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Item 1. Financial Statements

2025-11-12 compared with 2025-08-13 · 284 added, 198 removed, 264 unchanged (65% of the section changed)

3 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

JUNE 29, 2025 AND MARCH 30, 2025

SEPTEMBER 28, 2025 AND MARCH 30, 2025

(amounts in thousands, except share and per share amounts)

June 29, 2025

September 28, 2025

March 30, 2025

1 unchanged sentence

Cash and cash equivalents

Accounts receivable (net of allowances of $ 1,988 at June 29, 2025 and $ 1,723 at March 30, 2025):

Accounts receivable - net of allowances of $ 2,046 and $ 1,723 , respectively

Due from factor

6 unchanged sentences

10,265 12,253

Property, plant and equipment - at cost:

Leasehold improvements

Machinery and equipment

Furniture and fixtures

Property, plant and equipment - gross

Less accumulated depreciation

Property, plant and equipment - net

Finite-lived intangible assets - at cost:

Customer relationships

Other finite-lived intangible assets

Finite-lived intangible assets - gross

17,890 17,890

Less accumulated amortization

11,054 10,840

Finite-lived intangible assets - net

Property, plant and equipment - net of accumulated depreciation of $ 5,426 and $ 5,037 , respectively

Intangible assets - net of accumulated amortization of $ 11,241 and $ 10,840 , respectively

Deferred income taxes

4 unchanged sentences

$ 8,907 $ 5,225

Accrued wages and benefits

Accrued royalties

1 unchanged sentence

Operating lease liabilities, current

Other accrued liabilities

Accrued liabilities

Current maturities of long-term debt

10 unchanged sentences

Common stock - $ 0.01 par value per share;

Authorized 40,000,000 shares at June 29, 2025 and March 30, 2025;

Issued 13,493,402 shares at June 29, 2025 and 13,478,402 shares at March 30, 2025

Authorized 40,000,000 shares at September 28, 2025 and March 30, 2025;

Issued 13,616,749 shares at September 28, 2025 and 13,478,402 shares at March 30, 2025

Additional paid-in capital

59,026 58,637

Treasury stock - at cost - 2,910,859 shares at June 29, 2025 and March 30, 2025

Treasury stock - at cost - 2,913,962 shares at September 28, 2025 and 2,910,859 shares at March 30, 2025

( 15,889 ) ( 15,880 )

8 unchanged sentences

AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE-MONTH PERIODS ENDED JUNE 29, 2025 AND JUNE 30, 2024

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

THREE- AND SIX-MONTH PERIODS ENDED SEPTEMBER 28, 2025 AND SEPTEMBER 29, 2024

(amounts in thousands, except per share amounts)

June 29, 2025

June 30, 2024

Three-Month Periods Ended

Six-Month Periods Ended

September 28, 2025

September 29, 2024

September 28, 2025

September 29, 2024

Cost of products sold

Marketing and administrative expenses

Loss from operations

Income from operations

Other (expense) income:

Interest expense - net of interest income

Other income - net

Loss before income tax benefit

Income tax benefit

Other income (expense) - net

Income before income tax expense

Income tax expense

Weighted average shares outstanding:

Basic loss per share

Diluted loss per share

Effect of dilutive securities

Earnings per share - basic and diluted

See notes to consolidated financial statements.

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

THREE-MONTH PERIODS ENDED JUNE 29, 2025 AND JUNE 30, 2024

THREE- AND SIX-MONTH PERIODS ENDED SEPTEMBER 28, 2025 AND SEPTEMBER 29, 2024

Common Shares

Treasury Shares

Shareholders'

Number of Shares

Paid-in Capital

Retained Earnings (Accumulated

Shareholders' Equity

(Dollar amounts in thousands)

Balances - March 31, 2024

Three-Month Periods

Balances - June 30, 2024

13,208,226 $ 132 ( 2,897,507 ) $ ( 15,821 ) $ 58,090 $ 8,255 $ 50,656

Issuance of shares, net of forfeitures

91,176 - - - - - -

Stock-based compensation

- - - - 189 - 189

Acquisition of treasury stock

- - ( 8,154 ) ( 39 ) - - ( 39 )

Dividend declared on common stock - $ 0.08 per share

- - - - - 860 860

Dividend declared on common stock - $ 0.08 per share, net of forfeitures

- - - - - ( 831 ) ( 831 )

Balances - September 29, 2024

13,299,402 $ 132 ( 2,905,661 ) $ ( 15,860 ) $ 58,279 $ 8,284 $ 50,835

Balances - June 29, 2025

13,493,402 $ 135 ( 2,910,859 ) $ ( 15,880 ) $ 58,837 $ ( 5,223 ) $ 37,869

Issuance of shares, net of forfeitures

123,347 1 - - ( 1 ) - -

Stock-based compensation

- - - - 190 - 190

Acquisition of treasury stock

- - ( 3,103 ) ( 9 ) - - ( 9 )

- - - - - 1,157 1,157

Dividend declared on common stock - $ 0.08 per share, net of forfeitures

- - - - - ( 850 ) ( 850 )

Balances - September 28, 2025

13,616,749 $ 136 ( 2,913,962 ) $ ( 15,889 ) $ 59,026 $ ( 4,916 ) $ 38,357

Six-Month Periods

Balances - March 31, 2024

13,208,226 $ 132 ( 2,897,507 ) $ ( 15,821 ) $ 57,888 $ 9,402 $ 51,601

Issuance of shares

Issuance of shares, net of forfeitures

91,176 - - - - - -

1 unchanged sentence

- - - - 391 - 391

Acquisition of treasury stock

- - ( 8,154 ) ( 39 ) - - ( 39 )

Dividends declared on common stock - $ 0.08 per share

- - - - - 538 538

Balances - June 29, 2025

Dividends declared on common stock - $ 0.16 per share, net of forfeitures

- - - - - ( 1,656 ) ( 1,656 )

