Fiscal year N°: 92, beginning on July 1, 2024 Legal address: Carlos Della Paolera 261, 9rd floor – Autonomous City of Buenos Aires, Argentina Company activity: Real estate and agricultural activities Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria Consolidated Financial Statements as of June 30, 2025, June 30, 2024 and July 1, 2023, and for the fiscal years ended June 30, 2025, 2024 and 2023. Legal information Denomination: Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financ ...

FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2024 F-1 Exhibit 99.1 UNAUDITED CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS HOMESTOLIFE LTD AND SUBSIDIARIES INDEX TO UNAUDITED CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS | Page | | --- | | Unaudited Condensed Consolidated and Combined Balance Sheets F-3 | | Unaudited Condensed Consolidated and Combined Statements of Operations and Comprehensive Income F-4 | | Unaudited Condensed Consolidated and Combined Statements of Changes in Sharehol ...

Exhibit 99.1 NANO LABS LTD CONSOLIDATED BALANCE SHEETS (Unaudited) | | As of | As of | | | --- | --- | --- | --- | | | December 31, | June 30, | | | | 2024 | 2025 | | | ASSETS | RMB | RMB | US$ | | Current assets: | | | | | Cash and cash equivalents | 32,431,081 | 363,440,412 | 50,769,761 | | Restricted cash | 418,722 | 468,526 | 65,449 | | Accounts receivable, net | 572,803 | 507,688 | 70,920 | | Inventories, net | 29,866,418 | 35,850,932 | 5,008,093 | | Prepayments | 4,606,066 | 8,652,263 | 1,208,653 | | ...

Exhibit 99 FOR IMMEDIATE RELEASE September 17, 2025 General Mills Reports Fiscal 2026 First-quarter Results and Reaffirms Full-year Outlook MINNEAPOLIS (September 17, 2025) – General Mills, Inc. (NYSE: GIS) today reported results for its first quarter ended August 24, 2025. "Our primary goal in fiscal 2026 is to restore organic sales growth by investing in greater value, innovation, and product news for consumers," said General Mills Chairman and Chief Executive Officer Jeff Harmening. "I'm pleased that we' ...

INNATE PHARMA SA HALF-YEAR FINANCIAL REPORT JUNE 30, 2025 INNATE PHARMA S.A. French société anonyme governed by a Board of Directors with a share capital of 4,609,522.15 euros composed of 92,176,373 ordinary shares, and 14,070 preferred shares with a nominal value of 0.05 euros each Registered office: 117, Avenue de Luminy, F-13009 Marseille, France Registered with the Company and Trade Register of Marseille under number 424 365 336 The following interim condensed consolidated financial statements have been ...

[Filing Information](index=1&type=section&id=Filing%20Information) This section provides key details about the company's annual report filing and stock market information [Registrant Details](index=1&type=section&id=Registrant%20Details) FLUX POWER HOLDINGS, INC. filed its annual report on Form 10-K for the fiscal year ended June 30, 2025. The company's common stock is traded on the Nasdaq Capital Market under the symbol FLUX. It is classified as a non-accelerated filer and a smaller reporting company - **FLUX POWER HOLDINGS, INC.** filed its annual report on Form 10-K for the fiscal year ended June 30, **2025**[2](index=2&type=chunk) Title of Each Class | Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common Stock, par value \$0.001 per share | FLUX | Nasdaq Capital Market | - The registrant is classified as a **non-accelerated filer** and a **smaller reporting company**[3](index=3&type=chunk) [Market Value and Shares Outstanding](index=2&type=section&id=Market%20Value%20and%20Shares%20Outstanding) As of December 31, 2024, the aggregate market value of voting and non-voting common stock held by non-affiliates was approximately **\$19.565 million**. As of September 12, 2025, there were **16,835,698 shares** of common stock outstanding Market Value and Shares Outstanding | Metric | Value | | :----- | :---- | | Aggregate market value of voting and non-voting common stock held by non-affiliates (as of Dec 31, 2024) | ~\$19,565,000 | | Shares of common stock outstanding (as of Sep 12, 2025) | 16,835,698 | [Introductory Information](index=4&type=section&id=Introductory%20Information) This section outlines important disclaimers regarding forward-looking statements and defines key terms [Special Note Regarding Forward-Looking Statements](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights that the report contains forward-looking statements, particularly in the Business, Risk Factors, and MD&A sections. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially, and readers are cautioned not to place undue reliance on them. Key risks include the ability to continue as a going concern, compliance with credit facility terms, legal proceedings, meeting revenue targets, remediating material weaknesses, and maintaining Nasdaq listing - **Forward-looking statements** are contained principally in the sections entitled 'Description of Business,' 'Risk Factors,' and 'Management's Discussion and Analysis of Financial Condition and Results of Operations.'[15](index=15&type=chunk) - Key risks include: ability to continue as a going concern, compliance with GBC credit facility terms, expense and outcome of legal proceedings, ability to meet projected revenue targets due to order delays and tariff uncertainties, ability to remediate material weaknesses in internal controls, ability to regain and maintain Nasdaq listing standards, and ability to secure sufficient funding[16](index=16&type=chunk) - Other risks include managing working capital, obtaining raw materials, maintaining market share, achieving profitability, fulfilling backlog, keeping up with technology, dependence on major customers, and impact of tariffs[18](index=18&type=chunk) [Use of Certain Defined Terms](index=5&type=section&id=Use%20of%20Certain%20Defined%20Terms) This section defines key terms used throughout the report, such as 'Company,' 'Flux,' 'we,' 'us,' and 'our' referring to Flux Power Holdings, Inc. and its subsidiary, and standard SEC-related acronyms like 'Exchange Act,' 'SEC,' and 'Securities Act.' - The 'Company,' 'Flux,' 'we,' 'us,' and 'our' refer to the combined business of Flux Power Holdings, Inc. and its wholly owned subsidiary, Flux Power, Inc.[19](index=19&type=chunk) - 'Exchange Act' refers to the Securities Exchange Act of 1934, as amended[19](index=19&type=chunk) - 'SEC' refers to the Securities and Exchange Commission[19](index=19&type=chunk) - 'Securities Act' refers to the Securities Act of 1933, as amended[19](index=19&type=chunk) - This 'Annual Report', 'Form 10-K' and 'Current Report' refer to this Annual Report on Form 10-K[19](index=19&type=chunk) [PART I](index=6&type=section&id=PART%20I) This part covers the company's business operations, risk factors, properties, and legal proceedings [Business Overview](index=6&type=section&id=ITEM%201.%20BUSINESS) Flux Power Holdings, Inc. designs, develops, manufactures, and sells advanced lithium-ion energy storage solutions for industrial and commercial sectors, primarily material handling and airport ground support equipment (GSE). The company's strategy focuses on meeting growing demand, expanding product mix through R&D, improving sales and customer support, and enhancing production efficiencies. Recent developments include order delays due to economic uncertainties and tariffs, but also improvements in supply chain and new OEM partnerships. The company is actively addressing Nasdaq listing compliance issues and has undertaken significant financial and corporate actions, including a private placement and settlement of class action litigation - **Flux Power** designs, develops, manufactures, and sells advanced lithium-ion energy storage solutions for industrial and commercial sectors, including material handling and airport ground support equipment (GSE)[21](index=21&type=chunk) - **Long-term strategy**: Meet rapidly growing demand for lithium-ion solutions, be the supplier of choice for large companies, invest in R&D, expand sales/marketing, improve customer support, and enhance production efficiencies[22](index=22&type=chunk) - **Near-term priority**: Achieve profitability within capital constraints through supply chain improvements, gross margin expansion, and cost reductions[23](index=23&type=chunk) [Company Overview](index=6&type=section&id=Overview) This section provides a general description of the company's business and product offerings - The company designs, develops, manufactures, and sells advanced lithium-ion energy storage solutions for industrial and commercial sectors, including material handling and airport ground support equipment (GSE)[21](index=21&type=chunk) - These solutions offer a reliable, high-performing, cost-effective, and environmentally friendly alternative to traditional lead-acid and propane-based solutions[21](index=21&type=chunk) - Modular and scalable design with proprietary wireless battery management system (BMS) provides real-time monitoring[21](index=21&type=chunk) [Strategic Vision and R&D Focus](index=6&type=section&id=Our%20Strategy) This section outlines the company's long-term strategic goals and research and development priorities - **Long-term strategy** is to be the supplier of choice for large companies with energy storage needs, focusing on the material handling sector (multi-billion-dollar market)[22](index=22&type=chunk) - R&D efforts focus on adaptable, reliable, and cost-effective solutions[22](index=22&type=chunk) - Patented technology aims to increase battery life, improve battery health understanding, and apply AI for predictive cell balancing[24](index=24&type=chunk) [Near-Term Strategic Initiatives](index=6&type=section&id=Strategic%20Initiatives) This section details the company's immediate strategic priorities for achieving profitability and growth - **Near-term priority** is to achieve profitability within capital constraints[23](index=23&type=chunk) - Pursue supply chain improvements, gross margin expansion, and cost reductions[23](index=23&type=chunk) - Expand business by leveraging customer relationships, entering new markets, enhancing 'SkyBMS' telemetry, expanding manufacturing/service capacities, capitalizing on leadership with new high-power offerings, and supporting other lithium chemistries[25](index=25&type=chunk) [Recent Business and Corporate Developments](index=8&type=section&id=Recent%20Developments) This section summarizes recent operational, financial, and corporate actions and challenges - **Experienced delays in new orders** due to lower capital spending by large customer fleets, higher interest rates, geopolitical uncertainty, and global tariff impacts[26](index=26&type=chunk) - **Improved sourcing and purchasing activity**, expanding vendor strategy, and adding a second 'tier one' OEM private label battery program[28](index=28&type=chunk) - Partnered with the largest critical battery components recycling company in the U.S. for end-of-life lithium-ion batteries[28](index=28&type=chunk) - **Received multiple Nasdaq notices** regarding non-compliance with stockholders' equity and timely filing requirements. The company regained compliance with filing but faced delisting for equity deficit. Nasdaq granted an extension until October 31, **2025**, to demonstrate compliance[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - **Increased authorized common stock** from **30,000,000** to **75,000,000 shares** effective May 28, **2025**[33](index=33&type=chunk) - **Entered into a settlement term sheet** on July 11, **2025**, to resolve a federal securities class action for **\$1.75 million**, with insurers funding **\$1.15 million** and the company contributing **\$600,000**[34](index=34&type=chunk)[35](index=35&type=chunk)[39](index=39&type=chunk) - **Stockholders approved increasing authorized preferred stock** to **3,000,000 shares** and designating **1,000,000 shares** as Series A Convertible Preferred Stock on August 29, **2025**[40](index=40&type=chunk)[41](index=41&type=chunk) - **Completed a private placement** on September 15, **2025**, **raised approximately \$5.0 million** through Prefunded Warrants and Common Warrants, with proceeds for general corporate purposes and growth capital. Certain affiliates, including the CEO and CFO, participated[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) - The **GBC Credit Facility's maturity date was automatically extended** to July 31, **2027**, upon conversion of the Cleveland Note into equity. The company has received **multiple waivers** and amendments for non-compliance with financial covenants under the

