Annual Report for Fiscal Year Ending November 1, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

General

Nobility focuses on home buyers who generally purchase their manufactured homes from retail sales centers to locate on property they own. Nobility has aggressively pursued this market through its Prestige retail sales centers. While Nobility actively seeks to make wholesale sales to independent retail dealers, its presence as a competitor limits potential sales to dealers located in the same geographic areas serviced by its Prestige retail sales centers.

Nobility has aggressively targeted the retirement community market, which is made up of retirees moving to Florida and typically purchasing homes to be located on sites leased from park communities offering a variety of amenities. Sales are not limited by the presence of the Company's Prestige retail sales centers in this type of arrangement, as the retirement community sells homes only within their community.

Nobility has a product line of approximately 100 active models. Although market demand can fluctuate on a fairly short-term basis, the manufacturing process is such that Nobility can alter its product mix relatively quickly in response to changes in the market. Our three-, four- and five-bedroom manufactured homes are favored by families, compared with the one, two and three-bedroom homes that typically appeal to the retirement buyers who reside in the manufactured housing communities.

In an effort to make manufactured homes more competitive with site-built housing, financing packages are available through third-party lenders to provide (1) 30-year financing, (2) an interest rate reduction program (buy-down), (3) combination land/manufactured home loans, and (4) a 5% down payment program for qualified buyers.

Prestige maintains several outside financing sources that provide financing to retail homebuyers for its manufactured homes. The Company continually tries to develop relationships with new lenders, since established lenders will occasionally leave manufactured home lending. The lack of lenders in our industry, partly as a result of an increase in government regulations, still affects our results by limiting many affordable manufactured housing buyers from purchasing homes. In addition, rising interest rates have slowed the demand for retail homebuyers.

Mountain Financial, Inc., is an independent insurance agent and licensed loan originator. Mountain Financial provides automobile insurance, extended warranty coverage and property and casualty insurance to Prestige customers in connection with their purchase and financing of manufactured homes as well as to other non-Prestige customers.

The interest rate environment's future impact on the overall housing market and other factors impacting the Company, such as production work force and supply of certain building products are difficult to forecast for fiscal year 2026. These factors have had a negative impact on customer traffic (and corresponding sales) within our sales centers, operations of the manufacturing facility and our business partners throughout fiscal years 2025 and 2024.

Nobility believes that being located in Florida offers a number of advantages such as an increasing population, a low-tax and business friendly state government. However, Nobility is also aware of climate-related risks such as hurricanes, tornados, sea-level rise, flooding and wildfires which are prone to occur in Florida. To date, management does not believe these climate-related risks have adversely impacted the Company. However, if such climate-related events impacted the Company's manufacturing or sales facilities or deter future population growth in Florida, the Company would be adversely impacted.

The Company's fiscal year ends on the first Saturday on or after October 31. The years ended November 1, 2025 (fiscal year 2025) and November 2, 2024 (fiscal year 2024) each consisted of a fifty-two-week period.

Results of Operations

Total net sales in fiscal year 2025 increased 1% to $52,667,970 compared to $51,933,622 in fiscal year 2024. The Company reported net income of $8,446,383 in fiscal year 2025, compared to a net income of $8,611,262 in fiscal year 2024. Although total net sales increased slightly in fiscal year 2025 as compared to the same period in 2024, the number of new retail homes sold in our Company owned retail sales centers decreased in fiscal 2025 as compared to 2024, which was offset by an increase in the number of homes sold to independent dealers in fiscal 2025 (which sales have lower margins than retail sales). In addition, we are building and selling lower-priced homes due to the higher interest rates on mortgages that we believe are negatively impacting sales as compared to the prior years. There also remain delays in the receipt of certain key production materials from suppliers, back orders, price increases and labor shortages which continue to cause delays in the completion of the homes at our manufacturing facility and the set-up process of retail homes in the field. We expect these challenges will continue into fiscal year 2026. The Company also continues to experience inflation in several building products resulting in increases in our material and labor costs which may increase the wholesale and retail selling prices of our homes. We believe that potential customers have delayed or deferred purchasing decisions when considering the

interest rate environment and the demand has been impacted by weaker consumer confidence and ongoing affordability challenges, for our typical retail customers.

The current demand for affordable manufactured housing in Florida and the U.S. has slowed. According to the Florida Manufactured Housing Association, shipments for the industry in Florida for the period from November 2024 through October 2025 declined by approximately 9% compared to a decline of 3% for the same period last year.

The following table summarizes certain key sales statistics and percent of gross profit for the years ended November 1, 2025 and November 2, 2024

Maintaining our strong financial position is vital for future growth and success. Our many years of experience in the Florida market, combined with home buyers' increased need for more affordable housing, should serve the Company well in the coming years. Management remains convinced that our specific geographic market is one of the best long-term growth areas in the country.

On June 5, 2025, we celebrated our 58th anniversary in business specializing in the design and production of quality, affordable manufactured and modular homes. With multiple retail sales centers in Florida for over 35 years and an insurance agency subsidiary, we are the only vertically integrated manufactured home company headquartered in Florida.

Insurance agent commissions in fiscal year 2025 were $314,105 compared to $342,254 in fiscal year 2024. Revenues are generated by new and renewal policies being written which affects agent commission earned. We have established appropriate reserves for policy cancellations based on numerous factors, including past transaction history with customers, historical experience and other information, which is periodically evaluated and adjusted as deemed necessary. In the opinion of management, no reserve was deemed necessary for policy cancellations at November 1, 2025 and November 2, 2024.

Cost of goods sold includes manufacturing costs such as: (1) materials, material variance and discounts, freight-in (2) direct and indirect labor-factory production (3) manufacturing expenses: (a) factory occupancy; depreciation of building and equipment, equipment rental, factory supplies and tools, repair/maintenance of building and equipment, rubbish disposal and utilities (b) salary and salary related; supervision, maintenance, purchasing, payroll taxes, group insurance and workmen's compensation (c) delivery costs (d) home service costs; salaries servicemen and office personnel, home repair contractors and materials, service vans expense for gas/maintenance and servicemen travel expenses (e) other manufacturing expenses; employee benefits, factory gas, oil, insurance, licenses and taxes and professional services. Post manufacturing cost of goods sold at our retail model centers may include appliances, air conditioners, electrical and plumbing hook-ups, furniture, insurance, impact and permit fees, land and home fees, manufactured home, service warranty, setup contractor, interior drywall finish, setup display, skirting, steps, well, septic tank and other expenses.

Gross profit as a percentage of net sales was 32% in fiscal year 2025 compared to 34% in fiscal year 2024. Our gross profit was $16,785,200 for fiscal year 2025 compared to $17,424,077 for fiscal year 2024. The gross profit is dependent on the sales mix of wholesale and retail homes and number of pre-owned homes sold. The gross profit as a percentage of net sales decreased due to an increase in the number of homes sold to independent dealers that have lower margins and a decrease in the number of homes sold at our Company owned retail sales centers that generate higher margins.

Selling, general and administrative expenses at our manufacturing facility include salaries, professional services, advertising and promotions, corporate expenses, employee benefits, office equipment and supplies and utilities. Selling, general and administrative expenses at our retail sales center include advertising, retail sales centers expenses, salary and salary related, professional fees, corporate expense, employee benefit, office equipment and supplies, utilities and travel. Selling, general and administrative expenses at the insurance company include advertising, professional fees and office supplies.

Selling, general and administrative expenses as a percentage of net sales was 13% in fiscal year 2025 compared to 15% in fiscal year 2024. Selling, general and administrative expenses were $6,748,678 for fiscal year 2025 compared to $7,842,626 for fiscal year 2024. The dollar decrease in selling, general and administrative expenses for fiscal year 2025 versus 2024 were due to decrease in the number of new homes sold at our Company owned retail sales centers.

The Company earned interest in the amount of $1,119,101 in fiscal year 2025 compared to $1,126,951 in fiscal year 2024. The amount of interest income is primarily a function of change in the interest rates and the amount invested.

The Company earned $90,121 from its joint venture, Majestic 21, in fiscal year 2025 compared to $96,323 in fiscal year 2024. The earnings from Majestic 21 represent the allocation of profit and losses which are owned 50% by 21st Mortgage Corporation and 50% by the Company. The earnings from the Majestic 21 loan portfolio could vary year to year, but overall, the earnings will continue to decrease due to the amortization, maturity and payoff of the loans.

We received $126,759 in fiscal year 2025 and $147,155 in fiscal year 2024 under an escrow arrangement related to a Finance Revenue Sharing Agreement (FRSA) between 21stMortgage Corporation and the Company. The distributions from the escrow account, related to certain loans financed by 21stMortgage Corporation, are recorded in income by the Company as received, which has been the Company's past practice due to the uncertainty of the receipts. The earnings overall from the FRSA loan portfolio will continue to decrease due to the amortization and payoff of the loans.

The Company realized pre-tax income of $11,297,239 in fiscal year 2025 compared to a pre-tax income of $11,471,949 in fiscal year 2024.

