Financial Performance - For the year ended December 31, 2025, the company reported a net income of $3,605,405, primarily from interest earned on marketable securities held in the Trust Account amounting to $4,827,356, after deducting general and administrative costs of $1,221,951[283]. - As of December 31, 2025, the company held marketable securities in the Trust Account valued at $120,754,293, which includes approximately $5,179,293 of interest income[289]. Initial Public Offering - The company completed its Initial Public Offering on December 5, 2024, raising gross proceeds of $100,000,000 from the sale of 10,000,000 Units at $10.00 per Unit[284]. - The company incurred $3,605,995 in costs related to the Initial Public Offering, which included a cash underwriting fee of $2,300,000[285]. - Following the Initial Public Offering, the company placed $100,500,000 in the Trust Account, which includes net proceeds from the sale of Public and Private Placement Units[285]. Financial Position - As of December 31, 2025, the company had cash of $229,625 and a working capital deficit of $1,053,365, indicating a need for additional funds to support operations[290]. - The company has no long-term debt or off-balance sheet financing arrangements as of December 31, 2025, and has only a monthly obligation of $10,000 for certain administrative support services[293][294]. Future Plans and Needs - The company anticipates incurring significant costs in pursuing its acquisition plans and may need to raise additional funds to complete a Business Combination[281][292]. - The company plans to use funds from the Trust Account primarily to complete its Business Combination and may withdraw interest to pay taxes if necessary[289]. - The company has engaged EarlyBirdCapital, Inc. as an advisor for its Business Combination, agreeing to pay a cash fee of 3.5% of the gross proceeds of the Initial Public Offering upon consummation[296].

Water Production and Operations - The retail operations in the Cayman Islands have a combined production capacity of 5.0 million gallons of water per day from two plants[49]. - Bulk water operations accounted for approximately 25% of consolidated revenue for fiscal years 2025 and 2024, and 19% for 2023[55]. - The company supplies bulk water in The Bahamas with a minimum delivery requirement of 63.0 million gallons per week from the Blue Hills plant, which has a capacity of 12.0 million gallons per day[61]. - Manufacturing operations accounted for approximately 14% of consolidated revenue for fiscal year 2025, up from 10% in 2023[67]. - OC-BVI, a company in which the company holds a 43.53% equity interest, operates a desalination plant with a capacity of 720,000 gallons per day under a water supply agreement with the BVI government[70]. - The company utilizes reverse osmosis technology for desalination, achieving approximately 40% conversion of saline water to fresh water[75]. - The company operates all but one of the reverse osmosis desalination plants owned by the Water Authority of the Cayman Islands (WAC) on Grand Cayman[91]. - The company has exclusive rights to provide potable water within its licensed service area on Grand Cayman, with no competition in this area[96]. Revenue Composition - Services operations represented approximately 35% of consolidated revenue for fiscal year 2025, down from 54% in 2023[63]. - The company expects to compete with firms like Veolia and IDE Technologies for future water supply contracts in both the Bahamas and the British Virgin Islands[98][100]. Seasonal Demand and Market Influences - Demand for water production varies seasonally, with higher sales during the first and second quarters due to increased tourism[84]. - Water sales in the Cayman Islands are significantly influenced by stay-over tourists, as they tend to purchase more water compared to cruise ship tourists[93]. - The population of the Cayman Islands is estimated to be 88,833 in 2024, with tourist air arrivals increasing by 2.9% to approximately 450,000 in 2025[92]. - The Bahamas has a population of approximately 297,000 on New Providence, with air arrivals decreasing by 2% to about 1,290,000 and cruise ship arrivals increasing by 6% to approximately 4,153,000 in 2025[94]. Workforce and Employment - The company employs a total of 293 persons as of March 9, 2026, with 206 in the United States and 65 in the Cayman Islands[110]. - The company has historically experienced low employee turnover, indicating a stable workforce[109]. Regulatory Compliance and Environmental Commitment - The company is required to meet World Health Organization guidelines for drinking water quality, ensuring less than 200 mg/l of total dissolved solids[104]. - The company is committed to preventing environmental pollution and operates under strict regulatory compliance in all its operational regions[105]. - The company maintains standby generators at all plants to ensure operational continuity during electricity supply interruptions[50].