Balances - September 29, 2024

13,299,402 $ 132 ( 2,905,661 ) $ ( 15,860 ) $ 58,279 $ 8,284 $ 50,835

Balances - March 30, 2025

13,478,402 $ 135 ( 2,910,859 ) $ ( 15,880 ) $ 58,637 $ ( 3,273 ) $ 39,619

Issuance of shares, net of forfeitures

138,347 1 - - ( 1 ) - -

Stock-based compensation

- - - - 390 - 390

Acquisition of treasury stock

- - ( 3,103 ) ( 9 ) - - ( 9 )

- - - - - 53 53

Dividends declared on common stock - $ 0.16 per share, net of forfeitures

- - - - - ( 1,696 ) ( 1,696 )

Balances - September 28, 2025

13,616,749 $ 136 ( 2,913,962 ) $ ( 15,889 ) $ 59,026 $ ( 4,916 ) $ 38,357

See notes to consolidated financial statements.

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE-MONTH PERIODS ENDED JUNE 29, 2025 AND JUNE 30, 2024

SIX-MONTH PERIODS ENDED SEPTEMBER 28, 2025 AND SEPTEMBER 29, 2024

(amounts in thousands)

Three-Month Periods Ended

June 29, 2025

June 30, 2024

Six-Month Periods Ended

September 28, 2025

September 29, 2024

Operating activities:

9 unchanged sentences

Accounts receivable

( 4,782 ) ( 1,696 )

Prepaid expenses

Lease liabilities

( 2,364 ) ( 2,214 )

Accounts payable

Accrued liabilities

( 1,953 ) 1,262

Net cash provided by operating activities

1 unchanged sentence

Capital expenditures for property, plant and equipment

( 260 ) ( 475 )

Payment to acquire Baby Boom

Net cash used in investing activities

( 260 ) ( 16,830 )

Financing activities:

Repayments under revolving line of credit

( 41,423 ) ( 39,368 )

Borrowings under revolving line of credit

40,258 44,375

Payments on term loan

( 1,000 ) ( 333 )

Proceeds from term loan, net of issuance costs

Shares withheld to pay taxes on stock compensation

Dividends paid

Net cash used in financing activities

Net decrease in cash and cash equivalents

( 1,680 ) ( 1,646 )

Net cash (used in) provided by financing activities

( 3,854 ) 10,953

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

$ 810 $ 1,982

Supplemental cash flow information:

3 unchanged sentences

Property, plant and equipment purchased but unpaid

( 66 ) ( 68 )

Dividends declared but unpaid

( 892 ) ( 853 )

See notes to consolidated financial statements.

2 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE-MONTH PERIODS ENDED JUNE 29, 2025 AND JUNE 30, 2024

FOR THE THREE- AND SIX-MONTH PERIODS ENDED SEPTEMBER 28, 2025 AND SEPTEMBER 29, 2024

Note 1 – Interim Financial Statements

3 unchanged sentences

Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements.

References herein to GAAP are to topics within the FASB Accounting Standards Codification (the “FASB ASC”), which the FASB periodically revises through the issuance of an Accounting Standards Update (“ASU”) and which has been established by the FASB as the authoritative source for GAAP recognized by the FASB to be applied by nongovernmental entities.

In the opinion of the Company’s management, the unaudited condensed consolidated financial statements contained herein include all adjustments necessary to present fairly the financial position of the Company as of June 29, 2025 and the results of its operations and cash flows for the periods presented.

References herein to GAAP are to topics within the FASB Accounting Standards Codification (the “ASC”), which the FASB periodically revises through the issuance of an Accounting Standards Update (“ASU”) and which has been established by the FASB as the authoritative source for GAAP recognized by the FASB to be applied by nongovernmental entities.

In the opinion of the Company’s management, the unaudited condensed consolidated financial statements contained herein include all adjustments necessary to present fairly the financial position of the Company as of September 28, 2025 and the results of its operations and cash flows for the periods presented.

Such adjustments include normal, recurring accruals, as well as the elimination of all significant intercompany balances and transactions.

Operating results for the three -month period ended June 29, 2025 are not necessarily indicative of the results that may be expected by the Company for its fiscal year ending March 29, 2026.

Operating results for the three - and six -month periods ended September 28, 2025 are not necessarily indicative of the results that may be expected by the Company for its fiscal year ending March 29, 2026.

For further information, refer to the Company’s consolidated financial statements and notes thereto for the fiscal year ended March 30, 2025, included in the Company’s Annual Report on Form 10 -K filed with the United States Securities and Exchange Commission (the “SEC”).

6 unchanged sentences

2023 - 09 are required to be adopted for fiscal years beginning after December 15, 2024 and early adoption is permitted.

The Company is evaluating the guidance of the ASU No.

The Company is evaluating the guidance of ASU No.

2023 - 09 against its existing disclosures related to income tax disclosures.

3 unchanged sentences

2024 - 03 are required to be adopted for annual reporting periods beginning after December 15, 2026, and for interim periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted.

The Company is evaluating the guidance of the ASU No.

The Company is evaluating the guidance of ASU No.

2024 - 03 against its existing disclosures related to income statement expenses.

The Company has determined that all other ASUs issued which had become effective as of June 29, 2025, or which will become effective at some future date, are not expected to have a material impact on the Company’s consolidated financial statements.

Loss Per Share:

Due to the net loss incurred by the Company in the three -month periods ended June 29, 2025 and June 30, 2024, diluted shares used in the calculation of the diluted loss per share represented basic shares because the inclusion of the potentially dilutive effect of the exercisable stock options would have resulted in anti-dilution.

Note 2 – Advertising Costs

Advertising expense is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of operations and amounted to $ 396,000 and $ 127,000 for the three months ended June 29, 2025 and June 30, 2024, respectively.

The Company has determined that all other ASUs issued which had become effective as of September 28, 2025, or which will become effective at some future date, are not expected to have a material impact on the Company’s consolidated financial statements.

