BLOOMIA HOLDINGS, INC.

Previous wording

On February 22, 2024, the Company acquired majority ownership in Bloomia. Bloomia produces and sells fresh cut tulips. Bloomia purchases tulip bulbs, hydroponically grows tulips from the bulbs, and sells the stems to retail stores. Bloomia is a leading producer of fresh cut tulips in the United States, nurturing over 75 million stems annually. Net sales (unaudited) of Bloomia for the twelve months ended December 31, 2024 and 2023 were approximately $40,000,000 and $45,000,000, respectively. Bloomia was founded in the Netherlands and is now strategically positioned in the United States, Netherlands, South Africa and Chile. Bloomia has relationships with prominent U.S. mass market retailers and has grown its customer base year over year.

Current wording

On February 22, 2024, the Company acquired majority ownership in Bloomia. Bloomia produces and sells fresh cut tulips. Bloomia purchases tulip bulbs, hydroponically grows tulips from the bulbs, and sells the stems to retail stores. Bloomia is a leading producer of fresh cut tulips in the United States, nurturing over 90 million stems annually. Bloomia was founded in the Netherlands and is now strategically headquartered in the United States with additional interests in the Netherlands, South Africa, and Chile. Bloomia has relationships with prominent U.S. mass market retailers and has grown its customer base year over year.

Previous wording

In August 2023, the Company completed the sale of its In-Store Marketing Business for gross proceeds of $3,500,000 (See Note 4 in the consolidated financial statements appearing in Part II, Item 8 of this Annual Report on Form 10-K). The operations of the In-Store Marketing Business are presented as discontinued operations. All prior periods presented have been restated to also present the In-Store Marketing Business as discontinued operations.

Current wording

In August 2023, the Company completed the sale of its In-Store Marketing Business for gross proceeds of $3,500,000. The operations of the In-Store Marketing Business are presented as discontinued operations.

Previous wording

In April 2023, the Company began the development of a non-bank lending business, through the hiring of a Senior Vice President of Lending, who later became our Chief Executive Officer. The Company met with a number of prospects for loan originations and/or purchases and deals were negotiated, but none reached execution. With the Company’s decision to allocate capital to the Bloomia acquisition, significantly less capital was available for the lending business in the near-term. Promptly after receiving a notice of resignation from the Company’s then-serving Chief Executive Officer in June 2024, our Board of Directors reexamined the Company’s strategic position and prospects. Primarily because the departing Chief Executive Officer represented nearly all of the Company’s knowledge and expertise relating to the purchase of existing loans and/or origination and funding of new loans, the Company has determined to focus solely on the ag business. Because the non-bank lending business remained in development, this change did not have a significant impact on the Company’s operations or financial results.

Current wording

In April 2023, the Company began the development of a non-bank lending business, through the hiring of a Senior Vice President of Lending, who later became our Chief Executive Officer. The Company met with a number of prospects for loan originations and/or purchases and deals were negotiated, but none reached execution. With the Company’s decision to allocate capital to the Bloomia acquisition, significantly less capital was available for the lending business in the near-term. Promptly after receiving a notice of resignation from the Company’s then-serving Chief Executive Officer in June 2024, our Board of Directors reexamined the Company’s strategic position and prospects. Primarily because the departing Chief Executive Officer represented nearly all of the Company’s knowledge and expertise relating to the purchase of existing loans and/or origination and funding of new loans, the Company has determined to focus solely on the ag business. Because the non-bank lending business remained in development at the time this business focus was abandoned by the Company, this change did not have a significant impact on the Company’s operations or financial results.

Previous wording

The following table sets forth, for the periods indicated, certain items in our consolidated statements of operations as a percentage of total net revenue.

Current wording

The following tables set forth, for the periods indicated, certain items in our consolidated statements of operations as a percentage of total net revenue.

Previous wording

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Current wording

Twelve Months Ended June 30, 2026 Compared to Twelve Months Ended June 30, 2025

Previous wording

Revenue, Net. Revenue, net for the year ended December 31, 2024 was $37,773,000, all of which were generated from Bloomia for the period from its acquisition on February 22, 2024 (“the acquisition date”) through December 31, 2024 (the “acquisition period”). The first and second calendar quarters are normally the strongest sales quarters for Bloomia with the first calendar quarter benefiting from Valentine’s Day, Easter season and the start of the Spring season. Revenue in fiscal year 2023 is included in discontinued operations.

Current wording

Revenue, Net. Revenue, net for the twelve months ended June 30, 2026 and 2025 was $48,130,000 and $48,442,000, respectively. The decrease is primarily due to lower stem sales, particularly in the fourth quarter of fiscal year 2026 due to excess waste. The decrease in stems sold was partially offset by a 12% price increase from fiscal year 2025 prices. The first and second calendar quarters are normally the strongest sales quarters for Bloomia with the first calendar quarter benefiting from Valentine’s Day, the Easter season, Mother’s Day, and the start of the spring season.

Previous wording

Sales, general and administrative. Sales, general and administrative expenses for the year ended December 31, 2024 were $13,226,000 compared to $3,519,000 for the year ended December 31, 2023. The increase was primarily due to the acquisition of Bloomia. Fiscal year 2024 includes $1,542,000 of acquisition costs and $1,335,000 of integration related costs.

Current wording

Sales, General and Administrative. Sales, general and administrative expenses for the twelve months ended June 30, 2026 and 2025 were $11,589,000 and $11,459,000, respectively. The increase was primarily due to costs related to the rights offering and deleveraging.

Previous wording

See Note 13 to the consolidated financial statements appearing in Part II, Item 8 of this Annual Report on Form 10-K.

Current wording

See Note 9 to the consolidated financial statements appearing in Part II, Item 8 of this Annual Report on Form 10-K for more information concerning these impairments.

Previous wording

Income Taxes. For the year ended December 31, 2024, the Company recorded an income tax benefit of $2,329,000, with a corresponding effective tax rate of 25.2%, on loss from continuing operations. For the year ended December 31, 2023, the Company recorded income tax expense of $20,000, with a corresponding effective tax rate of (0.7)%, on loss from continuing operations.

Current wording

Income Taxes. For the twelve months ended June 30, 2026, the Company recorded an income tax benefit of $579,000, with a corresponding effective tax rate of 4.1%, on loss from continuing operations. For the twelve months ended June 30, 2025, the Company recorded income tax benefit of $2,094,000, with a corresponding effective tax rate of 42.1%, on loss from continuing operations.

Previous wording

Income from Discontinued Operations, Net of Tax. For the year ended December 31, 2024, income from discontinued operations is a result of the reduction in the accrual for sales tax due to the expiration of the statute of limitations. Income from discontinued operations, net of tax, for the year ended December 31, 2023 reflects results from operations from the legacy In-store Marketing Business and the $2,961,000 gain from the sale of that business. Information on the sale of the In-Store Marketing Business and statement of operations and comprehensive income (loss) details of the discontinued operations are included in Note 4 to the consolidated financial statements appearing in Part II, Item 8 of this Annual Report on Form 10-K.

Current wording

Income from Discontinued Operations, Net of Tax. For the twelve months ended June 30, 2025, income from discontinued operations is a result of the reduction in the accrual for sales tax due to the expiration of the statute of limitations. See Note 5 to the consolidated financial statements appearing in Part II, Item 8 of this Annual Report on Form 10-K for more information concerning income from discontinued operations.

Previous wording

Noncontrolling interest. The 18.6% noncontrolling interest in Tulp 24.1’s loss for the acquisition period was $934,000 for the year ended December 31, 2024.

Current wording

Noncontrolling Interest. The 18.6% noncontrolling interest in Tulp 24.1’s loss was $2,203,000 and $191,000 for the twelve months ended June 30, 2026 and 2025, respectively.

Previous wording

This non-GAAP financial measure, which is not calculated or presented in accordance with U.S. generally accepted accounting principles (“GAAP”), has been provided as information supplemental and in addition to the financial measures presented in accordance with GAAP. This non-GAAP financial measure is not a substitute for, or as an alternative to, and should be considered in conjunction with, respective GAAP financial measures. The non-GAAP financial measure presented may differ from similarly named measures used by other companies. We believe this non-GAAP financial measure will be useful to permit investors to evaluate the business consistent with how management evaluates the business. Our EBITDA excludes amounts from net loss from discontinued operations that we do not consider part of our core operating results when assessing our performance. Management has used EBITDA (a) to evaluate our historical and prospective financial performance and trends as well as our performance relative to competitors and peers; (b) to measure operational profitability on a consistent basis; (c) in presentations to the members of our Board of Directors; and (d) to evaluate compliance with covenants and restricted activities under the terms of our Credit Agreement.

Current wording

This non-GAAP financial measure, which is not calculated or presented in accordance with GAAP, has been provided as supplemental information and in addition to the financial measures presented in accordance with GAAP. This non-GAAP financial measure is not a substitute for, or as an alternative to, and should be considered in conjunction with, the respective GAAP financial measures. The non-GAAP financial measure presented may differ from similarly named measures used by other companies. We believe this non-GAAP financial measure will be useful to permit investors to evaluate the business consistent with how management evaluates the business. Our EBITDA excludes amounts from net income from discontinued operations that we do not consider part of our core operating results when assessing our performance. Management has used EBITDA (a) to evaluate our historical and prospective financial performance and trends as well as our performance relative to competitors and peers; (b) to measure operational profitability on a consistent basis; (c) in presentations to the members of our Board of Directors; and (d) to evaluate compliance with covenants and restricted activities under the terms of our Amended Credit Agreement.

Previous wording

Included below is a reconciliation of EBITDA to net loss from continuing operations, the most directly comparable GAAP measure.

Current wording

Included below is a reconciliation of EBITDA to net (loss) income from continuing operations, the most directly comparable GAAP measure.

Previous wording

The Company has financed its operations with proceeds from the sale of its In-Store Marketing Business and sales of its products, in addition to a significant payment resulting from the settlement of litigation. To aid in funding the Bloomia acquisition, Tulp 24.1 entered a Credit Agreement that provided an $18,000,000 term loan and a revolver with borrowings of up to $6,000,000. At December 31, 2024, the Company’s working capital (defined as current assets less current liabilities) was $11,026,000 compared to $15,525,000 at December 31, 2023. During the year ended December 31, 2024, cash and cash equivalents decreased $14,318,000 from $16,077,000 at December 31, 2023 to $1,759,000 at December 31, 2024.

Current wording

The Company has financed its operations with sales of its products and equity and debt raises. At June 30, 2026, the Company’s working capital (defined as current assets less current liabilities) was $7,311,000 compared to $1,089,000 at June 30, 2025. During the year ended June 30, 2026, cash and cash equivalents increased $546,000 from $906,000 at June 30, 2025 to $1,452,000 at June 30, 2026.

Previous wording

Operating Activities of Continuing Operations. Net cash used in operating activities during the year ended December 31, 2024 was $4,120,000. Cash from operations is greatest in the first half of the year due to the seasonality of the Bloomia business. The Company used approximately $12,200,000 in cash in the period to purchase tulip bulbs.

Current wording

Operating Activities of Continuing Operations. Net cash used in operating activities during the year ended June 30, 2026 was $3,981,000. Included in fiscal year 2026 cash use was $1,549,000 of tariffs that were refunded in July 2026. Cash use in fiscal year 2026 also includes $1,878,000 of cash interest. Higher bulbs costs and unusually high crop waste also contributed to the cash use in the period. Cash from operations is greatest in the first half of the calendar year due to the seasonality of the Bloomia business. Bulbs are purchased in the second half of the calendar year creating a significant cash outflow, and the bulbs are grown and sold in the first half of the calendar year creating significant cash inflow.

Previous wording

Investing Activities of Continuing Operations. Net cash used in investing activities during the year ended December 31, 2024 was $35,148,000, which primarily related to the purchase price and other expenses resulting from the acquisition of Bloomia. Net cash used in investing activities also includes cash received from a note receivable, partially offset by cash paid for purchases of property and equipment.

Current wording

Investing Activities of Continuing Operations. Net cash used in investing activities during the year ended June 30, 2026 was $433,000, which primarily related to the purchases of property and equipment, including a new bulb management software.

Previous wording

On February 22, 2024, the Company acquired majority ownership in Bloomia for a total purchase price of $53,360,000. Consideration comprised of $34,919,000 of cash paid, $15,451,000 of seller bridge loans in lieu of cash, and $2,990,000 of equity issued of Tulp 24.1 which is reflected as noncontrolling interest within these consolidated financial statements. The acquisition was funded through a combination of debt and cash on hand.

Current wording

On February 22, 2024, the Company acquired majority ownership in Bloomia for a total purchase price of $53,360,000. Consideration comprised of $34,919,000 of cash paid, a $15,451,000 Seller Note in lieu of cash, and $2,990,000 of equity issued of Tulp 24.1 which is reflected as noncontrolling interest within the consolidated financial statements appearing in Part II, Item 8 of this Annual Report on Form 10-K. The acquisition was funded through a combination of debt and cash on hand from the sales of the former In-Store Marketing Business that is presented as discontinued operations in the consolidated statements of operations appearing in Part II, Item 8 of this Annual Report on Form 10-K.

Previous wording

To finance the Bloomia acquisition, the Company entered into the Credit Agreement, together with Tulp 24.1 as the borrower. Under the terms of the Credit Agreement, Tulp 24.1 had an $18,000,000 term loan funded. The Credit Agreement also contains a $6,000,000 revolving credit facility, which may be used by Tulp 24.1 for general business purposes and working capital. On October 16, 2024, the Company amended the credit agreement (Amended Credit Agreement) to, among other things, temporarily increase the borrowing capacity under the revolving credit facility to $8,000,000 through March 31, 2025.

Current wording

To finance the Bloomia acquisition, the Company, as parent guarantor, Tulp 24.1 as the borrower (the “Borrower”) and each of Tulipa, Bloomia B.V., and Fresh Tulips USA, LLC, as guarantors (collectively, the “Company Credit Parties”), entered into a Credit Agreement (the “Credit Agreement” and, as subsequently amended, the Amended Credit Agreement) with Associated Bank, N.A. (“Lender”) for a $18,000,000 term loan and a $6,000,000 revolving credit facility. On October 15, 2024, the Company Credit Parties entered into a First Amendment to Credit Agreement which, among other things, temporarily increased the borrowing capacity under the revolving credit facility to $8,000,000 until March 31, 2025. On September 15, 2025, the Company Credit Parties, entered into a Second Amendment to Credit Agreement, pursuant to which, among other things, the borrowing capacity under the revolving credit facility was temporarily increased from $6,000,000 to $10,000,000 and the definition of eligible inventory continued to include inventory in the Netherlands, in each case until April 30, 2026. The revolving credit facility may be used by Tulp 24.1 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. Borrowings under the Amended Credit Agreement bear interest at a rate per annum equal to SOFR for an interest period selected by the Company plus an applicable margin based on Tulp 24.1’s senior cash flow leverage ratio. In addition to paying interest on the outstanding principal under the Amended Credit Agreement, Tulp 24.1 is required to pay a commitment fee of 0.50% on the unutilized commitments under the revolving credit facility.

Previous wording

The obligations under the Amended Credit Agreement are secured by substantially all of the personal property assets of Tulp 24.1 and its subsidiaries. The Company provided an unsecured guaranty of the obligations of Tulp 24.1 under the Amended Credit Agreement.

Current wording

The obligations under the Amended Credit Agreement are secured by substantially all of the personal property of Tulp 24.1 and its subsidiaries. The Company has also provided an unsecured guaranty of the obligations of Tulp 24.1 under the Amended Credit Agreement. Pursuant to the Third Amendment, the Amended Credit Agreement requires Tulp 24.1 and its subsidiaries to maintain (a) a minimum fixed charge coverage ratio of not less than (i) 1.00 to 1.00 as of the last day of the fiscal quarters ending September 30, 2026, December 31, 2026, and March 31, 2027, (ii) 1.10 to 1.00 as of the last day of the fiscal quarter ending June 30, 2027, and (iii) 1.25 to 1.00 as of the last day of the fiscal quarter ending September 30, 2027 and the last day of each fiscal quarter thereafter through the maturity date of the Amended Credit Agreement, and (b) a maximum senior cash flow leverage ratio of not greater than (i) 6.25 to 1.00 as of the last day of the fiscal quarter ending September 30, 2026, (ii) 6.75 to 1.00 as of the last day of the fiscal quarter ending December 31, 2026, (iii) 6.25 to 1.00 as of the last day of the fiscal quarter ending March 31, 2027, (iv) 3.50 to 1.00 as of the last day of the fiscal quarter ending June 30, 2027, and (v) 3.00 to 1.00 as of the last day of the fiscal quarter ending September 30, 2027 and the last day of each fiscal quarter thereafter through the maturity date of the Amended Credit Agreement. The Company was not in compliance with its financial covenants under the Amended Credit Agreement on December 31, 2025, March 31, 2026, and June 30, 2026, but received waivers from the Lender for each of these covenant breaches (including pursuant to waivers granted in the Third Amendment). The Amended Credit Agreement contains other customary affirmative and negative covenants, including covenants that restrict the ability of Tulp 24.1 and its subsidiaries to incur additional indebtedness, dispose of significant assets, make distributions or pay dividends, make certain investments, including any acquisitions other than permitted acquisitions, make certain payments, enter into sale and leaseback transactions or grant liens on its assets, subject to certain limitations. The Amended Credit Agreement also contains customary events of default, the occurrence of which would permit the Lenders to terminate its commitments and accelerate loans under the Amended Credit Agreement, including failure to make payments under the credit facility, failure to comply with covenants in the Amended Credit Agreement and other loan documents, cross default to other material indebtedness of Tulp 24.1 or any of its subsidiaries, failure of Tulp 24.1 or any of its subsidiaries to pay or discharge material judgments, bankruptcy of Tulp 24.1 or any of its subsidiaries, and a change of control of the Company or Tulp 24.1. The term loan under the Amended Credit Agreement is schedule to be repaid in quarterly installments of $450,000 that commenced on June 3…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

As part of the financing of the Bloomia acquisition, Tulp 24.1 entered into notes payable with the sellers. Notes payable for $12,750,000 have a term of five years, subject to requiring principal payments based on “excess cash flow” as defined. Interest is at 8% per annum in the first year and increases annually by 2 percentage points. Notes payable for $2,700,000 were paid in full as of June 30, 2024.

Current wording

As part of the financing of the Bloomia acquisition, Tulp 24.1 and Tulipa (the “Seller Note Borrowers”) entered into a Seller Note with Botman, Jansen, and Strengers (the “Seller Note Lenders”) with the sellers of Bloomia. The Seller Note was $12,750,000 with a term of five years, subject to requiring principal payments based on “excess cash flow” as defined in the Seller Note. Interest under the Seller Note is 8% per annum in the first year and increases annually thereafter by 2 percentage points.

Previous wording

On September 27, 2024, we entered into an Amended and Restated Delayed Draw Term Note (the “Amended Note”) with Air T pursuant to which Air T has agreed to advance up to an additional $1,000,000 from time to time until August 15, 2026, but not on a revolving basis. The Amended Note provides for total borrowing of up to $3,500,000 to fund the Company’s operations. The Company borrowed $3,500,000 under the note during the year ended December 31, 2024. On January 15, 2025, the note was amended again to increase the total borrowing to $3,750,000. As previously disclosed, amounts outstanding under the Amended Note bear interest at a fixed rate of 8.0%, which may be increased by 3.0% upon certain events of default. The Amended 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. No closing or origination fees will be paid to the Air T.

Current wording

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 agreed to advance from time to time until August 15, 2026, initially not on a revolving basis, up to $3,750,000 to fund the Company’s operations. In January 2026, the 2024 Note was amended to allow for borrowing on a revolving basis. The 2024 Note had a maturity date of August 15, 2029, subject to Air T’s right to demand payment on or after February 15, 2026. Air T beneficially owns approximately 34% of our outstanding common stock and is a member of a group of stockholders that collectively owns approximately 60% of our outstanding common stock. Amounts outstanding under the 2024 Note bore interest at a fixed rate of 8.0%, subject to a 3.0% increase upon certain events of default, payable on the maturity date. As of June 30, 2025, the Company had $3,350,000 of principal outstanding and $209,000 of paid-in-kind interest outstanding under the 2024 Note. The 2024 Note is included in total current liabilities on the condensed consolidated balance sheets as of June 30, 2025.

Previous wording

The Company expects that cash from operations combined with funds available under the Amended Credit Facility and the Note will provide sufficient credit availability to support its ongoing operations, fund its new debt service requirements, capital expenditures and working capital for at least the next 12 months.

Current wording

The Company expects that cash from operations combined with funds available under the Amended Credit Facility will provide sufficient credit availability to support its ongoing operations, fund its new debt service requirements, capital expenditures and working capital for at least the next 12 months.

Previous wording

As the Company grows its businesses, we may be required to obtain additional capital through equity offerings or additional debt financings. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of those securities may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include additional covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Additional capital may not be available when needed, on reasonable terms, or at all, and our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to and volatility in the credit and financial markets in the U.S. and worldwide. If we are unable to raise additional funds when needed, we may not be able to grow our businesses or complete transactions related to the strategy.

Current wording

As the Company grows its businesses, we may be required to obtain additional capital through equity offerings or additional debt financings. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of those securities may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include additional covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Additional capital may not be available when needed, on reasonable terms, or at all, and our ability to raise additional capital may be adversely impacted by potential worsening U.S. or global economic conditions and or disruptions to and volatility in the credit and financial markets in the U.S. and worldwide. If we are unable to raise additional funds when needed, we may not be able to grow our businesses or complete transactions related to the strategy.

Previous wording

Our discussion of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. During the preparation of these financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales, costs and expenses and related disclosures. Critical accounting estimates are those estimates made in accordance with GAAP which involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. On an ongoing basis, we evaluate our estimates and assumptions, including those related to business combinations, inventory, goodwill, long-lived and indefinite-lived assets, interest expense, and income taxes. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of our analysis form the basis for making assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and the impact of such differences may be material to our financial statements.

Current wording

Our discussion of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with GAAP. During the preparation of these financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales, costs and expenses and related disclosures. Critical accounting estimates are those estimates made in accordance with GAAP which involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. On an ongoing basis, we evaluate our estimates and assumptions, including those related to business combinations, inventory, goodwill, long-lived and indefinite-lived assets, interest expense, and income taxes. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of our analysis form the basis for making assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and the impact of such differences may be material to our financial statements.

Previous wording

Our significant accounting policies are described in Note 2 to the consolidate financial statements appearing in Part II, Item 8 of this Annual Report on Form 10-K. We believe our most critical accounting estimates include the following:

Current wording

Our significant accounting policies are described in Note 2 to the consolidated financial statements appearing in Part II, Item 8 of this Annual Report on Form 10-K. We believe our most critical accounting estimates include the following:

Previous wording

Inventory**.**We coordinate with recurring customers to plan production based on anticipated demand and projections; however, we may have to write down inventory or recognize a material impairment if our production significantly exceeds customer demand. No write-downs occurred in fiscal year 2024.

Current wording

Inventory**.**We coordinate with recurring customers to plan production based on anticipated demand and projections; however, we may have to write down inventory or recognize a material impairment if our production significantly exceeds customer demand or the crop underperforms. During fiscal year 2026, the Company experienced unusual significant crop underperformance at the end of the Dutch bulb season. As a result, the Company estimated a $562,000 provision for inventory as of June 30, 2026 to ensure inventory is stated at its realizable value. There was no provision for inventory as of June 30, 2025.

Previous wording

Business Combinations. We account for business combinations under the acquisition method of accounting. This method requires the recording of acquired assets, including separately identifiable intangible assets, and assumed liabilities at their acquisition date fair values. The excess of the purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, royalty rates and asset lives, among other items.

Current wording

Business Combinations. The Company completed the acquisition of a majority interest in Bloomia in February 2024. We account for business combinations under the acquisition method of accounting. This method requires the recording of acquired assets, including separately identifiable intangible assets, and assumed liabilities at their acquisition date fair values. The excess of the purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, royalty rates and asset lives, among other items.

Previous wording

Allocations of the purchase price for acquisitions are based on estimates of the fair value of the net assets acquired and are subject to adjustment upon finalization of the purchase price allocation. During this measurement period, we will adjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. All changes that do not qualify as measurement period adjustments are included in current period earnings.

Current wording

Allocations of the purchase price for acquisitions are based on estimates of the fair value of the net assets acquired and were subject to adjustment upon finalization of the purchase price allocation. During the measurement period, assets or liabilities were adjusted if new information was obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. All changes that do not qualify as measurement period adjustments were included in current period earnings.

Previous wording

We test goodwill and identifiable intangible assets with indefinite lives for impairment at least annually in the fourth quarter. Impairment testing for goodwill is done at a reporting unit level and all goodwill is assigned to a reporting unit. Our reporting unit is the same as our reporting segment.

Current wording

We test goodwill and identifiable intangible assets with indefinite lives for impairment at least annually in the fourth quarter and when a trigger event occurs. Impairment testing for goodwill is done at a reporting unit level and all goodwill is assigned to a reporting unit. We have one reporting unit which is the same as our reporting segment.

Previous wording

We have an indefinite-lived intangible asset for trade name of $8,570,000 from the Bloomia acquisition. Annually in the fourth quarter, or if conditions indicate an additional review is necessary, we assess qualitative factors to determine if it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. We have the option to first assess qualitative factors to determine whether the fair value of a trade name is “more likely than not” less than its carrying value. If it is more likely than not that an impairment has occurred, we then perform the quantitative impairment test. If we perform the quantitative test, the carrying value of the asset is compared to an estimate of its fair value to identify impairment. The fair value is determined by the relief from royalty method, which requires significant judgment. Actual results may differ from assumed and estimated amounts utilized in the analysis. If we conclude an impairment exists, the asset’s carrying value will be written down to its fair value.

Current wording

In the fourth quarter, or if conditions indicate an additional review is necessary, we assess qualitative factors to determine if it is more likely than not that the fair value of an indefinite-lived intangible asset, the Company’s trade name, is less than its carrying amount. We have the option to first assess qualitative factors to determine whether the fair value of a trade name is “more likely than not” less than its carrying value. If it is more likely than not that an impairment has occurred, we then perform the quantitative impairment test. If we perform the quantitative test, the carrying value of the asset is compared to an estimate of its fair value to identify impairment. The fair value is determined by the relief from royalty method, which requires significant judgment. Actual results may differ from assumed and estimated amounts utilized in the analysis. If we conclude an impairment exists, the asset’s carrying value will be written down to its fair value.

Previous wording

Long-Lived Assets**.**Long-lived assets, which include property and equipment, and definite-lived intangible assets, primarily customer relationships and trade name, are assessed for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. The impairment testing involves comparing the carrying amount of the asset to the forecasted undiscounted future cash flows generated by that asset. These assumptions require significant judgment, and actual results may differ from assumed and estimated amounts. In the event the carrying amount of the asset exceeds the undiscounted future cash flows generated by that asset and the carrying amount is not considered recoverable, an impairment exists. An impairment loss is measured as the excess of the asset’s carrying amount over its fair value and is recognized in the statements of operations and comprehensive income (loss) in the period that the impairment occurs. The reasonableness of the useful lives of this asset and other long-lived assets is regularly evaluated.

Current wording

Long-Lived Assets**.**Long-lived assets, which include property and equipment, definite-lived intangible assets subject to amortization, and right-of-use assets, are assessed for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. The impairment testing involves comparing the carrying amount of the asset to the forecasted undiscounted future cash flows generated by that asset. These assumptions require significant judgment, and actual results may differ from assumed and estimated amounts. In the event the carrying amount of the asset exceeds the undiscounted future cash flows generated by that asset and the carrying amount is not considered recoverable, an impairment exists. An impairment loss is measured as the excess of the asset’s carrying amount over its fair value and is recognized in the statements of operations in the period that the impairment occurs. The reasonableness of the useful lives of the long-lived assets are regularly evaluated.

Previous wording

Certain statements made in this Annual Report on Form 10-K that are not statements of historical or current facts are considered “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of the Company to be materially different from the results or performance expressed or implied by such forward-looking statements. The words “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “intend,” “likely,” “may,” “plan,” “project,” “will” and similar expressions identify forward-looking statements. Forward-looking statements include statements expressing the intent, belief or current expectations of the Company and members of our management team regarding, for instance: (i) our belief that our cash balance, cash generated by operations and borrowings available under our Credit Agreement, will provide adequate liquidity and capital resources for at least the next twelve months, (ii) regarding the potential for growth and other opportunities for our business and (iii) the nature and timing of the Company’s intended financial reporting during its transition to a fiscal year ending June 30. Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date the statement was made. These statements are subject to the risks and uncertainties that could cause actual results to differ materially and adversely from the forward-looking statements. These forward-looking statements are based on current information, which we have assessed and which by its nature is dynamic and subject to rapid and even abrupt changes.

Current wording

Certain statements made in this Annual Report on Form 10-K that are not statements of historical or current facts are considered “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of the Company to be materially different from the results or performance expressed or implied by such forward-looking statements. The words “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “intend,” “likely,” “may,” “plan,” “project,” “will” and similar expressions identify forward-looking statements. Forward-looking statements include statements expressing the intent, belief or current expectations of the Company and members of our management team regarding, for instance: (i) our belief that our cash balance, cash generated by operations and borrowings available under our Amended Credit Agreement, will provide adequate liquidity and capital resources for at least the next twelve months, and (ii) regarding the potential for growth and other opportunities for our business. Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date the statement was made. These statements are subject to the risks and uncertainties that could cause actual results to differ materially and adversely from the forward-looking statements. These forward-looking statements are based on current information, which we have assessed and which by its nature is dynamic and subject to rapid and even abrupt changes.

Previous wording

Factors that could cause our estimates and assumptions as to future performance, and our actual results, to differ materially include the following: (1) our ability to integrate and continue to successfully operate the newly acquired Bloomia business, (2) our ability to compete, (3) concentration of Bloomia’s historical revenue among a small number of customers, (4) changes in interest rates, (5) ability to comply with the requirements of the Credit Agreement and operate within its restrictions, (6) economic and market conditions that may restrict or delay appropriate or desirable opportunities, (7) our ability to develop and maintain necessary processes and controls relating to our businesses (8) reliance on one or a small number of employees, (9) potential adverse classifications of our Company if we are unsuccessful in executing our business plans, (10) other economic, international, business, market, financial, competitive and/or regulatory factors affecting the Company’s businesses generally; (11) our ability to attract and retain highly qualified managerial, operational and sales personnel; and (12) the availability of additional capital on desirable terms, if at all. Forward-looking statements involve known and unknown risks, uncertainties and other factors, including those set forth in this report and additional risks, if any, identified in this Annual Report on Form 10-K, and subsequent Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K filed with the SEC. Such forward-looking statements should be read in conjunction with the Company’s filings with the SEC. The Company assumes no responsibility to update the forward- looking statements contained in this report or the reasons why actual results would differ from those anticipated in any such forward-looking statement, other than as required by law.

Current wording

Factors that could cause our estimates and assumptions as to future performance, and our actual results, to differ materially include the following: (1) our ability to integrate and continue to successfully operate the Bloomia business, (2) our ability to compete, (3) concentration of Bloomia’s historical revenue among a small number of customers, (4) changes in interest rates, (5) ability to comply with the requirements of the Amended Credit Agreement and operate within its restrictions, (6) economic and market conditions that may restrict or delay appropriate or desirable opportunities, (7) our ability to develop and maintain necessary processes and controls relating to our businesses, (8) reliance on one or a small number of employees, (9) potential adverse classifications of the Company if we are unsuccessful in executing our business plans, (10) other economic, international, business, market, financial, competitive and/or regulatory factors affecting the Company’s businesses generally, (11) our ability to attract and retain highly qualified managerial, operational and sales personnel, and (12) the availability of additional capital on desirable terms, if at all. Forward-looking statements involve known and unknown risks, uncertainties and other factors, including those set forth in this Annual Report on Form 10-K, subsequent Annual Reports on Form 10-K, subsequent Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K filed with the SEC. Such forward-looking statements should be read in conjunction with the Company’s filings with the SEC. The Company assumes no responsibility to update the forward- looking statements contained in this Annual Report on Form 10-K or the reasons why actual results would differ from those anticipated in any such forward-looking statement, other than as required by law.