Financial Performance - For the three months ended September 30, 2025, net income increased by $2.2 million, or 63.1%, compared to the same period in 2024, while for the nine months ended September 30, 2025, net income decreased by $5.3 million, or 57.6%, compared to the same period in 2024[158]. - The company reported a net income of $4.414 million for the three months ended September 30, 2025, a 130% increase from $1.921 million in 2024[205]. - Noninterest income for the three months ended September 30, 2025, was $5.2 million, slightly down from $5.3 million in Q3 2024[181]. Assets and Liabilities - As of September 30, 2025, the Company reported total assets of $1.93 billion, net loans of $1.45 billion, total deposits of $1.66 billion, and shareholders' equity of $185.6 million[147]. - Total assets as of September 30, 2025, were $2,012,402,000, up from $1,823,478,000 in the same period of 2024, reflecting a growth of 10.4%[160]. - Total deposits rose to $1.66 billion at September 30, 2025, a $79.9 million increase or 5.07% from $1.58 billion at December 31, 2024[236]. Income and Expenses - Total noninterest expenses increased by $1.5 million, or 11.28%, for the three months ended September 30, 2025, and by $2.6 million, or 6.76%, for the nine months ended September 30, 2025, compared to the same periods in 2024[191]. - Salaries and employee benefits rose by 15% to $8.717 million for the three months ended September 30, 2025, compared to $7.548 million in 2024[192]. - Other operating expenses rose by $412 thousand, or 27.56%, during the three months ended September 30, 2025, compared to the same period in 2024[200]. Interest Income and Margin - Net interest income for the three months ended September 30, 2025, was $17.2 million, compared to $13.2 million for the same period in 2024, reflecting a significant increase[158]. - The net interest margin (non-GAAP) improved to 3.58% for the three months ended September 30, 2025, up from 3.03% in the same period of 2024[160]. - Net interest income increased to $17.2 million for Q3 2025, up 30.6% from $13.2 million in Q3 2024[169]. Credit Losses - The provision for credit losses for the three months ended September 30, 2025, was $1.1 million, compared to $1.5 million for the same period in 2024[158]. - Total charge-offs for the three months ended September 30, 2025, were $2.4 million, compared to $1.4 million for the same period in 2024, representing a 75% increase[225]. - The allowance for credit losses on loans was $15,699,000 as of September 30, 2025, compared to $14,729,000 as of September 30, 2024, indicating an increase of 6.6%[160]. Capital and Ratios - As of September 30, 2025, the Bank's Common Equity Tier 1 capital ratio increased to 14.29% from 11.04% at December 31, 2024[244]. - The Bank's Total Risk-Based Capital ratio rose to 15.25% at September 30, 2025, compared to 12.00% at December 31, 2024[244]. - The allowance for credit losses on loans to nonperforming assets ratio was 104% at September 30, 2025, down from 581% at December 31, 2024[231]. Shareholder Information - The company declared dividends of $0.93 per share for the nine months ended September 30, 2025, compared to $0.90 per share in the same period of 2024[241]. - The Company completed a public offering of 1,796,875 shares at a price of $32.00 per share, generating net proceeds of $53.5 million[148]. Securities and Investments - The Company recognized a loss on the sale of available for sale securities totaling $9.8 million, net of tax, during the nine months ended September 30, 2025[158]. - The company reported a net pre-tax loss of $12.4 million from the sale of available for sale debt securities totaling $99.2 million, with a fair value of $86.8 million[208]. - The company purchased $102.2 million of securities during the nine months ended September 30, 2025, including $66.0 million as part of balance sheet repositioning transactions[213].

Revenue - Klotho Neurosciences, Inc. reported no revenue for the three months ended September 30, 2025 and 2024[114]. Operating Expenses - Operating expenses decreased to $1,853,304 for the three months ended September 30, 2025, down from $2,870,932 in the same period of 2024, a reduction of approximately 35.4%[115]. - For the nine months ended September 30, 2025, operating expenses increased to $5,333,124, up from $3,688,584 in 2024, an increase of approximately 44.6%[118]. Net Loss - The net loss for the three months ended September 30, 2025 was $2,895,585, compared to a net loss of $2,959,426 for the same period in 2024, reflecting a decrease of about 2.2%[116]. - The net loss for the nine months ended September 30, 2025 was $9,222,798, compared to $4,083,109 for the same period in 2024, representing an increase of approximately 126.3%[119]. Cash Flow - Net cash used in operating activities for the nine months ended September 30, 2025 was $4,610,390, compared to $2,002,358 in 2024, an increase of approximately 130.5%[121]. - Cash and cash equivalents as of September 30, 2025 were $7,348,034, with an accumulated deficit of approximately $19.8 million[127]. - Net cash provided by financing activities for the nine months ended September 30, 2025 was $11,894,683, significantly higher than $2,173,942 in 2024[123][124]. Future Outlook - The Company expects to continue incurring significant professional costs to remain publicly traded and requires additional working capital funding to execute its business plans[125][127]. - Klotho Neurosciences, Inc. has no off-balance sheet arrangements as of September 30, 2025[128].

