What changed in this filing

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Item 1. Financial Statements

2026-02-17 compared with 2025-11-14 · 161 added, 114 removed, 518 unchanged (35% 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 $ 35 on September 30, 2025 and $ 35 on June 30, 2025

Inventories, net of allowance for inventory reserve of $ 232 on September 30, 2025 and $ 232 on June 30, 2025

Accounts receivable, net of allowance for doubtful accounts and allowance for discounts and returns of $ 18 on December 31 2025 and $ 35 on June 30, 2025

Inventories, net of allowance for inventory reserve of $ 232 on December 31, 2025 and $ 232 on June 30, 2025

Other current assets

1 unchanged sentence

Equipment, property and leasehold improvements, net

Finance lease assets

Finance lease assets, net

Operating lease assets

14 unchanged sentences

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, 2025 and June 30, 2025

Common stock, $ 0.01 par value, 175,000,000 shares authorized, 76,834,057 and 76,834,057 shares issued and outstanding as of September 30, 2025 and June 30, 2025, 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, 2025 and June 30, 2025

Common stock, $ 0.01 par value, 175,000,000 shares authorized, 76,834,057 and 76,834,057 shares issued and outstanding as of December 31, 2025 and June 30, 2025, 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

Other expense:

Operating income

Other income (expense):

Interest expense and financing costs

Total other expense

Loss from operations before income taxes

Income (Loss) from operations before income taxes

Provision for income taxes

Net loss per share:

Shares used in calculation of net loss per share:

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

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Changes in Stockholders’ Equity

For the Three Months ended September 30, 2025 and September 30, 2024 (unaudited)

Series A Preferred Stock

For the Three and Six Months ended December 31, 2025 and December 31, 2024 (unaudited)

For the three months ended December 31, 2024 and December 31, 2025 (unaudited)

Preferred Stock

Total Stockholders'

(in thousands, except share data)

Ending balance, June 30, 2024

Ending balance, September 30, 2024

Stock-based compensation expense

Stock option exercises

Ending balance, December 31, 2024

Ending balance, September 30, 2025

Stock-based compensation expense

Stock option exercises

Ending balance, December 31, 2025

For the six months ended December 31, 2024 and December 31, 2025 (unaudited)

Preferred Stock

Additional Paid-

Total Stockholders'

(in thousands, except share data)

Ending balance, June 30, 2024

1 unchanged sentence

Stock option exercises

Ending balance, September 30, 2025

Ending balance, December 31, 2024

Ending balance, June 30, 2025

Stock-based compensation expense

Stock option exercises

Ending balance, December 31, 2025

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)

2 unchanged sentences

Depreciation and amortization

Deferred tax expense

Stock-based compensation expense

Loss on sale of fixed asset

Change in operating assets and liabilities:

Accounts receivable

Other current assets

Accounts payable

Accrued expenses and interest

Operating lease liability

Amortization of operating lease asset

Prepaid expenses and other current assets

Accounts payable

Other current liabilities

Net cash provided by operating activities

3 unchanged sentences

FINANCING ACTIVITIES:

(Repayment) borrowing under revolving line of credit

Borrowing under revolving line of credit

Repayment of unsecured line of credit

Proceeds from secured notes payable

Repayment of secured notes payable

Proceeds from equipment notes

Payments on equipment notes

Payments on secured notes payable

Principal payments on finance leases

Net cash provided by (used in) financing activities

Principal payments on capital leases

Net cash used in financing activities

Net increase in cash and cash equivalents

2 unchanged sentences

Supplemental Disclosure of Cash Flow Information:

Non cash item:

New operating lease liability

Cash paid during the year for:

20 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, 2025 are not necessarily indicative of the results to be expected for the entire fiscal year.

The results of operations for the three and six months ended December 31, 2025 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, 2025 as filed with the Securities and Exchange Commission (the “SEC”) on October 14, 2025 (the “2025 10-K”).

43 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, 2025 was $ 1,650 and was included in “Other accrued liabilities” on the Company’s consolidated balance sheets.

The Company’s total deferred revenue as of December 31, 2025 was $ 1,650 and was included in “Other accrued liabilities” on the Company’s consolidated balance sheets.

The deferred revenue balance as of June 30, 2025 was $ 1,700 .

9 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, 2025 and June 30, 2025.

September 30,

The following is a summary of Accounts Receivable as of December 31, 2025 and June 30, 2025.

June 30, 2025

9 unchanged sentences

This approach simplifies the estimation of expected credit losses by removing the requirement to forecast future economic conditions for assets with contractual maturities of one year or less.