Note 2 – Segment Reporting

2 unchanged sentences

These products consist of infant and toddler bedding, diaper bags, bibs, toys and disposable products.

The CODM assesses performance and allocates resources based on the Company’s consolidated statements of operations, which requires the CODM to manage and evaluate the results of the Company in a consolidated manner to drive efficiencies and develop uniform strategies.

The CODM assesses performance and allocates resources based on the Company’s consolidated statements of income, which requires the CODM to manage and evaluate the results of the Company in a consolidated manner to drive efficiencies and develop uniform strategies.

Segment asset information is not used by the CODM to allocate resources.

As a single reportable segment entity, the Company’s segment performance measure is net income (loss).

As a single reportable segment entity, the Company’s segment performance measure is net income.

The following table presents information about the Company’s reportable segment (in thousands):

Three-Month Periods Ended

June 29, 2025

June 30, 2024

Six-Month Periods Ended

September 28, 2025

September 29, 2024

September 28, 2025

September 29, 2024

$ 23,695 $ 24,460 39,173 $ 40,672

2 unchanged sentences

Marketing and administrative expenses

4,708 5,448 9,425 9,711

Interest expense, net and other

Income tax benefit

283 382 467 471

Segment net loss

Income tax expense

423 267 144 203

Segment net income

$ 1,157 $ 860 53 $ 538

Included in the profit or loss measure above are the following:

Depreciation expense and amortization expense were $ 198,000 and $ 214,000 , respectively, for the three months ended June 29, 2025 while for the three months ended June 30, 2024, depreciation and amortization expenses were $ 184,000 and $ 148,000 , respectively.

depreciation expense and amortization expense were $ 191 thousand and $ 187 thousand, respectively, for the three months ended September 28, 2025 while for the three months ended September 29, 2024, depreciation and amortization expenses were $ 158 thousand and $ 195 thousand, respectively.

Depreciation expense and amortization expense were $ 389 thousand and $ 401 thousand, respectively, for the six months ended September 28, 2025 while for the six months ended September 29, 2024 depreciation and amortization expenses were $ 342 thousand and $ 344 thousand, respectively.

Note 3 – Licensing Agreements

The Company has entered into licensing agreements that provide for royalty payments based on a percentage of sales with certain minimum guaranteed amounts.

These royalty amounts are accrued based upon historical sales rates adjusted for current sales.

Royalty expense is included in cost of products sold in the accompanying unaudited condensed consolidated statements of operations and amounted to $ 1.0 million and $ 1.1 million for the three months ended June 29, 2025 and June 30, 2024, respectively.

Note 5 – Income Taxes

The Company files income tax returns in many jurisdictions in which it operates, including the U.S., several U.S.

states and the People’s Republic of China.

The statute of limitations varies by jurisdiction;

tax years open to examination or other adjustment as of June 29, 2025 were the fiscal years ended March 30, 2025 , March 31, 2024, April 2, 2023, April 3, 2022, March 28, 2021, and March 29, 2020.

Although management believes that the calculations and positions taken on its filed income tax returns are reasonable and justifiable, the outcome of an examination could result in an adjustment to the position that the Company took on such income tax returns.

Such adjustment could also lead to adjustments to one or more other state income tax returns, or to income tax returns for subsequent fiscal years, or both.

To the extent that the Company’s reserve for unrecognized tax liabilities is not adequate to support the cumulative effect of such adjustments, the Company could experience a material adverse impact on its future results of operations.

Conversely, to the extent that the calculations and positions taken by the Company on the filed income tax returns under examination are sustained, the reversal of all or a portion of the Company’s reserve for unrecognized tax liabilities could result in a favorable impact on its future results of operations.

The Company has entered into licensing agreements that provide for royalty payments based on a percentage of sales of products covered by the license agreements, subject to certain minimum guaranteed amounts.

Royalty expense is calculated based upon sales at contractual rates under the licensing agreements and any applicable minimum guaranteed amounts.

Royalty expense is included in cost of products sold in the accompanying unaudited condensed consolidated statements of income and amounted to $ 1.9 million and $ 1.7 million for the three months ended September 28, 2025 and September 29, 2024, respectively, and amounted to $ 2.9 and $ 2.8 million for the six months ended September 28, 2025 and September 29, 2024, respectively.

Note 4 – Concentrations

Product Sourcing:

Foreign and domestic contract manufacturers produce most of the Company’s products, with the largest concentration being in China.

The Company makes sourcing decisions on the basis of quality, timeliness of delivery and price, including the impact of ocean freight and duties.

Although the Company maintains relationships with a limited number of suppliers, the Company believes that its products may be readily manufactured by several alternative sources in quantities sufficient to meet the Company’s requirements.

The Company maintains foreign representative offices located in Shanghai and Shenzhen, China, which are responsible for the coordination of production, purchases and shipments, seeking out new vendors and overseeing inspections for social compliance and quality.

The Company’s management and quality assurance personnel visit the third -party facilities regularly to monitor and audit product quality and to ensure compliance with labor requirements and social and environmental standards.

In addition, the Company closely monitors the currency exchange rate.

The impact of future fluctuations in the exchange rate or changes in safeguards cannot be predicted with certainty.

For the period ended September 28, 2025, purchases from the Company’s three largest suppliers accounted for approximately 16 %, 11 % and 11 % of purchases.

To mitigate the risks associated with supplier concentration, the Company engages in ongoing efforts to identify alternative sources of supply, assess supplier reliability and performance, and negotiate favorable contractual terms where feasible.

However, there can be no assurance that the Company will be successful in reducing its dependence on any single supplier or mitigating the impact of supplier-related risks in the future.

government has tariffs on imports from certain countries, including China.

During 2025, the U.S.

government introduced increased tariffs which have increased the cost of the products the Company sources from China and affected shipments from the Company’s Chinese-based suppliers.

The Company is evaluating the potential impact of the imposition of new tariffs on imports from China to the Company’s business and financial condition.

