OMCC 10-K & 10-Q changes, risk factors and insider trading
OLD MARKET CAPITAL Corp · OTC · Short-Term Business Credit Institutions · CIK 1000045 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Weak economic conditions may have a negative impact on Amplex.”
New heading “Amplex is subject to various federal, state and local laws and regulations.”
New heading “We may incur losses due to asset impairment charges related to goodwill and other intangible assets.”
New heading “We rely significantly on our executive leadership, and the loss or limited availability of key personnel could negatively impact our business.”
New heading “Operating as a U.S. public company exposes us to increased costs and regulatory burdens.”
New heading “We may seek to raise additional equity capital through public or private offerings, which could significantly dilute your investment.”
New heading “We may incur additional debt financing, which could impose restrictive covenants and materially affect our financial condition.”
New heading “Our ability to access capital may be limited.”
New heading “Cybersecurity threats and IT system disruptions could significantly impact our business, financial condition, and operations.”
New heading “Amplex operates in a highly competitive market, often against companies with significantly greater resources, and its inability to compete effectively could harm its business and reduce its market share.”
Removed heading “Risks Relating to the Loan Portfolio Sale”
Removed heading “The net proceeds of the closing of the Loan Portfolio Sale may not be used successfully to fully implement our proposed restructuring plan.”
Removed heading “We may not be able to use our net operating loss carryforwards as a result of the Loan Portfolio Sale or otherwise, which could adversely affect our restructuring plan.”
Removed heading “We may be deemed to be a shell company as a result of the Loan Portfolio Sale or otherwise, which could adversely affect your ability to sell your shares of Company stock.”
Removed heading “We face intense competition, including competition from companies with significantly greater resources than us, and if we are unable to compete effectively with these companies, our market share may decline and our business could be harmed.”
Removed heading “Our success has been dependent on our ability to forecast the performance of our remaining Contracts and remaining Direct Loans.”
Removed heading “We have operated in an increasingly competitive market.”
Removed heading “We are heavily reliant upon our executive management team.”
Removed heading “Risks Related to COVID-19”
Removed heading “The extent to which COVID-19 and measures taken in response thereto impact our business, results of operations and financial condition will continue to depend on factors outside of our control. COVID-19 has had and is likely to continue to have a material impact on our results of operations and financial condition and heightens many of our known risks.”
Removed heading “Our success has dependent on our ability to forecast the performance of our Contracts and remaining Direct Loans.”
Removed heading “Our level of indebtedness could adversely affect our financial health, ability to obtain financing in the future, ability to react to changes in our business and ability to fulfill our obligations under such indebtedness.”
Removed heading “We are heavily reliant upon our executive management team.”
Removed heading “We are subject to risks associated with litigation.”
Removed heading “Our business is highly dependent upon general economic conditions.”
Removed heading “The auction proceeds received from the sale of repossessed vehicles and other recoveries are subject to fluctuation due to economic and other factors beyond our control.”
Removed heading “We partially rely on third parties to deliver services, and failure by those parties to provide these services or meet contractual requirements could have a material adverse effect on our business, financial condition and results of operations.”
Removed heading “The success of our business depends upon our ability to retain and attract a sufficient number of qualified employees.”
Removed heading “Natural disasters, acts of war, terrorist attacks and threats, or the escalation of military activity in response to these attacks or otherwise may negatively affect our business, financial condition, and results of operations.”
Removed heading “Risks Related to Regulation”
Removed heading “The CFPB has broad authority to pursue administrative proceedings and litigation for violations of federal consumer financing laws.”
Removed heading “Our use of vendors and our other ongoing third-party business relationships are subject to increasing regulatory requirements and attention.”
Removed heading “We are subject to many other laws and governmental regulations, and any material violations of or changes in these laws or regulations could have a material adverse effect on our financial condition and business operations.”
Removed heading “Failure to properly safeguard confidential customer information could subject us to liability, decrease our profitability, and damage our reputation.”
Removed heading “Risks Related to our Common Stock”
Removed heading “Our stock is thinly traded, which may limit your ability to resell your shares.”
Removed heading “We currently do not have any analysts covering our stock which could negatively impact both the stock price and trading volume of our stock.”
Removed heading “Some provisions of our Articles may deter third parties from acquiring us and diminish the value of our common stock.”
Removed heading “We are a “smaller reporting company” as defined in SEC regulations, and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors.”
Removed heading “Our common shares may be delisted from the NASDAQ Global Select Market, which could adversely affect the price of such common shares and your ability to sell or purchase shares.”
Removed heading “General Risk Factors”
Removed heading “Epidemics, pandemics, and other outbreaks (including the coronavirus (COVID-19) pandemic) can disrupt the Company’s operations and adversely affect its business, financial condition, results of operations, and cash flows.”
Removed heading “We have in the past had material weaknesses in our internal control over financial reporting. Failure to maintain an effective system of internal control over financial reporting and disclosure controls and procedures could lead to a loss of investor confidence in our financial statements and have an adverse effect on our stock price.”
Largest changes
“Any failure, interruption, or breach in our cybersecurity, including through employee misconduct or any failure of our back-up systems or failure to maintain adequate security surrounding customer information, could result in reputational harm, disruption in the management of our customer relationships, or the inability to originate, process and service our products. …”see in full comparison
“Some litigation against us could take the form of class action complaints by consumers. As the assignee of Contracts originated by dealers, we may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of actions can be substantial. The relief requested by the plaintiffs varies but may include requests for compensatory, statutory, and punitive damages. …”see in full comparison
“Some litigation against us could take the form of class action complaints by consumers. As the assignee of contracts originated by dealers, we may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of actions can be substantial. The relief requested by the plaintiffs varies but may include requests for compensatory, statutory, and punitive damages. …”see in full comparison
“The CFPB and the FTC may investigate the products, services and operations of credit providers, including banks and other finance companies engaged in auto finance activities. …”see in full comparison
“As a provider of consumer financial services, the Company has operated in a highly regulated environment. The Company is subject to state licensing requirements and state and federal laws and regulations. In addition, the Company may be subject to governmental and regulatory examinations, information gathering requests, and investigations from time to time at the state and federal levels. Compliance with applicable law is costly and can affect the Company’s results of operations. Compliance requires forms, processes, procedures, controls and the infrastructure to support these requirements. …”see in full comparison
“We have in the past had material weaknesses in our internal control over financial reporting. Failure to maintain an effective system of internal control over financial reporting and disclosure controls and procedures could lead to a loss of investor confidence in our financial statements and have an adverse effect on our stock price.”see in full comparison
Full comparison: every changed paragraph (172)
The following factors, as well as other factors not set forth below, may adversely affect the business, operations, financial condition or results of operations of the Company (sometimes referred to in this section as “we” “us” or “our”). The risks described in this 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.
Risks Relating to the Loan Portfolio Sale
The net proceeds of the closing of the Loan Portfolio Sale may not be used successfully to fully implement our proposed restructuring plan.
We intend to use net proceeds from the Loan Portfolio Sale to either acquire or invest in businesses outside of the Company’s traditional business, such as Amplex. The board of directors intends to explore acquisitions of businesses in industries with respect to which they have familiarity based on their other business and investment activities; however, the board does not intend to limit its acquisition and investment activities to those businesses and industries. The overall timeframe for potential acquisitions and investments beyond the Amplex Acquisition remains uncertain. Even though the Loan Portfolio Sale has closed, the restructuring plan may not be implemented at all or, if implemented, may not be successful in achieving its intended goals. We may not be successful in identifying other businesses beyond Amplex to acquire or invest in and, if we do, we may not be able to make such acquisitions or investments on terms favorable to us, if at all. There can be no assurance that if such acquisitions or investments are made that the value to shareholders over time will exceed the amount, if any, they would receive in a liquidation. There can be no assurance that the restructuring plan will result in greater shareholder value than the liquidation and dissolution of the Company.
We may not be able to use our net operating loss carryforwards as a result of the Loan Portfolio Sale or otherwise, which could adversely affect our restructuring plan.
Our ability to preserve and use our net operating loss (“NOL”) carryforwards and certain other tax attributes as part of our restructuring plan, or otherwise, may be limited or may not be available for use at all. As of March 31, 2024, we maintained a deferred income tax valuation allowance of $14.0 million, the remaining state gross NOL was $59.4 million, and the remaining U.S. gross NOL amounted to $38.8 million. The U.S. NOL generated beginning in 2022 and later will carry forward indefinitely, while some state NOLs begin to expire March 31, 2039. Realization of these NOL carryforwards depends on future income and if we do not generate future income our existing carryforwards would be unavailable to offset future income tax liabilities, which could materially and adversely affect our results of operations. Additionally, under Section 382 of the Internal Revenue Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a rolling three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. Similar rules may apply under state tax laws. We do not believe that we will experience an ownership change as a result of the domestication or the Loan Portfolio Sale. However, we may experience ownership changes in the future as a result of future transactions in, or issuances of, our stock, some of which may be outside our control. If a “change in ownership” occurs and if we earn net taxable income, our ability to use our pre-change NOL carryforwards, or other pre-change tax attributes, to offset U.S. and state taxable income may be subject to significant limitations or may not be available at all. Limitations on the use of our pre-change NOL carryforwards or other pre-change tax attributes or our inability to use them could adversely affect our restructuring plan by delaying or preventing its implementation.
We may be deemed to be a shell company as a result of the Loan Portfolio Sale or otherwise, which could adversely affect your ability to sell your shares of Company stock.
If we become a shell company as defined in Rule 405 promulgated under the Securities Act and Rule 12b-2 of the Exchange Act, your ability to resell your common shares could be limited. A shell company is a company that has: (a) no or nominal operations and (b) either no or nominal assets, assets consisting solely of cash and cash equivalents or assets consisting of any amount of cash and cash equivalents and nominal other assets. Your common shares may only be sold pursuant to an effective registration statement or an exemption from registration, if available, such as Rule 144 promulgated under the Securities Act or another exemption. Currently, there is no effective registration statement for you to resell your common shares. Rule 144 provides a potential registration exemption for resales of your common shares if all of the requirements of the rule are met. The registration exemption provided by Rule 144 is not available for resales of securities issued by a company that has been at any time a shell company, with an exception. Under this exemption, Rule 144 may be available for a company that is at any time a shell company if all of the following conditions are met: (i) the issuer of the securities that was formerly a shell company has ceased to be a shell company; (ii) the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; (iii) the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding twelve months (or such shorter period that the issuer was required to file such reports and materials), other than Current Reports on Form 8-K; and (iv) at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company. At the present time, the Company is not classified as a “shell company” under Rule 405 of the Securities Act or Rule 12b-2 of the Exchange Act. To the extent the Company is designated a shell company you would be unable to resell your common shares under Rule 144, unless the conditions of the exemption in Rule 144 are satisfied.
Weak economic conditions may have a negative impact on Amplex.
Weak economic conditions may have a negative impact on Amplex. A substantial portion of Amplex's revenue comes from customers whose spending patterns may be affected by prevailing economic conditions. Weak economic conditions in the United States may affect demand for Amplex products and services and have a negative impact on its 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.
Radio spectrum, both unlicensed and licensed, is critical to the operation of Amplex's fixed wireless network. FCC or Congressionally mandated changes to the operating regulations, forced relocations of existing licensed spectrum, and other regulatory changes may result in significant cost and/or loss of customers.
We may incur losses due to asset impairment charges related to goodwill and other intangible assets.
In addition to reviewing our investment securities for potential impairment, and as a result of the Amplex Acquisition, the addition of goodwill and intangible assets to our balance sheet we plan to conduct an annual goodwill impairment test, to be performed in the Company's fourth fiscal quarter annually. The recent review and subsequent valuation work performed by a third party as part of our purchase price allocation analysis for the Amplex Acquisition did not result in any impairment charges. However, we continue to monitor events or changes in circumstances that could indicate the need for an interim impairment test before our next annual review.
For instance, a sustained period during which our market capitalization falls significantly below our book value could be an indicator that the fair value of one or more reporting units is less than its carrying amount. In such cases, we would be required to perform an impairment test under ASC 350, Goodwill and Other Intangible Assets. If impairment is confirmed and the presumption of fair value decline cannot be overcome, we would record a non-cash charge. Any such charge could materially and adversely affect our financial condition and results of operations.
We rely significantly on our executive leadership, and the loss or limited availability of key personnel could negatively impact our business.
Our success is highly dependent on the expertise, leadership, and continued service of our executive officers and senior management team, including our Chief Executive Officer (CEO), Chief Financial Officer (CFO), and the senior leadership of Amplex as our sole operating subsidiary. The unexpected departure, unavailability, or reduced involvement of any of these individuals could materially and adversely affect our operations, financial condition, and future prospects. The Company is focused on maximizing shareholder value and intentionally keeps corporate headcounts low and as efficient as possible to keep overhead costs down.
We face intense competition, including competition from companies with significantly greater resources than us, and if we are unable to compete effectively with these companies, our market share may decline and our business could be harmed.
The broadband services to be offered through Amplex will compete with other technologies, including traditional cable services as well as satellite services. These markets are highly competitive, and many traditional providers of cable and wireless services have greater financial, marketing, and human resources than we do and may be able to offer additional products and services to our customers. In addition, new technologies may be developed which would provide an alternative to our fiber-to-the-home services we currently provide. As we seek to expand our broadband services, we may face incumbent service providers which would be able to retain a significant customer base in the communities in which we may seek to enter, making it difficult to achieve a share of the market needed to provide our services profitably. Our inability to compete effectively or expand our customer base could have a material adverse effect on our financial position, liquidity and results of operations.
Our success has been dependent on our ability to forecast the performance of our remaining Contracts and remaining Direct Loans.
We have in the past experienced and may in the future experience high delinquency and loss rates in our portfolios. This has in the past reduced and may continue to reduce our profitability. In addition, our inability to accurately forecast and estimate the amount and timing of future collections could have a material adverse effect on our financial position, liquidity and results of operations.
Our consolidated net loss for the year ended March 31, 2024 was $20.8 million as compared to net loss of $34.1 million for the year ended March 31, 2023. Although our significant net loss during fiscal 2023 was largely attributable to our previously announced change in operating strategy and restructuring plan, our profitability usually depends, to a material extent, on the performance of Contracts that we purchase. Historically, we have experienced higher delinquency rates than traditional financial institutions because substantially all of our Contracts and remaining Direct Loans are to non-prime borrowers, who are unable to obtain financing from traditional sources due primarily to their credit history. Contracts and Direct Loans made to these individuals generally entail a higher risk of delinquency, default, repossession, and higher losses than loans made to consumers with better credit.
Our underwriting standards and collection procedures may not offer adequate protection against the risk of default, especially in periods of economic uncertainty. In the event of a default, the collateral value of the financed vehicle usually would not cover the outstanding Contract or Direct Loan balance and costs of recovery.
Our ability to accurately forecast performance and determine an appropriate provision and allowance for credit losses was critical to our business and financial results. The allowance for credit losses is established through a provision for credit losses based on management’s evaluation of the risk inherent in the portfolio, the composition of the portfolio, specific impaired Contracts and Direct Loans, and current economic conditions. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” in Item 7 of this Form 10-K, which is incorporated herein by reference.
There can be no assurance that our performance forecasts will be accurate. In periods with changing economic conditions, such as is the case currently, accurately forecasting the performance of Contract and Direct Loans is more difficult. Our allowance for credit losses is an estimate, and if actual Contract and Direct Loan losses are materially greater than our allowance for credit losses, or more generally, if our forecasts are not accurate, our financial position, liquidity and results of operations could be materially adversely affected.
We have operated in an increasingly competitive market.
The non-prime consumer-finance industry has been highly competitive, and the competitiveness of the market has continued to increase as new competitors continue to enter the market and certain existing competitors continue to expand their operations and become more aggressive in offering competitive terms. There are numerous financial service companies that provide consumer credit in the markets we have served, including banks, credit unions, other consumer finance companies and captive finance companies owned by automobile manufacturers and retailers. Many of these competitors have substantially greater financial resources than us. In addition, some of these competitors often provided financing on terms more favorable to automobile purchasers or dealers than we were able to offer. Many of these competitors also have long-standing relationships with automobile dealerships and may have offered dealerships, or their customers, other forms of financing including dealer floor-plan financing and leasing, which we were not able to provide. Providers of non-prime consumer financing have traditionally competed primarily on the basis of:
interest rates charged;
the quality of credit accepted;
dealer discount;
amount paid to dealers relative to the wholesale book value;
the flexibility of Contract and Direct Loan terms offered; and the quality of service provided.
We are heavily reliant upon our executive management team.
We depend heavily on the efforts and services of our executive officers and other members of our management team to manage our operations. The unexpected loss or unavailability of key members of management may have a material adverse effect on our business, financial condition, results of operations, or prospects. Although our executive officers devote most of their business time to us and are highly active in our management, they may expend part of their time on other business ventures. If any key executive officers are unable to dedicate adequate time to our businesses and operations, we could experience an adverse effect on our operations due to the demands placed on our management team by other professional obligations.
Risks Related to COVID-19
The extent to which COVID-19 and measures taken in response thereto impact our business, results of operations and financial condition will continue to depend on factors outside of our control. COVID-19 has had and is likely to continue to have a material impact on our results of operations and financial condition and heightens many of our known risks.
The outbreak of the global pandemic of COVID-19 and resultant economic effects of preventative measures taken across the United States and worldwide have been weighing on the macroeconomic environment, negatively impacting consumer confidence, employment rates and other economic indicators that contribute to consumer spending behavior and demand for credit. The extent to which COVID-19 impacts our business, results of operations and financial condition will continue to depend on factors outside of our control, which are highly uncertain and difficult to predict, including, but not limited to, the duration and spread of the outbreak in light of different levels of vaccination across the globe and new variants of the virus or additional waves of cases, its severity, actions to contain the virus or treat its impact, and whether the recently observable resumption of pre-pandemic economic and operating conditions in the United States can continue in light of inflationary pressure and higher insurance costs. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
In addition, the spread of COVID-19 has caused us to modify our business practices (including restricting employee travel, developing social distancing plans for our employees and cancelling physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or as we determine is in the best interests of our employees, partners and customers. The outbreak has adversely impacted and may further adversely impact our workforce and operations and the operations of our partners, customers, suppliers and third-party vendors, throughout the time period during which the spread of COVID-19 continues and related restrictions remain in place, and even after the COVID-19 outbreak has subsided.
Even after the COVID-19 outbreak has subsided and despite the formal declaration of the end of the COVID-19 global health emergency by the World Health Organization in May 2023, our business may continue to experience materially adverse impacts as a result of the virus’s economic impact, including the availability and cost of funding and any recession that has occurred or may occur in the future. There are no comparable recent events that provide guidance as to the effect COVID-19 as a global pandemic may have, and, as a result, the ultimate impact of the outbreak is highly uncertain and subject to change.
Additionally, many of the other risk factors described below are heightened by the effects of the COVID-19 pandemic and related economic conditions, which in turn could materially adversely affect our business, financial condition, results of operations, access to financing and liquidity.
Risks Related to Ourour BusinessCommon and IndustryStock
Operating as a U.S. public company exposes us to increased costs and regulatory burdens.
As a publicly traded company in the United States, we face ongoing and significant expenses related to legal, accounting, insurance, and compliance obligations. These include costs associated with SEC reporting requirements, NASDAQ listing standards, and the Sarbanes-Oxley Act, as well as other corporate governance and regulatory frameworks. These requirements have increased steadily over time and are expected to continue doing so, resulting in higher compliance costs and more time-consuming administrative processes.
Although the exact impact is difficult to quantify, we anticipate elevated spending in areas such as legal counsel, audit services, director and officer liability insurance, and internal controls. In some cases, obtaining adequate insurance coverage may become more difficult or costly, potentially requiring us to accept lower policy limits or pay higher premiums. These regulatory demands may also hinder our ability to attract and retain qualified directors, executive officers, and committee members.
We may seek to raise additional equity capital through public or private offerings, which could significantly dilute your investment.
Future sales of our equity securities, whether through follow-on offerings, private placements, or equity awards under management’s compensation plan, could result in material dilution to existing stockholders. We may require substantial additional capital to support our acquisition strategy and ongoing operations. There is no assurance that we will be able to raise such funds on favorable terms, or at all. Failure to secure needed capital on a timely basis could have a material adverse effect on our business.
If we issue equity or convertible securities, including preferred stock, these securities may include voting rights, dividend and liquidation preferences, conversion or redemption features, and antidilution protections. Such issuances may reduce the ownership percentage of existing stockholders, negatively affect the market value of our stock, and potentially alter the rights of current holders. Additionally, the issuance or anticipated conversion of such securities could impair our ability to raise future capital on favorable terms, as holders may choose to convert when it is least advantageous for us to seek new financing.
