement of **third-party cybersecurity consultants**, regular employee awareness training, and risk management for third-party providers[171](index=171&type=chunk) - Cybersecurity governance is led by the **CIO and executive team**, with **over 35 years of combined experience**, and the CIO **reports regularly to the executive team and annually to the Board of Directors**[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk) - **No cybersecurity risks** have been identified to date that could **materially impact the company's operations, strategy, financial condition, or overall business performance**[170](index=170&type=chunk) [Item 2. Properties](index=24&type=section&id=Item%202.%20Properties) LightPath's properties are leased office and manufacturing facilities globally, totaling approximately **157,000 square feet**, for corporate, engineering, manufacturing, and R&D - LightPath's primary properties are **leased office and manufacturing facilities across five locations globally**[172](index=172&type=chunk) Facility Locations and Square Footage (as of June 30, 2025) | Location | Square Feet | Commitment and Use | | :-------------------- | :---------- | :------------------------------------------------------ | | Orlando, Florida | 58,500 | Corporate headquarters, manufacturing, R&D | | Hudson, New Hampshire | 27,000 | Administrative offices, engineering, manufacturing | | Plano, Texas | 3,000 | Engineering and manufacturing | | Riga, Latvia | 29,000 | Administrative offices and manufacturing | | Zhenjiang, China | 39,500 | Manufacturing | [Item 3. Legal Proceedings](index=24&type=section&id=Item%203.%20Legal%20Proceedings) LightPath is occasionally involved in legal actions but currently has no material legal proceedings or anticipated adverse legal activity - **No material legal proceedings** are currently active or anticipated[174](index=174&type=chunk) [Item 4. Mine Safety Disclosures](index=24&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to LightPath Technologies, Inc - **Not Applicable**[175](index=175&type=chunk) [PART II](index=25&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=25&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) LightPath's Class A common stock trades on Nasdaq under 'LPTH', with **220 record holders**. No cash dividends are paid or intended, and no repurchases occurred in FY2025 - LightPath's Class A common stock trades on the **Nasdaq Capital Market** under the symbol **"LPTH"**[177](index=177&type=chunk) - As of September 18, 2025, there were approximately **220 holders of record** and **10,835 street name holders** of Class A common stock[178](index=178&type=chunk) - The company has **never declared or paid cash dividends** and plans to **retain all future earnings** to finance operations and expansion[179](index=179&type=chunk) - **No repurchases** of Class A common stock were made during the fiscal year ended June 30, 2025[180](index=180&type=chunk) [Item 6. [Reserved]](index=25&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - **Item 6 is reserved**[181](index=181&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY2025 revenue increased **17% to $37.2 million**, driven by assemblies and engineering services, but net loss widened to **$14.9 million** due to higher operating and acquisition costs. Working capital is **$11.3 million** Key Financial Highlights (FY2025 vs. FY2024) | Metric | FY2025 (Millions) | FY2024 (Millions) | Change (%) | | :---------------------- | :---------------- | :---------------- | :--------- | | Total Revenue | $37.2 | $31.7 | 17% | | Gross Margin | $10.1 | $8.6 | 17% | | Gross Margin (% Revenue)| 27% | 27% | 0% | | SG&A Costs | $15.8 | $12.3 | 29% | | New Product Dev. Costs | $3.1 | $2.4 | 28% | | Net Loss | $(14.9) | $(8.0) | 86% | | Basic/Diluted EPS | $(0.36) | $(0.21) | 71% | - Revenue growth in FY2025 was primarily driven by a **79% increase in assemblies and modules** (including **$4.0M from G5 Infrared**) and a **63% increase in engineering services** (driven by Visimid's Lockheed Martin contract)[188](index=188&type=chunk)[189](index=189&type=chunk)[245](index=245&type=chunk)[246](index=246&type=chunk) - Increased net loss in FY2025 was due to **higher operating expenses**, including **$1.1M in G5 Infrared SG&A**, **$1.5M in non-recurring acquisition costs**, and a **$1.0M increase in interest expense**[192](index=192&type=chunk)[195](index=195&type=chunk)[201](index=201&type=chunk) - Working capital was approximately **$11.3 million** and total cash and cash equivalents were **$4.9 million** as of June 30, 2025, with **25% of cash held by foreign subsidiaries**[203](index=203&type=chunk) [Effect of Certain Events Occurring at Our Chinese Subsidiaries](index=25&type=section&id=Effect%20of%20Certain%20Events%20Occurring%20at%20Our%20Chinese%20Subsidiaries) LightPath terminated China subsidiary employees in April 2021 due to malfeasance, recovering approximately **$0.2 million** in misappropriated funds in December 2023 - In **April 2021**, LightPath terminated several employees of its China subsidiaries due to **malfeasance, misappropriation of technology, and fraud**[184](index=184&type=chunk) - Approximately **$0.2 million** in misappropriated funds were recovered in **December 2023**, included in 'Other income' for FY2024, with no further recoveries or legal fees expected[185](index=185&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) FY2025 revenue increased **17% to $37.2 million**, driven by assemblies and engineering services, but net loss widened to **$14.9 million** due to higher operating expenses and acquisition costs Revenue by Product Group (FY2025 vs. FY2024) | Product Group | FY2025 (Millions) | FY2024 (Millions) | Change (%) | | :-------------------- | :---------------- | :---------------- | :--------- | | Infrared components | $14.3 | $14.1 | 2% | | Visible components | $11.7 | $11.2 | 4% | | Assemblies and modules| $8.0 | $4.5 | 79% | | Engineering services | $3.2 | $2.0 | 63% | | **Total Revenue** | **$37.2** | **$31.7** | **17%** | - Gross margin remained at **27%** for both fiscal years, favorably impacted by **G5 Infrared revenue and higher-margin assemblies and modules**, but unfavorably by a **$0.5 million increase in inventory reserve charges** for visible components[190](index=190&type=chunk)[191](index=191&type=chunk) - SG&A costs increased by **29% to $15.8 million** in FY2025, primarily due to **$1.1 million from G5 Infrared**, **$1.5 million in non-recurring acquisition costs**, increased sales/marketing spend, and IT infrastructure upgrades[192](index=192&type=chunk) - New product development costs rose **28% to $3.1 million** in FY2025, driven by **additional engineering personnel** and **increased materials/services** for infrared cores and camera systems[193](index=193&type=chunk) - Interest expense, net, increased **significantly to $1.1 million** in FY2025 (from **$0.2 million in FY2024**) due to **financing costs for warrant liability and the Bridge Note/Acquisition Notes**[195](index=195&type=chunk) - A **net loss of $14.9 million** was reported for FY2025, an **increase from $8.0 million in FY2024**, primarily due to **higher operating expenses and non-operating items** like increased interest expense, loss on debt extinguishment, and change in fair value of warrant liability[201](index=201&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, LightPath had **$11.3 million** in working capital and **$4.9 million** in cash, with **25%** held internationally, and **$5.2 million** in Acquisition Notes - As of June 30, 2025, LightPath had **$11.3 million in working capital** and **$4.9 million in cash and cash equivalents**, with approximately **25% held by foreign subsidiaries**[203](index=203&type=chunk) - The company repatriated **$1.2 million from LPOIZ (China)** in FY2025, with **$0.4 million in retained earnings** available for future repatriation[204](index=204&type=chunk) - Loans payable as of June 30, 2025, included **$5.2 million in Acquisition Notes** (**10-12% interest**, **maturing Feb 2027**) and equipment loans totaling approximately **$0.4 million**[205](index=205&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) - Cash used in operations was **$8.3 million in FY2025** (compared to **$0.5 million provided in FY2024**), driven by **net loss, acquisition-related legal/consulting expenses, and inventory increases**[218](index=218&type=chunk) - Net cash used in investing activities was **$19.7 million in FY2025**, primarily for the **G5 Infrared acquisition ($18.5 million)** and **capital equipment ($1.3 million)**[220](index=220&type=chunk) - Net cash provided by financing activities was **$29.3 million in FY2025**, mainly from **$29.8 million related to the G5 Infrared acquisition financing**[222](index=222&type=chunk) [How We Operate](index=29&type=section&id=How%20We%20Operate) LightPath focuses on a 'design win' and 'annuity' model, collaborating with customers on engineered solutions, prototyping, and long-term supply agreements - LightPath focuses on converting business to a **'design win' and 'annuity' model**, involving collaboration with customers on optical specifications and designs (**'engineered solutions'**), followed by **prototyping and long-term supply agreements**[223](index=223&type=chunk) - Challenges include **maintaining design capabilities**, **cost reduction pressures** from customers, and **financial constraints on capital expenditures** due to limited cash resources[226](index=226&type=chunk) [Our Key Performance Indicators](index=29&type=section&id=Our%20Key%20Performance%20Indicators) Management reviews weekly KPIs including shippable output, production yield, sales backlog, revenue by product group, inventory, and accounts receivable - Management reviews qualitative and quantitative performance indicators weekly, including **shippable output, production yield rates, sales backlog, revenue by product group, inventory levels, and accounts receivable levels**[227](index=227&type=chunk)[228](index=228&type=chunk) Quarterly Sales Backlog | Quarter | Total Backlog ($000) | Change From Prior Year End (%) | Change From Prior Quarter End (%) | | :------ | :------------------- | :----------------------------- | :-------------------------------- | | Q1 2024 | $21,303 | (2)% | (2)% | | Q2 2024 | $21,220 | (2)% | 0% | | Q3 2024 | $21,967 | 1% | 4% | | Q4 2024 | $19,268 | (11)% | (12)% | | Q1 2025 | $20,542 | 7% | 7% | | Q2 2025 | $19,767 | 3% | (4)% | | Q3 2025 | $27,423 | 42% | 39% | | Q4 2025 | $37,390 | 94% | 36% | - Backlog increased **significantly in Q3 and Q4 FY2025**, with **G5 Infrared adding $5.6 million** at acquisition and **$16.6 million by June 30, 2025**. The **remaining backlog increased 8%** due to an industrial customer[230](index=230&type=chunk) - Demand for infrared products is **growing**, fueled by interest in **BD6 glass and new BDNL materials as alternatives to Germanium**, especially given **global supply restrictions**[231](index=231&type=chunk)[233](index=233&type=chunk) Revenue by Product Group (Quarterly and Annual) | Product Group | Q4 2025 ($) | Q4 2024 ($) | Q-o-Q Change (%) | FY 2025 ($) | FY 2024 ($) | Y-o-Y Change (%) | | :-------------------- | :---------- | :---------- | :--------------- | :---------- | :---------- | :--------------- | | Infrared components | 4,947,111 | 3,043,148 | 63% | 14,310,589 | 14,089,277 | 2% | | Visible components | 2,835,474 | 3,178,023 | (11)% | 11,736,549 | 11,233,737 | 4% | | Assemblies and modules| 4,164,932 | 1,373,178 | 203% | 7,968,296 | 4,451,165 | 79% | | Engineering services | 262,276 | 1,039,783 | (75)% | 3,187,196 | 1,952,013 | 63% | | **Total revenue** | **12,209,793**| **8,634,132** | **41%** | **37,202,630**| **31,726,192**| **17%** | Days Cost of Sales in Inventory (DCSI) | Fiscal Quarter | Ended | DCSI (days) | | :------------- | :--------- | :---------- | | Q4-2025 | 6/30/2025 | 123 | | Q3-2025 | 3/31/2025 | 178 | | Q2-2025 | 12/31/2024 | 107 | | Q1-2025 | 9/30/2024 | 112 | | **FY 2025 Average**| | **130** | | Q4-2024 | 6/30/2024 | 98 | | Q3-2024 | 3/31/2024 | 98 | | Q2-2024 | 12/31/2023 | 133 | | Q1-2024 | 9/30/2023 | 119 | | **FY 2024 Average**| | **112** | - Average DCSI increased to **130 days in FY2025** from **112 in FY2024**, driven by the **G5 Infrared acquisition**. The company expects DCSI to return to **110-120 days**[247](index=247&type=chunk) Days Sales Outstanding (DSO) | Fiscal Quarter | Ended | DSO (days) | | :------------- | :--------- | :--------- | | Q4-2025 | 6/30/2025 | 71 | | Q3-2025 | 3/31/2025 | 76 | | Q2-2025 | 12/31/2024 | 65 | | Q1-2025 | 9/30/2024 | 56 | | **FY 2025 Average**| | **67** | | Q4-2024 | 6/30/2024 | 52 | | Q3-2024 | 3/31/2024 | 55 | | Q2-2024 | 12/31/2023 | 59 | | Q1-2024 | 9/30/2023 | 57 | | **FY 2024 Average**| | **56** | - Average DSO increased to **67 days in FY2025** from **56 in FY2024**, due to **G5 Infrared's higher concentration of shipments** late in fiscal quarters. The company aims to maintain **DSO below 60 days**[249](index=249&type=chunk) [Non-GAAP Financial Measures](index=33&type=section&id=Non-GAAP%20Financial%20Measures) LightPath uses non-GAAP measures like EBITDA and Adjusted EBITDA to assess performance and aid planning, acknowledging their limitations as substitutes for GAAP - LightPath uses non-GAAP measures like **EBITDA and Adjusted EBITDA** to assess business performance and aid planning, acknowledging their **limitations as substitutes for GAAP results**[251](index=251&type=chunk)[252](index=252&type=chunk) - Adjusted EBITDA excludes **stock compensation, loss on debt extinguishment, mark-to-market adjustments for warrants, and foreign exchange gains/losses**[253](index=253&type=chunk) EBITDA and Adjusted EBITDA (FY2025 vs. FY2024) | Metric | FY2025 (Millions) | FY2024 (Millions) | | :---------------- | :---------------- | :---------------- | | Net loss | $(14.87) | $(8.01) | | EBITDA | $(9.57) | $(3.70) | | Adjusted EBITDA | $(5.06) | $(2.75) | | Adjusted EBITDA % | -14% | -9% | - Adjusted EBITDA loss **increased in FY2025** due to **higher SG&A** (including **$1.5 million in non-recurring G5 Infrared acquisition costs**) and **new product development expenses**, partially offset by **increased gross margin**[256](index=256&type=chunk) [Off Balance Sheet Arrangements](index=34&type=section&id=Off%20Balance%20Sheet%20Arrangements) LightPath does not engage in any activities involving variable interest entities or off-balance sheet arrangements - LightPath **does not engage in any activities involving variable interest entities or off-balance sheet arrangements**[257](index=257&type=chunk) [Critical Accounting Policies and Estimates](index=34&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting estimates include allowances for trade receivables and obsolete inventory, stock-based compensation, income taxes, and goodwill/intangible asset valuation - Critical accounting estimates include **allowances for trade receivables and obsolete inventory**, **valuation of stock-based compensation**, and **accounting for income taxes**[258](index=258&type=chunk) - Inventory obsolescence allowance is calculated based on sales and purchase history, with reserves ranging from **25% to 100%** for slow-moving or excess items[260](index=260&type=chunk) - Revenue is recognized upon **transfer of control** of products or services, with performance obligations for components and assemblies satisfied at a **point in time**, and engineering services recognized as **deliverables are met**[261](index=261&type=chunk) - Goodwill and amortizable intangible assets are recognized at **fair value in business combinations** and **tested for impairment annually** or when circumstances indicate recoverability issues[263](index=263&type=chunk)[264](index=264&type=chunk) - Income tax accounting involves **estimates for tax credits, benefits, deductions, and deferred tax assets/liabilities**, with a **valuation allowance established against deferred tax assets** due to uncertainty of future taxable income[266](index=266&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a Smaller Reporting Company, LightPath Technologies, Inc. is not required to provide quantitative and qualitative disclosures about market risk - LightPath, as a **Smaller Reporting Company**, is **exempt from providing quantitative and qualitative disclosures about market risk**[269](index=269&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=36&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The required financial statements and supplementary data are incorporated by reference from Item 15 of this Annual Report on Form 10-K - Financial statements and supplementary data are **incorporated by reference from Item 15**[270](index=270&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=36&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure - **No changes in or disagreements with accountants on accounting and financial disclosure**[271](index=271&type=chunk) [Item 9A. Controls and Procedures](index=37&type=section&id=Item%209A.%20Controls%20and%20Procedures) LightPath's management concluded disclosure controls and internal control over financial reporting were effective as of June 30, 2025, excluding G5 Infrared - As of June 30, 2025, LightPath's CEO and CFO concluded that disclosure controls and procedures were **effective**[272](index=272&type=chunk) - Management assessed internal control over financial reporting as **effective** as of June 30, 2025, based on the **COSO framework**[273](index=273&type=chunk) - The assessment of internal control over financial reporting **excluded G5 Infrared, LLC**, acquired on February 18, 2025, which represented approximately **14% of total assets, 16% of revenue, and 5% of net loss** for FY2025[273](index=273&type=chunk) - **No significant changes** in internal control over financial reporting occurred during the fourth quarter ended June 30, 2025[277](index=277&type=chunk) [Item 9B. Other Information](index=37&type=section&id=Item%209B.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - **No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement** during the three months ended June 30, 2025[278](index=278&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=37&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to LightPath Technologies, Inc - **Not applicable**[279](index=279&type=chunk) [PART III](index=37&type=section&id=PART%20III) [Item 10. Directors, Executive Officers and Corporate Governance](index=37&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the fiscal year 2026 Annual Stockholders' Meeting Proxy Statement - Information is **incorporated by reference** from the fiscal year 2026 Annual Stockholders' Meeting Proxy Statement[281](index=281&type=chunk) [Item 11. Executive Compensation](index=37&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the fiscal year 2026 Annual Stockholders' Meeting Proxy Statement - Information is **incorporated by reference** from the fiscal year 2026 Annual Stockholders' Meeting Proxy Statement[282](index=282&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management](index=37&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management) Information on security ownership is incorporated by reference from the fiscal year 2026 Annual Stockholders' Meeting Proxy Statement, with details on equity compensation plans - Information on security ownership is **incorporated by reference** from the fiscal year 2026 Annual Stockholders' Meeting Proxy Statement[283](index=283&type=chunk) Securities Authorized for Issuance Under Equity Compensation Plans (as of FY2025 end) | Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise and grant price of outstanding options, warrants and rights | Number of securities remaining available for future issuance | | :------------------------------------------------ | :------------------------------------------------------------------------ | :-------------------------------------------------------------------- | :----------------------------------------------------------- | | Equity compensation plans approved by security holders | 1,923,484 | $1.82 | 4,184,925 | | Equity compensation plans not approved by security holders | — | — | — | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=38&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the fiscal year 2026 Annual Stockholders' Meeting Proxy Statement - Information is **incorporated by reference** from the fiscal year 2026 Annual Stockholders' Meeting Proxy Statement[285](index=285&type=chunk) [Item 14. Principal Accountant Fees and Services](index=38&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the fiscal year 2026 Annual Stockholders' Meeting Proxy Statement - Information is **incorporated by reference** from the fiscal year 2026 Annual Stockholders' Meeting Proxy Statement[286](index=286&type=chunk) [PART IV](index=38&type=section&id=PART%20IV) [Item 15. Exhibits, Financial Statement Schedules](index=38&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the Annual Report on Form 10-K, including financial statements, corporate governance documents, material contracts, and certifications - This section details the **exhibits and financial statement schedules** filed as part of the Form 10-K, including **corporate governance documents, material contracts, and certifications**[288](index=288&type=chunk) - Financial statements are **indexed on page F-1** of the report[289](index=289&type=chunk) [Item 16. Form 10-K Summary](index=41&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided - **No Form 10-K Summary is provided**[296](index=296&type=chunk) [Index to Consolidated Financial Statements](index=41&type=section&id=Index%20to%20Consolidated%20Financial%20Statements) [Report of Independent Registered Public Accounting Firm – BDO USA, P.C.](index=42&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20%E2%80%93%20BDO%20USA,%20P.C.) BDO USA, P.C. issued an unqualified opinion on LightPath's FY2025 consolidated financial statements and ASU 2023-07 adjustments, with critical audit matters including acquisition financing, intangible asset valuation, earnout liability, and warrant/preferred stock classification - BDO USA, P.C. provided an **unqualified opinion** on the consolidated financial statements for **FY2025** and on the retrospective application of **ASU 2023-07**[299](index=299&type=chunk)[300](index=300&type=chunk) - Critical audit matters included the **valuation of acquisition financing instruments** (warrants, Acquisition Notes), **valuation of G5 Infrared intangible assets** (tradenames, know-how, customer relationships), **valuation of the earnout liability**, and **classification of warrants and Series G Convertible Preferred Stock**[304](index=304&type=chunk)[305](index=305&type=chunk)[309](index=309&type=chunk)[311](index=311&type=chunk)[314](index=314&type=chunk) [Report of Independent Registered Public Accounting Firm – MSL, P.A.](index=44&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20%E2%80%93%20MSL,%20P.A.) MSL, P.A. issued an unqualified opinion on LightPath's FY2024 consolidated financial statements before retrospective accounting changes, serving as auditor from 2017 to 2024 - MSL, P.A. provided an **unqualified opinion** on the consolidated financial statements for **FY2024**, prior to the **retrospective application of ASU 2023-07**[319](index=319&type=chunk) - MSL, P.A. served as the Company's auditor from **2017 to 2024**[323](index=323&type=chunk) [Consolidated Financial Statements](index=45&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's core consolidated financial statements, including Balance Sheets, Statements of Comprehensive Income (Loss), Statements of Changes in Stockholders' Equity, and Statements of Cash Flows for FY2025 and FY2024 [Consolidated Balance Sheets as of June 30, 2025 and 2024](index=45&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20June%2030,%202025%20and%202024) Total assets significantly increased from **$48.1 million** to **$81.5 million** in FY2025 due to acquisitions, while total liabilities also rose, and stockholders' equity decreased Consolidated Balance Sheet Highlights | Asset/Liability/Equity | June 30, 2025 ($) | June 30, 2024 ($) | | :--------------------- | :---------------- | :---------------- | | Cash and cash equivalents | 4,877,036 | 3,480,268 | | Total current assets | 28,373,995 | 15,537,335 | | Total assets | 81,505,766 | 48,086,964 | | Total current liabilities | 17,100,125 | 8,036,348 | | Total liabilities | 31,628,488 | 17,887,299 | | Total stockholders' equity | 15,644,768 | 30,199,665 | - Total assets increased **significantly from $48.1 million in FY2024 to $81.5 million in FY2025**, largely due to acquisitions[325](index=325&type=chunk) - Total liabilities also increased **substantially from $17.9 million to $31.6 million**, reflecting acquisition financing[325](index=325&type=chunk) - Stockholders' equity **decreased from $30.2 million to $15.6 million**, despite an increase in common stock shares[326](index=326&type=chunk) [Consolidated Statements of Comprehensive Income (Loss) for the years ended June 30, 2025 and 2024](index=46&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20for%20the%20years%20ended%20June%2030,%202025%20and%202024) Net loss increased to **$14.9 million** in FY2025 from **$8.0 million** in FY2024 due to higher operating expenses and non-operating items, despite a **17%** revenue increase Consolidated Statements of Comprehensive Income (Loss) Summary | Metric | FY2025 ($) | FY2024 ($) | | :------------------------ | :------------ | :------------ | | Revenue, net | 37,202,630 | 31,726,192 | | Gross profit | 10,130,114 | 8,631,246 | | Operating loss | (11,822,881) | (7,826,664) | | Net loss | (14,873,182) | (8,007,346) | | Comprehensive loss | (14,404,432) | (8,103,946) | | Loss per common share (basic/diluted) | (0.36) | (0.21) | - Net loss increased to **$14.9 million in FY2025** from **$8.0 million in FY2024**, primarily due to **higher operating expenses and non-operating items** like interest expense and acquisition-related fair value changes[328](index=328&type=chunk) - Revenue increased by **17% year-over-year**, while gross profit also increased by **17%**[328](index=328&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity for the years ended June 30, 2025 and 2024](index=46&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20for%20the%20years%20ended%20June%2030,%202025%20and%202024) Total stockholders' equity decreased from **$30.2 million** to **$15.6 million** in FY2025, impacted by Series G Convertible Preferred Stock issuance, G5 acquisition, and net loss - Total stockholders' equity **decreased from $30.2 million in FY2024 to $15.6 million in FY2025**[331](index=331&type=chunk) - Key changes in equity for FY2025 include the issuance of **Series G Convertible Preferred Stock ($19.5 million)**, **common stock for G5 acquisition ($4.9 million)**, and **common stock under private equity placement ($1.6 million)**[330](index=330&type=chunk)[331](index=331&type=chunk) - **Accretion of dividends on Series G preferred stock ($14.8 million)** and the **net loss ($14.9 million)** significantly impacted the accumulated deficit[331](index=331&type=chunk) [Consolidated Statements of Cash Flows](index=48&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating activities shifted to using **$8.3 million** in FY2025, investing activities used **$19.7 million** (G5 acquisition), and financing activities provided **$29.3 million** (G5 financing) Consolidated Statements of Cash Flows Summary | Cash Flow Activity | FY2025 ($) | FY2024 ($) | | :------------------------ | :------------ | :------------ | | Net cash (used in) provided by operating activities | (8,331,390) | 521,037 | | Net cash used in investing activities | (19,738,323) | (2,665,236) | | Net cash provided by (used in) financing activities | 29,296,277 | (1,466,440) | | Change in cash, cash equivalents and restricted cash | 1,396,768 | (3,664,222) | | Cash, cash equivalents and restricted cash, end of period | 4,877,036 | 3,480,268 | - Operating activities shifted from **providing $0.5 million in FY2024 to using $8.3 million in FY2025**, primarily due to **increased net loss and acquisition-related expenses**[334](index=334&type=chunk) - Investing activities **used $19.7 million in FY2025**, largely for the **G5 Infrared acquisition ($18.5 million)**[335](index=335&type=chunk) - Financing activities **provided $29.3 million in FY2025**, mainly from the **G5 Infrared acquisition financing**[335](index=335&type=chunk) [Notes to Consolidated Financial Statements (continued)](index=49&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(continued)) These notes provide detailed explanations of financial statement figures, covering organization, accounting policies, acquisitions, revenue, inventory, assets, equity, taxes, and other financial disclosures [1. Organization and History](index=49&type=section&id=1.%20Organization%20and%20History) LightPath Technologies, Inc., incorporated in 1992, has expanded through acquisitions like ISP, Visimid (2023), and G5 Infrared (2025), manufacturing optical components and thermal imaging cameras - LightPath Technologies, Inc. was incorporated in **1992** and has expanded through acquisitions, including **ISP (2016), Visimid (July 2023), and G5 Infrared (February 2025)**[337](index=337&type=chunk)[338](index=338&type=chunk)[340](index=340&type=chunk) - The company manufactures **optical components, assemblies, and sub-systems**, including **precision molded glass aspheric optics, infrared optics, and thermal imaging cameras**, serving diverse applications[341](index=341&type=chunk) [2. Significant Accounting Policies](index=50&type=section&id=2.%20Significant%20Accounting%20Policies) Significant accounting policies cover consolidation, inventory valuation, goodwill/intangible asset impairment, operating leases, deferred income taxes, and segment reporting, with new pronouncements under evaluation - Consolidated financial statements include the company and its **wholly-owned subsidiaries**, with all **significant intercompany balances and transactions eliminated**[343](index=343&type=chunk) - Inventories are stated at the **lower of cost or net realizable value** on a **first-in, first-out basis**, with **obsolescence allowances** based on sales and purchase history[348](index=348&type=chunk) - Goodwill and amortizable intangible assets are recognized at **fair value in business combinations** and **tested for impairment annually** or when circumstances indicate[351](index=351&type=chunk)[352](index=352&type=chunk) - Operating leases are recognized on the balance sheet as **right-of-use assets and liabilities**, measured at the **present value of future minimum lease payments**[353](index=353&type=chunk)[355](index=355&type=chunk) - Deferred income tax assets and liabilities are computed based on **temporary differences**, with **valuation allowances established against deferred tax assets** when realization is uncertain[357](index=357&type=chunk) - The company operates in **one reportable operating segment (optics)** and has **retrospectively applied ASU 2023-07, Segment Reporting**[378](index=378&type=chunk) - New accounting pronouncements, **ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation)**, are being evaluated but are **not expected to materially impact operating results, financial position, or cash flows**[379](index=379&type=chunk)[381](index=381&type=chunk)[382](index=382&type=chunk) [3. Acquisitions](index=54&type=section&id=3.%20Acquisitions) LightPath acquired Visimid (July 2023 for **$2.7 million**) and G5 Infrared (February 2025 for **$27.1 million**), expanding thermal imaging and cooled infrared camera capabilities, recognizing **$7.0 million** goodwill for G5 - Visimid Technologies was acquired in **July 2023** for approximately **$2.7 million** (net of cash acquired), specializing in **thermal imaging and night vision design**, aligning with LightPath's engineered solutions strategy[383](index=383&type=chunk)[384](index=384&type=chunk)[386](index=386&type=chunk) - G5 Infrared was acquired on **February 18, 2025**, for total consideration of approximately **$27.1 million**, expanding LightPath's portfolio to include **cooled infrared camera systems and imaging solutions**[391](index=391&type=chunk)[392](index=392&type=chunk)[395](index=395&type=chunk) - The G5 Infrared acquisition consideration included **$20.3 million in cash**, **1,972,501 shares of Class A Common Stock ($4.9 million fair value)**, and a **potential earnout of up to $23 million, initially valued at $3.5 million**[395](index=395&type=chunk) - The earnout liability for G5 Infrared, valued using a Monte Carlo method, was **adjusted to $5.0 million** as of June 30, 2025, an **increase of $1.4 million**[399](index=399&type=chunk) - Identifiable intangible assets acquired from G5 Infrared totaled **$13.8 million**, comprising **backlog, know-how, tradename, and customer relationships**, with **goodwill recognized at $7.0 million**[403](index=403&type=chunk)[405](index=405&type=chunk) G5 Infrared Financial Results (Acquisition Date to June 30, 2025) | Metric | Amount (Millions) | | :----------------- | :---------------- | | Revenue | $5.6 | | Loss before income taxes | $(0.4) | Unaudited Pro Forma Financial Results (G5 Infrared Acquisition as of July 1, 2023) | Metric | FY2025 ($) | FY2024 ($) | | :----------------- | :------------ | :------------ | | Revenue | 49,733,817 | 48,018,602 | | Income before taxes | (9,520,465) | (5,996,886) | [4. Revenue](index=57&type=section&id=4.%20Revenue) Revenue is recognized upon transfer of control for products and assemblies at a point in time, while engineering services revenue is recognized as deliverables are met - Revenue is recognized upon **transfer of control** of products or services, with performance obligations for optical components and assemblies satisfied at a **point in time**[411](index=411&type=chunk)[414](index=414&type=chunk) - Product development agreements for engineering services are generally **short-term**, with revenue recognized upon **satisfaction of deliverables**[414](index=414&type=chunk) Revenue by Product Group (FY2025 vs. FY2024) | Product Group | FY2025 ($) | FY2024 ($) | | :-------------------- | :------------ | :------------ | | Infrared components | 14,310,589 | 14,089,277 | | Visible components | 11,736,549 | 11,233,737 | | Assemblies and modules| 7,968,296 | 4,451,165 | | Engineering services | 3,187,196 | 1,952,013 | | **Total revenue** | **37,202,630**| **31,726,192**| [5. Inventories, net](index=58&type=section&id=5.%20Inventories,%20net) Total inventories, net, significantly increased from **$6.6 million** in FY2024 to **$12.9 million** in FY2025, with the obsolescence allowance rising from **$1.2 million** to **$2.0 million** Components of Inventories, Net | Component | June 30, 2025 ($) | June 30, 2024 ($) | | :-------------------- | :---------------- | :---------------- | | Raw materials | 4,507,764 | 3,112,428 | | Work in process | 7,321,779 | 2,333,240 | | Finished goods | 3,053,726 | 2,330,287 | | Allowance for obsolescence | (2,024,431) | (1,224,896) |\ | **Total Inventories, net** | **12,858,838** | **6,551,059** | - Total inventories, net, increased **significantly from $6.6 million in FY2024 to $12.9 million in FY2025**[417](index=417&type=chunk) - The allowance for obsolescence **increased from $1.2 million to $2.0 million**, with approximately **$0.1 million of inventory written off** against the allowance in both fiscal years[417](index=417&type=chunk) [6. Property and Equipment, net](index=58&type=section&id=6.%20Property%20and%20Equipment,%20net) Net property and equipment increased to **$15.9 million** in FY2025 from **$15.2 million** in FY2024, with depreciation and amortization expense rising to **$2.7 million** Property and Equipment, Net | Category | June 30, 2025 ($) | June 30, 2024 ($) | | :------------------------ | :---------------- | :---------------- | | Manufacturing equipment | 24,257,063 | 22,582,429 | | Leasehold improvements | 9,411,482 | 8,964,714 | | Construction in progress | 1,536,968 | 646,217 | | Total property and equipment | 37,053,807 | 33,513,786 | | Less accumulated depreciation and amortization | (21,189,746) | (18,303,174) | | **Total property and equipment, net** | **15,864,061** | **15,210,612** | - Net property and equipment increased to **$15.9 million in FY2025 from $15.2 million in FY2024**[421](index=421&type=chunk) - Depreciation and amortization expense for property and equipment was **$2.7 million in FY2025**, up from **$2.4 million in FY2024**[421](index=421&type=chunk) [7. Goodwill and Intangible Assets](index=58&type=section&id=7.%20Goodwill%20and%20Intangible%20Assets) Goodwill increased due to the G5 Infrared acquisition, with total intangible assets, net, rising significantly from **$3.7 million** in FY2024 to **$16.0 million** in FY2025 - Goodwill **increased due to the G5 Infrared acquisition**, with **no impairment recorded** in FY2025 or FY2024[422](index=422&type=chunk)[423](index=423&type=chunk) Identifiable Intangible Assets, Net | Intangible Asset | Useful Lives (Years) | June 30, 2025 ($) | June 30, 2024 ($) | | :-------------------- | :------------------- | :---------------- | :---------------- | | Customer relationships | 10 - 15 | 8,852,300 | 3,712,300 | | Trade secrets | 8 - 10 | 8,998,304 | 4,197,304 | | Tradenames | 8 - 10 | 7,706,418 | 4,256,418 | | Backlog | 1 | 824,525 | 463,525 | | Total intangible assets | | 26,381,547 | 12,629,547 | | Less accumulated amortization | | (10,393,624) | (8,978,808) | | **Total intangible assets, net** | | **15,987,923** | **3,650,739** | - Total intangible assets, net

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 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 No. 001-41363 CLIMATEROCK (Exact name of registrant as specified in its charter) Cayman Islands N/A (State or other jurisdiction ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 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 No. 001-41363 CLIMATEROCK (Exact name of registrant as specified in its charter) Cayman Islands N/A (State or other jurisdiction ...

[Executive Summary](index=1&type=section&id=Executive%20Summary) Armlogi Holding Corp. reported a 14% revenue increase to $190.4 million for FY2025, but operational challenges led to a $3.0 million gross loss and $15.3 million net loss, with future focus on optimization - Armlogi Holding Corp. announced financial results for the fiscal year ended June 30, 2025[2](index=2&type=chunk) - Total revenue increased by **14.0% to $190.4 million**, driven by continued demand for transportation and warehousing services[5](index=5&type=chunk) - The company reported a **gross loss of $3.0 million** and a **net loss of $15.3 million**, primarily due to increased costs from operational expansion and freight[5](index=5&type=chunk) - Future strategy focuses on operational optimization, technology-driven efficiency, and prudent cost management for long-term sustainable growth[6](index=6&type=chunk) [Company Information](index=2&type=section&id=Company%20Information) This section provides an overview of Armlogi Holding Corp.'s business, its forward-looking statements, and contact information for both the company and investor relations [About Armlogi Holding Corp.](index=2&type=section&id=About%20Armlogi%20Holding%20Corp.) Armlogi Holding Corp. is a U.S.-based warehousing and logistics service provider offering comprehensive supply-chain solutions, primarily for cross-border e-commerce merchants, operating ten warehouses covering over 3.5 million square feet - Armlogi is a U.S.-based warehousing and logistics service provider offering comprehensive supply-chain solutions, including warehouse management and order fulfillment[8](index=8&type=chunk) - The Company caters to cross-border e-commerce merchants looking to establish overseas warehouses in the U.S. market[8](index=8&type=chunk) - Armlogi operates **ten warehouses** covering over **3.5 million square feet** and is a member of the Russell Microcap® Index[8](index=8&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section contains standard forward-looking statements based on expectations and projections about future events, advising caution due to inherent risks and uncertainties, with no obligation to update them - The press release contains forward-looking statements about future events, financial performance, and business prospects[9](index=9&type=chunk) - These statements are based on current expectations and projections but are subject to risks and uncertainties that may cause actual results to differ materially[9](index=9&type=chunk) - The company is not obligated to publicly update or revise any forward-looking statements[9](index=9&type=chunk) [Contact Information](index=2&type=section&id=Company%20Contact) Provides contact details for Armlogi Holding Corp. (info@armlogi.com) and Investor Relations (Matthew Abenante, Strategic Investor Relations, LLC) - Company contact email: **info@armlogi.com**[10](index=10&type=chunk) - Investor Relations contact: **Matthew Abenante**, President, Strategic Investor Relations, LLC, Tel: **347-947-2093**, Email: **matthew@strategic-ir.com**[10](index=10&type=chunk) [Fiscal Year 2025 Financial Performance](index=1&type=section&id=Financial%20Results%20for%20the%20Fiscal%20Year%20Ended%20June%2030%2C%202025) This section details Armlogi's financial performance for fiscal year 2025, including management's perspective on key drivers and challenges, and a summary of the main financial figures [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Aidy Chou highlighted 14% revenue growth and a four-fold increase in active customers, but acknowledged significant operational challenges from warehouse expansion and rising freight costs, which pressured margins. Future focus includes operational optimization, technology-driven efficiency, and prudent cost management - Fiscal year 2025 demonstrated strong demand with **14% revenue growth** and a more than **four-fold increase in active customers**[4](index=4&type=chunk) - Operational challenges included substantial investments in labor and infrastructure for warehouse network expansion, pressuring near-term margins[4](index=4&type=chunk) - Increased freight costs from major carriers (FedEx, UPS) significantly impacted profitability, leading to carrier diversification[5](index=5&type=chunk) - The company's future strategy focuses on operational optimization, technology-driven efficiency, and prudent cost