Atlas Lithium Corp 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation. The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the notes to those financial statements appearing elsewhere in this Annual Report. This discussion and analysis below include forward-looking statements that are subject to risks, uncertainties and other factors described in the “Risk Factors” section that could cause actual results could differ materially from those anticipated in these forward- looking statements as a result of various factors. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future. We caution you to read the “Forward Looking Statements” section of our Annual Report. Overview Atlas Lithium is a mineral exploration and development company with lithium projects and multiple lithium exploration properties. In addition, we own exploration properties in other battery minerals, including nickel, copper, rare earths, graphite, and titanium. Our current focus is the continued advancement of our hard-rock lithium project in Minas Gerais, Brazil toward active mining. The project is located within a well-known lithium-bearing pegmatitic district designated by the state government as “Lithium Valley.” We intend to mine and then process our lithium-containing ore to produce lithium concentrate (also known as spodumene concentrate), a key ingredient for the battery supply chain. In 2025, we received our DMS Plant, which was designed to produce approximately 150,000 tons of lithium concentrate per annum (“tpa”). Our DMS Plant represents a cornerstone of our Neves Project, designed to deliver high-quality lithium concentrate to the global market for electric vehicles (EVs) and renewable energy storage systems. With worldwide lithium demand growing, we are positioned to emerge as a key contributor to the sustainable energy transition. However, there can be no assurance that we will have the necessary capital resources to develop such a facility or, if developed, that we will reach the production capacity necessary to commercialize our products and with the quality needed to meet market demand. All our mineral projects and properties are located in Brazil, a well-established mining jurisdiction. Our mineral rights include approximately: ● 53,942 hectares (539 km 2 ) for lithium in 95 mineral rights (2 in pre-mining concession stage, 85 in exploration stage, and 8 in pre-exploration stage); ● 44,913 hectares (449 km 2 ) for nickel in 29 mineral rights (23 in exploration stage, and 6 in pre-exploration stage); ● 25,050 hectares (251 km 2 ) for copper in 13 mineral rights (12 in exploration stage, and 1 in pre-exploration stage); ● 12,144 hectares (121 km 2 ) for rare earths in 7 mineral rights, all in exploration stage; ● 6,927 hectares (69 km 2 ) for titanium in 5 mineral rights, all in exploration stage; ● 3,910 hectares (39 km 2 ) for graphite in 2 mineral rights, all in exploration stage; ● 1,030 hectares (10 km 2 ) for gold mineral rights, all in exploration stage. We believe that we hold the largest portfolio of exploration properties for lithium and other battery minerals in Brazil among publicly listed companies. 25 Table of Contents Operational Update During the fourth quarter of 2025, we made substantial progress in the procurement process for the project tasks and other contracted work (collectively referred to herein as “work items”) needed for the implementation of the Neves Project. Examples of such work items include assembly of our dense media separation plant and earth works. We have generally received multiple competing bids for each of the relevant work items, including 19 bids for one work item. Our supplier selection criteria are based on technical qualification and experience, and with these conditions met, then best price and terms. On December 22, 2025, we announced that we had entered the final stage of contracting project management and construction supervision services. This engagement will support the integrated management and oversight of project construction activities. The scope includes planning, coordination, monitoring, and control of all activities required for project execution, ensuring compliance with schedule, cost, scope, quality, safety, and overall performance objectives. Our selection process included extensive due diligence on five firms with proven experience in delivering projects of similar scope and complexity. Multiple technical and commercial interactions were conducted to thoroughly assess and identify the most suitable partner for the Neves Project; evaluation parameters focused on technical excellence, track record in Brazilian mining projects, project management methodology, systems and tools, as well as the qualifications and experience of the proposed technical team. On January 9, 2026, the Company’s subsidiary Atlas Critical Minerals Corporation (“Atlas Critical Minerals”), commenced trading on the Nasdaq Capital Market under the ticker symbol “ATCX.” Atlas Critical Minerals has projects in rare earths, graphite, uranium, and iron ore. More details about Atlas Critical Minerals are available on its website at www.atlascriticalminerals.com and in its filings with the Securities and Exchange Commission. Since the beginning of 2026, we have received written indications of interest from multiple parties to purchase our future lithium concentrate production. Following a period of lower lithium prices, we have observed increased interest from potential customers in securing long-term supply arrangements. We believe that both the continued global growth in electric vehicle adoption now coupled with demand from energy storage systems for data centers provide a healthy environment for lithium. 