What changed in this filing

/stocks — the workspaceLOADING

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2026-03-05 compared with 2025-03-06 · 140 added, 119 removed, 885 unchanged (23% of the section changed)

13 unchanged sentences

Organization and Description of Business

S ignificant Accounting Poli cies

P repaid Expenses and Other Current Assets

P rop erty and Equipment, Net

I ntan gible Assets

I ncome Taxes

A ccrued Liabilities

D eferred Re venue

E quity- based Compensation

S tockholders ’ Equity

N et Loss Per Share

C ommitments and Contin gencies

S egment Information

S ubsequent Events

Significant Accounting Policies

Prepaid Expenses and Other Current Assets

Property and Equipment, Net

Intangible Assets

Accrued Liabilities

Deferred Revenue

Equity-based Compensation

Stockholders’ Equity

Net Loss Per Share

Commitments and Contingencies

Segment Information

Subsequent Events

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

2 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of a.k.a.

We have audited the accompanying consolidated balance sheets of a.k.a.

Brands Holding Corp.

and its subsidiaries (the "Company") as of December 31, 2024, and the related consolidated statement of income, of comprehensive income, of stockholders’ equity and of cash flows for the period ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of income, of comprehensive income, of stockholders’ equity and of cash flows for the years then ended, including the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

112 unchanged sentences

( 29,315 ) ( 21,661 ) ( 96,965 )

(Provision for) benefit from income tax

Provision for income tax

( 2,119 ) ( 4,329 ) ( 1,921 )

5 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements

* Adjusted for the one-for-12 Reverse Stock Split.

Refer to Note 13, “Stockholders’ Equity.”

BRANDS HOLDING CORP.

4 unchanged sentences

$ ( 31,434 ) $ ( 25,990 ) $ ( 98,886 )

Other comprehensive loss:

Other comprehensive income (loss):

Currency translation

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Issuance of common stock under employee equity plans, net of shares withheld 137,801 — ( 28 ) — — ( 28 )

Repurchase of shares ( 320,506 ) ( 1 ) ( 2,100 ) — — ( 2,101 )

Cumulative translation adjustment — — — ( 5,084 ) — ( 5,084 )

7 unchanged sentences

Balance as of December 31, 2024

10,669,649 128 471,758 ( 60,849 ) ( 293,403 ) 117,634

Equity-based compensation — — 7,049 — — 7,049

5 unchanged sentences

10,770,721 $ 128 $ 476,124 $ ( 53,644 ) $ ( 324,837 ) $ 97,771

(1) Adjusted for the one-for-12 Reverse Stock Split.

Refer to Note 13, “Stockholders’ Equity.”

The accompanying notes are an integral part of these consolidated financial statements

6 unchanged sentences

$ ( 31,434 ) $ ( 25,990 ) $ ( 98,886 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation expense 8,332 6,550 7,605

Amortization expense 9,426 11,047 11,536

Amortization of inventory fair value adjustment — — 707

Amortization of debt issuance costs 761 597 624

1 unchanged sentence

Loss on disposal of businesses

600 673 1,533

Non-cash operating lease expense 13,615 8,979 7,766

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Lease liabilities ( 11,799 ) ( 7,628 ) ( 7,676 )

Net cash provided by (used in) operating activities 669 33,426 ( 319 )

Cash flows from investing activities:

Acquisition of businesses, net of cash acquired

Net cash provided by operating activities

16,436 669 33,426

Cash flows from investing activities:

Purchases of intangible assets

4 unchanged sentences

Cash flows from financing activities:

Payments of costs related to initial public offering — — ( 1,142 )

Payments of debt issuance costs

( 1,406 ) — —

Proceeds from line of credit

7 unchanged sentences

( 1,976 ) ( 1,515 ) ( 2,100 )

Net cash provided by (used in) financing activities

Net cash (used in) provided by financing activities

( 4,433 ) 15,506 ( 52,829 )

18 unchanged sentences

Restricted cash, included in other assets

2,009 1,710 —

Total cash, cash equivalents and restricted cash $ 22,514 $ 26,479 $ 24,029

39 unchanged sentences

Accounts receivable consists of trade accounts receivable that are reported net of an allowance for doubtful accounts.