The Company recorded an income tax expense of $2,850,856 in fiscal year 2025 compared to $2,860,687 in fiscal year 2024.

Net income in fiscal year 2025 was $8,446,383 or $2.59 per share ($2.58 diluted), and net income in fiscal year 2024 was $8,611,262 or $2.63 per basic and diluted share.

Liquidity and Capital Resources

Cash and cash equivalents were $13,230,504 at November 1, 2025 compared to $13,521,296 at November 2, 2024. Certificates of deposit were $13,109,325 at November 1, 2025 compared to $13,021,839 at November 2, 2024. Short-term investments were $583,128 at November 1, 2025 compared to $680,017 at November 2, 2024. Working capital was $46,866,425 at November 1, 2025 compared to $42,927,149 at November 2, 2024. A cash dividend was paid from our cash reserves in April 2025 in the amount of $1.25 per share ($4,086,247) and in April 2024 in the amount of $1.50 per share ($4,903,243). Prestige new home inventory was $16,605,049 at November 1, 2025 compared to $18,475,932 at November 2, 2024. We own the entire inventory for our Prestige retail sales centers which includes new, pre-owned and repossessed or foreclosed homes and do not incur any third-party floor plan financing expenses. In February 2025 the Company started manufacturing steel frames for our homes in the 11,900 square foot building at our manufacturing facility, which was completed in fiscal 2024 for an approximate cost of $1,752,600 for the building and equipment. In the first quarter of fiscal 2024, the Company received a distribution of $1.6 million from 21st Mortgage Corporation, representing our share of excess capital in the portfolio.

The Company currently has no line of credit facility and no debt and does not believe that such a facility is currently necessary for its operations. The Company also has approximately $4.8 million of cash surrender value of life insurance which it would be able to access as an additional source of liquidity though the Company has not currently viewed this to be necessary. As of November 1, 2025, the Company continued to report a strong balance sheet which included total assets of approximately $67.1 million which was funded primarily by stockholders' equity of approximately $60.7 million.

Looking ahead, the Company's strong balance sheet and significant cash reserves accumulated in profitable years has allowed the Company to remain sufficiently liquid to allow the continuation of operations and should enable the Company to take advantage of any market opportunities. Management believes it has sufficient levels of liquidity as of the date of the filing of this Form 10-K to allow the Company to operate into the foreseeable future.

Critical Accounting Policies and Estimates

Inventories - New home inventory is carried at a lower of cost or net realizable value. Capitalized manufacturing costs on retail manufactured homes built by the Company are valued at manufacturing cost, including materials, labor, and manufacturing overhead, or net purchase price if acquired from unaffiliated third parties. The Company estimates manufacturing costs based on an original bill of materials which may or may not have been recently updated. For bills of materials that have not been recently updated, the Company estimates manufacturing cost based on changes in current material prices and labor and overhead rates since the last update

of the standard cost. These estimates involved especially challenging, subjective, and complex judgment due to the estimation uncertainty and the extent of effort required to evaluate management's assumptions and supporting data.

See Note 6 "Inventories" to the Company's financial statement included herein.

Off-Balance Sheet Arrangements

As part of our ongoing business, we generally do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or variable interest entities ("VIE's"), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of November 1, 2025, we are not involved in any material unconsolidated entities (other than the Company's investments in Majestic 21).

Forward Looking Statements

Certain statements in this report are unaudited or forward-looking statements within the meaning of the federal securities laws. Although Nobility believes that the amounts and expectations reflected in such forward-looking statements are based on reasonable assumptions, there are risks and uncertainties that may cause actual results to differ materially from expectations. These risks and uncertainties include, but are not limited to, the potential adverse impact on our business caused by competitive pricing pressures at both the wholesale and retail levels, inflation, tariffs, increasing material costs (including forest based products) or availability of materials due to supply chain interruptions (such as current inflation with forest products and supply issues with vinyl siding and PVC piping), changes in market demand, increase in interest rates, availability of financing for retail and wholesale purchasers, consumer confidence, adverse weather conditions that reduce sales at retail centers, the risk of manufacturing plant shutdowns due to storms or other factors, the impact of marketing and cost-management programs, the impact of higher interest rates on mortgage financing, reliance on the Florida economy, impact of labor shortage, impact of materials shortage, increasing labor cost, cyclical nature of the manufactured housing industry, impact of rising fuel costs, catastrophic events impacting insurance costs, availability of insurance coverage for various risks to Nobility, market demographics, management's ability to attract and retain executive officers and key personnel, increased global tensions, market disruptions resulting from terrorist attacks, or other events such as a pandemic, any armed conflict involving the United States and the impact of inflation.