Through our acquisition of Gemini Direct Investments, LLC ("Gemini") in 2021, a related party relationship was created through Mr. Urvan, then a director and now our Chairman of the Board and Chief Executive Officer, by virtue of his ownership of entities that provided services to Gemini. There was $201,646 included in our accounts receivable at September 30, 2025 and March 31, 2025 from entities owned by Mr. Urvan. During the three months ended December 31, 2025, we determined that these amounts were uncollectible after evaluating the age of the receivables, historical collection experience, incomplete billing records, and the financial condition and operating history of the related entities. As a result, the $201,646 included in our accounts receivable was written off against our reserve for credit losses. The determination of uncollectibility and the related write-off were reviewed and approved by the Company's Audit Committee, and Mr. Urvan did not participate in the review or approval of such determination and the related write-off.

As partial consideration for the settlement in the Delaware Litigation (as defined and described in Note 14, "Contingencies"), on May 30, 2025 we issued to an affiliated designee of Mr. Urvan, a warrant (the “Warrant”) to purchase 7.0 million shares of common stock (the "Warrant Shares"). The Warrant has a five-year term and an exercise price of $1.81 per share. Pursuant to the terms of the Warrant, the Warrant is exercisable at the holder’s discretion, in whole or in part, on or after November 30, 2025, provided that the Warrant automatically vests and becomes exercisable in certain circumstances, such as bankruptcy, liquidation, termination of the business or other similar events, as well as upon consummation of any Extraordinary Transaction (as defined in the Warrant).

Pursuant to the terms of the Warrant, the Warrant Shares may not, subject to certain exceptions, be sold, assigned, transferred or otherwise distributed without prior approval from a majority of the disinterested and independent members of the Board of Directors, provided that on each of the first three anniversaries of May 30, 2025, the holder may transfer 25% of the total issuable shares under the Warrant.

We evaluated the Warrant in accordance with ASC 815, Derivatives and Hedging ("ASC 815"). We determined that the Warrant meets the criteria for equity classification since the Warrant is indexed to the Company's equity and includes settlement in shares. The Warrant was valued using the Black-Scholes option pricing model using a 70% volatility, risk free rate of 4.15%, an assumed dividend of zero and a term of five years with a resulting fair value of $7,094,926. The Warrant was recorded as additional paid-in capital on the consolidated balance sheet as of March 31, 2026.

On September 17, 2025, the independent and disinterested members of the Board of Directors approved the exercise of the Prepayment Option on Note 2 (as defined and described below), and we issued a warrant (the “Additional Warrant”) to purchase 13.0 million shares of common stock (the “Additional Warrant Shares”) in satisfaction of Note 2. The Additional Warrant has a five-year term and an exercise price of $1.00 per share. Pursuant to the terms of the Additional Warrant, the warrant is exercisable at the holder’s discretion, in whole or in part, on or after September 17, 2026, provided that the Additional Warrant automatically vests and becomes exercisable in certain circumstances, such as bankruptcy, liquidation, termination of the business or other similar events, as well as upon consummation of any Extraordinary Transaction (as defined in the Additional Warrant ). Except with respect to the exercise price and the vesting date, the terms of the Additional Warrant and the Warrant are substantially similar.

We evaluated the Additional Warrant in accordance with ASC 815. We determined that the Additional Warrant meets the criteria for equity classification since the Additional Warrant is indexed to the Company's equity and includes settlement in shares. The Additional Warrant was valued using the Black-Scholes option pricing model using a 67.49% volatility, risk free rate of 3.62% and a term of five years with a resulting fair value of $12,253,800. The Additional Warrant was recorded as additional paid-in capital on the consolidated balance sheet as of March 31, 2026.

As partial consideration for the settlement in the Delaware Litigation , on May 30, 2025, we also issued to Mr. Urvan's affiliated designee, an unsecured promissory note for a principal amount of $12.0 million (“Note 1”). Note 1 bears interest at 6.50% per annum (subject to a 2.00% increase during an event of default), which interest is payable to the holder annually on May 30, beginning on May 30, 2026 (each interest payment due date, an “Interest Payment Date”). The unpaid principal balance of Note 1 and all accrued and unpaid interest thereon is due on May 30, 2037.

Pursuant to the terms of Note 1, we are required to make annual prepayments such that $1,000,000 (inclusive of accrued and unpaid interest then due and payable) is paid to the holder on each Interest Payment Date. We have the right to prepay, prior to May 30, 2037, all or any part of the principal or interest of Note 1 without penalty. In addition, the holder may not request early repayment of Note 1 prior to May 30, 2027. Any optional prepayment by us must be approved by a majority vote of the independent and disinterested members of the Board of Directors as then constituted.

We evaluated Note 1 in accordance with ASC 470, Debt ("ASC 470"). Note 1 was initially recorded at its calculated fair value of $9,866,679 with a resulting debt discount recorded of $2,133,321 on the consolidated balance sheet for the period ended June 30, 2025. Note 1 fair value was calculated as the net present value using a discount rate of 9.40%. The debt discount is being amortized over the life of the note using the effective interest rate method.

During the year ended March 31, 2026, we recorded interest expense on Note 1 of $819,550.

As partial consideration for the settlement in the Delaware Litigation on May 30, 2025, we also issued to Mr. Urvan's affiliated designee, an unsecured promissory note in a principal amount of $39.0 million (“Note 2” and together with Note 1, the “Notes”). Note 2 bore interest at 4.62% per annum (subject to a 2.00% increase during an event of default), which was payable to the holder annually on the Interest Payment Date. The unpaid principal balance of Note 2 and all accrued and unpaid interest thereon was due on May 30, 2035.

Pursuant to the terms of Note 2, we were required to make annual prepayments of the outstanding principal amount on Note 2 equal to $1.95 million on each Interest Payment Date. We had the right to prepay, prior to May 30, 2035, all or any part of the principal or interest of Note 2 without penalty. In addition, the holder could not request early repayment of Note 2 prior to May 30, 2027. We also had the option, at any time prior to May 30, 2026 (unless extended by mutual consent of the holder and us), to prepay all, but not less than all, of the then-outstanding principal amount of Note 2 and accrued and unpaid interest thereon in exchange for the issuance of the Additional Warrant, provided that we must first obtain stockholder approval of the issuance of the Additional Warrant and the Additional Warrant Shares pursuant to Nasdaq Listing Rule 5635. Upon issuance of the Additional Warrant, all remaining obligations under Note 2 would be deemed satisfied with the same force and effect as a prepayment of all principal and accrued and unpaid interest under Note 2. Any optional prepayment by us, whether in cash or by issuance of the Additional Warrant, was required to be approved by a majority vote of the independent and disinterested members of the Board of Directors as then constituted.

We evaluated Note 2 in accordance with ASC 470. Note 2 was initially recorded at its calculated fair value of $12,105,624 with a resulting debt discount recorded of $26,894,376 on the consolidated balance sheet for the period ended June 30, 2025. Note 2 was valued using a Binomial Lattice Model with a 9.60% discount rate and a 70% volatility along with a probability of exercise of the Prepayment Option. The debt discount would be amortized over the life of the note using the effective interest rate method. We also evaluated the option to call Note 2 by issuing the Additional Warrant Shares in accordance with ASC 815. We determined that the call option is clearly and closely related to the debt host, therefore, the call option is not required to be bifurcated.

On September 17, 2025, the independent and disinterested members of the Board of Directors approved the exercise of the Prepayment Option and we issued the Additional Warrant in satisfaction of Note 2. The prepayment of Note 2 was accounted for as an extinguishment of debt and a gain of $801,894 was recognized on the consolidated statement of operations for the year ended March 31, 2026.

During the year ended March 31, 2026, we recorded interest expense on Note 2 of $950,070.

Future maturities on the Notes excluding debt discounts at March 31, 2026 were as follows:


Years Ended March 31,	Amount
2027	$	220,000
2028		234,300
2029		249,529
2030		265,749
2031		283,023
Thereafter		10,747,399
Total notes payable - related parties outstanding	$	12,000,000
Less unamortized discount		(1,963,771	)
Total notes payable - related parties outstanding, net of discount	$	10,036,229
Notes payable - related parties, current maturities	$	220,000
Notes payable - related parties, noncurrent	$	9,816,229

On July 26, 2023, we obtained a $1.6 million letter of credit with The Northern Trust Company (“Northern Trust”) for collateral for a bond related to a judgment assessed to GunBroker. On July 17, 2023, we generated a $1.6 million certificate of deposit with Northern Trust for security on the letter of credit. The initial term of the certificate of deposit was twelve months and included interest of approximately 5%.

Effective July 12, 2024, the letter of credit with Northern Trust was extended until July 26, 2025. Effective July 7, 2025 the letter of credit was moved to Sunflower Bank with an expiration date of July 7, 2026. The term of the certificate of deposit is twelve months and includes interest of approximately 4%. Per the terms of the merger agreement with Gemini, Mr. Urvan was required to indemnify any losses related to the underlying judgment if the appeal is unsuccessful. As a function of the 2025 Urvan Settlement Agreement, the losses related to the judgment are no longer indemnified by Mr. Urvan.

On June 24, 2024, we entered into a Confidential Settlement Agreement and Mutual General Release (the “Triton Settlement Agreement”) with Triton Value Partners, LLC, Donald Gasgarth, Paul Freischlag, Jr., Jeff Zwitter (the “Plaintiffs,” and together with the Defendants and the Company, the “Parties” or, individually, “Party”), and Steven Urvan and TVP Investments LLC (the “Urvan Defendants”) and GunBroker.com, LLC, IA TECH, LLC, and GB Investments, Inc. (the “GunBroker Defendants,” and collectively with the Urvan Defendants, the “Defendants”) to fully resolve and settle all disputes and claims related to the litigation between the Defendants and Plaintiffs captioned Triton Value Partners, LLC et al. v. TVP Investments, LLC et al., Cobb County Superior Court, CAFN 18104869 (the “Action”). Pursuant to the Triton Settlement Agreement, the GunBroker Defendants agreed to pay the Plaintiffs $8,000,000 (the “Settlement Amount”) in a single lump sum payment. We agreed to tender the Settlement Amount to an escrow agent on behalf of the GunBroker Defendants within 45 days of the Triton Settlement Agreement’s execution. In connection with the Merger Agreement, on April 30, 2021, the Company and Urvan entered into a Pledge and Escrow Agreement (the “Pledge and Escrow Agreement”), pursuant to which ten stock certificates in the name of Urvan, with each certificate representing $2.8 million worth of shares of the Company’s common stock as of the date of the Pledge and Escrow Agreement (the “Pledged Securities”) were placed in escrow pending resolution of the Action. Pursuant to the Triton Settlement Agreement, a portion of the Pledged Securities in the form of a stock certificate for 2,857,143 shares (the “Stock Certificate”) were sent to the Company’s transfer agent for cancellation on September 30, 2024.

As a result of the contingency recognized for the Triton Settlement Agreement, we had recorded a receivable of $4,800,000 that was re-classed to treasury stock upon Mr. Urvan’s transfer of the shares related to the settlement payment to the Company on September 30, 2024. During the year ended March 31, 2025, we recognized the value of shares returned to the Company in lieu of the settlement payment. As of March 31, 2025, Mr. Urvan transferred the shares to us and they have been reclassified to treasury stock.

Pursuant to the merger agreement with Gemini, Mr. Urvan was granted sole and exclusive control over the prosecution, defense and settlement of certain designated litigation matters, including the litigation captioned GunBroker.com, LLC v. Tenor Capital Partners, No. 1:20-CV-00613 (N.D. GA.) (the "Tenor Litigation"), and the right to receive any amounts recovered by or awarded to the Company with respect to such matters. In addition, the merger agreement with Gemini required Mr. Urvan to indemnify, defend, hold harmless and reimburse the Company with respect to designated matters, including the Tenor Litigation. Subsequently, pursuant to the 2025 Settlement Agreement, the Company released Mr. Urvan from certain of these indemnification, defense and hold harmless obligations under the merger agreement. In April 2026, the United States Court of Appeals for the Eleventh Circuit reversed the district court's grant

of summary judgment on a breach of fiduciary duty claim asserted by GunBroker in the Tenor Litigation and remanded that claim for further proceedings.

In June 2026, the Company and its subsidiary Speedlight Group I, LLC entered into a side letter agreement with Mr. Urvan confirming his right to control the prosecution, defense, and settlement of the Tenor Litigation was not extinguished by the 2025 Settlement Agreement and clarifying that, consistent with the intent of the merger agreement and the 2025 Settlement Agreement, (i) Mr. Urvan is solely responsible for all costs, fees and expenses incurred in connection with the prosecution, defense and settlement of the Tenor Litigation, (ii) the Company has no obligation to fund, advance, reimburse or indemnify any cost, expense or liability arising from or related to the Tenor Litigation, and (iii) Mr. Urvan may not settle the Tenor Litigation on terms that would result in any obligation or restriction binding upon the Company or its subsidiaries without the prior written consent of the independent and disinterested members of the Board of Directors. The side letter does not amend the merger agreement with Gemini or the 2025 Settlement Agreement and does not revive or reinstate any indemnification or similar obligations of Mr. Urvan that were released pursuant to the 2025 Settlement Agreement. If Mr. Urvan determines to pursue a damage claim for breach of fiduciary duty in the full amount permitted by applicable law, such amount is likely to exceed the $120,000 disclosure threshold of Item 404 of Regulation S-K. The side letter was reviewed and approved by the Company's Audit Committee.