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First Horizon(FHN) - 2025 Q3 - Quarterly Results

2025-10-15 10:36

[Executive Summary & Overall Performance](index=1&type=section&id=Executive%20Summary%20%26%20Overall%20Performance) This section provides an overview of First Horizon Corporation's strong third-quarter 2025 financial performance, highlighting key metrics and CEO commentary [Third Quarter 2025 Highlights](index=1&type=section&id=Third%20Quarter%202025%20Highlights) First Horizon Corporation achieved strong third-quarter 2025 results with increased net income available to common shareholders and EPS, both on a GAAP and adjusted basis Third Quarter 2025 Highlights | Metric | 3Q25 | 2Q25 | Change (QoQ) | | :--------------------------------- | :----- | :----- | :------------ | | Net Income Available to Common Shareholders (NIAC) | $254M | $233M | +$21M | | EPS | $0.50 | $0.45 | +$0.05 | | Adjusted NIAC | $263M | $229M | +$34M | | Adjusted EPS | $0.51 | $0.45 | +$0.06 | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Bryan Jordan emphasized the company's strong performance in a changing environment, driven by its diversified business model, attractive geographic footprint, and robust credit quality - “First Horizon’s diversified business model and attractive geographic footprint position us favorably in an evolving environment. Our continued focus on safety and soundness, profitability, and growth enables us to meet the evolving needs of our clients with tailored solutions, creating meaningful value”[2](index=2&type=chunk) - “Credit quality remains strong, supported by prudent risk management and the dedicated efforts of our associates who maintain high standards of service for our clients and communities. As economic conditions evolve, our adaptability and robust performance, supported by continued investments in technology and community partnerships, enable First Horizon to deliver sustained returns for shareholders and foster long-term growth”[2](index=2&type=chunk) [Quarterly Performance Comparison (3Q25 vs 2Q25)](index=2&type=section&id=Quarterly%20Performance%20Comparison%20%283Q25%20vs%202Q25%29) The third quarter saw growth in net interest income and noninterest income, alongside increased noninterest expenses, higher loan balances, deposit growth, and improved asset quality - Net interest income (FTE) increased by **$33 million** to **$678 million**, with net interest margin rising **15 basis points** to **3.55%**[7](index=7&type=chunk) - Noninterest income increased by **$26 million** to **$215 million**, primarily driven by a **$15 million** increase in fixed income revenue and a **$6 million** increase in mortgage banking income[8](index=8&type=chunk) - Noninterest expense increased by **$59 million** to **$551 million**, mainly due to a **$20 million** contribution to the First Horizon Foundation and increased spending on technology and risk initiatives[9](index=9&type=chunk) - Average loans and leases increased by **$236 million** to **$62.8 billion**, with loan yields rising **14 basis points** to **6.06%**[10](index=10&type=chunk) - Average deposits increased by **$1.2 billion** to **$65.9 billion**, though period-end deposits slightly decreased by **$52 million**[11](index=11&type=chunk) - Provision for credit losses was a **$5 million credit**, compared to a **$30 million expense** in the prior quarter, with net charge-offs decreasing to **$26 million** (**17 basis points**)[12](index=12&type=chunk) - The CET1 ratio remained stable at **11.0%**, consistent with the prior quarter[13](index=13&type=chunk) [Consolidated Financial Results](index=3&type=section&id=Consolidated%20Financial%20Results) This section details First Horizon Corporation's consolidated financial performance, including income statement, balance sheet, and key performance indicators [Summary Results](index=3&type=section&id=Summary%20Results) First Horizon Corporation's 3Q25 summary results show significant improvements in revenue, common stock information, key performance metrics, and asset quality compared to prior periods [Income Statement](index=3&type=section&id=Income%20Statement) Net interest income (FTE) and noninterest income both increased sequentially and year-over-year, driving total revenue growth and a rise in net income available to common shareholders | Metric | 3Q25 | 2Q25 | 3Q24 | Change vs. 2Q25 ($) | Change vs. 2Q25 (%) | Change vs. 3Q24 ($) | Change vs. 3Q24 (%) | | :--------------------------------- | :----- | :----- | :----- | :------------------ | :------------------ | :------------------ | :------------------ | | Net interest income (FTE) | $678M | $645M | $631M | $33M | 5% | $46M | 7% | | Noninterest income | $215M | $189M | $200M | $26M | 14% | $15M | 7% | | Total revenue | $889M | $830M | $828M | $60M | 7% | $62M | 7% | | Noninterest expense | $551M | $491M | $511M | $59M | 12% | $39M | 8% | | Provision for credit losses | $(5)M | $30M | $35M | $(35)M | (117)% | $(40)M | (114)% | | Net income available to common shareholders | $254M | $233M | $213M | $21M | 9% | $41M | 19% | [Common Stock Information](index=3&type=section&id=Common%20Stock%20Information) Diluted EPS and adjusted EPS significantly increased sequentially and year-over-year, while diluted shares outstanding decreased | Metric | 3Q25 | 2Q25 | 3Q24 | Change vs. 2Q25 ($) | Change vs. 2Q25 (%) | Change vs. 3Q24 ($) | Change vs. 3Q24 (%) | | :----------------- | :----- | :----- | :----- | :------------------ | :------------------ | :------------------ | :------------------ | | EPS | $0.50 | $0.45 | $0.40 | $0.05 | 11% | $0.10 | 25% | | Adjusted EPS | $0.51 | $0.45 | $0.42 | $0.06 | 13% | $0.09 | 21% | | Diluted shares (millions) | 510 | 514 | 538 | (3) | (1)% | (28) | (5)% | [Key Performance Metrics](index=3&type=section&id=Key%20Performance%20Metrics) Net interest margin, return on average assets, and return on average tangible common equity all improved, while the efficiency ratio increased | Metric | 3Q25 | 2Q25 | 3Q24 | Change vs. 2Q25 (bp) | Change vs. 3Q24 (bp) | | :--------------------------------- | :----- | :----- | :----- | :------------------- | :------------------- | | Net interest margin | 3.55% | 3.40% | 3.31% | 15 bp | 24 bp | | Efficiency ratio | 61.92% | 59.20% | 61.89% | 272 bp | 3 bp | | Return on average assets | 1.29% | 1.20% | 1.08% | 9 bp | 21 bp | | Return on average tangible common equity (ROTCE) | 14.5% | 13.8% | 12.6% | 64 bp | 189 bp | [Balance Sheet Summary](index=3&type=section&id=Balance%20Sheet%20Summary) Average loans slightly increased, average deposits grew, and average assets remained stable, reflecting minor shifts in the balance sheet | Metric | 3Q25 ($B) | 2Q25 ($B) | 3Q24 ($B) | Change vs. 2Q25 ($B) | Change vs. 2Q25 (%) | Change vs. 3Q24 ($B) | Change vs. 3Q24 (%) | | :--------------- | :-------- | :-------- | :-------- | :------------------- | :------------------- | :------------------- | :------------------- | | Average loans | $62.8 | $62.6 | $62.4 | $0.2 | 0% | $0.4 | 1% | | Average deposits | $65.9 | $64.7 | $66.3 | $1.2 | 2% | $(0.3) | (1)% | | Average assets | $82.0 | $82.0 | $82.4 | $0.1 | 0% | $(0.3) | 0% | [Asset Quality Highlights](index=3&type=section&id=Asset%20Quality%20Highlights) The allowance for credit losses to loans and leases ratio decreased, while the nonperforming loan and leases ratio slightly increased, and net charge-offs declined | Metric | 3Q25 | 2Q25 | 3Q24 | Change vs. 2Q25 (bp) | Change vs. 3Q24 (bp) | | :----------------------------------------- | :----- | :----- | :----- | :------------------- | :------------------- | | Allowance for credit losses to loans and leases | 1.38% | 1.42% | 1.44% | (4) bp | (6) bp | | Nonperforming loan and leases ratio | 0.96% | 0.94% | 0.92% | 2 bp | 4 bp | | Net charge-off ratio | 0.17% | 0.22% | 0.15% | (5) bp | 2 bp | | Net charge-offs ($M) | $26 | $34 | $24 | $(7) | $2 | [Capital Ratio Highlights](index=3&type=section&id=Capital%20Ratio%20Highlights) The Common Equity Tier 1 ratio remained stable, while Tier 1 and Total Capital ratios experienced slight sequential decreases | Metric | 3Q25 | 2Q25 | 3Q24 | Change vs. 2Q25 (bp) | Change vs. 3Q24 (bp) | | :----------------- | :----- | :----- | :----- | :------------------- | :------------------- | | Common Equity Tier 1 | 11.0% | 11.0% | 11.2% | (2) bp | (26) bp | | Tier 1 | 11.9% | 12.0% | 12.2% | (13) bp | (37) bp | | Total Capital | 13.8% | 14.0% | 14.2% | (17) bp | (46) bp | [Consolidated Income Statement](index=7&type=section&id=Consolidated%20Income%20Statement) The consolidated income statement shows strong sequential growth in net interest income and noninterest income, leading to a 7% increase in total revenue and a 9% rise in net income available to common shareholders | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | Change vs. 2Q25 ($M) | Change vs. 2Q25 (%) | Change vs. 3Q24 ($M) | Change vs. 3Q24 (%) | | :--------------------------------- | :-------- | :-------- | :-------- | :------------------- | :------------------- | :------------------- | :------------------- | | Interest income - taxable equivalent | $1,081 | $1,047 | $1,123 | $34 | 3% | $(42) | (4)% | | Interest expense - taxable equivalent | $403 | $403 | $491 | $1 | 0% | $(88) | (18)% | | Net interest income - taxable equivalent | $678 | $645 | $631 | $33 | 5% | $46 | 7% | | Total noninterest income | $215 | $189 | $200 | $26 | 14% | $15 | 7% | | Total revenue | $889 | $830 | $828 | $60 | 7% | $62 | 7% | | Total noninterest expense | $551 | $491 | $511 | $59 | 12% | $39 | 8% | | Provision for credit losses | $(5) | $30 | $35 | $(35) | (117)% | $(40) | (114)% | | Net income available to common shareholders | $254 | $233 | $213 | $21 | 9% | $41 | 19% | | Diluted EPS | $0.50 | $0.45 | $0.40 | $0.05 | 11% | $0.10 | 25% | [Adjusted Financial Data](index=8&type=section&id=Adjusted%20Financial%20Data) Adjusted financial data for 3Q25 reveals robust sequential growth in adjusted net interest income and noninterest income, driving a 7% increase in adjusted total revenue (FTE) and a 15% rise in adjusted net income available to common shareholders | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | Change vs. 2Q25 ($M) | Change vs. 2Q25 (%) | Change vs. 3Q24 ($M) | Change vs. 3Q24 (%) | | :--------------------------------- | :-------- | :-------- | :-------- | :------------------- | :------------------- | :------------------- | :------------------- | | Net interest income (FTE) | $678 | $645 | $631 | $33 | 5% | $46 | 7% | | Adjusted total noninterest income | $215 | $189 | $200 | $26 | 14% | $15 | 7% | | Total revenue (FTE) | $893 | $833 | $832 | $60 | 7% | $61 | 7% | | Adjusted total noninterest expense | $542 | $495 | $497 | $47 | 9% | $45 | 9% | | Adjusted pre-provision net revenue | $351 | $338 | $335 | $13 | 4% | $16 | 5% | | Adjusted net income available to common shareholders | $263 | $229 | $224 | $33 | 15% | $38 | 17% | | Adjusted diluted EPS | $0.51 | $0.45 | $0.42 | $0.06 | 13% | $0.09 | 21% | | Adjusted ROTCE | 15.0% | 13.6% | 13.2% | 135 bp | 176 bp | | Adjusted efficiency ratio | 60.8% | 59.5% | 59.9% | 129 bp | 90 bp | [Notable Items Analysis](index=1&type=section&id=Notable%20Items%20Analysis) This section analyzes the impact of notable items on First Horizon's financial results, including specific pre-tax and after-tax adjustments [Summary of Notable Items](index=1&type=section&id=Summary%20of%20Notable%20Items) First Horizon reported a pre-tax notable item of negative $8 million in 3Q25, primarily due to a Visa derivative valuation expense, partially offset by an FDIC special assessment credit Summary of Notable Items | Notable Item (Pre-tax) | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | | :--------------------------------- | :-------- | :-------- | :-------- | | Deferred compensation adjustment | $0 | $4 | $0 | | FDIC special assessment | $2 | $1 | $2 | | Other notable expenses | $(10) | $0 | $(17) | | **Total notable items (pre-tax)** | **$(8)** | **$4** | **$(14)** | | Preferred Stock Dividend | $(3) | $0 | $0 | | **Total notable items (after-tax)** | **$(9)** | **$3** | **$(11)** | - Third quarter pre-tax notable items included a **$2 million credit** for the FDIC special assessment and a **$10 million impact** related to Visa derivative valuation expense[5](index=5&type=chunk) - Third quarter after-tax notable items included a **$3 million deemed dividend** from the redemption of **$80 million** par value Series B Preferred Stock[5](index=5&type=chunk) [Impact of Notable Items](index=9&type=section&id=Impact%20of%20Notable%20Items) In 3Q25, notable items had an $8 million positive impact on income before income taxes, mainly from noninterest expense adjustments, and a $9 million positive impact on net income available to common shareholders Impact of Notable Items | Impact of Notable Items | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | | :--------------------------------- | :-------- | :-------- | :-------- | | Total noninterest income | $0 | $0 | $0 | | Total noninterest expense | $(8) | $4 | $(14) | | Income before income taxes | $8 | $(4) | $14 | | Provision for income taxes | $2 | $(1) | $4 | | Preferred stock dividends | $(3) | $0 | $0 | | Net income/(loss) available to common shareholders | $9 | $(3) | $11 | | EPS impact of notable items | $0.01 | $0.00 | $0.02 | [Detailed Financial Statements & Ratios](index=10&type=section&id=Detailed%20Financial%20Statements%20%26%20Ratios) This section provides a comprehensive breakdown of First Horizon's consolidated financial ratios, period-end and average balance sheets, net interest income, and asset quality metrics [Consolidated Financial Ratios](index=10&type=section&id=Consolidated%20Financial%20Ratios) First Horizon's 3Q25 financial ratios show improved profitability metrics like net interest margin and ROTCE, stable capital ratios, and mixed asset quality trends with lower allowance for credit losses but slightly higher nonperforming loans Consolidated Financial Ratios | Metric | 3Q25 | 2Q25 | 3Q24 | Change vs. 2Q25 (bp) | Change vs. 3Q24 (bp) | | :--------------------------------- | :----- | :----- | :----- | :------------------- | :------------------- | | Net interest margin | 3.55% | 3.40% | 3.31% | 15 bp | 24 bp | | Return on average assets | 1.29% | 1.20% | 1.08% | 9 bp | 21 bp | | Return on average common equity ("ROCE") | 11.74% | 11.14% | 10.10% | 60 bp | 164 bp | | Return on average tangible common equity ("ROTCE") | 14.49% | 13.85% | 12.60% | 64 bp | 189 bp | | Efficiency ratio | 61.92% | 59.20% | 61.89% | 272 bp | 3 bp | | Allowance for credit losses to loans and leases | 1.38% | 1.42% | 1.44% | (4) bp | (6) bp | | Nonperforming loan and leases ratio | 0.96% | 0.94% | 0.92% | 2 bp | 4 bp | | Net charge-off ratio | 0.17% | 0.22% | 0.15% | (5) bp | 2 bp | | CET1 capital ratio | 11.0% | 11.0% | 11.2% | (2) bp | (26) bp | | Tangible common equity/tangible assets ("TCE/TA") | 8.55% | 8.58% | 8.56% | (3) bp | (1) bp | | Book value per common share | $17.19 | $16.78 | $16.15 | $0.41 | $1.04 | | Tangible book value per common share | $13.94 | $13.57 | $13.02 | $0.37 | $0.92 | | Loans-to-deposit ratio (period-end) | 96.23% | 96.47% | 93.80% | (23) bp | 244 bp | | Full-time equivalent associates | 7,341 | 7,255 | 7,186 | 86 | 155 | [Consolidated Period-End Balance Sheet](index=11&type=section&id=Consolidated%20Period-End%20Balance%20Sheet) Total assets increased sequentially by $1.11 billion to $83.19 billion at 3Q25 end, with a slight decrease in loans and leases and a significant increase in trading securities Consolidated Period-End Balance Sheet | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | Change vs. 2Q25 ($M) | Change vs. 2Q25 (%) | Change vs. 3Q24 ($M) | Change vs. 3Q24 (%) | | :--------------------------------- | :-------- | :-------- | :-------- | :------------------- | :------------------- | :------------------- | :------------------- | | Total assets | $83,192 | $82,084 | $82,635 | $1,109 | 1% | $558 | 1% | | Loans and leases, net of unearned income | $63,058 | $63,260 | $62,445 | $(202) | 0% | $612 | 1% | | Trading securities | $2,070 | $1,430 | $1,549 | $640 | 45% | $521 | 34% | | Total interest earning assets | $76,963 | $75,893 | $76,311 | $1,070 | 1% | $652 | 1% | | Total deposits | $65,525 | $65,576 | $66,575 | $(52) | 0% | $(1,050) | (2)% | | Total liabilities | $73,948 | $72,826 | $73,318 | $1,122 | 2% | $630 | 1% | | Total shareholders' equity | $9,244 | $9,257 | $9,316 | $(13) | 0% | $(72) | (1)% | [Consolidated Average Balance Sheet](index=12&type=section&id=Consolidated%20Average%20Balance%20Sheet) Average total assets slightly increased by $91 million, with average loans and leases rising by $236 million, primarily driven by commercial and consumer real estate, and average deposits growing by $1.18 billion Consolidated Average Balance Sheet | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | Change vs. 2Q25 ($M) | Change vs. 2Q25 (%) | Change vs. 3Q24 ($M) | Change vs. 3Q24 (%) | | :--------------------------------- | :-------- | :-------- | :-------- | :------------------- | :------------------- | :------------------- | :------------------- | | Total assets | $82,049 | $81,958 | $82,366 | $91 | 0% | $(318) | 0% | | Loans and leases, net of unearned income | $62,787 | $62,551 | $62,413 | $236 | 0% | $375 | 1% | | Total interest earning assets | $76,032 | $75,887 | $76,121 | $145 | 0% | $(89) | 0% | | Total deposits | $65,924 | $64,742 | $66,263 | $1,182 | 2% | $(339) | (1)% | | Total liabilities | $72,825 | $72,861 | $73,238 | $(36) | 0% | $(413) | (1)% | | Total shareholders' equity | $9,224 | $9,097 | $9,128 | $126 | 1% | $95 | 1% | [Consolidated Net Interest Income and Yields/Rates](index=14&type=section&id=Consolidated%20Net%20Interest%20Income%20and%20Yields%2FReates) Net interest income (FTE) increased sequentially by $33 million (5%) to $678 million, primarily driven by a 14 basis point rise in total loan yield to 6.06% Consolidated Net Interest Income and Yields/Rates | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | Change vs. 2Q25 ($M) | Change vs. 2Q25 (%) | Change vs. 3Q24 ($M) | Change vs. 3Q24 (%) | | :--------------------------------- | :-------- | :-------- | :-------- | :------------------- | :------------------- | :------------------- | :------------------- | | Interest income | $1,081 | $1,047 | $1,123 | $34 | 3% | $(42) | (4)% | | Interest expense | $403 | $403 | $491 | $1 | 0% | $(88) | (18)% | | Net interest income - tax equivalent | $678 | $645 | $631 | $33 | 5% | $46 | 7% | | Total loan yield | 6.06% | 5.92% | 6.37% | 14 bp | (31) bp | | Total interest bearing deposits cost | 2.78% | 2.76% | 3.44% | 2 bp | (66) bp | | Net interest margin | 3.55% | 3.40% | 3.31% | 15 bp | 24 bp | [Consolidated Nonperforming Loans and Leases (NPL)](index=16&type=section&id=Consolidated%20Nonperforming%20Loans%20and%20Leases%20%28NPL%29) Total nonperforming loans and leases increased sequentially by $13 million (2%) to $605 million, mainly driven by commercial real estate NPLs, while commercial and industrial NPLs decreased Consolidated Nonperforming Loans and Leases (NPL) | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | Change vs. 2Q25 ($M) | Change vs. 2Q25 (%) | Change vs. 3Q24 ($M) | Change vs. 3Q24 (%) | | :--------------------------------- | :-------- | :-------- | :-------- | :------------------- | :------------------- | :------------------- | :------------------- | | Commercial, financial, and industrial (C&I) NPL | $211 | $224 | $190 | $(14) | (6)% | $21 | 11% | | Commercial real estate NPL | $254 | $236 | $259 | $18 | 8% | $(4) | (2)% | | Total nonperforming loans and leases | $605 | $593 | $578 | $13 | 2% | $28 | 5% | | Total nonperforming loans and leases to loans and leases | 0.96% | 0.94% | 0.92% | 2 bp | 4 bp | [Consolidated Loans and Leases 90+ Days Past Due](index=16&type=section&id=Consolidated%20Loans%20and%20Leases%2090%2B%20Days%20Past%20Due) Total loans and leases 90 days or more past due and still accruing remained stable sequentially at $9 million, while significantly decreasing year-over-year by $8 million (49%) Consolidated Loans and Leases 90+ Days Past Due | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | Change vs. 2Q25 ($M) | Change vs. 2Q25 (%) | Change vs. 3Q24 ($M) | Change vs. 3Q24 (%) | | :--------------------------------- | :-------- | :-------- | :-------- | :------------------- | :------------------- | :------------------- | :------------------- | | Commercial, financial, and industrial (C&I) | $1 | $1 | $1 | $0 | 2% | $0 | 16% | | Consumer real estate | $6 | $6 | $13 | $0 | (5)% | $(7) | (55)% | | Total loans and leases 90+ days past due and accruing | $9 | $8 | $17 | $0 | 5% | $(8) | (49)% | [Consolidated Net Charge-offs (Recoveries)](index=17&type=section&id=Consolidated%20Net%20Charge-offs%20%28Recoveries%29) Total net charge-offs decreased sequentially by $7 million (22%) to $26 million, with the net charge-off rate falling to 0.17%, primarily due to reduced commercial real estate net charge-offs Consolidated Net Charge-offs (Recoveries) | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | Change vs. 2Q25 ($M) | Change vs. 2Q25 (%) | Change vs. 3Q24 ($M) | Change vs. 3Q24 (%) | | :--------------------------------- | :-------- | :-------- | :-------- | :------------------- | :------------------- | :------------------- | :------------------- | | Total gross charge-offs | $36 | $43 | $33 | $(7) | (17)% | $2 | 7% | | Total gross recoveries | $(9) | $(9) | $(9) | $0 | 0% | $0 | 0% | | Total net charge-offs | $26 | $34 | $24 | $(7) | (22)% | $2 | 10% | | Total loans and leases (annualized net charge-off rate) | 0.17% | 0.22% | 0.15% | (5) bp | 2 bp | [Consolidated Allowance for Loan and Lease Losses and Reserve for Unfunded Commitments](index=18&type=section&id=Consolidated%20Allowance%20for%20Loan%20and%20Lease%20Losses%20and%20Reserve%20for%20Unfunded%20Commitments) The allowance for loan and lease losses (ALLL) decreased sequentially by $37 million (5%) to $777 million, and total allowance for credit losses (ACL) decreased by $31 million (3%) to $870 million Consolidated Allowance for Loan and Lease Losses and Reserve for Unfunded Commitments | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | Change vs. 2Q25 ($M) | Change vs. 2Q25 (%) | Change vs. 3Q24 ($M) | Change vs. 3Q24 (%) | | :--------------------------------- | :-------- | :-------- | :-------- | :------------------- | :------------------- | :------------------- | :------------------- | | Allowance for loan and lease losses - beginning | $814 | $822 | $821 | $(8) | (1)% | $(7) | (1)% | | Total charge-offs | $(36) | $(43) | $(33) | $7 | 17% | $(2) | (7)% | | Total recoveries | $9 | $9 | $9 | $0 | 0% | $0 | 0% | | Total provision for loan and lease losses | $(11) | $26 | $26 | $(37) | NM | $(37) | NM | | Allowance for loan and lease losses - ending | $777 | $814 | $823 | $(37) | (5)% | $(46) | (6)% | | Reserve for unfunded commitments - ending | $93 | $87 | $75 | $6 | 7% | $18 | 24% | | Total allowance for credit losses - ending | $870 | $901 | $897 | $(31) | (3)% | $(28) | (3)% | [Consolidated Asset Quality Ratios - Allowance](index=19&type=section&id=Consolidated%20Asset%20Quality%20Ratios%20-%20Allowance) The total allowance for credit losses to loans and leases ratio decreased sequentially by 4 basis points to 1.38%, and the total allowance for credit losses to nonperforming loans and leases ratio also declined by 8 basis points to 144% Consolidated Asset Quality Ratios - Allowance | Metric | 3Q25 | 2Q25 | 3Q24 | | :------------------------------------------------- | :----- | :----- | :----- | | Allowance for loans and lease losses to loans and leases | 1.23% | 1.29% | 1.32% | | Allowance for loans and lease losses to nonperforming loans and leases | 128% | 137% | 142% | | Total allowance for credit losses to loans and leases | 1.38% | 1.42% | 1.44% | | Total allowance for credit losses to nonperforming loans and leases | 144% | 152% | 155% | [Segment Performance](index=20&type=section&id=Segment%20Performance) This section provides a detailed breakdown of the financial performance for First Horizon's Commercial, Consumer, and Wealth, Wholesale, and Corporate segments [Commercial, Consumer, and Wealth Segment](index=20&type=section&id=Commercial%2C%20Consumer%2C%20and%20Wealth%20Segment) This segment, offering traditional lending, deposits, and wealth management in the Southern U.S., saw net interest income and total revenue grow by 4% sequentially, with net income rising 8% to $312 million - The Commercial, Consumer, and Wealth segment provides financial products and services, including traditional lending and deposit gathering businesses, primarily to commercial and consumer clients in the Southern U.S. and other selected markets, also offering investment, wealth management, financial planning, trust, and asset management services[57](index=57&type=chunk)[85](index=85&type=chunk) Commercial, Consumer, and Wealth Segment Performance | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | Change vs. 2Q25 ($M) | Change vs. 2Q25 (%) | Change vs. 3Q24 ($M) | Change vs. 3Q24 (%) | | :--------------------------------- | :-------- | :-------- | :-------- | :------------------- | :------------------- | :------------------- | :------------------- | | Net interest income | $660 | $634 | $634 | $26 | 4% | $26 | 4% | | Noninterest income | $117 | $113 | $119 | $3 | 3% | $(2) | (2)% | | Total revenue | $777 | $747 | $754 | $30 | 4% | $23 | 3% | | Net income | $312 | $289 | $274 | $23 | 8% | $38 | 14% | | Return on average assets (annualized) | 2.10% | 1.98% | 1.83% | 12 bp | 27 bp | | Return on allocated equity | 25.14% | 23.03% | 21.59% | 211 bp | 355 bp | [Wholesale Segment](index=21&type=section&id=Wholesale%20Segment) The Wholesale segment, focusing on specialized lending and fixed income services, reported a 6% sequential increase in net interest income and a 21% rise in total revenue, with net income surging 75% to $39 million - The Wholesale segment consists of product and service business lines offering differentiated industry expertise, including mortgage warehouse lending, franchise finance, correspondent banking, and mortgage, also focusing on fixed income securities sales, trading, underwriting, and strategy, as well as loan sales, portfolio advisory services, and derivatives sales to institutional clients in the U.S. and abroad[60](index=60&type=chunk)[86](index=86&type=chunk) Wholesale Segment Performance | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | Change vs. 2Q25 ($M) | Change vs. 2Q25 (%) | Change vs. 3Q24 ($M) | Change vs. 3Q24 (%) | | :--------------------------------- | :-------- | :-------- | :-------- | :------------------- | :------------------- | :------------------- | :------------------- | | Net interest income | $60 | $57 | $52 | $3 | 6% | $9 | 17% | | Noninterest income | $74 | $53 | $57 | $20 | 38% | $17 | 31% | | Total revenue | $134 | $111 | $108 | $24 | 21% | $26 | 24% | | Net income | $39 | $22 | $30 | $17 | 75% | $9 | 29% | | Fixed income product average daily revenue (thousands) | $771 | $550 | $593 | $221 | 40% | $178 | 30% | | Return on average assets (annualized) | 1.66% | 0.96% | 1.43% | 70 bp | 24 bp | | Return on allocated equity | 27.16% | 15.96% | 21.36% | 1,120 bp | 580 bp | [Corporate Segment](index=22&type=section&id=Corporate%20Segment) The Corporate segment, encompassing corporate support functions and centralized capital management, reported a net loss of $85 million in 3Q25, an increase from the $67 million loss in 2Q25, driven by a significant rise in noninterest expense - The Corporate segment primarily includes corporate support functions such as risk management, audit, accounting, treasury, executive offices, and corporate communications, along with centralized management of capital and funding, and revenues and expenses from discontinued operations like pre-2009 mortgage banking elements, terminated consumer and trust preferred loan portfolios, and other exited businesses[63](index=63&type=chunk)[87](index=87&type=chunk) Corporate Segment Performance | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | Change vs. 2Q25 ($M) | Change vs. 2Q25 (%) | Change vs. 3Q24 ($M) | Change vs. 3Q24 (%) | | :--------------------------------- | :-------- | :-------- | :-------- | :------------------- | :------------------- | :------------------- | :------------------- | | Net interest income/(expense) | $(46) | $(50) | $(59) | $4 | 7% | $12 | 21% | | Noninterest income | $25 | $22 | $25 | $3 | 12% | $0 | 0% | | Total revenues | $(22) | $(28) | $(34) | $6 | 23% | $12 | 37% | | Noninterest expense | $102 | $61 | $84 | $41 | 67% | $18 | 21% | | Net income/(loss) | $(85) | $(67) | $(81) | $(18) | (27)% | $(4) | (5)% | [Non-GAAP Reconciliations & Disclosures](index=5&type=section&id=Non-GAAP%20Reconciliations%20%26%20Disclosures) This section provides reconciliations and disclosures for non-GAAP financial measures, explaining their use and relationship to GAAP and regulatory metrics [Use of Non-GAAP and Regulatory Measures](index=5&type=section&id=Use%20of%20Non-GAAP%20and%20Regulatory%20Measures) This section clarifies the use of non-GAAP financial measures, such as fully taxable equivalent metrics and adjusted performance, which management deems relevant for understanding financial condition, distinguishing them from regulatory measures - Non-GAAP measures are used by management to understand financial condition, capital position, and financial performance, despite not conforming to U.S. Generally Accepted Accounting Principles (GAAP)[19](index=19&type=chunk) - Non-GAAP measures include fully taxable equivalent metrics, pre-provision net revenue (PPNR), return on average tangible common equity (ROTCE), tangible common equity (TCE) to tangible assets (TA) ratio, tangible book value per common share (TBV), and various consolidated and segment results and performance metrics adjusted for notable items[20](index=20&type=chunk) - Regulatory measures, such as Common Equity Tier 1 (CET1), Tier 1 Capital, and risk-weighted assets, are not considered “non-GAAP” measures under U.S. financial reporting rules as long as they comply with regulatory standards, providing a meaningful basis for comparison with other similarly regulated financial institutions[21](index=21&type=chunk) [Tangible Common Equity Reconciliation](index=23&type=section&id=Tangible%20Common%20Equity%20Reconciliation) The reconciliation shows tangible common equity (non-GAAP) of $6.98 billion and tangible book value per share of $13.94 for 3Q25, with a tangible common equity to tangible assets ratio (TCE/TA) of 8.55% Tangible Common Equity Reconciliation | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | | :----------------------------------------- | :-------- | :-------- | :-------- | | Total equity (GAAP) | $9,244 | $9,257 | $9,316 | | Total common equity | $8,600 | $8,536 | $8,595 | | Intangible assets (GAAP) | $1,624 | $1,633 | $1,663 | | Tangible common equity (Non-GAAP) | $6,976 | $6,903 | $6,931 | | Total assets (GAAP) | $83,192 | $82,084 | $82,635 | | Tangible assets (Non-GAAP) | $81,568 | $80,451 | $80,971 | | Tangible common equity to tangible assets ("TCE/TA") | 8.55% | 8.58% | 8.56% | | Book value per common share (GAAP) | $17.19 | $16.78 | $16.15 | | Tangible book value per common share (Non-GAAP) | $13.94 | $13.57 | $13.02 | [Adjusted EPS, Net Income, and ROA Reconciliation](index=24&type=section&id=Adjusted%20EPS%2C%20Net%20Income%2C%20and%20ROA%20Reconciliation) For 3Q25, adjusted diluted EPS was $0.51 compared to GAAP EPS of $0.50, with adjusted net income at $272 million and adjusted return on assets at 1.32% Adjusted EPS, Net Income, and ROA Reconciliation | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | | :----------------------------------------- | :-------- | :-------- | :-------- | | Net income available to common shareholders ("NIAC") (GAAP) | $254 | $233 | $213 | | Plus Total notable items (after-tax) (Non-GAAP) | $9 | $(3) | $11 | | Adjusted net income available to common shareholders (Non-GAAP) | $263 | $229 | $224 | | Diluted EPS (GAAP) | $0.50 | $0.45 | $0.40 | | Adjusted diluted EPS (Non-GAAP) | $0.51 | $0.45 | $0.42 | | Net Income ("NI") (GAAP) | $266 | $244 | $223 | | Plus Relevant notable items (after-tax) (Non-GAAP) | $6 | $(3) | $11 | | Adjusted NI (Non-GAAP) | $272 | $241 | $234 | | ROA (GAAP) | 1.29% | 1.20% | 1.08% | | Adjusted ROA (Non-GAAP) | 1.32% | 1.18% | 1.13% | [ROCE, ROTCE, and Adjusted ROTCE Reconciliation](index=24&type=section&id=ROCE%2C%20ROTCE%2C%20and%20Adjusted%20ROTCE%20Reconciliation) The reconciliation shows GAAP return on common equity (ROCE) at 11.74% and non-GAAP return on tangible common equity (ROTCE) at 14.49% for 3Q25, with adjusted ROTCE at 15.00% reflecting notable items ROCE, ROTCE, and Adjusted ROTCE Reconciliation | Metric | 3Q25 | 2Q25 | 3Q24 | | :------------------------------------------------- | :----- | :----- | :----- | | Net income available to common shareholders ("NIAC") (annualized) (GAAP) | $1,007M | $933M | $849M | | Adjusted Net income available to common shareholders (annualized) (Non-GAAP) | $1,042M | $919M | $892M | | Average Common Equity (GAAP) | $8,579M | $8,376M | $8,407M | | Average Tangible Common Equity (Non-GAAP) | $6,950M | $6,738M | $6,738M | | ROCE (GAAP) | 11.74% | 11.14% | 10.10% | | ROTCE (Non-GAAP) | 14.49% | 13.85% | 12.60% | | Adjusted ROTCE (Non-GAAP) | 15.00% | 13.65% | 13.24% | [Adjusted Noninterest Income as a % of Total Revenue Reconciliation](index=25&type=section&id=Adjusted%20Noninterest%20Income%20as%20a%20%25%20of%20Total%20Revenue%20Reconciliation) For 3Q25, adjusted noninterest income as a percentage of total revenue (non-GAAP) was 24.07%, slightly lower than the GAAP noninterest income percentage of 24.16% Adjusted Noninterest Income as a % of Total Revenue Reconciliation | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | | :------------------------------------------------- | :-------- | :-------- | :-------- | | Noninterest income (GAAP) | $215 | $189 | $200 | | Adjusted noninterest income (Non-GAAP) | $215 | $189 | $200 | | Revenue (GAAP) | $889 | $830 | $828 | | Adjusted revenue (Non-GAAP) | $893 | $833 | $832 | | Noninterest income as a % of total revenue (GAAP) | 24.16% | 22.73% | 24.06% | | Adjusted noninterest income as a % of total revenue (Non-GAAP) | 24.07% | 22.63% | 23.95% | [Adjusted Efficiency Ratio Reconciliation](index=25&type=section&id=Adjusted%20Efficiency%20Ratio%20Reconciliation) The adjusted efficiency ratio (non-GAAP) for 3Q25 was 60.76%, an increase from 59.47% in 2Q25, but lower than the GAAP efficiency ratio of 61.92% Adjusted Efficiency Ratio Reconciliation | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | | :------------------------------------------------- | :-------- | :-------- | :-------- | | Noninterest expense (GAAP) | $551 | $491 | $511 | | Plus notable items (pretax) (GAAP) | $(8) | $4 | $(14) | | Adjusted noninterest expense (Non-GAAP) | $542 | $495 | $497 | | Revenue (GAAP) | $889 | $830 | $828 | | Adjusted revenue (Non-GAAP) | $893 | $833 | $832 | | Efficiency ratio (GAAP) | 61.92% | 59.20% | 61.98% | | Adjusted efficiency ratio (Non-GAAP) | 60.76% | 59.47% | 59.86% | [Loans Excluding LMC Reconciliation](index=26&type=section&id=Loans%20Excluding%20LMC%20Reconciliation) Total loans excluding Loan Mortgage Company (LMC) loans were $59.13 billion at 3Q25 end, a slight sequential decrease of $70 million, while average total loans excluding LMC increased by $140 million to $59.16 billion Loans Excluding LMC Reconciliation | Metric | 3Q25 ($M) | 2Q25 ($M) | Change vs. 2Q25 ($M) | Change vs. 2Q25 (%) | | :--------------------------------- | :-------- | :-------- | :------------------- | :------------------- | | Total Loans (GAAP) (Period-end) | $63,058 | $63,260 | $(202) | 0% | | LMC (GAAP) (Period-end) | $3,926 | $4,058 | $(132) | (3)% | | Total Loans excl. LMC (Non-GAAP) (Period-end) | $59,131 | $59,201 | $(70) | 0% | | Total Loans (GAAP) (Average) | $62,787 | $62,551 | $236 | 0% | | LMC (GAAP) (Average) | $3,628 | $3,533 | $96 | 3% | | Total Loans excl. LMC (Non-GAAP) (Average) | $59,159 | $59,019 | $140 | 0% | [Allowance for Credit Losses Ratios Reconciliation](index=26&type=section&id=Allowance%20for%20Credit%20Losses%20Ratios%20Reconciliation) For 3Q25, the total allowance for credit losses (non-GAAP) to loans and leases ratio was 1.38%, and to nonperforming loans and leases was 144% Allowance for Credit Losses Ratios Reconciliation | Metric | 3Q25 | 2Q25 | 3Q24 | | :------------------------------------------------- | :----- | :----- | :----- | | Allowance for loan and lease losses (GAAP) | $777M | $814M | $823M | | Reserve for unfunded commitments (GAAP) | $93M | $87M | $75M | | Allowance for credit losses (Non-GAAP) | $870M | $901M | $897M | | Loans and leases (GAAP) | $63,058M | $63,260M | $62,445M | | Nonaccrual loans and leases (GAAP) | $605M | $593M | $578M | | Allowance for credit losses to loans and leases (Non-GAAP) | 1.38% | 1.42% | 1.44% | | Allowance for credit losses to nonperforming loans and leases (Non-GAAP) | 144% | 152% | 155% | [Adjusted Pre-provision Net Revenue (PPNR) Reconciliation](index=27&type=section&id=Adjusted%20Pre-provision%20Net%20Revenue%20%28PPNR%29%20Reconciliation) Adjusted pre-provision net revenue (PPNR) (non-GAAP) for 3Q25 was $347 million, an increase from $334 million in 2Q25, with taxable-equivalent PPNR at $351 million Adjusted Pre-provision Net Revenue (PPNR) Reconciliation | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | | :----------------------------------------- | :-------- | :-------- | :-------- | | Pre-tax income (GAAP) | $344 | $309 | $281 | | Plus notable items (pretax) (GAAP) | $8 | $(4) | $14 | | Adjusted Pre-tax income (non-GAAP) | $352 | $304 | $296 | | Plus provision expense (GAAP) | $(5) | $30 | $35 | | Adjusted Pre-provision net revenue (PPNR) (non-GAAP) | $347 | $334 | $331 | | Pre-provision net revenue-Taxable-equivalent (Non-GAAP) | $351 | $338 | $334 | [Adjusted Personnel Expense Excluding Deferred Compensation Expense Reconciliation](index=27&type=section&id=Adjusted%20Personnel%20Expense%20Excluding%20Deferred%20Compensation%20Expense%20Reconciliation) Adjusted personnel expense excluding deferred compensation expense (non-GAAP) for 3Q25 was $288 million, a slight increase from $279 million in 2Q25 Adjusted Personnel Expense Excluding Deferred Compensation Expense Reconciliation | Metric | 3Q25 ($M) | 2Q25 ($M) | 3Q24 ($M) | | :------------------------------------------------- | :-------- | :-------- | :-------- | | Personnel expense (GAAP) | $296 | $282 | $282 | | Plus notable items (pretax) (GAAP) | $0 | $4 | $(1) | | Adjusted personnel expense (non-GAAP) | $296 | $286 | $281 | | Less adjusted deferred compensation expense (GAAP) | $8 | $7 | $6 | | Adjusted personnel expense excluding deferred compensation expense (non-GAAP) | $288 | $279 | $275 | [General Information & Disclosures](index=5&type=section&id=General%20Information%20%26%20Disclosures) This section provides important general information and disclosures, including forward-looking statements, conference call details, company overview, and contact information [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements subject to significant business, operational, economic, and competitive uncertainties and contingencies, with actual results potentially differing materially from expectations - Forward-looking statements are not historical information but rather statements about future operations, strategies, financial results, or other developments, inherently subject to significant business, operational, economic, and competitive uncertainties and contingencies beyond FHN’s control[17](index=17&type=chunk) - FHN undertakes no obligation to update or revise any forward-looking statements, and actual results may differ materially due to one or more factors, including those listed in this document or the documents referenced above, as well as other unlisted factors[17](index=17&type=chunk) [Conference Call Information](index=6&type=section&id=Conference%20Call%20Information) First Horizon Corporation held a conference call on October 15, 2025, at 8:30 AM CT to discuss third-quarter results, with replay options available until October 29, 2025 - The third quarter 2025 earnings conference call was held on October 15, 2025, at 8:30 AM CT[23](index=23&type=chunk) - A replay of the conference call is available from noon CT on October 15 through midnight CT on October 29, 2025, via telephone (U.S. dial 1-866-813-9403, access code 101579) and webcast[24](index=24&type=chunk) [About First Horizon Corporation](index=6&type=section&id=About%20First%20Horizon%20Corporation) First Horizon Corporation (NYSE: FHN) is a leading regional financial services company with $83.2 billion in assets as of September 30, 2025, headquartered in Memphis, Tennessee - First Horizon Corporation (NYSE: FHN) had **$83.2 billion in assets** as of September 30, 2025[25](index=25&type=chunk) - Headquartered in Memphis, Tennessee, its banking subsidiary, First Horizon Bank, operates in 12 states across the Southern U.S., offering commercial, private banking, consumer, small business, wealth and trust management, retail brokerage, capital markets, fixed income, and mortgage banking services[25](index=25&type=chunk) - First Horizon has been recognized as one of the best employers in the U.S. by Fortune and Forbes magazines and as a Top 10 Most Admired Bank in America[25](index=25&type=chunk) [Contact Information](index=6&type=section&id=Contact%20Information) Investor relations contact is Tyler Craft, and media relations contact is Beth Ardoin - Investor Relations: Tyler Craft - Tyler.Craft@firsthorizon.com[26](index=26&type=chunk) - Media Relations: Beth Ardoin - Beth.Ardoin@firsthorizon.com[26](index=26&type=chunk) [Footnotes & Glossary](index=22&type=section&id=Footnotes%20%26%20Glossary) This section provides detailed footnotes clarifying financial terms, calculations, and reclassifications, along with a glossary defining key financial and operational terms used in the report [Footnotes](index=22&type=section&id=Footnotes) This section offers detailed footnotes clarifying specific financial terms, calculation methodologies, and reclassifications used in the report, including definitions and reconciliations for non-GAAP measures - Footnotes provide disclosures for various financial data, including taxable equivalent interest income, occupancy and equipment expense, pre-provision net revenue, non-GAAP measures, credit card balances, net interest margin calculations, segment equity allocations, and share count impacts[65](index=65&type=chunk) [Glossary of Terms](index=28&type=section&id=Glossary%20of%20Terms) The glossary defines key financial and operational terms used in the report, encompassing regulatory capital ratios, key performance ratios, asset quality ratios, and descriptions of operating segments - Definitions of key financial ratios are provided, such as Return on Average Assets, Return on Average Common Equity, Return on Average Tangible Common Equity, Noninterest Income as a % of Total Revenue, and Efficiency Ratio[81](index=81&type=chunk)[82](index=82&type=chunk) - Asset quality ratios are defined, including Nonperforming Loans and Leases (NPL) %, Net Charge-off Rate, Allowance for Credit Losses/Loans and Leases, and Allowance for Credit Losses/NPL[83](index=83&type=chunk)[84](index=84&type=chunk) - Descriptions of operating segments (Commercial, Consumer, and Wealth; Wholesale; and Corporate) are included[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)

