Reformation Inc. 10-Q

Item 1. Financial Statements. Reformation Inc. Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except share and per share data) June 27, 2026 December 27, 2025 Assets Cash and cash equivalents $ 76,627 $ 65,473 Accounts receivable, net 18,584 18,407 IEEPA tariff receivable 10,921 - Inventories 81,766 60,640 Prepaid expenses and other current assets 22,861 16,393 Total current assets 210,759 160,913 Property and equipment, net 89,225 83,346 Right-of-use assets 176,941 167,695 Intangible assets, net 977 1,396 Trade name 309,100 309,100 Goodwill 209,421 209,421 Other noncurrent assets 8,733 5,996 Total assets 1,005,156 937,867 Liabilities and Stockholders' Equity Accounts payable $ 6,303 $ 7,656 Accrued expenses and other current liabilities 72,285 66,828 Recapitalization dividend payable 29,056 - Current lease liabilities 16,835 16,670 Current portion of long-term debt 1,606 8,250 Deferred revenue 7,601 6,740 Total current liabilities 133,686 106,144 Long-term debt, net of current portion 239,923 147,724 Noncurrent lease liabilities 176,948 166,837 Deferred income tax liabilities 68,568 68,072 Deferred revenue, net of current portion 3,548 3,064 Other noncurrent liabilities 5,754 5,229 Total liabilities 628,427 497,070 Commitments and contingencies (Note 14) Stockholders' equity Common stock, $ 0.0001 par value; 107,025,000 shares authorized as of June 27, 2026 and December 27, 2025; 49,793,037 and 49,784,379 shares issued and outstanding as of June 27, 2026 and December 27, 2025, respectively 5 5 Additional paid-in capital 375,957 358,274 Retained earnings 1,304 82,493 Accumulated other comprehensive (loss) income ( 537 ) 25 Total stockholders' equity 376,729 440,797 Total liabilities and stockholders' equity $ 1,005,156 $ 937,867 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Reformation Inc. Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) 13 and 26 Weeks Ended June 27, 2026 and June 28, 2025 13 Weeks Ended 26 Weeks Ended (in thousands except share and per share data) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Net revenue $ 155,233 $ 125,073 $ 267,533 $ 211,164 Cost of goods sold 51,761 44,507 85,064 78,720 Gross profit 103,472 80,566 182,469 132,444 Operating expenses Marketing expenses 14,490 11,250 23,942 19,792 Selling, general and administrative expense 69,958 56,728 152,342 103,971 Total operating expenses 84,448 67,978 176,284 123,763 Income from operations 19,024 12,588 6,185 8,681 Other (expense) income Interest expense ( 3,543 ) ( 4,035 ) ( 6,814 ) ( 8,187 ) Interest income 185 414 498 1,069 Other income, net 1,439 308 1,183 235 Total other (expense) income ( 1,919 ) ( 3,313 ) ( 5,133 ) ( 6,883 ) Income before income taxes 17,105 9,275 1,052 1,798 Income tax provision 4,697 2,360 792 434 Net income 12,408 6,915 260 1,364 Other comprehensive income (loss), net of tax Foreign currency translation (loss) gain, net of tax ( 380 ) 562 ( 562 ) 703 Total comprehensive income (loss) $ 12,028 $ 7,477 $ ( 302 ) $ 2,067 Earnings per share Basic $ 0.25 $ 0.14 $ 0.01 $ 0.03 Diluted $ 0.23 $ 0.13 $ — $ 0.03 Weighted-average shares used in per share calculation Basic 49,792,130 49,784,463 49,790,125 49,784,463 Diluted 52,948,297 51,273,182 52,051,023 51,247,897 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Reformation Inc. Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) 13 and 26 Weeks Ended June 27, 2026 and June 28, 2025 (in thousands, except share data) Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Stockholders' Equity Shares Amount Balances at March 28, 2026 49,789,944 $ 5 $ 382,387 $ 70,345 $ ( 157 ) $ 452,580 Issuance of common stock from exercise of stock options 3,093 — 25 — — 25 Stock-based compensation expense - — 307 — — 307 Recapitalization dividend - — ( 6,762 ) ( 81,449 ) ( 88,211 ) Net income - — — 12,408 — 12,408 Foreign currency translation adjustment - — — — ( 380 ) ( 380 ) Balances at June 27, 2026 49,793,037 $ 5 $ 375,957 $ 1,304 $ ( 537 ) $ 376,729 (in thousands, except share data) Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Stockholders' Equity Shares Amount Balances at March 29, 2025 49,784,379 $ 5 $ 357,488 $ 64,304 $ ( 293 ) $ 421,504 Stock-based compensation expense - - 259 - - 259 Net income - - - 6,915 - 6,915 Foreign currency translation adjustment - - - - 562 562 Balances at June 28, 2025 49,784,379 $ 5 $ 357,747 $ 71,219 $ 269 $ 429,240 (in thousands, except share data) Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Stockholders' Equity Shares Amount Balances at December 27, 2025 49,784,379 $ 5 $ 358,274 $ 82,493 $ 25 $ 440,797 Issuance of common stock from exercise of stock options 8,658 — 67 — — 67 Stock-based compensation expense - — 24,378 — — 24,378 Recapitalization dividend - — ( 6,762 ) ( 81,449 ) — ( 88,211 ) Net income - — — 260 — 260 Foreign currency translation adjustment - — — — ( 562 ) ( 562 ) Balances at June 27, 2026 49,793,037 $ 5 $ 375,957 $ 1,304 $ ( 537 ) $ 376,729 (in thousands, except share data) Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Stockholders' Equity Shares Amount Balances at December 28, 2024 49,784,379 $ 5 $ 357,179 $ 69,855 $ ( 434 ) $ 426,605 Stock-based compensation expense - - 568 - - 568 Net income - - - 1,364 - 1,364 Foreign currency translation adjustment - - - - 703 703 Balances at June 28, 2025 49,784,379 $ 5 $ 357,747 $ 71,219 $ 269 $ 429,240 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Reformation Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) 26 Weeks Ended June 27, 2026 and June 28, 2025 26 Weeks Ended (in thousands) June 27, 2026 June 28, 2025 Cash flows from operating activities Net income $ 260 $ 1,364 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation of property and equipment 7,988 5,458 Change in operating lease right-of-use assets 10,545 8,820 Amortization of definite-lived intangible assets 419 419 Amortization of debt issuance costs 551 565 Deferred income taxes 498 ( 473 ) Stock-based compensation expense 24,378 568 Other — 45 Increase (decrease) in cash due to changes in operating assets and liabilities Accounts receivable ( 309 ) ( 4,748 ) IEEPA tariff receivable ( 10,921 ) — Inventories ( 21,248 ) ( 12,947 ) Prepaid expenses and other current assets ( 6,785 ) ( 2,987 ) Other noncurrent assets ( 286 ) ( 1,803 ) Accounts payable ( 1,254 ) ( 5,194 ) Accrued expenses and other