Item 1. Financial Statements
Item 1. Financial Statements
Lendway, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
Values are rounded to the nearest thousand dollars and thousand shares
September 30, 2025
June 30, 2025
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
1,840,000
$
906,000
Accounts receivable - net of allowances for credit losses of $ 122 and $ 122 , respectively
2,347,000
5,124,000
Inventories
18,799,000
6,697,000
Prepaid expenses and other current assets
2,428,000
2,122,000
Total current assets
25,414,000
14,849,000
Noncurrent assets
Property and equipment, net
11,056,000
11,433,000
Equity-method investment
240,000
216,000
Goodwill
11,138,000
11,128,000
Intangible assets, net
24,425,000
24,806,000
Operating lease right-of-use assets
31,971,000
32,306,000
Finance lease right-of-use assets
547,000
310,000
Long-term receivable
240,000
240,000
Other assets
—
814,000
Total noncurrent assets
79,617,000
81,253,000
Total assets
$
105,031,000
$
96,102,000
Liabilities and Stockholders’ equity
Current liabilities:
Accounts payable
$
4,648,000
$
1,748,000
Accrued compensation
326,000
385,000
Accrued expenses and other current liabilities
3,508,000
4,934,000
Current portion of operating lease liabilities
1,249,000
1,184,000
Current portion of finance lease liabilities
117,000
71,000
Current portion of debt
1,895,000
1,870,000
Related party note payable
2,407,000
3,559,000
Total current liabilities
14,150,000
13,751,000
Long-term liabilities:
Operating lease liabilities, net of current portion
31,612,000
31,896,000
Finance lease liabilities, net of current portion
461,000
254,000
Long-term debt, net
36,851,000
28,354,000
Related party notes payable
4,023,000
—
Deferred tax liabilities, net
6,416,000
7,010,000
Total long-term liabilities
79,363,000
67,514,000
Commitments and contingencies (Note 11)
Stockholders’ equity
Common stock, par value $ 0.01 :
Authorized shares - 5,714,000
Issued and outstanding shares - 1,770,000 at both September 30, 2025 and June 30, 2025
17,000
17,000
Additional paid-in capital
16,291,000
16,278,000
Accumulated other comprehensive income
777,000
750,000
Accumulated deficit
( 7,762,000 )
( 4,908,000 )
Total stockholders’ equity attributable to Lendway, Inc.
9,323,000
12,137,000
Equity from noncontrolling interest
2,195,000
2,700,000
Total Stockholders’ equity
11,518,000
14,837,000
Total Liabilities and Stockholders’ equity
$
105,031,000
$
96,102,000
See accompanying notes to the condensed consolidated financial statements.
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Lendway, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Values are rounded to the nearest thousand dollars and thousand shares (Unaudited)
Three Months Ended
September 30,
2025
2024
Revenue, net
$
5,153,000
$
6,628,000
Cost of goods sold
5,213,000
5,188,000
Gross (loss) profit
( 60,000 )
1,440,000
Sales, general and administrative expenses
2,983,000
2,791,000
Operating loss
( 3,043,000 )
( 1,351,000 )
Foreign currency transaction loss, net
253,000
46,000
Interest expense, net
822,000
800,000
Other income, net
( 32,000 )
( 3,000 )
Loss from continuing operations before income taxes
( 4,086,000 )
( 2,194,000 )
Income tax benefit
( 721,000 )
( 736,000 )
Net loss from continuing operations
( 3,365,000 )
( 1,458,000 )
Income from discontinued operations, net of tax
—
66,000
Net loss including noncontrolling interest
( 3,365,000 )
( 1,392,000 )
Less: Net loss attributable to noncontrolling interest
( 511,000 )
( 267,000 )
Net loss attributable to Lendway, Inc.
( 2,854,000 )
( 1,125,000 )
Other comprehensive income (foreign currency translation gain)
33,000
1,000
Less: Comprehensive income attributable to noncontrolling interest
6,000
—
Comprehensive loss attributable to Lendway, Inc.
$
( 2,827,000 )
$
( 1,124,000 )
Net loss per basic and diluted share attributable to Lendway, Inc.:
Continuing operations
$
( 1.61 )
$
( 0.67 )
Discontinued operations
—
0.04
Basic and diluted earnings per share
$
( 1.61 )
$
( 0.64 )
Weighted average shares used in calculation of net loss per share:
Basic and diluted
1,770,000
1,770,000
See accompanying notes to the condensed consolidated financial statements.
