BUILD-A-BEAR WORKSHOP INC 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our management, with the participation of our President and Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that information we are required to disclose in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including our certifying officers, as appropriate to allow timely decisions regarding required disclosure. Based on the foregoing evaluation, our management, including the President and Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of January 31, 2026 , the end of the period covered by this Annual Report. It should be noted that our management, including the President and Chief Executive Officer and the Chief Financial Officer, does not expect that our disclosure controls and procedures or internal controls will prevent all error and all fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Under the supervision and with the participation of our management, including the President and Chief Executive Officer and the Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of January 31, 2026 . Our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer, also conducted an evaluation of our 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, our internal control over financial reporting. All internal control systems have inherent limitations, including the possibility of circumvention and overriding the control. Accordingly, even effective internal control can provide only reasonable assurance as to the reliability of financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness of internal control may vary over time. The Company’s independent registered public accounting firm, Ernst & Young LLP, has audited the Company’s Consolidated Financial Statements included in this Annual Report on Form 10-K and the effectiveness of the Company’s internal control over financial reporting as of January 31, 2026 and has issued an attestation report expressing an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting, as stated in their report located below. In making its evaluation, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 framework). Based upon this evaluation, our management has concluded that our internal control over financial reporting as of January 31, 2026 is effective. Changes in Internal Control over Financial Reporting 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 2025, there were no changes that materially affected the Company's internal control over financial reporting. 37 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Build-A-Bear Workshop, Inc. Opinion on Internal Control Over Financial Reporting We have audited Build-A-Bear Workshop, Inc. and subsidiaries’ internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Build-A-Bear Workshop, Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2026, 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 January 31, 2026 and February 1, 2025, the related consolidated statements of operations and comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended January 31, 2026, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated April 16, 2026 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the 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 in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP St. Louis, Missouri April 16, 2026 38 Table of Contents ITEM 9B. OTHER INFORMATION Security Trading Plans of Directors and Executive Officers None of the Company’s directors or executive officers adopted or terminated a Rule 10b5 - 1 trading arrangement or a non-Rule 10b5 - 1 trading arrangement during the Company’s fiscal quarter ended January 31, 2026 , as such terms are defined under Item 408 (a) or Regulations S-K. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information concerning directors, appearing in the sections titled “Directors,” “The Board of Directors and its Committees,” and “Committee Charters, Corporate Governance Guidelines, Business Conduct Policy and Code of Ethics” in our Proxy Statement (the “Proxy Statement”) to be filed with the SEC pursuant to Regulation 14A in connection with our Annual Meeting of Stockholders scheduled to be held on June 11, 2026, is incorporated by reference in response to this Item 10. Business Conduct Policy The Board of Directors has adopted a Business Conduct Policy applicable to our directors, officers and employees, including all executive officers. The Business Conduct Policy has been posted in the Investor Relations section of our corporate website at http://ir.buildabear.com. 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. Executive Officers and Key Employees Sharon Price John , 62 , was appointed to the Board of Directors on June 3, 2013, in connection with her employment as Chief Executive Officer and Chief President Bear of the Company. Effective March 2016, she now holds the title of President and Chief Executive Officer. From January 2010 through May 2013, Ms. John served as President of Stride Rite Children’s Group LLC, a division of Wolverine Worldwide, Inc., which designs and markets footwear for children. From 2002 through 2009, she held positions of broadened portfolio and increased responsibility at Hasbro, Inc., a multinational toy and board game company, including as General Manager & Senior Vice President of its U.S. Toy Division from 2006 to 2008 and General Manager & Senior Vice President of its Global Preschool unit from June 2008 through 2009. Ms. John also founded and served as Chief Executive Officer of Checkerboard Toys, served as Vice President, U.S. Toy Division with VTech Industries, Inc., and served in a range of roles at Mattel, Inc. She started her career in advertising, overseeing accounts such as Hershey’s and the Snickers/M&M Mars business. Until February 2025, Ms. John served on the Board of Directors of Jack in the Box Inc., a publicly traded restaurant company. On March 12, 2026, the Board of Directors of the Company announced that as part of a multi-year planned succession process, Sharon Price John intends to retire from her role effective June 11, 2026, the date of the Company’s Annual Shareholders’ Meeting upon which she will be succeeded by Chris Hurt, the Company’s tenured Chief Operations and Experience Officer. David Henderson , 54 , 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 Yevgeny Fundler , 56 , joined Build-A-Bear Workshop as Chief Legal Officer and Secretary in August 2025. Prior to joining the Company, Mr. Fundler led the law departments of publicly traded companies Benson Hill, Inc. and American Railcar Industries, Inc. He also served as General Counsel of WestPoint Home LLC, a company in the business of manufacturing, licensing, and distributing various home textile products and brands with an international manufacturing base in Bahrain and a multinational sourcing operation. Prior to WestPoint Home’s engagement, Mr. Fundler served as Assistant General Counsel of Icahn Enterprises L.P., a diversified holding company engaged in investment, energy, automotive, food packing, metals, real estate, and home fashion. Mr. Fundler earned his Bachelor of Arts in International Business from San Diego State University and his Juris Doctor from University of California College of the Law, San Francisco. J. Christopher Hurt , 60 , is anticipated to become a Class II Director effective as of the date of the 2026 Annual meeting following an appointment to our Board of Directors on March 10, 2026 in connection with his employment as Chief Executive Officer of the Company. Mr. Hurt joined the Company in 2015 as Chief Operations Officer, and, from June 2020 until June 11, 2026, served as Chief Operations and Experience Officer. Much of his tenure with the Company has focused on restructuring the organization’s largest business unit, the global retail management and operations team, including guest experience, real estate, build-out, and logistics. Since 2024, Mr. Hurt has shifted his operational and consumer-insight expertise to redefine the brand, merchandising, marketing and licensing areas of the Company’s business where he has further expanded consumer segments and categories through product expansion and engaging brand initiatives. Prior to joining the Company, Mr. Hurt was at American Eagle Outfitters, Inc. from 2002 to 2015 in various senior leadership roles of increasing responsibility, including Senior Vice President of North America, Vice President/General Manager of the Factory stores, Zone Vice President and Regional Director. Prior to that, Mr. Hurt held positions of increasing responsibility at Polo Ralph Lauren after starting his career at The Procter & Gamble Company. Voin Todorovic , 51 , joined Build-A-Bear Workshop in September 2014 as Chief Financial Officer. Prior to joining the Company, Mr. Todorovic was employed at Wolverine Worldwide, Inc., a leading global footwear and apparel company, where since September 2013 Mr. Todorovic served as the head of finance and operations for its Lifestyle Group, which includes a portfolio of iconic brands such as Sperry Top-Sider®, Hush Puppies®, Keds®, and Stride Rite®. From 2011 to 2013 Mr. Todorovic was Vice President—Finance and Administration of the Stride Rite Children’s Group business, operating in wholesale, direct to consumer and international franchising, and from 2010 to 2011 Mr. Todorovic was Vice President of the Performance + Lifestyle Group. Prior to his tenure at Wolverine World Wide he held positions of increasing responsibility at Collective Brands, Inc. and Payless ShoeSource. 39 Table of Contents ITEM 11. EXECUTIVE COMPENSATION The information contained in the sections titled “Executive Compensation” and “Board of Directors Compensation” in the Proxy Statement is incorporated herein by reference in response to this Item 11. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information contained in the section titled “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement is incorporated herein by reference in response to this Item 12. Equity Compensation Plan Information (c) Number of securities (a) (b) remaining available for Number of securities to Weighted-average future issuance under equity be issued upon exercise of exercise price of compensation plans outstanding options, outstanding options, (excluding securities Plan category warrants and rights warrants and rights reflected in column (a)) Equity compensation plans approved by security holders - $ - - Equity compensation plans not approved by security holders - $ - - Total - $ - - See Note 12 - "Stock Incentive Plans" to the consolidated financial statements for additional information regarding our equity compensation plans. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information contained in the section titled “Related Party Transactions” in the Proxy Statement is incorporated herein by reference in response to this Item 13. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information contained in the sections titled “Principal Accountant Fees” and “Policy Regarding Pre-Approval of Services Provided by the Independent Registered Public Accounting Firm” in the Proxy Statement is incorporated herein by reference in response to Item 14. 40 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a)(1) Financial Statements The financial statements and schedules set forth below are filed on the indicated pages as part of this Annual Report on Form 10-K. Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 42 Consolidated Balance Sheets as of January 31, 2026 and February 1, 2025 44 Consolidated Statements of Operations and Comprehensive Income for the fiscal years ended January 31, 2026 , February 1, 2025. and February 3, 2024 45 Consolidated Statements of Stockholders’ Equity for the fiscal years ended January 31, 2026, February 1, 2025, and February 3, 2024 46 Consolidated Statements of Cash Flows for the fiscal years ended January 31, 2026, February 1, 2025, and February 3, 2024 47 Notes to Consolidated Financial Statements 48 Schedule II - Valuation and Qualifying Accounts 67 41 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Build-A-Bear Workshop, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Build-A-Bear Workshop, Inc. and subsidiaries (the Company) as of January 31, 2026 and February 1, 2025, the related consolidated statements of operations and comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended January 31, 2026, 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 January 31, 2026 and February 1, 2025, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2026, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated April 16, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the 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 audits 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 financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue recognition - gift card breakage Description of the Matter As described in Note 3, for the Company’s gift cards, revenue is deferred for single transactions until redemption. The breakage revenue related to unredeemed gift cards is recorded in proportion to the customer’s redemption pattern using an estimated breakage rate based on historical experience. For the year ended January 31, 2026, net retail sales included gift card breakage revenue of $6.2 million. 42 Table of Contents Auditing the Company’s breakage revenue related to unredeemed gift cards was complex and judgmental due to the complexity of the model and the subjectivity related to the judgments that are made by the Company to estimate the breakage rate. Further, given the magnitude of the Company’s gift card liability, changes in breakage rates have a significant impact on the amount of breakage revenue recognized. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s determination of gift card breakage revenue, including the model and data inputs used in the model, as well as significant underlying assumptions selected by management in establishing the breakage rates. We performed audit procedures that included, among others, evaluating the methodologies, assessing the judgments and testing the completeness and accuracy of the historical data used by the Company in its determination of the breakage rate. In addition, we performed sensitivity analyses over the breakage rate to evaluate the impact changes in breakage rates had on breakage revenue recorded. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2011. St. Louis, Missouri April 16, 2026 43 Table of Contents BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share data) January 31, February 1, 2026 2025 ASSETS Current assets: Cash, cash equivalents and restricted cash $ 26,755 $ 27,758 Inventories, net 82,203 69,775 Receivables, net 21,459 16,096 Prepaid expenses and other current assets 9,603 12,669 Total current assets 140,020 126,298 Operating lease right-of-use asset 121,129 90,200 Property and equipment, net 70,926 59,761 Deferred tax assets 7,370 7,596 Other assets, net 6,008 6,101 Total Assets $ 345,453 $ 289,956 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 15,318 $ 16,538 Accrued expenses 26,104 16,209 Operating lease liability short term 28,651 26,841 Gift cards and customer deposits 15,289 15,791 Deferred revenue and other 5,264 4,015 Total current liabilities 90,626 79,394 Operating lease liability long term 98,647 70,155 Other long-term liabilities 1,152 1,325 Stockholders' equity: Preferred stock, par value $ 0.01 , Shares authorized: 15,000,000 ; No shares issued or outstanding at January 31, 2026 and February 1, 2025 - - Common stock, par value $ 0.01 , Shares authorized: 50,000,000 ; Issued and outstanding: 12,808,954 and 13,257,131 shares, respectively 128 133 Additional paid-in capital 60,821 61,987 Accumulated other comprehensive loss ( 10,760 ) ( 12,554 ) Retained earnings 104,839 89,516 Total stockholders' equity 155,028 139,082 Total Liabilities and Stockholders' Equity $ 345,453 $ 289,956 See accompanying notes to consolidated financial statements. 44 Table of Contents BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Dollars in thousands, except share and per share data) Fiscal year ended January 31, February 1, February 3, 2026 2025 2024 Revenues: Net retail sales $ 485,956 $ 460,325 $ 456,163 Commercial revenue 38,750 31,387 25,413 International franchising 5,126 4,692 4,538 Total revenues 529,832 496,404 486,114 Costs and expenses: Cost of merchandise sold - retail 213,229 207,200 206,815 Cost of merchandise sold - commercial 17,199 13,439 12,091 Cost of merchandise sold - international franchising 3,775 3,247 2,816 Total cost of merchandise sold 234,203 223,886 221,722 Consolidated gross profit 295,629 272,518 264,392 Selling, general and administrative expense 229,203 206,238 198,992 Interest income, net ( 801 ) ( 861 ) ( 929 ) Income before income taxes 67,227 67,141 66,329 Income tax expense 15,024 15,356 13,524 Net income $ 52,203 $ 51,785 $ 52,805 Foreign currency translation adjustment 1,794 ( 472 ) 192 Comprehensive income $ 53,997 $ 51,313 $ 52,997 Income per common share: Basic $ 4.00 $ 3.81 $ 3.68 Diluted $ 3.99 $ 3.80 $ 3.65 Shares used in computing common per share amounts: Basic 13,045,394 13,578,587 14,342,931 Diluted 13,083,436 13,621,075 14,471,875 See accompanying notes to consolidated financial statements. 45 Table of Contents BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Dollars in thousands) Accumulated Additional other Common paid-in comprehensive Retained stock capital income (loss) earnings Total Balance, January 28, 2023 $ 148 $ 69,868 $ ( 12,274 ) $ 60,590 $ 118,332 Stock-based compensation expense - 1,385 - - 1,385 Shares issued under employee stock plans 5 2,894 - - 2,899 Shares withheld in lieu of tax withholdings ( 2 ) ( 3,638 ) - ( 3,640 ) Share repurchase ( 9 ) ( 4,179 ) - ( 16,312 ) ( 20,500 ) Cash dividend - - - ( 22,014 ) ( 22,014 ) Other - - - 203 203 Other comprehensive income - - 192 192 Net income - - 52,805 52,805 - - - Balance, February 3, 2024 $ 142 $ 66,330 $ ( 12,082 ) $ 75,272 $ 129,662 Stock-based compensation expense 1,364 1,364 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 ) Other ( 40 ) ( 40 ) Other comprehensive income ( 472 ) ( 472 ) Net income 51,785 51,785 Balance, February 1, 2025 $ 133 $ 61,987 $ ( 12,554 ) $ 89,516 $ 139,082 Stock-based compensation expense - 1,474 1,474 Shares issued under employee stock plans 1 1,103 1,104 Forfeiture of shares issued under employee stock plan - ( 94 ) ( 94 ) Shares withheld in lieu of tax withholdings ( 1 ) ( 1,266 ) ( 1,267 ) Share repurchase ( 5 ) ( 2,383 ) ( 25,347 ) ( 27,735 ) Cash dividend - ( 11,533 ) ( 11,533 ) Other comprehensive income - 1,794 1,794 Net income - 52,203 52,203 Balance, January 31, 2026 $ 128 $ 60,821 $ ( 10,760 ) $ 104,839 $ 155,028 See accompanying notes to consolidated financial statements. 46 Table of Contents BUILD-A-BEAR WORKSHOP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Fiscal year ended January 31, February 1, February 3, 2026 2025 2024 Cash flows provided by operating activities: Net income $ 52,203 $ 51,785 $ 52,805 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 14,952 14,772 13,657 Share-based and performance-based stock compensation 2,930 2,175 2,089 Deferred taxes 339 1,060 ( 1,893 ) Provision/(adjustments) for doubtful accounts 427 187 251 Loss/(Gain) on disposal of property and equipment ( 1 ) 290 121 Net change in film costs and advances ( 272 ) 513 ( 1,913 ) Change in assets and liabilities: Inventories, net ( 11,317 ) ( 6,550 ) 7,102 Receivables, net ( 5,433 ) ( 7,742 ) 5,870 Prepaid expenses and other assets 3,340 ( 750 ) 6,776 Accounts payable and accrued expenses 8,021 ( 3,480 ) ( 11,083 ) Operating leases ( 698 ) ( 3,302 ) ( 5,175 ) Gift cards and customer deposits ( 586 ) ( 2,298 ) ( 1,310 ) Deferred revenue 1,147 427 ( 2,987 ) Net cash provided by operating activities 65,052 47,087 64,310 Cash flows used in investing activities: Capital expenditures ( 25,545 ) ( 19,317 ) ( 18,295 ) Net cash used in investing activities ( 25,545 ) ( 19,317 ) ( 18,295 ) Cash flows used in financing activities: Line of credit amendment fee ( 80 ) - - Purchases of common stock for employee equity awards, net of tax ( 1,361 ) ( 1,869 ) ( 1,339 ) Purchases of Company's common stock ( 27,735 ) ( 31,266 ) ( 20,500 ) Cash dividends paid on vested participating securities ( 11,533 ) ( 11,024 ) ( 22,062 ) Net cash used in financing activities ( 40,709 ) ( 44,159 ) ( 43,901 ) Effect of exchange rates on cash 199 ( 180 ) 15 Increase (decrease) in cash, cash equivalents and restricted cash ( 1,003 ) ( 16,569 ) 2,129 Cash, cash equivalents and restricted cash, beginning of period 27,758 44,327 42,198 Cash, cash equivalents and restricted cash, end of period $ 26,755 $ 27,758 $ 44,327 Reconciliation of cash, cash equivalents and restricted cash (1) Cash and cash equivalents $ 26,349 $ 27,368 $ 43,934 Restricted cash from long-term deposits 406 390 393 Total cash, cash equivalents and restricted cash $ 26,755 $ 27,758 $ 44,327 Net cash paid during the period for income taxes $ 9,891 $ 16,693 $ 17,364 (1) See cash, cash equivalents and restricted cash in Note 2 - "Summary of Significant Accounting Policies" for further discussion. See accompanying notes to consolidated financial statements. 47 Table of Contents Notes to Consolidated Financial Statements ( 1 ) Description of Business and Basis of Preparation Build-A-Bear Workshop, Inc. and subsidiaries (collectively, the “Company”) was formed in 1997 as a mall-based, experiential specialty retailer for children. The Company has evolved to become a leading global "retailtainment" brand on a mission to add a little more heart to life. The Company sells its products through its 375 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 partner-operated model at 178 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. GAAP. ( 2 ) Summary of Significant Accounting Policies For each accounting topic that is addressed in its own note, the description of the accounting policy may be found in the related note. The Company’s other significant accounting policies applied in the preparation of the accompanying consolidated financial statements are as follows: Principles of Consolidation The accompanying consolidated financial statements include the accounts of Build-A-Bear Workshop, Inc. and its wholly-owned subsidiaries. All intercompany accounts are eliminated in consolidation. Fiscal Year 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 2025 ( 52 weeks ended January 31, 2026 ), fiscal 2024 ( 52 weeks ended February 1, 2025 ) and fiscal 2023 ( 53 weeks ended February 3, 2024 ). References to years in these financial statements relate to fiscal years or year-ends rather than calendar years. Cash, Cash Equivalents and Restricted Cash Cas h and cash equivalents include cash, money market funds, and short-term highly liquid investments with an original maturity of three months or less held in both domestic and foreign financial institutions. In addition, the Company has a long-term deposit to satisfy contractual terms with the UK Customs Authority (unrelated to the matter discussed in Note 10 - Commitments and Contingencies). The Company also has deposits from franchisees under contractual agreements which are refundable. The long-term and franchisee deposits are considered restricted cash and disclosed within the supplemental disclosure within the consolidated statement of cash flows. Cash equivalents also include amounts due from third -party financial institutions for credit and debit card transactions. The carrying amount of cash and cash equivalents approximates fair value, given the short maturity of those instruments. The majority of the Company’s cash and cash equivalents exceed federal deposit insurance limits. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to any significant credit risk on cash, cash equivalents, and restricted cash. Inventories Inventories are stated at the lower of cost or net realizable value, with cost determined on an average-cost basis. Inventory includes supplies of $ 4.5 million and $ 3.5 million as of January 31, 2026 and February 1, 2025 , 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 January 31, 2026 and $ 1.2 million as of February 1, 2025 . 48 Table of Contents Receivables Receivables are recorded at invoiced amounts and 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. The Company assesses the collectability of all receivables on an ongoing basis by considering its historical credit loss experience, current economic conditions, and other relevant factors. 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. Property and Equipment Property and equipment consist of leasehold improvements, furniture and fixtures, computer equipment and software, building and land and are stated at cost. Leasehold improvements are depreciated using the straight-line method over the shorter of the useful life of the assets or the life of the lease ranging from one to ten years. Furniture and fixtures and computer equipment are depreciated using the straight-line method over the estimated service lives ranging from three to seven years. Computer software includes certain costs, including internal payroll costs incurred in connection with the development or acquisition of software for internal use and is amortized using the straight-line method over a period of three to five years. New store construction deposits are recorded at the time the deposit is made as construction-in-progress and reclassified to the appropriate property and equipment category at the time of completion of construction, when operations of the store commence. Maintenance and repairs are expensed as incurred and improvements are capitalized. Gains or losses on the disposition of fixed assets are recorded upon disposal. Leases The majority of the Company's leases relate to retail stores, corporate offices, and storage locations. For leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of lease payments over the term. Most retail store leases have an original term of five to ten -year base period and the term can be extended on a lease-by-lease basis with additional terms that are typically much shorter than the original lease term giving the Company lease optionality. The renewal options are not included in the measurement of the right of use assets and right of use liabilities unless the Company is reasonably certain to exercise the optional renewal periods. Some leases also include early termination options, which can be exercised under specific conditions. Additionally, the Company may operate stores for a period of time on a month-to-month basis after the expiration of the lease term. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Certain leases contain incentives, such as construction allowances from landlords and/or rent abatements subsequent to taking possession of the leased property. These incentives reduce the right-of-use asset related to the lease and are amortized through the right-of-use asset as reductions of expense over the lease term. The Company's leases typically contain rent escalations over the lease term and the Company recognizes expense for these leases on a straight-line basis over the lease term. T he Company recognizes the related rental expense on a straight-line basis and records the difference between the recognized rental expense and amounts payable under the lease as part of the lease right-of-use asset. Some of the Company's leases include rent escalations based on inflation indexes and fair market value adjustments. Operating lease liabilities are calculated using the prevailing index or rate at lease commencement. Subsequent escalations in the index or rate and contingent rental payments are recognized as variable lease expenses. Certain leases contain contingent rental provisions that include a fixed base rent plus an additional percentage of the store’s sales in excess of stipulated amounts and certain leases may contain rental provisions that only include a provision for a percentage of a store's total sales, instead of a fixed base rent amount. Such rents based on a percentage of store's total sales are recorded as variable lease expenses. The Company has elected the practical expedient allowed by the standard to account for all fixed consideration in a lease as a single lease compone nt. Therefore, the lease payments used to measure the lease liability for these leases include fixed minimum rentals along with fixed operating costs such as common area maintenance and utilities. Most of the Company’s leases do not provide a readily available implicit interest rate. Therefore, the Company estimates the incremental borrowing discount rate based on information available at lease commencement. The discount rates used are indicative of a synthetic credit rating based on quantitative and qualitative analysis and adjusted to estimate a secured credit rating. For non-U.S. locations, a risk-free rate yield based on the currency of the lease is used to adjust the estimate of the incremental borrowing rate. 49 Table of Contents Long-lived Assets Whenever facts and circumstances indicate that the carrying value of a long-lived asset (asset group) and right-of-use operating lease assets may not be recoverable, the carrying value of those assets is reviewed for potential impairment. If this review indicates that the carrying value of the asset (asset group) will not be recovered, as determined based on projected undiscounted cash flows related to the asset (asset group) over its remaining life, the carrying value of the asset (asset group) is reduced to its estimated fair value. The Company typically performs an annual assessment of its store assets in the DTC segment, based on operating performance and forecasts of future performance. For the purposes of evaluating store assets for impairment, the Company has determined that each store location is an asset group, inclusive of the right-of-use asset attributable to each store. In periods where the Company identifies indicators of impairment for its store fleet, the Company performs a recoverability test for these assets by comparing the estimated undiscounted future cash flows over the remaining useful life of the asset (asset group) to the carry value of the asset (asset group). The estimated undiscounted future cash flows involve expectations for future operations and projected cash flows, including estimates of revenue, operating expenses and market conditions. Based on this, the Company determines if certain stores had long-lived and right-of-use assets with carrying values that exceed their estimated undiscounted future cash flows for the remaining useful life of the respective assets. An impairment charge is recognized to the extent the carrying value exceeded the fair value of the asset (asset group). The Company estimates fair values of these long-lived assets based on its discounted future cash flow analysis for the remaining useful life of the asset or its market rent assessment. An individual asset within an asset group is not impaired below its estimated fair value. Asset impairment charges are recorded within the cost of merchandise sold - retail expense within the Consolidated Statement of Operations and Comprehensive Income. The Company's analysis identified no indicators of impairment during fiscal 2025 for long-lived assets. 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 estimates, all of which are considered Level 3 inputs, used to calculate the fair value of the asset (asset group) include: the Company’s expectations for future operations and projected cash flows, including revenues, operating expenses including market rents, and market conditions. Changes in these estimates could have an impact on whether long-lived store assets should be further evaluated for impairment and could have a significant impact on the resulting impairment charge. Other Assets, net Other assets consist primarily of the non-current portion of prepaid income taxes and deferred costs related to franchise agreemen ts, financing agreements, and capitalized film production costs. Deferred franchise costs are initial costs related to the Company’s franchise agreements that are deferred and amortized over the life of the respective franchise agreement. Deferred financing costs are the initial issuance costs and fees incurred in obtaining the Company's new credit agreement. The Company had no outstanding borrowings at the beginning of the facility or at of the date of the second amendment, therefore these costs and fees incurred for the original agreement and amendment were recorded as a deferred asset and the unamortized costs will be amortized over the length of the amended agreement. Film production costs include capitalizable direct costs, production overhead, interest and development costs and are stated at the lower of cost, less accumulated amortization, or fair value. Entertainment Production Costs Costs of producing entertainment assets, which include direct costs, production overhead and development costs, are capitalized when incurred and are stated at the lower of cost, less accumulated amortization, or fair value. For film related costs, the Company expects assets to be monetized individually and are amortized using the individual film-forecast-computation method which amortizes such costs in the same ratio that current period actual revenue bears to the estimated remaining unrecognized total revenues (ultimate revenue). Ultimate revenue includes estimates over a period not to exceed ten years from the date of initial release of the film. Participation costs and residuals are accrued and expensed over the applicable product life cycle based upon the ratio of the current period's revenues to the estimated remaining total revenues for each production. 