What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-02-11 compared with 2025-11-12 · 115 added, 135 removed, 413 unchanged (38% of the section changed)

3 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 28, 2025 AND MARCH 30, 2025

DECEMBER 28, 2025 AND MARCH 30, 2025

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

September 28, 2025

December 28, 2025

March 30, 2025

1 unchanged sentence

Cash and cash equivalents

$ 2,402 $ 521

Accounts receivable - net of allowances of $ 1,898 and $ 1,723 , respectively

6 unchanged sentences

Operating lease right of use assets

10,265 12,253

Property, plant and equipment - net of accumulated depreciation of $ 5,615 and $ 5,037 , respectively

22 unchanged sentences

Common stock - $ 0.01 par value per share;

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

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

Issued 13,611,749 shares at December 28, 2025 and 13,478,402 shares at March 30, 2025

Additional paid-in capital

59,213 58,637

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

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

( 15,889 ) ( 15,880 )

9 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

THREE- AND NINE-MONTH PERIODS ENDED DECEMBER 28, 2025 AND DECEMBER 29, 2024

(amounts in thousands, except per share amounts)

Three-Month Periods Ended

Six-Month Periods Ended

September 28, 2025

September 29, 2024

September 28, 2025

September 29, 2024

Nine-Month Periods Ended

December 28, 2025

December 29, 2024

December 28, 2025

December 29, 2024

Cost of products sold

Marketing and administrative expenses

Income from operations

(Loss) income from operations

Other (expense) income:

Interest expense - net of interest income

(Loss) gain on sale of property, plant and equipment

Other income (expense) - net

8 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

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

THREE- AND NINE-MONTH PERIODS ENDED DECEMBER 28, 2025 AND DECEMBER 29, 2024

Common Shares

1 unchanged sentence

Number of Shares

Paid-in Capital

Retained Earnings (Accumulated

Shareholders' Equity

Shareholders'

(Dollar amounts in thousands)

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

Balances - September 29, 2024

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

1 unchanged sentence

- - - - 180 - 180

Acquisition of treasury stock

- - - - - 893 893

- - - - - 860 860

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

- - - - - ( 832 ) ( 832 )

Balances - September 29, 2024

Balances - December 29, 2024

13,299,402 $ 132 ( 2,905,661 ) $ ( 15,860 ) $ 58,459 $ 8,345 $ 51,076

Balances - June 29, 2025

Balances - September 28, 2025

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

Issuance of shares, net of forfeitures

Forfeiture of shares

( 5,000 ) - - - - - -

1 unchanged sentence

- - - - 187 - 187

Acquisition of treasury stock

- - - - - 1,510 1,510

- - - - - 1,157 1,157

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

- - - - - ( 855 ) ( 855 )

Balances - September 28, 2025

Balances - December 28, 2025

13,611,749 $ 136 ( 2,913,962 ) $ ( 15,889 ) $ 59,213 $ ( 4,261 ) $ 39,199

Six-Month Periods

Nine-Month Periods

Balances - March 31, 2024

9 unchanged sentences

- - - - - ( 2,488 ) ( 2,488 )

Balances - September 29, 2024

Balances - December 29, 2024

13,299,402 $ 132 ( 2,905,661 ) $ ( 15,860 ) $ 58,459 $ 8,345 $ 51,076

10 unchanged sentences

- - - - - ( 2,551 ) ( 2,551 )

Balances - September 28, 2025

Balances - December 28, 2025

13,611,749 $ 136 ( 2,913,962 ) $ ( 15,889 ) $ 59,213 $ ( 4,261 ) $ 39,199

3 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

NINE-MONTH PERIODS ENDED DECEMBER 28, 2025 AND DECEMBER 29, 2024

(amounts in thousands)

Six-Month Periods Ended

September 28, 2025

September 29, 2024

Nine-Month Periods Ended

December 28, 2025

December 29, 2024

Operating activities:

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

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

Depreciation of property, plant and equipment

3 unchanged sentences

Deferred income taxes

Loss (gain) on sale of property, plant and equipment

Reserve for unrecognized tax liabilities

2 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

1 unchanged sentence

Dividends paid

( 1,680 ) ( 1,646 )

Net cash (used in) provided by financing activities

( 3,854 ) 10,953

Net increase in cash and cash equivalents

1 unchanged sentence

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

FOR THE THREE- AND NINE-MONTH PERIODS ENDED DECEMBER 28, 2025 AND DECEMBER 29, 2024

Note 1 – Interim Financial Statements

4 unchanged sentences

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.

