What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-04-17 compared with 2024-04-18 · 187 added, 140 removed, 984 unchanged (25% of the section changed)

26 unchanged sentences

T he Company’s management, with the participation of the Company’s President and Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of the Company’s internal control over financial reporting to determine whether any changes occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

During fiscal 2023 the Company implemented new software and control processes to manage inventory at its corporately-operated retail stores within its enterprise resource planning (ERP) system.

The transition of this inventory management from the legacy system to the ERP system occurred in phases beginning in the first quarter fiscal 2023 and was completed by the end of the third quarter fiscal 2023.

This implementation has had and is expected to continue to have minimal effects on the Company's controls and processes over accounting for corporately-operated retail store inventory.

Except for the changes to our inventory management process, no other changes in our internal control over financial reporting occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

During fiscal 2024, there were no changes that materially affected the Company's internal control over financial reporting.

Report of Independent Registered Public Accounting Firm

4 unchanged sentences

In our opinion, Build-A-Bear Workshop, Inc.

and Subsidiaries (collectively, the Company) maintained, in all material respects, effective internal control over financial reporting as of February 3, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Build-A-Bear Workshop, Inc.

and Subsidiaries as of February 3, 2024 and January 28, 2023, the related consolidated statements of operations and comprehensive income , stockholders’ equity and cash flows for each of the two years in the period ended February 3, 2024, and the related notes and the financial statement schedule listed in the Index at Item 15(a) and our report dated April 18, 2024 expressed an unqualified opinion thereon.

and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of February 1, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of February 1, 2025 and February 3, 2024, the related consolidated statements of operations and comprehensive income , stockholders’ equity and cash flows for each of the three years in the period ended February 1, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated April 17, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

28 unchanged sentences

We intend to satisfy the amendment and waiver disclosure requirements under applicable securities regulations by posting any amendments of, or waivers to, the Business Conduct Policy on our website.

We have adopted insider trading policies and procedures applicable to our directors, officers, and employees, that we believe are reasonably designed to promote compliance with insider trading laws, rules, and regulations, and the listing standards of the New York Stock Exchange.

Our insider trading policy prohibits our directors, officers and employees and related persons from trading in securities of the Company while in possession of material, non-public information.

The policy also prohibits trading in securities of another company (such as a customer, supplier, business partners, competitors or others within whom we have contractual relationships or may be negotiating transactions) when an individual is aware of material non-public information about that company.

The policy requires that certain designated individuals and roles of the Company only transact in Company securities during an open window period.

Our policy also provides that it is the Company’s policy not to engage in transactions in its securities while aware of material non-public information relating to the Company or our securities.

A copy of the Company’s insider trading policy has been filed as Exhibit 19.1 to this Annual Report on Form 10-K.

The information appearing in the section titled “Committee Charters, Corporate Governance Guidelines, Business Conduct Policy and Code of Ethics” in the Proxy Statement is incorporated by reference in response to this Item 10.

10 unchanged sentences

John serves on the Board of Directors of Jack in the Box Inc., a publicly traded restaurant company.

David Henderson , 53, joined Build-A-Bear Workshop in September 2024 as Chief Revenue Officer.

Prior to joining the Company, Mr.

Henderson served as the Chief Commercial Officer of Melissa & Doug, LLC, a manufacturer of children's toys, from May 2020 to June 2024.

From September 2017 to March 2019, he was President and General Manager-Global of Baby Gear at Newell Brands, a manufacturer, marketer and distributor of consumer and commercial products.

Prior to that, he was at Hasbro, a multinational toy manufacturing and entertainment holding company, for over 19 years, ultimately holding the office of Senior Vice President Consumer Products/Licensing North America

Eric Fencl , 63 , joined Build-A-Bear Workshop in July 2008 as Chief Bearrister - General Counsel.

13 unchanged sentences

Hurt held positions of increasing responsibility at companies including Polo Ralph Lauren and The Procter & Gamble Company.

Jennifer Kretchmar , 51, joined Build-A-Bear Workshop in August 2014 as Chief Product Officer and Innovation Bear and in March 2016, she became Chief Merchandising Officer.

She served as Chief Digital and Merchandising Officer from June 2020 through February 3, 2024 when her employment was terminated by the Company without cause.

Kretchmar serves on the Board of Directors of Mace Security International, Inc., a publicly traded personal security company.

Prior to joining the Company, Ms.

Kretchmar was Senior Vice President of Product and Brand

Management with the Stride Rite Children’s Group of Wolverine Worldwide, Inc.

where since 2004 she was responsible for the global product creation strategy for a diverse portfolio of children’s footwear brands, including Stride Rite, Sperry Top- Sider®, Saucony®, Keds®, Merrell®, Robeez®, Jessica Simpson® and Hush Puppies®.

Before joining Stride Rite, Ms.

Kretchmar held positions of increasing responsibility at The Timberland Company, Goldbug, and the United States Department of Agriculture Foreign Service.

Voin Todorovic , 50, joined Build-A-Bear Workshop in September 2014 as Chief Financial Officer.

28 unchanged sentences

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

See Note 12 - "Stock Incentive Plans" to the consolidated financial statements for additional information regarding our equity compensation plans.

7 unchanged sentences

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of February 3, 2024 and January 28, 2023

Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal years ended February 3, 2024 and January 28, 2023

Consolidated Statements of Stockholders’ Equity for the fiscal years ended February 3, 2024 and January 28, 2023

Consolidated Statements of Cash Flows for the fiscal years ended February 3, 2024 and January 28, 2023

Consolidated Balance Sheets as of February 1, 2025 and February 3, 2024

Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal years ended February 1, 2025 and February 3, 2024

Consolidated Statements of Stockholders’ Equity for the fiscal years ended February 1, 2025 and February 3, 2024

Consolidated Statements of Cash Flows for the fiscal years ended February 1, 2025 and February 3, 2024

Notes to Consolidated Financial Statements

4 unchanged sentences

We have audited the accompanying consolidated balance sheets of Build-A-Bear Workshop, Inc.

and Subsidiaries (collectively, the Company) as of February 3, 2024 and January 28, 2023, the related consolidated statements of operations and comprehensive income, stockholders' equity and cash flows for each of the two years in the period ended February 3, 2024, and the related notes and the financial statement schedule listed in the Index at Item 15(a) (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 at February 3, 2024 and January 28, 2023, and the results of its operations and its cash flows for each of the two years in the period ended February 3, 2024, in conformity with U.S.

and subsidiaries (the Company) as of February 1, 2025 and February 3, 2024, the related consolidated statements of operations and comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended February 1, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (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 at February 1, 2025 and February 3, 2024, and the results of its operations and its cash flows for each of the three years in the period ended February 1, 2025, in conformity with U.S.

generally accepted accounting principles.

69 unchanged sentences

Preferred stock, par value $ 0.01 , Shares authorized:

No shares issued or outstanding at February 3, 2024 and January 28, 2023

No shares issued or outstanding at February 1, 2025 and February 3, 2024

Common stock, par value $ 0.01 , Shares authorized:

23 unchanged sentences

International franchising

4,692 4,538 3,233

Total revenues

4 unchanged sentences

Cost of merchandise sold - commercial

13,439 12,091 8,591

Cost of merchandise sold - international franchising

3,247 2,816 1,985

Total cost of merchandise sold

5 unchanged sentences

Interest expense (income), net

( 861 ) ( 929 ) 19

Income before income taxes

4 unchanged sentences

Foreign currency translation adjustment

( 472 ) 192 196

Comprehensive income

31 unchanged sentences

- - - ( 785 ) ( 785 )

Balance, January 28, 2023

$ 148 $ 69,868 $ ( 12,274 ) $ 60,590 $ 118,332

14 unchanged sentences

$ 142 $ 66,330 $ ( 12,082 ) $ 75,272 $ 129,662

Stock-based compensation expense

Shares issued under employee stock plans

2 1,094 1,096

Shares withheld in lieu of tax withholdings

( 1 ) ( 2,089 ) ( 2,090 )

Share Repurchase

( 10 ) ( 4,712 ) ( 26,544 ) ( 31,266 )

Cash Dividend

( 10,957 ) ( 10,957 )

( 40 ) ( 40 )

Other comprehensive income

( 472 ) ( 472 )

51,785 51,785

Balance, February 1, 2025

$ 133 $ 61,987 $ ( 12,554 ) $ 89,516 $ 139,082

See accompanying notes to consolidated financial statements.

10 unchanged sentences

Share-based and performance-based stock compensation

2,175 2,089 2,559

Deferred taxes

1 unchanged sentence

Provision/(adjustments) for doubtful accounts

187 251 ( 820 )

Loss on disposal of property and equipment

3 unchanged sentences

Inventories, net

( 6,550 ) 7,102 357

Receivables, net

27 unchanged sentences

Effect of exchange rates on cash

( 180 ) 15 767

Increase (decrease) in cash, cash equivalents and restricted cash

( 16,569 ) 2,129 9,353

Cash, cash equivalents and restricted cash, beginning of period

17 unchanged sentences

The Company began operations in October 1997.

The Company sells its products through its 359 corporately-managed locations operated primarily in leased mall locations in the U.S., Canada, Ireland, and the U.K.

The Company sells its products through its 368 corporately-managed locations operated primarily in leased mall locations in the U.S., Canada, the Republic of Ireland, and the U.K.

along with its e-commerce sites.

As of the balance sheet date, operations in foreign countries where the Company does not have corporately-managed locations are through franchise agreements.

The Company also sold product through its "third-party retail" model at 92 stores in which it sells its products on a wholesale basis to other companies that then in turn execute the Company's retail experience.

The Company also sold product through its partner-operated "third-party retail" model at 138 stores in which it sells its products on a wholesale basis to other companies that then in turn execute the Company's retail experience.

The Company’s consolidated financial statements have been prepared in accordance U.S.

8 unchanged sentences

The Company operates on a 52 - or 53 -week fiscal year ending on the Saturday closest to January 31.

The periods presented in these financial statements are fiscal 2023 ( 53 weeks ended February 3, 2024 ) and fiscal 2022 ( 52 weeks ended January 28, 2023 ).

The periods presented in these financial statements are fiscal 2024 ( 52 weeks ended February 1, 2025 ), fiscal 2023 ( 53 weeks ended February 3, 2024 ) and fiscal 2022 ( 52 weeks ended January 28, 2023 ).

References to years in these financial statements relate to fiscal years or year-ends rather than calendar years.

9 unchanged sentences

Inventories are stated at the lower of cost or net realizable value, with cost determined on an average-cost basis.

Inventory includes supplies of $ 4.1 million and $ 4.7 million as of February 3, 2024 and January 28, 2023 , respectively.

Inventory includes supplies of $ 3.5 million and $ 4.1 million as of February 1, 2025 and February 3, 2024 , respectively.

A reserve for estimated shortage is accrued throughout the year based on detailed historical averages.

The inventory reserve was $ 1.1 million as of both February 3, 2024 and January 28, 2023 .

The inventory reserve was $ 1.2 million as of February 1, 2025 and $ 1.1 million as of February 3, 2024 .

Receivables consist primarily of amounts due to the Company in relation to wholesale and corporate product sales, franchisee royalties and product sales, tenant allowances, certain amounts due from taxing authorities, receivables due from insurance providers, and licensing revenue.

48 unchanged sentences

The Company's analysis identified indicators of impairment at two retail locations and the Company incurred immaterial impairment charges during fiscal 2024 for long-lived assets in the Company's DTC segment.

The Company incurred immaterial impairment charges during fiscal 2022 for long-lived assets.

The estimates, all of which are considered Level 3 inputs, used to calculate the fair value of the asset (asset group) include:

17 unchanged sentences

The amount by which the unamortized costs of entertainment assets exceed their estimated fair values are written off.

As of February 3, 2024 and January 28, 2023 , the Company had net capitalized entertainment production costs of $ 4.7 million and $ 2.9 million, respectively.

As of February 1, 2025 and February 3, 2024 , the Company had net capitalized entertainment production costs of $ 4.2 million and $ 4.7 million, respectively.

The February 1, 2025 balance for entertainment production costs is comprised of unamortized, released assets and several in-development entertainment projects.

4 unchanged sentences

A discounted cash flow analysis was used to estimate the fair value of the asset and determined the carry value of the production asset was greater than its fair value.

As a result, the Company recorded $ 0.6 million in film asset impairment.

As a result, the Company recorded $ 0.3 million in film asset amortization.

The Company recorded a total of $ 1.1 million in film costs amortization in fiscal 2024 and a total of $ 2.4 million in fiscal 2023.

16 unchanged sentences

The costs of advertising and marketing programs are charged to operations in the first period the program takes place.

Advertising expense was $ 24.3 million and $ 19.6 million for fiscal years 2023 and 2022 , respectively.

Advertising expense was $ 21.0 million, $ 24.3 million and $ 19.6 million for fiscal years 2024 , 2023 and 2022 , respectively.

Income taxes are accounted for using a balance sheet approach known as the liability method.

24 unchanged sentences

As of February 1, 2025 , the current portions of the assets and related liabilities of less than $ 0.1 million are presented in prepaid expenses and other current assets and accrued expenses in the accompanying Consolidated Balance Sheets, and the non-current portions of the assets and the related liabilities of $ 0.9 million are presented in other assets, net and other liabilities in the accompanying Consolidated Balance Sheets.

As of January 28, 2023 , the current portions of the assets and related liabilities of $ 0.1 million are presented in prepaid expenses and other current assets and accrued expenses in the accompanying Consolidated Balance Sheets, and the non-current portions of the assets and the related liabilities of $ 0.7 million are presented in other assets, net and other liabilities in the accompanying Consolidated Balance Sheets.

As of February 3, 2024 , the current portions of the assets and related liabilities of less than $ 0.1 million are presented in prepaid expenses and other current assets and accrued expenses in the accompanying Consolidated Balance Sheets, and the non-current portions of the assets and the related liabilities of $ 0.7 million are presented in other assets, net and other liabilities in the accompanying Consolidated Balance Sheets.

Fair Value of Financial Instruments

For purposes of financial reporting, management has determined that the fair value of financial instruments, including cash, cash equivalents and restricted cash, receivables, short term investments, accounts payable and accrued expenses, approximates book value at February 3, 2024 and January 28, 2023 .

Use of Estimates

10 unchanged sentences

Gains and losses resulting from foreign exchange transactions, including the impact of the re-measurement of the Company’s balance sheet, are recorded as a component of selling, general and administrative expenses.

The Company recorded a loss of $ 0.1 million and $ 0.6 million related to foreign currency in fiscal 2023 and 2022 , respectively.

The Company recorded a loss of $ 0.2 million, $ 0.1 million and $ 0.6 million related to foreign currency in fiscal 2024 , 2023 and 2022 , respectively.

R ecent Accounting Pronouncements – Adopted in the current year

At the beginning of fiscal 2023, the Company adopted ASU No.

2016 - 13 , “Financial Instruments - Credit Losses (Topic 326 ):

Measurement of Credit Losses on Financial Instruments.” This ASU requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model.

These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions and reasonable and supportable forecasts.

Upon adoption, the Company recognized a charge of $0.8 million to the opening balance of retained earnings which represents a reduction in its account receivable balance associated with expected credit losses.

R ecent Accounting Pronouncements – Pending adoption

In November 2023, the FASB issued ASU No.

At the end of fiscal 2024, the Company adopted ASU No.

2023 - 07, "Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures." This ASU updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

Management is currently evaluating this ASU to determine its impact on the Company's disclosures.

R ecent Accounting Pronouncements – Pending adoption

In December 2023, the FASB issued ASU No.

3 unchanged sentences

Management is currently evaluating this ASU to determine its impact on the Company's disclosures.

In November 2024, the FASB issued ASU No.

2024 - 03 , "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

Disaggregation of Income Statement Expenses." The amendment requires a public business entity (PBE) to disclose, on an annual and interim basis, disaggregated information about certain income statement line items in a tabular format in the notes to the financial statements.

The amendments are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Management is currently evaluating this ASU to determine its impact on the Company's disclosures.

Nearly all of the Company’s revenue is derived from retail sales (including e-commerce sites) and is recognized when control of the merchandise is transferred to the customer.

17 unchanged sentences

Further, given the magnitude of the Company's gift card liability, the changes in breakage rates could have a significant impact on the amount of breakage revenue recognized in future periods.

For the fiscal years ended February 3, 2024 and January 28, 2023 , net retail sales included gift card breakage revenue of $ 6.3 million and $ 5.1 million, respectively.

For the fiscal years ended February 1, 2025 , February 3, 2024 , and January 28, 2023 , net retail sales included gift card breakage revenue of $ 6.5 million, $ 6.3 million and $ 5.1 million, respectively.

In regard to the consolidated balance sheet, contract liabilities for gift cards are classified as gift cards and customer deposits.

4 unchanged sentences

The Company issues certifications daily for those loyalty program members who have earned 100 or more points in the previous day in North America and 50 points or more in the U.K.

with certifications historically expiring in six months if not redeemed .

with certifications historically expiring in four months if not redeemed .

The Company assesses the redemption rates of its certifications on a quarterly basis to update the rate at which loyalty program points turn into certifications and the rate that certifications are redeemed.

19 unchanged sentences

Adjustment for expected credit losses

165 1,912 2,105

Uncollectible accounts written off, net of recoveries (1)

6 unchanged sentences

February 1, 2025

February 3, 2024

January 28, 2024

11 unchanged sentences

February 1, 2025

February 3, 2024

January 28, 2023

1 unchanged sentence

$ 41,547 $ 39,598 $ 37,285

Operating cash flows for operating leases for fiscal 2023 increased from the operating cash flows for operating leases for the same periods in fiscal 2022, primarily due to increased corporately-managed store count and overall increases in market rent.

Operating cash flows for operating leases for fiscal 2024 increased from the operating cash flows for operating leases for the same periods in fiscal 2023 and fiscal 2022 , primarily due to increased corporately-managed store count and overall increases in market rent.

As of February 1, 2025 , the weighted-average remaining operating lease term was 6.0 years and the weighted-average discount rate was 7.2 % for operating leases recognized on the consolidated balance sheet.

The Company recorded immaterial impairment charges during fiscal 2023 and 2022 against its right-of-use operating lease assets in the Company's DTC segment.

The Company recorded immaterial impairment charges during fiscal 2024 , fiscal 2023 and fiscal 2022 against its right-of-use operating lease assets in the Company's DTC segment.

Undiscounted cash flows

7 unchanged sentences

As of February 1, 2025 , the Company had additional executed leases that had not yet commenced with operating lease liabilities totaling $ 29.3 million.

These leases are expected to commence in the first quarter of fiscal 2024 with lease terms of seven to ten years.

These leases are expected to commence in the first quarter of fiscal 2025 with lease terms of five to twenty years.

Prepaid Expenses and Other Current Assets

2 unchanged sentences

$ 2,213 $ 2,442

Prepaid taxes (2)

Prepaid insurance

1,250 $ 1,221

Prepaid gift card fees

Prepaid royalties

Prepaid taxes (2)

Prepaid merchandise (3)

Prepaid gift card fees

6,467 $ 6,468

1 unchanged sentence

( 1 ) Prepaid occupancy consists of prepaid expenses related to non-lease components.

( 2 ) Prepaid taxes consist of prepaid federal and state income tax.

( 3 ) Prepaid merchandise consists of prepaid purchase orders of inventory that are not in transit as of fiscal year end.

( 2 ) Prepaid taxes consist primarily of prepaid federal and state income tax.

( 3 ) Other consists primarily of prepaid expenses related to IT maintenance contracts and software as a service.

31 unchanged sentences

Sales tax payable

$ 2,447 4,561

Accrued rent and related expenses (1)

$ 1,356 1,512

Current income taxes payable

$ 16,209 $ 19,954

Accrued expense - other (2)

$ 19,954 $ 37,358

1 ) Accrued rent and related expenses consist of accrued costs associated with non-lease components.

2 ) Accrued expense - other consists of accrued costs associated with a legal reserve accrual.

For fiscal 2024 and 2023 , defined contribution expense was $ 1.4 million and $ 1.5 million, respectively, included within Accrued wages, bonuses and related expenses.

10 unchanged sentences

$ 15,356 $ 13,524

A reconciliation of the significant differences between the U.S.

statutory tax rate and the effective income tax rate on pre-tax income is as follows:

The provision for income taxes was $ 15.4 million in fiscal 2024 compared to $ 13.5 million in fiscal 2023.

The 2024 effective rate of 22.9 % differed from the statutory rate of 21 % primarily due to state income tax expense partially offset by the tax benefit of the foreign-derived intangible income (FDII) deduction.

The 2023 effective rate of 20.4 % differed from the statutory rate of 21% primarily due to the reversal of the valuation allowance in the U.K.

partially offset by state income tax expense.

The Company periodically assesses whether it is more likely than not that it will generate sufficient taxable income to realize its deferred income tax assets based on all available positive and negative evidence.

Changes in the valuation allowance in fiscal 2024 are primarily related to functional currency fluctuations.

Differences between the provision for income taxes at the U.S.

federal statutory income tax rate and the provision in the consolidated statements of operations are as follows:

Income before income taxes

3 unchanged sentences

14,100 13,929

Valuation allowance

( 5,075 ) ( 328 )

State and local income taxes, net of federal tax benefit

Foreign-derived intangible income benefit

( 891 ) ( 534 )

Non deductible executive compensation

1 unchanged sentence

Adjustment for unrecognized tax positions

Valuation allowance

( 1 ) ( 5,075 )

Other items, net

4 unchanged sentences

22.9 % 20.4 %

The 2023 effective rate of 20.4 % differed from the statutory rate of 21 % primarily due to the reversal of the valuation allowance in the U.K.

partially offset by state income tax expense.

The 2022 effective rate of 22.5% differed from the statutory rate of 21% primarily due to state income tax expense.

In the fourth quarter of fiscal 2023 , as the Company was in a cumulative income position in the U.K.

and continues to be profitable in the jurisdiction, the Company recorded a benefit of $ 5.1 million for the reversal of the valuation allowance on deferred tax assets expected to be realized in the U.K.

Changes in the valuation allowance in fiscal 2023 primarily related to the U.K.

valuation reversal, balance sheet adjustments and functional currency fluctuations.

Temporary differences that gave rise to deferred tax assets and liabilities are as follows (in thousands):

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Deferred revenue

Intangible assets

Accrued compensation

Net operating loss carryforwards

Investment in affiliates

Accrued expenses

Deferred compensation

Receivables write-offs

Net operating loss carryforwards

Accrued expenses

Carryforward of tax credits

Intangible assets

Total gross deferred tax assets

11 unchanged sentences

( 890 ) ( 682 )

( 15 ) ( 18 )

Total deferred tax liabilities

3 unchanged sentences

As of February 1, 2025, the Company had gross net operating loss (NOL) carryforwards of approximately $ 3.2 million, $ 1.8 million of which relate to the U.K.

where NOLs have no expiration date.

The remaining NOLs in certain other foreign jurisdictions are not expected to be utilized.

where NOLs have no expiration date, and $ 1.4 million of which relate to China where NOLs are carried forward for five years subsequent to the year in which the loss was incurred.

The Company continues to assert its investments in foreign subsidiaries are permanent in duration and it is not practical to estimate the income tax liability on the outside basis differences.

As of February 3, 2024 , the Company had total unrecognized tax benefits of $ 0.1 million, of which approximately $ 0.1 million would favorably impact the Company’s provision for income taxes if recognized.

As of January 28, 2023 , the Company had total unrecognized tax benefits of $ 0.1 million, of which approximately $ 0.1 million would favorably impact the Company’s provision for income taxes if recognized.

As of February 1, 2025, the Company had no unrecognized tax benefits.

As of February 3, 2024, the Company had total unrecognized tax benefits of $ 0.1 million, of which $ 0.1 million would favorably impact the Company’s provision for income taxes if recognized.

In the fourth quarter of fiscal year 2024, the Company recorded additional unrecognized tax benefits of $ 0.1 million and settled all unrecognized tax benefits of $ 0.1 million.

The Company reviews its uncertain tax positions periodically and accrues interest and penalties accordingly.

Accrued interest and penalties included within other liabilities in the consolidated balance sheets were less than $ 0.1 million for both years ended as of February 3, 2024 and January 28, 2023 .

Accrued interest and penalties included within other liabilities in the consolidated balance sheets was $ 0.0 million and less than $ 0.1 million for the years ended February 1, 2025, and February 3, 2024, respectively.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes within the consolidated statement of operations.

For the years ended February 3, 2024 and January 28, 2023 , the Company recognized an (expense) benefit of less than ($ 0.1 ) million and $ 0.1 million, respectively, for interest and penalties.

For the years ended February 1, 2025, and February 3, 2024, the Company recognized an (expense) benefit of less than ($ 0.1 ) million and ($ 0.1 ) million, respectively, for interest and penalties.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

16 unchanged sentences

As of February 1, 2025 , the Company had a borrowing base of $ 25.0 million.

As a result of a $ 250,000 letter of credit against the line of credit at the end of fiscal 2023, approximately $ 24.7 million was available for borrowing.

The Company had no outstanding borrowings as of February 1, 2025 .

7 unchanged sentences

customs authority contested the Company's appeal.

Rulings by the lower tribunal in November 2019 and upper tribunal in March 2021 held that duty was due on some, but not all, of the products at issue.

Rulings by the First Tier Tribunal in November 2019 and Upper Tribunal in March 2021 held that duty was due on some, but not all, of the products at issue.

The Company petitioned the Court of Appeal for permission to appeal certain elements of the Upper Tribunal decision, and in early November 2021, a judge granted the Company's petition for permission to appeal those elements of the Upper Tribunal decision on some, but not all, of the grounds of appeal that the Company had put forward.

6 unchanged sentences

The Company believes that the outcome of this dispute will not have a material adverse impact on the results of operations, liquidity, or financial position of the Company.

In August 2021, a putative class action lawsuit was filed against Build-A-Bear Workshop, Inc., asserting claims under the Telephone Consumer Protection Act (the "TCPA") alleging that the Company continued to send marketing text messages to mobile phone numbers registered on the National Do Not Call Registry after allegedly opting-out of receiving them.

The Company reached a settlement with the Plaintiff and an insurance carrier which has been approved by the Court and will not result in a significant expense for the Company.

The action was dismissed, with prejudice, in October 2023.

Net Income Per Share

13 unchanged sentences

$ 3.80 $ 3.65 $ 3.15

In calculating diluted earnings per share for fiscal 2023 and 2022 , options to purchase 31,343 and 49,133 shares of common stock, respectively, were outstanding at the end of the period, but were not included in the computation of diluted income per share due to their anti-dilutive effect under provisions of ASC 260 - 10.

In calculating diluted earnings per share for fiscal 2024 , 2023 and 2022 , there were 21,828 , 23,324 , and 46,543 shares of common stock, respectively, that were outstanding at the end of the period that were not included in the computation of diluted income per share due to their anti-dilutive effect under provisions of ASC 260 - 10.

Stock Incentive Plans

In 2017, the Company adopted the Build-A-Bear Workshop, Inc.

2004 Stock Incentive Plan which the Company amended and restated in 2009 and 2014 (collectively, the Incentive Plans).

In 2017, the Company adopted the Build-A-Bear Workshop, Inc.

2017 Omnibus Incentive Plan.

2017 Omnibus Incentive Plan (the "2017 Plan").

On April 14, 2020, the Board of Directors (the “Board”) of Build-A-Bear Workshop, Inc.

7 unchanged sentences

The Restated 2020 Incentive Plan will terminate on April 11, 2033, unless earlier terminated by the Board.

The total number of shares of the Company’s common stock authorized for issuance under the Restated 2020 Incentive Plan increased by 800,000 to a maximum of 1,800,000 since its inception as the 2020 Incentive Plan, subject to customary capitalization adjustments, substitutions of acquired company awards and certain additions of acquired company plan shares, plus shares that are subject to outstanding awards made under the Build-A-Bear Workshop, Inc.

2017 Omnibus Incentive Plan (the “2017 Plan”) that on or after April 14, 2020 may be forfeited, expire or be settled for cash.

For the years ended February 3, 2024 and January 28, 2023 , Selling, general and administrative expense included stock-based compensation expense of $ 2.1 million and $ 2.6 million, respe ctively.

For the years ended February 1, 2025 , February 3, 2024 and January 28, 2023 , Selling, general and administrative expense included stock-based compensation expense of $ 2.2 million, $ 2.1 million and $ 2.6 million, respe ctively.

As of February 1, 2025 , there was $ 2.7 million of total unrecognized compensation expense related to unvested stock awards which is expected to be recognized over a weighted-average period of 1.6 years.

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The following table is a summary of the balance and activity for the Plans related to stock options for the periods presented:

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term

Aggregate Intrinsic Value (in millions)

Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (in millions)

Outstanding, January 28, 2023

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12,375 $ 17.84 1.5 $ 0.1

( 12,375 ) 17.84

Canceled or expired

Outstanding, February 1, 2025

Options Exercisable as of:

February 1, 2025

12,375 $ 17.84 1.5 $ 0.1

There were no options granted during fiscal 2023 or 2022 .

There were no stock options granted during fiscal 2024 , 2023 or 2022 .

The expense recorded related to options granted was determined using the Black-Scholes option pricing model and the provisions of SAB 107 and 110, which allow the use of a simplified method to estimate the expected term of “plain vanilla” options.

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Restricted Stock

The Company granted restricted stock awards that vest over a one to three -year period.

The Company granted restricted stock awards that typically vest over a one to three -year period.

Recipients of time-based restricted stock awards have the right to vote and receive dividends as to all unvested shares, however, the receipt of such dividends is contingent on such time-based awards vesting.

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122,609 18.02 185,082 $ 17.37

59,823 27.18 64,619 27.61

( 81,561 ) 15.87 ( 106,190 ) 8.24

Adjusted for performance achievement

Canceled or expired

( 3,333 ) 24.75 ( 3,333 ) 24.75

Outstanding, February 1, 2025

97,538 $ 25.21 193,273 $ 23.17

In fiscal 2024 , the Committee awarded three -year performance-based restricted stock, established specific profitability and revenue objectives for fiscal 2024, 2025, and 2026, and assigned a weighting to each objective.

Profitability is measured by the Company’s achievement of established compound annual growth for consolidated EBITDA.

Revenue will be measured by the Company's achievement of revenue growth, by meeting established compound annual growth rate targets for cumulative total revenue.

Profitability is measured by the Company’s achievement of established cumulative consolidated EBITDA.

Revenue will be measured by the Company's achievement of cumulative total revenue.

The target number of shares awarded was 64,619 with a weighted average grant date fair value of $ 27.61 per share.

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In fiscal 2022 , the Committee awarded three -year performance-based restricted stock, established specific profitability and revenue objectives for fiscal 2022, 2023, and 2024, and assigned a weighting to each objective.

Profitability is measured by the Company’s achievement of established cumulative consolidated EBITDA.

Revenue will be measured by the Company's achievement of revenue growth, by meeting established compound annual growth rate targets for total web demand sales or cumulative total revenue objectives.

Profitability is measured by the Company’s achievement of established compound annual growth for consolidated EBITDA.

Revenue will be measured by the Company's achievement of revenue growth, by meeting established compound annual growth rate targets for cumulative total revenue.

The target number of shares awarded was 84,579 with a weighted average grant date fair value of $ 18.03 per share.

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As of February 1, 2025 , the Company had recorded aggregate expense for the fiscal 2022, 2023, and 2024 three -year performance-based restricted stock awards of $ 0.8 million.

Th e vesting date fair value of shares that vested in fiscal 2023 and 2022 was $ 2.1 million and $ 2.0 million, respectively.

Th e vesting date fair value of shares that vested in fiscal 2024 , 2023 and 2022 was $ 2.2 million, $ 2.1 million and $ 2.0 million, respectively.

Stockholders’ Equity

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Share repurchase

( 1,533,503 )

Shares as of January 28, 2023

Shares as of February 3, 2024

Shares issued under employee stock plans, net of shares withheld in lieu of tax withholding

Share repurchase

( 1,021,004 )

Shares as of February 1, 2025

The Company's Board of Directors declared an initial quarterly dividend of $ 0.20 per share paid on April 11, 2024 , to all shareholders of record as of March 28, 2024 .

Major Vendors

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The Company’s operations are conducted through three operating segments consisting of DTC, commercial and international franchising.

The DTC segment includes the operating activities of corporately-managed locations and other retail delivery operations in the U.S., Canada, Ireland and the U.K., including the Company’s e-commerce sites and temporary stores.

The DTC segment includes the operating activities of corporately-managed locations and other retail delivery operations in the U.S., Canada, the Republic of Ireland and the U.K., including the Company’s e-commerce sites and temporary stores.

The commercial segment includes the Company’s transactions with other businesses, mainly comprised of wholesale activities, licensing the Company’s intellectual properties for third party use, and entertainment activities.

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The operating segments have discrete sources of revenue, different capital structures and different cost structures.

These operating segments represent the basis on which the Company’s chief operating decision maker regularly evaluates the business in assessing performance, determining the allocation of resources and the pursuit of future growth opportunities.

These operating segments represent the basis on which the Company’s Chief Executive Officer, who is also the Chief Operating Decision Maker ("CODM"), regularly evaluates the business in assessing performance, determining the allocation of resources and the pursuit of future growth opportunities.

The CODM uses contribution margin to allocate resources across the reportable segments as part of the Company's long-range and annual planning processes, and to evaluate planned versus actual results when assessing segment operating performance.

Accordingly, the Company has determined that each of its operating segments represent a reportable segment.

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International

Fifty-three weeks ended February 3, 2024

Net sales to external customers

Fifty-two weeks ended February 1, 2025

Total Revenue

$ 460,325 $ 31,387 $ 4,692 $ 496,404

Cost of Goods Sold

207,200 13,439 3,247 223,886

253,125 17,948 1,445 272,518

Selling, General & Administrative

134,076 1,166 - 135,242

Contribution Margin

119,049 16,782 1,445 137,276

Overhead Expenses (1)

Interest Expense (Income)

Income before income taxes

Fifty-three weeks ended February 3, 2024

Total Revenue

$ 456,163 $ 25,413 $ 4,538 $ 486,114

Capital expenditures

Cost of Goods Sold

206,815 12,091 2,816 221,722

Depreciation and amortization

249,348 13,322 1,722 264,392

Selling, General & Administrative

127,722 4,102 - 131,824

Contribution Margin

121,626 9,220 1,722 132,568

Overhead Expenses (1)

Interest Expense (Income)

Income before income taxes

Fifty-two weeks ended January 28, 2023

Net sales to external customers

Total Revenue

$ 446,181 $ 18,523 $ 3,233 $ 467,937

Cost of Goods Sold

211,489 8,591 1,985 222,065

234,692 9,932 1,248 245,872

Selling, General & Administrative

118,550 44 - 118,594

Contribution Margin

116,142 9,888 1,248 127,278

Overhead Expenses (1)

Interest Expense (Income)

Income before income taxes

( 1 ) Overhead expenses contain selling, general and administrative expenses not attributable to a segment.

Total assets, depreciation and amortization, and capital expenditures for the Company's segments, as well as for Corporate and support, are as follows:

International

Fifty-two weeks ended February 1, 2025

$ 170,132 $ 11,712 $ 2,571 $ 105,541 $ 289,956

Depreciation and amortization

10,551 204 - 4,017 14,772

Capital Expenditures

11,414 - - 7,903 19,317

Fifty-three weeks ended February 3, 2024

$ 195,373 $ 8,801 $ 1,225 $ 66,926 $ 272,325

Depreciation and amortization

9,517 393 - 3,747 13,657

Total Assets as of:

February 3, 2024

Capital Expenditures

6,733 - - 11,562 18,295

January 28, 2023

Fifty-two weeks ended January 28, 2023

$ 84,233 $ 7,466 $ 1,107 $ 187,988 $ 280,794

Depreciation and amortization

8,501 510 - 3,471 12,482

Capital Expenditures

3,922 - - 9,712 13,634

The Company’s reportable segments are primarily determined by the types of products and services that they offer.

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Revenues are recognized in the geographic areas based on the location of the customer or franchisee.

The following schedule is a summary of the Company’s sales to external customers and long-lived assets by geographic area (in thousands):

Fifty-three weeks ended February 3, 2024

The following schedule is a summary of the Company’s sales to external customers (in thousands):

Fifty-two weeks ended February 1, 2025

Net sales to external customers

$ 425,139 $ 65,233 $ 6,032 $ 496,404

Property and equipment, net

Fifty-three weeks ended February 3, 2024

Net sales to external customers

$ 426,244 $ 56,141 $ 3,729 $ 486,114

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$ 408,881 $ 55,854 $ 3,202 $ 467,937

Property and equipment, net

48,242 2,517 - 50,759

For purposes of this table only:

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Beginning Balance

Charged to cost and expenses

Deductions to cost and expenses

Ending Balance

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8,000 ( 5,500 ) ( 954 ) 1,546

( 1 ) Other deferred tax asset valuation allowance represents reserves utilized and the impact of currency translation.

9,795 ( 478 ) ( 1,317 ) 8,000

( 1 ) Other deferred tax asset valuation allowance changes represent reserves utilized and the impact of currency translation.

(a)(3) Exhibits.

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Description of Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (incorporated by reference from Exhibit 4.2 to our Annual Report on Form 10-K, filed on April 14, 2021)

Build-A-Bear Workshop, Inc.

Amended and Restated 2004 Stock Incentive Plan (incorporated by reference from Exhibit 10.1 to our Current Report on Form 8-K, filed on August 1, 2006)

Second Amended and Restated Build-A-Bear Workshop, Inc.

2004 Stock Incentive Plan (incorporated by reference from Exhibit 99.1 on our Registration Statement on Form S-8, filed on May 18, 2009)

Third Amended and Restated Build-A-Bear Workshop, Inc.

2004 Stock Incentive Plan (incorporated by reference from Exhibit 10.1 on our Current Report on Form 8-K, filed on May 12, 2014)

Form of the Restricted Stock and Non-Qualified Stock Option Agreement under the Registrant’s Third Amended and Restated 2004 Stock Incentive Plan (incorporated by reference from Exhibit 10.2 on our Current Report on Form 8-K, filed on May 12, 2014)

Form of the Restricted Stock and Non-Qualified Stock Option Agreement under the Registrant’s Third Amended and Restated 2004 Stock Incentive Plan (incorporated by reference from Exhibit 10.1 on our Current Report on Form 8-K, filed on March 20, 2015)

Form of Restricted Stock and Non-Qualified Stock Option Agreement under the Registrant’s Third Amended and Restated 2004 Stock Incentive Plan (incorporated by reference from Exhibit 10.7 on our Current Report on Form 8-K, filed on March 11, 2016)

Form of Restricted Stock Agreement under the Registrant’s Third Amended and Restated 2004 Stock Incentive Plan (incorporated by reference from Exhibit 10.1.11 on our Annual Report on Form 10-K, for the year ended December 31, 2016)

Form of Restricted Stock and Non-Qualified Stock Option Agreement under the Registrant’s Third Amended and Restated 2004 Stock Incentive Plan (incorporated by reference from Exhibit 10.2 on our Current Report on Form 8-K, filed on March 17, 2017)

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Form of Restricted Stock and Non-Qualified Stock Option Award Agreement under Registrant's 2017 Omnibus Incentive Plan (incorporated by reference from Exhibit 10.2 on our Current Report on Form 8-K, filed on March 21, 2018)

Form of Restricted Stock Agreement (incorporated by reference from Exhibit 10.2 on our Current Report on Form 8-K, filed on April 19, 2019)

Build-A-Bear Workshop, Inc.

2020 Omnibus Incentive Plan (incorporated by reference from Exhibit 10.1 to our Current Report on Form 8-K, filed on June 12, 2020)

Description of Build-A-Bear Workshop, Inc.

Three-Year Performance-Based Cash Program for C-Level Employees (incorporated by reference from Exhibit 10.2 on our Current Report on Form 8-K, filed on October 9, 2020)

Form of Restricted Stock Agreement under the Registrant ’ s 2020 Omnibus Incentive Plan (incorporated by reference from Exhibit 10.3 on our Current Report on Form 8-K, filed on October 9, 2020)

Form of Restricted Stock Agreement under the Registrant’s 2020 Omnibus Incentive Plan (incorporated by reference from Exhibit 10.3 of our Current Report on Form 8-K, filed on April 16, 2021)

1 unchanged sentence

Cash Bonus Program for C-Level Employees (incorporated by reference from Exhibit 10.1 of our Current Report on Form 8-K, filed on April 14, 2023)

Description of Build-A-Bear Work, Inc.

Cash Bonus Program for C-Level Employees (incorporated by reference from Exhibit 10.1 of our Current Report on Form 8-K, filed on April 14, 2023)

Build-A-Bear Workshop, Inc.

1 unchanged sentence

Form of Non-Employee Director Restricted Stock Agreement (incorporated by reference from Exhibit 10.2 of our Current Report on Form 8-K, filed on June 9, 2023)

Description of Build-A-Bear Workshop, Inc.

Cash Bonus Program for Executive Officers (incorporated by reference from Exhibit 10.1 of our Current Report on Form 8-K, filed on April 19, 2024)

Form of Restricted Stock Agreement under the Registrant ’ s Amended and Restated 2020 Omnibus Incentive Plan (incorporated by reference from Exhibit 10.2 of our Current Report on Form 8-K, filed on April 19, 2024)

Nonqualified Deferred Compensation Plan (incorporated by reference from Exhibit 10.42 to our Annual Report on Form 10-K, for the year ended December 30, 2006)

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(incorporated by reference from Exhibit 10.5 on our Current Report on Form 8-K, filed on March 11, 2016)

Employment, Confidentiality and Noncompete Agreement, effective as of September 16, 2024 by and between David Henderson and Build-A-Bear Workshop, Inc.

(incorporated by reference from Exhibit 10.1 on our Current Report on Form 8-K, filed on September 12, 2024)

Form of Indemnification Agreement between the Registrant and its directors and executive officers (incorporated by reference from Exhibit 10.11 to our Registration Statement on Form S-1, filed on August 12, 2004, Registration No.

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Statement regarding computation of earnings per share (incorporated by reference from Note 10 of the Registrant’s audited consolidated financial statements included herein)

Build-A-Bear Workshop Insider Trading Policy

List of Subsidiaries of the Registrant

4 unchanged sentences

Section 1350 Certification (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Chief Financial Officer)

Clawback Policy

Clawback Policy (incorporated by reference from Exhibit 97.1 to our Annual Report on Form 10-K for the year ended February 3, 2024

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

31 unchanged sentences

Narayan Iyengar

/s/Richard A.

April 17, 2025

/s/ Lesli Rotenberg

11 unchanged sentences

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 9A. Controls and Procedures