As of September 30, 2025, the Company’s accounts receivables totaling $ 1.55 million.

As of December 31, 2025, the Company had net accounts receivable totaling $ 1.50 million.

Based on historical loss experience and current conditions, the Company had an allowance for credit losses of $ 18,000 .

12 unchanged sentences

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

On September 30, 2025, the Company had bank balances on deposit that exceeded the balance insured by the FDIC by $ 568,053 .

On December 31, 2025, the Company had bank balances on deposit that exceeded the balance insured by the FDIC by $ 544,492 .

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

During the three month period ended September 30, 2025, the Company purchased 23 % of total inventory purchases from one vendor.

During the three month period ended September 30, 2024, the Company purchased 22 % of total inventory purchases from one vendor.

As of September 30, 2025, three of the Company’s customers represent 41 %, 11 % and 8 % of the total accounts receivable.

For the three months ended September 30, 2024, two customers represented 57 % and 8 % of the total accounts receivable.

For the three months ended September 30, 2025 and September 30, 2024 sales to and through Amazon accounted for 34 % and 38 %, respectively, of the Company’s net sales.

During the three and six month period ended December 31, 2025, the Company purchased 22 % and 24 % of total inventory purchases from one vendor, respectively.

During the three and six month period ended December 31, 2024, the Company purchased 20 % and 22 %of total inventory purchases from one vendor, respectively.

As of December 31, 2025, three of the Company’s customers represent 44 %, 12 % and 6 % of the total accounts receivable.

For the three and six months ended December 31, 2024, two customers represented 40 % and 12 % of the total accounts receivable.

For the three and six months ended December 31, 2025 sales to and through Amazon accounted for 36 % and 37 %.

For the three and six months ended December 31, 2024 sales to and through Amazon were 37 % and 39 %, respectively, of the Company’s net sales.

Fair Value of Financial Instruments

At September 30, 2025 and June 30, 2025, 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, 2025 and June 30, 2025, 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.

14 unchanged sentences

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

Prepaid advertising as of September 30, 2025 and June 30, 2025 was $ 0 and $ 0 .

Advertising expense for the three months ended September 30, 2025, and September 30, 2024, was $ 249,387 and $ 231,131 , respectively.

Prepaid advertising as of December 31, 2025 and June 30, 2025 was $ 0 and $ 0 .

Advertising expense for the three months ended December 31, 2025, and December 31, 2024, was $ 255,420 and $ 247,057 , respectively.

Research and Development

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

For the three months ended September 30, 2025 and 2024, expenses for new product development totaled $ 38,107 and $ 42,594 , respectively.

For the three months ended December 31, 2025 and 2024, expenses for new product development totaled $ 41,426 Dand $ 42,430 , respectively.

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

9 unchanged sentences

360, Property, Plant, and Equipment .

The Company has determined that there was no impairment at September 30, 2025 and June 30, 2025.

The Company has determined that there was no impairment at December 31, 2025 and June 30, 2025.

Operating Leases

On November 2, 2020, the Company entered into an agreement with its landlord on a lease for its then current facilities for six years and two months, beginning January 1, 2021.

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

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, 2025 and 2024 was $ 163,188 and $ 163,188 , respectively.

On November 7, 2025, the Company entered into an agreement with its landlord on a lease for its then current facilities for 56 months, beginning November 7, 2025.

The lease includes four months of rent abatement totaling $ 333,000 beginning March 1, 2027.

Under the lease, the monthly rent on the facility will be $ 58,053 with annual escalations of 3 % to February 2027 at $ 61,605 .

From March 1, 2027, the rent monthly rent will increase to $83,250 with 3.5% annual increases with the final 4 months of the lease ending at $92,241.

In addition, the Company will pay the landlord proportional share of project expenses and taxes estimated at $23,421 per month .

The rent expense for the three and six months ended December 31, 2025 was $ 218,605 and $ 381,793 , respectively.

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

13 unchanged sentences

Segment Information

As of September 30, 2025, the Company was comprised of two reportable segments:

As of December 31, 2025, the Company was comprised of two reportable segments:

Direct to Consumer and Wholesale.

3 unchanged sentences

The Company defines AOI as operating income excluding:

(i) depreciation, amortization and impairments of property and equipment, goodwill and intangible assets,

(ii) amortization for capitalized costs,

(iii) share-based compensation expense, and

(iv) gains or losses on sales or dispositions of assets.

depreciation, amortization and impairments of property and equipment, goodwill and intangible assets,

amortization for capitalized costs,

share-based compensation expense, and

gains or losses on sales or dispositions of assets.

The CODM uses AOI for each segment predominantly throughout the annual budget and forecasting process.

9 unchanged sentences

Three Months Ended

September 30, 2025

September 30, 2024

December 31, 2025

December 31, 2024

(in thousands)

4 unchanged sentences

Overhead expenses(b)

Operating income (loss)

Operating (loss) income

Interest income

3 unchanged sentences

Reconciliation of operating (loss) income to adjusted operating income:

Operating income (loss)

Operating (loss) income

Share-based compensation expense

Depreciation and amortization

Adjusted operating income

Six Months Ended

December 31, 2025

December 31, 2024

(in thousands)

Direct to Consumer

Cost of Goods Sold

Other direct operating expenses (a)

Overhead expenses(b)

Operating (loss) income

Interest income

Interest expense

Other expense, net

Loss from operations before income taxes

Reconciliation of operating (loss) income to adjusted operating income:

Operating (loss) income

Share-based compensation expense

Depreciation and amortization

Adjusted operating income

Other direct operating expenses are directly attributable to the business segment, such as marketing, salaries, customer relationship expenses, and travel and entertainment expenses.

3 unchanged sentences

From time to time, the Financial Accounting Standards Board (“FASB”) or other standard-setting bodies issue new accounting pronouncements that are adopted by the Company as of the specified effective date.

The Company has adopted ASU 2023-07 regarding business segmentation reporting and will be adopting ASU2023-09 and 2024-03 in future filings.

The Company has adopted ASU 2023-07 regarding business segmentation reporting and ASU2023-09 and 2024-03.

The Company has adopted ASU 2025-05 regarding practical expedient for expected credit loss.

2 unchanged sentences

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 September 30, 2025 and 2024, the common stock equivalents did not have any effect on net income (loss) per share.

September 30,

As of December 31, 2025 and 2024, the common stock equivalents did not have any effect on net income (loss) per share.

Common stock options – 2015 Plan

7 unchanged sentences

The Company expects to provide a full valuation allowance on its future tax benefits until it can sustain a level of profitability that demonstrates the Company’s ability to realize these assets.

During the three months ended December 31, 2025, the Company recognized $ 813,000 of income tax expense, which was primarily attributable to the tax effects associated with the new operating lease executed on November 7, 2025.

The lease resulted in book‑to‑tax differences related to the recognition of the right‑of‑use asset and corresponding lease liability under ASC 842, giving rise to the tax expense recorded for the period.

Stock Based Compensation

10 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, 2025 or June 30, 2025.

There was no impairment as of December 31, 2025 or June 30, 2025.

INVENTORIES, NET

2 unchanged sentences

Inventories consisted of the following:

September 30,

December 31, 2025

(in thousands)

6 unchanged sentences

EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Equipment, property and leasehold improvements at September 30, 2025 and June 30, 2025 consisted of the following:

September 30,

Equipment, property and leasehold improvements at December 31, 2025 and June 30, 2025 consisted of the following:

Estimated Useful Life

(in thousands)

5 unchanged sentences

Equipment and leasehold improvements, net

Depreciation expense was $ 87,325 and $ 109,221 , respectively, for the three months ended September 30, 2025 and 2024 respectively.

Depreciation expense was $ 96,616 and $ 108,243 , respectively, for the three months ended December 31, 2025 and 2024 and for six months ended December 31, 2025 and 2024 depreciation expense was $ 183,941 and $ 217,464 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, 2025 and 2024.

Management has determined no asset impairment occurred during the three months and six months ended December 31, 2025 and 2024.

OTHER ACCRUED LIABILITIES

Other accrued liabilities at September 30, 2025 and June 30, 2025:

September 30,

Other accrued liabilities at December 31, 2025 and June 30, 2025:

December 31, 2025

(in thousands)

3 unchanged sentences

CURRENT AND LONG-TERM DEBT SUMMARY

Current and long-term debt at September 30, 2025 and June 30, 2025 consisted of the following:

September 30,

Current and long-term debt at December 31, 2025 and June 30, 2025 consisted of the following:

Current debt:

15 unchanged sentences

UNSECURED NOTES PAYABLE

Unsecured notes payable at September 30, 2025 and June 30, 2025 consisted of the following:

September 30,

Unsecured notes payable at December 31, 2025 and June 30, 2025 consisted of the following:

Current debt:

4 unchanged sentences

13.5% Unsecured note, interest only, due July 31, 2027 (3)

