What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-02-12 compared with 2025-11-13 · 218 added, 204 removed, 328 unchanged (56% of the section changed)

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are focused on generating long-term, brand-right growth and improving profitability.

During the six months ended September 30, 2025,

During the nine months ended December 31, 2025,

we continued to scale our direct-to-consumer business, launched a new spring/summer capsule, opened a new European distribution hub in

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to increase awareness, strengthen customer engagement, and support customer acquisition and retention.

October 2025, we entered into an equity purchase agreement (the “ELOC”), whereby we have the right, but not the obligation,

to direct an investor to purchase up to $25,000 of our common stock (the “Put Shares”).

The ELOC will not become effective

until it has received approval from our shareholders and our board of directors.

October 2025, we amended the First August 2025 Related Party Note extending the maturity date from November 8, 2025 to March 9, 2026.

January 2026, the shareholders holding a majority of the voting power of the Company entitled to vote as of the record date of January

14, 2026 approved a number of corporate matters.

These actions included authorizing certain issuances of common stock and warrants, amending

the Certificate of Incorporation to increase authorized shares, approving the ELOC, and authorizing an additional reverse stock split

of the common stock at a ratio to be determined by the Company’s board of directors

January 2026, we issued 11,458,306 shares of our common stock upon conversion of all outstanding shares of Series AA Preferred Stock

at a reduced conversion price of $0.46822 per share, as approved by our shareholders.

Comparability

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Three months ended

September 30, 2025

December 31, 2025

Three months ended

September 30, 2024

Cost of goods sold

December 31, 2024

Cost of sales

Gross margin (1)

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Total operating expenses

Loss from operations

Total other (expense) income, net

Other comprehensive losses

Foreign currency translation losses

Comprehensive loss

Six months ended

September 30, 2025

Six months ended

September 30, 2024

Cost of goods sold

Income (loss) from operations

Total other expense, net

Net income (loss)

Other comprehensive income (loss)

Foreign currency translation income (loss)

Comprehensive income (loss)

Nine months ended

December 31, 2025

Nine months ended

December 31, 2024

Cost of sales

Gross margin (1)

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Total other (expense) income, net

Other comprehensive losses

Foreign currency translation losses

Other comprehensive loss

Foreign currency translation loss

Comprehensive loss

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In addition to total

net sales, net loss, and other results under GAAP, the following information includes key operating metrics and non-GAAP financial measures

that we use to evaluate our business.

net sales, net income (loss), and other results under GAAP, the following information includes key operating metrics and non-GAAP financial

measures that we use to evaluate our business.

We believe that these measures are useful for period-to-period comparisons of the Company’s

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to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

Three months ended September 30,

Six months ended September 30,

Net loss, as reported

Three months ended

Nine months ended

Net income (loss), as reported

Interest expense

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Adjusted EBITDA

EBITDA is a non-GAAP financial measure that displays our net loss from continuing operations, adjusted to eliminate the effect of certain

items as described below.

We define Adjusted EBITDA as net loss excluding interest expense, income tax benefit (expense), depreciation

and amortization and stock-based compensation expense.

EBITDA is a non-GAAP financial measure that displays our net income (loss) from continuing operations, adjusted to eliminate the effect

of certain items as described below.

We define Adjusted EBITDA as net income (loss) excluding interest expense, income tax benefit (expense),

depreciation and amortization and stock-based compensation expense.

Adjusted EBITDA is a measure that is not defined in US GAAP.

We believe that it

is useful to exclude these expenses because the amount of such expenses in any specific period may not directly correlate to the underlying

performance of our business operations.

that it is useful to exclude these expenses because the amount of such expenses in any specific period may not directly correlate to

the underlying performance of our business operations.

considers our core operating performance to be that which our managers can affect in any particular period through their management of

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and in communications with our board of directors concerning our financial performance.

$1,205 improvement in adjusted EBITDA for the three months ended September 30, 2025, compared to the same period in 2024, was primarily

driven by a $791 increase in gross profit, reflecting higher revenue and an increase in gross margin from 54.0% to 60.1%.

expansion was largely attributable to the contribution from the partnership revenue stream, which was not in effect during the three

months ended June 30, 2024, as well as a more favorable channel and product mix.

In addition, continued

improvements in the Company’s logistics and supply chain operations, including enhanced warehouse efficiency and optimized shipping

routes, contributed to lower fulfillment costs and supported further gross margin improvement.

general and administrative (SG&A) expenses decreased by $286 during

the quarter compared to the prior-year period, reflecting continued cost discipline and reduced discretionary spending across most categories.

The decrease was primarily driven by a reduction in stock-based compensation expense following the restructuring of the Company’s

employee equity compensation program and the redundancy plan implemented in the fourth quarter of the prior fiscal year.

Partially offsetting

these savings were higher legal and professional fees associated with ongoing public company compliance and fundraising activities, as

The $1,553 improvement in Adjusted EBITDA for the three months ended December

31, 2025, compared to the same period in 2024, was primarily driven by a $1,119 increase in gross profit.

This increase was largely attributable

to improvements in gross margin, which rose from 54.8% to 64.4%, reflecting enhancements in the Company’s operating model and logistics

During the period, the Company benefited from continued optimization of its supply chain and fulfillment processes, including

improved warehouse efficiency, more effective shipping flows, and better cost control across distribution activities.

In addition, growth

in partnership revenue contributed to the overall margin improvement, with partnership revenue increasing to $239 for the three months

ended December 31, 2025, from $91 in the prior-year period.

general and administrative (SG&A) expenses decreased by $1,010 during the three months ended December 31, 2025, compared to the

same period in 2024, reflecting continued cost discipline and reduced discretionary spending across most categories.

was primarily driven by a reduction in stock-based compensation expense following the restructuring of our employee equity

compensation program and the redundancy plan implemented in the fourth quarter of the prior fiscal year.

Partially offsetting these

savings were higher legal and professional fees associated with ongoing public company compliance and fundraising activities, as

well as costs to support operational expansion.

The Company also incurred incremental spending across key functional areas including information

technology, insurance, travel, and retail operations, which were necessary to support its transition and long-term growth initiatives.

Additionally, a $343 decrease

in marketing and advertising expense, primarily from agency fees and promotional activities, further supported brand awareness and sales

$1,531 improvement in adjusted EBITDA for the six months ended September 30, 2025 compared to the same period in 2024 was primarily driven

by a $1,321 increase in gross profit, reflecting higher revenue and an increase in gross margin from 50.5% to 60.2%.

The margin expansion

was largely attributed to the contribution from our partnership revenue stream, which had not been in effect during the six months ended

September 30, 2024, as well as improved channel and product mix.

general and administrative (SG&A) expenses decreased by $171 for the

six months ended September 30, 2025, primarily driven by lower stock-based compensation following the restructuring of the employee equity

program and prior-year redundancy actions.

These savings were partly offset by higher legal, professional, and payroll costs related to

public company activities and operational expansion.

The increase was more visible in the most recent quarter as new management initiatives

began to take effect, resulting in a more balanced expense profile for the six-month period.

Marketing and advertising expenses also decreased

by $267, mainly due to lower agency fees and promotional activity.

The Company also incurred incremental spending across key functional areas including

information technology, insurance, travel, and retail operations, which were necessary to support its transition and long-term

growth initiatives.

Marketing and advertising expenses increased by $252 during the three months ended December 31, 2025, compared to

the same period in 2024, primarily due to the timing of marketing spend.

The Company increased activation and promotional activities in

the quarter to support the AW25 launch relative to the prior-year period.

The $3,089 improvement in Adjusted

EBITDA for the nine months ended December 31, 2025, compared to the same period in 2024, was primarily driven by a $2,398 increase in

gross profit, reflecting higher revenue and an increase in gross margin from 53.6% to 62.7%.

The improvement in gross margin was mainly

attributable to enhancements in the Company’s operating model and logistics execution, including more efficient supply chain and

fulfillment processes and improved cost control.

In addition, growth in partnership revenue contributed positively to gross margin, with

partnership revenue increasing to $375 during the nine months ended December 31, 2025, from $91 in the prior-year period, alongside a

more favorable channel and product mix.

Selling, general and

administrative (SG&A) expenses decreased by $1,222 for the nine months ended December 31, 2025, compared to the same period in

2024, which was primarily driven by a reduction in stock-based compensation expense following the restructuring of our employee

equity program and the redundancy plan implemented in the fourth quarter of the prior fiscal year.

