What changed in this filing

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Item 1. Financial Statements

2026-05-15 compared with 2026-02-17 · 141 added, 122 removed, 557 unchanged (32% of the section changed)

6 unchanged sentences

Cash and cash equivalents

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

Accounts receivable, net of allowance for doubtful accounts and allowance for discounts and returns of $ 18 on March 31, 2026 and $ 35 on June 30, 2025

Inventories, net of allowance for inventory reserve of $ 232 on March 31, 2026 and $ 232 on June 30, 2025

Other current assets

18 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 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

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 March 31, 2026 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 March 31, 2026 and June 30, 2025, respectively

Additional paid-in capital

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands, except share data)

6 unchanged sentences

Total operating expenses

Operating income

Operating income/(loss)

Other income (expense):

Interest expense and financing costs

Total other expense

Total other income (expense)

Income (loss) from operations before income taxes

Provision for income taxes

Net loss per share:

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

Net income (loss)

Net income (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

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

For the three months ended March 31, 2025 and March 31, 2026 (unaudited)

Series A Preferred Stock

Total Stockholders'

(in thousands, except share data)

Ending balance, September 30, 2024

Ending balance, December 31, 2024

Stock-based compensation expense

Stock option exercises

Ending balance, March 31, 2025

Ending balance, December 31, 2025

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-

Ending balance, March 31, 2026

For the nine months ended March 31, 2025 and March 31, 2026 (unaudited)

Series A Preferred Stock

Total Stockholders'

Capital Deficit Equity

(in thousands, except share data)

2 unchanged sentences

Stock option exercises

Ending balance, December 31, 2024

Ending balance, March 31, 2025

Ending balance, June 30, 2025

1 unchanged sentence

Stock option exercises

Ending balance, December 31, 2025

Ending balance, March 31, 2026

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended

Nine Months Ended

(in thousands)

21 unchanged sentences

Repayment of secured notes payable

Repayment of unsecured notes payable

Proceeds from equipment notes

Payments on equipment notes

Principal payments on capital leases

Proceeds for finance leases

Principal payments on finance leases

Net cash used in financing activities

4 unchanged sentences

Non cash item:

New operating lease liability

New operating lease liability and right of use asset

Cash paid during the year for:

17 unchanged sentences

The accompanying unaudited consolidated financial statements of the Company and all of its wholly-owned subsidiaries included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles of the United States of America ("GAAP") have been or omitted pursuant to applicable rules and regulations.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles of the United States of America “GAAP”) have been included or omitted pursuant to applicable rules and regulations.

In the opinion of management, all normal recurring adjustments considered necessary for fair presentation have been included.

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 and six months ended December 31, 2025 are not necessarily indicative of the results to be expected for the entire fiscal year.

The results of operations for the three and nine months ended March 31, 2026 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 December 31, 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 March 31, 2026 was $ 4,737 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 December 31, 2025 and June 30, 2025.

June 30, 2025

The following is a summary of Accounts Receivable as of March 31, 2026 and June 30, 2025.

March 31, 2026

(in thousands)

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

As of March 31, 2026, the Company had net accounts receivable totaling $ 1.61 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 December 31, 2025, the Company had bank balances on deposit that exceeded the balance insured by the FDIC by $ 544,492 .

On March 31, 2026, the Company had bank balances on deposit that exceeded the balance insured by the FDIC by $ 615,689 .

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

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.

During the three and nine month period ended March 31, 2026, the Company purchased 27 % and 29 % of total inventory purchases from one vendor, respectively.

During the three and nine month period ended March 31, 2025, the Company purchased 23 % and 27 % of total inventory purchases from one vendor, respectively.

As of March 31, 2026, three of the Company’s customers represent 46 %, 10 % and 7 % of the total accounts receivable.

As of March 31, 2025, two customers represented 49 % and 10 % of the total accounts receivable.

As of March 31, 2026 sales to and through Amazon accounted for 30 % and 32 %.

For the three and nine months ended March 31, 2025 sales to and through Amazon were 35 % and 35 %, respectively, of the Company’s net sales.

Fair Value of Financial Instruments

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.

At March 31, 2026 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 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.

Prepaid advertising as of March 31, 2026 and June 30, 2025 was $ 0 and $ 0 .

Advertising expense for the three and nine months ended March 31, 2026 was $ 193,289 and $ 698,096 , respectively.

For the three and nine months ended March 31, 2025, advertising expense was $ 240,145 and $ 718,334 , respectively.

Research and Development

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

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

For the three and nine months ended March 31, 2026 expenses for new product development totaled $ 31,021 and $ 110,554 , and for the three and nine months ended March 31, 2025 expenses for new product development totaled $ 41,409 and $ 126,433 , 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 December 31, 2025 and June 30, 2025.

The Company has determined that there was no impairment at March 31, 2026 and June 30, 2025.

Operating Leases

2 unchanged sentences

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.

From March 1, 2027, the 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.

The rent expense for the three and nine months ended March 31, 2026 was $ 218,606 and $ 509,813 respectively.