50 Table of Contents Costs of entertainment assets are subject to recoverability assessments, whenever events or changes in circumstances indicate that the fair value of the entertainment asset may be less than the unamortized cost, which for content predominantly monetized individually, involves comparing the estimated fair values with the unamortized cost. The fair value is determined based on a discounted cash flow analysis of the cash flows directly attributable to the entertainment assets. The discounted cash flow analysis includes cash flow estimates of ultimate revenue as well as a discount rate (a Level 3 fair value measurement). The discount rate used in the Company’s discounted cash flow model reflects the time value of money, expectations about variation in the amount or timing of the most likely cash flows, and the price market participants would seek for bearing the uncertainty inherent with the entertainment assets. The amount by which the unamortized costs of entertainment assets exceed their estimated fair values is written off. As of January 31, 2026 and February 1, 2025 , the Company had net capitalized entertainment assets of $ 4.5 million and $ 4.2 million, respectively. The January 31, 2026 balance for entertainment assets is comprised of unamortized, released assets and several in-development entertainment projects. The main purpose of the Company's entertainment assets is to drive consumer engagement with its own intellectual property, similar to a marketing campaign. As such, the amortization of entertainment assets and any related impairment charges are recorded as advertising expenses with the Selling, general, and administrative line within the Consolidated Statement of Operations and Comprehensive Income and includes this expense in the financial information of the Commercial reportable segment presented in Note 15 - Segment Information. Additionally, as of January 31, 2026 , the Company performed a recoverability assessment of the entertainment assets and determined there were no indicators of impairment. The Company recorded a total of $ 0.5 million in entertainment assets amortization in fiscal 2025 and a total of $ 1.1 million in fiscal 2024. Revenue See Note 3 — Revenue for additional accounting information. Cost of Merchandise Sold Cost of merchandise sold - retail includes the cost of the merchandise, tariff costs, royalties paid to licensors of third -party branded merchandise; store occupancy cost, including store depreciation; cost of warehousing and distribution; packaging; stuffing; damages and shortages; and shipping and handling costs incurred in shipment to consumers. Cost of merchandise sold - commercial includes the cost of the merchandise, including royalties paid to licensors of third -party branded merchandise; cost of warehousing and distribution; packaging; stuffing; damages and shortages; and shipping and handling costs incurred in shipment to customers. Selling, General, and Administrative Expenses Selling, general, and administrative expenses include store payroll and related benefits, advertising, credit card fees, store supplies and store closing costs, as well as central office management payroll and related benefits, travel, information systems, accounting, insurance, legal, and public relations costs. It also includes depreciation and amortization of central office leasehold improvements, furniture, fixtures, and equipment. In addition, bad debt expenses and accounts receivable related charges are included. Further, it includes store preopening expenses which represent costs incurred prior to store openings, remodels and relocations including certain store set-up, labor and hiring costs, rental charges, payroll, government grants, marketing, travel and relocation costs and recoveries. Advertising The costs of advertising and marketing programs are ch arged to operations in the first period the program takes place. Advertising expense was $ 21.0 million, $ 21.0 million and $ 24.3 million for fiscal years 2025 , 2024 and 2023 , r espectively. 51 Table of Contents Income Taxes Income taxes are accounted for using a balance sheet approach known as the liability method. The liability method accounts for deferred income taxes by applying the rate, based on enacted tax law, that will be in effect in the period in which the temporary differences between the book basis and the tax basis of assets and liabilities reverse or are settled. Deferred taxes are reported on a jurisdictional basis. Tax positions are reviewed at least quarterly and adjusted as new information becomes available. The recoverability of deferred tax assets is evaluated by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These estimates of future taxable income inherently require significant judgment. To the extent it is considered more likely than not that a deferred tax asset will be not recovered, a valuation allowance is established. The Company assesses its total liability for uncertain tax positions on a quarterly basis. The Company recognizes estimated interest and penalties related to uncertain tax positions in income tax expense. See Note 8—Income Taxes for further discussion. I ncome Per Share Basic income per share is dete rmined by dividing net income allocated to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income per share reflects the potential dilution that could occur from outstanding restricted stock awards and if options to issue common stock were exercised. In periods in which the inclusion of such instruments is anti-dilutive, the effect of such securities is not given consideration. Stock-Based Compensation The Company has share-based compensation plans covering certain management groups and its Board of Directors. The Company accounts for share-based payments utilizing the fair value recognition provisions of ASC 718 Compensation - Stock Compensation. The Company recognizes compensation cost for graded-vested equity awards on a straight-line basis over the requisite service period for the entire award and forfeitures as they occur. S ee Note 12 — "Stock Incentive Plans" for additional information. Comprehensive Income Comprehensive income is comprised of net income and foreign currency translation adjustments. 52 Table of Contents Fair Value of Financial Instruments For purposes of financial reporting, management has determined that the carrying value of financial instruments, including cash, cash equivalents and restricted cash, receivables, short term investments, accounts payable and accrued expenses, approximates fair value at January 31, 2026 and February 1, 2025 . Use of Estimates The preparation of the consolidated financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The assumptions used by management in future estimates could change significantly due to changes in circumstances, including, but not limited to, challenging economic conditions. Accordingly, future estimates may change significantly. Significant items subject to such estimates and assumptions include the calculation of revenue from gift card breakage, valuation of long-lived asset for asset impairments, income tax valuation allowances on deferred income tax assets, and the determination of deferred revenue under the Company’s customer loyalty program. Sales Tax Policy The Company’s revenues in the consolidated statement of operations are net of sales taxes. Foreign Currency Assets and liabilities of the Company’s foreign operations with functional currencies other than the U.S. dollar are translated at the exchange rate in effect at the balance sheet date, while revenues and expenses are translated at average rates prevailing during the year. Translation adjustments are reported in accumulated other comprehensive income, a separate component of stockholders’ equity. 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 gain of $ 1.8 million i n fiscal 2025 , and loss of $ 0.2 million and $ 0.1 million related to foreign currency in fisc al 2024 and 2023 , r espectively. R ecent Accounting Pronouncements – Adopted in the current year In December 2023, the FASB issued ASU No. 2023 - 09, "Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures." The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. We adopted this ASU on a prospective basis effective February 2, 2025. Refer to Note 8 - Income Taxes for the inclusion of new disclosures required. R ecent Accounting Pronouncements – Pending adoption 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. In September 2025, the FASB issued ASU No. 2025 - 06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350 - 40 ): Targeted Improvements to the Accounting for Internal-Use Software. The ASU simplifies the capitalization guidance by removing all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout ASC 350 - 40. The ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years. Adoption of this ASU can be applied prospectively for reporting periods after its effective date; or follow a modified transition approach that is based on the status of the respective projects and whether software costs were capitalized before the date of adoption; or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements. In December 2025, the FASB issued ASU No. 2025 - 11, Interim Reporting (Topic 270 ): Narrow-Scope Improvements. The ASU clarifies interim disclosure requirements and the applicability of Topic 270. The objective of the amendments is to provide further clarity about the current interim disclosure requirements. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Adoption of this ASU can be applied either a prospective or a retrospective approach. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements. In December 2025, the FASB issued ASU No. 2025 - 12, Codification Improvements. The ASU addresses thirty-three items, representing the changes to the Codification that ( 1 ) clarify, ( 2 ) correct errors, or ( 3 ) make minor improvements. Generally, the amendments in this Update are not intended to result in significant changes for most entities. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2026. The adoption method of this ASU may vary, on an issue-by-issue basis. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.  53 Table of Contents ( 3 ) Revenue 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. The Company accounts for revenue in accordance with Topic 606, Revenue from Contracts with Customers. The Company's disaggregated revenue is fully disclosed as net sales to external customers by reporting segment and by geographic area (See Note 15 — "Segment Information" for additional information). The Company's direct-to-consumer reporting segment represents nearly 92 % of consolidated revenue. The majority of these sales transactions are single performance obligations that are recorded when control is transferred to the customer. The following is a description of principal activities from which the Company generates its revenue, by reportable segment. The Company’s direct-to-consumer segment includes the operating activities of corporately-managed stores, other retail-delivered operations and online sales. Direct-to-consumer revenue is recognized when control of the merchandise is transferred to the customer and for the Company’s online sales, control generally transfers upon delivery to the customer. Revenue is measured as the amount of consideration, including any discounts or incentives, the Company expects to receive in exchange for transferring the merchandise. Product returns have historically averaged less than one -half of one percent due to the interactive nature of sales, where consumers customize their own stuffed animal. The Company has elected to exclude from revenue all collected sales, value-add and other taxes paid by its customers. For the Company’s gift cards, revenue is deferred for single transactions until redemption including any related gift card discounts. Approximately 80 % of gift cards issued have been redeemed within three years of issuance and over the last three years, approximately 65 % of gift cards issued have been redeemed within the first twelve months. In addition, unredeemed gift cards or breakage revenue is recorded in proportion to the customer’s redemption pattern using an estimated breakage rate based on historical experience. Following the reopening of stores after the pandemic, the Company experienced lower gift card redemption rates for all periods of outstanding activated gift cards compared to historical redemption patterns observed prior to fiscal year 2020, which impacted the gift card breakage rate. Management believes that the redemption behavior observed during the pandemic was not indicative of long-term customer behavior and accordingly adjusted the historical redemption data used to calculate the breakage rate. In more recent periods, gift card redemption patterns have generally returned to levels consistent with pre‑2020 experience. The Company continues to evaluate expected breakage annually and adjusts the breakage rates in the fourth quarter of each year, or other times, if significant changes in customer behavior are detected. Changes to breakage estimates impact revenue recognition prospectively. 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 January 31, 2026 , February 1, 2025 , and February 3, 2024 , net retail sales included gift card breakage revenue of $ 6.2 million, $ 6.5 million and $ 6.3 million, respectively. In regard to the consolidated balance sheet, contract liabilities for gift cards are classified as gift cards and customer deposits. For certain qualifying transactions, a portion of revenue transactions are deferred for the obligation related to the Company’s loyalty program or when a material right in the form of a future discount is granted. In these transactions, the transaction price is allocated to the separate performance obligations based on the relative standalone selling price. The standalone selling price for the points earned for the Company’s loyalty program is estimated using the net retail value of the merchandise purchased, adjusted for estimated breakage based on historical redemption patterns. The revenue associated with the initial merchandise purchased is recognized immediately and the value assigned to the points is deferred until the points are redeemed, forfeited or expired. Loyalty program points expire if there is no qualifying account activity for a period of 12 months. 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 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. In regard to the consolidated balance sheet, contract liabilities related to the loyalty program are classified as deferred revenue and other. The Company’s commercial segment includes transactions with other businesses and are mainly comprised of wholesale sales of merchandise, supplies and fixtures, licensing the Company’s intellectual properties for third -party use, and revenues generated from entertainment activities. Revenue for wholesale sales is recognized when control of the merchandise or fixtures is transferred to the customer, which generally occurs upon delivery to the customer. The license agreements provide the customer with highly interrelated rights that are not distinct in the context of the contract and, therefore, have been accounted for as a single performance obligation and recognized as licensee sales occur. If the contract includes a guaranteed minimum, the minimum guarantee is recognized as licensee sales occur over the guarantee term until such time as royalties earned through licensee sales exceed the minimum guarantee. The Company classifies these guaranteed minimum contract liabilities as deferred revenue and other on the consolidated balance sheet. Entertainment revenue is generated through the sale of entertainment assets directly to customers or through licensing agreements. 54 Table of Contents The Company’s international franchising segment includes the activities with franchisees who operate store locations in certain countries and includes development fees, sales-based royalties, merchandise, supplies and fixture sales. The Company’s obligations under the franchise agreement are ongoing and include operations and product development support and training, generally concentrated around new store openings. These obligations are highly interrelated rights that are not distinct in the context of the contract and, therefore, have been accounted for as a single performance obligation and recognized as franchisee sales occur. If the contract includes an initial, one -time nonrefundable development fee, this fee is recognized on a straight-line basis over the term of the franchise agreement, which may extend for periods up to 25 years. The Company classifies these initial, one -time nonrefundable franchise fee contract liabilities as deferred revenue and other on the consolidated balance sheet. Revenue from merchandise and fixture sales is recognized when control is transferred to the franchisee which generally occurs upon delivery to the customer. The Company also incurs expenses directly related to the startup of new franchises, which may include finder’s fees, legal and travel costs, expenses related to its ongoing support of the franchisees, and employee compensation. Accordingly, the Company’s policy is to capitalize the finder’s fee, an incremental cost, and expense all other costs as incurred. The Company amortizes these capitalized costs into expense in the same pattern as the development fee as described previously. Allowance for Expected Credit Losses Fiscal year ended January 31, 2026 February 1, 2025 February 3, 2024 Balance, beginning of period (dollars in thousands) $ 6,775 $ 6,935 $ 5,872 Adjustment for expected credit losses 685 165 1,912 Uncollectible accounts written off, net of recoveries (1) - ( 325 ) ( 849 ) Balance, end of period $ 7,460 $ 6,775 $ 6,935 ( 1 ) Other receivables allowance for doubtful accounts represent uncollectible accounts written off, recoveries and the impact of currency translation ( 4 ) Leases The table below presents information related to the lease costs for operating leases for the periods presented (in thousands). For the Year Ended January 31, 2026 February 1, 2025 February 3, 2024 Operating lease costs $ 43,489 $ 39,792 $ 36,849 Variable lease costs (1) 11,858 11,063 10,782 Short term lease costs 101 101 110 Total Operating Lease costs $ 55,448 $ 50,956 $ 47,741 ( 1 ) Variable lease costs consist of leases with variable rent structures, which are intended to increase flexibility in an environment with expected high sales volatility and provide a natural hedge against potential sales declines. Other information The table below presents supplemental cash flow information related to leases for the periods presented (in thousands). For the Year Ended January 31, 2026 February 1, 2025 February 3, 2024 Operating cash flows for operating leases $ 41,803 $ 41,547 $ 39,598 As of January 31, 2026 , the weighted-average remaining operating lease term was 6.3 years and the weighted-average discount rate was 7.0 % for operating leases recognized on the consolidated balance sheet. 55 Table of Contents The Company recorded immaterial impairment charges during fiscal 2025 , fiscal 2024 and fiscal 2023 against its right-of-use operating lease assets in the Company's DTC segment. Undiscounted cash flows The table below reconciles the undiscounted cash flows for each of the first five years and total remaining years to the operating lease liabilities recorded on the balance sheet (in thousands). Operating Leases 2026 $ 38,905 2027 26,822 2028 21,405 2029 17,149 2030 13,498 Thereafter 40,062 Total minimum lease payments 157,841 Less: amount of lease payments representing interest ( 30,543 ) Present value of future minimum lease payments 127,298 Less: current obligations under leases ( 28,651 ) Long-term lease obligations $ 98,647 As of January 31, 2026 , the Company had additional executed leases that had not yet commenced with operating lease liabilities totaling $ 5.7 million. These leases are expected to commence in the first and second quarters of fiscal 2026 with lease terms of three to ten years. ( 5 ) Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following (in thousands): January 31, February 1, 2026 2025 Prepaid occupancy (1) $ 2,570 $ 2,213 Prepaid taxes (2) 81 1,512 Prepaid insurance 1,068 1,248 Prepaid royalties 111 736 Prepaid gift card fees 511 493 Other (3) 5,262 $ 6,467 Total $ 9,603 $ 12,669 ( 1 ) Prepaid occupancy consists of prepaid expenses related to non-lease components. ( 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. Other non-current assets consist of the following (in thousands): January 31, February 1, 2026 2025 Entertainment assets $ 4,493 $ 4,222 Deferred compensation 1,356 1,684 Other (1) 159 195 Total $ 6,008 $ 6,101 ( 1 ) Other consists primarily of deferred financing costs related to the Company's credit facility. 56 Table of Contents ( 6 ) Property and Equipment , net Property and equipment, net consist of the following (in thousands): January 31, February 1, 2026 2025 Land $ 2,261 $ 2,261 Furniture and fixtures 26,626 26,418 Machinery and equipment 18,227 17,494 Leasehold improvements 112,253 104,809 Building 14,969 14,969 Computer hardware 29,744 28,709 Computer software 37,623 33,796 Construction in progress 19,844 10,363 Property and equipment 261,547 238,819 Less accumulated depreciation 190,621 179,058 Total, net $ 70,926 $ 59,761 For fiscal 2025 and 2024 , depreciation and amortization expense was $ 15.0 million and $ 14.8 million, respectively. The Company recorded immaterial impairment charges during fiscal 2025 and 2024 for long-lived assets in the Company's DTC segment. ( 7 ) Accrued Expenses Accrued expenses consist of the following (in thousands): January 31, February 1, 2026 2025 Accrued wages, bonuses and related expenses $ 16,824 $ 13,268 Sales tax and VAT payable 3,341 1,359 Accrued rent and related expenses (1) 1,046 1,002 Current income taxes payable 3,943 580 Accrued expense - other (2) 950 - Total $ 26,104 $ 16,209 ( 1 ) Accrued rent and related expenses consist of accrued costs associated with non-lease components. ( 2 ) Accrued expense - other consists of costs associated with legal accruals. For fiscal 2025 and 2024 , defined contribution expense was $ 1.4 million and $ 1.4 million, respectively. 57 Table of Contents ( 8 ) Income Taxes The Company’s income before income taxes from domestic and foreign operations (which include the U.K., Canada, China, and Ireland), is as follows (in thousands): Fiscal year ended January 31, February 1, February 3, 2026 2025 2024 Domestic $ 65,761 $ 63,872 $ 61,110 Foreign 1,466 3,269 5,219 Total income before income taxes $ 67,227 $ 67,141 $ 66,329 The components of the income tax expense (benefit) are as follows (in thousands): Fiscal year ended January 31, February 1, February 3, 2026 2025 2024 Current: U.S. Federal $ 11,382 $ 11,345 $ 12,080 U.S. State 3,037 2,834 3,205 Foreign 56 54 145 Deferred: U.S. Federal 924 683 ( 537 ) U.S. State 118 161 ( 212 ) Foreign ( 493 ) 279 ( 1,157 ) Income tax expense $ 15,024 $ 15,356 $ 13,524 The provision for income taxes was $ 15.0 million in fiscal 2025 compared to $ 15.4 million in fiscal 2024 . The 2025 effective rate of 22.3 % 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 and a favorable tax position affecting its U.K. net operating loss (NOL) from prior years. 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 benefit of the FDII deduction. 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 2025 are primarily related to return-to-provision true-ups and functional currency fluctuations. For the year ended January 31, 2026, the Company adopted ASU 2023 - 09 on a prospective basis. 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: Fiscal year ended January 31, 2026 Amount Percent U.S. federal statutory income tax rate $ 14,118 21.0 % State and local income taxes, net of federal tax benefit (1) 2,492 3.7 % Foreign tax effects United Kingdom Prior Period Adjustments ( 908 ) ( 1.4 %) Other 55 0.1 % Other foreign jurisdictions 13 0.0 % Effect of cross-border tax laws Foreign-derived intangible income ( 1,014 ) ( 1.5 %) Changes in valuation allowances ( 2 ) ( 0.0 %) Nontaxable or nondeductible items Executive compensation 467 0.7 % Other 204 0.3 % Tax credit ( 257 ) ( 0.4 %) Other adjustments ( 144 ) ( 0.2 %) Effective tax rate $ 15,024 22.3 % ( 1 ) During the year ended January 31, 2026, state taxes in California, Florida, Illinois, New York, and Texas comprised more than 50% of the tax effect in this category. Differences between the provision for income taxes at the U.S. federal statutory income tax rates and the provision prior to the adoption of ASU 2023 - 09 is as follows: Fiscal year ended February 1, February 3, 2025 2024 Income before income taxes $ 67,141 $ 66,329 U.S. federal statutory income tax rate 21 % 21 % Income tax expense at statutory federal rate 14,100 13,929 State and local income taxes, net of federal tax benefit 2,433 2,354 Foreign-derived intangible income benefit ( 891 ) ( 534 ) Non deductible executive compensation 572 1,038 Effect of lower foreign taxes 130 639 Adjustment for unrecognized tax positions 18 3 Valuation allowance ( 1 ) ( 5,075 ) Other items, net ( 1,005 ) 1,170 Income tax expense $ 15,356 $ 13,524 Effective tax rate 22.9 % 20.4 % Income taxes paid, net of refunds received, for the year ended January 31, 2026 are as follows: January 31, 2026 U.S. Federal $ 7,361 State California 501 Other 1,871 Foreign Other 158 Total $ 9,891 58 Table of Contents Temporary differences that gave rise to deferred tax assets and liabilities are as follows (in thousands): January 31, February 1, 2026 2025 Deferred tax assets: Operating lease liability $ 32,942 $ 23,866 Deferred revenue 2,571 2,973 Intangible assets 2,539 2,747 Accrued compensation 2,113 1,624 Deferred compensation 1,070 1,034 Depreciation 739 918 Receivables write-offs 910 849 Net operating loss carryforwards 1,597 806 Inventories 976 674 Accrued expenses 573 329 Carryforward of tax credits 261 222 Other 296 68 Total gross deferred tax assets 46,587 36,110 Less: Valuation allowance ( 1,552 ) ( 1,533 ) Total deferred tax assets, net of valuation allowance 45,035 34,577 Deferred tax liabilities: Operating lease right-of-use assets ( 30,683 ) ( 21,557 ) Depreciation ( 5,211 ) ( 3,096 ) Deferred expense ( 1,254 ) ( 1,436 ) Inventories ( 516 ) ( 890 ) Other ( 1 ) ( 2 ) Total deferred tax liabilities ( 37,665 ) ( 26,981 ) Net deferred tax assets $ 7,370 $ 7,596 As of January 31, 2026, the Company had gross NOL carryforwards of approximately $ 6.4 million, $ 5.3 million of which relate to the U.K. where NOLs have no expiration date, and $ 1.1 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 January 31, 2026, and 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 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 was $ 0.0 million for each of the years ended January 31, 2026, and February 1, 2025. 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 January 31, 2026, and February 1, 2025, the Company recognized an expense of $ 0.0 million and less than $ 0.1 million, respectively, for interest and penalties. 59 Table of Contents A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): January 31, February 1, 2026 2025 Balance at beginning of year - 66 Increases for prior year tax positions - 8 Settlements - ( 74 ) Balance at end of year - - The following tax years remain open in the Company’s major taxing jurisdictions as of January 31, 2026: United States (Federal) 2022 through 2025 United Kingdom 2022 through 2025 ( 9 ) Line of Credit The Company had a revolving credit and security agreement with PNC Bank, as agent, which was set to expire on December 17, 2026, and provided for a secured revolving loan in aggregate principal of up to $ 25.0 million, subject to a borrowing base formula. On December 31, 2025, the Company entered into a Third Amendment to revolving credit and security agreement (the “Third Amendment”) with PNC Bank. The Third Amendment (i) increased the base borrowing amount under the facility from $ 25.0 million to $ 40.0 million (while retaining the accordion feature allowing such amount to increase up to $ 50.0 million); (ii) reduced the interest rates for borrowings under the facility; (iii) extended the maturity date of the Credit Agreement to December 31, 2030; and (iv) reduced the facility fee related to undrawn availability. The Third Amendment also updated various provisions regarding compliance with sanctions and anti-money laundering laws, international trade laws, and implemented certain other technical amendments. As amended, the new revolving credit and security agreement provides for a senior secured revolving loan in aggregate principal amount of up to $ 40.0 million (subject to a borrowing base formula), which may be increased with the consent of the lenders by an amount not to exceed $ 10.0 million, subject to the conditions set forth in the agreement (the “Increase Option”). The new revolving credit and security agreement continues to provide for swingline loans of up to $ 5.0 million and the issuance of standby or commercial letters of credit of up to $ 5.0 million. As of January 31, 2026 , borrowings under the new agreement would bear interest by reference to, at the borrower’s option, either (a) a base rate determined under the agreement, or (b) at a rate based on SOFR reference rate, plus in either case a margin based on average undrawn availability as determined in accordance with the agreement, but the Third Amendment reduced such rates. The Third Amendment also reduced the facility fee percentage on undrawn commitments under the agreement from 0.25 % to 0.20 %. 60 Table of Contents The new agreement continues to require the Company to comply with one financial covenant, specifically, that the Company maintain availability (as determined in accordance with the agreement) at all times equal to or greater than the greater of (a) 10.0 % of the Loan Cap and (b) $ 1,875,000 (subject to increase upon exercise of the Increase Option). The Third Amendment increased the “Loan Cap” to the lesser of ( 1 ) $ 40.0 million less the outstanding amount of loans and letters of credit under the agreement and ( 2 ) the borrowing base from time to time under the agreement. The Third Amendment contains customary events of default, including without limitation events of default based on payment obligations, material inaccuracies of representations and warranties, covenant defaults, final judgments and orders, unenforceability of the Credit Agreement, material ERISA events, change in control, insolvency proceedings, and defaults under certain other obligations. An event of default may cause the applicable interest rate and fees to increase by 2 % until such event of default has been cured, waived, or amended. The Third Amendment contains typical negative covenants, including, among other things, that the Borrower will not incur indebtedness except for permitted indebtedness or make any investments except for permitted investments, declare dividends or repurchase its stock except as permitted, acquire any subsidiaries except in connection with a permitted acquisition, or merge or consolidate with any other entity or acquire all or substantially all of the assets of any other company outside the ordinary course of business. The Company is in compliance with the new revolving credit and security agreement covenants. As of January 31, 2026 , the Company had a borrowing base of $ 40.0 million. The Company had no outstanding borrowings as of January 31, 2026 . ( 10 ) Commitments and Contingencies Litigation In the normal course of business, the Company is subject to legal proceedings, government inquiries and claims, and other commercial disputes. If one or more of these matters has an unfavorable resolution, it is possible that the results of operations, liquidity or financial position of the Company could be materially affected in any particular period. The Company accrues a liability for these types of contingencies when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. Gain contingencies are recorded when the underlying uncertainty has been settled. Assessments made by the U.K. customs authority in 2012 were appealed by the Company, which has paid the disputed duty, strictly under protest, pending the outcome of the continuing dispute, and this is included in receivables, net in the DTC segment. The U.K. customs authority contested the Company's appeal. 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. An appeal was heard by the Court of Appeal during the first quarter of fiscal 2022, and the Court of Appeal dismissed the appeal in the third quarter of fiscal 2022. During the fourth quarter of fiscal 2022, the UK Supreme Court declined to hear the appeal. The Company is engaging with the customs authority to attempt to resolve all outstanding issues following the application of the determined principles. The case will return to the lower tribunal for a final ruling if outstanding issues cannot be resolved. The Company maintains a provision against the related receivable, based on a current evaluation of collectability, using the latest facts available in the dispute. As of January 31, 2026 , the Company had a gross receivable balance of $ 4.7 million and a reserve of $ 3.8 million, leaving a net receivable of $ 0.9 million. 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. 61 Table of Contents ( 1 1 ) Net Income Per Share The Company computes both basic and diluted income per common share. The following table sets forth the computation of basic and diluted income per share (in thousands, except share and per share data): Fiscal year ended January 31, February 1, February 3, 2026 2025 2024 NUMERATOR: Net Income $ 52,203 $ 51,785 $ 52,805 DENOMINATOR: Weighted average number of common shares outstanding - basic 13,045,394 13,578,587 14,342,931 Dilutive effect of share-based awards: 38,042 42,488 128,944 Weighted average number of common shares outstanding - dilutive 13,083,436 13,621,075 14,471,875 Basic income per common share $ 4.00 $ 3.81 $ 3.68 Diluted income per common share $ 3.99 $ 3.80 $ 3.65 In calculating diluted earnings per share for fisca l 2025 , 2024 and 2023 , there were 20,577 , 21,828 , and 23,324 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. ( 1 2 ) Stock Incentive Plans In 2017, the Company adopted the Build-A-Bear Workshop, Inc. 2017 Omnibus Incentive Plan (the "2017 Plan"). On April 14, 2020, the Board of Directors (the “Board”) of Build-A-Bear Workshop, Inc. (the “Company”) adopted, subject to stockholder approval, the Build-A-Bear Workshop, Inc. 2020 Omnibus Incentive Plan (the “2020 Incentive Plan”). On June 11, 2020, at the Company’s 2020 Annual Meeting of Stockholders (the “Annual Meeting”), the Company’s stockholders approved the 2020 Incentive Plan. On April 11, 2023, the Board adopted, subject to stockholder approval, the Build-A-Bear Workshop, Inc. Amended and Restated 2020 Omnibus Incentive Plan (the “Restated 2020 Incentive Plan”). On June 8, 2023, at the Company’s 2023 Annual Meeting of Stockholders (the “Annual Meeting”), the Company’s stockholders approved the Restated 2020 Incentive Plan. The Restated 2020 Incentive Plan, which is administered by the Compensation and Development Committee of the Board, permits the grant of stock options (including both incentive and non-qualified stock options), stock appreciation rights, other stock-based awards, including restricted stock and restricted stock units, cash-based awards, and performance awards pursuant to the terms of the Restated 2020 Incentive Plan. 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 2017 Plan that on or after April 14, 2020 may be forfeited, expire or be settled for cash. 62 Table of Contents For the years ended January 31, 2026 , February 1, 2025 and February 3, 2024 , Selling, general and administrative expense included stock-based compensation expense of $ 2.9 million, $ 2.2 million and $ 2.1 million, respe ctively. As of January 31, 2026 , there was $ 5.0 million of total unrecognized compensation expense related to unvested stock awards which is expected to be recognized over a weighted-average period of 1.8 years. Future total shares available for options, non-vested stock and restricted stock grants were 750,030 , 857,838 and 1,010,666 at the end o f 2025 , 2024 and 2023 , respectively. (a) Stock Options The following table is a summary of the balance and activity for the Plans related to stock options for the periods presented: Options Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (in millions) Outstanding, February 3, 2024 12,375 17.84 Granted - - Exercised ( 12,375 ) 17.84 Expired - - Canceled or expired - - Outstanding, February 1, 2025 - $ - - $ - Granted - - Exercised - - Expired - - Canceled or expired - - Outstanding, January 31, 2026 - $ - - $ - Options Exercisable as of: January 31, 2026 - $ - - $ - There were no stock options granted during fiscal 2025 , 2024 or 2023 . 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. The total grant date fair value of options exercised in fiscal 2024 was $ 0.1 million and the total intrinsic value was $ 0.14 million. The Company generally issues new shares to satisfy option exercises. (b) Restricted Stock 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. Recipients of performance-based restricted stock awards have the right to vote and receive dividends upon satisfaction of the performance criteria and certain of these awards’ dividend rights are also subject to time-based vesting. The following table is a summary of the balance and activity for the Plans related to unvested time-based and performance-based restricted stock granted as compensation to employees and directors for the periods presented: Time-Based Restricted Stock Performance-Based Restricted Stock Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Outstanding, February 3, 2024 122,609 $ 18.02 185,082 $ 17.37 Granted 59,823 27.18 64,619 27.61 Vested ( 81,561 ) 15.87 ( 106,190 ) 8.24 Adjusted for performance achievement 53,095 8.24 Canceled or expired ( 3,333 ) 24.75 ( 3,333 ) 24.75 Outstanding, February 1, 2025 97,538 25.21 193,273 $ 23.17 Granted 46,228 46.76 51,450 47.57 Vested ( 59,386 ) 24.23 ( 61,222 ) 18.03 Adjusted for performance achievement ( 11,572 ) 18.03 Canceled or expired ( 10,792 ) 35.91 ( 15,264 ) 30.97 Outstanding, January 31, 2026 73,588 $ 37.97 156,665 $ 32.82 63 Table of Contents In fiscal 2025 , the Committee awarded three -year performance-based restricted stock, established specific profitability and revenue objectives for fiscal 2025, 2026, and 2027, 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 cumulative total revenue. The target number of shares awarded was 51,450 with a weighted average grant date fair value of $ 47.57 per share. If profitability and revenue exceed the threshold objectives, the performance-based restricted stock award has a payout opportunity ranging from 25 % to 200 % of the target number of shares. 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. The target number of shares awarded was 64,619 with a weighted average grant date fair value of $ 27.61 per share. If profitability and revenue exceed the threshold objectives, the performance-based restricted stock award has a payout opportunity ranging from 25 % to 200 % of the target number of shares. In fiscal 2023 , the Committee awarded three -year performance-based restricted stock, established specific profitability and revenue objectives for fiscal 2023, 2024, and 2025, 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. The target number of shares awarded was 65,254 with a weighted average grant date fair value of $ 24.75 per share. If profitability and revenue exceed the threshold objectives, the performance-based restricted stock award has a payout opportunity ranging from 25 % to 200 % of the target number of shares. As of January 31, 2026 , the Company had recorded aggregate expense for the fiscal 2023, 2024, and 2025 three -year performance-based restricted stock awards of $ 1.5 million. Th e vesting date fair value of shares that vested in fisca l 2025 , 2024 and 2023 w as $ 2.5 million , $ 2.2 million and $ 2.1 million, respectively. ( 1 3 ) Stockholders’ Equity The following table summarizes the changes in outstanding shares of common stock for fiscal 2025 and fiscal 2024 : Common Stock Shares as of February 3, 2024 14,172,362 Shares issued under employee stock plans, net of shares withheld in lieu of tax withholding 105,773 Share repurchase ( 1,021,004 ) Shares as of February 1, 2025 13,257,131 Shares issued under employee stock plans, net of shares withheld in lieu of tax withholding 60,768 Share repurchase ( 508,945 ) Shares as of January 31, 2026 12,808,954 64 Table of Contents ( 14 ) Major Vendors Five vendors, each of whose primary manufacturing facilities are located in Asia, accounted for approximately 75 % of inventory purchases in 2025 and 69 % in 2024 . ( 15 ) Segment Information 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, 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. The international franchising segment includes the licensing activities of the Company’s franchise agreements with store locations in select countries in Asia, Australia, the Middle East, Africa, and South America. 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 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. The three reportable segments follow the same accounting policies used for the Company’s consolidated financial statements. Following is a summary of the financial information for the Company’s reporting segments (in thousands): Direct-to- International Consumer Commercial Franchising Total Fifty-two weeks ended January 31, 2026 Total Revenue $ 485,956 $ 38,750 $ 5,126 $ 529,832 Cost of Goods Sold 213,229 17,199 3,775 234,203 Gross Profit 272,727 21,551 1,351 295,629 Selling, General & Administrative 146,732 962 - 147,694 Contribution Margin 125,995 20,589 1,351 147,935 Overhead Expenses (1) 81,509 Interest income, net ( 801 ) Income before income taxes $ 67,227 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 Gross Profit 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) 70,996 Interest income, net ( 861 ) Income before income taxes $ 67,141 Fifty-three weeks ended February 3, 2024 Total Revenue $ 456,163 $ 25,413 $ 4,538 $ 486,114 Cost of Goods Sold 206,815 12,091 2,816 221,722 Gross Profit 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) 67,168 Interest income, net ( 929 ) Income before income taxes $ 66,329 ( 1 ) Overhead expenses contain selling, general and administrative expenses not attributable to a segment. 65 Table of Contents Total assets, depreciation and amortization, and capital expenditures for the Company's segments, as well as for Corporate and support, are as follows: Direct-to- International Consumer Commercial Franchising Corporate Total Fifty-two weeks ended January 31, 2026 Total Assets $ 249,399 $ 18,419 $ 1,734 $ 75,901 $ 345,453 Depreciation and amortization 10,782 136 - 4,034 14,952 Capital Expenditures 17,432 8,113 25,545 Fifty-two weeks ended February 1, 2025 Total Assets $ 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 Total Assets $ 195,373 $ 8,801 $ 1,225 $ 66,926 $ 272,325 Depreciation and amortization 9,517 393 - 3,747 13,657 Capital Expenditures 6,733 - - 11,562 18,295 The Company’s reportable segments are primarily determined by the types of products and services that they offer. Each reportable segment may operate in many geographic areas. 