Galaxy Gaming, Inc.

Previous wording

The following is a discussion and analysis of our financial condition, results of operations and liquidity and capital resources as of and for the three and six months ended June 30, 2026 and 2025. This discussion should be read together with our audited consolidated financial statements and related notes included in Item 8. Financial Statements and Supplementary Financial Information included in our 2025 Form 10-K. Some of the information contained in this discussion includes forward-looking statements that involve risks and uncertainties; therefore our "Special Note Regarding Forward-Looking Statements" should be reviewed for a discussion of important factors that could cause actual results to differ materially from the results described in, or implied by, such forward-looking statements.

Current wording

The following is a discussion and analysis of our financial condition, results of operations and liquidity and capital resources as of and for the three and nine months ended September 30, 2026 and 2025. This discussion should be read together with our audited consolidated financial statements and related notes included in Item 8. Financial Statements and Supplementary Financial Information included in our 2025 Form 10-K. Some of the information contained in this discussion includes forward-looking statements that involve risks and uncertainties; therefore our "Special Note Regarding Forward-Looking Statements" should be reviewed for a discussion of important factors that could cause actual results to differ materially from the results described in, or implied by, such forward-looking statements.

Previous wording

Agreement and Plan of Merger with Evolution

Current wording

Termination of Agreement and Plan of Merger with Evolution

Previous wording

On July 18, 2024, we entered into the Merger Agreement providing for the Company’s acquisition by Evolution Malta Holding Limited in a cash transaction. Evolution failed to either waive or meet the conditions to close the Merger on or before the Extended Outside Date of July 17, 2026. On July 21, 2026, Evolution notified us that Evolution terminated the Merger Agreement. Under the terms of the Merger Agreement, Evolution paid us a cash termination fee in the amount of $5,234,678.

Current wording

On July 18, 2024, we entered into the Merger Agreement providing for the Company’s acquisition by Evolution Malta Holding Limited. On July 21, 2026, Evolution notified us that Evolution terminated the Merger Agreement. Under the terms of the Merger Agreement, Evolution paid us a cash termination fee in the amount of $5,234,678.

Previous wording

Recurring core license revenue increased by $319,613, or 6.2% for the three months ended June 30, 2026, as compared to the same period in the prior year. Recurring core license revenue grew across all geographies, led slightly by Europe, Middle East and Africa on higher participation-based game revenue, and GOS progressive system placements contributed in all regions. Royalties netted against gross core revenue were relatively flat, increasing by $7,464, or 1.0% for the three months ended June 30, 2026, as compared to the same period in the prior year. Perpetual license sales of our progressive gaming systems was $51,182, representing an 80.0% decrease for the three months ended June 30, 2026, as compared to the same period in the prior year. This decline was primarily driven by the timing of customer purchases. Gross digital revenues of $4,355,037, increased by $334,048, or 8.3% for the three months ended June 30, 2026, as compared to the same period in the prior year. This favorable growth reflects the ongoing expansion of our digital content into new markets and the continued success of our competitive, branded product offerings. Net of royalties, digital revenues increased by $303,289, representing growth of 10.7% for the three months ended June 30, 2026, as compared to the same period in the prior year.

Current wording

Recurring core license revenue increased by $522,768, or 10.1%, for the three months ended September 30, 2026, as compared to the same period in the prior year. Recurring core license revenue growth was driven by new game placements in the U.S. and higher participation-based revenue in foreign jurisdictions, largely fueled by continued momentum from the GOS Progressive System and the MONOPOLY®-branded progressive systems launched earlier this year. Royalties netted against gross core revenue were relatively flat, increasing by $14,742, or 2.0%, for the three months ended September 30, 2026, as compared to the same period in the prior year. Perpetual license sales of our progressive gaming systems was $11,570, representing an 83.2% decrease for the three months ended September 30, 2026, as compared to the same period in the prior year. This decline reflects the deprioritization of such transactions and the timing of individual system sales.

Previous wording

Cost of ancillary products and assembled component expense decreased by $106,008, or 56.4% for the three months ended June 30, 2026, as compared to the same period in the prior year. The activity in cost of ancillary products and assembled components reflects the component costs associated with the perpetual license sales of our progressive gaming systems.

Current wording

Cost of ancillary products and assembled component expense decreased by $177,825, or 73.7%, for the three months ended September 30, 2026, as compared to the same period in the prior year. The activity in cost of ancillary products and assembled components reflects the component costs associated with the decrease in perpetual license sales of our progressive gaming systems.

