Company Classification and Financial Reporting - The company is classified as an "emerging growth company," allowing it to provide reduced financial disclosures, including only two years of audited financial statements [441]. - The company is classified as a "smaller reporting company" and is not required to provide certain market risk disclosures [538]. Stock and Equity - As of March 26, 2026, the company has 2,540,518 shares of Common Stock outstanding, which may be subject to significant dilution if additional shares are sold under the at-the-market offering sales agreement [455]. - The company may issue additional shares of Common Stock or a new class of preferred stock, which could dilute the equity positions of current stockholders without their consent [467]. - The company has $52.8 million in net operating loss carryforwards as of December 31, 2025, which may be limited in utilization due to potential ownership changes under IRC Section 382 [468]. Compliance and Regulatory Issues - The company has received notices from Nasdaq regarding non-compliance with minimum stockholders' equity and minimum bid price requirements, but has regained compliance with the minimum bid price requirement as of March 5, 2026 [456]. Financial Performance and Market Conditions - Global economic conditions, including inflation and potential recession, may adversely impact the company's financial condition and share price [446]. - The company may face challenges in securing necessary financing if equity and credit markets deteriorate, which could harm its growth strategy and financial performance [452]. - The stock price of the company is likely to be volatile, influenced by various factors including operating performance and market conditions [444]. - The company may experience significant fluctuations in stock price due to external factors such as geopolitical tensions and economic uncertainty [448]. Dividend Policy - The company does not anticipate paying dividends in the foreseeable future, meaning returns for investors may only be realized through stock sales [460]. Corporate Governance and Legal Provisions - Provisions in the company's charter documents may deter beneficial takeover efforts, potentially impacting stockholder value [461]. - The exclusive forum for certain disputes is the Court of Chancery of the State of Delaware, which may limit stockholders' ability to choose a favorable judicial forum [462]. - The federal district courts of the United States will be the exclusive forum for complaints arising under the Securities Act, which may not be enforceable in other jurisdictions [463]. - The company may incur additional costs if the exclusive forum provisions are found to be unenforceable in other jurisdictions [466]. - The choice of forum provisions may discourage stockholders from bringing claims due to increased costs [465]. Cash Management - The company has broad discretion in using cash and cash equivalents, which may not yield significant returns for stockholders [458].

Real Estate Investments - Gyrodyne's remaining real estate investments include 13.8 acres in Cortlandt Manor, New York, and 63 acres in Flowerfield, St. James, New York, with a total of 135,000 rentable square feet[22]. - Gyrodyne has entered into a Purchase and Sale Agreement for approximately 49 acres of vacant land in Flowerfield, with a purchase price estimated between $24 million and $28.74 million, contingent on subdivision and site plan approval[38]. - The Company aims to enhance property values by pursuing entitlement opportunities, which may increase development flexibility for potential purchasers[19]. - Gyrodyne's strategy includes managing the real estate portfolio to improve operating cash flow while increasing market values of the underlying properties[29]. - The Company is focusing on enhancing the development flexibility of its Flowerfield and Cortlandt Manor properties, with ongoing discussions with local authorities for potential entitlements[55]. - The Cortlandt Manor property is planned to include 150,000 square feet of medical use and 4,000 square feet of ancillary retail, with a projected completion of subdivision and site plan approval by mid-2027[53]. - The Flowerfield property subdivision application was approved by the Suffolk County Planning Commission, allowing for local determination by the Town of Smithtown[57]. - The Company has 28 tenants at Flowerfield, including four on month-to-month commitments, comprising 32 leases[67]. - The leases with Stony Brook University and its affiliates represent over 21% of the company's overall rentable space, generating $534,000 in annual rental revenue[193]. Financial Position and Strategy - The estimated cash balance upon completion of the liquidation process in 2028 is approximately $25.9 million, equating to future distributions of $11.76 per share based on 2,199,308 common shares outstanding[42]. - Gyrodyne intends to dissolve after completing the disposition of all real property assets and settling any debts, with distributions to shareholders dependent on the proceeds from asset sales[20]. - The Company aims to modify existing loan facilities to strengthen its financial position through the end of 2028, indicating a need for additional capital to fund operations[44]. - The Company is exploring alternative capital raising strategies to address working capital needs, emphasizing the uncertainty of securing satisfactory loan modifications[44]. - The Company secured a non-revolving credit line for up to $3,000,000, with an outstanding balance of $1,828,416 as of December 31, 2025[87]. - A second loan for up to $3,000,000 was secured, with an outstanding balance of $2,503,293 as of December 31, 2025[88]. - The Company secured a $4.95 million term loan with Signature Bank, bearing an interest rate of 3.75% for five years, with an option to extend for another five years[90]. - The outstanding balance of the 2021 Mortgage Loan as of December 31, 2025, was $4,558,993[91]. - The Company obtained a $1.5 million term mortgage loan on December 27, 2023, with a floating interest rate of 1.5% above the Wall Street Prime Rate[93]. - The Company expects to incur operating losses and has cash resources sufficient for approximately 18 months without additional property sales[212]. Legal and Regulatory Challenges - The Company is actively defending against a legal challenge related to the Flowerfield Subdivision Application, which may extend the timeline for property sales into 2028[34]. - The Company is subject to extensive regulations affecting its healthcare tenants, which could impact rental revenues[64]. - The Company is subject to extensive federal, state, and local regulations that could impact its tenants' ability to operate and pay rent[191]. - The Flowerfield property was granted preliminary approval to be divided into eight lots, but is currently facing legal challenges from local parties[129]. - The company is restricted by a Stipulation of Settlement that mandates property sales at or above December 2014 appraised values, limiting its options[150]. Market