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Lendway, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Values are rounded to the nearest thousand dollars and thousand shares (Unaudited)
Accumulated
Additional
Other
Total Lendway
Total
Common Stock
Paid-In
Comprehensive
Accumulated
Stockholders’
Noncontrolling
Stockholders’
Shares
Amount
Capital
Income
Deficit
Equity
Interest
Equity
BALANCE JUNE 30, 2025 (Audited)
1,770,000
$
17,000
$
16,278,000
$
750,000
$
( 4,908,000 )
$
12,137,000
$
2,700,000
$
14,837,000
Value of stock-based compensation
—
—
13,000
—
—
13,000
—
13,000
Net loss
—
—
—
—
( 2,854,000 )
( 2,854,000 )
( 511,000 )
( 3,365,000 )
Other comprehensive income
—
—
—
27,000
—
27,000
6,000
33,000
BALANCE SEPTEMBER 30, 2025
1,770,000
$
17,000
$
16,291,000
$
777,000
$
( 7,762,000 )
$
9,323,000
$
2,195,000
$
11,518,000
—
BALANCE JUNE 30, 2024
1,770,000
$
17,000
$
16,190,000
$
37,000
$
( 2,339,000 )
$
13,905,000
$
2,729,000
$
16,634,000
Value of stock-based compensation
—
—
22,000
—
—
22,000
—
22,000
Net loss
—
—
—
—
( 1,125,000 )
( 1,125,000 )
( 267,000 )
( 1,392,000 )
Other comprehensive income
—
—
—
1,000
—
1,000
—
1,000
BALANCE SEPTEMBER 30, 2024
1,770,000
$
17,000
$
16,212,000
$
38,000
$
( 3,464,000 )
$
12,803,000
$
2,462,000
$
15,265,000
See accompanying notes to the condensed consolidated financial statements.
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Lendway, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Values are rounded to the nearest thousand dollars (Unaudited)
Three Months Ended September 30,
2025
2024
Operating Activities
Net loss including noncontrolling interest
$
( 3,365,000 )
$
( 1,392,000 )
Adjustments to reconcile net loss including noncontrolling interest to net cash used in operating activities:
Depreciation and amortization
874,000
820,000
Amortization of deferred financing costs
26,000
38,000
Stock-based compensation expense
13,000
22,000
Noncash paid in-kind interest expense
465,000
400,000
Noncash operating lease expense
116,000
134,000
Deferred income taxes
( 594,000 )
( 379,000 )
Equity method investment income
( 24,000 )
—
Changes in operating assets and liabilities
( 7,438,000 )
( 7,198,000 )
Net cash used in operating activities
( 9,927,000 )
( 7,555,000 )
Investing Activities
Purchases of property and equipment
( 46,000 )
( 47,000 )
Receipts of escrow receivable
—
164,000
Net cash (used in) provided by investing activities
( 46,000 )
117,000
Financing Activities
Proceeds from revolving debt
8,575,000
5,056,000
Proceeds from related party note
4,000,000
2,000,000
Repayments of term loan
( 450,000 )
—
Repayments of related party note
( 1,200,000 )
—
Repayments of long-term debt
( 17,000 )
—
Principal payments on finance lease liabilities
( 23,000 )
( 7,000 )
Net cash provided by financing activities
10,885,000
7,049,000
Effect of exchange rate changes on cash
22,000
1,000
Net increase (decrease) in cash and cash equivalents
934,000
( 388,000 )
Cash and cash equivalents, beginning of period
906,000
1,721,000
Cash and cash equivalents, end of period
$
1,840,000
$
1,333,000
Supplemental cash flow information
Cash paid for interest
$
319,000
$
300,000
Cash paid for income taxes, net of tax refunds
$
8,000
$
21,000
Non-cash financing activities
Purchase of property and equipment included in accounts payable
$
29,000
$
—
Purchase of property and equipment included in debt
$
—
$
150,000
See accompanying notes to the condensed consolidated financial statements.
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Lendway, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Description of Business and Basis of Presentation.
Description of Business. Lendway, Inc. (“the Company”) is a specialty agricultural (“ag”) company focused on making and managing its ag investments in the United States (“U.S.”) and internationally. On February 22, 2024, the Company, through its majority-owned U.S. subsidiary Tulp 24.1, LLC (“Tulp 24.1”), acquired Bloomia B.V. and its subsidiaries (“Bloomia”). Bloomia is a significant producer of fresh-cut tulips in the U.S. with a presence in the Netherlands and South Africa. Subsequent to the purchase of Bloomia, the Company’s primary operations have been those of Bloomia. As part of consideration for the business combination, the Company issued units of Tulp 24.1 to the continuing CEO of Bloomia, which amounted to 18.6 % and is presented as noncontrolling interest in these unaudited condensed consolidated financial statements. The remaining 81.4 % equity interest of Tulp 24.1 is owned by the Company and the Company is and maintains control of Tulp 24.1 as its sole managing member.
Year End. As previously reported, the Company’s Board of Directors approved a change in the Company’s fiscal year end from December 31 to June 30 of each calendar year. As a result, the three months ended September 30, 2025 represent the first quarter of the fiscal year ending June 30, 2026 (“fiscal year 2026”).
Basis of Presentation. The accompanying unaudited condensed consolidated financial statements of the Company include all wholly and majority owned subsidiaries of the Company. Entities for which the Company owns an interest, does not consolidate, but exercises significant influence, are accounted for under the equity method of accounting and are included in equity method investments within the unaudited condensed consolidated balance sheets. All intercompany accounts and transactions have been eliminated. These unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Securities and Exchange Commission (“SEC”) Regulation S-X and do not include all information and footnotes required by U.S. GAAP for complete financial statements. However, except as described herein, there has been no material change in the information disclosed in the notes to financial statements included in the Company’s consolidated financial statements as of and for the year ended June 30, 2025 included in the Company’s Transition Report on Form 10-KT filed with the SEC on August 28, 2025 (the “Form 10-KT”). In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included.
Sales, expenses, cash flows, assets and liabilities can and do vary during the year as a result of seasonality and other factors. The tulip business tends to be seasonal, with the first and second calendar quarters being the strongest sales season. Accounts receivable and inventory balances are at their lowest levels in June and July following the strong sales season. Inventory balances peak in the first calendar quarter ahead of the primary selling season. Therefore, interim results are not necessarily indicative of results to be expected for the full fiscal year.
Significant Accounting Policies. We use the same accounting policies in preparing quarterly and annual financial statements. The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period.
Fair Value. The carrying amounts of certain financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and other financial working capital items approximate their fair values at September 30, 2025 and June 30, 2025 due to their short-term nature and management’s belief that their carrying amounts approximate the amount for which the assets could be sold or the liabilities could be settled. The carrying amount of debt approximates fair value due to the debt’s variable market interest rate.
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Recently Issued Accounting Pronouncements.
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures. The amendments in this update require disaggregated disclosure of income statement expenses for public business entities. The ASU does not change the expense captions an entity presents on the face of the statement of operations; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. The amendments in ASU 2024-03 are effective for annual periods beginning after December 15, 2026 and should be applied retrospectively. The Company is evaluating the impacts of the amendments on its condensed consolidated financial statements and the accompanying notes to the financial statements.
Recently Adopted Accounting Pronouncements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires public companies to expand their income tax disclosures with respect to the reconciliation of the effective tax rate to the statutory rate for federal, state, and foreign income taxes and requires greater detail about significant reconciling items in the reconciliation. Additionally, the amendment requires disaggregated information pertaining to taxes paid, net of refunds received, for federal, state, and foreign income taxes. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09 for fiscal year ended June 30, 2025 as reported in the Form 10-KT.
2. Revenue and related accounts.
Accounts Receivable, net. Accounts receivable are presented in the condensed consolidated balance sheets at their outstanding balances net of the allowance for credit losses. The allowance for credit losses was $ 122,000 at both September 30, 2025 and June 30, 2025. These receivables are generally trade receivables due in one year or less or expected to be billed and collected within one year. The Company estimates credit losses on accounts receivable in accordance with ASC 326 Financial Instruments - Credit Losses . The Company measures the allowance for credit losses on trade receivables on a collective (pool) basis when similar risk characteristics exist. The estimate for allowance for credit losses is based on a historical loss rate for each pool. Management considers qualitative factors such as changes in economic factors, regulatory matters, and industry trends to determine if an allowance should be further adjusted. The provision for credit losses is included in selling, general, and administrative expenses on the condensed consolidated statements of operations and comprehensive loss.
