Ceco Environmental Corp: Form 10-Q for the period ended Sep 30, 2025

The Company’s Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2025 and 2024 reflect the consolidated operations of the Company and its subsidiaries.

CECO Environmental Corp. (“CECO,” “we,” “us,” "our," or the “Company”) is a leading environmentally focused, diversified industrial company, serving the broad landscape of industrial air, industrial water and energy transition markets globally providing innovative technology and application expertise through a collection of focused operating companies with niche leadership positions and well-established brands in fragmented markets with flexible business models and established supply chains. CECO helps companies grow their business with safe, clean, and more efficient solutions that help protect people, the environment and industrial equipment. CECO's solutions improve air and water quality, optimize emissions management, and increase the energy and process efficiency for highly engineered applications in power generation, midstream and downstream hydrocarbon processing and transport, chemical processing, electric vehicle production, polysilicon fabrication, semiconductor and electronics production, battery production and recycling, specialty metals, aluminum and steel production, beverage can manufacturing, and industrial and produced water and wastewater treatment, and a wide range of other industrial end markets.

Market Pressures

The senior management team monitors and manages the Company's ability to operate effectively as the result of market pressures. Against the current backdrop of a rapidly evolving global commercial environment, we believe we are comparatively well-positioned as we execute and manufacture a majority of our business in the same regions in which we sell, with our cost and revenue bases largely aligned as a result. Recently, international trade has been impacted by geopolitical tariff considerations. To mitigate potential tariff-related impacts, we have worked strategically with customers and suppliers to optimize terms and pricing, sourcing locations, and logistics routes and schedules. While we will continue to take a proactive approach on our efforts to mitigate the impacts of tariffs, our business and results could be adversely affected by further policy developments. Additionally, we are currently experiencing shortages of raw materials and inflationary pressures for certain materials and labor. We have secured raw materials from existing and alternate suppliers and have taken other mitigating actions to mitigate supply disruptions; however, we cannot guarantee that we will be able to continue to do so in the future. If we are unable to continue to mitigate the effects of these supply disruptions and/or inflationary pressures, our business, results and financial condition could be adversely affected.

Note Regarding Use of Non-GAAP Financial Measures

The Company's unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These GAAP financial statements include certain charges the Company believes are not indicative of its core ongoing operational performance.

As a result, the Company provides financial information in this Management’s Discussion and Analysis that was not prepared in accordance with GAAP and should not be considered as an alternative to the information prepared in accordance with GAAP. The Company provides this non-GAAP financial information because the Company’s management utilizes it to evaluate its ongoing financial performance and the Company believes it provides greater transparency to investors as supplemental information to its GAAP results.

The Company has provided the non-GAAP financial measures of non-GAAP operating income and non-GAAP operating margin as a result of items that the Company believes are not indicative of its ongoing operations. These include transactions associated with the Company’s acquisitions, divestiture, and the items described below in “Consolidated Results.” The Company believes that these items are not necessarily indicative of the Company’s ongoing operations and their exclusion provides individuals with additional information to better compare the Company's results over multiple periods. The Company utilizes this information to evaluate its ongoing financial performance. The Company has incurred substantial expense and income associated with acquisitions. While the Company cannot predict the exact timing or amounts of such charges, it does expect to treat the financial impact of these transactions as special items in its future presentation of non-GAAP results.

Results of Operations

Consolidated Results

Our Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2025 and 2024 are as follows:

(in millions, except ratios)

To compare operating performance between the three and nine months ended September 30, 2025 and 2024, the Company has adjusted GAAP operating income to exclude (1) amortization of intangible assets, (2) acquisition and integration expenses, which include legal, accounting, and other expenses, (3) gain on the sale of the Global Pump Solutions business as discussed in Note 16, and (4) other non-recurring expenses, including fair value adjustment of earn-out liabilities from the acquisitions of WK Group, restructuring expenses primarily relating to severance, facility exits, and associated legal expenses, asbestos litigation expenses relating to future settlement payments, and third party professional consulting fees associated with Enterprise Resource Planning system implementations.

The following table presents the reconciliation of GAAP operating income and GAAP operating margin to non-GAAP operating income and non-GAAP operating margin:

(in millions, except ratios)

Orders booked increased $70.6 million, or 44%, to $232.9 million during the three months ended September 30, 2025 compared with $162.3 million in the three months ended September 30, 2024, inclusive of organic growth of 33%, as defined as the change in orders excluding the impact of orders recorded in the twelve month period subsequent to acquisition dates and orders from the GPS business, which was divested in the first quarter of 2025. The orders increase is primarily attributable to the Company's energy and power businesses as well as international industrial water projects.

Orders booked increased $286.7 million, or 64%, to $735.0 million during the nine months ended September 30, 2025 compared with $448.3 million in the nine months ended September 30, 2024, inclusive of organic growth of 53%. The orders increase is primarily attributable to the Company's energy and power technologies. Investments in energy infrastructure and growth in midstream and downstream markets have resulted in increased demand for emissions, separation, and acoustics products. Additionally, the Company has seen increased demand for its wet scrubbers and industrial fan technologies as well as international industrial water applications in produced water and wastewater.

Net sales for the three months ended September 30, 2025 increased $62.1 million, or 45.8%, to $197.6 million compared with $135.5 million for the three months ended September 30, 2024, inclusive of organic growth of 35%, as defined as the change in orders excluding the impact of orders recorded in the twelve month period subsequent to acquisition dates and orders from the GPS business, which was divested in the first quarter of 2025. The increase in organic revenue is driven by significant order intake in the preceding quarters which led to a record backlog position. The Company also executed on customer projects and progressed its respective projects per contractual commitments, without any materially significant delays observed. The remainder of the increase in net sales is attributable to the Company's recent acquisitions.

Net sales for the nine months ended September 30, 2025 increased $160.3 million, or 40.1%, to $559.7 million compared with $399.4 million for the nine months ended September 30, 2024, inclusive of organic growth of 24%. The increase in organic revenue is driven by significant order intake in the preceding quarters which led to a record backlog position. The Company was also able to recover from revenue project delays that adversely impacted the Company in prior periods driven by customer’s catching up to the project schedules. The remainder of the increase in net sales is attributable to the Company's recent acquisitions.

Gross profit increased $19.3 million, or 42.6%, to $64.6 million in the three months ended September 30, 2025 compared with $45.3 million in the three months ended September 30, 2024. The increase in gross profit is primarily attributable to the increase in sales volume as described above. Gross profit as a percentage of sales slightly decreased to 32.7% in the three months ended September 30, 2025 compared with 33.4% in the three months ended September 30, 2024. This decrease is attributable to project mix within industrial solutions end markets.

Gross profit increased $54.4 million, or 39.0%, to $193.9 million in the nine months ended September 30, 2025 compared with $139.5 million in the nine months ended September 30, 2024. The increase in gross profit is primarily attributable to the increase in sales volume as described above. Gross profit as a percentage of sales was flat at 34.6% in the nine months ended September 30, 2025 and 34.9% in the nine months ended September 30, 2024.

Selling and administrative expenses were $47.0 million for the three months ended September 30, 2025 compared with $34.3 million for the three months ended September 30, 2024. The increase is primarily attributable to increased headcount resources to support the Company’s growing pipeline of opportunities as well as additional capabilities to support backlog execution and functional support. Additionally, acquisitions during the current and prior year drove increased selling and administrative expense.

Selling and administrative expenses were $149.4 million for the nine months ended September 30, 2025 compared with $105.7 million for the nine months ended September 30, 2024. The increase is primarily attributable to increased headcount resources to support the Company’s growing pipeline of opportunities as well as additional capabilities to support backlog execution and functional support. Additionally, acquisitions during the current and prior year drove increased selling and administrative expense.

Amortization expense was $6.1 million for the three months ended September 30, 2025 compared with $2.2 million for the three months ended September 30, 2024. The increase in expense is attributable to increased intangible assets attributable to current and prior year acquisitions.

Amortization expense was $12.2 million for the nine months ended September 30, 2025 compared with $6.5 million for the nine months ended September 30, 2024. The increase in expense is attributable to increased intangible assets attributable to current and prior year acquisitions.

Operating income increased $2.2 million to $9.4 million for the three months ended September 30, 2025 compared with operating income of $7.2 million for the three months ended September 30, 2024. The increase in operating income is primarily attributable to the fair value adjustment to the earn-out liability associated with the acquisition of WK Group, as well as the increase in gross profit described above.

Operating income increased $65.2 million to $89.3 million for the nine months ended September 30, 2025 compared with operating income of $24.1 million for the nine months ended September 30, 2024. The increase in operating income is primarily attributable to the gain on the sale of the Global Pump Solutions business and fair value adjustment to the earn-out liability associated with the acquisition of WK Group, partially offset by the increase in selling and administrative expenses described above.

Non-GAAP operating income was $17.5 million for the three months ended September 30, 2025 compared with $11.0 million for the three months ended September 30, 2024. Non-GAAP operating income as a percentage of sales increased to 8.9% for the three months ended September 30, 2025 from 8.1% for the three months ended September 30, 2024.

Non-GAAP operating income was $44.5 million for the nine months ended September 30, 2025 compared with $33.8 million for the nine months ended September 30, 2024. Non-GAAP operating income as a percentage of sales was flat at 8% for the both the nine months ended September 30, 2025 and 2024.

Interest expense increased to $5.1 million in the three months ended September 30, 2025 compared with interest expense of $2.6 million for the three months ended September 30, 2024. The increase in interest expense is primarily due to increased debt balances.

Interest expense increased to $16.2 million in the nine months ended September 30, 2025 compared with interest expense of $9.3 million for the nine months ended September 30, 2024. The increase in interest expense is primarily due to increased debt balances.

Income tax expense was $0.5 million for the three months ended September 30, 2025 compared with income tax expense of $1.6 million for the three months ended September 30, 2024. Income tax expense was $23.6 million for the nine months ended September 30, 2025 compared with income tax expense of $2.7 million for the nine months ended September 30, 2024. The effective income tax rate for the three months ended September 30, 2025 was 21.1% compared with 38.7% for the three months ended September 30, 2024. The effective income tax rate for the nine months ended September 30, 2025 was 32.8% compared with 21.8% for the nine months ended September 30, 2024. The effective income tax rates for the three and nine months ended September 30, 2025 and September 30, 2024 differ from the United States federal statutory rate. Our effective tax rate is affected by other permanent differences, including the gain on the sale of the Global Pump Solutions business, state income taxes, non-deductible incentive stock-based compensation, and differences in tax rates among the jurisdictions in which we operate.

Business Segments

The Company’s operations are organized as groups of similar products and services, and are presented in two reportable segments. The results of the segments are reviewed through “Income from operations” on the unaudited Condensed Consolidated Statements of Income.

Financial results by segment are as follows:

(in thousands)

(in thousands)

(1) Includes corporate compensation, professional services, information technology, and other general and administrative corporate expenses.

Engineered Systems Segment

Our Engineered Systems segment orders booked increased $53.5 million, or 44%, to $175.5 million during the three months ended September 30, 2025 compared with $122.0 million in the three months ended September 30, 2024, inclusive of organic growth of 37%. The increase is primarily attributable to the Company's energy and power technologies. Investments in energy infrastructure and growth in midstream and downstream markets have resulted in increased demand for emissions, and acoustics products. The

Company’s acquisition of Profire, a niche-leader specializing in the design and manufacture of burner-management systems and other combustion-management technologies, is another driver of increased orders.

Our Engineered Systems segment orders booked increased $239.9 million, or 74%, to $562.6 million during the nine months ended September 30, 2025 compared with $322.7 million in the nine months ended September 30, 2024, inclusive of organic growth of 73%. The increase is primarily attributable to the Company's energy and power technologies. Investments in energy infrastructure and growth in midstream and downstream markets have resulted in increased demand for emissions, separation, and acoustics products. The Company’s acquisition of Profire also contributed to the increase in orders.

Our Engineered Systems segment net sales increased $52.4 million to $143.7 million for the three months ended September 30, 2025 compared with $91.3 million for the three months ended September 30, 2024, inclusive of organic growth of 47%. The increase is led by backlog execution on large scale power projects and inorganic sales growth attributable to Profire.

Our Engineered Systems segment net sales increased $114.6 million to $392.6 million for the nine months ended September 30, 2025 compared with $278.0 million for the nine months ended September 30, 2024, inclusive of organic growth of 33%. The increase is led by backlog execution on large scale power projects and inorganic sales growth attributable to Profire.

Operating income for the Engineered Systems segment increased $9.2 million to $25.0 million for the three months ended September 30, 2025 compared with $15.8 million for the three months ended September 30, 2024. The operating income increase is attributable to higher gross profit related to increased net sales, partially offset by an increase in selling and administrative expense.

Operating income for the Engineered Systems segment increased $17.6 million to $69.0 million for the nine months ended September 30, 2025 compared with $51.4 million for the nine months ended September 30, 2024. The operating income increase is attributable to higher gross profit related to increased net sales, partially offset by an increase in selling and administrative expense.

Industrial Process Solutions Segment

Our Industrial Process Solutions segment orders booked increased $17.3 million, or 43%, to $57.4 million during the three months ended September 30, 2025 compared with $40.1 million in the three months ended September 30, 2024, inclusive of organic growth of 23%. The increase is primarily attributable to the Company’s most recent acquisitions in industrial air treatment applications and increase in demand for the Company's scrubber technologies.

Our Industrial Process Solutions segment orders booked increased $46.7 million, or 37%, to $172.3 million during the nine months ended September 30, 2025 compared with $125.6 million in the nine months ended September 30, 2024, inclusive of organic growth of 7%. The increase is primarily attributable to Company’s most recent acquisitions in industrial air treatment applications and increase in demand for the Company's scrubber technologies.

Our Industrial Process Solutions segment net sales increased $9.7 million to $53.9 million for the three months ended September 30, 2025 compared with $44.2 million for the three months ended September 30, 2024, inclusive of organic growth of 11%. The increase is primarily attributable to Company’s most recent acquisitions in industrial air treatment applications, partially offset by the loss of net sales due to the divestiture of the Global Pump Solutions business.

Our Industrial Process Solutions segment net sales increased $45.8 million to $167.1 million for the nine months ended September 30, 2025 compared with $121.3 million for the nine months ended September 30, 2024, inclusive of organic growth of 5%. The increase is primarily attributable to Company’s most recent acquisitions in industrial air treatment applications, partially offset by the loss of net sales due to the divestiture of the Global Pump Solutions business.

Operating income for the Industrial Process Solutions segment decreased $3.9 million to $4.2 million for the three months ended September 30, 2025 compared with $8.1 million for the three months ended September 30, 2024. The decrease is primarily attributable to the fair value adjustment to the earn-out liability associated with the acquisition of WK Group, as well as the increase in gross profit driven by the net sales increase described above.

Operating income for the Industrial Process Solutions segment increased $68.2 million to $89.0 million for the nine months ended September 30, 2025 compared with $20.8 million for the nine months ended September 30, 2024. The increase is primarily attributable to the gain on the sale of the Global Pump Solutions business and fair value adjustment to the earn-out liability associated with the acquisition of WK Group.

Backlog

Backlog (i.e., unfulfilled or remaining performance obligations) represents the sales we expect to recognize for our products and services for which control has not yet transferred to the customer. Backlog increased to $719.6 million as of September 30, 2025, from $540.9 million as of December 31, 2024. Our customers may have the right to cancel a given order. Historically, cancellations have not been significant. Backlog is adjusted on a quarterly basis for adjustments in foreign currency exchange rates. Substantially all backlog is expected to be delivered within 12 to 30 months. Backlog is not defined by GAAP and our methodology for calculating backlog may not be consistent with methodologies used by other companies.

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements, see Note 2 to the unaudited condensed consolidated financial statements within Item 1 of this Quarterly Report on Form 10-Q.

Liquidity and Capital Resources

When we undertake large jobs, our working capital objective is to make these projects self-funding. We work to achieve this by obtaining customer advanced payments, structuring our contracts with progress billing provisions, when possible, utilizing extended payment terms from material suppliers, and paying sub-contractors after payment from our customers, which is an industry practice. Our investment in working capital is funded by cash flows from operations and by our revolving line of credit under our Credit Facility (as defined below).

At September 30, 2025, the Company had working capital of $97.2 million, compared with $86.3 million at December 31, 2024. The ratio of current assets to current liabilities was 1.33 to 1.00 on September 30, 2025, as compared with a ratio of 1.35 to 1.00 on December 31, 2024.

At September 30, 2025 and December 31, 2024, cash and cash equivalents totaled $32.8 million and $37.8 million, respectively. As of September 30, 2025 and December 31, 2024, $25.4 million and $29.7 million, respectively, of our cash and cash equivalents were held by certain foreign subsidiaries, as well as being denominated in foreign currencies.

Debt consisted of the following:

(in thousands)

Credit Facility

The Company’s outstanding borrowings in the United States consist of a senior secured revolver loan with sub-facilities for letters of credit, swing-line loans and multi-currency loans (collectively, the “Credit Facility”). As of September 30, 2025 and December 31, 2024, the Company was in compliance with all related financial and other restrictive covenants under the Credit Facility.

See Note 8 to the unaudited condensed consolidated financial statements within Item 1 of this Quarterly Report on Form 10-Q for further information on the Company’s debt facilities.

Total unused credit availability under our existing Credit Facility is as follows:

(in millions)

Overview of Cash Flows and Liquidity

(in thousands)

Operating Activities

For the nine months ended September 30, 2025, $4.1 million of cash was used in operating activities compared with $23.0 million provided by operations in the prior year period, representing a decrease of $27.1 million. Cash flows from operating activities in the first nine months of 2025 had an unfavorable impact year-over-year primarily due to timing of project-related payments.

Investing Activities

For the nine months ended September 30, 2025, net cash provided by investing activities was $1.5 million compared with $26.2 million used in investing activities in the prior year period. For the nine months ended September 30, 2025, the Company received $107.8 million related to the sale of the Global Pump Solutions business as discussed in Note 16, offset by $97.6 million used in the acquisition of Profire as discussed in Note 15. In the prior year period, $26.2 million cash used in investing activities was primarily the result of the purchase of EnviroCare and acquisitions of property and equipment.

Financing Activities

For the nine months ended September 30, 2025, $2.8 million was used in financing activities compared with $14.5 million used in financing activities in the prior year period, for an increase of $11.7 million. The increase was driven by $5.0 million in common stock repurchases and $1.7 million of earn-out payments in the nine months ended September 30, 2024 that did not recur in the nine months ended September 30, 2025, as well as $5.1 million decrease in net debt repayments.

Critical Accounting Estimates

Management believes there have been no changes during the nine months ended September 30, 2025 to the items that the Company disclosed as its critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, which are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Any statements contained in this Quarterly Report on Form 10-Q, other than statements of historical fact, including statements about management’s beliefs and expectations, are forward-looking statements and should be evaluated as such. These statements are made on the basis of management’s views and assumptions regarding future events and business performance. We use words such as “believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “will,” “plan,” “should” and similar expressions to identify forward-looking statements. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Potential risks and uncertainties, among others, that could cause actual results to differ materially are discussed under “Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and include, but are not limited to:

• the effect of recent acquisitions and the divestiture of our Fluid Handling Business (together, the “transactions”) on business relationships, operating results, and business generally, disruption of current plans and operations and potential difficulties in employee retention as a result of the transactions, diversion of management’s attention from ongoing business operations in connection with the integration of recent acquisitions, the amount of the costs, fees, expenses and other charges related to the transactions, the achievement of the anticipated benefits of transactions, our ability to successfully integrate acquired businesses and realize the synergies from acquisitions, as well as a number of factors related to our business, including the sensitivity of our business to economic and financial market conditions generally and economic conditions in CECO’s service areas;
• dependence on fixed price contracts and the risks associated therewith, including actual costs exceeding estimates and method of accounting for revenue;
• the effect of growth on our infrastructure, resources and existing sales;
• the ability to expand operations in both new and existing markets;
• the potential for contract delay or cancellation as a result of on-going or worsening supply chain challenges, or other customer-driven project delays relating to supply chain challenges or other customer considerations;
• liabilities arising from faulty services or products that could result in significant professional or product liability, warranty or other claims;
• changes in or developments with respect to any litigation or investigation;
• failure to meet timely completion or performance standards that could result in higher cost and reduced profits or, in some cases, losses on projects;
• the potential for fluctuations in prices for manufactured components and raw materials, including as a result of tariffs and surcharges, and rising energy costs;
• inflationary pressures relating to rising raw material costs and the cost of labor;
• the substantial amount of debt incurred in connection with our strategic transactions and our ability to repay or refinance it or incur additional debt in the future;
• the impact of federal, state or local government regulations, including with respect to tax policy;
• our ability to repurchase shares of our common stock and the amounts and timing of repurchases;
• our ability to successfully realize the expected benefits of our restructuring program;
• economic and political conditions generally;
• our ability to optimize our business portfolio by identifying acquisition targets, executing upon any strategic acquisitions or divestitures, integrating acquired businesses and realizing the synergies from strategic transactions; and
• unpredictability and severity of catastrophic events, including cybersecurity threats, acts of terrorism or outbreak of war or hostilities or public health crises, as well as management’s response to any of the aforementioned factors.

Many of these risks are beyond management’s ability to control or predict. Should one or more of these risks or uncertainties materialize, or should any related assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated. Investors are cautioned not to place undue reliance on such forward-looking statements as they speak only to our views as of the date the statement is made. Except as required under the federal securities laws or the rules and regulations of the SEC, we undertake no obligation to update or review any forward-looking statements, whether as a result of new information, future events or otherwise.

We are exposed to certain market risks, primarily changes in interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange and interest rates. For the Company, these exposures are primarily related to changes in interest rates. We do not currently hold any derivatives or other financial instruments purely for trading or speculative purposes.

The carrying value of the Company’s total long-term debt and current maturities of long-term debt at September 30, 2025 was $222.4 million. Market risk was estimated as the potential decrease (increase) in future earnings and cash flows resulting from a hypothetical

10% increase (decrease) in the Company’s estimated weighted average borrowing rate at September 30, 2025. Most of the interest on the Company’s debt is indexed to SOFR market rates. The estimated annual impact of a hypothetical 10% change in the estimated weighted average borrowing rate at September 30, 2025 is $1.6 million.

The Company has wholly-owned subsidiaries in several countries, including in the Netherlands, Canada, the People’s Republic of China, Mexico, United Kingdom, Singapore, India, United Arab Emirates, Germany, South Korea and Saudi Arabia. In the past, we have not hedged our foreign currency exposure, and fluctuations in exchange rates have not materially affected our operating results. Future changes in exchange rates may positively or negatively impact our revenues, operating expenses and earnings. Transaction (gains) losses included in “Other expense, net” line of the Condensed Consolidated Statements of Income were $2.0 million and $0.3 million for the three months ended September 30, 2025 and 2024, respectively, and $1.1 million and $1.9 million for the nine months ended September 30, 2025 and 2024, respectively.

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) that are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of September 30, 2025.

Management believes that the condensed consolidated financial statements included in this report present fairly, in all material respects, the Company’s financial condition, results of operations and cash flows for each of the periods presented in this report in conformity with accounting principles generally accepted in the United States of America.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended September 30, 2025 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Limitations on the Effectiveness of Controls

Control systems, no matter how well conceived and operated, are designed to provide a reasonable, but not an absolute, level of assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. The Company conducts periodic evaluations of its internal controls to enhance, where necessary, its procedures and controls.

There have been no material changes in the Company’s risk factors that were disclosed in “Part I – Item 1A. Risk Factors” of the Company's Annual Report on Form 10-K for the year ended December 31, 2024.