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Item 1. Financial Statements

2026-05-08 compared with 2026-02-11 · 131 added, 134 removed, 368 unchanged (42% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(Thousands of Dollars) December 28,

(Thousands of Dollars) March 29,

2026 September 28,

24 unchanged sentences

The accompanying Notes are an integral part of the Consolidated Financial Statements.

(Thousands of Dollars and Shares, Except Per Share Data) December 28,

(Thousands of Dollars and Shares, Except Per Share Data) March 29,

2026 September 28,

20 unchanged sentences

issued and outstanding:

December 28, 2025;

March 29, 2026;

22,230 shares;

3 unchanged sentences

$ 0.01 par value

Class B Common Stock, $ 2 par value;

authorized 3,000 shares;

Additional paid-in capital 309,560 263,812

9 unchanged sentences

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

Three months ended

(Thousands of Dollars, Except Per Common Share Data) December 28,

2025 December 29,

Three months ended Six months ended

(Thousands of Dollars, Except Per Common Share Data) March 29,

2026 March 30,

2025 March 29,

2026 March 30,

Operating revenue:

9 unchanged sentences

Depreciation and amortization 3,515 5,171 7,094 11,436

Assets gain on sales, impairments and other, net ( 3 ) ( 929 )

(Gain) loss on asset sales, impairments and other, net ( 900 ) 126 ( 903 ) ( 803 )

Restructuring costs and other 3,640 6,516 6,788 11,666

6 unchanged sentences

Total non-operating expense, net ( 6,803 ) ( 9,292 ) ( 16,206 ) ( 18,921 )

Loss before income taxes ( 4,195 ) ( 12,981 )

Income tax expense 931 3,243

Income (loss) before income taxes 1,739 ( 13,795 ) ( 2,456 ) ( 26,776 )

Income tax expense (benefit) 3,448 ( 1,780 ) 4,379 1,463

Net loss ( 1,709 ) ( 12,015 ) ( 6,835 ) ( 28,239 )

22 unchanged sentences

December 28, 2025 ( 335,545 ) 62 264,067 22,674 2,302 ( 46,440 )

Shares redeemed — — ( 66 ) — — ( 66 )

Loss attributable to Lee Enterprises, Incorporated ( 2,148 ) — — — 439 ( 1,709 )

Private Placement proceeds 2 45,346 45,348

Stock compensation — — 213 — — 213

Other comprehensive loss — — — ( 104 ) — ( 104 )

Deferred income taxes, net — — — 25 — 25

Distributions to minority owners — — — — ( 431 ) ( 431 )

March 29, 2026 ( 337,693 ) 64 309,560 22,595 2,310 ( 3,164 )

(Thousands of Dollars) Accumulated

12 unchanged sentences

December 29, 2024 ( 309,089 ) 62 262,569 19,805 2,476 ( 24,177 )

Loss attributable to Lee Enterprises, Incorporated ( 12,511 ) — — — 496 ( 12,015 )

Stock compensation — — 358 — — 358

Other comprehensive loss — — — ( 152 ) — ( 152 )

Deferred income taxes, net — — — 37 — 37

Distributions to minority owners — — — — ( 149 ) ( 149 )

March 30, 2025 ( 321,600 ) 62 262,927 19,690 2,823 ( 36,098 )

The accompanying Notes are an integral part of the Consolidated Financial Statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended

(Thousands of Dollars) December 28,

2025 December 29,

Six months ended

(Thousands of Dollars) March 29,

2026 March 30,

Cash (required for) provided by operating activities:

4 unchanged sentences

Stock compensation expense 541 788

Assets gain on sales, impairments and other, net ( 3 ) ( 929 )

Gain on asset sales, impairments and other, net ( 903 ) ( 803 )

Earnings, net of distributions, deemed returns on investment of TNI and MNI ( 133 ) 247

Non-cash interest — 6,808

Deferred income taxes ( 28 ) ( 290 )

2 unchanged sentences

Decrease (increase) in receivables 4,207 ( 8,599 )

Decrease (increase) in inventories and other 463 ( 406 )

Increase in accounts payable, unearned revenue, other accrued liabilities and other working capital items 4,469 4,197

Decrease in inventories and other 318 26

(Decrease) increase in accounts payable, unearned revenue, other accrued liabilities and other working capital items ( 5,397 ) 6,299

Decrease in pension and other postretirement and postemployment benefit obligations ( 2,065 ) ( 2,035 )

1 unchanged sentence

Other ( 2,557 ) ( 427 )

Net cash provided by (required for) operating activities 4,471 ( 7,337 )

Net cash required for operating activities ( 1,776 ) ( 8,127 )

Cash provided by (required for) investing activities:

2 unchanged sentences

Net cash (required for) provided by investing activities ( 284 ) 3,193

Cash required for financing activities:

Deferred offering costs ( 1,080 ) —

Net cash required for financing activities ( 1,080 ) —

Cash provided by financing activities:

Costs of Private Placement of common stock ( 4,654 ) —

Private Placement proceeds 50,000 —

Net cash provided by financing activities 45,346 —

Net increase (decrease) in cash and cash equivalents 43,286 ( 4,934 )

7 unchanged sentences

The accompanying unaudited interim Consolidated Financial Statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for quarterly reports.

In the opinion of management, these financial statements contain all adjustments (consisting of only normal recurring items) necessary to present fairly the financial position of Lee Enterprises, Incorporated and its subsidiaries (the “Company”) as of December 28, 2025, and our results of operations and cash flows for the periods presented.

In the opinion of management, these financial statements contain all adjustments (consisting of only normal recurring items) necessary to present fairly the financial position of Lee Enterprises, Incorporated and its subsidiaries (the “Company”) as of March 29, 2026, and our results of operations and cash flows for the periods presented.

The Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Company's 2025 Annual Report on Form 10-K.

2 unchanged sentences

Fiscal year 2026 and 2025 includes 52 weeks of operations.

Because of seasonal and other factors, the results of operations for the three months ended December 28, 2025, are not necessarily indicative of the results to be expected for the full year.

Because of seasonal and other factors, the results of operations for the three and six months ended March 29, 2026, are not necessarily indicative of the results to be expected for the full year.

The Consolidated Financial Statements include our accounts and those of our wholly owned subsidiaries, as well as our 82.5 % interest in INN Partners, L.C.

5 unchanged sentences

The ASU is effective for interim periods within fiscal years beginning after December 15, 2027.

We are still evaluating the guidance but we do not expect it will fundamentally change our interim reporting.

In December 2025, the Financial Accounting Standards Board FASB issued ASU 2025-12 which the FASB's "Codification Improvements" update, making various technical corrections and clarifications to existing United States Generally Accepted Accounting Principles ("GAAP"), improving consistency and usability for preparers by refining guidance and making standards easier to apply.

We are currently evaluating the guidance but we do not expect it will fundamentally change our interim reporting.

In December 2025, the FASB issued ASU 2025-12 which is the FASB's "Codification Improvements" update, making various technical corrections and clarifications to existing United States Generally Accepted Accounting Principles ("GAAP"), improving consistency and usability for preparers by refining guidance and making standards easier to apply.

The ASU is effective for annual periods beginning after December 15, 2026.

19 unchanged sentences

We are currently evaluating the provisions of the updated guidance and assessing the impact on the Consolidated Financial Statements.

2 PRIVATE PLACEMENT FINANCING AND RELATED AGREEMENTS

On February 5, 2026, we issued an aggregate of 16,000,000 shares of Common Stock, consisting of 15,384,615 shares of Common Stock to certain investors and 615,385 shares of Common Stock to service providers as reimbursement for certain expenses incurred by certain investors, at a price of $ 3.25 per share in a private placement pursuant to the private placement agreement by and among the Company and the investors ("Private Placement").