Revenue - The Company reported no revenue for the three months ended September 30, 2025 and 2024[114] Operating Expenses - Operating expenses decreased to $1,853,304 for the three months ended September 30, 2025, down from $2,870,932 in the same period of 2024, a reduction of approximately 35.4%[115] - For the nine months ended September 30, 2025, operating expenses increased to $5,333,124 from $3,688,584 in the same period of 2024, an increase of approximately 44.6%[118] Net Loss - The net loss for the three months ended September 30, 2025 was $2,895,585, compared to a net loss of $2,959,426 for the same period in 2024, reflecting a decrease of about 2.2%[116] - The net loss for the nine months ended September 30, 2025 was $9,222,798, compared to $4,083,109 for the same period in 2024, representing an increase of approximately 126.4%[119] Cash Flow - Net cash used in operating activities for the nine months ended September 30, 2025 was $4,610,390, compared to $2,002,358 for the same period in 2024, an increase of approximately 130.5%[121] - The Company had cash and cash equivalents of $7,348,034 as of September 30, 2025, with an accumulated deficit of approximately $19.8 million[127] - Net cash provided by financing activities for the nine months ended September 30, 2025 was $11,894,683, significantly higher than $2,173,942 for the same period in 2024[123][124] Future Outlook - The Company expects to continue incurring significant professional costs to remain publicly traded and requires additional working capital funding to execute its business plans[125][127] - The Company has no off-balance sheet arrangements as of September 30, 2025[128]

Capital Adequacy - As of September 30, 2025, the Company maintained total capital of $152,826, representing a ratio of 12.97% to risk-weighted assets, exceeding the minimum requirement of 8.00%[136] - Common equity tier 1 capital was $111,343, with a ratio of 9.45% to risk-weighted assets, above the minimum requirement of 4.50%[136] - The Company was categorized as "well capitalized" under the regulatory framework, indicating compliance with capital adequacy guidelines[135] Interest Rate Risk Management - The Company entered into interest rate swaps with a total notional value of $70 million to hedge interest rate risk associated with floating-rate time deposit accounts[144] - For the nine months ended September 30, 2025, the Company recognized $79,000 in gains from cash flow hedges, resulting in a decrease in interest expense[147] - The notional amount of risk participation agreements outstanding was $4.9 million as of September 30, 2025[143] - The Company had $945,000 in interest income from swap assets for the nine months ended September 30, 2025[141] - The effective portion of changes in the fair value of cash flow hedges was reported in accumulated other comprehensive loss, with $5,000 estimated to be reclassified as a decrease to interest expense in the next twelve months[147] - The Company had no caps or floors outstanding as of September 30, 2025[150] - The Company’s hedging policy allows a maximum notional amount of $500 million for interest rate swaps, caps, and floors[150] Credit Losses and Commitments - The Company reported consolidated net income for the three months ended September 30, 2025, with a provision for credit losses on unfunded commitments of $28,000, compared to a recovery of $4,000 for the same period in 2024[157] - The allowance for credit losses related to unfunded commitments and standby letters of credit was $274,000 as of September 30, 2025, down from $966,000 at December 31, 2024[157] - The Company had outstanding commitments to extend credit approximating $243.9 million as of September 30, 2025, compared to $233.2 million as of December 31, 2024[155] Pension Benefits - The net periodic pension benefit for the three months ended September 30, 2025, was $(457,000), compared to $(437,000) for the same period in 2024[159] - The Company recorded a net periodic pension benefit for the nine months ended September 30, 2025, of $(1,431,000), compared to $(908,000) for the same period in 2024[159] - The Company implemented a soft freeze of its defined benefit pension plan for non-union employees hired on or after January 1, 2013, and union employees hired on or after January 1, 2014[162] - The Company recognized no settlement charge in connection with its defined benefit pension plan in the third quarter of 2025, while a charge of $34,000 was recognized in the same period of 2024[160] Fair Value Measurements - The fair value of available-for-sale securities was reported at $171,000,000 as of September 30, 2025, with various classifications including U.S. Agency and corporate bonds[174] - The Company’s total assets measured and reported at fair value as of September 30, 2025, included equity securities valued at $181,000[174] - As of September 30, 2025, the fair value of individually evaluated loans is $3,278, with no