Revenue and Income - Regulated utility segment accounted for 93.2% of total operating revenues in 2025, with total revenues of $112.9 million, an increase of $5.0 million or 4.6% from 2024[158]. - Water sales revenue increased by $2.8 million, or 3.2%, due to temporary rate increases and an increase in the number of customers served[159]. - Total operating revenues for 2025 reached $112,941,000, an increase of 4.8% from $107,952,000 in 2024[196]. - Net income applicable to common stock increased by $2.4 million, or 11.9%, with total revenue rising by $5.0 million[171]. - Net income applicable to common stock for 2025 was $22,822,000, up 11.9% from $20,394,000 in 2024[196]. - Basic net income per common share increased to $2.21 in 2025, compared to $1.98 in 2024, reflecting a growth of 11.6%[196]. - Consolidated revenues for 2025 were $112,941,000, up 4.5% from $107,952,000 in 2024 and 14.2% from $98,861,000 in 2023[339]. - Regulated Utility Revenues for 2025 reached $105,506,000, an increase of 4.3% from $101,210,000 in 2024 and 14.4% from $92,228,000 in 2023[339]. Customer and Service Growth - The number of metered water customers in Delaware and Maryland increased by approximately 1.8% as of December 31, 2025, while the number of wastewater customers in Delaware increased by approximately 6.5%[146][147]. - Customer enrollment in SLP Plans increased by 4.1%, 2.0%, and 5.7% for WSLP, SSLP, and ISLP Plans, respectively, as of December 31, 2025[148]. - Artesian Water served approximately 99,100 customers, Artesian Water Maryland served approximately 2,700 customers, and Artesian Water Pennsylvania served approximately 40 customers as of December 31, 2025[320]. Operating Expenses and Financial Ratios - Operating expenses increased by $2.7 million, or 4.4%, with utility operating expenses rising by $2.6 million, or 5.3%[163][164]. - The ratio of operating expenses to total revenue was 56.2% for 2025, slightly down from 56.4% in 2024[166]. - Operating income for 2025 was $27,782,000, an increase of 6.2% from $26,151,000 in 2024[196]. - Consolidated operating income for 2025 was $27,782,000, an increase of 6.2% from $26,151,000 in 2024 and 23.8% from $22,446,000 in 2023[339]. Capital Expenditures and Investments - Capital expenditures in 2025 were $58.8 million, an increase from $45.9 million in 2024, focusing on infrastructure rehabilitation and new construction projects[176]. - Projected net investments in utility plant for 2026 are expected to be approximately $64.3 million[174]. - The company plans to continue its investment in utility plant, with construction work in progress valued at $45,667 million as of December 31, 2025[212]. Cash Flow and Financing - Cash flow from operating activities for the year ended December 31, 2025, was $40.3 million, up from $36.8 million in 2024, primarily due to changes in net income and working capital[175]. - Cash flows provided by financing activities increased to $17.3 million in 2025 from $7.1 million in 2024, driven by higher contributions in aid of construction[180]. - The company has a $40 million line of credit with Citizens Bank, with $34.3 million available as of December 31, 2025[181]. - The company expects to renew its $20 million line of credit with CoBank, which had $20 million available as of December 31, 2025[291]. Regulatory and Compliance - Artesian Wastewater received a permit for a new 625,000 gallon per day regional wastewater treatment facility, expected to enhance service capabilities[154]. - The company is in compliance with financial covenants related to long-term debt agreements and revolving lines of credit as of December 31, 2025[183]. - The company adopted new accounting standards for income taxes effective December 31, 2025, requiring additional disclosures but not impacting operations or cash flows[341]. Taxation and Deferred Items - Federal income tax expense for 2025 totaled $5,009,000, an increase from $4,629,000 in 2024[279]. - Total income tax expense for 2025 was $7,831 million, resulting in an effective tax rate of 25.6%, compared to 26.4% in 2024 and 27.6% in 2023[281]. - Deferred tax assets net of valuation allowance decreased to $7,368 million in 2025 from $7,720 million in 2024[283]. Miscellaneous - The company plans to expand its regulated water service area in Cecil County and continue strategic acquisitions to enhance operations[150][151]. - Artesian Water received reimbursements totaling approximately $10.0 million related to treatment costs from the Delaware Sand & Gravel Landfill Superfund Site, with payments scheduled in four installments of approximately $2.5 million each from August 2022 to July 2025[241]. - The company has accrued approximately $22 thousand in penalties and interest related to uncertain tax positions for the full year 2025[235].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended November 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-42555 Quartzsea Acquisition Corporation (Exact name of registrant as specified in its charter) Cayman Islands N/A (State or other jurisdiction of incorpo ...

