What changed in this filing

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Item 1A. Risk Factors

2026-04-08 compared with 2025-04-14 · 59 added, 33 removed, 221 unchanged (29% of the section changed)

9 unchanged sentences

Sustained declines in the per-student funding levels provided for in state and local budgets in the future could have a materially adverse impact on our business, financial condition, and results of operations as they have in the past.

In addition, public health emergencies such as epidemics or pandemics, geopolitical uncertainties, terrorist attacks, acts of war, natural disasters, increases in energy and other costs or combinations of such factors and other factors that are outside of our control could at any time have a significant effect on the economy, which in turn would affect government revenues and allocations of government spending.

control could at any time have a significant effect on the economy, which in turn would affect government revenues and allocations of government spending.

The occurrence of any of these or similar events in the future could cause demand for our products to decline or competitive pricing pressures to increase, any of which would likely adversely affect our business, operating results, cash flows and financial condition.

32 unchanged sentences

In fiscal 2026 and 2025, the cost of commodities was relatively stable.

In fiscal 2023, the cost of commodities was volatile, but the volatility dampened noticeably compared to fiscal 2022.

Any failure to obtain raw materials and components on a timely basis, or any significant delays or interruptions in the supply of raw materials, could prevent us from being able to manufacture and deliver products ordered by our customers in a timely fashion and increase our cost of obtaining raw materials and components in excess of our ability to pass along such costs to customers, any of which could have a negative impact on our reputation, sales and profitability.

18 unchanged sentences

Although Virco sells direct to hundreds of individual schools and school districts, these schools and school districts can purchase our products and services under several bids and contracts available to them.

Approximately 59% of Virco's sales in fiscal 2025 and 64% of Virco's sales in fiscal 2024 were priced under this nationwide contract/price list.

In November 2017, the Company was awarded a five-year contract extending through December 2022 along with two two-year extensions through 2026.

Approximately 65% of Virco's sales in 2026 and 59% of Virco's sales in fiscal 2025 were priced under this nationwide contract/price list.

In November 2017, the Company was awarded a five-year contract extending through December 2022 along with two two-year extensions through December 31, 2026.

If Virco were to lose its exclusive supplier status under this contract/price list, and other manufacturers were allowed to sell under this contract/price list, it could cause Virco's sales, or growth in sales, to decline.

10 unchanged sentences

Under our credit facility, substantially all of our accounts receivable is automatically and promptly swept to repay amounts outstanding under the credit facility upon our receipt.

Due to this automatic liquidating nature, if we breach any covenant, violate any representation or warranty or suffer any deterioration in our ability to borrow pursuant to the borrowing base calculation contained in the credit facility, we may not have access to cash liquidity unless provided by the lender at its discretion.

Due to this automatic liquidating nature, if we breach any covenant,

violate any representation or warranty or suffer any deterioration in our ability to borrow pursuant to the borrowing base calculation contained in the credit facility, we may not have access to cash liquidity unless provided by the lender at its discretion.

If the indebtedness under our credit facility were to be accelerated, we cannot be certain that we will have sufficient funds available to pay such indebtedness or that we will have the ability to refinance the accelerated indebtedness on terms favorable to us or at all.

4 unchanged sentences

If we breach any of our financial covenants without receiving a corresponding waiver or amendment, the Agent and Lender may accelerate our credit facility and impose default interest and other fees, any of which could have a material adverse effect on our financial condition and results of operations.

Health crisis events, such as epidemics or pandemics, have adversely impacted, and may continue to impact, the economy and disrupt our operations and supply chains, which may have an adverse effect on our results of operations.

Health crisis events, including epidemics or pandemics such as COVID-19,and the actions taken by various governments and third parties to combat such events, have caused significant disruptions in our product sales and marketing, manufacturing and distribution operations, and supply chains.

The resurgence of COVID-19 or its variants, as well as an outbreak of other widespread public health epidemics or pandemics, could cause new disruptions to our product sales, manufacturing and distribution operations, supply chains and demand for our products by our customers, which could adversely affect our business, financial condition, and results of operations.

Rising health care costs could adversely affect the Company’s business and financial results.

Health care costs have increased significantly over time and may continue to rise, resulting in higher employee benefit expenses for the Company.

