What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-04-16 compared with 2024-04-18 · 122 added, 72 removed, 391 unchanged (33% of the section changed)

12 unchanged sentences

We have audited the accompanying consolidated balance sheets of Citi Trends, Inc.

and subsidiary (the "Company") as of February 3, 2024 and January 28, 2023, the related consolidated statements of operations, cash flows, and stockholders ’ equity, for each of the three years in the period ended February 3, 2024, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 3, 2024 and January 28, 2023, and the results of its operations and its cash flows for each of the three years in the period ended February 3, 2024, in conformity with accounting principles generally accepted in the United States of America.

and subsidiary (the "Company") as of February 1, 2025 and February 3, 2024, the related consolidated statements of operations, cash flows, and stockholders ’ equity, for each of the three years in the period ended February 1, 2025, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 1, 2025 and February 3, 2024, and the results of its operations and its cash flows for each of the three years in the period ended February 1, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of February 1, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 16, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

52 unchanged sentences

Noncurrent operating lease liabilities

Deferred Tax Liability

Other long-term liabilities

3 unchanged sentences

Authorized 32,000,000 shares;

16,354,714 shares issued as of February 3, 2024 and 16,158,494 shares issued as of January 28, 2023;

8,550,701 shares outstanding as of February 3, 2024 and 8,354,481 shares outstanding as of January 28, 2023

16,497,092 shares issued as of February 1, 2025 and 16,354,714 shares issued as of February 3, 2024;

8,547,841 shares outstanding as of February 1, 2025 and 8,550,701 shares outstanding as of February 3, 2024

Paid in capital

1 unchanged sentence

Treasury stock, at cost;

7,804,013 shares held as of February 3, 2024 and January 28, 2023

7,949,251 shares held as of February 1, 2025 and 7,804,013 shares held as of February 3, 2024

Total stockholders ’ equity

13 unchanged sentences

(Loss) income before income taxes

Income tax benefit (expense)

Income tax (expense) benefit

Net (loss) income

8 unchanged sentences

Net (loss) income

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Non-cash operating lease costs

14 unchanged sentences

Investing activities:

Sales/redemptions of investment securities

Purchases of investment securities

Purchases of property and equipment

3 unchanged sentences

Financing activities:

Payment of debt issuance costs

Cash used to settle withholding taxes on vested restricted stock

6 unchanged sentences

Cash paid for interest

Cash payments of income taxes

Cash (receipts) payments of income taxes

Supplemental disclosures of non-cash investing activities:

Accrual for purchases of property and equipment

Conversion of nonvested cash-settled units to nonvested shares under incentive plan

See accompanying notes to consolidated financial statements.

5 unchanged sentences

Vesting of nonvested shares

Conversion of nonvested cash-settled units to nonvested shares

Issuance of nonvested shares

Issuance of common stock under incentive plan, net of shares withheld for taxes

Forfeiture of nonvested shares

3 unchanged sentences

Balances — January 28, 2023

Vesting of nonvested shares

Vesting of nonvested units

Issuance of nonvested shares

3 unchanged sentences

Net share settlement of nonvested shares

Repurchase of common stock

Balances — January 28, 2023

Balances — February 3, 2024

Vesting of nonvested units

Issuance of nonvested shares

2 unchanged sentences

Net share settlement of nonvested shares

Repurchase of common stock

Balances — February 1, 2025

4 unchanged sentences

Citi Trends, Inc.

and its subsidiary (the “ Company ” ) is a leading specialty value retailer of apparel, accessories and home trends for way less spend primarily for African American and multicultural families in the United States.

and its subsidiary (the “ Company ” ) is a leading off-price value retailer of apparel, accessories and home trends primarily for African American families in the United States.

As of February 1, 2025, the Company operated 591 stores in urban, suburban and rural markets in 33 states.

4 unchanged sentences

The Company ’ s fiscal year ends on the Saturday closest to January 31 of each year.

The years ended February 3, 2024, January 28, 2023 and January 29, 2022 are referred to as fiscal 2023, fiscal 2022 and fiscal 2021, respectively, in the accompanying consolidated financial statements.

