cbdMD, Inc.

Company Overview

Business Model: cbdMD, Inc. is a consumer wellness company focused on the development, manufacturing, marketing, and sale of supplement brands powered by natural compounds. The majority of its products are anchored by hemp-derived cannabinoids, including broad-spectrum and full-spectrum CBD formulations, and hemp-derived Delta-9 THC products where permitted by law. The Company also offers a range of functional products designed to address wellness needs such as sleep, recovery, mood, discomfort, mobility, cognitive function, and stress management. cbdMD, Inc. operates a multi-brand portfolio including its flagship cbdMD® line, the pet-wellness brand Paw CBD®, the ATRX® platform for non-cannabinoid functional ingredients, and the Herbal Oasis brand for THC-infused social seltzers. Products are distributed through direct-to-consumer e-commerce platforms, online marketplaces, wholesale distribution to national and regional retailers, specialty health and pet channels, and emerging international markets.

Market Position: cbdMD, Inc. positions itself as an industry leader in producing and distributing hemp-derived cannabinoid products. The broader hemp-derived cannabinoid market is highly fragmented, with over 2,000 brands and no clear dominant player in the U.S. The Company differentiates itself by focusing on specific functional formulas to address consumer need states. It faces significant competitive pressure in the fast-growing functional mushroom and CBD beverage segments, as well as from synthetic cannabinoid compounds (e.g., delta-8, delta-10, HHC) that lack extensive market history or safety data. The Company anticipates that potential changes in federal law may reduce competition by impacting smaller, less capitalized, or non-compliant competitors.

Recent Strategic Developments: During fiscal year 2025, management focused on achieving positive earnings through product portfolio optimization, cost structure rationalization, and revenue growth, alongside simplifying its capital structure. The Company essentially maintained its revenue base and reduced its GAAP operating loss from $3.3 million in fiscal 2024 to $2.1 million in fiscal 2025. In April 2025, cbdMD, Inc. successfully converted its Series A Convertible Preferred Stock and outstanding accrued preferred dividends into approximately 91% of the Company’s outstanding common stock, which was critical for regaining compliance with NYSE American continued listing standards. The fourth fiscal quarter of 2025 showed sequential and year-over-year revenue increases, with the Herbal Oasis brand continuing to grow quarterly by adding distributors and improving retail sell-through across the Southeast and other states. In early fiscal 2026, cbdMD, Inc. implemented changes to reduce certain Herbal Oasis brand overhead expenses and add sales staff, beginning to see benefits of scale. The Company also identified nearly $200,000 in corporate overhead savings to be implemented in early 2026.

Geographic Footprint: cbdMD, Inc. primarily operates in the United States, sourcing hemp from U.S.-grown cultivation programs and maintaining its executive offices and warehouse in Charlotte, North Carolina. Its distribution network covers direct-to-consumer e-commerce, national and regional retailers, and specialty health and pet channels across the U.S. Internationally, the Company is exploring expansion, having secured trademarks for cbdMD and Paw CBD in countries including Chile, Costa Rica, Argentina, Peru, Ecuador, the European Union, the United Kingdom, Czech Republic, New Zealand, Columbia, Australia, and Switzerland. It is also prosecuting trademarks in Brazil, Canada, China, Spain, Mexico, Norway, and South Africa, and has obtained or is in the process of securing sanitary registrations in several Latin American countries.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 62.4% (FY2025), 61.6% (FY2024)
• Operating Margin: -11.26% (FY2025), -17.02% (FY2024)
• Net Margin: -10.63% (FY2025), -18.99% (FY2024)

Investment in Growth:

• R&D Expenditure: $33,856 (0.18% of revenue) in FY2025, $39,021 (0.20% of revenue) in FY2024.
• Capital Expenditures: $184,172 (FY2025), $190,015 (FY2024) for property and equipment.
• Strategic Investments: The Company maintains an equity investment of $700,000 in Steady State, LLC, with no further impairment deemed necessary as of September 30, 2025. In August 2024, cbdMD, Inc. acquired the "CBD MD" trademark from Majik Medicine, LLC, for an initial payment of $100,000, four additional annual payments of $50,000, and the issuance of 9,375 shares of common stock, with an additional 6,250 shares issued in August 2025.