IPO and Financial Proceeds - The company completed its IPO on March 19, 2025, raising total gross proceeds of $82,800,000 from the sale of 8,280,000 units at an offering price of $10.00 per unit[21]. - A total of $82,800,000 of the net proceeds from the IPO and the Private Placement were placed in a U.S.-based trust account for the benefit of the company's public shareholders[23]. - The company generated gross proceeds of $82.8 million from its initial public offering, selling units at a price of $10.00 per unit[61]. - The company raised total gross proceeds of $82,800,000 from its IPO, with 8,280,000 units sold at an offering price of $10.00 per unit[133]. - The company plans to use substantially all net proceeds from the IPO for its initial business combination and related expenses, including a deferred underwriting fee of 4.0% of the total gross proceeds raised[157]. Business Strategy and Acquisition Plans - The company intends to focus its search for an initial business combination on private companies with compelling economics and clear paths to positive operating cash flow[36]. - The company seeks to acquire businesses with strong revenue and earnings growth potential through new product development and synergistic acquisitions[40]. - The company has entered into a business combination agreement as part of its strategy to complete an initial business combination[26]. - The company plans to identify companies with strong management teams that can complement its own operational and investment capabilities[40]. - The company has established a deal sourcing network to access high-quality acquisition opportunities through its management team's contacts[32]. - The company will only acquire businesses that can benefit from being publicly traded and effectively utilize access to broader sources of capital[40]. - The initial business combination must involve target businesses with an aggregate fair market value of at least 80% of the balance in the trust account at the time of signing a definitive agreement[43]. - The company anticipates structuring the initial business combination so that the post-transaction entity will own or acquire 100% of the equity interests or assets of the target business[45]. - The company will only complete an initial business combination in which it owns or acquires 50% or more of the outstanding voting securities of the target[69]. - The company has not identified any specific business combination target and has not initiated substantive discussions with any potential targets[142]. Financial Performance and Risks - The company has had no revenue since inception and has incurred losses due to formation and operating costs, relying on the sale of securities and loans for funding[24]. - The company anticipates that its insiders may engage in privately negotiated purchases of shares from public shareholders[84]. - The company may incur losses if the identification and evaluation of a prospective target business do not lead to a completed business combination[72]. - The company may face risks if the target business is financially unstable or in early stages of development[70]. - Claims by creditors may reduce the amount available in the trust account, potentially affecting the redemption price for shareholders[111]. - In the event of bankruptcy, the trust account proceeds may be subject to claims from creditors, impacting shareholder returns[113]. - The company acknowledges that it lacks the financial resources to sustain operations for a reasonable period, raising substantial doubt about its ability to continue as a going concern[159]. Shareholder Rights and Redemption - The company has not made any dividends or distributions to shareholders as of the date of the Annual Report and does not intend to do so until after the closing of the business combination[42]. - Shareholder approval may be required for the initial business combination under Nasdaq's listing rules[79]. - Shareholders are restricted from seeking redemption rights for more than 15% of the shares sold in the initial public offering, referred to as "Excess Shares"[96]. - The tender offer for redemptions will remain open for at least 20 business days, and a final proxy statement will be mailed to public shareholders at least 10 days prior to the shareholder vote[90][92]. - If public shareholders tender more shares than the company has offered to purchase, the tender offer will be withdrawn, and the initial business combination will not be completed[90]. - If the initial business combination is not approved or completed, public shareholders who elected to exercise their redemption rights will not be entitled to redeem their shares[103]. - The company will not redeem public shares in an amount that would cause net tangible assets to be less than $5,000,001 before and after the initial business combination[95]. - The company will not redeem public shares if it would cause net tangible assets to fall below $5,000,001[107]. - The company has a 15-month period to complete its initial business combination, extendable to 18 or 21 months if necessary[105]. Management and Governance - The management team aims to create shareholder value by leveraging experience in management, operation, and financing of businesses to improve operational efficiency[37]. - The board of directors consists of four members, three of whom are independent, in compliance with SEC and Nasdaq rules[196]. - The audit committee is composed solely of independent directors and is responsible for reviewing financial statements and ensuring compliance with applicable laws[204]. - The company has adopted a Code of Ethics applicable to its directors, officers, and employees[214]. - Officers and directors may have conflicts of interest due to multiple business affiliations and may present business opportunities to other entities[216]. - The company has not established specific minimum qualifications for directors but considers education, professional experience, and integrity in the nomination process[211]. - The company may not have a compensation committee in place prior to the completion of its initial business combination[213]. - The compensation committee is responsible for reviewing and approving the compensation of all officers and producing a report on executive compensation for the annual proxy statement[208]. Internal Controls and Reporting - Management has identified material weaknesses in internal controls over financial reporting, particularly in expense preparation and short-term investment accounting, which are currently ineffective[186]. - There were no changes in internal control over financial reporting during the most recent fiscal quarter that materially affected the company's financial reporting[183]. - The company plans to enhance processes for identifying and applying accounting requirements and improve communication among personnel and third-party professionals[181]. - The company has not identified any critical accounting policies and estimates that could materially differ from actual results[170].