and Economic Conditions - The COVID-19 pandemic has negatively impacted demand for office and hotel development, affecting occupancy rates and average rates per square foot[71]. - A general economic slowdown could significantly impact property values, revenues, and the ability to pay distributions to shareholders[165]. - Rising interest rates may negatively impact property valuations and lower sales proceeds from future dispositions[181]. - The real estate market values are subject to fluctuations influenced by inflation, interest rates, and other economic factors[136]. - Increased operating costs may reduce estimated net assets and sales prices for properties, affecting profitability[172]. - The ongoing impact of the COVID-19 pandemic may continue to affect the company's operations and financial results[169]. Shareholder and Management Risks - The company cannot assure growth in property value that exceeds land entitlement costs, which could adversely affect shareholder distributions[127]. - Distributions to shareholders may be delayed or reduced due to potential buyer defaults or failure to secure site plan approvals[137]. - The company faces uncertainties regarding the timing and amount of distributions, which depend on various external factors[135]. - The company may face delays or reductions in shareholder distributions if land entitlement and liquidation costs exceed expectations[140]. - The company incurred approximately $1,050,000 in costs responding to shareholder activist campaigns through December 31, 2025[150]. - The company is subject to risks from proxy contests and actions by activist shareholders, which could disrupt operations and affect strategic objectives[154]. - The loss of key management personnel could materially adversely affect the Company's business and financial condition[210]. Operational Performance - The Company incurred approximately $380,000 in land entitlement costs during the year ended December 31, 2025, with an estimated additional $1.3 million expected through December 31, 2028[46]. - The entitlement costs for the year ended December 31, 2025, associated with property ownership and development were approximately $301,300[60]. - The Company agreed to approximately $345,000 in lease incentives/concessions in 2025, including rent abatements and tenant improvements[106]. - Approximately 52% of the company's annual leasing revenue is up for renewal in 2026, increasing the risk of non-renewals or terminations by current tenants[167]. - The largest medical tenant represents 14% of total rentable square feet and is expected to contribute approximately 34% of annual rental revenue for 2026[171]. - The company faces competition from nearby hospitals and medical office buildings, which may affect rental revenues[188]. - The geographic concentration of properties in the New York metropolitan area makes the company vulnerable to local economic downturns[196]. - The company anticipates ongoing capital expenditures for renovations and improvements, which could adversely affect its financial condition[197]. Cybersecurity and Risk Management - The Company recognizes the importance of robust cybersecurity measures and has integrated cybersecurity risk management into its overall risk management framework[214][215].

Income and Cash Flow - The Trust derives all or substantially all of its income and cash flow from the Net Profits Interest, which entitles it to receive 80% of the net profits from the sale of oil and natural gas production from the Underlying Properties [25]. - The Trust makes monthly cash distributions to holders of its Trust units, with distributions generally relating to sales from a one-month period [24]. - The Trust will dissolve if the annual cash proceeds available for distribution are less than $2.0 million for any two consecutive years [46]. - The Trust's net profits are computed monthly, and any negative net profits will result in no payment for that period, affecting future distributions [33]. - The Trust's cash distributions are highly dependent on oil and natural gas prices, which are volatile and can fluctuate widely, potentially reducing proceeds to Trust unitholders [75]. - Lower oil and natural gas prices have historically resulted in reduced net proceeds, which could eliminate cash available for distribution to Trust unitholders [76]. - The ability of OPEC and other oil-exporting nations to maintain production levels significantly impacts commodity prices, affecting cash distributions to Trust unitholders [82]. - Actual reserves and future production may be less than current estimates, which could reduce cash distributions and the value of Trust units [83]. - The amount of cash available for distribution depends on access to gathering, transportation, and processing facilities, which could be limited, affecting sales of oil and natural gas [88]. - The unavailability or high cost of equipment, supplies, and personnel could increase operational costs, reducing cash available for distribution to Trust unitholders [91]. - Public health concerns, such as COVID-19, could adversely affect global demand for oil and gas, impacting cash distributions [80]. - Changes in federal tax law may affect the tax treatment of investments in Trust units, potentially impacting cash distributions [77]. - The Trust's distributions to unitholders could be reduced due to the complexities of tax reporting and potential changes in federal tax law [159]. - Distributable income for 2025 was $4,712,736, compared to $5,161,498 in 2024 and $6,262,256 in 2023, reflecting a significant reduction in cash available for distribution [219]. - The distributable income per unit for 2025 was $0.387371, down from $0.424259 in 2024 and $0.514745 in 2023, showing a decline in returns to unitholders [219]. Operational Risks and Regulations - The Trust's operations are subject to stringent environmental regulations, which may impose significant obligations and increase operational costs [45]. - The competitive nature of the oil and natural gas industry may impact the Trust's Net Profits Interest due to the presence of financially stronger competitors [41]. - The EPA designated two per- and polyfluoroalkyl substances (PFAS) as hazardous substances under CERCLA on September 6, 2022, increasing potential liabilities for companies historically using these chemicals [49]. - In October 2023, the EPA released a final rule eliminating an exemption for PFAS reporting in small concentrations, which could increase compliance costs for companies [52]. - The EPA's National Enforcement and Compliance Initiatives for fiscal years 2024-2027 include identifying and characterizing PFAS contamination, indicating a focus on regulatory scrutiny in this area [49]. - The Clean Water Act imposes strict controls on pollutant discharges, with potential delays in oil and gas project development due to permit requirements [54]. - The EPA's final rule on March 12, 2025, aims to revise wastewater regulations for oil and gas extraction, potentially lowering production costs and promoting beneficial reuse of