Business Segment Analysis

cbdMD, Inc. operates as a single reportable segment, with financial information reviewed on a consolidated basis by the Chief Executive Officer. However, the Company provides disaggregated revenue by sales channel and specific brand performance.

E-commerce Sales

Financial Performance:

• Revenue: $14,713,380 (FY2025), a decrease of 6.0% year-over-year from $15,655,337 (FY2024).
• Key Growth Drivers: Experienced continued growth in new e-commerce customers during fiscal 2025. Sales are stabilizing, with a focus on building stronger acquisition funnels and improving customer lifetime value in the fourth quarter of fiscal 2025.

Product Portfolio:

• Products are sold through the Company's various websites, including www.cbdmd.com, www.pawcbd.com, www.atrxlabs.com, www.herbaloasis.com, and www.directcbdonline.com.

Market Dynamics:

• Primarily direct-to-consumer, impacted by changes in social media algorithms and iOS updates affecting marketing effectiveness and customer acquisition costs.

Wholesale Sales

Financial Performance:

• Revenue: $4,477,088 (FY2025), an increase of 17.0% year-over-year from $3,826,830 (FY2024).
• Key Growth Drivers: Growth is attributed to strong efforts from the sales team and the addition of the Herbal Oasis distribution network. Wholesale continues to expand with additional growth from international distributors.

Product Portfolio:

• The Company employs an inside sales team focused on B2B niche specialty retailers and wholesale distributors, including international partners. A separate team is dedicated to building relationships with beverage distributors and mass retailers for the Herbal Oasis ready-to-drink ("RTD") beverages.

Market Dynamics:

• Aims to expand the reach of cbdMD products and brand recognition in physical retail locations.

Paw CBD Brand

Financial Performance:

• Revenue: $1.1 million (FY2025), a decrease of 21.4% year-over-year from $1.4 million (FY2024).
• Key Growth Drivers: The decline is due to increasing competition in the pet product industry and a rationalization of marketing efforts specific to the brand.

ATRX® Platform

Product Portfolio:

• Offers emerging and novel non-cannabinoid functional ingredients, such as functional mushrooms.
• Supports future expansion into performance-driven nutraceutical and nootropic categories using synergistic ingredient combinations.
• Launched in GNC and Amazon during fiscal 2024.

Herbal Oasis Brand

Product Portfolio:

• A premium hemp-derived THC-infused social seltzer that combines cannabinoids and nootropic mushrooms for a fast-acting, functional beverage.
• Launched in early fiscal 2025, following the Mixer line introduced in fiscal 2024.

Market Dynamics:

• Operates in the fast-growing CBD beverage market segment.
• Available in multiple states, including Texas, Alabama, Georgia, Florida, North Carolina, and Tennessee.
• While an earnings drag in fiscal 2025 due to scaling investments, the brand is experiencing quarterly growth in revenue, distribution, and retail sell-through.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: Not disclosed.
• Dividend Payments:
  • Common Stock: cbdMD, Inc. does not currently intend to pay dividends on its common stock.
  • Series B Convertible Preferred Stock: Accrues dividends at a rate of 10% per annum, payable quarterly in shares of common stock (subject to Equity Conditions) or in cash. If North Carolina law prohibits cash dividends, the Stated Value is increased.
  • Series C Convertible Preferred Stock (subsequent event): Accrues dividends at a rate of 10% per annum, payable quarterly in shares of common stock (subject to Equity Conditions) or in cash. If North Carolina law prohibits cash dividends, the Stated Value is increased.
• Dividend Yield: Not disclosed.
• Future Capital Return Commitments: Not explicitly disclosed beyond preferred dividends.

Balance Sheet Position:

• Cash and Equivalents: $2,261,242 (September 30, 2025), $2,452,553 (September 30, 2024).
• Total Debt: Convertible notes, at fair value, were $0 as of September 30, 2025, having been fully converted during fiscal 2025. This compares to $1,171,308 as of September 30, 2024.
• Net Cash Position: Not explicitly disclosed.
• Credit Rating: Not disclosed.
• Debt Maturity Profile: Convertible Promissory Notes issued in January 2024 (aggregate principal $1.7 million) matured on July 30, 2025, and were fully converted during fiscal 2025.