Level 1 or Level 2 inputs[178] - The fair value of other real estate owned and repossessed assets is $240 as of September 30, 2025, with a weighted average appraisal adjustment range of 15% to 59%[178] - The carrying value of investment securities held to maturity (HTM) is $67,179, with a fair value of $63,492 as of September 30, 2025[182] - Loans, net of allowance for credit losses and unearned income, have a carrying value of $1,041,275 and a fair value of $1,031,384 as of September 30, 2025[182] - Deposits with stated maturities have a carrying value of $381,639 and a fair value of $381,508 as of September 30, 2025[182] - The fair value of loans held for sale is $470 as of December 31, 2024, with a carrying value of $460[182] - The fair value of other real estate owned and repossessed assets was $1,724 as of December 31, 2024, with a weighted average appraisal adjustment range of 18% to 63%[178] - Changes in assumptions or estimation methodologies may materially affect estimated fair values[183] - The company manages market risk primarily through interest rate risk management processes[284] - Fair values for financial instruments are determined using independent third-party valuations and estimation methodologies[181]

Financial Performance - For the three and nine-month periods ended September 30, 2025, the Company recorded net income of $6,693,000 and $17,578,000, representing decreases of 8.6% and 7.8% compared to the same periods in 2024[101] - Return on average assets (annualized) was 1.35% and 1.22% for the three and nine-month periods ended September 30, 2025, down from 1.56% and 1.38% in 2024[101] - Net interest income was $19,197,000 and $55,158,000 for the three and nine-month periods ended September 30, 2025, reflecting increases of $1,542,000 and $2,970,000 from the comparable periods in 2024[104] - Non-interest income for the three and nine-month periods ended September 30, 2025, was $1,973,000 and $5,289,000, representing increases of 6.9% and 3.2% year-over-year, respectively[124] - Non-interest expense increased by $1,376,000 and $3,543,000 for the three and nine-month periods ended September 30, 2025, mainly due to staffing increases and overhead related to servicing growing business portfolios[102] Asset and Liability Management - Total assets increased by $94,812,000 or 5.0%, total net loans increased by $6,062,000 or 0.6%, and deposits increased by $79,192,000 or 4.7% from December 31, 2024 to September 30, 2025[102] - The total assets as of September 30, 2025, were $1,961,374, an increase from $1,863,983 as of September 30, 2024[107] - Total deposits increased by $79,192,000 or 4.7% to $1,774,882,000 as of September 30, 2025, compared to $1,695,690,000 as of December 31, 2024[155] - Average deposits rose by $73,712,000 to $1,714,473,000 for the nine-month period ended September 30, 2025, compared to the same period in 2024[155] - Demand deposits increased by $57,878,000 or 5.3% to $1,159,633,000 as of September 30, 2025[156] Interest Income and Margin - The net interest margin was 4.16% and 4.12% for the three and nine-month periods ended September 30, 2025, compared to 4.04% and 4.08% for the same periods in 2024[106] - For the three months ended September 30, 2025, net interest income increased by $1,570,000 compared to the same period in 2024, driven by a $940,000 increase from volume changes and a $630,000 increase from rate changes[114] - For the nine months ended September 30, 2025, total interest income was $66,550, an increase of $3,616 compared to the same period in 2024[110] - The net interest spread for the nine months ended September 30, 2025, was 3.67%, compared to 3.62% for the same period in 2024[110] Credit Quality - The Company recorded a reversal of credit loss provisions of $60,000 during the three and nine-month periods ended September 30, 2025, compared to a reversal of $1,620,000 during the same periods in 2024[102] - The Company recorded a reversal of provisions for credit losses of $60,000 for the three and nine-month periods ended September 30, 2025, indicating stable credit quality[123] - Non-performing loans remained at a zero balance throughout the nine-month period ending September 30, 2025, indicating strong asset quality[123] - As of September 30, 2025, total non-performing assets remained at $0, indicating strong credit quality within the loan portfolio[143] - The allowance for credit losses decreased to $11,420,000 as of September 30, 2025, down from $11,460,000 as of December 31, 2024, due to net loan charge-offs of $40,000[145] Capital and Liquidity - The Company had $247,155,000 in cash and cash equivalents as of September 30, 2025, compared to $168,751,000 as of December 31, 2024[150] - As of September 30, 2025, the Company's total capital to risk-weighted assets ratio was 16.1%, exceeding the minimum requirement of 10.5%[162] - The Company's Tier I capital to risk-weighted assets ratio was 15.2% as of September 30, 2025, above