First Horizon(US:FHN)

Citizens Financial (CFG) - 2025 Q3 - Quarterly Results

2025-10-15 10:32

[Consolidated Financial Highlights](index=3&type=section&id=Consolidated%20Financial%20Highlights) This section overviews the company's 3Q25 financial performance, highlighting increased revenue, net income, and EPS, improved efficiency, and strong capital ratios [Selected Operating Data](index=3&type=section&id=Selected%20Operating%20Data) The company achieved significant 3Q25 growth in total revenue and net income, resulting in higher diluted EPS and increased book values Selected Operating Data (3Q25 vs 2Q25 vs 3Q24) | Metric | 3Q25 | 2Q25 | 3Q24 | 3Q25 Change vs 2Q25 ($/%) | 3Q25 Change vs 3Q24 ($/%) | | :----------------------- | :----- | :----- | :----- | :------------------------ | :------------------------ | | Total revenue (in millions USD) | $2,118 | $2,037 | $1,901 | $81 (4%) | $217 (11%) | | Noninterest expense (in millions USD) | 1,335 | 1,319 | 1,259 | 16 (1%) | 76 (6%) | | Net income (in millions USD) | 494 | 436 | 382 | 58 (13%) | 112 (29%) | | Diluted earnings per share (USD) | $1.05 | $0.92 | $0.77 | $0.13 (14%) | $0.28 (36%) | | Book value per common share (USD) | $54.97 | $53.43 | $51.25 | $1.54 (3%) | $3.72 (7%) | | Tangible book value per common share (USD) | $36.73 | $35.23 | $33.54 | $1.50 (4%) | $3.19 (10%) | [Financial Ratios](index=4&type=section&id=Financial%20Ratios) Key financial ratios improved in 3Q25, with increased net interest margin and returns on equity, alongside a lower efficiency ratio Financial Ratios (3Q25 vs 2Q25 vs 3Q24) | Metric | 3Q25 | 2Q25 | 3Q24 | 3Q25 Change vs 2Q25 (bps) | 3Q25 Change vs 3Q24 (bps) | | :-------------------------------- | :----- | :----- | :----- | :------------------------ | :------------------------ | | Net interest margin (FTE) | 3.00% | 2.95% | 2.77% | 5 bps | 23 bps | | Return on average common equity | 7.77% | 7.18% | 6.12% | 59 bps | 165 bps | | Return on average tangible common equity | 11.75% | 11.05% | 9.45% | 70 bps | 230 bps | | Efficiency ratio | 63.03% | 64.76% | 66.23% | (173) bps | (320) bps | [Capital Ratios - Period-End](index=4&type=section&id=Capital%20Ratios%20-%20Period-End) The company maintained stable and strong capital ratios at 3Q25 period-end, with CET1, Tier 1, and Total Capital ratios consistent Capital Ratios (Period-End 3Q25) | Metric | 3Q25 | | :------------------ | :----- | | CET1 capital ratio | 10.7% | | Tier 1 capital ratio | 11.9% | | Total capital ratio | 13.9% | | Tier 1 leverage ratio | 9.4% | | Common equity ratio | 10.6% | | Tangible common equity ratio | 7.4% | [Selected Balance Sheet Data](index=4&type=section&id=Selected%20Balance%20Sheet%20Data) The loan-to-deposit ratio decreased QoQ and YoY, reflecting shifts in the balance of loans and deposits Loan-to-Deposit Ratio (Period-End) | Metric | 3Q25 | 2Q25 | 3Q24 | 3Q25 Change vs 2Q25 (bps) | 3Q25 Change vs 3Q24 (bps) | | :-------------------------- | :----- | :----- | :----- | :------------------------ | :------------------------ | | Loan-to-deposit ratio | 78.26% | 79.56% | 80.85% | (130) bps | (259) bps | [Consolidated Statements of Operations (unaudited)](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20(unaudited)) This section details 3Q25 and YTD revenues, expenses, and net income, showing growth in net interest and noninterest income, boosting net income [Quarterly Performance](index=5&type=section&id=Quarterly%20Performance) 3Q25 saw net interest income rise 4% QoQ and 9% YoY, with total noninterest income up 5% QoQ and 18% YoY, boosting net income Quarterly Performance (3Q25 vs 2Q25 vs 3Q24) | Metric | 3Q25 | 2Q25 | 3Q24 | 3Q25 Change vs 2Q25 ($/%) | 3Q25 Change vs 3Q24 ($/%) | | :-------------------------------- | :----- | :----- | :----- | :------------------------ | :------------------------ | | Total interest income (in millions USD) | $2,458 | $2,407 | $2,539 | $51 (2%) | ($81) (3%) | | Total interest expense (in millions USD) | 970 | 970 | 1,170 | — (0%) | ($200) (17%) | | Net interest income (in millions USD) | 1,488 | 1,437 | 1,369 | 51 (4%) | 119 (9%) | | Total noninterest income (in millions USD) | 630 | 600 | 532 | 30 (5%) | 98 (18%) | | Total revenue (in millions USD) | 2,118 | 2,037 | 1,901 | 81 (4%) | 217 (11%) | | Provision for credit losses (in millions USD) | 154 | 164 | 172 | (10) (6%) | (18) (10%) | | Total noninterest expense (in millions USD) | 1,335 | 1,319 | 1,259 | 16 (1%) | 76 (6%) | | Net income (in millions USD) | $494 | $436 | $382 | $58 (13%) | $112 (29%) | [Year-to-Date Performance](index=5&type=section&id=Year-to-Date%20Performance) For 9M 2025, net interest income increased 2% YoY and noninterest income grew 11% YoY, leading to an 18% rise in net income Year-to-Date Performance (9M 2025 vs 9M 2024) | Metric | 9M 2025 | 9M 2024 | 9M 2025 Change vs 9M 2024 ($/%) | | :-------------------------------- | :------ | :------ | :------------------------------- | | Total interest income (in millions USD) | $7,217 | $7,724 | ($507) (7%) | | Total interest expense (in millions USD) | 2,901 | 3,503 | ($602) (17%) | | Net interest income (in millions USD) | 4,316 | 4,221 | 95 (2%) | | Total noninterest income (in millions USD) | 1,774 | 1,602 | 172 (11%) | | Total revenue (in millions USD) | 6,090 | 5,823 | 267 (5%) | | Provision for credit losses (in millions USD) | 471 | 525 | (54) (10%) | | Total noninterest expense (in millions USD) | 3,968 | 3,918 | 50 (1%) | | Net income (in millions USD) | $1,303 | $1,108 | $195 (18%) | [Consolidated Balance Sheets (unaudited)](index=6&type=section&id=Consolidated%20Balance%20Sheets%20(unaudited)) This section details the company's 3Q25 financial position, showing increased assets and deposits, decreased long-term borrowed funds, and shifts in funding [Period-End Balances](index=6&type=section&id=Period-End%20Balances) As of Sept 30, 2025, total assets and deposits increased QoQ and YoY, while long-term borrowed funds significantly decreased Consolidated Balance Sheet Highlights (Sept 30, 2025 vs June 30, 2025 vs Sept 30, 2024) | Metric | Sept 30, 2025 | June 30, 2025 | Sept 30, 2024 | Change vs June 30, 2025 ($/%) | Change vs Sept 30, 2024 ($/%) | | :-------------------------------- | :------------ | :------------ | :------------ | :----------------------------- | :----------------------------- | | **ASSETS** | | | | | | | Total Assets (in millions USD) | $222,747 | $218,310 | $219,706 | $4,437 (2%) | $3,041 (1%) | | Loans and leases (net) (in millions USD) | 138,898 | 137,296 | 139,553 | 1,602 (1%) | (655) (0%) | | Debt securities available for sale (in millions USD) | 35,419 | 34,658 | 32,835 | 761 (2%) | 2,584 (8%) | | **LIABILITIES** | | | | | | | Total Deposits (in millions USD) | 180,011 | 175,086 | 175,188 | 4,925 (3%) | 4,823 (3%) | | Noninterest-bearing deposits (in millions USD) | 39,472 | 38,001 | 35,978 | 1,471 (4%) | 3,494 (10%) | | Total long-term borrowed funds (in millions USD) | 10,441 | 12,526 | 13,944 | (2,085) (17%) | (3,503) (25%) | | Total Liabilities (in millions USD) | 196,918 | 193,076 | 194,774 | 3,842 (2%) | 2,144 (1%) | | **STOCKHOLDERS' EQUITY** | | | | | | | Total Stockholders' Equity (in millions USD) | 25,829 | 25,234 | 24,932 | 595 (2%) | 897 (4%) | | Total tangible common equity (in millions USD) | $15,848 | $15,246 | $14,931 | $602 (4%) | $917 (6%) | [Loans and Deposits](index=7&type=section&id=Loans%20and%20Deposits) This section details period-end loan and deposit portfolios, showing growth in commercial and residential loans, declines in auto and education loans, and overall deposit increases [Loans and Leases Breakdown](index=7&type=section&id=Loans%20and%20Leases%20Breakdown) Total loans and leases increased 1% QoQ but decreased 1% YoY, with commercial and industrial loans growing, while automobile loans declined significantly Loans and Leases (Sept 30, 2025 vs June 30, 2025 vs Sept 30, 2024) | Loan Category | Sept 30, 2025 | June 30, 2025 | Sept 30, 2024 | Change vs June 30, 2025 ($/%) | Change vs Sept 30, 2024 ($/%) | | :------------------------ | :------------ | :------------ | :------------ | :----------------------------- | :----------------------------- | | Commercial and industrial (in millions USD) | $46,953 | $45,412 | $43,825 | $1,541 (3%) | $3,128 (7%) | | Commercial real estate (in millions USD) | 25,540 | 26,230 | 27,983 | (690) (3%) | (2,443) (9%) | | Total commercial (in millions USD) | 72,493 | 71,642 | 71,808 | 851 (1%) | 685 (1%) | | Residential mortgages (in millions USD) | 34,477 | 33,823 | 32,379 | 654 (2%) | 2,098 (6%) | | Home equity (in millions USD) | 18,415 | 17,711 | 15,992 | 704 (4%) | 2,423 (15%) | | Automobile (in millions USD) | 2,816 | 3,407 | 5,540 | (591) (17%) | (2,724) (49%) | | Education (in millions USD) | 8,556 | 8,550 | 11,118 | 6 (0%) | (2,562) (23%) | | Total loans and leases (in millions USD) | $140,870 | $139,304 | $141,632 | $1,566 (1%) | ($762) (1%) | [Deposits Breakdown](index=7&type=section&id=Deposits%20Breakdown) Total deposits increased 3% QoQ and YoY, driven by noninterest-bearing demand and money market deposits, while time deposits decreased Deposits (Sept 30, 2025 vs June 30, 2025 vs Sept 30, 2024) | Deposit Category | Sept 30, 2025 | June 30, 2025 | Sept 30, 2024 | Change vs June 30, 2025 ($/%) | Change vs Sept 30, 2024 ($/%) | | :------------------------ | :------------ | :------------ | :------------ | :----------------------------- | :----------------------------- | | Noninterest-bearing demand (in millions USD) | $39,472 | $38,001 | $35,978 | $1,471 (4%) | $3,494 (10%) | | Checking with interest (in millions USD) | 35,219 | 34,918 | 33,680 | 301 (1%) | 1,539 (5%) | | Savings (in millions USD) | 24,759 | 25,400 | 26,489 | (641) (3%) | (1,730) (7%) | | Money market (in millions USD) | 59,709 | 55,638 | 54,654 | 4,071 (7%) | 5,055 (9%) | | Time (in millions USD) | 20,852 | 21,129 | 24,387 | (277) (1%) | (3,535) (14%) | | Total deposits (in millions USD) | $180,011 | $175,086 | $175,188 | $4,925 (3%) | $4,823 (3%) | [Average Balance Sheets, Annualized Yields and Rates](index=8&type=section&id=Average%20Balance%20Sheets%2C%20Annualized%20Yields%20and%20Rates) This section analyzes average balances, yields, and rates, showing increased net interest margin and spread in 3Q25, reflecting effective asset-liability management [Quarterly Trends in Yields and Rates](index=8&type=section&id=Quarterly%20Trends%20in%20Yields%20and%20Rates) 3Q25 saw net interest margin (FTE) rise 5 bps QoQ and 23 bps YoY to **3.00%**, with improved interest rate spread, indicating better profitability Quarterly Trends (3Q25 vs 2Q25 vs 3Q24) | Metric | 3Q25 | 2Q25 | 3Q24 | 3Q25 Change vs 2Q25 | 3Q25 Change vs 3Q24 | | :-------------------------------- | :----- | :----- | :----- | :------------------ | :------------------ | | Total interest-earning assets (Avg Bal, in millions USD) | $197,598 | $196,318 | $197,164 | $1,280 | $434 | | Total interest-earning assets (Rate) | 4.92% | 4.89% | 5.09% | 3 bps | (17) bps | | Total interest-bearing liabilities (Avg Bal, in millions USD) | $150,119 | $150,202 | $151,655 | ($83) | ($1,536) | | Total interest-bearing liabilities (Rate) | 2.56% | 2.59% | 3.07% | (3) bps | (51) bps | | Interest Rate Spread | 2.36% | 2.30% | 2.02% | 6 bps | 34 bps | | Net Interest Income (FTE, in millions USD) | $1,492 | $1,441 | $1,373 | $51 | $119 | | Net Interest Margin (FTE) | 3.00% | 2.95% | 2.77% | 5 bps | 23 bps | [Year-to-Date Trends in Yields and Rates](index=9&type=section&id=Year-to-Date%20Trends%20in%20Yields%20and%20Rates) For 9M 2025, net interest margin (FTE) increased 10 bps YoY to **2.95%**, with improved interest rate spread despite lower interest-earning assets Year-to-Date Trends (9M 2025 vs 9M 2024) | Metric | 9M 2025 | 9M 2024 | 9M 2025 Change vs 9M 2024 | | :-------------------------------- | :------ | :------ | :-------------------------- | | Total interest-earning assets (Avg Bal, in millions USD) | $196,334 | $198,561 | ($2,227) | | Total interest-earning assets (Rate) | 4.88% | 5.15% | (27) bps | | Total interest-bearing liabilities (Avg Bal, in millions USD) | $149,941 | $152,703 | ($2,762) | | Total interest-bearing liabilities (Rate) | 2.58% | 3.06% | (48) bps | | Interest Rate Spread | 2.30% | 2.09% | 21 bps | | Net Interest Income (FTE, in millions USD) | $4,328 | $4,234 | $94 | | Net Interest Margin (FTE) | 2.95% | 2.85% | 10 bps | [Mortgage Banking Fees](index=10&type=section&id=Mortgage%20Banking%20Fees) This section details mortgage banking fees, showing a QoQ decrease but YoY increase, driven by MSR valuation changes and higher residential originations [Mortgage Banking Fees Summary](index=10&type=section&id=Mortgage%20Banking%20Fees%20Summary) Total mortgage banking fees decreased 33% QoQ to **$49 million** in 3Q25, primarily due to a **92% drop in MSR valuation changes**, but increased 7% YoY Mortgage Banking Fees (3Q25 vs 2Q25 vs 3Q24) | Metric | 3Q25 | 2Q25 | 3Q24 | 3Q25 Change vs 2Q25 ($/%) | 3Q25 Change vs 3Q24 ($/%) | | :-------------------------------- | :----- | :----- | :----- | :------------------------ | :------------------------ | | Production revenue (in millions USD) | $18 | $19 | $15 | ($1) (5%) | $3 (20%) | | Mortgage servicing revenue (in millions USD) | 29 | 28 | 33 | 1 (4%) | (4) (12%) | | MSR valuation changes, net of hedge impact (in millions USD) | 2 | 26 | (2) | (24) (92%) | 4 (NM) | | Total mortgage banking fees (in millions USD) | $49 | $73 | $46 | ($24) (33%) | $3 (7%) | [Residential Real Estate Originations](index=10&type=section&id=Residential%20Real%20Estate%20Originations) Residential real estate originations decreased 6% QoQ but increased 19% YoY in 3Q25, with YTD originations growing 34% Residential Real Estate Originations (9M 2025 vs 9M 2024) | Metric | 9M 2025 | 9M 2024 | 9M 2025 Change vs 9M 2024 ($/%) | | :------------------------ | :------ | :------ | :------------------------------- | | Total originations (in millions USD) | $10,879 | $8,097 | $2,782 (34%) | | Originated for sale (in millions USD) | 6,781 | 5,316 | 1,465 (28%) | | Originated for investment (in millions USD) | 4,098 | 2,781 | 1,317 (47%) | [Mortgage Servicing Information (UPB)](index=10&type=section&id=Mortgage%20Servicing%20Information%20(UPB)) Total mortgage servicing UPB increased slightly YoY, driven by owned loans serviced, offsetting a decrease in loans serviced for others Mortgage Servicing Information (UPB) (Sept 30, 2025 vs Sept 30, 2024) | Metric | Sept 30, 2025 | Sept 30, 2024 | Change vs Sept 30, 2024 ($/%) | | :------------------------ | :------------ | :------------ | :----------------------------- | | Loans serviced for others (in millions USD) | $95,244 | $96,120 | ($876) (1%) | | Owned loans serviced (in millions USD) | 34,760 | 32,655 | 2,105 (6%) | | Total (in millions USD) | $130,004 | $128,775 | $1,229 (1%) | [Segment Financial Highlights](index=11&type=section&id=Segment%20Financial%20Highlights) This section breaks down financial performance and key metrics across Consumer, Commercial, Non-Core, and Other segments, reflecting varied market conditions [Consumer Banking](index=11&type=section&id=Consumer%20Banking) Consumer Banking reported increased net income and total revenue QoQ and YoY, driven by net interest and noninterest income growth, improving efficiency Consumer Banking Financial Performance (3Q25 vs 2Q25 vs 3Q24) | Metric | 3Q25 | 2Q25 | 3Q24 | 3Q25 Change vs 2Q25 ($/%) | 3Q25 Change vs 3Q24 ($/%) | | :------------------------ | :----- | :----- | :----- | :------------------------ | :------------------------ | | Net interest income (in millions USD) | $1,262 | $1,218 | $1,156 | $44 (4%) | $106 (9%) | | Noninterest income (in millions USD) | 311 | 329 | 285 | (18) (5%) | 26 (9%) | | Total revenue (in millions USD) | 1,573 | 1,547 | 1,441 | 26 (2%) | 132 (9%) | | Net income (loss) (in millions USD) | $383 | $376 | $327 | $7 (2%) | $56 (17%) | Consumer Banking Average Balances (3Q25 vs 3Q24) | Metric | 3Q25 | 3Q24 | 3Q25 Change vs 3Q24 ($/%) | | :------------------------ | :----- | :----- | :------------------------ | | Total assets (in millions USD) | $80,729 | $75,392 | $5,337 (7%) | | Total loans and leases (in millions USD) | 74,274 | 69,021 | 5,253 (8%) | | Deposits (in millions USD) | 128,547 | 121,899 | 6,648 (5%) | Consumer Banking Key Metrics (3Q25 vs 3Q24) | Metric | 3Q25 | 3Q24 | 3Q25 Change vs 3Q24 | | :------------------------ | :----- | :----- | :------------------ | | Net interest margin | 6.69% | 6.60% | 9 bps | | Efficiency ratio | 62.22% | 63.53% | (131) bps | [Commercial Banking](index=12&type=section&id=Commercial%20Banking) Commercial Banking saw QoQ net income and revenue increases from noninterest income, but YoY declines in net interest income and overall net income Commercial Banking Financial Performance (3Q25 vs 2Q25 vs 3Q24) | Metric | 3Q25 | 2Q25 | 3Q24 | 3Q25 Change vs 2Q25 ($/%) | 3Q25 Change vs 3Q24 ($/%) | | :------------------------ | :----- | :----- | :----- | :------------------------ | :------------------------ | | Net interest income (in millions USD) | $448 | $439 | $478 | $9 (2%) | ($30) (6%) | | Noninterest income (in millions USD) | 286 | 232 | 207 | 54 (23%) | 79 (38%) | | Total revenue (in millions USD) | 734 | 671 | 685 | 63 (9%) | 49 (7%) | | Net income (loss) (in millions USD) | $248 | $206 | $231 | $42 (20%) | $17 (7%) | Commercial Banking Average Balances (3Q25 vs 3Q24) | Metric | 3Q25 | 3Q24 | 3Q25 Change vs 3Q24 ($/%) | | :------------------------ | :----- | :----- | :------------------------ | | Total assets (in millions USD) | $66,134 | $68,092 | ($1,958) (3%) | | Total loans and leases (in millions USD) | 62,905 | 64,974 | (2,069) (3%) | | Deposits (in millions USD) | 44,482 | 44,190 | 292 (1%) | Commercial Banking Key Metrics (3Q25 vs 3Q24) | Metric | 3Q25 | 3Q24 | 3Q25 Change vs 3Q24 | | :------------------------ | :----- | :----- | :------------------ | | Net interest margin | 2.78% | 2.90% | (12) bps | | Efficiency ratio | 45.15% | 43.84% | 131 bps | [Non-Core](index=13&type=section&id=Non-Core) The Non-Core segment's net loss decreased QoQ and YoY, driven by increased net interest income and lower noninterest expense, despite declining assets Non-Core Financial Performance (3Q25 vs 2Q25 vs 3Q24) | Metric | 3Q25 | 2Q25 | 3Q24 | 3Q25 Change vs 2Q25 ($/%) | 3Q25 Change vs 3Q24 ($/%) | | :------------------------ | :----- | :----- | :----- | :------------------------ | :------------------------ | | Net interest income (in millions USD) | ($7) | ($5) | ($28) | ($2) (40%) | $21 (75%) | | Total revenue (in millions USD) | (3) | (2) | (28) | (1) (50%) | 25 (89%) | | Noninterest expense (in millions USD) | 12 | 15 | 23 | (3) (20%) | (11) (48%) | | Net income (loss) (in millions USD) | ($14) | ($14) | ($51) | $0 (0%) | $37 (73%) | Non-Core Average Balances (3Q25 vs 3Q24) | Metric | 3Q25 | 3Q24 | 3Q25 Change vs 3Q24 ($/%) | | :------------------------ | :----- | :----- | :------------------------ | | Total assets (in millions USD) | $4,000 | $8,389 | ($4,389) (52%) | | Total loans and leases (in millions USD) | 3,976 | 8,352 | (4,376) (52%) | [Other](index=14&type=section&id=Other) The 'Other' segment's net loss improved QoQ and YoY, primarily due to decreased noninterest expense and an improved provision for credit losses Other Segment Financial Performance (3Q25 vs 2Q25 vs 3Q24) | Metric | 3Q25 | 2Q25 | 3Q24 | 3Q25 Change vs 2Q25 ($/%) | 3Q25 Change vs 3Q24 ($/%) | | :------------------------ | :----- | :----- | :----- | :------------------------ | :------------------------ | | Net interest income (in millions USD) | ($215) | ($215) | ($237) | $0 (0%) | $22 (9%) | | Total revenue (in millions USD) | (186) | (179) | (197) | (7) (4%) | 11 (6%) | | Noninterest expense (in millions USD) | 11 | 24 | 20 | (13) (54%) | (9) (45%) | | Provision (benefit) for credit losses (in millions USD) | (9) | (3) | (20) | (6) (200%) | 11 (55%) | | Net income (loss) (in millions USD) | ($123) | ($132) | ($125) | $9 (7%) | $2 (2%) | Other Segment Average Balances (3Q25 vs 3Q24) | Metric | 3Q25 | 3Q24 | 3Q25 Change vs 3Q24 ($/%) | | :------------------------ | :----- | :----- | :------------------------ | | Total assets (in millions USD) | $68,254 | $66,705 | $1,549 (2%) | | Deposits (in millions USD) | 2,928 | 7,962 | (5,034) (63%) | [Credit-Related Information](index=15&type=section&id=Credit-Related%20Information) This section overviews credit quality, showing decreasing nonaccrual loans and net charge-offs, indicating overall asset quality improvement [Nonaccrual loans and leases](index=15&type=section&id=Nonaccrual%20loans%20and%20leases) Total nonaccrual loans and leases decreased slightly QoQ and 10% YoY to **$1.518 billion**, driven by commercial real estate and retail reductions Nonaccrual Loans and Leases (Sept 30, 2025 vs June 30, 2025 vs Sept 30, 2024) | Category | Sept 30, 2025 | June 30, 2025 | Sept 30, 2024 | Change vs June 30, 2025 ($/%) | Change vs Sept 30, 2024 ($/%) | | :------------------------ | :------------ | :------------ | :------------ | :----------------------------- | :----------------------------- | | Commercial and industrial (in millions USD) | $230 | $233 | $219 | ($3) (1%) | $11 (5%) | | Commercial real estate (in millions USD) | 703 | 706 | 852 | (3) (0%) | (149) (17%) | | Total commercial (in millions USD) | 933 | 939 | 1,071 | (6) (1%) | (138) (13%) | | Total retail (in millions USD) | 585 | 585 | 616 | — (0%) | (31) (5%) | | Total nonaccrual loans and leases (in millions USD) | $1,518 | $1,524 | $1,687 | ($6) (0%) | ($169) (10%) | Asset Quality Ratios (Sept 30, 2025 vs Sept 30, 2024) | Metric | Sept 30, 2025 | Sept 30, 2024 | Change vs Sept 30, 2024 | | :-------------------------------- | :------------ | :------------ | :---------------------- | | Allowance for loan and lease losses to loans and leases | 1.40% | 1.47% | (7) bps | | Nonaccrual loans and leases to loans and leases | 1.08% | 1.19% | (11) bps | [Loans and Leases 90 Days or More Past Due and Accruing](index=16&type=section&id=Loans%20and%20Leases%2090%20Days%20or%20More%20Past%20Due%20and%20Accruing) Loans and leases 90+ days past due decreased 16% QoQ and 4% YoY to **$162 million**, mainly due to an **88% QoQ reduction** in commercial real estate Loans and Leases 90 Days or More Past Due and Accruing (Sept 30, 2025 vs June 30, 2025 vs Sept 30, 2024) | Category | Sept 30, 2025 | June 30, 2025 | Sept 30, 2024 | Change vs June 30, 2025 ($/%) | Change vs Sept 30, 2024 ($/%) | | :------------------------ | :------------ | :------------ | :------------ | :----------------------------- | :----------------------------- | | Commercial and industrial (in millions USD) | $39 | $3 | $5 | $36 (NM) | $34 (NM) | | Commercial real estate (in millions USD) | 7 | 60 | 15 | (53) (88%) | (8) (53%) | | Total commercial (in millions USD) | 46 | 63 | 20 | (17) (27%) | 26 (130%) | | Residential mortgages (in millions USD) | 114 | 128 | 146 | (14) (11%) | (32) (22%) | | Total loans and leases (in millions USD) | $162 | $194 | $169 | ($32) (16%) | ($7) (4%) | [Charge-offs, Recoveries, and Related Ratios](index=17&type=section&id=Charge-offs%2C%20Recoveries%2C%20and%20Related%20Ratios) Total net charge-offs decreased 3% QoQ and 16% YoY to **$162 million**, driven by commercial and retail reductions, with an **8 bps YoY** drop in the overall rate Total Gross Charge-offs (3Q25 vs 2Q25 vs 3Q24) | Metric | 3Q25 | 2Q25 | 3Q24 | 3Q25 Change vs 2Q25 ($/%) | 3Q25 Change vs 3Q24 ($/%) | | :------------------------ | :----- | :----- | :----- | :------------------------ | :------------------------ | | Total commercial (in millions USD) | $91 | $93 | $106 | ($2) (2%) | ($15) (14%) | | Total retail (in millions USD) | 104 | 108 | 125 | (4) (4%) | (21) (17%) | | Total gross charge-offs (in millions USD) | $195 | $201 | $231 | ($6) (3%) | ($36) (16%) | Total Net Charge-offs (3Q25 vs 2Q25 vs 3Q24) | Metric | 3Q25 | 2Q25 | 3Q24 | 3Q25 Change vs 2Q25 ($/%) | 3Q25 Change vs 3Q24 ($/%) | | :------------------------ | :----- | :----- | :----- | :------------------------ | :------------------------ | | Total commercial (in millions USD) | $85 | $92 | $98 | ($7) (8%) | ($13) (13%) | | Total retail (in millions USD) | 77 | 75 | 94 | 2 (3%) | (17) (18%) | | Total net charge-offs (in millions USD) | $162 | $167 | $192 | ($5) (3%) | ($30) (16%) | Annualized Net Charge-off Rates (3Q25 vs 3Q24) | Category | 3Q25 | 3Q24 | Change (bps) | | :------------------------ | :----- | :----- | :----------- | | Commercial and industrial | 0.26% | 0.49% | (23) bps | | Commercial real estate | 0.85% | 0.62% | 23 bps | | Total commercial | 0.47% | 0.54% | (7) bps | | Automobile | 0.43% | 0.81% | (38) bps | | Education | 0.92% | 0.85% | 7 bps | | Other retail | 5.45% | 4.93% | 52 bps | | Total loans and leases | 0.46% | 0.54% | (8) bps | [Summary of Changes in the Components of the Allowance for Credit Losses](index=19&type=section&id=Summary%20of%20Changes%20in%20the%20Components%20of%20the%20Allowance%20for%20Credit%20Losses) Total allowance for credit losses decreased 0% QoQ and 4% YoY to **$2.201 billion**, driven by a reduction in allowance for loan and lease losses Allowance for Loan and Lease Losses (Sept 30, 2025 vs June 30, 2025 vs Sept 30, 2024) | Metric | Sept 30, 2025 | June 30, 2025 | Sept 30, 2024 | Change vs June 30, 2025 ($/%) | Change vs Sept 30, 2024 ($/%) | | :-------------------------------- | :------------ | :------------ | :------------ | :----------------------------- | :----------------------------- | | Beginning balance (in millions USD) | $2,008 | $2,014 | $2,125 | ($6) (0%) | ($117) (6%) | | Total net charge-offs (in millions USD) | 162 | 167 | 192 | (5) (3%) | (30) (16%) | | Total provision for loan and lease losses (in millions USD) | 126 | 161 | 146 | (35) (22%) | (20) (14%) | | Ending balance (in millions USD) | $1,972 | $2,008 | $2,079 | ($36) (2%) | ($107) (5%) | Total Allowance for Credit Losses (Sept 30, 2025 vs Sept 30, 2024) | Metric | Sept 30, 2025 | Sept 30, 2024 | Change vs Sept 30, 2024 ($/%) | | :-------------------------------- | :------------ | :------------ | :----------------------------- | | Ending balance (in millions USD) | $2,201 | $2,286 | ($85) (4%) | [Capital and Ratios](index=20&type=section&id=Capital%20and%20Ratios) This section details key capital ratios, including CET1, Tier 1, and Total Capital, showing strong and slightly increasing capital positions [Capital Ratios and Components](index=20&type=section&id=Capital%20Ratios%20and%20Components) As of Sept 30, 2025, CET1 capital ratio increased to **10.7%**, with Tier 1 and Total capital ratios remaining strong, indicating robust regulatory capital Capital Ratios (Sept 30, 2025 vs June 30, 2025 vs Sept 30, 2024) | Metric | Sept 30, 2025 | June 30, 2025 | Sept 30, 2024 | Change vs June 30, 2025 | Change vs Sept 30, 2024 | | :------------------------ | :------------ | :------------ | :------------ | :---------------------- | :---------------------- | | CET1 capital ratio | 10.7% | 10.6% | 10.6% | 0.1% | 0.1% | | Tier 1 capital ratio | 11.9% | 11.9% | 11.9% | 0.0% | 0.0% | | Total capital ratio | 13.9% | 13.8% | 13.9% | 0.1% | 0.0% | | Tier 1 leverage ratio | 9.4% | 9.4% | 9.4% | 0.0% | 0.0% | [Tangible Common Equity (Period-End)](index=20&type=section&id=Tangible%20Common%20Equity%20(Period-End)) Period-end tangible common equity increased 4% QoQ and 6% YoY to **$15.848 billion**, reflecting growth in common stockholders' equity Tangible Common Equity (Period-End) (Sept 30, 2025 vs Sept 30, 2024) | Metric | Sept 30, 2025 | Sept 30, 2024 | Change vs Sept 30, 2024 ($/%) | | :------------------------ | :------------ | :------------ | :----------------------------- | | Common stockholders' equity (in millions USD) | $23,718 | $22,820 | $898 (4%) | | Total tangible common equity (in millions USD) | $15,848 | $14,931 | $917 (6%) | [Non-GAAP Financial Measures and Reconciliations](index=21&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines and reconciles non-GAAP financial measures, labeled 'Underlying,' to GAAP, providing additional insights into core operational trends [Non-GAAP Financial Measures Overview](index=21&type=section&id=Non-GAAP%20Financial%20Measures%20Overview) The company uses 'Underlying' non-GAAP measures to exclude non-recurring items, aiding management's operational evaluation and investor insight - Non-GAAP financial measures, denoted as **'Underlying,'** exclude certain items not considered indicative of the company's ongoing financial performance. Management uses these measures to evaluate operating performance and make day-to-day operating decisions[27](index=27&type=chunk) - Investors are cautioned not to place undue reliance on non-GAAP financial measures and to consider them with the most directly comparable GAAP measures, as they have limitations as analytical tools and should not be considered in isolation[28](index=28&type=chunk) [Reconciliations of Key Non-GAAP Measures](index=22&type=section&id=Reconciliations%20of%20Key%20Non-GAAP%20Measures) This subsection provides detailed reconciliations for non-GAAP metrics like net income, efficiency ratio, and tangible book value, highlighting notable item impacts Reconciliation: Net Income, Underlying (3Q25 vs 3Q24) | Metric | 3Q25 | 3Q24 | Change ($/%) | | :-------------------------------- | :----- | :----- | :------------ | | Net income (GAAP, in millions USD) | $494 | $382 | $112 (29%) | | Add: Notable items, net of income tax benefit (in millions USD) | — | 10 | (10) (100%) | | Net income, Underlying (non-GAAP, in millions USD) | $494 | $392 | $102 (26%) | Reconciliation: Efficiency Ratio, Underlying (3Q25 vs 3Q24) | Metric | 3Q25 | 3Q24 | Change (bps) | | :-------------------------------- | :----- | :----- | :----------- | | Efficiency ratio (GAAP) | 63.03% | 66.23% | (320) bps | | Efficiency ratio, Underlying (non-GAAP) | 63.03% | 65.61% | (258) bps | Reconciliation: Tangible Book Value Per Common Share (3Q25 vs 3Q24) | Metric | 3Q25 | 3Q24 | Change ($/%) | | :-------------------------------- | :----- | :----- | :------------ | | Book value per common share (GAAP, USD) | $54.97 | $51.25 | $3.72 (7%) | | Tangible book value per common share (non-GAAP, USD) | $36.73 | $33.54 | $3.19 (10%) |