The Company had $ 0.1 million and $ 0.2 million in allowance for doubtful accounts as of December 31, 2024 and 2023, respectively.

The Company had $ 0.1 million in allowance for doubtful accounts at each of December 31, 2025 and 2024.

Inventories are accounted for using an average cost method and are valued at the lower of cost or net realizable value.

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Upon the sale or disposal of property and equipment, the cost and related accumulated depreciation and amortization are removed from the consolidated balance sheets and the resulting gain or loss is reflected in general and administrative expense in the consolidated statements of income.

Property and equipment that is fully depreciated as of the last day of a fiscal year is written off during the first quarter of the following year.

The Company incurs costs related to the development of the Company’s websites and capitalizes these website development costs incurred during the website development stage.

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No goodwill impairment was required for the year ended December 31, 2025 .

However, as of the annual testing date of October 31, 2024, the estimated fair value of the mnml reporting unit exceeded the carrying value by 11.2 % and the carrying value of the related goodwill was $ 30.0 million.

In June 2025, due to a continued period of uncertain trade policy and the impact of increased tariffs and duties between countries, the Company revised its forecasts for each of its reporting units.

These revisions and a continued decrease in the Company’s stock price were identified as triggering events and a subsequent quantitative test concluded that the fair value of each of the Company’s reporting units exceeded their carrying values as of June 30, 2025.

As of the testing date, the estimated fair value of the mnml reporting unit exceeded the carrying value by 4.6 % and the carrying value of the related goodwill was $ 30.0 million.

In 2023, the Company concluded that the carrying value of the Culture Kings and Petal & Pup reporting units exceeded their fair values as of August 31, 2023.

As a result, the Company recorded a non-cash goodwill impairment charge of $ 68.5 million during the third quarter of 2023.

As part of the annual goodwill impairment test conducted in the fourth quarter of 2022, the Company concluded that the carrying value of the Company’s Culture Kings and Rebdolls reporting units exceeded their fair values and recorded a total non-cash goodwill impairment charge of $ 173.8 million during the year ended December 31, 2022.

Refer to Note 5, “Goodwill,” for further information.

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Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

As of December 31, 2024, there are no known uncertain tax positions.

Equity-based Compensation

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Cost of Sales

Cost of sales consists of the purchase price of merchandise sold to customers and includes import duties and other taxes, freight-in, defective merchandise returned from customers, inventory write-offs and other miscellaneous shrinkage.

Selling Expenses

39 unchanged sentences

The Company has aggregated its operating segments into one reportable segment based on the similar nature of products sold, production, merchandising and distribution processes involved, target customers and economic characteristics.

Reclassification

As of December 31, 2023, the Company reclassified restricted cash of $ 2.2 million from its separate balance sheet line item to be included within prepaid expenses and other current assets on the balance sheet.

This reclassification had no effect on total current assets or total assets previously reported.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This standard requires disclosure of significant segment expenses and other segment items by reportable segment.

This ASU becomes effective for annual periods beginning in 2024 and interim periods in 2025.

The Company has adopted this ASU.

Refer to Note 16, “Segment Information,” for further information.

In December 2023, FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which will require incremental income tax disclosures on an annual basis for all public entities.

2 unchanged sentences

ASU 2023-09 is effective for annual reporting beginning with the fiscal year ending December 31, 2025.

The Company is currently evaluating the incremental disclosures that will be required in the Company’s consolidated financial statements.

Refer to “Note 9 to the Consolidated Financial Statements - Income Taxes” for additional information regarding the Company’s income taxes.

In November 2024, FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

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There was no goodwill impairment recorded for the year ended December 31, 2025.

In June 2025, due to a continued period of uncertain trade policy and the impact of increased tariffs and duties between countries, the Company revised its forecasts for each of its reporting units.

As of the testing date, the estimated fair value of the mnml reporting unit exceeded the carrying value by 4.6 % and the carrying value of the related goodwill was $ 30.0 million.

The goodwill of acquired companies is primarily related to expected improvements in technology performance and functionality, as well as sales growth from future product and service offerings and new customers, together with certain intangible assets that do not qualify for separate recognition.

5 unchanged sentences

As of December 31, 2023, $ 11.3 million of goodwill related to Petal & Pup remained on the consolidated balance sheet, while the goodwill related to Culture Kings was fully impaired.