Prepaid Expenses and Other Current Assets. The Company records a prepaid expense when it has paid for a good or service that it has not yet incurred. As of September 30, 2025 and June 30, 2025, the Company had paid $ 329,000 and $ 887,000 , respectively, for bulbs to be received in fiscal year 2026. The balance in prepaids and other current assets includes $ 813,000 of ex-force bulbs as of September 30, 2025. As of June 30, 2025, ex-force bulbs were included in other assets.
Revenue. The following table presents revenue disaggregated by customer, as determined by the operational nature of their industry:
Three Months Ended
Three Months Ended
September 30, 2025
September 30, 2024
Supermarket
$
4,874,000
$
5,611,000
Wholesaler
259,000
792,000
Other
20,000
225,000
$
5,153,000
$
6,628,000
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During the three months ended September 30, 2025 and 2024, the Company had three customers that accounted for 10% or more of the total revenues. During the three months ended September 30, 2025, three customers accounted for approximately 32 %, 19 %, and 18 % of revenues, respectively. During the three months ended September 30, 2024, three customers accounted for approximately 30 %, 14 %, and 13 % of revenues, respectively. As of September 30, 2025, two of these customers also accounted for approximately 29 % and 18 % of accounts receivable, net. As of June 30, 2025, three customers accounted for approximately 26 %, 15 %, and 10 % of accounts receivable, net. The loss of a major customer could adversely affect the Company’s operating results and financial condition.
Cost of Sales. Cost of sales consists primarily of costs to procure, sort, pick, cool, and transport bulbs. Additionally, cost of sales includes labor and facility costs related to production operations. Inventories are stated at the lower of cost, as determined on the first-in, first-out method, or net realizable value.
3. Inventories.
Inventories consisted of the following at:
September 30, 2025
June 30, 2025
Finished goods
$
88,000
$
182,000
Work-in-process
1,409,000
1,333,000
Raw materials and packaging supplies
17,302,000
5,182,000
Inventories
$
18,799,000
$
6,697,000
4. Property and Equipment.
Property and equipment, net consisted of the following at:
September 30, 2025
June 30, 2025
Machinery and equipment
$
12,176,000
$
12,092,000
Leasehold improvements
366,000
359,000
Bushes
489,000
489,000
Vehicles
400,000
393,000
Furniture and fixtures
199,000
199,000
Capitalized software
43,000
43,000
Construction in progress
240,000
240,000
Property and equipment, gross
13,913,000
13,815,000
Less: accumulated depreciation
( 2,857,000 )
( 2,382,000 )
Property and equipment, net
$
11,056,000
$
11,433,000
Depreciation expense was $ 460,000 and $ 436,000 for the three months ended September 30, 2025 and 2024, respectively. Depreciation of $ 442,000 and $ 18,000 was recorded within cost of sales and sales, general and administrative expenses, respectively, for the three months ended September 30, 2025. Depreciation of $ 408,000 and $ 28,000 was recorded within cost of sales and sales, general and administrative expenses, respectively, for the three months ended September 30, 2024.
5. Goodwill and Other Intangible Assets.
The following table summarizes the changes in goodwill:
Balance as of June 30, 2025
$
11,128,000
Other - Foreign currency translation
10,000
Balance as of September 30, 2025
$
11,138,000
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Other intangible assets and related amortization are as follows:
September 30, 2025
June 30, 2025
Carrying
Useful Life
Accumulated
Net Carrying
Accumulated
Net Carrying
Amount
(Years)
Amortization
Amount
Amortization
Amount
Tradename
$
8,570,000
Indefinite
$
—
$
8,570,000
$
—
$
8,570,000
Customer relationships
18,300,000
12
2,445,000
15,855,000
2,064,000
16,236,000
$
26,870,000
$
2,445,000
$
24,425,000
$
2,064,000
$
24,806,000
For each of the three months ended September 30, 2025 and 2024, amortization of intangible assets expensed to operations was $ 381,000 . The weighted average remaining amortization period for intangible assets as of September 30, 2025 and June 30, 2025 is approximately 10.4 years and 10.6 years, respectively.