produced water [54]. - The EPA's new NSPS standards, effective December 2, 2023, aim to reduce methane and VOC emissions from oil and gas operations, introducing a "super emitter" program [60]. - Many states have adopted GHG emission reduction goals that may impose moratoriums on drilling and limits on permitting, impacting the oil and gas industry [61]. - The EPA's rules require monitoring and reporting of GHG emissions from petroleum and natural gas systems, expanding regulatory obligations for companies [58]. - Future regulatory changes regarding waste management could increase operational costs for companies involved in oil and gas exploration and production [52]. - The EPA's final Greenhouse Gas Reporting rule requires certain sources to report GHGs over 25,000 tons per year, which could increase compliance costs for the company [62]. - The company faces potential operational delays and increased costs due to new federal and state regulations on hydraulic fracturing, which could reduce oil and gas production [67]. - The Endangered Species Act may impose restrictions on the company's operations if new species are listed as endangered, potentially increasing costs and limiting production activities [68]. - The company is subject to various federal and state health and safety regulations, which could impact operational costs and compliance [70]. - The designation of critical habitat areas for endangered species could materially restrict access to lands necessary for operations [69]. - The company may incur additional costs due to increased regulatory scrutiny and potential litigation related to hydraulic fracturing practices [67]. - Compliance with environmental laws may generate significant costs and liabilities, reducing cash available for distribution to Trust unitholders [135]. - Increased regulation on hydraulic fracturing could lead to higher costs and operational delays for T2S, potentially reducing oil and gas production [139]. - The adoption of climate change legislation could increase operating costs for T2S and reduce demand for its oil and gas products [143]. - The potential physical effects of climate change may disrupt production and increase costs for T2S, affecting cash distributions to Trust unitholders [144]. - T2S faces cybersecurity threats that could adversely affect its operations and financial condition, including potential data breaches and operational disruptions [147]. - Cyber-attacks on third-party oil and gas distribution systems could delay or prevent delivery to markets, impacting T2S's business [149]. Production and Reserves - The Underlying Properties consist of 31,354 gross (22,394 net) acres in the Permian Basin, which is a significant area for oil and natural gas production [26]. - As of December 31, 2025, the Underlying Properties had proved reserves of 2.8 MMBoe, with 100% of the volumes and PV-10 value attributable to proved developed reserves [167]. - Approximately 94% of the 2.8 MMBoe of proved reserves were operated by T2S as of December 31, 2025 [167]. - The Permian Clearfork area has an estimated 0.9 MMBoe of total proved reserves, all of which are proved developed reserves [168]. - The Permian Abo area has an estimated 0.4 MMBoe of total proved reserves, all of which are proved developed reserves [169]. - The Permian Shelf area has an estimated 0.3 MMBoe of total proved reserves, all of which are proved developed reserves [170]. - The Permian Platform area has an estimated 1.2 MMBoe of total proved reserves, all of which are proved developed reserves [171]. - The reserves from the Underlying Properties are depleting assets, and production will diminish over time, potentially leading to decreased cash distributions [98]. - Maintenance projects on the Underlying Properties may affect the quantity of proved reserves and future production rates, depending on market prices [101]. - The Trust does not have the ability to acquire new properties to replace depleting assets, limiting future revenue potential [101]. - No productive development wells were drilled in 2025, maintaining a total of 0.0 gross and net productive wells [191]. - The company operated 426 gross wells as of December 31, 2025, with a net well count of 258 [187]. - Oil production for the year ended December 31, 2025, was 252.8 MBbls, while natural gas production was 312.4 MMcf, resulting in total production of 304.9 MBoe [193]. - The average net daily production for 2025 was 835.25 Boe/d, down from 950.08 Boe/d in 2024 [193]. Financial Performance - For the year ended December 31, 2025, T2S reported that Phillips 66, Plains All American Pipeline, Energy Transfer Partners, and Enterprise Crude Oil LLC accounted for 34.34%, 17.01%, 16.31%, and 14.69% respectively, of its total oil and natural gas revenues [40]. - T2S's net profits income for 2025 was $5,559,315, a decrease of 6.7% from $5,959,482 in 2024 and a 21.8% decline from $7,127,379 in 2023 [219]. - Total revenue for 2025 was $5,607,416, down from $6,018,264 in 2024 and $7,186,191 in 2023, indicating a downward trend in revenue generation [219]. - Total operating expenses per Boe decreased to $22.65 in 2025 from $24.97 in 2024, with lease operating expenses at $18.84 per Boe [192]. - Total costs for the year ended December 31, 2025, amounted to $10,885,077, a decrease from $15,569,271 in 2024 [194]. - T2S revised its 2025 capital and workover budget from $4.5 million to approximately $1.0 million due to market conditions, preserving liquidity and financial flexibility [217]. - Total capital expenditure by the end of 2025 was $515,530, indicating a focus on maintaining production levels amid economic pressures [217]. Trust Structure and Governance - The Trust has no employees and does not conduct any operations or activities beyond managing the Net Profits Interest [23]. - The Trust will receive net profits only from the Net Profits Interest, with no voting rights for unitholders regarding operational decisions [118]. - Trust unitholders have limited ability to enforce provisions of the Conveyance creating the Net Profits Interest [129]. - The Trust may face delisting from the NYSE if it fails to maintain an average closing price of at least $1.00 over a 30-day period [131]. - T2S's ability to fulfill obligations to the Trust may be limited by restrictions under its debt agreements [128]. - T2S may sell some or all of the Underlying Properties without considering the interests of the Trust unitholders [130]. - The Trustee can only be replaced by a majority vote of the Trust unitholders, making it difficult to remove or replace the Trustee [127]. - Boaz Energy conveyed 4,884,861 Trust units to Ustx, LLC on March 31, 2025, which may impact the trading price of the Trust units [132]. - The Trust filed a Registration Statement on Form S-3 on April 28, 2022, seeking registration of 5,801,675 Trust units held by Boaz Energy, confirmed effective by the SEC on May 9, 2022 [132]. - The Trust indirectly bears 80% of all costs and expenses paid by T2S, including environmental compliance costs associated with the Underlying Properties [138].