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 (in thousands): North America (1) Europe (2) Other (3) Total Fifty-two weeks ended January 31, 2026 Net sales to external customers $ 451,218 $ 71,687 $ 6,927 $ 529,832 Fifty-two weeks ended February 1, 2025 Net sales to external customers $ 425,139 $ 65,233 $ 6,032 $ 496,404 Fifty-three weeks ended February 3, 2024 Net sales to external customers $ 426,244 $ 56,141 $ 3,729 $ 486,114 For purposes of this table only: ( 1 ) North America includes corporately-managed stores in the U.S. and Canada. ( 2 ) Europe includes corporately-managed stores in the U.K. and Ireland. ( 3 ) Other includes franchise businesses outside of North America and Europe. 66 Table of Contents ( 16 ) Subsequent Events On February 20, 2026, the U.S Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act ("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 U.S. presidential 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 its business, financial condition, and results of operations. (a)(2) Financial Statement Schedules Schedule II – Valuation and Qualifying Accounts Beginning Balance Deductions to cost and expenses Other (1) Ending Balance Deferred Tax Asset Valuation Allowance 2026 $ 1,533 1 18 $ 1,552 2025 1,546 ( 1 ) ( 12 ) 1,533 2024 8,000 ( 5,500 ) ( 954 ) 1,546 ( 1 ) Other deferred tax asset valuation allowance changes represent reserves utilized and the impact of currency translation. 67 Table of Contents (a)(3) Exhibits. The following is a list of exhibits filed as a part of the Annual Report on Form 10-K: Exhibit Number Description 2.1 Agreement and Plan of Merger dated April 3, 2000 between Build-A-Bear Workshop, L.L.C. and the Registrant (incorporated by reference from Exhibit 2.1 to our Registration Statement on Form S-1, filed on August 12, 2004, Registration No. 333-118142) 3.1 Third Amended and Restated Certificate of Incorporation (incorporated by reference from Exhibit 3.1 of our Current Report on Form 8-K, filed on November 8, 2004) 3.2 Amended and Restated Bylaws, as amended through January 4, 2018 (incorporated by reference from Exhibit 3.1 to our Current Report on Form 8-K, filed on January 4, 2018) 4.1 Specimen Stock Certificate (incorporated by reference from Exhibit 4.1 to Amendment No. 3 to our Registration Statement on Form S-1, filed on October 1, 2004, Registration No. 333-118142) 4.2 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) 10.1* 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) 10.1.1* 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) 10.1.2* 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) 10.1.3* 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) 10.1.4* Build-A-Bear Workshop, Inc. 2017 Omnibus Incentive Plan (incorporated by reference from Exhibit 10.1 to our Current Report on Form 8-K, filed on May 12, 2017) 68 Table of Contents 10.1.5* 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) 10.1.6* 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) 10.1.7* 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) 10.1.8* 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) 10.1.9* Build-A-Bear Workshop, Inc. Amended and Restated 2020 Omnibus Incentive Plan (incorporated by reference from Exhibit 10.1 of our Current Report on Form 8-K, filed on June 9, 2023) 10.1.10* 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) 10.1.11* 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) 10.1.12* 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) 10.2 * 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) 10.3* Amended and Restated Employment, Confidentiality and Noncompete Agreement, dated March 7, 2016, by and between Eric Fencl and Build-A-Bear Workshop, Inc. (incorporated by reference from Exhibit 10.1 on our Current Report on Form 8-K, filed on March 11, 2016) 10.4* Amended and Restated Employment, Confidentiality and Noncompete Agreement, dated March 7, 2016, by and between Sharon Price John and Build-A-Bear Workshop, Inc. (incorporated by reference from Exhibit 10.3 on our Current Report on Form 8-K, filed on March 11, 2016) 10.5* Amended and Restated Employment, Confidentiality and Noncompete Agreement, dated March 7, 2016, by and between Vojin Todorovic and Build-A-Bear Workshop, Inc. (incorporated by reference from Exhibit 10.5 on our Current Report on Form 8-K, filed on March 11, 2016) 10.6* 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) 69 Table of Contents 10.7* Employment, Confidentiality and Noncompete Agreement, effective as of August 4, 2025, by and between Yevgeny Fundler and Build-A-Bear Workshop, Inc. (incorporated by reference from Exhibit 10.1 on our Current Report on Form 10-Q, filed on September 11, 2025) 10.8* CEO Employment, Confidentiality and Noncompete Agreement, effective as of March 12, 2026, by and between J. Christopher Hurt and Build-A-Bear Workshop, Inc. (incorporated by reference from Exhibit 10.1 on our Current Report on Form 8-K, filed on March 12, 2026) 10.9* 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. 333-118142) 10.10 Revolving Credit and Security Agreement dated as of August 25, 2020 among the Company and Build-A-Bear Retail Management, Inc., as borrowers; Build-A-Bear Workshop Franchise Holdings, Inc., Build-A-Bear Entertainment, LLC, Build-A-Bear Card Services LLC and Build-A-Bear Workshop Canada, Ltd., as guarantors; the lenders party thereto; and PNC Bank, National Association, as agent for lenders (incorporated by reference from Exhibit 10.1 of our Current Report on Form 8-K, filed on August 31, 2020). 10.10.1 First Amendment to Revolving Credit and Security Agreement dated as of December 17, 2021 among the Company and Build-A-Bear Retail Management, Inc., as borrowers; Build-A-Bear Workshop Franchise Holdings, Inc., Build-A-Bear Entertainment, LLC, Build-A-Bear Card Services LLC and Build-A-Bear Workshop Canada, Ltd., as guarantors; the lenders party thereto; and PNC Bank, National Association, as agent for lenders (incorporated by reference from Exhibit 10.1 on our Current Report on Form 8-K, filed on December 22, 2021) 10.10.2 Second Amendment to Revolving Credit and Security Agreement dated as of November 21, 2022 among the Company and Build-A-Bear Retail Management, Inc., as borrowers; Build-A-Bear Workshop Franchise Holdings, Inc., Build-A-Bear Entertainment, LLC, Build-A-Bear Card Services LLC and Build-A-Bear Workshop Canada, Ltd., as guarantors; the lenders party thereto; and PNC Bank, National Association, as agent for lenders (incorporated by reference from Exhibit 10.1 of our Current Report on Form 8-K, filed on November 23, 2022) 10.10.3 Third Amendment to Revolving Credit and Security Agreement dated as of December 31, 2025 among the Company, as borrowing agent and borrower; Build-A-Bear Retail Management, Inc., as an additional borrower; Build-A-Bear Workshop Franchise Holdings, Inc., Build-A-Bear Entertainment, LLC, Build-A-Bear Card Services LLC and Build-A-Bear Workshop Canada, Ltd., as guarantors; the lenders party thereto; and PNC Bank, National Association, as agent for the lenders. 10.11 Facility Construction Agreement dated December 22, 2005 between the Registrant and Duke Construction Limited Partnership (incorporated by reference from Exhibit 10.35 to our Annual Report on Form 10-K, for the year ended December 31, 2005) 10.12 Real Estate Purchase Agreement dated December 19, 2005 between Duke Realty Ohio and the Registrant (incorporated by reference from Exhibit 10.36 to our Annual Report on Form 10-K, for the year ended December 31, 2005) 11.1 Statement regarding computation of earnings per share (incorporated by reference from Note 10 of the Registrant’s audited consolidated financial statements included herein) 19.1 Build-A-Bear Workshop, Inc. Insider Trading Policy 21.1 List of Subsidiaries of the Registrant 23.1 Consent of Ernst & Young LLP 31.1 Rule 13a-14(a)/15d-14(a) certification (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by the President and Chief Executive Officer) 31.2 Rule 13a-14(a)/15d-14(a) certification (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by the Chief Financial Officer) 32.1 Section 1350 Certification (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the President and Chief Executive Officer) 32.2 Section 1350 Certification (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Chief Financial Officer) 97.1 Clawback Policy (incorporated by reference from Exhibit 97.1 to our Annual Report on Form 10-K for the year ended February 3, 2024 70 Table of Contents 101.INS 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. 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Extension Calculation Linkbase Document 101.DEF Inline XBRL Extension Definition Linkbase Document 101.LAB Inline XBRL Extension Label Linkbase Document 101.PRE Inline XBRL Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) * Management contract or compensatory plan or arrangement ITEM 16. FORM 10-K SUMMARY None. 71 Table of Contents B UILD-A-BEAR WORKSHOP, INC. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BUILD-A-BEAR WORKSHOP, INC. (Registrant) Date: April 16, 2026 By: /s/ Sharon John Sharon John President and Chief Executive Officer By: /s/ Voin Todorovic Voin Todorovic Chief Financial Officer KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Sharon John and Voin Todorovic, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities to sign the Annual Report on Form 10-K of Build-A-Bear Workshop, Inc. (the “Company”) for the fiscal year ended January 31, 2026 and any other documents and instruments incidental thereto, together with any and all amendments and supplements thereto, to enable the Company to comply with the Securities Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission in respect thereof, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents and/or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. 72 Table of Contents Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signatures Title Date /s/ Craig Leavitt Non-Executive Chairman April 16, 2026 Craig Leavitt /s/ George Carrara Director April 16, 2026 George Carrara /s/ Narayan Iyengar Director April 16, 2026 Narayan Iyengar /s/Richard A. Johnson Director April 16, 2026 Richard A. Johnson /s/ Lesli Rotenberg Director April 16, 2026 Lesli Rotenberg /s/ James Goldman Director April 16, 2026 James Goldman /s/ Sharon John Director and President and Chief Executive Officer April 16, 2026 Sharon John (Principal Executive Officer) /s/ Voin Todorovic Chief Financial Officer April 16, 2026 Voin Todorovic (Principal Financial and Accounting Officer) 73