The aggregate gross proceeds from the Private Placement were $ 50.0 million before deducting offering expenses.

The investors also agreed to a lock-up with respect to the shares for a period of 180 days and standstill period of twelve months , subject to certain exceptions.

With respect to the standstill, certain investors are each able to purchase up to 600,000 shares of Common Stock during the standstill period.

Since the closing of the Private Placement, our majority owner and Chairman of the Board, David Hoffmann purchased 357,009 shares through March 29, 2026 bringing his percentage ownership to 53.5 %.

Further, in connection with the closing of the Private Placement, we amended our Certificate of Incorporation, increasing the number of authorized shares from 12,000,000 to 40,000,000 .

Registration Rights Agreement

We entered into a registration rights agreement pursuant to which we will agree to provide certain customary registration rights, including the registration of the Shares for resale.

We were required to use commercially reasonable efforts to file a registration statement with the Securities and Exchange Commission covering the resale by the investors of their shares within 60 days following the closing and S-3 was filed on March 6, 2026.

Financing costs

Costs related to the transaction are $ 4.7 million and partially offset the Private Placement proceeds of $ 50.0 million in "Additional Paid-in Capital" on the Consolidated Balance Sheets.

The following table presents our revenue disaggregated by source:

Three months Ended

(Thousands of Dollars) December 28,

2025 December 29,

Three months Ended Six months ended

(Thousands of Dollars) March 29,

2026 March 30,

2025 March 29,

2026 March 30,

Operating revenue:

15 unchanged sentences

Digital advertising revenue includes amounts for advertisements placed on our digital platforms, amounts charged to customers for digital marketing services which include:

audience extension, search

engine optimization, search engine marketing, web and mobile production, social media services and reputation monitoring and management.

audience extension, search engine optimization, search engine marketing, web and mobile production, social media services and reputation monitoring and management.

Payments for print and digital advertising revenue are due upon completion of our performance obligations at previously agreed upon rates.

18 unchanged sentences

Our primary source of unearned revenue is from subscriptions paid in advance of the service provided.

We expect to recognize the revenue related to unsatisfied performance obligations over the next twelve months in accordance with the terms of the subscriptions and other contracts with customers.The unearned revenue balances described herein are our only contract liability.

Revenue recognized in the three months ended December 28, 2025, that was included in the contract liability as of September 28, 2025, was $ 16.4 million.

Accounts receivable, excluding allowance for credit losses, was $ 55.2 million and $ 59.4 million as of December 28, 2025, and September 28, 2025 , respectively.

Allowance for credit losses was $ 4.1 million and $ 4.8 million as of December 28, 2025, and September 28, 2025 , respectively.

We expect to recognize the revenue related to unsatisfied performance obligations over the next twelve months in accordance with the terms of the subscriptions and other contracts with customers.

The unearned revenue balances described herein are our only contract liability.

Revenue recognized in the six months ended March 29, 2026, that was included in the contract liability as of September 28, 2025, was $ 21.2 million.

Accounts receivable, excluding allowance for credit losses, was $ 49.3 million and $ 59.4 million as of March 29, 2026, and September 28, 2025 , respectively.

Allowance for credit losses was $ 3.7 million and $ 4.8 million as of March 29, 2026, and September 28, 2025 , respectively.

Valuation and qualifying account information related to the allowance for credit losses related to continuing operations is as follows:

(Thousands of Dollars) December 28,

(Thousands of Dollars) March 29,

2026 September 28,

12 unchanged sentences

Summarized results of TNI are as follows:

Three months ended

(Thousands of Dollars) December 28,

2025 December 29,

Three months ended Six months ended

(Thousands of Dollars) March 29,

2026 March 30,

2025 March 29,

2026 March 30,

Operating revenue 5,069 5,756 9,883 12,289

3 unchanged sentences

Equity in earnings of TNI 790 909 1,420 1,534

TNI makes periodic distributions of its earnings and for the three months ended December 28, 2025, and December 29, 2024, we received $ 0.5 million and $ 0.5 million in distributions, respectively.