the minimum requirement of 8.5%[162] - Liquid assets increased to $494.8 million as of September 30, 2025, compared to $431.8 million as of December 31, 2024, representing a liquidity level of 24.8% of total assets[165] - The Company had commitments to extend credit of $206.9 million as of September 30, 2025, up from $185.8 million as of December 31, 2024[168] Operational Strategy - The Company’s shareholder value strategy focuses on enhancing shareholder value, increasing the retail banking franchise's value, and efficiently utilizing capital[100] - Management anticipates that non-interest expenses will continue to increase as the Company grows, but remains committed to cost-control measures[136] - The liquidity management strategy includes maintaining cash and cash equivalents, salable government guaranteed loans, and securities available for sale[165] - The Company had no brokered deposits as of September 30, 2025, maintaining a strategy focused on core deposit growth[157] Regulatory Environment - The CFPB's recent rulemaking process may impact the Company and the Bank, with compliance dates currently stayed pending reconsideration[169] - Proposed Basel III Endgame rules are expected to be more capital-neutral than the original proposal, with a revised version anticipated for public comment in early 2026[162]

Revenue and Profit - Revenue for the three months ended September 30, 2025, was $2,915,081, an 8% increase compared to $2,705,461 for the same period in 2024[128][129] - Gross profit for the nine months ended September 30, 2025, was $5,491,594, compared to $5,123,795 for the same period in 2024, maintaining a gross profit margin of 67%[128][130] Operating Expenses and Losses - Operating expenses for the nine months ended September 30, 2025, totaled $11,721,704, an increase from $10,599,924 in 2024[131] - The company generated an operating loss of $6.2 million and a net loss of $5.9 million for the nine months ended September 30, 2025[139] Cash and Investments - Cash and cash equivalents as of September 30, 2025, were $4.1 million, with an additional $7.6 million invested in government securities[139] - The company received gross proceeds of $14.4 million from the issuance of common stock and warrants during the nine months ended September 30, 2025[139][143] Cost Increases - Direct operating costs increased by $53.8 thousand for the nine months ended September 30, 2025, primarily due to higher personnel wages[132] - Research and development costs rose by $50.9 thousand for the nine months ended September 30, 2025, driven by increased personnel wages[135] Corporate Actions and Outlook - The company executed a 1-for-750 reverse stock split on October 28, 2025[126] - The company believes it has sufficient capital to sustain operations for at least twelve months from the date of filing its condensed financial statements[140]

Financial Performance - Net revenues for Q3 2025 were $44,239, a 25% increase from $35,503 in Q3 2024[106] - Net income for Q3 2025 was $7,463, significantly up from $74 in Q3 2024, reflecting a 9985.1% increase[107] - Adjusted EBITDA for Q3 2025 was $2,407, down from $3,366 in Q3 2024, indicating a decline of 28.5%[102] - Free cash flow for Q3 2025 was $19,270, compared to $4,848 in Q3 2024, showing a substantial increase[103] - For the nine months ended September 30, 2025, total revenues increased by 9.8% to $120,312 million, with a gross profit decline of 26.3% to $12,821 million[123][124] - Net income for the nine months ended September 30, 2025, was $6,104 million, a 195.5% increase compared to $2,066 million in the prior year[126] Orders and Backlog - Total orders in Q3 2025 reached $43,585, a 90% increase from $22,975 in Q3 2024[105] - Backlog at the end of Q3 2025 was $94,686, down from $124,298 in Q3 2024[102] - Book-to-bill ratio for Q3 2025 was 1.0, compared to 0.6 in Q3 2024, indicating improved order intake relative to revenue[102] - Heavy Fabrications segment orders increased by 25% year-over-year to $13,885 million, with revenues rising 43% to $29,364 million[115] - Gearing segment orders skyrocketed by 261% to $15,877 million, driven by higher demand in power generation, while revenues decreased by 23% to $7,069 million[117] - Industrial Solutions segment orders rose by 86% to $13,823 million, with revenues increasing by 37% to $7,872 million, attributed to new gas turbine projects[119] - Gearing segment orders increased by 57% to $30,636 million, while revenues fell by 27% to $20,320 million due to reduced shipments to oil and gas customers[129] Segment Performance - Heavy Fabrications segment revenues for the nine months increased by 28% to $79,600 million, driven by a 46% rise in wind revenue[127] - Operating income for the Heavy Fabrications segment surged by $8,053 million, primarily due to an $8,155 million gain from the sale of Manitowoc operations[116] - Industrial Solutions segment operating income decreased to $1,261 million, reflecting a less profitable product mix and increased fixed costs[131] Cash Flow and Liquidity - As of September 30, 2025, the company had $1,195 million in cash and $15,273 million in total debt and finance lease obligations[134] - Total cash used in operating activities for the nine months ended September 30, 2025, was $16,242, compared to $986 for the same period in 2024, indicating a significant increase in cash outflow[144] - Net cash provided by investing activities for the nine months ended September 30, 2025, was $9,936, a turnaround from net cash used of $3,120 in the prior year period, primarily due to proceeds from the sale of Manitowoc industrial fabrication operations[145] - Net cash used in financing activities for the nine months ended September 30, 2025, totaled $220, a decrease from net cash provided of $4,391 in the prior year, attributed to reduced borrowings under the 2022 Credit Facility[146] - The company anticipates that current cash resources and available credit will be sufficient to meet liquidity needs for at least the next twelve months[139] - There is a risk of cash flow and liquidity issues if production, sales, and collections from large customers do not meet management's expectations[141] - The increase in cash used in operating activities is primarily due to a significant rise in inventory and decreased proceeds from AMP credits[144] Operational Risks and Considerations - The company may face operational flexibility limitations if it cannot comply with existing financial covenants, potentially requiring additional equity or debt financing[142] - Forward-looking statements indicate potential impacts from global health concerns, regulatory frameworks, and competition in the wind energy market[149] - The company has not experienced material changes in critical accounting estimates during the nine months ended September 30, 2025[147] - The company is a smaller reporting company and is not required to provide detailed market risk disclosures[151]

Financial Performance - Revenues for the three months ended September 30, 2025, were $13,813,551, a decrease of 34.5% compared to $21,081,094 for the same period in 2024[10]. - Gross profit improved to $1,169,092 for the three months ended September 30, 2025, compared to $196,981 in the prior year, marking a significant increase[10]. - Operating expenses decreased to $1,457,715 for the three months ended September 30, 2025, down from $2,227,531 in 2024, a reduction of 34.5%[10]. - The net loss attributable to the Company for the three months ended September 30, 2025, was $201,026, compared to a net loss of $1,961,989 in the same period of 2024, reflecting an improvement of 89.8%[10]. - For the three months ended September 30, 2025, the Company reported a net loss of approximately $0.20 million, compared to a net loss of $1.96 million for the same period in 2024[32]. - The net loss for the three months ended September 30, 2025, was $413,389, a slight improvement from a net loss of $452,170 in the same period of 2024[47]. - Revenue for the same period was $13,813,551, a decrease of $7,267,543 or 34.47% compared to $21,081,094 in the previous year, due to a strategic contraction of low-margin business[167]. Assets and Liabilities - Total assets increased to $7,691,360 as of September 30, 2025, up from $6,735,881 as of June 30, 2025, representing a growth of 14.2%[9]. - Total current assets increased to $2,387,658 as of September 30, 2025, from $1,734,402 as of June 30, 2025, representing a growth of approximately 37.7%[47]. - Total liabilities increased to $4,564,383 as of September 30, 2025, from $3,735,390 as of June 30, 2025, indicating a rise of approximately 22.2%[47]. - The total stockholders' equity rose to $3,013,452 as of September 30, 2025, compared to $2,942,195 as of June 30, 2025, an increase of 2.4%[9]. - The Company had an accumulated deficit of approximately $44.73 million as of September 30, 2025[32]. Cash Flow and Investments - Cash and cash equivalents increased to $745,264 as of September 30, 2025, from $620,807 at the beginning of the period, representing a growth of 20.1%[14]. - Cash flows from operating activities generated $879,299 for the three months ended September 30, 2025, compared to a cash outflow of $732,655 in the same period of 2024[14]. - The Company acquired intangible assets amounting to $1,551,009 during the three months ended September 30, 2025[14]. - The total amount of unearned revenue increased to $180,195 as of September 30, 2025, up from $150,088 as of June 30, 2025, reflecting a growth of approximately 20.5%[111]. Stock and Equity Transactions - The Company issued 95,377 shares for stock compensation expense, contributing to an increase in additional paid-in capital to $47,582,488 as of September 30, 2025[11]. - The Company granted 398,925 restricted shares to Chairwoman and CEO Ms. Zhixin Liu for the acquisition of software copyrights, with the purchase accounted at a historical cost of $0[136]. - The Company recorded stock compensation expenses of $3,900 and $4,500 to independent directors for the three months ended September 30, 2025 and 2024, respectively[140]. - The Company issued 18,367 shares to a consultant, with a fair value of $36,000 recorded as stock compensation expense for the three months ended September 30, 2025[142]. Research and Development - Research and development expenses are expensed in the period incurred, primarily consisting of materials, salaries, and third-party fees[79]. - The Company achieved a major technological breakthrough in AI-enhanced acoustic coupling for neural regulation and precision medicine in August 2025, entering an accelerated commercialization stage[172]. - The Company has established in-depth cooperation with top research institutions to drive ongoing innovation in acoustic technologies[176]. - New product developments include ultrasonic disinfectants and AI medical robots, targeting healthcare and medical aesthetics sectors[199]. Strategic Initiatives - The Company established a wholly owned subsidiary, Datasea Acoustic, LLC, in Delaware on July 31, 2023, to expand its products to the North American market[30]. - The Company formed a joint venture, Nanjing Shuhai Equity Investment Fund Management Co. Ltd., with a 99% ownership interest to facilitate access to government funding for new technology development[20]. - Datasea plans to strengthen its competitive advantages through scaled sales and international deployment of high-margin acoustic high-tech products and AI multimodal technology solutions in fiscal year 2026[175]. - The Company is exploring options to raise additional funds through strategic investors or public offerings to support its operations and R&D[33]. Market and Product Development - Flagship products like the Tianer sterilization series and Star Dream sleep-aid systems are driving high-margin growth, with plans for overseas market expansion[192]. - The Company has built a comprehensive sound-based health ecosystem covering environmental sterilization, physiological regulation, cognitive enhancement, and sleep improvement[191]. - The Company is developing high-end clinical intervention systems for tertiary hospitals and portable therapeutic devices for community rehabilitation centers, extending neuromodulation applications[189]. - The Company is focusing on five key sub-sectors: acoustic healthcare, acoustic health, acoustic industry, acoustic agriculture, and acoustic IoT, leveraging cutting-edge technologies[206].

Revenue Composition - Integrated Manufacturing Solutions (IMS) generated approximately 80% of total revenue in 2025[14] - Components, Products and Services (CPS) accounted for about 20% of total revenue in 2025[14] - Sales to the ten largest customers represented 52% of net sales in 2025, indicating a significant reliance on major clients for revenue generation[67] - Sales to the ten largest customers historically represent approximately 50% of net sales, indicating a reliance on a small number of customers for revenue[105] - Approximately 80% of net sales are generated from products manufactured in foreign operations, reflecting a strategy to leverage lower-cost manufacturing locations[191] Market Focus and Strategy - The company targets high-growth markets such as industrial, medical, defense and aerospace, and automotive, which require higher value-added services[25] - The company aims to increase the number of manufacturing programs with multiple solutions to improve margins and profitability[18] - The company emphasizes attracting long-term partnerships with growth industry leaders to leverage its advanced electronics manufacturing capabilities[23] - The company is committed to pursuing strategic transactions to access new customers and technologies[26] - The company aims to diversify into mission-critical markets and develop higher technology products with longer life cycles to drive future growth[194] Manufacturing and Technology - The company is focused on extending technology capabilities and enhancing manufacturing processes to provide a competitive advantage[19] - The global manufacturing network allows the company to offer flexibility and optimize costs for customers[36] - The company provides integrated manufacturing solutions including Printed Circuit Board Assembly (PCBA) and testing, focusing on technologies like surface mount technology (SMT) and pin-through-hole assembly (PTH) to meet customer needs for complex electronic systems[43] - The company emphasizes a vertically integrated manufacturing strategy, providing end-to-end solutions that include product design, engineering, and post-manufacturing services[62] - The company plans to continue investing in factory automation, process improvements, and artificial intelligence to enhance operational efficiency[191] Workforce and Employment - The company has approximately 39,000 employees, with 55% in