ThZeal - The Zeal

10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _ to _

Commission file number: 0-26680

OLD MARKET CAPITAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)


Delaware		59-2506879
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)


1601 Dodge St., Suite 3350
Omaha, Nebraska		68102
(Address of Principal Executive Offices)		(Zip Code)

(402) 658-0809

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	OMCC	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 and 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the Registrant was required to file such reports), and 92) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the Registrant has submitted electronically, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer		Accelerated filer		Non-accelerated filer	
Smaller reporting company	☒	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes ☐ No 

As of February 10, 2025, approximately 6.7 million shares of common stock of the Registrant were outstanding. Of the Registrant’s approximately 12.7 million shares of common stock issued as of that date, approximately 5.4 million shares were held by the Registrant’s principal operating subsidiary and approximately 658 thousand shares were held by the Registrant. Pursuant to applicable law, the shares held by the Registrant and its subsidiary are not entitled to vote and, accordingly, approximately 6.7 million shares were entities to vote.

OLD MARKET CAPITAL CORPORATION

FORM 10-Q

TABLE OF CONTENTS



Part I.	Financial Information	3
Item 1 .	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of December 31, 2024 and March 31, 2024	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2024 and 2023	4
	Condensed Consolidated Statements of Redeemable Non-Controlling Interest and Shareholders' Equity for the Three and Nine Months Ended December 31, 2024 and 2023	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2024 and 2023	7
	Notes to the Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	49
Item 4.	Controls and Procedures	49

Part II	Other Information	50
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	51
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	52

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Old Market Capital Corporation

Condensed Consolidated Balance Sheets

(In thousands)



	December 31, 2024			March 31, 2024
	(Unaudited)			(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	27,132		$	18,982
Accounts receivable, net		133			-
Materials and supplies		877			-
Income taxes receivable		902			902
Prepaid expenses and other assets		1,405			373
Assets of discontinued operations		65			39,441
Total current assets		30,514			59,698
Operating lease right-of-use assets		2,925			65
Property, plant, and equipment, net		24,870			75
Intangible assets, net		10,743			-
Goodwill		10,434			-
Total assets	$	79,486		$	59,838

Liabilities, redeemable non-controlling interest and shareholders' equity
Current liabilities:
Accounts payable	$	1,701		$	99
Accrued expenses and other current liabilities		483			335
Current portion of operating lease liabilities		267			-
Deferred revenue		564			-
Current portion long-term debt		69			-
Liabilities of discontinued operations		-			497
Total current liabilities		3,084			931
Deferred income taxes		4,792			-
Long-term debt		772			-
Operating lease liabilities		2,688			65
Total liabilities		11,336			996
Commitments and contingencies (Note 10)
Redeemable non-controlling interest		14,210			-
Shareholders’ equity:
Preferred stock, no par: 5,000 shares authorized; none issued		-			-
Common stock, 50,000 shares authorized, $0.01 par value, 12,674 shares issued and 6,654 outstanding at December 31, 2024; no par value, 12,657 shares issued and 7,289 shares outstanding at March 31, 2024		67			35,267
Treasury stock: 6,020 and 5,368 common shares, at cost, as of December 31, 2024 and March 31, 2024, respectively		(82,423	)		(76,794	)
Additional paid-in capital		41,411			-
Retained earnings		94,885			100,369
Total shareholders' equity		53,940			58,842
Total liabilities, redeemable non-controlling interest and shareholders' equity	$	79,486		$	59,838

See accompanying Notes to the Condensed Consolidated Financial Statements.

Old Market Capital Corporation

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)


	For the Three Months Ended December 31,						For the Nine Months Ended December 31,
	2024			2023			2024			2023
Revenue
Wireless internet services	$	1,693		$	-		$	3,776		$	-
Fiber internet services		851			-			1,730			-
Other revenue		424			-			909			-
Total revenue:		2,968			-			6,415			-
Operating expenses
Marketing		21			-			33			-
Cost of wireless and fiber internet services		167			-			354			-
Cost of other revenue		211			-			456			-
Plant specific operations		422			-			820			-
Plant nonspecific operations		226			-			491			-
General and administrative		2,123			1,745			8,725			4,810
Depreciation and amortization		501			22			1,073			66
Total operating expenses		3,671			1,767			11,952			4,876

(Loss) from operations		(703	)		(1,767	)		(5,537	)		(4,876	)

Other income (expense)
Interest income, net		252			31			1,058			31
Emigration tax (expense)		-			-			(1,711	)		-
(Loss) on dissenting shareholders' liability		-			-			(1,103	)		-
Gain on sale of assets		-			-			30			-
Gain on Lease Settlement		14			-			14			-
Other income (expense)		32			37			42			-
Total other income (expense), net		298			68			(1,670	)		31

(Loss) before income taxes		(405	)		(1,699	)		(7,207	)		(4,845	)
Income tax expense		(60	)		-			(35	)		-
(Loss) from continuing operations		(465	)		(1,699	)		(7,242	)		(4,845	)

Discontinued operations:
Income (loss) from discontinued operations, net of taxes		185			(9,962	)		630			(15,745	)
Gain on disposal of assets, net of taxes		-			-			1,692			-
Gain on sale of finance receivables, net of taxes		94			-			817			-
Total income (loss) from discontinued operations		279			(9,962	)		3,139			(15,745	)

Net (loss)		(186	)		(11,661	)		(4,103	)		(20,590	)

Less: Net income (loss) attributable to redeemable noncontrolling interest		(62	)		-			12			-

Net (loss) attributable to common shareholders	$	(124	)	$	(11,661	)	$	(4,115	)	$	(20,590	)

Net (loss) per share attributable to common shareholders from continuing operations:
Basic	$	(0.08	)	$	(0.23	)	$	(1.11	)	$	(0.66	)
Diluted	$	(0.08	)	$	(0.23	)	$	(1.11	)	$	(0.66	)

Net income (loss) per share attributable to common shareholders from discontinued operations:
Basic	$	0.04		$	(1.37	)	$	0.47		$	(2.16	)
Diluted	$	0.04		$	(1.37	)	$	0.47		$	(2.16	)

Net (loss) per share attributable to common shareholders:
Basic	$	(0.04	)	$	(1.60	)	$	(0.64	)	$	(2.83	)
Diluted	$	(0.04	)	$	(1.60	)	$	(0.64	)	$	(2.83	)

See accompanying Notes to Condensed Consolidated Financial Statements.

Old Market Capital Corporation

Condensed Consolidated Statements of Redeemable Non-Controlling Interest and Shareholders' Equity

(Unaudited)

(In Thousands)


	Three Months Ended December 31, 2024
	Redeemable Non-Controlling Interest			Common Stock				Treasury Stock			Additional Paid-In Capital			Retained Earnings			Total OMCC Shareholders' Equity
				Shares		Amount
Balance at September 30, 2024	$	15,738			6,654	$	67	$	(82,423	)	$	39,945		$	95,009		$	52,598
Purchase of additional shares of Amplex		(1,620	)		-		-		-			1,620			-			1,620
Net income (loss)		(62	)		-		-		-			-			(124	)		(124	)
Redeemable non-controlling interest redemption value in excess of carrying value		154			-		-		-			(154	)		-			-
Balance at December 31, 2024	$	14,210		$	6,654	$	67	$	(82,423	)	$	41,411		$	94,885		$	53,940


	Three Months Ended December 31, 2023
	Common Stock				Treasury Stock			Retained Earnings			Total OMCC Shareholders' Equity
	Shares		Amount
Balance at September 30, 2023		7,289	$	35,266	$	(76,794	)	$	112,241		$	70,713
Share-based compensation		-		1		-			-			1
Net loss		-		-		-			(11,661	)		(11,661	)
Balance at December 31, 2023		7,289	$	35,267	$	(76,794	)	$	100,580		$	59,053

See accompanying Notes to Condensed Consolidated Financial Statements.

Old Market Capital Corporation

Condensed Consolidated Statements of Redeemable Non-Controlling Interest and Shareholders' Equity

(Unaudited)

(In Thousands)


	Nine Months Ended December 31, 2024
	Redeemable Non-Controlling Interest			Common Stock						Treasury Stock			Additional Paid-In Capital			Retained Earnings			Total OMCC Shareholders' Equity
				Shares			Amount
Balance at March 31, 2024	$	-			7,289		$	35,267		$	(76,794	)	$	-		$	100,369		$	58,842
Issuance of restricted stock awards		-			17			-			-			-			-			-
Reclassification of dissenting shares to liability		-			(652	)		(3,157	)		-			-			(1,369	)		(4,526	)
Repurchase of common stock from dissenting shareholders		-			-			-			(5,629	)		5,629			-			-
Redomestication from Canada to Delaware and reduction of par value		-			-			(32,043	)		-			32,043			-			-
Share-based compensation		-			-			-			-			293			-			293
Acquisition of Amplex		17,644			-			-			-			-			-			-
Purchase of additional shares of Amplex		(3,600	)		-			-			-			3,600			-			3,600
Net income (loss)		12			-			-			-			-			(4,115	)		(4,115	)
Redeemable non-controlling interest redemption value in excess of carrying value		154			-			-			-			(154	)		-			(154	)
Balance at December 31, 2024	$	14,210		$	6,654		$	67		$	(82,423	)	$	41,411		$	94,885		$	53,940


	Nine Months Ended December 31, 2023
	Common Stock				Treasury Stock			Retained Earnings			Total OMCC Shareholders' Equity
	Shares		Amount
Balance at March 31, 2023		7,289	$	35,223	$	(76,794	)	$	121,380		$	79,809
Cumulative effect of adoption of ASU 2016-13, net of tax		-		-		-			(210	)		(210	)
Share-based compensation		-		44		-			-			44
Net loss		-		-		-			(20,590	)		(20,590	)
Balance at December 31, 2023		7,289	$	35,267	$	(76,794	)	$	100,580		$	59,053

See accompanying Notes to Condensed Consolidated Financial Statements.

Old Market Capital Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In Thousands)


	For the Nine Months Ended December 31,
	2024			2023
Cash flows from operating activities:
Net loss	$	(4,103	)	$	(20,590	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization expense		1,073			66
Amortization of debt issuance costs		-			70
Loss on dissenting shareholders' liability		1,103			-
Loss (gain) on disposal of property, plant, and equipment		9			10
Share-based compensation		373			44
Impairment of operating lease right-of-use assets		56			-
Gain on lease settlement		(14	)		-
Deferred income taxes		35			-
Provision for credit losses		2			-
Amortization of operating lease right-of-use assets		152			36
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable		(18	)		-
Materials and supplies		(339	)		-
Prepaid expenses and other assets		(308	)		(27	)
Accounts payable, accrued expenses, and other liabilities		1,178			(627	)
Operating lease liabilities		(152	)		(37	)
Income taxes receivable		-			31
Cash provided by (used in) operating activities from discontinued operations		(192	)		22,059
Net cash (used in) provided by operating activities		(1,145	)		1,035
Cash flows from investing activities:
Cash paid for acquisition of Amplex		(18,364	)		-
Payments for property, plant, and equipment		(6,228	)		-
Proceeds from the disposal of property, plant, and equipment		69			(13	)
Net cash provided by investing activities from discontinued operations		39,006			35,440
Net cash provided by investing activities		14,483			35,427
Cash flows from financing activities:
Proceeds from RUS Loan		615			-
Proceeds from Bank Equipment Financing Loans		226			-
Repurchase of dissenting shares		(5,629	)		-
Cash used in financing activities from discontinued operations		-			(29,100	)
Net cash used in financing activities		(4,788	)		(29,100	)
Net increase in cash and cash equivalents		8,550			7,362
Cash, cash equivalents and restricted cash at beginning of period		18,982			454
Cash, cash equivalents and restricted cash at end of period	$	27,531		$	7,817
Reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the total amounts reported on the condensed consolidated statements of cash flows:
Cash and cash equivalents at beginning of period	$	18,982		$	454
Restricted cash included in Prepaid expenses and other assets at beginning of period		-			-
Total cash, cash equivalents and restricted cash at beginning of period	$	18,982		$	454

Cash and cash equivalents at end of period	$	27,132		$	7,818
Restricted cash included in Prepaid expenses and other assets at end of period		399			-
Total cash, cash equivalents and restricted cash at end of period	$	27,531		$	7,818
Supplemental disclosure of cash flow information:
Interest paid		-		$	975
Supplemental schedule of noncash investing and financing activities:
Purchase of property, plant, and equipment included in accounts payable	$	774			-


Conversion of term loan advances into additional equity of controlled entity (Amplex)	$	754
Additional investments in controlled entity (Amplex)	$	7,500		-
Redeemable non-controlling interest redemption value in excess of carrying value deemed dividend	$	154
Transfer of finance receivables to repossessed assets		-	$	14,034

See accompanying Notes to Condensed Consolidated Financial Statements.

Notes to the Condensed Consolidated Financial Statements

Note 1. Organization

Effective as of September 27, 2024, the Company amended its Certificate of Incorporation to change its name from Nicholas Financial, Inc. to Old Market Capital Corporation by filing a Certificate of Amendment to Certificate of Incorporation with the Delaware Secretary of State. Old Market Capital Corporation (f/k/a Nicholas Financial, Inc. (“NFI”) and now "OMCC" and together, with its wholly-owned and majority-owned subsidiary, the "Company") is a holding company incorporated under the laws of the State of Delaware with one wholly-owned United States subsidiary, Nicholas Data Services, Inc. ("NDS") and its one controlling interest in Amplex Holdings, Inc. ("Amplex"). On April 18, 2024, Old Market Capital Corporation completed its continuation and domestication from British Columbia to the State of Delaware by filing its Certificate of Corporate Domestication and Certification of Incorporation in the State of Delaware. As a result of the domestication, the Company's common stock par value increased from $0.00 to $0.01 on a one-for-one basis.

NDS historically was engaged in supporting and updating industry specific computer application software for small businesses located primarily in the Southeastern United States. NDS has ceased its operations; however, it continues as the interim holding company for Old Market Capital Corporation. NFI was a specialized consumer finance company engaged primarily in acquiring and servicing automobile finance installment contracts for purchases of used and new automobiles and light trucks. NFI had also offered direct consumer loans and sold consumer finance related products. NFI and NDS are based in Florida, U.S.A.

On November 13, 2023, the Company entered into a Master Asset Purchase Agreement (the "Purchase Agreement") with Westlake Services, LLC dba Westlake Financial, a California limited liability company ("Westlake Financial"), pursuant to which the Company agreed to sell substantially all of the finance receivables and all of the repossessed assets of Old Market Capital Corporation. In connection with entering into the Purchase Agreement, the Company ceased new loan originations of contracts and direct loans. On April 26, 2024, the transactions contemplated by the Purchase Agreement closed. See Note 13 for additional information.

On June 15, 2024, Old Market Capital Corporation closed upon the acquisition of 51% of the issued and outstanding common shares of Amplex Electric Inc, which was placed into a newly formed entity Amplex Holdings, Inc. ("Amplex"). Amplex is a provider of broadband internet, voice over internet protocol (VOIP), and video services within service areas located primarily in Northwest and North Central Ohio. As of December 31, 2024, Amplex had approximately 12,850 broadband customers (4,100 fiber subscribers) and over 11,000 fiber passings completed. Amplex's customer base includes residential and commercial customers. Amplex leases certain property (including an office building) and warehouse building from Red Bug, LLC and Red Bug Properties, Ltd. (collectively, the "Red Bug Entities"). The Red Bug Entities were created by, and are majority-owned by Amplex's Chief Executive Officer. The Red Bug Entities were initially treated as a variable interest entity ("VIE") for which Amplex was determined to be the primary beneficiary. See below regarding the impact of the misclassification on the current period and prior period's financial statements as well as Note 2 and Note 9.

Correction of Immaterial Errors in Previously Issued Financial Statements Through the Current Period

During the preparation of the Company’s unaudited condensed consolidated interim financial statements for the three and nine months ended December 31, 2024, the Company’s management identified certain immaterial errors related to previously issued condensed consolidated interim financial statements within this current year. A description of the nature of the errors is discussed below:

•

Management determined that the Red Bug Entities were previously incorrectly reported in Form 10-Q for quarterly period ended June 30, 2024 and in Form 10-Q for the three and six months ended September 30,

2024. During these periods, the Red Bug entities were reported as consolidated VIEs as they were considered to not have sufficient equity at risk to finance its activities without additional subordinated financial support. The Company previously consolidated the Red Bug Entities (beginning on June 15, 2024 in conjunction with the Amplex acquisition) as certain obligations due from the Red Bug entities were previously determined to be subordinated debt and concluded that the Company had the power to direct the activities of the Red Bug Entities that most significantly impact the entity's economic performance. As the third-party debt and amount due from Red Bug was extinguished pursuant to the purchase agreement between the Company and Amplex, the Red Bug entities should not have been consolidated as a VIE as, upon acquisition, Amplex did not have a variable interest in the Red Bug entities.

•

Failure to record approximately $185 thousand of stock-based compensation expense pertaining to certain awards granted in the quarter ended September 30, 2024.

In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the corrections and has determined that the related impacts were not material, individually or in the aggregate, to the previously issued financial statements that contained the errors, based on overall considerations of both quantitative and qualitative factors. The Company has concluded that prior period financial statements as of and for the three month period ended June 30, 2024 and the three and six month period ended September 30, 2024 were not materially misstated and can continue to be relied upon. Accordingly, the Company has corrected the previously reported immaterial errors in the current period financial statements by adjusting the opening balances of the affected accounts.

In accordance with ASC 250, Accounting Changes and Error Corrections, the Company has recorded the impact of the prior period errors through opening retained earnings in the current period financial statements. The affected prior period balances are displayed below. Note that there was an immaterial impact on net cash provided by (used in) operating activities, net cash provided by (used in) investing activities or net cash provided by (used in) financing activities for the condensed consolidated statement of cash flows for the three months ended June 30, 2024 or the three and six months ended September 30, 2024.

These corrections did not have a significant impact on the Company’s trends in financial performance or key financial ratios.

Management and the Audit Committee have reviewed these adjustments and concluded that the financial statements, as corrected, present fairly, in all material respects, the balance sheet, results of operations and cash flows of the Company in accordance with U.S. GAAP.

The following table represents the three months ended June 30, 2024, including the statements of operations, balance sheets, and statements of cash flows (in thousands):


	As Reported			As Revised
Account Name	Q1			Q1			Difference
BALANCE SHEET

Assets:
Cash and cash equivalents		40,658			40,626			(32	)
Accounts receivable, net		145			137			(8	)
Operating lease right-of-use assets		553			3,100			2,547
Property, Plant, and equipment, net		23,993			20,356			(3,637	)
Liabilities:
Accounts payable		1,930			1,922			(8	)
Accrued expenses and other current liabilities		686			565			(121	)
Current portion of operating lease liabilities		124			296			172
Operating lease liabilities		436			2,811			2,375

Total Assets		88,678			87,548			(1,130	)
Total Liabilities		16,553			18,971			2,418

Total Old Market Capital Corporation shareholders' equity		53,121			53,121			-
Noncontrolling interest		3,550			-			(3,550	)
Total shareholders' equity		56,671			53,121			(3,550	)
Redeemable NCI		15,454			15,454			-
Total liabilities, redeemable noncontrolling interest, and shareholders' equity		88,678			87,546			(1,132	)

STATEMENT OF CASH FLOWS

Cash flows from operating activities		(437	)		(438	)		(1	)
Cash flows from investing activities:		22,113			22,081			(32	)
Cash flows from financing activities:		-			-			-

STATEMENT OF OPERATIONS
Revenue:		489			489			-
Expenses:
Depreciation and amortization		94			91			(3	)
General and administrative		3,764			3,791			27
Interest income, net		411			411			-

Net (loss)		(3,489	)		(3,513	)		(24	)
Loss from continuing operations		(5,548	)		(5,572	)		(24	)
Net income (loss) from continuing ops attributable to common shareholders (Note 5)		(5,337	)		(5,361	)		(24	)
Per share loss from continuing operations attributable to common shareholders - basic and diluted	$	(0.79	)	$	(0.79	)	$	-
Per share (loss) income available to common stockholders - basic and diluted	$	(0.49	)	$	(0.49	)	$	-

The following table represents the six months ended September 30, 2024, including the statements of operations, balance sheets, and statements of cash flows (in thousands):


	As Reported			As Revised
Account Name	Q2			Q2			Difference
BALANCE SHEET

Assets:
Cash and cash equivalents		29,475			29,464			(11	)
Accounts receivable, net		123			130			7
Operating lease right-of-use assets		480			2,985			2,505
Property, plant, and equipment, net		25,911			22,294			(3,617	)
Liabilities
Accounts payable		1,767			1,759			(8	)
Accrued expenses and other current liabilities		665			644			(21	)
Current portion of operating lease liabilities		117			292			175
Operating lease liabilities		419			2,749			2,330

Total Assets		80,282			79,165			(1,117	)
Total Liabilities		8,331			10,807			2,476

Total Old Market Capital Corporation shareholders' equity		52,670			52,670			-
Noncontrolling interest		3,543			-			(3,543	)
Total shareholders' equity		56,213			52,670			(3,543	)
Redeemable NCI		15,738			15,738			-
Total liabilities, redeemable noncontrolling interest, and shareholders' equity		80,282			79,215			(1,067	)

STATEMENT OF CASH FLOWS

Cash flows from operating activities		(553	)		(560	)		(7	)
Cash flows from investing activities:		16,675			16,643			(32	)
Cash flows from financing activities:		(5,629	)		(5,629	)		-

STATEMENT OF OPERATIONS

Revenue:		2,083			2,083			-
Expenses:
Depreciation and amortization		595			572			(23	)
General and administrative		6,317			6,602			285
Interest income, net		798			790			(8	)


Net (loss)		(3,663	)		(3,917	)		(254	)
Loss from continuing operations		(6,523	)		(6,777	)		(254	)
Net income (loss) from continuing ops attributable to common shareholders (Note 5)		(6,589	)		(6,843	)		(254	)
Per share loss from continuing operations attributable to common shareholders - basic and diluted	$	(0.98	)	$	(1.02	)	$	(0.04	)
Per share (loss) income available to common stockholders - basic and diluted	$	(0.56	)	$	(0.59	)	$	(0.03	)

The following table represents the Statements of Operations for the three months ended September 30, 2024, (in thousands) for the Statement of Operations only:


	As Reported			As Revised
Account Name	Q2			Q2			Difference
STATEMENT OF OPERATIONS
Revenue:		2,958			2,958			-
Expenses
Depreciation and amortization		501			481			(20	)
General and administrative		2,553			2,811			258
Interest income, net		387			379			(8	)

Net (loss)		(174	)		(404	)		(230	)
Loss from continuing operations		(975	)		(1,205	)		(230	)
Net income (loss) from continuing ops attributable to common shareholders (Note 5)		(1,252	)		(1,482	)		(230	)
Per share loss from continuing operations attributable to common shareholders - basic and diluted	$	(0.19	)	$	(0.22	)	$	(0.03	)
Per share (loss) income available to common stockholders - basic and diluted	$	(0.07	)	$	(0.10	)	$	(0.03	)

The following table represents Purchase Price Adjustments (within Note 3) reported as of June 30, 2024 and September 30, 2024, (in thousands):


	As Reported			As Revised
(In thousands)	Q1 & Q2			Q1 & Q2			Difference

Cash and cash equivalents	$	32		$	-		$	(32	)
Accounts receivable		124			117			(7	)
Materials and supplies		538			538			-
Operating lease right-of-use		502			3,063			2,561
Prepaid expenses and other assets		266			266			-
Property, plant, and equipment		23,750			20,110			(3,640	)
Intangible assets		11,130			11,130			-
Goodwill		10,434			10,434			-
Total assets acquired		46,776			45,658			(1,118	)

Accounts payable		1,260			1,252			(8	)
Accrued expenses and other liabilities		231			111			(120	)
Lease liabilities		502			3,063			2,561
Deferred income taxes		4,668			4,668			-
Deferred revenue		556			556			-
Total liabilities assumed		7,217			9,650			2,433

Total fair value of net assets acquired		39,559			36,008			(3,551	)
Less: redeemable noncontrolling interest		(17,644	)		(17,644	)		-
Less: noncontrolling interest		(3,551	)		-			3,551
Total purchase price	$	18,364		$	18,364		$	-

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Old Market Capital Corporation and its wholly-owned and majority-owned subsidiaries, primarily consisting of the operations of Amplex. For consolidated entities that are less than wholly-owned, the third party's holding of the equity interest is presented as noncontrolling interests in the condensed consolidated statements of redeemable noncontrolling interest and shareholders' equity. The portion of net income (loss) attributable to the noncontrolling interests is presented as net loss attributable to noncontrolling interests in the Company's condensed consolidated statements of operations. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying condensed consolidated financial statements are stated in U.S. dollars and are presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). for interim financial information, with instructions to Form 10-Q pursuant to the Securities Exchange Act of 1934, as amended, and with Article 8 of Regulation S-X thereunder Accordingly, they do not include all of the information and notes to the consolidated financial statements required by U.S. GAAP for complete consolidated financial statements, although the Company believes that the disclosures made are adequate to ensure the information is not misleading. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for the year ending March 31, 2025. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2024, as filed with the Securities and Exchange Commission on July 1, 2024.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements, in accordance with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Management evaluates its estimates, assumptions, and judgments on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. The Company's significant estimates and assumptions include the fair value of assets acquired and liabilities assumed in business combinations, the recognition of deferred taxes, assessing the useful life and recoverability of long-lived assets including property, plant and equipment, goodwill, and intangible assets, and assessing the likelihood of adverse outcomes from pending litigation and regulatory matters. Actual results could differ from those estimates.

Cash, Cash Equivalents, and Restricted Cash

Short-term highly liquid investments with a maturity date that was 3 months or less at the time of purchase are treated as cash equivalents. Amounts earned from cash equivalents are presented separately in the condensed consolidated statements of operations.

Restricted cash consists of cash held in a pledged deposit account received in connection with the RUS Loan (see Note 6) that is required to be held by Amplex and is able to be used by the Company solely for the purposes for which the funds were awarded to complete a project, or for such other purposes as may be approved in writing. Restricted cash is included in Prepaid expenses and other assets in the Condensed Consolidated Balance Sheets.

Accounts Receivable and Allowances for Credit Losses

Trade accounts receivable are recorded at invoiced amounts, net of allowance for credit losses, if applicable, and are unsecured and do not bear interest.

The allowance for credit losses is based on the probability of future collection under the current expect credited loss impairment model under ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Assets. Under the CECL impairment model, the Company determines its allowance by applying a loss-rate method based on an aging schedule using the Company’s historical loss rate. The Company also considers reasonable and supportable current information in determining its estimated loss rates, such as macroeconomic trends or other factors including customers’ credit risk and historical loss experience. The adequacy of the allowance is evaluated on a regular basis. Account balances are written off after all means of collection are exhausted and the balance is deemed uncollectible. Subsequent recoveries are credited to the allowance. Changes in the allowance are recorded as adjustments to bad debt expense in the period incurred.

Property, Plant, and Equipment, net

Property, plant, and equipment is recorded at cost, net of accumulated depreciation. Expenditures for repairs and maintenance are charged to expense as incurred. Additions and improvements that extend the economic useful life of the asset are capitalized and depreciated over the remaining useful lives of the assets. Upon disposal of assets, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized currently in the condensed consolidated statements of operations. Depreciation of property, plant, and equipment is computed using the straight-line method over the estimated useful lives of the assets as follows:


Asset		Estimated Useful Life
Equipment		5 - 7 years
Furniture and fixtures		5 - 7 years
Leasehold improvements		Lesser of lease term or useful life (generally 6 - 15 years)
Construction equipment		5 - 10 years
Fiber plant		15 - 30 years
Customer premise equipment		4 - 5 years
Towers		5 - 10 years
Plant in service		15 - 49 years

Acquisitions, Goodwill and Intangible Assets

Upon acquisition of a company, the Company determines if the transaction is a business combination, which is accounted for using the acquisition method of accounting. Under the acquisition method, once control is obtained from a business, the assets acquired, and liabilities assumed, including amounts attributed to noncontrolling interests, are recorded at their estimated fair values. Any excess consideration over the fair value of assets acquired and liabilities assumed is recognized as goodwill.

Certain assumptions, estimates, and judgments are used in determining the fair value of net assets acquired, including goodwill and intangible assets, as well as determining the allocation of goodwill to the reporting units. Accordingly, the Company may obtain the assistance of third-party valuation specialists for the valuation of significant tangible and intangible assets. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management but that are inherently uncertain. Measurement period adjustments are reflected at the time identified, up through the conclusion of the measurement period, which is the time at which all information for determination of the values of assets acquired and liabilities assumed is received and is not to exceed one year from the acquisition date. The Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. Contract assets and liabilities are measured and recognized in accordance with ASC 606, Revenue from Contracts with Customers. Additionally, uncertain tax positions and tax-related valuation allowances are initially recorded in connection with a business combination as of the acquisition date. The Company continues to collect information and reevaluates these estimates and assumptions periodically and records any adjustments to preliminary estimates to goodwill, provided the Company is within the measurement period. If outside of the measurement period, any subsequent adjustments are recorded within the Company’s condensed consolidated statements of operations.

Intangibles with definite lives are amortized on a straight-line basis over their useful lives, which generally range from 5 to 21 years. Annually, or when certain triggering events occur, the Company assesses the useful lives of its intangibles with definite lives.

Goodwill and intangibles with indefinite lives are not amortized. The Company is required to test goodwill and indefinite lived intangible assets for impairment on an annual basis, or more often if indicators of potential impairment exist due to triggering events, by determining if the carrying value of the Company's goodwill exceeds the estimated fair value of said goodwill. Indicators that could trigger an interim impairment test include, but are not limited to, underperformance relative to projected future operating results, significant negative industry or economic trends, an adverse change in regulatory environment, or pending adverse litigation.

In evaluating goodwill for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of the Company's goodwill is less than its carrying value as of the assessment date. If no events, facts, or circumstances are identified during the qualitative assessment, the Company does not need to perform a quantitative impairment assessment. If the Company concludes that it is more likely than not that the fair value of the goodwill is less than its carrying value, then the Company will perform a quantitative impairment test by comparing the fair value of the goodwill with its carrying amount. If the carrying amount of goodwill exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill. During the periods presented, the Company did not have any impairment charges.

Assets Held-for-Sale and Discontinued Operations

The Company classifies assets as held-for-sale if all held-for-sale criteria are met pursuant to Accounting Standards Codification ("ASC") 360-10, Property, Plant and Equipment. Criteria include management's commitment to sell the disposal group in its present condition and the sale being deemed probable of being completed within one year. Assets classified as held-for-sale are not depreciated and are measured at the lower of their carrying amount or fair value less cost to sell. The Company assesses the fair value of a disposal group, less any costs to sell, each reporting period it remains classified as held-for-sale and reports any subsequent changes as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the initial carrying value of the disposal group.

Pursuant to ASC 310-10, Receivables, a loan classified as held for investment should be reclassified to held for sale if the reporting on the date a loan is transferred into the held-for-sale category, any previously recorded allowance for credit losses is reversed in earnings and the loan is recorded at its amortized cost basis. Prior to the transfer, a reporting entity should apply its writeoff policy to the amortized cost basis. The amortized cost at the date of transfer should be reduced by any writeoffs recognized just prior to the transfer. If the amortized cost basis exceeds the loan’s fair value at the date of transfer, the reporting entity should establish a valuation allowance equal to the difference between amortized cost basis and fair value.

When the Company has sold, or classified as held for sale, a business component that represents a strategic shift with significant effect on the Company's operations and financial results, it classifies that business component as discontinued operations and retrospectively presents discontinued operations for the comparable periods. The post-tax income, or loss, of discontinued operations are shown as a single line on the face of the statement of operations. The disposal of the discontinued operation would also result in a gain or loss upon final disposal.

As a result of the sale of finance receivables and repossessed assets to Westlake Financial, the accompanying condensed consolidated financial statements reflect the activity related to the sale of the assets of the consumer finance segment as discontinued operations. The Company determined that the finance receivables met the held-for-sale criteria as of November 1, 2023 and the consumer finance segment met the discontinued operations criteria during the nine months ended December 31, 2024. Additionally, concurrent with the decision to sell the finance receivables in November 2023, the Company reclassified its finance receivables to held for sale, which are carried at the lower of amortized cost or fair value. The Company compared the fair value and amortized cost of finance receivables held for sale and recorded a held for sale valuation allowance through earnings to reduce the amortized cost basis to fair value. The sale of the finance receivables and repossessed assets of the consumer finance segment was completed on April 26, 2024. See Note 12 for additional information regarding the activities of discontinued operations.

Leases

The Company determines if an arrangement is a lease at inception and classifies its leases at commencement. Operating leases are presented as right-of-use ("ROU") assets, and the corresponding lease liabilities are included in operating lease liabilities, current and operating lease liabilities in the Company's balance sheets. ROU assets represent the Company's right to use an underlying asset, and lease liabilities represent the Company's obligation for lease payments in exchange for the ability to use the asset for the duration of the lease term.

ROU assets and lease liabilities are recognized at commencement date or acquisition date and determined using the present value of the future minimum lease payments over the lease term. The Company uses a discount rate based on a benchmark approach to derive an appropriate incremental borrowing rate to discount remaining lease payments. The Company benchmarked itself against other companies of similar credit ratings and comparable quality and derived imputed rates for lease term lengths ranging 3 to 8 years. The lease term may include options to extend when it is reasonably certain that the Company will exercise that option. In addition, the Company does not recognize short term leases that have a term of twelve months or less as ROU assets or lease liabilities for all asset classes. The Company recognizes operating lease expense on a straight-line basis over the lease term.

The Company has lease agreements which contain both lease and non-lease components, which it has elected to account for as a single lease component for all asset classes when the payments are fixed. As such, variable lease payments, including those not dependent on an index or rate, such as real estate taxes, common area maintenance, and other costs that are subject to fluctuation from period to period are not included in lease measurement.

Upon the acquisition of Amplex on June 15, 2024, the Company recorded lease liabilities and corresponding right of use assets of approximately $502 thousand, based on the present value of the remaining minimum rental payments for leases existing upon adoption of the new lease standard and other adjustments to the opening balance of right of use assets. The Company estimates its incremental borrowing rate based on information available at the commencement date in determining the present value of payments. Additionally, after adjusting for the immaterial correction of an error of the Red Bug entities as a VIE, the Company recognized ROU assets and lease liabilities which should have initially been accounted for as part of the acquisition of Amplex of approximately $2.5 million. See Note 9 for additional detail on the Company's leasing arrangements.

Investments in Debt Securities

Old Market Capital Corporation and Amplex entered into a Term Loan Agreement (the "Term Loan Agreement") entered into on February 15, 2024, as amended by the First Amendment dated April 26, 2024 and later amended by the Second Amendment dated June 15, 2024, pursuant to which Old Market Capital Corporation agreed to make one or more term loan advances ("Term Loan Advances" or "Term Loans") to Amplex in an aggregate principal amount not to exceed $900 thousand. The Borrower agrees to make monthly payments of interest on each Term Loan Advance, commencing on March 1, 2024, and on the first day of each month thereafter. No payments of principal are due until the earlier of a) closing of a share purchase agreement (the "Transaction Closing Date") or b) in the event of terminating the negotiation of a share purchase agreement ("Triggering Event"), the first anniversary of the date of initial Term Loan Advance (the "Term Loan Maturity Date"). All unpaid principal and accrued and unpaid interest on the Term Loan Advance is due and payable in cash on the Term Loan Maturity Date. Amounts may be prepaid without penalty by giving five days written notice to the Lender. Interest is accrued on Term Loan Advances at an interest rate of 12.5% per annum.

Per the amended terms of the Term Loan Agreement, at the Transaction Closing Date, the outstanding debt from the Term Loan Advances shall automatically be converted into the number of common shares of Amplex determined by dividing the outstanding debt from the Term Loan Advances by the share purchase price (the "Converted Shares"). The Term Loans were converted upon the Transaction Closing Date as of June 15, 2024 (a total of approximately $754 thousand, comprised of $750 thousand of principal and $4 thousand of accrued interest) at the share purchase price of $1,792.55 per share into 421 shares of Amplex common stock.

As of March 31, 2024, the Term Loan Advance receivable was accounted for as an available-for-sale debt security and fair valued using "Level 3" inputs, which consist of unobservable inputs and reflect management's estimates of assumptions

that market participants would use in pricing the asset. The Company's Term Loan Advances were determined to be available-for-sale debt securities under ASC 320, Investments - Debt Securities. The Company estimated the fair value of the Term Loan Advances as of March 31, 2024 using a probability-weighted scenario-based model, which uses as inputs the estimated fair value of the Borrower's common stock, the estimated volatility of the Borrower's common stock, the time to expiration of the Term Loan Advances, the discount rate, the stated interest rate compared to the current market rate, and the risk-free interest rate for a period that approximates the time to expiration. The estimated fair value of the Borrower's common stock was based on the estimated closing price of the Amplex shares to the Company at the time of issuance. The estimated volatility of the Borrower's common stock was based on the observed volatility range of comparable publicly traded companies. The time to expiration was based on the probability of conversion prior to the contractual maturity date. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve in effect at the time of measurement for time periods approximately equal to the time to expiration.

Between April 1, 2024 and June 1, 2024 the Company made Term Loan Advances to Amplex in the aggregate amount of $450 thousand. The Term Loan Advances were to be repaid at the earlier of a) the closing of the share purchase agreement and b) the first anniversary of the initial term loan advance date if the negotiations of the share purchase agreement are terminated. As mentioned above, the Term Loan Advances with a total outstanding principal and accrued interest of $754 thousand was converted into 421 shares of Amplex common stock from a selling shareholder at the share purchase price of $1,792.55 per share in conjunction with the closing of the share purchase agreement.

Dissenting Shares & Domestication

On November 22, 2023, OMCC, formerly known as Nicholas Financial, Inc., filed the initial Form S-4 related to the re-domestication (continuation) and Loan Portfolio Sale. Shareholders had the right to dissent to the continuation and the Loan Portfolio Sale under Section 309 of the British Columbia Business Corporations Act (“BCBCA”) (“Dissent Right”). Dissenting shareholders had the right to be paid the fair value of their shares (“Dissenting Shares”) under Section 245 of the BCBCA. Fair value was determined as of the close of business on the day before the Loan Portfolio Sale was approved by shareholders.

On April 15, 2024 (“Approval Date”), the stockholders of OMCC approved the re-domestication of the Company from Canada to Delaware and the Loan Portfolio Sale. There were 652,249 Dissenting Shares exercised in accordance with the Dissent Right. The Company determined the Dissenting Shares are within the scope of ASC 480-10 as they are considered mandatorily redeemable as of the Approval Date and as such were classified as liabilities. Liability-classified instruments are initially measured at fair value (or allocated value). Subsequent changes in fair value are recognized through earnings for as long as the instruments continue to be classified as a liability. As of April 15, 2024, the Company determined the fair value of the Dissenting Shares was $4.5 million based on the Company’s stock price of $6.94.

On September 5, 2024, the Company settled in cash with the dissenting shareholders to repurchase 652,249 Dissenting Shares at a price per share of $8.63, or $5.6 million. The Dissenting Shares were retained by the Company to be included within treasury stock. In conjunction with the cash settlement, the Company recognized a loss on dissenting shareholders’ liability of $1.1 million for the nine months ended December 31, 2024, and derecognized the dissenting shareholders' liability. In addition, the repurchase of the Dissenting Shares (which were retained by the Company) were included within treasury stock as of the date of repurchase.

The following table summarizes the change in the Dissenting Shares liability measured at fair value, on a recurring basis, for which Level 3 inputs have been used to determine fair value:


Balance of Dissenting Shareholders' Liability as of April 1, 2024	$	-
Initial value upon re-domestication		4,526
Change in fair value		1,103
Cash settlement of dissenting shareholders' liability		(5,629	)
Balance of Dissenting Shareholders' Liability as of December 31, 2024	$	-

Fair Value Measurements

The Company applies ASC 820, Fair Value Measurement ("ASC 820"), which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances.

Certain assets and liabilities of the Company are required to be recorded at fair value either on a recurring or nonrecurring basis and are presented with Level 3 of the fair value hierarchy, such as Term Loan Advances, dissenting shareholders’ liability and contingent liability. The Company's non-financial assets such as property, plant, and equipment are recorded at cost. Fair value adjustments are made to these non-financial assets, on a nonrecurring basis, during the period an impairment charge is recognized, as applicable.

Certain of the Company's financial instruments are carried at fair value and are presented within Level 1 of the fair value hierarchy, such as money market funds included within cash and cash equivalents on the condensed consolidated balance sheet. In addition, the carrying amounts reflected in the condensed consolidated balance sheet for cash and cash equivalents, accounts receivable, materials and supplies, prepaid expenses and other assets, accounts payable, and accrued expenses and other liabilities approximate fair value due to their short-term nature.

The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below:

Level 1 - Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 - Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities.

The following tables presents information about the Company’s financial instruments measured at fair value, on a recurring basis, consistent with the fair value hierarchy provisions:


	Fair Value Measurement Using (In thousands)
Description	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Cash and Restricted Cash:
December 31, 2024	$	11,851	$	-	$	-	$	11,851	$	11,851
March 31, 2024	$	994	$	-	$	-	$	994	$	994
Cash equivalents:
December 31, 2024	$	15,281	$	-	$	-	$	15,281	$	15,281
March 31, 2024	$	17,988	$	-	$	-	$	17,988	$	17,988
Term loan advance to Amplex:
December 31, 2024	$	-	$	-	$	-	$	-	$	-
March 31, 2024	$	-	$	-	$	300	$	300	$	300

The following table summarizes the changes in financial assets measured at fair value, on a recurring basis, for which Level 3 inputs have been used to determine fair value:


Balance of Term Loan Advances as of April 1, 2024	$	300
Issued		450
Change in fair value		-
Interest accrued		4
Conversion		(754	)
Balance of Term Loan Advances as of December 31, 2024	$	-


Balance of Dissenting Shareholders' Liability as of April 1, 2024	$	-
Initial value upon re-domestication		4,526
Change in fair value		1,103
Cash settlement of dissenting shareholders' liability		(5,629	)
Balance of Dissenting Shareholders' Liability as of December 31, 2024	$	-

Discontinued operations assets measured on a non-recurring basis using Level 3 inputs were $0 and $39.4 million as of December 31, 2024 and March 31, 2024, respectively.

Loss Contingencies

Certain conditions may exist as of the date the condensed consolidated financial statements are issued that may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies, the Company’s legal counsel evaluates the perceived merits of any legal proceedings, disputes, or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability would be accrued in the Company’s condensed consolidated financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases along with operating loss and tax credit carryforwards, if any. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date.

As part of the recent acquisition of Amplex by Old Market Capital Corporation, goodwill was recorded on the books. The goodwill recorded on the books as a result of the acquisition of Amplex through a stock purchase does not have favorable tax treatment. It will not be amortized or deducted for tax purposes, and the tax basis of the acquired assets remains unchanged. This results in a permanent book-tax difference when the goodwill is recognized for financial reporting purposes but not for tax purposes.

The Company recognizes tax benefits from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the condensed consolidated financial statements from any such position would be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. It is the Company’s policy to recognize interest and penalties accrued on any uncertain tax benefits as a component of income tax expense. There were no uncertain tax positions as of December 31, 2024 or 2023.

The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and Canada. The effect on deferred taxes of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.

Revenue Recognition

The Company generates revenue primarily from the following sources:

Wireless internet services – The Company offers these services to residential and commercial customers under standard monthly plans for 12-month periods. Contracts standard terms and conditions state a penalty for early termination; however, the Company normally waives this penalty. Standard monthly plans vary in price according to the amount of bandwidth provided and include installation and equipment. For the three and nine months ended December 31, 2024, revenues from these services totaled approximately $1.7 million and $3.8 million, respectively.

Fiber internet services – The Company offers these services to residential and commercial customers under standard monthly plans for 12-month periods. Fiber optic internet services provide higher speeds than wireless internet. Contracts are typically cancellable without penalty. Standard monthly plans vary in price according to the amount of bandwidth provided and include installation and equipment. For the three and nine months ended December 31, 2024, revenues from these services totaled approximately $851 thousand and $1,730 thousand, respectively.

Other – These services include primarily voice over IP (“VOIP”) telephone services to residential and commercial customers under 12-month periods. Contracts are typically cancellable without penalty. Standard monthly plans vary based on the features offered. Customers may purchase the equipment from the Company or a third-party vendor. In addition, the Company offers video streaming services through third-party providers. For the three and nine months ended December 31, 2024, revenues from these services totaled approximately $424 thousand and $909 thousand, respectively.

In accordance with ASC 606 “Revenue Recognition”, the Company recognizes revenue from contracts with customers using a five-step model, which is described below:

identify the customer contract;

identify performance obligations that are distinct;

determine the transaction price;

allocate the transaction price to the distinct performance obligations; and

recognize revenue as the performance obligations are satisfied.

Identify the customer contract

A customer contract is generally identified when there is approval and commitment from both the Company and its customer, the rights have been identified, payment terms are identified, the contract has commercial substance and collectability is probable. Specifically, the Company obtains written/electronic signatures on contracts and purchase orders, if said purchase orders are issued in the normal course of business by the customer.

Identify performance obligations that are distinct

A performance obligation is a promise by the Company to provide a distinct good or service or a series of distinct goods or services. A good or service that is promised to a customer is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and a company’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

Determine the transaction price

The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer, excluding sales taxes that are collected on behalf of government agencies.

Allocate the transaction price to distinct performance obligations

The transaction price is allocated to each performance obligation based on the relative standalone selling prices (“SSP”) of the goods or services being provided to the customer. The Company’s contracts may contain multiple performance obligations, for which the Company accounts for individual performance obligations separately, if they are distinct. The standalone selling price reflects the price the Company would charge for a specific piece of equipment or service if it was sold separately in similar circumstances and to similar customers.

Recognize revenue as the performance obligations are satisfied

Revenues from wireless and fiber internet, VOIP services, and video streaming services are recognized ratably as performance obligations are satisfied by transferring control of a promised product or service to a customer. Revenues from equipment sales are recognized when control transfers to the customer, which occurs upon delivery.

Customers are billed in advance for services to be provided in the upcoming month. Once billed, payment from customers is due 30 days from the invoice date. The Company’s agreements with its customers do not provide for any refunds for services or products and therefore no specific reserve for such is maintained.

Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue.

The Company fulfills obligations under a contract with a customer by transferring products and services in exchange for consideration from the customer. There are no contract assets related to performance under the contract. The Company is contractually entitled to invoice in advance for services to be provided in the future. Accordingly, accounts receivable are recorded when the customer has been billed or the right to consideration is unconditional. The Company recognizes

deferred revenue when consideration has been billed or received in advance of the Company’s satisfaction of its performance obligation(s).

In accordance with ASC 606-10-50-13, the Company is required to include disclosure on its remaining performance obligations as of the end of the current reporting period. Due to the nature of the Company’s contracts, these reporting requirements are not applicable. The majority of the Company’s remaining contracts meet one of the exemptions defined in ASC 606-10-50-14 through 606-10-50-14A, i.e., performance obligation is part of a contract that has an original expected duration of one year or less.

Segment Reporting

The Company reports operating segments in accordance with ASC 280, Segment Reporting (“ASC 280”). Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by their chief operating decision maker in deciding how to allocate resources and assesses performance. ASC 280 requires that a public enterprise report a measure of segment profit or loss, certain specific revenue and expense items, segment assets, information about the way operating segments were determined and other items.

The Company has two reportable segments: consumer finance and telecommunications. The consumer finance company segment is reported within discontinued operations for the periods presented.

Redeemable Noncontrolling Interest

The Company classifies noncontrolling interests with redemption features that are not solely within the control of the Company within temporary equity on the Company’s condensed consolidated balance sheets in accordance with ASC 480-10-S99-3A, SEC Staff Announcement: Classification and Measurement of Redeemable Securities (“ASC 480-10-S99-3A”). The noncontrolling interest was recorded outside of shareholders’ equity because the noncontrolling interest provided the holder with put rights which allows the holder to compel the Company to purchase Amplex common stock at a variable amount per share at any time following the fifth anniversary of the closing date of the Amplex acquisition but prior to the fifteenth anniversary of the closing date of the Amplex acquisition. During this time period, the put option may be exercised by the holder at any time after 90 days prior written notice, which is considered not solely within the Company’s control. The Company determined the put option is not within the scope of ASC 480-10 to be recorded as a liability at fair value and will not subsequently adjust for changes in fair value. The Company adjusts redeemable noncontrolling interests for the portion of net loss attributable to the redeemable noncontrolling interests and for the change in the carrying amount of redeemable noncontrolling interest for the incremental value the NCI holder may ultimately be entitled to. When the redemption amount of redeemable noncontrolling interest exceeds the fair value, the Company has made an accounting policy election to reflect as a deemed dividend the entire change in the redemption amount (see Note 5). For the three and nine months ended December 31, 2024, the Company recognized a deemed dividend of $154 thousand for its redeemable noncontrolling interest to adjust the carrying amount of the redeemable noncontrolling interest to its redemption value, after giving effect to the change in its carrying amount from the net income (loss) attributable to the redeemable noncontrolling interest. As of December 31, 2024, the book value of this interest was approximately $14.2 million and was recorded as a redeemable noncontrolling interest in our condensed consolidated balance sheets.

Reclassifications

During the nine months ended December 31, 2024, the Company determined that the consumer finance company segment met the criteria for discontinued operations classification. As a result, the Company made reclassifications to include certain prior year amounts within discontinued operations and assets held for sale in the Company's condensed consolidated balance sheets, statements of operations, and statements of cash flows. See Note 13 Discontinued Operations for further details.

Recently Issued But Not Yet Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU No. 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" (“ASU 2023-07”). This ASU requires interim and annual disclosure of significant segment expenses

that are regularly provided to the chief operating decision-maker (“CODM”) and included within the reported measure of a segment’s profit or loss, requires interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually, requires disclosure of the position and title of the CODM, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, and contains other disclosure requirements. This authoritative guidance is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effect of this new guidance and does not expect this standard to have a material impact on the Company's condensed consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"). This ASU requires that reporting entities disclose specific categories in the effective tax rate reconciliation as well as information about income taxes paid. The authoritative guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effect of this new guidance and does not expect this standard to have a material impact on the Company’s condensed consolidated financial statements.

In March 2024, the FASB issued ASU 2024-02, Codification Improvements-Amendments to Remove References to the Concepts Statements (“ASU 2024-02”). ASU 2024-02 contains amendments to the Codification that remove references to various FiASB Concepts Statements. The requirements of this ASU 2024-02 are effective for the Company for fiscal years beginning after December 15, 2024 and can be applied on a prospective or retrospective basis. This standard is not expected to have a significant impact on our consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. ASU 2024-03 requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. The requirements of ASU 2024-03 are effective for the Company for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted and should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all period periods presented in the financial statements. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.

Note 3. Business Combination

On June 15, 2024 (the "Closing Date"), the Company closed a share purchase agreement to acquire Amplex from the sellers (the “Sellers”), pursuant to which the Sellers agreed to sell, and the Company agreed to purchase 51% of the issued and outstanding common shares, no par value per share, of Amplex and the Company agreed to make payment to holders of options for Amplex’s common shares in consideration of cancellation of such options for total purchase consideration of $18.4 million, which was paid in cash on the date of closing (the "Amplex Acquisition"). Amplex is an Ohio-based provider of rural broadband services to business and residential customers. The Company acquired Amplex in order to provide better shareholder value over time. The financial results of Amplex have been included within the condensed consolidated financial statements since the Closing Date.

In conjunction with the closing of the Amplex Acquisition, the Company converted the outstanding principal and accrued interest of approximately $0.8 million under the Term Loan Advances into 421 shares of Amplex common stock at the share purchase price of $1,792.55 and purchased an additional 1,674 shares of Amplex common stock at a price of $1,792.55 per share for a total of $3.0 million. These transactions concurrently executed at the Transaction Closing Date increased the Company's ownership in Amplex to 56.5%. During the quarter ended December 31, 2024, the Company entered into a Subscription Agreement whereby the Company invested an additional $4.5 million into Amplex, increasing the Company's ownership percentage to 61%.

In accordance with ASC 805, Business Combinations, the Amplex Acquisition was accounted for using the acquisition method of accounting, which requires, among other things, the assets acquired and the liabilities assumed be recognized at their fair values as of the acquisition date. Goodwill is the excess purchase price over the preliminary estimated fair

value of net assets acquired and liabilities assumed in the Amplex Acquisition. The purchase price allocation as of the date of acquisition was based on a preliminary valuation and is subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available. The primary areas that remain preliminary relate to the fair values of property, plant, and equipment, goodwill and intangible assets.

The fair value of the subscriber relationships were determined using the multi-period excess earnings method (“MPEEM”) under the income approach. This method reflects the present value of the operating cash flows generated by this asset after taking into account the cost to realize the revenue, and an appropriate discount rate to reflect the time value and risk associated with the invested capital. The Company utilized the relief-from-royalty method, a form of both the market and income approach, to determine the fair value of the trade names. Under this method, it is assumed that if the Company did not own the intangible asset, it would be willing to pay a royalty for its use. Internally developed software was valued using a cost approach, specifically the cost to re-create method. The cost to re-create method considers the cost required to recreate an identical asset considering current prices of direct and indirect costs. These costs are then adjusted for the developers’ profit, which reflects the expected return on the direct and indirect costs, and opportunity cost, which represents the forgone returns during the period when the asset is being developed. The Citizens Broadband Radio Service FCC license ("CBRS FCC license") was valued using a cost approach, specifically, the cost incurred by the business in acquiring the CBRS FCC license. In determining the fair value of the property, plant, and equipment, the Company used a combination of various valuation techniques including the income approach, the cost approach, and the market approach.

The Company's preliminary allocation of the purchase price to the assets acquired, liabilities assumed, and noncontrolling interest recognized and redeemable as of the Closing Date were as follows:


(In thousands)

Cash and cash equivalents	$	-
Accounts receivable		117
Materials and supplies		538
Operating lease right-of-use		3,063
Prepaid expenses and other assets		266
Property, plant, and equipment		20,110
Intangible assets		11,130
Goodwill		10,434
Total assets acquired		45,658

Accounts payable		1,252
Accrued expenses and other liabilities		111
Lease liabilities		3,063
Deferred income taxes		4,668
Deferred revenue		556
Total liabilities assumed		9,650

Total fair value of net assets acquired		36,008
Less: redeemable noncontrolling interest		(17,644	)
Total purchase price	$	18,364

The Company incurred $1.1 million of transaction costs related to the acquisition of Amplex during the nine months ended December 31, 2024. These costs are classified as general and administrative expenses in the Company's condensed consolidated statements of operations.

The following is the net impact of the Amplex Acquisition on the Company's condensed consolidated statements of operations since the Closing Date:


	For the Three Months Ended December 31, 2024		For the Nine Months Ended December 31, 2024
	(In thousands)
Total revenue	$	2,968	$	6,415

Income (loss) from continuing operations	$	261	$	(5	)

The following table represents the supplemental consolidated financial results of the Company on an unaudited pro forma basis, as if the acquisition had been consummated on April 1, 2023.


	(In thousands)
	For the Three Months Ended December 31,						For the Nine Months Ended December 31,
	2024 (Actual)			2023 (Pro Forma)			2024 (Pro Forma)			2023 (Pro Forma)
Revenue	$	2,968		$	2,780		$	8,825		$	8,275
Net loss from continuing operations attributable to common shareholders before dividends		(403	)		(1,487	)		(11,279	)		(3,969	)
Redeemable noncontrolling interest redemption value in excess of carrying value deemed dividend		(154	)		-			(154	)		-
Net loss from continuing operations attributable to common shareholders		(557	)		(1,487	)		(11,433	)		(3,969	)
Net income (loss) from discontinued operations attributable to common shareholders		279			(9,962	)		3,139			(15,745	)
Net loss attributable to common shareholders		(278	)		(11,449	)		(8,294	)		(19,714	)
Per share amounts:
Basic (loss) earnings per share from continuing operations attributable to common shareholders		(0.08	)		(0.20	)		(1.71	)		(0.54	)
Diluted (loss) earnings per share from continuing operations attributable to common shareholders		(0.08	)		(0.20	)		(1.71	)		(0.54	)
Basic earnings (loss) per share from discontinued operations attributable to common shareholders		0.04			(1.37	)		0.47			(2.16	)
Diluted earnings (loss) per share from discontinued operations attributable to common shareholders		0.04			(1.37	)		0.47			(2.16	)
Basic (loss) earnings per share attributable to common shareholders		(0.04	)		(1.57	)		(1.24	)		(2.70	)
Diluted (loss) income per share attributable to common shareholders		(0.04	)		(1.57	)		(1.24	)		(2.70	)

The following table represents the supplemental schedule of noncash investing and financing activities:


	(In thousands)
	For the Nine Months Ended December 31,
	2024			2023
Supplemental schedule of noncash investing and financing activities
Fair value of Amplex assets acquired	$	45,658		$	-
Less: redeemable noncontrolling interest		(17,644	)		-
Less: cash paid for Amplex common stock		(18,364	)		-
Amplex liabilities assumed	$	9,650		$	-

Note 4. Revenue and Deferred Revenue

Revenue

The Company sells its goods and services to customers primarily under contracts with stated terms of 12 months. The Company’s standard terms and conditions state a penalty for early termination of wireless internet service contracts; however, the Company normally waives this penalty. Disaggregated revenues are presented in the accompanying statements of operations.

Contract Liability

The Company recorded a current contract liability balance of $564 thousand as of December 31, 2024, which represents amounts billed or collected in advance of the Company’s satisfaction of its performance obligations for the upcoming month.

Note 5. Earnings Per Share

The Company has granted stock compensation awards with nonforfeitable dividend rights which are considered participating securities. Earnings per share is calculated using the two-class method, as such awards are more dilutive under this method than the treasury stock method. Ordinarily, basic earnings per share is calculated by dividing net income allocated to common shareholders by the weighted average number of common shares outstanding during the period, which excludes the participating securities. The Company's participating securities are non-vested restricted shares which are not required to share losses, and accordingly, are not allocated losses in periods of net loss. Dilutive earnings per share are calculated by dividing net income allocated to common shareholders by the weighted average number of common shares outstanding during the period which includes the dilutive effect of additional potential common shares from stock compensation awards. In a period of loss, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. Therefore, in periods when a loss is reported, basic and dilutive loss per share are the same. In accordance with ASC 480-10-S99-3A, as the Company's redeemable noncontrolling interest is redeemable at an amount other than fair value, the Company has made an accounting policy election to reflect the entire adjustment to the carrying value as a deemed dividend. For the three and nine months ended December 31, 2024, the Company recognized a deemed dividend of $154 thousand for its redeemable noncontrolling interest to adjust the carrying amount of the redeemable noncontrolling interest to its redemption value, after giving effect to the change in its carrying amount from the net income (loss) attributable to the redeemable noncontrolling interest. The deemed dividend adjustment to record this redeemable noncontrolling interest at its redemption value was recorded to additional paid-in capital and there were no further adjustments to the net loss attributable to common shareholders for the purposes of calculating basic and dilutive loss per share. For the three and nine months ended December 31, 2024 and 2023, potentially dilutive securities that were not included in the diluted net loss per share calculation because they would be anti-dilutive comprise 5 thousand and 10 thousand shares from options to purchase common shares, respectively.

Loss and income per share has been computed based on the following weighted average number of common shares outstanding:


	Three Months Ended December 31,						Nine Months Ended December 31,
	(In thousands, except per share amounts)
	2024			2023			2024			2023
Numerator
Net loss from continuing operations attributable to common shareholders before dividends	$	(403	)	$	(1,699	)	$	(7,254	)	$	(4,845	)
Redeemable noncontrolling interest redemption value in excess of carrying value deemed dividend		(154	)		-			(154	)		-
Net loss from continuing operations attributable to common shareholders	$	(557	)	$	(1,699	)	$	(7,408	)	$	(4,845	)
Net income (loss) from discontinued operations attributable to common shareholders		279			(9,962	)		3,139			(15,745	)
Net loss attributable to common shareholders	$	(278	)	$	(11,661	)	$	(4,269	)	$	(20,590	)

Denominator
Denominator for basic loss per share - weighted-average shares outstanding		6,685			7,286			6,696			7,288
Dilutive effect of stock options		5			10			5			10
Denominator for diluted earnings per share from discontinued operations		6,690			7,296			6,701			7,298

Per share loss from continuing operations attributable to common shareholders
Basic	$	(0.08	)	$	(0.23	)	$	(1.11	)	$	(0.66	)
Diluted		(0.08	)		(0.23	)		(1.11	)		(0.66	)

Per share income (loss) from discontinued operations attributable to common shareholders
Basic	$	0.04		$	(1.37	)	$	0.47		$	(2.16	)
Diluted		0.04			(1.37	)		0.47			(2.16	)

Per share loss available to common stockholders
Basic	$	(0.04	)	$	(1.60	)	$	(0.64	)	$	(2.83	)
Diluted		(0.04	)		(1.60	)		(0.64	)		(2.83	)

Note 6. Long-Term Debt


	(In thousands)
	December 31, 2024		March 31, 2024

RUS Loan		615		-
Bank Equipment Loans		226		-
Total Outstanding Debt		841
Less Current Portion		69		-
Total Long-Term Debt	$	772	$	-

The scheduled maturities of outstanding debt, excluding the effect of any future drawdowns or interest expense, at December 31, 2024 are as follows (in thousands):


(In thousands)
Remainder of FY 2025	$	17
FY 2026		69
FY 2027		102
FY 2028		102
FY 2029		32
Thereafter		519
Total Outstanding Debt	$	841

The Company’s weighted-average interest rate on its short-term borrowings outstanding under its outstanding debt agreements for the three months ended December 31, 2024 was 4.73%.

RUS Loan - On September 23, 2024, Amplex entered into a Reconnect Program Loan and Security Agreement (the “RUS Loan”) with the United States of America acting through the Administrator of the Rural Electric Services (“RUS”), pursuant to which RUS has extended Amplex a secured loan in the principal amount of up to $21,341,792 (the “Loan”). The purpose of the Loan is to finance the construction of a broadband infrastructure project to serve rural areas where at least 50% of the households are without sufficient access to broadband.

Amplex has five years to draw funds under the Loan Agreement, which expires on October 31, 2029. The Loan is secured by all of Amplex’s assets. The Loan bears interest at a rate of 2% per annum, calculated by daily accrual. All accrued interest and principal on advances will be deferred for a three year period ending on October 31, 2027, unless earlier payment is made by Amplex. At the end of the three-year deferral period, all unpaid accrued interest will be capitalized and added to the outstanding principal, and monthly payments will be established in an amount that amortizes the outstanding balance in equal payments over the remaining term of the Loan. The principal advanced pursuant to this Agreement and remaining unpaid, if any, and interest thereon, shall be due and payable on October 31, 2046. All, or a portion of the outstanding balance, of any advance made under the Loan Agreement may be prepaid on any payment date without penalty.

The obligation of RUS to advance funds to Amplex under the Loan Agreement is subject to conditions that are customary for loans made by RUS, including the accuracy of Amplex’s representations and warranties, no material adverse effect with respect to Amplex, no event of default, receipt of a financial requirement statement from Amplex, current financial statements, compliance with buildout timelines, material compliance with the Loan Agreement, obtaining specified permits, licenses and franchises and maintenance of on deposit in a pledged deposit account of required matching funds for completion of projects. Other conditions include Amplex having positive cash flow from operations at the end of the fifth year of an award under the Loan Agreement and providing the specified level of broadband service for the period specified in the Loan Agreement. The Loan Agreement contains negative covenants of Amplex that are customary for loans made by RUS, including Amplex not merging, consolidating, reorganizing or selling, leasing or transferring a substantial part of its property without RUS’ prior written consent, not incurring additional debt with specified exceptions, Amplex not changing its principal place or place of business without RUS’ consent and not issuing preferred stock without RUS’ consent. RUS may suspend advances if Amplex suffers a material adverse effect or an event of default occurs.

The Loan Agreement contains customary events of default, including materially incorrect representations and warranties, nonpayment of the Loan, improper expenditures, failure to keep adequate records, failure to build in accordance with timelines, bankruptcy, dissolution or liquidation and impairment of business. If an event of default occurs, RUS could restrict Amplex’s ability to obtain additional advances under the Loan Agreement, accelerate all amounts outstanding under the Loan Agreement, enforce their interest against collateral pledged under the Loan Agreement or enforce such other rights and remedies as they have under the loan documents or applicable law as secured lenders.

Bank Equipment Loans - In November 2024, the Company entered into two equipment finance agreements with a lender to provide financing for the Company to enable the purchase of certain pieces of equipment fixed assets. The loans are secured by the pieces of equipment for which the financing agreements were entered into for purchase. The Bank Equipment Loans contain customary covenants and events of default, including materially incorrect representations and warranties, nonpayment of the loans, and failure to maintain proper registrations, titles, permits, licenses, and insurance policies covering the equipment. The interest accrues at a rate indexed to the "ICE Swap Rate - USD rates SOFR 1100" as published by Intercontinental Exchange, Inc., up to a maximum of 18% per annum. Payments on the loans are due monthly, and the loans mature in November 2026.

Note 7. Property, Plant, and Equipment, net

Property, plant, and equipment consist of the following:


	(In thousands)
	December 31, 2024			March 31, 2024

Equipment	$	4,380		$	305
Construction equipment		323			-
Leasehold improvements		183			2
Furniture and fixtures		201			6
Fiber plant		17,536			-
Customer premise equipment		818			-
Towers		37			-
Total, property, plant, and equipment in service		23,478			313
Property, plant, and equipment under construction		2,042			-
Total property, plant, and equipment		25,520			313

Less: accumulated depreciation		(650	)		(238	)
Total property, plant, and equipment, net	$	24,870		$	75

Depreciation expense was $299 thousand and $686 thousand for the three and nine months ended December 31, 2024, respectively. Depreciation expense was $19 thousand and $57 thousand for the three and nine months ended December 31, 2023, respectively. Depreciation expense is included in depreciation and amortization in the condensed consolidated statements of operations.

Note 8. Goodwill and Intangible Assets

The acquired goodwill represents the value of combining operations of Amplex and the Company.

The change in the carrying amount of goodwill for the nine months ended December 31, 2024 was as follows:


(In thousands)	Gross Carrying Amount		Additions		Impairment		Net Book Value
Goodwill	$	-	$	10,434	$	-		10,434
	$	-	$	10,434	$	-	$	10,434

The changes in intangible assets for the nine months ended December 31, 2024 consists of the following:


(In thousands)	Weighted Average Remaining Amortization Period		Gross Carrying Amount		Additions		Impairment		Accumulated Amortization			Net Book Value
Definite lived intangible assets:
Subscriber relationships		13.47	$	-	$	7,300	$	-	$	(283	)	$	7,017
Trade name		20.44		-		3,000		-		(77	)		2,923
Internally developed software		4.46		-		250		-		(27	)		223
				-		10,550		-		(387	)		10,163
Indefinite lived intangible assets:
CBRS FCC license				-		580		-		-			580
				-		580		-		-			580
			$	-	$	11,130	$	-	$	(387	)	$	10,743

Amortization expense totaled $179 thousand and $387 thousand for the three and nine months ended December 31, 2024, respectively. Amortization expense totaled $4 thousand for the three and nine months ended December 31, 2023. Amortization expense is included in depreciation and amortization in the condensed consolidated statements of operations.

As of December 31, 2024, the future expected amortization expense for intangible assets is as follows:


(In thousands)
Remainder of FY 2025	$	179
FY 2026		714
FY 2027		714
FY 2028		714
FY 2029		714
Thereafter		7,129
Total	$	10,164

Note 9. Leases

The Company's operating leases for its equipment and specialized spaces for company equipment have terms expiring at various dates through June 2033. Certain lease arrangements include renewal options and escalation clauses.

Operating lease assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at the commencement date. As most of the Company's leases do not provide an implicit rate, the Company estimates its incremental borrowing rate based on information available at the commencement date in determining the present value of future payments. Lease expense related to the net present value of payments is recognized on a straight-line basis over the lease term.

The key components of the Company's operating leases expenses were as follows:


	Three Months Ended December 31,				Nine Months Ended December 31,
(In thousands)	2024		2023		2024		2023
Operating lease expense	$	108	$	16		251		48
Short-term lease expense		6		1		9		3
Total lease cost	$	114	$	17	$	260	$	51

Right-of-use assets and lease liabilities for operating leases were recorded in the condensed consolidated balance sheets as follows:


	(In thousands)
	December 31, 2024		March 31, 2024
Operating leases:
Operating lease right-of-use assets	$	2,925	$	65
Current portion of operating lease liabilities		267		-
Operating lease liabilities		2,688		65

The weighted-average remaining lease term for operating leases was 10.4 years and 2.4 years for the nine months ended December 31, 2024 and 2023, respectively. The weighted-average discount rate was 6.3% and 6.5% for the nine months ended December 31, 2024 and 2023, respectively.

Future minimum lease payments under non-cancelable operating leases as of December 31, 2024, are as follows:


(In thousands)
Remainder of FY 2025	$	131
FY 2026		430
FY 2027		431
FY 2028		421
FY 2029		413
Thereafter		2,246
Total minimum lease payments		4,072
Less: effects of discounting		(1,117	)
Present value of future minimum lease payments	$	2,955

As previously stated, Amplex leases certain property (including an office building) and warehouse building from the Red Bug Entities (See Notes 1 and 2). The Red Bug Entities are considered related parties under ASC 850, Related Parties. The Red Bug Entities were created by, and are majority-owned by Amplex's Chief Executive Officer. We consider our leasing arrangements with the Red Bug Entities to be arms-length transactions. The office building lease calls for monthly payments of approximately $13 thousand for the duration of the fifteen year lease term that runs through December 14, 2031. The warehouse building lease calls for monthly payments of approximately $15 thousand, with annual price increases being indexed to the Consumer Price Index, for the duration of the fifteen year lease term that runs through July 31, 2038. As of December 31, 2024, the connected ROU assets and liabilities recorded on our condensed consolidated balance sheets equaled approximately $2,462 thousand. Corresponding operating lease expenses of $83 thousand and $192 thousand have been recorded within general and administrative expenses on the condensed consolidated statements of operations for the three and nine months ended December 31, 2024, respectively. No balances or activity related to these leases are reflected in the December 31, 2023 condensed consolidated balance sheet or the condensed consolidated statements of operations for the three and nine months ended December 31, 2023 given Amplex was not consolidated within the Company financial statements during fiscal year 2024. The Company has no other material related party transactions requiring disclosure in these condensed consolidated financial statements.

The amounts recorded for operating lease expenses include short-term leases, which are immaterial. During the second quarter of fiscal year 2025, the Company recorded $56 thousand in impairment charges related to operating lease

right-of-use assets which is included within general and administrative expenses during the nine months ended December 31, 2024 as the Company had planned to close their Clearwater office location in December 2024. On December 13, 2024, the Company entered into a termination of lease agreement in connection with the Clearwater office location with an effective termination date of January 31, 2025. After executing the termination of lease agreement, the Company recorded a Gain on Lease Settlement of $0 thousand, reflecting the difference between the lease liability for the Clearwater office location as of the date of the termination of lease agreement and the total amount due to the Lessor as a result of the termination.

On December 2, 2024 the Company entered into a lease agreement for a new office space in Omaha, Nebraska. The lease term will commence on March 1, 2025 and the total future minimum lease payments under the agreement, excluding the effect of discounting, are expected to be $112 thousand.

Note 10. Commitments and Contingencies

The Company is involved in certain claims and legal proceedings in the normal course of business of which one, if decided adversely to the Company, would, in the opinion of management, have a material adverse effect on the Company’s financial condition or results of operations.

Claims and legal proceedings relating to discontinued operations

Specifically, the Company has been sued together with several other defendants, in a lawsuit styled: Nicholas Financial, Inc. v. Jeremiah Gross, No. 21CY-CV02148-01, 7th Judicial Circuit, Clay County, Missouri. On March 9, 2021 the Company filed suit against Jeremiah Gross for a deficiency balance owed the Company following the 2018 surrender and sale of his motor vehicle which secured a loan from the Company. On April 22, 2021 a default judgment for $7,984 was entered against Gross. On December 22, 2021 Gross filed a motion to set aside the default judgment. The Court granted his motion on March 23, 2022. In his answer he asserted a class-action counterclaim against the Company seeking to represent a Nationwide class of the Company’s customers who received allegedly deficient notices regarding the sale of their vehicles and whose vehicles were recovered and sold by the Company, and on behalf of Missouri customers who received allegedly deficient notices from the Company regarding the sale of their recovered vehicles and the calculation of the deficiency owed the Company. The Company filed its answer to the counterclaim on May 13, 2022. On September 9, 2022 the Company filed a motion for summary judgment as to all counts of the counterclaim and Nicholas Financial, Inc.’s claim against Gross. The motion was argued on February 16, 2023. On March 27, 2023 the Court entered an order granting the motion in part and denying the motion in part. The Court found in favor of Nicholas Financial, Inc. as to the counterclaim regarding presale notices and prejudgment interest and in Gross’s favor for the counterclaim as to post-sale notices. The Court also denied Nicholas Financial, Inc.’s motion for summary judgment as to its claim for a deficiency against Gross. The remaining claim related to post sale notices sent to Missouri customers. The parties, including the Company’s insurer Gemini, settled the case and the Court entered a Final Approval Order on May 15, 2024 which found the Agreement to have been entered into in good faith and approving the Company’s assignment to the Class of the Company’s claims against certain insurers, brokers, and agents. Further, the Court approved the settlement as fair, reasonable, and adequate as to, and in the best interests of, each of the Parties and the Settlement Class members and in full compliance with all requirements of the laws of Missouri, the United States Constitution (including the Due Process Clause), and any other applicable law. The Court directed the parties to the Lawsuit to implement and consummate the Agreement pursuant to its terms and provisions. Pursuant to the terms of the Agreement, the Court entered a Final Judgment against the Company in favor of the Class. In the Final Judgment, the Court held that other than the funds to be paid by Gemini Insurance Company on behalf of the Company, the Company had no obligation to satisfy the judgment, and that any remaining amount may only be satisfied from the Company’s Insurers and Insurance Agents other than Gemini Insurance Company.

On May 15, 2024, Gross filed on behalf of the Class, as assignee of the Company, a Cross-Claim in the underlying lawsuit against American Zurich Insurance Company (“AZIC”), American Guarantee and Liability Insurance Company (“AGLIC”), and Zurich American Insurance Company (“ZAIC” and collectively with AZIC and AGLIC, “Zurich”), for breach of contract, breach of the duty to defend, and bad faith failure to defend or settle (“Cross-Claim”). On June 14, 2024, Zurich filed a Motion to Amend the Final Judgment and a Notice of Removal of the Cross-Claim, seeking to remove

the Cross-Claim to federal court in the Western District of Missouri. In its Notice of Removal, Zurich acknowledged that the Company is no longer a proper party to the Lawsuit “because all the claims against it are resolved by the Final Judgment.” On June 24, 2024, Zurich filed a Notice of Appeal of the Final Judgment.

Claims and legal proceedings relating to continuing operations

Armstrong Teasdale LLP reported the following updates based on recent events and the information available to it as of November 1, 2024:

On August 14, 2024, the federal court in the Western District of Missouri granted Gross’s (Class Representative’s) motion to remand the Cross-Claim against Zurich, which means the action was reinstated that day in the state Circuit Court. Shortly after the remand, on September 5, 2024, the state court granted a joint motion by Gross and Zurich to stay the state court action pending the state Appeals Court’s disposition of Zurich’s appeal, which is still undecided.

Because of the pending motion to amend and the pending appeal, the Final Judgment is not yet final, which means the funding deadline for Gemini Insurance Company’s payment to the Class on behalf of the Company has not yet been triggered. The stay entered by the state court will likely not affect the finality of the Final Judgment.

Armstrong Teasdale LLP has been informed that Gross and Zurich participated in a mediation on October 9, and that they reached a global settlement of their disputes; however, a settlement agreement is apparently still being prepared, and the reported settlement is not yet final.

It is likely that Gemini Insurance Company’s funding deadline will occur 14 business days following the later of: November 22, 2024 (which is based on a statutory determination of automatic judgment finality, assuming no other appeals of the Final Approval Order or Final Judgment have been filed); or the date of the Court of Appeals’ disposition of the existing appeal or the effective date of any settlement agreement between Gross and Zurich, whichever of those two happens first (assuming the settlement between Gross and Zurich resolves the pending appeal and forecloses Zurich from pursuing any additional appeals).

However, Armstrong Teasdale LLP advised that it is still waiting to review the final written terms of the reported settlement between Gross and Zurich, and that it must review those terms in order to be in a position to provide the Company with a higher level of certainty regarding the date by which Gemini Insurance Company will be required to fund the Class payment (which will satisfy the Company’s remaining obligation pursuant to the Class Settlement Agreement).

Armstrong Teasdale advised that based on the information currently available, it still expects the Final Judgment to become final eventually, either as it is, or in a slightly modified version.

Note 11. Stock Plans

In May 2019, the Company’s Board of Directors (“Board”) authorized a stock repurchase program allowing for the repurchase of up to $8.0 million of the Company’s outstanding shares of common stock in open market purchases, privately negotiated transactions, or through other structures in accordance with applicable federal securities laws. The authorization was effective immediately.

The timing and actual number of shares will depend on a variety of factors, including stock price, corporate and regulatory requirements and other market and economic conditions. The Company’s stock repurchase program may be suspended or discontinued at any time.

In August 2019, the Company’s Board authorized an additional repurchase of up to $1.0 million of the Company’s outstanding shares.

On September 5, 2024, the Company settled in cash with the dissenting shareholders to repurchase the 652,249 Dissenting Shares at a price per share of $8.63, or $5.6 million (as discussed in Note 2). The Dissenting Shares were retained by the Company to be included within treasury stock.

The table below summarizes treasury share transactions for the Company:


	Three Months Ended December 31, (in thousands)
	2024					2023
	Number of Shares		Amount			Number of Shares		Amount
Treasury shares at the beginning of period		6,020	$	(82,423	)		5,368	$	(76,794	)
Treasury shares purchased		-		-			-		-
Treasury shares at the end of period		6,020	$	(82,423	)		5,368	$	(76,794	)


	Nine Months Ended December 31, (in thousands)
	2024					2023
	Number of Shares		Amount			Number of Shares		Amount
Treasury shares at the beginning of period		5,368	$	(76,794	)		5,368	$	(76,794	)
Treasury shares purchased		652		(5,629	)		-		-
Treasury shares at the end of period		6,020	$	(82,423	)		5,368	$	(76,794	)

Note 12. Income Taxes

The provision (benefit) for income taxes reflects an effective U.S. tax rate, which differs from the corporate tax rate for the following reasons:

The Company recorded an income tax expense of approximately $60 thousand and $0 from continuing operations for the three months ended December 31, 2024 and 2023, respectively. The Company also recorded an income tax expense of approximately $35 thousand and $0 from continuing operations for the nine months ended December 31, 2024 and 2023, respectively. The tax expense is primarily related to the newly acquired entity Amplex. Amplex was acquired during the nine months ended December 31, 2024 and will be consolidated for GAAP purposes, while continuing to file a separate federal tax return.

As of March 31, 2024, the Company had federal and state net operating losses ("NOL") of approximately $44.6 million and $59.4 million, respectively. During the nine months ended December 31, 2024, the Company acquired federal NOLs of approximately $5.8 million related to the Amplex acquisition. The federal NOLs generated for the nine months ended December 31, 2024, will carryforward indefinitely. Generally, state NOLs begin to expire December 31, 2039. In accordance with Section 382 of the U.S. Internal Revenue Code, the usage of the Company's NOL carryforwards is subject to annual limitations following greater than 50% ownership changes. Tax returns for the years ended 2021 through 2024 are subject to review by tax authorities.

The Company’s effective tax rate for the nine months ended December 31, 2024 and 2023, was -0.48% and 0%, respectively. The Company's effective tax rate for the three months ended December 31, 2024 and 2023 was -14.81% and 0%, respectively. The change in the effective tax rate from the comparison of 2024 and 2023, as noted above, primarily relates to the operations of Amplex. The Company records a valuation allowance for OMCC since there is not sufficient evidence of future earnings to support a position that it will be more likely than not to realize its net deferred tax asset.

Note 13. Discontinued Operations

On November 13, 2023, the Company entered into the Purchase Agreement with Westlake Financial, pursuant to which the Company agreed to sell substantially all of its finance receivables and all of its repossessed assets. In connection with

the entering into the Purchase Agreement, the Company ceased new loan originations of contracts and direct loans. On April 26, 2024, the transactions contemplated by the Purchase Agreement closed with an aggregate purchase price of $65.6 million, pursuant to the terms of the Purchase Agreement. Pursuant to the terms of the Purchase Agreement, Westlake Financial was due to make additional payments to the Company based on a percentage of cash collections received over a predetermined threshold on the loan portfolio from September 30, 2023 through the closing of the disposition. On April 26, 2024, Westlake Financial made a $40.6 million payment to the Company at the closing of the disposition.

Subsequent to closing, the Company and Westlake Financial determined that Westlake Financial overpaid the Company $2.6 million. The Company accordingly recorded a $2.6 million contingent liability while negotiations took place until a settlement could be reached on the established contingent consideration.

On July 25, 2024, the arrangement between the Company and Westlake regarding a reconciliation of the initial payment to Nicholas Financial, escrow, and contingent consideration was settled, which resulted in the Company paying Westlake Financial $2.4 million and waiving the right to any future contingent payments from Westlake Financial as originally stated in the Purchase Agreement. As a result of the sale of the Company's finance receivables and repossessed assets to Westlake, the Company recognized a gain of $1.7 million, calculated as the excess of the total consideration over the carrying value of the finance receivables and repossessed assets sold to Westlake. The disposition of the finance receivables and all of its repossessed assets represents a strategic shift in the business based on the total assets, revenue, and net income of the segment sold to Westlake in comparison to the financial information of the Company as a whole.

The following depicts the results of operations for the discontinued operations of the Company for the three and nine months ended December 31, 2024 and 2023:


	For the Three Months Ended December 31,						For the Nine Months Ended December 31,
(In thousands)	2024			2023			2024			2023
Revenue
Interest and fee income on finance receivables	$	-		$	4,954		$	1,229		$	18,367
Total revenue		-			4,954			1,229			18,367

Operating expenses
Marketing		-			22			6			88
Provision for credit losses		-			(10,482	)		-			2,570
Fair value and other adjustments, net		(202	)		23,110			(230	)		23,110
General and administrative		17			2,198			823			7,518
Total operating expenses		(185	)		14,848			599			33,286

Gain on disposal of assets, net of taxes		-			-			(1,692	)		-
Gain on sale of finance receivables, net of taxes		(94	)		-			(817	)		-

Income before income taxes		279			(9,962	)		3,139			(15,745	)
Income tax benefit		-			-			-			-
Net income (loss) from discontinued operations, net of taxes	$	279		$	(9,962	)	$	3,139		$	(15,745	)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward- Looking Information

This Quarterly Report on Form 10-Q contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on management's current beliefs and assumptions, as well as information currently available to management. When used in this document, the words "anticipate", "estimate", "expect", "forecast", "will", "would", "may", "plan", "believe", "intend" and similar expressions are intended to identify forward-looking statements. Although Old Market Capital Corporation, including its subsidiaries (collectively, the "Company", "we", "us", or "our") believes that the expectations reflected or implied in such forward-looking statements are reasonable, it can give no assurance that such expectation will prove to be correct. As a result, actual results could differ materially from those indicated in these forward-looking statements. Forward-looking statements in this Quarterly Report may include, without limitation statements about (1) approval by the Court of the settlement of the litigation involving Mr. Jeremiah Gross, (2) the availability and use of excess capital (including by acquiring businesses or by investing outside of the Company's traditional business), (3) projections of revenue, income, and other items relating to our financial position and results of operations, (4) statements of our plans, objectives, strategies, goals and intentions, (5) statements regarding the capabilities, capacities, market position and expected development of our business operations, and (6) statements of expected industry and general economic trends. These statements are subject to certain risks, uncertainties and assumptions that may cause results to differ materially from those expressed or implied in the forward-looking statements, including without limitation:

•

the risk that approval by the Court of the settlement of the litigation involving Mr. Jeremiah Gross may not be granted, either on terms and conditions satisfactory to the Company or at all;

•

uncertainties surrounding the Company's success in developing and executing on a new business plan;

•

uncertainties surrounding the Company's ability to use any excess capital to increase shareholder returns, by acquiring businesses or investing outside of the Company's traditional business;

•

availability of capital (including the ability to access bank financing);

•

recently enacted, proposed or future legislation and the manner in which it is implemented, including tax legislation initiatives or challenges to our tax positions and/or interpretations, and state sales tax rules and regulations;

•

an increase in legislative and regulatory activity with respect to broadband networks;

•

changes in consumer behavior;

•

fluctuations in the economy;

•

the degree and nature of competition and its effects on the Company's financial results;

•

fluctuations in interest rates;

•

effectiveness on our risk management processes and procedures, including the effectiveness of the Company's internal control over financial reporting and disclosure controls and procedures;

•

our ability to successfully develop and commercialize new or enhanced products or services;

•

the sufficiency of our allowance for credit losses and the accuracy of the assumptions or estimates used in preparing our financial statements;

•

higher borrowing costs and adverse financial market conditions impacting our funding and liquidity;

•

regulation, supervision, examination of our business by governmental authorities and adverse regulatory changes in the Company’s existing and future markets;

•

fraudulent activity, employee misconduct or misconduct by third parties;

•

failure of third parties to provide various services that are important to our operations;

•

alleged infringement of intellectual property rights of others and our ability to protect our intellectual property;

•

litigation and regulatory actions;

•

our ability to attract, retain and motivate key officers and employees;

•

use other third-party vendors and ongoing third-party business relationships;

•

cyber-attacks or other security breaches suffered by us;

•

disruptions in the operations of our computer systems and data centers;

•

the impact of changes in accounting rules and regulations, or their interpretation or application, which could materially and adversely affect the Company's reported consolidated financial statements or necessitate material

delays or changes in the issuance of the Company's audited consolidated financial statements;

•

uncertainties associated with management turnover and the effective succession of senior management;

•

our ability to realize our intentions regarding strategic alternatives, including the failure to achieve anticipated synergies; and

•

the risk factors discussed under "Item 1A - Risk Factors" in our Annual Report on Form 10-K and our other filings made with the U.S. Securities and Exchange Commission ("SEC")

Any forward-looking statements made by us in this document speak only as of the date on which they are made. We are under no obligation, and expressly disclaim any obligation, to update or alter our forward-looking statements, whether as a result of new information, subsequent events or otherwise.

The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto as of and for the year ended March 31, 2024, and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our 2024 Form 10-K. Our results of operations for the three and nine months ended December 31, 2024, may not be indicative of our future results.

Overview

Old Market Capital Corporation ("OMCC") is a specialized consumer finance company engaged primarily in acquiring and servicing automobile finance installment contracts for purchases of used and new automobiles and light trucks incorporated under the laws of the State of Delaware with a wholly owned subsidiary, Nicholas Data Services, Inc. ("NDS"). NDS historically was engaged in supporting and updating industry specific computer application software for small businesses located primarily in the Southeastern United States. NDS has ceased its operations; however, it continues as the interim holding company for Old Market Capital Corporation. OMCC and NDS are based in Florida, U.S.A.

Change in Operating Strategy

On November 13, 2023, the Company entered into a Master Asset Purchase Agreement (the "Purchase Agreement") with Westlake Services, LLC dba Westlake Financial, a California limited liability company ("Westlake Financial"), pursuant to which the Company has agreed to sell substantially all of the Company's finance receivables and all of its repossessed assets. On April 26, 2024, the transactions contemplated by the Purchase Agreement closed.

Concurrently, on June 15, 2024, the Company converted the outstanding principal of $0.8 million under the Term Loan Advances into 421 shares of Amplex common stock at the Share Purchase Price of $1,792.55 and purchased 1,674 shares of Amplex common stock at the same Share Purchase Price for a purchase price of $3.0 million (collectively, the "Additional NICK Closing Stock"). These transactions concurrently executed at the Transaction Closing Date increased the Company's ownership in Amplex to 56.5%. During the quarter ended December 31, 2024, the Company entered into a Subscription Agreement whereby the Company invested an additional $4.5 million into Amplex, increasing the Company's ownership percentage to 61%.

How We Generate Revenues and Evaluate our Business

The Company generates revenues primarily through customer contracts and provides wireless internet services, fiber internet services, and other services including voice over telephone services. The Company fulfills obligations and recognizes revenue under a contract with a customer by transferring products and services in exchange for consideration

from the customer. Payments received or consideration billed in advance are recorded as deferred revenue. Further, the Company records accounts receivable for services billed in advance.

Operating income (loss) is a key metric that we use to evaluate segment operating performance and to determine resource allocation between segments. We define operating income (loss) as revenues less operating expenses. Operating expenses include cost of wireless and fiber internet services, cost of other revenue, plant specific and nonspecific operations expenses, general and administrative expenses, and depreciation and amortization expenses.

Result of Operations

Three months ended December 31, 2024 compared to three months ended December 31, 2023

Revenues of Continuing Operations

For the three months ended December 31, 2024 and 2023, our revenues in dollars and as a percentage of total revenues were as follows:


	For the Three Months Ended December 31,				Variance
(In thousands)	2024		2023		$ Change		% Change
Revenue

Wireless internet services		1,693		-		1,693		100	%
Fiber internet services		851		-		851		100	%
Other revenue		424		-		424		100	%
Total revenue	$	2,968	$	-	$	2,968		100	%

Revenue totaled $3.0 million for the three months ended December 31, 2024, compared to $0 for the three months ended December 31, 2023. The increase in revenue for the three months ended December 31, 2024 is primarily due to additional services the Company now provides from the acquisition of Amplex that were not provided in the prior period. Through acquiring Amplex, the Company now provides wireless internet services, fiber internet services, and other services including VOIP telephone and video streaming. Further, with the Company's Purchase Agreement in April of 2024 and the acquisition in June of 2024, the Company's revenue is not comparable on a year-over-year basis.

Expenses of Continuing Operations

For the three months ended December 31, 2024 and 2023, our expenses in dollars and as a percentage of total expenses were as follows:


	For the Three Months Ended December 31,				Variance
(In thousands)	2024		2023		$ Change		% Change
Operating expenses
Marketing	$	21	$	-	$	21		100	%
Cost of wireless and fiber internet services		167		-		167		100	%
Cost of other revenue		211		-		211		100	%
Plant specific operations		422		-		422		100	%
Plant nonspecific operations		226		-		226		100	%
General and administrative		2,123		1,745		378		22	%
Depreciation and amortization		501		22		479		2177	%
Total operating expenses	$	3,671	$	1,767	$	1,904		108	%

Cost of Wireless and Fiber Internet Services and Cost of Other Revenue of Continuing Operations

Cost of wireless and fiber internet services totaled $167 thousand for the three months ended December 31, 2024, compared to $0 for the three months ended December 31, 2023. In addition, cost of other revenue totaled $211 thousand for the three months ended December 31, 2024 compared to $0 for the three months ended December 31, 2023. As discussed above, the Company now provides wireless internet, fiber internet, and other services in conjunction with its acquisition of Amplex. Therefore, the cost of wireless and fiber internet services and cost of other revenue increased during the three months ended December 31, 2024 when compared to the prior period. With the Company's Purchase Agreement in April of 2024 and the acquisition in June of 2024, the Company's cost of wireless and fiber internet services and cost of other revenue is not comparable on a year-over-year basis.

Plant Specific and Plant Nonspecific Operations of Continuing Operations

Plant specific and plant nonspecific operations expenses totaled $648 thousand for the three months ended December 31, 2024, compared to $0 for the three months ended December 31, 2023. Due to the Company's acquisition of Amplex, the Company began providing additional services during the three months ended December 31, 2024 that were not provided in prior periods. Therefore, plant specific and nonspecific operations expenses increased for the three months ended December 31, 2024 when compared to the prior period. With the Company's Purchase Agreement in April of 2024 and the acquisition in June of 2024, the Company's plant specific and nonspecific operations expenses are not comparable on a year-over-year basis.

General and Administrative Expenses of Continuing Operations

General and administrative expenses totaled $2.1 million for the three months ended December 31, 2024, compared to $1.7 million three months ended December 31, 2023. The increase in general and administrative expenses for the three months ended December 31, 2024 is primarily due to additional professional fees and restructuring expenses incurred in relation to the acquisition of Amplex which was acquired by the Company during the period. With the Company's Purchase Agreement in April of 2024 and the acquisition in June of 2024, the Company's general and administrative expenses are not comparable on a year-over-year basis.

Depreciation and Amortization Expenses of Continuing Operations

Depreciation and amortization expense totaled $501 thousand for the three months ended December 31, 2024, compared to $22 thousand three months ended December 31, 2023. The increase in depreciation and amortization expense for the three months ended December 31, 2024 is primarily due to an increase in property, plant, and equipment and intangible assets resulting from the Company's acquisition of Amplex. With the Company's Purchase Agreement in April of 2024 and the acquisition in June of 2024, the Company's depreciation and amortization expense is not comparable on a year-over-year basis.

Discontinued Operations

Income from discontinued operations was $0.3 million for the three months ended December 31, 2024 compared to a loss of $10 million for the three months ended December 31, 2023. The increase in income for three months ended December 31, 2024 is primarily attributed to a decrease in general and administrative expenses and a decrease in credit losses due to the sale of the finance receivables and repossessed assets to Westlake when compared to the three months ended December 31, 2023.

Nine months ended December 31, 2024 compared to nine months ended December 31, 2023

Revenues of Continuing Operations

For the nine months ended December 31, 2024 and 2023, our revenues in dollars and as a percentage of total revenues were as follows:


	For the Nine Months Ended December 31,				Variance
(In thousands)	2024		2023		$ Change		% Change
Revenue
Wireless internet services	$	3,776	$	-	$	3,776		100	%
Fiber internet services		1,730		-		1,730		100	%
Other revenue		909		-		909		100	%
Total revenue	$	6,415	$	-	$	6,415		100	%

Revenue totaled $6.4 million for the nine months ended December 31, 2024, compared to $0 for the nine months ended December 31, 2023. The increase in revenue for the nine months ended December 31, 2024 is primarily due to additional services the Company now provides from the acquisition of Amplex that were not provided in the prior period. Through acquiring Amplex, the Company now provides wireless internet services, fiber internet services, and other services including VOIP telephone and video streaming. Further, with the Company's Purchase Agreement in April of 2024 and the acquisition in June of 2024, the Company's revenue is not comparable on a year-over-year basis.

Expenses of Continuing Operations

For the nine months ended December 31, 2024 and 2023, our expenses in dollars and as a percentage of total expenses were as follows:


	For the Nine Months Ended December 31,				Variance
(In thousands)	2024		2023		$ Change		% Change
Operating expenses
Marketing	$	33	$	-	$	33		100	%
Cost of wireless and fiber internet services		354		-		354		100	%
Cost of other revenue		456		-		456		100	%
Plant specific operations		820		-		820		100	%
Plant nonspecific operations		491		-		491		100	%
General and administrative		8,725		4,810		3,915		81	%
Depreciation and amortization		1,073		66		1,007		1526	%
Total operating expenses	$	11,952	$	4,876	$	7,076		145	%

Cost of Wireless and Fiber Internet Services and Cost of Other Revenue of Continuing Operations

Cost of wireless and fiber internet services totaled $354 thousand for the nine months ended December 31, 2024, compared to $0 for the nine months ended December 31, 2023. In addition, cost of other revenue totaled $456 thousand for the nine months ended December 31, 2024 compared to $0 for the nine months ended December 31, 2023. As discussed above, the Company now provides wireless internet, fiber internet, and other services in conjunction with its acquisition of Amplex. Therefore, the cost of wireless and fiber internet services and cost of other revenue increased during the nine months ended December 31, 2024 and when compared to the prior period. With the Company's Purchase Agreement in April of 2024 and the acquisition in June of 2024, the Company's cost of wireless and fiber internet services and cost of other revenue is not comparable on a year-over-year basis.

Plant Specific and Plant Nonspecific Operations of Continuing Operations

Plant specific and plant nonspecific operations expenses totaled $1,311 thousand for the nine months ended December 31, 2024, compared to $0 for the nine months ended December 31, 2023. Due to the Company's acquisition of Amplex, the Company began providing additional services during the nine months ended December 31, 2024 that were not provided in prior periods. Therefore, plant specific and nonspecific operations expenses increased for the nine months ended December 31, 2024 when compared to the prior period. With the Company's Purchase Agreement in April of 2024 and the acquisition in June of 2024, the Company's plant specific and nonspecific operations expenses are not comparable on a year-over-year basis.

General and Administrative Expenses of Continuing Operations

General and administrative expenses totaled $8.7 million for the nine months ended December 31, 2024, compared to $4.8 million nine months ended December 31, 2023. The increase in general and administrative expenses for the nine months ended December 31, 2024 is primarily due to additional professional fees and restructuring expenses incurred in relation to the acquisition of Amplex which was acquired by the Company during the period. With the Company's Purchase Agreement in April of 2024 and the acquisition in June of 2024, the Company's general and administrative expenses are not comparable on a year-over-year basis.

Depreciation and Amortization Expenses of Continuing Operations

Depreciation and amortization expense totaled $1,073 thousand for the nine months ended December 31, 2024, compared to $66 thousand for the nine months ended December 31, 2023. The increase in depreciation and amortization expense for the nine months ended December 31, 2024 is primarily due to an increase in property, plant, and equipment and intangible assets resulting from the Company's acquisition of Amplex. With the Company's Purchase Agreement in April of 2024 and the acquisition in June of 2024, the Company's depreciation and amortization expense is not comparable on a year-over-year basis.

Emigration Tax Expense of Continuing Operations

Emigration tax expense was $1.7 million for the nine months ended December 31, 2024 compared to $0 for the nine months ended December 31, 2023. The increase in emigration tax expense in the current period is due to the Company completing its continuation and domestication from a company incorporated under the laws of British Columbia to a corporation incorporated under the laws of the State of Delaware as of April 18, 2024.

Loss on Dissenting Shareholders' Liability of Continuing Operations

Loss on dissenting shareholders' liability was $1.1 million for the nine months ended December 31, 2024 compared to $0 for the nine months ended December 31, 2023. The increase in loss on dissenting shareholders' liability is a result of the change in fair value of the liability during the period that represents the amount owed to dissenting shareholders from the sale of assets to Westlake. As of December 31, 2024, the Company settled the total amount owed to the dissenting shareholders.

Discontinued Operations

Income from discontinued operations was $3.1 million for the nine months ended December 31, 2024 compared to the loss of $15.7 million for the nine months ended December 31, 2023. The increase in income for the nine months ended December 31, 2024 is primarily attributed to a decrease in general and administrative expenses and a decrease in credit losses due to the sale of the finance receivables and repossessed assets to Westlake when compared to the nine months ended December 31, 2023.

Liquidity and Capital Resources

During the nine months ended December 31, 2024, the Company closed on the Share Purchase Agreement with Amplex, in which the Company purchased 51% of the issued and outstanding common shares, no par value per share, of Amplex and to make payment to holders of options for Amplex’s common shares in consideration of cancellation of such options for total purchase consideration of $18.4 million. In conjunction with the closing of the Share Purchase Agreement, the Company converted the outstanding principal and accrued interest of approximately $0.8 million under the Term Loan Advances into 421 shares of Amplex common stock at the Share Purchase Price of $1,792.55 and purchased an additional 1,674 shares of Amplex common stock at the share purchase price of $1,792.55 per share for a purchase price of $3.0 million. For further details of the acquisition, refer to Note 3.

The Company's cash flows are summarized as follows:


	Nine Months Ended December 31,
(In thousands)	2024			2023
Net cash (used in) provided by operating activities	$	(1,145	)	$	1,035
Net cash provided by investing activities		14,483			35,427
Net cash used in financing activities		(4,788	)		(29,100	)

Net cash (used in) provided by operating activities decreased for the nine months ended December 31, 2024 when compared to the nine months ended December 31, 2023. The decrease in cash (used in) provided by operating activities was primarily due to a decrease in net loss of $16.5 million, noncash charge of $1.1 million for the loss on dissenting shareholders' liability, and net change in operating assets and liabilities of $1.0 million, partially offset by a decrease in cash provided by operating activities from discontinued operations of $22.3 million. Further, with the Company's Purchase Agreement in April of 2024 and the acquisition in June of 2024, the Company's change in cash provided by operating activities is not comparable on a year-over-year basis.

Net cash provided by investing activities decreased for the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023. The decrease in net cash provided by investing activities is primarily due to $18.4 million of cash paid for the acquisition of Amplex in June 2024, partially offset by an increase in net cash provided by investing activities from discontinued operations of $74.4 million for the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023. With the Company's Purchase Agreement in April of 2024 and the acquisition in June of 2024, the Company's change in cash provided by investing activities is not comparable on a year-over-year basis.

Net cash used in financing activities decreased during the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023. The decrease was primarily due to the repurchase of $5.6 million worth of shares of common stock held by dissenting shareholders, offset by the proceeds long-term debt of $615 thousand during the nine months ended December 31, 2024.

We have no material commitments for capital expenditures as of December 31, 2024. Part of our growth strategy, however, is to acquire businesses. We would anticipate funding such activity through cash on hand, the issuance of debt, Common Stock, restricted stock units, and warrants for our Common Stock or a combination thereof.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements.

Significant Developments

None.

Critical Accounting Policies and Estimates

A critical accounting estimate is an estimate that: (i) is made in accordance with generally accepted accounting principles, (ii) involved a significant level of estimation uncertainty and (iii) has had or is reasonably likely to have a material impact on the Company's financial condition or results of operations.

There have been changes in our critical accounting policies from those disclosed in our 2024 Annual Report on Form 10-K related to the Company’s acquisition of Amplex which closed June 15, 2024. We revised our critical policies relating to principles of consolidation, trade receivables and allowance for doubtful accounts, and revenue recognition.

Basis of Presentation

The accompanying condensed consolidated financial statements are stated in U.S. dollars and are presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP”). Management believes it has made all necessary adjustments so that the condensed consolidated financial statements are presented fairly and that estimates made in preparing the condensed consolidated financial statements are reasonable and prudent. The condensed consolidated financial statements include the accounts of the Company, its wholly owned or majority-owned subsidiaries and entities in which the Company is deemed to have a direct or indirect controlling financial interest based on either a variable interest model or voting interest model. All intercompany transactions and balances have been eliminated upon consolidation.

Business Combinations

We account for our business combinations using the acquisition accounting method, which requires us to determine the fair value of identifiable assets acquired and liabilities assumed, including any contingent consideration, to properly allocate the purchase price to the individual assets acquired and liabilities assumed and record any residual purchase price as goodwill in accordance with ASC 805, Business Combinations. We identify and attribute fair values and estimated lives to the intangible assets acquired and allocate the total cost of an acquisition to the underlying net assets based on their respective estimated fair values. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and involves the use of significant estimates, including projections of future cash inflows and outflows, discount rates and asset lives. These determinations will affect the amount of depreciation and amortization expense recognized in future periods. Contingent consideration is initially recorded at its fair value at the acquisition date and is revalued every financial reporting date thereafter. Adjustments to contingent consideration liabilities after the completion of acquisition accounting are recorded in the consolidated statement of operations. We base our fair value estimates on assumptions we believe are reasonable but recognize that the assumptions are inherently uncertain.

If the initial accounting for the business combination has not been completed by the end of the reporting period in which the business combination occurs, provisional amounts are reported to present information about facts and circumstances that existed as of the acquisition date. Once the measurement period ends, which in no case extends beyond one year from the acquisition date, revisions to the accounting for the business combination are recorded in earnings.

All acquisition-related costs, other than the costs to issue debt or equity securities, are accounted for as expenses in the period in which they are incurred.

Accounts Receivable and Allowances for Credit losses

Trade accounts receivable are recorded at invoiced amounts, net of allowance for credit losses, if applicable, and are unsecured and do not bear interest.

The allowance for credit losses is based on the probability of future collection under the current expect credited loss impairment model under ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Assets. Under the CECL impairment model, we determine the allowance by applying a loss-rate method based on an aging schedule using our historical loss rate. We also consider reasonable and supportable current information in determining its estimated loss rates, such as macroeconomic trends or other factors including customers’ credit risk and historical loss experience. There is significant judgment applied in estimating the allowance for credit losses. These assumptions and estimates are susceptible to significant changes based on the current environment.

The adequacy of the allowance is evaluated on a regular basis. Account balances are written off after all means of collection are exhausted and the balance is deemed uncollectible. Subsequent recoveries are credited to the allowance. Changes in the allowance are recorded as adjustments to bad debt expense in the period incurred.

Discontinued Operations

We record discontinued operations when the disposal of a separately identified business unit constitutes a strategic shift in our operations, as defined in ASC 205-20, Discontinued Operations.

Contingent Liability

We have been, and may in the future be, involved in legal proceedings which are subject to significant uncertainty. We record an estimated loss for a contingency in our condensed consolidated financial statements for these matters as a charge to income when a loss is known or considered probable and the amount can be reasonably estimated. Management reviews these estimates each accounting period as additional information becomes known and adjusts the loss provision when appropriate. In determining whether a loss should be recorded or adjusted, management evaluates several factors, including advice from outside legal counsel, in order to estimate the likelihood of an unfavorable outcome and to make a reasonable estimate of the amount of loss or range of reasonably possible loss. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in the condensed consolidated financial statements. If a loss is probable but the amount of loss cannot be reasonably estimated, we disclose the loss contingency and an estimate of possible loss or range of loss (unless such an estimate cannot be made). Changes in these factors could have a material impact on our financial position, results of operations and operating cash flows for any particular quarter or year. We do not recognize gain contingencies until they are realized. Legal costs incurred in connection with loss contingencies are expensed as incurred. Refer to Note 2 and Note 12 of our condensed consolidated financial statements for further information.

Fair Value Measurements

ASC 820, Fair Value Measurements (“ASC 820”) defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosure about fair value measurements. ASC 820 classifies these inputs into the following hierarchy:

Level 1 inputs: Quoted prices for identical instruments in active markets.

Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 inputs: Instruments with primarily unobservable value drivers.

Certain of our assets and liabilities are required to be recorded at fair value either on a recurring or nonrecurring basis and are presented with Level 3 of the fair value hierarchy, such as Term Loan Advances, dissenting shareholders’ liability and contingent liability. Our non-financial assets such as property, plant, and equipment are recorded at cost. Fair value adjustments are made to these non-financial assets, on a nonrecurring basis, during the period an impairment charge is recognized, as applicable.

Certain of our financial instruments are carried at fair value and are presented within Level 1 of the fair value hierarchy, such as money market funds included within cash and cash equivalents on the condensed consolidated balance sheet. In addition, the carrying amounts reflected in the condensed consolidated balance sheet for cash and cash equivalents, accounts receivable, materials and supplies, prepaid expenses and other assets, accounts payable, and accrued expenses and other liabilities approximate fair value due to their short-term nature. Refer to Note 2 for additional information.

Revenue Recognition

In accordance with ASC 606, Revenue Recognition, we recognize revenue from contracts with customers using the five-step model:

identify the customer contract;

identify performance obligations that are distinct;

determine the transaction price;

allocate the transaction price to the distinct performance obligations; and

recognize revenue as the performance obligations are satisfied.

We generate revenues primarily from our wireless internet services, fiber internet services, and other services.

Identify the customer contract

A customer contract is generally identified when there is approval and commitment from both us and our customer, the rights have been identified, payment terms are identified, the contract has commercial substance and collectability is probable. Specifically, we obtain written/electronic signatures on contracts and purchase orders, if said purchase orders are issued in the normal course of business by the customer.

Identify performance obligations that are distinct

A performance obligation is a promise to provide a distinct good or service or a series of distinct goods or services. A good or service that is promised to a customer is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and a promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

Determine the transaction price

The transaction price is the amount of consideration to which we expect to be entitled in exchange for transferring goods or services to a customer, excluding sales taxes that are collected on behalf of government agencies.

Allocate the transaction price to distinct performance obligations

The transaction price is allocated to each performance obligation based on the relative standalone selling prices (“SSP”) of the goods or services being provided to the customer. Our contracts may contain multiple performance obligations, for which we account for individual performance obligations separately, if they are distinct. The standalone selling price reflects the price we would charge for a specific piece of equipment or service if it was sold separately in similar circumstances and to similar customers.

Recognize revenue as the performance obligations are satisfied

Customers are billed in advance for services to be provided in the upcoming month. Once billed, payment from customers is due 30 days from the invoice date. Our agreements with our customers do not provide for any refunds for services or products and therefore no specific reserve for such is maintained.

Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.

We fulfill obligations under a contract with a customer by transferring products and services in exchange for consideration from the customer. There are no contract assets related to performance under the contract. We are contractually entitled to invoice in advance for services to be provided in the future. Accordingly, accounts receivable are recorded when the customer has been billed or the right to consideration is unconditional. We recognize deferred revenue when consideration has been billed or received in advance of our satisfaction of our performance obligation(s).

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s management evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act).

Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company's disclosure controls and procedures were not effective at a reasonable level of assurance as of December 31, 2024, because of a material weakness in our internal control over financial reporting relating to non-routine transactions which lead to the correction of errors with respect to the (a) application of complex technical accounting standards related to the presentation and measurement of certain equity and liability instruments from the re-domestication and (b) initial and subsequent measurement of redeemable noncontrolling interest, certain acquired assets and deferred tax liabilities assumed in the acquisition of a controlling interest in Amplex and the consolidation of smaller leasing entities for which a variable interest did not exist.

The Company's management, including our Chief Executive Officer and Chief Financial Officer, does not expect that the Company's disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud due to inherent limitations of internal controls. Because of such limitations, there is a risk that material misstatements will not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

While the Company believes that its efforts for remediation, once implemented, will improve the effectiveness of its internal control over financial reporting, these remediation efforts have been ongoing and will require more time to operate for management to be able to conclude that the design is effective to remediate the material weakness identified. The Company may conclude that additional measures will be necessary to remediate the material weakness in its internal control over financial reporting, which may necessitate additional evaluation and implementation time.

Changes in Internal Control Over Financial Reporting

In connection with the weaknesses noted above management is in the process of establishing and is refining its internal procedures and controls to ensure the accounting around future complex transactions are thoroughly reviewed with external consultants specializing in the specific transactions identified.

On June 15, 2024, the Company completed the acquisition of Amplex (Refer to Note 3 – Business Combination in our unaudited condensed consolidated financial statements for further information on the Amplex acquisition). In accordance with the general guidance issued by the staff of the SEC, Amplex will be excluded from the scope of management’s report on internal control over financial reporting for the year ending March 31, 2025. As part of the ongoing integration of Amplex, we are in the process of incorporating the controls and related procedures.

In connection with the acquisition, we have performed additional analyses and other procedures to enable management to conclude that our condensed consolidated financial statements included in this report fairly, in all material respects, our financial condition and results of operations as of and for the three and nine months ended December 31, 2024.

Other than as described above, during the most recent fiscal quarter, there has been no change in the Company's internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

See the disclosure in Note 9 - Commitments and Contingencies to the condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is hereby incorporated herein by reference.

ITEM 1A. Risk Factors

In addition to the Risk Factor below and the other information set forth in this Quarterly Report on Form 10-Q, especially in the section entitled “PART I – Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Forward Looking Statements,” you should carefully consider the factors discussed in Part I “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024, which could materially affect our business, financial condition or future results of operations. The risks described in the Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Weak economic conditions may have a negative impact on Amplex.

Weak economic conditions may have a negative impact on Amplex. A substantial portion of the Amplex revenue comes from customers whose spending patterns may be affected by prevailing economic conditions. Weak economic conditions in the United States affect demand for Amplex products and services and have a negative impact on results of operations. For example, weak economic conditions will likely impact Amplex customers’ discretionary spending and as a result, they may reduce the level of services to which they subscribe or may discontinue subscribing to one or more of the Amplex services altogether. This risk may be increased by the expanded availability of free or lower cost competitive services, such as certain streaming services, or substitute services for broadband and voice services, such as wireless and public Wi-Fi networks.

Amplex is subject to various federal, state and local laws and regulations.

Amplex is subject to various federal, state and local laws and regulations. In particular, the Communications Act of 1934, as amended (the “Communications Act”) and Federal Communications Commission (“FCC”) regulations and policies affect significant aspects of Amplex. Federal agencies are considering adopting new regulations for communications services, including broadband. States and localities are also increasingly proposing new regulations impacting communications services, including broader regulation of broadband networks. Any of these regulations could significantly affect the business, legal and compliance costs of Amplex. In addition, United States regulators and courts could adopt new interpretations of existing competition or antitrust laws or enact new competition or antitrust laws or regulatory tools that could negatively impact Amplex. Any future legislative, judicial, regulatory or administrative actions may adversely impact the Amplex business by increasing Amplex costs, increasing competition, or imposing additional restrictions on Amplex, some of which may be significant and/or limiting the ability of Amplex to offer services in a manner that would maximize its revenue potential.

Legislative and regulatory changes have in the past, and could in the future, include, for example, the reclassification of Internet services as regulated telecommunications services or other utility-style regulation of Internet services; restrictions on how Amplex manages its Internet access services and networks; the adoption of new customer service or service quality requirements for Amplex Internet access services; the adoption of new privacy restrictions on the collection, use and disclosure of certain customer information by Amplex; new data security and cybersecurity mandates that could result in additional network and information security and cyber incident reporting requirements for Amplex; new restraints on the discretion of Amplex over programming decisions; new restrictions on the rates Amplex charges to consumers for one or more of the services or equipment options offered by Amplex; and increases in government-administered broadband subsidies to rural areas that could result in subsidized overbuilding of Amplex facilities.

The broadband services of Amplex are subject to a number of regulations and commitments. The FCC frequently considers imposing new broadband-related regulations. States and localities also periodically consider new broadband-related regulations, including those regarding broadband affordability. New broadband regulations, if adopted, may have adverse effects on Amplex. Amplex may also become subject to additional broadband-related commitments as a condition of receiving federal or state broadband funding. The Company is unable to predict the outcome or effects of any of these potential actions or any other legislative or regulatory proposals on Amplex.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

During the quarter ended December 31, 2024, no Section 16 officer or director as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934 (the "Exchange Act).

ITEM 6. Exhibits


Exhibit No.		Description
31.1		Certificate of the Principal Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002

31.2		Certificate of the Principal Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002

32.11		Certificate of the Principal Executive Officer Pursuant to 18 U.S.C. § 1350

32.21		Certificate of the Principal Financial Officer Pursuant to 18 U.S.C. § 1350

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

1 This certification accompanies the Quarterly Report on Form 10-Q and is not filed as part of it.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.



Signature	Title	Date


/s/ Jeffrey Royal	Chief Executive Officer (Principal Executive Officer)	February 14, 2025
Jeffrey Royal

/s/ Charlie Krebs	Chief Financial Officer (Principal Financial and Accounting Officer)	February 14, 2025
Charlie Krebs