[PART I](index=4&type=section&id=PART%20I) Provides an overview of Key Tronic's contract manufacturing business, strategies, global operations, and related factors [Item 1. Business](index=4&type=section&id=Item%201.%20Business) Key Tronic, a contract manufacturer, offers integrated engineering and production services, expanding capacity in the US and Vietnam to meet demand and mitigate tariffs [Background](index=4&type=section&id=Background) [Our Industry and Strategy](index=4&type=section&id=Our%20Industry%20and%20Strategy) [Customers and Marketing](index=5&type=section&id=Customers%20and%20Marketing) [Manufacturing](index=5&type=section&id=Manufacturing) [Research, Development, and Engineering](index=6&type=section&id=Research%2C%20Development%2C%20and%20Engineering) [Competition](index=6&type=section&id=Competition) [Trademarks](index=6&type=section&id=Trademarks) [Employees](index=6&type=section&id=Employees) [Backlog](index=6&type=section&id=Backlog) [Foreign Markets](index=6&type=section&id=Foreign%20Markets) [Governmental Regulation](index=6&type=section&id=Governmental%20Regulation) [Information about Our Executive Officers](index=7&type=section&id=Information%20about%20Our%20Executive%20Officers) [Available Information](index=8&type=section&id=Available%20Information) - Key Tronic shifted from keyboard manufacturing to contract manufacturing, leveraging strengths in design, engineering, and global production capabilities[14](index=14&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk) - The company plans to significantly increase production capacity in its Arkansas and Vietnam facilities to benefit from growing customer demand for rebalancing contract manufacturing and mitigate tariff impacts[17](index=17&type=chunk) - Order backlog decreased from **$249.6 million** in June 2024 to **$159.1 million** in June 2025, but is not necessarily indicative of future sales due to potential cancellations or rescheduling[33](index=33&type=chunk) Customer Concentration (Percentage of Total Net Sales) | Customer | 2025 | 2024 | | :--------- | :--- | :--- | | Top 5 Customers | 48% | 34% | | Customer A | 25% | 20% | Full-time Employees | Date | Employees | | :--------- | :-------- | | June 28, 2025 | 3,539 | | June 29, 2024 | 4,122 | [Item 1A. Risk Factors](index=8&type=section&id=Item%201A.%20Risk%20Factors) Key Tronic faces operational, financial, and cybersecurity risks from foreign operations, customer concentration, supply chain, and internal control issues [RISKS RELATED TO OUR BUSINESS AND STRATEGY](index=9&type=section&id=RISKS%20RELATED%20TO%20OUR%20BUSINESS%20AND%20STRATEGY) [TECHNOLOGY RISKS](index=13&type=section&id=TECHNOLOGY%20RISKS) [RISKS RELATED TO CAPITAL AND FINANCING](index=14&type=section&id=RISKS%20RELATED%20TO%20CAPITAL%20AND%20FINANCING) [RISKS RELATED TO OUR CONTROLS AND PROCEDURES AND THE INTERNAL INVESTIGATION](index=15&type=section&id=RISKS%20RELATED%20TO%20OUR%20CONTROLS%20AND%20PROCEDURES%20AND%20THE%20INTERNAL%20INVESTIGATION) [LEGAL AND ACCOUNTING RISKS](index=16&type=section&id=LEGAL%20AND%20ACCOUNTING%20RISKS) [GENERAL RISKS](index=17&type=section&id=GENERAL%20RISKS) - Operations in Mexico, China, and Vietnam are subject to risks including political/economic instability, tariffs, regulatory changes, and potential loss of tax incentives[48](index=48&type=chunk)[52](index=52&type=chunk) - Quarterly results can fluctuate due to volatile customer demand, timing of new programs, and fixed operating expenses, exacerbated by macroeconomic conditions like inflation and supply chain disruptions[50](index=50&type=chunk)[51](index=51&type=chunk)[56](index=56&type=chunk) - A significant portion of sales comes from a small number of customers (**48% from top five in FY2025**), and the loss or reduction of orders from these customers could materially harm the business[59](index=59&type=chunk)[60](index=60&type=chunk) - The company has experienced and expects to continue experiencing cyberattacks, including a previously disclosed incident in Q4 FY2024 that materially impacted financial condition and results of operations[79](index=79&type=chunk)[80](index=80&type=chunk) - The company has previously identified and remediated material weaknesses in internal control over financial reporting related to revenue recognition and new accounting standards, with ongoing risks of recurrence[90](index=90&type=chunk)[91](index=91&type=chunk) [Item 1B. Unresolved Staff Comments](index=17&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments[105](index=105&type=chunk) [Item 1C. Cybersecurity](index=17&type=section&id=Item%201C.%20Cybersecurity) Key Tronic manages cybersecurity risks via NIST CSF, Board oversight, and management, acknowledging past material impacts from incidents [Risk Management and Strategy](index=17&type=section&id=Risk%20Management%20and%20Strategy) [Governance](index=18&type=section&id=Governance) - Key Tronic's cybersecurity processes are based on the NIST CSF, including third-party monitoring and mandatory employee training[105](index=105&type=chunk) - The Board of Directors oversees risk management, with the Audit Committee specifically responsible for cybersecurity threat oversight, receiving regular updates from management[107](index=107&type=chunk) - Risks from cybersecurity threats, including a previously disclosed incident, have materially affected the company's results of operations and financial condition[107](index=107&type=chunk) [Item 2. Properties](index=19&type=section&id=Item%202.%20Properties) Key Tronic operates over 2.19 million sq ft of ISO-certified manufacturing and sales facilities across four countries Operating Facilities by Location and Square Footage | Location | Approx. Sq. Ft. | Type of Interest | | :------------------------ | :-------------- | :--------------- | | Total USA | 1,059,540 | Leased | | Total Mexico | 899,000 | Mixed (Owned/Leased) | | Total China | 103,000 | Leased | | Total Vietnam | 133,000 | Leased | | **Grand Total** | **2,194,540** | | - All facilities are ISO 9001:2015 and CTPAT certified, with specific sites holding additional certifications like IATF 16949 (automotive), ISO 13485:2016 (medical devices), AS9100D (aviation, space, defense), and ISO 14001:2015 (environmental)[112](index=112&type=chunk)[118](index=118&type=chunk) [Item 3. Legal Proceedings](index=20&type=section&id=Item%203.%20Legal%20Proceedings) Management anticipates no material adverse effect from ordinary course lawsuits on financial position, results, or cash flow - The company is party to certain lawsuits or claims in the ordinary course of business[113](index=113&type=chunk) - Management does not believe these proceedings, individually or in aggregate, will have a material adverse effect on financial position, results of operations, or cash flow[113](index=113&type=chunk) [Item 4. Mine Safety Disclosures](index=20&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Key Tronic Corporation - Not Applicable[114](index=114&type=chunk) [PART II](index=21&type=section&id=PART%20II) Details Key Tronic's market for common equity, financial performance, market risks, and financial statements [Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=21&type=section&id=Item%205.%20Market%20for%20the%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Key Tronic's common stock trades on NASDAQ, with 532 shareholders, and dividend payments are restricted by credit agreements [Market Information](index=21&type=section&id=Market%20Information) [Holders and Dividends](index=21&type=section&id=Holders%20and%20Dividends) [Performance Graph](index=21&type=section&id=Performance%20Graph) - Common stock is traded on the NASDAQ Global Market under the symbol 'KTCC'[115](index=115&type=chunk) - As of June 28, 2025, there were **532 shareholders** of common stock[116](index=116&type=chunk) - The company is restricted from declaring or paying dividends without Bank of Montreal's prior written consent and does not anticipate paying dividends in the foreseeable future[116](index=116&type=chunk) Common Stock High and Low Sales Prices | Quarter | 2025 High | 2025 Low | 2024 High | 2024 Low | | :-------------- | :-------- | :------- | :-------- | :------- | | First Quarter | $6.00 | $3.70 | $6.24 | $4.32 | | Second Quarter | $6.03 | $3.99 | $4.50 | $3.72 | | Third Quarter | $4.28 | $2.56 | $5.14 | $4.04 | | Fourth Quarter | $3.13 | $2.26 | $4.85 | $3.69 | [Item 6: [RESERVED]](index=21&type=section&id=Item%206%3A%20%5BRESERVED%5D) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Key Tronic's FY2025 net sales decreased 17.5% to $467.9 million, resulting in an $8.3 million net loss, despite improved gross margin [Overview](index=22&type=section&id=Overview) [Executive Summary](index=22&type=section&id=Executive%20Summary) [RESULTS OF OPERATIONS (Comparison of the Fiscal Year Ended June 28, 2025 with the Fiscal Year Ended June 29, 2024)](index=23&type=section&id=RESULTS%20OF%20OPERATIONS) [Net Sales](index=23&type=section&id=Net%20Sales) [Cost of Sales](index=24&type=section&id=Cost%20of%20Sales) [Gross Profit](index=24&type=section&id=Gross%20Profit) [Research, Development and Engineering](index=24&type=section&id=Research%2C%20Development%20and%20Engineering) [Selling, General and Administrative](index=24&type=section&id=Selling%2C%20General%20and%20Administrative) [Interest Expense](index=25&type=section&id=Interest%20Expense) [Income Tax Provision](index=25&type=section&id=Income%20Tax%20Provision) [Non-GAAP Financial Measures](index=25&type=section&id=Non-GAAP%20Financial%20Measures) [International Subsidiaries](index=26&type=section&id=International%20Subsidiaries) [RESULTS OF OPERATIONS (Comparison of the Fiscal Year Ended June 29, 2024 with the Fiscal Year Ended