TNI makes periodic distributions of its earnings and for the three months ended March 29, 2026 and March 30, 2025, we received $ 0.5 million and $ 1.2 million in distributions, respectively.

In the six months ended March 29, 2026 and March 30, 2025, we received $ 1.1 million and $ 1.7 million in distributions, respectively.

Madison Newspapers, Inc.

3 unchanged sentences

Summarized results of MNI are as follows:

Three months ended

(Thousands of Dollars) December 28,

2025 December 29,

Three months ended Six months ended

(Thousands of Dollars) March 29,

2026 March 30,

2025 March 29,

2026 March 30,

Operating revenue 8,835 9,079 18,305 18,838

5 unchanged sentences

Equity in earnings of MNI 219 247 669 744

MNI makes periodic distributions of its earnings and in the three months ended December 28, 2025, and December 29, 2024, we received $ 0.4 million and $ 0.9 million in distributions, respectively.

MNI makes periodic distributions of its earnings and in the three months ended March 29, 2026, and March 30, 2025, we received $ 0.4 million and $ 0.0 million i n distributions, respectively.

In the six months ended March 29, 2026 and March 30, 2025, we received $ 0.8 million and $ 0.9 million in distributions, respectively.

5 GOODWILL AND OTHER INTANGIBLE ASSETS

1 unchanged sentence

Goodwill and identified intangible assets consist of the following:

(Thousands of Dollars) December 28,

(Thousands of Dollars) March 29,

2026 September 28,

11 unchanged sentences

We operate as a single operating and reportable segment.

The Chief Executive Officer (“CEO”) serves as our Chief Operating Decision Maker (“CODM”) and is responsible for evaluating financial performance and allocating resources.

The President and Chief Executive Officer (“CEO”) serves as our Chief Operating Decision Maker (“CODM”) and is responsible for evaluating financial performance and allocating resources.

The CODM reviews financial information and makes operating decisions on a consolidated basis.

3 unchanged sentences

Separate operating results for each SBU are not reviewed by the CODM when assessing performance or making operating decisions.

The CODM reviews our consolidated statements of (loss) income and balance sheets on a monthly basis and makes key decisions regarding resource allocation, including operating expenses and capital expenditures, primarily focusing on consolidated net (loss) income and consolidated total

These consolidated statements are used by the CODM to monitor budget versus actual results and evaluate the return on assets.

Significant segment expenses are separately disclosed and presented in the Consolidated Statements of Loss (Income) and Comprehensive Loss (Income).

Significant segment expenses are separately disclosed and presented in the Consolidated Statements of Loss and Comprehensive Loss.

The measure of segment assets is reported on the Consolidated Balance Sheets as Total Assets.

The accounting policies of our operating segment are the same as those described in Note 1.

We have debt consisting of a single 25 -year term loan with BH Finance LLC, with an aggregate principal balance of $ 455.5 million at a 9 % annual fixed rate and maturing on March 16, 2045 (referred to herein as “Credit Agreement” and “Term Loan”).

On December 28, 2025, the fair value was $ 387.9 million, representing a Level 2 fair value measurement, which are fair values estimated using significant other observable inputs.

During the three months ended December 28, 2025, we had no Net Cash Proceeds, as defined in our Credit Agreement, from asset sales and did not make any principal debt payments as a result of non-core asset sales.

We have debt consisting of a single 25 -year term loan with BH Finance LLC, with an aggregate principal balance of $ 455.5 million at an annual fixed rate and maturing on March 16, 2045 (referred to herein as “Credit Agreement” and “Term Loan”).

On March 29, 2026, the fair value was $ 309.6 million, representing a Level 2 fair value measurement, which are fair values estimated using significant other observable inputs.

Concurrently with the execution of the Private Placement agreement discussed in Note 2, we entered into the Second Amendment to Credit Agreement on February 5, 2026.

