Company Operations - Quipt Home Medical Corp. operates in 27 states in the US, focusing on durable medical equipment for chronic conditions, particularly respiratory diseases[24]. - As of September 30, 2025, the Company had approximately 1,600 employees and operates in 27 states, facing competition from both large national and regional DME providers[51][46]. Financial Performance - The company has been negatively impacted by inflation and rising interest rates, affecting its financial performance[19]. - Supply chain disruptions and labor shortages in the US have adversely affected Quipt's operations[19]. - Quipt's financial condition is influenced by private third-party payors' efforts to control costs, which may lead to lower reimbursement rates[19]. - Changes in governmental reimbursement policies could significantly affect Quipt's revenue and financial condition[22]. - The Company has no current plans to pay cash dividends on its Common Shares for the foreseeable future, which may affect returns on investment[30]. - The Company has no customers accounting for 10% or more of its consolidated revenue, primarily earning revenue through reimbursements from government and private health insurance[49]. - The Company recognized a foreign currency loss of approximately $367,000 due to unfavorable exchange rate movements during the twelve months ended September 30, 2025[333]. - The company has not employed any foreign currency hedging programs, which could lead to significant effects on net income due to fluctuations in the Canadian dollar against the US dollar[334]. - With $87,583,000 of borrowings on the credit facility, a 1% increase in interest rates would result in an additional $335,830 of annual interest expense[335]. Strategic Growth and Acquisitions - Quipt's strategic growth plan includes acquisitions, but the success of this strategy is uncertain[19]. - The Company has entered into an Arrangement Agreement to be acquired for US$3.65 per Share, with the transaction expected to close in the first half of 2026[25][27]. - The acquisition will result in the Company being de-listed from The Nasdaq Capital Market and the Toronto Stock Exchange, ceasing to be a Canadian "reporting issuer" post-transaction[28]. - The Company acquired 100% of Mediserve Medical Equipment for a total purchase price of $2,616,000, funded from cash on hand[40]. - The Company also acquired a 60% interest in Hart Medical Equipment for $17,372,000 in cash and the repayment of $3,261,000 in indebtedness, funded through borrowings under its senior credit facility[41]. - The Company aims to create shareholder value by expanding its geographical footprint through strategic acquisitions and enhancing patient compliance with technology solutions[35][36]. Regulatory and Operational Risks - The company relies on a limited number of suppliers for patient service equipment, which poses operational risks[19]. - Quipt's operations are subject to various regulatory requirements, and failure to comply could result in penalties[22]. - The company may need additional capital to fund growth, which may not be available on acceptable terms[22]. - The company has entered into interest rate swap agreements for $54,000,000 of principal to receive a fixed rate during the year ended September 30, 2025[335]. Competition - The company faces competition from numerous providers in the sleep therapy and home respiratory equipment markets, which could impact revenues[19].

Financial Performance - The company incurred a net loss of approximately $18.2 million and used cash in operations of approximately $13.1 million during the six months ended October 31, 2025 [141]. - Revenues for the three months ended October 31, 2025, were approximately $0.4 million, a decline of 83.5% compared to $2.4 million in the same period of 2024, primarily due to disruptions from the U.S. federal government shutdown [165]. - The net loss for the six months ended October 31, 2025, was $18.2 million, compared to a net loss of $8.4 million for the same period in 2024, indicating a year-over-year increase of 116.7% [176]. - Operating expenses rose to $8.7 million for the three months ended October 31, 2025, compared to $4.7 million in 2024, driven by a $2.5 million increase in share-based compensation [167]. - Net cash used in operating activities for the six months ended October 31, 2025, was $13.1 million, an increase of $2.2 million from $10.9 million in the same period of 2024 [177]. - Interest expense for the three months ended October 31, 2025, was $(564,000), a significant decrease from $3,000 in 2024, primarily due to expenses related to convertible notes [168]. Financial Position - As of October 31, 2025, the company had cash and cash equivalents of $11.8 million, which is expected to fund operations through December 2026 [182]. - The company believes cash on hand and forecasted operating results will provide sufficient liquidity for at least the next 12 months [142]. - Net cash provided by financing activities increased to $19.8 million for the six months ended October 31, 2025, compared to $10.0 million in 2024, primarily due to proceeds from convertible notes [179]. - The company issued an additional $6.5 million of convertible notes to institutional investors during the quarter, increasing its financial flexibility [140]. Market and Operational Insights - As of October 31, 2025, the backlog was $15.0 million, compared to $3.8 million at October 31, 2024, indicating significant growth in unfulfilled purchase orders [147]. - The company expects to convert all current backlog into revenue within the next 12 to 36 months, although timing may vary [147]. - Revenue distribution for the three months ended October 31, 2025, showed 32% from North and South America, 26% from EMEA, and 42% from Asia and Australia, highlighting a shift in market focus [154]. Costs and Expenses - Cost of revenues increased to $1.8 million for the three months ended October 31, 2025, from $1.6 million in 2024, reflecting full recognition of losses associated with contracts in strategically important markets [166]. - The company has a history of operating losses, which are expected to continue in the short term [141]. Development and Strategic Plans - Engineering and product development costs are focused on enhancing the PowerBuoy® system's power output and reliability, as well as developing new products [156]. - The company plans to use net proceeds from its At-the-Market Offering Program, which has a gross sales price of up to $40.0 million, for general corporate purposes including product development and potential acquisitions [144]. Accounting and Reporting - The company is currently evaluating the impact of recently issued Accounting Standards Updates on its financial reporting [149]. - The company experienced a foreign exchange loss of $10, compared to a loss of $1 in the same period of 2024 [164]. - The company has not engaged in any off-balance sheet financing activities since inception [183].