Previous wording

Selling, general and administrative expenses increased by $673,207, or 7.9% for the six months ended June 30, 2026, as compared to the same period in the prior year. The increase includes $505,361 of state tax expense recorded in connection with the preliminary results of a managed audit that the Company voluntarily initiated, largely relating to sales and use tax not charged to customers, substantially all of which is attributable to periods prior to 2026 (see Note 6, Commitments and Contingencies), and $287,511 of professional fees and transaction-related costs, primarily related to the proposed acquisition of the Company by Evolution, which was terminated on July 21, 2026. Excluding these items and comparable costs of $451,955 in the prior-year period, selling, general and administrative expenses increased by $332,290, driven by higher distributor costs on increased placements of land-based products in foreign jurisdictions and higher royalty fees on licensed content.

Current wording

Selling, general and administrative expenses increased by $1,832,965, or 45.6%, for the three months ended September 30, 2026, as compared to the same period in the prior year. The increase includes $186,265 of state tax expense driven by managed audits and voluntary disclosures across multiple jurisdictions that the Company self-initiated, largely relating to sales and use tax not charged to customers, substantially all of which is attributable to periods prior to 2026 (see Note 6, Commitments and Contingencies), and $1,194,419 of professional fees and transaction-related costs, primarily related to the termination of the Merger Agreement with Evolution, which was terminated on July 21, 2026. Excluding these items and comparable costs of $310,778 in the prior-year period, selling, general and administrative expenses increased by $763,059, or 20.6%, primarily driven by the timing of $316,736 of G2E trade show expenses, which were incurred in the third quarter of 2026 compared with the fourth quarter of 2025, and higher incentive compensation accruals compared with a reduced accrual level in the prior-year period, and to a lesser extent, higher distributor costs associated with increased placements of land-based products and higher royalty fees on licensed content.

Previous wording

Research and development expenses decreased by $325,327, or 53.7% for the six months ended June 30, 2026, as compared to the same period in the prior year. This decrease was primarily driven by lower payroll costs resulting from reduced headcount and increased capitalization of internal labor costs associated with development activities.

Current wording

Research and development expenses decreased by $13,834, or 6.0%, for the three months ended September 30, 2026, as compared to the same period in the prior year. This decrease was primarily attributable to reduced use of third-party research and development services.

Previous wording

Depreciation and amortization increased by $223,441, or 14.3% for the six months ended June 30, 2026, as compared to the same period in the prior year. This increase was primarily driven by depreciation expense associated with incremental placements of assets deployed at client locations.

Current wording

Depreciation and amortization increased by $89,734, or 11.1%, for the three months ended September 30, 2026, as compared to the same period in the prior year. This increase was primarily driven by depreciation expense associated with incremental placements of assets deployed at client locations, partially offset by lower amortization expense as certain intangible assets became fully amortized.

Previous wording

Interest expense decreased by $93,115, or 10.3% for the three months ended June 30, 2026, as compared to the same period in the prior year. The decrease was driven by a reduced principal balance of outstanding debt and a lower average interest rate, for the three months ended June 30, 2026, as compared to the same period in the prior year. Interest income decreased by $15,444, or 97.3% compared to the prior year period.

Current wording

Interest expense decreased by $142,557, or 16.3%, for the three months ended September 30, 2026, as compared to the same period in the prior year. The decrease was driven by a lower average interest rate and a reduced principal balance of outstanding debt for the three months ended September 30, 2026, as compared to the same period in the prior year. Interest income increased by $12,271, or 256.2%, compared to the prior year period.

Previous wording

Income tax provision decreased to $94,900 for the six months ended June 30, 2026, compared to income tax provision of $130,333 for the comparable prior year period. The decrease was primarily attributable to changes in pre-tax book income and the related mix of rate-impacting components, including permanent items and changes in valuation allowance considerations, as compared to the prior-year period.

Current wording

Income tax provision was $55,985 for the three months ended September 30, 2026, compared to an income tax benefit of $23,983 for the comparable prior year period. The change was primarily attributable to higher pre-tax book income and the related mix of rate-impacting components, including foreign taxes, permanent items and changes in the valuation allowance.

Previous wording

Primarily as a result of the factors described above, we had net income of $996,978 for the three months ended June 30, 2026, as compared to a net income of $950,357 for the same period in the prior year.

Current wording

Primarily as a result of the factors described above, we had net income of $5,129,364 for the three months ended September 30, 2026, as compared to net income of $1,039,139 for the same period in the prior year.

Previous wording

Results of operations for the six months ended June 30, 2026 and 2025.

Current wording

Results of operations for the nine months ended September 30, 2026 and 2025.

Previous wording

Recurring core license revenue increased by $491,162, or 4.7% for the six months ended June 30, 2026, as compared to the same period in the prior year. Recurring core license revenue grew across all geographies. The Americas grew slightly faster than Europe, Middle East and Africa, and GOS progressive system placements contributed in all regions. Royalties netted against gross core revenue were relatively flat, increasing by $8,912, or 0.6% for the six months ended June 30, 2026, as compared to the same period in the prior year. Perpetual license sales of our progressive gaming systems was $147,549, representing a 80.6% decrease for the six months ended June 30, 2026, as compared to the same period in the prior year. This decline was primarily driven by the timing of customer purchases. We continue to prioritize recurring placements of our progressive systems, which we believe generate greater value per installation over the life of the placement than a one-time sale, while continuing to offer perpetual license sales selectively, primarily in connection with strategic customer opportunities where that structure is preferred. We expect perpetual license sales for the full year 2026 to be slightly lower than the prior year as we work toward the optimal balance between perpetual sales and recurring placements. Gross digital revenues of $8,557,721, increased by $701,147, or 8.9% for the six months ended June 30, 2026, as compared to the same period in the prior year. This favorable growth reflects the ongoing expansion of our digital content into new markets and the continued success of our competitive, branded product offerings. Net of royalties, digital revenues increased by $419,569, representing growth of 7.5% for the six months ended June 30, 2026, as compared to the same period in the prior year.

Current wording

Recurring core license revenue increased by $1,013,930, or 6.5%, for the nine months ended September 30, 2026, as compared to the same period in the prior year. Recurring core license revenue grew across all geographies, driven by new game placements and higher participation-based revenue, largely fueled by continued momentum from the GOS Progressive System and the MONOPOLY®-branded progressive systems launched earlier this year. Royalties netted against gross core revenue were relatively flat, increasing by $23,654, or 1.1%, for the nine months ended September 30, 2026, as compared to the same period in the prior year. Perpetual license sales of our progressive gaming systems was $159,119, representing an 80.8% decrease for the nine months ended September 30, 2026, as compared to the same period in the prior year. This decline reflects the deprioritization of such transactions and the timing of individual system sales. We continue to prioritize recurring placements of our progressive systems, which we believe generate greater value per installation over the life of the placement than a one-time sale, while continuing to offer perpetual license sales selectively, primarily in connection with strategic customer opportunities where that structure is preferred. We expect perpetual license sales for the full year 2026 to be lower than the prior year as we work toward the optimal balance between perpetual sales and recurring placements.

Previous wording

Cost of ancillary products and assembled component expense decreased by $226,822, or 60.3% for the six months ended June 30, 2026, as compared to the same period in the prior year. The activity in cost of ancillary products and assembled components reflects the component costs associated with the perpetual license sales of our progressive gaming systems.

Current wording

Cost of ancillary products and assembled component expense decreased by $404,647, or 65.6%, for the nine months ended September 30, 2026, as compared to the same period in the prior year. The activity in cost of ancillary products and assembled components reflects the component costs associated with the decrease in perpetual license sales of our progressive gaming systems.

Previous wording

Selling, general and administrative expenses increased by $639,136, or 15.2% for the three months ended June 30, 2026, as compared to the same period in the prior year. The increase includes $505,361 of state tax expense recorded in connection with the preliminary results of a managed audit that the Company voluntarily initiated, largely relating to sales and use tax not charged to customers, substantially all of which is attributable to periods prior to 2026 (see Note 6, Commitments and Contingencies), and $168,128 of professional fees and transaction-related costs, primarily related to the proposed acquisition of the Company by Evolution, which was terminated on July 21, 2026. Excluding these items and comparable costs of $243,682 in the prior-year period, selling, general and administrative expenses increased by $209,329, driven by higher distributor costs on increased placements of land-based products in foreign jurisdictions, higher royalty fees on licensed content, and increased travel costs supporting expanded sales efforts and placements of our progressive gaming systems.

Current wording

Selling, general and administrative expenses increased by $2,506,172, or 20.0%, for the nine months ended September 30, 2026, as compared to the same period in the prior year. The increase includes $691,626 of state tax expense driven by managed audits and voluntary disclosures across multiple jurisdictions that the Company self-initiated, largely relating to sales and use tax not charged to customers, substantially all of which is attributable to periods prior to 2026 (see Note 6, Commitments and Contingencies), and $1,481,930 of professional fees and transaction-related costs, primarily related to the termination of the Merger Agreement with Evolution, which was terminated on July 21, 2026. Excluding these items and comparable costs of $762,733 in the prior-year period, selling, general and administrative expenses increased by $1,095,349, or 9.3%, primarily driven by the timing of $317,988 of G2E trade show expenses, the majority of which were incurred in the third quarter of 2026 compared with the fourth quarter of 2025, and higher incentive compensation accruals compared with a reduced accrual level in the prior-year period, as well as higher distributor costs associated with increased placements of land-based products and higher royalty fees on licensed content.

Previous wording

Research and development expenses decreased by $114,609, or 47.1% for the three months ended June 30, 2026, as compared to the same period in the prior year. This decrease was primarily driven by lower payroll costs resulting from reduced headcount and increased capitalization of internal labor costs associated with development activities.

Current wording

Research and development expenses decreased by $339,161, or 40.5%, for the nine months ended September 30, 2026, as compared to the same period in the prior year. This decrease was primarily driven by lower payroll costs resulting from reduced headcount and reduced use of third-party research and development services.

Previous wording

Depreciation and amortization increased by $133,307, or 17.0% for the three months ended June 30, 2026, as compared to the same period in the prior year. This increase was primarily driven by depreciation expense associated with incremental placements of assets deployed at client locations.

Current wording

Depreciation and amortization increased by $313,175, or 13.2%, for the nine months ended September 30, 2026, as compared to the same period in the prior year. This increase was primarily driven by depreciation expense associated with incremental placements of assets deployed at client locations.

Previous wording

Stock-based compensation expenses decreased by $210,737, or 66.0% for the six months ended June 30, 2026, as compared to the same period in the prior year. The decrease was primarily attributable to a change in the form of board compensation, as our directors elected during the first half of 2026 to receive cash compensation in lieu of restricted shares, representing $114,750 of the decrease, with the remaining balance attributable to employee-related stock-based compensation.

Current wording

Stock-based compensation expense decreased by $52,786, or 12.0%, for the nine months ended September 30, 2026, as compared to the same period in the prior year. The decrease was primarily attributable to a change in the form of board compensation as our directors elected to receive cash compensation in lieu of restricted shares for the first half of 2026, representing $114,750 of the decrease and partially offset by higher officer-related stock-based compensation.

Previous wording

Interest expense decreased by $319,976, or 16.8% for the six months ended June 30, 2026, as compared to the same period in the prior year. The decrease was due to the reduced principal balance of outstanding debt and a lower average interest rate, for the six months ended June 30, 2026, as compared to the same period in the prior year. Interest income decreased by $37,943, or 97.9% compared to the prior year period.

Current wording

Interest expense decreased by $462,533, or 16.6%, for the nine months ended September 30, 2026, as compared to the same period in the prior year. The decrease was due to the reduced principal balance of outstanding debt and a lower average interest rate, for the nine months ended September 30, 2026, as compared to the same period in the prior year. Interest income decreased by $25,672, or 59.0% compared to the prior year period.

Previous wording

The Company recognized a loss on extinguishment of debt of $2,969,585 for the six months ended June 30, 2025 related to the refinancing of our debt from Fortress to BMO in January 2025, primarily driven by the write-off of unamortized debt issuance costs.

Current wording

The Company recognized a loss on extinguishment of debt of $2,969,585 for the nine months ended September 30, 2025 related to the refinancing of our debt from Fortress to BMO in January 2025, primarily driven by the write-off of unamortized debt issuance costs.

Previous wording

Income tax provision decreased to $64,268 for the three months ended June 30, 2026, compared to income tax provision of $93,912 for the comparable prior year period. The decrease was primarily attributable to changes in pre-tax book income and the related mix of rate-impacting components, including permanent items and changes in valuation allowance considerations, as compared to the prior-year period.

Current wording

Income tax provision increased to $150,885 for the nine months ended September 30, 2026, compared to income tax provision of $106,350 for the comparable prior year period. The increase was primarily attributable to changes in pre-tax book income and the related mix of rate-impacting components, including permanent items and changes in valuation allowance considerations, as compared to the prior-year period.

Previous wording

Primarily as a result of the factors described above, we had net income of $2,364,534 for the six months ended June 30, 2026, as compared to a net loss of $1,070,925 for the same period in the prior year.

Current wording

Primarily as a result of the factors described above, we had net income of $7,493,898 for the nine months ended September 30, 2026, as compared to a net loss of $31,786 for the same period in the prior year.

Previous wording

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") and Free Cash Flow ("FCF"). Adjusted EBITDA includes adjustments to U.S. GAAP net income (loss) to exclude interest, income taxes, depreciation, amortization, stock-based compensation, foreign currency exchange loss (gain), and severance and other expenses related to litigation, non-income tax assessments, and other adjustments to reflect changes that occur in our business but do not represent ongoing operations, including loss on extinguishment of debt. Adjusted EBITDA is not a measure of performance defined in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP"). However, Adjusted EBITDA is used by management to evaluate our operating performance. Management believes that disclosure of the Adjusted EBITDA metric offers investors, regulators and other stakeholders a view of our operations in the same manner management evaluates our performance. When combined with U.S. GAAP results, management believes Adjusted EBITDA provides a comprehensive understanding of our financial results. Adjusted EBITDA should not be considered as an alternative to net income or (loss) to net cash provided by operating activities as a measure of operating results or of liquidity. It may not be comparable to similarly titled measures used by other companies, and it excludes financial information that some may consider important in evaluating our performance. We define Free Cash Flow as Adjusted EBITDA less cash paid for interest, net of interest income received, cash used in investing activities, and cash paid for income taxes, net of refunds. Free Cash Flow is not a measure of performance defined in accordance with U.S. GAAP. Management uses Free Cash Flow to evaluate the cash generated by our operations that is available to service and repay indebtedness and to reinvest in the business, and believes disclosure of Free Cash Flow provides investors, regulators and other stakeholders with useful information for the same purpose. Free Cash Flow should not be considered an alternative to net income (loss) as a measure of operating performance, or to net cash provided by operating activities as a measure of liquidity. It should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures. Free Cash Flow may not be comparable to similarly titled measures used by other companies. A reconciliation of Adjusted EBITDA to Free Cash Flow is presented below, and Adjusted EBITDA is reconciled to net income (loss), the most directly comparable U.S. GAAP measure, in the same table. A reconciliation of U.S. GAAP net income (loss) to Adjusted EBITDA to FCF is as follows:

Current wording

Adjusted EBITDA includes adjustments to U.S. GAAP net income (loss) to exclude interest, income taxes, depreciation, amortization, stock-based compensation, transaction termination income, foreign currency exchange loss (gain), and severance and other expenses related to litigation, professional fees and transaction-related costs, non-income tax assessments, and other adjustments to reflect changes that occur in our business but do not represent ongoing operations, including loss on extinguishment of debt. Adjusted EBITDA is not a measure of performance defined in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP"). However, Adjusted EBITDA is used by management to evaluate our operating performance. Management believes that disclosure of the Adjusted EBITDA metric offers investors, regulators and other stakeholders a view of our operations in the same manner management evaluates our performance. When combined with U.S. GAAP results, management believes Adjusted EBITDA provides a comprehensive understanding of our financial results. Adjusted EBITDA should not be considered as an alternative to net income (loss) or to net cash provided by operating activities as a measure of operating results or of liquidity. It may not be comparable to similarly titled measures used by other companies, and it excludes financial information that some may consider important in evaluating our performance. We define Free Cash Flow as Adjusted EBITDA less cash paid for interest, net of interest income received, cash used in investing activities, and cash paid for income taxes, net of refunds. Free Cash Flow is not a measure of performance defined in accordance with U.S. GAAP. Management uses Free Cash Flow to evaluate the cash generated by our operations that is available to service and repay indebtedness and to reinvest in the business, and believes disclosure of Free Cash Flow provides investors, regulators and other stakeholders with useful information for the same purpose. Free Cash Flow should not be considered an alternative to net income (loss) as a measure of operating performance, or to net cash provided by operating activities as a measure of liquidity. It should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures. Free Cash Flow may not be comparable to similarly titled measures used by other companies.

Previous wording

(4) Represents a charge of state tax expense recorded in connection with the preliminary results of a managed audit that the Company voluntarily initiated, largely relating to sales and use tax not charged to customers, substantially all of which is attributable to periods prior to 2026.

Current wording

(4) Represents a charge of state tax expense across multiple jurisdictions recorded in connection with managed audits and voluntary disclosures that the Company self-initiated, largely relating to sales and use tax not charged to customers, substantially all of which is attributable to periods prior to 2026.

Previous wording

As of June 30, 2026, we had total current assets of $10,813,584 and total assets of $26,958,720. As of December 31, 2025, we had total current assets of $11,569,839 and total assets of $27,500,619. The decrease in current assets as of June 30, 2026 compared to December 31, 2025 was primarily driven by a decrease in our accounts receivable balance resulting from increased customer collection efforts. The decrease in total assets as of June 30, 2026 compared to December 31, 2025 was primarily due to the decrease of current assets noted above offset by an increase in cash and cash equivalents.

Current wording

As of September 30, 2026, we had total current assets of $15,082,522 and total assets of $31,347,317. As of December 31, 2025, we had total current assets of $11,569,839 and total assets of $27,500,619. Current assets increased by $3,512,683 as of September 30, 2026 compared to December 31, 2025, primarily due to a $4,755,734 increase in cash and cash equivalents resulting from receipt of the $5,234,678 termination fee from Evolution, partially offset by a $963,166 decrease in accounts receivable due to increased collection efforts. Total assets increased by $3,846,698 over the same period, primarily due to the increase in current assets described above and a $857,255 increase in assets deployed at client locations, net, reflecting new deployments during the period.

Previous wording

Our operating activities provided cash of $4,167,486 for the six months ended June 30, 2026, compared to $4,345,791 for the comparable prior year period. This change is mainly attributable to net income for the six months ended June 30, 2026, as compared to a net loss in the prior year period, as well as a $602,544 variance in operating assets and liabilities. Additionally, the prior year period included a loss on extinguishment of debt of $2,969,585 related to the refinancing of the Fortress loan to BMO. Stock-based compensation decreased by $210,737 due to a change in the composition of board compensation.

Current wording

Our operating activities provided cash of $11,858,235 for the nine months ended September 30, 2026, compared to $5,469,738 for the comparable prior year period. The $6,388,497 increase was primarily attributable to net income of $7,493,898 for the nine months ended September 30, 2026, which included the $5,234,678 termination fee received from Evolution, compared to a net loss of $31,786 in the prior year period, and a $1,552,430 favorable change in operating assets and liabilities, driven primarily by collections of accounts receivable and a change in accounts payable related to professional fees and transaction-related costs associated with the terminated Merger Agreement. Higher depreciation and amortization of $313,175 was partially offset by a $52,786 decrease in stock-based compensation expense. The prior year period included a $2,969,585 non-cash loss on extinguishment of debt related to the refinancing of the Fortress loan with BMO.

Previous wording

Share Repurchase Program. On July 22, 2026, the Company’s Board of Directors authorized a share repurchase program of up to $4,000,000 of the Company’s outstanding common stock. Repurchases under the share repurchase program may be made from time to time through open market purchases, privately negotiated transactions, or a trading plan intended to qualify under Rule 10b5-1 under the Exchange Act, with the timing and amount determined based on market conditions and other factors, including constraints specified in the Rule 10b5-1 repurchase plan. The share repurchase program, which has no fixed expiration date, supersedes the Company’s prior authorization to repurchase up to $750,000 of its common stock, under which no shares were repurchased.

Current wording

Share Repurchase Program. On July 22, 2026, the Company’s Board of Directors authorized a share repurchase program of up to $4,000,000 of the Company’s outstanding common stock and warrants. Repurchases under the share repurchase program may be made from time to time through open market purchases, privately negotiated transactions, or a trading plan intended to qualify under Rule 10b5-1 under the Exchange Act, with the timing and amount determined based on market conditions and other factors, including constraints specified in the Rule 10b5-1 repurchase plan. All shares repurchased will be retired. The share repurchase program, which has no fixed expiration date, supersedes the Company’s prior authorization to repurchase up to $750,000 of its common stock, under which no shares were repurchased.

Previous wording

Critical accounting policies and estimates. Our significant accounting policies and estimates are described in our 2025 Form 10-K. There have been no material changes to those policies.

Current wording

Critical accounting policies and estimates. Our significant accounting policies and estimates are described in our 2025 Form 10-K. Other than the share repurchase policy described above, there have been no material changes to those policies.

Previous wording

Recently issued accounting pronouncements. We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

Current wording

Recently issued accounting pronouncements. See Note 2, Significant Accounting Policies, for a discussion of recently adopted and recently issued accounting pronouncements, including the Company’s early adoption of ASU 2025-12. We do not expect the adoption of recently issued accounting pronouncements not yet adopted to have a significant impact on our results of operations, financial position or cash flow.