Cash Flow Generation:

• Operating Cash Flow: $(1,452,375) (cash used by operating activities) in FY2025, compared to $(352,792) (cash used by operating activities) in FY2024.
• Free Cash Flow: Not explicitly disclosed.
• Cash Conversion Metrics: Not explicitly disclosed.

Operational Excellence

Production & Service Model: cbdMD, Inc. employs a hybrid manufacturing model that combines internal specification design and oversight with both in-house manufacturing and the use of experienced third-party contract manufacturers. This approach provides production flexibility, aligns with evolving regulatory expectations, and allows for efficient scaling. All hemp-derived cannabinoids are sourced from U.S.-grown hemp cultivated under federal and state programs. Suppliers are evaluated for Good Manufacturing Practice ("GMP") compliance, traceability, contaminant controls, and cannabinoid profile consistency. All raw materials undergo comprehensive testing for potency, residual solvents, pesticides, microbials, mycotoxins, and heavy metals. Contract manufacturing partners operate under GMP-aligned procedures, including strict documentation, validated processes, and batch-level traceability, performing blending, homogenization, encapsulation, filling, packaging, and stability testing across various product formats. Finished goods are subjected to multiple levels of testing by ISO-17025 accredited laboratories to confirm cannabinoid content, purity, and compliance with the 0.3% Delta-9 THC limit.

Supply Chain Architecture: Key Suppliers & Partners:

• Hemp Producers: U.S.-based cultivators operating under federal and state hemp programs.
• Contract Manufacturers: Third-party partners for various production stages, governed by master manufacturing agreements and quality assurance agreements.
• Testing Laboratories: ISO-17025 accredited laboratories for raw material and finished goods testing.

Facility Network:

• Manufacturing: Utilizes a hybrid model with both in-house capabilities and third-party contract manufacturers.
• Warehousing & Fulfillment: An 80,000-square-foot GMP-aligned facility in Charlotte, North Carolina, manages incoming components, packaging, finished goods storage, and order fulfillment. This facility maintains environmental controls, FEFO-based inventory rotation, product-level traceability, and documented recall protocols, supporting high-volume direct-to-consumer shipments and large retail distribution orders.
• Research & Development: Conducted through cbdMD Therapeutics, the Company's scientific and clinical research arm.

Operational Metrics:

• Cost of sales as a percentage of net sales was 37% in fiscal 2025, an improvement from 38% in fiscal 2024, reflecting a $0.6 million one-time non-cash inventory write-down in fiscal 2024. Gross margins in fiscal 2025 were impacted by lower overhead absorption due to lower revenue, ongoing product mix changes from high-margin tinctures to gummies, functional products, and beverages, and higher lease costs for the warehouse facility.
• Inventory write-downs of $365,979 in fiscal 2025 and $921,314 in fiscal 2024 were primarily related to obsolete and expired stock keeping units ("SKUs"), as the Company works to streamline its offerings to higher velocity products.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Primarily through online sales channels via its websites: www.cbdmd.com, www.pawcbd.com, www.atrxlabs.com, www.herbaloasis.com, and www.directcbdonline.com. An internal sales team focuses on B2B niche specialty retailers and wholesale distributors, including international partners.
• Channel Partners: Products are sold through a network of wholesalers and retailers, encompassing both brick-and-mortar locations and their online platforms.
• Digital Platforms: E-commerce websites serve as a primary sales channel, with marketing efforts including social media engagement, podcasts, digital and television advertising, affiliate marketing, search engine optimization, and influencer endorsements.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: Includes national and regional retailers.
• Strategic Partnerships: Collaborates with retail partners on marketing efforts to enhance shelf velocity.
• Customer Concentration: No single customer represented a significant amount of the Company's sales for the fiscal years ended September 30, 2025, and 2024.

Geographic Revenue Distribution:

• E-commerce Sales: Accounted for 76.7% of total net sales in fiscal 2025.
• Wholesale Sales: Accounted for 23.3% of total net sales in fiscal 2025.
• Growth Markets: The Company is pursuing international expansion, evidenced by secured trademarks in various countries across Europe, Latin America, and Oceania, and ongoing trademark prosecution in other global markets. It is also obtaining sanitary registrations in Central and South American countries to facilitate distribution.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The dietary supplement market is characterized by high competition and frequent entry of new products and brands. The hemp-derived cannabinoid market remains fragmented, with over 2,000 brands in the U.S. and no clear dominant brand. Functional mushrooms and CBD beverages are identified as fast-growing segments within the broader dietary supplement and CBD markets, respectively, and face significant competitive pressure. The regulatory environment for hemp-derived cannabinoids is dynamic, multi-layered, and complex, influenced by federal, state, and international frameworks. Recent federal legislative actions, such as H.R. 5371, could significantly impact the industry by limiting THC content, potentially reducing competition by forcing smaller, poorly capitalized, or non-compliant competitors to cease operations.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: The hemp-derived cannabinoid market includes over 2,000 brands, comprising a mix of public and private companies operating through e-commerce, wholesale, and brick-and-mortar retail channels. Emerging Competitive Threats: The Company faces competition from synthetic compounds such as delta-8, delta-10, and HHC, which have gained market share despite lacking long market history or safety data. New entrants and disruptive technologies in the functional mushroom and CBD beverage segments also pose competitive threats. Competitive Response Strategy: cbdMD, Inc.'s strategy includes continuous product innovation to offer new and compelling dietary supplements and functional products, expanding revenue channels domestically and internationally, cultivating additional brands like ATRX and Herbal Oasis, and evaluating strategic acquisitions. The Company aims to differentiate itself through specific functional formulas and by educating consumers, retailers, and regulators on its scientific rigor, safety, and clinical efficacy.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The Company has experienced consecutive fiscal years of revenue declines, with net sales decreasing to $19.2 million in fiscal 2025 from $19.5 million in fiscal 2024. This is attributed to broader CBD category softness, macro inflationary pressures, lower marketing spend, changes in social algorithms and iOS affecting marketing effectiveness, limited access to certain channels, an ongoing competitive environment, and negative statements from the FDA impacting retailer interest. Technology Disruption: The Company faces risks related to its ability to adapt to evolving challenges in sourcing, logistics, recruiting, maintaining internal controls, marketing, designing innovative products, and meeting consumer needs, which could erode brand strength or harm product quality. Customer Concentration: Not identified as a material risk, as no single customer accounted for a significant portion of sales.

Operational & Execution Risks

Supply Chain Vulnerabilities: The Company relies on third parties for raw materials and manufacturing, operating under short-term supply and manufacturing agreements. There is a risk that replacements for these vendors may not be available on acceptable terms or that manufacturers may not allocate sufficient capacity, leading to production delays, interruptions, or increased costs. Geographic Concentration: While hemp is U.S.-grown, international expansion introduces risks associated with compliance with foreign laws, increased shipping and distribution costs, and economic or political instability in foreign markets. Capacity Constraints: The Company may face challenges in expanding existing or finding new sources for raw materials and manufacturing capacity to meet demand. Inventory Management: Products have a limited shelf life, and there is a risk that inventory may expire prior to sale, necessitating write-downs, which negatively impacts financial results. Inventory write-downs of $365,979 and $921,314 were recorded in fiscal 2025 and 2024, respectively, primarily due to obsolete and expired SKUs.

Financial & Regulatory Risks

Market & Financial Risks: cbdMD, Inc. has a history of operating losses, reporting a $2.1 million loss in fiscal 2025 and a $3.3 million loss in fiscal 2024, resulting in an accumulated deficit of approximately $179 million as of September 30, 2025. The Company's working capital of $3.1 million at September 30, 2025, may not be sufficient to support daily operations for the subsequent twelve months, raising substantial doubt about its ability to continue as a going concern. The Company's ability to continue is dependent on improving profitability, cash flow, and securing additional funding. The Series B Convertible Preferred Stock ranks senior to common stock in liquidation, and its change of control rights may deter acquisition proposals. Regulatory & Compliance Risks: The regulatory environment for hemp-derived cannabinoids is dynamic and complex. - Federal Laws: The FDA asserts that CBD cannot be lawfully marketed as a dietary supplement or added to human food, citing prior drug investigation, and has issued warning letters for unapproved drug claims, mislabeling, and inadequate testing. H.R. 5371, signed into law in November 2025, limits THC content to 0.4mg per container for hemp-derived consumable products nationally starting November 12, 2026. This poses a significant threat, potentially impacting 40-45% of the Company's revenue derived from full spectrum SKUs, unless mitigated by further legislation like the proposed Cannabinoid Safety and Regulation Act (CSRA). - FTC Regulation: The FTC actively regulates advertising and marketing, requiring competent and reliable scientific evidence for health claims, with potential for significant penalties for non-compliance. - State and Local Laws: The highly fragmented state-level regulatory environment for hemp-derived products necessitates ongoing reformulation, labeling adjustments, packaging updates, and market-specific strategies, as certain products may not be legal for sale in particular states. - International Compliance: International expansion requires adherence to varied regulatory landscapes, such as Novel Foods authorization in the UK and EU, and sanitary registrations in Latin America. - Product Liability: Consumers of the Company's products may test positive for THC due to trace amounts, potentially leading to reputational damage, litigation, or regulatory challenges. Legal Proceedings: The Company is a defendant in a purported collective and class action lawsuit (Cynthia Davis v. cbdMD, Inc.) filed in December 2019, alleging violations of California's Unfair Competition Law, False Advertising Law, Consumer Legal Remedies Act, and breach of warranties. The case has been stayed since March 2021, pending definitive regulatory action on CBD by the FDA or Congress.

Geopolitical & External Risks

Geopolitical Exposure: International expansion exposes the Company to risks from economic weakness or political instability in foreign economies and markets. Trade Relations: The imposition of tariffs on imported packaging materials could increase costs, reduce profit margins, and disrupt the supply chain. Sanctions & Export Controls: Compliance with anti-bribery, anti-corruption, and anti-money laundering laws (e.g., FCPA, Bribery Act, OFAC regulations) is critical for international operations.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas: cbdMD, Inc.'s research and development activities, primarily conducted through cbdMD Therapeutics, focus on understanding the safety and efficacy of its formulations. This includes controlled human and companion-animal clinical trials, biomarker and biometric studies, and toxicology evaluations. The innovation pipeline includes proprietary formulations designed for sleep, stress, pain, inflammation reduction, recovery, mood, and mobility. The Company also focuses on novel ingredient combinations that integrate cannabinoids with other clinically supported functional compounds, such as functional mushrooms in its ATRX and Herbal Oasis brands. Innovation Pipeline: The Company continually evaluates new delivery systems, including improved edible formats, beverages, and bioavailability-enhancing technologies, to expand consumer access to safe and effective cannabinoid and other wellness products. Published Findings: Completed randomized, double-blind, placebo-controlled human studies have indicated improvements in pain, inflammation, mood, and general well-being. Veterinary trials have shown mobility and gait improvements in dogs with osteoarthritis. A biometric sleep study conducted with WHOOP confirmed measurable improvements in sleep performance. These findings are used to refine formulations, substantiate claims, inform patent applications, and generate regulatory dossiers.

Intellectual Property Portfolio:

• Patent Strategy: The Company has a pending U.S. Patent Application No.: 17/359,193, which is currently under examination and seeks to protect certain cannabinoid-based formulations developed through its clinical research program, particularly for the treatment of mood and sleep disorders.
• Trademark Strategy: cbdMD, Inc. maintains an extensive trademark portfolio covering its key brands, including cbdMD®, Paw CBD®, ATRX®, DIRECT CBD ONLINE, CBD MD, and hempMD, in the United States and internationally. It has secured marks in numerous countries and is actively prosecuting others.
• Trade Secrets: The Company relies on trade secrets and proprietary processes, including formulation techniques, cannabinoid ratios, clinical methodologies, and data analytics, protected by confidentiality agreements and controlled access systems.
• IP Litigation: A trademark cancellation proceeding against Majik Medicine, LLC regarding the "CBD MD" trademark was settled in August 2024, resulting in the acquisition of the trademark by cbdMD, Inc.

Technology Partnerships:

• Strategic Alliances: The Company collaborates with partners like WHOOP for biometric studies to validate product efficacy.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: T. Ronan Kennedy's Executive Employment Agreement as Chief Executive Officer and Chief Financial Officer commenced on November 28, 2025, for a three-year term, with options for additional one-year extensions. The Board of Directors approved the 2025 Equity Compensation Plan on November 28, 2025, to attract, retain, and motivate highly qualified personnel.

Board Composition: The Board of Directors includes Scott Stephen (Chairman), Bakari Sellers, William Raines III, Sibyl Swift, PhD, Kevin Roe, and Jeffery Porter. The board actively oversees the Company’s cybersecurity risk management, receiving regular updates from senior management on strategy, potential risks, and incidents.