the Americas, 36% in APAC, and 9% in EMEA[80][81] - The average tenure of employees is approximately eight years, with about 30% having been employed for over ten years[89] - Approximately 49% of the global workforce is female, and non-Caucasian employees account for approximately 60% of the U.S. employee base[91] - Recruiting and retaining key personnel is critical for growth, with challenges in the current employment market[150] Environmental and Regulatory Compliance - The company operates globally with a focus on compliance with environmental regulations, including wastewater treatment systems at PCB manufacturing plants[72] - The company is subject to complex regulations regarding export controls and government contracts, which require extensive compliance efforts and could lead to significant penalties if violated[79] - The company has implemented standardized environmental management systems across manufacturing facilities, with nearly all certified under ISO 14001[74] - Environmental liabilities have been incurred due to acquisitions, with ongoing investigations and remediation activities at several sites, including locations in New York and California[77] - The company operates under environmental permits that require periodic renewal and are subject to revocation for violations, which could adversely affect production[76] Financial Performance and Risks - The company has never declared or paid cash dividends and plans to retain future earnings for operations, business expansion, and debt repayments[181] - The company's liquidity is dependent on factors such as profitability, business volume, and the timing of acquisitions, with no assurance that additional liquidity will be available on acceptable terms if needed[130] - The company faces significant uncertainties in operating results due to factors such as intense competition, regulatory changes, and supply chain disruptions[101][102] - The company is exposed to risks from fluctuations in currency exchange rates, which may affect operating costs[107] - Changes in financial accounting standards could significantly affect the company’s reported financial results and require adjustments to estimates and assumptions[125] Acquisitions and Investments - The company acquired the data center infrastructure manufacturing business of ZT Systems in October 2025, aiming to enhance its capabilities in large-scale data center rack deployments[137] - The acquisition of ZT Group Int'l, Inc. (ZT Systems) was completed for an aggregate consideration of $1.6 billion, including $1.46 billion in cash and contingent cash consideration of up to $450 million based on financial metrics[195] - The acquisition of ZT Systems involves risks such as integration difficulties, quality issues, and potential loss of key employees, which could impact profitability[140] - Future divestitures may reduce revenue and margins, with risks of retained liabilities from divested operations[141] Cybersecurity and Operational Risks - Cybersecurity measures may not be sufficient to protect sensitive data, exposing the company to legal liability and reputational damage[121] - The company’s operations could be disrupted by cyberattacks, which may lead to significant losses and impact customer relationships[121] - The company experienced a temporary disruption in worldwide manufacturing operations due to a misconfigured system update by a network security vendor in July 2024[120] Tax and Financial Liabilities - Changes in tax rates and audits could increase tax expenses, potentially reducing net income; cumulative net operating loss carryforwards as of September 27, 2025, are $200 million for state and $481 million for foreign[146] - The effective tax rate is influenced by the geographic distribution of income, tax regulations, and the effectiveness of tax planning strategies[210] - The company estimates its income tax provision based on various factors, including past experience and tax law interpretations, with a focus on maintaining adequate accruals for tax liabilities[206]

Financial Performance - Distributable income for the three months ended September 30, 2025, was $6,861,887, down 14.8% from $8,053,284 for the same period in 2024[19] - For the nine months ended September 30, 2025, distributable income was $11,855,354, a decrease of 46% compared to $21,982,178 for the same period in 2024[20] - Total income for the nine months ended September 30, 2025, was $13,450,373, a decline of 42.3% from $23,298,094 for the same period in 2024[20] - Distributions per unit for the three months ended September 30, 2025, were $0.15, down from $0.17 in the same period of 2024[22] - Distributable income for Q3 2025 was $6,861,887 or $0.15 per Unit, compared to $8,053,284 or $0.17 per Unit in Q3 2024[69] - Distributable income for the nine months ended September 30, 2025, was $11,855,354, or $0.25 per Unit, down from $21,982,178, or $0.47 per Unit, for the same period in 2024, representing a decrease of about 46%[80] Revenue and Income Sources - Royalty income for the three months ended September 30, 2025, was $7,258,464, down 13.2% from $8,366,375 in the prior year[19] - Royalty income for the nine months ended September 30, 2025, was $13,403,049, a decrease of approximately 42% compared to $23,175,406 for the same period in 2024[78] - The Trust's royalty income is computed as a percentage of net profit, with the Waddell Ranch properties contributing 75% and the Texas Royalty properties contributing 95% to the royalty income[90] Asset and Liability Overview - As of September 30, 2025, total assets of the Permian Basin Royalty Trust amounted to $6,655,631, a significant increase from $2,286,992 as of December 31, 2024[17] - The total liabilities as of September 30, 2025, were $6,493,208, reflecting an increase from $2,122,585 at the end of 2024[17] - The cash and short-term investments increased to $6,493,208 as of September 30, 2025, compared to $2,122,585 at the end of 2024[17] Operational Metrics - Oil sales for Waddell Ranch properties totaled 913,912 barrels in Q3 2025, compared to 533,073 barrels in Q3 2024, while gas sales increased to 4,072,978 Mcf from 3,387,875 Mcf[71] - Oil sales (Bbls) from the Waddell Ranch properties for the nine months ended September 30, 2025, were 2,310,987, compared to 1,468,441 for the same period in 2024, indicating an increase of approximately 57%[83] - Gas sales (Mcf) from the Waddell Ranch properties for the nine months ended September 30, 2025, were 11,138,948, compared to 8,761,191 for the same period in 2024, reflecting an increase of about 27%[83] Price and Market Influences - The price of oil fluctuated between $58.50 and $75.89 per barrel in the second quarter of 2025, impacting the Trust's income and distributions[59] - Average realized oil price for Waddell Ranch properties decreased to $62.32 per barrel in Q3 2025 from $79.91 per barrel in Q3 2024, while gas price increased to $1.35 per Mcf from $1.19 per Mcf[72] - For Texas Royalty properties, average realized oil price fell to $65.20 per barrel in Q3 2025 from $79.06 per barrel in Q3 2024, and gas price decreased to $8.65 per Mcf from $10.54 per Mcf[74] - Average realized oil prices for the Waddell Ranch properties decreased to $66.68 per Bbl for the nine months ended September 30, 2025, down from $76.62 per Bbl for the same period in 2024, reflecting a decline of about 13%[84] - Average realized gas prices for the Waddell Ranch properties increased to $1.80 per Mcf for the nine months ended September 30, 2025, compared to $1.61 per Mcf for the same period in 2024, marking an increase of approximately 11.8%[84] Settlements and Legal Matters - The Trust received a partial settlement of $4.5 million in September 2025 from Blackbeard, with a total settlement amount of $9 million to be paid in installments[47] - The Trust has entered into a Settlement Agreement with Blackbeard, agreeing to a payment of $9,000,000, with $4,500,000 paid in September 2025 and the remaining amount to be paid in four quarterly installments of $1,125,000 during 2026[100][101] - The Settlement Agreement establishes an overhead rate for the Trust and allows Blackbeard to pass through third-party charges for saltwater disposal and other services[102] - There have been no material changes in the Trust's internal control over financial reporting during the reporting period[98] - The Trust has no material pending legal proceedings against it or its properties[103] Expenses and Cost Management - Total expenses in Q3 2025 were $411,626, up from $367,625 in Q3 2024, mainly due to increased legal expenses related to Blackbeard[68] - Lease operating expenses and property taxes for the nine months ended September 30, 2025, amounted to $67.8 million (gross), up from $60.1 million (gross) in the same period of 2024, indicating an increase of about 28%[89] - The Trust maintains an expense reserve of $1,100,000 to cover obligations in case of insufficient royalty income[54] Governance and Meetings - A special meeting of Unitholders is scheduled for December 16, 2025, to discuss potential amendments to the Trust Indenture[63] - Blackbeard will provide quarterly production and sales information to the Trust, enhancing transparency and reporting accuracy[71] - The Trust does not have any directors or officers, and therefore no trading arrangements have been adopted or terminated[106] Risk Factors - Risk factors related to the Trust remain unchanged from the previous Annual Report for the fiscal year ended December 31, 2024[104] - The Trust's income is heavily influenced by commodity prices, which have shown volatility due to geopolitical conditions[59] - The Trust's accounting policies differ from GAAP, with revenues not accrued in the month of production and expenses recorded when paid[32] - The Trust is exempt from Texas franchise tax as a passive entity, benefiting Unitholders from tax considerations[49]