The rent expense for the three and nine months ended March 31, 2025 was $ 163,188 and $ 489,564 , 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 December 31, 2025, the Company was comprised of two reportable segments:

As of March 31, 2026, the Company was comprised of two reportable segments:

Direct to Consumer and Wholesale.

3 unchanged sentences

The Company defines AOI as operating income excluding:

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.

(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.

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

9 unchanged sentences

Three Months Ended

December 31, 2025

December 31, 2024

March 31, 2026

March 31, 2025

(in thousands)

4 unchanged sentences

Overhead expenses(b)

Operating (loss) income

Operating income before depreciation

Interest income

Interest expense

Depreciation expense

Other expense, net

Loss from operations before income taxes

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

Operating (loss) income

Income/(loss) from operations before income taxes

Reconciliation of operating income to adjusted operating income :

Operating income (loss)

Share-based compensation expense

Depreciation and amortization

Adjusted operating income

Six Months Ended

December 31, 2025

December 31, 2024

Nine Months Ended

March 31, 2026

March 31, 2025

(in thousands)

4 unchanged sentences

Overhead expenses(b)

Operating (loss) income

Operating income before depreciation

Interest income

Interest expense

Depreciation expense

Other expense, net

Loss from operations before income taxes

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

Operating (loss) income

Income/(loss) from operations before income taxes

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

Operating income before depreciation

Share-based compensation expense

Depreciation and amortization

Adjusted operating income

4 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 ASU2023-09 and 2024-03.

The Company has adopted ASU 2023-07 regarding business segmentation reporting and ASU2023-09 regarding disclosures of income tax information.

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

The Company will be adopting ASU2024-03 regarding disclosure of disaggregate income statement expenses.

Net Income (Loss) Per Share

1 unchanged sentence

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

As of March 31, 2026 and 2025, 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.

During the nine months ended March 31, 2026, the Company recognized $ 763,813 of income tax expense, which was 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.

11 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 December 31, 2025 or June 30, 2025.

There was no impairment as of March 31, 2026 or June 30, 2025.

INVENTORIES, NET

2 unchanged sentences

Inventories consisted of the following:

December 31, 2025

March 31, 2026

June 30, 2025

(in thousands)

6 unchanged sentences

EQUIPMENT AND LEASEHOLD IMPROVEMENTS

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

Equipment, property and leasehold improvements at March 31, 2026 and June 30, 2025 consisted of the following:

March 31, 2026

June 30, 2025

Estimated Useful Life

6 unchanged sentences

Equipment and leasehold improvements, net

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

Depreciation expense was $ 80,902 and $ 106,517 , respectively, for the three months ended March 31, 2026 and 2025 and for nine months ended March 31, 2026 and 2025 depreciation expense was $ 264,842 and $ 323,981 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 and six months ended December 31, 2025 and 2024.

Management has determined no asset impairment occurred during the three months and nine months ended March 31, 2026 and 2025.

OTHER ACCRUED LIABILITIES

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

December 31, 2025

Other accrued liabilities at March 31, 2026 and June 30, 2025:

March 31, 2026

June 30, 2025

(in thousands)

3 unchanged sentences

CURRENT AND LONG-TERM DEBT SUMMARY

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

Current and long-term debt at March 31, 2026 and June 30, 2025 consisted of the following:

March 31, 2026

June 30, 2025

Current debt:

15 unchanged sentences

UNSECURED NOTES PAYABLE

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

Unsecured notes payable at March 31, 2026 and June 30, 2025 consisted of the following:

March 31, 2026

June 30, 2025

Current debt:

22 unchanged sentences

On August 20, 2025, this note was extended with the same lender with interest payable monthly at 13.5%, principal due in full on July 31, 2027 .

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

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

SECURED NOTES PAYABLE

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

Secured notes payable at March 31, 2026 and June 30, 2025 consisted of the following:

March 31, 2026

June 30, 2025

(in thousands)

16 unchanged sentences

NOTES PAYABLE - RELATED PARTY

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

Related party notes payable at March 31, 2026 and June 30, 2025 consisted of the following:

March 31, 2026

June 30, 2025

(in thousands)

12 unchanged sentences

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

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.

On March 31, 2026 and June 30, 2025, the balance owed under this line of credit was $ 1,279,126 and $ 1,096,403 .

As of March 31, 2026, 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 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.

The terms of this unsecured line of credit calls for monthly payments of principal and interest, with interest at 12 % as of March 31, 2026 and was 13.2 % as of June 30, 2025.

The aggregate amount owed on the unsecured line of credit was $ 47,022 at March 31, 2026 and $ 52,144 at June 30, 2025.

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

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 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 %.

At March 31, 2026, the weighted average remaining lease term for the lease renewal is 4.25 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 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:

The cost for these additional rent expenses for the three and nine months ending March 31, 2026 were $ 70,263 and $ 214,092 , respectively.

These costs for the three and nine months ending March 31, 2025 were $ 77,550 and $ 183,534 , respectively.