The amendments include, among other items, a reduction of the applicable margin on our 25 -year term loan from 9.00 % to 5.00 % for a period of 5 years following the closing and amending the definition of “Excess Cash Flow” such that the cash-on hand balance greater than $ 64.0 million held by us will be deemed Excess Cash Flow

for a 5 year period following the closing.

The interest rate amendment to 5.00 % is treated as modification to the existing Credit Agreement.

During the six months ended March 29, 2026, we had $ 0.8 million in transactions that generated proceeds that qualified as Net Cash Proceeds, as defined in our Credit Agreement, from asset sales and did not make any principal debt payments.

Future payments are contingent on our ability to generate future excess cash flow, as defined in the Credit Agreement.

As of December 28, 2025, there was no Excess Cash payment due as we did not generate the defined level of excess cash flow.

As of March 29, 2026, there was no Excess Cash payment due as we did not generate the defined level of Excess Cash Flow.

In February 2025, in an effort to provide short-term liquidity to fund the Cyber Incident's remediation efforts and other operations, BH Finance LLC waived the interest expense payment and BH Media Group, Inc.

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Future payments are contingent on our ability to generate future Excess Cash Flow, as defined in the Credit Agreement.

See Note 12 for changes to our Credit Agreement related to a Subsequent Event.

8 PENSION, POSTRETIREMENT AND POSTEMPLOYMENT DEFINED BENEFIT PLANS

4 unchanged sentences

Additionally, we provide retiree medical and life insurance benefits under postretirement plans at several of our operating locations.

Through December 28, 2025, our liability and related expense for benefits under the plans are recorded over the service period of employees based upon annual actuarial calculations.

Through March 29, 2026, our liability and related expense for benefits under the plans are recorded over the service period of employees based upon annual actuarial calculations.

The net periodic pension and postretirement cost (benefit) components for our plans are as follows:

PENSION PLAN Three months ended

(Thousands of Dollars) December 28,

2025 December 29,

PENSION PLAN Three months ended Six months ended

(Thousands of Dollars) March 29,

2026 March 30,

2025 March 29,

2026 March 30,

Service cost for benefits earned during the period 1 1 2 2

3 unchanged sentences

Net periodic pension benefit ( 277 ) ( 72 ) ( 554 ) ( 143 )

POSTRETIREMENT MEDICAL PLANS Three months ended

(Thousands of Dollars) December 28,

2025 December 29,

POSTRETIREMENT MEDICAL PLANS Three months ended Six months ended

(Thousands of Dollars) March 29,

2026 March 30,

2025 March 29,

2026 March 30,

Service cost for benefits earned during the period — 1 — 2

4 unchanged sentences

Net periodic postretirement benefit ( 624 ) ( 664 ) ( 1,248 ) ( 1,328 )

In the three months ended December 28, 2025 and December 29, 2024, we made no contributions to our pension plans.

In the six months ended March 29, 2026 and March 30, 2025, we made no contributions to our pension plans.

W e have no required contributions to our pension plans for 2026.

1 unchanged sentence

In prior periods, we completed withdrawals from several multi-employer plans.

As of December 28, 2025 and September 28, 2025, we had $ 22.0 million and $ 22.4 million of accrued withdrawal liabilities.

As of March 29, 2026 and September 28, 2025, we had $ 21.7 million and $ 22.4 million of accrued withdrawal liabilities.

The liabilities reflect the estimated value of payments to the funds, payable over 20 years.

9 INCOME TAXES

We recorded an income tax expense of $ 0.9 million related to loss before taxes of $ 4.2 million for the three months ended December 28, 2025.

We recorded an income tax expense of $ 3.2 million related to loss before taxes of $ 13.0 million for the three months ended December 29, 2024.

The effective income tax rate for the three months ended December 28, 2025, was ( 21.4 )% .

The effective income tax rate for the three months ended December 29, 2024, was ( 25.0 )%.

We recorded an income tax expense of $ 3.4 million related to income before taxes of $ 1.7 million for the three months ended March 29, 2026, and an income tax expense of $ 4.4 million related to loss before taxes of $ 2.5 million for the six months ended March 29, 2026.

We recorded an income tax benefit of $ 1.8 million related to loss before taxes of $ 13.8 million for the three months ended March 30, 2025, and an income tax expense of $ 1.5 million related to loss before income taxes of $ 26.8 million for the six months ended March 30, 2025.

The effective income tax rate for the three and six months ended March 29, 2026, was 198.3 % and ( 178.3 )%, respectively.

The effective income tax rate for the three and six months ended March 30, 2025, was 12.9 % and ( 5.5 )% respectively.

The primary differences between these rates and the U.S.

federal statutory rate of 21% are because of state taxes, non-deductible expenses, increase in valuation allowance, and adjustments to reserves for uncertain tax positions, including any related interest.

We are evaluating the income tax impacts of the private placement financing and Second Amendment to the Credit Agreement as related to the subsequent events disclosed in Note 12.

We file a consolidated federal tax return, as well as combined and separate tax returns in approximately 27 state and local jurisdictions.

We do not currently have any federal or material income tax examinations in progress.

Our income tax returns have generally been audited or closed to audit through 2017.

10 LOSS PER COMMON SHARE

The following table sets forth the computation of basic and diluted earnings per common share:

Three months ended

(Thousands of Dollars and Shares, Except Per Share Data) December 28,

2025 December 29,

Three months ended Six months ended

(Thousands of Dollars and Shares, Except Per Share Data) March 29,

2026 March 30,

2025 March 29,

2026 March 30,

Loss attributable to Lee Enterprises, Incorporated:

1 unchanged sentence

Weighted average common shares 13,898 6,217 10,036 6,207

Less weighted average restricted Common Stock ( 139 ) ( 204 )

Less weighted average restricted common shares ( 137 ) ( 185 ) ( 138 ) ( 198 )

Basic average common shares 13,761 6,032 9,898 6,009

Dilutive restricted Common Stock — —

Dilutive restricted common shares — — — —

Diluted average common shares 13,761 6,032 9,898 6,009

2 unchanged sentences

Diluted ( 0.16 ) ( 2.07 ) ( 0.78 ) ( 4.87 )

For the three months ended December 28, 2025 and December 29, 2024, no shares were considered in the computation of diluted earnings per common share because we recorded net losses.

For the three and six months ended March 29, 2026 and March 30, 2025, no shares were considered in the computation of diluted earnings per common share because we recorded net losses.

The increase in weighted common shares is due to shares issued for the Private Placement on February 5, 2026 described in Note 2.

Rights Agreement

1 unchanged sentence

Pursuant to the Rights Agreement, on March 28, 2024, our Board of Directors declared a dividend of one preferred share purchase right (a “Right”), payable on April 8, 2024, for each share of our Common Stock outstanding to the stockholders of record on that date.

Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series C Participating Convertible Preferred Stock, without par value (the “Preferred Shares”), of the Company at a price of $ 90.00 per one one-thousandth of a Preferred Share represented by a Right, subject to adjustment.

The Rights will initially trade with our Common Stock and will generally become exercisable only if any person or group, other than certain exempt persons, acquires beneficial ownership of 15 % or more of our Common Stock outstanding.

In the event the Rights become exercisable, each holder of a Right, other than the triggering person(s), will be entitled to purchase additional shares of our Common Stock at a 50 % discount or the Company may exchange each Right held by such holders for one share of our Common Stock.

The Rights Agreement was to continue in effect until March 27, 2025, or unless earlier redeemed or terminated by the Company, as provided in the Rights Agreement.

On March 27, 2025, the Board of Directors extended the termination date of the Rights Agreement to March 27, 2026.

The Rights have no voting or dividend privileges, and, unless and until they become exercisable, have no dilutive effect on the earnings of the Company.

The Rights Agreement applies equally to all current and future stockholders and is not intended to deter offers or preclude our Board of Directors from considering acquisition proposals that are fair and otherwise in the best interest of our stockholders.

However, the overall effect of the Rights Agreement may render it more difficult or discourage a merger, tender offer, or other business combination involving us that is not supported by our Board of Directors.

Each Right entitled the registered holder to purchase from the Company one one-thousandth of a share of Series C Participating Convertible Preferred Stock, without par value (the “Preferred Shares”), of the Company at a price of $ 90.00 per one one-thousandth of a Preferred Share represented by a Right, subject to adjustment.

On February 4, 2026, in connection with the closing of the Private Placement, the Board of Directors amended the termination date of the Rights Agreement to February 4, 2026 causing each Right to expire and to be extinguished and for the Rights Agreement to be terminated.

6 unchanged sentences

The incident remains under legal and forensic review, and we continue to implement security enhancements.

Since the incident occurred, we have incurred $ 10.5 million loss of cash flows related to the Cyber Incident.

Approximately $ 3.7 million of this was incurred expenses, which were recognized in "Restructuring and Other" in the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income during the year ended September 28, 2025.

We have filed insurance claims for the remaining $ 6.8 million to cover business interruption related and other expenses.

We maintain cyber insurance with a $ 0.5 million deductible.

For the year ended September 28, 2025, we had submitted $ 10.0 million of claims and received $ 2.0 million of reimbursements, which are presented as a reduction of related costs within “Restructuring and other.” For the three months ended December 28, 2025, we received an additional $ 2.0 million in business interruption reimbursements that were recorded on a separate line within "Operating Expenses".

The remaining business-interruption claims remain under review.

Since the incident, we have incurred $ 10.5 million in cash flow losses attributable to the cyber incident, which have been submitted for recovery to our insurance providers.

Approximately $ 3.7 million of incurred expenses and $ 2.0 million of reimbursements were recognized in "Restructuring and Other" in the Consolidated Statements of Loss and Comprehensive Loss during the year ended September 28, 2025.

For the six months ended March 29, 2026, we have received $ 0.8 million of reimbursements,

which are presented as a reduction of related costs within “Restructuring and other” and $ 5.8 million in business interruption reimbursements that were recorded on a separate line within "Operating Expenses".

12 COMMITMENTS AND CONTINGENT LIABILITIES

24 unchanged sentences

We anticipate final approval of the settlement by August 2026.

The probable settlement liability and insurance receivable are recorded within “Compensation and other accrued liabilities” and “Prepaids and other” on the Consolidated Balance Sheets as of December 28, 2025.

Lineup Systems Corporation v.

5 unchanged sentences

Lineup filed a Motion for Judgment on the Pleadings for various counts and oral arguments were heard by the Court on the Motion for Judgment on the Pleadings on January 16, 2026.

The Court is expected to rule in the next 90 days.

The Court rendered an opinion in favor of defendants denying the motion.

Discovery is ongoing in this case and the outcome is uncertain at this time.

12 SUBSEQUENT EVENTS

PRIVATE PLACEMENT FINANCING AND RELATED AGREEMENTS

The aggregate gross proceeds from the private placement were approximately $ 50.0 million before deducting offering expenses.

We expect to use the net proceeds for working capital and for other general corporate purposes.

The investors have also agreed to a lock-up with respect to the shares for a period of 180 days and standstill period of twelve months , subject to certain exceptions.

With respect to the standstill, certain investors are each able to purchase up to 600,000 shares of Common Stock during the standstill period.

Further, in connection with the closing of the private placement, we amended our Certificate of Incorporation, increasing the number of authorized shares from 12,000,000 to 40,000,000 .

Registration Rights Agreement

We entered into a registration rights agreement pursuant to which we will agree to provide certain customary registration rights, including the registration of the Shares for resale.

We are required to use commercially reasonable efforts to file a registration statement with the Securities and Exchange Commission covering the resale by the investors of their shares within 60 days following the closing.

President and Chief Executive Officer Transition

In connection with the closing of the private placement agreement, Kevin Mowbray, our President and Chief Executive Officer, entered into an agreement to voluntarily retire from his positions at the Company and its subsidiaries and affiliates.

Pursuant to this agreement, we have agreed to pay (i) a severance payment to Mr.

Mowbray of $ 1,500,000 payable in thirty-six installments and (ii) COBRA medical premiums for a period of 18 months for Mr.

Mowbray and his spouse.

In addition, Mr.

Mowbray agreed to provide consultation, advice and assistance in the transition and operation of the Company’s business as reasonably requested by the Company through May 31, 2026.

In connection with the closing and the planned retirement of the Chief Executive Officer, Nathan Bekke, our current Chief Operating Officer, assumed the role of Interim Chief Executive Officer.

Vice President, Chief Financial Officer Transition

On November 17, 2025, Timothy R.

Millage, Vice President, Chief Financial Officer informed us of his decision to resign from his positions with us to pursue an opportunity in church ministry.

His resignation became effective February 3, 2026, and he has agreed to provide consulting services to the Company through May 31, 2026.

In connection with Mr.

Millage’s resignation, we and Mr.

Millage entered into a separation agreement, dated November 20, 2025 (the “Separation Agreement”).

Under the terms of the Separation Agreement, Mr.

Millage will receive (a) his full compensation through the end of his consulting role, (b) a severance payment equaling twenty-six weeks of his base salary, (c) the vesting of all unvested stock awards on February 3, 2026, and (d) survival of the indemnification terms under his employment agreement and indemnity agreement.

The Separation Agreement also includes customary

non-compete, non-solicitation, and release of claims provisions.

We have initiated a search process to identify a new Chief Financial Officer.

Rinehults, our current Vice President of Operations and Finance, has been appointed as Vice President, Interim Chief Financial Officer, and Treasurer, effective as of February 3, 2026.

New Board Chairman

In connection with the closing of the private placement agreement, David Hoffmann was appointed to our board of directors for a term ending at our 2028 annual meeting.

Additionally, pursuant to our second amended and restated bylaws, the board of directors appointed Mr.

Hoffmann as Chairman, replacing Mary E.

Junck, who previously served in the role.

Junck is expected to remain a director on the Company’s board through the expiration of her term at the Company’s 2028 annual meeting.

Credit Agreement Amendment

Additionally, concurrently with the execution of the private placement agreement, we entered into the Second Amendment to Credit Agreement.

The amendments became operative concurrently with the closing of the private placement agreement.

The amendments include, among other things, a reduction of the applicable margin on our 25-year term loan from 9.00 % to 5.00 % for a period of five years following the closing and amending the definition of “Excess Cash Flow” such that the minimum amount of cash-on hand held by us before being deemed Excess Cash Flow would be equal to $ 64.0 million for a five year period following the closing.

Rights Agreement Amendment

On February 4, 2026, in connection with the closing of the private placement agreement, the Board of Directors amended the termination date of the Rights Agreement to February 4, 2026, causing each Right to expire and to be extinguished and for the Rights Agreement to be terminated.

Financing costs

Costs related to the transaction are approximately $ 4.7 million and will offset the financing proceeds in "Additional Paid-in Capital" on the Consolidated Balance Sheets once the private placement is completed.

$ 1.1 million in costs were paid by December 28, 2025 and are recorded as "Deferred Offering Costs" in the financing activity section of our Consolidated Statement of Cash Flows.

13 SUBSEQUENT EVENT

On April 23, 2026, the Board of Directors appointed Nathan E.

Bekke as President and Chief Executive Officer of the Company and Joshua P.

Rinehults as Vice President, Chief Financial Officer and Treasurer.

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-Q

Item 1. Financial Statements