2022 Impairment

As part of the annual goodwill impairment test conducted in the fourth quarter of 2022, the Company determined that the carrying value of its Culture Kings and Rebdolls reporting units exceeded their fair values and recorded a total non-cash goodwill impairment charge of $ 173.8 million during the year ended December 31, 2022.

The worsening economic trends in the fourth quarter of 2022, including continued inflation and rising interest rates, as well as unfavorable demand due to changing customer preferences towards a mix of online and physical store shopping led the Company to lower its earnings forecasts and expectations for the Culture Kings and Rebdolls reporting units, driving the reduction in their fair values.

Goodwill Activity

35 unchanged sentences

• The $ 50.0 million accordion feature allows the Company to enter into additional term loan borrowings at terms to be agreed upon at the time of issuance, but on substantially the same basis as the original term loan, which includes the requirement to make amortized annual payments at the same cadence as that of the original term loan.

The senior secured credit facility requires that the Company maintain a maximum total net leverage ratio of 3.50 to 1.00 and maintain a minimum fixed charge coverage ratio of 1.25 to 1.00, each as of the last day of any fiscal quarter.

In the event that the Company fails to comply with the financial covenant, the Company will have the option to make certain equity contributions, directly or indirectly, to cure any non-compliance with such covenant, subject to certain other conditions and limitations.

The Company is required to make a mandatory prepayment as a percentage of excess cash flows, as defined in the Credit Agreement, in the period based on the Company triggering certain net debt leverage ratios.

Specifically, a mandatory prepayment of 50 % of excess cash flows is required if the Company’s net leverage ratio exceeds 2.75 x, and a mandatory prepayment of 25 % of excess cash flows is required if the Company’s net leverage ratio is greater than or equal to 2.25 x.

Amended and Restated Credit Agreement

On October 14, 2025, the Company entered into an Amended and Restated Syndicated Facility Agreement (the “Amended and Restated Credit Agreement”), which amends and restates in its entirety the Senior Secured Credit Facility.

The Amended and Restated Credit Agreement amends and restates the Senior Secured Credit Facility to, among other things, (i) establish revolving credit facility commitments in an aggregate principal amount of $ 35.3 million , (ii) establish term loans in an aggregate principal amount of $ 85.0 million , (iii) adjust the pricing stepdowns related to the interest rate and (iv) resize baskets within certain negative covenants based on a Consolidated EBITDA (as defined in the Amended and Restated Credit Agreement) of $ 35.2 million.

The Amended and Restated Credit Agreement extends the maturity date of the revolving credit facility commitments and the term loans to October 14, 2028.

The Company is required to make mandatory amortization payments in respect of the term loans in an amount equal to (a) commencing with the fiscal quarter ending on December 31, 2025 and until the fiscal quarter ending on December 31, 2027, a principal amount of term loans equal to the aggregate outstanding principal amount of term loans made on the date of the execution of the Amended and Restated Credit Agreement, multiplied by 1.875 % and (b) commencing with the fiscal quarter ending on March 31, 2028, a principal amount of term loans equal to the aggregate outstanding principal amount of term loans made on the date of the execution of the Amended and Restated Credit Agreement, multiplied by 2.50 % .

Borrowings under the Amended and Restated Credit Agreement accrue interest at Term SOFR plus an applicable margin dependent upon the Company’s net leverage ratio, as defined in the Amended and Restated Credit Agreement.

The highest interest rate under the agreement occurs at a net leverage ratio of greater than 2.75 x, yielding an interest rate of Term SOFR plus 3.75 % .

The Amended and Restated Credit Agreement includes certain financial covenants requiring the Company to maintain a maximum total net leverage ratio and a minimum fixed charge coverage ratio, each tested as of the last day of every fiscal quarter.

Specifically, the Company must maintain a maximum total net leverage ratio of 3.50 to 1.00 and a minimum fixed charge coverage ratio of 1.35 to 1.00 for 2025 and 2026, 3.25 to 1.00 and 1.50 to 1.00 for 2027, and 3.00 to 1.00 and 1.75 to 1.00 for 2028, respectively.

The agreement also includes a capital expenditure covenant limiting growth-related capital expenditures for new store development to $ 17.5 million for the period from October 14, 2025, through the first anniversary of that date, with annual limits of $ 20.0 million and $ 22.5 million in subsequent years.

