What changed in this filing

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Item 1. Financial Statements

2025-02-10 compared with 2024-11-14 · 141 added, 109 removed, 488 unchanged (34% of the section changed)

3 unchanged sentences

Consolidated Balance Sheets

September 30,

(in thousands, except share data)

1 unchanged sentence

Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts and allowance for discounts and returns of $ 10 on September 30, 2024 and $ 11 on June 30, 2024

Inventories, net of allowance for inventory reserve of $ 214 on September 30, 2024 and $ 214 on June 30, 2024

Accounts receivable, net of allowance for doubtful accounts and allowance for discounts and returns of $ 10 on December 31, 2024 and $ 11 on June 30, 2024

Inventories, net of allowance for inventory reserve of $ 165 on December 31, 2024 and $ 214 on June 30, 2024

Other current assets

10 unchanged sentences

Noncurrent liabilities:

Deferred Tax Liability

Deferred Tax Liabilities

Long-term debt

3 unchanged sentences

Commitments and contingencies (See Note 12)

Stockholders’ equity (deficit):

Stockholders’ equity:

Preferred stock, 5,700,000 shares authorized, $ 0.0001 par value none issued and outstanding

Series A Convertible Preferred stock, 4,300,000 shares authorized $ 0.0001 par value, 4,300,000 shares issued and outstanding with a liquidation preference of $ 1,000 as of September 30, 2024 and June 30, 2024

Common stock, $ 0.01 par value, 175,000,000 shares authorized, 76,834,057 and 76,547,672 shares issued and outstanding as of September 30, 2024 and June 30, 2024, respectively

Series A Convertible Preferred stock, 4,300,000 shares authorized $ 0.0001 par value, 4,300,000 shares issued and outstanding with a liquidation preference of $ 1,000 as of December 31, 2024 and June 30, 2024

Common stock, $ 0.01 par value, 175,000,000 shares authorized, 76,834,057 and 76,547,672 shares issued and outstanding as of December 31, 2024 and June 30, 2024, respectively

Additional paid-in capital

7 unchanged sentences

Three Months Ended

September 30,

Six Months Ended

(in thousands, except share data)

Cost of goods sold (excluding depreciation expense presented below)

4 unchanged sentences

Total operating expenses

Operating loss

Operating income

Other income (expense):

Interest expense and financing costs, net

Loss from operations before income taxes

Interest expense and financing costs

Total other income (expense)

Income (loss) from operations before income taxes

Provision for income taxes

Net income/(loss)

Net loss per share:

Shares used in calculation of net loss per share:

Shares used in calculation of net income (loss) per share:

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

For the Three Months ended September 30, 2024 and September 30, 2023 (unaudited)

For the Six Months ended December 31, 2024 and December 31, 2023 (unaudited)

Series A Preferred Stock

Stockholders'

Total Stockholders'

(in thousands, except share data)

B alance, June 30, 2023

Ending balance, June 30, 2023

Stock-based compensation expense

Stock option exercises

Balance, September 30, 2023

Balance, June 30, 2024

Ending balance, December 31, 2023

Ending balance, June 30, 2024

Stock-based compensation expense

Stock option exercises

Balance, September 30, 2024

Ending balance, December 31, 2024

For the Three Months ended December 31, 2024 and December 31, 2023 (unaudited)

Series A Preferred Stock

Total Stockholders'

(in thousands, except share data)

Ending balance, September 30 ,2023

Stock-based compensation expense

Stock option exercises

Ending balance, December 31, 2023

Ending balance, September 30, 2024

Stock-based compensation expense

Stock option exercises

Ending balance, December 31, 2024

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended

September 30,

Six Months Ended

(in thousands)

4 unchanged sentences

Provision for bad debt

Loss on sale of fixed asset

Inventory reserves

Change in operating assets and liabilities:

2 unchanged sentences

Accounts payable

Accrued expenses and interest

Other accrued liabilities

Operating lease liability

Operating lease asset

Amortization of operating lease asset

Net cash provided by operating activities

10 unchanged sentences

Net cash used in financing activities

Net decrease in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

22 unchanged sentences

The year-end balance sheet data were derived from audited consolidated financial statements but do not include all disclosures required by GAAP.

The results of operations for the three months ended September 30, 2024 are not necessarily indicative of the results to be expected for the entire fiscal year.

The results of operations for the six months ended December 31, 2024 are not necessarily indicative of the results to be expected for the entire fiscal year.