26 Table of Contents Results of Operations Fiscal Year Ended December 31, 2025, Compared to Fiscal Year Ended December 31, 2024 After a trial mining period in the second half of 2023, one of our subsidiaries commenced ongoing operations at its quartzite quarry in 2024. Our gross margin of $265,694 was generated from the sales of 551 m 3 of unprocessed blocks of quartzite and 905 m 2 of processed slabs produced by our subsidiary’s quartzite operation. We generated limited revenues in year ended on December 31, 2025 because we paused production of quartzite blocks and slabs in first half of 2025 to effect modifications to our operations and address certain identified issues, including the adoption of an updated drainage plan for the quarry. We have retained an engineering firm to prepare an updated drainage plan and expect to resume operations during the second half of 2026. Operating expenses for the year ended December 31, 2025, totaled $31,592,273, compared to operating expenses of $44,123,939 during the year ended December 31, 2024, representing a reduction of 28.4%. The decrease was mostly due to the $16.0 million reduction in stock-based compensation and $3.0 million reduction in exploration costs, offset by the $6.7 million increase in general and administrative expenses, as detailed below: ● An increase in general and administrative expenses of approximately $6.7 million during the period, primarily due to: (i) an increase in payroll expenses of $1.9 million directly related to increase of operational activities related to the preparation for the project implementation; (ii) $3.1 million due to higher investor relations expenses and (iii) $2.1 million due to increased third-party contractor costs as the Company’s activities expanded as a result of the preparation for the project implementation; ● A decrease of approximately $16.0 million in stock-based compensation expense compared to the year ended December 31, 2024, corresponding to a reduced fair value of the instruments issued due to the decreased trading price of the Company’s common stock compared to 2024; and ● $3.0 million reduction in exploration costs as a result of the commencement of capitalizing exploration expenses due to the conclusion of a preliminary economic assessment of the Neves Project in the second quarter of 2024. Other expenses for the year ended December 31, 2025 totaled $67,875 compared to $1,338,370 during the year ended December 31, 2024, representing a decrease of 94.9%, driven by the derecognition of a $1.3 million asset relating to the premium paid for an option to acquire two mining rights in Governador Valadares, Minas Gerais, and the corresponding recognition of a $1.3 million expense. We decided not to exercise such option and derecognized the amount recorded for the premium occurred because the results of geological studies did not achieve the expected results. The assets subject to the option are unrelated to the Company’s Das Neves Project. As a result, we incurred a net loss attributable to our stockholders of $28,110,592, or $1.54 per share, for the year ended December 31, 2025, compared to a net loss attributable to our stockholders of $42,241,196, or $2.91 per share, during the year ended December 31, 2024. 27 Table of Contents Liquidity and Capital Resources As of December 31, 2025, we had cash and cash equivalents of $35,935,104 and net working capital of $23,066,924. Net cash used by operating activities totaled $22,166,692 for the year ended December 31, 2025, compared to net cash used of $18,784,844 during the year ended December 31, 2024, representing an increase in cash used of $3,381,848, or 18.00%. The variation in net cash used by operating activities was mainly due to: ● An increase of approximately $6.7 million in General and administrative expenses due to the growth of our personnel, infrastructure and the costs related to our operational permit relating to our Neves Project as we move towards revenue-generating operations. As a result, we had more expenditures such as employee compensation and the costs of third-party service providers such as technical consultants; and ● A decrease of approximately $3.0 million in Exploration costs due to the commencement of capitalization of exploration expenses. Net cash used in investing activities totaled $8,959,390 for the year ended December 31, 2025, compared to net cash used of $27,344,436 during the year ended December 31, 2024, representing a decrease in cash used in investing activities of $ 18,385,046, or 67.24%. The variation in net cash used in investing activities was mainly due to: ● A decrease of $16.4 million in the payments made in connection with the acquisition of our lithium processing plant ($6.1 million in 2025, compared to $22.4 million in 2024) due to the finalization of the fabrication process in 2025; ● A decrease of $1.6 million in capitalized exploration costs incurred during the year ended December 31, 2025 as a result of the reduction in the drilling activities in 2025 compared to 2024 ($2.9 million in 2025 and $4.5 million in 2024); and ● Decrease of $0.4 million in the acquisition of intangible assets represented by the implementation of SAP done in 2024. Net cash provided by financing activities totaled $51,523,029 for the year ended December 31, 2025, compared to $32,131,672 during the year ended December 31,2024, representing an increase in cash provided of $19,391,357, or 60.35%. We completed the following financing activities in 2025: ● During the year ended December 31, 2025, we sold (i) 7,627,566 shares under the ATM Agreement for proceeds of $ 41.7 million ($1.3 million net proceeds in 2024), and (ii) 2,500,000 shares to certain institutional investors in a registered direct offering for proceeds of $10 million ($30 million in 2024); and ● In 2025, net proceeds of $2.5 million were generated from the sale of shares of Atlas Critical Minerals, a consolidated subsidiary of the Company. In 2024, the proceeds from the sale of shares of the subsidiary totaled $1.0 million. The consolidated financial statements have been prepared on a going concern basis. We have historically incurred net operating losses and have not yet received material revenues from the sale of products or services. As a result, our primary source of liquidity has been the proceeds from the sale of our equity. As of December 31, 2025, we had cash and cash equivalents of $35,935,104 and net working capital of $23,066,924, compared to cash and cash equivalents $15,537,476 and a working capital of $10,553,780 as of December 31, 2024. We believe our cash on hand will be sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months. However, our future short- and long-term capital requirements will depend on several factors, including but not limited to, the rate of our growth, our ability to identify areas for mineral exploration and the economic potential of such areas, the exploration and other drilling campaigns needed to verify and expand our mineral resources, the types of processing facilities we would need to install to obtain commercial-ready products, and the ability to attract talent to manage our different areas of endeavor. To the extent that our current resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing. If the needed financing is not available, or if the terms of financing are less desirable than we expect, we may be forced to scale back our existing operations and growth plans, which could have an adverse impact on our business and financial prospects and could raise substantial doubt about our ability to continue as a going concern. We currently have no off-balance sheet arrangements. Offtake and Sales Agreement from Mitsui As further described in “Note 7 – Related Party Transactions, ” the Company has entered into an Offtake and Sales Agreement with Mitsui pursuant to which Mitsui has agreed to purchase a spot quantity of 15,000 dry metric tons of product and, subject to the satisfaction of certain conditions, to purchase a minimum of 60,000 dry metric tons per year for a period of five years commencing with the first year of such shipments, or until an aggregate of 300,000 dry metric tons has been delivered, if later. 28 Table of Contents Currency Risk We operate primarily in Brazil, which exposes us to currency risks. Our business activities may generate intercompany receivables or payables that are in a currency other than the functional currency of the entity. Changes in exchange rates from the time the activity occurs to the time payments are made may result in it receiving either more or less in local currency than the local currency equivalent at the time of the original activity. Our consolidated financial statements are denominated in U.S. dollars. Accordingly, changes in exchange rates between the applicable foreign currency and the U.S. dollar affect the translation of each foreign subsidiary’s financial results into U.S. dollars for purposes of reporting in the consolidated financial statements. Our foreign subsidiaries translate their financial results from the local currency into U.S. dollars in the following manner: (a) income statement accounts are translated at average exchange rates for the period; (b) balance sheet asset and liability accounts are translated at end of period exchange rates; and (c) equity accounts are translated at historical exchange rates. Translation in this manner affects the shareholders’ equity account referred to as the foreign currency translation adjustment account. This account exists only in the foreign subsidiaries’ U.S. dollar balance sheets and is necessary to keep the foreign subsidiaries’ balance sheets in agreement. Critical Accounting Polices and Estimates The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results may differ from those estimates. Exploration Stage Company The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to accounting and reporting by exploration stage companies. An exploration stage company is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from. Trade Receivables Trade receivables represent amounts to be received from clients due to the sale of quartzite and iron ore products. We recognize a trade receivable following the recognition of revenue when control of a product is transferred to the customer, and we have an unconditional right to receive payment for such product. The receivable is initially recognized at fair value, which usually corresponds to the price of the transaction (invoice), and such receivable is subsequently assessed to determine the recoverability of the amounts as of each balance sheet date. Inventories We value our inventories in accordance with Accounting Standards Codification (“ASC”) 330, Inventory (“ASC 330”), which requires that inventories be valued at the lower of cost or market. The cost of inventories is determined using the weighted average cost method. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Major improvements and betterments are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful life. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the statements of operations as other gain or loss, net. The processing plant and other machinery are depreciated over an estimated useful life of ten years; vehicles are depreciated over an estimated life of five years; and computers and other office equipment are depreciated over an estimated useful life of five years. Mineral Properties Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as incurred, up to the stage at which the commercial and economic feasibility of the mineral properties are proved. After the feasibility is determined, exploration costs are capitalized as incurred. Mineral property acquisition costs, including licenses and lease payments, are capitalized. Although we have taken steps to verify title to mineral properties in which we have an interest, these procedures do not guarantee our rights. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects. Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. As of December 31, 2025, and 2024, we did not recognize any impairment losses related to mineral properties held. Proceeds received on the sale of interests in exploration and evaluation assets are credited to the incurred exploration and evaluation expenditures, with any excess included in operations. Write-downs due to impairment in value are charged to profit or loss. Mineral properties are amortized throughout the life of the property based on a units-of-production method. 