Sales Performance - In 2025, syringes accounted for 65.1% of total sales, with EasyPoint® products contributing 31.2% and other products at 3.7%[110] - Domestic sales represented 84.2% of revenues in 2025, with a 9.7% increase driven by higher sales of VanishPoint® and EasyPoint® needles; international revenues surged by 64.0%[130] - Overall unit sales increased by 23.3%, while total revenues rose by 15.8% in 2025[130] Financial Performance - Gross profit margins improved slightly from (3.1)% in 2024 to 0.1% in 2025, despite a loss from operations of $21.2 million[132] - Cash flow used by operations was $7.1 million in 2025, primarily due to a net loss for the year[135] - Tariff expenses amounted to approximately $1.8 million in 2025, significantly impacting the cost of manufactured products[131] Securities and Assets - The unrealized loss on debt and equity securities was $5.0 million, while a realized gain of $5.6 million was recorded from the sale of these securities[133] - As of December 31, 2025, the company held $34.4 million in debt and equity securities, representing 24.1% of total assets[122] Production and Future Expectations - The company incurred approximately $1 million in costs for converting equipment to produce 0.5 mL syringes domestically, which accounted for 11% of overall domestic unit sales in 2025[138] - The company anticipates that commercial quantities of domestically produced 0.5 mL syringes will be available in the second half of 2026[116] Customer Rebates and Estimates - As of December 31, 2025, the total potential future credits to be issued due to prior purchases not yet claimed is estimated at $2.4 million[145] - The company relies on historical trends and assumptions regarding customer rebates to estimate liabilities for future claims[145] - The establishment of reserves for contractual obligations is based on an understanding of sales distribution channels and product categories[145] - Historical redemption rates and inventory turnover rates are considered in the estimation process for customer rebates[145] - The company does not expect significant changes to the current inputs and assumptions used in rebate estimate calculations[145] - There is an inherent risk that estimates and underlying assumptions may not reflect actual future results, potentially impacting future financial outcomes[145] - Adjustments to reserves may have a material impact on future results if estimates or assumptions are incorrect[145] - The company examines the results of estimates against actual historical results to refine future assumptions[145] - The estimates for customer rebates involve a combination of historical data and tracking information provided by distributors[145] - The company is responsible for developing estimates in accordance with U.S. GAAP for reported assets, liabilities, revenues, and expenses[145]

Financial Performance - Net income for 2025 was $2,090,778, a significant recovery from a net loss of $2,170,420 in 2024[329]. - Comprehensive income for 2025 was $3,639,914, a substantial increase from $696,906 in 2024[329]. - Total interest income increased to $43,009,122 in 2025, up from $41,749,745 in 2024, representing a growth of approximately 3.0%[327]. - Net interest income after recovery of provision for credit losses rose to $15,600,822 in 2025, compared to $10,699,210 in 2024, marking an increase of about 46.0%[327]. - Total non-interest income increased to $1,768,156 in 2025, up from $1,348,404 in 2024, reflecting a growth of approximately 31.1%[327]. - Total non-interest expenses rose to $15,296,478 in 2025, compared to $14,589,603 in 2024, indicating an increase of about 4.8%[327]. - Basic earnings per share (EPS) for 2025 was $0.17, while the diluted EPS was also $0.17, compared to a basic and diluted EPS of $(0.17) in 2024[342]. Assets and Liabilities - The company's assets decreased by $66.5 million, or 6.8%, from $971.5 million at December 31, 2024, to $904.9 million at December 31, 2025, primarily due to increases in cash and cash equivalents[178]. - Total liabilities decreased to $764.04 million in 2025 from $834.20 million in 2024, reflecting a reduction of about 8.4%[325]. - Total stockholders' equity increased to $140.91 million in 2025 from $137.29 million in 2024, marking an increase of approximately 2%[325]. - The company held $145,878,693 in total securities, with a fair value of $140,307,447 after accounting for unrealized losses of $6,114,261[404]. Deposits and Liquidity - Certificates of deposit comprised $493.9 million or 75.7% of total deposits at December 31, 2025, with $441.3 million due within one year[171]. - The company’s total deposits rose to $652.45 million in 2025, up from $642.19 million in 2024, indicating a growth of about 1.97%[325]. - Non-interest bearing deposits decreased to $28.18 million in 2025 from $32.68 million in 2024, a decline of approximately 13.7%[325]. - Interest-bearing deposits increased to $624.27 million in 2025, compared to $609.51 million in 2024, reflecting an increase of about 2.4%[325]. - Available liquidity at December 31, 2024, was approximately $211.3 million, including $35.6 million in cash and $136.6 million in secured borrowing capacity[174]. Loans and Credit Quality - The company's loan portfolio totaled $650.2 million as of December 31, 2025, with an allowance for credit losses (ACL) of $2.5 million, indicating a slight decrease in ACL from $2.62 million in 2024[319]. - Total loans decreased from $714,337,185 in 2024 to $650,175,556 in 2025, representing a decline of approximately 9%[414]. - The net loans for 2025 were reported at $647,645,607, down from $711,716,236 in 2024, indicating a reduction of about 9%[414]. - The total recorded investment in loans past due 90 days or more was $26,807,218 as of December 31, 2025, compared to $14,339,179 in 2024, indicating a significant increase[424]. - The total balance of residential first mortgage loans classified as "Pass" was $441,476,903 as of December 31, 2025, reflecting a stable credit quality[430]. Regulatory and Compliance - The company is subject to stringent capital requirements, including a common equity Tier 1 capital ratio of 7.0% and a total capital ratio of 10.5%[198]. - The company has opted to comply with a community bank leverage ratio of 9% to meet capital requirements[200]. - Non-compliance with laws such as the USA PATRIOT Act could result in fines or sanctions, impacting operations[202]. - Regulatory compliance costs and changes in laws could adversely affect operations and increase operational costs[194]. Market Conditions and Risks - Inflation levels exceeded the Federal Reserve Board's long-term target of 2.0%, impacting asset values and customer repayment