Remaining estimated annual amortization expense is as follows for the fiscal years ended June 30:
Remainder of 2026
$
1,144,000
2027
1,525,000
2028
1,525,000
2029
1,525,000
2030
1,525,000
Thereafter
8,611,000
Total
$
15,855,000
6. Long-term debt, net.
The components of debt consisted of the following at:
September 30, 2025
June 30, 2025
Amended Credit Agreement - term loan
$
15,300,000
$
15,750,000
Notes payable
12,750,000
12,750,000
Amended Credit Agreement - revolving credit facility
8,575,000
—
Paid in-kind interest (PIK)
2,459,000
2,065,000
Machinery financing loans
214,000
231,000
$
39,298,000
$
30,796,000
Less: unamortized debt issuance costs
( 252,000 )
( 272,000 )
Total debt
$
39,046,000
$
30,524,000
PIK included in accrued expenses and other current liabilities
( 300,000 )
( 300,000 )
Less current maturities
( 1,895,000 )
( 1,870,000 )
Long-term debt, net of current maturities
$
36,851,000
$
28,354,000
To finance the acquisition of Bloomia the Company entered into a revolving credit and term loan agreement (the “Credit Agreement”), with Tulp 24.1 as the borrower (the “Borrower”) for a $ 18,000,000 term loan and a $ 6,000,000 revolving credit facility. The Company pays $ 450,000 of principal term loan payments quarterly. On October 16, 2024, the Company entered into a First Amendment to Credit Agreement to, among other things, temporarily increase the borrowing capacity under the revolving credit facility to $ 8,000,000 until March 31, 2205. On September 15, 2025, the Company, as parent guarantor, entered into a Second Amendment to Credit Agreement (the Credit Agreement, as amended by the First Amendment to Credit Agreement and the Second Amendment to Credit Agreement, the “Amended Credit Agreement”), together with its direct and indirect subsidiaries Tulp 24.1, LLC, as borrower, and each of Tulipa Acquisitie Holding B.V., Bloomia B.V., and Fresh Tulips USA, LLC, as guarantors, with Associated Bank, N.A., a national banking association. Under the Amended Credit Agreement, among other things, the revolving facility capacity was temporarily increased from $ 6,000,000 to $ 10,000,000 and the definition of eligible inventory will continue to include inventory in the Netherlands, in each case until April 30, 2026. Additionally, the senior cash flow leverage ratio covenant levels were revised.
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Commencing September 30, 2025, the interest rate for all loans under the facility will be based on a term SOFR rate for an interest period selected by the Company plus an applicable margin, with a range from 3.00 % to 4.00 % based on the Company’s cash flow leverage ratio. As of September 30, 2025, the Company had an outstanding balance of $ 8,575,000 under the revolving facility. The revolving credit facility may be used by the Company for general business purposes and working capital, subject to availability under a borrowing base consisting of 80 % of eligible accounts receivable and generally 50 % of eligible inventory.
As part of the financing of the acquisition, the Company entered into notes payable with the sellers. Notes payable for $ 12,750,000 have a term of five years with a scheduled maturity date of March 24, 2029. The notes payable are subject to additional principal payments based on excess cash flow. The notes payable initially bear interest at 8 % per annum for the first year that increases annually by 2 percentage points. Interest on loans made under the notes payable is payable “in kind” (“PIK”). Interest that is payable “in-kind” is added to the aggregate principal amount on the applicable interest payment date.
As of September 30, 2025 and June 30, 2025, there were $ 385,000 of debt issuance costs related to the term loan, net of amortization of $ 133,000 and $ 113,000 , respectively, which have been presented as a direct deduction from long-term debt in the accompanying condensed consolidated balance sheets. As of September 30, 2025 and June 30, 2025, there were $ 128,000 of deferred financing costs related to the revolving credit facility, net of amortization of $ 41,000 and $ 35,000 , respectively, which have been presented within prepaid expenses and other current assets in the accompanying condensed consolidated balance sheet.
The Company incurred $ 319,000 and $ 419,000 of interest expense on the term loans and revolving facility in the three months ended September 30, 2025 and 2024, respectively. In addition, the Company incurred non-cash paid-in-kind interest of $ 394,000 and $ 392,000 on the seller notes facility in the three months ended September 30, 2025 and 2024, respectively. Term loan, revolving credit facility and paid-in-kind interest are included in interest expense, net on the condensed consolidated statements of operations and comprehensive loss.
The combined aggregate maturities for the fiscal years ended June 30 are as follows:
Remainder of 2026
$
1,403,000
2027
1,861,000
2028
1,826,000
2029
34,162,000
2030
29,000
Thereafter
17,000
$
39,298,000
7. Related Party Notes Payable
On August 15, 2024, and as amended on September 27, 2024 and January 15, 2025, the Company entered into an unsecured Delayed Draw Term Note (the “2024 Note”) with Air T Inc. (“Air T”) pursuant to which Air T has agreed to advance from time to time until August 15, 2026, but not on a revolving basis, up to $ 3,750,000 to fund the Company’s operations. The 2024 Note remains scheduled to mature, and all principal and accrued but unpaid interest will become due on August 15, 2029, subject to Air T’s right to demand payment on or after February 15, 2026. Air T Inc. beneficially owns greater than 10 % of our outstanding Common Stock and is a member of a group of stockholders that collectively owns approximately 40 % of our outstanding common stock. Amounts outstanding under the 2024 Note bear interest at a fixed rate of 8.0 %, which may be increased by 3.0 % upon certain events of default, and the interest accrued and deferred until the maturity date. As of September 30, 2025 and June 30, 2025, the Company had $ 2,150,000 and $ 3,350,000 , respectively, principal outstanding under the 2024 Note. Interest expense incurred during the three months ended September 30, 2025 and 2024 was $ 48,000 and $ 8,000 , respectively, which is included in noncash paid in-kind interest expense on the condensed consolidated statements of cash flows. The 2024 Note is included total current liabilities on the condensed consolidated balance sheets as of September 30, 2025 and June 30, 2025.
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On September 15, 2025, the Company entered into unsecured Promissory Notes (collectively, the “2025 Notes”) with Air T, AO Partners I, L.P. (“AO Partners Fund”), and Gary S. Kohler (“Kohler,” and, together with Air T and AO Partners Fund, the “Note Lenders”), pursuant to which the Note Lenders have agreed to lend to the Company a total of $ 4,000,000 , in the amounts of $ 1,100,156 , $ 1,699,844 , and $ 1,200,000 , respectively. Kohler is Chief Investment Officer and Portfolio Manager of BCCM Advisors, LLC, which, according to Schedule 13G filed with the SEC on October 15, 2025, beneficially owned approximately 8.9 % of our outstanding Common Stock as of September 23, 2025. Amounts outstanding on the 2025 Notes are included in total noncurrent liabilities on the condensed consolidated balance sheets as of September 30, 2025. Proceeds from the 2025 Notes are expected to be used to fund operations of the Bloomia business. Amounts outstanding under the 2025 Notes bear interest at a fixed rate of 13.5 % per year. Interest expense incurred during the three months ended September 30, 2025 was $ 23,000 , which is included in noncash paid in-kind interest expense on the condensed consolidated statements of cash flows. The 2025 Notes are scheduled to mature and all principal and accrued but unpaid interest will become due on June 1, 2027. The 2025 Notes restrict the Company’s ability to obtain additional indebtedness, either directly or through its subsidiaries, other than existing indebtedness and usual and customary indebtedness incurred in the operation of the Company’s business, which restriction may be waived by the Note Lenders holding a majority interest in the 2025 Notes. No closing or origination fees are being paid to any Note Lender.
8. Leases.
The Company is party to leasing contracts in which the Company is the lessee. These lease contracts are classified as either operating or finance leases. The Company’s lease contracts include land, buildings, and equipment. Remaining lease terms range from 1 to 15 years with various term extension options available . The Company includes optional extension periods and early termination options in its lease term if it is reasonably likely that the Company will exercise an option to extend or terminate early.
Operating lease Right of Use (“ROU”) assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term, at the later of the commencement date or business combination date. Because most of the Company’s leases do not provide an implicit rate of return, the discount rate is based on the collateralized borrowing rate of the Company, on a portfolio basis.