These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2024 as filed with the Securities and Exchange Commission (the “SEC”) on September 30, 2024 (the “2024 10-K”).

44 unchanged sentences

Deferred revenues primarily relate to gift cards purchased, but not used, prior to the end of the fiscal period.

The Company’s total deferred revenue as of September 30, 2024 was $ 20,029 and was included in “Other accrued liabilities” on the Company’s consolidated balance sheets.

The Company’s total deferred revenue as of December 31, 2024 was $ 20,679 and was included in “Other accrued liabilities” on the Company’s consolidated balance sheets.

The deferred revenue balance as of June 30, 2024 was $ 19,454 .

3 unchanged sentences

For purposes of reporting cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Allowance for Doubtful Accounts

4 unchanged sentences

The Company does not have any off-balance sheet credit exposure related to its customers.

The following is a summary of Accounts Receivable as of September 30, 2024 and June 30, 2024.

September 30,

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The following is a summary of Accounts Receivable as of December 31, 2024 and June 30, 2024.

(in thousands)

13 unchanged sentences

The Federal Deposit Insurance Corporation (“FDIC”) insures the total cash balances up to $ 250,000 per bank.

On September 30, 2024, the Company had bank balances on deposit that exceeded the balance insured by the FDIC by $ 817,862 .

On December 31, 2024, the Company had bank balances on deposit that exceeded the balance insured by the FDIC by $ 1,054,533 .

Accounts receivable are typically unsecured and are derived from revenue earned from customers primarily located in North America and Europe.

During the three months ended September 30, 2024, the Company purchased 16 % of total inventory purchases from one vendor.

During the three months ended September 30, 2023, the Company purchased 35 % of total inventory purchases from one vendor.

As of September 30, 2024, two of the Company’s customers represents 57 % and 8 % of the total accounts receivables, respectively.

During the three and six month periods ended December 31, 2024, the Company purchased 25 % and 21 % , respectively, of total inventory purchases from one vendor.

During the three and six month periods ended December 31, 2023, the Company purchased 25 % and 24 %, respectively, of total inventory purchases from one vendor.

As of December 31, 2024, two of the Company’s customers represents 40 % and 12 % of the total accounts receivables, respectively.

As of June 30, 2024, two of the Company’s customers represents 43 % and 17 % of the total accounts receivables, respectively.

For the three months ended September 30, 2024 and September 30, 2023, sales to and through Amazon accounted for 38 % and 37 %, respectively, of the Company’s net sales.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

For the six months ended December 31, 2024 and December 31, 2023, sales to and through Amazon accounted for 41 % and 42 %, respectively, of the Company’s net sales.

Fair Value of Financial Instruments

At September 30, 2024 and June 30, 2024, the Company’s financial instruments included cash and cash equivalents, accounts receivable, accounts payable, short-term debt, and other long-term debt.

At December 31, 2024 and June 30, 2024, the Company’s financial instruments included cash and cash equivalents, accounts receivable, accounts payable, short-term debt, and other long-term debt.

The fair values of these financial instruments approximated their carrying values based on either their short maturity or current terms for similar instruments.

1 unchanged sentence

ASC 820 does not require any new fair value measurements, but its provisions apply to all other accounting pronouncements that require or permit fair value measurement.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

ASC 820 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability.

11 unchanged sentences

Advertising costs are expensed in the period when the advertisements are first aired or distributed to the public.

There were $ 338 in Prepaid advertising at September 30, 2024 and $ 836 at June 30, 2024.

Advertising expense for the three months ended September 30, 2024 and 2023 was $ 231,131 and $ 268,544 , respectively.

Prepaid advertising as of December 31, 2024 and June 30, 2024 was $ 0 and $ 836 .

Advertising expense for the three and six months ended December 31, 2024 was $ 247,057 and $ 478,189 , respectively.

Advertising expense for the three and six months ended December 31, 2023 were $ 272,751 and $ 541,295 , respectively.

Research and Development

Research and development expenses for new products are expensed as they are incurred.

Expenses for new product development totaled $ 42,594 and $ 32,722 for the three months ended September 30, 2024 and 2023, respectively.

For the three months ended December 31, 2024 and 2023, expenses for new product development totaled $ 42,430 and $ 38,115 , respectively.

For the six months ended December 31, 2024 and 2023, expenses totaled $ 85,024 and $ 70,837 .