The impact of the increased tariffs is uncertain because it is subject to a number of factors, including the duration of such tariffs, changes in the amount, scope and nature of the tariffs in the future, any countermeasures that China may take and any mitigation actions that may become available.

Licensed Products:

Certain products are manufactured and sold pursuant to licensing agreements for trademarks.

Also, many of the designs used by the Company are copyrighted by other parties, including trademark licensors, and are available to the Company through copyright license agreements.

The licensing agreements are generally for an initial term of one to three years and may or may not be subject to renewal or extension.

Sales of licensed products represented 50 % of the Company’s gross sales in fiscal year 2025, which included 21 % of sales under the Company’s license agreements with affiliated companies of The Walt Disney Company, which expire as set forth below:

License Agreement

Infant and Toddler Bedding and Diaper Bags (US and Canada)

December 31, 2027

Infant Feeding and Bath

December 31, 2025

STAR WARS - Lego Plush

December 31, 2025

The Company expects to renew the licenses upon their expiration.

The Company’s customers consist principally of mass merchants, large chain stores, mid-tier retailers, juvenile specialty stores, value channel stores, grocery and drug stores, restaurants, internet accounts and wholesale clubs.

The Company does not enter into long-term or other purchase agreements with its customers.

The table below sets forth those customers that represented at least 10% of the Company’s gross sales:

Six-Month Periods Ended

September 28, 2025

September 29, 2024

Amazon.com, Inc.

Target Corporation

Note 5 – Inventories

As of June 29, 2025 and March 30, 2025, the Company’s balances of inventory were $ 31.6 million and $ 27.8 million, respectively, nearly all of which were finished goods.

Note 7 – Acquisition

On July 19, 2024 ( the “Closing Date”), NoJo Baby & Kids, Inc., a wholly-owned subsidiary of the Company acquired substantially all of the assets, and assumed certain specified liabilities, of Baby Boom Consumer Products, Inc.

(“Baby Boom”) (the “Acquisition”), for a purchase price of $ 18.0 million in cash, subject to a working capital adjustment.

The Acquisition was funded by the Company using the proceeds of an $ 8.0 million term loan from The CIT Group/Commercial Services, Inc.

(“CIT”) and additional borrowings under the Company’s revolving line of credit with CIT.

The Acquisition has been accounted for in accordance with FASB ASC Topic 805, Business Combinations .

The identifiable assets acquired were recorded at their estimated fair value, which has been preliminarily determined based on available information and the use of multiple valuation approaches.

The estimated useful lives of the identifiable intangible assets acquired were determined based upon the remaining time that these assets are expected to directly or indirectly contribute to the future cash flow of the Company.

The Company considers the measurement period to have ended as of June 25, 2025 and further considers all measurement period adjustments to be final.

The acquisition cost paid on the Closing Date amounted to $ 16.3 million, which included net working capital adjustment.

The following table represents the Company’s allocation of the acquisition cost (in thousands) to the identifiable assets acquired and the liabilities assumed based on their respective estimated fair values as of the Closing Date.

The excess of the acquisition cost over the estimated fair value of the identifiable net assets acquired is reflected as goodwill.

Tangible assets:

Accounts receivable

Prepaid expenses and other current assets

Total tangible assets

Amortizable intangible assets:

Licensing relationships

Total amortizable intangible assets

Total acquired assets

Liabilities assumed:

Accounts payable

Total liabilities assumed

Net acquisition cost

Based upon the initial allocation of the acquisition cost, the Company recognized $ 5.3 million of goodwill as of the Closing Date, the entirety of which was assigned to the reporting unit of the Company that produces and markets infant and toddler bedding and diaper bags, and the entirety of which is expected to be deductible for income tax purposes.

The goodwill recognized primarily consists of synergies expected from combining operations of Baby Boom and the Company and intangible assets acquired that do not qualify for separate recognition.

The following table represents adjustments made to the amount of goodwill during the fiscal year ended March 30, 2025 ( in thousands):

Amount of goodwill recognized based upon the preliminary allocation of the acquisition cost

Adjustments made during the fiscal year ended March 30, 2025:

Increase to pre-acquisition accounts payable

Decrease to tradename as of the Closing Date

Decrease to licensing relationships as of the Closing Date

Settlement of working capital adjustment

Net adjustments made during the fiscal year ended March 30, 2025

Amount of goodwill recognized as of March 30, 2025

The assets acquired in the Acquisition generated net sales of $ 2.1 million of bedding and diaper bag products for the three -month period ended June 29, 2025.

Amortization expense associated with the acquired amortizable intangible assets was $ 88,000 for the three months ended June 29, 2025, which is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

Amortization is calculated using the straight-line method over the estimated useful lives of the assets, which are 15 years for the tradename, 14 years for the customer and licensing relationships and 14 years on a weighted-average basis for the grouping taken together.

The basis of accounting for inventories is cost, which includes the direct supplier acquisition cost, duties, taxes and freight, and the indirect costs to design, develop, source and store the product until it is sold.

Once cost has been determined, the Company’s inventory is then stated at the lower of cost or net realizable value, with cost determined using the first -in, first -out method, which assumes that inventory quantities are sold in the order in which they are acquired.

The determination of the indirect charges and their allocation to the Company’s finished goods inventories requires management judgment and estimates.

If management made different judgments or utilized different estimates, then differences would result in the valuation of the Company’s inventories and in the amount and timing of the Company’s cost of products sold and the resulting net income for the reporting period.

The Company’s inventory is nearly all finished goods.

On a periodic basis, management reviews its inventory quantities on hand for obsolescence, physical deterioration, changes in price levels and the existence of quantities on hand which may not reasonably be expected to be sold within the Company’s normal operating cycle.

To the extent that any of these conditions is believed to exist or the market value of the inventory expected to be realized in the ordinary course of business is otherwise no longer as great as its carrying value, an allowance against the inventory value is established.

To the extent that this allowance is established or increased during an accounting period, an expense is recorded in cost of products sold in the Company’s consolidated statements of income.