current liabilities 3,633 5,080 Operating lease liabilities ( 9,337 ) ( 9,250 ) Deferred revenue 1,370 755 Other noncurrent liabilities 524 118 Net cash provided by (used in) operating activities 26 ( 14,210 ) Cash flows from investing activities Purchases of property and equipment ( 13,216 ) ( 21,060 ) Net cash used in investing activities ( 13,216 ) ( 21,060 ) Cash flows from financing activities Proceeds from exercise of stock options 50 — Proceeds from term loan, net of lender fees 89,211 — Repayments on term loan ( 4,125 ) ( 2,023 ) Payment of debt issuance costs ( 209 ) — Payment of offering costs ( 1,038 ) — Payment of dividends declared ( 59,066 ) — Net cash provided by (used in) financing activities 24,823 ( 2,023 ) Effect of exchange rate changes on cash and cash equivalents ( 479 ) 777 Net change in cash and cash equivalents 11,154 ( 36,516 ) Cash and cash equivalents Beginning of the period 65,473 87,678 End of the period $ 76,627 $ 51,162 Supplemental cash flow information Cash paid during the year for Income taxes, net of refunds $ 4,148 $ 4,593 Interest 6,133 6,992 Noncash financing and investing activities Recapitalization dividend accrued but not paid 29,056 — Purchase of property and equipment included in accounts payable and accrued expenses and other current liabilities 927 1,913 Operating lease right-of-use assets obtained in exchange for operating lease liabilities 19,986 39,683 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 Table of Contents Reformation Inc. Notes to the Condensed Consolidated Financial Statements (unaudited) 1. Organization and Nature of Business Reformation Inc. (formerly known as REF Topco, Inc.) is a Delaware corporation headquartered in Los Angeles, California. On April 11, 2025, REF Topco, Inc. changed its legal entity name to Reformation Inc. Reformation Inc. and its subsidiaries (collectively, the “Company”) sell apparel and accessories direct to customers through its website and company-owned retail stores located in the United States and internationally, as well as through wholesale and other channels. The Company’s mission is to bring sustainable fashion to everyone by minimizing its environmental impact through the sourcing of sustainable fabrics and vintage garments and incorporating sustainable practices throughout its supply chain and broader operations. 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying condensed consolidated interim financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim reporting (ASC 270) and in accordance with Article 10 of Regulation S-X. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP, can be condensed or omitted. These financial statements have been prepared on the same basis as the Company’s annual audited financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Company’s financial position as of June 27, 2026 and December 27, 2025, the Company’s results of operations for the 13 and 26 weeks ended June 27, 2026 and the corresponding periods in 2025, and the Company’s cash flows for the 26 weeks ended June 27, 2026 and June 28, 2025. The financial information as of December 27, 2025, is derived from the Company’s audited consolidated financial statements and related notes for the fiscal year ended December 27, 2025. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 26, 2026, or for any other interim period or for any other future year. All intercompany balances and transactions are eliminated in consolidation. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes as of and for the year ended December 27, 2025, included in the Company’s final prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended, in connection with the Company’s initial public offering (“IPO”), on July 30, 2026 (the “IPO Prospectus”). Fiscal Year End The Company operates on a 52/53-week fiscal year convention whereby its fiscal year ends on the Saturday nearest to December 31 of each year. Each fiscal quarter consists of 13 weeks, except for fiscal years with 53 weeks. Fiscal 2026 will end on December 26, 2026 and will be a 52-week year. Fiscal 2025 was a 52-week year and ended on December 27, 2025. Use of Estimates The preparation of the condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates and assumptions made by management relate to variable consideration for net sales provided to customers, including the sales return liability, allowances for excess and obsolete inventories; fair value of stock-based compensation; the recoverability of goodwill, the trade name, and long-lived assets; determination of incremental borrowing rate for leases; and determination of valuation allowance on deferred tax assets. Actual results could differ from these estimates. Accounts Receivable, Net Accounts receivable primarily consist of wholesale receivables from apparel retailers with a smaller portion attributed to credit card receivables related to sales transactions from the Company’s ecommerce platform and retail stores. Accounts receivable are carried at invoiced amounts less allowances for expected credit losses and are generally settled within 30 to 60 days. The allowance for expected credit losses is based on forecasts of future economic conditions, as well as information about past events and current conditions under the accounts 9 Table of Contents receivable aging method. As of June 27, 2026 and December 27, 2025, the allowance for credit losses was $ 2.4 million and $ 2.4 million, respectively. The Company has elected the practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. IEEPA Tariff Receivable During the 26 weeks ended June 27, 2026, the Company established a legal right to a refund of customs duties previously paid under the International Emergency Economic Powers Act (“IEEPA”). The refund represents a statutory recovery from a regulatory authority and is recognized within IEEPA tariff receivable in the condensed consolidated balance sheets. The Company recognizes these statutory refunds when there is a valid legal refund claim against the government. The receivable is carried at net realizable value, with the corresponding credit recognized as a reduction of inventory or as a reduction of cost of goods sold in the condensed consolidated statements of operations and comprehensive income (loss). As of June 27, 2026, the IEEPA tariff receivable amounted to $ 10.9 million and