Research and development costs are included in general and administrative expenses.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Property and Equipment

4 unchanged sentences

When properties are disposed of, the related costs and accumulated depreciation are removed from the respective accounts, and any gain or loss is recognized currently.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment or Disposal of Long Lived Assets

2 unchanged sentences

360, Property, Plant, and Equipment .

The Company has determined that there was no impairment at September 30, 2024.

The Company has determined that there was no impairment at December 31, 2024 and June 30, 2024.

Operating Leases

1 unchanged sentence

The new lease includes two months of rent abatement totaling $ 103,230 .

Under the new lease, the monthly rent on the facility is $ 51,615 with annual escalations of 3 % with the final two months of rent at $ 61,605 .

Under the lease, the monthly rent on the facility is $ 51,615 with annual escalations of 3 % with the final two months of rent at $ 61,605 .

In addition, the Company will pay the landlord a 2 % property management fee.

The rent expense for the three months ended September 30, 2024 and 2023 was $ 163,188 and $ 163,188 , respectively.

Under ASC 842, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present.

The rent expense for the three months ended December 31, 2024 and 2023 was $ 163,188 and $ 163,188 , respectively.

The rent expense for the six months ended December 31, 2024 and 2023 was $ 326,376 and $ 326,376 , respectively.

Under ASC 842 Leases, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present.

Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities.

11 unchanged sentences

See Note 12 for details.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Segment Information

7 unchanged sentences

Three Months Ended

September 30, 2024

December 31, 2024

Three Months Ended

September 30, 2023

December 31, 2023

(in thousands)

1 unchanged sentence

Total Net Sales

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Three Months Ended

September 30, 2024

September 30, 2023

(in thousands)

2 unchanged sentences

Total Gross Profit

Six Months Ended

December 31, 2024

Six Months Ended

December 31, 2023

(in thousands)

Net Sales by Channel:

Total Net Sales

Six Months Ended

(in thousands)

Gross Profit by Channel:

Total Gross Profit

Recent accounting pronouncements

10 unchanged sentences

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Net Loss Per Share

In accordance with ASC 260, “Earnings Per Share”, basic net income per share is computed by dividing the net income available to common stockholders for the period by the weighted average number of common shares outstanding during the period.

Diluted net income per share is computed by dividing net income available to common stockholders by the weighted average number of common and common equivalent shares outstanding during the period plus the effect of stock options using the treasury stock method.

As of September 30, 2024 and 2023, the common stock equivalents did not have any effect on net loss per share.

September 30,

Net Income (Loss) Per Share

In accordance with ASC 260, “Earnings Per Share”, basic net income (loss) per share is computed by dividing the net income (loss) available to common stockholders for the period by the weighted average number of common shares outstanding during the period.

Diluted net income (loss) per share is computed by dividing net income available to common stockholders by the weighted average number of common and common equivalent shares outstanding during the period plus the effect of stock options using the treasury stock method.

As of December 31, 2024 and 2023, the common stock equivalents did not have any effect on net income (loss) per share.

Common stock options – 2015 Plan

19 unchanged sentences

Assets to be disposed of would be reported at the lower of the carrying value or fair value less costs to sell and would not be depreciated.

There was no impairment as of September 30, 2024 or June 30, 2024.

There was no impairment as of December 31, 2024 or June 30, 2024.

INVENTORIES, NET

2 unchanged sentences

Inventories consisted of the following:

September 30,

(in thousands)

6 unchanged sentences

EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Equipment, property and leasehold improvements at September 30, 2024 and June 30, 2024 consisted of the following:

September 30,

Estimated Useful Life

Equipment, property and leasehold improvements at December 31, 2024 and June 30, 2024 consisted of the following:

(in thousands)

5 unchanged sentences

Equipment and leasehold improvements, net

Depreciation expense was $ 109,221 and $ 99,222 for the three months ended September 30, 2024 and 2023, respectively.

For the three months ended December 31, 2024 and 2023, depreciation expense was $ 108,243 and $ 103,770 , respectively.

Depreciation expense was $ 217,464 and $ 202,992 for the six months ended December 31, 2024 and 2023, respectively.

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.

1 unchanged sentence

If the carrying amount exceeds its estimated future cash flows, then an impairment charge is recognized to the extent that the carrying amount exceeds the asset’s fair value.

Management has determined no asset impairment occurred during the three months ended September 30, 2024.

Management has determined no asset impairment occurred during the six months ended December 31, 2024 and 2023.