management for sustainable growth[6](index=6&type=chunk) [Key Financial Summary](index=1&type=section&id=Key%20Financial%20Summary) FY2025 revenue grew 14.0% to $190.4 million, but a 29.9% rise in cost of service led to a $3.0 million gross loss and a $15.3 million net loss, or $0.37 per share Fiscal Year 2025 Key Financial Highlights | Metric | FY2025 (US$) | FY2024 (US$) | Change (US$) | Change (%) | | :-------------------------------- | :----------- | :----------- | :----------- | :--------- | | Total Revenue | 190,408,258 | 166,977,034 | 23,431,224 | 14.0% | | Cost of Service | 193,408,827 | 148,894,227 | 44,514,600 | 29.9% | | Gross (Loss) Profit | (3,000,569) | 18,082,807 | (21,083,376) | -116.6% | | Gross Margin | -1.6% | 10.8% | -12.4 pp | - | | General and Administrative Expenses | 14,675,543 | 9,967,792 | 4,707,751 | 47.2% | | Net (Loss) Income | (15,348,767) | 7,441,218 | (22,789,985) | -306.3% | | Basic & Diluted Net (Loss) Earnings Per Share | (0.37) | 0.19 | (0.56) | -294.7% | | Cash and Cash Equivalents and Restricted Cash (Year-End) | 13,577,827 | 9,950,384 | 3,627,443 | 36.4% | [Conference Call & Audio Webcast](index=2&type=section&id=Conference%20Call%20%26%20Audio%20Webcast) Armlogi's management team will host an earnings conference call and live audio webcast on September 25, 2025, at 1:30 p.m. Pacific Time to discuss financial results and operations, with specific dial-in and webcast access details provided - An earnings conference call will be held on **September 25, 2025**, at **1:30 p.m. Pacific Time** (4:30 p.m. Eastern Time)[6](index=6&type=chunk) - Access details include a phone number (**1-800-445-7795**, international **1-785-424-1699**) with conference ID **ARMLOGI**, and a live audio webcast link[7](index=7&type=chunk) [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) This section presents the detailed consolidated financial statements for Armlogi Holding Corp. for the fiscal years ended June 30, 2025, and 2024, including the Balance Sheets, Statements of Operations and Comprehensive Income, and Statements of Cash Flows [Consolidated Balance Sheets](index=3&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2025, total assets increased slightly to $170.2 million, while total liabilities significantly rose to $145.1 million, driven by operating lease liabilities and convertible notes, leading to a decrease in stockholders' equity to $25.1 million Consolidated Balance Sheet Highlights (US$) | Metric | June 30, 2025 | June 30, 2024 | Change | | :-------------------------------- | :------------ | :------------ | :----- | | Total Assets | 170,214,195 | 167,034,856 | 3,179,339 | | Current Assets | 37,665,911 | 37,984,932 | (319,021) | | Non-Current Assets | 132,548,284 | 129,049,924 | 3,498,360 | | Total Liabilities | 145,124,257 | 127,796,151 | 17,328,106 | | Current Liabilities | 45,787,013 | 32,963,921 | 12,823,092 | | Non-Current Liabilities | 99,337,244 | 94,832,230 | 4,505,014 | | Total Stockholders' Equity | 25,089,938 | 39,238,705 | (14,148,767) | - Convertible notes of **$5.29 million** were recorded as current liabilities in FY2025[12](index=12&type=chunk) - Operating lease liabilities (current and non-current) increased significantly, reflecting expanded operational footprint[12](index=12&type=chunk) [Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME) For FY2025, revenue increased by 14.0% to $190.4 million, but a 29.9% surge in cost of service resulted in a $3.0 million gross loss and a $15.3 million net loss, or $0.37 per share, a significant decline from the prior year Consolidated Statements of Operations Highlights (US$) | Metric | FY2025 | FY2024 | Change | Change (%) | | :-------------------------------- | :----------- | :----------- | :----------- | :--------- | | Revenue | 190,408,258 | 166,977,034 | 23,431,224 | 14.0% | | Costs of Service | 193,408,827 | 148,894,227 | 44,514,600 | 29.9% | | Gross (Loss) Profit | (3,000,569) | 18,082,807 | (21,083,376) | -116.6% | | General and Administrative | 14,675,543 | 9,967,792 | 4,707,751 | 47.2% | | (Loss) Income from Operations | (17,676,112) | 8,115,015 | (25,791,127) | -317.8% | | Net (Loss) Income | (15,348,767) | 7,441,218 | (22,789,985) | -306.3% | | Basic & Diluted Net (Loss) Earnings Per Share | (0.37) | 0.19 | (0.56) | -294.7% | - The company recognized a **loss on debt extinguishment of $1.19 million** in FY2025[15](index=15&type=chunk) - Total income tax shifted from an expense of **$2.95 million** in FY2024 to a recovery of **$1.56 million** in FY2025[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash from operating activities decreased to $1.46 million in FY2025 due to net loss. Net cash used in investing activities decreased to $1.81 million, while net cash from financing activities also decreased to $3.97 million, resulting in an overall increase in cash and cash equivalents to $13.58 million Consolidated Statements of Cash Flows Highlights (US$) | Metric | FY2025 | FY2024 | Change | | :-------------------------------- | :----------- | :----------- | :----------- | | Net Cash Provided from Operating Activities | 1,460,845 | 2,992,889 | (1,532,044) | | Net Cash Used in Investing Activities | (1,805,223) | (7,437,605) | 5,632,382 | | Net Cash Provided by Financing Activities | 3,971,821 | 7,837,001 | (3,865,180) | | Net Increase in Cash and Cash Equivalents and Restricted Cash | 3,627,443 | 3,392,285 | 235,158 | | Cash and Cash Equivalents and Restricted Cash, End of Year | 13,577,827 | 9,950,384 | 3,627,443 | - Non-cash transactions included **$27.86 million** in right-of-use assets acquired for operating lease liabilities and **$0.82 million** for finance lease liabilities in FY2025[18](index=18&type=chunk) - Repayments of SEPA (Share Exchange Purchase Agreement) totaled **$3.26 million** in FY2025[17](index=17&type=chunk)

-8UNITED 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 June 30, 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 001-36908 PARAMOUNT GOLD NEVADA CORP. (Exact name of Registrant as specified in its Charter) Nevada 98-0138393 (State or other jurisdiction of ...