As of September 28, 2025 and March 30, 2025, the Company’s balances of inventory were $ 32.6 million and $ 27.8 million, respectively, net of an inventory obsolescence reserve of $ 967 thousand and $ 997 thousand, respectively.

Note 6 – Property, Plant and Equipment

Net property, plant and equipment consisted of the following (amounts in thousands):

September 28, 2025

March 30, 2025

Property, plant and equipment - at cost:

Machinery and equipment

Leasehold improvements

Furniture and fixtures

Property, plant and equipment - gross

Less accumulated depreciation

Property, plant and equipment - net

Depreciation expense amounted to $ 191 thousand and $ 158 thousand for the three months ended September 28, 2025 and September 29, 2024, respectively, and amounted to $ 389 thousand and $ 342 thousand for the six months ended September 28, 2025 and September 29, 2024, respectively.

Note 7 – Financing Arrangements

Factoring Agreements:

To reduce its exposure to credit losses, the Company assigns the majority of its trade accounts receivable to CIT, a subsidiary of First Citizens Bank, pursuant to factoring agreements, which have expiration dates that are coterminous with that of the financing agreement described below.

To reduce its exposure to credit losses, the Company assigns the majority of its trade accounts receivable to The CIT Group/Commercial Services, Inc.

(“CIT”), a subsidiary of First Citizens Bank, pursuant to factoring agreements, which have expiration dates that are coterminous with that of the financing agreement described below.

Under the terms of the factoring agreements, CIT remits customer payments to the Company as such payments are received by CIT.

3 unchanged sentences

If such a termination or limitation occurs, then the Company either assumes (and may seek to mitigate) the credit risk for shipments to the customer after the date of such termination or limitation or discontinues shipments to the customer.

Factoring fees, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of operations, amounted to $ 70,000 and $ 74,000 for the three -month periods ended June 29, 2025 and June 30, 2024, respectively.

Factoring fees, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income, amounted to $ 110 thousand and $ 94 thousand for the three -month periods ended September 28, 2025 and September 29, 2024, respectively, and amounted to $ 180 thousand and $ 168 thousand for the six -month periods ended September 28, 2025 and September 29, 2024, respectively.

Credit Facility:

2 unchanged sentences

The financing agreement for the revolving line of credit matures on July 19, 2029.

On June 29, 2025, the Company elected to pay interest on balances owed under the revolving line of credit under the SOFR option, which was 5.9 %.

On September 28, 2025, the Company elected to pay interest on balances owed under the revolving line of credit under the SOFR option, which was 5.9 %.

The financing agreement also provides for the payment by CIT to the Company of interest at prime as of the beginning of the calendar month minus 2.0 % on daily negative balances, if any, held at CIT.

At June 29, 2025 and March 30, 2025, the balances on the revolving line of credit were $ 7.7 million and $ 11.9 million, respectively, there was no letter of credit outstanding and $ 12.2 million and $ 13.8 million, respectively, was available under the revolving line of credit based on the Company’s eligible accounts receivable and inventory balances.

At September 28, 2025 and March 30, 2025, the balances on the revolving line of credit were $ 10.7 million and $ 11.9 million, respectively, there was no letter of credit outstanding and $ 13.7 million and $ 13.8 million, respectively, was available under the revolving line of credit based on the Company’s eligible accounts receivable and inventory balances.

The financing agreement contains usual and customary covenants for agreements of that type, including limitations on other indebtedness, liens, transfers of assets, investments and acquisitions, merger or consolidation transactions, transactions with affiliates, and changes in or amendments to the organizational documents for the Company and its subsidiaries.

The Company’s credit facility as of June 29, 2025 includes an $ 8.0 million term loan, issued July 19, 2024, which is payable by the Company in 48 equal monthly installments and bears interest at SOFR plus 2.25 % ( 6.6 % at June 29, 2025).

The balance on the term loan as of June 29, 2025 was $ 6.2 million, including $ 2.0 million classified as current.

On June 23, 2025, the Company and CIT amended the Company’s financing agreement with CIT to:

(i) provide that, until the Company’s term loan is paid in full, the Company shall maintain at all times Excess Availability (as defined in the financing agreement) equal to or the greater of (a) the sum of the balance outstanding under the Company’s term loan plus $ 1,000,000 or (b) $ 4,000,000 (the “Availability Covenant”);

(i) provide that, until the Company’s term loan is paid in full, the Company shall maintain at all times Excess Availability (as defined in the financing agreement) equal to or the greater of (a) the sum of the balance outstanding under the Company’s term loan plus $ 1.0 million or (b) $ 4.0 million (the “Availability Covenant”);

and (ii) reinstate the fixed charge coverage ratio;

provided however, that the fixed charge coverage ratio shall not be tested at any fiscal quarter end in which, during the immediately preceding fiscal quarter, the Company at all times has been in compliance with the Availability Covenant.

As of June 29, 2025, the Company was in compliance with the Excess Availability requirements.

As of September 28, 2025, the Company was in compliance with the Excess Availability requirements.

The balance on the $ 8.0 million term loan as of September 28, 2025 was $ 5.7 million, including $ 2.0 million classified as current.

The term loan was issued July 19, 2024, is payable by the Company in 48 equal monthly installments and bears interest at SOFR plus 2.25 % ( 6.5 % at September 28, 2025).

Credit Concentration:

The Company’s accounts receivable at June 29, 2025 amounted to $ 17.2 million, net of allowances of $ 2.0 million.

The Company’s accounts receivable at September 28, 2025 amounted to $ 18.4 million, net of allowances of $ 2.0 million.

Of this amount, $ 16.1 million was due from CIT under the factoring agreements, which represents the maximum loss that the Company could incur if CIT failed completely to perform its obligations under the factoring agreements.

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Level 3 – Includes unobservable inputs and should be used only when observable inputs are unavailable.