OTHER ACCRUED LIABILITIES

Other accrued liabilities at September 30, 2024 and June 30, 2024:

September 30,

Other accrued liabilities at December 31, 2024 and June 30, 2024:

(in thousands)

3 unchanged sentences

CURRENT AND LONG-TERM DEBT SUMMARY

Current and long-term debt at September 30, 2024 and June 30, 2024 consisted of the following:

September 30, 2024

Current and long-term debt at December 31, 2024 and June 30, 2024 consisted of the following:

Current debt:

14 unchanged sentences

UNSECURED NOTES PAYABLE

Unsecured notes payable at September 30, 2024 and June 30, 2024 consisted of the following:

September 30,

Unsecured notes payable at December 31, 2024 and June 30, 2024 consisted of the following:

Current debt:

(in thousands)

13.5% Unsecured note, interest only, due May 1, 2025 (2)

13.5% Unsecured note, interest only, due July 31, 2025(3)

13.5% Unsecured note, interest only, due October 31, 2025 (1)

Total current debt

6 unchanged sentences

This note was repaid in full on October 1, 2021 and replaced with a new note from an entity controlled by the same lender with interest payable monthly at 13.5 %, principal due in full on October 31, 2023.

This note was extended in full on September 30, 2023 with the same lender with interest payable monthly at 13.5%, principal due in full on October 31, 2025.

This note was extended in full on December 31, 2023 with the same lender with interest payable monthly at 13.5%, principal due in full on October 31, 2025.

Personally guaranteed by Louis Friedman, the Company’s CEO and principal shareholder.

8 unchanged sentences

NOTES PAYABLE - RELATED PARTY

Related party notes payable at September 30, 2024 and June 30, 2024 consisted of the following:

September 30,

Related party notes payable at December 31, 2024 and June 30, 2024 consisted of the following:

(in thousands)

12 unchanged sentences

In addition, the Company has provided its corporate guarantee of the credit facility (see Note 13).

On September 30, 2024, the balance owed under this line of credit was $ 1,053,908 .

As of September 30, 2024, the Company was current and in compliance with all terms and conditions of this line of credit.

On December 31, 2024, the balance owed under this line of credit was $ 1,203,874 .

As of December 31, 2024, the Company was current and in compliance with all terms and conditions of this line of credit.

Management believes cash flows generated from operations, along with current cash and investments as well as borrowing capacity under the line of credit should be sufficient to finance capital requirements required by operations.

3 unchanged sentences

The terms of this unsecured line of credit calls for monthly payments of principal and interest, with interest at 11 %.

The aggregate amount owed on the unsecured line of credit was $ 0 at September 30, 2024 and $ 116 at June 30, 2024.

The aggregate amount owed on the unsecured line of credit was $ 0 at December 31, 2024 and $ 116 at June 30, 2024.

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

Right-of-use assets and liabilities for the lease renewal were recognized at the inception date which is November 2, 2020 based on the present value of lease payments over the lease term, using the Company’s incremental borrowing rate based on the information available.

At September 30, 2024, the weighted average remaining lease term for the lease renewal is 2.4 years and the weighted average discount rate is 14.49 %.

At December 31, 2024, the weighted average remaining lease term for the lease renewal is 2.2 years and the weighted average discount rate is 14.49 %.

In addition to the rent payment, The Company pays a proportionate share of operating costs, taxes, and insurance costs.

The cost for these additional rent expenses for the three months ending September 30 2024 and 2023 were $ 52,992 and $ 54,484 respectively.

Supplemental balance sheet information related to leases at September 30, 2024 is as follows:

The cost for these additional rent expenses for the three months ending December 31, 2024 and 2023 were $ 52,992 and $ 54,484 respectively.

The cost for these additional rent expenses for the six months ending December 31, 2024 and 2023 were $ 105,983 and $ 108,968 respectively.

Supplemental balance sheet information related to leases at December 31, 2024 is as follows:

Operating leases

8 unchanged sentences

Total lease liabilities

Maturities of lease liabilities at September 30, 2024 are as follows:

Maturities of lease liabilities at December 31, 2024 are as follows:

(in thousands)

2 unchanged sentences

Total lease liability balance

COMMITMENTS AND CONTINGENCIES (continued)

Equipment Notes Payable

4 unchanged sentences

The equipment notes have stated or imputed interest rates ranging from 7.1 % to 13.5 %.