Increases in the cost of providing health care and related benefits to employees could increase operating expenses and adversely affect the Company’s business, financial condition, and results of operations.

Natural disasters, public health crises, and other catastrophic or force majeure events could disrupt the Company’s production, supply chains, and broader economic conditions, adversely affecting its results of operations.

Natural disasters, global pandemics or epidemics, force majeure events, and other catastrophic events — including severe weather, military actions, terrorist attacks, power outages, floods, and fires — could disrupt the Company’s operations and impair its ability to manufacture or deliver products.

Certain of the Company’s production facilities are located in regions susceptible to severe weather and other natural hazards, which could adversely affect the Company’s business, financial condition, and results of operations.

Any temporary or permanent interruption in the Company’s ability to produce or deliver products could reduce revenues and materially adversely affect the Company’s business.

In addition, disruptions to the Company’s information technology systems, whether caused by catastrophic events or other factors, could impair the Company’s ability to receive and process customer orders, procure raw materials, and manufacture and ship products.

Such disruptions could harm customer relationships, result in lost sales, and negatively impact future demand for the Company’s products.

Our recent revenue growth may not be sustainable.

6 unchanged sentences

The price of commodities, raw materials and components, including steel and plastics, our largest raw material categories, have been volatile in prior years, and the cost, quality and availability of such commodities have been significantly affected in recent years by, among other things, changes in global supply and demand, changes in laws and regulations (including tariffs and duties), changes in exchange rates and worldwide price levels, natural disasters, public health issues, labor disputes, terrorism and political unrest or instability.

These factors could lead to further price increases or supply interruptions in the future.

These factors could lead to further price increases or supply chain interruptions in the future.

As discussed above, in the short term, rapid changes in raw material costs can be very difficult for us to offset with price increases because, in the case of many of our contracts, we have committed to selling prices for goods and services for periods of one year, and occasionally longer.

Our profit margins could be adversely affected if commodity, raw material, and component costs remain high or escalate further, and we are unable to pass along a portion of the higher costs to our customers.

In early 2025, there have been significant changes and proposed changes to U.S.

trade policies.

On April 2, 2025, President Trump announced new tariffs on foreign imported goods, including a baseline duty of 10% on foreign imports and additional tariffs on imports from China of an additional 34%.

also reinstated the steel import tariff to 25% effective March 12, 2025.

These tariffs are likely to result in increased prices for the Company’s imported components, steel and other material costs.

The Company has increased list prices for its products in fiscal 2025 and 2026 in an effort to recover anticipated increases in material costs.

The increase in cost of obtaining raw materials and components in excess of our ability to pass along such costs to customers, any of which could have a negative impact on our reputation, sales and profitability.

Total material costs for fiscal 2026, as a percentage of sales, could be higher than in fiscal 2025.

Both availability and volatility in cost were moderate in fiscal 2025 and 2024.

Beginning in 2025, the United States implemented and proposed significant changes to trade policies, including broad-based tariffs on imports from certain countries and product categories under the International Emergency Economic Powers Act ("IEEPA").

These actions included tariffs on imports from Canada, Mexico, and China, as well as higher tariffs on steel, aluminum, and certain manufactured goods, including furniture.

As a result, U.S.

tariff rates increased to their highest levels in decades.

Tariffs have also been used as a policy tool in trade negotiations and in connection with broader geopolitical objectives.

These tariffs are expected to increase the cost of imported components and materials during fiscal 2027.

Although the Company increased product prices in fiscal 2026 and 2027 to offset higher costs, it may not be able to fully pass through increases in raw materials, transportation, and energy, including steel and plastics.

On February 20, 2026, the U.S.

Supreme Court issued a ruling in Learning Resources, Inc.

Trump, striking down certain tariffs previously imposed under the IEEPA.

The ultimate availability, timing, and amount of any potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory, and administrative developments.

Following the Supreme Court's decision, the U.S.

implemented a 10% global tariff under Section 122 of the Trade Act of 1974, effective February 24, 2026, for a period of 150 days.

There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business.

We continue to monitor and evaluate these developments and asses their potential impact on our business, financial condition and results of operations.

We are affected by the cost of petroleum-based products and increases in petroleum prices could reduce our margins and profits.

