Financial Analysis

NOTE 14 Commitments and Contingent Liabilities Operating Leases The Company leases the property for two Prestige retail sales centers from various unrelated entities under operating lease agreements. One of the operating lease agreement is month to month and the other is a one year lease expiring in October 2026 . The Company also leases certain equipment under unrelated operating leases. Other Contingent Liabilities Certain claims and suits arising in the ordinary course of business have been filed or are pending against the Company. In the opinion of management, the ultimate outcome of these matters will not have a material adverse effect on the Companys financial position, results of operations or cash flows. Accordingly, the Company has an accrual provision of $ 19,000 for litigation settlements in the accompanying consolidated financial statements. The Company does not maintain casualty insurance on some of its property, including the inventory at our retail centers, our plant machinery and plant equipment and is at risk for those types of losses. …

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NOTE 12 Stock Option Plan In June 2011, the Companys Board of Directors adopted, and the Companys shareholders later approved, the Nobility Homes, Inc. 2011 Stock Incentive Plan (the Plan), providing for the issuance of options to purchase shares of common stock, stock appreciation rights and other stock-based awards to employees and non-employee directors. A total of 300,000 shares were reserved for issuance under the Plan, all of which may be issued pursuant to the exercise of incentive stock options. The Plan was amended by the Board of Directors to extend the termination date from June 2021 until June 1, 2026. At November 1, 2025, 169,191 options were available for future grant under the Plan and 122,610 options were outstanding. The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost is to be recognized over the period during which an employee is required to provide a service in exchange for the award (usually the vesting period). The grant date fair value of employee share options and similar instruments will be estimated using option-pricing models adjusted for the unique characteristics of those instruments (unless observable market prices for the same or similar instruments are available). If an equity award is modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair value of the modified awar …

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NOTE 3 Fair Values of Financial Instruments The carrying amount of cash and cash equivalents, accounts and notes receivable, accounts payable and accrued expenses approximate fair value because of the short maturity of those instruments. The Company accounts for the fair value of financial instruments in accordance with FASB ASC No. 820, Fair Value Measurements (ASC 820). ASC 820 defines fair value as the price that would be received upon the sale of an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. ASC 820 requires disclosures that categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The ASC 820 fair value hierarchy is defined as follows: Level 1Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities. Level 2Valuations are based on quoted prices for similar assets or liabilities in active markets or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly. Level 3Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect ma …

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NOTE 10 Income Taxes The Company computes income tax expense using the liability method. Under this method, deferred income taxes are provided, to the extent considered realizable by management, for basis differences of assets and liabilities for financial reporting and income tax purposes. The Company follows guidance issued by the FASB with respect to accounting for uncertainty in income taxes. A tax position is recognized as a benefit only if it is more-likely-than-not that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50 % likely of being realized on examination. For tax positions not meeting the more-likely-than-not test, no tax benefit is recorded. The Company and its subsidiaries are subject to U.S. federal income tax, as well as income tax of the state of Florida. The Companys income tax returns for the past three years are subject to examination by tax authorities and may change upon examination. We have no open tax examinations. T he Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities. The estimate of the Companys tax liabilities relating to uncertain tax positions requires management to assess uncertainties and to make judgments about the application of complex tax laws and regulations. We recognize …

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NOTE 13 Employee Benefit Plan The Company has a defined contribution retirement plan (the Plan) qualifying under Section 401(k) of the Internal Revenue Code. The Plan covers employees who have met certain service requirements. The Company makes a discretionary matching contribution, up to a maximum of 6 % of an employees compensation. The contribution expense charged to operations amounted to approximately $ 252,598 and $ 226,004 in fiscal years 2025 and 2024, respectively. …

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NOTE 4 Related Party Transactions Affiliated Entities TLT, Inc. Our President and Chairman of the Board of Directors (President) and the Executive Vice President each own 50 % of the stock of TLT, Inc. TLT, Inc. is the general partner of limited partnerships which are developing manufactured housing communities in Central Florida (the TLT Communities). Our President owns between a 24.75 % and a 56.0 % direct and indirect interest in each of these limited partnerships. Our Executive Vice President owns between a 23.0 % and a 57.75 % direct and indirect interest in each of these limited partnerships. The TLT Communities have purchased manufactured homes exclusively from the Company since 1990. Sales to TLT Communities were not significant during fiscal years 2025 and 2024. In January 2026, the Company repurchased 100,000 shares of common stock from our President at $ 29.70 per share. …

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NOTE 11 Stockholders Equity Authorized preferred stock may be issued in series with rights and preferences designated by the Board of Directors at the time it authorizes the issuance of such stock. The Company has never issued any preferred stock. Treasury stock is recorded at cost and is presented as a reduction of stockholders equity in the accompanying consolidated financial statements. The Company repurchased 15,333 and 0 shares of its common stock in fiscal year 2025 and 2024 respectively. In fiscal year 2024, we reclassed 246 shares of common stock to treasury stock due to a cancellation of a stock award. …

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"NOTE 15 Subsequent Events See Note 4 ""Affiliated Entities"" to the Company's financial statement included herein for repurchase of common shares from related party subsequent to November 1, 2025."

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Note 5 Fair Value of Financial Instruments The carrying amount of cash and cash equivalents, accounts and notes receivable, accounts payable, customer deposits and accrued expenses approximate fair value because of the short maturity of those instruments. The Company accounts for the fair value of financial instruments in accordance with FASB Accounting Standards Codification (ASC) No. 820 Fair Value Measurements (ASC 820). ASC 820 defines fair value as the price that would be received upon the sale of an asset or paid to transfer a liability (i.e. exit price) in an orderly transaction between market participants at the measurement date. ASC 820 requires disclosures that categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e. inputs) used in the valuation. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The ASC 820 fair value hierarchy is defined as follows: Level 1 - Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 - Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly. Level 3 - Valuations are based on prices or valuation techniques that require inputs that are both observable and significa …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Note 7 Revenues by Products and Services The Company operates in one business segment, which is manufactured housing and ancillary services. Revenues by net sales from manufactured housing homes and insurance agent commissions for the three and six months ended May 2, 2026 and May 3, 2025 are as follows. Three Months Ended Six Months Ended May 2, May 3, May 2, May 3, 2026 2025 2026 2025 Manufactured housing Homes sold through Company owned sales centers $ 8,107,207 $ 10,292,466 $ 14,964,826 $ 20,611,528 Homes sold to independent dealers and through manufactured home parks, net 4,234,597 4,387,441 7,800,927 6,251,747 12,341,804 14,679,907 22,765,753 26,863,275 Insurance agent commissions 68,756 77,430 147,653 135,804 Total net sales $ 12,410,560 $ 14,757,337 $ 22,913,406 $ 26,999,079

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