What changed in this filing

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Item 1. Financial Statements

2026-08-12 compared with 2026-02-11 · 180 added, 236 removed, 292 unchanged (59% of the section changed)

3 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

DECEMBER 28, 2025 AND MARCH 30, 2025

JUNE 28, 2026 AND MARCH 29, 2026

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

December 28, 2025

June 28, 2026

March 29, 2026

1 unchanged sentence

Cash and cash equivalents

$ 2,402 $ 521

Accounts receivable - net of allowances of $ 1,563 and $ 1,521 , respectively

2 unchanged sentences

26,792 28,365

Other current assets 4,512 -

Prepaid expenses

19 unchanged sentences

Long-term debt

14,432 16,512

Operating lease liabilities, noncurrent

4 unchanged sentences

Common stock - $ 0.01 par value per share;

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

Authorized 40,000,000 shares at June 28, 2026 and March 29, 2026;

Issued 13,674,249 shares at June 28, 2026 and March 29, 2026

Additional paid-in capital

59,605 59,402

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

Treasury stock - at cost - 2,913,962 shares at June 28, 2026 and March 29, 2026

( 15,889 ) ( 15,889 )

Retained Earnings (accumulated deficit)

Accumulated deficit

( 3,638 ) ( 4,837 )

6 unchanged sentences

AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE-MONTH PERIODS ENDED JUNE 28, 2026 AND JUNE 29, 2025

(amounts in thousands, except per share amounts)

Three-Month Periods Ended

Nine-Month Periods Ended

December 28, 2025

December 29, 2024

December 28, 2025

December 29, 2024

June 28, 2026

June 29, 2025

$ 16,766 $ 15,478

Cost of products sold

Marketing and administrative expenses

(Loss) income from operations

Other (expense) income:

Income (loss) from operations

2,799 ( 1,199 )

Other income (expense):

Interest expense - net of interest income

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

Other income (expense) - net

Income before income tax expense

Income tax expense

( 190 ) ( 283 )

Other income - net

Income (loss) before income tax expense

2,774 ( 1,383 )

Income tax expense (benefit)

Net income (loss)

$ 2,060 $ ( 1,104 )

Weighted average shares outstanding:

10,760 10,570

Effect of dilutive securities

Earnings per share - basic and diluted

10,760 10,570

Earnings (loss) per share - basic and diluted

$ 0.19 $ ( 0.10 )

See notes to consolidated financial statements.

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

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

THREE-MONTH PERIODS ENDED JUNE 28, 2026 AND JUNE 29, 2025

Common Shares

3 unchanged sentences

(Dollar amounts in thousands)

Three-Month Periods

Balances - September 29, 2024

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

Stock-based compensation

- - - - 180 - 180

- - - - - 893 893

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

- - - - - ( 832 ) ( 832 )

Balances - December 29, 2024

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

Balances - September 28, 2025

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

Forfeiture of shares

( 5,000 ) - - - - - -

Stock-based compensation

- - - - 187 - 187

- - - - - 1,510 1,510

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

- - - - - ( 855 ) ( 855 )

Balances - December 28, 2025

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

Nine-Month Periods

Balances - March 30, 2025

4 unchanged sentences

- - - - 200 - 200

Acquisition of treasury stock

- - - - - ( 1,104 ) ( 1,104 )

- - - - - 1,431 1,431

Dividends declared on common stock - $0.32 per share, net of forfeitures

- - - - - ( 846 ) ( 846 )

Balances - December 29, 2024

Balances - June 29, 2025

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

1 unchanged sentence

13,674,249 $ 137 ( 2,913,962 ) $ ( 15,889 ) $ 59,402 $ ( 4,837 ) $ 38,813

Issuance of shares, net of forfeitures

133,347 1 - - ( 1 ) - -

Stock-based compensation

- - - - 203 - 203

Acquisition of treasury stock

- - - - - 2,060 2,060

- - - - - 1,563 1,563

Dividends declared on common stock - $0.32 per share, net of forfeitures

- - - - - ( 861 ) ( 861 )