The following table presents fair value of debt as of June 29, 2025:

The carrying value of financial instruments reported in the accompanying condensed consolidated balance sheets for cash, which is considered Level 1, accounts receivable, accounts payable, accrued expenses and other liabilities, which are all considered Level 2, approximate fair value due to the immediate or short-term nautre of these financial instruments.

The following table presents fair value of debt as of September 28, 2025:

Fair Value Measurement Using

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The significant inputs used in the model are observable market data including SOFR Forward Curves.

Net debt issuance costs are presented as a direct reduction of the Company’s long-term debt in the consolidated balance sheets and amounted to $ 27,000 and $ 30,000 as of June 29, 2025 and March 30, 2025, respectively.

The amortization of the debt issuance costs was charged to interest expense.

The amount of debt issuance costs included in interest expense were $ 3,000 and $ 0 for the three months ended June 29, 2025 and June 30, 2024, respectively.

The aggregate maturities of long-term debt for each of the five years subsequent to June 29, 2025 are:

$ 1.5 million in 2026, $ 2.0 million in 2027, $ 2.2 million in 2028, $ 500,000 in 2029 and $ 7.7 million in 2030.

Note 9 – Goodwill

The aggregate maturities of long-term debt for each of the five years subsequent to September 28, 2025 are:

$ 1.0 million in fiscal 2026, $ 2.0 million in fiscal 2027, $ 2.2 million in fiscal 2028, $ 500 thousand in fiscal 2029 and $ 10.7 million in fiscal 2030.

Note 8 – Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net identifiable assets acquired in business combinations.

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one that produces and markets bedding and diaper bags and another that produces and markets bibs, toys and disposable products.

The Company measures for impairment of the goodwill within its reporting units annually as of the first day of the Company’s fiscal year.

The Company reported goodwill net of impairment charges of $ 7.9 million at June 30, 2024.

The Company measures for impairment annually as of the first day of the Company’s fiscal year.

The Company reported goodwill net of impairment charges of $ 13.2 million at September 29, 2024.

For the fiscal year ended March 30, 2025, the Company determined that a triggering event occurred in relation to the depressed market price of the Company’s common stock and corresponding significant decline in the Company’s market capitalization.

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Consequently, the Company recorded a non-cash goodwill impairment charge of $ 13.8 million during the three -month period ended March 30, 2025.

The Company reported no goodwill at June 29, 2025.

Note 10 – Concentrations

Product Sourcing:

Foreign and domestic contract manufacturers produce most of the Company’s products, with the largest concentration being in China.

The Company makes sourcing decisions on the basis of quality, timeliness of delivery and price, including the impact of ocean freight and duties.

In addition, the Company closely monitors the currency exchange rate.

The impact of future fluctuations in the exchange rate or changes in safeguards cannot be predicted with certainty.

government has tariffs on imports from certain countries, including China.

During 2025, the U.S.

government introduced increased tariffs which have increased the cost of the products the Company sources from China and affected shipments from the Company’s Chinese-based suppliers.

The Company is evaluating the potential impact of the imposition of new tariffs on imports from China to the Company’s business and financial condition.

No supplier represented at least 10% of the Company’s total suppliers.

Licensed Products:

Certain products are manufactured and sold pursuant to licensing agreements for trademarks.

Also, many of the designs used by the Company are copyrighted by other parties, including trademark licensors, and are available to the Company through copyright license agreements.

The licensing agreements are generally for an initial term of one to three years and may or may not be subject to renewal or extension.

License Agreement

Infant and Toddler Bedding and Diaper Bags (US and Canada)

December 31, 2027

Infant Feeding and Bath

December 31, 2025

STAR WARS - Lego Plush

December 31, 2025

The Company expects to renew the licenses upon their expiration.

The Company does not enter into long-term or other purchase agreements with its customers.

The table below sets forth those customers that represented at least 10% of the Company’s gross sales:

Three-Month Periods Ended

June 29, 2025

June 30, 2024

Amazon.com, Inc.

Target Corporation

* Amount represented less than 10% of the Company's gross sales for the period.

The Company reported no goodwill at September 28, 2025.

Intangible Assets:

Our finite-lived intangible assets consist primarily of the fair value of identifiable assets acquired in business combinations.

The gross amount, accumulated amortization and net balances of the Company’s intangible assets as of September 28, 2025 and March 30, 2025, are as follows (in thousands):

Accumulated Amortization

September 28,

Tradename and trademarks

$ 3,217 $ 3,217 $ 2,364 $ 2,316 $ 853 $ 901

Non-compete covenants

98 98 98 98 - -

1,601 1,601 1,186 1,160 415 441

Customer relationships

8,174 8,174 7,159 7,007 1,014 1,167

Licensing relationships

4,800 4,800 433 259 4,367 4,541

Total intangible assets

$ 17,890 $ 17,890 $ 11,241 $ 10,840 $ 6,649 $ 7,050

Amortization expense, which is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income, amounted to $ 187 thousand and $ 195 thousand for the three -month periods ended September 28, 2025 and September 29, 2024, respectively, and amounted to $ 401 thousand and $ 344 thousand for the six -month periods ended September 28, 2025 and September 29, 2024, respectively.

Note 9 – Acquisition

(“Baby Boom”) (the “Acquisition”), for a purchase price of $ 18.0 million in cash, subject to a working capital adjustment.

The Acquisition was funded by the Company using the proceeds of an $ 8.0 million term loan from CIT and additional borrowings under the Company’s revolving line of credit with CIT.

The Acquisition has been accounted for in accordance with FASB ASC Topic 805, Business Combinations .

The identifiable assets acquired were recorded at their estimated fair value, which has been preliminarily determined based on available information and the use of multiple valuation approaches.

The Company considers the measurement period to have ended as of June 25, 2025 and further considers all measurement period adjustments to be final.

The acquisition cost paid on the Closing Date amounted to $ 16.3 million, which included net working capital adjustment.

The excess of the acquisition cost over the estimated fair value of the identifiable net assets acquired is reflected as goodwill.