Citizens Financial (US:CFG)

Recon(RCON) - 2025 Q4 - Annual Report

2025-10-15 10:27

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EX ...

Recon(US:RCON)

Synchrony(SYF) - 2025 Q3 - Quarterly Results

2025-10-15 10:00

Synchrony(US:SYF)

Foxx Development Holdings Inc.(FOXX) - 2025 Q4 - Annual Report

2025-10-15 02:00

PART I This section details Foxx Development Holdings Inc.'s business, corporate structure, and initial financial and governance disclosures [Item 1. Business](index=6&type=section&id=Item%201.%20Business) Foxx Development Holdings Inc. is a 2017 Texas-based communications technology firm, designing and selling Foxx-branded devices through ODMs and diverse channels - Foxx Development Holdings Inc. was founded in Texas in 2017, specializing in the communications sector, with operations across various U.S. locations for sales, retail, distribution, after-sales support, and R&D[21](index=21&type=chunk) - The company's business model involves providing hardware/software specifications to original design manufacturers (ODMs), securing necessary certifications (FCC, GMSA), and offering Foxx-branded products like tablets, smartphones, and wearables[22](index=22&type=chunk) - On September 26, 2024, Acri Capital Acquisition Corporation (ACAC) completed a business combination with Foxx Development Inc. (Old Foxx), resulting in the formation of Foxx Development Holdings Inc., which subsequently listed its Common Stock and Warrants on Nasdaq under 'FOXX' and 'FOXXW' on September 27, 2024[17](index=17&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) [Overview](index=6&type=section&id=Overview) This section provides a general introduction to Foxx Development Holdings Inc.'s establishment, operational scope, and business model - Foxx Development Holdings Inc. is a technology innovation firm in the communications sector, established in Texas in 2017, with expanded presence across the U.S. for sales, distribution, support, and R&D[21](index=21&type=chunk) - The company provides hardware and software specifications to original design manufacturers, obtains certifications, and sells Foxx-branded tablets, smartphones, and wearables through distributors, major U.S. carriers (T-Mobile, AT&T, Verizon), and e-commerce channels like TikTok Shop[22](index=22&type=chunk) [The Business Combination](index=6&type=section&id=The%20Business%20Combination) This section details the merger between ACAC and Old Foxx, forming Foxx Development Holdings Inc. and its Nasdaq listing - On September 26, 2024, Acri Capital Acquisition Corporation (ACAC) completed a business combination with Foxx Development Inc. (Old Foxx), leading to the formation of Foxx Development Holdings Inc. and its listing on Nasdaq[17](index=17&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - The merger involved ACAC merging into Acri Capital Merger Sub I Inc. (renamed Foxx Development Holdings Inc.) and Old Foxx merging into Acri Capital Merger Sub II Inc. (renamed Foxx Development Inc., the Operating Subsidiary)[23](index=23&type=chunk) - Original Foxx Shareholders received **5,000,000 shares** of Registrant's Common Stock (Closing Payment Stock), with **500,000 shares** subject to an escrow arrangement contingent on the reauthorization of the Affordable Connectivity Program (ACP) with at least **$4 billion** funding[27](index=27&type=chunk)[28](index=28&type=chunk) - An additional **4,200,000 Earnout Shares** were contingent on achieving specific revenue targets for fiscal years ended June 30, 2024, and June 30, 2025. However, all Earnout Shares were forfeited as the company did not meet the vesting conditions for both fiscal years[29](index=29&type=chunk)[30](index=30&type=chunk) [Transaction Financing](index=9&type=section&id=Transaction%20Financing) This section outlines the convertible promissory notes used to finance the business combination and their subsequent conversion into common stock - Old Foxx secured Transaction Financing through convertible promissory notes totaling **$6 million** from New Bay Capital Limited (Notes 1, 2, 3) and **$9 million** from BR Technologies PTE, Ltd. and Grazyna Plawinski Limited (Notes 4, 5)[33](index=33&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - Immediately prior to the Business Combination's closing, all principal and accrued interest on these notes were converted into Original Foxx Common Stock at **$30.00 per share**, which were then exchanged for shares of Foxx Development Holdings Inc. Common Stock at a **3.3033 ratio**[37](index=37&type=chunk) Shares Issued to Convertible Note Holders at Closing | Investor | Shares of Original Foxx Common Stock Converted | Shares of Foxx Development Holdings Inc. Common Stock Issued | | :----------------------- | :--------------------------------------------- | :----------------------------------------------------------- | | New Bay Capital Limited | 212,050 | 700,473 | | BR Technologies PTE, Ltd. | 200,882 | 663,581 | | Grazyna Plawinski Limited | 100,690 | 332,614 | [Products and Services](index=10&type=section&id=Products%20and%20Services) This section describes the company's current product portfolio, including tablets, smartphones, and new IoT offerings, along with its growth strategies [Current Products](index=10&type=section&id=Current%20Products) This section details the company's primary revenue-generating products, including tablets, smartphones, and newly launched wearables and smart home solutions - The company's primary revenue streams are from sales of tablets and smartphones, with significant growth in smartphone sales in FY2025[38](index=38&type=chunk) Product Sales and Revenue (FY2024 vs. FY2025) | Product | FY2025 Sales Volume | FY2025 Revenue | FY2024 Sales Volume | FY2024 Revenue | | :---------------- | :-------------------- | :--------------- | :-------------------- | :--------------- | | Tablets | ~8,000 | ~$60.4 million | ~12,000 | ~$3.2 million | | Smartphones | ~328,000 | ~$60.4 million | ~80,000 | ~$3.2 million | - New product lines include wearables (**4G LTE kids smartwatches** launched Q1 2025, second generation planned Q4 2025) and smart home solutions (**Leak Shield** launched July 2025, solar-powered **4G LTE outdoor security camera** planned Q4 2025)[51](index=51&type=chunk)[52](index=52&type=chunk)[54](index=54&type=chunk)[84](index=84&type=chunk) [Growth Strategies with IoT Cloud Platform](index=16&type=section&id=Growth%20Strategies%20with%20IoT%20Cloud%20Platform) This section outlines the company's IoT Cloud Platform development and expansion into automotive IoT and various IoT modules for future growth - The company has developed an IoT Cloud Platform to connect its devices, offering systematized upgrades, efficient IoT operations, improved human-machine interactions, and enhanced data analytics[74](index=74&type=chunk)[75](index=75&type=chunk)[78](index=78&type=chunk) - The first generation of the IoT cloud platform, launched in Q3 2024, leverages AWS cloud services for device, user, data, and security management. The second generation, launched in Q4 2024, offers full IoT PaaS and SaaS capabilities, supporting advanced communication protocols and scalability for millions of devices[81](index=81&type=chunk)[83](index=83&type=chunk) - Expansion into IoT in Automotive includes a **4G LTE dashcam**, **4G LTE jump starter**, and **4G LTE tracker**, all expected to launch in Q4 2025[86](index=86&type=chunk)[87](index=87&type=chunk) - The company is building a portfolio of IoT modules (**4G LTE Cat 1 bis, Cat 4, Cat M, NB-IoT, Bluetooth, Wi-Fi modules** launched Q1 2025; **5G, 5G Redcap, 5G AI modules** planned H1 2026)[89](index=89&type=chunk) [Target End-Users](index=13&type=section&id=Target%20End-Users) This section identifies the key demographic segments for the company's products, focusing on budget-conscious and socially connected consumers - Target end-users include budget-conscious/practical shoppers seeking functional devices, first-time tablet/smartphone users driven by social connectivity, and parents looking for affordable yet capable devices for their children[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) [Strategic Approach to Sales and Distribution](index=13&type=section&id=Strategic%20Approach%20to%20Sales%20and%20Distribution) This section describes the company's sales model, leveraging distributors, major carriers, national programs, and diverse e-commerce platforms - The company employs a third-party customer-driven sales model, engaging distributors who market products to consumers through prominent telecommunications carriers and Mobile Virtual Network Operators (MVNOs)[59](index=59&type=chunk) - Sales channels have diversified to include participation in national initiatives like the Lifeline Program, and launching products through various online E-Commerce platforms such as TikTok Shop (March 2024), BestBuy.com, Walmart.com, Amazon, Shein, Newegg, and Mercado Libre (2025)[61](index=61&type=chunk) - An internal sales team manages a network of hundreds of customers across seven major regions and collaborates with telecommunications carriers to ensure product availability online and in retail stores[62](index=62&type=chunk) [Competitive Advantages](index=15&type=section&id=Competitive%20Advantages) This section highlights the company's strengths, including strategic operational facilities, experienced management, a build-to-order model, and strong R&D capabilities - Key competitive advantages include a comprehensive network of operational facilities in strategic locations (Irvine, CA; Dallas, TX; Atlanta, GA; Singapore) for R&D, sales, distribution, and supply chain management[63](index=63&type=chunk)[64](index=64&type=chunk) - An experienced management team with over **20 years** in electronics and communications, including CEO Greg Foley and CTO James Liao, provides deep market understanding and strategic decision-making[67](index=67&type=chunk) - A build-to-order business model allows for effective inventory management, risk mitigation, and customization based on customer demand, securing steady revenue from bulk purchase orders[68](index=68&type=chunk)[69](index=69&type=chunk) - Strong R&D and innovation capabilities, efficient supply chain management with diversified suppliers in Southeast Asia, and stringent quality control measures further enhance market position[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) [Intellectual Property](index=21&type=section&id=Intellectual%20Property) This section details the company's trademarks and future plans for patent filings to protect its technical innovations and expertise - The company holds U.S. trademarks for its brand and maintains the domain name www.foxxusa.com[93](index=93&type=chunk)[95](index=95&type=chunk) - Currently, the company does not have any registered patents but plans to file patents to safeguard its technical expertise and innovations, which are presently protected as trade secrets[95](index=95&type=chunk) [Research and Development](index=22&type=section&id=Research%20and%20Development) This section outlines the company's R&D expenditures and its strategy of leveraging outsourcing collaborations for cutting-edge IoT product development - Research and development expenses for the year ended June 30, 2025, amounted to approximately **$2.2 million**, primarily directed towards new product development[96](index=96&type=chunk) - The company leverages outsourcing collaborations with industry-leading partners to accelerate progress and deliver cutting-edge solutions in IoT product development[97](index=97&type=chunk) [Employees](index=22&type=section&id=Employees) This section provides an overview of the company's workforce, including total employee count and departmental distribution - As of the report date, the company had **25 full-time employees**, maintaining good working relationships and no material labor disputes[98](index=98&type=chunk) Employee Count by Department | Department | Number of Employees | | :-------------------------- | :------------------ | | Customer Service | 1 | | Sales and Marketing | 5 | | Product Research and Testing | 6 | | Information Technology | 1 | | Human Resources and Administration | 3 | | Finance | 3 | | Operations | 6 | | **Total** | **25** | [Certifications and Regulations](index=22&type=section&id=Certifications%20and%20Regulations) This section details the company's compliance with FCC and Google Mobile Services certifications for its products and relevant regulatory frameworks - The company has obtained FCC and Google Mobile Services (GMS) certifications for its open market products, ensuring compliance with radio frequency safety levels and the ability to run Google proprietary applications[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) - The FCC regulates RF devices, and equipment from companies on the FCC's 'Covered List' (posing national security risks) cannot be authorized in the U.S.[103](index=103&type=chunk)[104](index=104&type=chunk) [Environmental Matters](index=23&type=section&id=Environmental%20Matters) This section highlights the company's commitment to environmental protection through eco-friendly materials, manufacturing, and energy-efficient designs - The company is dedicated to environmental protection, prioritizing eco-friendly materials, manufacturing processes, and designs that emphasize a low carbon footprint, green practices, and energy efficiency[105](index=105&type=chunk) [Warranties and Customer Services](index=21&type=section&id=Warranties%20and%20Customer%20Services) This section describes the company's one-year product warranty and its after-sales service support provided to dealers - The company offers a **one-year warranty** on its products, providing after-sales service support to dealers through direct product replacement or by supplying **2% after-sales service spares**[90](index=90&type=chunk) [Competition](index=21&type=section&id=Competition) This section identifies key competitive factors and lists major competitors across the company's smartphone, tablet, and IoT product segments - Key competitive factors include features, functionality, performance, quality, and brand. The company competes with various solution providers in different market segments[91](index=91&type=chunk) - Competitors in smartphones and tablets include Motorola, Inseego, HMD, TCL, Vortex, Tinno, BLU, Sky, Maxwest, and Hot Pepper. For IoT products, competitors include Netgear, Franklin Wireless, TCL, and ZTE[94](index=94&type=chunk) [Item 1A. Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Foxx Development Holdings Inc. is not required to provide specific disclosures under Item 1A, Risk Factors - The company is a smaller reporting company and is not required to provide disclosures under Item 1A, Risk Factors[106](index=106&type=chunk) [Item 1B. Unresolved Staff Comments](index=24&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments to report - There are no unresolved staff comments to report[107](index=107&type=chunk) [Item 1C. Cybersecurity](index=24&type=section&id=Item%201C.%20Cybersecurity) The company's Board approved a Cybersecurity Incident Response Policy on September 24, 2024, integrating routine risk assessments and safeguards, with the CTO leading management and the Audit Committee providing oversight - The company's Board of Directors approved a Cybersecurity Incident Response Policy on September 24, 2024, integrating it into overall risk management systems[108](index=108&type=chunk) - The policy mandates routine and event-driven risk assessments to identify threats, evaluate potential damage, and assess the sufficiency of existing safeguards, with the CTO, James Liao, leading the management of this process[109](index=109&type=chunk)[110](index=110&type=chunk)[114](index=114&type=chunk) - The Board of Directors, through the Audit Committee, provides oversight of cybersecurity risk management, receiving periodic briefings from the CTO on risks, incidents, and policies[113](index=113&type=chunk)[115](index=115&type=chunk) [Item 2. Properties](index=25&type=section&id=Item%202.%20Properties) The company leases its corporate headquarters in Irvine, CA, and other facilities in San Diego, CA, and Alpharetta, GA, deeming them sufficient for current operations - The company's corporate headquarters are in Irvine, CA, and it leases facilities in San Diego, CA, and Alpharetta, GA, for flex space and offices[116](index=116&type=chunk)[117](index=117&type=chunk) Leased Facilities Overview | Location | Square Footage | Purpose | Lease Expiration Date | Monthly Payments | | :--------------- | :------------- | :-------- | :-------------------- | :--------------- | | Irvine, CA | 1,548 | Flex Space | 09/30/2026 | $3,653.28 | | San Diego, CA | 2,800 | Office | 05/31/2031 | $3,605.00 | | Alpharetta, GA | 300 | Office | 02/14/2026 | $591.25 | [Item 3. Legal Proceedings](index=25&type=section&id=Item%203.%20Legal%20Proceedings) The company settled a class action complaint regarding a corporate opportunity doctrine waiver by amending its charter and paying $85,000 to avoid litigation costs - On November 22, 2024, a class action complaint was filed against the company and certain individual defendants concerning a waiver of the corporate opportunity doctrine[119](index=119&type=chunk) - To resolve the litigation, the Board approved an amendment to the company's charter, and the plaintiff voluntarily dismissed the action as moot on March 3, 2025[119](index=119&type=chunk)[120](index=120&type=chunk) - The company agreed to pay **$85,000** to the plaintiff's counsel to cover attorneys' fees and expenses, without admitting wrongdoing, to avoid further litigation costs and distractions[120](index=120&type=chunk) [Item 4. Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company is not subject to the requirements of Item 4, Mine Safety Disclosures - The company is not subject to the requirements of Item 4, Mine Safety Disclosures[122](index=122&type=chunk) PART II This section covers the market for the company's equity, financial condition, results of operations, and internal controls [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=26&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Common Stock and Warrants trade on Nasdaq, with no cash dividends anticipated as earnings are retained for business development, and a 2024 Equity Incentive Plan was adopted - The company's Common Stock and Public Warrants are traded on Nasdaq under the symbols 'FOXX' and 'FOXXW'[124](index=124&type=chunk) - As of October 13, 2025, there were **4 record holders** of Common Stock and **2 for Public Warrants**[125](index=125&type=chunk) - The company has never declared or paid cash dividends and does not anticipate doing so, intending to retain all available funds and future earnings for business development and expansion[126](index=126&type=chunk) - A 2024 Equity Incentive Plan was adopted, making **1,454,019 shares** of Common Stock available for grant, representing **20%** of outstanding shares at closing[128](index=128&type=chunk)[130](index=130&type=chunk) [Item 6. [Reserved]](index=26&type=section&id=Item%206.%20[Reserved]) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's financial condition and results for FY2025 and FY2204, highlighting significant revenue growth, substantial net loss, and going concern doubts, influenced by the Business Combination and strategic factors [Overview](index=27&type=section&id=Overview) This section provides a general introduction to the company's formation, business focus, strategic shifts, and key factors influencing its financial performance - Foxx Development Holdings Inc. was formed on September 26, 2024, through a business combination between Acri Capital Acquisition Corporation (ACAC) and Foxx Development Inc. (Old Foxx), and subsequently listed on Nasdaq[135](index=135&type=chunk)[136](index=136&type=chunk) - The company specializes in communications technology, offering Foxx-branded tablets, smartphones, and expanding into IoT markets and MVNO services, with revenue primarily from product sales[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) - A strategic shift began in 2023 to diversify suppliers and customers, expand product offerings, and launch an IoT platform, moving away from reliance on limited partners[141](index=141&type=chunk) - The discontinuation of the Affordable Connectivity Program (ACP) in February 2024 negatively impacted product demand in FY2024, but the company is targeting Lifeline Program eligible users and growing e-commerce sales through platforms like TikTok Shop[142](index=142&type=chunk) - For FY2025, the company experienced significant sales increases in mobile phones due to new major customers and launched new wearable products and App service commission revenue[143](index=143&type=chunk) [The Business Combination and Accounting Treatment](index=29&type=section&id=The%20Business%20Combination%20and%20Accounting%20Treatment) This section details the business combination's structure, share issuances, earnout conditions, and its accounting treatment as a reverse recapitalization - The Business Combination, completed on September 26, 2024, involved ACAC merging into Foxx Development Holdings Inc. and Old Foxx merging into a subsidiary, with the combined entity retaining the name Foxx Development Holdings Inc.[144](index=144&type=chunk)[145](index=145&type=chunk)[148](index=148&type=chunk) - Original Foxx Shareholders received **5,000,000 shares** of Common Stock, with **500,000 shares** subject to an escrow arrangement contingent on ACP reauthorization, which were subsequently cancelled and forfeited[146](index=146&type=chunk)[149](index=149&type=chunk)[369](index=369&type=chunk) - An additional **4,200,000 Earnout Shares** were contingent on revenue targets for FY2024 and FY2025, but all were forfeited as the company did not meet the vesting conditions[150](index=150&type=chunk)[151](index=151&type=chunk)[360](index=360&type=chunk) - For accounting purposes, Old Foxx was deemed the accounting acquirer in a reverse recapitalization, meaning Old Foxx's historical financial statements became the combined company's, with ACAC's net assets recognized at historical cost[154](index=154&type=chunk)[320](index=320&type=chunk) [Transaction Financing](index=33&type=section&id=Transaction%20Financing) This section outlines the convertible promissory notes used to finance the business combination and their subsequent conversion into common stock - Old Foxx secured **$6 million** in convertible promissory notes from New Bay Capital Limited (Notes 1, 2, 3) and **$9 million** from BR Technologies PTE, Ltd. and Grazyna Plawinski Limited (Notes 4, 5) to finance transaction expenses and working capital[156](index=156&type=chunk)[158](index=158&type=chunk)[160](index=160&type=chunk) - Prior to the Business Combination, all principal and accrued interest on these notes were converted into Original Foxx Common Stock at **$30.00 per share**, which were then exchanged for shares of Foxx Development Holdings Inc. Common Stock[161](index=161&type=chunk) Shares Issued to Convertible Note Holders at Closing | Investor | Shares of Foxx Development Holdings Inc. Common Stock Issued | | :----------------------- | :----------------------------------------------------------- | | New Bay Capital Limited | 700,473 | | BR Technologies PTE, Ltd. | 663,581 | | Grazyna Plawinski Limited | 332,614 | [Key Factors Affecting Operating Results](index=34&type=section&id=Key%20Factors%20Affecting%20Operating%20Results) This section identifies critical factors impacting the company's performance, including management retention, technology investment, and customer base diversification - Retention of key management team members, with extensive experience in the electronics and IoT services industries, is crucial for maintaining service quality and product offerings[162](index=162&type=chunk) - Continued investment in technology and talent, particularly in R&D for new products, solutions, and **5G technology**, is essential for competitiveness and enterprise growth[163](index=163&type=chunk)[164](index=164&type=chunk) - The ability to expand product and service offerings and diversify the customer base beyond current tablet and mobile phone sales is a significant factor influencing future operating results[165](index=165&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenues, cost of goods sold, gross profit, operating expenses, and net loss for the fiscal years [Revenues](index=35&type=section&id=Revenues) This section details the company's revenue streams, highlighting significant growth in FY2025 driven by new customers and product lines - Total revenues increased significantly by **1,941.8%** to **$65.9 million** in FY2025 from **$3.2 million** in FY2024, primarily due to sales from three new major wholesale customers (accounting for **76%** of sales) and the launch of wearable electronic products and new services[167](index=167&type=chunk) Revenue Breakdown (FY2025 vs. FY2024) | Revenue Category | FY2025 Revenue | FY2024 Revenue | Change ($) | Change (%) | | :-------------------------- | :--------------- | :--------------- | :----------- | :--------- | | Tablet products | $509,843 | $660,787 | $(150,944) | (22.8)% | | Mobile phone products | $59,696,955 | $2,567,772 | $57,129,183 | 2,224.9% | | Wearable products and others | $3,444,077 | $- | $3,444,077 | 100.0% | | App service commission revenue, net | $2,166,477 | $- | $2,166,477 | 100.0% | | Other services | $101,814 | $- | $101,814 | 100.0% | | **Total revenues, net** | **$65,919,166** | **$3,228,559** | **$62,690,607** | **1,941.8%** | [Cost of Goods Sold](index=35&type=section&id=Cost%20of%20Goods%20Sold) This section analyzes the cost of goods sold, which increased in direct correlation with the significant rise in revenue from new customers and products - Total cost of goods sold increased by **1,864.4%** to **$61.1 million** in FY2025 from **$3.1 million** in FY2024, directly correlating with the increase in revenue from new major wholesale customers and new product lines[169](index=169&type=chunk) Cost of Goods Sold Breakdown (FY2025 vs. FY2024) | Cost Category | FY2025 Cost | FY2024 Cost | Change ($) | Change (%) | | :---------------- | :------------ | :------------ | :----------- | :--------- | | Tablet products | $437,903 | $505,832 | $(67,929) | (13.4)% | | Mobile phone products | $57,618,133 | $2,606,784 | $55,011,349 | 2,110.3% | | Wearable products | $3,040,588 | $- | $3,040,588 | 100.0% | | Other services cost | $47,937 | $- | $47,937 | 100.0% | | **Total cost of goods sold** | **$61,144,561** | **$3,112,616** | **$58,031,945** | **1,864.4%** | [Gross Profit](index=37&type=section&id=Gross%20Profit) This section examines the company's gross profit and gross profit percentage, noting an increase driven by mobile phone products and new service offerings - Gross profit increased by **4,018.1%** to **$4.8 million** in FY2025 from **$0.1 million** in FY2024, with the overall gross profit percentage rising from **3.6% to 7.2%**[172](index=172&type=chunk)[173](index=173&type=chunk) Gross Profit and Percentage by Category (FY2025 vs. FY2024) | Category | FY2025 Gross Profit | FY2025 Gross Profit % | FY2024 Gross Profit | FY2024 Gross Profit % | Change in Gross Profit % | | :-------------------------- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | :----------------------- | | Tablet products | $71,940 | 14.1% | $154,955 | 23.5% | (9.3)% | | Mobile phone products | $2,078,822 | 3.5% | $(39,012) | (1.5)% | 5.0% | | Wearable products and others | $403,489 | 11.7% | $- | - | 11.7% | | App service commission revenue | $2,166,477 | 100.0% | $- | - | 100.0% | | Other services | $53,877 | 52.9% | $- | - | 100.0% | | **Total** | **$4,774,605** | **7.2%** | **$115,943** | **3.6%** | **3.7%** | - The increase in gross profit percentage was primarily driven by mobile phone products (from **-1.5% to 3.5%**), new wearable products (**11.7%**), and App service commission revenue (**100.0%** due to commission-based nature with minimal direct costs)[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) [Operating Expenses](index=38&type=section&id=Operating%20Expenses) This section details the significant increase in operating expenses, including selling, general and administrative, and R&D costs, for the fiscal year - Total operating expenses increased by **346.1%** to **$14.5 million** in FY2025 from **$3.2 million** in FY2024[178](index=178&type=chunk)[179](index=179&type=chunk) Operating Expenses (FY2025 vs. FY2024) | Expense Category | FY2025 Amount | FY2024 Amount | Change ($) | Change (%) | | :-------------------------------- | :------------ | :------------ | :----------- | :--------- | | Selling expenses | $5,183,464 | $1,076,761 | $4,106,703 | 381.4% | | General and administrative expense | $7,068,426 | $2,076,484 | $4,991,942 | 240.4% | | Research and development – related party | $136,752 | $91,168 | $45,584 | 50.0% | | Research and development | $2,083,897 | $- | $2,083,897 | 100.0% | | **Total operating expense** | **$14,472,539** | **$3,244,413** | **$11,228,126** | **346.1%** | - Selling expenses rose due to increased commissions, payroll, consulting fees, sampling/testing/certification, stock-based compensation, warranty expenses, and advertising/marketing[180](index=180&type=chunk) - General and administrative expenses increased due to higher professional fees (audit, legal, accounting) as a public company, increased salaries/wages from new hires, credit losses, stock-based compensation, and other miscellaneous operational expenses[181](index=181&type=chunk) - R&D expenses (including related party) increased due to the completion of a **5G development project**, hiring more employees, engaging third parties for new product development, and stock-based compensation[182](index=182&type=chunk)[183](index=183&type=chunk) [Other Income (Expense), Net](index=40&type=section&id=Other%20Income%20(Expense),%20Net) This section analyzes the change in other income and expenses, primarily influenced by a gain from earnout liabilities and increased interest expenses - Total other income (expense), net, increased by **$1.0 million** to **$0.8 million** of income in FY2025 from **$0.3 million** of expense in FY2024[185](index=185&type=chunk) Other Income (Expense), Net (FY2025 vs. FY2024) | Category | FY2025 Amount | FY2024 Amount | Change ($) | Change (%) | | :-------------------------------- | :------------ | :------------ | :----------- | :--------- | | Interest expense | $(4,959,055) | $(278,328) | $(4,680,727) | 1,681.7% | | Other income (expense), net | $25,589 | $(4,016) | $29,605 | (737.2)% | | Change in fair value of earnout liabilities | $5,688,007 | $- | $5,688,007 | 100.0% | | **Total other income (expense), net** | **$754,541** | **$(282,344)** | **$1,036,885** | **(367.2)%** | - The increase was primarily due to a **$5.7 million** gain from the change in fair value of earnout liabilities, partially offset by a **$4.7 million** increase in interest expenses related to vendor financing[185](index=185&type=chunk) [Provision for Income Taxes](index=40&type=section&id=Provision%20for%20Income%20Taxes) This section details the company's income tax provision, which increased due to non-deductible items and capitalized