We may incur additional debt financing, which could impose restrictive covenants and materially affect our financial condition.
As of the date of this report, aside from borrowings by Amplex under the RUS loan program, we have not engaged in significant debt financing. However, if our operations expand and we reach higher levels of revenue and cash flow, we may choose to utilize debt to support acquisitions and operational needs. Subject to market conditions and capital availability, we or our subsidiaries could incur substantial debt through various instruments, such as credit facilities (including term loans and revolving credit lines), structured financings, or public or private debt offerings.
Future debt arrangements may include restrictive covenants that limit our financial and operational flexibility. Non-compliance with these covenants could materially impact our ability to meet debt obligations and could have a significant adverse effect on our financial condition. Some of these arrangements may occur at the subsidiary level, but could also include parent-level guarantees or require pledging of substantially all assets of the Company or its subsidiaries.
The amount of leverage we may use will depend on several factors, including acquisition and investment opportunities, available capital, access to credit markets, and our and our lenders’ views on the stability of our cash flows. Our organizational documents impose no cap on the amount of debt we may incur, and we may substantially increase our leverage at any time without shareholder approval. Debt levels may vary across different assets and entities within our structure, with some subsidiaries carrying significantly higher leverage.
While leverage can amplify returns, it also increases risk. Incurring substantial debt could expose us to risks that may materially and adversely impact our business, including:
Insufficient cash flow to meet principal and interest obligations or comply with debt covenants, potentially resulting in:
Debt acceleration and cross-defaults under related agreements;
Inability to access additional credit, or;
Foreclosure or forced sale of assets;
Heightened vulnerability to adverse economic, industry, or market conditions;
Management's Discussion & Analysis (MD&A)
New heading “Forward- Looking Statements”
New heading “Change in Operating Strategy”
New heading “How We Generate Revenues and Evaluate our Business”
New heading “Fiscal Year Ended March 31, 2025 compared to Fiscal Year Ended March 31, 2024”
New heading “Revenues of Continuing Operations”
New heading “Expenses of Continuing Operations”
New heading “Cost of Wireless and Fiber Internet Services and Cost of Other Revenue of Continuing Operations”
New heading “Plant Specific and Plant Nonspecific Operations of Continuing Operations”
New heading “General and Administrative Expenses of Continuing Operations”
New heading “Depreciation and Amortization Expenses of Continuing Operations”
New heading “Emigration Tax Expense of Continuing Operations”
New heading “Loss on Dissenting Shareholders' Liability of Continuing Operations”
New heading “Discontinued Operations”
New heading “Off-Balance Sheet Arrangements”
New heading “Significant Developments”
New heading “Critical Accounting Policies and Estimates”
Removed heading “Critical Accounting Estimates”
Removed heading “Fair Value of Finance Receivables Held for Sale”
Removed heading “Fiscal 2024 Compared to Fiscal 2023”
Removed heading “Interest and Fee Income on Finance Receivables”
Removed heading “Operating Expenses”
Removed heading “Analysis of Credit Losses”
Removed heading “Implementation of ASU 2016-13”
Removed heading “Impact of Inflation”
Removed heading “Subsequent Events”
Largest changes
“Non-performing assets are defined as accounts that are contractually delinquent for 61 or more days past due or Chapter 13 bankruptcy accounts. For these accounts, the accrual of interest income is suspended, and any previously accrued interest is reversed. Upon notification of a bankruptcy, an account is monitored for collection with other Chapter 13 accounts. In the event the debtors’ balance is reduced by the bankruptcy court, the Company will record a loss equal to the amount of principal balance reduction. …”see in full comparison
“The net charge-off percentage increased to 30.6% for the year ended March 31, 2024, from 15.9% for year ended March 31, 2023. …”see in full comparison
“Prior to adoption of ASU 2016-13 the Company used a trailing twelve-month charge-off analysis to calculate the allowance for credit losses and took into consideration the composition of the portfolio, current economic conditions, estimated net realizable value of the underlying collateral, historical loan loss experience, delinquency, non-performing assets, and bankrupt accounts when determining management’s estimate of probable credit losses and adequacy of the allowance for credit losses. …”see in full comparison
“The delinquency percentage for Contracts more than 29 days past due, excluding Chapter 13 bankruptcy accounts, as of March 31, 2024 was 16.9%, an increase from 15.7% as of March 31, 2023. The delinquency percentage for Direct Loans more than 29 days past due, excluding Chapter 13 bankruptcy accounts, as of March 31, 2024 was 16.1%, a decrease from 17.0% as of March 31, 2023. While delinquency percentage declined for Direct Loans, the customers continue experiencing market and economic pressure and its adverse impact on the consumers.”see in full comparison
“Beginning March 31, 2018, the Company allocated a specific reserve for the Chapter 13 bankruptcy accounts using a look back method to calculate the estimated losses. Based on this look back, management calculated a specific reserve of approximately $381 thousand for these accounts as of October 31, 2023.”see in full comparison
Full comparison: every changed paragraph (107)
Forward- Looking Statements
Certain statements in this Annual Report, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, constitute forward-looking statements. See “Forward-Looking Statements” immediately prior to Item 1 of Part I of this Annual Report for factors relating to these statements and “Risk Factors” in Item 1A of Part I of this Annual Report for a discussion of certain risk factors applicable to our business, financial condition, results of operations, liquidity or prospects 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 consolidated financial statements and accompanying notes included in this Annual Report and the audited consolidated financial statements and notes thereto as of and for the year ended March 31, 2025, and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our 2025. Our results of operations for the fiscal year ended March 31, 2025, may not be indicative of our future results.
The Company was previously a specialized consumer finance company focused on subprime auto lending. After the Company announced the restructuring of operations in November 2023, the Company now operates as a holding company which owns an indirect controlling interest in Amplex, a broadband company located in northwest Ohio. The Company, which is based in Omaha, Nebraska, continues to pursue additional controlling interests in other companies and sectors yet to be determined.
Change in Operating Strategy
On November 13, 2023, the Company entered into the Westlake Purchase Agreement pursuant to which the Company has agreed to sell substantially all of the Company's finance receivables and all of its repossessed assets to Westlake Financial. On April 26, 2024, the transactions contemplated by the Westlake Purchase Agreement closed.
On June 15, 2024, the Company closed upon the acquisition of 51% of the issued and outstanding common shares of Amplex, which was placed into a newly formed entity Amplex Holdings. 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 March 31, 2025, Amplex had approximately 13,000 broadband customers (4,400 fiber subscribers) and over 13,000 fiber passings completed.
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. These transactions concurrently executed at the Transaction Closing Date increased the Company's ownership in Amplex to 56.5%. During the year ended March 31, 2025, 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 its equity interest in Amplex Holdings, which derives its revenues from Amplex's operations. Amplex generates revenues through customer contracts and provides wireless internet services, fiber internet services, video, and other services including voice over internet protocol (VoIP) services. Amplex 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, Amplex 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 for Amplex include the 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.
Nicholas Financial Parent started as a Canadian holding company incorporated under the laws of British Columbia in 1986. Nicholas Financial Parent conducted its business activities exclusively through a wholly-owned indirect Florida subsidiary, Nicholas Financial, during the fiscal years ended March 31, 2024 and 2023. Nicholas Financial has been a specialized consumer finance company engaged primarily in servicing automobile finance installment contracts (“Contracts”) for purchases of used and new automobiles and light trucks. To a lesser extent, prior to the end of the third fiscal quarter of the fiscal year ended March 31, 2024, Nicholas Financial also originated Contracts, and prior to the end of the third fiscal quarter of the fiscal year ended March 31, 2023, direct consumer loans (“Direct Loans”) and sold consumer-finance related products. Nicholas Financial’s financing activities represent a primary source of consolidated revenue for the fiscal years ended March 31, 2024 and 2023. A second Florida subsidiary, NDS, serves as an intermediate holding company for Nicholas Financial.
Nicholas Financial Parent, Nicholas Financial, and NDS are collectively referred to herein as the “Company”.
Introduction
The Company’s consolidated revenues decreased from $44.3 million for the fiscal year ended March 31, 2023 to $22.2 million for the fiscal year ended March 31, 2024. The Company’s net loss per share decreased from $4.65 per share for the fiscal year ended March 31, 2023 to a net loss of $2.86 per share for the fiscal year ended March 31, 2024. The Company’s loss before income tax decreased from $32.7 million for the year ended March 31, 2023 to a loss before income tax of $20.8 million for the year ended March 31, 2024. The decrease in profitability was primarily driven by a decrease in average finance receivables from $165.4 million to $88.2 million for the years ended March 31, 2023 and 2024, respectively.
The Company’s consolidated net loss decreased from $34.1 million for the fiscal year ended March 31, 2023 to a net loss of $20.8 million for the fiscal year ended March 31, 2024.
The gross portfolio yield of the portfolio for the fiscal years ended March 31, 2024 and 2023 was 33.6% and 26.8%, respectively. For the fiscal years ended March 31, 2023 and 2024, the average dealer discount decreased from 6.5% to 6.3%, primarily as a result of market conditions in the 2024 fiscal year. The APR (and therefore overall yield) on new purchases declined in fiscal 2024 and fiscal 2023 to 22.1% from 22.5%, which was primarily driven by the Company’s continuing commitment to its core principles of disciplined underwriting and risk-based pricing.
Operating expenses as presented include restructuring costs of $1.2 million for the twelve months ended March 31, 2024 and $4.8 million for the twelve months ended March 31, 2023.
Average finance receivables represent the average of finance receivables throughout the period.
Average indebtedness represents the average outstanding borrowings under the Credit Facility throughout the period. Average indebtedness does not include a loan obtained by the Company on May 27, 2020 in the amount of $3,243,900 from Fifth Third Bank in connection with the U.S. Small Business Administration’s Paycheck Protection Program (the “PPP Loan”).
(3)
Gross portfolio yield represents interest and fee income on finance receivables as a percentage of average finance receivables.
(4)
Net charge-off percentage represents net charge-offs (charge-offs less recoveries) divided by average finance receivables, outstanding during the period.
Critical Accounting Estimates
A critical accounting estimate is an estimate that: (i) is made in accordance with generally accepted accounting principles, (ii) involves 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.
The Company’s critical accounting estimates (i.e., that involves a significant level of estimation uncertainty and has or is reasonably likely to have a material impact on the Company’s financial condition or results of operations) relates to the determination of the fair value of finance receivables held for sale which determines the held for sale valuation allowance necessary to carry finance receivables held for sale at the lower of amortized cost or fair value.
There have been changes in our critical accounting policies from those disclosed in our 2023 Annual Report on Form 10-K related to the following:
On April 1, 2023, the Company adopted of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and subsequent amendments to the guidance: ASU 2018-19 in November 2018, ASU 2019-04 in April 2019, ASU 2019-05 in May 2019, ASU 2019-10 and ASU 2019-11 in November 2019, ASU 2020-02 in February 2020 and ASU 2022-02 in March 2022, and ASC 326 was applicable for the period from April 1, 2023 to October 31, 2023.
Upon the Company's decision on November 1, 2023, to sell the portfolio, the Company reclassified its finance receivables to held for sale, which are carried at the lower of amortized cost or fair value. As a result of this reclassification, the Company eliminated the allowance for credit losses established under Accounting Standards Codification ("ASC") 326 which resulted in a reversal of previously recorded provisions for credit losses for the period from April 1, 2023 through October 31, 2023.
Fair Value of Finance Receivables Held for Sale
Finance receivables held for sale are carried at the lower of amortized cost basis or fair value which generally established a new held for sale valuation allowance through earnings in the same reporting period. 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 as of March 31, 2024. The Company estimates the fair value of finance receivables held for sale utilizing a discounted cash flow approach which includes an evaluation of the collateral and underlying loan characteristics, as well as assumptions to determine the discount rate such as credit loss and prepayment forecasts. In determining the appropriate discount rate, prepayment and credit assumptions, the Company monitors other capital markets activity for similar collateral being traded and /or interest rates currently being offered for similar products. Significant increases (decreases) in assumptions in isolation could result in a significantly lower (higher) fair value measurement. Changes in the held for sale valuation allowance are recorded through earnings along with charge offs and recoveries as "Fair value and other adjustments, net" in the Consolidated Statements of Operations.
Fiscal 2024 Compared to Fiscal 2023
Interest and Fee Income on Finance Receivables
Interest and fee income on finance receivables, predominantly finance charge income, decreased to $22.2 million in fiscal 2024 as compared to $44.3 million in fiscal 2023. The average finance receivables totaled $88.3 million for the fiscal year ended March 31, 2024, a decrease of 46.6% from $165.4 million for the fiscal year ended March 31, 2023. Specifically, origination of direct loans decreased to $0 in fiscal year 2024 compared to $15.8 million in fiscal year end 2023, and Contract purchases decreased to $5.5 million in fiscal year 2024 compared to $47.5 million in fiscal year 2023.Purchasing volume decreased to $5.5 million in fiscal 2024 from $47.5 million in fiscal 2023. Purchasing volume decreased from fiscal 2023 primarily as a result of implementation of our restructuring strategy.
Competition continued to affect the Company’s ability to acquire Contracts at desired yields. The average APR on new Contract purchases was 22.1% for fiscal 2024 and 22.5% for fiscal 2023. Concurrently, the dealer discount on new Contract purchases decreased from 6.5% for fiscal 2023 to 6.3% for fiscal 2024, primarily as a result of competitive pressures. Overall, the Company maintains its strategy focused on risk-based pricing (rate, yield, advance, term, etc.) and a commitment to the underwriting discipline required for optimal portfolio performance.
The gross portfolio yield decreased to 25.19% for the fiscal year ended March 31, 2024 as compared to 26.76% for the fiscal year ended March 31, 2023. The gross portfolio yield decreased primarily as a result of the decrease in average finance receivables.
Operating Expenses
Our operating expenses consisted primarily of servicing expenses, payroll and employee benefits, administrative expenses, and other miscellaneous expenses. Operating expenses decreased to $15.5 million for the fiscal year ended March 31, 2024 compared to $32.4 million for the fiscal year ended March 31, 2023 as a result of restructuring initiatives undertaken by the Company.
InterestResult Expenseof Operations
Fiscal Year Ended March 31, 2025 compared to Fiscal Year Ended March 31, 2024
Revenues of Continuing Operations
For the fiscal year ended March 31, 2025 and 2024, our revenues in dollars and as a percentage of total revenues were as follows:
Revenue totaled $9.4 million for the fiscal year ended March 31, 2025, compared to $0 for the fiscal year ended March 31, 2024. The increase in revenue for the fiscal year ended March 31, 2025 is primarily due to revenue now received by the Company from additional services now now provided by Amplex that were not provided in the prior period. Through acquiring a majority interest in Amplex Holdings, which holds 100% of Amplex, the Company now indirectly through Amplex provides wireless internet services, fiber internet services, and other services including VOIP telephone and video streaming. Further, as a result of the Westlake Purchase Agreement in April of 2024 and the Amplex Acquisition in June of 2024, the Company's revenue is not comparable on a year-over-year basis.
Expenses of Continuing Operations
For the fiscal years ended March 31, 2025 and 2024, our expenses in dollars and as a percentage of total expenses were as follows:
Cost of Wireless and Fiber Internet Services and Cost of Other Revenue of Continuing Operations
Cost of wireless and fiber internet services totaled $0.5 million for the fiscal year ended March 31, 2025, compared to $0 for the fiscal year ended March 31, 2024. In addition, cost of other revenue totaled $0.6 million for the fiscal year ended March 31, 2025 compared to $0 for the fiscal year ended March 31, 2024. As discussed above, the Company now indirectly through Amplex provides wireless internet, fiber internet, and other services in conjunction with its acquisition of a majority interest in Amplex Holdings, which holds 100% of Amplex. Therefore, the cost of wireless and fiber internet services and cost of other revenue increased during the fiscal year ended March 31, 2025 and when compared to the prior period. As a result of the Westlake Purchase Agreement in April of 2024 and the Amplex 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 $2.0 million for the fiscal year ended March 31, 2025, compared to $0 for the fiscal year ended March 31, 2024. Due to the Amplex Acquisition, the Company began providing additional services during the fiscal year ended March 31, 2025 that were not provided in prior periods. Therefore, plant specific and nonspecific operations expenses increased for the fiscal year ended March 31, 2025 when compared to the prior period. As a result of the Westlake Purchase Agreement in April of 2024 and the Amplex 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 $10.8 million for the fiscal year ended March 31, 2025, compared to $6.2 million fiscal year ended March 31, 2024. The increase in general and administrative expenses for the fiscal year ended March 31, 2025 is primarily due to additional professional fees and restructuring expenses incurred in relation to the Amplex Acquisition, which was closed by the Company during the period. As a result of the Westlake Purchase Agreement in April of 2024 and the Amplex 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 $2.0 million for the fiscal year ended March 31, 2025, compared to $0.1 million for the fiscal year ended March 31, 2024. The increase in depreciation and amortization expense for the fiscal year ended March 31, 2025 is primarily due to an increase in property, plant, and equipment and intangible assets resulting from Amplex Acquistion. With the Westlake Purchase Agreement in April of 2024 and the Amplex 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 fiscal year ended March 31, 2025 compared to $0 for the fiscal year ended March 31, 2024. 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 fiscal year ended March 31, 2025 compared to $0 for the fiscal year ended March 31, 2024. 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 Financial. As of March 31, 2025, the Company settled the total amount owed to the dissenting shareholders.
Discontinued Operations
Income from discontinued operations was $0.5 million for the fiscal year ended March 31, 2025 compared to the loss of $14.7 million for the fiscal year ended March 31, 2024. The increase in income for the fiscal year ended March 31, 2025 is primarily attributable 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 Financial when compared to the fiscal year ended March 31, 2024.
What changed in the latest 10-Q
Risk Factors
There have been no material changes from risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K. See the discussions of the Company’s risk factors under Part I, Item 1A in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Six months ended September 30, 2025 compared to six months ended September 30, 2024”
New heading “Revenues of Continuing Operations”
New heading “Expenses of Continuing Operations”
New heading “Cost of Wireless and Fiber Internet Services and Cost of Other Revenue of Continuing Operations”
New heading “Plant Specific and Plant Nonspecific Operations of Continuing Operations”
New heading “General and Administrative Expenses of Continuing Operations”
New heading “Depreciation and Amortization Expenses of Continuing Operations”
New heading “Emigration Tax Expense of Continuing Operations”
New heading “Loss on Dissenting Shareholders' Liability of Continuing Operations”
New heading “Discontinued Operations”
Largest changes
In evaluating goodwill and indefinite-lived intangible assets 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 and indefinite-lived intangible assets with its carrying amount. If the carrying amount exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess. During the periods presented, the Company did not have any impairment charges. Our annual impairment test for goodwill and indefinite-lived intangible assets is ongoing as of the date of filing this Quarterly Report on Form 10-Q. Once our analysis is complete, it may result in a change in the recorded value of goodwill.see in full comparison
“Cost of Wireless and Fiber Internet Services and Cost of Other Revenue of Continuing Operations”see in full comparison
“Six months ended September 30, 2025 compared to six months ended September 30, 2024”see in full comparison
“Plant Specific and Plant Nonspecific Operations of Continuing Operations”see in full comparison
“Loss on Dissenting Shareholders' Liability of Continuing Operations”see in full comparison
Full comparison: every changed paragraph (46)
On June 15, 2024, the Company closed upon the acquisition of 51% of the issued and outstanding common shares of Amplex, all of which waswere placed into Amplex Holdings. 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 JuneSeptember 30, 2025, Amplex had approximately 13,20013,400 broadband customers (4,8005,200 fiber subscribers) and over 13,00014,600 fiber passings completed.
Concurrently, on June 15, 2024, the Company converted the outstanding principal and accrued interest of approximately $0.8 million under the Term Loan Advances into 421 shares of Amplex Holdings common stock at the Share Purchase Price of $1,792.55 and purchased 1,674 shares of Amplex Holdings common stock at the share purchase price of $1,792.55 each for an aggregate purchase price of $3.0 million. These transactions increased the Company's indirect ownership in Amplex to 56.5%. In December 2024, the Company entered into a Subscription Agreement whereby the Company invested an additional $4.5 million into Amplex Holdings, increasing the Company's ownership percentage to 60.9%. In July 2025, the Company invested an additional $4.5 million into Amplex Holdings, increasing the Company's ownership percentage to 66.4%.
Three months ended JuneSeptember 30, 2025 compared to three months ended JuneSeptember 30, 2024
For the three months ended JuneSeptember 30, 2025 and 2024, our revenues in dollars and as a percentage of total revenues were as follows:
Revenue totaled $3.2 million for the three months ended September 30, 2025, compared to $3 million for the three months ended September 30, 2024. The increase in revenue for the three months ended September 30, 2025 is primarily due to an increase in total number of broadband subscribers as compared to the three months ended September 30, 2024.
Revenue totaled $3.0 million for the three months ended June 30, 2025, compared to $0.5 million for the three months ended June 30, 2024. The increase in revenue for the three months ended June 30, 2025 is primarily due to the Company completing its acquisition of Amplex on June 15, 2024. As a result, revenue was received by the Company from additional services provided by Amplex for the entire quarter for the current period, whereas for the three months ended June 30, 2024, Amplex only provided 15 days’ worth of revenue. By acquiring a majority interest in Amplex Holdings, which holds 100% of Amplex, the Company now indirectly through Amplex provides wireless internet services, fiber internet services, and other services including VOIP telephone and video streaming. Further, as a result of changes in the Company's operations arising in connection with the transactions undertaken pursuant to the Purchase Agreement with Westlake Financial in April 2024 and the Amplex Acquisition in June 2024, the Company's revenue is not comparable on a year-over-year basis.
For the three months ended JuneSeptember 30, 2025 and 2024, our expenses in dollars and as a percentage of total expenses were as follows:
Cost of wireless and fiber internet services totaled $0.2million for the three months ended September 30, 2025, compared to $0.2 million for the three months ended September 30, 2024. In addition, cost of other revenue totaled $0.2 million for the three months ended September 30, 2025 compared to $0.2 million for the three months ended September 30, 2024. The increase in the cost of wireless and fiber internet of $0.02 million is primarily related to an increase in fiber subscribers as we continue to expand the fiber network. The decrease in the cost of other revenue of $0.03 million is primarily related to a increased emphasis on the wireless and fiber internet service offerings.
Cost of wireless and fiber internet services totaled $0.2 million for the three months ended June 30, 2025, compared to $0.1 for the three months ended June 30, 2024. In addition, cost of other revenue totaled $0.2 million for the three months ended June 30, 2025 compared to $0.1 million for the three months ended June 30, 2024. As discussed above, the Company now indirectly through Amplex provides wireless internet, fiber internet, and other services in conjunction with its acquisition of a majority interest in Amplex Holdings, which holds 100% of Amplex. Therefore, the cost of wireless and fiber internet services and cost of other revenue increased during the three months ended June 30, 2025 when compared to the prior period. As a result of the Purchase Agreement with Westlake Financial in April of 2024 and the Amplex 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 expenses totaled $0.6 million for the three months ended September 30, 2025, which were flat as compared to $0.6 million for the three months ended September 30, 2024.
Plant specific and plant nonspecific operations expenses totaled $0.7 million for the three months ended June 30, 2025, compared to $0.1 million for the three months ended June 30, 2024. Due to the Company's acquisition of Amplex, the Company began providing additional services during the three months ended June 30, 2025 that were not provided in the prior period. Therefore, plant specific and nonspecific operations expenses increased for the three months ended June 30, 2025 when compared to the prior period. As a result of the Purchase Agreement with Westlake Financial in April of 2024 and the Amplex 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 totaled $2.2 million for the three months ended JuneSeptember 30, 2025, compared to $3.8$2.8 million for the three months ended JuneSeptember 30, 2024. The decrease in general and administrative expenses for the three months ended JuneSeptember 30, 2025 is primarily due to additional professional fees and restructuring expenses incurred in the prior period in relation to the Amplex Acquisition, which was closed by the Company during the threesix months ended JuneSeptember 30, 2024. As a result of the Purchase Agreement with Westlake Financial in April of 2024 and the Amplex Acquisition in June of 2024, the Company's generalGeneral and administrative expenses arefor the three months ended September 30, 2024 included costs related to the integration of Amplex into the Company's consolidated operations subsequent to the Amplex Acquisition, which did not comparablerecur onin athe year-over-yearthree basis.months ended September 30, 2025
Depreciation and amortization expense totaled $0.6$0.9 million for the three months ended JuneSeptember 30, 2025, compared to $0.1$0.5 million for the three months ended JuneSeptember 30, 2024. The increase in depreciation and amortization expense for the three months ended JuneSeptember 30, 2025 is primarily attributable to increases in fixed asset balances from the consolidationcontinuing build out of Amplexour forfiber thenetwork entire periodas of the three months ended JuneSeptember 30, 2025.2025, Asas acompared resultto ofSeptember the30, Purchase Agreement with Westlake Financial in April of 2024 and the Amplex Acquisition in June of 2024, the Company's depreciation and amortization expense is not comparable on a year-over-year basis.2024.
EmigrationThere was no emigration tax expense wasfor $0the three months ended September 30, 2025 compared to emigration tax expense of $0.00 million for the three months ended June 30, 2025 compared to $1.7 million for the three months ended JuneSeptember 30, 2024. The decrease in emigration tax expense in the current period is due to the Company completingcompleted 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.
LossThere was no loss on dissenting shareholders' liability wasfor $0the three months ended September 30, 2025 compared to a loss on dissenting shareholders' liability of -$0.3 million for the three months ended June 30, 2025 compared to $0.8 million for the three months ended JuneSeptember 30, 2024. The decrease 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 re-domestication of the Company from British Columbia to the State of Delaware and the sale of assets to Westlake Financial. As of JuneSeptember 30, 2025, the Company settled the total amount owed to the dissenting shareholders.
Income from discontinued operations was $38$0.1 thousandmillion for the three months ended JuneSeptember 30, 2025 compared to income from discontinued operations of $542$0.8 thousandmillion for the three months ended JuneSeptember 30, 2024. The decrease in income for the three months ended JuneSeptember 30, 2025 is primarily attributed to athe decreasenon-recurrence inof generalany gains on the disposal of assets and administrative expenses and a decrease in credit losses due toon the sale of the finance receivables andin repossessedthe assetscurrent tofiscal Westlake Financialperiod when compared to the three months ended JuneSeptember 30, 2024.
Six months ended September 30, 2025 compared to six months ended September 30, 2024
Revenues of Continuing Operations
For the six months ended September 30, 2025 and 2024, our revenues in dollars and as a percentage of total revenues were as follows:
Revenue totaled $6.2 million for the six months ended September 30, 2025, compared to $3.4 million for the six months ended September 30, 2024. The increase in revenue for the six months ended September 30, 2025 is primarily reflects the full-period consolidation of Amplex following the Amplex Acquisition on June 15, 2024. In the current period, revenue includes services provided by Amplex for the entire six month period, whereas in 2024 Amplex contributed revenue only for the period between June 15, 2024 to September 30, 2024. Through the Company's majority interest in Amplex Holdings, which owns 100% of Amplex, the Company now offers wireless internet, fiber internet, and additional services such as VOIP telephone and video streaming. Due the Amplex Acquisition in 2024, revenue is not comparable on a year-over-year basis.