Tangible assets:

Accounts receivable

Prepaid expenses and other current assets

Total tangible assets

Amortizable intangible assets:

Licensing relationships

Total amortizable intangible assets

Total acquired assets

Liabilities assumed:

Accounts payable

Total liabilities assumed

Net acquisition cost

The goodwill recognized primarily consists of synergies expected from combining operations of Baby Boom and the Company and intangible assets acquired that do not qualify for separate recognition.

The following table represents adjustments made to the amount of goodwill during the fiscal year ended March 30, 2025 ( in thousands):

Amount of goodwill recognized based upon the preliminary allocation of the acquisition cost

Adjustments made during the fiscal year ended March 30, 2025:

Increase to pre-acquisition accounts payable

Decrease to tradename as of the Closing Date

Decrease to licensing relationships as of the Closing Date

Settlement of working capital adjustment

Net adjustments made during the fiscal year ended March 30, 2025

Amortization expense associated with the acquired amortizable intangible assets was $ 88 thousand and $ 65 thousand for the three months ended September 28, 2025 and September 29, 2024, respectively, and $ 176 thousand and $ 65 thousand for the six months ended September 28, 2025 and September 29,2024, respectively, which is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income.

Note 10 – Advertising Costs

Advertising expense is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income and amounted to $ 431 thousand and $ 133 thousand for the three months ended September 28, 2025 and September 29, 2024, respectively, and amounted to $ 827 thousand and $ 260 thousand for the six months ended September 28, 2025 and September 29, 2024, respectively

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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in the infant, toddler and juvenile products segment within the consumer products industry.

The infant, toddler and juvenile products segment consists of infant and toddler bedding, diaper bags, bibs, disposables, toys and feeding products.

The infant, toddler and juvenile products segment consists of infant and toddler bedding, toys, bibs, diaper bags, disposables and feeding products.

The Company’s products are marketed under Company-owned trademarks, under trademarks licensed from others and as private label goods.

The Company-owned trademarks include Sassy®, Manhattan Toy®, NoJo®, Baby Boom® and Neat Solutions®.

The Company-owned trademarks include Sassy®, NoJo®, Manhattan Toy®, Baby Boom® and Neat Solutions®.

Sales of the Company’s products are made directly to retailers, such as mass merchants, large chain stores, juvenile specialty stores, value channel stores, grocery and drug stores, restaurants, wholesale clubs, internet-based retailers and direct-to-consumers through the Company’s websites.

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RESULTS OF OPERATIONS

The following table contains the results of operations for the three-month periods ended June 29, 2025 and June 30, 2024 and the dollar and percentage changes for those periods (in thousands, except percentages):

The following table contains the results of operations for the three- and six-month periods ended September 28, 2025 and September 29, 2024 and the dollar and percentage changes for those periods (in thousands, except percentages):

Three-Month Periods Ended

June 29, 2025

June 30, 2024

Six-Month Periods Ended

September 28, 2025

September 29, 2024

September 28, 2025

September 29, 2024

Net sales by category:

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Interest expense - net

Other income - net

Income tax benefit

Other income (expense) - net

Income tax expense

% of net sales

Sales decreased to $15.5 million for the three months ended June 29, 2025, compared with $16.2 million for the three months ended June 30, 2024, a decrease of $734,000, or 4.5%.

Sales of bedding and diaper bags increased by $540,000, and sales of bibs, toys and disposable products decreased by $1.3 million.

The Acquisition added $2.1 million in net sales during the three months ended June 29, 2025;

however, sales across all categories were negatively affected by inventory shortages resulting from the Company’s strategy to minimize the impact of the extremely high tariffs in effect during the first half of the quarter.

Sales were $23.7 million for the three months ended September 28, 2025, compared with $24.5 million for the three months ended September 29, 2024, a decrease of $765 thousand or 3.1%.

Sales of bedding and diaper bags decreased by $1.6 million, while the sales of bibs, toys and disposable products increased by $0.8 million.

The decrease in bedding and diaper bags was primarily due to the decrease in the number of items included in a program at a major retailer, which was partially offset by an increase in the sales of bibs, toys and disposables.

Sales were $39.2 million for the six months ended September 28, 2025 compared with $40.7 million for the six months ended September 29, 2024, a decrease of $1.5 million or 3.7%.

Sales of bedding and diaper bags decreased by $1.0 million and sales of bibs, toys and disposable products decreased by $0.5 million.

The decrease in the sales of bedding and diaber bags is primarily due to the decrease in the number of items included in a program at a major retailer.

Sales were also negatively affected by inventory shortages resulting from the Company’s strategy to minimize the impact of increased tariffs in effect primarily during the first quarter of the current fiscal year.

Gross Profit:

Gross profit decreased by $448,000 from the prior year resulting in a decrease from 24.5% of net sales for the three-month period ended June 30, 2024 to 22.7% of net sales for the three-month period ended June 29, 2025.

Gross profit decreased by $0.4 million from the prior year reflecting a margin of 27.7% for the three-month period ended September 28, 2025 compared to 28.4% of net sales for the three-month period ended September 29, 2024.

This decrease in gross profit is primarily a result of increased tariff costs associated with products imported from China.

Gross profit decreased in amount by $0.8 million from the prior year reflecting a margin of 25.8% for the six-month period ended September 28, 2025 compared to 26.9% of net sales for the six-month period ended September 29, 2024.

The primary cause of this decrease in gross profit relates to increased tariff costs associated with products imported from China.

Marketing and Administrative Expenses:

Marketing and administrative expenses increased by $454,000 and increased from 26.3% of net sales for the three-month period ended June 30, 2024 to 30.5% of net sales for the three-month period ended June 29, 2025.

The increase in the current year period includes increased advertising costs of $268,000 as well as increased marketing and administrative costs associated with the Acquisition.