was substantially collected in full in July 2026. For the 13 weeks ended March 28, 2026, the Company recognized $ 10.2 million for refunds submitted for IEEPA tariffs as a reduction of cost of goods sold, and for the 13 weeks ended June 27, 2026, no amount was recognized for refunds submitted for IEEPA tariffs. Revenue Recognition Revenue is recognized as the net amount estimated to be received after deducting estimated or known amounts for sales returns and chargebacks. Sales returns and chargebacks are estimated using the expected value method based primarily on historical rates. Estimates are reviewed regularly until product returns are realized and the result of any such adjustments are known. As of June 27, 2026 and December 27, 2025, the amount of reserves for sales returns included in the accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheets were $ 17.4 million and $ 12.7 million, respectively. The Company accounts for gift card transactions by recording a contract liability at the time gift cards are issued to the customer in exchange for consideration from the customer which is presented as deferred revenue in the condensed consolidated balance sheets. Contract liabilities for customer gift cards remain on the Company’s books until the gift card is redeemed by the customer, at which time the Company records the redemption of the gift card for merchandise as net revenues. Gift cards do not have an expiration date. The Company determines the probability of gift cards being redeemed based on historical redemption patterns and recognizes net revenues on unredeemed gift cards where the likelihood of the gift card being redeemed is remote and there is no legal obligation to remit the unredeemed gift cards to relevant jurisdictions (gift card breakage). Gift card breakage is recognized in proportion, and over the same period, as actual gift card redemptions. Gift card breakage is included in net revenues in the condensed consolidated statements of operations and comprehensive income (loss). The balance of deferred revenue as of June 27, 2026 and December 27, 2025 was $ 11.1 million and $ 9.8 million, respectively, and $ 8.4 million as of the beginning of fiscal 2025. The Company recognized $ 1.1 million and $ 0.1 million as revenue for the 13 weeks ended June 27, 2026 and June 28, 2025, respectively, from amounts recorded as deferred revenue at the beginning of the periods. The Company recognized $ 4.4 million and $ 4.0 million as revenue for the 26 weeks ended June 27, 2026 and June 28, 2025, respectively, from amounts recorded as deferred revenue at the beginning of the periods. Deferred Offering Costs The Company capitalizes certain legal, accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded as a reduction of the proceeds from the offering. Should the in-process equity financing be abandoned, the deferred offering costs would be expensed immediately as a charge to operating expenses in the condensed consolidated statements of operations and comprehensive income (loss). As of June 27, 2026 and December 27, 2025, deferred offering costs included in other noncurrent assets on the accompanying condensed consolidated balance sheets were $ 3.9 million and $ 1.6 million, respectively. As of June 27, 2026, $ 1.3 million of deferred offering costs had not yet been paid and were included in accrued expenses and other current liabilities. Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The new guidance requires, on an annual basis, disclosure of specific categories in 10 Table of Contents the rate reconciliation and disclosure of income taxes paid disaggregated by jurisdiction. The Company will adopt the new standard during the year ended December 26, 2026. Adoption of the new standard is expected to result in expanded tax disclosures. In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”). The new guidance requires additional disclosure related to the disaggregation of income statement expense categories. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The adoption of ASU 2024-03 is expected to result in additional disclosures and the Company is currently evaluating the effect this standard will have on the condensed consolidated financial statements. In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software . This update provides amendments to clarify and modernize the accounting for costs incurred to develop or acquire internal-use software. Under this guidance, capitalization for internal-use software costs begins when management has authorized and committed to funding the project and it is probable the project will be completed, and the software will be used to perform the intended function. ASU 2025-06 is effective for annual and interim periods beginning after December 15, 2027, with early adoption permitted on a retrospective, modified, or prospective basis. The Company is currently evaluating the potential impact of this guidance and the timing of adoption. In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements . This update provides amendments to for a broad range of Topics arising from technical corrections, unintended application of the FASB codification, clarifications, and other minor improvements. The resulting amendments are collectively referred to as “Codification improvements”. The guidance is effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. An entity may elect to early adopt the amendments on an issue-by-issue basis. The Company is currently evaluating the potential impact of this guidance and the timing of adoption, especially issue 10 which clarifies the treasury stock retirement guidance in paragraph 505-30-30-8 to explicitly permit the excess of repurchase price over par or stated value to be accounted for entirely as a deduction from additional paid-in capital (“APIC”) as long as APIC does not become negative. In May 2026, the FASB issued ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818) , which establishes recognition, measurement, presentation and disclosure requirements for environmental credits and environmental credit obligations. The guidance requires costs incurred to obtain environmental credits that are used for voluntary environmental initiatives to be recognized as expense when incurred. The guidance also requires enhanced annual disclosures related to environmental credits and environmental credit obligations. The amendments are effective for public business entities for annual reporting periods beginning after December 15, 2027, including interim periods within those annual reporting periods, with early adoption permitted. The Company currently purchases carbon offsets in connection with its voluntary environmental initiatives and expenses the related costs as incurred. Accordingly, the Company does not expect the adoption of ASU 2026-02 to have a material impact on its consolidated financial statements; however, adoption will result in additional disclosures related to the Company’s environmental credit activities. The Company is currently evaluating the timing of adoption. 