July 1, 2023)](index=26&type=section&id=RESULTS%20OF%20OPERATIONS%20%28Comparison%20of%20the%20Fiscal%20Year%20Ended%20June%2029%2C%202024%20with%20the%20Fiscal%20Year%20Ended%20July%201%2C%202023%29) [Capital Resources and Liquidity](index=26&type=section&id=Capital%20Resources%20and%20Liquidity) [Operating Cash Flow](index=26&type=section&id=Operating%20Cash%20Flow) [Investing Cash Flow](index=26&type=section&id=Investing%20Cash%20Flow) [Financing Cash Flow](index=27&type=section&id=Financing%20Cash%20Flow) [Off-Balance Sheet Arrangements and Contractual Obligations](index=27&type=section&id=Off-Balance%20Sheet%20Arrangements%20and%20Contractual%20Obligations) [Critical Accounting Policies and Estimates](index=28&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) [Revenue](index=28&type=section&id=Revenue) [Inactive, Obsolete, and Surplus Inventory Valuation](index=28&type=section&id=Inactive%2C%20Obsolete%2C%20and%20Surplus%20Inventory%20Valuation) [Allowance for Credit Losses](index=29&type=section&id=Allowance%20for%20Credit%20Losses) [Income Taxes](index=29&type=section&id=Income%20Taxes) [New and Future Accounting Pronouncements](index=29&type=section&id=New%20and%20Future%20Accounting%20Pronouncements) - Net sales decreased by **$99.1 million**, with approximately **$48 million** attributed to reduced scrap and component sales from end-of-life programs in FY2024, alongside global economic disruptions and tariff-related delays in new programs[123](index=123&type=chunk)[133](index=133&type=chunk) - The company secured new programs in pest control, personal protection, air purification, automotive, medical technology, and utilities inspection equipment, including a large data processing OEM contract expected to exceed **$20 million** in annual revenue[122](index=122&type=chunk) - Headcount was reduced by approximately **600 employees** in FY2025 to align costs with demand and boost automation, improving competitiveness for new program bids[124](index=124&type=chunk) Key Financial Highlights (FY2025 vs. FY2024) | Metric | FY2025 (in thousands) | FY2024 (in thousands) | Change ($) | Change (%) | | :---------------------------------- | :-------------------- | :-------------------- | :--------- | :--------- | | Net Sales | $467,871 | $566,942 | $(99,071) | -17.5% | | Gross Profit | $36,427 | $39,879 | $(3,452) | -8.7% | | Gross Profit % of Net Sales | 7.8% | 7.0% | +0.8 pts | | | Operating Income | $562 | $6,758 | $(6,196) | -91.7% | | Operating Income % of Net Sales | 0.1% | 1.2% | -1.1 pts | | | Net Loss | $(8,318) | $(2,787) | $(5,531) | +198.5% | | Net Loss Per Share (Diluted) | $(0.77) | $(0.26) | $(0.51) | +196.2% | Revenue by Industry Sector (Percentage of Total Revenue) | Industry | FY2025 | FY2024 | | :----------- | :----- | :----- | | Industrial | 52% | 46% | | Consumer | 38% | 45% | | Communication | 6% | 4% | | Medical | 3% | 3% | | Gaming | — | 1% | | Transportation | 1% | 1% | | **Total** | **100%** | **100%** | Adjusted Net Loss (Non-GAAP) | Metric | FY2025 (in thousands) | FY2024 (in thousands) | | :---------------------------------- | :-------------------- | :-------------------- | | GAAP net loss | $(8,318) | $(2,787) | | Cybersecurity expenses | — | $2,340 | | Severance expenses | $2,908 | $1,743 | | Gain on insurance proceeds (net of losses) | — | $(431) | | Stock-based compensation expense | $218 | $(444) | | Write-off of unamortized loan fees | $1,012 | — | | Income tax effect of non-GAAP adjustments | $(828) | $(642) | | **Adjusted net loss** | **$(5,008)** | **$(221)** | | **Adjusted net loss per share — Diluted** | **$(0.47)** | **$(0.02)** | [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=30&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Key Tronic faces interest rate risk on debt and foreign currency exchange risk, using Mexican Peso forward contracts for hedging [Interest Rate Risk](index=30&type=section&id=Interest%20Rate%20Risk) [Foreign Currency Exchange Risk](index=30&type=section&id=Foreign%20Currency%20Exchange%20Risk) - The company is exposed to interest rate risk from its asset-based senior secured revolving credit facility and line of credit, which fluctuate with SOFR and Iterbancaria de Equilibrio Interest Rate, respectively[173](index=173&type=chunk) - Foreign currency exchange risk arises from operations in Mexico, China, and Vietnam, with transactions in Mexican Peso, Chinese Renminbi, and Vietnamese Dong[175](index=175&type=chunk) - Key Tronic uses Mexican Peso forward contracts to hedge foreign currency fluctuations, with **$12.9 million** in outstanding contracts as of June 28, 2025[175](index=175&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=31&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Key Tronic's audited financial statements, including an unqualified auditor's opinion and a critical audit matter on revenue recognition estimates [Report of Independent Registered Public Accounting Firm](index=31&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) [Critical Audit Matter](index=31&type=section&id=Critical%20Audit%20Matter) [Consolidated Balance Sheets](index=33&type=section&id=Consolidated%20Balance%20Sheets) [Consolidated Statements of Operations](index=34&type=section&id=Consolidated%20Statements%20of%20Operations) [Consolidated Statements of Comprehensive Loss](index=35&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) [Consolidated Statements of Cash Flows](index=36&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) [Consolidated Statements of Shareholders' Equity](index=37&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity) [NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](index=38&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) [1. Significant Accounting Policies](index=38&type=section&id=1.%20Significant%20Accounting%20Policies) [2. Inventories](index=42&type=section&id=2.%20Inventories) [3. Property, Plant and Equipment](index=42&type=section&id=3.%20Property%2C%20Plant%20and%20Equipment) [4. Long-Term Debt](index=43&type=section&id=4.%20Long-Term%20Debt) [5. Income Taxes](index=45&type=section&id=5.%20Income%20Taxes) [6. Earnings Per Share](index=49&type=section&id=6.%20Earnings%20Per%20Share) [7. Stock-Based Compensation and Benefit Plans](index=49&type=section&id=7.%20Stock-Based%20Compensation%20and%20Benefit%20Plans) [Stock Appreciation Rights](index=49&type=section&id=Stock%20Appreciation%20Rights) [Restricted Stock Units](index=50&type=section&id=Restricted%20Stock%20Units) [8. Commitments and Contingencies](index=50&type=section&id=8.%20Commitments%20and%20Contingencies) [Litigation and Other Matters](index=50&type=section&id=Litigation%20and%20Other%20Matters) [Warranties](index=50&type=section&id=Warranties) [Leases](index=51&type=section&id=Leases) [Internal Investigation](index=51&type=section&id=Internal%20Investigation) [Indemnification Rights](index=51&type=section&id=Indemnification%20Rights) [9. Derivative Financial Instruments](index=51&type=section&id=9.%20Derivative%20Financial%20Instruments) [10. Fair Value Measurements](index=52&type=section&id=10.%20Fair%20Value%20Measurements) [11. Segment Information and Enterprise-Wide Disclosures](index=53&type=section&id=11.%20Segment%20Information%20and%20Enterprise-Wide%20Disclosures) [Products and Services](index=53&type=section&id=Products%20and%20Services) [Geographic Areas](index=53&type=section&id=Geographic%20Areas) [Significant Customers](index=54&type=section&id=Significant%20Customers) [Significant Segment Measures](index=54&type=section&id=Significant%20Segment%20Measures) [12. Revenue](index=54&type=section&id=12.%20Revenue) [Revenue Recognition](index=54&type=section&id=Revenue%20Recognition) [Contract Balances](index=55&type=section&id=Contract%20Balances) [Disaggregation of Revenue](index=56&type=section&id=Disaggregation%20of%20Revenue) [13. Leases](index=56&type=section&id=13.%20Leases) - Baker Tilly US, LLP issued an unqualified opinion on the consolidated financial statements for the years ended June 28, 2025, and June 29, 2024[177](index=177&type=chunk) - A critical audit matter involved auditing revenue recognized over time on manufacturing contracts, specifically management's estimates for total estimated costs at completion of performance obligations[182](index=182&type=chunk)[183](index=183&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Metric | June 28, 2025 | June 29, 2024 | | :-------------------------- | :------------ | :------------ | | Total Current Assets | $234,173 | $288,399 | | Total Assets | $315,874 | $355,343 | | Total Current Liabilities | $91,991 | $104,176 | | Total Liabilities | $198,740 | $231,353 | | Total Shareholders' Equity | $117,134 | $123,990 | Consolidated Statements of Operations Highlights (in thousands) | Metric | FY2025 | FY2024 | | :---------------------------------- | :------- | :------- | | Net sales | $467,871 | $566,942 | | Gross profit | $36,427 | $39,879 | | Operating income | $562 | $6,758 | | Loss before income taxes | $(11,961) | $(5,187) | | Net loss | $(8,318) | $(2,787) | | Net loss per share — Basic | $(0.77) | $(0.26) | Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | FY2025 | FY2024 | | :---------------------------------- | :------- | :------- | | Cash provided by operating activities | $18,929 | $13,776 | | Cash used in investing activities | $(4,199) | $(2,108) | | Cash used in financing activities | $(18,098) | $(10,519) | | Net increase (decrease) in cash | $(3,368) | $1,149 | | Cash and cash equivalents, end of period | $1,384 | $4,752 | [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=57&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) Key Tronic reported no changes in or disagreements with accountants on accounting and financial disclosure matters - There were no changes in or disagreements with accountants on accounting and financial disclosure[309](index=309&type=chunk) [Item 9A. Controls and Procedures](index=58&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management assessed disclosure controls and internal control over financial reporting as effective, having remediated prior material weaknesses [Evaluation of Disclosure Controls and Procedures](index=58&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) [Management's Report on Internal Control over Financial Reporting](index=58&type=section&id=Management%27s%20Report%20on%20Internal%20Control%20over%20Financial%20Reporting) [Remediation Update](index=58&type=section&id=Remediation%20Update) [Changes in Internal Control over Financial Reporting](index=60&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - As of June 28, 2025, the company's disclosure controls and procedures were deemed effective[311](index=311&type=chunk) - Management concluded that internal control over financial reporting was effective as of June 28, 2025, based on the COSO framework[314](index=314&type=chunk) - Material weaknesses identified as of June 29, 2024, related to revenue recognition for material price variances and the adoption of new accounting standards, have been remediated during fiscal year 2025[315](index=315&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk) - Remediation actions included training, enhanced closing process documentation, and hiring technical accounting finance staff[320](index=320&type=chunk) [Item 9B. Other Information](index=61&type=section&id=Item%209B.