Fiscal 2023 has a 53 -week accounting period, and fiscal years 2022 and 2021 are each comprised of 52 weeks.

The years ended February 1, 2025, February 3, 2024 and January 28, 2023 are referred to as fiscal 2024, fiscal 2023 and fiscal 2022, respectively, in the accompanying consolidated financial statements.

Fiscal years 2024 and 2022 have a 52 -week accounting period, and fiscal year 2023 is comprised of 53 weeks.

Use of Estimates

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Merchandise markdowns are reflected in the inventory valuation when the retail price of an item is lowered in the stores.

Inventory is recorded net of an allowance for shrinkage based on the most recent physical inventory counts and other assumptions for shrinkage activity.

The allowance for inventory shrinkage was $ 3.9 million as of February 3, 2024 and $ 5.8 million as of January 28, 2023.

Inventory is recorded net of an allowance for shrink based on the most recent physical inventory counts and other assumptions for shrink activity.

The allowance for inventory shrink was $ 5.2 million as of February 1, 2025 and $ 3.9 million as of February 3, 2024.

Property and Equipment, net

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If this review indicates that the carrying value of the asset group will not be recovered as determined based on projected undiscounted cash flows related to the asset over its remaining life, the carrying value of the asset is reduced to its estimated fair value.

There was non-cash impairment expense in fiscal 2023 of $ 1.0 million consisting of $ 0.9 million for leasehold improvements and fixtures and equipment at underperforming stores, and $ 0.1 for a right of use asset.

There was no impairment expense in 2022 or 2021.

There was non-cash impairment expense in fiscal 2024 of $ 2.5 million consisting of $ 1.2 million for leasehold improvements and fixtures and equipment at underperforming stores, and $ 1.3 for right of use assets.

There was non-cash impairment expense in fiscal year 2023 of $ 1.0 million consisting of $ 0.9 million for leasehold improvements and fixtures and equipment at an underperforming store, and $ 0.1 million for a right of use asset.

Insurance Liabilities

The Company is largely self-insured for workers ’ compensation costs, general liability claims and employee medical claims.

The Company ’ s self-insured retention or deductible, as applicable, for each claim involving workers ’ compensation and employee medical is limited to $ 250,000 and $ 100,000 , respectively.

The Company is largely self-insured for workers ’ compensation costs, general liability claims.

The Company ’ s self-insured retention or deductible, as applicable, for each claim involving workers ’ compensation and general liability is limited to $ 250,000 and $ 100,000 respectively.

Self-insurance liabilities are based on the total estimated costs of claims filed and estimates of claims incurred but not reported, less amounts paid against such claims.

8 unchanged sentences

Revenue Recognition

The Company ’ s primary source of revenue is derived from the sale of clothing and accessories to its customers with the Company ’ s performance obligations satisfied at the point of sale when the customer pays for their purchase and receives the merchandise.

The Company ’ s primary source of revenue is derived from the sale of apparel, accessories and home goods to its customers with the Company ’ s performance obligations satisfied at the point of sale when the customer pays for their purchase and receives the merchandise.

Sales taxes collected by the Company from customers are excluded from revenue.

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Expected refunds to customers are recorded based on estimated margin using historical return information.

The refund liability for merchandise returns is recorded in accrued expenses on the consolidated balance sheet and totaled $ 0.2 million and $ 0.3 million as of February 3, 2024 and January 28, 2023, respectively.

The corresponding asset for the recoverable cost of expected refunds is included in prepaid and other current assets and totaled $ 0.1 million as of both February 3, 2024 and January 28, 2023.

The refund liability for merchandise returns is recorded in accrued expenses on the consolidated balance sheet and totaled $ 0.2 million as of both February 1, 2025 and February 3, 2024.

The corresponding asset for the recoverable cost of expected refunds is included in prepaid and other current assets and totaled $ 0.1 million as of both February 1, 2025 and February 3, 2024.

Disaggregation of Revenue

In the following table, the Company ’ s revenue is disaggregated by “ Citi ” or major product category.

The following table provides the percentage of net sales for each Citi within the merchandise assortment:

In the following table, the Company ’ s revenue is disaggregated by Division or major product category.