The following is an analysis of the minimum future equipment note payable payments subsequent to September 30, 2024:

Years ending September 30,

COMMITMENTS AND CONTINGENCIES (continued)

The following is an analysis of the minimum future equipment note payable payments subsequent to December 31, 2024:

Years ending December 31, 2024

(in thousands)

11 unchanged sentences

On June 3, 2024, the Company entered into a finance lease agreement in the amount of $ 39,972 with monthly payments of $ 807 with 60 -month term at an imputed rate of 7.80 %.

At September 30, 2024, the weighted average remaining lease term is 4.5 years, and the weighted average discount rate is 8.1 %

COMMITMENTS AND CONTINGENCIES (continued)

The following is an analysis of the minimum finance lease payable payments subsequent to September 30, 2024:

Year ending September 30,

At December 31, 2024, the weighted average remaining lease term is 4.3 years, and the weighted average discount rate is 8.1 %

The following is an analysis of the minimum finance lease payable payments subsequent to December 31, 2024:

Year ending December 31, 2024

(in thousands)

5 unchanged sentences

Long-Term Obligations under Finance Lease Payable

COMMITMENTS AND CONTINGENCIES (continued)

Employment Agreements

3 unchanged sentences

Friedman for up to nine months at his current salary.

On January 15, 2024, the Company, through OneUp, engaged Chris Knauf to serve as Chief Financial Officer and Controller of the Company.

On January 15, 2024, the Company, through OneUp, engaged Christopher Knauf to serve as Chief Financial Officer and Controller of the Company.

The Company shall pay Mr.

5 unchanged sentences

The Company has a subordinated note payable to an officer of the Company who is also the wife of the Company’s CEO and principal shareholder in the amount of $ 76,000 (see Note 9).

Interest on the note during the three months ended September 30, 2024 was accrued by the Company at the prevailing prime rate (which is currently 8.50 %) and totaled $ 1,628 and $ 1,615 for the three ended September 30, 2023.

The accrued interest on the note as of September 30, 2024 and June 30, 2024 was $ 42,688 and $ 41,060 , respectively .

Interest on the note during the three months ended December 31, 2024 was accrued by the Company at the prevailing prime rate (which is currently 7.50 %) and totaled $ 1,500 and $ 1,628 for the three months ended December 31, 2023.

The accrued interest on the note as of December 31, 2024 and June 30, 2024 was $ 44,188 and $ 41,060 , respectively .

This note is subordinate to all other credit facilities currently in place.

On October 30, 2010, The Company’s CEO, loaned the Company $ 40,000 (see Note 9).

The Company accrued interest on the note during the three months ended September 30, 2024 at the prevailing prime rate (which is currently 8.50 %) and totaled $ 856 and $ 850 for the three months ended September 30, 2023[RA1] .

The accrued interest on the note as of September 30, 2024 and June 30, 2024 was $ 8,357 and $ 7,500 respectively.

The Company accrued interest on the note during the three months ended December 31, 2024 at the prevailing prime rate (which is currently 7.50 %) and totaled $ 790 and $ 857 for the three months ended December 31, 2023.

The accrued interest on the note as of December 31, 2024 and June 30, 2024 was $ 9,147 and $ 7,500 respectively.

This note is subordinate to all other credit facilities currently in place.

1 unchanged sentence

In addition, Luvu Brands has provided its corporate guarantees of the credit facility.

On September 30, 2024, the balance owed under this line of credit was $ 1,053,908 .

On December 31, 2024, the balance owed under this line of credit was $ 1,203,874 .

On July 20, 2011, the Company issued an unsecured promissory note to an individual for $ 100,000 .

9 unchanged sentences

Repayment of the promissory note is personally guaranteed by the Company’s CEO.

RELATED PARTY TRANSACTIONS (continued)

On May 1, 2012, an individual loaned the Company $ 200,000 with an interest rate of 20 %.

6 unchanged sentences

The terms of this unsecured line of credit calls for monthly payments of principal and interest, with interest at 8 %.

The aggregate amount owed on the unsecured line of credit was $ 0 at September 30, 2024 and $ 116 at June 30, 2024 (see Note 11).

The aggregate amount owed on the unsecured line of credit was $ 0 at December 31, 2024 and $ 116 at June 30, 2024 (see Note 11).

The loan is personally guaranteed by the Company’s CEO.

STOCKHOLDERS’ EQUITY

At September 30, 2024, the Company had the 2015 Stock Option Plan (the “2015 Plan”), which is shareholder-approved and under which 1,700,000 shares are reserved for issuance under the 2015 Plan until such Plan terminates on August 31, 2025.