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in FY2025 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during fiscal year 2025[321](index=321&type=chunk) [Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](index=61&type=section&id=Item%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This item is not applicable to Key Tronic Corporation - Not applicable[322](index=322&type=chunk) [PART III](index=61&type=section&id=PART%20III) Covers Key Tronic's corporate governance, executive compensation, security ownership, related party transactions, and accounting fees [Item 10. Directors, Executive Officers and Corporate Governance](index=61&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement and Item 1 of Part 1[324](index=324&type=chunk)[325](index=325&type=chunk) - The Board of Directors has adopted a written Code of Conduct applicable to directors and employees, available on the company's website[327](index=327&type=chunk) [Item 11. Executive Compensation](index=61&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the 2025 Proxy Statement - Executive compensation information is incorporated by reference from the 2025 Proxy Statement[328](index=328&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=61&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership and equity compensation plan information is incorporated by reference from the 2025 Proxy Statement - Security ownership and equity compensation plan information is incorporated by reference from the 2025 Proxy Statement[329](index=329&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=62&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related person transactions and director independence is incorporated by reference from the 2025 Proxy Statement - Information on related person transactions and director independence is incorporated by reference from the 2025 Proxy Statement[330](index=330&type=chunk) [Item 14. Principal Accounting Fees and Services](index=62&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Principal accounting fees and services information is incorporated by reference from the 2025 Proxy Statement - Principal accounting fees and services information is incorporated by reference from the 2025 Proxy Statement[331](index=331&type=chunk) - Baker Tilly US, LLP is the independent registered public accounting firm[331](index=331&type=chunk) [PART IV](index=62&type=section&id=PART%20IV) Details Key Tronic's financial statements, exhibits, and the absence of a Form 10-K summary [Item 15. Exhibits and Financial Statement Schedule](index=62&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedule) This section lists financial statements and a detailed schedule of exhibits, including corporate governance and loan agreements [FINANCIAL STATEMENTS](index=62&type=section&id=FINANCIAL%20STATEMENTS) [EXHIBITS](index=63&type=section&id=EXHIBITS) - The section includes a list of financial statements and a detailed schedule of exhibits[333](index=333&type=chunk)[334](index=334&type=chunk) - Exhibits cover corporate governance documents, compensation plans, employment contracts, and various loan and security agreements[334](index=334&type=chunk)[335](index=335&type=chunk)[336](index=336&type=chunk) - XBRL interactive data files are included, with specific taxonomy extension documents[336](index=336&type=chunk) [Item 16. Form 10-K Summary](index=66&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K Summary was provided - No Form 10-K Summary was provided[337](index=337&type=chunk) [SIGNATURES](index=67&type=section&id=SIGNATURES) Official declarations and attestations by Key Tronic Corporation's executive officers and directors [Signatures](index=67&type=section&id=Signatures) The report was signed by Key Tronic's President/CEO and EVP/CFO/Treasurer, along with Directors, on September 16, 2025 - The report was signed by Brett R. Larsen (President and CEO) and Anthony G. Voorhees (EVP, CFO, and Treasurer) on September 16, 2025[339](index=339&type=chunk)

[Report Highlights](index=1&type=section&id=Report%20Highlights) This section provides a concise overview of Optical Cable Corporation's key financial achievements for the third quarter and first nine months of fiscal year 2025 [Third Quarter 2025 Key Financial Highlights](index=1&type=section&id=Third%20Quarter%202025%20Key%20Financial%20Highlights) Optical Cable Corporation (OCC) reported substantial year-over-year growth in net sales and gross profit for the third quarter of fiscal year 2025, with net sales increasing 22.8% and gross profit increasing 61.2% - OCC reported substantial year-over-year growth in net sales and gross profit for both the third quarter and the first nine months of fiscal year 2025[2](index=2&type=chunk) Q3 FY2025 Key Financial Highlights (YoY) | Metric | Q3 FY2025 | Q3 FY2024 | Change (%) | | :----- | :-------- | :-------- | :--------- | | Net Sales | $19.9M | $16.2M | +22.8% | | Gross Profit | $6.3M | $3.9M | +61.2% | - The company experienced an increase in net sales in both its enterprise and specialty markets, and continues to see general market improvement, including strengthening in military and severe duty markets[3](index=3&type=chunk) [Detailed Financial Results](index=1&type=section&id=Detailed%20Financial%20Results) This section presents a comprehensive analysis of OCC's financial performance for the third quarter and year-to-date fiscal year 2025, covering sales, profit, and expenses [Third Quarter 2025 Performance](index=1&type=section&id=Third%20Quarter%202025%20Performance) OCC demonstrated strong financial performance in Q3 FY2025, marked by significant year-over-year and sequential growth in net sales and gross profit, leading to a return to net income [Net Sales Analysis](index=1&type=section&id=net-sales-analysis-q3) This subsection details OCC's net sales performance for Q3 FY2025, including year-over-year and sequential growth, and geographic contributions Net Sales Performance (Q3 FY2025) | Metric | Q3 FY2025 | Q3 FY2024 | Change (%) | | :----- | :-------- | :-------- | :--------- | | Net Sales (YoY) | $19.9M | $16.2M | +22.8% | | Net Sales (Sequential) | $19.9M | $17.5M (Q2 FY2025) | +13.5% | Geographic Net Sales Growth (Q3 FY2025 YoY) | Region | Change (%) | | :----- | :--------- | | United States | +22.0% | | Outside US | +26.2% | - Sales order backlog/forward load was **$7.1 million** at the end of Q3 FY2025, compared to $7.2 million as of April 30, 2025, $6.6 million as of January 31, 2025, and $5.7 million as of October 31, 2024[5](index=5&type=chunk) [Gross Profit and Margin](index=2&type=section&id=gross-profit-and-margin-q3) This subsection analyzes OCC's gross profit and margin for Q3 FY2025, highlighting year-over-year and sequential changes and contributing factors Gross Profit Performance (Q3 FY2025) | Metric | Q3 FY2025 | Q3 FY2024 | Change ($) | Change (%) | | :----- | :-------- | :-------- | :--------- | :--------- | | Gross Profit (YoY) | $6.3M | $3.9M | +$2.4M | +61.2% | | Gross Profit (Sequential) | $6.3M | $5.3M (Q2 FY2025) | +$1.0M | +18.5% | Gross Profit Margin (Q3 FY2025) | Metric | Q3 FY2025 | Q3 FY2024 | Q2 FY2025 | | :----- | :-------- | :-------- | :-------- | | Margin | 31.7% | 24.2% | 30.4% | - Gross profit benefited from production efficiencies driven by increased volumes and the positive impact of OCC's operating leverage[6](index=6&type=chunk) [Operating Expenses and Profitability](index=2&type=section&id=operating-expenses-and-profitability-q3) This subsection examines OCC's operating expenses and overall profitability for Q3 FY2025, including SG&A and net income/loss - SG&A expenses increased **9.5% to $5.7 million** in Q3 FY2025 (from $5.2 million in Q3 FY2024), primarily due to increases in employee and contracted sales personnel-related costs and shipping costs associated with net sales growth[8](index=8&type=chunk) Net Income (Loss) and EPS (Q3 FY2025 YoY) | Metric | Q3 FY2025 | Q3 FY2024 | | :----- | :-------- | :-------- | | Net Income (Loss) | $302,000 | ($1.6M) | | Basic & Diluted EPS | $0.04 | ($0.20) | [Fiscal Year-to-Date 2025 Performance](index=2&type=section&id=Fiscal%20Year-to-Date%202025%20Performance) For the first nine months of fiscal year 2025, OCC achieved significant year-over-year growth in net sales and gross profit, leading to a substantial reduction in net loss compared to the prior year [Net Sales Analysis (YTD)](index=2&type=section&id=net-sales-analysis-ytd) This subsection details OCC's net sales performance for the first nine months of FY2025, including year-over-year growth and market impacts Net Sales Performance (9M FY2025 YoY) | Metric | 9M FY2025 | 9M FY2024 | Change (%) | | :----- | :-------- | :-------- | :--------- | | Net Sales | $53.2M | $47.2M | +12.8% | Geographic Net Sales Growth (9M FY2025 YoY) | Region | Change (%) | | :----- | :--------- | | United States | +9.8% | | Outside US | +24.9% | - Net sales were positively impacted by general market improvements, including particular strength in OCC's military and severe duty markets[11](index=11&type=chunk) [Gross Profit and Margin (YTD)](index=2&type=section&id=gross-profit-and-margin-ytd) This subsection analyzes OCC's gross profit and margin for the first nine months of FY2025, highlighting year-over-year changes Gross Profit Performance (9M FY2025 YoY) | Metric | 9M FY2025 | 9M FY2024 | Change (%) | | :----- | :-------- | :-------- | :--------- | | Gross Profit | $16.3M | $11.7M | +39.5% | Gross Profit Margin (9M FY2025 YoY) | Metric | 9M FY2025 | 9M FY2024 | | :----- | :-------- | :-------- | | Margin | 30.6% | 24.7% | [Operating Expenses and Profitability (YTD)](index=3&type=section&id=operating-expenses-and-profitability-ytd) This subsection examines OCC's operating expenses and overall profitability for the first nine months of FY2025, including SG&A and net loss - SG&A expenses increased **8.2% to $16.9 million** in 9M FY2025 (from $15.7 million in 9M FY2024), primarily due to increases in employee and contracted sales personnel-related costs and shipping costs[13](index=13&type=chunk) Net Loss and EPS (9M FY2025 YoY) | Metric | 9M FY2025 | 9M FY2024 | | :----- | :-------- | :-------- | | Net Loss | ($1.5M) | ($4.6M) | | Basic & Diluted EPS | ($0.19) | ($0.59) | [Strategic Initiatives](index=3&type=section&id=Strategic%20Initiatives) This section outlines OCC's recent strategic actions, including a key collaboration agreement and associated investment aimed at expanding market reach [Strategic Collaboration and Investment](index=3&type=section&id=Strategic%20Collaboration%20and%20Investment) OCC announced a strategic collaboration agreement with Lightera, LLC to expand product offerings and solutions in the enterprise and data center sectors, which included Lightera making an investment in OCC - On July 7, 2025, OCC and Lightera, LLC announced a strategic collaboration agreement to expand product offerings and solutions to the enterprise sector, the