What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-14 compared with 2026-02-12 · 133 added, 300 removed, 246 unchanged (64% of the section changed)

10 unchanged sentences

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

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

the Netherlands as part our global logistics transformation, and increased our annual style count from approximately 75 to over 200.

We also implemented a tiered pricing architecture across key categories to support value perception and drive margin enhancement.

During the three months ended June 30, 2026, we

continued to scale our direct-to-consumer business, launched a new spring/summer capsule, and increased our annual style count from approximately

75 to over 200.

We also implemented a tiered pricing architecture across key categories to support value perception and drive margin

intend to grow our business over time by expanding our digital and retail footprint, diversifying our product portfolio, enhancing international

2 unchanged sentences

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

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

of Financial Information

historical operations and statements of assets and liabilities may not be comparable to our operations and statements of assets and liabilities

as a result of completing our IPO in February 2024 and becoming a public company.

June 12, 2026, our common stock was delisted from the NYSE American and commenced trading on the OTCQB Venture Market on June 18, 2026.

July 2026, we drew $1,000 on our Revolver.

of Operations

following tables set forth our results of operations for the:

Three months ended

December 31, 2025

Three months ended

December 31, 2024

Cost of sales

Gross margin (1)

Operating expenses:

Selling, general and administrative expenses

Marketing and advertising expenses

Total operating expenses

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)

following table sets forth our results of operations for the:

of goods sold

general and administrative expenses

and advertising expenses

operating expenses

Selling, general and administrative expenses

Marketing and advertising expenses

Total operating expenses

Loss from operations

Total other (expense) income, net

Other comprehensive loss

Foreign currency translation loss

Comprehensive loss

from operations

other (expense) income, net

comprehensive losses

currency translation losses

Comprehensive

margin is defined as gross profit as a percentage of revenue, net

1 unchanged sentence

In addition to total

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.

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.

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

4 unchanged sentences

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

Nine months ended

Net income (loss), as reported

Interest expense

Stock compensation expense

Amortization of stock-based marketing services

Depreciation and amortization

Total EBITDA adjustments

Adjusted EBITDA

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.

loss, as reported

compensation expense

of stock-based services

and amortization

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.

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

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.

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.

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

9 unchanged sentences

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

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.

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

and brand development.

The $564 decrease in Adjusted

EBITDA for the three months ended June 30, 2026 compared to the same period in 2025 was primarily driven by a $262 decrease in gross profit,

reflecting lower revenue and a decrease in gross margin from 60.3% to 54.5%, along with higher legal and professional fees, payroll and

related costs, and other operating expenses.

The margin contraction was largely attributed to a decrease in partnership revenue,

which had been in effect during the three months ended June 30, 2025.

Selling, general and administrative

(“SG&A”) expenses decreased $35 during the three months ended June 30, 2026 compared to the same period in 2025, with

key drivers including decreased amortization of stock-based services and decreased share-based compensation, largely offset by increased

legal and professional fees in connection with fundraising efforts, higher payroll and related costs to support operational expansion,

and incremental spending across key areas such as IT, insurance, travel, and retail operations.

While these investments contributed to

higher operating costs, they were necessary to support the Company’s strategic objectives for growth.

The $564 decrease in Adjusted

EBITDA for the three months ended June 30, 2026 compared to the same period in 2025 was primarily driven by margin contraction on lower

revenue combined with ongoing investments in headcount and infrastructure to support the Company’s transition and growth strategy.

financial measures have limitations, should be considered as supplemental in nature and are not meant as a substitute for the related

12 unchanged sentences

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

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.

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 June 30, 2026 was $1,150, compared to $1,472 for the same period in 2025, a decrease of $322, or

The decrease was primarily driven by a partnership revenues of $304 that were realized during the three months ended June 30,

2025 that did not recur in the current period.

of goods sold

of goods sold for the three months ended June 30, 2026 was $523, compared to $583 for the same period in 2025, a decrease of $60, or

The decrease was primarily driven by improved inventory efficiency and disciplined cost management.

The Company continues to focus

on optimizing its supply chain and sourcing practices to support long-term margin expansion.

profit and gross margin

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.

for the three months ended June 30, 2026 was $627, compared to $889 for the same period in 2025, a decrease of $262, or 29.5%.

decreased to 54.5% from 60.3% in the prior-year period.

The decrease was primarily attributable to a change in revenue mix, as the prior-year

period benefited from higher-margin partnership revenue that did not recur in the current period.

This was partially offset by the Company’s

continued focus on disciplined pricing, inventory management and sourcing initiatives.

general and administrative expenses

SG&A for the three months

ended June 30, 2026 were $3,380, compared to $3,415 for the same period in 2025, a decrease of $35, or 1.0%.

