[FORM 10-K Filing Information](index=1&type=section&id=FORM%2010-K) Identifies the filing as an Annual Report on Form 10-K for FY2025, noting Benitec is a non-accelerated, smaller reporting company with $152.96 million in non-affiliate common equity market value - Benitec Biopharma Inc. is filing its Annual Report on Form 10-K for the fiscal year ended June 30, 2025[2](index=2&type=chunk) Filer Status | Filer Status | | |---|---| | Large Accelerated Filer | ☐ | | Accelerated Filer | ☐ | | Non-Accelerated Filer | ☒ | | Smaller Reporting Company | ☒ | | Emerging Growth Company | ☐ | - The aggregate market value of the Registrant's common equity held by non-affiliates was approximately **$152,964,292** as of December 31, 2024[6](index=6&type=chunk) [Restatement Explanatory Note](index=3&type=section&id=RESTATEMENT%20EXPLANATORY%20NOTE) Benitec is restating financial information for Q4 2024 and Q1 2025 due to understated non-cash share-based compensation expenses, resulting from an incorrectly configured system and identifying a material weakness in internal controls - The Company is restating financial information for the Non-Reliance Periods (quarters ended December 31, 2024, and March 31, 2025) due to inappropriate recording of certain non-cash share-based compensation expenses[10](index=10&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk) - The errors stemmed from an incorrectly configured information recording system after an equity awards data migration in November 2023, leading to understatements of share-based compensation expense, additional paid-in capital, accumulated deficit, net loss, and loss per share[13](index=13&type=chunk) - A **material weakness** exists in the Company's internal control over financial reporting as of June 30, 2025, which management is actively remediating[15](index=15&type=chunk) [Part I - Business and Risk Factors](index=5&type=section&id=PART%20I) This part covers the company's business operations, product development, competitive landscape, regulatory environment, and a comprehensive analysis of associated risk factors [About This Annual Report](index=5&type=section&id=ABOUT%20THIS%20ANNUAL%20REPORT) This section defines key terms, specifies U.S. dollars as the currency, sets the fiscal year-end as June 30, and notes the impact of a 1-for-17 reverse stock split - The terms 'Benitec,' the 'Company,' 'we,' 'us,' 'our' refer to Benitec Biopharma Inc. and its subsidiaries[20](index=20&type=chunk) - All dollar references are to U.S. dollars, and the fiscal year-end is June 30[21](index=21&type=chunk)[22](index=22&type=chunk) - All share and earnings per share amounts reflect the impact of the 1-for-17 reverse stock split effective July 26, 2023[22](index=22&type=chunk) [Industry and Market Data](index=5&type=section&id=INDUSTRY%20AND%20MARKET%20DATA) This section states that the Annual Report includes market and industry data from third-party sources or estimates, which the company believes are reasonable and reliable - The report includes market and industry data from third-party sources or estimates, which the company believes are reasonable and reliable[24](index=24&type=chunk) - The company has not independently verified third-party data, and internal research is based on its understanding of industry conditions[24](index=24&type=chunk) [Trademarks and Tradenames](index=5&type=section&id=TRADEMARKS%20AND%20TRADENAMES) Benitec Biopharma Inc. holds proprietary and licensed rights to several important trademarks, including 'BENITEC BIOPHARMA®' and 'GIVING DISEASE THE SILENT TREATMENT®' - Benitec Biopharma Inc. has proprietary and licensed rights to trademarks important to its business[26](index=26&type=chunk) - BENITEC BIOPHARMA® - BENITEC® - GIVING DISEASE THE SILENT TREATMENT® - SILENCING GENES FOR LIFE® [Special Note Regarding Forward-Looking Statements](index=6&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights that the Annual Report contains forward-looking statements subject to risks and uncertainties, many beyond the company's control, and disclaims any obligation to update them - The Annual Report contains forward-looking statements regarding strategy, future operations, financial position, projected costs, prospects, plans, and objectives, which are subject to known and unknown risks and uncertainties[29](index=29&type=chunk) - Success of product candidates development and commercialization plans - Timing and completion of preclinical studies and clinical trials, including patient enrollment and data availability - Timing and outcome of regulatory filings and approvals - Intellectual property position and patent portfolio duration - Expenses, ongoing losses, future revenue, capital needs, and ability to access additional financing - Impact of, and ability to remediate, identified material weakness in internal controls over financial reporting - The company disclaims any obligation to revise or update forward-looking statements, except as required by law[31](index=31&type=chunk) [Item 1. Business](index=7&type=section&id=Item%201.%20Business.) Benitec is a clinical-stage biotechnology company developing novel genetic medicines using ddRNAi and 'silence and replace' platforms, with BB-301 for OPMD as its lead candidate - Benitec Biopharma Inc. is a clinical-stage biotechnology company focused on novel genetic medicines using its proprietary DNA-directed RNA interference (ddRNAi) and 'silence and replace' platforms[34](index=34&type=chunk) - The lead product candidate, BB-301, is an AAV-based gene therapy for Oculopharyngeal Muscular Dystrophy (OPMD), designed to permanently silence disease-causing genes and simultaneously replace mutant genes with wildtype genes[35](index=35&type=chunk)[38](index=38&type=chunk) - BB-301 has been granted Orphan Drug Designation in the United States and the European Union[35](index=35&type=chunk)[60](index=60&type=chunk) [Company Overview](index=7&type=section&id=Company%20Overview) Benitec is a clinical-stage biotechnology company developing genetic medicines using its proprietary ddRNAi and 'silence and replace' platforms, with BB-301 for OPMD as its lead candidate - Benitec Biopharma Inc. is a clinical-stage biotechnology company focused on novel genetic medicines using DNA-directed RNA interference (ddRNAi) and 'silence and replace' platforms[34](index=34&type=chunk) - The 'silence and replace' approach combines RNAi with gene therapy to facilitate sustained silencing of disease-causing genes and simultaneous delivery of wildtype replacement genes following a single administration[34](index=34&type=chunk)[38](index=38&type=chunk) - BB-301, a lead therapeutic for OPMD, has received Orphan Drug Designation in the United States and the European Union[35](index=35&type=chunk)[60](index=60&type=chunk) [Overview of RNAi and the siRNA Approach](index=8&type=section&id=Overview%20of%20RNAi%20and%20the%20siRNA%20Approach) RNA interference (RNAi) uses siRNAs to temporarily reduce disease-causing proteins, but traditional siRNA approaches have limitations like repeat administration, unstable concentrations, and inability to replace defective genes - RNA interference (RNAi) utilizes small interfering RNAs (siRNAs) to temporarily reduce disease-causing protein production by cleaving target mRNA[40](index=40&type=chunk)[44](index=44&type=chunk) - Requires repeat administration for sustained efficacy - Therapeutic concentrations are not stably maintained - Often requires novel chemical modifications or delivery materials - Potential for adverse immune responses - Cannot replace defective genes with normally functioning genes - Many genetic disorders are not suitable for traditional gene silencing if selective targeting of mutant proteins without affecting vital wild type proteins is difficult[45](index=45&type=chunk) [Our Approach: ddRNAi and Silence and Replace](index=10&type=section&id=Our%20Approach%20to%20the%20Treatment%20of%20Genetic%20Diseases%E2%80%94ddRNAi%20and%20Silence%20and%20Replace) Benitec's 'silence and replace' approach combines ddRNAi with classical gene therapy using AAV vectors to permanently silence disease-causing genes and simultaneously restore functional wild type genes after a single administration - Benitec's 'silence and replace' approach combines ddRNAi with classical gene therapy using AAV vectors for permanent silencing of disease-causing genes and concomitant restoration of functional wild type genes via a single administration[49](index=49&type=chunk)[50](index=50&type=chunk)[52](index=52&type=chunk) - This technology utilizes proprietary DNA expression cassettes to continuously produce gene silencing shRNAs and wild type proteins, addressing limitations of siRNA-based methods[50](index=50&type=chunk)[52](index=52&type=chunk) - The company's strategy is to discover, develop, and commercialize these treatments, potentially through collaborations or out-licensing, with cash deployed for BB-301 advancement and other product candidates[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) [Oculopharyngeal Muscular Dystrophy (OPMD)](index=11&type=section&id=Oculopharyngeal%20Muscular%20Dystrophy%E2%80%94OPMD) OPMD is a rare, autosomal-dominant, late-onset degenerative muscle disorder caused by a PABPN1 gene mutation, characterized by dysphagia and ptosis, with BB-301 as a gene therapy candidate - OPMD is a rare, autosomal-dominant, late-onset degenerative muscle disorder characterized by progressive dysphagia and ptosis, caused by a mutation in the PABPN1 gene[58](index=58&type=chunk)[67](index=67&type=chunk) - BB-301 is an AAV-based gene therapy designed to silence the disease-causing gene and replace it with a wildtype gene, and has been granted Orphan Drug Designation in the United States and the European Union[59](index=59&type=chunk)[60](index=60&type=chunk) - The commercial opportunity for a safe and efficacious therapeutic agent for OPMD is estimated to exceed **$1 billion** over the product's commercial life[70](index=70&type=chunk) [Our Pipeline](index=12&type=section&id=Our%20Pipeline) Benitec's pipeline focuses on BB-301 for OPMD-related dysphagia, with its IND cleared by the FDA in June 2023 and Phase 1b/2a clinical trial dosing commenced in November 2023 - Benitec's pipeline currently features BB-301 for Oculopharyngeal Muscular Dystrophy (OPMD)-related dysphagia[63](index=63&type=chunk) - The IND for BB-301 was approved by the FDA in June 2023, and the Phase 1b/2a clinical trial (NCT06185673) commenced dosing in November 2023, with six subjects safely treated by April 2025[63](index=63&type=chunk) - BB-301 is a first-in-class genetic medicine employing the 'silence and replace' approach for OPMD, targeting the PABPN1 gene mutation[67](index=67&type=chunk) [BB-301: Design and Mechanism of Action](index=14&type=section&id=BB-301%E2%80%94Design%20and%20Mechanism%20of%20Action) BB-301 is engineered to silence two distinct regions of PABPN1 mRNA via shmiR molecules and simultaneously express a codon-optimized, siRNA-resistant wild type PABPN1 gene to correct the genetic defect with a single localized administration - BB-301 targets two distinct regions of PABPN1 mRNA for gene silencing via two shmiR molecules from a single DNA construct[73](index=73&type=chunk) - It simultaneously drives the expression of a codon-optimized, siRNA-resistant wild type PABPN1 gene[73](index=73&type=chunk) - BB-301 is designed to correct the genetic defect underlying OPMD following a single localized administration[72](index=72&type=chunk) [Operational Updates](index=14&type=section&id=Operational%20Updates) The BB-301 clinical development program in the US includes a 6-month OPMD Natural History Study and a Phase 1b/2a dose-escalation cohort study, with direct administration to pharyngeal muscles and 52 weeks of follow-up - The BB-301 clinical development program in the US includes a 6-month OPMD Natural History (NH) Study and a Phase 1b/2a single-arm, open-label, sequential, dose-escalation cohort study[78](index=78&type=chunk)[81](index=81&type=chunk) - BB-301 is administered directly to the pharyngeal muscles, with 52 weeks of post-dosing follow-up for safety and efficacy evaluation[78](index=78&type=chunk)[81](index=81&type=chunk) - The NH Study characterizes baseline dysphagia and its progression using quantitative radiographic measures (e.g., VFSS), clinical measures, and patient-reported outcomes, which serve as baseline for comparative assessments in the treatment study[81](index=81&type=chunk) [Intellectual Property](index=15&type=section&id=Intellectual%20Property) Benitec actively protects its intellectual property, including patents, know-how, and trade secrets, related to its ddRNAi and 'silence and replace' technologies and product candidates, with patent terms generally 20 years from filing - Benitec actively procures and protects intellectual property, including patents, know-how, and trade secrets, for its ddRNAi and 'silence and replace' technologies and product candidates[80](index=80&type=chunk)[91](index=91&type=chunk) - The OPMD patent portfolio comprises five active families covering shRNA/shmiRs targeting PABPN1, the BB-301 'silence and replace' construct, treatment strategies, proprietary AAV vectors, and specialized injection devices/methods[82](index=82&type=chunk) - Patent terms are generally 20 years from filing, with potential for Patent Term Adjustment (PTA) and Patent Term Extension (PTE) for FDA-approved drugs, extending up to five years[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) [Manufacturing](index=18&type=section&id=Manufacturing) Benitec relies on contract manufacturing organizations (CMOs) for product candidate production and is exploring long-term alliances to ensure cGMP-compliant materials at reasonable scale and cost - Benitec does not own manufacturing facilities and relies on third-party contract manufacturing organizations (CMOs) for the production of its product candidates[96](index=96&type=chunk) - The company is exploring long-term manufacturing alliances to produce materials at reasonable scale and cost for future commercialization efforts[96](index=96&type=chunk) - Manufacturing is subject to extensive cGMP regulations, which CMOs must comply with[97](index=97&type=chunk) [Sales and Marketing](index=19&type=section&id=Sales%20and%20Marketing) Benitec has not yet established its own sales and marketing operations, intending to commercialize products through strategic alliances or direct sales upon approval, depending on clinical results and funding - Benitec has not established sales, marketing, or product distribution operations due to its product candidates being in preclinical or clinical development[98](index=98&type=chunk) - Upon approval, the company intends to market products through strategic alliances and distribution agreements with third parties, or directly in selected geographical segments[98](index=98&type=chunk) - The commercialization strategy depends on clinical trial results, funding availability, and acceptable commercial terms with third parties[98](index=98&type=chunk) [Competition](index=19&type=section&id=Competition) The biopharmaceutical industry is highly competitive, with Benitec facing larger, better-funded competitors and intense competition based on efficacy, safety, convenience, price, and reimbursement - The biopharmaceutical industry is intensely competitive, with Benitec facing larger, better-funded pharmaceutical and biotechnology companies, as well as academic and governmental entities[99](index=99&type=chunk)[100](index=100&type=chunk)[102](index=102&type=chunk) - Benitec's ddRNAi technology provides competitive advantages, but it competes with existing and new therapies, including other gene therapy and gene silencing approaches, though no direct gene therapy competitors for OPMD are currently known[100](index=100&type=chunk)[101](index=101&type=chunk) - Competition is expected to intensify based on efficacy, safety, convenience, price, and reimbursement, potentially leading to reduced commercial opportunity if competitors offer superior or less expensive products[103](index=103&type=chunk)[104](index=104&type=chunk) [Government Regulation](index=20&type=section&id=Government%20Regulation) Benitec is subject to extensive and evolving government regulations by the FDA and international agencies across all stages of product development, approval, and commercialization, with non-compliance leading to severe sanctions - Benitec is subject to extensive regulation by the FDA and other agencies in the US, and similar regulations internationally, covering all aspects of product development, approval, and commercialization[107](index=107&type=chunk)[108](index=108&type=chunk) - Non-compliance can lead to severe sanctions, including clinical trial suspension, refusal of marketing applications, product recalls, and civil or criminal penalties[107](index=107&type=chunk) - The regulatory process for gene therapy products is complex and evolving, involving nonclinical testing, IND submission, multi-phase clinical trials, and BLA approval, with potential for Orphan Drug Designation and expedited programs like RMAT[110](index=110&type=chunk)[111](index=111&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[128](index=128&type=chunk)[135](index=135&type=chunk)[137](index=137&type=chunk) [Pharmaceutical Coverage, Pricing and Reimbursement](index=29&type=section&id=Pharmaceutical%20Coverage,%20Pricing%20and%20Reimbursement) Commercial success depends on adequate coverage and reimbursement from third-party payers, who are increasingly implementing cost-containment measures, potentially limiting product usage and sales - Sales of approved products depend on coverage and adequate reimbursement from third-party payers (federal, state, foreign government healthcare programs, commercial insurance, managed healthcare organizations)[157](index=157&type=chunk) - Increasing efforts by payers to reduce reimbursements and implement cost-containment measures could limit net revenue and results[157](index=157&type=chunk) - If products are not considered cost-effective or receive insufficient payment, physician usage could decrease, materially affecting sales and financial condition[158](index=158&type=chunk) [Royalties, Milestone Payments and Other License Fees](index=29&type=section&id=Royalties,%20milestone%20payments%20and%20other%20license%20fees) Benitec is obligated to pay royalties, milestone payments, and other license fees for in-licensed intellectual property, with unpredictable future amounts and potential negative impacts from calculation errors - Benitec is required to pay royalties, milestone payments, and other license fees for in-licensed intellectual property from third parties[159](index=159&type=chunk) - The amount of future royalties is unpredictable, and calculation errors could negatively affect results of operations[159](index=159&type=chunk) - Future license agreements may also include royalty, milestone, and other payment obligations[159](index=159&type=chunk) [Foreign Currency Translation and Other Comprehensive Income (Loss)](index=29&type=section&id=Foreign%20Currency%20Translation%20and%20Other%20Comprehensive%20Income%20(Loss)) Benitec's functional currency is the U.S. dollar, while its Australian subsidiary uses the Australian dollar, with translation adjustments recorded in 'Accumulated other comprehensive loss' and gains/losses in the consolidated statements of operations - The Company's functional and reporting currency is the U.S. dollar; its Australian subsidiary (BBL) uses the Australian dollar[160](index=160&type=chunk) - Assets and liabilities are translated at the balance sheet date exchange rate, and expenses at the average rate[160](index=160&type=chunk) - Translation adjustments are included in 'Accumulated other comprehensive loss' in stockholders' equity, while foreign currency translation gains/losses are in consolidated statements of operations and comprehensive loss[160](index=160&type=chunk) [Capital Raises](index=29&type=section&id=Capital%20Raises) Benitec conducted several capital raises in FY2023-2025, including public and PIPE offerings, generating significant net proceeds through the issuance of common stock and warrants, with some warrant exercise prices reset Capital Raise Summary | Date | Type of Offering | Gross Proceeds (USD) | Net Proceeds (USD) | Key Securities Issued | |---|---|---|---|---| | August 11, 2023 | Underwritten Public Offering | N/A | $27.9 million | Common Stock, Pre-funded Warrants, Common Warrants | | April 22, 2024 | Private Investment in Public Equity (PIPE) | $40.0 million | $37.1 million | Common Stock, Pre-funded Warrants | | March 25, 2025 | Underwritten and Registered Direct Offering | $30.5 million | $28.2 million | Common Stock, Pre-funded Warrants | - The August 2023 public offering resulted in the exercise price of Series 2 Warrants being automatically reset to **$1.9299** due to an exercise