Partially offsetting these

savings were higher legal, professional, and payroll costs associated with ongoing public company compliance and fundraising

activities, as well as costs to support operational expansion.

Marketing and advertising expenses decreased by $15 for the nine months ended December 31, 2025, compared to the

same period in 2024, primarily due to the timing of marketing spend.

While the Company incurred higher activation and promotional costs

in the third quarter to support the AW25 product launch, these increases were offset by lower spending in other periods, resulting in

a decrease in marketing and advertising expenses on a year-to-date basis.

improvement in adjusted EBITDA demonstrates operating leverage on higher revenue and margin despite ongoing investments in infrastructure

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of these limitations, you should consider the non-GAAP financial measures alongside other financial performance measures, including our

net loss and our other financial results presented in accordance with GAAP.

You are encouraged to evaluate the above adjustments and

the reasons we consider them appropriate for supplemental analysis.

In evaluating Adjusted EBITDA, you should be aware that in the future

we may incur expenses that are the same as or similar to some of the adjustments in this presentation.

Our presentation of Adjusted EBITDA

should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

revenue for the three months ended September 30, 2025 was $4,763, compared to $3,833 for the same period in 2024, an increase of $930,

or 24% and for the six months ended September 30, 2025 was $6,235, compared to $4,808 for the same period in 2024, an increase of $1,427,

Growth for both periods was primarily driven by contributions from the

new partnership channel, with additional improvement from the wholesale channel reflecting more favorable shipment timing compared to

the same period in FY25.

The year-over-year increase in

revenue was primarily driven by a stronger wholesale order book and improved operational execution, which enabled more efficient fulfillment

and shipment timing compared to the prior year.

These enhancements reflect the Company’s ongoing focus on operational discipline

and supply chain optimization, positioning it to capture additional sales opportunities over the remainder of the season.

of goods sold

of goods sold for the three months ended September 30, 2025 was $1,901, compared to $1,762 for the same period in 2024, an increase

of $139, or 8% and for the six months ended September 30, 2025 was $2,484, compared to $2,378 for the same period in 2024, an

increase of $106, or 4%.

The increase was primarily driven by improved inventory efficiency and disciplined cost

net income (loss) and our other financial results presented in accordance with GAAP.

You are encouraged to evaluate the above adjustments

and the reasons we consider them appropriate for supplemental analysis.

In evaluating Adjusted EBITDA, you should be aware that in the

future we may incur expenses that are the same as or similar to some of the adjustments in this presentation.

Our presentation of Adjusted

EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Total revenue for the three months ended December 31, 2025 was $11,656,

compared to $11,658 for the same period in 2024, a decrease of $2, or 0.0% and for the nine months ended December 31, 2025 was $17,891,

compared to $16,466 for the same period in 2024, an increase of $1,425, or 8.7%.

Growth for both periods was primarily driven by contributions

from the new partnership channel.

year-over-year increase in revenue was primarily driven by a stronger wholesale order book and improved operational execution, which

enabled more efficient fulfillment and shipment timing compared to the prior year.

These enhancements reflect the Company’s ongoing

focus on operational discipline and supply chain optimization, positioning it to capture additional sales opportunities over the remainder

of the season.

Cost of sales for the three months ended December 31, 2025 was $4,148,

compared to $5,269 for the same period in 2024, a decrease of $1,121, or 21.3% and for the nine months ended December 31, 2025 was $6,674,

compared to $7,647 for the same period in 2024, a decrease of $973, or 12.7%.

The decrease was primarily driven by improved inventory

efficiency and disciplined cost management.

continue to focus on optimizing our supply chain and sourcing practices to support long-term margin expansion.

profit and gross margin

profit for the three months ended September 30, 2025 was $2,862, compared to $2,071 for the same period in 2024, an increase of $791,

Gross margin improved to 60.1%, up from 54.0% in the prior-year period.

This increase reflects the favorable impact of channel

mix, particularly growth in higher-margin revenue streams, and our ongoing focus on disciplined pricing and supply chain reengineering.

profit for the six months ended September 30, 2025 was $3,751, compared to $2,430 for the same period in 2024, an increase of $1,321,

Gross margin improved to 60.2%, up from 50.5% in the prior-year period.

This increase reflects the favorable impact of channel

mix, particularly growth in higher-margin revenue channels, and our ongoing focus on disciplined pricing and supply chain reengineering.

margin expansion demonstrates progress toward achieving improved profitability while continuing to scale the business.

general and administrative expenses (“SG&A”)

Selling, general and administrative

(SG&A) expenses for the three months ended September 30, 2025 were $3,637, compared to $3,923 for the same period in 2024, a decrease

of $286, or 7%.

For the six months ended September 30, 2025, SG&A expenses were $7,052, compared to $7,223 in the prior-year period,

a decrease of $171, or 2%.

The decreases primarily

reflect continued cost discipline and reduced discretionary spending, including lower stock-based compensation following the

restructuring of the Company’s employee equity program and prior-year redundancy actions.

These savings were partially offset

by higher legal and professional fees related to public company compliance and fundraising activities, as well as increased payroll

and operational costs to support expansion initiatives.

The Company also incurred targeted increases across technology, compliance,

and insurance to strengthen its operating infrastructure and scalability.

Overall, SG&A expenses decreased as a percentage

of revenue—improving to 76% from 102% for the three-month period and to 113% from 150% for the six-month period—reflecting

enhanced operating leverage, improved cost efficiency, and the early benefits of management’s ongoing efforts to align the cost

base with revenue growth.

Gross profit for the three months

ended December 31, 2025 was $7,508, compared to $6,389 for the same period in 2024, an increase of $1,119, or 17.5%.

Gross margin improved

to 64.4%, up from 54.8% for the same period in 2024.

This increase reflects the favorable impact of channel mix, particularly growth in

higher-margin revenue streams, and our ongoing focus on disciplined pricing and supply chain reengineering.

Gross profit for the nine months

ended December 31, 2025 was $11,217, compared to $8,819 for the same period in 2024, an increase of $2,398, or 27.2%.

Gross margin improved

to 62.7%, up from 53.6% for the same period in 2024.

This increase reflects the favorable impact of channel mix, particularly growth in

higher-margin revenue channels, and our ongoing focus on disciplined pricing and supply chain reengineering.

The margin expansion demonstrates

progress toward achieving improved profitability while continuing to scale the business.

Selling, general and administrative expenses

SG&A expenses for the three

months ended December 31, 2025 were $5,639, compared to $6,649 for the same period in 2024, a decrease of $1,010, or 15.2%.

months ended December 31, 2025, SG&A expenses were $12,649, compared to $13,871 for the same period in 2024, a decrease of $1,222,

decreases primarily reflect continued cost discipline and reduced discretionary spending, including lower stock-based compensation following

the restructuring of our employee equity program and redundancy plan implemented in the fourth quarter of the prior fiscal year.

savings were partially offset by higher legal and professional fees related to public company compliance and fundraising activities,

as well as increased payroll and operational costs to support expansion initiatives.

The Company also incurred targeted increases across

technology, compliance, and insurance to strengthen its operating infrastructure and scalability.

Overall, SG&A expenses decreased as a percentage of revenue—improving

to 48.4% from 57.0% for the three-month period and to 70.7% from 84.2% for the nine-month period—reflecting enhanced operating leverage,

improved cost efficiency, and the early benefits of management’s ongoing efforts to align the cost base with revenue growth.

and advertising expense

and advertising expenses for the three months ended September 30, 2025 were $362, compared to $705 for the same period in 2024, a decrease

of $343, or 49%.

For the six months ended September 30, 2025, marketing and advertising expenses were $891, compared to $1,158 in

the prior-year period, a decrease of $267, or 23%.

The decreases

primarily reflect the timing of marketing initiatives as the Company continues to better align and phase its brand and promotional activities

throughout the year, rather than concentrating spend in the first half.

In addition, management implemented permanent cost-saving measures

through optimized agency support, improved event planning, and a greater focus on in-house capabilities, resulting in a more efficient

allocation of marketing resources.

The Company remains focused on

maintaining marketing efficiency while continuing to strengthen global brand awareness and customer engagement through targeted and data-driven

campaigns that support both direct-to-consumer and wholesale channels.

and advertising expenses for the three months ended December 31, 2025 were $1,286, compared to $1,034 for the same period in 2024, an

increase of $252, or 24.4 %.

For the nine months ended December 31, 2025, marketing and advertising expenses were $2,177, compared to

$2,192 for the same period in 2024, a decrease of $15, or 0.7%.

fluctuations primarily reflect the timing of marketing initiatives as the Company continues to better align and phase its brand and promotional

activities throughout the year, rather than concentrating spend during the first half.

In addition, management implemented permanent

cost-saving measures through optimized agency support, improved event planning, and a greater focus on in-house capabilities, resulting

in a more efficient allocation of marketing resources.

remain focused on maintaining marketing efficiency while continuing to strengthen global brand awareness and customer engagement through

targeted and data-driven campaigns that support both direct-to-consumer and wholesale channels.

and Quarterly Trends

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and Capital Resources

September 30, 2025, the Company has funded its operations with proceeds from the sale of common stock from the initial public offering,

a public offering during September 2025, and other sales of common stock;

the sale of preferred stock, alongside existing trade, invoice

and shareholder financing arrangements.

The Company has incurred recurring losses, including a net loss of $5,659 for the six months

ended September 30, 2025 and used cash in operations of $11,138 during that period.

As of September 30, 2025, the Company had an accumulated

deficit of $70,575.

These factors raise substantial doubt about the Company’s ability to continue as a going concern for at least

twelve months from the date these condensed consolidated financial statements were available to be issued.

The Company’s ability

to continue as a going concern is dependent upon management of its expenses and its ability to obtain necessary financing to meet its

obligations and pay its liabilities arising from normal business operations when they come due, and upon profitable operations.

of September 30, 2025, we had cash and cash equivalents of $393, including an accumulated deficit of $70,575.

Historically, we have generated

negative cash flows from operations and have primarily financed our operations through sales of equity securities, issuance of debt instruments

and working capital finance facilities.

Through December 31, 2025, we have funded our operations with proceeds

from the sale of common stock from the initial public offering, a public offering during December 2025, and other sales of common stock;

the sale of preferred stock, alongside existing trade, invoice and shareholder financing arrangements.

We have incurred recurring losses,

including a net loss of $5,566 for the nine months ended December 31, 2025 and used cash in operations of $8,882 during that period.

of December 31, 2025, the Company had an accumulated deficit of $70,482.

These factors raise substantial doubt about our ability to continue

as a going concern for at least twelve months from the date these condensed consolidated financial statements were available to be issued.

Our ability to continue as a going concern is dependent upon management of its expenses and its ability to obtain necessary financing

to meet its obligations and pay its liabilities arising from normal business operations when they come due, and upon profitable operations.

of December 31, 2025, we had cash and cash equivalents of $1,567.

Historically, we have generated negative cash flows from operations

and have primarily financed our operations through sales of equity securities, issuance of debt instruments and working capital finance

expect operating losses and negative cash flows from operations to continue into the foreseeable future as we continue to invest in growing

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If we conduct additional debt financing, the terms of such debt financing may be similar or more restrictive

that the terms of our current financing arrangements and we would have additional debt service obligations.

than the terms of our current financing arrangements and we would have additional debt service obligations.

In the event that additional

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following table shows summary cash flow information for the periods presented:

Six months ended

September 30,

months ended December 31,

Consolidated statement of cash flow data:

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Flows Used in Operating Activities

the six months ended September 30, 2025, operating activities used $11,138 in cash and cash equivalents and restricted cash,

primarily resulting from a net loss of $5,659, non-cash adjustments totaling $2,479, and a net cash outflow from changes in

operating assets and liabilities of $7,958.

Net cash used in changes in operating assets and liabilities was driven primarily by an

increase in inventory of $5,339, reflecting higher stock purchases to support the upcoming winter season and expanded sales

channels, as well as an increase in accounts receivable of $3,888 and a decrease in accrued expenses of $1,248.

These outflows were

partially offset by an increase in trade payables of $1,633 and an increase in deferred revenue of $912.

The increase in inventory

also reflects improved inventory planning and purchasing timing, designed to enhance availability and support stronger sell-through

performance in the second half of the fiscal year.

the six months ended September 30, 2024, operating activities used $7,734 in cash and cash equivalents and restricted cash, primarily

resulting from a net loss of $6,132, an adjustment to add back non-cash charges of $961 and a net cash outflow from changes in operating

assets and liabilities of $2,563.

Net cash used by changes in operating assets and liabilities during the six months ended September

30, 2024 consisted primarily of an inflow of cash from a $2,559 increase in trade payables, a $908 increase in unearned revenue, offset

by a cash outflow as a result of a $2,811 increase in inventories, $1,435 increase in accounts receivable, $1,425 increase in prepaid

and other current assets and a $359 decrease in accrued expenses.

During the nine months ended December 31, 2025, operating activities used

$8,882 in cash and cash equivalents and restricted cash, primarily resulting from a net loss of $5,566, non-cash adjustments totaling

$3,323, and a net cash outflow from changes in operating assets and liabilities of $6,639.

Net cash used in changes in operating assets

and liabilities was driven primarily by an increase in inventory of $3,191, an increase in accounts receivable of $4,518, and an increase

in other non-current assets of $83, and a decrease in accrued expenses of $477.

These outflows were partially offset by an increase in

trade payables of $1,060 and a decrease in prepaid and other current assets of $454.

The increase in inventory reflects higher stock purchases

to support the upcoming winter season and expanded sales channels and also improved inventory planning and purchasing timing, designed

to enhance availability and support stronger sell-through performance in the second half of the fiscal year.

During the nine months ended December 31, 2024, operating activities used

$8,780 in cash and cash equivalents and restricted cash, primarily resulting from a net loss of $8,614, non-cash adjustments totaling

$2,798 and a net cash outflow from changes in operating assets and liabilities of $2,964.

Net cash used by changes in operating assets

and liabilities during the nine months ended December 31, 2024 consisted primarily of an increase in inventory of $2,039, reflecting higher

stock purchases to support the upcoming winter season, as well as an increase in accounts receivable of $1,740, offset by an increase

in accrued expenses of $750.

Flows Used in Investing Activities

activities for the six months ended September 30, 2025 were $169, compared to $102 for the same period in 2024, an increase of $67, or

The increase primarily reflects capital expenditures related to the opening of the new pop-up store in Verbier and

preparatory investments for additional pop-up locations planned for the third quarter.

These investments are consistent with the Company’s

strategy to enhance brand visibility and expand its retail presence in key markets while maintaining disciplined capital allocation.

the nine months ended December 31, 2025, investing activities used $204 in cash and cash equivalents and restricted cash, compared to

$287 for the same period in 2024, a decrease of $83, or 28.9%.

The current period capital expenditures related to the opening of the

new pop-up store in Verbier and preparatory investments for additional pop-up locations planned for the third quarter.

These investments

are consistent with the Company’s strategy to enhance brand visibility and expand its retail presence in key markets while maintaining

disciplined capital allocation.

Flows Provided by Financing Activities

the six months ended September 30, 2025, financing activities provided $4,338 in cash and cash equivalents, primarily attributed to $4,050

of net proceeds from the sale of our common stock, $1,330 of net proceeds from short term borrowings, and $5,590 of proceeds related

to the issuance of notes payable to related parties, offset by a $3,871 repayment of short term borrowings, $2,495 repayment of trade

finance facility, and $266 payment of dividends on our Series AA Convertible Preferred Stock.

the six months ended September 30, 2024, financing activities provided $2,507 in cash and cash equivalents and restricted cash,

primarily attributed to $2,000 net proceeds from short term borrowings and $906 in net proceeds from trade finance facilities,

offset by $399 in repayment of short term borrowings.

the nine months ended December 31, 2025, financing activities provided $3,275 in cash and cash equivalents, primarily attributed to

$4,050 of net proceeds from the sale of our common stock, $1,330 of net proceeds from short term borrowings, and $5,590 of net

proceeds from the issuance of notes payable to related parties, offset by a $4,725 repayment of short term borrowings, $2,495

repayment of trade finance facility, and $475 payment of dividends on our Series AA Convertible Preferred Stock.

the nine months ended December 31, 2024, financing activities provided $5,321 in cash and cash equivalents and restricted cash, primarily

attributed to $4,604 of net proceeds from short term borrowings, $2,849 of net proceeds from trade finance facilities, and $2,000 proceeds from a convertible note, offset by a $3,846 repayment of short term borrowings,

$139 payment of deferred offering costs and a $147 repayment of trade finance facilities.

Sheet Arrangements

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preparation of financial statements in conformity with U.S.

generally accepted accounting principles requires management to make

estimates and assumptions.

Predicting future events is inherently an imprecise activity and, as such, requires the use of significant

generally accepted accounting principles requires management to make estimates

and assumptions.

Predicting future events is inherently an imprecise activity and, as such, requires the use of significant judgment.

Actual results may vary from our estimates in amounts that may be material to the financial statements.

An accounting policy

is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain

at the time the estimate is made, and if different estimates that reasonably could have been used or changes in the accounting estimates

that are reasonably likely to occur periodically, could materially impact our consolidated financial statements.

An accounting policy is deemed

to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time

the estimate is made, and if different estimates that reasonably could have been used or changes in the accounting estimates that are

reasonably likely to occur periodically, could materially impact our consolidated financial statements.

critical accounting policies, estimates, and judgements are as follows, and see Note 2.

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in Item 8 of Part II for additional information:

amount of consideration we receive and recognize as revenue, net across both wholesale and DTC channels varies with changes

in sales returns and other accommodations and incentives we offer to our customers.

When we give our customers the right to return products

or provide other accommodations such as chargebacks and markdowns, we estimate the expected sales returns and miscellaneous claims from

amount of consideration we receive and recognize as revenue, net across both wholesale and DTC channels varies with changes in sales

returns and other accommodations and incentives we offer to our customers.

When we give our customers the right to return products or

provide other accommodations such as chargebacks and markdowns, we estimate the expected sales returns and miscellaneous claims from

customers and record sales reserves to reduce revenue, net.

of September 30, 2025, our sales-related reserves were $0.1 million compared to $0.6 million as of March 31, 2025.

The most significant

variable affecting these reserve balances is sales levels.

As a percentage of net revenue, the sales reserves balances were 1.1%

as of September 30, 2025 compared to 2.8% as of March 31, 2025 .

The reserve for returns from customers is the component of our sales-related

reserves most susceptible to estimation uncertainty.

As of December 31, 2025, our sales-related reserves were $0.9 million compared

to $0.6 million as of March 31, 2025.

The most significant variable affecting these reserve balances is sales levels.

As a percentage

of net revenue, sales-related reserves were 4.8% as of December 31, 2025, compared to 2.8% as of March 31, 2025.

The reserve for customer

returns is the component of our sales-related reserves most susceptible to estimation uncertainty.

31, 2025 represents the period with the highest return reserves, reflecting the seasonality of our business and the concentration of

sales in the winter period.

A significant portion of revenue in December is generated through our eCommerce channel, which historically

experiences higher return rates than other channels, resulting in elevated return reserves at quarter-end.

These estimates are based on 1) historical rates of product returns and claims;

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If actual or expected future returns

and claims are significantly different than the sales reserves established, we record an adjustment to Net sales in the period

in which such determination was made.

and claims are significantly different than the sales reserves established, we record an adjustment to Net sales in the period in which

such determination was made.

Receivable and Credit Losses

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terms and applicable authoritative guidance in ASC 480, Distinguishing liabilities from equity (“ASC 480”), and ASC

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition

of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC

815, including whether the warrants are indexed to our own common shares and whether the warrant holders could potentially require “net

cash settlement” in a circumstance outside of our control, among other conditions for equity classification.

This assessment, which

requires the use of professional judgment, is conducted at the time of warrant issuance, modification, and as of each subsequent quarterly

period end date while the warrants are outstanding.

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of

a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including

whether the warrants are indexed to our own common shares and whether the warrant holders could potentially require “net cash settlement”

in a circumstance outside of our control, among other conditions for equity classification.

This assessment, which requires the use of

professional judgment, is conducted at the time of warrant issuance, modification, and as of each subsequent quarterly period end date

while the warrants are outstanding.

issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component

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Accounting Pronouncements

recent accounting pronouncements, see Note 2 of our audited consolidated financial statements included in this Annual Report.

recent accounting pronouncements, see Note 2 of our audited consolidated financial statements included in this Quarterly Report and

Note 2 of our unaudited condensed consolidated financial statements included in this Form 10-Q.

and Qualitative Disclosures about Market Risk

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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 2. Management’s Discussion and Analysis