data center sector, as well as an expanded presence in other sectors[15](index=15&type=chunk) - The collaboration involves combining portions of product portfolios to deliver additional integrated cabling and connectivity solution offerings, including certain Lightera products being offered and sold by OCC[15](index=15&type=chunk) - Lightera made an investment in OCC, purchasing shares of common stock and holding **7.24%** of the Company's outstanding shares[16](index=16&type=chunk) [Management Outlook](index=3&type=section&id=Management%20Outlook) This section provides insights from OCC's CEO regarding the company's recent performance, operational leverage, and future growth prospects [CEO's Commentary](index=3&type=section&id=CEO%27s%20Commentary) Neil Wilkin, President and CEO, highlighted Q3 as a strong quarter with significant net sales growth and gross profit expansion, driven by increased demand and operating leverage. He expressed confidence in the company's long-term growth strategy and anticipated further opportunities from the Lightera collaboration - OCC delivered significant net sales growth and gross profit expansion during both the third quarter and first nine months, capturing additional opportunities as demand increased[17](index=17&type=chunk) - The company saw benefits of significant operating leverage, with a **22.8% year-over-year increase in net sales** driving **61.2% gross profit growth**[17](index=17&type=chunk) - Management anticipates the strategic collaboration with Lightera will provide additional growth opportunities and is confident in OCC's market positioning to capture growth and create shareholder value[17](index=17&type=chunk) [Corporate Information](index=4&type=section&id=Corporate%20Information) This section provides essential background on Optical Cable Corporation, including its business scope, innovative technologies, and a disclaimer on forward-looking statements [Company Profile](index=4&type=section&id=Company%20Profile) Optical Cable Corporation (OCC) is a leading manufacturer of fiber optic and copper data communication cabling and connectivity solutions, serving enterprise, harsh environment, specialty, and wireless carrier markets, recognized for pioneering innovative technologies - OCC is a leading manufacturer of a broad range of fiber optic and copper data communication cabling and connectivity solutions primarily for the enterprise market and various harsh environment and specialty markets, and also the wireless carrier market[19](index=19&type=chunk) - The company is internationally recognized for pioneering innovative fiber optic and copper communications technologies, offering integrated suites of high-quality products[19](index=19&type=chunk)[20](index=20&type=chunk) - OCC's solutions cover a broad range of applications including commercial, enterprise network, datacenter, residential, campus installations, and customized products for military, industrial, mining, petrochemical, broadcast, and wireless carrier markets[21](index=21&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section serves as a disclaimer regarding forward-looking information, highlighting inherent risks and uncertainties that could cause actual results to differ materially from expectations, and states that the company disclaims any obligation to update such information - The news release may contain forward-looking information concerning the company's outlook, beliefs, future plans, strategies, and anticipated events[24](index=24&type=chunk) - Such information is subject to known and unknown variables, uncertainties, contingencies, and risks that may cause actual events or results to differ materially from expectations[24](index=24&type=chunk) - The Company expressly disclaims any obligation to update this information, whether as a result of new information, future events or otherwise, except as required by applicable laws and regulations[24](index=24&type=chunk) [Financial Tables](index=5&type=section&id=Financial%20Tables) This section presents the unaudited condensed consolidated financial statements, including statements of operations and balance sheet data for specified periods [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This table presents the unaudited condensed consolidated statements of operations for the three and nine months ended July 31, 2025, and 2024, detailing revenue, costs, expenses, and net income/loss Condensed Consolidated Statements of Operations (Q3 and 9M FY2025, in thousands) | | Three Months Ended | | | Nine Months Ended | | | :--- | :--- | :--- | :--- | :--- | :--- | | | July 31, 2025 | July 31, 2024 | July 31, 2025 | July 31, 2024 | | Net sales | $19,917 | $16,222 | $53,209 | $47,188 | | Cost of goods sold | 13,598 | 12,302 | 36,929 | 35,516 | | Gross profit | 6,319 | 3,920 | 16,280 | 11,672 | | SG&A expenses | 5,737 | 5,237 | 16,939 | 15,650 | | Royalty expense, net | 7 | 7 | 20 | 20 | | Amortization of intangible assets | 13 | 13 | 40 | 40 | | Income (loss) from operations | 562 | (1,337) | (719) | (4,038) | | Interest expense, net | (260) | (301) | (772) | (881) | | Gain on insurance proceeds, net | — | 90 | — | 309 | | Other, net | 4 | (2) | 19 | 47 | | Other income (expense), net | (256) | (213) | (753) | (525) | | Income (loss) before income taxes | 306 | (1,550) | (1,472) | (4,563) | | Income tax expense | 4 | 7 | 31 | 21 | | Net income (loss) | $302 | $(1,557) | $(1,503) | $(4,584) | | Net income (loss) per share: | | | | | | Basic and diluted | $0.04 | $(0.20) | $(0.19) | $(0.59) | | Weighted average shares outstanding: | | | | | | Basic and diluted | 8,395 | 7,739 | 7,901 | 7,753 | [Condensed Consolidated Balance Sheet Data](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheet%20Data) This table provides unaudited condensed consolidated balance sheet data as of July 31, 2025, and October 31, 2024, detailing assets, liabilities, and shareholders' equity Condensed Consolidated Balance Sheet Data (July 31, 2025 vs. October 31, 2024, in thousands) | | July 31, 2025 | October 31, 2024 | | :--- | :--- | :--- | | Cash | $421 | $244 | | Trade accounts receivable, net | 11,078 | 10,946 | | Inventories | 18,697 | 18,725 | | Other current assets | 492 | 685 | | Total current assets | 30,688 | 30,600 | | Non-current assets | 9,480 | 9,758 | | Total assets | $40,168 | $40,358 | | Current liabilities | $16,959 | $15,144 | | Non-current liabilities | 1,777 | 4,372 | | Total liabilities | 18,736 | 19,516 | | Redeemable common stock | 3,202 | — | | Total shareholders' equity | 18,230 | 20,842 | | Total liabilities, redeemable common stock and shareholders' equity | $40,168 | $40,358 | [Investor Relations](index=3&type=section&id=Investor%20Relations) This section provides details for investors regarding the company's conference call to discuss financial results and access information [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) This section provides information for the conference call to discuss the third quarter fiscal year 2025 financial results, including access details and replay options - OCC hosted a conference call on September 11, 2025, at 4:15 p.m. Eastern Time[18](index=18&type=chunk) - Participants could join by calling (800) 274-8461 (U.S.) or (203) 518-9814 (internationally), using Conference ID: OCCQ325[18](index=18&type=chunk) - A replay was available through September 18, 2025, by dialing (800) 934-8233 or (402) 220-6991, and the call was also broadcast live over the internet via www.occfiber.com[18](index=18&type=chunk)

[Filing Information](index=1&type=section&id=Filing%20Information) This document is a Quarterly Report on Form 10-Q for the period ended July 31, 2025, filed by KAIVAL BRANDS INNOVATIONS GROUP, INC - The document is a Quarterly Report on Form 10-Q for the period ended July 31, 2025, filed by **KAIVAL BRANDS INNOVATIONS GROUP, INC.**[2](index=2&type=chunk) Company Filing Details | Metric | Value | | :--- | :--- | | Trading Symbol | KAVL | | Exchange | The Nasdaq Stock Market, LLC | | Filer Status | Non-accelerated filer, Smaller reporting company, Emerging growth company | | Common Stock Outstanding (as of Sep 16, 2025) | 11,542,302 shares | [Cautionary Note Concerning Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Concerning%20Forward-Looking%20Statements) This report contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ materially - The report contains forward-looking statements reflecting current expectations about future events and results, identified by words such as 'may,' 'should,' 'believe,' 'expect,' and 'intend'[9](index=9&type=chunk) - These statements involve significant risks, uncertainties, and other factors, some beyond the company's control, which may cause actual results to differ materially from those anticipated[10](index=10&type=chunk) - Key risks include substantial reliance on Bidi Vapor, inability to import/sell Bidi Stick due to patent infringement claims, challenges in raising funding, integration of acquired intellectual property from GoFire, impact of FDA marketing denial orders (MDOs), reliance on royalty payments from Philip Morris International, and the effects of government regulation[11](index=11&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Kaival Brands Innovations Group, Inc., including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with detailed notes [Unaudited Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Summary | Metric | July 31, 2025 | October 31, 2024 | Change | | :-------------------------- | :-------------- | :--------------- | :----- | | Total Current Assets | $1,411,009 | $4,510,183 | -68.7% | | Total Assets | $11,503,114 | $16,004,276 | -28.1% | | Total Current Liabilities | $864,590 | $1,526,333 | -43.3% | | Total Liabilities | $1,418,088 | $2,188,604 | -35.2% | | Total Stockholders' Equity | $10,085,026 | $13,815,672 | -27.0% | [Unaudited Consolidated Statements of Operations](index=7&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations) Statements of Operations (Three Months Ended July 31) | Metric (3 Months Ended July 31) | 2025 | 2024 | Change | | :------------------------------ | :--- | :--- | :----- | | Total revenues, net | $142,425 | $713,814 | -80.0% | | Gross profit | $142,425 | $368,816 | -61.4% | | Total operating expenses | $700,944 | $1,786,594 | -60.8% | | Net loss | $(559,355) | $(1,571,861) | -64.4% | | Net loss per common share - basic and diluted | $(0.05) | $(0.39) | -87.2% | Statements of Operations (Nine Months Ended July 31) | Metric (9 Months Ended July 31) | 2025 | 2024 | Change | | :------------------------------ | :--- | :--- | :----- | | Total revenues, net | $392,073 | $6,151,701 | -93.6% | | Gross profit | $392,073 | $2,066,610 | -81.0% | | Total operating expenses | $7,018,286 | $6,454,722 | +8.7% | | Net loss | $(6,618,088) | $(5,212,725) | +26.9% | | Net loss per common share - basic and diluted | $(0.61) | $(1.62) | -62.4% | [Unaudited Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Changes in Stockholders' Equity | Metric | October 31, 2024 | July 31, 2025 | Change | | :-------------------------------- | :--------------- | :-------------- | :----- | | Common Shares Outstanding | 8,517,302 | 11,542,302 | +35.5% | | Additional Paid-in Capital | $51,269,485 | $54,153,902 | +5.6% | | Accumulated Deficit | $(37,463,230) | $(44,081,318) | +17.7% | | Total Stockholders' Equity | $13,815,672 | $10,085,026 | -27.0% | - Common shares issued for services totaled **3,025,000 shares**, contributing **$2,870,725** to additional paid-in capital during the nine months ended July 31, 2025[24](index=24&type=chunk)[110](index=110&type=chunk) [Unaudited Consolidated Statements of Cash Flows](index=10&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows (Nine Months Ended July 31) | Cash Flow Activity (9 Months Ended July 31) | 2025 | 2024 | Change | | :------------------------------------------ | :--- | :--- | :----- | | Net cash (used in) provided by operating activities | $(2,020,758) | $120,821 | -1772.0% | | Net cash used in investing activities | $0 | $0 | 0% | | Net cash (used in) provided by financing activities | $(612,616) | $3,870,509 | -115.8% | | Net change in cash | $(2,633,374) | $3,991,330 | -166.0% | | Ending cash balance | $1,268,926 | $4,524,989 | -71.9% | - The significant decrease in cash flows from operating activities in 2025 was primarily due to lower sales revenue[148](index=148&type=chunk) - Cash used in financing activities for the first nine months of fiscal year 2025 primarily consisted of payments on preferred dividends (**$405,000**) and payments on loans payable (**$207,616**)[30](index=30&type=chunk)[149](index=149&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) [Note 1 – Organization and Description of Business](index=12&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Description%20of%20Business) This note details the company's incorporation, primary business activities, and significant events impacting its operations - **Kaival Brands Innovations Group, Inc.** was incorporated on September 4, 2018, and primarily distributes electronic nicotine delivery systems (ENDS) and related components, specifically the 'Bidi Stick,' from Bidi Vapor, LLC[33](index=33&type=chunk)[34](index=34&type=chunk) - The company's wholly-owned subsidiary, KBI, entered into an international licensing agreement with **Philip Morris Products S.A. (PMPSA)** for the development and distribution of ENDS products in certain markets outside the United States[34](index=34&type=chunk)[35](index=35&type=chunk) - The company's primary revenue source is now royalties from PMI under the PMI License Agreement, as significant revenue from Bidi Stick sales is not expected due to an ITC patent infringement complaint and FDA Marketing Denial Orders (MDOs)[37](index=37&type=chunk)[131](index=131&type=chunk) - The **ITC Complaint** filed by RJ Reynolds Entities on June 11, 2024, seeks to prohibit the importation, sale, and distribution of the Bidi Stick in the U.S. due to alleged patent infringement[36](index=36&type=chunk)[129](index=129&type=chunk) - The FDA issued an **MDO for the Classic BIDI® Stick** in January 2024, which was upheld by the 11th Circuit Court of Appeals in April 2025, prohibiting its continued marketing and distribution[44](index=44&type=chunk) - The MDO for non-tobacco flavored BIDI® Sticks was rescinded by the FDA on July 29, 2024, allowing the company to market and sell these products subject to FDA's enforcement discretion during PMTA scientific review[43](index=43&type=chunk) - The previously announced merger agreement with **Delta Corp Holdings Limited** was mutually terminated on September 11, 2025[48](index=48&type=chunk)[49](index=49&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) [Note 2 – Basis of Presentation and Significant Accounting Policies](index=14&type=section&id=Note%202%20%E2%80%93%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) This note outlines the basis for financial statement preparation and key accounting policies, including revenue recognition and inventory valuation - The consolidated financial statements include the company's wholly-owned subsidiaries, Kaival Labs and Kaival Brands International, and are prepared in accordance with GAAP and SEC rules[50](index=50&type=chunk)[51](index=51&type=chunk) - The company had uninsured cash of **$1,018,926** as of July 31, 2025, and **$3,652,300** as of October 31, 2024[54](index=54&type=chunk) - No reserve for credit losses was required as of July 31, 2025, or October 31, 2024, based on management's assessment of accounts receivable aging and customer payment history[57](index=57&type=chunk) - A full reserve of **$313,654** was recognized for all remaining 'Classic' BIDI® Stick products on hand as of October 31, 2024, due to the FDA MDO, resulting in **zero inventory** as of July 31, 2025[61](index=61&type=chunk) - Revenue from product sales is recognized when control is transferred to the customer (typically upon shipment), while royalty revenue from the PMI License Agreement is recognized in the period the sales of the manufactured product occur[68](index=68&type=chunk)[74](index=74&type=chunk) - The PMI License Agreement was amended on August 12, 2023, to change the royalty rate to be volume-based (**$0.08 to $0.16 per sale**, increasing to **$0.10 to $0.20** upon milestones), eliminate certain potential royalty adjustments, and cancel guaranteed royalty payments in favor of quarterly payments based on actual sales[77](index=77&type=chunk)[78](index=78&type=chunk) [Note 3 – Going Concern](index=20&type=section&id=Note%203%20%E2%80%93%20Going%20Concern) This note addresses the company's ability to continue as a going concern, citing recurring losses and regulatory uncertainties - The company has incurred recurring losses and negative cash flows from operations for the nine months ended July 31, 2025, raising substantial doubt about its ability to continue as a going concern[95](index=95&type=chunk)[143](index=143&type=chunk) - Factors contributing to going concern doubt include uncertainty surrounding Bidi's PMTA process with the FDA, the inability to sell the Bidi Stick due to patent infringement claims, and the upheld FDA MDO for the Classic BIDI® Stick[95](index=95&type=chunk)[143](index=143&type=chunk) - Management plans to finance cash needs through public or private equity offerings or debt financing, but there is no assurance that the company will be able to raise additional capital, generate revenues, or achieve profitability[96](index=96&type=chunk)[97](index=97&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) [Note 4 – Intangible Assets](index=21&type=section&id=Note%204%20%E2%80%93%20Intangible%20Assets) This note provides details on the company's intangible assets, primarily patents and technology, and their amortization - Intangible assets, primarily patents and technology acquired pursuant to the GoFire Asset Purchase Agreement, had a net carrying value of **$10,092,105** as of July 31, 2025, down from **$10,681,911** as of October 31, 2024[19](index=19&type=chunk)[98](index=98&type=chunk) - Amortization expense for intangible assets was **$589,806** for the nine months ended July 31, 2025[99](index=99&type=chunk) Future Amortization Expense for Intangible Assets | Period | Amortization Expense | | :-------------------------- | :------------------- | | Remaining period in 2025 | $196,592 | | Year ending October 31, 2026 | $786,398 | | Year ending October 31, 2027 | $786,398 | | Year ending October 31, 2028 | $786,398 | | Year ending October 31, 2029 | $786,398 | | Thereafter | $6,749,921 | | **Total** | **$10,092,105** | [Note 5 – Loans Payable](index=21&type=section&id=Note%205%20%E2%80%93%20Loans%20Payable) This note details the status of the company's loans payable, including repayments and outstanding balances - The outstanding balance of insurance loans was **zero** as of July 31, 2025, down from **$207,616** as of October 31, 2024[101](index=101&type=chunk) - All loan agreements entered into on November 29, 2023, were fully repaid on June 13, 2024[102](index=102&type=chunk) - A promissory note in the principal amount of **$650,000**, issued to AJB Capital Investments, LLC, was fully repaid in advance of its maturity date on December 1, 2023, resulting in a **$98,432 loss on extinguishment of debt** recognized in the nine months ended July 31, 2024[103](index=103&type=chunk)[104](index=104&type=chunk) [Note 6 – Leases](index=22&type=section&id=Note%206%20%E2%80%93%20Leases) This note describes the company's operating lease for office and storage space, including its termination and future lease liabilities - The company has one operating lease for office space and inventory storage space with Just Pick, LLC, a related party[105](index=105&type=chunk) - On April 30, 2025, the company terminated its office lease with Just Pick, LLC, due to breach of lease terms and recorded a loss on the Right-of-Use (ROU) assets of **$707,626**[107](index=107&type=chunk) Lease Liabilities Maturity | Lease Liabilities Maturity (July 31, 2025) | Amount | | :----------------------------------------- | :----- | | Remaining period in 2025 | $121,474 | | Year ending October 31, 2026 | $253,614 | | Year ending October 31, 2027 | $274,946 | | Year ending October 31, 2028 | $175,989 | | **Total future undiscounted lease payments** | **$826,023** | | Less: Interest | $(58,573) | | **Present value of lease liabilities** | **$767,450** | [Note 7 – Stockholders' Equity](index=23&type=section&id=Note%207%20%E2%80%93%20Stockholders%27%20Equity) This note provides information on the company's stockholders' equity, including preferred stock, common shares, stock options, and warrants - The company issued **900,000 shares** of Series B Preferred Stock on May 30, 2023, as consideration for the GoFire asset purchase, with a liquidation preference of **$15 per share** and a **2% cumulative dividend**[108](index=108&type=chunk) - Accrued dividends of **$405,000** were paid to Series B shareholders on December 3, 2024, with no further dividends to be accrued or paid as of July 31, 2025[108](index=108&type=chunk) - During the nine months ended July 31, 2025, **3,025,000 fully vested common shares** were issued to directors, officers, and an employee, resulting in **$2,873,750 in stock compensation cost**[110](index=110&type=chunk) Stock Options Summary | Stock Options | October 31, 2024 | July 31, 2025 | | :-------------------------- | :--------------- | :-------------- | | Outstanding Number | 189,590 | 119,953 | | Aggregate Exercise Price | $6,847,736 | $3,353,019 | | Weighted Average Exercise Price | $36.12 | $27.95 | - Stock option expense for the nine months ended July 31, 2025, was **$36,192**, with **$18,744** of unrecognized expense remaining to be recognized over approximately **1.94 years**[111](index=111&type=chunk)[112](index=112&type=chunk) Warrants Summary | Warrants | October 31, 2024 | July 31, 2025 | | :-------------------------- | :--------------- | :-------------- | | Outstanding Number | 5,754,686 | 5,754,686 | | Aggregate Exercise Price | $19,826,116 | $19,826,116 | | Weighted Average Exercise Price | $3.45 | $3.45 | [Note 8 – Related-Party Transactions](index=24&type=section&id=Note%208%20%E2%80%93%20Related-Party%20Transactions) This note details transactions with related parties, including revenue, inventory purchases, and lease agreements - The company's business operations commenced as the exclusive distributor of ENDS products manufactured by Bidi, a related party[114](index=114&type=chunk) - Revenue from related parties decreased from **$5,950** for the nine months ended July 31, 2024, to **zero** for the same period in 2025[115](index=115&type=chunk) - No inventory purchases were made from Bidi for the nine months ended July 31, 2025, compared to **$273,060** in the prior year[116](index=116&type=chunk) - License fees paid to Bidi were **$228,215** for the nine months ended July 31, 2025, and **$130,000** for the same period in 2024[117](index=117&type=chunk)[118](index=118&type=chunk) - The company terminated its operating lease for office and storage space with Just Pick, LLC, a related party, on April 30, 2025, due to breach of lease terms[120](index=120&type=chunk) [Note 9 – Subsequent Events](index=25&type=section&id=Note%209%20%E2%80%93%20Subsequent%20Events) This note reports on significant events occurring after the balance sheet date, specifically the termination of a merger agreement - On September 11, 2025, **Kaival Brands Innovations Group, Inc.