The profitability of our operations is sensitive to the cost of fuel, which materially affects our transportation costs, the costs of petroleum-based materials (like plastics) and the costs of energy (including electricity and natural gas) used in operating our manufacturing facilities.

Ongoing conflict in the Middle East has contributed to volatility in crude oil and natural gas markets.

Because many plastic resins are petroleum- and natural gas-based, disruptions in these markets may reduce supply availability and increase material costs.

Energy price volatility may also increase transportation and logistics costs.

Petroleum prices have fluctuated significantly in recent years and could rise from current levels.

5 unchanged sentences

The occurrence of an international trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for products, costs, customers, suppliers, and the United States economy generally, which could have a material adverse effect on the Company’s business, operating results, and financial condition.

In early 2025, there have been significant changes and proposed changes to U.S.

trade policies, including new tariffs on foreign imported goods announced by President Trump on April 2, 2025.

Since early 2025, there have been significant changes and proposed changes to U.S.

trade policies, including new tariffs on foreign imported goods.

These tariffs are likely to result in increased prices for imported components and materials supplied locally.

1 unchanged sentence

The Company may be challenged in effectively increasing the prices of its products to offset these factors, and its business and results of operations may be adversely affected.

The tariffs that have been announced and the potential escalation thereof, including reciprocal tariffs, could adversely affect the ability of the Company to sell products into foreign markets, including Canada, and could adversely affect profitability.

FINANCING RISKS

4 unchanged sentences

Uncertainty in the credit markets may negatively impact our ability to obtain approval of our annual forecast, make changes in our forecast or renew our credit facility upon its maturity in 2027 on favorable terms or at all.

If we are unable to access or renew our credit facility on favorable terms (including available borrowing line and the rate of interest charged thereunder), or at all, or we are in violation of our financial covenants in the future and do not receive a waiver, our ability to fund our operations would be impaired, which would have a material adverse effect on our results of operations.

receive a waiver, our ability to fund our operations would be impaired, which would have a material adverse effect on our results of operations.

If management does not accurately forecast the Company's requirements for the peak summer season, the Company's results of operations could be adversely affected.

19 unchanged sentences

and (iii) increase our future contribution requirements.

Because the recent economic environment was characterized by historically low interest rates, we may be required to make additional cash contributions to the Employee Plan

and recognize further increases in our net pension cost to satisfy our funding requirements.

Because the recent economic environment was characterized by historically low interest rates, we may be required to make additional cash contributions to the Employee Plan and recognize further increases in our net pension cost to satisfy our funding requirements.

A significant decrease in investment returns or the market value of plan assets or a significant decrease in interest rates could increase our net periodic pension costs and adversely affect our results of operations.

30 unchanged sentences

We reserve amounts for such matters when expenditures are probable and reasonably estimable.

In addition to environmental laws and regulations affecting our manufacturing activities, the Company is subject to laws and regulations related to consumer product regulation.

The Company is subject to environmental laws and regulations affecting both our manufacturing activities and consumer product regulation.

The Company sells products that are subject to the Consumer Product Safety Improvement Act of 2008 and the California Air Resources Board rule and Toxic Control Substances Act rule, concerning formaldehyde emissions from composite wood products.

8 unchanged sentences

Virtue, including shares received in subsequent stock dividends, are subject to an agreement that restricts the sale or transfer of those shares.

Because of the share ownership and representation on the board and in management, the parties to the agreement have significant influence on affairs and actions of the Company, including matters requiring stockholder approval such as the election of directors and approval of significant corporate transactions.

Because of share ownership and representation on the board and in management, the parties to the agreement have significant influence over affairs and actions of the Company, including matters requiring stockholder approval such as the election of directors and approval of significant corporate transactions.

In addition, these transfer restrictions and concentration of ownership could have the effect of impeding an acquisition of the Company.

Our corporate documents and Delaware law contain provisions that could discourage, delay or prevent a change in control of our company.

Provisions in our certificate of incorporation and our amended and restated bylaws may discourage, delay or prevent a merger or acquisition involving us that our stockholders may consider favorable.

Provisions in our certificate of incorporation and our amended and restated bylaws may discourage, delay or prevent a merger or acquisition involving the Company that our stockholders may consider favorable.