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 December 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 - 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.

Operating results for the three - and nine -month periods ended December 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 ASU No.

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

The Company is in the process of adopting ASU No.

2023 - 09 beginning with the Company's Annual Report on Form 10-K for the period ending March 29, 2026.

The Company does not expect ASU No.

2023 - 09 to have a material impact on the consolidated financial statements.

In November 2024, the FASB issued ASU No.

4 unchanged sentences

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 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.

The Company has determined that all other ASUs issued which had become effective as of December 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

The Company’s operations are managed and reported to its Chief Executive Officer, the Company’s chief operating decision maker (“CODM”), on a consolidated basis.

The Company operates primarily in one principal segment, infant, toddler and juvenile products.

The Company operates in one principal segment, infant, toddler and juvenile products.

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

4 unchanged sentences

Three-Month Periods Ended

Six-Month Periods Ended

September 28, 2025

September 29, 2024

September 28, 2025

September 29, 2024

Nine-Month Periods Ended

December 28, 2025

December 29, 2024

December 28, 2025

December 29, 2024

$ 20,717 $ 23,351 59,890 $ 64,023

10 unchanged sentences

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

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.

depreciation expense and amortization expense were $ 189 thousand and $ 187 thousand, respectively, for the three months ended December 28, 2025 while for the three months ended December 29, 2024, depreciation and amortization expenses were $ 158 thousand and $ 228 thousand, respectively.

Depreciation expense and amortization expense were $ 578 thousand and $ 588 thousand, respectively, for the nine months ended December 28, 2025 while for the nine months ended December 29, 2024 depreciation and amortization expenses were $ 501 thousand and $ 574 thousand, respectively.

Note 3 – Licensing Agreements

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.

The Company has entered into licensing agreements that provide for royalty payments based on a percentage of the 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.

Royalty expense is included in cost of products sold in the accompanying unaudited condensed consolidated statements of income and amounted to $ 1.8 million and $ 1.7 million for the three months ended December 28, 2025 and December 29, 2024, respectively, and amounted to $ 4.7 and $ 4.5 million for the nine months ended December 28, 2025 and December 29, 2024, respectively.

Note 4 – Concentrations

7 unchanged sentences

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.

For the nine months ended December 28, 2025, purchases from the Company’s three largest suppliers accounted for approximately 18 %, 11 % and 10 % 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.

2 unchanged sentences

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.

government 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 continues to evaluate the impact of the 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.

5 unchanged sentences

License Agreement

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

December 31, 2027

Infant Feeding and Bath

Infant and Toddler Bedding, Diaper Bags, Infant Feeding and Bath (USA and Canada), Bibs and Disposables (USA, Canada and Japan)

December 31, 2027

1 unchanged sentence

December 31, 2025

The Company expects to renew the licenses upon their expiration.

The STAR WARS – Lego Plush license expired December 31, 2025, in accordance with its terms.

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.

1 unchanged sentence

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

Nine-Month Periods Ended

December 28, 2025

December 29, 2024

Amazon.com, Inc.

9 unchanged sentences

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.

As of December 28, 2025 and March 30, 2025, the Company’s balances of inventory were $ 31.2 million and $ 27.8 million, respectively, net of an inventory obsolescence reserve of $ 960 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

December 28, 2025

March 30, 2025

6 unchanged sentences

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.

Depreciation expense amounted to $ 189 thousand and $ 158 thousand for the three months ended December 28, 2025 and December 29, 2024, respectively, and amounted to $ 578 thousand and $ 501 thousand for the nine months ended December 28, 2025 and December 29, 2024, respectively.

Note 7 – Financing Arrangements

7 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 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.