The decrease was primarily

attributable to decreased amortization of stock-based services and decreased share-based compensation, largely offset by increased legal

and professional fees in connection with fundraising efforts, higher payroll and related costs to support operational expansion, and incremental

spending across key areas such as IT, insurance, travel, and retail operations.

and advertising expense

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.

Marketing and advertising expenses for the three months ended June 30, 2026 were $507, compared to $529 for the same

period in 2025, a decrease of $22, or 4.2%.

The decrease was primarily driven by reduced agency support and lower promotional and event-based

activation spend.

The Company remains focused on maintaining marketing efficiency while building global brand awareness and desire.

and Quarterly Trends

10 unchanged sentences

and Capital Resources

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

of June 30, 2026, we had cash and cash equivalents of $707, including an accumulated deficit of $75,580.

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.

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

20 unchanged sentences

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

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

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

In the event that additional

5 unchanged sentences

sales and issuances of our common stock or rights to purchase common stock, including pursuant to our 2021 Equity Incentive Plan, could

result in additional dilution of the percentage ownership of our shareholders” and “Risk Factors – Risks Related to

result in additional dilution of the percentage ownership of our stockholders” and “Risk Factors – Risks Related to

Our Business, Our Brand, Our Products and Our Industry – We have a history of losses, expect to continue to incur losses in the

3 unchanged sentences

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

months ended December 31,

Consolidated statement of cash flow data:

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

consolidated statements of cash flow data:

cash used in operating activities

cash used in investing activities

cash provided by (used in) financing activities

Flows Used in Operating Activities

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.

the three months ended June 30, 2026, operating activities used $3,246 in cash and cash equivalents, primarily resulting from a net loss

of $3,533, an adjustment to add back non-cash charges of $455 and a net cash outflow from changes in operating assets and liabilities

Net cash used by changes in operating assets and liabilities during the three months ended June 30, 2026 consisted primarily

of an outflow of cash from a decrease in trade payables of $1,168 and a decrease in accrued expenses of $619, partially offset by an

inflow of cash from a decrease in accounts receivable of $860, an increase in deferred revenue of $378, a decrease in inventory of $141,

a decrease in prepaid and other current assets of $98, and a decrease in other non-current assets of $74.

the three months ended June 30, 2025, operating activities used $3,892 in cash and cash equivalents and restricted cash, primarily resulting

from a net loss of $3,819, an adjustment to add back non-cash charges of $1,249 and a net cash outflow from changes in operating assets

and liabilities of $1,322.

Net cash used by changes in operating assets and liabilities during the three months ended June 30, 2025 consisted

primarily of an outflow of cash from a decrease in accrued expenses of $1,824, a decrease in trade payables of $272, and an increase

in prepaid and other current assets of $260, partially offset by an inflow of cash from an increase in deferred revenue of $542 and a

decrease in inventory of $228.

Flows Used in Investing Activities

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 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.

During the three months ended June 30, 2026, investing activities used $66 in cash and cash equivalents, primarily

related to capital expenditures incurred in the ordinary course of business, including expenditures associated with the Company’s new

There were no investing activities during the three months ended June 30, 2025.

Flows Provided by (Used in) Financing Activities

the three months ended June 30, 2026, financing activities provided $2,860 in cash and cash equivalents, primarily attributed to $2,000

of proceeds from the sale of our common stock and $860 of proceeds from our line of credit with related parties.

the three months ended June 30, 2025, financing activities used $466 in cash and cash equivalents, primarily attributed to $2,538 of

net proceeds from the sale of our common stock, $1,330 of net proceeds from short term borrowings, and $500 of net proceeds related to

the issuance of a note payable to a related party, offset by a $2,241 repayment of short term borrowings, $2,495 repayment of trade finance

facilities, and $98 payment of dividends on our Series AA Convertible Preferred Stock.

Sheet Arrangements

20 unchanged sentences

customers and record sales reserves to reduce revenue, net.

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.

of June 30, 2026, our sales-related reserves were $0.2 million compared to $0.3 million as of March 31, 2026.

The most significant variable

affecting these reserve balances is sales levels.

As a percentage of Net sales, the sales reserves balances were 16.8% as of June 30,

2026 compared to 1.4% as of March 31, 2026.

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

most susceptible to estimation uncertainty.

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

and 2) events and circumstances that indicate changes to such historical rates are warranted, such as our customers’ inventory

positions and their anticipated sell-through rates.

However, actual returns and claims in any future period are inherently uncertain

and thus may differ from our estimates.

As a result, we adjust our estimates of revenue at the earlier of when the most likely amount

of consideration we expect to receive changes or when the amount of consideration becomes fixed.

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 2) events

and circumstances that indicate changes to such historical rates are warranted, such as our customers’ inventory positions and

their anticipated sell-through rates.

However, actual returns and claims in any future period are inherently uncertain and thus may differ

from our estimates.

As a result, we adjust our estimates of revenue at the earlier of when the most likely amount of consideration we

expect to receive changes or when the amount of consideration becomes fixed.

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.

Receivable and Credit Losses

50 unchanged sentences

to the below, see Note 11 – Stock Based Compensation to our audited consolidated financial statements for additional detail.

periods prior to the IPO, we issued stock option awards and restricted stock units to employees and non-employees under the 2021 Equity

Incentive Plan (the “2021 Plan”).

The fair value of each award is estimated on the date of the grant using the Black-Scholes

option-pricing model in order to measure the compensation cost associated with the award.

This model incorporates the following assumptions

the expected volatility in the market value of the underlying common stock, the expected term of the contractual option,

the risk-free interest rate based upon quoted market yields for United State Treasury instruments with terms that were consistent with

the expected term of the stock options and the expected dividend yield of the underlying common stock.

fair value of the stock awards issued to employees and nonemployees under the 2021 Plan prior to the IPO was estimated at each grant

date using the Black-Scholes model which requires the input of the following subjective assumptions:

(a) length of time grantees will

retain their vested stock options before exercising them for employees and the contractual term of the option for nonemployees (“expected

term”), (b) The volatility of our common stock price over the expected term, (c) expected dividends, (d) risk-free interest rate

over the option’s expected term, and estimated forfeiture rate.

A summary of our significant assumptions for the pre-IPO stock

awards is as follows:

Expected term:

For employees, the expected term is determined using the “simplified” method, as prescribed by the

SEC’s Staff Accounting Bulletin No.

107, Share-Based Payment, to estimate on a formula basis the expected term of the Company’s

employee stock options, which are considered to have “plain vanilla” characteristics.

For nonemployees, the expected term

represents the contractual term of the option.

Expected volatility:

The expected volatility was determined by examining the historical volatilities of a group of industry peers,

as the Company did not have any trading history for our common stock prior to the IPO.

Expected dividend yield:

The expected dividend yield was based on our history and management’s current expectation regarding

future dividends.

Risk-free interest rate:

The risk-free interest rate was based upon quoted market yields for the United States Treasury instruments

with terms that were consistent with the expected term of the stock options.

Estimated forfeiture rate:

The expected forfeiture rate was based on our history and management’s expectation regarding

future forfeitures.

factors change, and we utilize different assumptions, share-based compensation cost on future award grants may differ significantly from

share-based compensation cost recognized on past award grants.

Higher volatility and longer expected terms result in an increase to share-based

compensation determined at the date of grant.

Future share-based compensation cost will increase to the extent that we grant additional

share-based awards to employees and non-employees.

If there are any modifications or cancellations of the underlying unvested securities,

we may be required to accelerate any remaining unearned share-based compensation cost or incur incremental cost.

Share-based compensation

cost affects our selling, general and administrative expenses.

future periods, we expect share-based compensation to increase, due in part to our existing unrecognized share-based compensation and

33 unchanged sentences

Accounting Pronouncements

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.

recent accounting pronouncements, see Note 2 of our unaudited condensed consolidated financial statements included in this Form 10-Q.

and Qualitative Disclosures about Market Risk

3 unchanged sentences

interest rates to date, due to the short-term nature of these instruments.

The interest expense associated with our letter of credit

trade finance facility is composed of a fixed spread over HIBOR or SOFR.

The interest rate associated with our short-term borrowings

is a fixed rate also.

We are exposed to interest rate risk where the interest expense associated with our financing arrangements is depending

upon HIBOR or SOFR, a floating reference rate, or in the event that the fixed interest rate associated with our financing arrangements

is increased upon roll-over of the financing arrangement at its contractual maturity.

Fluctuations in interest rates have not been significant

We do not expect that interest rates will have a material impact on our results of operations, owing to the size and short-term

nature of the floating rate financing arrangements.

The interest expense associated with our revolver is a fixed

We are exposed to interest rate risk where the interest expense associated with our financing arrangements in the event that the

fixed interest rate associated with our financing arrangements is increased upon roll-over of the financing arrangement at its contractual

Fluctuations in interest rates have not been significant to date.

We do not expect that interest rates will have a material

impact on our results of operations.

are beginning to observe increases in our costs of goods sold, in particular, transportation costs.

28 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-Q

Item 2. Management’s Discussion and Analysis