Human Capital Strategy

Workforce Composition:

• Total Employees: As of December 1, 2025, cbdMD, Inc. had approximately 42 full-time employees, supplemented by additional contractors.
• Geographic Distribution: The primary operational base for employees is Charlotte, North Carolina, where the executive offices and warehouse are located.
• Skill Mix: The Company believes its success depends on attracting, developing, and retaining key personnel whose skills, experience, and industry knowledge significantly benefit operations and performance.

Talent Management: Acquisition & Retention: The Company's strategy emphasizes attracting, developing, and retaining key personnel. It employs additional contractors to support organizational efforts. Diversity & Development: Not explicitly disclosed. Culture & Engagement: Management acknowledges that the corporate culture could be harmed if the Company fails to adapt to evolving challenges in managing its business.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations: The Company operates within a dynamic, multi-layered, and complex regulatory environment for hemp-derived cannabinoids, encompassing federal, state, and international frameworks.

• Federal: The 2018 Farm Bill established a 0.3% Delta-9 THC limit for hemp. However, the U.S. Food and Drug Administration ("FDA") continues to assert that CBD cannot be lawfully marketed as a dietary supplement or added to human food due to its prior investigation as an approved drug. The FDA has issued warning letters for unapproved drug claims, mislabeling, inadequate testing, and non-compliant animal products. A significant federal development is H.R. 5371, signed into law on November 12, 2025, which limits THC content to 0.4mg per container for hemp-derived consumable products nationally, effective November 12, 2026. This poses a significant threat, potentially impacting 40-45% of the Company's revenue from full spectrum SKUs, unless further legislation, such as the proposed Cannabinoid Safety and Regulation Act ("CSRA"), is enacted. The Federal Trade Commission ("FTC") regulates advertising and marketing, requiring competent and reliable scientific evidence for all claims. The U.S. Department of Agriculture ("USDA") regulates hemp cultivation, ensuring raw materials originate from legal sources. The Drug Enforcement Administration ("DEA") retains jurisdiction over controlled substances and expresses concerns about synthetic and semi-synthetic cannabinoids.
• State Level: The regulatory environment is highly fragmented, with states adopting diverse definitions, potency limits, serving sizes, packaging and labeling requirements, testing mandates, age restrictions, and sales channel limitations. This necessitates ongoing product reformulation, labeling adjustments, packaging updates, and market-specific strategies.
• International Compliance: International operations require navigating varied regulatory landscapes, including Novel Foods authorization in the United Kingdom and the European Union (for which cbdMD, Inc. has submitted a dossier) and obtaining sanitary registrations or import permits in Latin American countries.

Trade & Export Controls: The Company's international activities require compliance with anti-bribery, anti-corruption, and anti-money laundering laws, such as the FCPA, the Bribery Act, and OFAC regulations. Tariffs on imported packaging materials could increase costs and negatively affect the business.

Legal Proceedings: cbdMD, Inc. is a defendant in a purported collective and class action lawsuit (Cynthia Davis v. cbdMD, Inc.) filed in December 2019 in California, alleging violations of consumer protection laws and breach of warranties. The case has been stayed since March 2021, pending definitive regulatory action on CBD by the FDA or Congress, and is expected to be dismissed eventually. No other material legal proceedings are currently disclosed.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 0.0% for both fiscal years ended September 30, 2025, and 2024. This is primarily due to the Company recognizing a full valuation allowance against its net deferred tax assets, given the uncertainty of their realization.
• Geographic Tax Planning: The Company files income tax returns in the United States and various state jurisdictions.
• Tax Reform Impact: Under Internal Revenue Code ("IRC") Section 382, prior changes in ownership during fiscal years 2017 and 2015 limited the use of net operating loss ("NOL") carryforwards, resulting in approximately $2.1 million of NOLs expiring before utilization.
• Net Operating Loss Carryforwards: As of September 30, 2025, the Company has utilizable federal NOL carryforwards of approximately $69.1 million, which will carry forward indefinitely.
• Tax Positions: Management has concluded that as of September 30, 2025, and 2024, there were no uncertain tax positions requiring recognition of a liability or disclosure in the consolidated financial statements.