abilities[166]. - A deterioration in economic conditions could lead to increased loan delinquencies and a decrease in demand for the company's products and services[170]. - The company faces strong competition in loan and deposit markets, which may pressure net interest income and profitability[193]. - Cybersecurity threats are evolving, with increased risks of breaches and attacks that could materially impact financial condition and operations[187]. Investments and Securities - The amortized cost of securities available for sale as of December 31, 2025 was $160,717,376, with gross unrealized losses of $4,150,464[403]. - The company purchased $60,062,086 in securities available for sale in 2025, down from $76,764,024 in 2024[333]. - The company did not sell any securities available for sale in 2025, while in 2024, it sold 16 securities with a book value of $38.2 million, realizing losses of $5.2 million[407]. Personnel and Management - The company relies on key personnel for managing revenue-generating functions, and loss of such staff could adversely affect income and increase hiring costs[184]. - The company has provisions in its bylaws that may delay or block takeover attempts, including a restriction on voting more than 10% of shares by any person other than Bogota Financial, MHC[210].

Revenue and Income - The Trust received no Royalty Income from Hilcorp in the fiscal year ended December 31, 2025, compared to $6.9 million in Royalty Income for the fiscal year ended December 31, 2024[40]. - The Trust reported gross revenue of $48,896,125 in 2024 and $73,576,384 in 2025, indicating a significant increase in revenue over the two years[54]. - Royalty Income for 2025 was $12,809,471, compared to a loss of $11,986,710 in 2024, indicating a significant recovery in profitability[192]. - Gross Proceeds from natural gas production increased to $71,760,694 in 2025 from $46,502,870 in 2024, reflecting a growth of approximately 54%[192]. - Royalty Income for Q4 2025 was $0, down from $6,945,974 in Q4 2024, indicating a substantial decline in revenue generation[233]. Production and Costs - Excess Production Costs incurred from January through March 2025 amounted to $491,938 gross ($368,954 net to the Trust)[40]. - Total production costs for the Subject Interests in 2025 were $82,014,920, with average production costs per unit at $2.8669[118]. - Total production costs for 2025 were $60,766,913, slightly down from $60,882,835 in 2024, indicating stable cost management[192]. - Lease operating expenses and property taxes increased by $2.6 million, or 8.3%, to $33.4 million for the year ended December 31, 2025, compared to $30.8 million for 2024[196]. - Monthly lease operating expenses averaged $3.0 million in Q4 2025, down from $7.5 million in Q4 2024, reflecting a decrease in operational costs[222]. Financial Position and Reserves - The Trust's corpus was approximately $2.3 million and $2.7 million as of December 31, 2025 and 2024, respectively[40]. - The Trust's cash reserves were $23,298 as of December 31, 2025, down from $1,800,000 as of April 30, 2024[42]. - The cumulative balance of Excess Production Costs as of December 31, 2025, was approximately $8,438,536 gross ($6,328,902 net to the Trust), which must be recovered from future Net Proceeds before Royalty Income is paid[199]. - The Trust's cash reserves fell to $23,298 in 2025 from $760,920 in 2024, highlighting liquidity challenges[233]. - The anticipated deficit in income raises substantial doubt about the Trust's ability to continue as a going concern within one year after the issuance date of the financial statements[211]. Capital Expenditures and Investments - The Trust's 2026 capital expenditures for the Subject Interests are estimated to be approximately $14.0 million, with $11.5 million allocated to new vertical and horizontal drilling projects[115]. - Capital expenditures decreased by approximately $3.1 million to $20.8 million for the year ended December 31, 2025, compared to $23.9 million for 2024, with spending focused on completion of two horizontal wells and seven new vertical drill projects[195]. - Hilcorp's 2026 capital expenditures for the Subject Interests are estimated at approximately $14.0 million, with $11.5 million allocated to new drilling projects[180]. Regulatory and Environmental Factors - The Trust's operations are subject to extensive governmental regulations, which could impact production and revenue[84]. - The EPA proposed adding nine PFAS compounds to its list of hazardous constituents, which could increase production costs and affect Royalty income[142]. - The Trust is subject to stringent environmental regulations that may impose significant compliance costs and liabilities related to contamination and waste management[141]. - The Inflation Reduction Act (IRA) aims to reduce U.S. greenhouse gas (GHG) emissions by approximately 40% by 2030 compared to 2005 levels, with a target of achieving a net-zero economy by 2050[151]. - The ultimate impact of climate change regulations on Royalty and Royalty Income paid to the Trust by Hilcorp remains uncertain due to potential increases in production costs[154]. Operational Risks and Dependencies - The Trust's distributions are highly dependent on oil and gas prices, which can fluctuate widely due to various external factors[62]. - The Trust's financial health is at risk if Hilcorp or any third-party operator faces bankruptcy, which could disrupt operations and decrease distributions[69]. - The Trust's ability to generate revenue is influenced by the performance of Hilcorp, which operates the majority of the Subject Interests[55]. - The Trust cannot acquire new natural gas and oil assets, making it reliant on the existing Subject Interests for Royalty Income[178]. - The Trust's distributions may be considered a return of capital due to the depleting nature of mineral properties[73]. Production Performance - For the year ended December 31, 2025, the production from Subject Interests was 28,412,786 Mcf of natural gas and 32,458 Bbls of oil, with average prices of $2.53 per Mcf and $55.94 per Bbl respectively[117]. - Gas production increased to 6,787,814 Mcf in Q4 2025 from 5,671,899 Mcf in Q4 2024, representing a growth of approximately 19.7%[220]. - Oil production also increased to 8,681 Bbls in Q4 2025, up from 6,718 Bbls in Q4 2024, maintaining a consistent daily production rate of 73 Bbls[220]. Tax and Income Classification - Trust Unit Holders are subject to U.S. federal income taxes on their share of the Trust's income, regardless of cash distributions received[94]. - The classification of the Trust's income as portfolio income may limit the ability to offset passive losses, affecting Unit Holders[165].

Revenue and Income - Total royalty income for 2025 was $11,555,301, a significant decrease from $26,963,365 in 2024 and $29,010,704 in 2023[175] - Oil royalty income for 2025 was $10,399,771, accounting for 90% of total royalty income, while gas royalty income was $1,155,530, making up 10%[175] - Distributable income for 2025 was $14,300,162, or $0.31 per Unit, which includes a $4.5 million partial settlement from Blackbeard[187] - Royalty income for the fourth quarter of 2025 was $2,652,251, or $0.06 per Unit, a decrease from $3,784,959, or $0.08 per Unit, in the fourth quarter of 2024[190] Capital Expenditures and Expenses - Total capital expenditures for 2025 were approximately $228.7 million, compared to $109.4 million in 2024 and $120.4 million in 2023[182] - Lease operating expenses and property taxes for the Waddell Ranch properties in 2025 amounted to approximately $98.0 million, up from $82.2 million in 2024[183] - The Trust received no royalty income from the Waddell Ranch properties for the year 2025 due to large capital expenditures and workovers[176] Production and Sales - Oil and gas production for the Underlying Properties increased approximately 56% and 46% respectively from 2024 to 2025, attributed to new development and increased capital expenditures[181] - Oil sales for Waddell Ranch properties in October 2025 were 326,081 Bbls, compared to 198,955 Bbls in October 2024, representing a 64% increase[192] - Gas sales for Waddell Ranch properties in October 2025 were 1,429,268 Mcf, compared to 1,181,264 Mcf in October 2024, indicating a 21% increase[192] - For Texas Royalty properties, total oil sales in October 2025 were 14,323 Bbls, compared to 16,103 Bbls in October 2024, a decrease of 11%[193] Pricing Trends - Average price of oil decreased to $65.95 per barrel in 2025 from $75.88 in 2024, while the average price of gas increased to $1.78 per Mcf from $1.45[176] - Average realized price per Bbl for oil in October 2025 was $63.15, down from $77.35 in October 2024, reflecting an 18% decrease[192] - Average realized price per Mcf for gas in October 2025 was $1.57, down from $2.01 in October 2024, showing a 22% decrease[192] - Average realized price per Bbl for oil in October 2025 was $65.08, down from $77.19 in October 2024, a decrease of 16%[193] - Average realized price per Mcf for gas in October 2025 was $8.10, compared to $10.02 in October 2024, a decrease of 19%[193] Assets and Liabilities - Total assets for the fourth quarter of 2025 were $1,877,733, a decrease from $2,158,851 in November 2025[192] - Total liabilities for the fourth quarter of 2025 were $1,715,167, down from $1,996,428 in November 2025[192] Distributions - Distributions declared in December 2025 were $615,176, a decline from $896,437 in November 2025[192] Future Outlook - As of March 16, 2026, NYMEX posted oil prices were approximately $93.39 per barrel, indicating potential future revenue adjustments for the Trust[177]

Financial Performance - Net profits income for 2025 was $5,738,240, a 13% decrease from $6,563,177 in 2024, primarily due to lower oil prices and decreased production[133]. - Total revenues for 2025 were $14,589,185, compared to $17,319,388 in 2024, reflecting a decline in both oil and gas sales[130]. - Distributable income for 2025 was $4,490,844, down 21% from $5,677,818 in 2024, resulting in a distributable income per unit of $0.748474[184]. - Trust administration expense decreased to $847,078 in 2025 from $945,612 in 2024, indicating improved cost management[134]. - Net profits income for Q4 2025 was $1,629,528, an 11% increase from $1,462,841 in Q4 2024, attributed to higher gas production and prices, despite lower oil prices[144]. Production and Reserves - Approximately 51% of the net profits income received by the Trust during 2025 was attributable to natural gas, with 66% of the Trust's estimated future net cash flows from proved reserves at December 31, 2025[31]. - The Trust's total proved reserves as of December 31, 2025, consist of 931,000 Bbls of oil and 10,872,000 Mcf of gas, with net profits interests reserves of 297,000 Bbls of oil and 9,431,000 Mcf of gas[87]. - Oil production for 2025 is projected at 148,068 Bbls, down from 164,996 Bbls in 2024 and 192,119 Bbls in 2023, representing a decrease of 10.5% and 23% respectively[93]. - Gas production for 2025 is projected at 1,099,910 Mcf, a decrease from 1,216,905 Mcf in 2024 and 1,773,864 Mcf in 2023, reflecting a decline of 9.6% and 38% respectively[92]. - Estimated proved reserves for the net profits interests are based on estimates of reserves for the underlying properties and can be significantly affected by changes in oil and gas prices[41]. Costs and Expenses - Total costs deducted in the calculation of net profits income decreased by 18% from $9.8 million in 2024 to $8.0 million in 2025, driven by reduced development costs, taxes, and production expenses[141]. - Higher production expenses and development costs without concurrent increases in revenue will directly decrease the net proceeds payable to the Trust from properties underlying the 75% net profits interests[38]. - The Trust incurred administration expenses and earned interest income on funds held for distribution during 2025[104]. - The average production cost per BOE for oil is expected to be $2.29 in 2025, slightly down from $2.33 in 2024 and significantly up from $1.67 in 2023[1]. Market and Pricing - The Trust's monthly cash distributions are highly dependent on the prices realized from the sale of natural gas and oil, which can fluctuate widely due to uncontrollable factors[37]. - Average sales price for oil in 2025 is expected to be $70.43 per Bbl, a decrease from $78.78 in 2024 and $79.50 in 2023[1]. - Average gas price increased by 11% to $4.40 per Mcf in 2025 from $3.97 per Mcf in 2024, influenced by various market factors[139]. - Federal regulation impacts the pricing and sales of oil and gas, with market-sensitive prices being the norm for sales from underlying properties[95]. Risks and Liabilities - The Trust's financial performance is subject to various risk factors, including geopolitical instability and market price fluctuations for oil and natural gas[40]. - The Trust's operational risks include natural disasters and mechanical failures, which could interrupt operations and reduce distributions[42]. - Cybersecurity threats pose a risk to the Trust's business, with potential material adverse effects on financial condition and operations[66]. - The Trust is not liable for any production costs or liabilities attributable to the underlying properties, and any overpayment of net profits income will reduce future distributions until recovered[24]. Trust Structure and Governance - Trust unitholders have limited voting rights and cannot influence the operations or future development of the underlying properties[51]. - The Trust's only cash requirement is for declared monthly distributions, funded by net profits income after administration expenses[150]. - The Trust has no equity compensation plans and did not purchase any units during the reporting period[128]. - The Trust's financial statements are prepared on a modified cash basis, differing from U.S. GAAP, which impacts revenue recognition and expense recording[191]. Future Outlook - The Trust will terminate if it fails to generate gross revenues of at least $1,000,000 per year over any successive two-year period[49]. - The estimated natural production decline rate for underlying oil and gas properties is approximately 6 to 8 percent per year[137]. - The Trust's assets are depleting, and if no successful development projects are undertaken, the assets may deplete faster than expected, potentially ceasing to produce in commercial quantities[46].

Company Overview - The Company was incorporated on February 21, 2013, to acquire all outstanding shares of the Bank and became its holding company[16]. - Virginia National Bank, the principal operating subsidiary, commenced operations on July 29, 1998, and offers a full range of banking services including checking accounts, loans, and trust services[18][24][25]. - As of December 31, 2025, the Company employed 140 full-time and 8 part-time employees, with women making up 75% and racial and ethnic minorities 22% of the workforce[35]. - The Company formed Masonry Capital Management, LLC in 2018, which will provide an annual revenue-share amount for six years after its membership interests are sold[22]. Regulatory Environment - The Company is regulated under the Bank Holding Company Act (BHCA) and is subject to supervision by the Federal Reserve and the SEC[17][38]. - The Company is subject to extensive regulations that may impact its operations and earnings, particularly in light of recent changes in federal and state laws[39][41]. - The Company expects to continue being treated as a small bank holding company under the Federal Reserve's policy statement, exempting it from certain regulatory capital requirements[62]. - The Bank is subject to compliance costs and obligations related to various laws and regulations, which may require significant resources[79]. - The Company must comply with the Office of Foreign Assets Control regulations to avoid serious legal and financial consequences[82]. - The CFPB remains an active regulatory agency with broad authority to pursue enforcement actions despite ongoing challenges[92]. - The Company complies with "qualified mortgage rules" and TILA requirements as a small creditor with assets below $2 billion[95]. Financial Performance - Net income for the year ended December 31, 2025, was $19.3 million, or $3.55 per diluted share, a 13.5% increase from $17.0 million, or $3.15 per diluted share in 2024[184]. - Net interest income (GAAP) for 2025 was $51.5 million, up from $46.4 million in 2024, with net interest income (FTE) (non-GAAP) at $51.9 million compared to $46.7 million in 2024[184][189]. - The efficiency ratio (FTE) (non-GAAP) improved to 57.6% in 2025 from 62.0% in 2024, reflecting better management of expenses relative to income[185]. - Return on average assets increased to 1.19% in 2025 from 1.06% in 2024, while return on average equity rose to 11.19% from 10.78%[184]. - The Bank segment earned net income of $19.6 million in 2025, a $2.3 million increase compared to $17.2 million in 2024[187]. - Average equity to average assets improved to 10.60% in 2025 from 9.80% in 2024, indicating stronger capital management[184]. - Cash dividend payout ratio decreased to 39.48% in 2025 from 41.80% in 2024, suggesting a shift in capital allocation strategy[184]. - The Company’s tangible book value per share increased to $32.21 in 2025 from $27.70 in 2024, reflecting growth in shareholder equity[181]. Capital and Liquidity - The Company's Tier 1 capital ratio was 19.60% as of December 31, 2025, exceeding the minimum requirement[58]. - The Bank's CET1 capital ratio was 19.36% as of December 31, 2025, also exceeding the minimum requirement of 6.5%[59]. - The FDIC's basic limit on deposit insurance coverage is $250,000 per depositor[67]. - Approximately 27.4% of the Company's deposits were uninsured as of December 31, 2025, posing liquidity risks and potential deposit outflows[121]. - The Company may need to raise additional capital in the future, which could be challenging due to market conditions and competition for investors[122]. Risk Management - The Company manages credit risk through consistent underwriting standards and a continuous quality assessment process[107]. - The Company faces significant risks related to borrowers' ability to repay loans, which could lead to increased nonperforming loans and adversely affect financial condition[114]. - Market risks include fluctuations in interest rates and credit quality, which could impact the Company's investment securities portfolio and overall earnings[115]. - Economic downturns and inflation could