29 Table of Contents Impairment of Intangible Assets with Indefinite Useful Lives We account for intangible assets in accordance with Accounting Standards Codification (“ASC”) 350, Intangibles – Goodwill and Other (“ASC 350”). ASC 350 requires that intangible assets with indefinite useful lives no longer be amortized but instead be evaluated for impairment at least annually. On an annual basis, in the fourth quarter of the fiscal year, we review our intangible assets with indefinite useful lives for impairment by first assessing qualitative factors to determine whether the existence of events or circumstances makes it more-likely-than-not that the fair value of an intangible asset is less than its carrying amount. If it is determined that it is more-likely-than-not that the fair value of an intangible asset is less than its carrying amount, the intangible asset is further tested for impairment by comparing the carrying amount to its estimated fair value using a discounted cash flow. Impairment, if any, is measured as the amount by which an indefinite-lived intangible asset’s carrying amount exceeds its fair value. Application of impairment tests requires significant management judgment, including the determination of fair value of each indefinite-lived intangible asset. Judgment applied when performing the qualitative analysis includes consideration of macroeconomic, industry and market conditions, overall financial performance of the entity, composition, or strategy changes affecting the recoverability of asset groups. Judgments applied when performing the quantitative analysis include estimating future cash flows, determining appropriate discount rates and making other assumptions. Changes in these judgments, estimates and assumptions could materially affect the determination of fair value for each indefinite-lived intangible asset. Impairment of Long-Lived Assets For long-lived assets, such as property and equipment and intangible assets subject to amortization, we continually monitor events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. Variable Interest Entities We determine at the inception of each arrangement whether an entity in which we hold an investment or in which we have other variable interests in is considered a variable interest entity. We consolidate VIEs when we are the primary beneficiary. The primary beneficiary of a VIE is the party that meets both of the following criteria: (1) has the power to make decisions that most significantly affect the economic performance of the VIE; and (2) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. Periodically, we assess whether any changes in the interest or relationship with the entity affect the determination of whether the entity is still a VIE and, if so, whether we are the primary beneficiary. If we are not the primary beneficiary in a VIE, we account for the investment under the equity method or cost method in accordance with the applicable GAAP. We have concluded that Atlas Critical Minerals and its subsidiaries are VIEs in accordance with applicable accounting standards and guidance; and although the operations of Atlas Critical Minerals are independent of ours, because our Chief Executive Officer and Chairman, Mr. Fogassa, is also the controlling shareholder of Atlas Critical Minerals, we may be considered to have power to direct the activities that are most significant to Atlas Critical Minerals. Therefore, we concluded that we are the primary beneficiary of Atlas Critical Minerals. Stock-Based Compensation We measure and record stock-based compensation expense in accordance with ASC Topic 718 for share-based payments related to stock options, restricted stock, and performance-based awards granted to certain directors, employees and consultants. ASC 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. Under ASC 718, volatility is based on the historical volatility of our stock or the expected volatility of the stock of similar companies. The expected life assumption is primarily based on historical exercise patterns and employee post-vesting termination behavior. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The fair value of stock options and performance awards without a market condition is estimated at the date of grant using the Black-Scholes option-pricing model. The fair value of restricted stock awards and stock options with a market condition is estimated at the date of grant, using the Monte Carlo Simulation model. The fair value of restricted stock awards with a required lock-up period without a market condition is estimated at the date of grant, using the Hull-White Lattice (binomial) model. The Black-Scholes, Monte Carlo Simulation, and Hull-White Lattice valuation models incorporate assumptions as to stock price volatility, the expected life of options or awards, a risk-free interest rate, illiquidity discount, and dividend yield. In valuing our stock options, significant judgment is required in determining the expected volatility of our common stock and the expected life that individuals will hold their stock options prior to exercising. Expected volatility for stock options is based on the historical and implied volatility of our common stock while the volatility for restricted stock awards with a market condition is based on the historical volatility of our own stock and the stock of companies within our defined peer group. Because changes in the subjective assumptions can materially affect the estimated value of our employee stock options, it is management’s opinion that the valuation models may not provide an accurate measure of the fair value of our stock options, restricted stock and performance-based awards. Although the fair value of stock options and restricted stock awards is determined in accordance with ASC Topic 718, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. 30 Table of Contents Foreign Currency With the exception of Atlas Lítio Brasil Ltda, our foreign subsidiaries use a local currency as the functional currency. Resulting translation gains or losses are recognized as a component of accumulated other comprehensive income. Transaction gains or losses related to balances denominated in a currency other than the functional currency are recognized in the consolidated statements of operations. Recent Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in this update require disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We will analyze the impacts of this update in the upcoming years and anticipate that we will not adopt the update early. In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. The Board issued this update to improve the relevance and consistency in application of the induced conversion guidance in Subtopic 470-20, Debt— Debt with Conversion and Other Options. The amendments in this update clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The amendments in this update are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06. Management does not expect this new guidance to have any impact on our consolidated financial statements. In May 2025, the FASB issued ASU 2025-03, Business Combinations and Consolidation — Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. The amendments in this Update require an entity involved in an acquisition transaction effected primarily by exchanging equity interests when the legal acquiree is a VIE that meets the definition of a business to consider the factors in paragraphs 805-10-55-12 through 55-15 to determine which entity is the accounting acquirer. The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The Company will analyze the impacts of this update in the upcoming years and anticipate that it will not adopt the update early. In May 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer. The amendments in this update revise the master glossary definition of the term performance condition for share-based consideration payable to a customer. The revised definition incorporates conditions (such as vesting conditions) that are based on the volume or monetary amount of a customer’s purchases (or potential purchases) of goods or services from the grantor (including over a specified period of time). The revised definition also incorporates performance targets based on purchases made by other parties that purchase the grantor’s goods or services from the grantor’s customers. The revised definition of the term performance condition cannot be applied by analogy to awards granted to employees and nonemployees in exchange for goods or services to be used or consumed in the grantor’s own operations. The amendments in this update are effective for all entities for annual reporting periods (including interim reporting periods within annual reporting periods) beginning after December 15, 2026. Early adoption is permitted for all entities. Management does not expect this new guidance to have any impacts on the Company’s consolidated financial statements. In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this update provide (1) all entities with a practical expedient and (2) entities other than public business entities with an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, as follows: 1. Practical expedient. In developing reasonable and supportable forecasts as part of estimating expected credit losses, all entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. 2. Accounting policy election. An entity other than a public business entity that elects the practical expedient is permitted to make an accounting policy election to consider collection activity after the balance sheet date when estimating expected credit losses. The amendments will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Management does not expect this new guidance to have material impacts on the Company’s consolidated financial statements. In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) — Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract. The amendments in this update exclude from derivative accounting nonexchange-traded contracts with underlying that are based on operations or activities specific to one of the parties to the contract. However, this scope exception does not apply to (1) variables based on a market rate, market price, or market index, (2) variables based on the price or performance of a financial asset or financial liability of one of the parties to the contract, (3) contracts (or features) involving the issuer’s own equity that are evaluated under the guidance in Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and (4) call options and put options on debt instruments. The amendments in this update are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted. Management does not expect this new guidance to have material impacts on the Company’s consolidated financial statements. 31 Table of Contents In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815) — Hedge Accounting Improvements. The amendments in this update clarify certain aspects of the guidance on hedge accounting and to address several incremental hedge accounting issues arising from the global reference rate reform initiative. For public business entities, the amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods. Management does not expect this new guidance to have material impacts on the Company’s consolidated financial statements. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) — Narrow-Scope Improvements. The amendments in this update clarify interim disclosure requirements and the applicability of Topic 270. The amendments in this update are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company will analyze the impacts of this Update in the upcoming years and anticipate that it will not adopt the update early. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The information to be reported under this Item is not required of smaller reporting companies. Item 8. Financial Statements and Supplementary Data. Our financial statements, including the notes thereto, together with the report from our independent registered public accounting firm are presented beginning at page F-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None .