Sales Performance - For the nine-month period of fiscal 2026, the combined net sales of Pulaski Furniture and Samuel Lawrence Furniture accounted for approximately 15% of consolidated net sales[98]. - Consolidated net sales for Q3 FY2026 decreased by $11.9 million, or 14.4%, to $70.7 million compared to $82.7 million in the prior-year period, primarily due to timing of shipments in the hospitality business[106]. - For the first nine months of FY2026, consolidated net sales decreased by $22.0 million, or 9.4%, to $211.1 million compared to $233.1 million in the prior-year period, largely due to lower hospitality net sales[109]. - The Hooker Branded segment's net sales increased by 1.1% for both Q3 and the nine-month period, supported by higher average selling prices[120]. - Domestic Upholstery segment's net sales increased by $870,000, or 3.0%, in Q3, with Shenandoah Furniture reporting a 7.2% increase for the quarter[120]. - All Other segment's net sales decreased significantly, primarily due to a decline in hospitality net sales from timing of shipments[120]. - Hooker Branded segment's net sales decreased by $990,000, or 8.0%, in the third quarter, and by $1.7 million, or 5.0%, for the nine-month period[123]. - Consolidated net sales for the third quarter were $18.2 million, a decrease of 24.5% compared to the prior year[123]. - Net sales decreased by $11.3 million, or 52.3%, in Q3 and $22.5 million, or 37.6%, for the nine-month period due to significantly lower unit volume[132]. Order Backlog - Consolidated order backlog decreased 10.3% compared to the fiscal year-end on February 2, 2025, and 23.8% compared to the prior year third quarter end[104]. - Hooker Branded's backlog increased 17.2% compared to fiscal year-end and 7.9% compared to the prior-year third quarter, supported by a 4.1% increase in incoming orders during the quarter[105]. - Domestic Upholstery's backlog decreased 10.9% from year-end but increased 7.5% compared to the prior-year quarter-end, driven by a 3.5% increase in incoming orders[105]. - The absence of large projects in the hospitality business during the current period contributed to the decrease in consolidated order backlog[104]. Strategic Changes - The divestiture of Pulaski Furniture and Samuel Lawrence Furniture brands represents a strategic shift and will result in a significant change to the Company's operations and financial reporting[98]. - Management initiated a formal process to sell the Pulaski Furniture and Samuel Lawrence Furniture brands due to substantial sales declines and misalignment with long-term strategic direction[96][97]. - The Home Meridian segment will be eliminated following the sale of Pulaski Furniture and Samuel Lawrence Furniture, with its remaining brand reclassified into the "All Other" category[98]. - The Company is focused on realigning its portfolio around its strongest brands to achieve sustainable, long-term profitability[97]. Financial Performance - Gross profit from continuing operations decreased by $2.4 million, but gross margin improved slightly to 25.6% from 24.8% in the prior-year period, driven by margin improvement at Hooker Branded[107]. - Consolidated operating loss for Q3 FY2026 was $16.3 million, including $15.6 million in non-cash impairment charges, with a net loss of $12.5 million, or ($1.18) per diluted share[108]. - Consolidated gross margin improved to 25.0% from 23.9% in the prior-year period, despite a $2.9 million decrease in gross profit, primarily due to increased profitability at Domestic Upholstery[110]. - The company recorded $15.6 million in non-cash impairment charges during the third quarter, including $14.5 million for goodwill impairment in the Sunset West division[125]. - The operating loss for the third quarter was $16.3 million, driven by the $15.6 million impairment charge and $597,000 in restructuring costs[126]. - Net loss from continuing operations for the third quarter was $3.6 million, a decrease of 17.7% compared to the prior year[129]. - The company reported a diluted loss per share from continuing operations of $0.34 for the third quarter[129]. Cost Management - The company exceeded its initial goal to reduce fixed costs by approximately $25 million by the end of Q3 FY2026, with a new cost structure in place[113]. - Restructuring costs of approximately $600,000 were recorded in Q3 FY2026, primarily related to severance associated with cost-reduction initiatives[108]. - Consolidated selling and administrative (S&A) expenses decreased by $5.9 million in the third quarter and by $9.7 million for the nine-month period, primarily due to the exit of the PRI business and lower restructuring costs[123]. - The Domestic Upholstery segment's S&A expenses decreased by $263,000, or 1.4%, in the third quarter, with restructuring costs totaling $127,000[124]. - All Other S&A expenses decreased significantly due to the absence of bad debt from a major customer bankruptcy in the prior year[124]. Cash Flow and Financing - Cash provided by operating activities totaled $22.9 million compared to $(11.9) million used in operations for the same period last year[140]. - Cash used in financing activities was $25.5 million, compared to $8.3 million in the prior-year period, mainly due to $17.9 million of repayments on the revolving credit facility[138]. - Cash