Expenses of Continuing Operations
For the six months ended September 30, 2025 and 2024, our expenses in dollars and as a percentage of total expenses were as follows:
Cost of Wireless and Fiber Internet Services and Cost of Other Revenue of Continuing Operations
Cost of wireless and fiber internet services totaled $0.4 million for the six months ended September 30, 2025, compared to $0.2 million for the six months ended September 30, 2024. In addition, cost of other revenue totaled $0.4 million for the six months ended September 30, 2025 compared to $0.2 million for the six months ended September 30, 2024. The increase is attributable to the full-period consolidation of Amplex. Operating expenses were recognized for the entire quarter for the current period, whereas for the six months ended September 30, 2024, Amplex only provided 15 days’ worth of operating expenses commencing from the date of the Amplex Acquisition. Therefore, the cost of wireless and fiber internet services and cost of other revenue increased during the six months ended September 30, 2025 when compared to the prior period. As a result of the Purchase Agreement with Westlake Financial in April of 2024 and the Amplex 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 $1.3 million for the six months ended September 30, 2025, compared to $0.7 million for the six months ended September 30, 2024. The increase is attributable to the full-period consolidation of Amplex with the Company's operations. Operating expenses for Amplex were recognized for the entire quarter for the current period, whereas for the six months ended September 30, 2024, Amplex only provided 15 days’ worth of operating expenses commencing from the date of the Amplex Acquisition.
Therefore, plant specific and nonspecific operations expenses increased for the six months ended September 30, 2025 when compared to the prior period. As a result of the Amplex 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 $4.4 million for the six months ended September 30, 2025, compared to $6.6 million for the six months ended September 30, 2024. The decrease in general and administrative expenses for the six months ended September 30, 2025 is primarily due to additional professional fees and restructuring expenses incurred in the prior period in relation to the Amplex Acquisition, which was closed by the Company during the six months ended September 30, 2024. As a result of the Purchase Agreement with Westlake Financial in April of 2024 and the Amplex 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 $1.5 million for the six months ended September 30, 2025, compared to $0.6 million for the six months ended September 30, 2024. The increase in depreciation and amortization expense for the six months ended September 30, 2025 is primarily attributable to the full-period consolidation of Amplex for the entire period of the six months ended September 30, 2025. Operating expenses were recognized for the entire quarter for the current period, whereas for the six months ended September 30, 2024, Amplex only provided 15 days’ worth of operating expenses commencing from the date of acquisition. As a result of the Purchase Agreement with Westlake Financial in April of 2024 and the Amplex 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
There was no emigration tax expense for the six months ended September 30, 2025 compared to emigration tax expense of $1.7 million for the six months ended September 30, 2024. The decrease 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
There was no loss on dissenting shareholders' liability for the six months ended September 30, 2025 compared to loss on dissenting shareholders' liability of $1.1 million for the six months ended September 30, 2024. As of September 30, 2024, the Company had fully settled all amounts owed to dissenting shareholders, resulting in no loss recognized in the current period.
Discontinued Operations
Income from discontinued operations was $0.1 million for the six months ended September 30, 2025 compared to income from discontinued operations of $2.9 million for the six months ended September 30, 2024. The decrease in income for the six months ended September 30, 2025 is primarily attributed to the non-recurrence of any gains on the disposal of assets and on the sale of the finance receivables in the current fiscal period when compared to the six months ended September 30, 2024.
Net cash provided by (operating activities was $0.8 million for the six months ended September 30, 2025 compared to net cash used in) operating activities increasedof $0.5 million for the threesix months ended June 30, 2025 when compared to the three months ended JuneSeptember 30, 2024. The increase in cash provided by (used in) operating activities was primarily due to a decrease in net loss of $2.8$2.5 million, andoffset in part by a net changedecrease in operating assets and liabilities of $0.4 million, partially offset by a decrease in cash provided by operating activities from discontinued operations of $1.1$1.3 million. Further, as a result of the Purchase Agreement with Westlake Financial in April of 2024 and the Amplex 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 used in investing activities was $8.5 million for the six months ended September 30, 2025 compared to net cash provided by investing activities of $16.7 million for the six months ended September 30, 2024. Net cash used in investing activities primarily reflects the purchase of property and equipment totaling $8.5 million for the six months ended September 30, 2025. In comparison, for the six months ended September 30, 2024, investing activities included $38.9 million in proceeds from discontinued operations related to the sale of assets to Westlake Financial. Additionally, $18.4 million was paid for the Amplex Acquisition, and purchases of property and equipment totaled $3.9 million. As a result of the Purchase Agreement with Westlake Financial in April of 2024 and the Amplex 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) provided by investing activities decreased for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The decrease in net cash (used in) provided by investing activities is primarily due to the purchase of property and equipment of $3.7 million for the three months ended June 30, 2025, as compared to the net $22 million proceeds received during the three months ended June 30, 2024 resulting from the $18.4 million of cash paid for the acquisition of Amplex in June 2024 offset by an increase in net cash provided by investing activities from discontinued operations of $40.8 million. As a result of the Purchase Agreement with Westlake Financial in April of 2024 and the Amplex 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 provided by financing activities for the six months ended September 30, 2025 was $2.6 million, compared to net cash used in financing activities increasedof $5.6 million during the threesix months ended June 30, 2025 compared to the three months ended JuneSeptember 30, 2024. The current increase in net cash provided by financing activities was primarily due to the proceeds offrom long-term debt of $0.9$2.7 million during the three months ended JuneSeptember 30, 2025.
We have no material commitments for capital expenditures as of JuneSeptember 30, 2025. Part of our growth strategy, however, is to continuing to make capital expenditures for the purpose of expanding our fiber network, and potentially 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.
On September 23, 2024, Amplex entered into a Reconnect Program Loan and Security Agreement with the United States of America, acting through the Administrator of the Rural Utilities Service (“RUS”), for a secured loan of up to $21.3 million.million (the “RUS Loan”). At September 30, 2025, Amplex had outstanding borrowings of $3.0 million under the RUS Loan. The loan is intended to finance broadband infrastructure in rural areas where at least 50% of households lack sufficient access.
Failure to meet these conditions or the occurrence of specified events of default could result in suspension of advances, acceleration of repayment obligations, or enforcement of collateral rights. At September 30, 2025, Amplex was in compliance with all financial loan covenants relating to the RUS Loan.
There have been changes in our critical accounting policies from those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025 related to the Company’s acquisition of Amplex which closed June 15, 2024. We revised our critical policies relating to business combinations.
In evaluating goodwill and indefinite-lived intangible assets 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 and indefinite-lived intangible assets with its carrying amount. If the carrying amount exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess. During the periods presented, the Company did not have any impairment charges. Our annual impairment test for goodwill and indefinite-lived intangible assets is ongoing as of the date of filing this Quarterly Report on Form 10-Q. Once our analysis is complete, it may result in a change in the recorded value of goodwill.
OMCC insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding OMCC (13F)
None of the 59 investors we track reported a position in their latest 13F.