Production and Reserves - For the year ended December 31, 2025, total production was approximately 6,043 MBoe, with Gabon contributing 2,535 MBoe (42%), Egypt 2,730 MBoe (45%), Cote d'Ivoire 111 MBoe (2%), and Canada 667 MBoe (11%) [38]. - Gabon's production was 100% crude oil, with revenue of $181,738,000 and proved reserves of 10,001 MBoe, representing 23% of total reserves [39][38]. - Egypt's production was also 100% crude oil, generating revenue of $139,963,000 and proved reserves of 8,614 MBoe, accounting for 20% of total reserves [43][38]. - Cote d'Ivoire produced 111 MBoe, all of which was crude oil, with a working interest of 27.4% in the CI-40 block [46][38]. - Canada produced 667 MBoe, comprising 32% crude oil, 36% natural gas, and 32% NGLs, with plans to wind down its subsidiary in Canada following asset divestment [51][53]. - Total proved reserves as of December 31, 2025, are 42,983 MBoe, consisting of 37,968 MBbls of crude oil, 19,163 MMcf of natural gas, and 1,781 MBbls of NGLs [70]. - Proved undeveloped reserves increased to 25,501 MBoe, with 1,326 MBoe from revisions and 1,219 MBoe from extensions and discoveries [78]. - The company plans to drill all scheduled proved undeveloped locations within the next five years [81]. Production Costs and Revenue - The average production cost per BoE for the year ended December 31, 2025, was $24.83, reflecting a decrease from $22.51 in 2024 [87]. - The average crude oil price for Gabon in 2025 was $66.60 per barrel, down from $81.08 in 2024, while Egypt's average price was $57.66, down from $65.48 [73]. - Revenue concentration by customer for Gabon was 100% for the years ended December 31, 2025, 2024, and 2023, indicating a stable customer base in this region [91]. - A $5 per Bbl decrease in crude oil price would decrease consolidated revenues by $13.7 million from Gabon, $13.6 million from Egypt, $1.2 million from Cote d'Ivoire, and $3.3 million from Canada, totaling a decrease of $31.8 million [412]. Operational Developments - The Baobab FPSO in Cote d'Ivoire ceased production on January 31, 2025, and is expected to return to service by late March 2026, with production resuming in Q2 2026 [48]. - The drilling campaign in Egypt contributed to consistent production growth, with 16 development wells drilled in 2025 [60]. - The company plans to commence significant development drilling in Cote d'Ivoire in Q4 2026 after the FPSO refurbishment [60]. - The Etame PSC in Gabon extends through 2028, with options for two five-year extensions, allowing for continued resource development [41]. Regulatory and Compliance - Regulatory changes in the countries of operation, particularly in Gabon, may impact production costs and operational compliance [105]. - The Government of Gabon plans to replace the 2019 Hydrocarbons Law with a new dual legal framework, expected to be implemented in Q3 2026, aiming to enhance transparency and improve fiscal terms for investors [112]. - Under the 2019 Hydrocarbons Law, the State's participation in PSCs is capped at 10%, while the national operator can acquire a maximum 15% stake at market value in all PSCs [109][111]. - The concession agreements in Egypt are valid for a maximum of 30 years and must include minimum work commitments and royalty payments [114][116]. - The 2019 Hydrocarbons Law in Gabon requires foreign producers to operate through a locally incorporated company and to domicile site rehabilitation funds with a Gabonese bank [108]. - Environmental regulations are becoming more stringent, and compliance costs could be significant for operations across various jurisdictions [134]. Financial Position and Liabilities - The company reported net monetary liabilities of $113.4 million (XAF 63.2 billion) denominated in the Central African CFA Franc (XAF) as of December 31, 2025 [405]. - A 10% weakening of the CFA relative to the U.S. dollar would increase the value of these net liabilities by $10.3 million [405]. - The company had expenditures of approximately $86.4 million denominated in XAF for the year ended December 31, 2025 [405]. - The company has $60.0 million in borrowings under its 2025 RBL Facility, accruing interest at a rate of 10.8% per annum [417]. - A 10% increase in average interest rates would result in an estimated increase in interest expense of $0.2 million [417]. Workforce and Diversity - The company had 281 full-time employees as of December 31, 2025, with a significant portion (159) located in Gabon, highlighting the regional workforce distribution [93]. - Approximately 19% of the management team are female employees, demonstrating the company's commitment to diversity and inclusion [94]. - The company aims to attract and retain talent through competitive compensation and benefits, including a pay-for-performance philosophy [95]. Market Risks - The company is exposed to commodity price risk, with market prices for crude oil, natural gas, and NGLs being volatile and unpredictable [410]. - If crude oil sales remain constant, a decrease in oil prices would increase operating losses, particularly impacting revenues from Gabon and Egypt [412]. - Natural gas sales are based on Canadian index prices influenced by NYMEX Henry Hub Natural Gas futures contracts [412]. Derivative Contracts - Outstanding derivative contracts as of December 31, 2025 include 400,000 Bbls with a weighted average floor price of $62.29 and a ceiling price of $68.63 for March 2026 [415]. - Additional derivative contracts entered into after December 31, 2025 include 702,000 Bbls with a weighted average floor price of $63.72 and a ceiling price of $68.49 for September 2026 [416].

Financial Performance - Net sales for 2025 were $434,166, an increase of $15,861 compared to $418,305 in 2024, with the ALP segment contributing significantly to this growth [130]. - The net loss attributable to Ampco-Pittsburgh was approximately $(66,067) or $(3.28) per common share for 2025, including a net after-tax charge of $63,348 related to various charges [152]. - The company reported a net loss of $63.542 million in 2025, compared to a net income of $2.351 million in 2024, indicating a significant decline in profitability [208]. - Operating loss for 2025 was $(44,679), a decrease of $55,173 compared to an operating income of $10,494 in 2024, impacted by the Deconsolidation Charge and Exit Charges [156]. - Comprehensive loss attributable to Ampco-Pittsburgh was $27.435 million in 2025, compared to a loss of $3.409 million in 2024 [208]. - The total assets decreased to $495.355 million in 2025 from $530.896 million in 2024, a reduction of 6.7% [206]. - The company’s retained deficit widened to $138.626 million in 2025 from $72.559 million in 2024, indicating a deterioration in financial health [210]. - Operating costs and expenses rose to $488.645 million in 2025, up from $406.136 million in 2024, reflecting an increase of 20.3% [207]. Order Backlog and Sales - The backlog of orders as of December 31, 2025, was approximately $328.9 million, down from $378.9 million at the end of 2024, with a decrease of about $41.9 million in the FCEP segment and $8.0 million in the ALP segment [32]. - Backlog decreased to $328,937 as of December 31, 2025, from $378,884 in 2024, with approximately 6% expected to be released after 2026 [136]. - Backlog decreased by $41,926 to $208,604 at December 31, 2025, from $250,530 at December 31, 2024, with approximately 6% expected to ship after 2026 [158]. Segment Performance - The FCEP segment aims to improve profitability by maintaining a strong position in the roll market and enhancing operational efficiency and equipment reliability in 2026 [18]. - The ALP segment is focusing on revenue growth, minimizing inflationary and tariff effects, and strengthening engineering and manufacturing capabilities for growth opportunities in 2026 [19]. - The FCEP segment is facing soft but stable demand for steel, with global steel manufacturing capacity exceeding consumption [18]. - The ALP segment has successfully increased market share in power generation and U.S. military markets despite rising production costs due to inflation [19]. Financial Risks and Challenges - A significant portion of the company's sales is dependent on the global steel and aluminum industries, which are subject to cyclical demand and economic downturns, potentially impacting profitability [48]. - Excess global capacity in the steel industry may lead to lower prices for the company's products, adversely affecting sales and profit margins [49]. - The company faces risks related to potential impairment of long-lived assets due to cyclicality in end-market demand [50]. - The company has undertaken restructuring initiatives to improve efficiency, but there is no assurance that the expected benefits will be realized, which could negatively impact financial results [51]. - The imposition of tariffs on steel and aluminum imports has negatively impacted operations and financial performance, with potential for further adverse effects [59]. - Increases in energy and commodity prices could reduce profit margins or result in losses, particularly if fixed-price contracts do not cover unexpected price hikes [63]. - The company may experience disruptions due to pandemics or geopolitical conflicts, which could adversely affect financial condition, results of operations, and liquidity [69]. - Economic conditions, including inflation and geopolitical conflicts, could have an adverse effect on the company's business and financial performance [84]. Operational and Strategic Initiatives - The Corporation closed its non-core steel distribution facility in Ohio in 2025 and merged AUP into Union Electric Steel Corporation [17]. - The Corporation is actively monitoring geopolitical matters and economic conditions that may impact its operations and financial condition [20]. - The Corporation's subsidiaries do not rely on any single supplier for raw materials, which are subject to significant price variations [30]. - The Corporation is focused on improving profitability in the FCEP segment by enhancing operational efficiency and equipment reliability following a significant capital equipment program [127]. Cash Flow and Liquidity - Cash and cash equivalents at the end of 2025 were $10,703, down from $15,427 at the end of 2024, a decrease of approximately 30.6% [173]. - Net cash flows provided by operating activities decreased to $1,344 in 2025 from $18,028 in 2024, a decline of approximately 92.6% [173]. - The current portion of debt increased by approximately $3,500 as of December 31, 2025, compared to December 31, 2024 [179]. - The Corporation anticipates sufficient liquidity to finance operational requirements, debt service costs, and capital expenditures [183]. Cybersecurity and Regulatory Risks - The Corporation's cybersecurity risk management program includes a standardized Written Information Security Policy (WISP) and an Incident Response Plan (IRP) to address potential cyber threats [92][98]. - The Corporation has not experienced any known material breaches or losses related to cyber-attacks to date, but acknowledges that a cybersecurity breach could materially affect its business and financial condition [96]. - A change in the existing regulatory environment could negatively impact operations, financial performance, and liquidity, potentially affecting revenue streams and overall financial position [73]. - The company is subject to audits by tax authorities, which may result in assessments of additional taxes that could adversely affect financial condition and liquidity [74]. Shareholder and Market Information - The number of registered shareholders decreased from 345 in 2024 to 317 in 2025, reflecting a decline in shareholder engagement [114]. - The Corporation suspended quarterly cash dividends in June 2017, indicating a shift in capital allocation strategy [113]. - The company's average global market capitalization over the 30-day trading period ended December 31, 2025, was $69.5 million, while total shareholders' equity was $32.6 million [79].