** and **Delta Corp Holdings Limited** mutually terminated their Merger and Share Exchange Agreement[121](index=121&type=chunk)[122](index=122&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a narrative report on the company's financial condition, results of operations, and liquidity for the nine months ended July 31, 2025, highlighting key business developments, financial performance, and future outlook [Overview](index=26&type=section&id=Overview) This section provides a high-level summary of the company's business, revenue sources, and recent strategic developments - The company is engaged in the sale, marketing, and distribution of electronic nicotine delivery system (ENDS) products[124](index=124&type=chunk) - The primary source of revenue has shifted from Bidi Stick sales to royalties from an international licensing agreement with **Philip Morris Products S.A. (PMPSA)** due to an ITC patent infringement complaint and FDA MDOs[124](index=124&type=chunk)[131](index=131&type=chunk) - The previously announced merger agreement with **Delta Corp Holdings Limited** was mutually terminated on September 11, 2025[126](index=126&type=chunk)[127](index=127&type=chunk) [Material Items, Trends and Risks Impacting Our Business](index=26&type=section&id=Material%20Items%2C%20Trends%20and%20Risks%20Impactin%20Our%20Business) This section discusses significant factors, trends, and risks affecting the company's business, including regulatory actions and litigation - The **ITC Complaint** filed by RJ Reynolds Entities on June 11, 2024, alleges patent infringement by the Bidi Stick, leading Bidi to agree to cease importation and distribution until October 2026[129](index=129&type=chunk) - An initial determination from the ITC Administrative Law Judge (ALJ) on August 29, 2025, found a violation of Section 337 based on patent infringement by respondents[129](index=129&type=chunk) - The company's primary revenue source is now royalties from PMI under the PMI License Agreement, and the ability of PMPSA to generate sales of its licensed products is crucial to the company's results of operations[131](index=131&type=chunk)[134](index=134&type=chunk) - The company acquired vaporizer and inhalation technology from GoFire in May 2023 to diversify its business, but there is no assurance of successful monetization or patent issuance from these assets[135](index=135&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - Inflation and economic conditions may impact discretionary consumer purchases of ENDS products, potentially leading to a decline in demand[136](index=136&type=chunk) - The company faces substantial doubt about its ability to continue as a going concern due to recurring losses, negative cash flows, and regulatory uncertainties surrounding Bidi's products[143](index=143&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's ability to meet its short-term and long-term financial obligations and its capital-raising strategies - As of July 31, 2025, the company had working capital of **$546,419** and total cash of **$1,268,926**, which is believed to be insufficient to support operations for at least twelve months, raising substantial doubt about its ability to continue as a going concern[146](index=146&type=chunk) - The company intends to rely on cash from operations and equity/debt offerings to meet liquidity needs, but there is no assurance of raising additional capital[147](index=147&type=chunk) - Net cash used in operations was approximately **$2.0 million** for the first nine months of fiscal year 2025, a significant decrease from **$0.12 million** provided by operations in the prior year, primarily due to lower sales revenue[148](index=148&type=chunk) - Net cash used in financing activities was approximately **$0.6 million** for the first nine months of fiscal year 2025, compared to **$3.9 million** provided in the prior year, mainly due to preferred dividend and loan payments[149](index=149&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance, comparing current and prior period results [Three months ended July 31, 2025, compared to three months ended July 31, 2024](index=30&type=section&id=Three%20months%20ended%20July%2031%2C%202025%2C%20compared%20to%20three%20months%20ended%20July%2031%2C%202024) This section compares the company's financial performance for the three-month periods ended July 31, 2025, and 2024 Statements of Operations (Three Months Ended July 31) | Metric (3 Months Ended July 31) | 2025 | 2024 | Change | | :------------------------------ | :--- | :--- | :----- | | Total revenues, net | $142,425 | $713,814 | -80.0% | | Gross profit | $142,425 | $368,816 | -61.4% | | Total operating expenses | $700,944 | $1,786,594 | -60.8% | | Net loss | $(559,355) | $(1,571,861) | -64.4% | | Net loss per common share - basic and diluted | $(0.05) | $(0.39) | -87.2% | - The decrease in revenue was primarily due to lower product sales to customers and a decrease in royalty revenue[150](index=150&type=chunk) - Gross profit decreased significantly due to the reduction of product sales, with total cost of revenue being zero in the third quarter of fiscal year 2025[151](index=151&type=chunk) - Operating expenses decreased primarily due to a reduction in professional fees, payroll, and general and administrative expenses[152](index=152&type=chunk) [Nine months ended July 31, 2025, compared to nine months ended July 31, 2024](index=31&type=section&id=Nine%20months%20ended%20July%2031%2C%202025%2C%20compared%20to%20nine%20months%20ended%20July%2031%2C%202024) This section compares the company's financial performance for the nine-month periods ended July 31, 2025, and 2024 Statements of Operations (Nine Months Ended July 31) | Metric (9 Months Ended July 31) | 2025 | 2024 | Change | | :------------------------------ | :--- | :--- | :----- | | Total revenues, net | $392,073 | $6,151,701 | -93.6% | | Gross profit | $392,073 | $2,066,610 | -81.0% | | Total operating expenses | $7,018,286 | $6,454,722 | +8.7% | | Net loss | $(6,618,088) | $(5,212,725) | +26.9% | | Net loss per common share - basic and diluted | $(0.61) | $(1.62) | -62.4% | - The substantial decrease in revenue was primarily due to a significant reduction in product sales to customers[156](index=156&type=chunk) - Gross profit decreased significantly due to the reduction of product sales, with total cost of revenue being zero for the nine months ended July 31, 2025[157](index=157&type=chunk) - Operating expenses increased due to higher stock-based compensation and a loss on ROU assets, despite reductions in other general and administrative expenses[158](index=158&type=chunk)[161](index=161&type=chunk) [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section discusses the accounting policies and estimates that require significant judgment and can materially impact financial results - No material changes to critical accounting policies and estimates were reported during the nine months ended July 31, 2025, from those disclosed in the 2024 Annual Report[162](index=162&type=chunk) [Recent Accounting Pronouncements](index=32&type=section&id=Recent%20Accounting%20Pronouncements) This section outlines the impact of recently issued accounting standards on the company's financial statements - The company is currently evaluating the impact of adopting **ASU 2023-09**, 'Income Taxes (Topic 740) - Improvements to Income Tax Disclosures,' effective for fiscal years beginning after December 15, 2024[91](index=91&type=chunk)[163](index=163&type=chunk) - The company does not expect that the adoption of **ASU 2023-07**, 'Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,' will have a material impact on its financial statements[92](index=92&type=chunk)[163](index=163&type=chunk) [Emerging Growth Company](index=32&type=section&id=Emerging%20Growth%20Company) This section clarifies the company's status as an emerging growth company under the JOBS Act and its election regarding accounting standards - The company is an 'emerging growth company' under the JOBS Act but has not elected to use the extended transition period for complying with new or revised accounting standards[164](index=164&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Kaival Brands Innovations Group, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is a 'smaller reporting company' as defined by Item 10 of Regulation S-K and is therefore not required to provide the information on market risk[165](index=165&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=33&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports on management's assessment of the effectiveness of the company's disclosure controls and procedures - Management concluded that the disclosure controls and procedures were **not effective** as of July 31, 2025, due to material weaknesses in internal control over financial reporting[168](index=168&type=chunk) [Changes in Internal Control over Financial Reporting](index=33&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section discloses any material changes in the company's internal control over financial reporting during the quarter - There have been no changes in internal control over financial reporting during the quarter ended July 31, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[169](index=169&type=chunk) [PART II. OTHER INFORMATION](index=33&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in legal proceedings expected to have a material adverse effect on its business, but acknowledges that the outcome of legal or regulatory proceedings involving Bidi could significantly impact its operations due to reliance on Bidi - The company is not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on its business, prospects, financial condition, or results of operations[170](index=170&type=chunk) - The outcome of legal or regulatory proceedings involving Bidi, a related party, could have a material adverse or positive impact on the company's ability to operate its business given its reliance on Bidi[171](index=171&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Kaival Brands Innovations Group, Inc. is not required to provide specific risk factors in this quarterly report - As a smaller reporting company, the company is not required to provide the information required by this item[172](index=172&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - None[173](index=173&type=chunk) [Item 3. Defaults Upon Senior Securities](index=33&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report for the period - None[174](index=174&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[175](index=175&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) There is no other information to report for the period - None[176](index=176&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of this Quarterly Report on Form 10-Q, including certifications and XBRL documents - The report includes certifications from the Chief Executive Officer and Chief Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[178](index=178&type=chunk) [Signatures](index=35&type=section&id=Signatures) This section contains the required signatures from the company's Chief Executive Officer and Interim Chief Financial Officer, certifying the report's accuracy - The report was signed on September 16, 2025, by **Mark Thoenes**, Chief Executive Officer, and **Eric Morris**, Interim Chief Financial Officer[183](index=183&type=chunk)

[Financial & Operational Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Crescent Energy reported a strong second quarter of 2025, achieving record production of 263 MBoe/d and generating significant cash flow, successfully reducing costs, executing accretive transactions, repaying debt, and returning capital to shareholders, leading to an enhanced full-year outlook Q2 2025 Financial and Operational Metrics | Metric | Q2 2025 Value | | :--- | :--- | | Average Production | 263 MBoe/d | | Oil Production | 108 Mbo/d | | Net Income | $162 million | | Adjusted Net Income | $110 million | | Adjusted EBITDAX | $514 million | | Operating Cash Flow | $499 million | | Levered Free Cash Flow | $171 million | | Capital Expenditures | $265 million | - Key operational and strategic achievements in Q2 2025 include: - Improved drilling, completion, and facilities (DC&F) costs by approximately **15%** in South Texas and the Uinta compared to 2024 - Repaid approximately **$200 million** of debt using excess free cash flow - Repurchased approximately **$28 million** of shares at an average price of **$7.88** - Simplified corporate structure by eliminating the Up-C structure[6](index=6&type=chunk) [Strategic Activities](index=2&type=section&id=Strategic%20Activities) During the quarter, Crescent continued its portfolio optimization strategy by closing a $72 million minerals acquisition and divesting approximately $110 million in non-core assets year-to-date, while maintaining its shareholder return program through a quarterly dividend and opportunistic share repurchases [Acquisitions and Divestitures](index=2&type=section&id=Acquisitions%20and%20Divestitures) Crescent closed a $72 million accretive minerals acquisition to scale its existing portfolio, with year-to-date divestitures of non-core assets reaching $110 million, including the sale of non-operated assets in the Permian and Eagle Ford basins, as part of a larger $250 million divestiture pipeline - On July 31, 2025, Crescent closed an accretive acquisition of complementary minerals assets for approximately **$72 million**[7](index=7&type=chunk) - Year-to-date, the company has divested approximately **$110 million** of non-core assets, including: - **$83 million** from non-operated Permian Basin assets (closed April 22, 2025) - **$22 million** from non-operated Eagle Ford Basin assets (closed July 30, 2025)[8](index=8&type=chunk) [Shareholder Return](index=2&type=section&id=Shareholder%20Return) The company declared a Q2 2025 cash dividend of $0.12 per share, and additionally repurchased $28 million of its Class A common stock at a weighted average price of $7.88 per share, leaving approximately $86 million available under its $150 million share repurchase program - The Board of Directors approved a Q2 2025 cash dividend of **$0.12 per share**, payable on September 2, 2025[11](index=11&type=chunk) - During Q2, the company repurchased approximately **$28 million** of shares, with **$86 million** remaining under the authorized **$150 million** Share Repurchase Program[12](index=12&type=chunk) [Enhanced 2025 Outlook](index=2&type=section&id=Enhanced%202025%20Outlook) Crescent has enhanced its full-year 2025 guidance, reducing its capital expenditure forecast by approximately 3% while maintaining production targets, and significantly improving the cash tax outlook to 0% of Adjusted EBITDAX, largely due to the new 'One Big Beautiful Bill Act' 2025 Full-Year Outlook Comparison | Metric | Prior 2025 Outlook | Current 2025 Outlook | Change vs. Midpoint | | :--- | :--- | :--- | :--- | | Total Production (MBoe/d) | 251 - 261 | 251 - 261 | 0% | | Capital Expenditures ($MM) | $925 - $1,025 | $910 - $990 | ($25 MM) / (~3%) | | Cash Taxes (% of Adj. EBITDAX) | 2.0% - 5.0% | 0% | (100%) | - The improved outlook reflects ongoing operational efficiencies, modest activity acceleration, and a more favorable tax outlook due to the 'One Big Beautiful Bill Act' (OBBBA) signed into law on July 4, 2025[9](index=9&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) The company's financial statements reflect significant year-over-year growth in production and revenue, driven by acquisitions and operational performance, with net income for Q2 2025 at $162.5 million, total assets at $9.86 billion, and strong operating cash flow of $836.1 million for the first six months of 2025 [Operational Summary](index=5&type=section&id=Crescent%20Operational%20Summary) In Q2 2025, total average daily production increased to 263 MBoe/d from 165 MBoe/d in Q2 2024, a 59% increase, and while realized prices for oil and NGLs before derivatives were lower year-over-year, operating expenses per Boe decreased from $19.61 to $16.31, demonstrating improved cost efficiency Operational Summary: Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Production (MBoe/d) | 263 | 165 | +59.4% | | Oil Production (MBbls/d) | 108 | 73 | +47.9% | | Realized Price ($/Boe, pre-hedges) | $35.96 | $41.27 | -12.9% | | Operating Expense ($/Boe) | $16.31 | $19.61 | -16.8% | [Income Statement](index=6&type=section&id=Crescent%20Condensed%20Consolidated%20Income%20Statement) For Q2 2025, Crescent reported total revenues of $898.0 million, up from $653.3 million in Q2 2024, driven by higher production volumes, with net income attributable to Crescent Energy at $153.2 million ($0.61 per basic share), a significant increase from $37.5 million ($0.34 per basic share) in the prior-year quarter, aided by a large gain on derivatives Condensed Consolidated Income Statement (Thousands) | (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenues | $897,983 | $653,283 | | Income from Operations | $79,635 | $119,384 | | Net Income | $162,498 | $70,205 | | Net Income Attributable to Crescent | $153,221 | $37,547 | | EPS (Class A, basic) | $0.61 | $0.34 | [Balance Sheet](index=7&type=section&id=Crescent%20Condensed%20Consolidated%20Balance%20Sheet) As of June 30, 2025, Crescent's total assets stood at $9.86 billion, up from $9.16 billion at year-end 2024, with total liabilities increasing to $5.36 billion from $4.79 billion, primarily due to a rise in long-term debt to $3.37 billion, while total equity grew to $4.50 billion, strengthened by the elimination of redeemable noncontrolling interests following the corporate simplification Condensed Consolidated Balance Sheet (Thousands) | (in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $753,271 | $788,088 | | Property, Plant and Equipment, net | $8,980,400 | $8,145,054 | | **Total Assets** | **$9,856,686** | **$9,160,649** | | Total Current Liabilities | $851,595 | $827,363 | | Long-term Debt | $3,373,595 | $3,049,255 | | **Total Liabilities** | **$5,357,962** | **$4,792,689** | | **Total Equity** | **$4,498,724** | **$3,139,631** | [Cash Flow Statement](index=9&type=section&id=Crescent%20Condensed%20Consolidated%20Cash%20Flow%20Statement) For the six months ended June 30, 2025, net cash from operating activities was $836.1 million, a significant increase from $470.7 million in the same period of 2024, with net cash used in investing activities at $1.27 billion, primarily for property acquisitions and development, and financing activities providing $213.4 million in net cash Condensed Consolidated Cash Flow Statement (Thousands) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $836,080 | $470,696 | | Net cash used in investing activities | ($1,269,111) | ($286,562) | | Net cash provided by (used in) financing activities | $213,380 | $594,461 | [Non-GAAP Financial Measures](index=10&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) The company provides reconciliations for key non-GAAP metrics used by management and investors to evaluate performance, with Q2 2025 Adjusted EBITDAX at $513.9 million, Levered Free Cash Flow at $170.9 million, Adjusted Net Income at $110.3 million, and a Net LTM Leverage ratio of 1.5x as of June 30, 2025 [Adjusted EBITDAX and Levered Free Cash Flow](index=10&type=section&id=Adjusted%20EBITDAX%20and%20Levered%20Free%20Cash%20Flow) Adjusted EBITDAX for Q2 2025 was $513.9 million, up from $319.8 million in Q2 2024, and after accounting for interest, taxes, and capital expenditures, the company generated $170.9 million in Levered Free Cash Flow for the quarter, compared to $146.9 million in the prior-year period Adjusted EBITDAX and Levered Free Cash Flow Reconciliation (Thousands) | (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income (loss) | $162,498 | $70,205 | | **Adjusted EBITDAX (non-GAAP)** | **$513,854** | **$319,774** | | **Levered Free Cash Flow (non-GAAP)** | **$170,875** | **$146,933** | [Adjusted Net Income](index=12&type=section&id=Adjusted%20Net%20Income) Adjusted Net Income, which excludes items like unrealized derivative gains/losses and non-cash compensation, was $110.3 million ($0.43 per share) for Q2 2025, representing a significant increase from the $56.2 million ($0.31 per share) reported in Q2 2024 Adjusted Net Income Reconciliation (Thousands) | (in thousands, except EPS) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income (loss) | $162,498 | $70,205 | | **Adjusted Net Income (non-GAAP)** | **$110,255** | **$56,155** | | **Adjusted EPS** | **$0.43** | **$0.31** | [Net LTM Leverage](index=13&type=section&id=Net%20LTM%20Leverage) As of June 30, 2025, Crescent's Net LTM Leverage ratio, calculated as net debt divided by LTM Adjusted EBITDAX under its credit agreement, was 1.5x, based on net debt of $3.37 billion and LTM Adjusted EBITDAX of $2.28 billion Net LTM Leverage Calculation (Millions) | (in millions) | June 30, 2025 | | :--- | :--- | | Net Debt | $3,371 | | LTM Adjusted EBITDAX for Leverage Ratio | $2,284 | | **Net LTM Leverage** | **1.5x** |