For example, our certificate of incorporation currently provides for a staggered board of directors, whereby directors serve for three-year terms, with approximately one-third of the directors coming up for reelection each year.

Having a staggered board will make it more difficult for a third party to obtain control of our board of directors through a proxy contest, which may be a necessary step in an acquisition of us that is not favored by our board of directors.

In addition, provisions in our certificate of incorporation require the affirmative vote of the holders of at least 75% of our outstanding shares for any business combination with a shareholder who beneficially holds, directly or indirectly, 5% or more of our outstanding stock, except where such transaction is approved by the Board of Directors of the Company prior to the acquisition of the 5% ownership position.

12 unchanged sentences

The success of our operations is highly dependent upon our ability to attract and retain qualified employees and upon the ability of our senior management and other key employees to implement our business strategy.

We believe there are only a limited

number of qualified executives in the industry in which we compete.

We believe there are only a limited number of qualified executives in the industry in which we compete.

The loss of the services of key members of our management team could seriously harm our efforts to successfully implement our business strategy.

Failure in our information technology and storage systems or cybersecurity incidents could adversely affect our business.

Failures, disruptions, or security incidents affecting the Company’s information technology systems could adversely affect operations, harm its reputation, and expose it to legal liability.

Our ability to execute our business plan and maintain operations depends on the continued and uninterrupted performance of our information technology systems.

These systems are vulnerable to risks and damages from a variety of sources, including telecommunications or network failures, malicious human acts, and natural disasters.

Some of these systems are dependent on services provided by third parties.

Moreover, despite network security and backup measures, some of our computer servers and those of our vendors are potentially vulnerable to physical or electronic break-ins, including cyberattacks, ransomware attacks, computer viruses and similar disruptive problems.

Insider or employee cyber and security threats are also of concern and are considered by the Company.

These events could lead to the unauthorized access, disclosure and use of non-public information and disruption of our accounting, sales and purchasing systems and overall operations.

Cybersecurity incidents or other unauthorized access to systems may result in disruption to our operations, corruption or theft of critical data, confidential information, or intellectual property.

As reliance on technology continues to grow and more business activities have shifted online, the risk associated with any cybersecurity incidents have grown.

While we and our third-party vendors have implemented security systems and infrastructure to prevent, detect and/or mitigate the risk of unauthorized access to technology systems or platforms, there can be no assurance that these measures will be effective.

The techniques used by criminal elements to attack computer systems are sophisticated, change frequently and may originate from less regulated and remote areas of the world.

As reliance on technology continues to grow and more business activities have shifted online, the risk associated with cybersecurity incidents has grown.

The techniques used by criminal elements to attack computer systems are increasing in frequency, sophistication, and unpredictability, change frequently and may originate from

less regulated and remote areas of the world.

As a result, we may not be able to address these techniques proactively or implement adequate preventative measures.

The Company has put in place security measures and disaster recovery plans to protect its critical systems from cyber-based attacks.

These measures are designed to protect the data of the Company and its customers and to prevent data loss and other security incidents.

While we and our third-party vendors have implemented measures to prevent, detect and/or mitigate the risk of unauthorized access to technology systems or platforms, there can be no assurance that these measures will be effective.

If any of our computer systems are compromised, our business could be interrupted and we could be subject to fines, damages, litigation and enforcement actions and we could lose trade secrets, the occurrence of which could harm our business.

1 unchanged sentence

Additional capital investments or expenditures may also be required to remediate any problems, infringements, misappropriations, or other third-party claims.

The adoption of artificial intelligence (“AI”) in educational environments may alter learning patterns and purchasing needs, which could reduce order volume and adversely affect the Company’s business and financial results.

As organizations evaluate and deploy artificial intelligence technologies, customers may begin to change or adapt educational needs and their approach to educational design and FF&E procurement.

The impact of AI in our industry is unknown, and there can be no assurance that AI will benefit our business or profitability.

Further, our competitors may develop AI technologies to improve procurement processes and potentially improve order fulfillment accuracy, lead times for developing quotes, and coordination with partners.

The Company's business may be adversely affected if it is unable to utilize AI to increase efficiency and reduce costs.

Any failure by us to comply with a variety of privacy and consumer protection laws may harm us.

20 unchanged sentences

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 1A. Risk Factors