Balances - December 28, 2025

Balances - June 28, 2026

13,674,249 $ 137 ( 2,913,962 ) $ ( 15,889 ) $ 59,605 $ ( 3,638 ) $ 40,215

3 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

THREE-MONTH PERIODS ENDED JUNE 28, 2026 AND JUNE 29, 2025

(amounts in thousands)

Nine-Month Periods Ended

December 28, 2025

December 29, 2024

Three-Month Periods Ended

June 28, 2026

June 29, 2025

Operating activities:

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

Net income (loss)

$ 2,060 $ ( 1,104 )

Adjustments to reconcile net income (loss) 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

( 80 ) ( 213 )

Reserve for unrecognized tax liabilities

2 unchanged sentences

Accounts receivable

1,573 ( 3,772 )

Other current assets ( 4,512 ) -

Prepaid expenses

Lease liabilities

( 1,018 ) ( 1,167 )

Accounts payable

3 unchanged sentences

Capital expenditures for property, plant and equipment

Payment to acquire Baby Boom

( 156 ) ( 86 )

Net cash used in investing activities

( 156 ) ( 86 )

Financing activities:

Repayments under revolving line of credit

( 18,817 ) ( 21,000 )

Borrowings under revolving line of credit

14,782 16,875

Payments on term loan

Proceeds from term loan, net of issuance costs

Shares withheld to pay taxes on stock compensation

( 500 ) ( 500 )

Dividends paid

Net cash (used in) provided by financing activities

Net increase in cash and cash equivalents

( 825 ) ( 831 )

Net cash used in financing activities

( 5,360 ) ( 5,456 )

Net decrease in cash and cash equivalents

( 6 ) ( 294 )

Cash and cash equivalents at beginning of period

5 unchanged sentences

Property, plant and equipment purchased but unpaid

( 27 ) ( 49 )

Dividends declared but unpaid

( 861 ) ( 890 )

See notes to consolidated financial statements.

2 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

FOR THE THREE-MONTH PERIODS ENDED JUNE 28, 2026 AND JUNE 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 December 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 June 28, 2026 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 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.

Operating results for the three -month period ended June 28, 2026 are not necessarily indicative of the results that may be expected by the Company for its fiscal year ending March 28, 2027.

For further information, refer to the Company’s consolidated financial statements and notes thereto for the fiscal year ended March 29, 2026, included in the Company’s Annual Report on Form 10 -K filed with the United States Securities and Exchange Commission (the “SEC”).

2 unchanged sentences

Recently-Issued Accounting Standards:

In December 2023, the FASB issued ASU No.

2023 - 09, Income Taxes (Topic 740 ) – Improvements to Income Tax Disclosures , the objective of which is to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in ASU No.

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

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.

2024 - 03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220 - 40 ) - Disaggregation of Income Statement Expenses, the objective of which is to enhance the transparency and usefulness of financial statements by requiring public business entities to provide more detailed disclosures about their expenses.

2024 - 03, Income Statement – Reporting Comprehensive – Expense Disaggregation Disclosures (Subtopic 220 - 40 ) – Disaggregation of Income Statement Expenses ("ASU No.

2024 - 03" ), the objective of which is to enhance the transparency and usefulness of financial statements by requiring public entities to provide more detailed disclosures about their expenses.

The amendments in ASU No.

2 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 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.

The Company has determined that all other ASUs issued which had become effective as of June 28, 2026, 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

1 unchanged sentence

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.

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.

These products consist of infant and toddler bedding, diaper bags, bibs, plush, dolls, disposables, toys and feeding 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.

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

2 unchanged sentences

Three-Month Periods Ended

Nine-Month Periods Ended

December 28, 2025

December 29, 2024

December 28, 2025

December 29, 2024

June 28, 2026

June 29, 2025

$ 16,766 $ 15,478

Cost of products sold

15,855 17,253 44,939 47,002

Marketing and administrative expenses

4,968 4,397 14,393 14,108

Interest expense, net and other

( 2,214 ) 426 ( 1,747 ) 897

Income tax expense

598 382 742 585

Segment net income

1 unchanged sentence

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

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.

depreciation expense and amortization expense were $ 185 thousand and $ 187 thousand, respectively, for the three -month period ended June 28, 2026 while for the three -month period ended June 29, 2025, depreciation and amortization expenses were $ 198 thousand and $ 214 thousand, respectively.

Note 3 – Licensing Agreements

1 unchanged sentence

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 $ 1.8 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.

Royalty expense is included in cost of products sold in the accompanying unaudited condensed consolidated statements of operations and amounted to $ 1.3 million and $ 1.0 million for the three -month period ended June 28, 2026 and June 29, 2025, respectively.

Note 4 – Concentrations

3 unchanged sentences

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 maintains foreign a representative office located in Shanghai, China, which is 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.

1 unchanged sentence

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

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.

For the three -month period ended June 28, 2026, purchases from the Company’s three largest suppliers accounted for approximately 17 %, 11 % and 10 % of purchases as compared to 15 %, 13 % and 11 % for the three -month period ended June 29, 2025.

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.

However, there is 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 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.

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

Some of these tariffs, the International Emergency Economic Powers Act ("IEEPA") tariffs, were recently deemed illegal by the U.S.

Supreme Court ruling issued on February 20, 2026.

The Company incurred approximately $ 5.3 million and $ 267 thousand of IEEPA tariffs during fiscal year 2026 and 2025, respectively.

In April 2026, the U.S.

Customs and Border Protection launched the Consolidated Administration and Processing of Entities ("CAPE"), a platform for importers of record to submit IEEPA tariff refund requests.

The Company has evaluated its eligibility to submit IEEPA tariff refund requests, is complying with all applicable refund procedures and has submitted its eligible entries.

As of June 28, 2026, $ 4.7 million of the refunds submitted were accepted by the CAPE system.

These accepted claims for the recovery of IEEPA tariffs were deemed probable under the loss recovery model as of June 28, 2026.

Of this amount, $ 0.2 million was received during the quarter and the remaining $ 4.5 million has been recorded as a receivable included within other current assets on the Condensed Consolidated Balance Sheets.

The Company recognized a reduction in cost of sales of $ 3.7 million within the Condensed Consolidated Statements of Operations.

Additionally, $ 0.9 million was recorded as a reduction to inventory for tariff costs that remain capitalized within inventory.

As of August 5, 2026, the Company has received $ 4.6 million in IEEPA refunds.

The Company continues to evaluate the impact of the tariffs and its potential refunds on the additional $ 0.9 million of refund requests.

While significant refunds have been received, some uncertainty remains regarding the ultimate availability, timing, and amount of a full recovery of this amount.

The Company will continue to monitor developments and will recognize any additional recovery when realization becomes probable.

Licensed Products:

2 unchanged sentences

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

December 31, 2027

STAR WARS - Lego Plush

December 31, 2025

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

Sales of licensed products represented 49 % of the Company’s gross sales in both the three -month periods ended June 28, 2026 and June 29, 2025, which included 24 % and 18 % of gross sales in the three -month periods ended June 28, 2026 and June 29, 2026, respectively, under the Company’s license agreements with affiliated companies of The Walt Disney Company (“Disney”).

The Company’s license agreement with Disney expires December 31, 2027, and covers infant and toddler bedding, diaper bags, infant feeding and bath in the United States and Canada, and bibs and disposable products in the United States, Canada and Japan.

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:

Nine-Month Periods Ended

December 28, 2025

December 29, 2024

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

Three-Month Periods Ended

June 28, 2026

June 29, 2025

Amazon.com, Inc.

1 unchanged sentence

Note 5 – Inventories

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 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.

As of June 28, 2026 and March 29, 2026, the Company’s balances of inventory were $ 26.8 million and $ 28.4 million, respectively.

Note 6 – Property, Plant and Equipment

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

December 28, 2025

June 28, 2026

March 29, 2026

1 unchanged sentence

Machinery and equipment

$ 6,389 $ 6,697

Leasehold improvements

3 unchanged sentences

Property, plant and equipment - net

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.

$ 2,008 $ 2,011

Depreciation expense amounted to $ 185 thousand and $ 198 thousand for the three -month period ended June 28, 2026 and June 29, 2025, 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 $ 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.

Factoring fees, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of operations, were $ 77 thousand and $ 70 thousand for the three -month periods ended June 28, 2026 and June 29, 2025, respectively.

Credit Facility:

2 unchanged sentences

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

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 %.

On June 28, 2026, the Company had elected to pay interest on balances owed under the revolving line of credit under the SOFR option, which was 5.2 %.

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 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.

At June 28, 2026 and March 29, 2026, the balances on the revolving line of credit were $ 5.4 million and $ 9.5 million, respectively, there was no letter of credit outstanding and $ 11.9 million and $ 12.5 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 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).

As of June 28, 2026, the Company was in compliance with the Excess Availability requirements.

The balance on the $ 8.0 million term loan as of June 28, 2026 was $ 4.2 million, including $ 2.0 million classified as current.

The term loan was issued on July 19, 2024, is payable by the Company in 48 equal monthly installments and bears interest at SOFR plus 2.25 % ( 5.9 % at June 28, 2026).

Credit Concentration:

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

The Company’s accounts receivable at June 28, 2026 amounted to $ 13.7 million, net of allowances of $ 1.6 million.

Of this amount, $ 11.6 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.

1 unchanged sentence

Of this amount, $ 16.3 million was due from CIT under the factoring agreements, which represented the maximum loss that the Company could have incurred if CIT had failed completely to perform its obligations under the factoring agreements.

The Company evaluates the fair value of its debt using the three level fair value heirarchy.

The Company evaluates the fair value of its debt using the three level fair value hierarchy.

Fair value should be based on the assumptions market participants would use when pricing the liability and establishes a fair value hierarchy that prioritizes the inputs used to develop those assumptions and measure fair value.

5 unchanged sentences

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

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 December 28, 2025:

The following table presents fair value of debt as of June 28, 2026:

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 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.

For the purpose of presenting and measuring for impairment of goodwill, the Company has two reporting units:

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 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.

As a result, the Company performed a quantitative goodwill impairment test.

Based on the goodwill impairment analysis performed, the Company determined that the estimated fair values of its reporting units were lower than the carrying value, indicating the goodwill within these reporting units had been impaired.

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 December 28, 2025.

The aggregate maturities of long-term debt for each of the five years subsequent to June 28, 2026 are:

$ 1.5 million in fiscal 2027, $ 2.2 million in fiscal 2028, $ 500 thousand in fiscal 2029, and $ 5.4 million in fiscal 2030.

Note 8 – Intangible Assets

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 December 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 June 28, 2026 and March 29, 2026, are as follows (in thousands):

Accumulated Amortization

Tradename and trademarks

$ 2,751 $ 3,217 $ 1,959 $ 2,405 $ 792 $ 812

Non-compete covenants

- 98 - 98 - -

1,601 1,601 1,226 1,212 375 389

Customer relationships

8,051 8,174 7,235 7,292 816 882

Licensing relationships

4,800 4,800 695 608 4,105 4,192

Total intangible assets

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

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 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.

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.

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.

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

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.

$ 17,203 $ 17,890 $ 11,114 $ 11,615 $ 6,088 $ 6,275

Amortization expense, which is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of operations, amounted to $ 187 thousand and $ 214 thousand for the three -month periods ended June 28, 2026 and June 29, 2025.

Note 9 – Advertising Costs

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.

Advertising expense is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of operations and amounted to $ 242 thousand and $ 396 thousand for the three -month period ended June 28, 2026 and June 29, 2025.

Note 10 – 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’s provisions for income taxes for the three -month periods ended June 28, 2026 and June 29, 2025 are based upon an estimated annual ETR of 24.1 % and 22.3 %, respectively.

The increase in the ETR primarily relates to higher state income taxes in the current period as compared to the prior period.

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.

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Forward-looking statements involve known and unknown risks and uncertainties that may cause future results to differ materially from those suggested by the forward-looking statements.

These risks include, among others, general economic conditions, including changes in interest rates, in the overall level of consumer spending and in the price of oil, cotton and other raw materials used in the Company’s products, changing competition, changes in the retail environment, the Company’s ability to successfully integrate newly acquired businesses, the level and pricing of future orders from the Company’s customers, the Company’s dependence upon third-party suppliers, including some located in foreign countries with unstable political situations, the Company’s ability to successfully implement new information technologies, customer acceptance of both new designs and newly-introduced product lines, actions of competitors that may impact the Company’s business, disruptions to transportation systems or shipping lanes used by the Company or its suppliers, and the Company’s dependence upon licenses from third parties.

These risks include, among others, general economic conditions, including the impact of increased U.S.

tariffs and any retaliatory measures by impacted exporting countries, the Company’s ability to mitigate the impact of such tariffs, changes in interest rates, changes in the overall level of consumer spending and in the price of oil, cotton and other raw materials used in the Company’s products, changing competition, changes in the retail environment, the Company’s ability to successfully integrate newly acquired businesses, the level and pricing of future orders from the Company’s customers, the Company’s dependence upon third-party suppliers, including some located in foreign countries with unstable political situations, the Company’s ability to successfully implement new information technologies, customer acceptance of both new designs and newly-introduced product lines, actions of competitors that may impact the Company’s business, disruptions to transportation systems or shipping lanes used by the Company or its suppliers, and the Company’s dependence upon licenses from third parties.

Reference is also made to the Company’s periodic filings with the SEC for additional factors that may impact the Company’s results of operations and financial condition.

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The Company was originally formed as a Georgia corporation in 1957 and was reincorporated as a Delaware corporation in 2003.

The Company primarily operates indirectly through its wholly-owned subsidiaries, NoJo Baby & Kids, Inc.

The Company primarily operates through its wholly-owned subsidiaries, NoJo Baby & Kids, Inc.

and Sassy Baby, Inc.

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

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

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.

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

The infant, toddler and juvenile consumer products industry is highly competitive.

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

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

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

The Company’s products are warehoused and distributed domestically from leased facilities located in Compton, California and Eden Valley, Minnesota and internationally from third-party logistics warehouses in Belgium and England.

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.

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

During 2025, the U.S.

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

Some of these tariffs, the IEEPA tariffs, were recently deemed illegal by the U.S.

Supreme Court ruling issued on February 20, 2026.

The Company incurred approximately $5.3 million and $267 thousand of IEEPA tariffs during fiscal year 2026 and 2025, respectively.

In April 2026, the U.S.

Customs and Border Protection launched CAPE, a platform for importers of record to submit IEEPA tariff refund requests.

The Company has evaluated its eligibility to submit IEEPA tariff refund requests, is complying with all applicable refund procedures and has submitted its eligible entries.

As of June 28, 2026, $4.7 million of the refunds submitted were accepted by the CAPE system.

These accepted claims for the recovery of IEEPA tariffs were deemed probable under the loss recovery model as of June 28, 2026.

Of this amount, $0.2 million was received during the quarter and the remaining $4.5 million has been recorded as a receivable included within other current assets on the Condensed Consolidated Balance Sheets.

The Company recognized a reduction in cost of sales of $3.7 million within the Condensed Consolidated Statements of Operations.

Additionally, $0.9 million was recorded as a reduction to inventory for tariff costs that remain capitalized within inventory.

As of August 5, 2026, the Company has received $4.6 million in IEEPA refunds.

The Company continues to evaluate the impact of the tariffs and its potential refunds on the additional $0.9 million of refund requests.

While significant refunds have been received, some uncertainty remains regarding the ultimate availability, timing, and amount of a full recovery of this amount.

The Company will continue to monitor developments and will recognize any additional recovery when realization becomes probable.

A summary of certain factors that management considers important in reviewing the Company’s results of operations, financial position, liquidity and capital resources is set forth below, which should be read in conjunction with the accompanying condensed consolidated financial statements and related notes included in the preceding sections of this Quarterly Report.

KNOWN TRENDS AND UNCERTAINTIES

The Company primarily sources products from foreign contract manufacturers, with the largest concentration being in China.

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

During 2025, the U.S.

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.

During 2025 and 2026, the U.S.

government has increased and decreased tariffs which increases volatility in the cost of the products the Company sources from China and affects shipments from the Company’s Chinese-based suppliers.

Should the U.S.

government introduce new or additional tariffs, the Company may not be able to timely pass along to its customers any or all increases in tariffs and freight charges.

Further alterations the Company may make to its business strategy or operations to adapt to the changing tariff environment could be time-consuming and expensive .

The full impact of additional tariffs may have a material adverse effect on the Company’s business, cash flow, results of operations and financial condition.

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.

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RESULTS OF OPERATIONS

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):

The following table contains the results of operations for the three-month periods ended June 28, 2026 and June 29, 2025 and the dollar and percentage changes for those periods (in thousands, except percentages):

Three-Month Periods Ended

Nine-Month Periods Ended

December 28, 2025

December 29, 2024

December 28, 2025

December 29, 2024

June 28, 2026

June 29, 2025

Net sales by category:

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% of net sales

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.

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.

Sales were $16.8 million for the three-month period ended June 28, 2026, compared with $15.5 million for the three-month period ended June 29, 2025, an increase of $1.3 million or 8.3%.

Sales of bibs, toys and disposable products increased by $2.0 million while the sales of bedding and diaper bags decreased by $758 thousand.

The overall increase in sales was primarily due to improved inventory availability, as the inventory shortages experienced in the prior year as a result of the Company's tariff mitigation strategy were no longer a significant factor.

Additionally, the increase in bibs, toys and disposable products increased due to international sales.

Gross Profit:

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.

Gross profit increased by $4.5 million from the prior year reflecting a margin of 47.9% for the three-month period ended June 28, 2026 compared to 22.7% of net sales for the three-month period ended June 29, 2025.

The significant fluctuation in gross profit and gross margin is driven by the tariff refund recorded to cost of products sold of $3.7 million.

Gross margin without the tariff refund would have been 25.6%, an increase from the three-month period a year ago.

Marketing and Administrative Expenses:

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 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.

Marketing and administrative expenses increased by $515 thousand and changed to 31.2% of net sales for the three-month period ended June 28, 2026 from 30.5% of net sales for the three-month period ended June 29, 2025.

This increase was due to an increase in accrued incentive compensation, including $529 thousand associated with tariff refunds, compared to the prior year.

Income Tax Expense (Benefit):

Income tax expense increased $993 thousand from an income tax benefit for the three-month period ended June 29, 2025 to the three-month period ended June 28, 2026.

The Company’s estimated annual ETR was 24.1% and 22.3% for the three-month periods ended June 28, 2026 and June 29, 2025, respectively.

Although the Company does not anticipate a material change to the ETR for the remainder of fiscal year 2027, 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 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.

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 $4.6 million compared to net cash provided by financing activities in the prior year of $10.2 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 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.

Net cash provided by operating activities increased from $5.2 million for the three-month period ended June 29, 2025 to $5.5 million for the three-month period ended June 28, 2026.

The increase in the current year was partially the result of a decrease of $1.6 million in inventories that was $5.3 million lower than the increase in the prior year and an increase of $625 thousand in accrued liabilities that was $1.6 million higher than the decrease in the prior year.

These increases were partially offset by a decrease of $5.2 million in accounts receivable that was $2.2 million lower than the increase in the prior year, an increase of $4.5 million in other current assets in the current year that was $4.5 million lower in the prior year, and a decrease of $237 thousand in accounts payable in the current year that was $2.9 million lower than the increase in the prior year.

Net cash used in investing activities increased from $86 thousand in the prior year to $156 thousand in the current year which were primarily associated with capital expenditures for property, plant and equipment.

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 $5.4 million compared to $5.5 million in the prior year, a decrease of $96 thousand.

As of June 28, 2026, the balance on the revolving line of credit with CIT was $5.4 million, there was no letter of credit outstanding and $11.9 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, the Company assigns the majority of its trade accounts receivable to CIT 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.

As such, the Company does not take advances on the factoring agreements.

CIT bears credit losses with respect to assigned accounts receivable from approved shipments, while the Company bears the responsibility for adjustments from customers related to returns, allowances, claims and discounts.

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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:

(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”);

Factoring fees, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of operations, amounted to $77 thousand and $70 thousand for the three-month periods ended June 28, 2026, and June 29, 2025.

On June 23, 2025, the Company and CIT further 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 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 December 28, 2025, the Company has complied with the Excess Availability requirements.

As of June 28, 2026, 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