Financial Performance - In 2025, the company's net sales declined by approximately 6% to $515,114, compared to $547,306 in 2024, with domestic sales remaining flat and international sales down by 14%[118]. - The gross profit margin improved to 29% in 2025, up from 22% in 2024, driven by a reduction in the cost of sales, which decreased to 71% of net sales from 78%[119][123]. - The company recorded a net loss of $49,882 (or $1.75 per share) in 2025, an improvement from a net loss of $126,340 (or $4.50 per share) in 2024[122]. - Operating expenses decreased by 21% in 2025 compared to 2024, due to lower spending on transformation and asset impairment charges[120]. - The Company experienced a significant decline in customer prepayments in 2025, which were notably below the levels received in 2024, impacting liquidity and working capital needs[78]. - Comprehensive loss for 2025 was $43.2 million, compared to a comprehensive loss of $139.1 million in 2024, indicating a significant improvement[189]. - The company reported a foreign currency translation adjustment of $6,729 thousand in 2024, which was a significant factor in the overall equity changes[195]. Sales and Customer Concentration - The company's largest three customers accounted for 13%, 12%, and 12% of total sales in 2025, compared to 14%, 13%, and 11% in 2024[26]. - In 2025, the top three customers represented 36% of the Company's sales, down from 38% in 2024 and 37% in 2023, indicating a slight decrease in customer concentration risk[86]. - International net sales for 2025 were $203.4 million, accounting for 39.5% of net sales, compared to $236.6 million (43.2%) in 2024 and $234.9 million (40.5%) in 2023[57]. Operational Efficiency - The company has implemented a business improvement plan to optimize manufacturing and supply chain costs, leading to decreased operating expenses[23]. - The company has made significant investments in its research facilities, including the Glenn A. Wintemute Research Center, to support new product development[93]. - The company has successfully implemented price increases on its products in response to inflationary pressures, although inflation has led to decreased demand due to customer destocking[166]. Regulatory and Compliance Risks - The company faces regulatory risks, including compliance with environmental regulations that could increase operational costs or limit product marketing[59]. - The company is dependent on a limited number of suppliers for certain raw materials, which poses a risk to achieving projected sales[68]. - Changes in tax laws or regulations in various jurisdictions could have a material adverse effect on the company's financial performance[72]. Debt and Financing - The Company refinanced its debt structure in March 2026, replacing the existing revolving credit agreement with a first lien term loan of $225 million and a second lien term loan of $60 million[77]. - The Company's average debt for 2025 was $194,669, slightly down from $195,160 in 2024, with an effective interest rate increase from 8.0% to 8.5%[132]. - The maturity date of the Credit Agreement has been extended to December 31, 2026, with borrowing capacity adjustments to $245,000 until November 29, 2025, decreasing to $180,000 through December 31, 2026[145]. Inventory and Asset Management - Inventory reserves were significantly reduced to approximately $3,802 in 2025 from $21,417 in 2024, reflecting improved inventory management[119][126]. - The company incurred impairment of assets amounting to $25,395 thousand in 2025, down from $50,414 thousand in 2024, reflecting improved asset management[195]. - The Company recorded intangible asset impairment charges of $1,802 in 2025, down from $9,345 in 2024, indicating improved asset management[153]. Employee and Organizational Structure - The company employed 739 employees as of December 31, 2025, with no employees subject to collective bargaining agreements[44]. - The company has a single reportable segment, primarily focused on agricultural, commercial, and consumer chemical products[19]. Environmental Commitment - The company has a commitment to environmental stewardship, focusing on reducing energy consumption, greenhouse gas emissions, and waste generation[38]. - The Company is committed to minimizing environmental risks and complying with regulations, but may still face liabilities that could impact financial performance[76]. Market and Competitive Landscape - The Company is exposed to market risks related to fluctuations in commodity prices, which can affect demand for its products used in row crops like corn, soybeans, and cotton[75]. - The Company faces competition from generic competitors operating at thinner gross margins, which could pressure pricing and profitability[85]. - The Company operates in regions with potential political and economic instability, which could adversely affect its financial performance[83]. Future Outlook - The Company anticipates that cash flows from operations, current cash on hand, and credit facilities will be sufficient to meet working capital and capital expenditure needs for at least the next 12 months[148]. - The company is expected to continue streamlining its corporate structure and enhancing IT systems to further reduce costs in the coming quarters[116].

Loan Portfolio - As of December 31, 2025, the company had net loans of $2.0 billion, representing 78.9% of total assets[44] - The loan portfolio primarily consists of commercial real estate loans totaling $1.8 billion, which constitutes 86.0% of total loans[45] - The company’s commercial real estate loans include $506.2 million of owner-occupied loans (24.5% of total loans) and $950.4 million of non-owner occupied loans (46.0% of total loans) as of December 31, 2025[56] - The average loan size in the commercial real estate portfolio was approximately $1.3 million, with a weighted average loan-to-value ratio of 55.5%[62] - The company originated $7.3 million in commercial real estate SBA 7(a) loans during 2025 and sold $2.2 million of the guaranteed portion, recognizing a gain of $152,000[61] - The aggregate amount of loans to the ten largest borrowers was approximately $266.9 million, or 12.9% of total loans, as of December 31, 2025[47] - The company held $49.9 million in undisbursed real estate-related loan commitments as of December 31, 2025[55] - The company’s authorized legal lending limit for unsecured loans was $47.0 million, and for specific secured loans, it was $78.3 million as of December 31, 2025[54] - The company’s commercial real estate loans may carry higher interest rates and shorter terms compared to residential real estate loans, with terms generally limited to 15 years or less[57] - As of December 31, 2025, agricultural real estate secured loans totaled $10.3 million, representing 0.5% of total loans[63] - The commercial real estate loan portfolio amounted to $1.77 billion as of December 31, 2025, an increase from $1.67 billion in 2024[64] - The largest commercial real estate loan had a net outstanding balance of $26.0 million, secured by a church in San Diego, California[65] - Construction and land loans outstanding were $9.0 million, representing 0.4% of total loans, with an average loan size of approximately $896,000[66] - One-to-four family residential loans totaled $113.2 million, or 5.5% of total loans, including a significant loan of $36.9 million secured by a multi-unit residential property[71] - Home equity loans and lines of credit amounted to $4.8 million, or 0.2% of total loans, with unfunded commitments totaling $5.8 million[72] - The Bank originated $3.0 million in commercial and industrial SBA 7(a) loans during 2025, selling $1.3 million of the guaranteed portion for a gain of $120,000[77] - Loans enrolled in the California Capital Access Program totaled $9.3 million, or 0.5% of total loans, as of December 31, 2025[79] - Loans in the On-Road Heavy-Duty Vehicle Air Quality Loan Program amounted to $19.0 million, or 0.9% of total loans[80] - Agricultural operating loans were $265,000, representing 0.01% of total loans, highlighting the company's focus on agricultural financing[78] - As of December 31, 2025, consumer loans totaled $916,000, representing 0.04% of total loans[86] Investment and Borrowings - The total investment in debt securities was $179.7 million, with an average yield of 4.1% and an estimated duration of 5.9 years[102] - The investment in equity securities amounted to $12.6 million, with holding periods determined by market conditions[103] - At December 31, 2025, the Bank had $261.2 million in reciprocal CDARS deposits and $119.9 million in ICS deposits[92] - The Bank had $580.7 million of available credit capacity with the Federal Home Loan Bank of San Francisco, with no advances outstanding[94] - The Company redeemed all outstanding subordinated notes during the third quarter of 2025, resulting in no outstanding notes as of December 31, 2025, compared to $63.7 million as of December 31, 2024[97] - The Bank's total borrowings included junior subordinated deferrable interest debentures totaling $8.7 million as of December 31, 2025[98] Regulatory Compliance and Risk Management - The Company employs client acquisition strategies to generate new account and deposit growth, including referral incentives and targeted marketing campaigns[88] - The Bank's investment policy aims to maintain a high-quality portfolio while managing risks, including credit and interest rate risk[101] - The FDIC insures deposit accounts in the Bank up to $250,000 per separately insured deposit ownership right or category[112] - The Bank paid $1.1 million in FDIC assessments for both the year ended December 31, 2025, and the year ended December 31, 2024[114] - As of December 31, 2025, the Bank's aggregate recorded loan balances for construction, land development, and land loans were 2.0% of total regulatory capital[131] - The Bank's commercial real estate loans were 411.1% of total regulatory capital as of December 31, 2025, exceeding the supervisory screening level for commercial real estate concentration risk[131] - To be considered "well capitalized," a depository institution must have a Tier 1 risk-based capital ratio of at least 8%, a total risk-based capital ratio of at least 10%, a CET1 capital ratio of at least 6.5%, and a leverage ratio of at least 5%[124] - The minimum capital ratios under capital regulations include a common equity Tier 1 (CET1) capital ratio of 4.5% of risk-weighted assets and a total risk-based capital ratio of 8.0% of risk-weighted assets[120] - The Community Reinvestment Act (CRA) rating received by the Bank was "Satisfactory" in its most recently completed examination[137] - The Bank has not elected to use the Community Bank Leverage Ratio (CBLR) framework and continues to calculate and report regulatory capital under the generally applicable risk-based capital rules[125] - The federal banking agencies proposed reducing the CBLR requirement to 8.0% in November 2025[125] - The FDIC may terminate the deposit insurance of any insured depository institution if it determines that the institution has engaged in unsafe or unsound practices[117] - The federal banking regulatory agencies have prescribed guidelines for all insured depository institutions relating to internal controls, information systems, and internal audit systems[118] Corporate Governance and Compliance - The Bank's dividends to the Company are limited by California law to the lesser of retained earnings or net income for the last three fiscal years, minus any distributions made during that period[139] - The Bank must meet capital conservation buffer requirements to avoid limitations on dividend payments, and federal law prohibits capital distributions if the institution would be "undercapitalized" post-distribution[139] - The California Consumer Privacy Act (CCPA) grants California residents rights regarding their personal information, which may require the Bank to implement significant changes in technology and processes for compliance[143] - Non-compliance with privacy and cybersecurity laws could result in substantial fines, penalties, and reputational harm to the Bank[144] - The SEC's new rules require registrants to disclose material cybersecurity incidents and annual information regarding their cybersecurity risk management and governance[145] - The Bank is subject to comprehensive regulation by the Federal Reserve under the Bank Holding Company Act (BHCA), which includes filing quarterly reports and compliance with capital regulations[152][157] - The Dodd-Frank Act imposes new restrictions and oversight for depository institutions, including requirements for shareholder votes on executive compensation and disclosures related to financial performance[159] - The Volcker Rule restricts financial institution holding companies from engaging in proprietary trading and holding certain interests in investment funds, necessitating continuous review of investment strategies[160] - The Federal Reserve must approve acquisitions of banks located in states other than the holding company's home state, with specific limitations on deposit control[161][162] Workforce and Talent Management - As of December 31, 2025, the company had approximately 327 full-time equivalent employees, with 70% identifying as female and 30% as male, and women holding 66% of management roles[174] - The average tenure of employees was 6.3 years, indicating a stable and experienced workforce[174] - The company has a dual approach to talent strategy, focusing on internal development and external hires to foster loyalty and innovation[178] Interest Rate Sensitivity - The company reported a dollar change in net interest income sensitivity of $(18,022) thousand for a -300 basis point shift in interest rates as of December 31, 2025, reflecting a 9% decrease[447] - For the same date, a +100 basis point shift would result in a dollar change of $(3,187) thousand, indicating a 2% decrease in net interest income[447] - The company maintained a well-balanced asset-liability profile designed to manage interest rate risk while supporting ongoing growth[449] - The redemption of subordinated debt during the year reduced interest expense and shifted the funding structure toward lower-cost deposits[449] - The company's sensitivity analysis indicates that net interest income is more resilient to moderate rate changes but remains exposed to larger shifts in rates[449] Competitive Landscape - The company operates in a highly competitive financial services industry, competing with banks, credit unions, and FinTech companies for loans and deposits[167]

Financial Losses and Taxation - The company has U.S. federal net operating losses (NOLs) of $256.1 million expiring between 2029 and 2037, and state NOL carryforwards of $554.6 million beginning to expire in 2026[199]. - The company has recognized additional U.S. federal NOLs of $690.5 million generated after December 31, 2017, which can be carried forward indefinitely but are limited to 80% of taxable income for years beginning after December 31, 2020[199]. - The company has established a full valuation allowance against its NOLs and tax credit carryforwards due to recurring net operating losses, potentially limiting future cash flow benefits[200]. Clinical Trials and Regulatory Risks - The company is currently not engaged in any material clinical or preclinical trials, with ongoing post-marketing pediatric Phase 4 clinical study of ROLVEDON[202]. - The regulatory approval process for future product candidates is expensive and time-consuming, with significant delays possible due to varying interpretations of clinical trial data[208]. - The company relies on third-party contract research organizations for clinical trials, which may affect the ability to obtain regulatory approvals if they fail to perform[211]. - The company is subject to risks associated with NDAs submitted under Section 505(b)(2) of the FDCA, which may lead to delays and patent litigation before commercialization[215]. Legal and Insurance Risks - The company may face significant expenses from ongoing legal proceedings, including shareholder litigation related to the Spectrum Merger and product approvals, which could impact financial condition and operations[196]. - The company has obtained product liability insurance for current products and clinical trials, but future coverage may be inadequate or unavailable[198]. - The company may be unable to maintain adequate insurance coverage for product liability, which could adversely affect its business and financial condition[204]. Stock Market and Shareholder Risks - The common stock is at risk of being delisted from Nasdaq if it fails to maintain a minimum bid price of $1.00 for 30 consecutive business days[219]. - Past non-compliance with the Bid Price Rule required grace periods and reverse stock splits, raising concerns about future compliance[219]. - A delisting could adversely affect market liquidity, stock price, and the ability to obtain financing, potentially leading to a "fundamental change" under the 2027 Convertible Notes[220]. - The stock price has historically been volatile, influenced by various factors beyond the company's control, which may continue to affect investor confidence[221]. - Significant drops in stock price could lead to shareholder lawsuits, impacting capital raising efforts[222]. - Activist shareholders have previously caused disruptions, resulting in legal fees and potential interference with strategic plans[225]. - The company faces risks from unsolicited takeover attempts, which could distract management and disrupt operations[226]. - Conversions of the 2027 Convertible Notes or future stock sales could lower the market price of common stock and adversely impact trading prices[227]. Management and Operational Risks - The company is dependent on the continued services of its executive management team, with recent leadership changes posing risks to business continuity[228]. - Cybersecurity incidents pose significant risks, including data breaches and operational disruptions, which could lead to substantial costs and reputational harm[233]. Technology and Regulatory Challenges - The use of AI and ML technologies presents new risks and challenges that could negatively impact the company's business operations[237]. - Potential regulatory fines or penalties may arise from the use of AI/ML, affecting business practices and efficiency[237]. - Vendors incorporating AI/ML tools may not meet evolving regulatory or industry standards, posing additional risks[238]. - The company may face reputational harm and liability due to the misuse of sensitive data by bad actors using AI/ML[238].