3. Inventories Inventories consist of the following: As of (in thousands) June 27, 2026 December 27, 2025 Raw materials $ 16,435 $ 11,309 Work-in-process 1,960 1,838 Finished goods 63,371 47,493 $ 81,766 $ 60,640 11 Table of Contents As of June 27, 2026 and December 27, 2025, the Company had inventory reserves in the amount of $ 14.8 million and $ 14.5 million, respectively. 4. Property and Equipment, Net Property and equipment consist of the following: (in thousands) As of June 27, 2026 December 27, 2025 Leasehold improvements $ 77,544 $ 71,178 Computer equipment and software 30,414 27,328 Furniture, fixtures and office equipment 17,491 15,684 Machinery and equipment 1,522 1,380 Construction in progress 6,205 3,815 133,176 119,385 Accumulated depreciation and amortization ( 43,951 ) ( 36,039 ) $ 89,225 $ 83,346 For the 13 weeks ended June 27, 2026 and June 28, 2025, depreciation and amortization expense amounted to $ 4.0 million and $ 2.8 million, respectively. For the 26 weeks ended June 27, 2026 and June 28, 2025, depreciation and amortization expense amounted to $ 8.0 million and $ 5.5 million, respectively. Depreciation and amortization expense of property and equipment are primarily recognized within selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income (loss). 5. Goodwill, Trade Name and Intangible Assets, Net Goodwill, trade name and intangible assets consist of the following: As of June 27, 2026 (in thousands) Useful Life (Years) Gross Accumulated Amortization Net Carrying Amount Trade name Indefinite $ 309,100 $ - $ 309,100 Goodwill Indefinite 209,421 - 209,421 E-commerce and retail customer relationships 8 6,700 5,723 977 $ 525,221 $ 5,723 $ 519,498 As of December 27, 2025 (in thousands) Useful Life (Years) Gross Accumulated Amortization Net Carrying Amount Trade name Indefinite $ 309,100 $ - $ 309,100 Goodwill Indefinite 209,421 - 209,421 E-commerce and retail customer relationships 8 6,700 5,304 1,396 $ 525,221 $ 5,304 $ 519,917 12 Table of Contents 6. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following: (in thousands) As of June 27, 2026 December 27, 2025 Salaries, wages and employee benefits $ 12,244 $ 14,696 Sales returns and allowances 17,377 12,701 Professional fees 7,452 8,555 Inventory purchases 10,374 8,029 Freight out 3,238 6,394 General and administrative 6,979 4,360 Sales tax payable 2,953 3,704 Marketing 7,168 3,453 Interest 664 3,206 Other accruals 3,836 1,730 $ 72,285 $ 66,828 7. Long-Term Debt On May 2, 2024, LYMI Inc., a wholly owned subsidiary of Reformation Inc., entered into a credit agreement with JPMorgan Chase Bank, N.A., Citibank, N.A., Morgan Stanley Senior Funding, Inc. and Royal Bank of Canada (the “Credit Agreement”), to secure a five-year term loan of $ 165.0 million (“Term Loan”) and a revolving line of credit (“Revolver”) with a maximum borrowing capacity of $ 30.0 million (together, the “Credit Facility”). On June 17, 2026, the Company entered into an amendment to its Credit Agreement (the "Amendment"). The Amendment, among other things, (i) provided for an additional $ 52.0 million of term loan borrowing (ii) provided for an incremental $ 40.0 million delayed draw term loan facility, of which, $ 40.0 million was funded on June 17, 2026 (iii) extended the maturity date of the term loan facilities and the revolving credit facility to June 17, 2031, and (iv) revised the scheduled principal amortization of the term loan facilities to reduce required principal payments over the remaining term of the debt. Upon completion of the Amendment, the Company had $ 246.7 million of term loan borrowings outstanding on June 17, 2026. Borrowings under the Amended Term Loans bear interest at a variable rate based on (Secured Overnight Financing Rate (“SOFR”) plus an applicable margin. The Company evaluated the Amendment in accordance with ASC 470, Debt, and concluded that the amendments to the term loan facilities should be accounted for as a debt modification as the terms were not substantially different. The Company incurred a total of $ 3.3 million in financing and third-party fees. Lender fees allocated to the term loans amounted to $ 2.8 million and were capitalized and will be amortized as an adjustment to interest expense over the remaining term of the debt using the effective interest method and the SOFR rate as of June 17, 2026. Third-party fees of $ 0.3 million incurred in connection with the modification of the term loan facilities were recognized in earnings as incurred. Fees allocated to the revolving borrowings of $ 0.2 million were capitalized and will be amortized ratably over the term of the revolving credit facility. As of June 27, 2026 and December 27, 2025, the Company had $ 246.7 million and $ 158.8 million outstanding under its Term Loan, respectively, and no borrowings under its Revolver. The Credit Facility includes a $ 10.0 million sub-limit on letters of credit. Outstanding letters of credit reduce the amount available to borrow on the Revolver. As of both June 27, 2026 and December 27, 2025, the available credit under the Revolver was $ 26.4 million, reflecting the available limit of $ 30.0 million less outstanding letters of credit of $ 3.6 million. Loan amounts under the Revolver may be borrowed, repaid and re-borrowed during the term. The unused portion of the Revolver bears a commitment fee of 0.50 %. 