negatively affect profitability, leading to increased loan delinquencies and financial stress on borrowers[116]. - Cybersecurity risks pose a significant threat, as breaches could result in legal claims, regulatory penalties, and damage to the Company's reputation[139]. Operational Challenges - The Company is at risk of operational disruptions due to reliance on internal systems and third-party technology, which could adversely affect business operations and financial results[131]. - The unexpected loss of key management personnel could adversely affect the Company's growth and profitability[136]. - The Company relies on third-party vendors for critical business operations, and any issues with these vendors could disrupt service delivery and harm the Company's reputation[137]. - The Company faces challenges in integrating and implementing new technologies, which are essential for maintaining competitiveness in the financial services market[143]. Employee and Talent Development - The Company has a commitment to attract and retain high-performing employees through competitive compensation and benefits programs[34]. - The Finance Career & Leadership Academy (FCLA) was created to develop young talent in the financial industry, offering free training and potential career opportunities[31][33]. - The company had 144 full-time equivalent employees at the end of 2025, down from 146 at the end of 2024, indicating a reduction in headcount[210]. Shareholder Information - The Company is currently paying a quarterly cash dividend of $0.36 per share, with total dividends of $1.41 and $1.32 per share for the years ended December 31, 2025 and 2024, respectively[151][170]. - The Company's Board approved a share repurchase plan of up to 5% of outstanding common stock, with the first repurchases occurring in February 2024[171]. - The trading volume of the Company's common stock on the Nasdaq Capital Market is relatively low compared to larger companies, affecting liquidity[155].

Financial Performance - For fiscal 2026, net revenues decreased by $49.1 million, or 15.4%, to $269.7 million from $318.8 million in fiscal 2025[228] - VB Direct segment revenues decreased by $29.8 million, or 11.6%, to $227.8 million, with comparable sales down by $28.6 million, or 11.6%[229] - VB Indirect segment revenues decreased by $19.3 million, or 31.5%, to $41.9 million, primarily due to a decline in specialty and key account orders[231] - Gross profit for fiscal 2026 was $125.0 million, representing 46.4% of net revenues, down from 49.8% in fiscal 2025[226] - For fiscal 2026, gross profit decreased by $33.8 million, or 21.3%, to $125.0 million, with a gross profit margin of 46.4% compared to 49.8% in fiscal 2025[232] - Operating loss from continuing operations increased by $3.1 million, or 10.8%, to $(31.9) million, with an operating loss margin of (11.8)% for fiscal 2026[235] - Net loss from continuing operations decreased by $0.7 million, or 2.1%, to $(32.7) million for fiscal 2026[242] - Loss from discontinued operations decreased by $13.6 million, or 47.4%, to $(15.2) million in fiscal 2026[243] - Total net loss decreased by $14.3 million, or 23.1%, to $(47.8) million for fiscal 2026[244] Expenses and Cost Management - Selling, general, and administrative expenses (SG&A) were $158.1 million, or 58.6% of net revenues, compared to 59.1% in fiscal 2025[226] - SG&A expenses for fiscal 2026 decreased by $30.4 million, or 16.1%, to $158.1 million, representing 58.7% of net revenues, down from 59.1% in fiscal 2025[233] - The company implemented strategic price increases in late fiscal 2022 through fiscal 2024 and continued in fiscal 2026 to mitigate inflationary pressures[223] Store Operations - The company closed 12 underperforming full-line stores and one outlet store, ending the fiscal year with 29 full-line and 86 outlet locations[214] - Comparable sales, including e-commerce, decreased by 11.6% in fiscal 2026, following a 16.6% decrease in fiscal 2025[227] Cash Flow and Financial Flexibility - Net cash used in operating activities was $10.0 million in fiscal 2026, a decrease from $14.1 million in fiscal 2025, primarily due to a $14.3 million decrease in net loss[264] - Net cash used in investing activities was $1.5 million in fiscal 2026, down from $10.4 million in fiscal 2025, attributed to a $7.1 million reduction in spending on property, plant, and equipment[266] - Net cash used in financing activities decreased to $0.2 million in fiscal 2026 from $22.5 million in fiscal 2025, mainly due to a $21.8 million reduction in common stock repurchases[267] - The company has no debt outstanding under its $75.0 million asset-based revolving credit agreement as of January 31, 2026, providing additional financial flexibility[260] - As of January 31, 2026, the company had no borrowings outstanding under its Credit Agreement and had availability of $58.6 million[270] Strategic Initiatives - The company is focusing on Project Sunshine to enhance market position and streamline operations, aiming for improved agility and customer experience[210] - The macroeconomic environment has been challenging, with inflationary pressures impacting consumer discretionary spending and increasing digital media costs[220] Impairments and Adjustments - The company recorded impairment charges of $1.0 million in fiscal 2026, compared to $2.4 million in fiscal 2025[277] - The balance of inventory adjustments was $6.0 million as of January 31, 2026, compared to $0.7 million for the prior fiscal year[276] - The company recorded a loss on the sale of business amounting to $15.2 million during fiscal 2026[264] Foreign Exchange and Funding - The company has not been materially impacted by changes in foreign exchange rates, as purchases and sales are primarily denominated in U.S. dollars[280] - The company expects to fund material cash requirements using cash on hand, cash from operations, and borrowings under the Credit Agreement[271]