Factoring fees, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income, amounted to $ 74 thousand and $ 115 thousand for the three -month periods ended December 28, 2025 and December 29, 2024, respectively, and amounted to $ 254 thousand and $ 283 thousand for the nine -month periods ended December 28, 2025 and December 29, 2024, respectively.

Credit Facility:

2 unchanged sentences

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

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 %.

On December 28, 2025, the Company elected to pay interest on balances owed under the revolving line of credit under the SOFR option, which was 5.5 %.

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 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.

At December 28, 2025 and March 30, 2025, the balances on the revolving line of credit were $ 11.3 million and $ 11.9 million, respectively, there was no letter of credit outstanding and $ 10.6 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.

3 unchanged sentences

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 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).

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

The balance on the $ 8.0 million term loan as of December 28, 2025 was $ 5.2 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 % ( 6.1 % at December 28, 2025).

Credit Concentration:

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

The Company’s accounts receivable at December 28, 2025 amounted to $ 17.9 million, net of allowances of $ 1.9 million.

Of this amount, $ 14.7 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.

10 unchanged sentences

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:

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

Fair Value Measurement Using

11 unchanged sentences

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

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

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

$ 500 thousand in fiscal 2026, $ 2.0 million in fiscal 2027, $ 2.2 million in fiscal 2028, $ 500 thousand in fiscal 2029 and $ 11.3 million in fiscal 2030.

Note 8 – Goodwill and Intangible Assets

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

7 unchanged sentences

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 September 28, 2025.

The Company reported no goodwill at December 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):

The gross amount, accumulated amortization and net balances of the Company’s intangible assets as of December 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.

Amortization expense, which is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income, amounted to $ 187 thousand and $ 228 thousand for the three -month periods ended December 28, 2025 and December 29, 2024, respectively, and amounted to $ 588 thousand and $ 574 thousand for the nine -month periods ended December 28, 2025 and December 29, 2024, respectively.

Note 9 – Acquisition

5 unchanged sentences

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.

On December 23, 2025, the Company received $ 2.5 million in proceeds from certain claims filed by the Company under a representations and warranties insurance policy purchased in connection with the Acquisition (the “Insurance Proceeds”).

The Insurance Proceeds are recorded within other income in the accompanying unaudited condensed consolidated statements of income for the three -and nine -month periods ended December 28, 2025.

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

13 unchanged sentences

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.

7 unchanged sentences

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.

Goodwill is expected to be deductible for income tax purposes, net of the effects of the adjustments outlined in the table above and the Insurance Proceeds.

Amortization expense associated with the acquired amortizable intangible assets was $ 88 thousand and $ 98 thousand for the three months ended December 28, 2025 and December 29, 2024, respectively, and $ 264 thousand and $ 166 thousand for the nine months ended December 28, 2025 and December 29,2024, respectively, which is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income.

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.

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

Advertising expense is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income and amounted to $ 391 thousand and $ 151 thousand for the three months ended December 28, 2025 and December 29, 2024, respectively, and amounted to $ 1.2 million and $ 411 thousand for the nine months ended December 28, 2025 and December 29, 2024, respectively.

Note 11 – Income Taxes

The Company’s provision for income taxes includes all currently payable federal and state taxes and is based upon the Company’s estimated annual effective tax rate (“ETR”).

The Company’s provisions for income taxes for the nine -month periods ended December 28, 2025 and December 29, 2024 are based upon an estimated annual ETR of 24.7 % and 22.4 %, respectively.

The increase in the ETR primarily relates to the result of tax credits that were included in the prior year provision that were not applicable in the current year provision and increase in state taxes due to jurisdictional nexus.

The Company provides for deferred income taxes based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates that will be in effect when the differences are expected to reverse.

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

28 unchanged sentences

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.

government 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 continues to evaluate the impact of the 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 rate or amount, scope and nature of the tariffs in the future, any countermeasures that China may take and any mitigation actions that may become available.

For additional discussion of trends, uncertainties and other factors that could impact the Company’s operating results, refer to the risk factors disclosed in Item 1A.

1 unchanged sentence

RESULTS OF OPERATIONS

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):

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

Three-Month Periods Ended

Six-Month Periods Ended

September 28, 2025

September 29, 2024

September 28, 2025

September 29, 2024

Nine-Month Periods Ended

December 28, 2025

December 29, 2024

December 28, 2025

December 29, 2024

Net sales by category:

10 unchanged sentences

% of net sales

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 were $20.7 million for the three months ended December 28, 2025, compared with $23.4 million for the three months ended December 29, 2024, a decrease of $2.6 million or 11.3%.

Sales of bedding and diaper bags decreased by $3.3 million, while the sales of bibs, toys and disposable products increased by $0.7 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 $59.9 million for the nine months ended December 28, 2025 compared with $64.0 million for the nine months ended December 29, 2024, a decrease of $4.1 million or 6.5%.

Sales of bedding and diaper bags decreased by $4.4 million and sales of bibs, toys and disposable products increased by $0.3 million.

The decrease in bedding and diaper bags was primarily due to the decrease in the number of items included in programs 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 $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.

Gross profit decreased by $1.2 million from the prior year reflecting a margin of 23.5% for the three-month period ended December 28, 2025 compared to 26.1% of net sales for the three-month period ended December 29, 2024.

Gross profit decreased by $2.1 million from the prior year reflecting a margin of 25.0% for the nine-month period ended December 28, 2025 compared to 26.6% of net sales for the nine-month period ended December 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 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.

Marketing and administrative expenses increased by $0.6 million and changed to 24.0% of net sales for the three-month period ended December 28, 2025 from 18.8% of net sales for the three-month period ended December 29, 2024.

The increase was due to severance expenses incurred in connection with operational consolidation efforts.

Marketing and administrative expenses increased by $0.3 million and changed to 24.0% of net sales for the nine-month period ended December 28, 2025 from 22.0% of net sales for the nine-month period ended December 29, 2024.

The increase in the current year period is due to an increase in advertising costs and severance expense which were partially offset by acquisition costs in the prior period.

Other Income (Expense):

Other income increased $2.5 million from the three-month period ended December 29, 2024 to the three-month period ended December 28, 2025, and increased $2.7 million from the nine-month period ended December 29, 2024 to the nine-month period ended December 29, 2025.

The increase is primarily due to the $2.5 million in Insurance Proceeds received during the quarter related to certain claims filed by the Company under a representation and warranties insurance policy purchased in connection with the Acquisition.

The financial impact of the Insurance Proceeds, excluding certain legal and license related expenses, resulted in a net impact of $2.1 million to income before income tax expense for the three months ended December 28, 2025.

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.

Income tax expense increased $0.2 million from the three-month period ended December 29, 2024 to the three-month period ended December 28, 2025, and increased $0.2 million from the nine-month period ended December 29, 2024 to the nine-month period ended December 29, 2025.

The Company’s estimated annual ETR was 24.7% and 22.3% for the three-month periods ended December 28, 2025 and December 29, 2024, respectively, and was 24.7% and 22.4% for the nine-month periods ended December 28, 2025 and December 29, 2024, respectively.

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 $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 provided by operating activities increased from $7.0 million for the nine-month period ended December 29, 2024 to $7.1 million for the nine-month period ended December 28, 2025.

The increase in the current year was partially the result of a decrease of $6.6 million in accounts receivable that was $6.0 million higher than the decrease in the prior year.

The increase in the current year was partially offset by an increase in inventories in the current year that was $2.7 million higher than the increase in the prior year, a decrease of $2.9 million in accrued liabilities from the prior year to the current year and an increase in accounts payable in the current year that was $1.6 million lower than the increase in the prior year.

Net cash used in investing activities decreased from $17.0 million in the prior year to $616 thousand in the current year which were primarily associated with capital expenditures for property, plant and equipment.

2 unchanged sentences

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.

As of December 28, 2025, the balance on the revolving line of credit with CIT was $11.3 million, there was no letter of credit outstanding and $10.6 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.

4 unchanged sentences

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.

Factoring fees, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income, amounted to $74 thousand and $115 thousand for the three-month periods ended December 28, 2025, and December 29, 2024, respectively, and amounted to $254 thousand and $283 thousand for the nine-month periods ended December 28, 2025 and December 29, 2024, respectively.

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

2 unchanged sentences

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

As of December 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.

1 unchanged sentence

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