13.5% Unsecured note, interest only, due October 31, 2027 (1)

13.5% Unsecured note, interest only, due April 30, 2027 (2)

17 unchanged sentences

SECURED NOTES PAYABLE

Secured notes payable at September 30, 2025 and June 30, 2025 consisted of the following:

September 30,

Secured notes payable at December 31, 2025 and June 30, 2025 consisted of the following:

(in thousands)

16 unchanged sentences

NOTES PAYABLE - RELATED PARTY

Related party notes payable at September 30, 2025 and June 30, 2025 consisted of the following:

September 30,

Related party notes payable at December 31, 2025 and June 30, 2025 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, 2025 and June 30, 2025, the balance owed under this line of credit was $ 1,037,582 and $ 1,096,403 .

As of September 30, 2025, the Company was current and in compliance with all terms and conditions of this line of credit.

On December 31, 2025 and June 30, 2025, the balance owed under this line of credit was $ 1,237,002 and $ 1,096,403 .

As of December 31, 2025, 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.

2 unchanged sentences

The Company has drawn a cash advance on one unsecured line of credit that is in the name of the Company and Louis Friedman.

The terms of this unsecured line of credit calls for monthly payments of principal and interest, with interest at 12 % as of September 30, 2025 and was 13.2 % as of June 30, 2025.

The aggregate amount owed on the unsecured line of credit was $ 50,154 at September 30, 2025 and $ 52,144 at June 30, 2025.

The terms of this unsecured line of credit calls for monthly payments of principal and interest, with interest at 12 % as of December 31, 2025 and was 13.2 % as of June 30, 2025.

The aggregate amount owed on the unsecured line of credit was $ 49,250 at December 31, 2025 and $ 52,144 at June 30, 2025.

COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases its facilities under a non-cancelable operating lease, which now expires February 28, 2027.

The Company leases its facilities under a non-cancelable operating lease, which now expires June 30, 2030.

Right-of-use assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease.

Right-of-use assets and liabilities for the lease renewal were recognized at the inception date of November 7, 2025, 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, 2025, the weighted average remaining lease term for the lease renewal is 1.5 years, and the weighted average discount rate is 14.49 %.

At December 31, 2025, the weighted average remaining lease term for the lease renewal is 4.5 years, and the weighted average discount rate is 3.7 %.

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, 2025 and 2024 were $ 72,623 and $ 52,992 , respectively.

Supplemental balance sheet information related to leases as of September 30, 2025 is as follows:

The cost for these additional rent expenses for the three and six months ending December 31, 2025 and 2024 were $ 72,623 and $ 143,829 , $52,992 and $ 105,983 , respectively.

Supplemental balance sheet information related to leases as of December 31, 2025 is as follows:

Operating leases

8 unchanged sentences

Total lease liabilities

Maturities of lease liabilities at September 30, 2025 are as follows:

Maturities of lease liabilities at December 31, 2025 are as follows:

(in thousands)

8 unchanged sentences

The equipment notes have stated or imputed interest rates ranging from 5.9 % to 13.2 %.

The following is an analysis of the minimum future equipment note payable payments subsequent to September 30, 2025:

The following is an analysis of the minimum future equipment note payable payments subsequent to December 31, 2025:

Years ending December 31,

(in thousands)

9 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, 2025, the weighted average remaining lease term is 3.6 years, and the weighted average discount rate is 8.5 %

The following is an analysis of the minimum finance lease payable payments subsequent to September 30, 2025:

Year ending September 2025

At December 31, 2025, the weighted average remaining lease term is 3.4 years, and the weighted average discount rate is 8.5 %

The following is an analysis of the minimum finance lease payable payments subsequent to December 31, 2025:

Year ending December 30,

(in thousands)

17 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, 2025 was accrued by the Company at the prevailing prime rate (currently 7.25 %) and totaled $ 1,421 and $ 1,628 for the three months ending September 30, 2024.

The accrued interest on the note as of September 30, 2025 and June 30, 2025, was $ 48,436 and $ 47,015 , respectively.

Interest on the note during the three and six months ended December 31, 2025 was accrued by the Company at the prevailing prime rate (currently 7.25 %) and totaled $ 1,325 and $ 2,746 and for the three and six months ending December 31, 2024 was accrued by the Company at the prevailing prime rate (currently 7.5 %) and totaled $ 1,500 and $ 3,128 .

The accrued interest on the note as of December 31, 2025 and June 30, 2025, was $ 49,761 and $ 47,015 , 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 ending September 30, 2025, at the prevailing prime rate (currently 7.25 %) and totaled $ 747 and $ 857 for the three months ending September 30, 2024.

The accrued interest on the note as of September 30, 2025, and June 30, 2025, was $ 11,382 and $ 10,634 , respectively.

The Company accrued interest on the note during the three and six months ending December 31, 2025, at the prevailing prime rate (currently 6.75 %) and totaled $ 697 and $ 1,445 for the three and six months ending December 31, 2024 at the prevailing prime rate (currently 6.75%) and totaled $ 790 and $ 1,647 .

The accrued interest on the note as of December 31, 2025, and June 30, 2025, was $ 12,080 Amand $ 10,634 , 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, 2025, the balance owed under this line of credit was $ 1,037,582 .

On December 31, 2025, the balance owed under this line of credit was $ 1,237,002 .

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

20 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 $ 50,154 at September 30, 2025 and $ 52,144 at June 30, 2025 (see Note 11).

The aggregate amount owed on the unsecured line of credit was $ 49,250 at December 31, 2025 and $ 52,144 at June 30, 2025 (see Note 11).

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

STOCKHOLDERS’ EQUITY

At September 30, 2025, the Company’s 2015 Stock Option Plan (the “2015 Plan”), which was shareholder-approved and under which 1,700,000 shares were reserved for issuance under the 2015 Plan terminated on August 31, 2025.

At December 31, 2025, the Company’s 2015 Stock Option Plan (the “2015 Plan”), which was shareholder-approved and under which 1,700,000 shares were reserved for issuance under the 2015 Plan terminated on August 31, 2025.

The shares issued 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.

The following table summarizes the Company’s stock option activities during the three months ended September 30, 2024 and 2025:

Contract Life

Exercise Price

The following table summarizes the Company’s stock option activities during the three months ended December 31, 2024 and 2025:

Number of shares of underlying outstanding option

Weighted Average Remaining Contract Life

Weighted Average Exercise Price

Intrinsic Value

1 unchanged sentence

Forfeited or expired

Options Outstanding as of September 30, 2024

Options Outstanding as of December 31.

Option Outstanding as of June 30, 2025

Forfeited or expired

Options Outstanding as of September 30, 2025

Options Exercisable as of September 30,2025

Options Outstanding as of December 31,2025

Options Exercisable as of December 31, 2025

The aggregate intrinsic value in the table above is before applicable income taxes and represents the excess amount over the exercise price that 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 $ 0.04 for such day.

There were no stock options exercised during the three months ended September 30, 2025 and 300,000 options exercised during the three months ended September 30, 2024.

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

During the three months ending September 30, 2025, no options expired.

There were no options that expired during the three months ending September 30, 2024.

There were no stock options granted during the three months ended September 30, 2025.

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

The following table summarizes the weighted average characteristics of outstanding stock options as of September 30, 2025:

There were no stock options exercised during the three months ended December 31, 2025 and 300,000 options exercised during the three and six months ended December 31, 2024.

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

During the three and six months ending December 31, 2025, no options expired.

There were no options that expired during the three and six months ending December 31, 2024.

There were no stock options granted during the three and six months ended December 31, 2025.

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

The following table summarizes the weighted average characteristics of outstanding stock options as of December 31, 2025:

Outstanding Options

1 unchanged sentence

Number of Shares

Remaining Life (Years)

Weighted Average Price

Options Number of Shares

Weighted Average Price

$0.02 to $0.03

7 unchanged sentences

The cost of each award is recognized as an 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, 2025 and 2024 is 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, 2025 and 2024 is 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:

Ending September 30,

Ending December 31,

($ in thousands)

Cost of Goods Sold

2 unchanged sentences

Total Stock-based Compensation Expense

As of September 30, 2025, the Company’s total unrecognized compensation cost was $ 36,746 which will be recognized over the weighted average vesting period of approximately twenty-four months.

As of September 30, 2025 and 2024, there were no warrants outstanding.

The Company’s authorized common stock was 175,000,000 shares at September 30, 2025 and June 30, 2025.

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, 2025, the Company had reserved the following shares of common stock for issuance:

September 30,

As of December 31, 2025, the Company’s total unrecognized compensation cost was $ 29,208 which will be recognized over the weighted average vesting period of approximately twenty-four months.

As of December 31, 2025 and 2024, there were no warrants outstanding.

The Company’s authorized common stock was 175,000,000 shares at December 31, 2025 and June 30, 2025.

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

The Company does not intend to authorize any dividends at this time.

At December 31, 2025, 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