generated from collections of trade accounts receivable was $13.6 million, compared to $1.4 million outflows in the prior-year period[140]. - The company recorded a net loss from discontinued operations of $(8,640) million, a decrease of 83.6% compared to the previous year[136]. - The Amended and Restated Loan Agreement provides for a revolving credit facility of up to $70 million, with an option to increase by up to $30 million[145]. - As of November 2, 2025, the company had $4.1 million in outstanding loans and $2.1 million in letters of credit, with an availability of $63.8 million based on the current borrowing base[153]. - The company expects to incur approximately $1 million in capital expenditures for the remainder of fiscal 2026 to maintain and enhance operating systems and facilities[154]. - A quarterly cash dividend of $0.115 per share was declared on December 11, 2025, to be paid on December 31, 2025[155]. - The outstanding loans under the Amended and Restated Loan Agreement bear interest at a rate of Term SOFR plus 1.85%, with a potential annual increase in interest expenses of approximately $41,000 for a 1% increase in the SOFR rate[158]. - The company incurred $480,000 in debt issuance costs in fiscal 2025 and an additional $33,000 in the first half of fiscal 2026[153]. - The financial covenant requires a maintenance ratio of at least 1.0 to 1.0 for EBITDA net of capital expenditures to debt service and dividends if availability falls below 10%[151]. Market Risks - The company is exposed to market risks including interest rate changes, raw materials price risk, and foreign currency exchange rate fluctuations[157]. - The company does not use derivative financial instruments to manage currency risk but may consider doing so in the future[160]. - The Amended and Restated Loan Agreement allows for prepayment of outstanding principal amounts without penalty, subject to certain conditions[148]. - The obligations under the loan agreement are secured by a first priority security interest in substantially all assets of the borrowers, excluding real estate[150].

Acquisition and Growth Strategy - Quanex completed the acquisition of Tyman plc on August 1, 2024, enhancing its global reach and cross-selling opportunities[16] - The company continues to evaluate business acquisitions to expand its market presence and enhance product offerings[99] - The company aims to invest in organic growth opportunities, develop infrastructure, and explore strategic acquisitions as part of its cash deployment strategy[162] Financial Performance - Net sales for the fiscal year ended October 31, 2025, increased by $559.8 million, or 44%, reaching $1,837.6 million compared to $1,277.9 million in 2024[117] - Operating income for the fiscal year ended October 31, 2025, was a loss of $194.0 million, a decline of 454% compared to an operating income of $54.8 million in 2024[117] - Net loss for the fiscal year ended October 31, 2025, was $250.8 million, a significant decrease of 859% from a net income of $33.1 million in 2024[117] Market Conditions and Risks - Housing starts in the U.S. are projected to decrease from 1,509 thousand units in 2023 to 1,463 thousand units in 2025, reflecting a 3% decline[20] - The company faces risks related to the cyclical nature of the residential remodeling and housing starts, which could adversely affect its financial condition[42] - The company is exposed to potential disruptions in the global economy due to geopolitical tensions, which could impact its operating results and profitability[52] Operational Efficiency and Sustainability - The company aims to improve profitability through operational efficiencies, preventive maintenance, and better utilization of manufacturing capacity[22] - The company emphasizes sustainability and aims to reduce its environmental impact while enhancing employee safety[29] - The company is subject to extensive laws and regulations concerning worker safety and environmental matters, which have not materially affected its operations[34] Employee and Workforce Management - As of October 31, 2025, the company had 7,071 full-time employees, with stable employee headcount throughout the year[38] - The company operates in rural areas where competition for skilled labor is fierce, potentially leading to higher labor costs and impacting profitability[64] Financial Position and Cash Flow - Cash and cash equivalents as of October 31, 2025, were $76.0 million, with $641.3 million outstanding under credit facilities[152] - The company had $296.3 million available for use under a revolving credit facility as of October 31, 2025[152] - Cash flows provided by operating activities increased by $76.1 million to $164.9 million for the year ended October 31, 2025, compared to $88.8 million in 2024[159] Goodwill and Impairment - The company experienced a goodwill impairment of $302.3 million in the third quarter of 2025, with total goodwill amounting to $271.3 million at the same date[55] - A goodwill impairment of $302.3 million was recorded in the third quarter of 2025, primarily due to a decline in stock price and market conditions[103] - The company performed its annual goodwill impairment test in the third quarter of 2025, identifying the estimation of fair value of reporting units as a critical audit matter[210] Legal and Compliance Issues - A shareholder class action lawsuit was filed against the Company on September 19, 2025, alleging violations of federal securities laws related to public disclosures, particularly concerning operations in Mexico[87] - Compliance with U.S. and international anti-corruption regulations is critical, as violations could lead to severe sanctions and adversely affect financial results[63] Supply Chain and Production Risks - Supply chain inefficiencies due to pandemics may force the company to pay higher prices for supplies, negatively impacting revenues and financial condition[62] - Equipment failures or catastrophic losses at manufacturing facilities could severely disrupt production capabilities, affecting sales and earnings[65] - Climate change and extreme weather events pose risks to the supply chain and manufacturing facilities, which could decrease customer demand and revenues[68] Intellectual Property and Data Security - The company relies on a combination of copyright, patent, and trade secrets to protect its intellectual property, which may not provide sufficient protection[45] - The company faces data security and privacy risks that could adversely affect its operations and financial results, including potential breaches leading to loss of confidential data and reputational damage[59] Taxation and Financial Regulations - Changes in taxation and tax audits could materially affect the company’s financial condition and cash flows[69] - The company is subject to various operational restrictions and financial covenants under its revolving credit facility, which may limit access to capital[56]

Loan Portfolio and Credit Risk - As of September 30, 2025, 63.9% of the loan portfolio, amounting to $1.22 billion, consisted of commercial real estate and commercial business loans, which expose the company to increased lending risks [116]. - Nonperforming commercial real estate loans totaled $6.0 million, while nonperforming commercial business loans amounted to $1.7 million as of September 30, 2025 [116]. - Construction loans and land development loans represented 2.9% of the loan portfolio, totaling $60.0 million, with speculative construction loans making up 16.2% of this segment at $6.5 million [117]. - Loans secured by non-owner occupied residential properties accounted for 4.1% of the residential mortgage loan portfolio, totaling $24.6 million, indicating increased credit risk [118]. - The allowance for credit losses may not be adequate to cover actual losses, which could materially and adversely affect the company's earnings and financial condition [120]. Interest Rate and Liquidity Risks - Approximately 49.5% of the total loan portfolio, or $943.9 million, consisted of fixed-rate loans with maturity dates after September 30, 2026, exposing the company to interest rate risk [129]. - The company faces significant liquidity risks that could impair its ability to fund operations, particularly if market conditions worsen or regulatory actions are taken against it [132]. Competition and Market Conditions - The company faces intense competition in loan origination and deposit attraction, holding approximately 22.78% of FDIC-insured deposits in its primary market area as of June 30, 2025 [128]. - Recessionary conditions could lead to increased nonperforming loans and reduced demand for products and services, negatively impacting revenue and earnings [125]. Regulatory and Compliance Risks - The company is subject to extensive regulation, and changes in laws or regulations could materially impact operations and profitability [144]. - The Dodd-Frank Act may impose increased regulatory burdens and compliance costs, potentially affecting the company's operations and profitability [145]. - The ability to pay dividends is subject to regulatory restrictions and capital adequacy guidelines, with no guarantee of maintaining current dividend levels [149]. Management and Operational Risks - The company relies heavily on its management team, and the unexpected loss of key personnel could adversely affect operations and financial condition [147]. - The company is exposed to operational risks, including fraud and cyber threats, which could result in financial losses and damage to reputation [136]. Mergers and Acquisitions - The pending merger with First Merchants Corporation has incurred substantial expenses, which could adversely impact the company's financial condition if the merger is not completed [133]. - The company has recorded goodwill totaling $9.8 million as of September 30, 2025, and any future impairment could negatively affect profitability [143]. Stock and Shareholder Influence - The trading volume of the company's stock has historically been sporadic, which may affect the ability to resell shares at desired prices [150]. - Insiders own approximately 16.53% of the company's outstanding common stock, which may limit other shareholders' influence over corporate matters [151]. SBA Lending Program - The SBA lending program is dependent on federal government support, and any changes to the program could adversely affect the company's business and earnings [121]. Valuation and Financial Condition - The value of loan servicing rights is subjective and may fluctuate, potentially impacting the company's balance sheet and financial condition [126].

Financial Performance - Royalty income for the three months ended October 31, 2025, was $3,390,609, a decrease of 53.8% compared to $7,348,366 in the same period of 2024[14] - Total revenues for the nine months ended October 31, 2025, were $13,931,747, down 84.8% from $91,742,322 in the same period of 2024[14] - Net income for the three months ended October 31, 2025, was $2,767,463, a decline of 96.4% compared to $78,325,525 in the same period of 2024[14] - Net income for the nine months ended October 31, 2025, was $11,142,554, down 87.3% from $87,207,203 in the prior year[75] - For the three months ended October 31, 2025, total royalty income decreased by $3,957,757 to $3,390,609 compared to the same period in 2024, primarily due to lower pricing and shipments of iron ore[67] - For the nine months ended October 31, 2025, total royalty income decreased by $6,456,708 to $13,156,985 compared to the same period in 2024, due to an extended maintenance shutdown and decreased pricing and shipments[69] Cash and Assets - Cash and cash equivalents decreased to $23,191,923 as of October 31, 2025, from $100,204,531 at the beginning of the period[16] - The unallocated cash and cash equivalents decreased from $100,204,531 on January 31, 2025, to $23,191,923 on October 31, 2025[43] - As of October 31, 2025, the net contract asset is $1,055,605, reflecting a significant increase from $240,642 recorded on January 31, 2025[37] - Total liabilities as of October 31, 2025, were $4,911,341, down from $78,400,735 as of January 31, 2025[16] - The Trust's unallocated reserve balance as of October 31, 2025, is $21,087,860, a decrease from $22,781,200 as of July 31, 2025[43] - Unallocated Reserve decreased by 77.9% to $21,087,860 as of October 31, 2025, compared to $95,324,736 as of October 31, 2024[79] - Accrued Income Receivable fell by 60.8% to $1,522,367 from $3,883,400 year-over-year[79] Distributions - Distributions declared per unit for the nine months ended October 31, 2025, were $1.0200, an increase from $0.9800 in the same period of 2024[14] - The Trust declared a distribution of $0.34 per Unit of Beneficial Interest, totaling $4,460,803, payable on November 20, 2025, compared to $0.39 per Unit for the same quarter in 2024[41] - The Trust declared a distribution of $0.34 per unit for the quarter ended October 31, 2025, down from $0.39 per unit in the same quarter of 2024[88] Royalty Income and Pricing - The Trust's royalty income for the nine months ended October 31, 2025, was $13,156,985, a decrease of 32.9% from $19,613,693 in the same period of 2024[14] - The Trust's royalty income is primarily derived from base overriding royalties, which are calculated as a percentage of gross proceeds from iron ore products shipped, ranging from 2.5% to 6% based on shipment volume[52] - The royalty bonus threshold price for 2025 is set at $69.41 per ton, up from $67.75 per ton in 2024[53] - The minimum advance royalty for calendar year 2025 is set at $1,157,261, an increase from $1,129,615 for 2024, adjusted for inflation[59] - Fee royalties increased by $54,092 to $224,670 for the three months ended October 31, 2025, attributed to a higher royalty rate[68] - The decrease in bonus royalties for the three months ended October 31, 2025 was due to lower prices of products shipped over the threshold price per ton[70] - Cliffs' acquisition of ArcelorMittal USA has led to a decrease in arms'-length sales, impacting the calculation of royalties owed to the Trust[62] - Variations in royalty payments to Mesabi Trust can occur due to interim and final pricing adjustments based on various price and inflation index factors[109] - The Trust's ability to project future sales prices remains uncertain, impacting potential royalty payments[126] - The Trust's bonus royalties could be reduced or eliminated in specific quarters or years due to market conditions[126] Operational Insights - Iron ore pellet production and shipments for the three months ended October 31, 2025 totaled 915,605 tons, down from 1,066,665 tons in the same period of 2024, attributed to lower customer demand[64] - Cliffs reported a total royalty payment of $4,005,142 to Mesabi Trust for the three months ended September 30, 2025[85] - Cliffs credited Mesabi Trust with 987,370 tons of iron ore shipped in Q3 2025, compared to 972,154 tons in Q3 2024, indicating a slight increase in shipments[86] - Cliffs has disclosed that marketing and selling iron ore pellets to third-party customers is no longer a core aspect of Northshore's business, affecting royalty calculations[108] Legal and Regulatory Matters - Mesabi Trust initiated arbitration against Northshore and Cliffs on September 26, 2025, seeking damages related to idling operations and underpayment of royalties[83] - Mesabi Trust initiated arbitration against Northshore and Cliffs seeking damages related to the idling of Northshore's operations from May 2022 to April 2023 and underpayment of royalties on intercompany shipments from 2023 to present[124] - The Minnesota Supreme Court denied petitions for review from Cliffs and the DNR, leaving the Court of Appeals' reversal decision in place[96] - WaterLegacy filed a civil complaint seeking to enjoin DNR and Northshore from proceeding with the Milepost 7 tailings basin project until an Environmental Impact Statement (EIS) is completed[98] - The court denied WaterLegacy's motion for a temporary injunction against DNR and Northshore on September 4, 2025, allowing the case to proceed with a trial set for September 2027[100] Governance and Compliance - The Trust's financial statements are prepared on an accrual basis, with distributions declared based on actual royalty payments received rather than recorded income[40] - The Trust is not taxable as a corporation and all net taxable income is attributed directly to Unitholders for tax purposes[115] - The Trustees concluded that the disclosure controls and procedures of Mesabi Trust are effective as of the end of the reporting period[120] - There were no changes in the Trust's internal control over financial reporting that materially affected its operations during the last fiscal quarter[121] - The Trust's financial reporting includes safety data as required by the Dodd-Frank Act[130] - No unregistered sales of equity securities or defaults upon senior securities were reported[127][128]

Drug Development and Clinical Trials - The company is developing EB06, an anti-CXCL10 monoclonal antibody for vitiligo, with a Phase 2 study expected to enroll by mid-2026, pending regulatory approval[22]. - EB05, a new class of Host-Directed Therapeutics, showed statistically significant improvement in survival and recovery in a Phase 3 study for ARDS, which accounts for approximately 10% of ICU admissions globally[23][37]. - The Phase 2 study indicated a 28-day mortality rate of 7.7% for the EB05 plus SOC group versus 40% for the placebo plus SOC group in critically ill patients, with a p-value of 0.04[45]. - The U.S. government has selected EB05 for a Phase 2 platform study funded by BARDA, focusing on ARDS treatments[46]. - The Canadian government committed up to C$23 million in funding for a Phase 3 clinical study of EB05, with C$5.75 million being non-repayable[48]. - The company is evaluating additional product candidates targeting inflammatory and immune-related diseases, including potential treatments for pulmonary fibrosis[51]. - The company must complete extensive clinical trials to demonstrate the safety and efficacy of its product candidates, which are expensive and uncertain[159]. - Unacceptable adverse events in clinical trials could delay or prevent regulatory approval and commercialization of the company's product candidates[161]. - Prolonged or delayed clinical trials may incur additional costs and hinder the timely commercialization of product candidates[162]. - The company faces potential delays in clinical trials, which could increase development costs and affect commercial prospects for its product candidates[164]. - There is uncertainty regarding the clinical trial designs and endpoints required for obtaining marketing approval, which may lead to additional trials and financial impacts[165]. Market Opportunity and Financials - The estimated prevalence of vitiligo is between 0.5% to 2% of the global population, indicating a significant market opportunity[26]. - The total addressable patient population for EB01, a therapy for Allergic Contact Dermatitis, is estimated to be as high as 5 million in major markets and Canada[34]. - ARDS-related ICU admissions are estimated at 600,000 annually in the seven major markets and Canada, with average ICU costs exceeding $100,000 per patient[37]. - The company has received over C$37 million in competitive government grants and funding awards, validating its technology and drug development capabilities[24]. - The company expects research and development expenses to increase significantly, particularly for drug candidates beyond Phase 2 clinical development[127]. - Substantial additional funding will be needed to finance operations through regulatory approval of product candidates; failure to raise capital could delay or eliminate development programs[121]. - The company anticipates that its cash and cash equivalents may not be sufficient to fund operations for one year after the filing date unless additional capital is raised or spending is delayed[125]. - The company has entered into the 2023 SIF Agreement with the Government of Canada, which includes up to C$23 million in partially repayable funding for the development of investigational therapy EB05, with a project completion deadline of December 31, 2028[134]. - The company relies on government grants, including C$14.1 million from the 2021 SIF Agreement, to support its EB05 development program[133]. Regulatory Environment - The company plans to pursue expedited regulatory review and orphan drug programs to accelerate clinical development timelines for its product candidates[27]. - The FDA requires extensive preclinical testing and multiple phases of human clinical trials before a product candidate can be marketed in the U.S.[72][74]. - The company must submit an NDA or BLA to the FDA after completing clinical trials, which includes comprehensive data on product development and testing[74]. - The Prescription Drug User Fee Act mandates user fees for each NDA or BLA submission, which are adjusted annually by the FDA[75]. - The FDA reviews NDA or BLA submissions within 60 days to determine if they are substantially complete, with performance goals to review 90% of original standard NDAs or BLAs within 10 months and 90% of original priority NDAs or BLAs within 6 months[1]. - The FDA may require a Risk Evaluation and Mitigation Strategy (REMS) if the benefits of a biologic do not outweigh potential risks, which must be submitted before BLA approval[2]. - The FDA typically inspects manufacturing facilities and clinical sites before approving an NDA or BLA to ensure compliance with GMP and GCP requirements[3]. - If the FDA issues a complete response letter, it may outline specific deficiencies that could be minor or major, affecting the approval process[4]. - Orphan drug designation can provide exclusivity for seven years if the product receives the first FDA approval for a specific active ingredient for a rare disease[5]. - The FDA has programs like Fast Track and Breakthrough Therapy designations to expedite the development and review of drugs addressing serious conditions[6]. - Priority Review designation allows for a six-month review period for drugs that significantly improve safety or effectiveness compared to existing treatments[7]. - Accelerated Approval may require post-approval studies to verify clinical benefits, and the FDA can withdraw approval if confirmatory trials fail[8]. - The Biologics Price Competition and Innovation Act provides a 12-year exclusivity period for reference products, impacting the approval of biosimilars[9]. - Sponsors of clinical trials must register and disclose information on clinicaltrials.gov, with results required to be disclosed after trial completion[10]. Competition and Market Risks - The pharmaceutical industry is highly competitive, with potential competitors including large pharmaceutical companies and smaller biotech firms, many of which have greater resources[68]. - The company faces substantial competition, which may result in others commercializing products for target indications before it does[121]. - The competitive landscape is significant, with major pharmaceutical and biotechnology companies potentially developing more effective treatments[172]. - Regulatory pricing and reimbursement practices may adversely affect the company's ability to generate revenue from approved products[173]. - The company faces significant competition in securing partnerships for Phase 3 clinical testing, which is crucial for funding and advancing its product candidates[184]. Intellectual Property and Licensing - The company has an exclusive license agreement with NovImmune SA, which includes potential milestone payments up to $356 million[57]. - The company has exclusive rights to develop and commercialize a pharmaceutical product for topical dermal and anorectal applications under the Yissum License Agreement, with a total commitment of up to $18.4 million in milestone payments[62]. - The Inventor License Agreement grants the company global rights for all fields of use for the pharmaceutical product, with future potential payments totaling up to $69.1 million based on commercial approval and sales milestones[64]. - The company is dependent on maintaining patent protection for its technologies, as failure to do so could allow competitors to commercialize similar products[196]. - The company may face legal proceedings regarding intellectual property rights, which could adversely affect its business and market position[199]. - Intellectual property litigation may lead to significant expenses and distract management, potentially increasing operating losses[200]. Management and Workforce - The leadership team has extensive experience in drug development and commercialization, enhancing the company's competitive position in the biopharmaceutical sector[24]. - The company employs 17 full-time employees, with 10 in research and development and 7 in management and administration[114]. - More than 50% of the workforce consists of women, and over 50% are individuals from underrepresented racial or ethnic groups[115]. - The company is highly dependent on key executives, and the loss of any of these individuals could materially impact its objectives[155]. - The company faces competition in attracting and retaining qualified personnel, which is critical for achieving its business objectives[156]. - The company anticipates growth in employee numbers and operational scope, particularly in drug development and regulatory affairs, which may lead to management challenges[154]. Financial Position and Shareholder Information - The company is a late-stage biopharmaceutical firm with no products approved for commercial sale and has incurred significant losses since inception, expecting to continue incurring losses[121]. - As of September 30, 2025, the company has incurred an accumulated deficit of $65.9 million and expects to continue incurring significant operating losses for the foreseeable future[122]. - The company does not currently intend to pay dividends, relying on share price appreciation for investor returns[206]. - As of December 12, 2025, the CEO owns 19.99% of outstanding shares, and executive officers and directors collectively own 23.6%[211]. - Velan Capital beneficially owns 9.99% of outstanding shares and has the right to designate a director nominee[212]. - The company has filed Amended Articles for Series A-1 and Series B-1 Convertible Preferred Shares, each with a stated value of $10,000[216][217]. - Series A-1 Preferred Shares accrue a 10% annual return and are convertible at a fixed price of $3.445[219]. - Series B-1 Preferred Shares are convertible at a fixed price of $1.92[220]. - The market price of common shares may decline due to substantial sales or the perception of potential sales[207]. - The company must comply with Nasdaq listing requirements to avoid delisting, which could reduce liquidity and market price[204][205]. - The concentration of voting power among executives could delay or prevent beneficial corporate actions for other shareholders[213].

Financial Performance - Net sales for the second quarter were $288 million, a slight decline from $291 million in the same period last year[4] - Operating income increased to $58 million, reflecting improvements in price/mix despite external economic pressures[5] - Basic earnings per share rose to $0.50, compared to $0.49 in the prior year[9] - For the trailing twelve months, net sales reached $1.2 billion, with net income at $186.5 million[5] - EBITDA for the trailing twelve months increased by 63 basis points to $258 million[5] Cash Flow and Reserves - Cash reserves increased by $156 million to $269 million, indicating strong cash flow generation[5] Shareholder Value - The company repurchased 20,000 shares prior to the quarterly blackout period, demonstrating commitment to shareholder value[6] - National Beverage Corp. has delivered a compounded annual return to shareholders of over 13% over the past 40 years[6] Product Development - The company plans to launch a new product, Pineapple Coconut, under the LaCroix brand in early 2026[6] Market Challenges - The company continues to navigate challenges such as inflation and elevated commodity costs while maintaining strong fundamentals[4]

Financial Performance - For the fiscal year ended September 30, 2025, Edesa reported a net loss of $7.2 million, or $1.27 per common share, compared to a net loss of $6.2 million, or $1.93 per common share for the previous year[6]. - Total operating expenses increased by $0.9 million to $7.9 million for the year ended September 30, 2025, compared to $7.0 million for the prior year[5]. - Total other income decreased by $0.1 million to $0.7 million for the year ended September 30, 2025, primarily due to a decrease in interest income[5]. Research and Development - Research and development expenses rose by $0.8 million to $3.7 million for the year ended September 30, 2025, primarily due to increased manufacturing-related activities[8]. - A Phase 3 study of paridiprubart met primary and secondary endpoints with statistical significance, and Edesa is exploring development partnerships for this asset[3]. - The company initiated manufacturing activities for a Phase 2 study of EB06, with recruitment expected to begin by midyear 2026[3]. Financial Position - Edesa had cash and cash equivalents of $10.8 million and working capital of $10.4 million as of September 30, 2025[7]. - Edesa's balance sheet was strengthened, and the Canadian government funding agreement was extended to support manufacturing and development for the respiratory program[4]. Strategic Initiatives - The company plans to participate in one-on-one meetings during JP Morgan week starting January 12, 2026, to engage with potential partners[9]. - Edesa is focused on executing the Phase 2 vitiligo study, advancing respiratory assets toward commercialization, and expanding manufacturing capacity[4].

User Engagement and Active Users - Zedge reported 22.2 million monthly active users (MAU) as of October 31, 2025, a key performance indicator for the Zedge App[91] - As of October 31, 2025, Zedge had approximately 1.1 million active subscribers for its Zedge+ subscription service, which offers an ad-free experience[94] - Monthly Active Users (MAU) for the Zedge App decreased by 11.2% to 22.2 million for the three months ended October 31, 2025, compared to 25.0 million in the same period last year[107] - Emojipedia recorded 43.6 million monthly page views and approximately 7.2 million MAU as of October 31, 2025, with 42.1% of users in developed markets[101] Revenue and Financial Performance - Total revenue for the three months ended October 31, 2025, increased by 5.8% to $7,610,000 compared to $7,194,000 in the same period last year[120] - Subscription revenue increased by 28.6% to $1,520,000 for the three months ended October 31, 2025, compared to $1,182,000 in the same period last year[121] - Digital goods and services revenue declined by 27.3% to $468,000 for the three months ended October 31, 2025, primarily due to a 28.4% decrease in Monthly Active Payers (MAP) for GuruShots[127] - Average Revenue Per Monthly Active User (ARPMAU) for the Zedge App increased by 29.2% to $0.0991 for the three months ended October 31, 2025, driven by higher advertising prices and strong subscription revenue growth[108] Cost and Expenses - Direct cost of revenues increased by 20.4% to $555,000 for the three months ended October 31, 2025, compared to $461,000 in the same period last year, reflecting higher data center costs[130] - SG&A expenses decreased by 13.0% to $5.9 million for the three months ended October 31, 2025, compared to $6.8 million in the prior year, primarily due to lower personnel-related expenses and the expiration of an $8 million retention bonus program[132] - Stock-based compensation expense fell by 72.6% to $104,000 for the three months ended October 31, 2025, down from $379,000 in the same period last year, mainly due to the full amortization of $4 million related to the GuruShots acquisition[134] - Depreciation and amortization expenses decreased by 43.3% to $216,000 for the three months ended October 31, 2025, compared to $381,000 in the prior year, largely due to a $0.8 million impairment charge recognized in the second quarter of fiscal 2025[136] Strategic Initiatives - The company introduced pAInt, a generative AI wallpaper maker, in fiscal 2023, enhancing user engagement through text-to-image and image-to-image capabilities[92] - The company is developing DataSeeds.AI, which creates custom datasets for enterprise AI teams, leveraging its creator ecosystem[95] - Zedge's monetization strategy includes advertising revenue, in-app sales of Zedge Credits, and subscription offerings[94] - Zedge's strategy includes reducing paid user acquisition costs for GuruShots to improve return on ad spend[99] Market and Economic Conditions - The ongoing geopolitical tensions, particularly in Israel, pose risks to Zedge's operations and workforce stability[84] - The Creator Economy, which Zedge is part of, is estimated to be worth between $191 billion and $250 billion globally in 2025[88] Shareholder and Customer Concentration - The company repurchased 238,460 shares of Class B common stock for approximately $776,000 during the three months ended October 31, 2025, under its share repurchase program[158] - In the three months ended October 31, 2025, one large customer represented 34% of the company's revenue, compared to 30% in the same period of 2024[162] - As of October 31, 2025, two customers accounted for 42% and 14% of the accounts receivable balance, respectively[162] - At July 31, 2024, three customers represented 43%, 12%, and 11% of the accounts receivable balance, indicating a concentration of revenue sources[162] Income and Taxation - Income tax expense rose by 375.5% to $233,000 for the three months ended October 31, 2025, compared to $49,000 in the prior year, reflecting a higher effective tax rate of 22.8%[142] Segment Performance - Segment income from operations for the Zedge Marketplace increased by 66.4% to $1.6 million for the three months ended October 31, 2025, compared to $0.9 million in the prior year, attributed to higher revenue and lower SG&A[148] - Total segment income improved to $914,000 for the three months ended October 31, 2025, compared to a loss of $457,000 in the prior year, marking a 300.0% increase[147] Liquidity and Cash Position - Cash and cash equivalents stood at $18.5 million as of October 31, 2025, with working capital of $14.6 million, indicating stable liquidity compared to $18.6 million and $14.7 million at July 31, 2025[150]