13 Table of Contents The following summarizes the Company’s outstanding long-term debt: (in thousands) As of June 27, 2026 December 27, 2025 Term loans, gross $ 246,687 $ 158,813 Less: Unamortized debt, issuance costs ( 5,158 ) ( 2,839 ) Total long-term debt 241,529 155,974 Less: Current portion of long-term debt ( 1,606 ) ( 8,250 ) Long-term debt, net of current portion $ 239,923 $ 147,724 The Term Loan may be prepaid in whole or in part prior to the maturity date and is subject to certain lender fees if converted, assigned, or paid on a day other than the end of the interest period. The Term Loan requires quarterly principal payments with a balloon payment upon maturity. Scheduled principal payments for future fiscal years are as follows: (in thousands) Fiscal year 2027 4,819 2028 11,244 2029 12,850 2030 12,850 2031 204,924 Total Term Loan - principal payments $ 246,687 Interest on the Term Loan is payable quarterly and accrues, at the Company’s option, at either SOFR plus 3.75 % or the Alternate Base Rate plus 2.75 %. The Alternate Base Rate is defined as the greatest of (i) the prime rate, (ii) the New York Federal Reserve Bank rate plus 0.50 %, and (iii) one-month Term SOFR plus 1.00 %, subject to a floor of 1.00 %. Borrowings under the Credit Facility are collateralized by substantially all assets of the Company. The Credit Agreement contains various customary representations and warranties, affirmative and negative and covenants, including, among others, covenants limiting the ability of the Company and its subsidiaries to dispose of assets, merge or consolidate, make acquisitions, incur indebtedness, grant liens, make investments, make certain restricted payments, and enter into transactions with affiliates, in each case subject to customary exceptions. The Credit Facility requires the Company to maintain a minimum fixed charge coverage ratio of 1.15 to 1.00 as of the last day of each fiscal quarter of the Company through March 31, 2025 and 1.25 to 1.00 for each fiscal quarter thereafter. The Credit Facility also requires that the Company maintain a maximum leverage ratio of 3.50 times Consolidated Adjusted Earnings Before Income Taxes, Depreciation and Amortization (“Adjusted EBITDA”) (as defined in the financing agreement) as of the last day of any fiscal quarter of the Company. As of June 27, 2026, the Company was in compliance with all financial covenants contained in the Credit Facility. 8. Net Revenues A summary of disaggregated net revenues is as follows: 13 Weeks Ended 26 Weeks Ended (in thousands) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Direct-to-consumer (DTC) $ 135,324 $ 111,682 $ 233,749 $ 186,378 Wholesale and other 19,909 13,391 33,784 24,786 Net revenues $ 155,233 $ 125,073 $ 267,533 $ 211,164 14 Table of Contents Direct-to-consumer represents net revenues from e-commerce through the Company’s online sale platform and net revenues from retail through direct product sales made from stores located in the U.S., United Kingdom, Canada, and France. Wholesale and other net revenues consist of sales made to third-party retailers such as department stores and online retailers, sales to distributors, and other miscellaneous revenues such as sample sales. 9. Income Taxes The Company accounts for income taxes in interim periods using an income statement approach in accordance with ASC 740-270. Under this approach, the interim income tax provision is determined by estimating the annual effective tax rate expected to be applicable for the full fiscal year and applying that rate to year to date ordinary income (or loss). For the 13 weeks ended June 27, 2026 and June 28, 2025, the Company’s effective tax rate of 27.5 % and 25.4 %, respectively, differs from the U.S. federal statutory rate of 21 % primarily due to state and local income taxes. For the 26 weeks ended June 27, 2026, the Company’s effective tax rate of 75.3 % differs from the U.S. federal statutory rate of 21 % primarily due to discrete state and local tax items, the impact of which is magnified by the 26 weeks ended June 27, 2026 pretax income. For the 26 weeks ended June 28, 2025, the Company’s effective tax rate of 24.1 % differs from the U.S. federal statutory rate of 21 % primarily due to state and local income taxes on ordinary income. 10. Stock-Based Compensation In 2019, the Company established the 2019 Stock Option Plan (the “2019 Plan”) to allow the Company to issue nonqualified stock options (“NQSO”) to eligible participants. The 2019 Plan is administered by the Compensation Committee of the Company’s Board of Directors, which determines the terms of the options granted, including exercise price, number of options granted, and vesting period of such options. Under the 2019 Plan, the exercise price of options may not be less than the fair market value of the Company’s common stock at the date of grant. Options have a term of no more than ten years from the date of grant and are generally cancelled 90 days after termination of employment or other service. As of June 27, 2026, there were 6,724,960 shares reserved for issuance under the 2019 Plan, of which options to purchase 5,838,178 shares were outstanding and 886,782 shares remained available for issuance. Stock Options Prior to March 27, 2026, the Company granted 50 % of its options with a service condition (“time-based option”) and 50 % of the options with both market and an implied performance condition (“performance-based option”) (collectively, the “Options”). The time-based options generally vest over a four-year period with 25 % of the shares vesting one year after the service date and the remaining 75 % of shares vesting in equal installments monthly for the following 36 months. The performance-based options were originally set to vest when the Company’s controlling stockholder achieves a multiple of invested capital (“MOIC”) ranging from 175 % to 250 % of invested capital, based on cash proceeds received by the investor. At the grant date, the performance-based awards had a service condition, the MOIC condition, and an implied performance condition because the MOIC condition was not deemed to be achievable without the occurrence of a Change in Control or an IPO. Prior to March 27, 2026, no compensation cost was recognized for the performance-based options as the implied performance condition was not considered probable. On March 27, 2026, the Company’s Board of Directors removed the non-service conditions on all outstanding performance-based options, thereby converting such options to time-based vesting awards. Following the modification, the former performance-based options are subject to the same time-based vesting conditions and other key terms as the time-based options originally granted to the same participant under the same option agreement. The modification was determined to be an improbable-to-probable modification and, accordingly, was accounted for as new equity awards for accounting purposes, with compensation cost measured based on the fair value of the modified awards as of the modification date. The aggregate fair value of modified awards was $ 25.3 million at the date of modification, determined using the Black-Scholes option-pricing model with the following weighted-average assumptions: expected term of 0.9 years, expected volatility of 45 %, risk-free interest rate of 3.76 %, and expected dividend yield of 0 %. Compensation cost for the modified awards is measured at the modification-date fair value and recognized over the requisite service period of the modified awards. For awards that were already 15 Table of Contents vested as of the modification date, the related compensation cost was recognized immediately. During the 13 weeks ended March 28, 2026, the Company recognized compensation expense of $ 23.8 million in connection with this modification since the majority of these options were vested at the modification date. Option activity under the 2019 Plan for time-based option grants is as follows: Time-Based Options Number of Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding at December 27, 2025 2,987,853 $ 7.22 5.2 $ 24,660 Options exercised ( 8,658 ) 7.75 Options forfeited or expired ( 76,641 ) 10.21 Options modified (a) 2,935,624 7.23 Outstanding at June 27, 2026 5,838,178 $ 6.86 4.6 $ 48,499 Exercisable at June 27, 2026 5,584,765 $ 6.83 4.5 $ 46,657 Vested at June 27, 2026 5,584,765 $ 6.83 4.5 $ 46,657 (a) As discussed above, on March 27, 2026, the Company's Board of Directors modified the terms of all outstanding performance-based options, thereby converting these to time-based awards. For the 13 weeks ended June 27, 2026 and June 28, 2025, stock-based compensation expense was $ 1.8 million and $ 0.3 million, respectively. For the 26 weeks ended June 27, 2026 and June 28, 2025, stock-based compensation expense was $ 25.9 million and $ 0.6 million, respectively. Stock-based compensation expense was recognized almost entirely in selling, general and administrative expense except for an immaterial amount recorded in cost of goods sold. As of June 27, 2026, total unrecognized compensation cost for all time-based options was 1.5 million and was recognized in full in July 2026 as a result of an acceleration of the vesting of all outstanding time-based options. The accelerated vesting was triggered by the Company’s controlling stockholder beneficially owning less than 50 % of the Company’s issued and outstanding shares upon completion of the IPO. Restricted Stock Units During the 13 weeks and 26 weeks ended June 27, 2026, the Company’s Board of Directors granted restricted stock unit awards (“RSUs”) to key employees outside of the 2019 Plan. The awards contain both a service condition and a performance-based condition. Under the service condition, the awards vest over a period of 3 or 4 years. The performance condition accelerates vesting at a Change in Control or an IPO and the awards would be forfeited if no Change in Control or IPO event occurs within 7 years of the grant date. No expense has been recognized for the RSUs for the 13 weeks ended June 27, 2026 and June 28, 2025 and for the 26 weeks ended June 27, 2026 and June 28, 2025, respectively, as the performance condition is not deemed probable. 16 Table of Contents The following table summarizes the activities for unvested RSUs: Restricted Stock Units Number of Shares Weighted- Average Grant Date Unvested at December 27, 2025 77,629 $ 15.47 Granted 303,655 $ 13.75 Forfeited ( 9,846 ) $ 16.38 Unvested at June 27, 2026 371,438 $ 14.07 As of June 27, 2026, there was $ 5.2 million of unrecognized compensation cost related to unvested RSUs, which was recognized upon completion of the IPO in July 2026 (see Note 18). 11. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share for the periods indicated: 13 Weeks Ended 26 Weeks Ended June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Net income (in thousands) $ 12,408 $ 6,915 $ 260 $ 1,364 Weighted average shares outstanding—basic 49,792,130 49,784,463 49,790,125 49,784,463 Dilutive effect of stock options 3,156,167 1,488,719 2,260,898 1,463,434 Weighted average shares outstanding—diluted 52,948,297 51,273,182 52,051,023 51,247,897 Basic earnings per share $ 0.25 $ 0.14 $ 0.01 $ 0.03 Diluted earnings per share $ 0.23 $ 0.13 $ 0.00 $ 0.03 Time-based shares excluded from the computation of diluted earnings per share 27,706 37,848 45,328 35,276 Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income available to common stockholders by the sum of the weighted average number of common shares and dilutive potential common shares outstanding during the period. The effect of the potential common shares from the exercise of the Company’s time-based stock options is included in diluted earnings per share under the treasury stock method as their effect is dilutive. The contingently issuable common shares from performance-based stock options and RSUs are excluded from diluted earnings per share as of June 28, 2025, because the Company determined that the performance and market conditions had not yet been satisfied. The contingently issuable common shares from performance-based RSUs are excluded from diluted earnings per share as of June 27, 2026, because the Company determined that the performance and market conditions had not yet been satisfied. The following shares have been excluded from the computation of diluted earnings per share as their inclusion would have an anti-dilutive effect on earnings per share, or in the case of contingently issuable performance shares, conditions have not been satisfied: • For the 13 weeks ended June 27, 2026 and June 28, 2025, the weighted-average outstanding time-based stock options to purchase 27,706 and 37,848 common shares, respectively. For the 26 weeks ended June 27, 2026 and June 28, 2025, the weighted-average outstanding time-based stock options to purchase 45,328 and 35,276 common shares, respectively. 17 Table of Contents • As of June 27, 2026 and June 28, 2025, the effect of nil and 3,051,782 of contingently issuable performance-based shares, respectively. • As of June 27, 2026 and June 28, 2025, the effect of 371,438 and 67,783 of contingently issuable performance-based RSUs, respectively. In March 2026, the Company converted all of its outstanding performance-based options into time-based options. 12. Stockholders’ Equity The Company’s Board of Directors has authorized one class of shares, common stock. On July 13, 2026, the Company effected a 142.7 -for-1 forward split of its common stock and a proportionate increase in the number of authorized shares. Accordingly, all share and per share information throughout the consolidated financial statements have been retroactively adjusted to reflect the stock split. As of June 27, 2026, the Company was authorized to issue 107,025,000 shares of common stock and had 49,793,037 shares issued and outstanding, as adjusted for the stock split. Effective July 31, 2026, the number of authorized shares of the Company’s common stock available for issuance was increased to 500,000,000 . Dividend Recapitalization Transaction On June 17, 2026, the Company declared a dividend in the amount of $ 1.63 per share (as adjusted for the 142.7 -for-1 forward stock split) to holders of its common stock using proceeds from the Amendment to the Credit Agreement as discussed in Note 7. The Board of Directors determined the dividend to be an extraordinary dividend under the 2019 Plan and certain RSU agreements, and consequently approved an adjustment to options outstanding under the 2019 Plan and RSUs outstanding under the RSU Agreements, pursuant to which (i) certain options and RSUs received an amount in cash equal to $ 1.63 for each such option and RSU, as applicable, (ii) the strike price of certain options was reduced by $ 1.63 for each such option and (iii) certain RSUs received an accrued dividend right equal to $ 1.63 for each such RSU, which are payable at the same time, and subject to the same terms, as the underlying RSU. The aggregate amount of the dividend and cash payments in respect of certain options and RSUs was $ 89.7 million, of which $ 60.6 million was paid during the thirteen weeks ended June 27, 2026 and $ 29.1 million was paid shortly thereafter. Accordingly, $ 29.1 million is recorded as a recapitalization dividend payable on the Company’s condensed consolidated balance sheet at June 27, 2026. During the 13 weeks ended June 27, 2026, the Company recognized stock-based compensation expense of $ 1.5 million in connection with the dividend declaration on June 17, 2026. 13. Leases The Company has certain manufacturing facilities, warehouse, office, and retail space that are accounted for as operating leases. The Company’s lease terms may include options to extend or terminate the lease and are, therefore, included in the operating lease right-of-use assets and operating lease liabilities when such options are reasonably certain to be exercised. Rent expense is recorded on a straight-line basis over the term of the lease (“operating lease cost”) and is included in cost of goods sold and selling, general, and administrative expenses on the condensed consolidated statements of operations and comprehensive income (loss). The following table presents the Company’s total lease cost: 13 Weeks Ended 26 Weeks Ended (in thousands) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Operating lease expense $ 8,397 $ 7,048 $ 16,274 $ 13,553 Short term lease expense - 76 - 76 Variable lease expense 1,540 1,371 2,706 2,302 Total lease expense $ 9,938 $ 8,495 $ 18,980 $ 15,931 18 Table of Contents Other information related to leases are as follows: As of June 27, 2026 December 27, 2025 Weighted average remaining lease term (in years) Operating leases 9.2 9.4 Weighted average discount rate Operating leases 5.0 % 4.8 % Future minimum lease payments for operating leases are as follows: (in thousands) Operating Lease Liability Fiscal year Remainder of 2026 $ 11,501 2027 30,458 2028 29,556 2029 27,367 2030 24,457 Thereafter 125,390 Total undiscounted lease payments 248,729 Less: Imputed interest ( 54,946 ) Present value of future minimum lease payments $ 193,783 14. Commitments and Contingencies Legal Matters The Company is from time to time involved in various claims and legal actions arising in the ordinary course of business, including proceedings involving workers’ compensation and other employee claims, unfair business practices, tort, and other general liability claims. While the Company cannot predict with certainty the results of these claims and legal actions in which it is currently or in the future may be involved, the Company does not expect that the ultimate disposition of any currently pending claims or actions will have a material adverse effect on the Company’s condensed consolidated balance sheets, statements of operations and comprehensive income (loss), or liquidity. 15. Employee Benefit Plan In 2019, the Company established The LYMI Inc. 401(k) Profit Sharing Plan and Trust (the “Plan”) of LYMI Inc. Employees who have worked for the Company for 13 consecutive weeks and meet certain eligibility restrictions may participate in the Plan and may defer up to 92 % of their salaries up to the maximum amount allowed by law of their eligible compensation to the Plan. The Company’s matching contribution is based on a percentage formula set forth in the Plan agreement. For the 13 weeks ended June 27, 2026 and June 28, 2025, Company contributions to the Plan were $ 0.7 million and $ 0.6 million, respectively. For the 26 weeks ended June 27, 2026 and June 28, 2025, Company contributions to the Plan were $ 1.2 million and $ 1.0 million, respectively. Contributions to the employee benefit plan are primarily recognized within selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income (loss). 