If the Company does not comply with these financial covenants, it may, subject to certain conditions and limitations, make direct or indirect equity contributions to cure such non-compliance.

Additionally, the Company is required to make a mandatory prepayment of a portion of excess cash flow, as defined in the Credit Agreement, based on its net leverage ratio.

A prepayment of 50 % of excess cash flow is required if the net leverage ratio exceeds 2.0 x, which is reduced to 25 % if the ratio is less than or equal to 2.0 x, and no prepayment is required if the ratio is less than or equal to 1.0 x.

As of December 31, 2025 , the Company was in compliance with all financial debt covenants.

The Company incurred $ 2.7 million of debt issuance costs in relation to the senior secured credit facility.

The Company incurred $ 1.4 million of debt issuance costs in relation to the Amended and Restated Credit Agreement.

Of this, $ 0.5 million related to the revolving credit facility and was capitalized and included in prepaid and other current assets as deferred financing costs to be amortized over the life of the facility, or 3 years.

1 unchanged sentence

Debt issuance costs are amortized over the life of the outstanding debt, using the effective interest rate method.

During 2024, the Company borrowed $ 49.5 million under its revolving line of credit, with final payoff due on September 24, 2026, and voluntarily repaid $ 26.2 million of the amounts outstanding under its revolving line of credit.

In connection with the replacement of certain lenders in the loan syndication as part of the amendment, the Company received gross proceeds of $ 13.8 million from new lenders and disbursed $ 13.6 million to exiting lenders.

During 2025, the Company borrowed $ 40.9 million under its revolving line of credit and voluntarily repaid $ 35.6 million of the amounts outstanding under its revolving line of credit.

As of December 31, 2025, the all-in rate (Term SOFR plus the applicable margin) for the Company’s term loan and borrowings under the revolving line of credit was 7.35 %.

3 unchanged sentences

Revolving credit facility

28,600 23,300

Capitalized debt issuance costs

7 unchanged sentences

Additionally, as of December 31, 2025 , the Company had $ 6.6 million of outstanding letters of credit.

As of December 31, 2024, the carrying value of the Company’s total debt was $ 111.7 million, while the fair value of the Company’s total debt, valued using level 2 inputs, was $ 103.0 million.

As of December 31, 2025, the carrying value of the Company’s total debt approximated its fair value.

As of December 31, 2025, the maturities of principal amounts of our total debt obligations were as follows:

34 unchanged sentences

Long-term operating lease liabilities

As of December 31, 2024, the Company had obligations under several lease agreements with expected commencement dates in the first half of 2025 and terms of between seven and ten years .

As of December 31, 2025, the Company had obligations under several lease agreements with expected commencement dates ranging from the first half of 2026 through early 2027 and terms of between ten and eleven years .

The Company expects to classify these leases as operating leases and recognize lease obligations totaling $ 34.0 million over the terms of the leases.

7 unchanged sentences

$ ( 29,315 ) $ ( 21,661 ) $ ( 96,965 )

The components of the provision for (benefit from) income taxes consisted of the following:

The components of the provision for income taxes consisted of the following:

Year Ended December 31,

5 unchanged sentences

40 ( 48 ) 1,149

( 48 ) 1,149 ( 1,671 )

Total 40 1,491 ( 689 )

Provision for (benefit from) income taxes

Provision for income taxes

$ 2,119 $ 4,329 $ 1,921

The provision for (benefit from) income taxes differs from the tax computed using the statutory U.S.

federal income tax rate of 21% as a result of the following items:

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S.

federal income tax rate to income before taxes for years prior to the adoption of ASU 2023-09 is as follows:

Year Ended December 31,

2024 2023 2022

Benefit from income taxes at U.S.

6 unchanged sentences

Equity-based compensation

240 1,082 860

Goodwill impairment

— 21,444 51,990

Change in valuation allowance

( 192 ) ( 76 )

Change in tax basis of Culture Kings’ inventory and intangibles

Provision for (benefit from) income taxes

$ 4,329 $ 1,921

Intra-entity transfer of certain intellectual property rights

The foreign tax rate differential relates to differences between the income tax rates in effect in the foreign countries in which the Company operates, in particular Australia where the corporate tax rate is 30%.

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S.

federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows:

Year Ended December 31,

Benefit from income taxes at U.S.

federal statutory rate

$ ( 6,256 ) 21 %

State and local income tax, net of federal income tax effect 1

Foreign tax effects:

Rate differential

Changes in Valuation Allowance

4,032 ( 14 ) %

Provision for (benefit from) income taxes

Nontaxable or nondeductible items

( 1,564 ) 5 %

Other foreign jurisdiction

Effect of cross border tax laws

Subpart F income inclusion

1,125 ( 4 ) %

Changes in valuation allowance

4,344 ( 15 ) %

Nontaxable or nondeductible items

Changes in unrecognized tax benefits

Provision for income taxes

$ 2,119 ( 7 ) %

1 The states and local jurisdictions that contribute to the majority (greater than 50%) of the effect in this category include California and New York.

The components of net deferred tax assets were as follows:

4 unchanged sentences

Lease liabilities 26,207 18,742

Asset retirement obligation

Foreign exchange gains / losses 2,635 653

11 unchanged sentences

Asset retirement obligations

( 109 ) ( 99 )

Total deferred tax liabilities ( 29,035 ) ( 23,988 )

Net deferred tax assets

The amount of income taxes paid (net of refunds received) were as follows:

Year Ended December 31,

State and local

New York State

New York City

Total income taxes paid (net of refunds received)

The Company had gross deferred tax assets of $ 58.2 million and $ 42.8 million and gross deferred tax liabilities of $ 29.0 million and $ 24.0 million at December 31, 2025 and 2024, respectively.

2 unchanged sentences

Based on this evaluation, a full valuation allowance of $ 29.1 million has been recorded on the net deferred tax assets in the Company’s United States and Australian businesses.

For the year ended December 31, 2024 , the valuation allowance increased by $ 6.6 million, primarily due to the Company placing a valuation allowance on its U.S.

deferred tax assets.

For the year ended December 31, 2025 , the valuation allowance increased by $ 10.4 million, primarily due to increased net operating losses.

As of December 31, 2025, the Company had a $ 23.6 million Australian net operating loss carryforward and a $ 15.4 million Australian capital loss carryforward, as well as a U.S.

6 unchanged sentences

As of December 31, 2025, there are no unremitted earnings from these operations.

As of December 31, 2024 and 2023, the Company had no uncertain tax positions.

As of December 31, 2025 the Company has recorded unrecognized tax benefits related to certain state income tax returns that have not yet been filed for prior tax years.

These unrecognized tax benefits primarily relate to the uncertainty associated with the Company’s filing positions and nexus determinations in various state jurisdictions.

Management has evaluated these positions under the more-likely-than-not recognition threshold prescribed by ASC 740 and has concluded that certain tax benefits do not meet the recognition criteria.

Accordingly, the Company has recorded a liability for unrecognized tax benefits within other noncurrent liabilities on the consolidated balance sheets as of December 31, 2025.

Because certain state income tax returns have not been filed, the applicable tax years remain open and subject to examination until the statute of limitations expires following the filing of such returns.

In general, the Company’s major state tax jurisdictions remain open for examination in jurisdictions where returns have not been filed beginning in tax year 2021.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.

As of December 31, 2024, the Company had no uncertain tax positions.

The following table summarizes the Company’s uncertain tax positions:

Year Ended December 31,

Gross unrecognized tax benefits at the beginning of the year $ —

Increases related to tax positions taken during the current periods

Increases related to tax positions taken during the prior periods

Gross unrecognized tax benefits at the end of the year $ 218

The Company is subject to taxation in the United States, Cayman Islands and Australia.

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2021 Omnibus Incentive Plan

In September 2021, the Company’s board of directors adopted, and its stockholders approved, the 2021 Omnibus Incentive Plan (the “2021 Plan”) which became effective in connection with the Company’s initial public offering of common stock in September 2021 (the “IPO”).

The 2021 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units and other forms of equity and cash compensation.

3 unchanged sentences

On May 22, 2024, the Company’s stockholders approved an amendment to the 2021 Plan to increase the number of shares available for issuance under the 2021 Plan by 1,100,000 shares of the Company’s common stock.

As of December 31, 2024, there were 2,662,075 shares reserved for issuance under the 2021 Plan.