Supplemental balance sheet information related to leases as of March 31, 2026 is as follows:

Operating leases

8 unchanged sentences

Total lease liabilities

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

Maturities of lease liabilities at March 31, 2026 are as follows:

(in thousands)

8 unchanged sentences

The equipment notes have stated or imputed interest rates ranging from 6.75 % to 11.6 %.

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

Years ending December 31,

On March 20, 2026, the Company acquired equipment valued at $ 21,812 through a note payable.

The note is for 36 months with monthly payments of $ 720 .31 at an interest rate of 11.6 % APR.

The following is an analysis of the minimum future equipment note payable payments subsequent to March 31, 2026:

Years ending March 31,

(in thousands)

Future Minimum Note Payable Payments

Less Current Portion

Current Portion

Long-Term Obligations under Equipment Notes Payable

3 unchanged sentences

The equipment acquired with these leases has a total cost of approximately $ 132,975 These assets are included in the finance lease and include production equipment.

On January 5, 2022, the Company entered into finance lease agreement in the amount of $ 22,862 with monthly payment of $ 514 with 48 -month term at an imputed interest rate of 3.75 %.

On March 15, 2024, the Company entered into a finance lease agreement in the amount of $ 63,948 with monthly payments of $ 1,459 with 60 -month term at an imputed rate of 8.90 %.

On June 3, 2024, the Company entered into a finance lease agreement in the amount of $ 39,972 with monthly payments of $ 836 with 60 -month term at an imputed rate of 7.80 %.

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,

One March 20, 2026, the Company entered into a finance lease agreement in the amount of $ 29,350 with monthly payments of $ 666 with a 48 month term at an imputed rate of 5.99 %.

At March 31, 2026, the weighted average remaining lease term is 3.4 years, and the weighted average discount rate is 7.3 %

The following is an analysis of the minimum finance lease payable payments subsequent to March 31, 2026:

Year ending March 31,

(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 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.

Interest on the note during the three and nine months ended March 31, 2026 was accrued by the Company at the prevailing prime rate (currently 6.75%) and totaled $ 1,265 and $ 4,011 and for the three and nine months ending March 31, 2025 was accrued by the Company at the prevailing prime rate ( 7.5 %) and totaled $ 1,405 and $ 4,534 .

The accrued interest on the note as of March 31, 2026 and June 30, 2025, was $ 51,026 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 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.

The Company accrued interest on the note during the three and nine months ending March 31, 2026, at the prevailing prime rate (currently 6.75 %) and totaled $ 666 and $ 2,111 for the three and nine months ending March 31, 2025 at the prevailing prime rate ( 7.5 %) and totaled $ 740 and $ 2,386 .

The accrued interest on the note as of March 31, 2026, and June 30, 2025, was $ 12,745 and $ 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 December 31, 2025, the balance owed under this line of credit was $ 1,237,002 .

On March 31, 2026, the balance owed under this line of credit was $ 1,279,126 .

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 $ 49,250 at December 31, 2025 and $ 52,144 at June 30, 2025 (see Note 11).

The aggregate amount owed on the unsecured line of credit was $ 47,022 at March 31, 2026 and $ 52,144 at June 30, 2025 (see Note 11).

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

STOCKHOLDERS’ EQUITY

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 December 31, 2024 and 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, terminated on August 31, 2025.

Grants under the 2015 Plan remain outstanding as of March 31, 2026 pursuant to the terms of such grants.

The following table summarizes the Company’s stock option activities during the nine months ended March 31, 2026 and 2025:

Number of shares of underlying outstanding option

4 unchanged sentences

Forfeited or expired

Options Outstanding as of December 31.

Options Outstanding as of March 31, 2025

Option Outstanding as of June 30, 2025

Forfeited or expired

Options Outstanding as of December 31,2025

Options Exercisable as of December 31, 2025

Options Outstanding as of March 31, 2026

Options Exercisable as of March 31, 2026

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 $ 0.03 for such day.

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:

There were no stock options exercised during the nine months ended March 31, 2026 and 300,000 options exercised during the nine months ended March 31, 2025.

The 300,000 options exercised were a cashless exercise which resulted in a net exercise amount 286,385 stock options during the three and nine months ended March 31, 2025.

During the three and nine months ending March 31, 2026, no options expired.

There were no options that expired during the three and nine months ending March 31, 2025.

There were no stock options granted during the three and nine months ended March 31, 2026.

There were 200,000 stock options granted during the nine months ended March 31, 2025.

The following table summarizes the weighted average characteristics of outstanding stock options as of March 31, 2026:

Outstanding Options

14 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 and six months ended December 31, 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 nine months ended March 31, 2026 and 2025 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 December 31,

Ending March 31,

($ in thousands)

4 unchanged sentences

Total Stock-based Compensation Expense

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.

As of March 31, 2026, the Company’s total unrecognized compensation cost was $ 20,208 which will be recognized over the weighted average vesting period of approximately twenty-four months.

As of March 31, 2026 and 2025, there were no warrants outstanding.

The Company’s authorized common stock was 175,000,000 shares at March 31, 2026 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.

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:

At March 31, 2026, 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