At December 31, 2024, the Company had the 2015 Stock Option Plan (the “2015 Plan”), which is shareholder-approved and under which 1,700,000 shares are reserved for issuance under the 2015 Plan until such Plan terminates on August 31, 2025.

Under the 2015 Plan, eligible employees and certain independent consultants may be granted options to purchase shares of the Company’s common stock.

The shares issuable under the 2015 Plan will either be shares of the Company’s authorized but previously unissued common stock or shares reacquired by the Company, including shares purchased on the open market.

As of September 30, 2024, the number of shares available for issuance under the 2015 Plan was 450,000 .

The following table summarizes the Company’s stock option activities during the three months ended September 30, 2024:

As of December 31, 2024, the number of shares available for issuance under the 2015 Plan was 550,000 .

The following table summarizes the Company’s stock option activities during the six months ended December 31, 2024:

Number of shares of underlying outstanding option

1 unchanged sentence

Weighted Average Exercise Price

Aggregated Intrinsic Value

Intrinsic Value

Option Outstanding as of June 30, 2024

Forfeited or expired

Options Outstanding as of September 30, 2024

Options Exercisable as of September 30, 2024

Options Outstanding as of December 31, 2024

Options Exercisable as of December 31, 2024

The aggregate intrinsic value in the table above is before applicable income taxes and represents the excess amount over the exercise price optionees would have received if all options had been exercised on the last business day of the period indicated, based on the Company’s closing stock price of $ 0.05 for such day.

There were 300,000 stock options exercised during the three months ended September 30, 2024 and none exercised during the three months ended September 30, 2023.

The 300,000 options exercised were a cashless exercise which resulted in a net exercise amount of 286,385 stock option during the three months ended September 30, 2024 .

There were 200,000 stock options granted during the three months ended September 30, 2024.

There were 200,000 stock options granted during the three months ended September 30, 2023.

The following table summarizes the weighted average characteristics of outstanding stock options as of September 30, 2024:

There were 300,000 stock options exercised during the six months ended December 31, 2024 and none exercised during the six months ended December 31, 2023.

The 300,000 options exercised were a cashless exercise which resulted in a net exercise amount of 286,385 stock option during the six months ended December 31, 2024 .

During the six months ending December 31, 2024, 100,000 options expired.

There were 250,000 options that expired during the six months ending December 31, 2023.

There were 200,000 stock options granted during the six months ended December 31, 2024.

There were 200,000 stock options granted during the six months ended December 31, 2023.

STOCKHOLDERS’ EQUITY (continued)

The following table summarizes the weighted average characteristics of outstanding stock options as of December 31, 2024:

Outstanding Options

14 unchanged sentences

The cost of each award is recognized as expense in the financial statements over the respective vesting period.

Stock option-based compensation expense recognized in the consolidated statements of operations for the three months ended September 30, 2024 and 2023 are based on awards ultimately expected to vest, and is reduced for estimated forfeitures.

Stock option-based compensation expense recognized in the consolidated statements of operations for the three and six months ended December 31, 2024 and 2023 are based on awards ultimately expected to vest, and is reduced for estimated forfeitures.

The following table summarizes stock option-based compensation expense by line item in the Consolidated Statements of Operations, all relating to the Plans:

Ended September 30,

Ending December 31,

($ in thousands)

3 unchanged sentences

Total Stock-based Compensation Expense

As of September 30, 2024, the Company’s total unrecognized compensation cost was $ 72,614 which will be recognized over the weighted average vesting period of approximately twenty-seven months.

As of September 30, 2024 and 2023, there were no warrants outstanding.

The Company’s authorized common stock was 175,000,000 shares at September 30, 2024 and June 30, 2024.

Ending December 31,

($ in thousands)

Cost of Goods Sold

Other Selling and Marketing

General and Administrative

Total Stock-based Compensation Expense

As of December 31, 2024, the Company’s total unrecognized compensation cost was $ 62,851 which will be recognized over the weighted average vesting period of approximately twenty four months.

As of December 31, 2024 and 2023, there were no warrants outstanding.

STOCKHOLDERS’ EQUITY (continued)

The Company’s authorized common stock was 175,000,000 shares at December 31, 2024 and June 30, 2024.

Common shareholders are entitled to dividends if and when declared by the Company’s Board of Directors, subject to preferred shareholder dividend rights.

At September 30, 2024, the Company had reserved the following shares of common stock for issuance:

September 30,

At December 31, 2024, the Company had reserved the following shares of common stock for issuance:

Shares of common stock reserved for issuance under the 2015 Plan

10 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements