BLOOMIA HOLDINGS, INC.

Item 1A. Risk Factors

Our business is subject to many risks. The following are significant factors known to us that could materially adversely affect our business, reputation, operating results, industry, financial position, or future financial performance.

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RISKS RELATING TO OUR BUSINESS AND OPERATIONS

We face competition and cannot guarantee our continued ability to compete effectively.

Our Bloomia business competes against other providers of cut tulips and other participants in the broader cut floral industry. Competition is based on, among other things, price, quality, product perception and ability to fulfill orders, particularly during seasonal peaks. We face direct competition from other growers as well as indirect competition through retailers who are supplied by our competitors, including on-line flower delivery websites. If competitors succeed in diverting business from our current customers or capturing a greater share of the overall market for cut tulips or cut flowers generally, Bloomias revenues and related operations would be adversely affected, potentially materially.

Our revenue is highly concentrated among a small number of customers.

During the fiscalendar  year ended June 30, 2024, three6, four customers accounted for approximately 6559% of Bloomiasour revenue. Although those customers have a history of purchasing fresh-cut tulips from Bloomia, there are no long-term purchase commitments. If one or more of Bloomias traditional customers significantly reduces or ceases purchasing fresh-cut tulips from Bloomia, then Bloomia could experience a significant decrease in revenue. Bloomia has historically had a high retention rate, with the majority of our significant customers having business relationships in excess of five years.

Our profit is highly dependent on the price of Dutch tulip bulbs which are subject to price changes, tariffs and the impact of exchange rates.

Tulip bulbs are our largest raw material purchase, and we source approximately 80% of our bulbs from the highly sophisticated Dutch tulip bulb market. Poor weather conditions in recent years have decreased yields which has led to higher bulbs prices. Imports from the Netherlands are currently subject to a 15% U.S. tariff which increases the cost to import Dutch bulbs. If the tariff rate increases, then it would further increase the cost to import Dutch bulbs. Increases in the value of the Euro against the U.S. Dollar raises the cost of Dutch bulbs, which also increases the import cost of Dutch stems. The Company endeavors to pass these cost increases on to customers, but it is unlikely that customers will be willing or able to absorb all costs increases. Any increase in costs that we are unable to recoup from sales will decrease the Companys profits and could materially affect our results of operations and financial condition.

We may be unable to prevent our competitors from benefiting from the expertise of our former executives.

In connection with the acquisition of Bloomia, we entered into non-compete agreements with its former owners. These agreements prohibit the former owners from competing with Bloomias business for a three-year period from the February 22, 2024 acquisition date. We may be unable to enforce these agreements under the laws of the jurisdictions in which our business operates, and it mahave no ability to restrict the former owners from competing once the three-year restrictive period expires. As a result, it may be difficult or impossible for us to restrict our competitors from benefiting from the expertise that our former owners developed while working for us., and our ability to remain competitive may be diminished.

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Our recently completed rights offering may limit our ability to use some or all of our net operating loss carryforwards in the future.

As a result of prior operating losses, we have net operating loss, or NOL, carryforwards for federal income tax purposes. Our ability to utilize our NOL carryforwards to reduce taxable income in future years could become subject to significant If limitations under Section 382 (Section 382) of the Internal Revenue Code of 1986, as amended (the Code), if we cannot demonstrate that such interests will be harmed, we may be unable to prevent our competitors from benefiting fromundergo an ownership change as determined under Section 382. We would undergo an ownership change under Section 382 if, among other things, the stockholders who own, directly or indirectly, 5% or more of our common stock, or are otherwise treated as 5% stockholders under Section 382 and the regulations promulgated thereunder, increase their aggregate percentage ownership of our common stock by more than 50 percentage points over the lowest percentage of the stock owned by these stockholders at any time during the testing period, which is generally the three-year period preceding the potential ownership change.

In the event of an ownership change, Section 382 imposes an annual limitation on the amount of taxable income a corporation may offset with NOL carryforwards. The annual limitation is generally equal to the value of the stock of the corporation immediately before the Section 382 ownership change, multiplied by the long-term tax-exempt rate for the month in which the ownership change occurs (the long-term tax-exempt rate for 2026 is 3.51%). Any unused annual limitation may generally be carried over to later years until the NOL carryforwards expire. While our recently completed rights offering did not result in an ownership change under Section 382, it could increase the likelihood that we may undergo an ownership change for purposes of Section 382 in the future which could limit our ability to utilize NOLs and other tax attributes in the future. Ownership changes that have occurred in the past or that may occur in the future could result in the imposition of an annual limit on the amount of pre-ownership change NOLs and other tax attributes we can use to reduce taxable income, potentially increasing and accelerating our liability for income taxes.

Certain significant stockholders may exert a degree of control in a manner the expertiat conflicts with the interests of other stockholders.

Current significant holders of the Companys common stock may have interests that are different than or adverse of our former ownersto our other stockholders. Based on public filings with the SEC, as a result of shares of common stock issued to our largest stockholder and its affiliates through their participation in our recently completed rights offering, we believe that our largest stockholder and its affiliates hold approximately 60% of our issued and our ability to remain competitivetstanding shares of common stock. Based on this share ownership and the simple majority vote of shares present in person or by proxy that is sufficient for the approval of most actions at any stockholders meeting, those stockholders are able to exercise control over certain matters requiring stockholder approval. Those matters include the election of directors, amendment of our certificate of incorporation, and approval of significant corporate transactions, subject to rules requiring the approval of a special may be diminished. jority among non-interested stockholders in certain situations. This control could have the effect of delaying or preventing a change of control of the Company or changes in management and will make the approval of certain transactions difficult without the support of those significant stockholders, including transactions in which a non-significant stockholder might otherwise receive a premium for its shares over the then-current market price.

RISKS RELATING TO ECONOMY AND MARKET CONDITIONS

We are subject to changes in interest rates.

The majority of our debt carries floating interest rates and is subject to interest rate fluctuations. Borrowings under the our credit agreement with Associated Bank, N.A. (as amended, the Amended Credit Agreement) bear interest at a rate per annum equal to a Term SOFR ecured Overnight Financing Rate (SOFR) rate for an interest period of one monthselected by the Company plus a margin ranging from 3.0%.  to 5.0% based on Tulp 24.1s senior cash flow leverage ratio. Changes in interest rates are caused by a number of factors beyond our control. If the SOFR interest rate increases significantly, our interest expense and cash paid for interest will increase, and our ability to obtain additional financing may decrease, which may materially adversely affect our operations.

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Our net sales and earnings have been and could continue to be adversely affected by economic conditions and outlook in the markets in which we conduct business.

Adverse economic conditions and outlook in the U.S. and in other countries in which we conduct business, such as South Africa the Netherlands, South Amefrica, hand Chile, have previously and could in the future impact our net sales and earnings. These adverse economic conditions could include, but are not limited to, business closures, slowdowns, suspensions or delays of production and commercial activity; recessionary conditions; slow or negative economic growth rates; reduced consumer spending levels; increased or prolonged high unemployment rates; higher costs, longer lead times, and reduced availability of commodities, components, parts, and accessories, including as a result of transportation-related costs, inflation, changing prices, foreign currency fluctuations, tariffs, and/or duties; inflationary or deflationary pressures; reduced infrastructure spending; the impact of U.S. federal debt, state debt, and sovereign debt defaults and austerity measures by certain Europeanountries in which we countriesnduct our business; reduced credit availability or unfavorable credit terms for our distributors, dealers, and end-user customers; higher short-term, mortgage, and other  interest rates; government shutdowns; and general economic and political conditions and expectations. Fresh cut tulips are something of a discretionary purchase and consumers may reduce purchases of tulips in slower economic times. In the past, some of these factors have caused and may continue toin the future cause

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customers to reduce spending and delay or forego purchases of our products, which has had and could continue to have an adverse effect on our net sales and earnings.

STRATEGIC RISKS

OurWe have companys results are highmitted to significant bulb purchases.

From July dependent on Bloomias success.

Although we to September, the Company commits to purchase its Dutch tulip bulbs which are grown inteo stems and to continuesold from January to develop our specialty ag business, we haveJune. The majority of the payment for these Dutch bulbs is due in September. As of September 2026, the Company had committed a substantial portion to purchasing approximately $12,400,000 of our capital to the acquisition Dutch tulip bulbs, subject to quality inspection, to be paid for between September 2026 and growth of BloomiasFebruary 2027. The Company is also committed to business. With this lack of diversificaying $1,600,000 of bulbs from the Southern Hemisphere. The Company will use its revolving credit facility and cash from operation,s to pay for at least the near term, the bulbs. We are currently seeking additional potential sour cash flow and abilityces of financing to serviceupport our debt is highly dependent on the performworking capital needs. The Company may not be able to finance of the Bloomia business. Risks inherent in the Bloomia bufull commitment. Any combination of re-selling bulbs to competitors at lower prices or ultimately purchasiness are discussed in this seg fewer bulbs could lead to a reduction.

Failure to successfully manage the recently acquired Bloomia business  in sales and/or lower profits and a corresponding loss of customer and supplier confidence, market share, and reduced demand otherin future acquisitiseasons c, any of which would ahave a material adversely a effect on our business.

As part results of operations and financial condition.

Our use of our sforeign currency contrategycts to develop our specialty ag stmanage exposure to fluctuations in the Euro exchange rategy, we  may maknot be effective additional acquisind could result in losses.

To manage a portions in of our exposure to the future. We cannot be certain that theEuro-to-U.S. dollar exchange rate related to our purchase of Dutch tulip busineslbs and other expenses that we acquire will become profitable or remain so. Oincur in Euros, we enter into foreign currency forward contracts. Our foreign currency contracts may not effectively offset changes in the value of our underlying Euro-denominated forecasted transactions which could adversely affect our management andcosts, cash flows, and operating results. Differences integration the timing, amount, or occurrence of the operaforecasted transactions of acquired businecompared to our expectations could result in gains or losses requi on the contracts without corres significant efponding offsetting impacts on our operating results.

We also face risks related to our use of forteign currency contracts, including the coordination of informatirisk that we may be unable to enter into or renew such contracts on technologies and finance. These efforts result in additional expenses and involve sfavorable terms, or at all, and the risk that our counterparties may fail to perform their obligations. While we use foreignificant amounts of currency contracts for risk managements time that cannot then be d purposes and not for speculation, these instruments expose us to credicated t risk and may require us to other projects. Factors that will affect therecognize realized or unrealized losses in our financial statements.

STRATEGIC RISKS

Our results are highly dependent on Bloomias success.

We have committed a success obstantial portion of our acapital to the acquisitions include:

T and growth of Bloomias business. With these effects, inis lack of dividually ersification, for inat least the aggregate, couldnear term, our cause a deterioratish flow and ability to service our debt is highly dependent on of our credit and result inthe performance of the Bloomia business. Risks increased borrowing costs anherent in the Bloomia business are discussed interest expense.  this section.

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We may not generate enough cash or secure enough capital to execute our business plans.

As we develop and grow our businesses, we may be required to finance this process through equity offerings or additional debt financings. To the extent that we raise additional capital through the sale of equity or debt financing, the ownership interest of our stockholders would 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 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 our strategy.

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OPERATIONAL RISKS

Restrictions in the Amended Credit Agreement could adversely affect the Bloomia business, financial condition, and results of operations.

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.

The Amended Credit Agreement contains 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 to the Company, 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 provisions of t These restrictions have and may in the future limit the Companys ability to utilize its full revolving credit facility under the Amended Credit Agreement and could limit the Companys ability to implement certain business strategies. During fiscal year 2026, the Company in breach of its financial covenants under the ComAmended Credit Agreement as of December 31, 2025, March 31, 2026, and June 30, 2026. The Companys credit a received a waiver from the lender for each of those financial covenant breaches; however, there can be no assurance that the lender would be willing to grant any additional waivers should the Company breach its financial covenants or other covenants in the future.

The provisions of the Companys Amended Credit Agreement or other debt instruments may restrict its ability to obtain additional financing and pursue attractive business opportunities and its flexibility in planning for, and reacting to, changes in business conditions. In addition, a failure to comply with the provisions of the Companys cAmended Credit aAgreement, any future credit facility or other debt instruments could result in a default or an event of default that could enable its lenders or other debt holders to declare the outstanding principal of that debt, together with accrued and unpaid interest, to be immediately due and payable. If the payment obligations of Tulp 24.1 or the Company under the Amended Credit Agreement aor other debt obligations are accelerated, its assets may be insufficient to repay such debt in full. These factors could have a material adverse effect on the Companys business, financial condition and results of operations.

The Amended Credit Agreement restricts Tulp 24.1s ability to make distributions to LendwayBloomia Holdings.

Under terms of the Amended Credit Agreement, the Bloomia business is permitted to pay a management fee of $60,000 monthly to LendwayBloomia Holdings, but generally is not permitted to make distributions to its members, including LendwayBloomia Holdings. This may constrain cash available to Lendway Bloomia Holdings for corporate expenses. The restriction on distributions will also limit our ability to fund additional strategic acquisitions using capital we have contributed to the Bloomia business.

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We may not be able to comply with our debt covenants.

The Companys success depend has experienced operating challenges that have adversely affected financial results, liquidity, and compliance with certain financial covenants under its credit agreements. The Company was in breach of its financial covenants under the Amended Credit Agreement as on its key personnel.f December 31, 2025, March 31, 2026, and June 30, 2026. The Company received a waiver from the lender for each of those financial covenant breaches and the covenants were revised through June 30, 2027 to reflect the Companys current financial position and projections. Based on the Companys current financial projections, we believe the Company will be in compliance with all required covenants for at least the next twelve months. However, if Company performance does not meet current projections, there is a risk that the Company could be in further breach of its financial or other covenants under the Amended Credit Agreement. If the Company is not in compliance with its Amended Credit Agreement or debt obligations, the lender has the right to declare the Company in technical default, and if the Company is unable to cure the technical default in a timely manner or obtain further waivers, the lender could declare the entire balance of the debt to be immediately due and payable in full, which could have a material adverse effect on the Companys business, financial condition, and results of operations. If actual operating results are less favorable than currently projected, the Company may be required to pursue additional financing arrangements, obtain further amendments or waivers under its debt agreements, or implement additional liquidity-preserving measures.

The Companys success depends on its key personnel.

The Companys business results depend largely upon the continued contributions of Bloomias CEO, Werner Jansen. If Mr. Jansen no longer serves in (or serves in some lesser capacity than) his current role, or if the Company loses other members of our management team, we may not be able to successfully execute on our business strategy and our business, financial condition and results of operations, as well as the market price of itthe Companys securities, could be adversely affected.

If we fail to establish and maintain effective internal control over financial reporting, then we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business and the market price of our common stock.

Company management is responsible for establishing and maintaining effective internal controls designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance. Any internal control system, no matter how well designed and operated, can only provide reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Given the limited current number of employees, this resource constraint causes challenges in effectively providing appropriate segregation of duties. Because of the inherent limitations in all internal control systems, internal control over business processes and financial reporting may not prevent or detect fraud or misstatements.

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We are required, pursuant to Section 404 of the Sarbanes -Oxley Act (SOX), to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting. As a smaller reporting company, the Company is not required to have an attestation from its external auditor on the effectiveness of its internal control over financial reporting and disclosure controls and procedures. With regards to its February 2024 acquisition of Bloomia, the Company intends to elect the provision under SOX to exclude the evaluation of internal control over financial reporting and disclosure controls and procedures for Bloomia for a one-year period after the acquisition date.  

We cannot assure you that the measures we have taken to date, and actions we may take in the future, will prevent or avoid potential future material weaknesses. During fiscalthe year ended December 31, 2024, the Company incurred two late filings and neededneeded to file extensions with the SEC in order to timely file two qQuarterly rReports timelyon Form 10-Q. If we are unable to maintain effective internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected, investors could lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, we could be subject to sanctions or investigations by the Nasdaq Stock Market, the SEC or other regulatory authorities, and our ability to access the capital markets could be limited.

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Bloomias international operations involve additional market and operational risks, and failure to manage these risks may adversely affect our business and operating results.

We operate in several countries throughout the world including South Africa, Chile and the Netherlands. Accordingly, we face significant operational risks from doing business internationally, including:

Our failure to manage the market and operational risks associated with our international operations effectively could limit the future growth of our business and adversely affect our operating results.

Exchange rate fluctuations between the U.S. dollar and the Euro and other non-U.S. currencies  have and may necontinue to negatively affect the earnings of our operations.

We report our financial results and most of our revenues are recorded in U.S. dollars. However, most of our tulip bulb costs as well as a portion of our general and administrative expenses, are incurred in eEuros. As a result, we are exposed to exchange rate risks that may adnegatively impacted our business in the year ended June 30, 2026 and may adversely affect our financial results in the future. For example, if the eEuro appreciates against the U.S. dollar, then the U.S. dollar cost of our operations in the Netherlands would increase, and our results of operations would be adversely affected.

From time to time, we may engage in currency hedging activities through foreign currency exchange contracts. These measures, however, may not adequately protect us from material adverse effects due to the fluctuations in the relative values of the U.S. dollar and the eEuro and other foreign currencies in which we transact business, and may result in a financial loss.

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 Our ability to hedge against foreign currency fluctuations is also limited by our Amended Credit Agreement and the Company may not be able to hedge against such fluctuations in the future.

Failure to comply with the U.S. Foreign Corrupt Practices Act or other applicable anti-corruption legislation could result in fines, criminal penalties, and an adverse effect on our business.

We are committed to doing business in accordance with applicable anti-corruption laws. We are subject, however, to the risk that our affiliated entities or our affiliates respective officers, directors, employees and agents may take action determined to be in violation of such anti-corruption laws, including the U.S. Foreign Corrupt Practices Act of 1977 and similar anti-bribery laws in non-U.S. jurisdictions, as well as trade sanctions administered by the Office of Foreign Assets Control and the U.S. Department of Commerce. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, curtailment of operations in certain jurisdictions, and might adversely affect our results of operations. In addition, actual or alleged violations could damage our reputation and ability to do business.

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Compliance with employment laws may adversely affect Bloomias business.

With the acquisition of Bloomia, we significantly increased the size and scope of our workforce. Various federal and state labor laws govern the relationship with Bloomias employees in the United States and impact operating costs. These laws include:

Although Bloomia verifies the employment eligibility status of its employees, some of its employees may, without Bloomias knowledge, be unauthorized workers. Unauthorized workers are subject to deportation and may subject Bloomia to fines or penalties, and if any of Bloomias workers are found to be unauthorized, Bloomia could experience adverse publicity that negatively impacts its brand and may make it more difficult to hire and keep qualified employees. Termination of a significant number of employees who were unauthorized employees may disrupt Bloomias operations, cause temporary increases in its labor costs as it trains new employees and result in additional adverse publicity. Bloomia could also become subject to fines, penalties and other costs related to claims that it did not fully comply with all recordkeeping obligations of federal and state immigration compliance laws. Failure to fully comply with one or more of these requirements could have a material adverse effect on the Companys business, financial condition and results of operations.

Through Bloomia, we are subject to risks inherent in the operation of an agricultural business.

Our business involves agricultural products with the procuring of tulip bulbs and the growing of tulips. Such business is subject to the risks inherent in the agricultural business, such as insects, plant diseases, government regulations regarding bulb production and similar agricultural risks. We can reduce, but cannot eliminate, the impacts of adverse weather conditions because the significant majority of our tulips are grown in a hydroponic greenhouse.

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Tulip bulbs, like any plant, are subject to quality issues and disease, and we could have significant inventory loss or production delays resulting from low -quality tulips. In June of the year ended December 31, 2023 Bloomia wrote off $900,0004, a portion of tulip bulb inventory due to our Southe bulbs not meeting Bloomias quality standards. Thern Hemisphere bulbs wsuffere sourced during the off-seasond from poor temperature treatment, which we believe contributresulted to the quality issues and subsequent write-offin less stem production. Additionally, in fiscalthe year 2024, a portion of our Souended June 30, 2026, thern Hemisphere bulbs suffered from poor tem Company experienced unusual significant crop underperature treatment whiformance at the end of the Dutch bulb season. As a resulted in less stemt, the Company estimated a $562,000 productvision for inventory. Although we coordinate with recurring customers to plan production based on anticipated demand and projections, we may have to write down inventory or recognize a material impairment if our production significantly exceeds customer demand.

Accordingly, any of these factors may have a material adverse effect on our inventory and any future production of tulips and a corresponding adverse effect on our results of operations.

Energy and water price increases could adversely impact our profit margins.

Bloomias hydroponic greenhouse cultivation process uses significant energy and water. Certain factors which may impact the availability of energy and water are out of Bloomias control including, but not limited to, disruptions resulting from weather, economic conditions, and interruption of energy supply. Significant increases in the cost or access of energy and water, and the failure to fully pass any such increased prices and costs through to our customers or to modify our activities to mitigate the impact, would have an adverse effect on our production results and operating income.

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Inclement weather and other disruptions to the transportation network could adversely impact our distribution system and demand for our products.

Bloomias operations rely on dependable and efficient transportation services, the disruption of which could result in difficulties supplying materials to Bloomias facilities and impair Bloomias ability to deliver products to its retail customers in a timely manner. Specifically, our ability to receive shipments of tulip bulbs from Bloomias Netherlands or, Chilean , or New Zealand facilities on a timely basis and to provide efficient distribution of our stems to our retail customers are integral components of our overall business strategy. The volumes handled by, and operating challenges at, ocean ports have at times been volatile and can delay the receipt of tulip bulbs or cause the cost of shipping goods to be more expensive. Additionally, the availability and reliability of truck transportation  from time to time has been negatively impacted by a number of factors, including limited availability of qualified drivers and equipment and limitations on drivers hours of service. Impairment in our ability to receive timely shipments of tulip bulbs or distribute stems to our retail customers may affect our ability to both maintain core products in inventory and deliver products to customers on a timely basis, which may in turn adversely affect our consolidated results of operations.

TECHNOLOGY AND CYBERSECURITY RISKS

We rely on our management information systems for inventory management, distribution, and other key functions. If our information systems fail to adequately perform these functions, or if we experience an interruption in their operation, our business and operating results could be adversely affected.

The efficient operation of our business is dependent on our management information systems, both internal and outsourced. We rely on our management information systems to, among other things, effectively manage our accounting and financial functions, including maintaining our internal controls, and to manage our procurement, greenhouse, distribution and sales processes. The failure of our management information systems to perform properly could disrupt our business, which may result in decreased sales, increased overhead costs, excess or obsolete inventory, causing our business and operating results to suffer. We also have automated processes in our greenhouse operations, which could be adversely impacted by interruptions in their operations. Although we take steps to secure our management information systems and automated processes, including our computer systems, intranet and internet sites, email and other telecommunications and data networks, the security measures we have implemented may not be effective and our systems may be vulnerable to theft, loss, damage and interruption from a number of potential sources and events, including unauthorized access or security breaches, natural or man-made disasters, cyber-attacks, computer viruses, power loss, or other disruptive events. Our reputation, brand, and financial condition could be adversely affected if, as a result of a significant cyber event or otherwise, our operations are disrupted or shutdown; our confidential, proprietary information is stolen or disclosed; we incur costs or are required to pay fines in connection with stolen customer, employee, or other confidential information;

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we must dedicate significant resources to system repairs or increase cyber -security protection; or we otherwise incur significant litigation or other costs related to a cybersecurity incident.

RISKS RELATED TO AN INVESTMENT IN OURTHE COMPANY

Our results of operations have been and may be subject to significant fluctuations.

Our quarterly and annual operating results have fluctuated in the past and may vary in the future due to a wide variety of factors including:

, but not limited to:

Due to these factors, our quarterly and annual net sales, expenses, and results of operations could vary significantly in the future, and this could adversely affect the market price of our common stock.

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Investment in our stock could result in fluctuating returns.

During fiscal yearSince July 1, 20245, the sale prices of our common stock as reported by The Nasdaq Stock Market ranged from a low of $3.0230 to a high of $6.885.83. We believe factors such as the fluctuations in our quarterly and annual operating results described above, the markets acceptance of our services and products, the performance of our business relative to market expectations, the results of our acquired Bloomia business, as well as limited daily trading volume of our stock and general volatility in the securities markets, could cause the market price of our common stock to fluctuate substantially. In addition, the stock markets have experienced price and volume fluctuations, resulting in changes in the market prices of the stock of many companies, which may not have been directly related to the operating performance of those companies.

We may need to raise additional capital, which might not be available or might be available only on terms unfavorable to us or our investors.

 In order to continue to operate and grow our businesses, we will likely need to raise additional capital beyond this current financing roundour recently completed rights offering by offering additional shares of our common or preferred stock and/or other classes of equity. All of these would result in dilution to our existing investors, plus they may include additional rights or terms that may be unfavorable to our existing investor base. We cannot assure you that the necessary funds will be available on a timely basis, on favorable terms, or at all, or that such funds, if raised, would be sufficient. The level and timing of future expenditure will depend on a number of factors, many of which are outside our control. If we are not able to obtain additional capital on acceptable terms, or at all, we may be forced to curtail or abandon our growth plans, which could adversely impact the Company, its business, development, financial condition, operating results or prospects.

We may be required to recognize impairment charges that could materially affect our results of operations.

We assess our intangible assets, and our other long-lived assets as and when required by U.S. generally accepted accounting principles (GAAP) to determine whether they are impaired. If they are impaired, we will record appropriate impairment charges. It is possible that we may be required to record significant impairment charges in the future and, if we do so, our results of operations could be materially adversely affected.

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Risks related to our plan to use proceeds from the rights offering to settle debt at a discount.

The Company recently conducted a rights offering that commenced in February 2026 and expired on April 1, 2026. The Company received gross proceeds from the rights offering of $12,100,000, of which approximately $5,000,000 was cash and $7,100,000 was conversion of outstanding related party debt. As previously disclosed, in addition to debt conversion, the primary goal of the rights offering was to raise funds to settle the promissory note issued as a portion of our purchase price for Bloomia (the Seller Note) for $7,330,000, which is a greater than 50% discount from its carrying value. The approximately $5,000,000 in cash proceeds raised from the rights offering net of expenses was not enough to repay the $7,330,000 discounted payment under the Seller Note in full, and the Company was not able to repay the balance of the $7,330,000 discounted payment under the Seller Note by the deadline to make such payment. As a result, a portion of the original principal balance of the Seller Note was reinstated (see description in Part II, Item 8 of this Annual Report on Form 10-K under the heading Seller Note), which resulted in less of a decrease in the Companys overall debt obligations.

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Certain significant stockholders of our cthe Company may exert a degree of control in a manner that conflicts with the interests of other stockholders.

Current significant holders of shares may have interests that are different than or adverse to our other stockholders. Based on public filings with the SEC, as a result of shares of common stock issued to our largest stockholder and its affiliates through their participation in our recently completed rights offering, we believe that our largest stockholders and its affiliates hold approximately 460% of our issued and outstanding common shares. Based on this share ownership and the simple majority vote of shares present in person or by proxy that is sufficient for the approval of most actions at any stockholders meeting, those stockholders may bare able to exercise a certain degree of ccontrol over certain matters requiring stockholders approval. Those matters include the election of directors, amendment of our acerticlesficate of associincorporation, and approval of significant corporate transactions, subject to rules requiring the approval of a special majority among non-interested stockholders in certain situations. This control could have the effect of delaying or preventing a change of control of ourthe Company or changes in management and will make the approval of certain transactions difficult without the support of those significant stockholders, including transactions in which a non-significant stockholder might otherwise receive a premium for its shares over the then-current market price. 

We could be deemed to have been a shell company after completion of the August 2023 asset sale and, as such, we and our stockholders could be restricted in reliance on certain rules or forms.

We were focused on the startup and growth of our non-bank lending business since before the sale of assets relating to our former In-Store Marketing Business. Following the acquisition of the Bloomia business, we have been focused on managing Bloomias operations and growth. We do not believe that the Company, even after completion of the sale of the In-Store Marketing Business was a shell company as described under Rule 405 promulgated under the Securities Act and  of 1933, as amended (the Securities Act) and Rule 12b-2 promulgated under the Securities Exchange Act,  of 1934, as amended (the Exchange Act), which is a company that has: no or nominal operations; and either (a) no or nominal assets; (b) assets consisting solely of cash and cash equivalents; or (c) assets consisting of any amount of cash and cash equivalents and nominal other assets.

However, a designation as a shell company could result in the application of Rule 144(i) of the Securities Act, which would limit the availability of the exemption from registration provided in Rule 144 for certain shares of Company common stock and could result in certain persons affiliated with the Company being deemed statutory underwriters under Rule 145(c). Some of the presently outstanding shares of our common stock are restricted securities as defined under Rule 144 promulgated under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available. Pursuant to Rule 144, if we were designated a shell company as defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act, one year would be required to elapse from the time, we ceased to be a shell company and filed a Form 8-K addressing Item 5.06 with such information as may be required in a Form 10 Registration Statement with the SEC, before our restricted stockholders could resell their holdings in reliance on Rule 144. The Form 10 information or disclosure is equivalent to the information that a company would be required to file if it were registering a class of securities on Form 10 under the Exchange Act. Under amended Rule 144, restricted or unrestricted securities that were initially issued by a reporting or non-reporting shell company, or a company that was at any time previously a reporting or non-reporting shell company, can only be resold in reliance on Rule 144 if the following conditions are met:

We have nAs described above, we do not believe that the Company has ever been classified as a shell company under rules promulgated under the Securities Act or the Exchange Act. However, in the event we were to be so designated, we may have to retroactively adjust our reporting or accounting for affected periods.

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