price adjustment mechanism[164](index=164&type=chunk) [Employees](index=30&type=section&id=Employees) As of June 30, 2025, Benitec had 19 full-time employees, with 14 in R&D and 5 in general management, all located in the US and not represented by a labor union - As of June 30, 2025, Benitec had **19** full-time employees, with **13** possessing post-graduate degrees[167](index=167&type=chunk) - **14** employees are dedicated to research and development, while **5** are in finance, legal, human resources, facilities, and general management[167](index=167&type=chunk) - All employees are in the United States and are not represented by any labor union[167](index=167&type=chunk) [Corporate Information](index=30&type=section&id=Corporate%20Information) Benitec Biopharma Inc. was incorporated in Delaware in 2019, re-domiciled from Australia in 2020, has its principal offices in Hayward, California, and its common stock trades on Nasdaq under 'BNTC' - Benitec Biopharma Inc. was incorporated in Delaware on November 22, 2019, and re-domiciled from Australia to the U.S. on April 15, 2020[168](index=168&type=chunk) - The company's common stock trades on The Nasdaq Capital Market under the symbol 'BNTC'[170](index=170&type=chunk) - A 1-for-17 reverse stock split was effected on July 26, 2023, with proportional adjustments to outstanding stock options, pre-funded warrants, and common warrants[170](index=170&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors.) This section outlines significant risks, including financial condition, product development, reliance on third parties, commercialization, business operations, intellectual property, and common stock investment - Benitec has incurred significant losses since inception (**$228.2 million** as of June 30, 2025) and anticipates continued losses, requiring additional funding which may not be available on acceptable terms[174](index=174&type=chunk)[176](index=176&type=chunk)[184](index=184&type=chunk) - The company's product candidates are based on novel ddRNAi and 'silence and replace' technologies, which are early in development and have no approved commercial products, posing risks to safety, efficacy, and marketability[175](index=175&type=chunk)[189](index=189&type=chunk)[191](index=191&type=chunk)[193](index=193&type=chunk) - Significant risks include challenges in obtaining regulatory approvals, difficulties in patient enrollment for clinical trials, reliance on third-party manufacturing and collaborations, intense competition, and uncertainties regarding market acceptance and reimbursement for novel gene therapies[175](index=175&type=chunk)[193](index=193&type=chunk)[208](index=208&type=chunk)[243](index=243&type=chunk)[251](index=251&type=chunk)[265](index=265&type=chunk)[273](index=273&type=chunk)[281](index=281&type=chunk) [Risk Factor Summary](index=32&type=section&id=Risk%20Factor%20Summary) This section provides a concise overview of the primary risks and uncertainties that could negatively impact Benitec Biopharma Inc.'s business, financial condition, or operating results - Significant losses since inception and anticipated future losses, impacting market value - Need for additional funding, with potential going concern implications - Product candidates based on unapproved ddRNAi and silence and replace technology - Early stage of product development and challenges in obtaining regulatory approvals - Potential issues with therapeutic delivery to cells - Competition from entities developing similar and novel treatments - Inability to obtain or protect sufficient intellectual property rights [Risks Related to Financial Condition and Capital Requirements](index=32&type=section&id=Risks%20Related%20to%20Our%20Financial%20Condition,%20Capital%20Requirements) Benitec has accumulated **$228.2 million** in losses as of June 30, 2025, expects continued significant losses, and requires substantial additional capital, which may not be available on acceptable terms, potentially impacting its ability to continue as a going concern - As of June 30, 2025, Benitec had accumulated losses of **$228.2 million** and expects to incur significant operating losses for the foreseeable future due to R&D costs[174](index=174&type=chunk)[176](index=176&type=chunk) - The company has never generated revenue from product sales and its ability to achieve profitability depends on successful development, regulatory approvals, manufacturing, and commercialization[178](index=178&type=chunk) - Additional capital will be required, and failure to obtain it on acceptable terms could lead to curtailment of programs, dilution of stockholders, restrictive covenants, or impact the company's ability to continue as a going concern[184](index=184&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk)[188](index=188&type=chunk) [Risks Related to Product Development and Regulatory Approval](index=35&type=section&id=Risks%20Related%20to%20the%20Product%20Development%20and%20Regulatory%20Approval%20of%20Our%20Product%20Candidates) Benitec's product candidates, based on novel ddRNAi and 'silence and replace' technologies, are in early clinical stages, and their development and regulatory approval are highly uncertain, expensive, and time-consuming - Product candidates are based on ddRNAi and 'silence and replace' technologies, with no approved commercial products, making their safety, efficacy, and marketability uncertain[189](index=189&type=chunk)[191](index=191&type=chunk) - Development and regulatory approval are expensive, lengthy, and uncertain, with preclinical results not necessarily predictive of clinical success, and potential for undesirable side effects from gene therapy vectors (e.g., AAV)[193](index=193&type=chunk)[205](index=205&type=chunk)[221](index=221&type=chunk) - Difficulty enrolling patients in clinical trials, leading to delays or increased costs - Regulatory agencies may delay, limit, or deny marketing approval, or impose significant post-approval restrictions - Inability to successfully develop related diagnostics could hinder marketing approval or commercial potential - Failure to develop a pipeline of additional product candidates or obtain orphan drug exclusivity in all markets [Risks Related to Reliance on Third Parties](index=46&type=section&id=Risks%20Related%20to%20Our%20Reliance%20on%20Third%20Parties) Benitec's success heavily depends on third-party collaborators for research, development, commercialization, and manufacturing, with limited control and risks of delays, program discontinuation, or loss of intellectual property rights - Benitec relies heavily on third-party collaborators for research, development, commercialization, and marketing, with limited control over their resources and efforts, posing risks of delays or program discontinuation[243](index=243&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk) - Reliance on third parties for preclinical studies, clinical trials, and manufacturing means any failures or interruptions could extend, delay, or terminate clinical development programs and impact product quality[246](index=246&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk)[251](index=251&type=chunk)[253](index=253&type=chunk) - Sharing trade secrets with third parties increases the risk of disclosure, and dependence on in-licensed intellectual property means reliance on licensors for patent protection, with potential loss of rights if license obligations are not met[260](index=260&type=chunk)[261](index=261&type=chunk)[321](index=321&type=chunk)[323](index=323&type=chunk) [Risks Related to Commercialization](index=50&type=section&id=Risks%20Related%20to%20Commercialization%20of%20Our%20Product%20Candidates) Commercialization depends on securing third-party manufacturing and establishing sales/marketing capabilities, facing market acceptance uncertainty, intense competition, international operational risks, and compliance with complex healthcare laws - Commercialization depends on securing third-party manufacturing and establishing sales/marketing capabilities, which may be difficult to achieve on reasonable terms[262](index=262&type=chunk)[265](index=265&type=chunk) - Market acceptance is uncertain due to potential hesitancy towards novel ddRNAi/silence and replace treatments by physicians, patients, and payers, and intense competition from established companies[267](index=267&type=chunk)[268](index=268&type=chunk)[273](index=273&type=chunk)[277](index=277&type=chunk) - Uncertainty regarding insurance coverage and adequate reimbursement, especially for novel products and orphan drugs - International operations expose the company to diverse regulatory requirements, intellectual property protection challenges, economic instability, and compliance risks - Relationships with healthcare professionals and payers are subject to strict anti-kickback, fraud and abuse, and privacy laws, with potential for significant penalties for non-compliance - Negative public opinion and increased regulatory scrutiny of gene therapy could damage public perception and hinder business operations or approvals [Risks Related to Business Operations](index=56&type=section&id=Risks%20Related%20to%20Our%20Business%20Operations) Benitec faces risks from strategic transactions, reliance on key personnel, managing growth, potential misconduct, product liability claims, and vulnerabilities in IT systems and hazardous material handling - Difficulties in engaging in strategic transactions (collaborations, acquisitions) could divert management, increase expenses, or disrupt business[291](index=291&type=chunk)[292](index=292&type=chunk)[293](index=293&type=chunk) - Success depends on attracting and retaining key management and technical personnel; loss of these individuals could harm R&D programs and business[294](index=294&type=chunk) - Misconduct by employees or third parties (e.g., non-compliance, fraud) could lead to regulatory sanctions, lawsuits, and reputational harm - Exposure to product liability claims from clinical trials and commercial sales, potentially resulting in substantial liability and costs - Reliance on biological and hazardous materials, concentrated laboratory operations, and investment of cash and cash equivalents are subject to risks - Internal computer and IT systems are vulnerable to security breaches, potentially disrupting product development and incurring liabilities [Risks Related to Intellectual Property](index=61&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) Benitec's success hinges on protecting IP through patents, know-how, and trade secrets, but the patent process is expensive, uncertain, and vulnerable to third-party claims, changes in law, and enforcement challenges - Benitec relies on patents, know-how, and trade secrets to protect its IP, but the patent process is expensive, time-consuming, and uncertain, with risks of failure to obtain broad claims or invalidation[312](index=312&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk)[316](index=316&type=chunk) - Reliance on in-licensed IP means dependence on licensors for patent prosecution and enforcement, with potential loss of rights if license obligations are breached[321](index=321&type=chunk)[322](index=322&type=chunk)[323](index=323&type=chunk) - Third-party claims of infringement could prevent or delay commercialization, leading to substantial damages or licensing costs - Risks of claims challenging inventorship or ownership of patents and other IP - Non-compliance with governmental patent agency requirements could lead to loss of patent rights - Changes in U.S. patent law (e.g., Leahy-Smith Act, Supreme Court rulings) have diminished patent value and increased uncertainty - Protecting IP outside the United States is challenging due to less extensive legal protections and enforcement difficulties in foreign jurisdictions [Risks Related to Common Stock Investment](index=69&type=section&id=Risks%20Related%20to%20an%20Investment%20in%20Our%20Common%20Stock) Investing in Benitec's common stock carries risks including significant stockholder influence, high price volatility, potential for dilution from future equity issuances, lack of dividends, and corporate governance structures that may prevent acquisitions - Significant stockholders, such as Suvretta Capital, hold substantial common stock and warrants, potentially exerting significant influence that may not align with other stockholders' interests[355](index=355&type=chunk)[357](index=357&type=chunk)[358](index=358&type=chunk) - The market price and trading volume of common stock are highly volatile, influenced by clinical trial results, regulatory actions, financial performance, and broader market conditions, potentially leading to significant price declines[359](index=359&type=chunk)[360](index=360&type=chunk)[361](index=361&type=chunk) - Failure to establish and maintain proper internal financial reporting controls, including a material weakness in share-based compensation calculation, has led to prior financial restatements and could impair future financial statement accuracy and investor confidence - The company has never declared or paid dividends and does not anticipate doing so, making stock appreciation the sole source of investment return - Future sales and issuances of common stock or rights to purchase common stock could result in substantial dilution to existing stockholders - Corporate governance structure may prevent acquisitions at a premium, and a limited number of unreserved authorized shares may hinder future capital raises without stockholder approval [Item 1B. Unresolved Staff Comments](index=74&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) This section states that there are no unresolved staff comments from the SEC regarding the company's filings - There are no unresolved staff comments[377](index=377&type=chunk) [Item 1C. Cybersecurity](index=74&type=section&id=Item%201C.%20Cybersecurity.) Benitec has implemented an information security program to manage cybersecurity risks to its critical networks and data, with Audit Committee oversight, and no material risks identified to date [Risk Management and Strategy](index=74&type=section&id=Risk%20Management%20and%20Strategy) Benitec has implemented an information security program to identify, assess, and manage material cybersecurity risks to its critical computer networks, systems, and data, including intellectual property and clinical trial participant information - Benitec maintains an information security program to identify, assess, and manage cybersecurity risks to its critical computer networks, systems, and data, including intellectual property and patient information[378](index=378&type=chunk) - Mechanisms, controls, and technologies designed to prevent or mitigate system intrusion or data loss, theft, misuse, or other security incidents or vulnerabilities and maintain a stable and secure information technology environment - Information security policies, network and device security, encryption standards, risk management, as well as security tools such as malware protection and secure authentication tools - Regular trainings for employees and senior management on cyber and information security [Governance](index=74&type=section&id=Governance) The Audit Committee oversees Benitec's cybersecurity risks, with periodic reports from senior leadership, and no material risks from known cybersecurity threats or incidents have been identified to date - The Audit Committee of the Board of Directors oversees and reviews the Company's cybersecurity risks[379](index=379&type=chunk) - Senior leadership, including the CFO and CEO, provides periodic reports to the Board and Audit Committee[379](index=379&type=chunk) - To date, no material risks from known cybersecurity threats or incidents have been identified[380](index=380&type=chunk) [Item 2. Properties](index=74&type=section&id=Item%202.%20Properties.) Benitec's corporate headquarters and R&D facility are in Hayward, California, with a lease expiring in December 2027, and a new office in Los Angeles, California, with a lease expiring in July 2026 - Benitec's corporate headquarters and R&D facility are in Hayward, California (7,295 sq ft, lease expires Dec 2027)[381](index=381&type=chunk) - A new office space in Los Angeles, California, has a lease expiring in July 2026[381](index=381&type=chunk) - Management believes these facilities are suitable and adequate for anticipated needs[381](index=381&type=chunk) [Item 3. Legal Proceedings](index=74&type=section&id=Item%203.%20Legal%20Proceedings.) Benitec Biopharma Inc. is not currently a party to any material legal proceedings and is unaware of any material pending or threatened litigation - Benitec is not currently a party to any material legal proceedings[382](index=382&type=chunk) [Item 4. Mine Safety Disclosures](index=74&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to Benitec Biopharma Inc - This item is not applicable[383](index=383&type=chunk) [Part II - Financial Information](index=75&type=section&id=PART%20II) This part presents Benitec's financial condition, results of operations, and related disclosures, including a restatement of prior period financial statements and management's discussion and analysis [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=75&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) Benitec's common stock trades on Nasdaq under 'BNTC', with a closing price of **$13.99** on September 18, 2025, and approximately 1,128 record holders, but the company has never paid dividends and does not anticipate doing so - Benitec's common stock trades on Nasdaq under the symbol 'BNTC'[386](index=386&type=chunk) - The closing sale price on September 18, 2025, was **$13.99** per share[386](index=386&type=chunk) - As of September 15, 2025, there were approximately **1,128** record holders of common stock[387](index=387&type=chunk) - The company has never declared or paid cash dividends and does not anticipate doing so in the foreseeable future, retaining funds for operations and growth[388](index=388&type=chunk) [Item 6. Reserved](index=75&type=section&id=Item%206.