Income Tax Benefit:

The Company’s provision for income taxes is based upon an estimated annual effective tax rate (“ETR”) of 22.3% for the three-month period ended June 29, 2025, as compared with an estimated annual ETR of 21.8% for the three-month period ended June 30, 2024.

The Company recorded discrete income tax charges of $30,000 and $20,000 during the three-month periods ended June 29, 2025 and June 30, 2024, respectively, to reflect the effects of the tax shortfalls and excess tax benefits arising from the forfeiture and expiration of stock options and the vesting of non-vested stock.

The ETR and the discrete income tax charges and benefits set forth above resulted in an overall provision for income taxes of 20.2% and 16.6% for the three-month periods ended June 29, 2025 and June 30, 2024, respectively.

Marketing and administrative expenses decreased by $0.7 million and changed to 19.9% of net sales for the three-month period ended September 28, 2025 from 22.3% of net sales for the three-month period ended September 29, 2024.

The decrease in the current year period is due to acquisition costs in the prior period, which was partially offset by increased advertising costs.

Marketing and administrative expenses decreased by $0.3 million and changed to 24.1% of net sales for the six-month period ended September 28, 2025 from 23.9% of net sales for the six-month period ended September 29, 2024.

The decreased expense in the current year period is primarily due to acquisition costs in the prior period partially offset by increased advertising costs in the current period.

Income Tax Expense:

Income tax expense increased $0.2 million from the three-month period ended September 29, 2024 to the three-month period ended September 28, 2025, and decreased $0.1 million from the six-month period ended September 29, 2024 to the six-month period ended September 29, 2025.

The Company’s estimated annual effective tax rate (“ETR”) was 23.0% and 21.9% for the three-month periods ended September 28, 2025 and September 29, 2024, respectively, and was 25.1% and 21.4% for the six-month periods ended September 28, 2025 and September 29, 2024, respectively.

Our effective rate was impacted by discrete items such as the effects of tax shortfalls and excess tax benefits arising from the forfeiture and expiration of stock options and the vesting of non-vested stock.

Although the Company does not anticipate a material change to the ETR for the remainder of fiscal year 2026, several factors could impact the ETR, including variations from the Company’s estimates of the amount and source of its pre-tax income, and the actual ETR for the year could differ materially from the Company’s estimates.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities decreased from $8.0 million for the three-month period ended June 30, 2024 to $5.2 million for the three-month period ended June 29, 2025.

The decrease in the current year was partially the result of an increase in inventories in the current year that was $2.9 million higher than the increase in the prior year and a decrease of $780,000 in net loss from the prior year to the current year.

This decrease was partially offset by an increase in accounts payable in the current year that was $950,000 higher than the increase in the prior year.

Net cash used in investing activities, which were primarily associated with capital expenditures for property, plant and equipment, decreased from $284,000 in the prior year to $86,000 in the current year.

Net cash used in financing activities, which were primarily associated with net repayments under the revolving line of credit and payments of the term loan, decreased by $2.0 million from the prior to the current year.

As of June 29, 2025, the balance on the revolving line of credit with CIT was $7.7 million, there was no letter of credit outstanding and $12.2 million was available under the revolving line of credit with CIT based on the Company’s eligible accounts receivable and inventory balances.

Net cash provided by operating activities decreased from $7.0 million for the six-month period ended September 29, 2024 to $4.4 million for the six-month period ended September 28, 2025.

The decrease in the current year was partially the result of an increase in inventories in the current year that was $3.1 million higher than the increase in the prior year and a decrease of $3.2 million in accrued liabilities from the prior year to the current year.

This decrease was partially offset by a decrease in accounts receivable in the current year that was $4.3 million higher than the decrease in the prior year.

Net cash used in investing activities decreased from $16.8 million in the prior year to $260 thousand in the current year which were primarily associated with capital expenditures for property, plant and equipment.

Prior year capital expenditures included $16.4 million for the Acquisition.

Net cash used in financing activities, which were primarily associated with net repayments under the revolving line of credit and payments of the term loan, was $3.9 million compared to net cash provided by financing activities in the prior year of $11.0 million.

This decrease was due to the issuance of an $8.0 million term loan in the prior year as well as the Company paying down debt in the current year.

As of September 28, 2025, the balance on the revolving line of credit with CIT was $10.7 million, there was no letter of credit outstanding and $13.7 million was available under the revolving line of credit with CIT based on the Company’s eligible accounts receivable and inventory balances.

To reduce its exposure to credit losses and to enhance the predictability of its cash flow, the Company assigns the majority of its trade accounts receivable to CIT under factoring agreements.

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Factoring fees, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of operations, amounted to $70,000 and $74,000 for the three-month periods ended June 29, 2025, and June 30, 2024, respectively.

Factoring fees, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income, amounted to $110 thousand and $94 thousand for the three-month periods ended September 28, 2025, and September 29, 2024, respectively, and amounted to $180 thousand and $168 thousand for the six-month periods ended September 28, 2025 and September 29, 2024, respectively.

On June 23, 2025, the Company and CIT amended the Company’s financing agreement with CIT to:

(i) provide that, until the Company’s term loan is paid in full, the Company shall maintain at all times Excess Availability (as defined in the financing agreement) equal to or the greater of (a) the sum of the balance outstanding under the Company’s term loan plus $1,000,000 or (b) $4,000,000 (the “Availability Covenant”);

(i) provide that, until the Company’s term loan is paid in full, the Company shall maintain at all times Excess Availability (as defined in the financing agreement) equal to or the greater of (a) the sum of the balance outstanding under the Company’s term loan plus $1.0 million or (b) $4.0 million (the “Availability Covenant”);

and (ii) reinstate the fixed charge coverage ratio;

As of June 29, 2025, the Company has complied with the Excess Availability requirements.

As of September 28, 2025, the Company has complied with the Excess Availability requirements.

The Company’s future performance is, to a certain extent, subject to general economic, financial, competitive, legislative, regulatory and other factors beyond its control.

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

What changed 10-Q

Item 1. Financial Statements