As of December 31, 2025, there were 2,768,771 shares reserved for issuance of awards under the 2021 Plan.

2021 Employee Stock Purchase Plan

26 unchanged sentences

As of December 31, 2025, no options issued as part of the Bryett Award had vested, the options held no intrinsic value, and total unrecognized compensation cost related to the Bryett Award was $ 0.7 million which is expected to be recognized over 3.2 years.

A summary of the Company's time-based stock option activity under the 2021 Plan for the years ended December 31, 2024 and 2023, as adjusted for the Reverse Stock Split, is as follows:

In connection with the appointment of Ciaran Long as the Chief Executive Officer in January 2025, Mr.

Long was granted a performance-based stock option, representing a contingent right to purchase 100,000 shares of common stock at a specified price, upon vesting of the option (the “Long Award”).

The Long Award expires after ten years , or upon the termination of Mr.

Long’s service to the Company, and includes four tranches that will vest and become exercisable based upon the achievement of various common stock price targets.

The weighted average exercise price for the option in the Long Award is $ 120.00 .

Each tranche has a different derived service period, the average of which is approximately 4.2 years.

As of December 31, 2025 , no tranche of the Long Award had vested, the option held no intrinsic value, and total unrecognized compensation cost related to the Long Award was $ 0.8 million, which is expected to be recognized over 3.1 years.

A summary of the Company's time-based stock option activity under the 2021 Plan for the years ended December 31, 2025 and 2024, is as follows:

Number of Options

5 unchanged sentences

Forfeited/Repurchased

( 2,468 ) 114.00

Balance as of December 31, 2024

5 unchanged sentences

39,820 $ 81.47 4.99 $ —

As of December 31, 2024, there was $ 0.2 million of total unrecognized compensation cost related to unvested time-based stock options issued under the 2021 Plan, which is expected to be recognized over a weighted average period of 0.6 years.

As of December 31, 2025, there was no unrecognized compensation cost related to unvested time-based stock options issued under the 2021 Plan.

Restricted Stock Units

5 unchanged sentences

If any common stock price target is achieved for one or more tranches of PSUs prior to April 1, 2025, the vesting date for the applicable tranche(s) will be April 1, 2025.

At time of grant, each PSU had a fair value of $ 29.50 and each tranche of PSUs has a different derived service period, the average of which is approximately 2.9 years.

At time of grant, each PSU had a fair value of $ 29.50 .

Each tranche of PSUs has a different derived service period, the average of which is approximately 2.9 years.

As of December 31, 2025, the common stock price target for two tranches of PSUs issued as part of the Interim CEO Award had been achieved, and the total unrecognized compensation cost related to the Interim CEO Award was $ 0.1 million, which is expected to be recognized over a weighted average period of 1.5 years.

A summary of the Company's time-based RSU activity under the 2021 Plan for the years ended December 31, 2024 and 2023, as adjusted for the Reverse Stock Split, is as follows:

A summary of the Company's time-based RSU activity under the 2021 Plan for the years ended December 31, 2025 and 2024, is as follows:

Number of Shares

3 unchanged sentences

403,458 14.86

( 274,201 ) 16.37

Forfeited/Repurchased

28 unchanged sentences

Forfeited/Repurchased

( 30,083 ) 1.34 22.68

Balance as of December 31, 2025

1 unchanged sentence

Vested as of December 31, 2025

As of December 31, 2024, there was $ 0.1 million of total unrecognized compensation cost related to unvested time-based incentive units issued under the 2018 Plan, which is expected to be recognized over a weighted average period of 0.3 years.

Performance-Based Incentive Units

Performance-based incentive units vest upon the satisfaction of a performance condition and become exercisable upon the satisfaction of the market condition.

The performance condition was satisfied upon the occurrence of the IPO.

As it was not deemed probable until it occurred, all compensation expense related to these awards was recognized at the date of the IPO.

The market condition is satisfied upon the initial investor in Excelerate, L.P.

receiving an aggregate return equal to three times its aggregate investment.

As of December 31, 2024, all outstanding performance-based incentive units had been fully expensed.

As of December 31, 2025, there was no unrecognized compensation cost related to unvested time-based incentive units issued under the 2018 Plan.

