Shareholder Distributions and Earnings and Profits (E&P)

3 Months Ended

Oct. 31, 2025

Shareholder Distributions and Earnings and Profits (E&P) [Abstract]

Shareholder Distributions and Earnings and Profits (E&P)

Note 14—Shareholder Distributions and Earnings and Profits (E&P)

On October 14, 2025, the Company issued a press release announcing that its Board of Directors had declared a quarterly cash dividend of $0.016 per share, aggregating approximately $208,000. The dividend was included in Accrued expenses and other current liabilities (see Note 6) as of October 31, 2025, and was paid on November 7, 2025, to stockholders of record as of October 24, 2025.

As of the declaration date, the Company had an accumulated deficit of approximately $14.5 million. Accordingly, under U.S. GAAP, the distribution was accounted for as a return of capital and recorded as a reduction to Additional paid-in capital in the accompanying financial statements. The distribution did not affect the Company’s results of operations for the year.

For U.S. federal income tax purposes, the Company had accumulated earnings and profits (“E&P”) of approximately $11.4 million. Pursuant to Internal Revenue Code Section 316(a), distributions to shareholders are characterized as dividends to the extent of current or accumulated E&P. As a result, the entire $208,000 distribution is treated as a taxable dividend to shareholders for U.S. federal income tax reporting purposes.

The difference between the book and tax characterization of the distribution results from timing and permanent differences between financial reporting income and taxable income, primarily related to the impairment of intangible assets and stock-based compensation.