R&D expenses - Provision for income taxes increased by **$57,000 (287.0%)** to **$77,000** in FY2025 from **$20,000** in FY2024, mainly due to non-deductible changes in fair value of earnout liabilities and capitalized R&D expenses[186](index=186&type=chunk) [Net Loss and Comprehensive Loss](index=40&type=section&id=Net%20Loss%20and%20Comprehensive%20Loss) This section reports the company's net loss and comprehensive loss, both of which significantly increased during the fiscal year - Net loss increased by **$5.6 million (162.9%)** to **$9.0 million** in FY2025 from **$3.4 million** in FY2024[187](index=187&type=chunk) - Comprehensive loss increased by **$5.6 million (163.1%)** to **$9.0 million** in FY2025 from **$3.4 million** in FY2024, including a foreign currency translation adjustment of **$5,002**[166](index=166&type=chunk)[188](index=188&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's cash position, accumulated deficit, and operating cash outflow, highlighting going concern doubts and potential financing needs - As of June 30, 2025, the company had **$1.9 million** in cash and cash equivalents, an accumulated deficit of **$20.0 million**, a net loss of **$9.0 million**, and a net operating cash outflow of **$6.6 million**[190](index=190&type=chunk) - These conditions raise substantial doubt about the company's ability to continue as a going concern, necessitating potential additional financing from banks, related parties, or equity financing[191](index=191&type=chunk)[192](index=192&type=chunk) Summary of Cash Flows (FY2025 vs. FY2024) | Cash Flow Activity | FY2025 Amount | FY2024 Amount | | :-------------------------------- | :------------ | :------------ | | Net cash used in operating activities | $(6,560,121) | $(4,680,079) | | Net cash used in investing activities | $(40,236) | $(8,743) | | Net cash provided by financing activities | $7,890,820 | $3,451,421 | | Effect of exchange rate changes | $(2,458) | $- | | **Net change in cash and cash equivalents** | **$1,288,005** | **$(1,237,401)** | - Operating cash outflow in FY2025 was driven by net loss, increased inventories, accounts receivable, prepaid expenses, and security deposits, partially offset by increases in accounts payable and other payables[195](index=195&type=chunk) - Financing activities provided **$7.9 million** in FY2025, mainly from reverse recapitalization proceeds and convertible promissory notes, offset by redemption payments and deferred transaction costs[199](index=199&type=chunk) [Off-Balance Sheet Arrangements](index=43&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of significant off-balance sheet arrangements that materially affect the company's financial condition - As of June 30, 2025, the company had no significant off-balance sheet arrangements that materially affect its financial condition, revenues, expenses, results of operations, liquidity, or capital resources[201](index=201&type=chunk) [Critical Accounting Estimates](index=43&type=section&id=Critical%20Accounting%20Estimates) This section discusses key accounting estimates, including income taxes and earnout liabilities, and their impact on financial reporting - Critical accounting estimates include Income Taxes, where deferred tax assets are reviewed for recoverability, and a **full valuation allowance** is currently recorded due to historical operating losses[203](index=203&type=chunk) - Earnout Liabilities, related to contingent shares from the Business Combination, are classified as a liability and measured at fair value using a Monte Carlo Model, with changes in fair value impacting the consolidated statements of operations[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Foxx Development Holdings Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Foxx Development Holdings Inc. is not required to make disclosures under this Item[210](index=210&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=45&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for FY2025 and FY2024, including balance sheets, income statements, cash flows, and detailed notes, with auditor reports highlighting going concern uncertainty [Independent Registered Public Accounting Firm Reports](index=46&type=section&id=Independent%20Registered%20Public%20Accounting%20Firm%20Reports) This section presents the audit opinions from CBIZ CPAs P.C. and Marcum LLP, both noting substantial doubt about the company's going concern ability - CBIZ CPAs P.C. issued an unqualified opinion on the consolidated financial statements for the year ended June 30, 2025, and on the retrospective application of ASU 2023-07 to the 2024 financial statements[216](index=216&type=chunk)[217](index=217&type=chunk) - Both CBIZ CPAs P.C. and Marcum LLP (for 2024 statements before retrospective adjustments) included an explanatory paragraph highlighting substantial doubt about the company's ability to continue as a going concern due to significant working capital deficiency, losses, and need for additional funds[218](index=218&type=chunk)[225](index=225&type=chunk)[227](index=227&type=chunk) [Consolidated Financial Statements](index=48&type=section&id=Consolidated%20Financial%20Statements) This section provides key financial statement highlights, including balance sheet, income statement, and cash flow data for the fiscal years 2025 and 2024 Consolidated Balance Sheet Highlights (June 30, 2025 vs. 2024) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Total Current Assets | $23,649,638 | $4,333,959 | | Total Assets | $25,999,814 | $5,374,422 | | Total Current Liabilities | $30,401,252 | $8,948,981 | | Total Liabilities | $31,364,497 | $9,376,858 | | Total Shareholders' Deficit | $(5,364,683) | $(4,002,436) | Consolidated Statements of Operations Highlights (FY2025 vs. FY2024) | Metric | FY2025 | FY2024 | | :-------------------------------- | :------------- | :------------- | | Revenues, net | $65,919,166 | $3,228,559 | | Gross profit | $4,774,605 | $115,943 | | Loss from operations | $(9,697,934) | $(3,128,470) | | Net loss | $(9,020,136) | $(3,430,642) | | Comprehensive loss | $(9,025,138) | $(3,430,642) | | Basic Loss Per Share | $(1.47) | $(1.04) | Consolidated Statements of Cash Flows Highlights (FY2025 vs. FY2024) | Cash Flow Activity | FY2025 | FY2024 | | :-------------------------------- | :------------- | :------------- | | Net cash used in operating activities | $(6,560,121) | $(4,680,079) | | Net cash used in investing activities | $(40,236) | $(8,743) | | Net cash provided by financing activities | $7,890,820 | $3,451,421 | | Net change in cash | $1,288,005 | $(1,237,401) | | Cash, end of the year | $1,875,453 | $587,448 | [Notes to Consolidated Financial Statements](index=54&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements, covering business nature, accounting policies, and specific financial accounts [Note 1 — Nature of business and organization](index=54&type=section&id=Note%201%20—%20Nature%20of%20business%20and%20organization) This note describes the company's incorporation, public listing, and the establishment of its various subsidiaries - Foxx Development Holdings Inc. was incorporated on November 13, 2023, and became a publicly traded company on September 26, 2024, following a business combination with Acri Capital Acquisition Corporation (ACAC) and Foxx Development Inc. (Old Foxx)[244](index=244&type=chunk)[245](index=245&type=chunk) - The company has established subsidiaries including Foxx Technology Pte Ltd (dissolved November 2024), Foxx Development (Singapore) Pte. Ltd (incorporated March 2025), Foxx Technologies Inc (incorporated April 2025), and Nexus IQ Technology Inc (incorporated May 2025, focused on AIOT)[246](index=246&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) [Note 2 — Going Concern](index=54&type=section&id=Note%202%20—%20Going%20Concern) This note addresses the substantial doubt about the company's ability to continue as a going concern due to significant losses and cash outflows - The company's management has identified substantial doubt about its ability to continue as a going concern within one year due to a net cash outflow from operating activities of **$6.6 million**, a net loss of **$9.0 million**, and an accumulated deficit of **$20.0 million** as of June 30, 2025[250](index=250&type=chunk)[252](index=252&type=chunk) - To address liquidity needs, the company may seek financing from banks, other financial institutions, private lenders, financial support/credit guarantees from related parties, or equity financing[251](index=251&type=chunk)[258](index=258&type=chunk) [Note 3 — Basis of presentation and significant accounting policies](index=55&type=section&id=Note%203%20—%20Basis%20of%20presentation%20and%20significant%20accounting%20policies) This note outlines the basis of financial statement preparation, key accounting policies, and recent accounting standard adoptions - The consolidated financial statements are prepared in accordance with U.S. GAAP and SEC rules, consolidating the company and its subsidiaries with intercompany transactions eliminated[253](index=253&type=chunk)[254](index=254&type=chunk) - Key accounting policies include fair value measurement (three-level hierarchy), foreign currency translation (USD reporting, SGD functional for Singapore subsidiary), and segment reporting (one operating segment based on CODM review)[257](index=257&type=chunk)[259](index=259&type=chunk)[260](index=260&type=chunk)[262](index=262&type=chunk) - Revenue recognition follows ASC 606, identifying performance obligations and recognizing revenue when control of goods/services transfers to customers, including wholesale, e-commerce, and App service commission revenue[275](index=275&type=chunk)[276](index=276&type=chunk)[277](index=277&type=chunk) - The company adopted ASU 2023-07, 'Segment Reporting,' retrospectively for the year ended June 30, 2025, to improve reportable segment disclosures[311](index=311&type=chunk) [Note 4 — Reverse recapitalization](index=65&type=section&id=Note%204%20—%20Reverse%20recapitalization) This note explains the accounting treatment of the business combination as a reverse recapitalization and the resulting common stock issuance - Upon the Business Combination on September 26, 2024, ACAC's common stock and warrants were converted into the Company's Common Stock and Warrants, and Old Foxx's common stock was exchanged for **5,000,000 Closing Payment Shares**[318](index=318&type=chunk)[320](index=320&type=chunk)[323](index=323&type=chunk) - Old Foxx was identified as the accounting acquirer, and the transaction was accounted for as a reverse recapitalization, with Old Foxx's historical financial statements becoming the Company's[320](index=320&type=chunk) Common Stock Issued Immediately Following Reverse Recapitalization | Item | Common Stock Shares | | :------------------------------------------------ | :-------------------- | | ACAC's common stock outstanding prior to Reverse Recapitalization | 3,971,634 | | Less: redemption of ACAC's common stock | (1,744,663) | | Common stock issued to underwriter | 43,125 | | Conversion of Old Foxx's common stock into Foxx's common stock | 3,303,333 | | Conversion of Old Foxx's convertible promissory notes into Foxx's common stock | 1,696,668 | | **Total common stock** | **7,270,097** | - The Company raised approximately **$19.7 million** in proceeds from the reverse recapitalization, including funds from ACAC's trust account and operating cash, net of transaction costs[321](index=321&type=chunk)[322](index=322&type=chunk) [Note 5 — Accounts receivable, net](index=68&type=section&id=Note%205%20—%20Accounts%20receivable,%20net) This note details the significant increase in accounts receivable and the provision for credit losses recognized in the current fiscal year - Accounts receivable, net, increased significantly to **$6,786,792** as of June 30, 2025, from **$251,894** as of June 30, 2024[325](index=325&type=chunk) - The company recognized a provision for allowance on credit losses of **$595,907** for the year ended June 30, 2025, compared to **$0** in the prior year[325](index=325&type=chunk)[326](index=326&type=chunk) [Note 6 — Inventories](index=68&type=section&id=Note%206%20—%20Inventories) This note describes the substantial increase in inventories, primarily finished goods, and the company's inventory valuation method - Inventories, consisting primarily of finished goods, increased substantially to **$12,686,739** as of June 30, 2025, from **$1,768,072** as of June 30, 2024[327](index=327&type=chunk) - Inventories are stated at the lower of cost or net realizable value, using the 'First in, First out' method, and no inventory write-downs were recorded for the years ended June 30, 2025, and 2024[267](index=267&type=chunk) [Note 7 — Contract assets](index=68&type=section&id=Note%207%20—%20Contract%20assets) This note explains the decrease in contract assets, representing cash deposited with suppliers for future inventory purchases - Contract assets decreased to **$454,842** as of June 30, 2025, from **$1,682,289** as of June 30, 2024, representing cash deposited or advanced to suppliers for future inventory purchases[328](index=328&type=chunk) - No allowance for credit losses on contract assets was recorded as of June 30, 2025, or 2024[268](index=268&type=chunk) [Note 8 — Prepaid expenses and other current assets](index=69&type=section&id=Note%208%20—%20Prepaid%20expenses%20and%20other%20current%20assets) This note details the significant increase in prepaid expenses and other current assets, including various receivables and prepayments - Prepaid expenses and other current assets increased significantly to **$1,837,812** as of June 30, 2025, from **$44,116** as of June 30, 2024[329](index=329&type=chunk) - This increase includes other receivables, prepaid rent, R&D fees, insurance, professional fees, and prepayments to be refunded, with an allowance for credit losses of **$317,282** recorded in FY2025[329](index=329&type=chunk)[330](index=330&type=chunk)[331](index=331&type=chunk) [Note 9 — Property and equipment, net](index=69&type=section&id=Note%209%20—%20Property%20and%20equipment,%20net) This note provides a breakdown of property and equipment, net, and the associated depreciation expense for the fiscal years - Property and equipment, net, decreased to **$131,722** as of June 30, 2025, from **$142,619** as of June 30, 2024[332](index=332&type=chunk) - Depreciation expense for FY2025 was **$47,732**, up from **$39,783** in FY2024[332](index=332&type=chunk) Property and Equipment, Net (June 30, 2025 vs. 2024) | Category | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Computer and office equipment | $12,580 | $9,942 | | Equipment | $30,697 | $- | | Furniture and fixtures | $3,432 | $3,432 | | Vehicles | $191,091 | $191,091 | | Less: accumulated depreciation | $(106,078) | $(61,846) | | **Total property and equipment, net** | **$131,722** | **$142,619** | [Note 10 — Other payables and accrued liabilities](index=70&type=section&id=Note%2010%20—%20Other%20payables%20and%20accrued%20liabilities) This note details the substantial increase in other payables and accrued liabilities, driven by higher interest payable and excise tax - Other payables and accrued liabilities increased significantly to **$3,570,959** as of June 30, 2025, from **$468,225** as of June 30, 2024[333](index=333&type=chunk) - This increase was primarily driven by a substantial rise in interest payable (**$2.3 million** in FY2025 vs. **$0.3 million** in FY2024) due to a purchase and financing agreement with a vendor, and the inclusion of excise tax payable from ACAC[333](index=333&type=chunk) [Note 11 — Contract liabilities](index=70&type=section&id=Note%2011%20—%20Contract%20liabilities) This note explains the decrease in contract liabilities, representing customer deposits, as revenue was recognized from these balances - Contract liabilities, representing customer deposits, decreased significantly to **$378** as of June 30, 2025, from **$649,450** as of June 30, 2024, as revenue was recognized from beginning contract liabilities[335](index=335&type=chunk) [Note 12 — Related party balances and transactions](index=70&type=section&id=Note%2012%20—%20Related%20party%20balances%20and%20transactions) This note details the company's balances and transactions with related parties, including prepaid service fees and various payables and expenses - Related party balances include prepaid service fees to Azure Horizon LLC (**$8,000** in FY2025) and other payables to Wuhan Haoxun Communication Technology Co. Ltd (**$18,792** in FY2025), Acri Capital Sponsor LLC (**$245,509** in FY2025), and Swiftfulfill Warehouse LLC (**$8,566** in FY2025)[337](index=337&type=chunk)[338](index=338&type=chunk) - Related party transactions for FY2025 include **$136,752** in R&D expenses with Wuhan Haoxun and **$548,200** in consulting expenses with Azure Horizon LLC and Swiftfulfill Warehouse LLC[339](index=339&type=chunk)[340](index=340&type=chunk) [Note 13 — Short-term loans](index=72&type=section&id=Note%2013%20—%20Short-term%20loans) This note confirms the full repayment of all outstanding short-term loans from third parties during the fiscal year ended June 30, 2025 - All outstanding short-term loans from third parties, totaling **$291,208** as of June 30, 2024, were fully repaid during the year ended June 30, 2025[341](index=341&type=chunk)[342](index=342&type=chunk) [Note 14 — Convertible promissory notes](index=72&type=section&id=Note%2014%20—%20Convertible%20promissory%20notes) This note details the issuance and subsequent conversion of $15 million in convertible promissory notes into common stock during the business combination - Old Foxx issued convertible promissory notes totaling **$6 million** to Investor A (New Bay Capital Limited) and **$9 million** to Investor B (BR Technologies) and Investor C (Grazyna Plawinski Limited) at **7% per annum**[343](index=343&type=chunk)[344](index=344&type=chunk)[346](index=346&type=chunk)[347](index=347&type=chunk) - Immediately prior to the Business Combination on September 26, 2024, the **$15 million** principal and **$408,685** in accrued interest were converted into Original Foxx Common Stock at **$30.00 per share**, then exchanged for **1,696,668 shares** of the Company's Common Stock[348](index=348&type=chunk) - As of June 30, 2025, there were no outstanding convertible promissory notes, as all were converted during the reverse recapitalization[349](index=349&type=chunk) [Note 15 — Long-term loan](index=73&type=section&id=Note%2015%20—%20Long-term%20loan) This note describes the company's six-year vehicle-secured long-term loan, including its payment schedule and interest expense - The company has a **six-year loan** of approximately **$137,000**, secured by a vehicle, with monthly payments of **$2,694** and an interest rate of **11.85% per annum**[350](index=350&type=chunk) Long-term Loan Payment Schedule (as of June 30, 2025) | Twelve months ended June 30, | Amount | | :--------------------------- | :----- | | 2026 | $23,743 | | 2027 | $24,826 | | 2028 | $27,984 | | Thereafter | $20,608 | | **Total long-term debt payment** | **$97,161** | | Current portion of long-term debt | $(23,743) | | **Long-term debt – non-current portion** | **$73,418** | - Interest expense for this loan was **$12,784** in FY2025, compared to **$14,989** in FY2024[351](index=351&type=chunk) [Note 16 — Shareholders' deficit](index=73&type=section&id=Note%2016%20—%20Shareholders'%20deficit) This note details changes in shareholders' deficit, including common stock issuances, equity incentive plan grants, warrant conversions, and earnout share forfeitures - As of June 30, 2025, the company had **50,000,000 authorized shares** of common stock, with **6,780,597 shares** outstanding[352](index=352&type=chunk) - Upon the reverse recapitalization, **2,270,096 common shares** were issued to ACAC shareholders and its underwriter, and **1,696,668 common shares** were issued to Old Foxx convertible note holders[353](index=353&type=chunk)[354](index=354&type=chunk) - A 2024 Equity Incentive Plan (EIP) reserved **1,454,019 shares** for awards. In November 2024 and January 2025, **727,009 restricted stock units (RSUs)** were granted to employees, consultants, and directors, with a **4-year vesting schedule**[355](index=355&type=chunk)[356](index=356&type=chunk)[357](index=357&type=chunk) - Total stock-based compensation expenses for FY2025 amounted to **$815,678**, allocated across selling, general and administrative, and R&D expenses[359](index=359&type=chunk) - All **4,200,000 Earnout Shares**, contingent on financial performance, were forfeited as the company did not meet the vesting requirements for FY2024 and FY2025[360](index=360&type=chunk) - **12,156,417 ACAC warrants** were converted into the Company's redeemable warrants, exercisable at **$11.50 per share**, with **10,500 warrants** exercised in October 2024[362](index=362&type=chunk)[365](index=365&type=chunk) - **500,000 common shares** held in escrow, contingent on ACP reauthorization, were cancelled and forfeited on February 18, 2025[367](index=367&type=chunk)[369](index=369&type=chunk) [Note 17 — Fair value measurement](index=77&type=section&id=Note%2017%20—%20Fair%20value%20measurement) This note explains the fair value measurement of earnout liabilities, which were reduced to zero due to the forfeiture of contingent shares - The company's earnout liabilities, initially valued at **$5,688,007** on September 26, 2024, were reduced to **$0** as of June 30, 2025, due to the forfeiture of earnout shares[370](index=370&type=chunk)[375](index=375&type=chunk) - The fair value of earnout liabilities was determined using a Monte Carlo simulation analysis, incorporating observable (stock price, risk-free rate, term) and unobservable (simulated forecast of base monthly revenue, industry revenue growth, revenue volatility, stock volatility) inputs[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[371](index=371&type=chunk)[372](index=372&type=chunk)[373](index=373&type=chunk) [Note 18 — Concentrations of risks](index=79&type=section&id=Note%2018%20—%20Concentrations%20of%20risks) This note identifies significant concentrations of risk related to major customers and suppliers, and the geographical derivation of revenues and assets - For FY2025, three major customers (A, B, C) accounted for **27%**, **25%**, and **25%** of total revenues, respectively. For FY2024, three customers (D, A, E) accounted for **41%**, **29%**, and **16%** of total revenues[376](index=376&type=chunk) - For FY2025, one supplier (Supplier A) accounted for **93%** of total purchases. For FY2024, three suppliers (A, B, C) accounted for **49%**, **31%**, and **18%** of total purchases[377](index=377&type=chunk) - All of the company's long-lived assets and revenues are derived solely from the United States[378](index=378&type=chunk) [Note 19 — Leases](index=79&type=section&id=Note%2019%20—%20Leases) This note details the company's operating lease agreements, including ROU assets, liabilities, and the associated lease costs and payment schedules - The company has various short-term and long-term operating lease agreements for offices, storage, and a factory/warehouse[379](index=379&type=chunk)[380](index=380&type=chunk)[381](index=381&type=chunk)[382](index=382&type=chunk)[383](index=383&type=chunk)[384](index=384&type=chunk) - Operating lease ROU assets and liabilities are recorded based on the present value of lease payments, using an incremental borrowing rate (weighted average rate of **4.07%**)[292](index=292&type=chunk)[385](index=385&type=chunk) - The weighted-average remaining operating lease term is approximately **4.51 years** as of June 30, 2025[385](index=385&type=chunk) Minimum Long-term Lease Payments (as of June 30, 2025) | For the twelve months ending June 30, | Amount | | :------------------------------------ | :----- | | 2026 | $251,566 | | 2027 | $260,287 | | 2028 | $270,941 | | 2029 | $283,141 | | 2030 | $92,377 | | Thereafter | $50,437 | | **Total lease payments** | **$1,208,749** | | Less: discount | $(107,397) | | **Present value of operating lease liabilities** | **$1,101,352** | | Operating lease liabilities, current portion | $(211,525) | | **Operating lease liabilities, non-current portion** | **$889,827** | - Total operating lease cost for FY2025 was **$260,527**, up from **$63,713** in FY2024[386](index=386&type=chunk) [Note 20 — Commitments and contingencies](index=82&type=section&id=Note%2020%20—%20Commitments%20and%20contingencies) This note outlines the settlement of a class action lawsuit, significant lease commitments, and potential risks from changes in U.S. trade policies - The company settled a class action lawsuit regarding a corporate opportunity doctrine waiver by amending its charter and paying **$85,000** to the plaintiff's counsel[389](index=389&type=chunk)[390](index=390&type=chunk) - A significant lease commitment was signed on July 12, 2024, for a manufacturing plant (**101,145 sq ft**) commencing July 1, 2025, and further expanded on December 20, 2024, to include an additional **102,099 sq ft** from January 1, 2026, with associated security deposits[391](index=391&type=chunk) - The company faces risks and uncertainties from potential changes in U.S. trade policies, including new tariffs, which could impact future costs, revenues, and financial performance[393](index=393&type=chunk) [Note 21 — Income taxes](index=83&type=section&id=Note%2021%20—%20Income%20taxes) This note details the company's income tax expense, net operating loss carryforwards, and the valuation allowance on deferred tax assets - Income tax expense for FY2025 was **$76,743**, compared to **$19,828** in FY2024, with an effective tax rate of **(0.9)%** in FY2025 and **(0.6)%** in FY2024[394](index=394&type=chunk) - The company has cumulative net operating loss (NOL) carryforwards of approximately **$7.5 million** (federal), **$2.7 million** (state), and **$0.1 million** (foreign) as of June 30, 2025[394](index=394&type=chunk) - A **100% valuation allowance** was elected on deferred tax assets due to historical tax losses, increasing by **$0.7 million** to **$2.7 million** in FY2025[394](index=394&type=chunk) - The utilization of NOLs may be subject to limitations under Section 382 of the Internal Revenue Code due to changes in ownership[395](index=395&type=chunk) [Note 22 — Disaggregated information of revenues](index=85&type=section&id=Note%2022%20—%20Disaggregated%20information%20of%20revenues) This note provides a detailed breakdown of the company's revenues by product type and business line for the fiscal years Disaggregated Revenues by Product Type (FY2025 vs. FY2024) | Product Type | FY2025 Revenue | FY2024 Revenue | | :-------------------------- | :------------- | :------------- | | Tablet products | $509,843 | $660,787 | | Mobile phone products | $59,696,955 | $2,567,772 | | Wearable products and others | $3,444,077 | $- | | App service commission revenue, net | $2,166,477 | $- | | Other services | $101,814 | $- | | **Total revenues, net** | **$65,919,166** | **$3,228,559** | Disaggregated Revenues by Business Line (FY2025 vs. FY2024) | Business Line | FY2025 Revenue | FY2024 Revenue | | :-------------------------- | :------------- | :------------- | | Wholesale revenues | $62,316,253 | $3,017,769 | | E-Commerce revenues | $1,334,622 | $210,790 | | App service commission revenue, net | $2,166,477 | $- | | Other services | $101,814 | $- | | **Total revenues, net** | **$65,919,166** | **$3,228,559** | [Note 23 — Basic and diluted loss per share](index=85&type=section&id=Note%2023%20—%20Basic%20and%20diluted%20loss%20per%20share) This note presents the basic and diluted loss per share calculations, explaining the exclusion of anti-dilutive common share equivalents Basic and Diluted Loss Per Share (FY2025 vs. FY2024) | Metric | FY2025 | FY2024 | | :------------------------------------------ | :------------- | :------------- | | Net loss – basic EPS | $(9,020,136) | $(3,430,642) | | Interest expenses incurred on the convertible note | $- | $264,445 | | **Net loss – basic and diluted EPS** | **$(9,020,136)** | **$(3,166,197)** | | Basic and diluted weighted average shares outstanding | 6,148,467 | 3,303,333 | | **Loss Per Share (Basic and Diluted)** | **$(1.47)** | **$(1.04)** | - Dilutive common share equivalents, including warrants and RSUs, were excluded from diluted EPS calculation due to their anti-dilutive effect given the net loss[403](index=403&type=chunk) [Note 24 — Segment information](index=87&type=section&id=Note%2024%20—%20Segment%20information) This note clarifies that the company operates as a single operating segment, with financial information reviewed on a consolidated basis - The company operates as a single operating segment, with the Chief Executive Officer and direct reports serving as the chief operating decision maker (CODM)[262](index=262&type=chunk)[404](index=404&type=chunk) - The CODM reviews financial information on a consolidated basis, disaggregated by revenues, cost of revenues, and gross profit by business lines (electronic products and App service commission)[262](index=262&type=chunk) - All revenues are derived solely from the U.S., and no geographical information is presented[262](index=262&type=chunk)[378](index=378&type=chunk) [Note 25 — Subsequent events](index=88&type=section&id=Note%2025%20—%20Subsequent%20events) This note discloses the enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, and its potential impact on the company's tax position - The company evaluated events up to the financial statement issuance date and identified no subsequent events requiring adjustment or disclosure, except for the enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025[406](index=406&type=chunk)[407](index=407&type=chunk) - OBBBA introduces significant changes to the U.S. tax system, including restoration of **100% accelerated tax depreciation**, immediate expensing of domestic R&E, and reinstatement of EBITDA-based interest deductions. The company is assessing its potential impact[407](index=407&type=chunk)[408](index=408&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](index=89&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) Marcum LLP resigned as auditor following its acquisition by CBIZ CPAs P.C., which was then appointed by the Audit Committee, with no disagreements reported between the company and either firm - CBIZ CPAs P.C. acquired Marcum LLP on November 1, 2024, leading to Marcum's resignation as the independent registered public accounting firm on May 1, 2025[410](index=410&type=chunk) - The Audit Committee appointed CBIZ CPAs P.C. as the new independent registered public accounting firm for the fiscal year ending June 30, 2025, effective May 1, 2025[411](index=411&type=chunk) - Neither the company nor anyone on its behalf consulted CBIZ regarding accounting principles or audit opinions, and there were no disagreements or reportable events with either firm[411](index=411&type=chunk) [Item 9A. Controls and Procedures](index=89&type=section&id=Item%209A.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were ineffective as of June 30, 2025, due to material weaknesses in internal control over financi

Foxx Development Holdings Inc.(US:FOXX)

Treasure (TGL) - 2025 Q4 - Annual Report

2025-10-14 21:29

[FORM 10-K Filing Information](index=1&type=section&id=FORM%2010-K) This section provides essential filing details for Treasure Global Inc.'s Form 10-K, including registrant information, classification, market value, and shares outstanding [Registrant Information](index=1&type=section&id=Registrant%20Information) Treasure Global Inc. (TGL) is a Delaware corporation, filing its annual report for the fiscal year ended June 30, 2025, with common stock traded on The Nasdaq Stock Market LLC under the symbol TGL, classified as a non-accelerated filer, a smaller reporting company, and an emerging growth company - Registrant: **Treasure Global Inc.**[2](index=2&type=chunk) - Fiscal Year Ended: **June 30, 2025**[2](index=2&type=chunk) Securities Registered | Title of Each Class | Trading Symbol | Name of each exchange on which registered | | :------------------ | :------------- | :---------------------------------------- | | Common Stock, par value $0.00001 per share | TGL | The Nasdaq Stock Market LLC | Registrant Classification | Classification | Status | | :------------------------ | :----- | | Well-known seasoned issuer | No | | Not required to file reports pursuant to Section 13 or 15(d) | No | | Filed all required reports during preceding 12 months | Yes | | Subject to filing requirements for past 90 days | Yes | | Submitted Interactive Data File pursuant to Rule 405 of Regulation S-T | Yes | | Large accelerated filer | No | | Accelerated filer | No | | Non-accelerated filer | Yes | | Smaller reporting company | Yes | | Emerging Growth Company | Yes | [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 common stock held by non-affiliates was approximately $297.6 million, with 8,490,187 shares outstanding on October 14, 2025 - Aggregate market value of common stock held by non-affiliates as of December 31, 2024: approximately **$297.6 million** (based on closing price of $8.85)[5](index=5&type=chunk) - Number of shares outstanding on October 14, 2025: **8,490,187**[6](index=6&type=chunk) [Table of Contents](index=3&type=section&id=Table%20of%20Contents) This section provides a comprehensive listing of all chapters and sub-sections within the report for easy navigation [SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section outlines the disclaimer for forward-looking statements contained within the report [Forward-Looking Statements Disclaimer](index=4&type=section&id=Forward-Looking%20Statements%20Disclaimer) This report contains forward-looking statements reflecting current views on future events, subject to inherent uncertainties, risks, and changes in circumstances, where actual results may differ materially from those contemplated, and the company does not intend to update them except as required by law - Forward-looking statements are based on current expectations and assumptions, subject to inherent uncertainties, risks, and changes in circumstances[10](index=10&type=chunk) - Actual results may differ materially from those contemplated by forward-looking statements[10](index=10&type=chunk) - The company does not intend to update forward-looking statements to conform to actual results, except as required by applicable law[12](index=12&type=chunk) [PRESENTATION OF INFORMATION](index=4&type=section&id=PRESENTATION%20OF%20INFORMATION) This section clarifies the terminology used throughout the report and the basis for the financial statements presented [Company References and Financial Statements](index=4&type=section&id=Company%20References%20and%20Financial%20Statements) References to 'Company,' 'TGL,' 'registrant,' 'we,' 'our,' or 'us' in this Annual Report refer to Treasure Global Inc. and its consolidated subsidiaries, with audited consolidated financial statements for the fiscal years ended June 30, 2025 and 2024 prepared in accordance with U.S. GAAP and presented in U.S. dollars - References to 'Company,' 'TGL,' 'registrant,' 'we,' 'our,' or 'us' mean Treasure Global Inc. and its consolidated subsidiaries[14](index=14&type=chunk) - Audited consolidated financial statements for fiscal years ended June 30, 2025 and 2024 are included[15](index=15&type=chunk) - Financial statements are prepared in accordance with U.S. GAAP and presented in U.S. dollars[15](index=15&type=chunk) [SUMMARY OF RISK FACTORS](index=5&type=section&id=SUMMARY%20OF%20RISK%20FACTORS) This section provides a high-level overview of the significant business, operational, financial, and regulatory risks facing the company [Key Business and Operational Risks](index=5&type=section&id=Key%20Business%20and%20Operational%20Risks) The company faces significant business and operational risks, including substantial doubt about its ability to continue as a going concern, a limited operating history in an evolving industry, and the critical need to raise additional capital, alongside challenges like reliance on short-term contracts, intense e-commerce competition, dependence on email and search engines for traffic, the unproven nature of the ZCITY platform market, and ongoing cybersecurity incidents - Substantial doubt about the company's ability to continue as a going concern[18](index=18&type=chunk) - Limited operating history in an evolving industry makes future prospects difficult to evaluate[18](index=18&type=chunk) - Failure to raise capital when needed will materially adversely affect business, financial condition, and results of operations[18](index=18&type=chunk) - Reliance on email, internet search engines, and application marketplaces to drive traffic to ZCITY platform, with providers potentially offering competing products[18](index=18&type=chunk) - The e-commerce market is highly competitive, requiring sufficient resources for R&D, marketing, sales, and client support[18](index=18&type=chunk) - The market for the ZCITY platform is new and unproven[18](index=18&type=chunk) - Experienced a limited cybersecurity incident in May 2025; cybersecurity events could recur and adversely affect the company[19](index=19&type=chunk) [Financial and Regulatory Risks](index=5&type=section&id=Financial%20and%20Regulatory%20Risks) Financial risks include the lack of assurance of profitability, potential adverse effects from Malaysian Ringgit exchange rate fluctuations, and customer/prepayment concentration risks, while regulatory challenges involve potential liability for platform content, inadequate intellectual property protection, and the costs and complexities of being a public company, including maintaining effective internal controls over financial reporting - No assurance of profitability[18](index=18&type=chunk) - Fluctuations in exchange rates in the Malaysian Ringgit could adversely affect business and securities value[18](index=18&type=chunk) - Limited number of customers and counterparties account for a meaningful portion of revenues, receivables, and prepayments[19](index=19&type=chunk) - Failure to maintain effective internal controls over financial reporting could have an adverse impact[19](index=19&type=chunk) - Intellectual property rights may be inadequate to protect against others claiming violations, and enforcement costs could be significant[19](index=19&type=chunk) - Litigation is costly and time-consuming and could have a material adverse effect on business, results of operations, and reputation[19](index=19&type=chunk) [PART I](index=7&type=section&id=PART%20I) This section covers the company's business operations, risk factors, and other foundational information [Item 1. Business](index=7&type=section&id=Item%201.%20Business) Treasure Global Inc. operates an innovative online-to-offline (O2O) e-commerce platform, ZCITY App, primarily in Malaysia, offering instant rebates, affiliate cashback, and seamless e-payment solutions, with plans to expand into Southeast Asia and Japan, leveraging its proprietary AI technology for personalized deals, alongside recent strategic investments, acquisitions, financing activities, and significant changes in executive leadership and board composition - Mission: To integrate online e-commerce and offline physical retail, expanding consumer choice, rewarding loyalty, and enhancing earning potential[21](index=21&type=chunk) - Proprietary product: ZCITY App, an O2O e-commerce platform launched in Malaysia in June 2020[22](index=22&type=chunk)[23](index=23&type=chunk) - Long-term goal: ZCITY App to become a well-known commercialized application in Southeast Asia and Japan[25](index=25&type=chunk) ZCITY App User and Merchant Statistics (as of October 13, 2025) | Metric | Count | | :------------------ | :---------- | | Registered Users | 2,708,641 | | Registered Merchants | 2,027 | [Corporate Structure](index=8&type=section&id=Corporate%20Structure) Treasure Global Inc. (TGL), a Delaware corporation incorporated on March 20, 2020, functions as a holding company for TADAA Technologies Sdn. Bhd., a Malaysian company incorporated in June 2017, with entities reorganized into a parent-subsidiary structure in March 2021 via a Share Swap Agreement, making TADAA Technologies a 100% subsidiary of TGL - Treasure Global Inc. (TGL) was incorporated in Delaware on **March 20, 2020**[28](index=28&type=chunk) - TGL is a holding company for TADAA Technologies Sdn. Bhd., which was incorporated in Malaysia on **June 6, 2017**[31](index=31&type=chunk) - TGL and TADAA Technologies reorganized into a parent-subsidiary structure on **March 11, 2021**, making TADAA Technologies a **100% subsidiary of TGL**[30](index=30&type=chunk) [Business Developments](index=8&type=section&id=Business%20Developments) Recent business developments include a $200,000 common stock subscription agreement with Malaysian investors, a AUD 300,000 sale of AI-based GPUs to I Synergy Group Ltd, and the acquisition of a 51% stake in Tien Ming Distribution Sdn Bhd for RM5,100, alongside a $16 million service agreement with V GALLANT SDN BHD for generative AI solutions and AI digital human technology, and a $2.8 million partnership with Octagram Investment Limited for mini-game modules in the ZCity App, with financing activities including a $1.177 million investment from certain investors and a $6 million common stock purchase agreement with Alumni Capital LP, while the TAZTE Smart F&B system was discontinued due to insufficient merchant participation, and significant executive and board changes occurred between June and September 2024 - October 7, 2025: Entered subscription agreement with two Malaysian individuals for **USD 200,000.00** in common stock at **$1.16 per share**[33](index=33&type=chunk) - August 12, 2025: Entered Sale and Purchase Agreement with I Synergy Group Ltd to sell AI-based GPUs for **AUD 300,000.00**[33](index=33&type=chunk)[34](index=34&type=chunk) - February 11, 2025: Wholly owned subsidiary TADAA Ventures entered Share Purchase Agreement to acquire **51% of Tien Ming Distribution Sdn Bhd** for **RM5,100.00**, with a commitment to invest up to **RM3,000,000.00**[36](index=36&type=chunk) - November 27, 2024: Entered subscription agreement with investors for an aggregate of **$1,177,000.00** for **3,566,668 shares of common stock** at **$0.33 per share**[36](index=36&type=chunk) - October 29, 2024: Entered service agreement with V GALLANT SDN BHD for generative AI solutions and AI digital human technology services for **$16,000,000**, payable via TGL shares at **$0.67 per share**[37](index=37&type=chunk) - October 10, 2024: Entered service partnership agreement with Octagram Investment Limited to integrate mini-game modules into the ZCity App for **$2,800,000.00**, payable via **3,500,000 TGL shares** at **$0.80 per share**[37](index=37&type=chunk)[38](index=38&type=chunk) - October 10, 2024: Entered Share Purchase Agreement with Alumni Capital LP for the right to purchase up to **$6,000,000 of common stock**[39](index=39&type=chunk) - September 20, 2024: Entered partnership agreement with Credilab Sdn. Bhd. (CLSB) to develop an AI-driven chatbot and digital wallet for the ZCity App, with a **$2,000,000 payment to CLSB**[39](index=39&type=chunk) - June 2024: Discontinued the TAZTE Smart F&B system due to insufficient merchant participation[39](index=39&type=chunk) - June-September 2024: Significant changes in executive leadership (CEO, CFO, COO resignations and appointments) and board composition[42](index=42&type=chunk) [Recent Developments](index=18&type=section&id=Recent%20Developments) Recent developments include a November 2023 public offering that raised approximately $3.6 million, a 1-for-70 reverse stock split in February 2024, and a subsequent 1-for-50 reverse stock split in April 2025 to regain Nasdaq compliance, along with addressing a Nasdaq non-compliance issue regarding shareholder approval for share issuance to a former CEO and regaining compliance with the minimum bid price rule, and bylaws were amended in August 2024 and August 2025 to reduce the quorum requirement for stockholder meetings to 33 1/3% - November 2023 Offering: Raised approximately **$3.6 million** net proceeds from the sale of common stock and pre-funded warrants[43](index=43&type=chunk) - February 2024 Reverse Stock Split: Effected a **1-for-70 reverse stock split** on February 27, 2024[43](index=43&type=chunk) - Nasdaq Compliance (March 2024): Regained compliance with Nasdaq's shareholder approval requirement and minimum bid price rule after a previous non-compliance related to share issuance to a former CEO and the reverse stock split[43](index=43&type=chunk) - April 2025 Reverse Stock Split: Effected a **1-for-50 reverse stock split** on April 7, 2025, to address minimum bid price rule non-compliance[45](index=45&type=chunk) - Bylaws Amendment (August 2024 & August 2025): Amended to provide that **33 1/3% of voting power** constitutes a quorum for stockholder meetings[43](index=43&type=chunk)[45](index=45&type=chunk) - CFO Resignation and Appointment (July 2025): Sook Lee Chin resigned as CFO, and See Wah "Sylvia" Chan was appointed, with an annual compensation of **RM19,000 plus $80,000 in common stock**[45](index=45&type=chunk) - Executive Director Appointment (September 2025): Chan Meng Chun appointed Executive Director, entitled to **$120,000 worth of common stock annually**[45](index=45&type=chunk) [Market Opportunity](index=22&type=section&id=Market%20Opportunity) Southeast Asia (SEA) presents significant market opportunities due to strong economic expansion, robust population growth, rising urbanization, and a growing middle class, with Malaysia expected to transition to a high-income economy by 2024-2028, and its internet economy projected to grow from $21 billion in 2021 to $35 billion in 2025, driving demand for the company's e-commerce platform - SEA market opportunities driven by strong economic expansion, population growth, urbanization, and emerging middle class[47](index=47&type=chunk) - Malaysia's GDP growth averaged over **4.5%** from 2016-2019, rebounded to **8.7% in 2022**, and is expected to maintain **4.5%** for the next five years[47](index=47&type=chunk) - Malaysia's internet economy grew from **$14 billion in 2020 to $21 billion in 2021** (**47% growth**) and is expected to reach **$35 billion by 2025**[52](index=52&type=chunk) - SEA Internet sector GMV is forecast to grow to over **US$360 billion by 2025**[51](index=51&type=chunk) - Malaysia's urbanization increased from **71.61% to 77.7%** between 2011 and 2022, driving middle-class consumption[49](index=49&type=chunk)[50](index=50&type=chunk) [About the ZCITY App](index=24&type=section&id=About%20the%20ZCITY%20App) The ZCITY App is an O2O e-commerce platform in Malaysia that offers personalized deals using proprietary AI technology based on user purchase history, location, and preferences, featuring a "RewardsOnRewards" program, secure e-payment solutions through partners like iPay88, and various functions including geo-location-based offers, affiliate partnerships, bill payment, branded e-vouchers, gamification, and an e-mall service called Zstore, though its "Smart F&B" system (TAZTE) was discontinued in June 2024 due to low merchant participation - ZCITY App provides personalized deals using proprietary AI technology based on purchase history, location, and preferences[57](index=57&type=chunk) - Operates under the hashtag "**RewardsOnRewards**," allowing users to spend and earn Reward Points (RP) and ZCITY Cash Vouchers[58](index=58&type=chunk) - Partners with iPay88 for secure e-payment solutions, supporting various e-wallets (Touch'n Go, Boost, GrabPay) and credit cards (Visa, Mastercard)[59](index=59&type=chunk) - Key functions include geo-location-based homepage, affiliate partnerships (e.g., Shopee, Lazada), bill payment, branded e-vouchers, gamification ("Spin & Win"), ZCITY RAHMAH Package (essential e-vouchers), and Zstore (e-mall service)[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk)[68](index=68&type=chunk) - TAZTE Smart F&B system was discontinued as of **June 2024** due to insufficient merchant participation[67](index=67&type=chunk) - ZCITY App is free to download from Google Play Store, Apple iOS Store, and Huawei AppGallery[81](index=81&type=chunk) [ZCITY Apps's Reward Points Program](index=28&type=section&id=ZCITY%20Apps's%20Reward%20Points%20Program) The ZCITY App's Reward Points (RP) program, branded as "RewardsOnRewards," incentivizes user engagement and spending, allowing users to earn RP for registration, referrals, and Malaysian Ringgit (MYR) spent, with additional RP for social engagement, redeemable for discounts with maximum deductions of up to 3% for bill payments and 5% for e-vouchers - RP program encourages user sign-up, engagement, and spending[82](index=82&type=chunk) - 200 RP for new user registration - 100 RP for new user referral - Conversion of Malaysian Ringgit spent into RP - 50% RP of every user paid amount - 25% RP of every referred user paid amount - RP offered for increased social engagement[87](index=87&type=chunk) - Maximum RP deduction: up to **3% for bill payments** and up to **5% for e-vouchers**[84](index=84&type=chunk) [Marketing Strategy - Consumer](index=28&type=section&id=Marketing%20Strategy%20-%20Consumer) The consumer marketing strategy for the ZCITY App focuses on attracting and retaining users through a multi-pronged approach, including online and offline branding, digital media advertising (social media, Google ads, email marketing), and leveraging Google's Universal App Campaign (UAC) for targeted promotions, while using AppsFlyer SDK to monitor user acquisition and retention data, optimizing marketing budgets and campaigns based on actionable insights - Marketing strategy aims to acquire users who will drive repeat engagement and become loyal advocates for the ZCITY App[88](index=88&type=chunk) - Multi-pronged approach includes outdoor digital billboards, radio commercials, third-party editorials, social media (Facebook, Instagram, TikTok, YouTube), Google ads, and direct email marketing[93](index=93&type=chunk) - Utilizes Google's Universal App Campaign (UAC) to promote the ZCITY App across Google's properties, using machine learning for targeted ads[98](index=98&type=chunk)[99](index=99&type=chunk) - AppsFlyer SDK is installed in the ZCITY App to provide conversion data for user acquisition and retention campaigns, optimizing marketing budget and informing strategic decisions[101](index=101&type=chunk) [Marketing Strategy - Merchants "6Cs" Strategy](index=32&type=section&id=Marketing%20Strategy%20-%20Merchants%20%226Cs%22%20Strategy) The company's "6Cs" marketing strategy for merchants focuses on attracting and retaining them by emphasizing clients, convenience, competition, consistency with creative content, corporate social responsibilities, and credibility, which includes forecasting potential merchants, offering quick onboarding (within 24 hours), differentiating from competitors, maintaining a consistent brand image, integrating social and environmental concerns (e.g., "Green Oil" program), and demonstrating expertise to build trust - Implementation of a "**6Cs**" marketing strategy for merchants: clients, convenience, competition, consistency with creative content, corporate social responsibilities, and credibility[106](index=106&type=chunk) - Clients: Forecast potential merchants by category to align promotional content with their business interests - Convenience: Digitalization initiative to onboard merchants within **24 hours** - Competition: Identify and compare business models to differentiate the system - Consistency with Creative Content: Maintain a consistent and recognizable brand image across marketing approaches - Corporate Social Responsibilities: Integrate social/environmental concerns (e.g., "Green Oil" program) for positive publicity - Credibility: Present expertise to potential merchants to increase referrals and positive reviews[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) [Revenue Model](index=33&type=section&id=Revenue%20Model) TADAA Technologies generates revenue from a diversified mix of e-commerce activities for users, services to merchants, and membership subscription fees, categorized as product and loyalty program revenue, transaction revenue, and agent subscription revenue - Revenues are generated from e-commerce activities for users, services to merchants, and membership subscription fees[113](index=113&type=chunk) - Revenue streams are categorized into product and loyalty program revenue, transaction revenue, and agent subscription revenue[113](index=113&type=chunk) [Competitive Strengths](index=33&type=section&id=Competitive%20Strengths) The company's competitive strengths include its powerful, unique, and integrated ZCITY App, which offers personalized rewards through AI technology, with its "RewardsOnRewards" loyalty program enhancing user engagement and loyalty, operating in attractive markets like Malaysia with plans for expansion into other Southeast Asian countries and Japan, and benefiting from an experienced management team - Powerful, Unique and Integrated App: ZCITY App serves consumers and merchants, maximizing value creation and enhancing shopping experience with proprietary AI technology for personalized rewards[113](index=113&type=chunk) - Unique Loyalty Program: "**RewardsOnRewards**" program increases user engagement and loyalty, benefiting both consumers and merchants[114](index=114&type=chunk) - Attractive Markets: Operates in Malaysia with an expected **4.5% average annual GDP growth**, with plans to expand to other Southeast Asian countries and Japan[114](index=114&type=chunk) - Experienced Management Team: Executives and directors combine local e-commerce operations, social media marketing, and global finance expertise[116](index=116&type=chunk) [Growth Strategy](index=34&type=section&id=Growth%20Strategy) The company's growth strategy focuses on rapidly recruiting new consumers and merchants to create a self-reinforcing cycle of growth, involving enhancing consumer shopping experiences with instant rebates, empowering merchants with access to a large user database, and continuously adding strategic partnerships, with future plans including expansion into neighboring countries like Indonesia, Thailand, and Japan, and evaluating investment and acquisition opportunities to broaden service offerings and market leadership - Main goal: Recruit new consumers and register merchants efficiently to establish a cycle where more consumers lead to more merchants and vice versa[117](index=117&type=chunk) - Consumer Growth: Attract consumers by awarding Reward Points (RP) for successful transactions - Merchant Growth: Encourage merchants to join by offering technological advantages and access to a significant consumer database (nearly **2.7 million registered users**) - Partner Growth: Enhance ZCITY App through strategic partnerships to offer more value-added services and gain low-cost access to partners' users - Expansion Growth: Launch and scale expansion plans to Indonesia, Thailand, and Japan by partnering with or acquiring local establishments - Acquisition Growth: Evaluate investment and acquisition opportunities in e-commerce platforms to expand service offerings and attract new consumers and merchants, financed through internal and potential stock market financings[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) [Strategic Partnerships](index=34&type=section&id=Strategic%20Partnerships) Strategic partnerships are crucial for the ZCITY App, enabling it to offer value-added services and gain low-cost access to partners' users, with key Malaysian partners including Touch'nGo e-wallet, iPay88, Boost eWallet, Digi, and Grabpay eWallet, providing payment gateways, e-vouchers, and bill payment services, extending the company's reach to leading brands and other e-wallet providers, enhancing its ecosystem - Strategic partnerships are vital for offering value-added services and gaining low-cost access to partners' users[124](index=124&type=chunk) - Retail Merchant Agreements: Allow merchants to sell products on ZCITY App for a **1-10% commission** - Services Partners Agreements: With Pay's Gift and Razer Gold for e-vouchers, and Apigate Sdn Bhd (Boost Connect) for reselling digital vouchers - Local Strategic Partner Agreements: With iPay88 for payment gateways (credit card, online banking, e-wallets like Touch' N Go, Grabpay, ShopeePay, Boost eWallet) - Local Demands Agreements: With Digi Telecommunication Sdn. Bhd. and ATX Distribution Sdn. Bhd. for bill payment services (telecommunication, utilities, insurance, entertainment, charities)[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) - Indirect relationships through service partners provide access to leading brands (Shell, Lazada, FamilyMart, Watsons) and other e-wallet providers (Boost, Grabpay), and telco service providers (CelcomDigi, U Mobile, Astro, Air Selangor)[78](index=78&type=chunk) [Competitive Outlook](index=35&type=section&id=Competitive%20Outlook) The company operates in a highly competitive e-commerce market, competing with other online platforms, food ordering services, and retailers for both merchants and consumers, with its competitive differentiation lying in its unique cross-business reward system, reward points module, instant rebate and cashback program, upcoming features, and a personalized, data-driven approach to customer engagement, aiming to build lasting customer loyalty - Competes with other online platforms, apps for merchants, food ordering platforms, e-commerce platforms, fashion/lifestyle retailers, and restaurants[125](index=125&type=chunk) - Key competitors in the Malaysian market include Fave and Shopback[126](index=126&type=chunk) - Differentiates through a unique cross-business reward system, reward points module, instant rebate & cashback, upcoming new features, and a personalized, data-driven approach to customer engagement[125](index=125&type=chunk)[129](index=129&type=chunk) [Intellectual Property Matters](index=35&type=section&id=Intellectual%20Property%20Matters) The company's technology and ZCITY App are protected by copyrightable and/or patentable subject matter licensed by its Malaysian subsidiary, TADAA Technologies, including trade secrets related to its software platform, with a trademark application for "ZCITY" and a patent application for "A Revenue Allocation System" filed in Malaysia, and information technology protection measures including an IT Policy Manual, Active Directory and VPN for access management, and AWS cloud hosting compliant with SOC2, ensuring security, availability, processing integrity, confidentiality, privacy, and backup, along with a Disaster Recovery SOP - Intellectual property assets include trade secrets associated with its software platform, licensed by TADAA Technologies[130](index=130&type=chunk) - Filed one trademark application for "**ZCITY**" and one patent application for "**A Revenue Allocation System**" in Malaysia[131](index=131&type=chunk)[132](index=132&type=chunk) - IT protection includes an IT Policy Manual, Active Directory and VPN for access management, and AWS cloud hosting compliant with SOC2[133](index=133&type=chunk)[134](index=134&type=chunk) - AWS cloud hosting ensures security, availability, processing integrity, confidentiality, privacy, and backup - Disaster Recovery SOP is in place, relying on AWS cloud facilities with distributed servers and database services across multiple zones[134](index=134&type=chunk)[135](index=135&type=chunk)[137](index=137&type=chunk) [Litigation](index=38&type=section&id=Litigation) The company may be involved in legal proceedings in the ordinary course of business but believes there is no pending or threatened litigation that would have a material adverse effect on its business, results of operations, financial condition, or cash flows - No pending or threatened litigation is expected to have a material adverse effect on the business, results of operations, financial condition, and/or cash flows[139](index=139&type=chunk) [Properties](index=38&type=section&id=Properties) The company leases its principal executive offices in New York, New York, and Kuala Lumpur, Malaysia, and does not currently own any real estate - Principal executive offices are leased in New York, New York, and Kuala Lumpur, Malaysia[140](index=140&type=chunk) - The company does not own any real estate[140](index=140&type=chunk) [Human Capital Resources](index=38&type=section&id=Human%20Capital%20Resources) As of June 30, 2025, the company had 12 full-time employees and uses consultants as needed, with human capital objectives including identifying, recruiting, retaining, incentivizing, and integrating employees, advisors, and consultants, primarily through equity and cash incentive plans to align interests with stockholders and motivate performance - As of June 30, 2025, the company had **12 full-time employees** and engages consultants as needed[141](index=141&type=chunk) - Human capital objectives focus on identifying, recruiting, retaining, incentivizing, and integrating personnel[142](index=142&type=chunk) - Equity and cash incentive plans are used to attract, retain, and reward personnel, aiming to increase stockholder value[142](index=142&type=chunk) [Available Information](index=38&type=section&id=Available%20Information) The company's corporate website (https://treasureglobal.org) and ZCITY website (https://zcity.world) provide free access to its SEC filings, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and Section 16 reports by executive officers and directors - Corporate website: **https://treasureglobal.org**[143](index=143&type=chunk) - ZCITY website: **https://zcity.world**[143](index=143&type=chunk) - SEC filings (10-K, 10-Q, 8-K, Section 16 reports) are available free of charge on the company's website under the "Investors" section[143](index=143&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) Investing in the company's common stock is highly speculative due to significant risks, including substantial doubt about its ability to continue as a going concern, a limited operating history, and the critical need for additional capital, with operational risks encompassing intense competition, reliance on third-party services, potential system failures, and the unproven market for its ZCITY App, while geopolitical conditions, foreign exchange fluctuations, and regulatory compliance (including cybersecurity, privacy, and anti-corruption laws) also pose material threats to its business and financial performance - Substantial doubt exists about the company's ability to continue as a going concern due to recurring losses and negative operating cash flow[145](index=145&type=chunk)[146](index=146&type=chunk) - Limited operating history in an evolving industry makes future prospects difficult to evaluate and increases the risk of not being successful[148](index=148&type=chunk) - Failure to raise capital when needed will have a material adverse effect on business, financial condition, and results of operations[151](index=151&type=chunk) - The e-commerce market is highly competitive, and insufficient resources for R&D, marketing, sales, and client support could adversely affect the business[159](index=159&type=chunk)[160](index=160&type=chunk) - The market for the ZCITY App is new and unproven, making customer adoption and growth rates difficult to predict[162](index=162&type=chunk) - Reliance on cloud-based applications and platforms means any disruption could adversely affect financial condition and results of operations[165](index=165&type=chunk) - Geopolitical conditions, including acts of war or terrorism, could adversely affect business, particularly in Malaysia where most operations are conducted[194](index=194&type=chunk) - Fluctuations in Malaysian Ringgit exchange rates could adversely affect business and the value of securities[191](index=191&type=chunk) - Failure to maintain effective internal controls over financial reporting, including inadequate U.S. GAAP expertise and internal audit function, could have an adverse impact[196](index=196&type=chunk)[198](index=198&type=chunk) - Compliance with laws and regulations applicable to business, including privacy, data protection, and anti-corruption laws, is critical; noncompliance could lead to fines and penalties[209](index=209&type=chunk)[215](index=215&type=chunk)[227](index=227&type=chunk) [Item 1B. Unresolved Staff Comments](index=56&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments from the SEC - No unresolved staff comments[236](index=236&type=chunk) [Item 1C. Cybersecurity](index=56&type=section&id=Item%201C.%20Cybersecurity) The company maintains a comprehensive cybersecurity program with identity and access management, network security monitoring, employee training, and third-party assessments, and in May 2025, a limited cybersecurity incident involving unauthorized changes to domain, DNS, and email configurations occurred due to former employee credentials, which was contained with no evidence of data exfiltration, and remediation included credential rotation, multi-factor authentication, account closure, hardened email authentication, domain locks, and migration to a new registrar, with no material impact on operations or financial condition - Maintains a comprehensive cybersecurity program with identity and access management, network security monitoring, employee awareness training, and periodic third-party assessments[237](index=237&type=chunk) - In May 2025, detected unauthorized changes to domain, DNS, and email configurations originating from administrative credentials retained by a former employee[238](index=238&type=chunk) - Impact was limited to a brief email-routing disruption; no evidence of data exfiltration or compromise of customer data, financial information, or internal systems was found[238](index=238&type=chunk) - Immediately purged and rotated credentials across critical systems - Enforced company-wide multi-factor authentication and closed orphaned accounts - Moved registrar and DNS administration under centralized secure access controls - Hardened email authentication (SPF, DKIM, DMARC) and implemented registry-level domain locks and DNSSEC - Completed a secure migration of domain and DNS records to a new registrar environment - Conducted forensic investigation, automated off-boarding processes, established 24/7 SIEM/SOC monitoring, and targeted cybersecurity training[239](index=239&type=chunk)[240](index=240&type=chunk) - The incident did not have a material impact on operations or financial condition[240](index=240&type=chunk) [Item 2. Properties](index=56&type=section&id=Item%202.%20Properties) The company's principal executive offices are leased in New York, New York, and Kuala Lumpur, Malaysia, and it does not own any real estate - Principal executive offices are located at 276 5 Avenue, Suite 704 739, New York, New York 10001 and B03-C-13A, Menara 3A, KL Eco City, No. 3 Jalan Bangsar, 59200 Kuala Lumpur, Malaysia[241](index=241&type=chunk) - The company leases its offices and does not own any real estate[241](index=241&type=chunk) [Item 3. Legal Proceedings](index=56&type=section&id=Item%203.%20Legal%20Proceedings) The company is not a party to any pending legal proceedings that are expected to have a material adverse effect on its business, operating results, cash flows, or financial condition - Not a party or subject to any pending legal proceedings expected to have a material adverse effect on business, operating results, cash flows, or financial condition[242](index=242&type=chunk) [Item 4. Mine Safety Disclosures](index=56&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[243](index=243&type=chunk) [PART II](index=57&type=section&id=PART%20II) This section covers market information for common equity, related stockholder matters, issuer purchases of equity securities, and management's discussion and analysis of financial condition and results of operations [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=57&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the Nasdaq Capital Market under 'TGL', with 18 stockholders of record as of June 30, 2025, and no cash dividends have been paid, with future earnings intended for business development, and no equity compensation plan adopted as of June 30, 2025, but one is planned for stockholder approval, while recent unregistered securities sales include a $200,000 subscription agreement, a $2.8 million service partnership with Octagram Investment Limited, and a $16 million service agreement with V GALLANT SDN BHD, all involving common stock issuance - Common stock trades on the Nasdaq Capital Market under the symbol "**TGL**"[245](index=245&type=chunk) - As of June 30, 2025, there were **18 stockholders of record**[245](index=245&type=chunk) - No cash dividends have been declared or paid; future earnings will be retained for business development and share repurchase program[246](index=246&type=chunk) - No equity compensation plans adopted as of June 30, 2025, but the 2025 Equity Incentive Plan will be submitted for stockholder approval[247](index=247&type=chunk) - October 7, 2025: Issued common stock for **$200,000** to two Malaysian individuals at **$1.16 per share** - October 10, 2024: Issued **3,500,000 common shares** at **$0.80 per share** to Octagram Investment Limited for **$2,800,000** in service fees - October 29, 2024: Issued common shares at **$0.67 per share** to V GALLANT SDN BHD for **$16,000,000** in generative AI solutions and AI digital human technology services[249](index=249&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk) - Transfer agent for common stock is Vstock Transfer, LLC[257](index=257&type=chunk) [Item 6. [Reserved]](index=59&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and not applicable - Not applicable[258](index=258&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=59&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Treasure Global Inc. is a holding company operating the ZCITY App, an O2O e-commerce platform in Malaysia, and has recently diversified into customized software development services, facing significant going concern risks due to recurring losses and negative operating cash flows, despite recent financing activities, with total revenues decreasing by 89.4% to $2.3 million in FY2025, primarily due to a strategic reduction in lower-margin product sales and marketing, offset by new software development revenue, while gross profit increased by 104.6% to $1.7 million, with gross margin improving to 71.6% due to high-margin software development projects, and operating expenses decreased overall, but long-lived asset impairment and share-based compensation adjustments significantly impacted net loss, which widened to $23.4 million in FY2025 - Treasure Global Inc. is a holding company for TADAA Technologies Sdn. Bhd. (ZCITY App) and TADAA Ventures Sdn. Bhd., operating an O2O e-commerce platform and customized software development services[260](index=260&type=chunk)[262](index=262&type=chunk)[272](index=272&type=chunk) - Management has determined there is substantial doubt about the company's ability to continue as a going concern due to recurring losses and insufficient funds to meet working capital and debt obligations[327](index=327&type=chunk)[398](index=398&type=chunk) Total Revenues (YoY Change) | Metric | FY2025 (USD) | FY2024 (USD) | Change (USD) | Change (%) | | :---------------------------------- | :----------- | :----------- | :----------- | :--------- | | Total revenues | 2,330,557 | 22,066,829 | (19,736,272) | (89.4)% | - Decrease in total revenues mainly attributable to a strategic decision to streamline product lines (eliminating lower-margin e-vouchers) and reduce spending on customer rewards and marketing campaigns[300](index=300&type=chunk)[301](index=301&type=chunk) Gross Profit and Margin (YoY Change) | Metric | FY2025 (USD) | FY2024 (USD) | Change (USD) | Change (%) | | :------------------ | :----------- | :----------- | :----------- | :--------- | | Gross profit | 1,669,825 | 816,062 | 853,763 | 104.6% | | Gross margin | 71.6% | 3.7% | 67.9% | | - Increase in gross profit and margin primarily due to engagement in a customized software development project, which generated approximately **$1.0 million** in gross profit with a high gross profit margin of approximately **77.8%**[309](index=309&type=chunk) Net Loss (YoY Change) | Metric | FY2025 (USD) | FY2024 (USD) | Change (USD) | | :------- | :----------- | :----------- | :----------- | | Net loss | (23,377,488) | (6,586,623) | (16,790,865) | [Overview](index=59&type=section&id=Overview) Treasure Global Inc. (TGL) is a Delaware holding company, primarily owning TADAA Technologies Sdn. Bhd. (ZCITY App) and TADAA Ventures Sdn. Bhd., with the ZCITY App, launched in Malaysia in June 2020, being an O2O e-commerce platform offering instant rebates and cashback, aiming to be Malaysia's top reward and payment gateway, with long-term goals for Southeast Asia and Japan, and as of February 10, 2025, it had 2,707,610 registered users and 2,027 registered merchants, while the company also briefly engaged in food distribution through Foodlink Global Sdn. Bhd., which was disposed of in May 2024, and initiated customized software development services in FY2025 - TGL is a Delaware holding company, incorporated **March 20, 2020**, holding TADAA Technologies Sdn. Bhd. (ZCITY App) and TADAA Ventures Sdn. Bhd.[260](index=260&type=chunk) - ZCITY App, launched in Malaysia in **June 2020**, is an O2O e-commerce platform offering instant rebates, affiliate cashback, and e-payment solutions[262](index=262&type=chunk)[263](index=263&type=chunk) - ZCITY App aims to be Malaysia's top reward and loyalty platform, with a long-term goal to expand into Southeast Asia and Japan[264](index=264&type=chunk) ZCITY App User and Merchant Statistics (as of February 10, 2025) | Metric | Count | | :------------------ | :---------- | | Registered Users | 2,707,610 | | Registered Merchants | 2,027 | - Proprietary AI technology provides personalized deals based on consumer purchase history, location, and preferences[266](index=266&type=chunk)[267](index=267&type=chunk) - Food distribution operation through Foodlink Global Sdn. Bhd. and its subsidiaries was disposed of in **May 2024** due to continued operating losses[270](index=270&type=chunk)[271](index=271&type=chunk) - Initiated a new revenue stream in customized software development services, primarily targeting enterprise clients, as of **January 2025**[272](index=272&type=chunk) [Recent Development](index=61&type=section&id=Recent%20Development) Recent corporate developments include the termination of a 51% acquisition of Tien Ming Distribution Sdn Bhd in February 2025, the execution of two reverse stock splits (1:70 in February 2024 and 1:50 in April 2025), financing activities including a November 2023 public offering raising $3.5 million, a marketing offering agreement with H.C. Wainwright & Co., LLC yielding $2.9 million, a share purchase agreement with Alumni Capital LP for $11.7 million, and a subscription agreement for $1.177 million, alongside business developments such as discontinuing the TAZTE Smart F&B system, concluding a Smart Campus System project, and forming strategic partnerships with Credilab Sdn Bhd for credit services and Octagram Investment Limited for mini-game modules, and V Gallant Sdn Bhd for AI digital human solutions and AI cloud infrastructure - Corporate Development: Share purchase agreement to acquire **51% of Tien Ming Distribution Sdn Bhd** was terminated, and no business combination was recognized for FY2025[273](index=273&type=chunk) - February 27, 2024: Effected a **1:70 reverse stock split** - April 7, 2025: Effected a **1:50 reverse stock split**[274](index=274&type=chunk) - November 30, 2023: Closed public offering, receiving approximately **$3.5 million** net proceeds - March 22, 2024: Entered marketing offering agreement, receiving approximately **$2.9 million** net proceeds as of June 30, 2025 - October 10, 2024: Entered Share Purchase Agreement with Alumni Capital LP, receiving approximately **$11.7 million** net proceeds as of June 30, 2025 - November 27, 2024: Entered subscription agreement with investors for **$1,177,000**[276](index=276&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk) - Discontinued TAZTE Smart F&B system as of **June 2024** due to insufficient merchant participation - Concluded engagement for Smart Campus System at ELMU University in Nilai, Malaysia, with no further performance obligation - Since September 2024: Partnered with Credilab Sdn Bhd (CLSB) to develop credit services, digital wallet, and AI-driven chatbot within the ZCity App - Since October 2024: Partnered with Octagram Investment Limited (OCTA) to develop and integrate mini-game modules into the ZCity App - Since October 2024: Partnered with V Gallant Sdn Bhd to develop a Live Streaming Platform enhanced by AI Digital Human Solutions and AI cloud infrastructure[280](index=280&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk)[285](index=285&type=chunk)[286](index=286&type=chunk) [Key Factors that Affect Operating Results](index=63&type=section&id=Key%20Factors%20that%20Affect%20Operating%20Results) Key factors affecting operating results include the company's ability to create value for users and generate revenue, driven by the number and volume of consumer transactions and its empowering data and technology, with significant ongoing investments in user base, technology, people, and infrastructure, while Malaysia's high inflation and global conflicts have not had a material adverse effect as of June 30, 2025 - Ability to create value for users and generate revenue is driven by the number and volume of consumer transactions and empowering data and technology[287](index=287&type=chunk)[288](index=288&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk) - Significant investments are made in user base, technology, people, and infrastructure to attract consumers and merchants, enhance user experience, and expand platform capabilities[291](index=291&type=chunk) - Inflation in Malaysia has not had a material adverse effect as of **June 30, 2025**, but is continuously monitored[292](index=292&type=chunk) - Supply chain disruptions from global conflicts (Russia-Ukraine, Middle East) have not had a material adverse effect as of **June 30, 2025**, but are continuously monitored[293](index=293&type=chunk) [Key Operating Metrics](index=65&type=section&id=Key%20Operating%20Metrics) The company experienced a decrease in the growth rate of registered users and a decline in active users over the last five quarters ending June 30, 2025, with accumulated registered users growing by approximately 0.1% on average, while active users decreased by an average of 32.0%, attributed to reduced e-voucher purchases from vendors, leading to fewer available e-vouchers, and reductions in marketing spending and customer rewards to enhance cost-effectiveness Key Operating Metrics (Quarterly Trends) | Metric | June 30, 2024 | Sep 30, 2024 | Dec 31, 2024 | Mar 31, 2025 | June 30, 2025 | | :-------------------------- | :------------ | :----------- | :----------- | :----------- | :------------ | | Number of new registered user | 12,405 | 293 | 2,016 | 1,467 | 88 | | Number of active users | 41,458 | 25,216 | 21,734 | 10,647 | 4,887 | Accumulated Users and Merchants (as of Quarter End) | Metric | June 30, 2024 | Sep 30, 2024 | Dec 31, 2024 | Mar 31, 2025 | June 30, 2025 | | :-------------------------- | :------------ | :----------- | :----------- | :----------- | :------------ | | Accumulated registered users | 2,701,189 | 2,704,482 | 2,706,498 | 2,707,965 | 2,708,053 | | Accumulated Participating merchants | 2,027 | 2,027 | 2,027 | 2,027 | 2,027 | - Average growth rate of registered users: approximately **0.1%** over the past five quarters[296](index=296&type=chunk) - Average decrease in active user numbers: **32.0%** over the past five quarters[296](index=296&type=chunk) - Decline attributed to reduced e-voucher purchases from vendors (fewer available e-vouchers) and reductions in marketing spending and customer rewards to enhance cost-effectiveness and profitability[297](index=297&type=chunk) Active User Proportion to Total Registered Users (Quarterly) | Starting | Ending | Total registered users | Total active users | Total active users to total registered users | | :--------- | :--------- | :--------------------- | :----------------- | :------------------------------------------- | | April 1, 2024 | June 30, 2024 | 2,701,189 | 26,819 | 1.0% | | July 1, 2024 | September 30, 2024 | 2,704,482 | 25,216 | 0.9% | | October 1, 2024 | December 31, 2024 | 2,706,498 | 21,734 | 0.1% | | January 1, 2025 | March 31, 2025 | 2,707,965 | 10,647 | 0.4% | | April 1, 2025 | June 30, 2025 | 2,708,053 | 4,887 | 0.2% | Active User Churn and Retention Rates (Quarterly) | Starting | Ending | Total active users | New active users (registered within the quarter) | Existing active users | Active users churn rate | Active users retention rate | | :--------- | :--------- | :----------------- | :----------------------------------------------- | :-------------------- | :---------------------- | :-------------------------- | | April 1, 2024 | June 30, 2024 | 26,819 | 4,634 | 22,185 | 46.5% | 53.5% | | July 1, 2024 | September 30, 2024 | 25,216 | 3,293 | 21,923 | 18.3% | 81.7% | | October 1, 2024 | December 30,2024 | 21,734 | 2,016 | 19,718 | 21.8% | 78.2% | | January 1, 2025 | March 31, 2025 | 10,647 | 1,467 | 9,180 | 57.8% | 42.2% | | April 1, 2025 | June 30, 2025 | 4,887 | 88 | 4,799 | 54.9% | 45.1% | [Results of Operation](index=66&type=section&id=Results%20of%20Operation) For the fiscal year ended June 30, 2025, total revenues decreased by 89.4% to $2.3 million, primarily due to a 97.1% decrease in product and loyalty program revenue, offset by new customized software development service revenue of $1.48 million, while gross profit increased by 104.6% to $1.7 million, with gross margin improving to 71.6%, driven by high-margin software development projects, and operating expenses decreased by 92.6% in selling expenses and 19.5% in general and administrative expenses, but a $19.5 million long-lived asset impairment and a $2.7 million share-based compensation adjustment led to a net loss of $23.4 million, significantly wider than the $6.6 million loss in FY2024 Revenue Breakdown (YoY Change) | Revenue Category | FY2025 (USD) | % of Total (FY2025) | FY2024 (USD) | % of Total (FY2024) | Change (%) | | :---------------------------------- | :----------- | :------------------ | :----------- | :------------------ | :--------- | | Product and loyalty program revenue | 619,897 | 26.6% | 21,455,862 | 97.2% | (97.1)% | | Transaction revenue | 127,127 | 5.5% | 61,241 | 0.3% | 107.6% | | Member subscription revenue | 103,533 | 4.4% | 375,949 | 1.7% | (72.5)% | | Sublicence revenue | - | -% | 173,777 | 0.8% | (100.0)% | | Customized software development service | 1,480,000 | 63.5% | - | -% | 100.0% | | **Total revenues** | **2,330,557**| **100.0%** | **22,066,829**| **100%** | **(89.4)%**| - Product and loyalty program revenue decreased by **$20.8 million** (**97.1%**) due to strategic streamlining of product lines (eliminating lower-margin e-vouchers) and reduced customer rewards/marketing[301](index=301&type=chunk) - Transaction revenue increased by **107.6%** due to a partnership with Credilab Sdn. Bhd. (CLSB) for credit services, generating transaction fees and **50% revenue share**[302](index=302&type=chunk) - Customized software development services generated **$1.48 million** in revenue in FY2025, a new revenue stream[305](index=305&type=chunk) Cost of Revenue Breakdown (YoY Change) | Cost Category | FY2025 (USD) | FY2024 (USD) | Change (%) | | :---------------------------------- | :----------- | :----------- | :--------- | | Product and loyalty program revenue | 206,106 | 21,057,386 | (99.0)% | | Sublicense revenue | - | 193,381 | (100.0)% | | Customized software development service | 454,626 | - | (100.0)% | | **Total cost of revenue** | **660,732** | **21,250,767**| **(96.9)%**| - Total cost of revenue decreased by **$21.0 million** (**96.9%**), consistent with the decline in revenue[307](index=307&type=chunk) Operating Expenses (YoY Change) | Expense Category | FY2025 (USD) | FY2024 (USD) | Change (USD) | Change (%) | | :------------------------ | :----------- | :----------- | :----------- | :--------- | | Selling expenses | (129,467) | (1,760,921) | 1,631,454 | (92.6)% | | General and administrative | (3,630,621) | (4,511,488) | 880,867 | (19.5)% | | Long-live assets impairment | (19,517,303) | - | (19,517,303) | 100.0% | | Research and development | (215,900) | (513,524) | 297,624 | (58.0)% | | Stock-based compensation | (208,445) | (93,111) | (115,334) | 123.9% | - Long-lived assets impairment of **$19.5 million** recognized in FY2025, primarily related to intangible assets[315](index=315&type=chunk) - Share-based compensation adjustment of approximately **$2.7 million** in FY2025, attributable to settling additional share compensation requested by V Gallant Sdn. Bhd. due to share price decline[317](index=317&type=chunk) [Liquidity and Capital Resources](index=72&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had $0.2 million in cash and cash equivalents, having financed operations through stockholder contributions, convertible notes, related party loans, and public offerings, including $3.5 million from a November 2023 offering, $2.9 million from a marketing offering, $11.7 million from Alumni Capital LP, and $1.177 million from a subscription agreement, yet despite these proceeds, management believes there is substantial doubt about the company's ability to continue as a going concern due to recurring losses, necessitating further equity financing and financial support from related parties - As of June 30, 2025, cash and cash equivalents were approximately **$0.2 million**[321](index=321&type=chunk) - Financed operations through stockholder contributions, convertible notes, related party loans, and public offerings[320](index=320&type=chunk) - November 2023 Offering: Approximately **$3.5 million** net proceeds - Marketing Offering Agreement: Approximately **$2.9 million** net proceeds as of June 30, 2025 - Share Purchase Agreement with Alumni Capital LP: Approximately **$11.7 million** net proceeds as of June 30, 2025 - Subscription Agreement: **$1,177,000** net proceeds as of June 30, 2025[322](index=322&type=chunk)[324](index=324&type=chunk)[325](index=325&type=chunk)[326](index=326&type=chunk) - Management believes there is substantial doubt about the company's ability to continue as a going concern due to recurring losses, despite recent financing[327](index=327&type=chunk) - Contingency plans include equity financing and financial support/credit guarantees from related parties to alleviate going concern risk[327](index=327&type=chunk) Cash Flow Summary (YoY Change) | Cash Flow Activity | FY2025 (USD) | FY2024 (USD) | | :-------------------------------- | :----------- | :----------- | | Net cash used in operating activities | (9,481,499) | (4,712,806) | | Net cash used in investing activities | (5,771,193) | (252,614) | | Net cash provided by financing activities | 15,433,587 | 350,473 | | Effect of exchange rate on cash and cash equivalents | (144,013) | 221,326 | | Net change in cash and cash equivalents | 36,882 | (4,393,621) | [Operating Activities](index=74&type=section&id=Operating%20Activities) Net cash used in operating activities increased to approximately $9.3 million in FY2025 from $4.7 million in FY2024, primarily driven by a net loss of $23.4 million, an increase in accounts receivable ($1.6 million), and significant increases in other receivables and assets ($7.0 million), including a $5.7 million collaboration deposit to Credilab Sdn. Bhd., partially offset by non-cash items totaling $21.6 million (depreciation, amortization, stock-based compensation, long-lived asset impairment, etc.) and a $2.9 million increase in other payables and accrued liabilities - Net cash used in operating activities was approximately **$9.3 million** for FY2025, an increase from **$4.7 million** in FY2024[329](index=329&type=chunk)[330](index=330&type=chunk) - Mainly comprised of net loss of approximately **$23.4 million** - Increase in accounts receivable of approximately **$1.6 million** - Increase of other receivable and other assets of approximately **$7.0 million**, including **$3.6 million** prepayment to vendors and **$5.7 million** collaboration deposit to Credilab Sdn. Bhd. - Decrease in customer deposits of approximately **$75,000** and contract liabilities of approximately **$0.2 million**[329](index=329&type=chunk) - Offset by non-cash items (depreciation, amortization, allowance for credit losses, stock-based compensation, long-lived assets impairment, unrealized loss on marketable securities) totaling approximately **$21.6 million**[329](index=329&type=chunk) - Increase of approximately **$2.9 million** in other payables and accrued liabilities, including a **$2.7 million** provision for share compensation adjustment to V Gallant Sdn. Bhd.[329](index=329&type=chunk) [Investing Activities](index=76&type=section&id=Investing%20Activities) Net cash used in investing activities significantly increased to approximately $5.9 million in FY2025 from $0.3 million in FY2024, primarily due to a $5.7 million collaboration deposit to Credilab Sdn. Bhd. and a $0.2 million prepayment for the acquisition of Tien Ming Distribution Sdn Bhd - Net cash used in investing activities was approximately **$5.9 million** for FY2025, compared to **$0.3 million** for FY2024[332](index=332&type=chunk)[333](index=333&type=chunk) - Remittance of approximately **$5.7 million** to CLSB as a collaboration deposit - Approximately **$0.2 million** prepayment of purchase consideration for acquisition of Tien Ming Distribution Sdn Bhd[332](index=332&type=chunk) [Financing Activities](index=76&type=section&id=Financing%20Activities) Net cash provided by financing activities increased substantially to approximately $15.4 million in FY2025 from $0.4 million in FY2024, mainly driven by $15.4 million in net proceeds from common stock issuances through market offerings, subscription agreements, and share purchase agreements, along with $64,000 from warrant exercises and $51,000 from loan proceeds, partially offset by loan payments - Net cash provided by financing activities was approximately **$15.4 million** for FY2025, compared to **$0.4 million** for FY2024[334](index=334&type=chunk)[335](index=335&type=chunk) - Approximately **$15.4 million** net proceeds from issuance of common stock through market offering, subscription agreement, and share purchase agreement - Approximately **$64,000** proceeds received from exercised warrants - Loan proceeds of approximately **$51,000**, offset by payments of insurance loan and related party loan of approximately **$54,000**[334](index=334&type=chunk) [Off-Balance Sheet Arrangements](index=76&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has no off-balance sheet arrangements that would affect its liquidity, capital resources, market risk support, credit risk support, or other benefits - No off-balance sheet arrangements[336](index=336&type=chunk) [Critical Accounting Estimate](index=76&type=section&id=Critical%20Accounting%20Estimate) The preparation of financial statements requires significant estimates and judgments, including those for loyalty program revenue (estimated retail price per point and breakage), useful lives of property and equipment, impairment of long-lived assets, credit loss allowances, inventory write-downs, realization of deferred tax assets, fair value of stock-based compensation, marketable securities, and warrants, which are crucial for understanding financial condition and results of operations, with actual results potentially differing significantly from current judgments - Significant accounting estimates include estimated retail price per point and breakage for loyalty program revenue, useful lives of property and equipment, impairment of long-lived assets, provision for estimated credit losses, write-down for estimated obsolescence or unmarketable inventories, realization of deferred tax assets and uncertain tax position, fair value of stock price for beneficial conversion feature, fair value of stock-based compensation, marketable securities, and warrants[338](index=338&type=chunk) - Actual results could differ from these estimates[338](index=338&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=81&type=section&id=