16. Segment Information The Company’s operations are conducted as one operating segment and one reportable segment via revenue derived from the sale of individual products sold to customers through various channels. Segment information has 19 Table of Contents been determined based on how the Company’s chief operating decision maker (“CODM”) manages its business, makes operating decisions, and evaluates operating performance. The Company’s CODM is its Chief Executive Officer. The Company’s assets are managed centrally and are reported internally in the same manner as the condensed consolidated financial statements, and thus, no additional information is disclosed herein. While the CODM evaluates operating performance based on both consolidated net income and Adjusted EBITDA, the primary measure of profit and loss evaluated by the CODM for its single reportable segment is consolidated net income. The CODM is also regularly provided disaggregated expense information, as shown below: 13 Weeks Ended 26 Weeks Ended (in thousands) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Revenue $ 155,233 $ 125,073 $ 267,533 $ 211,164 Less: Cost of goods sold(a) 51,500 44,508 84,566 78,688 Selling expenses(a) 22,364 16,256 40,180 27,791 Marketing expenses(a) 14,490 11,250 23,942 19,792 Employee compensation(b) 22,297 19,917 42,422 37,487 Occupancy expenses 10,233 9,864 19,436 18,159 Other segment expenses(c) 9,191 7,415 16,628 14,121 Depreciation of property and equipment 4,036 2,806 7,988 5,458 Amortization of definite-lived intangible assets 209 210 419 419 Stock-based compensation expense 1,795 259 25,866 568 Interest expense 3,543 4,035 6,814 8,187 Income tax expense 4,697 2,360 792 434 Plus: Interest income 185 414 498 1,069 Other segment items 1,345 308 1,282 235 Segment net income $ 12,408 $ 6,915 $ 260 $ 1,364 (a) Amounts are exclusive of depreciation and amortization expense as well as certain employee compensation and occupancy expenses. (b) Amount is exclusive of stock-based compensation expense. (c) Other segment expenses primarily include technology costs, professional fees, and other general and administrative expenses. 17. Geographic Information The Company operated in the United States and internationally for the 13 and 26 weeks ended June 27, 2026 and June 28, 2025. Net revenues from retail stores are attributed to the geographic area in which the store is located, while net revenues from e-commerce and wholesale are attributed based on the customer's shipping destination. The following table lists net revenues by geographic area: 13 Weeks Ended 26 Weeks Ended (in thousands) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 United States $ 123,986 $ 102,229 $ 216,423 $ 175,138 Rest of the world 31,247 22,844 51,110 36,026 Total net revenues $ 155,233 $ 125,073 $ 267,533 $ 211,164 20 Table of Contents The following table lists long-lived assets by foreign geographic area: As of (in thousands) June 27, 2026 December 27, 2025 United States $ 80,271 $ 75,971 Rest of the world 8,954 7,375 Total property and equipment, net $ 89,225 $ 83,346 The following table lists right-of-use assets by foreign geographic area: As of (in thousands) June 27, 2026 December 27, 2025 United States $ 157,710 $ 150,316 Rest of the world 19,231 17,379 Total right-of-use assets $ 176,941 $ 167,695 18. Subsequent Events Initial Public Offering On July 31, 2026, the Company completed its IPO, pursuant to which the Company issued and sold 9,478,821 shares of common stock, and the selling stockholders sold an aggregate of 4,583,679 shares of common stock at a price per share of $ 15.00 . The Company received aggregate proceeds of approximately $ 132.2 million from the IPO, after deducting the underwriting discount of $ 10.0 million. On September 1, 2026, an additional 229,546 shares of common stock were sold by the selling stockholders pursuant to the underwriters’ partial exercise of their option to purchase additional shares. The Company did not receive any proceeds from the sale of these shares. Upon the completion of the IPO, the Company’s authorized capital stock consists of 500,000,000 shares of common stock, $ 0.0001 par value per share and 10,000,000 shares of preferred stock, $ 0.0001 par value per share. Following the IPO, the Company used $ 110.0 million of the net proceeds for the partial repayment of term loans under the Credit Agreement and $ 8.5 million to repurchase shares of common stock and outstanding stock options from certain existing stockholders and employees. The remaining proceeds will be used to pay for expenses associated with the IPO and for general corporate purposes. 2026 Omnibus Incentive Plan Effective July 29, 2026, the Company adopted the 2026 Omnibus Incentive Plan (the “2026 Plan”), pursuant to which the Company and its affiliates’ employees, consultants and directors will be eligible to receive incentive awards. The 2026 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, bonus stock, dividend equivalents, other stock-based awards, substitute awards, annual incentive awards and performance awards, in each case intended to align the interests of participants with those of the Company’s stockholders. In connection with the 2026 Plan, 5,316,858 shares of the Company’s common stock were reserved for issuance. On July 29, 2026, the Board of Directors granted stock options to purchase approximately 0.8 million shares under the 2026 Plan. One-third of such options vest on the first anniversary of the grant date, with the remaining two-thirds vesting in eight equal quarterly installments thereafter, subject to continued service through the applicable vesting dates. The Board of Directors also granted approximately 2.7 million RSUs to certain employees, officers and directors under the 2026 Plan, with vesting terms ranging up to three years . In addition, the Board of Directors granted 300,000 performance-based RSUs to Hali Borenstein, the Company’s Chief Executive Officer (the “Borenstein Performance Award”). The Borenstein Performance Award is eligible to vest based on the achievement of specified stock price targets during the five-year period following the grant date. The award is divided into six tranches, each of which is subject to a separate, progressively higher stock price target. Achievement of the applicable stock price targets will be assessed quarterly, and a target will be deemed 21 Table of Contents achieved if the daily volume-weighted average trading price of the Company’s common stock over any 60 consecutive trading days equals or exceeds the applicable stock price target. The stock price targets range from 1.75 times to 3.0 times the Company’s initial public offering price of $ 15.00 per share. Depending on the level of achievement of the applicable performance conditions, the payout under the Borenstein Performance Award may range from 0 % to 200 % of the target number of RSUs. 22 Table of Contents