%20Reserved.) This item is reserved and contains no information - This item is reserved[392](index=392&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=76&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's discussion and analysis of Benitec's financial condition and operating results, including a restatement of prior period financial statements due to an error in share-based compensation calculation - The company restated prior period financial statements (Q3 2025 and Q4 2024) due to an error in share-based compensation expense calculation[394](index=394&type=chunk) - Benitec is a clinical-stage biotechnology company focused on ddRNAi and 'silence and replace' genetic medicines, with BB-301 for OPMD as its lead candidate[395](index=395&type=chunk)[396](index=396&type=chunk)[397](index=397&type=chunk) - The company incurred cumulative losses of **$218 million** as of June 30, 2025, and expects continued operating losses, relying on capital financing[422](index=422&type=chunk)[429](index=429&type=chunk) [Restatement of Prior Period Financial Statements](index=76&type=section&id=Restatement%20of%20Prior%20Period%20Financial%20Statements) Benitec has restated its unaudited condensed consolidated financial statements for the quarterly periods ended March 31, 2025, and December 31, 2024, to correct misstatements related to share-based compensation expense - Benitec has restated its unaudited condensed consolidated financial statements for the quarterly periods ended March 31, 2025, and December 31, 2024[394](index=394&type=chunk) - The restatement corrects misstatements related to accounting for share-based compensation expense[394](index=394&type=chunk) [Overview](index=76&type=section&id=Overview) Benitec is a clinical-stage biotechnology company focused on developing novel genetic medicines using its proprietary 'silence and replace' ddRNAi platform, with BB-301 for OPMD as its lead product - Benitec is a clinical-stage biotechnology company focused on developing novel genetic medicines using its proprietary DNA-directed RNA interference (ddRNAi) and 'silence and replace' platforms[395](index=395&type=chunk)[396](index=396&type=chunk) - The 'silence and replace' platform combines RNAi with gene therapy to facilitate sustained silencing of disease-causing genes and simultaneous delivery of wildtype replacement genes following a single administration[396](index=396&type=chunk)[398](index=398&type=chunk) - BB-301, the lead therapeutic for OPMD, has been granted Orphan Drug Designation in the United States and the European Union, offering potential for robust and durable clinical activity[397](index=397&type=chunk)[398](index=398&type=chunk) [Financing and Financing-Related Transactions (FY2025)](index=77&type=section&id=Financing%20and%20Financing-Related%20Transactions%20During%20the%20Year%20Ended%20June%2030,%202025) During FY2025, Benitec entered into an 'at-the-market' offering agreement for up to **$75 million** in common stock and completed an underwritten and registered direct offering, generating **$28.2 million** net proceeds - On October 11, 2024, Benitec entered into a Sales Agreement for an 'at-the-market offering' of up to **$75 million** in common stock, but no shares were sold under this agreement as of June 30, 2025[402](index=402&type=chunk) - On March 25, 2025, the company completed an underwritten and registered direct offering, issuing common stock and pre-funded warrants, generating gross proceeds of approximately **$30.5 million** and net proceeds of approximately **$28.2 million**[403](index=403&type=chunk) [Results of Operations](index=78&type=section&id=Results%20of%20Operations) Benitec reported no revenue for FY2025 and FY2024, with total operating expenses significantly increasing to **$41.765 million** in FY2025, primarily due to a **$14.5 million** increase in share-based compensation within G&A expenses - Benitec generated no revenue for the years ended June 30, 2025, and 2024[409](index=409&type=chunk) Operating Expenses (US$'000) | Expense Category | Year Ended June 30, 2025 | Year Ended June 30, 2024 | Change (YoY) | |---|---|---|---| | Royalties and license fees | $0 | $(108) | $108 | | Research and development | $18,332 | $15,609 | +$2,723 | | General and administrative | $23,433 | $6,989 | +$16,444 | | **Total operating expenses** | **$41,765** | **$22,490** | **+$19,275** | - The increase in General and administrative expenses for FY2025 was primarily due to a **$14.5 million** increase in share-based compensation, along with higher legal fees, consulting fees, travel expenses, and salaries and wages[418](index=418&type=chunk) Other Income (Loss), Net (US$'000) | Category | Year Ended June 30, 2025 | Year Ended June 30, 2024 | |---|---|---| | Foreign currency transaction gain (loss) | $(71) | $40 | | Interest income, net | $3,286 | $904 | | Other expense, net | $(131) | $(204) | | Gain on extinguishment of liabilities | $764 | $0 | | Unrealized loss on investment | $0 | $(1) | | **Total other income (loss), net** | **$3,848** | **$739** | [Liquidity and Capital Resources](index=81&type=section&id=Liquidity%20and%20Capital%20Resources) Benitec incurred cumulative losses of **$218 million** as of June 30, 2025, and negative cash flows from operations, but estimates its **$97.7 million** cash and cash equivalents will fund operations for at least the next twelve months, relying on capital financing - Benitec had accumulated losses of **$218 million** as of June 30, 2025, and expects continued operating losses[422](index=422&type=chunk) - As of June 30, 2025, cash and cash equivalents were approximately **$97.7 million**[423](index=423&type=chunk) Net Cash Flow Activity (US$'000) | Activity | Year Ended June 30, 2025 | Year Ended June 30, 2024 | |---|---|---| | Operating activities | $(23,588) | $(19,403) | | Investing activities | $(18) | $(179) | | Financing activities | $70,485 | $68,029 | | Effects of exchange rate changes | $49 | $(8) | | **Net increase in cash, cash equivalents, and restricted cash** | **$46,928** | **$48,439** | | Cash, cash equivalents, and restricted cash, end of period | $97,857 | $50,929 | - The company estimates its cash and cash equivalents will be sufficient to fund operations for at least the next twelve months[430](index=430&type=chunk) [Contractual Obligations and Commercial Commitments](index=83&type=section&id=Contractual%20Obligations%20and%20Commercial%20Commitments) Benitec has operating leases for office spaces in Hayward and Los Angeles, but contracts with third-party service providers are generally cancellable and not considered contractual obligations, with no off-balance sheet arrangements - Benitec has operating leases for office space in Hayward, California (expires Dec 2027) and Los Angeles, California (expires July 2026)[434](index=434&type=chunk) - Contracts with third-party service providers (CROs, CDMOs) are generally cancellable and not considered contractual obligations[436](index=436&type=chunk) - The company does not have any off-balance sheet arrangements[435](index=435&type=chunk) [Critical Accounting Policies and Significant Accounting Estimates](index=83&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Accounting%20Estimates) Benitec's critical accounting policies involve significant judgments and estimates, particularly for research and development expense accruals and share-based compensation, which are determined using the Black-Scholes Option Pricing Model - Critical accounting policies require significant judgments, assumptions, and estimates that materially affect financial condition or results of operations[438](index=438&type=chunk) - Research and development expenses are accrued based on estimates of work completed and agreements with third-party service providers[441](index=441&type=chunk) - Share-based compensation expense is determined using the Black-Scholes Option Pricing Model based on grant-date fair value and recognized over the service/vesting period using the graded vesting attribution method[442](index=442&type=chunk) [Recent Accounting Pronouncements](index=84&type=section&id=Recent%20Accounting%20Pronouncements) Benitec adopted ASU No. 2023-07, Segment Reporting, in FY2025 and is currently evaluating the impact of ASU No. 2023-09, Income Taxes, and ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures - Benitec adopted ASU No. 2023-07, Segment Reporting, during the fiscal year ended June 30, 2025, enhancing disclosures about significant segment expenses[514](index=514&type=chunk)[517](index=517&type=chunk) - The company is evaluating ASU No. 2023-09, Income Taxes (effective after Dec 15, 2024), and assessing ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (effective after Dec 15, 2026)[515](index=515&type=chunk)[516](index=516&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=84&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk.) As a smaller reporting company, Benitec Biopharma Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Benitec is not required to provide quantitative and qualitative disclosures about market risk[444](index=444&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=85&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) This section presents Benitec Biopharma Inc.'s audited consolidated financial statements for FY2025 and FY2024, prepared in accordance with GAAP, reflecting a restatement of prior interim periods due to a share-based compensation error - The section includes audited consolidated financial statements for fiscal years ended June 30, 2025 and 2024, prepared in accordance with GAAP[449](index=449&type=chunk) - The financial statements reflect a restatement of prior interim periods due to an error in share-based compensation calculation[519](index=519&type=chunk) Key Financial Statements Included | Document | |---| | Report of Independent Registered Public Accounting Firm | | Consolidated Balance Sheets | | Consolidated Statements of Operations and Comprehensive Loss | | Consolidated Statements of Stockholders' Equity | | Consolidated Statements of Cash Flows | | Notes to Consolidated Financial Statements | [Report of Independent Registered Public Accounting Firm](index=86&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Baker Tilly US, LLP issued an unqualified opinion on Benitec's consolidated financial statements for FY2025 and FY2024, affirming fair presentation in accordance with GAAP, without auditing internal control over financial reporting or identifying critical audit matters - Baker Tilly US, LLP issued an unqualified opinion on the consolidated financial statements for FY2025 and FY2024, affirming fair presentation in accordance with GAAP[449](index=449&type=chunk) - The firm did not audit internal control over financial reporting and identified no critical audit matters[451](index=451&type=chunk)[453](index=453&type=chunk) [Consolidated Balance Sheets](index=87&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, Benitec reported total assets of **$99.592 million**, driven by an increase in cash and cash equivalents to **$97.744 million**, with total liabilities decreasing and stockholders' equity significantly increasing to **$97.295 million** Consolidated Balance Sheet Highlights (US$'000) | Category | June 30, 2025 | June 30, 2024 | Change | |---|---|---|---| | Cash and cash equivalents | $97,744 | $50,866 | +$46,878 | | Total assets | $99,592 | $52,210 | +$47,382 | | Total liabilities | $2,297 | $4,962 | -$2,665 | | Total stockholders' equity | $97,295 | $47,248 | +$50,047 | - The significant increase in total assets and stockholders' equity is primarily due to capital raises and warrant exercises during the fiscal year[427](index=427&type=chunk)[462](index=462&type=chunk) [Consolidated Statements of Operations and Comprehensive Loss](index=88&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Benitec reported a net loss of **$37.917 million** for FY2025, an increase from **$21.751 million** in FY2024, driven by higher operating expenses, resulting in a loss per share of **$(1.05)** despite increased shares outstanding Consolidated Statements of Operations Highlights (US$'000) | Category | Year Ended June 30, 2025 | Year Ended June 30, 2024 | |---|---|---| | Total operating expenses | $41,765 | $22,490 | | Loss from operations | $(41,765) | $(22,490) | | Total other income (loss), net | $3,848 | $739 | | **Net loss** | **$(37,917)** | **$(21,751)** | | Total comprehensive loss | $(37,864) | $(21,813) | Per Share Data | Metric | Year Ended June 30, 2025 | Year Ended June 30, 2024 | |---|---|---| | Net loss per share (Basic and Diluted) | $(1.05) | $(1.22) | | Weighted average shares outstanding (Basic and Diluted) | 36,209,271 | 18,364,386 | - The increase in net loss was primarily driven by higher research and development and general and administrative expenses[417](index=417&type=chunk)[418](index=418&type=chunk) [Consolidated Statements of Stockholders' Equity](index=89&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Benitec's total stockholders' equity significantly increased to **$97.295 million** at June 30, 2025, primarily due to **$28.208 million** from equity offerings, **$2.999 million** from Series 2 warrant exercises, and **$39.278 million** from common warrant exercises, partially offset by a net loss of **$37.917 million** Changes in Stockholders' Equity (US$'000) | Category | Year Ended June 30, 2025 | |---|---| | Balance at June 30, 2024 | $47,248 | | Issuance of common stock and pre-funded warrants (net) | $28,208 | | Exercise of Series 2 warrants | $2,999 | | Exercise of common warrants (net) | $39,278 | | Share-based compensation | $17,426 | | Foreign currency translation gain | $53 | | Net loss | $(37,917) | | **Balance at June 30, 2025** | **$97,295** | - Total stockholders' equity increased by **$50.047 million**, primarily due to proceeds from equity offerings and warrant exercises, partially offset by the net loss[462](index=462&type=chunk) [Consolidated Statements of Cash Flows](index=90&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For FY2025, Benitec used **$23.588 million** in operating activities, while financing activities provided **$70.485 million** from equity issuances and warrant exercises, resulting in a net increase in cash of **$46.928 million** to a year-end total of **$97.857 million** Consolidated Statements of Cash Flows (US$'000) | Activity | Year Ended June 30, 2025 | Year Ended June 30, 2024 | |---|---|---| | Net cash used in operating activities | $(23,588) | $(19,403) | | Net cash used in investing activities | $(18) | $(179) | | Net cash provided by financing activities | $70,485 | $68,029 | | Effects of exchange rate changes | $49 | $(8) | | **Net increase in cash, cash equivalents, and restricted cash** | **$46,928** | **$48,439** | | Cash, cash equivalents, and restricted cash, end of period | $97,857 | $50,929 | - Net cash used in operating activities increased due to higher net loss, partially offset by non-cash expenses[425](index=425&type=chunk) - Financing activities were the primary source of cash, driven by equity issuances and warrant exercises[427](index=427&type=chunk) [Notes to Consolidated Financial Statements](index=91&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes to Benitec's consolidated financial statements, covering business overview, basis of presentation, significant accounting policies, and the restatement of prior period financial statements - The notes detail Benitec's business as a developer of novel genetic medicines using 'Silence and Replace' ddRNAi platform[468](index=468&type=chunk) - Significant accounting policies include foreign currency translation, fair value measurements, cash and cash equivalents, property and equipment, leases, and basic/diluted net loss per share[480](index=480&type=chunk)[483](index=483&type=chunk)[485](index=485&type=chunk)[490](index=490&type=chunk)[494](index=494&type=chunk)[500](index=500&type=chunk) - The notes explain the restatement of prior period financial statements due to an error in share-based compensation calculation, impacting additional paid-in capital, accumulated deficit, net loss, and loss per share[518](index=518&type=chunk)[519](index=519&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=122&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure.) Benitec Biopharma Inc. reports no changes in or disagreements with its accountants on accounting and financial disclosure matters - There are no changes in or disagreements with accountants on accounting and financial disclosure[631](index=631&type=chunk) [Item 9A. Controls and Procedures](index=122&type=section&id=Item%209A.%20Controls%20and%20Procedures.) Benitec's management concluded that its disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting related to share-based compensation calculation, leading to prior restatements, but remediation steps are underway - Benitec's disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting[632](index=632&type=chunk)[634](index=634&type=chunk) - The material weakness is related to inadequate design and implementation of controls over the share-based compensation calculation review process, leading to the restatement of prior interim financial statements[635](index=635&type=chunk) - Remediation steps include updating equity system configuration and enhancing management's quarterly share-based compensation review process - A previously reported material weakness concerning complex, non-routine transactions was remediated as of June 30, 2025, through enhanced financial reporting controls, formalizing transaction flow, hiring additional accounting personnel, and engaging accounting advisory firms [Item 9B. Other Information](index=124&type=section&id=Item%209B.%20Other%20Information.) During the three-month period ended June 30, 2025, none of Benitec's directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three-month period ended June 30, 2025[644](index=644&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=124&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections.) This section states that there are no disclosures regarding foreign jurisdictions that prevent inspections for Benitec Biopharma Inc - No disclosures regarding foreign jurisdictions that prevent inspections[645](index=645&type=chunk) [Part III - Directors, Executive Officers, and Corporate Governance](index=125&type=section&id=PART%20III) This part incorporates by reference information regarding Benitec's directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and principal accountant fees from the upcoming 2025 Proxy Statement [Item 10. Directors, Executive Officers and Corporate Governance](index=125&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance.) Information on Benitec's directors, executive officers, and corporate governance, including the Code of Ethics and Business Conduct, is incorporated by reference from the Proxy Statement to be filed for the 2025 Annual Meeting of Stockholders - Information on directors, executive officers, and corporate governance is incorporated by reference from the Proxy Statement[647](index=647&type=chunk) - The company has adopted a written Code of Ethics and Business Conduct applicable to all officers, directors, and employees[648](index=648&type=chunk) [Item 11. Executive Compensation](index=125&type=section&id=Item%2011.%20Executive%20Compensation.) Information regarding executive compensation and director compensation for Benitec Biopharma Inc. is incorporated by reference from the Proxy Statement to be filed for the 2025 Annual Meeting of Stockholders - Information on executive compensation and director compensation is incorporated by reference from the Proxy Statement[649](index=649&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=125&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters.) Details on the security ownership of certain beneficial owners and management, as well as related stockholder matters, are incorporated by reference from the Proxy Statement to be filed for Benitec's 2025 Annual Meeting of Stockholders - Information on security ownership of certain beneficial owners and management is incorporated by reference from the Proxy Statement[650](index=650&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=125&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence.) Information concerning certain relationships and related party transactions, along with director independence, is incorporated by reference from the Proxy Statement to be filed for Benitec's 2025 Annual Meeting of Stockholders - Information on certain relationships, related party transactions, and director independence is incorporated by reference from the Proxy Statement[651](index=651&type=chunk) [Item 14. Principal Accountant Fees and Services](index=125&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services.) Information regarding principal accountant fees and services is incorporated by reference from the Proxy Statement to be filed for Benitec's 2025 Annual Meeting of Stockholders, specifically under the caption 'Ratification of Appointment of Independent Registered Public Accounting Firm' - Information on principal accountant fees and services is incorporated by reference from the Proxy Statement under 'Ratification of Appointment of Independent Registered Public Accounting Firm'[652](index=652&type=chunk) [Part IV - Exhibits, Financial Statement Schedules, and Signatures](index=126&type=section&id=PART%20IV) This part lists all exhibits and financial statement schedules included in or incorporated by reference into the Form 10-K, and includes the duly signed report by the company's executive officers and directors [Item 15. Exhibits and Financial Statement Schedules](index=126&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules.) This section lists all exhibits and financial statement schedules included in or incorporated by reference into the Form 10-K, referencing Item 8 for financial statements and providing a comprehensive Exhibit Index of corporate documents - This section lists all exhibits and financial statement schedules included in or incorporated by reference into the Form 10-K[656](index=656&type=chunk) - Financial statements are referenced from Item 8, and required schedule information is within the notes to the consolidated financial statements[654](index=654&type=chunk)[655](index=655&type=chunk) - The Exhibit Index includes various corporate documents, such as amendments to the Certificate of Incorporation, forms of warrants, employment agreements, and the 2020 Equity and Incentive Compensation Plan[656](index=656&type=chunk)[657](index=657&type=chunk)[658](index=658&type=chunk) [Item 16. Form 10-K Summary](index=129&type=section&id=Item%2016.%20Form%2010-K%20Summary.) This item indicates that a Form 10-K Summary is not applicable for Benitec Biopharma Inc - Form 10-K Summary is not applicable[661](index=661&type=chunk) [Signatures](index=130&type=section&id=Signatures) The Form 10-K report is duly signed on behalf of Benitec Biopharma Inc. by its Chief Executive Officer, Dr. Jerel Banks, and Chief Financial Officer, Megan Boston, along with other directors, on September 22, 2025 - The Form 10-K report is signed by Dr. J

The Company's consolidated net loss for fiscal year ended June 30, 2025 was primarily due to expenses in connection with the funding of Marygold & Co. (U.S.), a wholly owned subsidiary of the Company, for development and marketing of the Marygold mobile fintech app. The Company halted its funding to this business unit as of March 31, 2025, and thus marketing expenses, salaries, and general administrative expenses on a consolidated basis were curtailed significantly for the fourth quarter ended June 30, 2025 ...

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Ennis, Inc. reported a slight revenue decrease but improved profitability metrics, including gross profit margin, net earnings, and diluted EPS, for both the quarter and six-month period ended August 31, 2025 [Quarterly Performance Overview](index=1&type=section&id=Quarterly%20Performance%20Overview) For the quarter ended August 31, 2025, Ennis, Inc. reported a slight revenue decrease but significant improvements in gross profit margin, net earnings, and diluted EPS compared to the prior year's quarter | Metric | Q3 2025 (Millions) | Q3 2024 (Millions) | Change (Millions) | Change (%) | | :------------------- | :----------------- | :----------------- | :---------------- | :--------- | | Revenues | $98.7 | $99.0 | -$0.3 | -0.3% | | Gross Profits | $30.1 | $29.8 | +$0.3 | +1.0% | | Gross Profit Margin | 30.5% | 30.1% | +0.4 pts | | | Net Earnings | $13.2 | $10.3 | +$2.9 | +28.2% | | Diluted EPS | $0.51 | $0.40 | +$0.11 | +27.5% | [Six-Month Period Performance Overview](index=1&type=section&id=Six-Month%20Period%20Performance%20Overview) For the six-month period ended August 31, 2025, the Company experienced a revenue decline but improved gross profit margin, net earnings, and diluted EPS compared to the same period last year | Metric | 6M 2025 (Millions) | 6M 2024 (Millions) | Change (Millions) | Change (%) | | :------------------- | :----------------- | :----------------- | :---------------- | :--------- | | Revenues | $195.9 | $202.1 | -$6.2 | -3.1% | | Gross Profit Margin | 30.8% | 30.0% | +0.8 pts | | | Net Earnings | $23.0 | $21.0 | +$2.0 | +9.5% | | Diluted EPS | $0.89 | $0.80 | +$0.09 | +11.3% | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlights improved gross margins and EBITDA, positive impacts from a legal settlement and acquisitions, and a strong debt-free balance sheet supporting share repurchases and future acquisitions [CEO's Review of Performance](index=1&type=section&id=CEO's%20Review%20of%20Performance) CEO Keith Walters noted that quarterly performance met expectations despite a sales volume decline, driven by improved gross margin and a significant increase in EBITDA. Results were positively impacted by a legal settlement and contributions from recent acquisitions - Sales volume declined, but gross margin improved to **30.5%** (up **40 basis points YoY**), though down **60 basis points QoQ**[3](index=3&type=chunk) EBITDA Performance | Metric | Q3 2025 (Millions) | Q2 2025 (Millions) | Q3 2024 (Millions) | | :----- | :----------------- | :----------------- | :----------------- | | EBITDA | $22.5 | $17.7 | $18.4 | | % of Sales | 22.8% | 18.2% | 18.6% | - A **$5.7 million** collection from a trade secret theft judgment positively impacted the quarter's results[3](index=3&type=chunk) - Recent acquisitions contributed approximately **$5.5 million** in revenues for the quarter and **$11.0 million** for the six-month period, positively impacting diluted EPS by **$0.03** for the quarter and **$0.06** for the six-month period, with Northeastern Envelope Company (NEC) and Printing Technologies, Inc. (PTI) delivering strong results[4](index=4&type=chunk) [Strategic Initiatives and Financial Position](index=3&type=section&id=Strategic%20Initiatives%20and%20Financial%20Position) The Company maintains a strong, debt-free balance sheet with sufficient cash reserves. Strategic inventory building for carbonless paper is complete, and cash flow is expected to strengthen. Ennis continues to repurchase shares and plans to pursue acquisitions without debt - The Company boasts a strong balance sheet with **no debt** and sufficient cash reserves, expecting cash flow to strengthen in coming quarters[6](index=6&type=chunk) - Strategically built additional inventory of carbonless paper following the closure of the only domestic producer, anticipating lower purchasing needs ahead[6](index=6&type=chunk) - Repurchased **456,671 shares** of common stock for **$8.5 million** year-to-date[6](index=6&type=chunk) - Financial position allows for debt-free operations and acquisitions, with access to credit for larger opportunities[6](index=6&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) The Company presents EBITDA as a key non-GAAP measure, providing a reconciliation to net earnings to offer additional insights into operational performance [EBITDA Reconciliation](index=3&type=section&id=EBITDA%20Reconciliation) The Company provides EBITDA as a non-GAAP financial measure to offer supplemental information on financial and business trends, reconciling it to net earnings for both the three- and six-month periods - EBITDA is presented as a non-GAAP measure to provide supplemental information for assessing results of operations, calculated as net earnings before interest expense, tax expense, depreciation, and amortization[7](index=7&type=chunk)[8](index=8&type=chunk) EBITDA Reconciliation Table | Metric (in thousands) | Three months ended Aug 31, 2025 | Three months ended Aug 31, 2024 | Six months ended Aug 31, 2025 | Six months ended Aug 31, 2024 | | :-------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net earnings | $13,155 | $10,308 | $22,953 | $20,995 | | Income tax expense | $4,989 | $3,909 | $8,706 | $7,963 | | Depreciation & amortization | $4,309 | $4,186 | $8,492 | $8,430 | | **EBITDA (non-GAAP)** | **$22,453** | **$18,403** | **$40,151** | **$37,388** | | % of sales | 22.8% | 18.6% | 20.5% | 18.5% | [Other Corporate News](index=3&type=section&id=Other%20Corporate%20News) The Board of Directors declared a quarterly cash dividend of 25.0 cents per share, payable in November 2025 [Quarterly Dividend Declaration](index=3&type=section&id=Quarterly%20Dividend%20Declaration) Ennis, Inc.'s Board of Directors declared a quarterly cash dividend of 25.0 cents per share - A quarterly cash dividend of **25.0 cents per share** was declared on September 19, 2025[11](index=11&type=chunk) - The dividend is payable on November 7, 2025, to shareholders of record on October 10, 2025[11](index=11&type=chunk) [Company Information](index=3&type=section&id=Company%20Information) Ennis, Inc. is a leading private-label printed business product supplier, providing a safe harbor statement for forward-looking information subject to various business risks [About Ennis, Inc.](index=3&type=section&id=About%20Ennis,%20Inc.) Ennis, Inc., founded in 1909 and headquartered in Midlothian, Texas, is a leading private-label printed business product supplier in the U.S., offering a wide range of custom printed products through a national distributor network - Founded in 1909, Ennis, Inc. is one of the largest private-label printed business product suppliers in the United States[12](index=12&type=chunk) - The Company manufactures and sells various products including business forms, integrated forms and labels, presentation products, advertising specialties, secure documents, specialty packaging, and envelopes[12](index=12&type=chunk) [Forward-Looking Statements (Safe Harbor)](index=5&type=section&id=Forward-Looking%20Statements%20(Safe%20Harbor)) This section provides a safe harbor statement under the Private Securities Litigation Reform Act of 1995, cautioning that forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations - Forward-looking statements are identified by words like 'anticipate,' 'expect,' 'believe,' and 'intend,' and are subject to risks and uncertainties[13](index=13&type=chunk) - Key risks include erosion of demand due to digital technologies, risks related to acquisitions and integration, and variability in raw material prices (e.g., paper)[13](index=13&type=chunk) - The Company disclaims any duty to update or revise forward-looking statements after the release date[13](index=13&type=chunk) [Unaudited Condensed Consolidated Financial Information](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Information) This section presents the unaudited condensed consolidated operating results, balance sheet, and cash flow information for the periods ended August 31, 2025 [Condensed Consolidated Operating Results](index=6&type=section&id=Condensed%20Consolidated%20Operating%20Results) The condensed consolidated operating results detail the Company's financial performance for the three and six months ended August 31, 2025, compared to the prior year, showing changes in sales, costs, and earnings Condensed Consolidated Operating Results (in thousands) | Metric (in thousands) | Three months ended Aug 31, 2025 | Three months ended Aug 31, 2024 | Six months ended Aug 31, 2025 | Six months ended Aug 31, 2024 | | :-------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net sales | $98,676 | $99,038 | $195,872 | $202,146 | | Cost of goods sold | $68,574 | $69,259 | $135,541 | $141,463 | | Gross profit | $30,102 | $29,779 | $60,331 | $60,683 | | Selling, general and administrative | $17,719 | $16,557 | $34,665 | $33,727 | | Income from operations | $12,383 | $13,183 | $25,666 | $26,913 | | Net earnings | $13,155 | $10,308 | $22,953 | $20,995 | | Diluted EPS | $0.51 | $0.40 | $0.89 | $0.80 | [Condensed Consolidated Balance Sheet Information](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheet%20Information) The balance sheet provides a snapshot of the Company's financial position as of August 31, 2025, compared to February 28, 2025, highlighting changes in assets, liabilities, and shareholders' equity Condensed Consolidated Balance Sheet (in thousands) | Metric (in thousands) | August 31, 2025 | February 28, 2025 | | :-------------------- | :-------------- | :---------------- | | Cash | $31,886 | $67,000 | | Accounts receivable, net | $42,157 | $38,753 | | Inventories, net | $62,078 | $38,797 | | Total Current Assets | $138,914 | $152,740 | | Goodwill and intangible assets, net | $147,551 | $127,619 | | Total Assets | $361,833 | $348,935 | | Total Current Liabilities | $41,154 | $33,304 | | Total Liabilities | $56,453 | $46,955 | | Shareholders' equity | $305,380 | $301,980 | [Condensed Consolidated Cash Flow Information](index=6&type=section&id=Condensed%20Consolidated%20Cash%20Flow%20Information) The cash flow statement outlines the sources and uses of cash for the six months ended August 31, 2025, showing a net decrease in cash primarily due to investing and financing activities Condensed Consolidated Cash Flow (in thousands) | Metric (in thousands) | Six months ended Aug 31, 2025 | Six months ended Aug 31, 2024 | | :-------------------- | :---------------------------- | :---------------------------- | | Cash provided by operating activities | $18,424 | $34,941 | | Cash provided by (used in) investing activities | ($31,954) | ($1,777) | | Cash used in financing activities | ($21,584) | ($14,784) | | Change in cash | ($35,114) | $18,380 | | Cash at end of period | $31,886 | $99,977 |

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 or ☐ 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: 001-41006 INTEGRAL ACQUISITION CORPORATION 1 (Exact name of registrant as specified in its charter) FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 Delaware 86-2148394 (State or ot ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Commission File Number: 001-41006 INTEGRAL ACQUISITION CORPORATION 1 (Exact name of registrant as specified in its charter) Delaware 86-2148394 (State or other jurisdiction of incorporation or organization) (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCH ...

FORM 10-K Filing Information [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides basic information about the registrant, The Marygold Companies, Inc., including its state of incorporation, principal executive offices, telephone number, and common stock listing on NYSE American LLC - Registrant name: The Marygold Companies, Inc., a Nevada corporation[1](index=1&type=chunk)[2](index=2&type=chunk) - Principal executive offices: 120 Calle Iglesia, Unit B, San Clemente, CA 92672[2](index=2&type=chunk) Securities Class and Trading Symbol | Securities Class | Trading Symbol | Registered Exchange | | :--- | :--- | :--- | | Common Stock, $0.001 par value per share | MGLD | NYSE American LLC | [Filing Status and Market Value](index=1&type=section&id=Filing%20Status%20and%20Market%20Value) The company is designated as a non-accelerated filer and a smaller reporting company, disclosing the aggregate market value of common stock held by non-affiliates and outstanding shares as of June 30, 2025 Filer Type and Status | Filer Type | Status | | :--- | :--- | | Large Accelerated Filer | ☐ | | Accelerated Filer | ☐ | | Non-Accelerated Filer | ☒ | | Smaller Reporting Company | ☒ | - As of December 31, 2024, the aggregate market value of voting and non-voting common stock held by non-affiliates was approximately **$18.6 million**[5](index=5&type=chunk) - As of June 30, 2025, there were **42,817,687 shares of common stock** and **13,302 shares of Series B convertible, voting preferred stock** outstanding[6](index=6&type=chunk) [DOCUMENTS INCORPORATED BY REFERENCE](index=2&type=section&id=DOCUMENTS%20INCORPORATED%20BY%20REFERENCE) Certain information required in Part III of this annual report is incorporated by reference from the company's definitive proxy statement for the 2025 Annual Meeting of Stockholders, to be filed within 120 days after the fiscal year-end - Part III information will be incorporated by reference from the company's definitive proxy statement for the 2025 Annual Meeting of Stockholders, to be filed within 120 days after the fiscal year ended June 30, 2025[7](index=7&type=chunk) PART I [ITEM 1. Business](index=6&type=section&id=ITEM%201.%20Business) The Marygold Companies, Inc. is a holding company operating globally through wholly-owned subsidiaries, primarily focused on financial services, exchange-traded fund management, and other business activities, with a decentralized management model - The company is a holding company operating globally through its wholly-owned subsidiaries, primarily focused on financial services, exchange-traded fund management, and other business activities[17](index=17&type=chunk)[281](index=281&type=chunk) - The company employs a decentralized management model, with the executive team responsible for corporate vision, strategy, capital allocation, and the selection and retention of subsidiary management[18](index=18&type=chunk)[281](index=281&type=chunk) - As of the fiscal year ended June 30, 2025, the company's business segments globally (New Zealand, Canada, UK, and US) employed a total of **104 employees**[20](index=20&type=chunk) [Certain Recent Developments](index=6&type=section&id=Certain%20Recent%20Developments) The company recently completed equity and note financings to support debt repayment and financial services investments, entered into an equity distribution agreement, and sold its security systems subsidiary in July 2025 Recent Equity Financing Overview | Metric | Detail | | :--- | :--- | | **Issuance Date** | January 28, 2025 | | **Shares Issued** | 2,050,000 common shares | | **Issuance Price** | $1.10 per share | | **Underwriter** | Maxim Group LLC | | **Net Proceeds** | Approximately **$1.8 million** | | **Use of Proceeds** | Repay or reduce debt, additional investments in financial services businesses, and other general working capital and corporate purposes | Recent Note Financing Overview | Metric | Detail | | :--- | :--- | | **Agreement Date** | September 19, 2024 | | **Initial Principal** | **$4.38 million** (secured promissory note) | | **Original Issue Discount** | 9% (**$360,000**) | | **Annual Interest Rate** | 9% | | **Additional Payment** | 6% of outstanding balance | | **Subsequent Notes (potential)** | **$2.18 million** (9% OID) | | **Collateral** | Pledge of all common stock of USCF Investments, Inc., security interest in all company assets, CEO trust guarantee of company obligations and pledge of company common stock held by trust | | **Outstanding Balance as of June 30, 2025 (net)** | **$1.3 million** | | **Effective Interest Rate** | 41.3% | | **FY2025 Interest Expense** | **$1.2 million** (including **$600,000** amortization of debt issuance costs) | - The company entered into an equity distribution agreement with Maxim Group LLC on March 7, 2025, to sell common stock with an aggregate offering price of up to **$4.65 million** from time to time, but no shares were sold as of June 30, 2025[32](index=32&type=chunk)[37](index=37&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk) - The company sold its wholly-owned Canadian subsidiary, Brigadier Security Systems (2000) Ltd., to an affiliate, SKCAL LLC, on July 1, 2025, for a total consideration of **$2.3 million**[38](index=38&type=chunk)[391](index=391&type=chunk)[392](index=392&type=chunk) [Subsidiary Business Overview](index=10&type=section&id=Subsidiary%20Business%20Overview) The company operates through various subsidiaries in US ETF fund management, New Zealand food production, Canadian security systems, US beauty products, and financial services in the US and UK, each facing market competition and specific regulations [U.S. ETF Fund Management - USCF Investments](index=10&type=section&id=U.S.%20ETF%20Fund%20Management%20-%20USCF%20Investments) USCF Investments and its subsidiaries provide fund management and advisory services for 16 ETFs, with **$2.8 billion** in assets under management as of June 30, 2025, relying heavily on its top three funds and competing through unique product offerings - USCF Investments and its subsidiaries manage and service **16 ETFs**, with total assets under management (AUM) of **$2.8 billion** as of June 30, 2025[39](index=39&type=chunk) - As of June 30, 2025, **70% of USCF Investments' revenue** was derived from its three largest funds: United States Oil Fund, LP; United States Natural Gas Fund, LP; and USCF Midstream Energy Income Fund[44](index=44&type=chunk) - USCF Investments maintains competitiveness against large financial institutions by offering first-to-market and customized commodity and equity index funds[45](index=45&type=chunk) - USCF Investments' operating subsidiaries are strictly regulated by the CFTC, NFA, SEC (under the Investment Advisers Act and Securities Act), and NYSE Arca[46](index=46&type=chunk)[47](index=47&type=chunk) - USCF LLC owns registered trademarks for "USCF LLC" and "USCF Advisers" and has been granted two patents for systems and methods related to exchange-traded funds (ETFs)[49](index=49&type=chunk) [Food Products - Gourmet Foods](index=14&type=section&id=Food%20Products%20-%20Gourmet%20Foods) Gourmet Foods, a New Zealand commercial bakery, produces meat pies, sausage rolls, and pastries, expanding into food packaging printing through Printstock Products Limited, serving national supermarket chains and convenience stores while facing rising raw material and labor costs - Gourmet Foods is a New Zealand commercial bakery producing meat pies, sausage rolls, and pastries, and acquired Printstock Products Limited, a food packaging printing company, in 2020[52](index=52&type=chunk)[53](index=53&type=chunk) - Key customers include national supermarket chains, convenience stores, and gas stations, with the gas station convenience store market accounting for **55% of total bakery revenue** in FY2025[54](index=54&type=chunk) - Rising raw material, local transportation, and labor costs post-COVID-19 negatively impacted Gourmet Foods' profit margins, leading the company to discontinue some low-margin products[55](index=55&type=chunk) - The company addresses competition by developing new products, such as vegan pies, and integrating its supply chain through the Printstock acquisition[56](index=56&type=chunk) - As of June 30, 2025, Gourmet Foods (including Printstock) employed **48 full-time employees** in New Zealand[59](index=59&type=chunk) [Security Systems - Brigadier](index=15&type=section&id=Security%20Systems%20-%20Brigadier) Brigadier Security Systems (2000) Ltd. sold and installed alarm systems, security monitoring hardware, and access control systems in Saskatchewan, Canada, as an authorized SecurTek dealer, with its largest customer contributing **44% of total revenue** in FY2025, and was sold to an affiliate in July 2025 - Brigadier sells and installs alarm systems, security monitoring hardware, access control systems, and fire monitoring panels in Saskatchewan, Canada[61](index=61&type=chunk)[62](index=62&type=chunk) - Brigadier is an authorized dealer for SecurTek, and its largest customer accounted for **44% of total revenue** in FY2025[63](index=63&type=chunk)[64](index=64&type=chunk) - Brigadier was sold to an affiliate, SKCAL LLC, on July 1, 2025[68](index=68&type=chunk)[391](index=391&type=chunk) [Beauty Products - Original Sprout](index=16&type=section&id=Beauty%20Products%20-%20Original%20Sprout) Original Sprout distributes 100% vegan, safe, and non-toxic hair and skin care products, shifting to online direct sales due to the pandemic, resulting in decreased sales, increased operating losses, and a **$1.4 million** goodwill and intangible asset impairment charge in FY2024 - Original Sprout distributes **100% vegan, safe, and non-toxic hair and skin care products** globally[69](index=69&type=chunk)[75](index=75&type=chunk) - Due to the COVID-19 pandemic, the company's distribution model shifted from wholesale to online direct sales, leading to decreased sales and increased operating losses[70](index=70&type=chunk) - In FY2024, the company recorded a **$1.4 million impairment loss** for goodwill and intangible assets due to increased losses and changes in distribution channels within the beauty products business segment[70](index=70&type=chunk)[125](index=125&type=chunk)[328](index=328&type=chunk) - The company relies on two product formulation and packaging companies for manufacturing and strives to maintain at least a **90-day inventory supply** to mitigate raw material procurement challenges[74](index=74&type=chunk) - Original Sprout addresses competition by promoting its brand, recruiting distributors, expanding retail store coverage, and increasing social media presence[75](index=75&type=chunk) [U.S. and U.K. Financial Services – Marygold US and Marygold UK](index=18&type=section&id=U.S.%20and%20U.K.%20Financial%20Services%20%E2%80%93%20Marygold%20US%20and%20Marygold%20UK) Marygold US suspended its P2P fintech mobile app operations in the US due to low user adoption, while Marygold UK expanded its asset management business through acquisitions and soft-launched its fintech app in the UK in April 2025 - Marygold US launched a P2P fintech mobile application in June 2023 but suspended US operations and further development on March 31, 2025, due to lower-than-expected user adoption[81](index=81&type=chunk)[105](index=105&type=chunk) - The company has invested **$19.1 million** in the US fintech app development and is currently seeking funding or partners to re-enter the US market or license the technology[84](index=84&type=chunk)[105](index=105&type=chunk)[178](index=178&type=chunk) - Marygold UK expanded its asset management business in the UK by acquiring Tiger Financial & Asset Management Limited (renamed Marygold & Co. Limited) in June 2022 and Step-By-Step Financial Planners Limited in May 2024[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) - Marygold UK soft-launched its fintech application in the UK in April 2025, offering "Piggy Bank" and "Me2Me" features and partnering with Griffin Bank Ltd. for high-yield savings accounts[92](index=92&type=chunk) - As of June 30, 2025, Marygold UK had **$80.2 million in assets under management**, but its fintech application has not yet generated significant revenue[94](index=94&type=chunk) [Available Information](index=20&type=section&id=Available%20Information) The company provides its annual, quarterly, and 8-K reports and amendments free of charge on its official website, with these electronic filings also accessible via the SEC website - The company provides its annual reports, quarterly reports, 8-K reports, and amendments free of charge on its website, www.themarygoldcompanies.com[98](index=98&type=chunk) - The company's electronic filings are also available on the SEC website, www.sec.gov[98](index=98&type=chunk) [Controlled Company Status](index=21&type=section&id=Controlled%20Company%20Status) The company is designated as a "controlled company" because Nicholas Gerber and Scott Schoenberger, through their family trusts, collectively control over **50% of the voting power**, exempting it from certain NYSE American corporate governance requirements - Nicholas Gerber and Scott Schoenberger, through their family trusts, own over **50% of the company's voting power**, making it a "controlled company" under NYSE American rules[99](index=99&type=chunk) - As a controlled company, the company is exempt from NYSE American requirements regarding a majority of independent directors, a fully independent compensation committee, and a nominating and governance committee[99](index=99&type=chunk) [ITEM 1A. Risk Factors](index=22&type=section&id=ITEM%201A.%20Risk%20Factors) Investing in the company's stock involves a high degree of risk and dilution, with business operations, financial condition, operating results, and stock price potentially affected by various factors including litigation, business structure, regulatory compliance, concentration of control, general business risks, and recent financing risks - Investing in the company's stock involves a high degree of risk and dilution, and business operations, financial condition, operating results, and stock price may be affected by various factors[101](index=101&type=chunk) [Litigation Risks](index=22&type=section&id=Litigation%20Risks) The company and its subsidiaries face class action and derivative lawsuits that could result in significant costs, divert management attention, harm reputation, and materially adversely affect financial condition, operating results, or cash flows - The company's indirect wholly-owned subsidiary, USCF LLC, currently faces class action lawsuits and derivative lawsuits against USO and USCF[102](index=102&type=chunk)[373](index=373&type=chunk)[378](index=378&type=chunk)[381](index=381&type=chunk) - Litigation could result in significant costs, divert management's attention, damage relationships with investors, customers, and suppliers, and make it more difficult to attract and retain qualified personnel[104](index=104&type=chunk) - Due to the uncertainty of litigation outcomes, the company cannot currently predict the ultimate outcome or reasonably estimate potential losses, but an unfavorable outcome could materially adversely affect its financial condition, operating results, or cash flows[103](index=103&type=chunk)[386](index=386&type=chunk) [Risks Related to our Business and Structure](index=22&type=section&id=Risks%20Related%20to%20our%20Business%20and%20Structure) The company incurred net losses in FY2025 and FY2024 and suspended further development of its US fintech app; as a holding company, its cash flow depends on subsidiary dividends, which may be legally and contractually restricted, and it faces risks related to key personnel, ETP market volatility, supply chain disruptions, product liability, international expansion, and goodwill and intangible asset impairment Net Loss and Working Capital Changes | Metric | FY2025 | FY2024 | Change | | :--- | :--- | :--- | :--- | | Net Loss | **$5.8 million** | **$4.1 million** | **Increased by 43%** | | Working Capital | **$12.4 million** | **$19.0 million** | **Decreased by 35%** | - The company has suspended further development of its US fintech application, despite investing **$19.1 million**, due to limited market acceptance[105](index=105&type=chunk)[178](index=178&type=chunk)[238](index=238&type=chunk) - As a holding company, the company's primary cash flow sources are dividends, loans, or other payments from subsidiaries, but subsidiaries may be legally and contractually restricted from distributing funds to the company[106](index=106&type=chunk)[107](index=107&type=chunk) - The company is highly dependent on key personnel, such as CEO Nicholas Gerber, and their loss could materially adversely affect operations[110](index=110&type=chunk) - A significant portion of the company's revenue (**57% in FY2025, 58% in FY2024**) is derived from its USCF Investments subsidiary, making its operating results particularly vulnerable to investor sentiment towards ETF investments[114](index=114&type=chunk) - In FY2024, the company recorded a **$1.4 million impairment loss** for goodwill and intangible assets within the beauty products business segment[125](index=125&type=chunk)[328](index=328&type=chunk) [Legal, Compliance and Regulatory Risks](index=26&type=section&id=Legal,%20Compliance%20and%20Regulatory%20Risks) The company's operations are subject to extensive government regulations and oversight, with non-compliance potentially leading to significant fines, legal actions, and reputational damage, while also incurring high operating costs as a public company and facing risks related to NYSE American listing standards, internal control effectiveness, and cybersecurity threats - The company's businesses are subject to complex and evolving laws and regulations concerning banking, credit, data privacy, cybersecurity, and anti-money laundering, with non-compliance potentially leading to significant fines, legal actions, and operational restrictions[127](index=127&type=chunk)[128](index=128&type=chunk) - The company must comply with NYSE American's continued listing standards, or it may face delisting risk, which would adversely affect its stock price and ability to raise capital[130](index=130&type=chunk) - As a public company, the company incurs significant legal, financial, and accounting costs, and management must dedicate substantial time and resources to ensure compliance[131](index=131&type=chunk) - The company relies on information technology systems and faces cybersecurity threats, such as data breaches and ransomware attacks, which could result in significant adverse reputational, financial, legal, and operational consequences[139](index=139&type=chunk)[140](index=140&type=chunk) [Risks Related to Our Controlled Company Election and Status](index=28&type=section&id=Risks%20Related%20to%20Our%20Controlled%20Company%20Election%20and%20Status) As a "controlled company," the company is exempt from certain NYSE American corporate governance requirements, potentially depriving shareholders of protections enjoyed by shareholders of other companies, and the CEO and his family trusts exert significant control over major corporate decisions - As a "controlled company," the company is exempt from NYSE American corporate governance requirements regarding a majority of independent directors, an independent compensation committee, and a nominating and governance committee[141](index=141&type=chunk)[143](index=143&type=chunk) - CEO Nicholas D. Gerber and his family trusts, along with Scott Schoenberger, collectively control **54.3% of the company's voting power**, giving them significant influence over director elections and major corporate decisions[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) [General Business Risks](index=29&type=section&id=General%20Business%20Risks) The company faces various general business risks including information system disruptions, cybersecurity attacks, resource consumption from unsuccessful acquisitions or dispositions, inaccurate revenue projections for new business opportunities, failed acquisition integration, lingering effects of the COVID-19 pandemic, geopolitical events, and inadequate intellectual property protection - The company relies on information technology infrastructure and faces risks such as cybersecurity attacks and system disruptions, which could materially adversely affect its business, operating results, and financial condition[149](index=149&type=chunk)[150](index=150&type=chunk) - The company may expend significant resources researching unsuccessful acquisitions or dispositions, new business opportunities, or financings, leading to lost costs and impacting future transactions[153](index=153&type=chunk) - The company may not accurately project revenue streams from newly acquired businesses or fintech applications, which could affect its ability to meet operating expenses and capital requirements[154](index=154&type=chunk) - The company faces the risk of failing to effectively integrate acquired businesses, which could adversely affect its business and operating results[155](index=155&type=chunk) - The company's business may be affected by uncontrollable factors such as political events, new tariffs, wars, terrorism, public health issues, and natural disasters[158](index=158&type=chunk)[159](index=159&type=chunk) - The company relies on trademarks, trade secrets, and other forms of intellectual property protection but cannot guarantee that its intellectual property will adequately prevent misappropriation or infringement[160](index=160&type=chunk)[161](index=161&type=chunk) [Risks Related to Ownership of Our Shares](index=33&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Shares) The company's stock price may fluctuate significantly, investors may not be able to sell shares at or above the purchase price, and they may suffer losses due to dilution, future stock issuances, board-issued preferred stock, and the company's policy of not paying cash dividends - The company's stock price may fluctuate significantly due to operating results, analyst expectations, market conditions, litigation, insider stock sales, and various other factors[163](index=163&type=chunk)[164](index=164&type=chunk)[167](index=167&type=chunk) - Future equity issuances or option exercises could dilute the voting power and ownership percentage of existing shareholders[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - The Board of Directors may issue preferred stock without shareholder approval, which could adversely affect the voting or other rights of common stock holders[174](index=174&type=chunk) - The company has not paid cash dividends to date and does not intend to do so in the foreseeable future, meaning shareholders' sole source of return may be stock appreciation[176](index=176&type=chunk)[177](index=177&type=chunk) [Risks Related to our Recent Note Financing](index=36&type=section&id=Risks%20Related%20to%20our%20Recent%20Note%20Financing) The company may require additional equity or debt financing to continue developing and promoting its fintech applications, fund operations, and acquisitions, and failure to obtain sufficient financing could force it to reduce or suspend fintech app development or seek to license it to third parties - The company may require additional equity or debt financing to continue developing and promoting its fintech applications, fund ongoing operations, and invest in acquisitions[178](index=178&type=chunk)[179](index=179&type=chunk) - Failure to obtain sufficient financing could force the company to reduce or suspend fintech application development or seek to license it to third-party financial institutions or payment providers[179](index=179&type=chunk)[180](index=180&type=chunk) - The fintech industry is highly competitive with well-funded competitors, increasing the challenges for the company to secure financing and achieve its business objectives[179](index=179&type=chunk) [ITEM 1B. Unresolved Staff Comments](index=37&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments in this report - No unresolved staff comments[181](index=181&type=chunk) [ITEM 1C. Cybersecurity](index=37&type=section&id=ITEM%201C.%20Cybersecurity) The company recognizes cybersecurity threats as a significant business risk and has established processes to identify, assess, and manage these threats, implementing a cybersecurity program with tailored solutions for each business unit, reporting to senior management and the Corporate Governance and Nominating Committee, with no reportable cyber incidents in FY2025 - The company has established processes to identify, assess, and manage cybersecurity threats and has implemented a cybersecurity management program across its business units[181](index=181&type=chunk)[182](index=182&type=chunk) - Each business unit's Chief Information Security Officer (CISO) reports annually on cybersecurity programs and significant cyber risks to the company's senior management, with oversight by the Corporate Governance and Nominating Committee (CGNC)[182](index=182&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk) - The company and its business units rely on information systems of third-party service providers, which increases the risk of cyberattacks[183](index=183&type=chunk) - As of the fiscal year ended June 30, 2025, the company had no cyber incidents requiring disclosure under Form 8-K, Item 1.05[186](index=186&type=chunk) [ITEM 2. Properties](index=37&type=section&id=ITEM%202.%20Properties) The company and its subsidiaries own or lease office, warehouse, and production facilities in various locations; Brigadier owned office facilities and land in Saskatoon, with its loan repaid in July 2024, and the company believes existing facilities are sufficient for current operational needs - Brigadier purchased its office facilities and land in Saskatoon in 2019 for **$600,000**, and the related bank loan was repaid in full in July 2024[187](index=187&type=chunk) - The company's administrative offices are located within facilities leased by Original Sprout, Gourmet Foods leases facilities in New Zealand, USCF Investments and Marygold US lease office space in California, and Marygold UK leases office space in the UK[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk) - The company believes its existing facilities are sufficient to meet current and foreseeable operational needs[194](index=194&type=chunk) [ITEM 3. Legal Proceedings](index=37&type=section&id=ITEM%203.%20Legal%20Proceedings) This section refers to information in Note 14, "Commitments and Contingencies – Litigation," to the consolidated financial statements, detailing the company's legal proceedings - Legal proceedings information is referenced in Note 14, "Commitments and Contingencies – Litigation," to the consolidated financial statements[196](index=196&type=chunk) [ITEM 4. Mine Safety Disclosures](index=38&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section is not applicable - Not applicable[197](index=197&type=chunk) PART II [ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=39&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 is traded on NYSE American; as of September 11, 2025, there were **360 common stock holders** and **2 Series B preferred stock holders**, with no cash dividends ever paid or planned for the foreseeable future, and the Schoenberger family trust converted Series B preferred stock to common stock in FY2025 - The company's common stock is traded on the NYSE American LLC stock exchange under the symbol "MGLD"[199](index=199&type=chunk) - As of September 11, 2025, the company had **360 record holders of common stock** and **2 holders of Series B preferred stock**[199](index=199&type=chunk) - The company has never declared or paid cash dividends on its common or preferred stock and does not intend to do so in the foreseeable future[200](index=200&type=chunk)[256](index=256&type=chunk) - On February 17, 2025, the Schoenberger family trust converted **36,058 shares of Series B preferred stock** into **721,160 shares of restricted common stock**[203](index=203&type=chunk) [ITEM 6. [Reserved.]](index=40&type=section&id=ITEM%206.%20%5BReserved.%5D) This section is reserved - This section is reserved[204](index=204&type=chunk) [ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=ITEM%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses the company's financial condition and operating results for the fiscal year ended June 30, 2025, including key accounting policies, consolidated and segment operating results, liquidity, and capital resources, noting an increased net loss in FY2025 primarily due to decreased fund management revenue and new loan interest expense, partially offset by reduced beauty product losses [Introduction](index=40&type=section&id=Introduction) This section introduces The Marygold Companies, Inc. as a holding company operating globally through its wholly-owned subsidiaries, primarily focused on financial services, exchange-traded fund management, and other business activities - The company is a holding company operating globally through its wholly-owned subsidiaries, primarily focused on financial services, exchange-traded fund management, and other business activities[206](index=206&type=chunk) [Critical Accounting Policies](index=41&type=section&id=Critical%20Accounting%20Policies) The company employs several critical accounting policies in preparing its financial statements, including the valuation of intangible assets in business combinations, revenue recognition, asset impairment testing, accounting for legal and other contingencies, and income tax accounting, all involving significant judgments and estimates - The company accounts for business combinations using the acquisition method, with fair value valuation of intangible assets (including goodwill) involving complex estimates and assumptions regarding future cash flows, useful lives, and discount rates[211](index=211&type=chunk) - Revenue is recognized when products or services are delivered or ownership is transferred, with ongoing support services evaluated based on historical experience and cost monitoring[212](index=212&type=chunk) - Goodwill and other intangible assets are tested for impairment annually or more frequently if circumstances change, primarily by estimating fair value using discounted cash flow methods[213](index=213&type=chunk) - Contingent losses from legal proceedings and claims are accrued when a loss is probable and the amount can be reasonably estimated[214](index=214&type=chunk) - Income taxes are accounted for using the balance sheet method, with deferred tax assets and liabilities recognized for future tax consequences, and uncertain tax positions are evaluated[215](index=215&type=chunk) [Summary Results of Operations](index=43&type=section&id=Summary%20Results%20of%20Operations) In FY2025, the company's revenue decreased by **8%** and gross profit by **9%**, primarily due to reduced revenue in fund management, food products, and beauty products; despite a **6% decrease in operating expenses** (partially due to FY2024 impairment charges), net other (expense) income turned negative due to interest expense from new loans, leading to a **43% increase in net loss** FY2025 vs. FY2024 Operating Results Comparison (in thousands of USD) | Metric | FY2025 | FY2024 | Change Rate | | :--- | :--- | :--- | :--- | | Revenue | **$30,154** | **$32,836** | **-8%** | | Cost of Sales | **$8,282** | **$8,720** | **-5%** | | Gross Profit | **$21,872** | **$24,116** | **-9%** | | Operating Expenses | **$28,562** | **$30,372** | **-6%** | | Operating Loss | **($6,690)** | **($6,256)** | **7%** | | Other (Expense) Income, Net | **($692)** | **$808** | **-186%** | | Loss Before Income Taxes | **($7,382)** | **($5,448)** | **35%** | | Income Tax Benefit | **$1,562** | **$1,379** | **13%** | | Net Loss | **($5,820)** | **($4,069)** | **43%** | - Revenue decreased primarily due to a **$1.8 million reduction** in fund management revenue, a **$600,000 reduction** in food products, and a **$300,000 reduction** in beauty products[218](index=218&type=chunk) - Operating expenses decreased by **6%**, mainly due to a **$1.4 million impairment charge** for beauty product goodwill and intangible assets in FY2024, and a **$700,000 reduction** in marketing expenses in FY2025 (due to suspension of US fintech app operations)[220](index=220&type=chunk) - Net other (expense) income shifted from **$800,000 income** in FY2024 to **$700,000 expense** in FY2025, primarily influenced by **$1.2 million in interest expense** from the **$4.4 million loan** originated in September 2024[221](index=221&type=chunk) [Segment Results of Operations](index=44&type=section&id=Segment%20Results%20of%20Operations) In FY2025, fund management revenue and operating profit declined due to decreased AUM; food product revenue and operating profit also fell due to product mix adjustments and non-recurring costs; beauty product revenue decreased, but operating loss significantly narrowed due to FY2024 impairment charges and reduced marketing spend; security systems revenue and operating profit both decreased, and this business was sold in July 2025; financial services revenue increased, but overall operating loss remained high, though Marygold US's suspension reduced its loss; and corporate headquarters operating loss expanded due to increased stock-based compensation expense FY2025 vs. FY2024 Segment Revenue Comparison (in thousands of USD) | Business Segment | FY2025 Revenue | FY2024 Revenue | Change Rate | | :--- | :--- | :--- | :--- | | Fund Management - Related Party | **$17,135** | **$18,965** | **-10%** | | Food Products | **$6,720** | **$7,271** | **-8%** | | Beauty Products | **$2,974** | **$3,296** | **-10%** | | Security Systems | **$2,471** | **$2,655** | **-7%** | | Financial Services | **$854** | **$649** | **32%** | | **Total Revenue** | **$30,154** | **$32,836** | **-8%** | FY2025 vs. FY2024 Segment Operating Profit (Loss) Comparison (in thousands of USD) | Business Segment | FY2025 Operating Profit (Loss) | FY2024 Operating Profit (Loss) | Change Rate | | :--- | :--- | :--- | :--- | | Fund Management - Related Party | **$3,274** | **$4,773** | **-31%** | | Food Products | **$145** | **$321** | **-55%** | | Beauty Products | **($395)** | **($2,138)** | **-82%** | | Security Systems | **$250** | **$325** | **-23%** | | Financial Services | **($5,621)** | **($5,943)** | **-5%** | | Corporate Headquarters | **($4,343)** | **($3,594)** | **21%** | | **Total Operating Loss** | **($6,690)** | **($6,256)** | **7%** | - Fund management revenue decreased by **10%**, and operating profit decreased by **31%**, primarily due to a **12% decrease in average assets under management (AUM)** from **$3.3 billion** in FY2024 to **$2.9 billion** in FY2025[226](index=226&type=chunk)[227](index=227&type=chunk) - Beauty products operating loss significantly decreased by **82%**, primarily benefiting from a **$1.4 million impairment charge** in FY2024 and a **$300,000 reduction** in marketing expenses in FY2025[231](index=231&type=chunk) - Marygold US incurred an operating loss of **$4.7 million** in FY2025 and suspended its US app operations on March 31, 2025, with future losses and negative cash flows expected to decrease[234](index=234&type=chunk) - Corporate headquarters operating loss increased by **21%**, mainly due to a **$400,000 increase in stock-based compensation expense** and the transfer of some employees from the financial services segment to the parent company[236](index=236&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, cash and cash equivalents decreased to **$5 million**, and working capital fell to **$12.4 million**; FY2025 saw **$3.3 million** in cash outflows from operating activities and **$3.3 million** invested in fintech applications; the company obtained **$1.8 million** net proceeds from equity financing and entered into a **$4.38 million** note financing agreement, believing existing cash and operating cash flow are sufficient for the next 12 months, but may require additional financing for fintech app development and future acquisitions Cash and Working Capital Changes (in thousands of USD) | Metric | June 30, 2025 | June 30, 2024 | Change Rate | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | **$5,005** | **$5,461** | **-8%** | | Working Capital | **$12,400** | **$19,000** | **-35%** | | Cash Outflow from Operating Activities (FY2025) | **$3,319** | **$1,911** | **73.7%** | | Total Investment in Fintech App Development | **$19,100** | - | - | - The company obtained **$1.8 million** in net proceeds from equity financing on January 28, 2025, used for debt repayment, investment in financial services businesses, and general working capital[241](index=241&type=chunk) - The company entered into a **$4.38 million** secured promissory note financing agreement on September 19, 2024, with a net outstanding balance of **$1.3 million** and an effective annual interest rate of **41.3%** as of June 30, 2025[247](index=247&type=chunk)[254](index=254&type=chunk) - The company believes its cash and cash equivalents and cash generated from ongoing operations are sufficient to meet cash needs for the next 12 months, but may require additional financing to support ongoing development of the UK fintech application and future acquisitions[244](index=244&type=chunk) - As of June 30, 2025, the company's total lease liabilities were **$1 million**, comprising **$1.034 million** in operating lease liabilities and **$102,000** in finance lease liabilities[245](index=245&type=chunk)[246](index=246&type=chunk)[370](index=370&type=chunk) - As of June 30, 2025, the company had not entered into any off-balance sheet arrangements[257](index=257&type=chunk) [ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a "smaller reporting company," the company is not required to provide the information requested by this item - As a "smaller reporting company," the company is not required to provide the information requested by this item[257](index=257&type=chunk) [ITEM 8. Financial Statements and Supplementary Data](index=50&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's consolidated financial statements for the fiscal year ended June 30, 2025, including the report of independent registered public accounting firm, consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive loss, consolidated statements of stockholders' equity, consolidated statements of cash flows, and notes to financial statements [Report of Independent Registered Public Accounting Firm](index=51&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) BPM LLP issued an unqualified opinion on the company's consolidated financial statements as of June 30, 2025, and 2024, highlighting the accounting and disclosure of contingent losses related to various legal proceedings as a critical audit matter due to the significant judgment involved in assessing management's estimates of loss probability and amount - BPM LLP issued an unqualified opinion on the company's consolidated financial statements as of June 30, 2025, and 2024[260](index=260&type=chunk) - A critical audit matter is the accounting and disclosure of contingent losses related to various legal proceedings, as assessing management's judgment regarding the likelihood and amount of loss is challenging[264](index=264&type=chunk)[265](index=265&type=chunk) [Consolidated Balance Sheets](index=53&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, the company's total assets were **$30.42 million**, a decrease from FY2024; total liabilities increased to **$7.433 million**, while total stockholders' equity decreased to **$22.987 million** Consolidated Balance Sheets Summary (in thousands of USD) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Assets | **$30,420** | **$32,899** | | Total Liabilities | **$7,433** | **$6,285** | | Total Stockholders' Equity | **$22,987** | **$26,614** | Current Assets and Liabilities (in thousands of USD) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash and Cash Equivalents | **$5,005** | **$5,461** | | Investments (at fair value) | **$7,829** | **$9,551** | | Total Current Assets | **$19,046** | **$24,253** | | Total Current Liabilities | **$6,632** | **$5,233** | [Consolidated Statements of Operations](index=54&type=section&id=Consolidated%20Statements%20of%20Operations) In FY2025, the company reported total revenue of **$30.154 million** and a net loss of **$5.82 million**, an increase from the **$4.069 million net loss** in FY2024, with operating loss and interest expense being primary contributors to the increased net loss Consolidated Statements of Operations Summary (in thousands of USD) | Metric | FY2025 | FY2024 | | :--- | :--- | :--- | | Revenue | **$30,154** | **$32,836** | | Gross Profit | **$21,872** | **$24,116** | | Operating Loss | **($6,690)** | **($6,256)** | | Other (Expense) Income, Net | **($692)** | **$808** | | Loss Before Income Taxes | **($7,382)** | **($5,448)** | | Net Loss | **($5,820)** | **($4,069)** | | Basic and Diluted Net Loss Per Share | **($0.14)** | **($0.10)** | [Consolidated Statements of Comprehensive Loss](index=55&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) In FY2025, the company's net loss was **$5.82 million**, and total comprehensive loss was **$5.971 million**, including **$151,000** in other comprehensive loss from foreign currency translation adjustments Consolidated Statements of Comprehensive Loss Summary (in thousands of USD) | Metric | FY2025 | FY2024 | | :--- | :--- | :--- | | Net Loss | **($5,820)** | **($4,069)** | | Other Comprehensive Loss (Foreign Currency Translation) | **($151)** | **($124)** | | Total Comprehensive Loss | **($5,971)** | **($4,193)** | [Consolidated Statements of Stockholders' Equity](index=56&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) As of June 30, 2025, total stockholders' equity was **$22.987 million**, with changes in FY2025 driven by net loss, common stock issuance, stock-based compensation, Series B preferred stock conversion, and stock repurchases Consolidated Stockholders' Equity Summary (in thousands of USD) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Preferred Stock (Series B) | **13 shares** | **49 shares** | | Common Stock | **42,818 shares** | **40,096 shares** | | Additional Paid-in Capital | **$15,167** | **$12,825** | | Accumulated Other Comprehensive Loss | **($420)** | **($269)** | | Retained Earnings | **$8,198** | **$14,018** | | **Total Stockholders' Equity** | **$22,987** | **$26,614** | - In FY2025, the company received **$1.808 million** net proceeds from common stock sales, incurred **$825,000** in stock-based compensation expense, converted Series B preferred stock to common stock, and repurchased **$289,000** in stock to cover employee payroll taxes[276](index=276&type=chunk) [Consolidated Statements of Cash Flows](index=57&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In FY2025, the company experienced **$3.319 million** in cash outflows from operating activities, **$1.203 million** in cash inflows from investing activities, and **$1.83 million** in cash inflows from financing activities, resulting in a net decrease of **$455,000** in cash and restricted cash, with an ending balance of **$5.068 million** Consolidated Statements of Cash Flows Summary (in thousands of USD) | Cash Flow Category | FY2025 | FY2024 | | :--- | :--- | :--- | | Net Cash Outflow from Operating Activities | **($3,319)** | **($1,911)** | | Net Cash Inflow (Outflow) from Investing Activities | **$1,203** | **($926)** | | Net Cash Inflow (Outflow) from Financing Activities | **$1,830** | **($30)** | | Effect of Exchange Rate Changes | **($169)** | **($196)** | | Net Decrease in Cash, Cash Equivalents, and Restricted Cash | **($455)** | **($3,063)** | | Ending Cash, Cash Equivalents, and Restricted Cash | **$5,068** | **$5,523** | - In FY2025, the company paid **$464,000** in interest and **$48,000** in income taxes[279](index=279&type=chunk)[280](index=280&type=chunk) - Non-cash investing and financing activities included an increase of **$380,000** in notes payable (original issue discount and loan fees) and the acquisition of right-of-use assets through operating lease liabilities of **$690,000**[280](index=280&type=chunk) [Notes to Consolidated Financial Statements](index=59&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes to the consolidated financial statements, covering the company's organization, significant accounting policies, net loss per share, balance sheet details, investments, business combinations, impairment losses, goodwill, intangible assets, related party transactions, notes payable, stockholders' equity, income taxes, commitments and contingencies, segment reporting, and subsequent events [NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS](index=59&type=section&id=NOTE%201.%20ORGANIZATION%20AND%20DESCRIPTION%20OF%20BUSINESS) The company is a holding company operating globally through its wholly-owned subsidiaries, primarily focused on financial services, exchange-traded fund management, and other business activities, with management responsible for capital allocation and the selection and retention of subsidiary executives - The company is a holding company operating globally through its wholly-owned subsidiaries, primarily focused on financial services, exchange-traded fund management, and other business activities[281](index=281&type=chunk)[285](index=285&type=chunk) - Company management is responsible for capital allocation decisions, investment activities, and the selection and retention of chief executive officers for each operating subsidiary[281](index=281&type=chunk) [NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=59&type=section&id=NOTE%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note details the significant accounting policies followed in preparing the consolidated financial statements, including consolidation principles, use of estimates, foreign currency translation, cash and cash equivalents, accounts receivable, inventory, property and equipment, leases, intangible assets, goodwill, impairment of long-lived assets, investments and fair value of financial instruments, revenue recognition, income taxes, advertising expenses, segment reporting, stock-based compensation, and business combinations - The company's financial statements are prepared on a consolidated basis in accordance with U.S. GAAP and involve management's estimates and assumptions regarding assets, liabilities, revenues, and expenses[282](index=282&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk) - Intangible assets and goodwill are tested for impairment annually; in FY2024, the beauty products business recorded a **$1 million impairment loss** for intangible assets and a **$400,000 impairment loss** for goodwill[296](index=296&type=chunk)[297](index=297&type=chunk)[328](index=328&type=chunk) - Investments are measured at fair value, with changes in fair value recognized in other income (expense) in the statements of operations[299](index=299&type=chunk) - Revenue recognition follows a five-step model, recognized upon product shipment, commencement of subscription periods, or provision of management services[304](index=304&type=chunk)[306](index=306&type=chunk) - Advertising expenses are expensed as incurred, totaling **$2.5 million** in FY2025 and **$3.2 million** in FY2024[309](index=309&type=chunk) - Stock-based compensation is accounted for using the fair value method, with stock options valued using the Black-Scholes model and restricted stock awards based on market price at the grant date[311](index=311&type=chunk) - The company has adopted ASU 2023-07 (Improvements to Reportable Segment Disclosures) and is evaluating the impact of ASU 2023-09 (Improvements to Income Tax Disclosures)[313](index=313&type=chunk)[314](index=314&type=chunk) [NOTE 3. NET LOSS PER SHARE](index=66&type=section&id=NOTE%203.%20NET%20LOSS%20PER%20SHARE) Basic and diluted net loss per share are identical due to the company incurring net losses in both FY2025 and FY2024, with anti-dilutive stock options, restricted stock awards, and warrants excluded from the calculation Basic and Diluted Net Loss Per Share (in thousands of USD, except per share data) | Metric | FY2025 Net Loss | FY2025 Shares | FY2025 Per Share | FY2024 Net Loss | FY2024 Shares | FY2024 Per Share | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Loss Attributable to Common Stockholders | **($5,719)** | **40,977** | **($0.14)** | **($3,970)** | **39,409** | **($0.10)** | | Net Loss Attributable to Preferred Stockholders | **($101)** | **724** | **($0.14)** | **($99)** | **987** | **($0.10)** | | **Basic and Diluted Net Loss Per Share** | **($5,820)** | **41,701** | **($0.14)** | **($4,069)** | **40,396** | **($0.10)** | - Basic and diluted net loss per share are identical due to the company incurring net losses in both FY2025 and FY2024, and anti-dilutive stock options, restricted stock awards, and warrants were excluded from the calculation[315](index=315&type=chunk) [NOTE 4. CERTAIN BALANCE SHEET DETAILS](index=67&type=section&id=NOTE%204.%20CERTAIN%20BALANCE%20SHEET%20DETAILS) This note provides detailed information on specific balance sheet accounts, including restricted cash, other current assets, inventory, property and equipment, net, and other non-current assets, notably reclassifying a **$1.8 million** equity investment deposit from FY2024 to a non-current asset in FY2025 Restricted Cash (in thousands of USD) | Item | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Restricted deposits related to fintech app accounts | **$51** | **$50** | | Lease security deposits | **$12** | **$12** | | **Total Restricted Cash** | **$63** | **$62** | Other Current Assets (in thousands of USD) | Item | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Deposit for potential 9.9% equity investment in financial institution | - | **$1,800** | | Prepaid expenses and other current assets | **$1,067** | **$1,234** | | **Total Other Current Assets** | **$1,067** | **$3,034** | - The **$1.8 million** deposit for a potential equity investment in a financial institution included in FY2024 was reclassified as an equity investment in non-current assets in FY2025 after regulatory approval in September 2024[318](index=318&type=chunk)[321](index=321&type=chunk) Property and Equipment, Net (in thousands of USD) | Item | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Manufacturing equipment | **$1,935** | **$1,935** | | Land and buildings | **$575** | **$575** | | Other equipment | **$854** | **$827** | | **Total Property and Equipment** | **$3,364** | **$3,337** | | Accumulated depreciation | **($2,326)** | **($2,171)** | | **Property and Equipment, Net** | **$1,038** | **$1,166** | [NOTE 5. INVESTMENTS](index=68&type=section&id=NOTE%205.%20INVESTMENTS) USCF Investments periodically provides initial seed capital for ETF funds; as of June 30, 2025, the company held **$3.6 million** in investments in affiliate-managed funds, down from **$7.5 million** in FY2024, resulting in **$800,000** in unrealized losses in FY2025 compared to **$100,000** in unrealized gains in FY2024 - USCF Investments periodically provides initial seed capital for ETF funds, and these investments are classified as current assets[255](index=255&type=chunk)[323](index=323&type=chunk) - In FY2025, the company recognized **$800,000** in unrealized losses, compared to **$100,000** in unrealized gains in FY2024[323](index=323&type=chunk) - All short-term investments are classified as Level 1 assets[324](index=324&type=chunk) Short-Term Investments (in thousands of USD) | Item | June 30, 2025 Fair Value | June 30, 2024 Fair Value | | :--- | :--- | :--- | | Money market funds | **$3,877** | **$1,788** | | Other short-term investments | **$312** | **$296** | | Other equity - related party | **$3,640** | **$7,467** | | **Total Short-Term Investments** | **$7,829** | **$9,551** | [NOTE 6. BUSINESS COMBINATIONS](index=69&type=section&id=NOTE%206.%20BUSINESS%20COMBINATIONS) On April 30, 2024, Marygold UK completed the acquisition of Step-By-Step Financial Planners Limited for **$1.2 million**, recognizing **$600,000** in goodwill, aiming to expand its business by increasing assets under management and introducing fintech mobile application services - Marygold UK acquired all outstanding shares of Step-By-Step Financial Planners Limited on April 30, 2024, for **$1.2 million**[326](index=326&type=chunk) - The acquisition recognized **$600,000** in goodwill[326](index=326&type=chunk) - Step-By-Step is an asset management firm and registered investment advisor, with **$42.4 million** in assets under management as of June 30, 2025[326](index=326&type=chunk) [NOTE 7. IMPAIRMENT LOSS](index=70&type=section&id=NOTE%207.%20IMPAIRMENT%20LOSS) In FY2024, the company recorded a **$1.4 million impairment loss** due to increased losses and changes in distribution channels within the beauty products business segment, comprising **$400,000** for goodwill and **$1 million** for intangible assets, with no impairment losses recorded in FY2025 - In FY2024, the company recorded a **$1.4 million impairment loss** for goodwill and intangible assets within the beauty products business segment due to increased losses and changes in distribution channels[328](index=328&type=chunk) - This impairment loss included **$400,000** for goodwill and **$1 million** for intangible assets such as brand names, formulations, and customer relationships[328](index=328&type=chunk) - No impairment losses were recorded in FY2025[296](index=296&type=chunk)[297](index=297&type=chunk)[328](index=328&type=chunk) [NOTE 8. GOODWILL](index=70&type=section&id=NOTE%208.%20GOODWILL) As of June 30, 2025, and 2024, the company's total goodwill was **$2.481 million**; in FY2024, goodwill increased by **$591,000** due to acquisitions and decreased by **$417,000** due to impairment in the beauty products business Changes in Goodwill Carrying Amount (in thousands of USD) | Goodwill Category | June 30, 2023 | Acquisitions | Impairment | June 30, 2024 | June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Beauty Products - Original Sprout | **$417** | - | **($417)** | - | - | | Food Products - Gourmet Foods | **$275** | - | - | **$275** | **$275** | | Security Systems - Brigadier | **$351** | - | - | **$351** | **$351** | | Financial Services - Marygold & Co. (UK) | **$1,264** | **$591** | - | **$1,855** | **$1,855** | | **Total** | **$2,307** | **$591** | **($417)** | **$2,481** | **$2,481** | - The company tests goodwill for impairment annually on June 30 for each reporting unit[330](index=330&type=chunk) [NOTE 9. INTANGIBLE ASSETS](index=71&type=section&id=NOTE%209.%20INTANGIBLE%20ASSETS) The company's intangible assets include customer relationships, brand names, and internally developed software; as of June 30, 2025, net intangible assets were **$1.029 million**, a decrease from **$1.375 million** in FY2024, with amortization expense of **$300,000** in FY2025 and **$400,000** in FY2024 Intangible Asset Composition (in thousands of USD) | Intangible Asset Category | June 30, 2025 Net | June 30, 2024 Net | | :--- | :--- | :--- | | Customer relationships | **$719** | **$916** | | Brand names | **$31** | **$82** | | Brand names – indefinite life | **$206** | **$231** | | Internally developed software | **$73** | **$146** | | **Total** | **$1,029** | **$1,375** | Intangible Asset Amortization Expense (in thousands of USD) | Fiscal Year | Amortization Expense | | :--- | :--- | | 2025 | **$300** | | 2024 | **$400** | Estimated Amortization Expense for Intangible Assets for the Next Five Years and Thereafter (in thousands of USD) | Year Ending June 30 | Expense | | :--- | :--- | | 2026 | **$290** | | 2027 | **$146** | | 2028 | **$146** | | 2029 | **$144** | | 2030 | **$54** | | Thereafter | **$249** | | **Total** | **$1,029** | [NOTE 10. RELATED PARTY TRANSACTIONS](index=72&type=section&id=NOTE%2010.%20RELATED%20PARTY%20TRANSACTIONS) This note discloses transactions between the company and related parties, primarily including USCF Investments' revenue and accounts receivable from funds it manages, and investments in these funds; additionally, USCF Advisers paid licensing fees to an affiliate, and Brigadier Security Systems was sold to an affiliate USCF Investments Related Party Transactions (in thousands of USD) | Metric | FY2025 | FY2024 | | :--- | :--- | :--- | | Fund management revenue | **$17,135** | **$18,965** | | Accounts receivable | **$1,281** | **$1,455** | | Investments in affiliate funds | **$3,600** | **$7,500** | - USCF Advisers paid **$300,000** and **$100,000** in licensing fees to an affiliate in FY2025 and FY2024, respectively, with the licensing agreement amended in February 2025 to reduce future fees to zero[336](index=336&type=chunk) - The company entered into an agreement on June 19, 2025, with SKCAL LLC (sole member Scott Schoenberger, a company director and **10.9% shareholder**) to sell its wholly-owned subsidiary, Brigadier Security Systems (2000) Ltd.[337](index=337&type=chunk) [NOTE 11. NOTES PAYABLE](index=72&type=section&id=NOTE%2011.%20NOTES%20PAYABLE) This note details the **$4.38 million** secured promissory note agreement entered into with Streeterville Capital, LLC on September 19, 2024, featuring a **9% original issue discount** and **9% annual interest rate**, secured by company assets and the CEO's trust's common stock; as of June 30, 2025, the net outstanding balance was **$1.3 million** with an effective interest rate of **41.3%** - The company entered into a secured promissory note agreement with Streeterville Capital, LLC on September 19, 2024, for an initial principal of **$4.38 million**, with a **9% annual interest rate** and a **9% original issue discount**[338](index=338&type=chunk) - The note is secured by all common stock of USCF Investments, Inc. held by the company, a security interest in all company assets, and a guarantee from the company's CEO's trust, which also pledged its common stock holdings in the company[340](index=340&type=chunk) - The noteholder has the right to require the company to redeem up to **$400,000** (initial note) or **$200,000** (subsequent notes) monthly, six months after the issuance date, and the company has the right to defer redemption payments three times[341](index=341&type=chunk) - As of June 30, 2025, the net outstanding balance of the note was **$1.3 million**, with an effective interest rate of **41.3%**; FY2025 interest expense was **$1.2 million**, including **$600,000** in amortization of debt issuance costs[344](index=344&type=chunk) - Brigadier's **$300,000** mortgage loan was repaid in full in July 2024[345](index=345&type=chunk) [NOTE 12. STOCKHOLDERS' EQUITY](index=73&type=section&id=NOTE%2012.%20STOCKHOLDERS'%20EQUITY) This note details the company's warrants, convertible preferred stock, and stock-based compensation plans; as of June 30, 2025, **82,500 warrants** remained unexercised, Series B preferred stock decreased to **13,302 shares**, and **36,058 Series B preferred shares** were converted to common stock, with FY2025 stock-based compensation expense totaling **$800,000** - The company issued **82,500 warrants** in FY2022 with an exercise price of **$2.40 per share**, expiring March 14, 2027, and remained unexercised as of June 30, 2025[346](index=346&type=chunk) - As of June 30, 2025, **13,302 shares of Series B convertible preferred stock** were outstanding, and **36,058 Series B preferred shares** were converted into **721,160 common shares** in FY2025[349](index=349&type=chunk) - The company's 2021 Equity Incentive Plan authorized the issuance of **5 million shares of common stock**, with **3,772,485 shares available for future grants** as of June 30, 2025[350](index=350&type=chunk) - Total stock-based compensation expense was **$800,000** in FY2025 and **$400,000** in FY2024[356](index=356&type=chunk) [NOTE 13. INCOME TAXES](index=76&type=section&id=NOTE%2013.%20INCOME%20TAXES) This note discloses the company's loss before income taxes, income tax benefit composition, and deferred tax assets and liabilities for FY2025 and FY2024; the company incurred pre-tax losses in both fiscal years, recognized income tax benefits, possesses federal and state net operating loss carryforwards, has not established a valuation allowance, and is evaluating the potential impact of the newly enacted "One Big Beautiful Bill Act" on future tax obligations Loss Before Income Taxes (in thousands of USD) | Region | FY2025 | FY2024 | | :--- | :--- | :--- | | United States | **($6,327)** | **($5,420)** | | Foreign | **($1,055)** | **($28)** | | **Total Loss Before Income Taxes** | **($7,382)** | **($5,448)** | Income Tax Benefit (in thousands of USD) | Region | FY2025 | FY2024 | | :--- | :--- | :--- | | United States | **$1,302** | **$1,408** | | Foreign | **$260** | **($29)** | | **Total Income Tax Benefit** | **$1,562** | **$1,379** | Deferred Tax Assets and Liabilities (in thousands of USD) | Item | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total deferred tax assets - US | **$3,440** | **$1,969** | | Total deferred tax liabilities - Foreign | **($221)** | **($360)** | | **Total Net Deferred Tax Assets** | **$3,219** | **$1,609** | - The company has not established a valuation allowance as of June 30, 2025, and 2024, believing that net deferred tax assets are more likely than not to be realized[361](index=361&type=chunk) - As of June 30, 2025, the company had **$9.4 million in federal net operating loss carryforwards** and **$6.9 million in state net operating loss carryforwards**[364](index=364&type=chunk) - The company is evaluating the potential impact of the "One Big Beautiful Bill Act," enacted on July 4, 2025, on deferred taxes and future tax obligations[367](index=367&type=chunk) [NOTE 14. COMMITMENTS AND CONTINGENCIES](index=79&type=section&id=NOTE%2014.%20COMMITMENTS%20AND%20CONTINGENCIES) This note details the company's lease commitments, other agreements and commitments, legal proceedings, and retirement plans; the company leases facilities in various regions and has future payment commitments to a former key service provider; it faces class action and derivative lawsuits related to the USO fund but has not accrued for losses, and provides a 401(k) retirement plan for US employees Future Minimum Consolidated Lease Payments (in thousands of USD) | Year Ending June 30 | Operating Leases | Finance Leases | | :--- | :--- | :--- | | 2026 | **$587** | **$19** | | 2027 | **$333** | **$19** | | 2028 | **$155** | **$19** | | 2029 | - | **$19** | | 2030 | - | **$19** | | Thereafter | - | **$29** | | **Total Minimum Lease Payments** | **$1,075** | **$124** | | Less: Discount to Present Value | **($41)** | **($22)** | | **Total Lease Liabilities** | **$1,034** | **$102** | - Marygold US has **$700,000** in future payment commitments to a former key service provider, with **$200,000** due in FY2026[371](index=371&type=chunk) - The company faces class action and derivative lawsuits related to the Uni

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________ FORM 10-K _____________________________________ (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 Or o 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 001-37503 _________________________________ ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________ FORM 10-K _____________________________________ (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 Or o 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 001-37503 _________________________________ ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________ FORM 10-K _____________________________________ (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 Or o 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 001-37503 _________________________________ ...

[Company Information](index=1&type=section&id=Company%20Information) This section provides essential details about The Kroger Co., including its filing status and stock exchange listing [Filing Details](index=1&type=section&id=Filing%20Details) This report is The Kroger Co.'s quarterly report (Form 10-Q) for the period ended August 16, 2025, with the company designated as a large accelerated filer - The Kroger Co.'s quarterly report (Form 10-Q) is for the period ended August 16, 2025[2](index=2&type=chunk) - The company's stock ticker is KR, listed on the New York Stock Exchange[3](index=3&type=chunk) Company Filing Status | Metric | Status | | :--- | :--- | | Large Accelerated Filer | ☒ | | Accelerated Filer | ☐ | | Non-Accelerated Filer | ☐ | | Smaller Reporting Company | ☐ | | Emerging Growth Company | ☐ | [PART I – FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part contains Kroger's unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements.) This section presents The Kroger Co.'s unaudited consolidated financial statements, including statements of operations, comprehensive income, balance sheets, cash flows, and changes in shareholders' equity, along with related notes [Consolidated Statements of Operations](index=2&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section presents the company's consolidated statements of operations, detailing key financial performance metrics for the reported periods Key Financial Performance ($ million, except per share amounts) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Sales | $33,940 | $33,912 | $79,058 | $79,181 | | Operating Profit | $863 | $815 | $2,185 | $2,109 | | Net Earnings Attributable to The Kroger Co. | $609 | $466 | $1,475 | $1,413 | | Net Earnings Per Diluted Share Attributable to The Kroger Co. | $0.91 | $0.64 | $2.20 | $1.93 | - Net earnings attributable to The Kroger Co. increased by **30.7%** in the second quarter of 2025 and **4.4%** in the first two quarters year-over-year[6](index=6&type=chunk) - Diluted net earnings per share increased by **42.2%** in the second quarter of 2025 (from **$0.64** to **$0.91**) and **14.0%** in the first two quarters (from **$1.93** to **$2.20**)[6](index=6&type=chunk) [Consolidated Statements of Comprehensive Income](index=3&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) This section provides the consolidated statements of comprehensive income, outlining net earnings and other comprehensive income components Comprehensive Income Overview ($ million) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Net Earnings Including Noncontrolling Interests | $610 | $465 | $1,478 | $1,421 | | Total Other Comprehensive Income (Loss) | $4 | $(121) | $6 | $(51) | | Comprehensive Income Attributable to The Kroger Co. | $613 | $345 | $1,481 | $1,362 | - Total other comprehensive income (loss) shifted from a **$(121) million** loss in the second quarter of 2024 to a **$4 million** gain in the second quarter of 2025, significantly contributing to comprehensive income growth[8](index=8&type=chunk) [Consolidated Balance Sheets](index=4&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) This section presents the consolidated balance sheets, detailing the company's assets, liabilities, and equity at specific reporting dates Balance Sheet Highlights ($ million) | Metric | As of August 16, 2025 | As of February 1, 2025 | | :--- | :--- | :--- | | Total Assets | $53,590 | $52,616 | | Total Liabilities | $44,313 | $44,335 | | Total Equity | $9,277 | $8,281 | | Cash and Temporary Cash Investments | $4,883 | $3,959 | - Cash and temporary cash investments increased by **$924 million**, from **$3,959 million** as of February 1, 2025, to **$4,883 million** as of August 16, 2025[13](index=13&type=chunk) - The current portion of long-term debt, including financing lease obligations, significantly increased from **$272 million** to **$827 million**[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section outlines the consolidated statements of cash flows, categorizing cash movements from operating, investing, and financing activities Cash Flow Summary ($ million) | Metric | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $3,688 | $3,464 | | Net Cash Used in Investing Activities | $(2,107) | $(1,905) | | Net Cash Used in Financing Activities | $(657) | $(642) | | Net Increase in Cash and Temporary Cash Investments | $924 | $917 | - Net cash provided by operating activities increased by **6%** to **$3,688 million** in the first two quarters[15](index=15&type=chunk) - Net cash used in investing activities increased, primarily due to a decrease in proceeds from asset sales, from **$309 million** in the first two quarters of 2024 to **$36 million** in the first two quarters of 2025[15](index=15&type=chunk) [Consolidated Statements of Changes in Shareowners' Equity](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20SHAREOWNERS'%20EQUITY) This section details the consolidated statements of changes in shareholders' equity, showing movements in capital, retained earnings, and other comprehensive income Shareowners' Equity Changes ($ million) | Metric | As of February 1, 2025 | As of May 24, 2025 | As of August 16, 2025 | | :--- | :--- | :--- | :--- | | Total Shareowners' Equity Attributable to The Kroger Co. | $8,281 | $8,908 | $9,277 | | Net Earnings Including Noncontrolling Interests | N/A | $868 | $610 | | Cash Dividends Declared | N/A | $(211) | $(234) | - Total shareowners' equity attributable to The Kroger Co. increased from **$8,281 million** as of February 1, 2025, to **$9,277 million** as of August 16, 2025[20](index=20&type=chunk) - Net earnings (including noncontrolling interests) contributed **$868 million** in the first quarter of 2025 and **$610 million** in the second quarter[20](index=20&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=NOTES%20TO%20UNAUDITED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed notes to the unaudited consolidated financial statements, explaining accounting policies and specific financial items [1. ACCOUNTING POLICIES](index=8&type=section&id=1.%20ACCOUNTING%20POLICIES) This section outlines the significant accounting policies used in preparing the financial statements, including fair value measurements and financing arrangements - The financial statements are unaudited, include normal recurring adjustments, and should not be considered indicative of full-year results[24](index=24&type=chunk) - Fair value measurements are categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[26](index=26&type=chunk) - The company has accounts payable financing arrangements with third parties, with **$266 million** outstanding under these arrangements as of August 16, 2025[32](index=32&type=chunk) [2. DEBT OBLIGATIONS](index=10&type=section&id=2.%20DEBT%20OBLIGATIONS) This section details the company's debt obligations, including long-term debt, interest expenses, and hedging activities Long-Term Debt Overview ($ million) | Metric | As of August 16, 2025 | As of February 1, 2025 | | :--- | :--- | :--- | | 1.70% to 8.00% Senior Notes (due 2064) | $14,859 | $14,854 | | Total Debt Excluding Financing Lease Obligations | $15,946 | $15,909 | | Fair Value of Total Debt | $14,886 | $14,648 | | Carrying Value of Total Debt | $15,946 | $15,909 | - Interest expense on long-term debt for the first two quarters of 2025 was **$485 million**, higher than **$265 million** for the same period in 2024[36](index=36&type=chunk) - In the second quarter of 2024, the company terminated **$5,350 million** of forward interest rate swaps and entered into **$5,350 million** of treasury lock agreements to hedge future fixed-rate debt issuances[34](index=34&type=chunk)[35](index=35&type=chunk) [3. BENEFIT PLANS](index=11&type=section&id=3.%20BENEFIT%20PLANS) This section provides information on the company's employee benefit plans, including pension and other post-retirement benefits Net Periodic Benefit Cost (Income) ($ million) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Net Periodic Benefit Cost (Income) for Pension Benefits | $4 | $(1) | $8 | $0 | | Net Periodic Benefit Cost (Income) for Other Benefits | $2 | $0 | $2 | $(1) | - The company contributed **$175 million** to employee 401(k) retirement savings accounts in the first two quarters of 2025, consistent with the prior year[39](index=39&type=chunk) [4. EARNINGS PER COMMON SHARE](index=13&type=section&id=4.%20EARNINGS%20PER%20COMMON%20SHARE) This section presents the calculation of basic and diluted earnings per common share, including adjustments for dilutive securities Earnings Per Share Reconciliation ($ million, except per share amounts) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Basic Net Earnings Per Common Share Attributable to The Kroger Co. | $0.91 | $0.64 | $2.22 | $1.94 | | Dilutive Effect of Stock Options (shares) | 3 | 4 | 3 | 6 | | Diluted Net Earnings Per Common Share Attributable to The Kroger Co. | $0.91 | $0.64 | $2.20 | $1.93 | | Average Number of Common Shares Used in Diluted Calculation | 665 | 727 | 664 | 728 | - Approximately **1 million** shares (second quarter 2025) and **4 million** shares (second quarter 2024) of options were excluded from diluted net earnings per share calculation due to their anti-dilutive effect[41](index=41&type=chunk) [5. COMMITMENTS AND CONTINGENCIES](index=14&type=section&id=5.%20COMMITMENTS%20AND%20CONTINGENCIES) This section discloses the company's commitments and contingent liabilities, including legal settlements and merger-related litigation - Kroger has reached an agreement in principle to resolve most opioid claims, agreeing to pay up to **$1,200 million** to states and local governments, **$36 million** to Native American tribes, plus approximately **$177 million** in attorneys' fees[47](index=47&type=chunk) - As of August 16, 2025, the company recorded **$137 million** of the estimated opioid settlement liability in "Other current liabilities" and **$982 million** in "Other long-term liabilities"[52](index=52&type=chunk) - The merger agreement with Albertsons Companies, Inc. was terminated on December 11, 2024, with Albertsons suing Kroger for a **$600 million** termination fee and additional damages, which Kroger denies and has counterclaimed[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) [6. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)](index=17&type=section&id=6.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME%20(LOSS)) This section details changes in accumulated other comprehensive income (loss), reflecting non-owner changes in equity Accumulated Other Comprehensive Income (Loss) Changes ($ million, net of tax) | Metric | As of February 1, 2025 | As of August 16, 2025 | | :--- | :--- | :--- | | Balance of Accumulated Other Comprehensive Income (Loss) | $(621) | $(615) | | Net Other Comprehensive Income for the Period | $6 | $6 | - Net other comprehensive income for the period was a **$6 million** gain in the first two quarters of 2025, a significant improvement from a **$(51) million** loss in the same period of 2024[60](index=60&type=chunk) [7. LEASES AND LEASE-FINANCED TRANSACTIONS](index=19&type=section&id=7.%20LEASES%20AND%20LEASE-FINANCED%20TRANSACTIONS) This section provides information on the company's lease arrangements and lease-financed transactions, including related assets and liabilities - As of August 16, 2025, net financing lease assets related to the Ocado agreement were **$907 million**, with total financing lease liabilities of **$857 million** (**$111 million** current and **$746 million** non-current)[63](index=63&type=chunk) - The company is conducting a comprehensive review of its e-commerce business to improve profitability, with potential significant impacts on its consolidated financial statements[64](index=64&type=chunk) [8. SEGMENT REPORTING](index=19&type=section&id=8.%20SEGMENT%20REPORTING) This section presents financial information by business segment, focusing on the company's primary retail operations - Retail operations account for **99%** of the company's consolidated sales and represent its sole reportable segment[65](index=65&type=chunk) Retail Segment FIFO EBITDA ($ million) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Retail Segment FIFO EBITDA | $1,521 | $1,436 | $3,717 | $3,543 | - Retail segment FIFO EBITDA increased by **$85 million** (**5.9%**) in the second quarter of 2025 and by **$174 million** (**4.9%**) in the first two quarters[67](index=67&type=chunk) [9. INCOME TAXES](index=20&type=section&id=9.%20INCOME%20TAXES) This section details the company's income tax provisions, including effective tax rates and their contributing factors Effective Income Tax Rate | Period | 2025 Effective Tax Rate | 2024 Effective Tax Rate | | :--- | :--- | :--- | | Second Quarter | 21.0% | 24.1% | | First Two Quarters | 21.2% | 21.2% | - The effective income tax rate for the second quarter of 2025 decreased, primarily because state income taxes were fully offset by tax credits and deductions, including equity-based payment benefits[69](index=69&type=chunk) [10. RECENTLY ISSUED ACCOUNTING STANDARDS](index=22&type=section&id=10.%20RECENTLY%20ISSUED%20ACCOUNTING%20STANDARDS) This section discusses recently issued accounting standards and their potential impact on the company's financial statements - FASB issued ASU 2024-03, requiring disclosure of specific expense categories, effective for annual periods beginning after December 15, 2026, with the company currently evaluating its impact[70](index=70&type=chunk) - FASB issued ASU 2023-09, amending income tax disclosure guidance, effective for annual periods beginning after December 15, 2024, and is not expected to have a material impact on the company's consolidated financial statements[71](index=71&type=chunk) [11. SUBSEQUENT EVENT](index=22&type=section&id=11.%20SUBSEQUENT%20EVENT) This section addresses subsequent events occurring after the balance sheet date, with specific disclosures marked as pending - The subsequent event section is marked as "To Be Determined" (TBD), indicating no specific disclosure information at the time of report submission[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's detailed analysis of Kroger's financial condition and operating results, covering forward-looking statements, value creation, operating performance, and liquidity [CAUTIONARY STATEMENT](index=23&type=section&id=CAUTIONARY%20STATEMENT) This section highlights that forward-looking statements are subject to various uncertainties and risks that could cause actual results to differ materially - Forward-looking statements are subject to uncertainties including financial market conditions, labor negotiations, competition, economic trends (inflation/deflation), geopolitical events, regulatory changes, and litigation outcomes (e.g., Albertsons merger, opioid settlements)[75](index=75&type=chunk) - The company does not undertake any obligation to update the information contained in this report, unless required by applicable law[76](index=76&type=chunk) [OUR VALUE CREATION MODEL – DELIVERING CONSISTENT AND ATTRACTIVE TOTAL SHAREHOLDER RETURN](index=25&type=section&id=OUR%20VALUE%20CREATION%20MODEL%20%E2%80%93%20DELIVERING%20CONSISTENT%20AND%20ATTRACTIVE%20TOTAL%20SHAREHOLDER%20RETURN) This section outlines Kroger's value creation model, centered on its omnichannel retail business and strategic pillars to drive customer loyalty and shareholder returns - Kroger's value creation model is centered on its omnichannel retail business, building customer loyalty and driving sales growth through four pillars: "Fresh," "Our Brands," "Personalization," and "eCommerce"[77](index=77&type=chunk) - The model aims to deliver a long-term total shareholder return of **8% to 11%**[80](index=80&type=chunk) - Key strategies include achieving identical sales growth excluding fuel (especially double-digit e-commerce sales growth) and expanding operating margin through gross margin improvement, alternative profit business growth, and cost savings initiatives[81](index=81&type=chunk) [EXECUTIVE SUMMARY](index=26&type=section&id=EXECUTIVE%20SUMMARY) This section provides an executive overview of Kroger's strong second-quarter performance, highlighting progress in organizational simplification, customer experience, and value creation - Kroger achieved strong results in the second quarter, making significant progress in simplifying its organization, improving customer experience, and focusing on value creation[82](index=82&type=chunk) - Sales growth was primarily driven by pharmacy, e-commerce, and fresh departments, with improved grocery volume[82](index=82&type=chunk) Executive Summary Financial Highlights ($ million, except per share amounts) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | % Change | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | % Change | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Sales | $33,940 | 0.1% | $33,912 | $79,058 | (0.2)% | $79,181 | | Sales Excluding Fuel | $30,671 | 1.3% | $30,276 | $71,449 | 1.2% | $70,587 | | Identical Sales Excluding Fuel and Adjustment Items | 3.4% | N/A | 1.2% | 3.3% | N/A | 0.8% | | Operating Profit | $863 | 5.9% | $815 | $2,185 | 3.6% | $2,109 | | Adjusted Diluted Net Earnings Per Share Attributable to The Kroger Co. | $1.04 | 11.8% | $0.93 | $2.53 | 7.2% | $2.36 | - E-commerce sales grew **16%** in the second quarter and **15%** in the first two quarters, driven by strong demand for delivery solutions (up **19%** in Q2 and **20%** in the first two quarters)[89](index=89&type=chunk) - In the first two quarters of 2025, the company returned **$625 million** to shareholders through share repurchases and dividend payments[89](index=89&type=chunk) [USE OF NON-GAAP FINANCIAL MEASURES](index=28&type=section&id=USE%20OF%20NON-GAAP%20FINANCIAL%20MEASURES) This section explains Kroger's use of non-GAAP financial measures like FIFO gross margin and adjusted net earnings to provide a clearer view of core operating performance - The company uses non-GAAP measures such as FIFO gross margin, FIFO operating profit, Adjusted Net Earnings, and Adjusted Diluted Net Earnings Per Share to more accurately compare core operating performance by excluding the impact of non-operating activities[90](index=90&type=chunk)[93](index=93&type=chunk) Adjusted Net Earnings Attributable to The Kroger Co. ($ million) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Net Earnings Attributable to The Kroger Co. | $609 | $466 | $1,475 | $1,413 | | Adjustment Items for 2025 and 2024 | $86 | $215 | $215 | $315 | | Adjusted Net Earnings Attributable to The Kroger Co. (Excluding Adjustment Items) | $695 | $681 | $1,690 | $1,728 | Adjusted Diluted Net Earnings Per Share Attributable to The Kroger Co. | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Diluted Net Earnings Per Share | $0.91 | $0.64 | $2.20 | $1.93 | | Adjustment Items for 2025 and 2024 | $0.13 | $0.29 | $0.33 | $0.43 | | Adjusted Diluted Net Earnings Per Share Attributable to The Kroger Co. (Excluding Adjustment Items) | $1.04 | $0.93 | $2.53 | $2.36 | - Key adjustment items for 2025 include **$100 million** in store closing costs, **$136 million** in merger-related litigation expenses, **$47 million** in severance costs, and **$56 million** in investment gains (second quarter)[95](index=95&type=chunk)[97](index=97&type=chunk) [RESULTS OF OPERATIONS](index=33&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a detailed analysis of Kroger's operating performance, including sales, gross margin, operating expenses, interest, and taxes [Sales](index=33&type=section&id=Sales) This section analyzes the company's sales performance, including total sales, fuel-excluded sales, and comparable store sales Total Sales ($ million) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | % Change | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | % Change | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Sales | $33,940 | 0.1% | $33,912 | $79,058 | (0.2)% | $79,181 | | Total Retail Customer Sales Excluding Fuel | $30,352 | 1.2% | $30,005 | $70,753 | 1.1% | $69,973 | | Supermarket Fuel Sales | $3,269 | (10.1)% | $3,636 | $7,609 | (11.5)% | $8,594 | - Identical sales excluding fuel and adjustment items grew **3.4%** in the second quarter of 2025 and **3.3%** in the first two quarters, driven by pharmacy, e-commerce, and fresh sales[105](index=105&type=chunk)[106](index=106&type=chunk) - E-commerce sales increased by **16%** in the second quarter and **15%** in the first two quarters, with delivery solutions growing **19%** in the second quarter and **20%** in the first two quarters[103](index=103&type=chunk) [Gross Margin, LIFO and FIFO Gross Margin](index=36&type=section&id=Gross%20Margin,%20LIFO%20and%20FIFO%20Gross%20Margin) This section examines the company's gross margin, including the impact of LIFO accounting and FIFO gross margin trends Gross Margin | Period | 2025 Second Quarter | 2024 Second Quarter | 2025 First Two Quarters | 2024 First Two Quarters | | :--- | :--- | :--- | :--- | :--- | | Gross Margin | 22.5% | 22.1% | 22.8% | 22.0% | - LIFO charge increased to **$62 million** in the second quarter of 2025 (from **$21 million** in Q2 2024) and to **$102 million** in the first two quarters (from **$62 million** in the first two quarters of 2024), reflecting anticipated annual product cost inflation[118](index=118&type=chunk) - Excluding the impact of fuel, FIFO gross margin increased by **39 basis points** in the second quarter of 2025 and **62 basis points** in the first two quarters, primarily due to the sale of the lower-margin Kroger Specialty Pharmacy business, reduced shrink, and lower supply chain costs[119](index=119&type=chunk)[120](index=120&type=chunk) [Operating, General and Administrative Expenses](index=37&type=section&id=Operating,%20General%20and%20Administrative%20Expenses) This section details the company's operating, general, and administrative expenses, analyzing their impact on profitability OG&A Expense as a Percentage of Sales | Period | 2025 OG&A as % of Sales | 2024 OG&A as % of Sales | | :--- | :--- | :--- | | Second Quarter | 17.6% | 17.4% | | First Two Quarters | 17.6% | 17.0% | - Excluding the impact of fuel, Kroger Specialty Pharmacy, and adjustment items, the OG&A rate decreased by **41 basis points** in the second quarter of 2025 and **9 basis points** in the first two quarters, driven by broad-based cost savings and administrative efficiencies[125](index=125&type=chunk)[127](index=127&type=chunk) - Increased multi-employer pension contributions and healthcare costs in 2025 contributed to a higher OG&A rate in the first two quarters of 2025[123](index=123&type=chunk)[126](index=126&type=chunk) [Rent Expense](index=39&type=section&id=Rent%20Expense) This section discusses the company's rent expense and its stability relative to sales over the reporting periods - Rent expense as a percentage of sales remained relatively stable in the second quarter and first two quarters of 2025 compared to the same periods in 2024[128](index=128&type=chunk) [Depreciation and Amortization Expense](index=39&type=section&id=Depreciation%20and%20Amortization%20Expense) This section analyzes depreciation and amortization expenses, noting factors influencing their changes relative to sales - Depreciation and amortization expense as a percentage of sales increased in the second quarter and first two quarters of 2025, primarily due to the sale of the Kroger Specialty Pharmacy business, which had a lower depreciation and amortization rate[129](index=129&type=chunk) [Operating Profit and FIFO Operating Profit](index=39&type=section&id=Operating%20Profit%20and%20FIFO%20Operating%20Profit) This section presents the company's operating profit and FIFO operating profit, highlighting growth and contributing factors Operating Profit ($ million) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Operating Profit | $863 | $815 | $2,185 | $2,109 | | FIFO Operating Profit | $925 | $836 | $2,287 | $2,171 | | Adjusted FIFO Operating Profit (Excluding Adjustment Items) | $1,091 | $984 | $2,610 | $2,483 | - Operating profit increased by **5.9%** in the second quarter of 2025 and **3.6%** in the first two quarters[84](index=84&type=chunk) - Adjusted FIFO operating profit, excluding adjustment items, increased by **10.9%** in the second quarter of 2025 and **5.1%** in the first two quarters[84](index=84&type=chunk) [Net Interest Expense](index=43&type=section&id=Net%20Interest%20Expense) This section details the company's net interest expense, explaining the drivers behind its changes Net Interest Expense ($ million) | Period | 2025 Second Quarter | 2024 Second Quarter | 2025 First Two Quarters | 2024 First Two Quarters | | :--- | :--- | :--- | :--- | :--- | | Net Interest Expense | $144 | $84 | $343 | $207 | - Net interest expense significantly increased, primarily due to higher average total outstanding debt resulting from senior notes issued in the third quarter of 2024[136](index=136&type=chunk) [Income Taxes](index=43&type=section&id=Income%20Taxes) This section provides an overview of the company's income tax expenses and effective tax rates for the reported periods Effective Income Tax Rate | Period | 2025 Second Quarter | 2024 Second Quarter | 2025 First Two Quarters | 2024 First Two Quarters | | :--- | :--- | :--- | :--- | :--- | | Effective Income Tax Rate | 21.0% | 24.1% | 21.2% | 21.2% | - The effective income tax rate for the second quarter of 2025 decreased to **21.0%**, mainly because state income taxes were fully offset by tax credits and deductions, including equity-based payment benefits[137](index=137&type=chunk) [Net Earnings and Net Earnings Per Diluted Share](index=43&type=section&id=Net%20Earnings%20and%20Net%20Earnings%20Per%20Diluted%20Share) This section analyzes the company's net earnings and diluted earnings per share, including adjusted figures and growth drivers Net Earnings and Diluted Net Earnings Per Share | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Diluted Net Earnings Per Share | $0.91 | $0.64 | $2.20 | $1.93 | | Adjusted Diluted Net Earnings Per Share | $1.04 | $0.93 | $2.53 | $2.36 | - Diluted net earnings per share increased by **42%** in the second quarter of 2025 and **14%** in the first two quarters[139](index=139&type=chunk)[140](index=140&type=chunk) - The growth in adjusted diluted net earnings per share was primarily driven by increased adjusted FIFO operating profit (excluding fuel), lower income tax expense, and a reduction in outstanding common shares, partially offset by higher net interest expense and lower fuel earnings[139](index=139&type=chunk)[140](index=140&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=44&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses Kroger's liquidity and capital resources, including cash flow, capital investments, debt management, and share repurchase programs [Cash Flow Information](index=44&type=section&id=Cash%20Flow%20Information) This section summarizes the company's cash flows from operating, investing, and financing activities Cash Flow Summary ($ million) | Metric | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $3,688 | $3,464 | | Net Cash Used in Investing Activities | $(2,107) | $(1,905) | | Net Cash Used in Financing Activities | $(657) | $(642) | - Net cash provided by operating activities increased by **6%** to **$3,688 million** in the first two quarters of 2025[143](index=143&type=chunk) - Net cash used in investing activities increased, primarily due to reduced proceeds from asset sales, while net cash used in financing activities remained consistent[144](index=144&type=chunk)[146](index=146&type=chunk) [Capital Investments](index=45&type=section&id=Capital%20Investments) This section details the company's capital investments, including expenditures for new stores and renovations Capital Investments ($ million) | Metric | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | | Total Capital Investments (Excluding Lease Acquisitions) | $(2,030) | $(2,076) | - Total capital investments for the first two quarters of 2025 were **$2,030 million**, consistent with the prior year[147](index=147&type=chunk) - During the rolling four-quarter period ended second quarter 2025, the company opened, expanded, relocated, or acquired **25** supermarkets and completed **203** remodels, resulting in a **0.3%** year-over-year increase in total supermarket square footage[147](index=147&type=chunk) [Debt Management](index=45&type=section&id=Debt%20Management) This section discusses the company's debt management strategies, including total debt levels and credit facilities - As of August 16, 2025, total debt (including current and long-term financing lease obligations) increased by **$54 million** compared to the end of fiscal year 2024, primarily due to net increases in financing lease obligations and real estate transactions[150](index=150&type=chunk) - As of August 16, 2025, the company had no outstanding commercial paper and no borrowings under its revolving credit facilities[148](index=148&type=chunk) [Common Share Repurchase Programs](index=45&type=section&id=Common%20Share%20Repurchase%20Programs) This section outlines the company's common share repurchase programs, including amounts and shares repurchased Share Repurchases (First Two Quarters 2025) | Metric | Amount | | :--- | :--- | | Share Repurchases | $203 million | | Shares Repurchased | 3.0 million shares | | Average Repurchase Price | $68.21/share | - The Board of Directors authorized a **$7.5 billion** share repurchase program on December 11, 2024, with **$2.5 billion** remaining under the authorization as of August 16, 2025[152](index=152&type=chunk)[155](index=155&type=chunk) - In 2024, the company initiated a **$5.0 billion** accelerated share repurchase (ASR) agreement under the December 2024 repurchase program, with final settlement expected in the third quarter of 2025[153](index=153&type=chunk) [Liquidity Needs](index=47&type=section&id=Liquidity%20Needs) This section addresses the company's liquidity needs and how they are met through cash, operations, and financing sources - The company expects to meet its short-term and long-term liquidity needs through existing cash and temporary cash investments (**$4.9 billion** as of August 16, 2025), cash flow from operations, and other liquidity sources, including its commercial paper program and bank credit facilities[156](index=156&type=chunk)[157](index=157&type=chunk) - The company typically operates with a working capital deficit, which is supported by its efficient cash utilization and consistent access to capital markets[157](index=157&type=chunk) - The company is committed to maintaining its current investment grade debt ratings and effectively managing competitive conditions[157](index=157&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=47&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) This section confirms that no significant changes have occurred in the company's critical accounting estimates since the last annual report - There have been no significant changes in the company's critical accounting estimates since the filing of the annual report on Form 10-K for the fiscal year ended February 1, 2025[160](index=160&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This section confirms no significant changes in the company's market risk exposures since the last annual report - There have been no material changes in the company's market risks since the annual report on Form 10-K for the fiscal year ended February 1, 2025[161](index=161&type=chunk) - As of August 16, 2025, the company had no outstanding forward interest rate swap agreements or treasury lock agreements[161](index=161&type=chunk) [PART II - OTHER INFORMATION](index=49&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part contains additional information beyond the financial statements, including controls, legal proceedings, equity purchases, and exhibits [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures.) This section confirms the effectiveness of the company's disclosure controls and procedures and ongoing internal control enhancements - As of August 16, 2025, disclosure controls and procedures were deemed effective, providing reasonable assurance for timely and accurate financial reporting[162](index=162&type=chunk) - Kroger is implementing a multi-year technology transformation project to modernize systems and improve process efficiencies, continuously evaluating the effectiveness of internal controls[163](index=163&type=chunk) - No significant changes in internal control over financial reporting occurred during the quarter ended August 16, 2025[164](index=164&type=chunk) [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings.) This section refers to the detailed disclosures on legal proceedings found in the notes to the consolidated financial statements - Information regarding legal proceedings is disclosed by reference to Note 5, "Commitments and Contingencies," in the consolidated financial statements[165](index=165&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information.) This section provides additional information, including details on issuer purchases of equity securities during the quarter [ISSUER PURCHASES OF EQUITY SECURITIES](index=50&type=section&id=ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) This section details the company's equity security repurchase activities, including shares bought back and remaining authorization Issuer Purchases of Equity Securities (Second Quarter 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($ million) | | :--- | :--- | :--- | :--- | :--- | | May 25 to June 21, 2025 | 2,999 | $66.20 | 2,999 | $2,500 | | June 22 to July 19, 2025 | 944,754 | $71.50 | 250,355 | $2,500 | | July 20 to August 16, 2025 | 60,098 | $72.35 | 60,098 | $2,500 | | Total | 1,007,851 | $71.53 | 313,452 | $2,500 | - Repurchased shares include those bought under the 1999 repurchase program and shares surrendered by employees for tax withholding on restricted stock under long-term incentive plans[170](index=170&type=chunk) - As of August 16, 2025, **$2.5 billion** remained available under the December 2024 repurchase program[155](index=155&type=chunk)[170](index=170&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits.) This section lists all exhibits filed with the Form 10-Q, including key agreements and certification documents - Exhibits include the Merger Agreement (October 13, 2022), amended Articles of Incorporation, indentures, credit agreements, and various certification documents (e.g., Rule 13a-14(a) / 15d-14(a) Certifications)[171](index=171&type=chunk) [SIGNATURES](index=54&type=section&id=SIGNATURES) This section confirms the official signing of the report by the company's interim CEO and CFO - This report was signed on September 19, 2025, by Ronald L. Sargent (Interim Chief Executive Officer) and David J. C. Kennerley (Chief Financial Officer)[178](index=178&type=chunk)