Treasure (US:TGL)

JBDI Holdings Limited(JBDI) - 2025 Q4 - Annual Report

2025-10-14 21:29

[FORM 20-F Cover Page](index=1&type=section&id=FORM%2020-F%20Cover%20Page) This section provides essential registrant details, securities information, outstanding shares, and issuer status for the FY2025 Annual Report [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides the basic identification details for JBDI Holdings Limited, including its incorporation jurisdiction, principal executive offices, and contact person - JBDI Holdings Limited is incorporated in the Cayman Islands and filed its Annual Report on Form 20-F for the financial year ended May 31, 2025[2](index=2&type=chunk) [Securities Registered](index=1&type=section&id=Securities%20Registered) The company's Ordinary Shares, with a par value of US$0.0005 per share, are registered on The Nasdaq Capital Market LLC under the trading symbol 'JBDI' Title of each class | Title of each class | Trading symbol | Name of each exchange on which registered | | :--- | :--- | :--- | | Ordinary Shares, par value US$0.0005 per share | JBDI | The Nasdaq Capital Market LLC | [Outstanding Shares](index=1&type=section&id=Outstanding%20Shares) As of May 31, 2025, the company had 19,254,471 Ordinary Shares outstanding, each with a par value of US$0.0005 - **19,254,471** Ordinary Shares, **US$0.0005** par value, were outstanding as of May 31, 2025[4](index=4&type=chunk) [Issuer Status](index=1&type=section&id=Issuer%20Status) The registrant is not a well-known seasoned issuer, is not exempt from filing reports, has filed all required reports, and is an emerging growth company preparing financial statements in accordance with U.S. GAAP - The Registrant is not a well-known seasoned issuer (No ☒) and is not exempt from filing reports (No ☒)[5](index=5&type=chunk)[6](index=6&type=chunk) - The Registrant has filed all required reports and submitted every Interactive Data File during the preceding 12 months (Yes ☒)[7](index=7&type=chunk)[8](index=8&type=chunk) - The Registrant is an emerging growth company and prepares its financial statements in accordance with U.S. GAAP (U.S. GAAP ☒)[8](index=8&type=chunk)[9](index=9&type=chunk) [SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns readers about forward-looking statements in the report, highlighting inherent risks and uncertainties [Forward-Looking Statements Disclosure](index=4&type=section&id=Forward-Looking%20Statements%20Disclosure) This section warns that the Annual Report contains forward-looking statements, particularly in sections like 'Risk Factors' and 'Management's Discussion and Analysis' - This Annual Report contains forward-looking statements, primarily in 'Risk Factors' and 'Management's Discussion and Analysis of Financial Condition and Results of Operations,' which involve known and unknown risks and uncertainties[14](index=14&type=chunk) - Forward-looking statements are identified by words like 'believe,' 'plan,' 'expect,' 'intend,' 'should,' 'seek,' 'estimate,' 'will,' 'aim,' and 'anticipate,' and are not guarantees of future performance[15](index=15&type=chunk)[16](index=16&type=chunk) [FINANCIAL STATEMENTS AND CURRENCY PRESENTATION](index=4&type=section&id=FINANCIAL%20STATEMENTS%20AND%20CURRENCY%20PRESENTATION) This section details the U.S. GAAP basis of financial reporting and the use of United States Dollar as the reporting currency [Basis of Presentation](index=4&type=section&id=Basis%20of%20Presentation) All financial information in this Annual Report is prepared and presented in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) - All financial information is prepared and presented in accordance with U.S. GAAP[18](index=18&type=chunk) - Amounts, percentages, and other figures in the report may be subject to rounding adjustments, meaning totals may not be exact arithmetic aggregations[19](index=19&type=chunk) [Financial Information in U.S. Dollars](index=4&type=section&id=Financial%20Information%20in%20U.S.%20Dollars) The company's reporting currency is the United States Dollar, with Singapore Dollar translations provided for convenience using specific exchange rates - The reporting currency is the United States Dollar[20](index=20&type=chunk) - Translations of Singapore Dollars into United States Dollars for convenience were made at **S$1.2893 to US$1.00** for FY2025, **S$1.3509 to US$1.00** for FY2024, and **S$1.3181 to US$1.00** for FY2023[20](index=20&type=chunk) [RECENT EVENTS](index=4&type=section&id=RECENT%20EVENTS) This section summarizes significant recent corporate events including auditor changes, Nasdaq compliance issues, and the company's initial public offering [Change in Auditors](index=4&type=section&id=Change%20in%20Auditors) On June 13, 2025, the Company dismissed Onestop Assurance PAC and appointed YCM CPA INC. as its new independent registered public accounting firm for the financial year ended May 31, 2025 - On June 13, 2025, the Company dismissed Onestop Assurance PAC and engaged YCM CPA INC. as its new independent registered public accounting firm for the financial year ended May 31, 2025[21](index=21&type=chunk) [Notice of Failure to File Interim Balance Sheet and Income Statement as of the End of Second Quarter on Form 6-K and Subsequent Filing and Compliance](index=5&type=section&id=Notice%20of%20Failure%20to%20File%20Interim%20Balance%20Sheet%20and%20Income%20Statement%20as%20of%20the%20End%20of%20Second%20Quarter%20on%20Form%206-K%20and%20Subsequent%20Filing%20and%20Compliance) On June 3, 2025, the company received a Nasdaq deficiency notice for failing to file its interim balance sheet and income statement, but subsequently regained compliance - On June 3, 2025, the Company received a Nasdaq deficiency notice for not filing its interim balance sheet and income statement[22](index=22&type=chunk) - The Company regained compliance by filing unaudited condensed consolidated financial statements on Form 6-K on June 5, 2025[23](index=23&type=chunk) - Nasdaq confirmed compliance on June 9, 2025, and the Ordinary Shares will continue to be listed[24](index=24&type=chunk) [Notice of Failure to Comply with the Bid Price Requirement to Continue Listing on Nasdaq and Subsequent Compliance](index=5&type=section&id=Notice%20of%20Failure%20to%20Comply%20with%20the%20Bid%20Price%20Requirement%20to%20Continue%20Listing%20on%20Nasdaq%20and%20Subsequent%20Compliance) On December 12, 2024, Nasdaq notified the company of non-compliance with the minimum bid price requirement, but the company regained compliance by June 3, 2025 - On December 12, 2024, Nasdaq notified the Company of non-compliance with the minimum bid price requirement (**$1.00**)[25](index=25&type=chunk) - The Company regained compliance by June 3, 2025, after its Ordinary Shares maintained a closing bid price of **$1.00** or greater for eleven consecutive business days[25](index=25&type=chunk)[26](index=26&type=chunk) [Initial Public Offering](index=5&type=section&id=Initial%20Public%20Offering) The company completed its initial public offering (IPO) on August 28, 2024, raising approximately $6.7 million in net proceeds - The Company completed its IPO on August 28, 2024, selling **1,750,000** Ordinary Shares at **US$5.00** per share[27](index=27&type=chunk) - Total net proceeds to the Company from the IPO were approximately **$6.7 million**[27](index=27&type=chunk) - Ordinary Shares began trading on August 27, 2024, on the Nasdaq Capital Market under the trading symbol 'JBDI'[27](index=27&type=chunk) [PART I](index=5&type=section&id=PART%20I) This section covers fundamental company information, including risk factors, business operations, and regulatory environment [ITEM 1. IDENTITY OF DIRECTORS, OFFICERS, SENIOR MANAGEMENT AND ADVISORS](index=5&type=section&id=ITEM%201.%20IDENTITY%20OF%20DIRECTORS%2C%20OFFICERS%2C%20SENIOR%20MANAGEMENT%20AND%20ADVISORS) This item is marked as 'Not Applicable,' indicating that the information regarding the identity of directors, officers, senior management, and advisors is not provided in this specific section - This item is marked as 'Not Applicable'[29](index=29&type=chunk) [ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE](index=5&type=section&id=ITEM%202.%20OFFER%20STATISTICS%20AND%20EXPECTED%20TIMETABLE) This item is marked as 'Not Applicable,' indicating that the information regarding offer statistics and expected timetable is not provided in this specific section - This item is marked as 'Not Applicable'[29](index=29&type=chunk) [ITEM 3. KEY INFORMATION](index=5&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section covers key information about the company, including its capitalization, indebtedness, reasons for the offering, use of proceeds, and a comprehensive list of risk factors - An investment in the company's Ordinary Shares is highly speculative and involves a significant degree of risk, which could materially and adversely affect the business, financial condition, results of operations, and share price[30](index=30&type=chunk) [A. RESERVED](index=5&type=section&id=A.%20RESERVED) This section is intentionally left blank [B. CAPITALIZATION AND INDEBTEDNESS](index=6&type=section&id=B.%20CAPITALIZATION%20AND%20INDEBTEDNESS) This section is intentionally left blank [C. REASONS FOR THE OFFER AND USE OF PROCEEDS](index=6&type=section&id=C.%20REASONS%20FOR%20THE%20OFFER%20AND%20USE%20OF%20PROCEEDS) This section is intentionally left blank [D. RISK FACTORS](index=6&type=section&id=D.%20RISK%20FACTORS) This section outlines significant risks related to the company's business, industry, and securities, emphasizing speculative investment aspects [Risks Related to Our Business and Industry](index=6&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) This section details operational, economic, and external risks impacting the company's core business and market position - The business is inherently susceptible to cyclical fluctuations of the solvent, chemical, petroleum, and edible oil product industries, which could reduce demand and profitability[31](index=31&type=chunk) - Over **80%** of revenue for FY2025 and FY2024 was derived from customers in Singapore, making the business highly dependent on Singapore's economic conditions[34](index=34&type=chunk) - Continued success is dependent on key management personnel (e.g., Mr. Lim Chwee Poh) and skilled labor; inability to retain or attract replacements could severely disrupt business[41](index=41&type=chunk)[42](index=42&type=chunk)[44](index=44&type=chunk) - The company faces risks from major defects or failures in products/services, prolonged machine/vehicle downtime, and disputes/claims arising from accidents, potentially damaging reputation and profitability[49](index=49&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) - Increased competition, significant dependence on major customers (top five accounted for **26.5%** and **30.0%** of revenue in FY2025 and FY2024), and reliance on key suppliers pose risks to market share and business relationships[56](index=56&type=chunk)[59](index=59&type=chunk)[62](index=62&type=chunk) - External factors like the war in Ukraine, tariffs, and other uncontrollable events (e.g., epidemics, political unrest) could materially and adversely affect business and profit margins[80](index=80&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) [Risks Related to Our Securities](index=15&type=section&id=Risks%20Related%20to%20Our%20Securities) This section addresses potential market, liquidity, tax, and governance risks associated with the company's Ordinary Shares - If an active trading market for Ordinary Shares does not continue, the market price and liquidity may be materially and adversely affected[86](index=86&type=chunk) - Failure to meet Nasdaq listing requirements could lead to delisting, resulting in reduced liquidity, potential 'penny stock' classification, and decreased ability to raise capital[88](index=88&type=chunk)[92](index=92&type=chunk) - The trading price of Ordinary Shares may be volatile due to factors like fluctuations in revenues/earnings, changes in analyst estimates, key personnel changes, and sales of additional equity securities[89](index=89&type=chunk)[93](index=93&type=chunk) - The company does not expect to pay dividends in the foreseeable future, requiring investors to rely on price appreciation for returns[96](index=96&type=chunk) - There is a possibility of being classified as a Passive Foreign Investment Company (PFIC), which could lead to increased U.S. federal income tax liability for U.S. taxpayers[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk) - As a Cayman Islands company and foreign private issuer, the company follows home country corporate governance practices, which may afford less protection to shareholders than Nasdaq standards[102](index=102&type=chunk)[105](index=105&type=chunk)[108](index=108&type=chunk) - Enforcing U.S. judgments against the company or its non-U.S. directors/officers may be difficult due to its Cayman Islands incorporation and location of assets outside the U.S[106](index=106&type=chunk)[111](index=111&type=chunk) - The Ordinary Shares could be delisted under the HFCA Act if the PCAOB is unable to inspect the company's auditors, who are located in Singapore[118](index=118&type=chunk)[119](index=119&type=chunk) [ITEM 4. INFORMATION ON THE COMPANY](index=22&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) JBDI Holdings Limited, a Cayman Islands company, operates through its Singaporean subsidiaries, specializing in reconditioned and new containers and wastewater treatment - JBDI Holdings Limited was incorporated in the Cayman Islands on October 11, 2022, and operates through its wholly-owned subsidiaries JBDI Investments, Jurong Barrels, and JBD Systems[121](index=121&type=chunk)[123](index=123&type=chunk) - The company's business originated in 1976, with Jurong Barrels & Drums Industries Pte. Ltd. established in 1983, and JBD Systems Pte. Ltd. venturing into wastewater treatment in 2017[131](index=131&type=chunk)[169](index=169&type=chunk)[171](index=171&type=chunk) - The Singapore drum reconditioning market, valued at **S$174.2 million** in 2023, is projected to grow to **S$207.5 million** by 2027 (CAGR **4.5%**), driven by thriving downstream demand, economic efficiency, environmental consciousness, and Singapore's role as a transportation hub[149](index=149&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - Key market trends include automation in operations, market consolidation, geographical expansion, and growing adoption of lean management[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - The company is a leading supplier of reconditioned and new containers in Singapore, with over **70%** of revenue from these sales in FY2025 and FY2024, and also provides reconditioning, disposal, collection/delivery, and wastewater treatment services[166](index=166&type=chunk)[167](index=167&type=chunk) - Strategic objectives include increasing storage, diversifying container range for new industries (semiconductor, shipyard), exploring strategic acquisitions/joint ventures, strengthening ESG (e.g., solar panels, electric trucks), and automating reconditioning processes[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) - The company holds ISO 9001 accreditation for quality management and various NEA/SCDF/SPF licenses for handling toxic waste, hazardous substances, and transportation, demonstrating commitment to quality, environmental protection, and safety[182](index=182&type=chunk)[206](index=206&type=chunk)[231](index=231&type=chunk)[233](index=233&type=chunk) - As of May 31, 2025, the company had **104** employees, with over **25%** having worked for over **10** years, and over **50%** being foreign employees[238](index=238&type=chunk)[239](index=239&type=chunk) - The company is subject to extensive Singaporean regulations covering electrical installations, explosive precursors, trade effluent discharge, toxic industrial waste, hazardous substances, motor vehicles, personal data, industrial noise, workplace health and safety, and employment[243](index=243&type=chunk)[244](index=244&type=chunk)[246](index=246&type=chunk)[250](index=250&type=chunk)[255](index=255&type=chunk)[258](index=258&type=chunk)[266](index=266&type=chunk)[268](index=268&type=chunk)[282](index=282&type=chunk)[289](index=289&type=chunk)[291](index=291&type=chunk)[309](index=309&type=chunk)[315](index=315&type=chunk) [CORPORATE HISTORY AND STRUCTURE](index=22&type=section&id=CORPORATE%20HISTORY%20AND%20STRUCTURE) This section traces the company's origins and outlines its current corporate and subsidiary structure [Entities](index=23&type=section&id=Entities) This section lists the key operating entities within the company's corporate structure [Key Milestones](index=23&type=section&id=Key%20Milestones) This section highlights significant historical achievements and developments in the company's journey [INDUSTRY AND MARKET OVERVIEW](index=24&type=section&id=INDUSTRY%20AND%20MARKET%20OVERVIEW) This section analyzes the macroeconomic environment in Singapore and the dynamics of the drum reconditioning market [OVERVIEW OF MACRO ECONOMIC ENVIRONMENT IN SINGAPORE](index=24&type=section&id=OVERVIEW%20OF%20MACRO%20ECONOMIC%20ENVIRONMENT%20IN%20SINGAPORE) This section provides context on the broader economic conditions influencing the company's operations in Singapore [OVERVIEW OF DRUM RECONDITIONING MARKET IN SINGAPORE](index=25&type=section&id=OVERVIEW%20OF%20DRUM%20RECONDITIONING%20MARKET%20IN%20SINGAPORE) This section examines market drivers, key trends, and competitive landscape within the Singaporean drum reconditioning sector [Market Drivers Analysis](index=27&type=section&id=Market%20Drivers%20Analysis) This section identifies the primary factors propelling demand and growth in the drum reconditioning market [Key Trends](index=28&type=section&id=Key%20Trends) This section highlights significant emerging patterns and developments shaping the industry [Competition Overview](index=28&type=section&id=Competition%20Overview) This section provides an analysis of the competitive landscape and market dynamics [Factors of Competition](index=28&type=section&id=Factors%20of%20Competition) This section details the key elements influencing competitive intensity in the market [Entry Barriers](index=29&type=section&id=Entry%20Barriers) This section describes obstacles new entrants face when attempting to join the industry [OUR BUSINESS OPERATIONS](index=29&type=section&id=OUR%20BUSINESS%20OPERATIONS) This section describes the company's core activities, products, services, customer relationships, and operational management [Overview](index=29&type=section&id=Overview) This section provides a general description of the company's business activities and scope [History and Development](index=30&type=section&id=History%20and%20Development) This section traces the evolution and growth of the company's operational capabilities [Our Products](index=31&type=section&id=Our%20Products) This section details the range of reconditioned and new containers offered by the company [Reconditioned Containers](index=32&type=section&id=Reconditioned%20Containers) This section focuses on the processes and offerings related to reconditioned containers [New Containers](index=32&type=section&id=New%20Containers) This section describes the company's business segment involving the sale of new containers [Our Services](index=32&type=section&id=Our%20Services) This section outlines the various services provided, including disposal, collection, delivery, and wastewater treatment [Disposal and collection/delivery services](index=32&type=section&id=Disposal%20and%20collection%2Fdelivery%20services) This section details the logistics and waste management services offered [Wastewater treatment services](index=33&type=section&id=Wastewater%20treatment%20services) This section describes the specialized environmental services provided by the company [Our by-products](index=33&type=section&id=Our%20by-products) This section discusses the secondary materials generated and sold from the company's operations [Our customers](index=33&type=section&id=Our%20customers) This section identifies the primary customer segments and their industries [Sales Process Flow](index=34&type=section&id=Sales%20Process%20Flow) This section illustrates the step-by-step procedure for customer engagement and sales execution [Sales and Marketing](index=35&type=section&id=Sales%20and%20Marketing) This section describes the strategies and activities used to promote products and services [Inventory](index=35&type=section&id=Inventory) This section details the management and composition of the company's stock of goods [Machinery and vehicles](index=35&type=section&id=Machinery%20and%20vehicles) This section lists the key operational assets used in production and logistics [Real Property and Equipment](index=36&type=section&id=Real%20Property%20and%20Equipment) This section provides information on the company's fixed assets and facilities [Licenses and Permits](index=36&type=section&id=Licenses%20and%20Permits) This section lists the necessary regulatory approvals for the company's operations [Competitive Strengths](index=37&type=section&id=Competitive%20Strengths) This section highlights the company's distinct advantages in the market [Business strategies](index=38&type=section&id=Business%20strategies) This section outlines the company's plans for future growth and operational improvement [Quality Assurance](index=39&type=section&id=Quality%20Assurance) This section describes the measures taken to ensure product and service quality [Production management](index=40&type=section&id=Production%20management) This section details the processes and oversight of manufacturing operations [Materials procurement](index=40&type=section&id=Materials%20procurement) This section explains the methods for sourcing raw materials and supplies [Relationship with our customers](index=40&type=section&id=Relationship%20with%20our%20customers) This section describes how the company builds and maintains client relationships [Environmental Protection](index=40&type=section&id=Environmental%20Protection) This section details the company's policies and practices for environmental stewardship [Workplace Health and Safety](index=41&type=section&id=Workplace%20Health%20and%20Safety) This section outlines the measures implemented to ensure employee well-being and safety [Competition](index=41&type=section&id=Competition) This section provides an analysis of the competitive landscape and market positioning [Intellectual Property](index=42&type=section&id=Intellectual%20Property) This section discusses the company's intangible assets and their protection [Employees](index=42&type=section&id=Employees) This section provides an overview of the company's workforce and human capital management [Insurance](index=42&type=section&id=Insurance) This section details the company's insurance coverage for various operational risks [Litigation and Other Legal Proceedings](index=42&type=section&id=Litigation%20and%20Other%20Legal%20Proceedings) This section summarizes any ongoing or potential legal disputes [Impact of COVID-19 on our business](index=42&type=section&id=Impact%20of%20COVID-19%20on%20our%20business) This section assesses the effects of the pandemic on the company's operations and financial performance [REGULATORY ENVIRONMENT](index=42&type=section&id=REGULATORY%20ENVIRONMENT) This section describes the extensive legal and regulatory framework governing the company's operations in Singapore [Laws and Regulations Relating To Our Business In Singapore](index=42&type=section&id=Laws%20and%20Regulations%20Relating%20To%20Our%20Business%20In%20Singapore) This section provides an overview of the legal framework specific to the company's operations in Singapore [Laws and regulations relating to electrical installations](index=43&type=section&id=Laws%20and%20regulations%20relating%20to%20electrical%20installations) This section details the rules governing electrical systems and safety [Laws and regulations relating to explosive precursors](index=43&type=section&id=Laws%20and%20regulations%20relating%20to%20explosive%20precursors) This section outlines the regulations concerning the handling of substances that can be used to make explosives [Laws and regulations relating to discharge of trade effluent](index=44&type=section&id=Laws%20and%20regulations%20relating%20to%20discharge%20of%20trade%20effluent) This section specifies the rules for managing and discharging industrial wastewater [Laws and regulations relating to toxic industrial waste](index=44&type=section&id=Laws%20and%20regulations%20relating%20to%20toxic%20industrial%20waste) This section details the legal framework for managing and transporting hazardous industrial waste [Laws and regulations relating to collection of toxic waste](index=44&type=section&id=Laws%20and%20regulations%20relating%20to%20collection%20of%20toxic%20waste) This section specifies the rules for gathering hazardous waste materials [Laws and regulations relating to transportation of toxic industrial waste](index=44&type=section&id=Laws%20and%20regulations%20relating%20to%20transportation%20of%20toxic%20industrial%20waste) This section outlines the regulations for moving hazardous industrial waste [Laws and regulations relating to storage and use of hazardous substances](index=45&type=section&id=Laws%20and%20regulations%20relating%20to%20storage%20and%20use%20of%20hazardous%20substances) This section details the rules for safely storing and utilizing dangerous materials [Laws and regulations relating to motor vehicles](index=45&type=section&id=Laws%20and%20regulations%20relating%20to%20motor%20vehicles) This section covers the legal requirements for operating vehicles, including parking, expressways, and third-party risks [Parking Places Act 1974 ("PPA 1974") of Singapore](index=46&type=section&id=Parking%20Places%20Act%201974%20%28%22PPA%201974%22%29%20of%20Singapore) This section details regulations concerning parking facilities and enforcement [Road Traffic (Expressways - Excluded Vehicles) Rules 2010 ("EEVR 2010") of Singapore](index=46&type=section&id=Road%20Traffic%20%28Expressways%20-%20Excluded%20Vehicles%29%20Rules%202010%20%28%22EEVR%202010%22%29%20of%20Singapore) This section specifies rules for vehicles prohibited or restricted on expressways [Motor Vehicles (Third-Party Risks and Compensation) Act 1960 ("MVA 1960") of Singapore](index=47&type=section&id=Motor%20Vehicles%20%28Third-Party%20Risks%20and%20Compensation%29%20Act%201960%20%28%22MVA%201960%22%29%20of%20Singapore) This section outlines legal requirements for motor vehicle insurance and accident compensation [Laws and regulations relating to Personal Data](index=48&type=section&id=Laws%20and%20regulations%20relating%20to%20Personal%20Data) This section details the legal framework for protecting personal information [Laws and regulations relating to industrial noise control and nuisances](index=49&type=section&id=Laws%20and%20regulations%20relating%20to%20industrial%20noise%20control%20and%20nuisances) This section specifies rules for managing noise levels and preventing public disturbances from industrial operations [Laws and regulations relating to workplace health and safety](index=49&type=section&id=Laws%20and%20regulations%20relating%20to%20workplace%20health%20and%20safety) This section covers the legal requirements for ensuring a safe and healthy work environment [Workplace Safety and Health (General Provisions) Regulations 2006 of Singapore ("WSHR 2006")](index=51&type=section&id=Workplace%20Safety%20and%20Health%20%28General%20Provisions%29%20Regulations%202006%20of%20Singapore%20%28%22WSHR%202006%22%29) This section provides general rules for workplace safety and health [Workplace Safety and Health (Risk Management) Regulations 2006 of Singapore ("Risk Management Regulations 2006")](index=52&type=section&id=Workplace%20Safety%20and%20Health%20%28Risk%20Management%29%20Regulations%202006%20of%20Singapore%20%28%22Risk%20Management%20Regulations%202006%22%29) This section outlines requirements for identifying, assessing, and controlling workplace risks [Work Injury Compensation Act 2019 of Singapore ("WICA 2019")](index=52&type=section&id=Work%20Injury%20Compensation%20Act%202019%20of%20Singapore%20%28%22WICA%202019%22%29) This section details the legal framework for compensating employees for work-related injuries or diseases [Laws and regulations relating to employment](index=52&type=section&id=Laws%20and%20regulations%20relating%20to%20employment) This section covers the legal framework for employment practices, including foreign manpower and benefits [Employment of Foreign Manpower Act 1990 of Singapore ("EFMA 1990")](index=53&type=section&id=Employment%20of%20Foreign%20Manpower%20Act%201990%20of%20Singapore%20%28%22EFMA%201990%22%29) This section regulates the employment of non-Singaporean workers [Required safety courses](index=54&type=section&id=Required%20safety%20courses) This section lists mandatory training programs for workplace safety [Other employment-related benefits prescribed by Singapore law](index=54&type=section&id=Other%20employment-related%20benefits%20prescribed%20by%20Singapore%20law) This section details additional statutory benefits for employees [Central Provident Fund Act 1953 ("CPFA 1953") of Singapore](index=54&type=section&id=Central%20Provident%20Fund%20Act%201953%20%28%22CPFA%201953%22%29%20of%20Singapore) This section governs the national social security savings scheme [Laws and regulations relating to exports](index=55&type=section&id=Laws%20and%20regulations%20relating%20to%20exports) This section details the legal requirements for exporting goods [Laws and regulations relating to COVID-19 and infectious diseases](index=55&type=section&id=Laws%20and%20regulations%20relating%20to%20COVID-19%20and%20infectious%20diseases) This section covers the regulatory responses and measures related to public health crises [Easing of COVID-19 safe management measures at the workplace](index=56&type=section&id=Easing%20of%20COVID-19%20safe%20management%20measures%20at%20the%20workplace) This section describes the relaxation of pandemic-related safety protocols in work environments [ITEM 4A. UNRESOLVED STAFF COMMENTS](index=56&type=section&id=ITEM%204A.%20UNRESOLVED%20STAFF%20COMMENTS) This item is marked as 'Not Applicable,' indicating there are no unresolved staff comments from the SEC regarding the company's filings - This item is marked as 'Not Applicable,' indicating no unresolved staff comments from the SEC[339](index=339&type=chunk) [ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS](index=57&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) JBDI Holdings Limited, a Cayman Islands holding company, conducts operations through Singaporean subsidiaries, reporting a net loss in FY2025 due to decreased sales and increased IPO-related fees - JBDI Holdings Limited operates through its Singaporean subsidiaries, with total revenue of approximately **$8.4 million** in FY2025 and **$9.4 million** in FY2024[341](index=341&type=chunk)[342](index=342&type=chunk) **Net Income (Loss) (in $'000):** | Year | Net Income (Loss) | | :--- | :--- | | FY2025 | (2,720) | | FY2024 | (977) | | FY2023 | 806 | **Total Revenue by Segment (in $'000):** | Revenue Source | FY2025 | FY2024 | FY2023 | | :--- | :--- | :--- | :--- | | Sales of reconditioned Containers | 5,326 | 6,311 | 8,021 | | Sales of new Containers | 755 | 664 | 505 | | Reconditioning services | 1,073 | 1,136 | 1,365 | | Waste water equipment services | - | 9 | 109 | | Sales of recycled materials and services | 1,291 | 1,274 | 1,122 | | **Total** | **8,445** | **9,394** | **11,122** | **Gross Profit and Margin:** | Year | Gross Profit ($'000) | Gross Profit Margin | | :--- | :--- | :--- | | FY2025 | 3,356 | 39.7% | | FY2024 | 4,275 | 45.5% | | FY2023 | 7,598 | 68.3% | - Administrative expenses increased significantly in FY2025 to **$6.1 million** (from **$5.4 million** in FY2024), primarily due to a **$1.6 million** increase in legal and professional fees related to the IPO[365](index=365&type=chunk)[367](index=367&type=chunk) **Cash Flows from Operating Activities (in $'000):** | Year | Net Cash Provided by (Used in) Operating Activities | | :--- | :--- | | FY2025 | (3,367) | | FY2024 | 1,000 | | FY2023 | 1,657 | - The company believes it has sufficient working capital for at least the next **12 months**, considering cash and cash equivalents on hand and cash flows from operations[422](index=422&type=chunk) **Bank Indebtedness (in $'000):** | Year | Term Loans | | :--- | :--- | | FY2025 | 236 | | FY2024 | 606 | *All bank borrowings bear a fixed annual interest rate of 2.0% and mature in December 2025. The company is not in compliance with certain financial covenant clauses.* [OVERVIEW](index=57&type=section&id=OVERVIEW) This section provides a general overview of the company's operating and financial performance [KEY FACTORS AFFECTING THE RESULTS OF OUR GROUP'S OPERATIONS](index=58&type=section&id=KEY%20FACTORS%20AFFECTING%20THE%20RESULTS%20OF%20OUR%20GROUP%27S%20OPERATIONS) This section identifies the primary internal and external factors influencing the company's financial results [Description and Analysis of Principal Components of Our Results of Operations](index=58&type=section&id=Description%20and%20Analysis%20of%20Principal%20Components%20of%20Our%20Results%20of%20Operations) This section analyzes the main elements contributing to the company's financial performance [Comparison of operating results for the financial years ended May 31, 2025 and 2024](index=59&type=section&id=Comparison%20of%20operating%20results%20for%20the%20financial%20years%20ended%20May%2031%2C%202025%20and%202024) This section compares the company's operating results for the financial years 2025 and 2024 [Revenue](index=59&type=section&id=Revenue) This section details the company's revenue performance for the period [Revenue by geographic location](index=59&type=section&id=Revenue%20by%20geographic%20location) This section breaks down the company's revenue based on the geographic location of its customers [Singapore](index=60&type=section&id=Singapore) This section details revenue generated from customers located in Singapore [Indonesia](index=60&type=section&id=Indonesia) This section details revenue generated from customers located in Indonesia [Malaysia and other countries](index=60&type=section&id=Malaysia%20and%20other%20countries) This section details revenue generated from customers located in Malaysia and other international markets [Cost of revenue](index=60&type=section&id=Cost%20of%20revenue) This section outlines the direct costs associated with generating the company's revenue [Gross profit and gross profit margin](index=60&type=section&id=Gross%20profit%20and%20gross%20profit%20margin) This section presents the company's gross profit and its corresponding margin [Selling and distribution expenses](index=61&type=section&id=Selling%20and%20distribution%20expenses) This section details the costs incurred for selling and distributing the company's products and services [Administrative expenses](index=61&type=section&id=Administrative%20expenses) This section outlines the general and administrative costs of the company's operations [Other Income, Net](index=62&type=section&id=Other%20Income%2C%20Net) This section reports the company's other income and expenses, net of related items [Income Tax Expenses](index=62&type=section&id=Income%20Tax%20Expenses) This section details the company's income tax expenses for the period [Net Loss](index=62&type=section&id=Net%20Loss) This section presents the company's net loss for the period [Comparison of operating results for the financial years ended May 31, 2024 and 2023](index=63&type=section&id=Comparison%20of%20operating%20results%20for%20the%20financial%20years%20ended%20May%2031%2C%202024%20and%202023) This section compares the company's operating results for the financial years 2024 and 2023 [Revenue](index=63&type=section&id=Revenue) This section details the company's revenue performance for the period [Revenue by geographic location](index=63&type=section&id=Revenue%20by%20geographic%20location) This section breaks down the company's revenue based on the geographic location of its customers [Singapore](index=64&type=section&id=Singapore) This section details revenue generated from customers located in Singapore [Indonesia](index=64&type=section&id=Indonesia) This section details revenue generated from customers located in Indonesia [Malaysia and other countries](index=64&type=section&id=Malaysia%20and%20other%20countries) This section details revenue generated from customers located in Malaysia and other international markets [Cost of revenue](index=64&type=section&id=Cost%20of%20revenue) This section outlines the direct costs associated with generating the company's revenue [Gross profit and gross profit margin](index=64&type=section&id=Gross%20profit%20and%20gross%20profit%20margin) This section presents the company's gross profit and its corresponding margin [Selling and distribution expenses](index=65&type=section&id=Selling%20and%20distribution%20expenses) This section details the costs incurred for selling and distributing the company's products and services [Administrative expenses](index=65&type=section&id=Administrative%20expenses) This section outlines the general and administrative costs of the company's operations [Other Income, Net](index=66&type=section&id=Other%20Income%2C%20Net) This section reports the company's other income and expenses, net of related items [Income Tax Expenses](index=66&type=section&id=Income%20Tax%20Expenses) This section details the company's income tax expenses for the period [Net Income (Loss)](index=66&type=section&id=Net%20Income%20%28Loss%29) This section presents the company's net income or loss for the period [Liquidity and Capital Resources](index=66&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's ability to generate and manage cash, including cash flows, accounts, and indebtedness [Cash flows](index=67&type=section&id=Cash%20flows) This section provides an overview of the company's cash inflows and outflows [Cash flows from operating activities](index=67&type=section&id=Cash%20flows%20from%20operating%20activities) This section details the cash generated or used by the company's primary business operations [Cash flows used in investing activities](index=68&type=section&id=Cash%20flows%20used%20in%20investing%20activities) This section outlines the cash utilized for acquiring or disposing of long-term assets [Cash flows used in financing activities](index=68&type=section&id=Cash%20flows%20used%20in%20financing%20activities) This section details the cash flows related to debt, equity, and dividend transactions [Accounts receivable, net](index=68&type=section&id=Accounts%20receivable%2C%20net) This section presents the net amount of money owed to the company by its customers [Accounts payable](index=69&type=section&id=Accounts%20payable) This section details the amounts the company owes to its suppliers and other creditors [Material Cash Requirements](index=69&type=section&id=Material%20Cash%20Requirements) This section outlines significant future cash obligations and needs of the company [Bank Indebtedness](index=69&type=section&id=Bank%20Indebtedness) This section details the company's outstanding loans and other obligations to banks [Capital commitments](index=70&type=section&id=Capital%20commitments) This section outlines the company's future obligations for capital expenditures [Off-Balance Sheet Transactions](index=70&type=section&id=Off-Balance%20Sheet%20Transactions) This section describes financial arrangements that are not recorded on the company's balance sheet [Critical Accounting Policies and Estimates](index=70&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section outlines the key accounting policies and significant estimates that are crucial to the company's financial reporting [Use of Estimates and Assumptions](index=70&type=section&id=Use%20of%20Estimates%20and%20Assumptions) This section explains the role of management's judgments and assumptions in preparing financial statements [Basis of Consolidation](index=71&type=section&id=Basis%20of%20Consolidation) This section describes how the financial statements of subsidiaries are combined with the parent company [Foreign Currency Translation and Transactions](index=71&type=section&id=Foreign%20Currency%20Translation%20and%20Transactions) This section details the accounting treatment for transactions and financial statements denominated in foreign currencies [Cash and Cash Equivalents](index=71&type=section&id=Cash%20and%20Cash%20Equivalents) This section defines and outlines the accounting policy for cash and highly liquid investments [Accounts Receivable, net](index=71&type=section&id=Accounts%20Receivable%2C%20net) This section describes the accounting policy for trade receivables and the allowance for doubtful accounts [Inventories](index=72&type=section&id=Inventories) This section outlines the accounting policy for valuing and reporting the company's inventory [Property and Equipment, net](index=72&type=section&id=Property%20and%20Equipment%2C%20net) This section details the accounting policy for fixed assets, including depreciation and capitalization [Impairment of Long-Lived Assets](index=72&type=section&id=Impairment%20of%20Long-Lived%20Assets) This section describes the accounting policy for assessing and recognizing impairment losses on long-term assets [Revenue Recognition](index=72&type=section&id=Revenue%20Recognition) This section outlines the principles and methods used to recognize revenue from contracts with customers [Shipping and Handling Costs](index=73&type=section&id=Shipping%20and%20Handling%20Costs) This section details the accounting treatment for costs associated with shipping and handling activities [Sales and Marketing](index=73&type=section&id=Sales%20and%20Marketing) This section describes the accounting policy for expenses related to sales and marketing efforts [Government Grant](index=73&type=section&id=Government%20Grant) This section outlines the accounting policy for recognizing and presenting government grants [Comprehensive Income (Loss)](index=73&type=section&id=Comprehensive%20Income%20%28Loss%29) This section defines and explains the components of comprehensive income or loss [Income Taxes](index=73&type=section&id=Income%20Taxes) This section details the accounting policy for current and deferred income taxes [Leases](index=74&type=section&id=Leases) This section outlines the accounting policy for recognizing and measuring lease assets and liabilities [Retirement Plan Costs](index=74&type=section&id=Retirement%20Plan%20Costs) This section describes the accounting policy for expenses related to employee retirement plans [Segment Reporting](index=74&type=section&id=Segment%20Reporting) This section outlines the accounting policy for reporting financial information by business segment [Related Parties](index=74&type=section&id=Related%20Parties) This section describes the accounting policy for transactions and balances with related parties [Commitments and Contingencies](index=75&type=section&id=Commitments%20and%20Contingencies) This section outlines the accounting policy for disclosing future obligations and potential liabilities [Concentration of Credit Risk](index=75&type=section&id=Concentration%20of%20Credit%20Risk) This section describes the accounting policy for managing and disclosing credit risk concentrations [Liquidity Risk](index=75&type=section&id=Liquidity%20Risk) This section outlines the accounting policy for managing and disclosing the company's liquidity risk [Fair Value Measurement](index=76&type=section&id=Fair%20Value%20Measurement) This section describes the accounting policy for measuring assets and liabilities at fair value [Recent Accounting Pronouncements](index=76&type=section&id=Recent%20Accounting%20Pronouncements) This section discusses recently issued accounting standards and their potential impact on the company's financial statements [Impact of Inflation](index=77&type=section&id=Impact%20of%20Inflation) This section assesses how inflationary pressures may affect the company's financial performance and operations [Seasonality](index=77&type=section&id=Seasonality) This section describes any seasonal patterns or fluctuations in the company's business operations [Quantitative and Qualitative Disclosures about Market Risk](index=77&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section provides information on the company's exposure to market risks and how they are managed [Interest Rate Risk](index=77&type=section&id=Interest%20Rate%20Risk) This section discusses the company's exposure to fluctuations in interest rates and its management strategies [Credit Risk](index=77&type=section&id=Credit%20Risk) This section outlines the company's exposure to credit risk and its policies for managing it [Liquidity Risk](index=77&type=section&id=Liquidity%20Risk) This section describes the company's exposure to liquidity risk and its strategies for maintaining sufficient cash flow [Foreign Exchange Risk](index=77&type=section&id=Foreign%20Exchange%20Risk) This section discusses the company's exposure to fluctuations in foreign currency exchange rates and its hedging strategies [ITEM 6. DIRECTORS, OFFICERS AND SENIOR MANAGEMENT](index=78&type=section&id=ITEM%206.%20DIRECTORS%2C%20OFFICERS%20AND%20SENIOR%20MANAGEMENT) This section lists the company's Directors and Executive Officers, detailing their experience, committee roles, compensation, and corporate governance practices **Directors, Officers and Senior Management:** | Name | Age | Title | | :--- | :--- | :--- | | Mr. Lim Chwee Poh | 71 | Executive Director and Chief Executive Officer | | Mr. Liang Zhao Rong | 38 | Executive Director and Chief Financial Officer | | Mr. Quek Che Wah | 59 | Deputy Chief Executive Officer | | Mr. Lim Tze Chong, Patrick | 44 | Operations Director | | Mr. Lim Tze Ming Kelvin | 41 | Sales Director | | Mr. Lim Kim Seng | 63 | Sales Director | | Mr. Han Yee Yen | 70 | Independent Director | | Mr. Chan Chin Hoong | 37 | Independent Director | | Mr. Soh Kar Liang | 56 | Independent Director | - Mr. Lim Chwee Poh, CEO, has over **51** years of experience and is responsible for business strategy and financial performance[487](index=487&type=chunk)[488](index=488&type=chunk) - The Board has established an audit committee (chaired by Mr. Han Yee Yen, designated as an 'audit committee financial expert'), a compensation committee (chaired by Mr. Chan Chin Hoong), and a nomination committee (chaired by Mr. Soh Kar Liang), all composed of independent directors[506](index=506&type=chunk)[508](index=508&type=chunk)[511](index=511&type=chunk)[516](index=516&type=chunk)[517](index=517&type=chunk)[518](index=518&type=chunk) - As a foreign private issuer, the company follows Cayman Islands corporate governance practices, which differ from some Nasdaq standards, such as shareholder approval requirements and independent director meetings[519](index=519&type=chunk)[522](index=522&type=chunk) **Summary Compensation for Key Executive Directors (S$'000):** | Name | Year | Salary | Bonus | | :--- | :--- | :--- | :--- | | Mr. Lim Chwee Poh | 2025 | 334 | - | | Mr. Liang Zhao Rong | 2025 | 98 | 8 | | Mr. Quek Che Wah | 2025 | 98 | 8 | | Mr. Lim Tze Chong, Patrick | 2025 | 167 | 8 | | Mr. Lim Tze Ming, Kelvin | 2025 | 98 | 8 | | Mr. Lim Kim Seng | 2025 | 181 | 13 | [6.A. Directors and Executive Officers](index=78&type=section&id=6.A.%20Directors%20and%20Executive%20Officers) This section provides a list of the company's directors and executive officers, including their ages and positions [Independent Directors](index=80&type=section&id=Independent%20Directors) This section identifies the independent members of the Board of Directors [Committees of our Board of Directors](index=81&type=section&id=Committees%20of%20our%20Board%20of%20Directors) This section describes the various committees established by the Board of Directors and their respective functions [Audit committee](index=81&type=section&id=Audit%20committee) This section details the composition, responsibilities, and activities of the audit committee [Compensation committee](index=82&type=section&id=Compensation%20committee) This section outlines the composition, responsibilities, and activities of the compensation committee [Nomination committee](index=83&type=section&id=Nomination%20committee) This section describes the composition, responsibilities, and activities of the nomination committee [Foreign Private Issuer Status](index=83&type=section&id=Foreign%20Private%20Issuer%20Status) This section explains the company's status as a foreign private issuer and its implications for regulatory compliance [Code of Conduct and Code of Ethics](index=83&type=section&id=Code%20of%20Conduct%20and%20Code%20of%20Ethics) This section describes the company's adopted code of conduct and ethics for its directors, officers, and employees [Compensation of Directors and Executive Officers](index=84&type=section&id=Compensation%20of%20Directors%20and%20Executive%20Officers) This section details the remuneration provided to the company's directors and executive officers [Summary Compensation Table](index=84&type=section&id=Summary%20Compensation%20Table) This section provides a tabular summary of the compensation paid to the company's named executive officers [Employment Agreements](index=84&type=section&id=Employment%20Agreements) This section outlines the key terms and conditions of employment agreements with the company's executive officers [Directors'Agreements](index=85&type=section&id=Directors%27Agreements) This section details the agreements in place with the company's directors [ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](index=85&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details the beneficial ownership of the company's capital stock and outlines material related party transactions **Major Shareholders (as of Report Date):** | Name of Beneficial Owners | Number of Ordinary Shares | Percentage | | :--- | :--- | :--- | | E U Holdings Pte. Ltd. | 7,895,820 | 41.49% | | Ms. Siow Kim Lian | 2,497,148 | 13.12% | | Mr. Lim Tze Chong, Patrick | 2,497,148 | 13.12% | | Mr. Lim Chwee Poh | 833,584 | 4.38% | | Mr. Lim Kim Seng | 833,584 | 4.38% | | All Directors and Executive Officers as a group | 4,164,316 | 21.88% | *Controlling Shareholders (E U Holdings, Mr. Lim CP, Ms. Siow KL, Mr. Lim KS, Mr. Lim TC) collectively own approximately 73.5% of total issued and outstanding Ordinary Shares.* **Related Party Transactions (in $'000):** | Nature of transactions | FY2025 | FY2024 | FY2023 | | :--- | :--- | :--- | :--- | | KDS Steel Pte Ltd - Logistics services | 1,209 | 802 | 789 | | KDS Steel Pte Ltd - Utilities | 69 | 71 | 72 | | E U Holdings Pte. Ltd. - Management fees | 90 | 267 | 263 | | E U Holdings Pte. Ltd. - Professional fees | 664 | - | - | | INNEOVA Industrial Pte Ltd - Sales | 1 | 1 | - | | INNEOVA Industrial Pte Ltd - Upkeep of machinery | - | * | - | | INNEOVA Industrial Pte Ltd - Upkeep of motor vehicles | - | * | - | *Figures marked with '*' are insignificant.* [Related Party Transactions](index=87&type=section&id=Related%20Party%20Transactions) This section details transactions and relationships between the company and its related parties [INTERESTS OF EXPERTS AND COUNSEL](index=87&type=section&id=INTERESTS%20OF%20EXPERTS%20AND%20COUNSEL) This section discloses any interests held by experts and legal counsel involved in the report [LEGAL PROCEEDINGS](index=87&type=section&id=LEGAL%20PROCEEDINGS) This section summarizes any ongoing or potential legal actions involving the company [ITEM 8. FINANCIAL INFORMATION](index=87&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This item refers to the company's Consolidated Financial Statements, which are presented in full under Item 18 of this Annual Report - The Consolidated Financial Statements are presented under Item 18 of this Annual Report[542](index=542&type=chunk) [Financial Statements](index=87&type=section&id=Financial%20Statements) This section indicates where the company's financial statements can be found within the report [ITEM 9. THE OFFER AND LISTING](index=87&type=section&id=ITEM%209.%20THE%20OFFER%20AND%20LISTING) The company's Ordinary Shares began trading on the Nasdaq Capital Market on August 27, 2024, under the symbol 'JBDI' - Ordinary Shares commenced trading on the Nasdaq Capital Market on August 27, 2024, under the trading symbol 'JBDI'[542](index=542&type=chunk) - VStock Transfer, LLC is the transfer agent and registrar for the Ordinary Shares[543](index=543&type=chunk) [Offer and Listing Details](index=87&type=section&id=Offer%20and%20Listing%20Details) This section provides information regarding the company's public offering and stock exchange listing [Transfer Agent](index=87&type=section&id=Transfer%20Agent) This section identifies the transfer agent responsible for maintaining the company's shareholder records [ITEM 10. ADDITIONAL INFORMATION](index=87&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section details the company's corporate governance, share rights, dividend policy, and tax considerations as a Cayman Islands entity - The company is a Cayman Islands exempted company, governed by its Memorandum and Articles of Association and Cayman Islands law[544](index=544&type=chunk) - Authorized share capital is **$500,000**, divided into **1,000,000,000** ordinary shares of **$0.0005** par value each, following a **1:2** forward stock split on February 7, 2024[546](index=546&type=chunk) - Dividends can be declared from profits or share premium, subject to the company's ability to pay debts; unclaimed dividends for **six** years may be forfeited[549](index=549&type=chunk)[555](index=555&type=chunk) - Shareholders have one vote per fully paid share on a poll, and one vote on a show of hands; the Board can decline to register transfers of non-fully paid shares or shares with restrictions[557](index=557&type=chunk)[561](index=561&type=chunk) - Shareholders have no general right to inspect corporate records, but may do so by ordinary resolution[581](index=581&type=chunk)[583](index=583&type=chunk) - The company has adopted a dividend policy considering operating results, cash flow, business conditions, and capital requirements, but currently has no predetermined distribution ratio[586](index=586&type=chunk) - The Cayman Islands levies no taxes on profits, income, gains, or appreciation, and there are no exchange controls; the company has a **20-year** tax concession from the Cayman Islands government[594](index=594&type=chunk)[595](index=595&type=chunk) - The company does not expect to be classified as a Passive Foreign Investment Company (PFIC) for the current or foreseeable future, but this determination is annual and subject to change[607](index=607&type=chunk)[608](index=608&type=chunk) [Ordinary Shares](index=88&type=section&id=Ordinary%20Shares) This section describes the characteristics and rights associated with the company's ordinary shares [Dividends](index=88&type=section&id=Dividends) This section outlines the company's policy and procedures regarding dividend payments [Voting Rights](index=89&type=section&id=Voting%20Rights) This section details the voting rights of the company's shareholders [Transfer of Ordinary Shares](index=89&type=section&id=Transfer%20of%20Ordinary%20Shares) This section describes the procedures and restrictions related to transferring the company's ordinary shares [Procedures on liquidation](index=90&type=section&id=Procedures%20on%20liquidation) This section outlines the processes and priorities for distributing assets in the event of the company's liquidation [Calls on Ordinary Shares and Forfeiture of Ordinary Shares](index=90&type=section&id=Calls%20on%20Ordinary%20Shares%20and%20Forfeiture%20of%20Ordinary%20Shares) This section describes the company's rights to call for unpaid share capital and the consequences of forfeiture [Redemption of Ordinary Shares](index=91&type=section&id=Redemption%20of%20Ordinary%20Shares) This section outlines the conditions and procedures under which the company may redeem its ordinary shares [Variations of Rights of Shares](index=91&type=section&id=Variations%20of%20Rights%20of%20Shares) This section describes the process for altering the rights attached to different classes of shares [General Meetings of Shareholders](index=92&type=section&id=General%20Meetings%20of%20Shareholders) This section details the rules and procedures for convening and conducting shareholder meetings [Inspection of Books and Records](index=92&type=section&id=Inspection%20of%20Books%20and%20Records) This section outlines the rights of shareholders to inspect the company's books and records [Material Contracts](index=93&type=section&id=Material%20Contracts) This section lists and describes any significant contracts entered into by the company [Dividends and Dividend Policy](index=93&type=section&id=Dividends%20and%20Dividend%20Policy) This section outlines the company's approach to dividend distributions and the factors influencing them [Enforceability Of Civil Liabilities](index=93&type=section&id=Enforceability%20Of%20Civil%20Liabilities) This section discusses the challenges and limitations in enforcing civil judgments against the company or its officers [Exchange Controls](index=93&type=section&id=Exchange%20Controls) This section describes any governmental regulations affecting the transfer of currency or securities [Material Income Tax Considerations](index=93&type=section&id=Material%20Income%20Tax%20Considerations) This section provides an overview of the significant income tax implications for the company and its shareholders [Cayman Islands Tax Considerations](index=94&type=section&id=Cayman%20Islands%20Tax%20Considerations) This section outlines the tax environment and implications under Cayman Islands law [United States Federal Income Tax Considerations](index=94&type=section&id=United%20States%20Federal%20Income%20Tax%20Considerations) This section discusses the U.S. federal income tax implications for investors in the company's securities [Documents on Display](index=97&type=section&id=Documents%20on%20Display) This section lists the documents that are available for public inspection [ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=98&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to market risks including interest rate, credit, liquidity, and foreign exchange risks, which are managed through various strategies - The company is exposed to interest rate risk, credit risk, liquidity risk, and foreign exchange risk[481](index=481&type=chunk)[482](index=482&type=chunk)[483](index=483&type=chunk)[484](index=484&type=chunk) - Interest rate risk is currently not significant due to a lack of outstanding short-term loans[620](index=620&type=chunk) - Credit risk is managed through credit approvals, limits, and monitoring, with concentration risk identified for major customers and vendors[482](index=482&type=chunk)[127](index=127&type=chunk) - Liquidity risk is managed by ensuring sufficient cash to meet financial obligations under normal and stressed conditions[483](index=483&type=chunk)[794](index=794&type=chunk) - Foreign exchange risk exists due to the majority of revenues and costs being in Singapore Dollars, while the reporting currency is United States Dollar[484](index=484&type=chunk)[793](index=793&type=chunk) [Interest Rate Risk](index=98&type=section&id=Interest%20Rate%20Risk) This section discusses the company's exposure to fluctuations in interest rates and its management strategies [Foreign Currency Exchange Rates](index=98&type=section&id=Foreign%20Currency%20Exchange%20Rates) This section details the company's exposure to foreign currency exchange rate fluctuations [ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES](index=98&type=section&id=ITEM%2012.%20DESCRIPTION%20OF%20SECURITIES%20OTHER%20THAN%20EQUITY%20SECURITIES) This item is marked as 'Not applicable,' indicating that the company does not have other types of securities to describe beyond its equity securities - This item is not applicable, as the company does not have securities other than equity securities to describe[622](index=622&type=chunk) [PART II](index=98&type=section&id=PART%20II) This section addresses corporate governance, auditor information, equity purchases, and cybersecurity disclosures [ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES](index=98&type=section&id=ITEM%2013.%20DEFAULTS%2C%20DIVIDEND%20ARREARAGES%20AND%20DELINQUENCIES) This item is marked as 'None,' indicating no defaults, dividend arrearages, or delinquencies - There are no defaults, dividend arrearages, or delinquencies to report[623](index=623&type=chunk) [ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS](index=98&type=section&id=ITEM%2014.%20MATERIAL%20MODIFICATIONS%20TO%20THE%20RIGHTS%20OF%20SECURITY%20HOLDERS%20AND%20USE%20OF%20PROCEEDS) This item is marked as 'None,' indicating no material modifications to the rights of security holders or changes in the use of proceeds - There have been no material modifications to the rights of security holders or changes in the use of proceeds[623](index=623&type=chunk) [ITEM 15. CONTROLS AND PROCEDURES](index=98&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management evaluated disclosure controls as effective, but identified a material weakness in internal control over financial reporting due to insufficient accounting resources - Management concluded that disclosure controls and procedures were effective as of May 31, 2025[625](index=625&type=chunk) - As an emerging growth company, JBDI Holdings is exempt from the auditor attestation requirement for internal control over financial reporting under Section 404 of Sarbanes-Oxley[626](index=626&type=chunk) - A material weakness was identified in internal control over financial reporting due to a lack of sufficient full-time resources with appropriate accounting knowledge and experience for complex U.S. GAAP issues[629](index=629&type=chunk) - No changes in internal control over financial reporting materially affected or are reasonably likely to materially affect controls during the financial year ended May 31, 2025[630](index=630&type=chunk) [Management's Report on Internal Control over Financial Reporting](index=99&type=section&id=Management%27s%20Report%20on%20Internal%20Control%20over%20Financial%20Reporting) This section presents management's assessment of the effectiveness of the company's internal control over financial reporting [Changes in Internal Control over Financial Reporting](index=99&type=section&id=Changes%20in

JBDI Holdings Limited(US:JBDI)

Rocky Mountain Chocolate Factory(RMCF) - 2026 Q2 - Quarterly Results

2025-10-14 21:24

[Company Overview & Strategic Update](index=1&type=section&id=Company%20Overview%20%26%20Strategic%20Update) This section outlines Rocky Mountain Chocolate Factory's profile and the CEO's strategic commentary on transformation and growth [Company Profile](index=1&type=section&id=Company%20Profile) Rocky Mountain Chocolate Factory, Inc. is a leading franchiser of premium chocolate and confectionery retail stores, operating over 250 locations globally - **RMCF is America's Chocolatier**, a leading franchiser of premium chocolate and confectionery retail stores, producing gourmet caramel apples since 1981[1](index=1&type=chunk)[6](index=6&type=chunk) - The company operates **over 250 Rocky Mountain Chocolate stores** across the United States and internationally[6](index=6&type=chunk) - RMCF is headquartered in Durango, Colorado, and is listed on the Nasdaq Global Market under "**RMCF**"[1](index=1&type=chunk)[6](index=6&type=chunk) [CEO's Strategic Commentary](index=1&type=section&id=CEOs_Strategic_Commentary) Interim CEO Jeff Geygan highlighted initial progress in transformation and modernization, focusing on strengthening operations, scalable growth, and data-driven decisions - The company is undergoing a **transformation and modernization**, showing early signs of progress, with a focus on strengthening operations and scalable growth[2](index=2&type=chunk) - **New ERP and POS systems** are providing clearer insights into store performance and customer trends, enabling faster, data-driven decisions[2](index=2&type=chunk) - The company launched a **rebrand and new store developments**, including two new franchise locations in Folsom, CA, and New Jersey, and a company-owned location in Camarillo, CA, with a Chicago flagship expected around the holidays[2](index=2&type=chunk) - Future initiatives include introducing a **new loyalty program and expanding digital capabilities** to enhance customer connections[2](index=2&type=chunk) [Fiscal Second Quarter 2026 Financial Highlights](index=2&type=section&id=Fiscal%20Second%20Quarter%202026%20Financial%20Highlights) Key financial metrics for Q2 FY2026 are presented, covering revenue, gross profit, net loss, and earnings per share [Key Financial Metrics (Q2 FY2026 vs. Year-Ago Quarter)](index=2&type=section&id=Key%20Financial%20Metrics%20Q2%20FY2026%20vs.%20Year-Ago%20Quarter) Total revenue for Q2 FY2026 increased to $6.8 million, while product and retail gross profit saw a loss, and net loss remained relatively flat Fiscal Second Quarter 2026 Financial Highlights (in thousands) | Metric | Q2 FY2026 | Q2 FY2025 | Change (YoY) | | :----------------------------- | :-------- | :-------- | :----------- | | Total Revenue | $6,823 | $6,380 | +$443 (+6.9%) | | Total Product & Retail Gross Profit | $(33) | $600 | -$633 (-105.5%) | | Total Costs & Expenses | $7,302 | $7,294 | +$8 (+0.1%) | | Net Loss | $(662) | $(722) | +$60 (-8.3%) | | Basic Loss per Common Share | $(0.09) | $(0.11) | +$0.02 | - **Total revenue increase** was attributed to pricing actions and a more profitable sales mix following the Company's exit from lower-margin specialty markets[7](index=7&type=chunk) - The **decline in product and retail gross profit** was due to higher input costs and operational inefficiencies, offsetting benefits from pricing actions and market exit[7](index=7&type=chunk) [Detailed Financial Statements](index=4&type=section&id=Detailed%20Financial%20Statements) Detailed condensed consolidated balance sheets and statements of operations are presented [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of August 31, 2025, total assets and liabilities increased, while stockholders' equity decreased Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | August 31, 2025 (Unaudited) | February 28, 2025 | Change (vs. Feb 28, 2025) | | :-------------------------- | :-------------------------- | :---------------- | :------------------------ | | Cash and cash equivalents | $2,017 | $720 | +$1,297 | | Total current assets | $10,183 | $9,223 | +$960 | | Total Assets | $22,254 | $21,175 | +$1,079 | | Total current liabilities | $6,651 | $6,869 | -$218 | | Notes payable | $7,766 | $5,957 | +$1,809 | | Total Liabilities | $16,128 | $14,200 | +$1,928 | | Total Stockholders' Equity | $6,126 | $6,975 | -$849 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenue increased for both three and six-month periods, with significant improvements in loss from operations and net loss year-over-year Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric (Three Months Ended Aug 31) | 2025 | 2024 | Change (YoY) | | :--------------------------------- | :-------- | :-------- | :----------- | | Sales | $5,183 | $4,918 | +$265 (+5.4%) | | Franchise and royalty fees | $1,640 | $1,462 | +$178 (+12.2%) | | Total Revenue | $6,823 | $6,380 | +$443 (+6.9%) | | Loss from Operations | $(479) | $(914) | +$435 (-47.6%) | | Net Loss | $(662) | $(722) | +$60 (-8.3%) | | Basic Loss per Common Share | $(0.09) | $(0.11) | +$0.02 | | **Metric (Six Months Ended Aug 31)** | **2025** | **2024** | **Change (YoY)** | | Total Revenue | $13,196 | $12,787 | +$409 (+3.2%) | | Loss from Operations | $(624) | $(2,544) | +$1,920 (-75.5%) | | Net Loss | $(986) | $(2,380) | +$1,394 (-58.6%) | | Basic Loss per Common Share | $(0.13) | $(0.37) | +$0.24 | - **Sales and franchise/royalty fees both contributed to the overall revenue increase** for both the three-month and six-month periods[13](index=13&type=chunk) - **Significant improvement in loss from operations and net loss** for both periods indicates better cost management or operational efficiency compared to the prior year[13](index=13&type=chunk) [Additional Information](index=2&type=section&id=Additional%20Information) Details for the upcoming conference call, forward-looking statements, and investor contact are provided [Conference Call Information](index=2&type=section&id=Conference%20Call%20Information) A conference call to discuss financial results will be held on Tuesday, October 14, 2025, at 9:00 a.m. Eastern time, with dial-in and webcast details provided - A conference call to discuss financial results will be held on **Tuesday, October 14, 2025, at 9:00 a.m. Eastern time**[4](index=4&type=chunk) - **Dial-in and live webcast registration links are available**, and the call will be broadcast live and available for replay on the company's investor relations website[4](index=4&type=chunk)[5](index=5&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) The press release includes forward-looking statements about future expectations, subject to various risks and uncertainties, with no obligation to update them - The press release includes **forward-looking statements about future financial and operating results**, business strategy, store pipeline, and transformation[8](index=8&type=chunk) - These statements are **subject to various risks and uncertainties**, including inflationary impacts, legal proceedings, changes in the confectionery business, seasonality, raw material costs, competition, and government regulations[8](index=8&type=chunk) - The company **advises caution against undue reliance on forward-looking statements** and does not undertake to update them unless legally required[8](index=8&type=chunk) [Investor Contact](index=3&type=section&id=Investor%20Contact) Investor inquiries can be directed to Sean Mansouri, CFA, at Elevate IR, via phone or email - Investor contact: **Sean Mansouri, CFA, Elevate IR, 720-330-2829, RMCF@elevate-ir.com**[9](index=9&type=chunk)

Rocky Mountain Chocolate Factory(US:RMCF)

Volition(VNRX) - 2025 Q3 - Quarterly Results

2025-10-14 21:12

[DEFINITIONS](index=1&type=section&id=ARTICLE%20I) This article defines key legal, financial, and operational terms for clarity in the Underwriting Agreement [Definitions](index=1&type=section&id=1.1%20Definitions) This section defines key terms, entities, dates, and financial/legal concepts for the public offering - The 'Company' refers to VolitionRx Limited and its subsidiaries and affiliates, while the 'Underwriter' or 'Newbridge' refers to Newbridge Securities Corporation[1](index=1&type=chunk) - The 'Public Securities' collectively include the 'Closing Securities' and, if applicable, the 'Option Securities'[36](index=36&type=chunk) - The 'Closing Date' is the Trading Day when all conditions precedent for the purchase and sale of Closing Securities are satisfied or waived, but no later than 10:00 a.m. (New York City time) on the second Trading Day following the agreement date[9](index=9&type=chunk) - The 'Warrants' are redeemable warrants to purchase one share of Common Stock, exercisable for five years from the Closing Date at a price of **$0.60**[48](index=48&type=chunk) [PURCHASE AND SALE](index=5&type=section&id=ARTICLE%20II) This article details the purchase and sale of common stock and warrants, including initial closing, over-allotment, and underwriter's warrants [Closing](index=5&type=section&id=2.1%20Closing) This section outlines the Company's agreement to sell and the Underwriter's agreement to purchase Closing Securities (Common Stock and Warrants) at a specified combined unit price on the Closing Date Closing Securities Purchase Details | Security Type | Quantity | | :------------ | :------- | | Common Stock | 11,550,000 shares | | Warrants | 11,550,000 warrants | | Total Closing Purchase Price | $5,585,580.00 | | Combined Purchase Price (Share + Warrant) | $0.4836 | | Allocated Value per Warrant | $0.0093 | [Over-Allotment Option](index=5&type=section&id=2.2%20Over-Allotment%20Option) Grants the Underwriter an option to purchase up to an additional 1,732,500 shares of Common Stock and 1,732,500 accompanying Warrants (Option Securities) at the same Securities Purchase Price, exercisable within 30 days of the Execution Date Over-Allotment Option Details | Security Type | Quantity | | :------------ | :------- | | Option Shares | Up to 1,732,500 shares | | Option Warrants | Up to 1,732,500 warrants | | Exercise Period | Within 30 days after Execution Date | [Underwriter's Securities](index=6&type=section&id=2.3%20Underwriter's%20Securities) Stipulates the issuance of Underwriter's Warrants to the Underwriter (or its designees) for up to 808,500 shares of Common Stock (7.0% of Closing/Option Shares). These warrants are exercisable 180 days from the Closing Date for five years at $0.63 per share, subject to FINRA lock-up restrictions Underwriter's Warrants Details | Feature | Detail | | :------ | :----- | | Shares | Up to 808,500 Common Stock (7.0% of Closing/Option Shares) | | Exercisability | Commencing 180 days from Closing Date | | Expiration | Five-year anniversary of Closing Date | | Initial Exercise Price | $0.63 per share | | Lock-up Restriction | 180 days from commencement of sales of Closing Securities (FINRA Rule 5110) | [Deliveries](index=6&type=section&id=2.4%20Deliveries) Specifies the documents and securities the Company must deliver to the Underwriter on the Closing Date and any Option Closing Date, including the Closing/Option Securities, legal opinions, comfort letters, officer's and secretary's certificates, and lock-up agreements - The Company is required to deliver Closing Securities and, if applicable, Option Securities via The Depository Trust Company Deposit or Withdrawal at Custodian system[56](index=56&type=chunk) - Legal opinions from Company Counsel, cold comfort letters from the Company Auditor, and duly executed Officer's, Secretary's, and Chief Financial Officer's Certificates are mandatory deliveries[57](index=57&type=chunk)[58](index=58&type=chunk) - Underwriter's Warrants must be delivered within **five Business Days** of the Closing Date, and Lock-Up Agreements contemporaneously with the main agreement[57](index=57&type=chunk)[58](index=58&type=chunk) [Closing Conditions](index=7&type=section&id=2.5%20Closing%20Conditions) Details the conditions that must be met for the Underwriter's obligations at closing, including the accuracy of Company representations and warranties, performance of obligations, delivery of specified items, effectiveness of the Registration Statement, FINRA clearance, and listing approval for the shares on the Trading Market - All representations and warranties of the Company must be accurate in all material respects, and all Company obligations, covenants, and agreements must be performed[59](index=59&type=chunk) - The Registration Statement must be effective, with no stop orders issued or pending, and FINRA clearance for Underwriter compensation must be received if required[59](index=59&type=chunk) - The Closing Shares and Option Shares, along with the Common Stock underlying the warrants, must be approved for listing on the Trading Market[60](index=60&type=chunk) - There must be no material adverse change in the Company's condition or prospects, and no material litigation or proceedings pending or threatened[60](index=60&type=chunk) [REPRESENTATIONS AND WARRANTIES](index=7&type=section&id=ARTICLE%20III) This article contains detailed representations and warranties by the Company to the Underwriter, covering business, legal standing, financial condition, and regulatory compliance [Representations and Warranties of the Company](index=7&type=section&id=3.1%20Representations%20and%20Warranties%20of%20the%20Company) The Company makes extensive representations and warranties to the Underwriter as of the Execution Date, Closing Date, and any Option Closing Date, covering its subsidiaries, organization, authorization, absence of conflicts, required filings, registration statement, issuance of securities, capitalization, SEC reports, material changes, litigation, labor relations, compliance, regulatory permits, title to assets, intellectual property, insurance, affiliate transactions, internal controls, certain fees, investment company status, registration rights, listing requirements, takeover protections, disclosure, integrated offering, solvency, stock option plans, tax status, foreign corrupt practices, accountants, FDA compliance, OFAC, U.S. real property holding corporation status, Bank Holding Company Act, money laundering, D&O questionnaires, FINRA affiliation, officer's certificates, Board of Directors composition, cybersecurity, and environmental laws [Subsidiaries](index=8&type=section&id=(a)%20Subsidiaries) The Company represents that all its subsidiaries are duly listed in SEC reports, and it owns their capital stock free of liens - All direct and indirect Subsidiaries of the Company are set forth in the SEC Reports[63](index=63&type=chunk) - The Company owns all capital stock or other equity interests of each Subsidiary free and clear of any Liens[63](index=63&type=chunk) - All issued and outstanding shares of capital stock of each Subsidiary are validly issued, fully paid, non-assessable, and free of preemptive and similar rights[63](index=63&type=chunk) [Organization and Qualification](index=8&type=section&id=(b)%20Organization%20and%20Qualification) The Company and its subsidiaries are duly organized, validly existing, in good standing, and possess the necessary authority to conduct business, without violating organizational documents - The Company and each Subsidiary are duly incorporated or organized, validly existing, and in good standing under applicable laws[64](index=64&type=chunk) - They possess the requisite power and authority to own assets and conduct business as currently conducted[64](index=64&type=chunk) - Neither the Company nor any Subsidiary is in violation or default of its organizational documents, and each is duly qualified in necessary jurisdictions, except where failure would not result in a Material Adverse Effect[64](index=64&type=chunk) [Authorization; Enforcement](index=8&type=section&id=(c)%20Authorization%3B%20Enforcement) The Company has the corporate power and authority to enter into and consummate the transactions, which have been duly authorized and constitute valid, binding, and enforceable obligations - The Company has the requisite corporate power and authority to enter into and consummate the transactions contemplated by the Agreement and other Transaction Documents[65](index=65&type=chunk) - The execution and delivery of these documents have been duly authorized by all necessary Company action, requiring no further action from the Board or stockholders other than Required Approvals[65](index=65&type=chunk) - The Agreement and Transaction Documents constitute valid and binding obligations of the Company, enforceable in accordance with their terms (subject to general equitable principles and bankruptcy laws)[65](index=65&type=chunk) [No Conflicts](index=8&type=section&id=(d)%20No%20Conflicts) The execution and performance of the Transaction Documents and the issuance of Public Securities will not conflict with organizational documents, create liens, or violate laws, unless such conflicts are not material - The execution, delivery, and performance of the Transaction Documents and the issuance/sale of Public Securities will not conflict with organizational documents, create Liens, or violate any laws or regulations, except where such conflicts would not result in a Material Adverse Effect[66](index=66&type=chunk) [Filings, Consents and Approvals](index=8&type=section&id=(e)%20Filings%2C%20Consents%20and%20Approvals) The Company is not required to obtain any governmental or third-party consents or make filings, other than those related to SEC registration, Trading Market listing, and state securities laws - The Company is not required to obtain any governmental or third-party consents, waivers, authorizations, or orders, nor make any filings or registrations, other than: (i) filing the Preliminary Prospectus and Prospectus with the Commission, (ii) applying to the Trading Market for listing, and (iii) making required state securities law filings[67](index=67&type=chunk) [Registration Statement](index=9&type=section&id=(f)%20Registration%20Statement) The Company's Registration Statement (Form S-3, effective April 18, 2025) for Public Securities is effective, with no stop orders, and neither party will use unapproved free writing prospectuses - The Company filed the Registration Statement (Form S-3, effective **April 18, 2025**) for

Volition(US:VNRX)

Biomerica(BMRA) - 2026 Q1 - Quarterly Report

2025-10-14 21:11

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Biomerica, Inc.'s unaudited condensed consolidated financial statements for the three months ended August 31, 2025, and comparative periods, including key financial statements and explanatory notes [Condensed Consolidated Balance Sheets (unaudited) – August 31, 2025 and May 31, 2025](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets show an increase in total assets and shareholders' equity, primarily driven by an increase in cash and accounts receivable, while total liabilities decreased slightly | Metric | August 31, 2025 | May 31, 2025 | Change ($) | Change (%) | | :-------------------------------- | :-------------- | :----------- | :--------- | :--------- | | Cash and cash equivalents | $3,053,000 | $2,399,000 | $654,000 | 27.26% | | Accounts receivable, net | $1,205,000 | $731,000 | $474,000 | 64.84% | | Total current assets | $5,899,000 | $4,875,000 | $1,024,000 | 21.01% | | Total Assets | $6,854,000 | $5,945,000 | $909,000 | 15.29% | | Total current liabilities | $1,693,000 | $1,740,000 | $(47,000) | -2.70% | | Total Liabilities | $1,699,000 | $1,840,000 | $(141,000) | -7.66% | | Total Shareholders' Equity | $5,155,000 | $4,105,000 | $1,050,000 | 25.58% | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited) – Three Months Ended August 31, 2025 and 2024](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) The company reported a net income of $2,000 for the three months ended August 31, 2025, a significant improvement from a net loss of $1,316,000 in the prior year, primarily due to a substantial increase in other income, largely from an Employee Retention Credit refund | Metric | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | Change ($) | Change (%) | | :------------------------------------ | :--------------------------------- | :--------------------------------- | :--------- | :--------- | | Net sales | $1,380,000 | $1,807,000 | $(427,000) | -23.63% | | Cost of sales | $(956,000) | $(1,518,000) | $562,000 | -37.02% | | Gross profit | $424,000 | $289,000 | $135,000 | 46.71% | | Total operating expense | $1,542,000 | $1,657,000 | $(115,000) | -6.94% | | Loss from operations | $(1,118,000) | $(1,368,000) | $250,000 | -18.27% | | Total other income | $1,123,000 | $56,000 | $1,067,000 | 1905.36% | | Income (loss) before income taxes | $5,000 | $(1,312,000) | $1,317,000 | -100.38% | | Net income (loss) | $2,000 | $(1,316,000) | $1,318,000 | -100.15% | | Basic net income (loss) per common share | $0.00 | $(0.63) | $0.63 | -100.00% | | Diluted net income (loss) per common share | $0.00 | $(0.63) | $0.63 | -100.00% | - Net sales decreased by **23.63% YoY** to **$1,380,000**, while gross profit increased by **46.71% YoY** to **$424,000** due to a larger decrease in cost of sales[14](index=14&type=chunk) - Other income saw a substantial increase of **$1,067,000**, primarily driven by a **$1,100,000** Employee Retention Credit (ERC) refund[14](index=14&type=chunk)[81](index=81&type=chunk)[120](index=120&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity (unaudited) – Three Months Ended August 31, 2025 and 2024](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) Shareholders' equity increased significantly for the three months ended August 31, 2025, primarily due to net proceeds from common stock sales and share-based compensation, contrasting with a net loss in the prior year | Metric | August 31, 2025 | May 31, 2025 | Change ($) | | :-------------------------------- | :-------------- | :----------- | :--------- | | Common Stock Shares | 2,815,410 | 2,546,216 | 269,194 | | Common Stock Amount | $225,000 | $203,000 | $22,000 | | Additional Paid-in Capital | $58,198,000 | $57,175,000 | $1,023,000 | | Accumulated Deficit | $(53,166,000) | $(53,168,000)| $2,000 | | Total Stockholders' Equity | $5,155,000 | $4,105,000 | $1,050,000 | - Net proceeds from sales of common stock contributed **$912,000** to shareholders' equity for the three months ended August 31, 2025[19](index=19&type=chunk)[84](index=84&type=chunk) - Share-based compensation added **$133,000** to shareholders' equity for the three months ended August 31, 2025[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows (unaudited) – Three Months Ended August 31, 2025 and 2024](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents increased significantly for the three months ended August 31, 2025, primarily driven by cash provided by financing activities, which offset cash used in operating activities | Metric | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | Change ($) | | :------------------------------------ | :--------------------------------- | :--------------------------------- | :--------- | | Net cash used in operating activities | $(268,000) | $(1,344,000) | $1,076,000 | | Net cash provided by financing activities | $920,000 | $0 | $920,000 | | Net increase (decrease) in cash and cash equivalents | $654,000 | $(1,350,000) | $2,004,000 | | Cash and cash equivalents at end of period | $3,053,000 | $2,820,000 | $233,000 | - Cash used in operating activities decreased significantly from **$(1,344,000)** in 2024 to **$(268,000)** in 2025, a **79.9%** improvement[22](index=22&type=chunk) - Financing activities provided **$920,000** in cash in 2025, primarily from common stock sales, compared to no cash from financing in 2024[22](index=22&type=chunk)[135](index=135&type=chunk) [Notes to Condensed Consolidated Financial Statements (unaudited)](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide essential context for the financial statements, detailing business operations, accounting policies, liquidity, and specific financial items, including ASC 326 adoption and ERC recognition [NOTE 1: BASIS OF PRESENTATION](index=8&type=section&id=NOTE%201%3A%20BASIS%20OF%20PRESENTATION) Biomerica, Inc. is a global biomedical technology company focused on diagnostic and therapeutic products, with unaudited interim financial statements prepared in accordance with SEC rules and GAAP - Biomerica, Inc. is a global biomedical technology company developing, patenting, manufacturing, and marketing advanced diagnostic and therapeutic products[24](index=24&type=chunk) - Primary focus is on diagnostic-guided therapy (DGT) products for gastrointestinal diseases, such as the inFoods® IBS product[25](index=25&type=chunk) - Products are sold worldwide in clinical laboratories and point-of-care markets, with some CE marked and/or FDA cleared[26](index=26&type=chunk) [NOTE 2: SIGNIFICANT ACCOUNTING POLICIES](index=8&type=section&id=NOTE%202%3A%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines significant accounting policies, critical estimates, and revenue recognition, highlighting ongoing operating losses and 'going concern' doubt, which management addresses through cost reduction and capital raising strategies - The company has incurred recurring operating losses and negative cash flows, with an accumulated deficit of approximately **$53,200,000** as of August 31, 2025, raising substantial doubt about its ability to continue as a going concern[34](index=34&type=chunk)[40](index=40&type=chunk) - Management is actively pursuing strategies to increase sales, reduce expenses, sell non-core assets, and seek additional financing to address capital needs[39](index=39&type=chunk) - The company sold **258,569** shares of common stock through an ATM offering, generating net proceeds of **$912,000** during the three months ended August 31, 2025, for general corporate purposes[36](index=36&type=chunk)[37](index=37&type=chunk) Net Sales by Market (Three Months Ended August 31) | Market | 2025 ($) | 2024 ($) | Change ($) | Change (%) | | :------------------ | :------- | :------- | :--------- | :--------- | | Clinical lab | 1,024,000| 1,278,000| (254,000) | -19.87% | | Contract manufacturing | 192,000 | 339,000 | (147,000) | -43.36% | | Over-the-counter | 161,000 | 187,000 | (26,000) | -13.90% | | Physician's office | 3,000 | 3,000 | 0 | 0.00% | | **Total** | **1,380,000**| **1,807,000**| **(427,000)**| **-23.63%**| - The company adopted ASC 326 (CECL model) for credit losses on June 1, 2023, establishing a reserve of approximately **$64,000** for credit losses as of August 31, 2025[49](index=49&type=chunk)[50](index=50&type=chunk) Inventory Composition (August 31, 2025 vs. May 31, 2025) | Inventory Type | August 31, 2025 ($) | May 31, 2025 ($) | | :--------------- | :------------------ | :--------------- | | Raw materials | 976,000 | 1,071,000 | | Work in progress | 816,000 | 743,000 | | Finished products| 159,000 | 147,000 | | Total gross inventory | 1,951,000 | 1,961,000 | | Inventory reserves | (478,000) | (471,000) | | Net inventory | 1,473,000 | 1,490,000 | - Share-based compensation expense for stock options was **$74,000** for the three months ended August 31, 2025, down from **$77,000** in the prior year. Restricted stock awards expense was **$59,000** for the three months ended August 31, 2025, with no expense in the prior year[64](index=64&type=chunk)[65](index=65&type=chunk) - Revenue from product sales is recognized at the time of shipment (FOB shipping point), and diagnostic testing services revenue is recognized upon completion of test results by a third-party lab[67](index=67&type=chunk)[68](index=68&type=chunk) - Research and development costs decreased by **29%** to **$212,000** for the three months ended August 31, 2025, compared to **$297,000** in the prior year[72](index=72&type=chunk) - The company recognized **$3,000** in income tax expense for state minimum and foreign miscellaneous taxes, and has a full valuation allowance against deferred tax assets due to uncertainties in generating future taxable income[73](index=73&type=chunk) - Operating lease costs were **$88,000** for both periods, with a weighted-average remaining lease term of **1.02 years** and a weighted-average discount rate of **5.78%** as of August 31, 2025[92](index=92&type=chunk) [NOTE 3: SHAREHOLDERS' EQUITY](index=17&type=section&id=NOTE%203%3A%20SHAREHOLDERS%27%20EQUITY) This note details changes in shareholders' equity, highlighting capital raised through the 2024 ATM Offering and net proceeds from common stock sales - The company filed a 'shelf' registration statement on Form S-3, effective September 29, 2023, allowing issuance of up to **$20,000,000** in common stock[83](index=83&type=chunk) - During the three months ended August 31, 2025, **258,569** shares of common stock were sold via the 2024 ATM Offering, yielding gross proceeds of **$939,000** and net proceeds of **$912,000**[84](index=84&type=chunk) [NOTE 4: GEOGRAPHIC INFORMATION](index=18&type=section&id=NOTE%204%3A%20GEOGRAPHIC%20INFORMATION) The company operates as a single segment but provides disaggregated revenue information by geographic region, showing a decline in sales across all major regions for the three months ended August 31, 2025 Revenues from Sales to Unaffiliated Customers by Region (Three Months Ended August 31) | Region | 2025 ($) | 2024 ($) | Change ($) | Change (%) | | :------------- | :------- | :------- | :--------- | :--------- | | Asia | 670,000 | 817,000 | (147,000) | -17.99% | | Europe | 305,000 | 470,000 | (165,000) | -35.11% | | North America | 318,000 | 427,000 | (109,000) | -25.53% | | Middle East | 85,000 | 90,000 | (5,000) | -5.56% | | South America | 2,000 | 3,000 | (1,000) | -33.33% | | **Total** | **1,380,000**| **1,807,000**| **(427,000)**| **-23.63%**| - Approximately **$480,000** of gross inventory and **$9,000** of net property and equipment were located in Mexicali, Mexico, as of August 31, 2025[85](index=85&type=chunk)[86](index=86&type=chunk) [NOTE 5: LEASES](index=19&type=section&id=NOTE%205%3A%20LEASES) The company leases facilities in Irvine, California, and Mexicali, Mexico, as well as a small office in Lindau, Germany. Lease liabilities are recognized on the balance sheet, with operating lease costs remaining stable year-over-year - The company leases approximately **22,000 square feet** for its corporate headquarters in Irvine, California, with the lease expiring in August 2026 and an option for a five-year extension[89](index=89&type=chunk) - Biomerica de Mexico leases **8,100 square feet** of manufacturing space under a 10-year lease with a 10-year renewal option[90](index=90&type=chunk) Lease Costs (Three Months Ended August 31) | Lease Cost Type | 2025 ($) | 2024 ($) | | :---------------- | :------- | :------- | | Operating lease cost | 88,000 | 88,000 | | Variable lease cost | 3,000 | 2,000 | | Short-term lease cost | - | 2,000 | | **Total lease cost** | **91,000** | **92,000** | [NOTE 6: COMMITMENTS AND CONTINGENCIES](index=19&type=section&id=NOTE%206%3A%20COMMITMENTS%20AND%20CONTINGENCIES) The company is occasionally involved in legal proceedings but had no pending matters as of August 31, 2025, with management believing future outcomes will not materially affect its financial position - No legal proceedings were pending as of August 31, 2025[94](index=94&type=chunk) - Management believes that any potential future legal outcomes will not have a material adverse effect on the company's consolidated financial position, results of operations, or cash flows[94](index=94&type=chunk) [NOTE 7: SUBSEQUENT EVENTS](index=20&type=section&id=NOTE%207%3A%20SUBSEQUENT%20EVENTS) There were no subsequent events to report after the period ended August 31, 2025, through the filing date of the report - No subsequent events were reported[95](index=95&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial condition and results for the three months ended August 31, 2025, covering operations, product development, revenues, expenses, liquidity, and 'going concern' strategies [Forward-Looking Statements](index=21&type=section&id=Forward-Looking%20Statements) This section cautions that the report contains forward-looking statements regarding future performance and financial position, subject to risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements that are not guarantees of future performance and actual results may differ materially[97](index=97&type=chunk) - Key factors influencing actual results include the ability to raise capital, accuracy of estimates, intellectual property protection, competition, regulatory certifications, distributor relations, global economic impacts, and retention of key personnel[98](index=98&type=chunk)[100](index=100&type=chunk) [Overview](index=21&type=section&id=Overview) Biomerica is a global biomedical technology company specializing in advanced diagnostic and therapeutic products, enhancing health and reducing healthcare costs through worldwide sales - Biomerica is a global biomedical technology company that develops, patents, manufactures, and markets advanced diagnostic and therapeutic products[100](index=100&type=chunk) - Products are sold worldwide in clinical laboratories and point-of-care settings, with many being CE marked and/or FDA cleared[102](index=102&type=chunk) [Technological Advancements and Product Development](index=22&type=section&id=Technological%20Advancements%20and%20Product%20Development) The company focuses on developing rapid, accurate, and easy-to-use diagnostic tests for point-of-care and home use, aiming to provide quick and reliable results without complex instrumentation - A key objective is to develop and market rapid diagnostic tests that are accurate, use easily obtained patient specimens, and are simple to perform without complex instrumentation[103](index=103&type=chunk) - The company believes its rapid point-of-care tests can be as accurate as laboratory tests, delivering reliable results in minutes[103](index=103&type=chunk) [Research and Development](index=22&type=section&id=Research%20and%20Development) Biomerica invests in R&D for new diagnostic and therapeutic products, notably its patented inFoods® IBS platform, expanding commercialization efforts and recently receiving FDA clearance for hp+detect™ - A key outcome of R&D is the patented diagnostic-guided therapy (DGT) product, inFoods® IBS, designed to identify patient-specific foods that trigger IBS symptoms[105](index=105&type=chunk) - The company is expanding inFoods® IBS to GI physician groups and exploring distribution, partnership, and licensing opportunities[107](index=107&type=chunk)[109](index=109&type=chunk) - In December 2023, the company received FDA clearance for hp+detect™, a diagnostic test for Helicobacter pylori bacteria[112](index=112&type=chunk) - Due to slower-than-expected product launches, the company initiated significant cost-cutting measures and raised **$912,000** in net proceeds from an ATM offering to extend cash runway[113](index=113&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) The company experienced a **24%** decrease in net sales for the three months ended August 31, 2025, but gross profit improved, operating expenses decreased, and a substantial ERC refund led to net income [Net Sales and Cost of Sales](index=24&type=section&id=Net%20Sales%20and%20Cost%20of%20Sales) Net sales decreased by **24%** to **$1,380,000**, primarily due to reduced retail activity, lower international OTC sales, and decreased contract manufacturing demand. Despite this, gross profit increased by **47%** due to a larger reduction in cost of sales, driven by changes in product mix, improved efficiency, and reduced labor costs Net Sales by Market (Three Months Ended August 31) | Market | August 31, 2025 ($) | August 31, 2024 ($) | Change ($) | Change (%) | | :------------------ | :------------------ | :------------------ | :--------- | :--------- | | Clinical lab | 1,024,000 | 1,278,000 | (254,000) | -20% | | Contract manufacturing | 192,000 | 339,000 | (147,000) | -43% | | Over-the-counter | 161,000 | 187,000 | (26,000) | -14% | | Physician's office | 3,000 | 3,000 | - | 0% | | **Total** | **1,380,000** | **1,807,000** | **(427,000)**| **-24%** | - Consolidated net sales decreased by **$427,000** (**24%**) to **$1,380,000** for the three months ended August 31, 2025, compared to the same period in 2024[115](index=115&type=chunk) - Cost of sales decreased by **$562,000** (**37%**) to **$956,000**, improving gross margin due to lower contract manufacturing costs and reduced direct labor[116](index=116&type=chunk) [Operating Expenses](index=24&type=section&id=Operating%20Expenses) Total operating expenses decreased by **7%** year-over-year, with SG&A decreasing due to RIF and lower stock-based compensation, and R&D decreasing due to payroll reductions and cost savings Operating Expenses (Three Months Ended August 31) | Expense Type | 2025 ($) | 2025 (% of Total Revenues) | 2024 ($) | 2024 (% of Total Revenues) | Change ($) | Change (%) | | :-------------------------------- | :------- | :------------------------- | :------- | :------------------------- | :--------- | :--------- | | Selling, General and Administrative | 1,330,000| 96% | 1,360,000| 75% | (30,000) | -2% | | Research and Development | 212,000 | 15% | 297,000 | 16% | (85,000) | -29% | - SG&A expenses decreased by **$30,000** (**2%**) due to a **$65,000** reduction in salaries/wages from a RIF, a **$68,000** decrease in stock-based compensation, and a **$43,000** decrease in legal expenses, partially offset by a **$131,000** increase in professional service fees for ERC filings[118](index=118&type=chunk) - R&D expenses decreased by **$85,000** (**29%**) due to a **$60,000** reduction in payroll from a RIF and **$23,000** in cost savings on inFoods® R&D projects[119](index=119&type=chunk) [Interest, Dividend Income and Other Income](index=24&type=section&id=Interest%2C%20Dividend%20Income%20and%20Other%20Income) Other income increased substantially by **$1,067,000**, primarily due to a **$1,100,000** cash refund from the IRS for the Employee Retention Credit (ERC), a one-time, non-recurring benefit - Interest, dividend, and other income increased by **$1,067,000** to **$1,123,000** for the three months ended August 31, 2025[120](index=120&type=chunk) - The increase was primarily driven by a **$1,100,000** cash refund from the IRS related to the Employee Retention Credit (ERC) for calendar year 2021, which is a one-time, non-recurring item[120](index=120&type=chunk) [Liquidity, Capital Resources and Going Concern](index=26&type=section&id=Liquidity%2C%20Capital%20Resources%20and%20Going%20Concern) The company's current cash is insufficient for operating requirements and growth, raising 'going concern' doubt, which management addresses through sales increases, expense reductions, and additional financing, including ATM offerings Liquidity Metrics | Metric | August 31, 2025 ($) | May 31, 2025 ($) | | :-------------------------------- | :------------------ | :--------------- | | Cash and cash equivalents | 3,053,000 | 2,399,000 | | Working capital | 4,206,000 | 3,135,000 | - Current cash and cash equivalents are insufficient to meet operating cash requirements and strategic growth objectives for the next twelve months, raising substantial doubt about the company's ability to continue as a going concern[123](index=123&type=chunk)[125](index=125&type=chunk)[130](index=130&type=chunk) - Strategies to address capital needs include increasing sales, reducing expenses, selling non-core assets, and seeking additional debt or equity financing[124](index=124&type=chunk) - The company raised **$912,000** in net proceeds from the 2024 ATM Offering during the three months ended August 31, 2025, intended for general corporate purposes[127](index=127&type=chunk)[129](index=129&type=chunk) [Operating Activities](index=27&type=section&id=Operating%20Activities) Cash used in operating activities significantly decreased to **$268,000** for the three months ended August 31, 2025, a substantial improvement from **$1,344,000** in the prior year, primarily due to net income and changes in working capital - Cash used in operating activities was approximately **$268,000** for the three months ended August 31, 2025, compared to **$1,344,000** in the prior year[131](index=131&type=chunk)[132](index=132&type=chunk) - Key factors contributing to cash used in operating activities in 2025 included a net income of **$2,000**, an increase in accounts receivable of **$512,000**, and decreases in accrued compensation and lease liabilities, partially offset by non-cash expenses and decreases in inventories and prepaid expenses[131](index=131&type=chunk) [Investing Activities](index=27&type=section&id=Investing%20Activities) The company did not acquire any new property, equipment, or patents during the three months ended August 31, 2025, or the same period in 2024 - No new property, equipment, or patents were acquired during the three months ended August 31, 2025, or 2024[133](index=133&type=chunk) [Financing Activities](index=28&type=section&id=Financing%20Activities) Cash provided by financing activities was **$920,000** for the three months ended August 31, 2025, entirely from the net proceeds of common stock sales through the ATM offering, a significant change from no financing activities in the prior year - Cash provided by financing activities was approximately **$920,000** for the three months ended August 31, 2025[135](index=135&type=chunk) - This cash was generated from gross proceeds of **$939,000** from common stock sales, offset by **$19,000** in costs[135](index=135&type=chunk) - There was no cash provided by financing activities in the comparable period of 2024[135](index=135&type=chunk) [Off Balance Sheet Arrangements](index=28&type=section&id=Off%20Balance%20Sheet%20Arrangements) The company reported no off-balance sheet arrangements as of August 31, 2025 - There were no off-balance sheet arrangements as of August 31, 2025[136](index=136&type=chunk) [Critical Accounting Policies and Estimates](index=28&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The preparation of financial statements requires significant estimates and assumptions for revenue recognition, bad debts, inventory, and leases, with no significant changes to critical accounting policies from the prior annual report - Critical accounting policies and estimates include revenue recognition, bad debts, inventory overhead application, inventory reserves, lease liabilities, and right-of-use assets[138](index=138&type=chunk) - No significant changes to critical accounting policies were reported from the 2025 Annual Report[138](index=138&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Biomerica, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Biomerica, Inc. is exempt from providing quantitative and qualitative disclosures about market risk[139](index=139&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of August 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective at a reasonable assurance level as of August 31, 2025[141](index=141&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended August 31, 2025[142](index=142&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in legal proceedings in the ordinary course of business but had no pending matters as of August 31, 2025, with management believing future outcomes will not materially affect its financial position - No legal proceedings were pending as of August 31, 2025[144](index=144&type=chunk) - Management believes that any future legal matters will not have a material adverse effect on the company's consolidated financial position, results of operations, or cash flows[144](index=144&type=chunk) [Item 1A. Risks Factors](index=29&type=section&id=Item%201A.%20Risks%20Factors) Investing in the company's common stock involves risks, and no material changes to previously disclosed risk factors occurred during the three months ended August 31, 2025 - Investing in the company's common stock involves certain risks, detailed in this report and the 2025 Annual Report[145](index=145&type=chunk) - No material changes to the risk factors described in the 2025 Annual Report occurred during the three months ended August 31, 2025[146](index=146&type=chunk) [Item 5. Other Information](index=29&type=section&id=Item%205.%20Other%20Information) Dr. Jane Emerson will step down as a Board member, effective November 1, 2025, with no disagreement with the company cited as the reason - Dr. Jane Emerson will step down as a Board member, effective November 1, 2025[147](index=147&type=chunk) - Her resignation was not due to any disagreement with the company's operations, policies, or practices[147](index=147&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed or furnished as part of the quarterly report on Form 10-Q, including certifications and interactive data files - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2)[148](index=148&type=chunk) - Interactive data files (XBRL) are furnished as Exhibit 101 and its sub-components, along with a Cover Page Interactive Data File (Exhibit 104)[148](index=148&type=chunk) [Signatures](index=30&type=section&id=Signatures) The report was signed by Zackary S. Irani, Chief Executive Officer, and Gary Lu, Chief Financial Officer, on October 14, 2025 - The report was signed by Zackary S. Irani, CEO, and Gary Lu, CFO, on October 14, 2025[150](index=150&type=chunk)

Biomerica(US:BMRA)

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