ESPP Purchase Rights

A summary of the Company's ESPP activity under the 2021 Plan for the years ended December 31, 2024, 2023 and 2022, as adjusted for the Reverse Stock Split, was as follows:

A summary of the Company's ESPP activity under the 2021 Plan for the years ended December 31, 2025, 2024 and 2023, was as follows:

Year Ended December 31,

34 unchanged sentences

With respect to these surrendered shares, the price paid per share is based on the fair value at the time of surrender.

In July 2025 the Company repurchased 159,201 shares of its common stock from a former employee for cash and other consideration totaling $ 1.6 million, at an average price of $ 10.10 per share.

This was a one-time transaction authorized by the board of directors that was not conducted pursuant to the Company’s Share Repurchase Program.

During the year ended December 31, 2025, inclusive of repurchases under the Share Repurchase Program and shares surrendered by employees to satisfy tax obligations, the Company repurchased 108,778 shares of its common stock for $ 1.3 million, at an average price of $ 12.02 per share.

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Legal Proceeding

In April 2024, the Company received a cease and desist letter alleging copyright infringement and related claims.

This matter has not proceeded to litigation as of the date that these condensed consolidated financial statements are issued, and the Company has accrued $ 2.0 million to general and administrative expenses for current estimated losses in connection with these claims.

The accrual for estimated losses is based on currently available information and may change as new information becomes available or circumstances change.

In April 2024, the Company received a cease and desist letter alleging copyright infringement and related claims, and, in 2024, the Company accrued $ 2.0 million to general and administrative expenses for estimated losses in connection with these claims.

On July 23, 2025, the Company entered into a final settlement agreement for this matter, wherein it agreed to pay, or have its insurers pay to the claimant on its behalf, a total of $ 16.5 million to the claimant in settlement costs.

As part of the final settlement agreement, the Company paid $ 1.1 million and subsequently released the remaining $ 0.9 million previously accrued for this matter.

Segment Information

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The Company has evaluated subsequent events occurring through the date that these financial statements were issued, and determined the following subsequent event occurred that would require disclosure in these financial statements.

Draws on Revolving Line of Credit

In January 2025, the Company borrowed $ 21.5 million under the revolving line of credit, which is part of the Company’s senior secured credit facility.

The initial weighted average applicable interest rate for the borrowings is 7.68 % and final payoff is due on September 24, 2026.

CEO Employment Agreement

On January 7, 2025, the board of directors of the Company appointed Ciaran Long, the Interim Chief Executive Officer and Chief Financial Officer of the Company (“Chief Financial Officer”), to the position of Chief Executive Officer of the Company and removed him from the position of Chief Financial Officer, in each case effective January 13, 2025.

In connection with Mr.

Long’s appointment, on January 13, 2025, a.k.a.

Brands, Inc., an indirectly wholly-owned subsidiary of the Company, entered into an employment agreement with Mr.

Long (the “CEO Employment Agreement”), which supersedes the employment agreement between Mr.

Long and a.k.a.

dated March 23, 2021.

The CEO Employment Agreement has an initial term of four years , subject to automatic renewals for additional one-year periods.

In connection with Mr.

Long’s appointment, on January 7, 2025, the board of directors, upon the recommendation of the Compensation Committee of the board, approved a grant, effective January 13, 2025, of performance-based stock options (the “Options”) to Mr.

Long under the 2021 Plan, representing a contingent right to purchase 100,000 shares of the Company’s common stock at a specified price, upon the vesting of the Options.

The Options expire after ten years , or upon the termination of Mr.

Long’s service to the Company, and include four tranches that will each vest and become exercisable based upon the achievement of various common stock price targets.

The weighted average exercise price for the Options is $ 120.00 .

The total unrecognized compensation cost related to the Options is $ 1.0 million, which is expected to be recognized over 4.2 years.

Changes to U.S.

On February 20, 2026, the U.S.

Supreme Court issued a ruling striking down certain tariffs previously imposed under IEEPA.

The ultimate availability, timing and amount of any potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory and administrative developments.

Following the Supreme Court’s decision, the Trump Administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs.

There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels and whether further additional tariffs or other retaliatory actions may be imposed, modified or suspended, and the impacts of such actions on the Company's business.

The Company continues to monitor and evaluate these developments and assess their potential impact on the Company’s business, financial condition and results of operations.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk