What changed in this filing

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Item 1. Business

2025-02-26 compared with 2024-03-08 · 70 added, 137 removed, 123 unchanged (63% of the section changed)

Overview Of Business

The Honest Company (the "Company," which may also be referred to as “we,” “us” or “our”) is a personal care company dedicated to creating clean- and sustainably-designed products .

The Honest Company (the “Company,” which may also be referred to as “we,” “us” or “our”) is a personal care company dedicated to creating cleanly-formulated and sustainably-designed products .

Our commitment to our core values, continual innovation and engaging our community has differentiated and elevated our brand and our products.

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their health, their families and their homes.

We are an omnichannel brand, ensuring our products are available wherever our consumers shop through our Retail and Digital channels.

Our differentiated platform positions us for continued growth through our trusted brand, award-winning multi-category product offering, deep digital-first connection with consumers and omnichannel accessibility.

We seek to meet consumers wherever they want to shop, balancing deep consumer connection with broad convenience and availability.

Our distribution strategy positions us for continued growth through our trusted brand and award-winning multi-category product offering.

Our Products and Product Categories

Our Chief Executive Officer, as the chief operating decision maker, organizes the Company, manages resource allocations, and measures performance on the basis of one operating segment.

Our three product categories are Diapers and Wipes, Skin and Personal Care and Household and Wellness, which represented 63%, 26%, and 11% of our 2023 revenue, respectively.

• Diapers and Wipes.

We offer an array of personal care products, including diapers, wipes and adult facial care (including skin and color cosmetics).

We use cleanly-formulated and safe ingredients designed for the whole family, including many naturally-derived ingredients that, most-importantly, are effective.

Primary components of our diapers include responsibly sourced, plant-based fluff pulp and other plant-derived materials.

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Our Clean Conscious TM wipes are compostable and plant-based, made with over 99% water and gentle on sensitive skin.

• Skin and Personal Care .

We use clean and safe ingredients, including many naturally-derived ingredients that, most-importantly, are effective.

We have an extensive line of bath, body, skincare and beauty products designed for a range of skin types and concerns, many of which are certified by trusted experts and institutions, including the National Eczema Association.

Our products are formulated to perform and our ingredients and formulas are toxicologist-audited for potential health concerns.

For example, our award-winning (1) Daily Green Juice Antioxidant Super Serum is made without harmful parabens or paraffin, synthetic fragrances, cyclomethicone or mineral oil and is formulated to improve the appearance of uneven skin tone and help your skin feel hydrated for a healthy glow.

• Household and Wellness.

We offer clean products that are designed to be safe for the whole family without compromising efficacy.

Some of the category products include baby clothing (2) made with organic cotton, pre and post natal vitamins, wellness supplements, sanitizing wipes, and hand sanitizer made with plant-based ingredients.

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(1) Allure's 2023 "Best of Beauty" award winner in the "Clean Beauty" category.

(2) Our "Holiday Fam Jams" were voted one of "Oprah's Favorite Things" in 2023.

We have an extensive line of bath and body care products for babies, as well as adult facial care products designed for a range of skin types and concerns, many of which are certified by trusted experts and institutions, including the National Eczema Association.

Our ingredients and formulas are toxicologist-audited for potential health concerns.

We also offer baby clothing made with organic cotton, family flushable wipes, sanitizing wipes and hand sanitizer made with plant-based ingredients.

Our Integrated Omnichannel Presence

Since our launch, we have built a well-integrated omnichannel presence by expanding our product accessibility across both Digital and Retail channels, including the launch of strategic partnerships with Target, Amazon and Walmart in 2014, 2017 and 2022, respectively, as well as distribution with several other retailers nationwide.

This business model has allowed us to efficiently scale our business while remaining agnostic as to the channel where consumers purchase our products.

• Digital Channel.

In 2023, we generated 49% of revenue through our Digital channel, which includes our flagship digital platform, Honest.com, and third-party pureplay ecommerce sites.

Through Honest.com, we are able to establish a direct relationship with our consumers, to more effectively influence brand experience and better understand consumer preferences and behavior.

Our website showcases the entirety of our product portfolio, offers exclusive products and services including our subscription service, houses branded content featured on product detail pages and our blog, and facilitates new product feedback.

In addition to shopping our products a la carte, consumers have the option to subscribe to our popular Diapers and Wipes bundle subscription.

In 2023, 19% of our revenue was generated from Honest.com.

Additionally, we have strong relationships with Amazon and other third-party ecommerce platforms which allow us to further our brand experience and leverage engaging assets and content featured on Honest.com.

We leverage first-party data on Amazon to improve the efficiency of our marketing spend and inform our growth strategy.

These relationships also enable us to participate in important key retailer-specific programs, leading to increased awareness with a new set of consumers.

We believe our Digital channel provides our consumers with the highest level of brand experience and further builds consumer loyalty.

• Retail Channel.

In 2023, we generated 51% of revenue through our Retail channel via strategic partnerships with leading omnichannel retailers that sell our products through brick and mortar stores and often on their own websites as well.

Our retail partnerships expand brand awareness and product accessibility, creating meaningful marketing efficiencies as we continue to scale.

Additionally, these partnerships support our differentiated value proposition by making our products conveniently accessible in the many places where our consumer shops.

As of December 31, 2023, our products can be found in approximately 51,000 retail locations across the United States and Canada.

Our omnichannel presence seeks to meet consumers wherever they want to shop, balancing deep consumer connection with broad convenience and availability.

Since our launch, we have built a well-integrated omnichannel presence by expanding our product availability, including the launch of strategic partnerships with Target, Amazon and Walmart in 2014, 2017 and 2022, respectively , as well as distribution with many other retailers nationwide .

We also increase availability of our products to more consumers through our leading retailers and their websites and Honest.com.

Our strategic retail partnerships with leading omnichannel retailers sell our products through brick and mortar stores and on their own websites.

Our retail partnerships expand brand awareness and product availability , creating meaningful marketing efficiencies as we continue to scale.

Additionally, these partnerships support our differentiated value proposition by making our products conveniently available in the many places where our consumer shops.

We maintain direct relationships with our consumers via our flagship digital platform, Honest.com, which allows us to influence brand experience and better understand consumer preferences and behavior.

Our website showcases the entirety of our product portfolio, excluding baby apparel, offers exclusive products and services including our subscription service, houses branded content featured on product detail pages and our blog, and facilitates new product feedback.

In addition to shopping for our products a la carte, consumers have the option to subscribe to our popular diapers and wipes bundle subscription.

All-commodity volume ( “ACV” ) is the measurement of a product’s distribution weighted by the overall dollar retail sales attributable to the retail location distributing such product;

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This metric provides a measurement of retail penetration that takes into account the importance of selling through retail locations with higher overall retail sales volumes, and as a result we believe that our competitors generally use the same measurement.

For the 13-weeks ended December 31, 2023, in total we had approximately 83 points ACV in national multi-outlet stores, as compared with 72 points in the year ago period, primarily driven by new distribution and growth at one of our key retailers.

For the 13-weeks ended January 5, 2025, in total we had approximately 83 points ACV in national multi-outlet stores, as compared with 84 points for the 13-weeks ended January 7, 2024, primarily driven by product and store mix changes at our key retailers.

Below is our ACV weighted distribution for the 13-week period ended:

Our Growth Strategy

The core of our marketing strategy is focused on building a purpose driven brand with deep connection to the community of shoppers we serve.

The core of our growth strategy centers around increasing physical availability of our products through expanded stores, doors, aisles, shelves and facings.

While we have made significant progress in our distribution gains, we are still under-indexed compared to competition.

Our omnichannel marketing strategy is focused on building a purpose driven brand with deep connection to the community of shoppers we serve.

We take a modern marketing approach and are constantly innovating on new ways to reach and connect with our community.

We believe this includes a best-in-class social media strategy, a deep creator/ influencer network, and a highly strategic approach to paid media.

We are committed to bringing our Honest Standard, as further described below, to new products and new categories where we believe there is a need for a higher standard for clean personal care.

We reach our consumers through a strategic omnichannel approach across complementary Digital and Retail channels to maximize consumers’ connection, experience and access to our brand.

In 2023, Target, Amazon and Walmart accounted for approximately 31%, 30% and 7% of our total revenue, respectively.

We are enhancing our technology to allow digital orders to be delivered to customers faster and providing content and community digital offerings to take advantage of our subscriptions program.

Our integrated omnichannel approach provides a meaningful benefit to our consumers who can shop our brand however they want, engendering further “stickiness” and loyalty.

Our omnichannel approach seeks to meet consumers however they want to shop, balancing deep consumer connection with broad convenience and accessibility.

With the higher costs of shipping and fulfillment activities related to our direct-to-consumer (“DTC”) business and other related costs, we will continue to shift our focus and investments towards more efficient and scalable distribution models with our current retail and digital customers.

As we move forward beyond 2025, we will gradually transition away from Honest.com as a shipping and fulfillment channel, while ensuring the site remains a resource for educating consumers, showcasing our complete product portfolio, and driving consumers to purchase offsite.

In 2023, we executed a broad-based Transformation Initiative designed to build the Honest brand and drive growth in higher-margin areas of the portfolio, strengthen our cost structure, drive focus on the most productive areas of our business, deliver greater impact from brand-building investments, and improve executional excellence across the enterprise.

Throughout 2023, we made meaningful progress across our Transformation Initiative pillars of Brand Maximization, Margin Enhancement, and Operating Discipline, including delivering cost savings throughout our supply chain, reducing marketing spend on low-return campaigns, emphasizing best-selling items, and exiting the Asian, European, and portions of our sanitization business, while building a culture that emphasizes executional excellence and discipline.

In addition, we continued our improved working capital position, including our discipline in inventory management and we executed price increases across a large portion of our portfolio that supports Brand Maximization, recognizing the value Honest provides consumers.

In fiscal year 2024, we expect to steadily improve our operating results by expanding gross margin, leveraging operating expenses and generating positive Adjusted EBITDA.

Our updated strategic plan is grounded in our Transformation Initiative Pillars, which set the building blocks for long-term value creation.

Throughout 2023 and 2024, we made meaningful progress across our Transformation Initiative Pillars of Brand Maximization, Margin Enhancement, and Operating Discipline, including delivering cost savings throughout our supply chain, optimizing our marketing spend to maximize impact, emphasizing best-selling items, and exiting the Asian, European, and portions of our sanitization business, while building a culture that emphasizes executional excellence and discipline.

In addition, we continued our improved working capital position, including our discipline in inventory management and we executed price increases that supported Brand Maximization, recognizing the value Honest provides consumers.

In fiscal year 2024, we improved our operating results by expanding gross margin, leveraging operating expenses and generating positive Adjusted EBITDA.

Our strategic plan is grounded in our Transformation Initiative Pillars, which set the building blocks for long-term value creation.

Beyond 2024, the Company expects to realize revenue growth of 4% to 6% annually and continued Adjusted EBITDA margin expansion.

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Our third-party partners are located in various locations including the United States, Mexico and China.

Our supply chain team manages these relationships and processes and, with the support of our innovation team, researches materials, components and equipment, approves and manages purchasing plans, and oversees product fulfillment.

Our supply chain team manages these

relationships and processes and, with the support of our innovation team, researches materials, components and equipment, approves and manages purchasing plans, and oversees product fulfillment.

The primary raw materials and components of our products include responsibly sourced, plant-based fluff pulp in our diapers and plant-based substrate in our baby wipes, among other materials.

Just as important as what goes into our products, we actively work with suppliers to avoid certain materials, including parabens, paraffins, synthetic fragrances, and mineral oil, that don’t meet our standards but are commonly used by mainstream brands.

Our distribution network includes two warehouses in Nevada and Pennsylvania, respectively, with retail and direct-to-consumer (“DTC”) fulfillment capabilities and value-added services operated by National Distribution Centers, LLC, or NFI, and GEODIS Logistics LLC, or GEODIS, respectively.

Just as important as what goes into our products, we actively work with suppliers to avoid certain materials, including parabens, paraffins and synthetic fragrances, that don’t meet our standards but are commonly used by mainstream brands.

Our distribution network includes two warehouses in Nevada and Pennsylvania, respectively, with retail and DTC fulfillment capabilities and value-added services operated by National Distribution Centers, LLC, or NFI, and GEODIS Logistics LLC, or GEODIS, respectively.

The warehouse in Las Vegas is a state-of-the-art facility leased by Honest with a focus on automated large scale DTC fulfillment.

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We face significant competition from both established, well-known legacy c onsumer packaged goods, or CPG players and emerging DTC brands.

• Diapers and Wipes.

Select competitors include Kimberly-Clark Corporation (maker of Huggies), Procter & Gamble Company (maker of Pampers, Pampers Pure and Luvs), WaterWipes UC and other private label brands.

• Skin and Personal Care.

Select competitors include Kenvue Inc.

(maker of Johnson’s Baby and Aveeno), The Clorox Company (parent company of Burt’s Bees, Inc.), Unilever PLC (maker of Shea Moisture), LVMH Moët Hennessy Louis Vuitton (maker of Benefit Cosmetics LLC), Estée Lauder Inc., L’Oréal S.A.

Select competitors of diapers and wipes include Kimberly-Clark Corporation (maker of Huggies and Cottonelle), Procter & Gamble Company (maker of Pampers, Pampers Pure, Luvs and Charmin), WaterWipes UC and other private label brands.

Select competitors of our skin and personal care products include Kenvue Inc.

(maker of Johnson’s Baby and Aveeno), The Clorox Company (parent company of Burt’s Bees, Inc.), Unilever PLC (maker of Shea Moisture), Estée Lauder Inc., L’Oréal S.A.

and Pacifica Beauty LLC.

• Household and Wellness.

Select competitors include Carter's Inc., The Clorox Company, Reckitt Benckiser Group plc (maker of Lysol) and Unilever PLC (maker of Seventh Generation products).

We compete based on various product attributes including clean formulation, sustainability, effectiveness and design, as well as our ability to establish direct relationships with our consumers through digital channels.

Select competitors of our baby clothing include Carter's Inc.

We believe that we compete favorably across these factors taken as a whole.

Our product-level revenue growth in 2023 significantly outpaced the category in wipes, diapers and baby personal care.

Based on independent third-party consumption data for the 52 weeks ended December 31, 2023, the dollar amount of sales of the clean and natural products of Honest wipes, diaper and baby personal care grew 39%, 23% and 19%, respectively, significantly outpacing the products in the industry as a whole which grew in wipes, diapers and baby personal care of 6%, 4% and 3%, respectively.

Our product-level point of sale consumption growth in 2024 significantly outpaced the category in wipes and baby personal care.

Based on independent third-party consumption data for the 52 weeks ended January 5, 2025 , the point of sale consumption growth for the clean and natural products of Honest wipes and baby personal care grew 25% and 16%, respectively, significantly outpacing the products in the industry as a whole which declined in wipes and baby personal care of 3% and 1%, respectively.

We believe that consumers' need for clean products will continue to grow in years to come and as consumers become more knowledgeable about clean credentials and our Honest Standard.

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We are a personal care company on a mission to challenge ingredients, ideals , and industries so people can protect more of what they love.

We decided the rules for mass personal care were outdated, so we made our own.

We call this the “Honest Standard” and it drives our standard for quality across the three dimensions below.

Our ingredients, ideals and industries drive our Environmental, Social, Governance ("ESG") strategy.

The Nominating and Corporate Governance Committee is responsible for overseeing management of risk related to our ESG practices, including risks related to our operations and our supply chain.

In 2022, we also formed an ESG Council which comprises certain executive management and various cross-functional leaders across the organization that share oversight of ESG matters.

This year, w e plan to publish our first Corporate Social Responsibility report for the 2022-2023 period, which will be available on our investor relations website.

Ingredients, Ideals, Industries

We believe that consumers should never have to worry about the safety of the products they bring into their home.

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We have an in-house toxicologist and an eco-toxicologist with in-depth audit protocols.

We review each formula for potential chemical hazards, dose-response, and anticipated exposure to ensure our products are safe not only for single use, but over the consumer’s lifetime.

Our in-house R&D team selects ingredients with care.

For example, we prioritize naturally-derived resources over synthetic, petroleum-derived ingredients in our product formulas and designs.

The alcohol used in our alcohol wipes and hand sanitizer spray is plant-derived and our fragrances are naturally derived, never synthetic.

Primary components of our diapers are made with responsibly sourced, plant-based fluff pulp and backsheet, and other plant-derived materials.

Our Honest Baby Clothing® is made with organic cotton.

We meet the requirements of many independent organizations or certification authorities for several of our products.

This includes the USDA's, National Organic Program, the USDA’s BioPreferred® Program for biobased content, the National Eczema Association’s Seal of Acceptance, Environmental Working Group ("EWG") Verified™, the U.S.

EPA’s Safer Choice Program, Green Seal®, the NSF/ANSI 305 standards set by Quality Assurance International and the Global Organic Textile Standard for organic cotton in our Honest Baby Clothing and bedding.

This includes the USDA’s BioPreferred® Program for biobased content, the National Eczema Association’s Seal of Acceptance, Environmental Working Group ( “EWG” ) Verified™, Green Seal®, the NSF/ANSI 305 standards set by Quality Assurance International, OEKO-TEX® STANDARD 100 and the Global Organic Textile Standard for organic cotton in our Honest baby clothing and bedding.

We have over 100 EWG Verified™ SKUs across the organization, which are products that do not include EWG's chemicals of concern while also meeting their strict health-based guidelines.

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We require our third-party manufacturers to commit to follow our high standards of controlled documentation, cleaning and safety protocols, and laboratory controls.

We partner with trusted science-based industry groups driving change in green chemistry.

In 2022, we announced our Co-Design Partnership with ChemFORWARD, a nonprofit value chain collaboration increasing access to data on chemical hazards and safer alternatives.

We are also members of the Green Chemistry & Commerce Council (GC3), a multi-stakeholder collaboration driving for commercial adoption of green chemistry by forging meaningful connections across the supply and value chain.

We believe that every day is an opportunity to reinvent and break the mold in ways that serve the human spirit.

As a company founded by a woman of color, we have always been passionate about ensuring a diverse and inclusive workforce that reflects our consumers and the communities we serve.

Our Chief Executive Officer is one of the only Afro-Latina Chief Executive Officers at a U.S.

publicly traded company, bringing a new era of leadership that reflects the diversity of Honest’s consumers.

We are proud to say that as of December 31, 2023, people of color represented more than half of our workforce, and women represented approximately 65% and 60% of our workforce and leadership, which includes director level and above, respectively.

As of December 31, 2023, we had a total of 176 full-time employees, as well as a limited number of temporary employees and consultants.

We seek to breakdown old standards of what “parenthood” and “beauty” should be, with a commitment to support diversity in how these standards come to life in our marketing.

We currently have five Employee Resource Groups ("ERGs"):

Women Excelling in Leadership and Living (W.E.L.L), Black Leadership, Allies & Community (B.L.A.C), Honest Orgulloso Latine & Allies (H.O.L.A), Honest Asian-American Pacific Islanders (H.A.A.P.I) and P.R.I.D.E.

Collective (Provide a Respectful, Inclusive, and Diverse Environment for the LGBTQIA+ community within and surrounding the Honest Company).

W.E.L.L was the first ERG created to support the personal and professional development of women at Honest.

B.L.A.C was created in 2020 to lift, engage and empower Black voices within The Honest Company and across the community.

H.A.A.P.I was launched in 2021 to create a supportive and inclusive community for Asian Americans and Pacific Islanders and allies.

H.O.L.A and P.R.I.D.E.

Collective were launched in 2023 to uplift and support an inclusive community that promotes diversity, professional development and cultural awareness.

Each ERG has an executive sponsor.

Community impact is also very important to us.

We work closely with our charity partners, including Baby2Baby, to help provide children and families around the world with the basic essentials and resources they need to live healthy lives.

We work closely with our charity partners, including Baby2Baby, to help provide children and families across the country with the basic essentials and resources they need to live healthy lives.

Since the start of our relationship with Baby2Baby and other partners in 2012, we have donated more than 36 million family personal care, feminine care, clean beauty products and other essentials to those in need and our compassionate team has volunteered over 20,500 hours giving back to our communities and providing disaster relief.

Our partnership with March of Dimes helps fund research, advocacy and service programs addressing maternal and infant mortality with critical healthcare and support.

The partnership will also fund the creation of new advocacy content about environmental justice for moms and babies, helping further spread the important work this organization has set out to do.

Through this partnership, in 2024 we have donated more than $0.7 million, reaching more than an estimated 8 million mothers with health education and programs to support the organization, including its new Mom and Baby Action Network.

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We offer a competitive compensation and benefits program, and our award-winning learning and development program, Honest University, delivers opportunities for all employees to grow and develop personally, professionally and financially.

Our corporate social responsibility efforts provide opportunities for employees to give back to communities in need through volunteerism, donation matching and paid volunteer time off.

The Honest Company supports employees’ emotional well-being through our partnership with Thrive Global which offers employees many resources to promote emotional well-being.

Additionally, we provide an Employee Assistance Program (EAP) at no cost to employees to support emotional health and a fitness reimbursement through Global Fit Rewards to encourage a healthy lifestyle for Honest employees.

Our corporate social responsibility efforts provide opportunities for employees to give back to communities in need through volunteerism and donation matching.

The Honest Company provides an Employee Assistance Program (EAP) at no cost to employees to support emotional well-being and a fitness reimbursement through Husk Wellness (formerly Global Fit Rewards) to encourage a healthy lifestyle for Honest employees.

As of December 31, 2024, we had a total of 164 employees, all who are full-time, as well as a limited number of temporary employees and consultants.

We believe small changes in the right direction start ripple effects that have the potential to change entire industries and how products are made.

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For example, the cartons used in our baby personal care line are environmentally-friendly, Forest Stewardship Council (“FSC”)-certified, and made from 100% recycled, PCW (pre/post consumer waste) materials.

We have transitioned our Honest.com shipping cartons to 100% PCR cardboard.

100% of our baby personal care and household cleaning bottles are recyclable or include recycled materials and we are regularly looking to increase the amount of post-consumer resin in our components.

Our diapers feature an innovative design that uses less material.

We strive to lessen our environmental footprint—minimizing our impact by offsetting carbon emissions and working to responsibly source materials and packaging.

In 2020, we entered into an agreement to participate in a carbon offset program to reduce greenhouse gas emissions resulting from our domestic Honest.com shipments.

We also have made a commitment to a 42% reduction in scope 1 and scope 2 emissions for all Honest operated facilities by 2030.

Our Honest.com shipping cartons are 100% PCR cardboard.

100% of our baby personal care bottles are recyclable or include recycled materials and we are regularly looking to increase the amount of post-consumer resin in our components.

Our diapers feature an innovative design that uses less material than our previous diaper innovation.

Government Regulation

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Other warnings may also be mandated pursuant to FDA regulations.

The FDA monitors compliance of cosmetic products through market surveillance and inspection of cosmetic manufacturers and distributors to ensure that the products neither contain false nor misleading labeling and that they are not manufactured under unsanitary conditions.

The FDA monitors compliance of cosmetic products through market surveillance, inquiry data, consumer complaints, and import surveillance and inspection of cosmetic manufacturers and distributors to ensure that the products neither contain false nor misleading labeling and that they are not manufactured under unsanitary conditions.

Inspections also may arise from consumer or competitor complaints filed with the FDA.

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In addition, the Modernization of Cosmetics Regulation Act (“MoCRA”), enacted in December 2022, expanded the FDA’s regulatory authority over cosmetic products, including by providing the FDA with new mandatory recall authority over cosmetics and by requiring the registration of cosmetic manufacturing facilities, the reporting of certain adverse events, the issuance of cGMP requirements and the establishment of safety substantiation requirements.

The registration and listing requirements became applicable on December 29, 2023, although the FDA has announced its intention not to enforce the registration and listing requirements until July 1, 2024 in order to provide regulated industry additional time to comply with those requirements.

The cGMP regulations under MoCRA are to be proposed by December 29, 2024.

The cGMP regulations under MoCRA are to be proposed by October 2025.

If a product is intended for use in the diagnosis, cure, mitigation, treatment or prevention of a disease condition or to affect the structure or function of the human body, the FDA will regulate the product as a drug.

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The CPSC has the authority to require the recall of noncompliant products or products containing a defect that creates a substantial risk of injury to the public.

The CPSC may seek penalties for regulatory noncompliance under certain circumstances.

The CPSC may seek civil and criminal penalties for regulatory noncompliance under certain circumstances.

CPSC regulations also require manufacturers of consumer products to report to the CPSC certain types of information regarding products that fail to comply with applicable regulations, that contain a defect which could create a substantial product hazard, or that create an unreasonable risk of serious injury or death.

Certain state laws also address the safety of consumer products and mandate reporting requirements, and noncompliance may result in penalties or other regulatory action.

Certain of our products are also subject to regulation by the EPA, under the Federal Insecticide, Fungicide, and Rodenticide Act, or FIFRA.

FIFRA establishes a system of pesticide, including disinfectant product, regulation to protect applicators, consumers and the environments.

Under FIFRA, certain of our cleaning products, including the disinfectant products, may require approval from and registration with the EPA prior to sale.

Products subject to FIFRA must comply with specified approval, registration, manufacture, labeling, and reporting requirements, among other requirements.

EPA is authorized to take enforcement action to prevent the sale or distribution of non-compliant disinfectant products, including to prevent the sale or distribution of unregistered disinfectants and to prevent the sale or distribution of registered pesticides that are not permitted to make claims permitted by the terms of their registration, among other areas of non-compliance.

The EPA may seek penalties for regulatory noncompliance under certain circumstances.

Manufacturers subject to FIFRA may also be required to report certain types of information regarding disinfectant products to EPA.

Certain state laws may also address requirements applicable to cleaning products, and non-compliance may result in penalties or other regulatory action.

The USDA enforces federal standards for organic production and use of the term “organic” on product labeling.

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federal and state and foreign laws and regulations are constantly evolving and can be subject to significant change.

In addition, the application, interpretation and enforcement of these laws and regulations are often uncertain, and may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices.

Data privacy and security laws impose significant and complex compliance obligations on entities that are subject to those laws.

The General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA) are examples of the increasingly stringent and evolving regulatory frameworks related to personal data processing that may increase our compliance obligations and exposure for any noncompliance.

The EU GDPR applies to any company established in the European Economic Area (EEA) and to companies established outside the EEA that process personal data in connection with the offering of goods or services to data subjects in the EEA or the monitoring of the behavior of data subjects in the EEA.

These obligations may include limiting personal data processing to only what is necessary for specified, explicit, and legitimate purposes;

requiring a legal basis for personal data processing;

requiring the appointment of a data protection officer in certain circumstances;

increasing transparency obligations to data subjects;

requiring data protection impact assessments in certain circumstances;

limiting the collection and retention of personal data;

increasing rights for data subjects;

formalizing a heightened and codified standard of data subject consents;

requiring the implementation and maintenance of technical and organizational safeguards for personal data;

mandating notice of certain personal data breaches to the relevant supervisory authority(ies) and affected individuals;

and mandating the appointment of representatives in the UK and/or the EU in certain circumstances.

In the United States, the CCPA imposes obligations on covered businesses to provide specific disclosures related to a business’s collecting, using, and disclosing personal data and to respond to certain requests from California residents related to their personal data (for example, requests to know of the business’s personal data processing activities, to delete the individual’s personal data, and to opt out of certain personal data disclosures).

Also, the CCPA provides for civil penalties and a private right of action for data breaches which may include an award of statutory damages.

In addition, the California Privacy Rights Act of 2020 (“CPRA”), that went into effect on January 1, 2023, expands the CCPA.

The CPRA, among other things, gives California residents the ability to limit use of certain sensitive personal data, establishes restrictions on personal data retention, expands the types of data breaches that are subject to the CCPA’s private right of action, and establishes a new California Privacy Protection Agency to implement and enforce the new law.

Comprehensive privacy legislation has also been enacted in four other states, imposing similar compliance obligations.

There are also a number of legislative proposals pending before the U.S.

Congress, various state legislative bodies and foreign governments concerning privacy and data protection which could affect us.

If our privacy or data security measures fail to comply with applicable current or future laws and regulations, we may be subject to litigation, regulatory investigations, enforcement notices requiring us to change the way we use personal data or our marketing practices, fines or other liabilities, as well as negative publicity and a potential loss of business.

In addition, the application, interpretation and enforcement of these laws and regulations are often uncertain,

and may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices.

In the ordinary course of our business, we may process personal or sensitive data.

Accordingly, we are, and may in the future become, subject to numerous data privacy and security obligations, including federal, state, local, and foreign laws, regulations, guidance, and industry standards related to data privacy, security, and protection.

Such obligations may include, without limitation, the Federal Trade Commission Act, the Telephone Consumer Protection Act of 1991, the Controlling the Assault of Non-Solicited Pornography And Marketing Act of 2003, the California Consumer Privacy Act of 2018 (“CCPA”), the Canadian Personal Information Protection and Electronic Documents Act, Canada’s Anti-Spam Legislation, the European Union’s General Data Protection Regulation 2016/679 (“EU GDPR”), the EU GDPR as it forms part of United Kingdom (“UK”) law by virtue of section 3 of the European Union (Withdrawal) Act 2018 (“UK GDPR”), the ePrivacy Directive, and the Payment Card Industry Data Security Standard (“PCI DSS”).

Additionally, we are, or may become, subject to various U.S.

federal and state consumer protection laws which require us to publish statements that accurately and fairly describe how we handle personal data and choices individuals may have about the way we handle their personal data.

Numerous U.S.

states have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data.

As applicable, such rights may include the right to access, correct, or delete certain personal data, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making.

The exercise of these rights may impact our business and ability to provide our products and services.

Certain states also impose stricter requirements for processing certain personal data, including sensitive information, such as conducting data privacy impact assessments.

These state laws allow for statutory fines for noncompliance.

For example, the CCPA applies to personal data of consumers, business representatives, and employees who are California residents, and requires businesses to provide specific disclosures in privacy notices and honor requests of such individuals to exercise certain privacy rights.

The CCPA provides for fines and allows private litigants affected by certain data breaches to recover significant statutory damages.

Outside the United States, under the GDPR, companies may face temporary or definitive bans on data processing and other corrective actions;

fines of up to 20 million Euros under the EU GDPR, 17.5 million pounds sterling under the UK GDPR or, in each case, 4% of annual global revenue, whichever is greater;

or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests.

See the section titled “Risk Factors – Risks Related to Legal and Governmental Regulation” for additional information about the laws and regulations to which we may become subject and about the risks to our business associated with such laws and regulations.

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These reports are available at investors.honest.com under Financial Information/SEC Filings.

Additionally, the Company routinely posts additional important information, including press releases, on its website and recognizes its website as a channel of distribution to reach public investors and as a means of disclosing material non-public information for complying with disclosure obligations under Regulation FD.

Accordingly, investors should monitor our website in addition to our SEC filings and public webcasts.

Additionally, the Company routinely posts additional important information, including press releases, on its website and corporate LinkedIn account and recognizes its website and corporate LinkedIn account as channels of distribution to reach public investors and as a means of disclosing material non-public information for complying with disclosure obligations under Regulation FD.

Accordingly, investors should monitor our website and corporate LinkedIn account in addition to our SEC filings and public webcasts.

These items are available at investors.honest.com under News and Events.

3 unchanged sentences

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

What changed 10-K

Item 1. Business