The following table provides the percentage of net sales for each Division within the merchandise assortment:

Accessories & Beauty

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The following table provides a reconciliation of the number of average common shares outstanding used to calculate basic earnings per share to the number of common shares and common stock equivalents outstanding used in calculating diluted earnings per share:

Weighted average number of common shares outstanding

Weighted average number of common shares outstanding (basic)

Incremental shares from assumed vesting of nonvested restricted stock

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Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are

expected to be recovered or settled.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

If there is a change in tax rates, the Company would recognize the impact of such change in income in the period that includes the enactment date.

If realization of the deferred tax asset is not considered more likely than not, then a valuation allowance is recorded to reduce the deferred tax asset to its net realizable value.

Business Operating Segment

The Company is a specialty value retailer of fashion apparel, accessories and home goods for the entire family.

The Company is an off-price value retailer of fashion apparel, accessories and home goods for the entire family.

The retail operations represent a single operating segment based on the way the Company manages its business.

2 unchanged sentences

All sales and assets are located within the United States.

New Accounting Pronouncement

New Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, “ Improvement to Income Tax Disclosures (Topic 740) ” , which requires additional disclosures for income tax rate reconciliations, income taxes paid, and certain other tax disclosures.

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The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, “ Expense Disaggregation Disclosures (Topic 220):

Disaggregation of Income Statement Expenses ” ( “ ASU 2024-03 ” ), which requires public entities to disclose additional information that disaggregates certain expense captions into specified categories in the Notes to the consolidated financial statements.

The new standard is effective for fiscal years beginning after December 15, 2026, and interim periods after December 15, 2027, with early adoption permitted.

The disclosure updates are required to be applied prospectively with the option for retrospective application.

The Company is currently evaluating the impact the amended guidance will have on its disclosures .

Property and Equipment, net

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In May 2023, the facility was amended to replace the London Interbank Offered Rate ( “ LIBOR ” ) with the Secured Overnight Financing Rate ( “ SOFR ” ).

The amended facility provides a $ 75 million credit commitment and a $ 25 million uncommitted “ accordion ” feature that under certain circumstances could allow the Company to increase the size of the facility to $ 100 million.

See Note 10 to the Financial Statements for more information regarding the subsequent amendment to extend the maturity date of the current agreement.

The facility provides a $ 75 million credit commitment and a $ 25 million uncommitted “ accordion ” feature that under certain circumstances could allow the Company to increase the size of the facility to $ 100 million.

The facility is secured by the Company ’ s inventory, accounts receivable and related assets, but not its real estate, fixtures and equipment, and it contains one financial covenant, a fixed charge coverage ratio, which is applicable and tested only in certain circumstances.

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As of February 1, 2025, the Company had no borrowings under the credit facility and $ 2.2 million of letters of credit outstanding.

Income tax benefit (expense) consists of the following (in thousands):

Income tax (expense) benefit consists of the following (in thousands):

Total current

Total deferred

Total income tax benefit (expense)

Income tax benefit (expense) computed using the federal statutory rate is reconciled to the reported income tax benefit (expense) as follows (in thousands):

Total income tax (expense) benefit

Income tax (expense) benefit computed using the federal statutory rate is reconciled to the reported income tax (expense) benefit as follows (in thousands):

Statutory rate applied to income before income taxes

5 unchanged sentences

Excess (deficit) tax benefits from stock-based compensation

Income tax benefit (expense)

Valuation Allowance

Income tax (expense) benefit

Deferred tax assets and deferred tax liabilities consist of the following (in thousands):

4 unchanged sentences

State tax credits

Federal tax credits

Stock compensation

3 unchanged sentences

Subtotal deferred tax assets

State tax credits valuation allowance - net

Valuation allowance - net

Total deferred tax assets

4 unchanged sentences

Total deferred tax liabilities

Net deferred tax asset

Net deferred tax (liability) asset

The Company files income tax returns in U.S.

13 unchanged sentences

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible and income tax credits may be utilized, management believes it is more likely than not that the Company will realize the benefits of these deductible differences with the exception of certain tax credits available in one state.

Beginning in 2011, the Company concluded that its ability to utilize a portion of such state ’ s tax credits was no longer more likely than not.

Such recognition resulted in the establishment of a valuation allowance which necessitated a charge to income tax expense and a reduction in deferred tax assets.

Subsequent to 2011, the Company has continued to earn such state credits and has further adjusted the related valuation allowance.

At February 3, 2024, the valuation allowance, net of federal tax benefit, totaled $ 1.9 million.

Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible and income tax credits may be utilized, management believes sufficient negative evidence exists to require a valuation allowance.

We intend to maintain a valuation allowance until sufficient positive evidence exists to support its reversal, resulting in no deferred tax asset balance being recognized.

At February 1, 2025, the valuation allowance established against the entire net deferred tax asset totaled $ 16.5 million.

The effective income tax rate for fiscal 2024, 2023 and 2022 included the recognition of benefits arising from various federal and state tax credits.

1 unchanged sentence

The income tax benefit included $ 0.0 million, $ 2.2 million and $ 1.6 million related to such credits in each of fiscal 2024, 2023 and 2022, respectively.

The credits generated for fiscal year 2024 were recorded with a full valuation allowance .

Stockholders ’ Equity

10 unchanged sentences

Incentive Plan (the “ Plan ” ) which permits the grant of stock-based incentive awards to employees, officers, directors and consultants.

The Plan provides for the grant of incentive and nonqualified options, stock appreciation rights, restricted stock, restricted stock units, performance awards and other forms of stock-based and cash-based compensation.

At February 1, 2025, the Company had 360,954 shares reserved for future grants under the Plan.

During fiscal 2024, 2023 and 2022, non-cash stock-based compensation expense recorded in selling and general and administrative expenses totaled $ 3.3 million, $ 4.1 million and $ 3.6 million, respectively.

The income tax expense (benefit) resulting from the fair market value of restricted stock at vesting versus the cumulative compensation cost of such stock is recorded as a component of income tax expense and was $ 0.5 million, $ 0.5 million and ($ 1.2 ) million, respectively.

The income tax expense resulting from the fair market value of restricted stock at vesting versus the cumulative compensation cost of such stock is recorded as a component of income tax expense and was $ 0.1 million, $ 0.5 million and $ 0.5 million, respectively.

The Company issues shares of restricted stock to key team members and non-employee directors.

3 unchanged sentences

The number of units earned and vested is subject to scaling based on a pre-established performance matrix.

Prior to fiscal 2021, the Company issued cash-settled restricted stock units ( “ CSUs ” ) to certain team members.

In the fourth quarter of fiscal 2021, all outstanding CSUs were converted to time-based restricted stock, with vesting criteria based on the original vesting criteria for the CSUs.

This conversion resulted in the reclassification of a $ 3.4 million liability from accrued compensation to equity.

The following table summarizes activity related to nonvested restricted stock and PSUs during fiscal 2023:

On November 18, 2024, the Company granted a performance-based restricted stock award to the Chief Executive Officer.

The total number of shares earned depends on the attainment of predefined average stock price targets measured over rolling 45 -trading-day periods during the performance period ending November 15, 2027.

Earned shares vest annually over a period extending through November 15, 2028.

The Company estimated the fair value of the awards using a Monte Carlo simulation including the following assumptions:

Stock Price on grant date

Risk-free interest rate

Expected volatility (annualized)

Dividend yield

The risk-free interest rate was derived from the continuously compounded yield of zero-coupon U.S.

Treasury STRIPS.

The expected volatility is based on the Company ’ s historical daily stock price movements for a period equal to the simulation term.

The dividend yield was based on the Company ’ s recent dividend history.

The total grant date fair value of the award was $ 3.36 million, or $ 10.45 per share.

The fair value associated with each tranche of the award will be recognized, straight-line, over the requisite service period for that tranche.

Failure to meet the market conditions for an award does not result in reversal of previously recognized expense, so long as the required service period condition is met.

The Company recognized $ 0.3 million of expense related to the award during the year ended February 1, 2025.

The following tables summarize activity related to nonvested restricted stock and PSUs and performance-based restricted stock during fiscal 2024:

Time-Based Restricted Stock

Weighted Average

Outstanding as of February 3, 2024

Outstanding as of February 1, 2025

Performance-Based Restricted Stock

Weighted Average

Outstanding as of February 3, 2024

Outstanding as of February 1, 2025

Performance-Based

1 unchanged sentence

Weighted Average

Outstanding as of January 28, 2023

Outstanding as of February 3, 2024

Outstanding as of February 1, 2025

At February 1, 2025, there was $ 4.5 million of unrecognized compensation expense related to restricted stock.

Based on current probable performance, we have determined no compensation expense is required on our PSUs.

Stockholder Right Agreement

On December 6, 2023, the board of directors adopted a limited duration stockholder protection rights plan, pursuant to which the board declared a dividend of one preferred share purchase right (a “ Right ” ) for each of the Company ’ s issued and outstanding shares of common stock, par value $ 0.01 per share.

The dividend was paid to the stockholders of record at the close of business on December 18, 2023.

Each Right entitles the registered holder, subject to the terms of the Rights Agreement (as defined below), to purchase from the Company one ten-thousandth of a share of the Company ’ s Series A Junior Participating Preferred Stock, par value $ 0.01 per share, at a price of $ 120.00 , subject to certain adjustments.

The Rights are governed by the Stockholder Protection Rights Agreement, dated as of December 6, 2023 (the “ Rights Agreement ” ), by and between the Company and Equiniti Trust Company, LLC, and are exercisable only after the occurrence of certain conditions set forth in the Rights Agreement.

The Rights Agreement expires upon the close of business on December 4, 2024, but may expire earlier upon the occurrence of certain events set forth in the Rights Agreement .

Commitments and Contingencies

1 unchanged sentence

Once it becomes probable that the Company will incur costs in connection with a legal proceeding and such costs can be reasonably estimated, it establishes appropriate reserves.

In connection with the previously disclosed January 2023 cyber disruption, four putative class action lawsuits were filed against the Company in the United States District Court for the Southern District of Georgia (the “ Court ” ).

In connection with the January 2023 cyber disruption previously disclosed in the Company ’ s Form 8-K filed on February 23, 2023, four putative class action lawsuits were filed against the Company in the United States District Court for the Southern District of Georgia (the “ Court ” ).

These matters, Matousek et al v.

36 unchanged sentences

Total present value of lease liabilities

(1) Calculated using the discount rate for each lease.

(1) Calculated using the incremental borrowing rate for each lease.

(2) Includes short-term and long-term portions of operating leases.

1 unchanged sentence

Supplemental cash flow and other information related to operating leases are as follows (in thousands, except for weighted average amounts):

February 1, 2025

February 3, 2024

Cash paid for operating leases

2 unchanged sentences

Weighted average discount rate - operating leases

Subsequent Event

As previously disclosed in the Company ’ s Form 8-K filed on February 29, 2024, the Company entered into a Cooperation Agreement (the “ Cooperation Agreement ” ) with Fund 1 Investments, LLC, a Delaware limited liability company (the “ Investor ” ) on February 28, 2024.

Pursuant to the Cooperation Agreement, the Company (i) appointed certain individuals as an observer to the Company ’ s Board of Directors to serve as such until the conclusion of the 2024 annual meeting of stockholders (ii) agreed to nominate each of the individuals for election to the Board at the 2024 Annual Meeting;

and (iii) accepted the retirement, effective as of the conclusion of the 2024 Annual Meeting, of three incumbent directors.

The Cooperation Agreement also gives the Investor, contingent upon the Investor satisfying certain conditions, replacement rights with respect to those new directors.

In addition, the Investor agreed to vote all Voting Securities (as defined in the Cooperation Agreement) beneficially owned by it or its affiliates at the 2024 Annual Meeting in accordance with the Board ’ s recommendations with respect to any and all proposals, with limited and specified exceptions.

Segment Reporting

The Company is an off-price value retailer of fashion apparel, accessories and home trends primarily for African American families.

The retail operations represent a single operating segment based on the way the Company manages its business.

The Company ’ s Chief Executive Officer, as our chief operating decision maker ( “ CODM ” ), manages and allocates resources to the operations of the Company on a consolidated basis.

This enables the Chief Executive Officer to assess the Company ’ s overall level of available resources and determine how best to deploy these resources across retail stores that are in line with the Company ’ s long-term company-wide strategic goals.

The Company ’ s retail stores sell similar products, use similar processes to sell those products, and sell their products to similar classes of customers.

All sales and assets are located within the United States.

The CODM assesses performance based on consolidated net (loss) income that is reported on the statement of operations as part of the annual budgeting and forecasting process.

The CODM considers budget-to-actual variances on a monthly basis when making decisions about allocating capital and personnel.

The CODM does not review assets in evaluating results, therefore such information is not provided.

The following table summarizes the Company ’ s one reportable segment profit or loss, including significant segment expenses, and includes the reconciliation to consolidated net (loss) income:

Cost of sales (exclusive of depreciation shown separately below)

Merchandising and other

Freight in and out

Selling, general, and administrative expenses

Store expenses - payroll and related expenses

Store expenses - rent

Corporate expenses - payroll and related expenses

Distribution center expenses - payroll and related expenses

Other segment expenses (1)

Asset impairment

Gain on sale leaseback

Interest income

Interest expense

Income tax (provision) benefit

Net (loss) income

(1) Other segment expenses represent other store, corporate and distribution center expenses including utilities, repairs, supplies, insurance, professional fees and other miscellaneous fees.

Subsequent Events

As previously disclosed in the Company ’ s Form 8-K filed on March 27, 2025, the Company entered into an Amended and Restated Cooperation Agreement (the “ Cooperation Agreement ” ) with Fund 1 Investments, LLC, a Delaware limited liability company (the “ Investor ” ) on March 25, 2025.

The Cooperation Agreement amends and restates the cooperation agreement previously entered into by the parties on February 28, 2024.

Pursuant to the Cooperation Agreement, the Company agreed to, among other things, (i) appoint each of Wesley Calvert and Pamela Edwards to the Company ’ s Board of Directors (the “ New Directors ” ) and (ii) nominate each of the New Directors, and David Heath, Charles Liu and Michael Kvitko for election to the Board at the Company ’ s 2025 annual meeting of stockholders (the “ 2025 Annual Meeting ” ).

The Investor also agreed to certain customary standstill provisions prohibiting it from, among other things, (i) soliciting proxies;

3 unchanged sentences

in each case as further described in the Cooperation Agreement.

Until the Termination Date (as defined in the Cooperation Agreement), the Company and Investor also agreed to certain mutual non-disparagement provisions.

The Cooperation Agreement will terminate on the date that is the earlier of (i) 30 days prior to the opening of the window for the submission of stockholder director nominations for the Company ’ s 2025 annual meeting of stockholders and (ii) 150 days prior to the one-year anniversary of the 2024 Annual Meeting (the earlier of (i) and (ii), the Termination Date).

Until the Termination Date (as defined in the Cooperation Agreement), the Company and the Investor have also agreed to certain mutual non-disparagement provisions.

The Cooperation Agreement will terminate on the date that is 30 days prior to the closing of the window for the submission of stockholder director nominations for the Company ’ s 2026 annual meeting of stockholders;

provided, however, that the Termination Date will be automatically extended to the date that is 30 days prior to the closing of the window for the submission of stockholder director nominations for the Company ’ s 2027 annual meeting of stockholders if the Company ’ s stock price meets certain thresholds as described in the Cooperation Agreement.

On April 10, 2025 the Company amended the five-year , $ 75 million credit facility with Bank of America to extend the maturity date to April 10, 2030.

The facility has an unused commitment fee of 0.25 % and permits the payment of cash dividends subject to certain limitations.

Borrowings under the credit facility bear interest (a) for SOFR Loans, at a rate equal to the SOFR Rate plus a SOFR adjustment equal to 0.10 % plus either 1.50 % , 1.75 % or 2.00 % , or (b) for Base Rate Loans, at a rate equal to the highest of (i) the prime rate, (ii) the Federal Funds Rate plus 0.5 % and (iii) the Term SOFR Rate plus 1.0 % , plus, in each case either 0.50 % , 0.75 % or 1.00 % , based in any such case on the average daily availability for borrowings under the facility.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data