The weighted average remaining lease term and weighted average discount rate were as follows at:
September 30, 2025
June 30, 2025
Weighted average remaining lease term (years)
Finance leases
5.5
5.8
Operating leases
13.1
13.4
Weighted average discount rate applied
Finance leases
8.1
%
8.1
%
Operating leases
8.2
%
8.2
%
The components of lease expense from continuing operations are as follows within our condensed consolidated statements of operations and comprehensive loss:
Three Months Ended
Three Months Ended
September 30, 2025
September 30, 2024
Operating lease expense:
Operating lease cost
$
1,068,000
$
1,061,000
Short-term and variable lease cost
83,000
67,000
Finance lease expense:
Finance lease cost - amortization
33,000
8,000
Finance lease cost - interest
10,000
—
Total lease expense
$
1,194,000
$
1,136,000
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Supplemental cash flow information related to leases where the Company is the lessee is as follows:
Three Months Ended
Three Months Ended
September 30, 2025
September 30, 2024
Operating cash flows from operating leases
$
952,000
$
927,000
Operating cash flows from finance leases
10,000
—
Financing cash flows from finance leases
23,000
8,000
Leased assets obtained in exchange for operating lease liabilities
60,000
—
Leased assets obtained in exchange for finance lease liabilities
267,000
62,000
The maturities of the operating and finance lease liabilities for the fiscal years ended June 30 are as follows:
Operating Leases
Finance Leases
Remainder of 2026
$
2,903,000
$
117,000
2027
3,934,000
156,000
2028
3,922,000
156,000
2029
3,809,000
130,000
2030
3,870,000
96,000
Thereafter
36,129,000
35,000
Total lease payments
54,567,000
690,000
Less discount to present value
( 21,706,000 )
( 112,000 )
Lease liability balance
$
32,861,000
$
578,000
9. Income Taxes.
For the three months ended September 30, 2025 and 2024, the Company recorded an income tax benefit of $ 721,000 and $ 736,000 on the loss from continuing operations before income taxes, respectively. For the three months ended September 30, 2025, the Company recorded income tax benefit of 17.6 % on loss from continuing operations. For the three months ended September 30, 2025, the rate differs from the federal statutory rate of 21 % due to state taxes, foreign taxes, and other permanent items. For the three months ended September 30, 2024, the Company recorded an income tax benefit of 33.5 % on loss from continuing operations. For the three months ended September 30, 2024, the rate differs from the federal statutory rate of 21 % due to state taxes, valuation allowance change, nondeductible transaction costs, and other permanent items.
10. Net Loss per Share.
Basic net loss per share is computed by dividing net loss by the weighted average shares outstanding and excludes any dilutive effects of stock options and restricted stock units and awards. Diluted net loss per share gives effect to all diluted potential common shares outstanding during the year.
In determining diluted net loss per share, the Company considers whether the result of the incremental shares would be antidilutive. During the three months ended September 30, 2025 and 2024, the Company was in a net loss position and the result of the potentially dilutive securities was determined to be antidilutive and therefore, no incremental shares are included in the per share calculations.
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Weighted average common shares outstanding for the three months ended September 30, 2025 and 2024 were as follows:
Three Months Ended
September 30,
2025
2024
Denominator for basic net loss per share - weighted average shares
1,770,000
1,770,000
Effect of dilutive equity awards
—
—
Denominator for diluted net loss per share - weighted average shares
1,770,000
1,770,000
11. Commitments and Contingencies.
Litigation. Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.
In the ordinary course of the business, the Company is subject to periodic legal or administrative proceedings. As of September 30, 2025, the Company was not involved in any material claims or legal actions which, in the opinion of management, the ultimate disposition would have a material adverse effect on the Company’s condensed consolidated financial position, results of operations, or liquidity.
Purchase Obligation. On July 1, 2023 the Company entered into an obligation with a third-party to purchase 25 % of their annual production of tulip bulbs through 2028 for $ 1,650,000 annually, totaling $ 8,000,000 over the duration of the agreement. In addition, the Company entered into a separate agreement with the same party to supply tulips to that party over a three-year period for a total of $ 360,000 . The Company will be paid in three sums of $ 120,000 beginning on March 1, 2026, with the final payment to be received on March 1, 2028.
Other than this obligation, the Company has not had any material service or supply agreements that obligate the Company to make payments to vendors for an extended period of time.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.