AKA 10-K & 10-Q changes, risk factors and insider trading

•Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results or financial condition; and

•We face risks related to our debt covenants if we fail to generate sufficient cash flow to service our debt which could arise from changes in our results of operations or general economic conditions.conditions; and

We use third-party suppliers and manufacturers based primarily in China. We use only a limited number of suppliers and we may have greater risks than our peers due to the concentration of our suppliers and manufacturers in China. This sourcing concentration increases our dependence ofon these suppliers and exposes us to the risks of doing business in China, which means that our business, results of operations, financial condition and prospects may be influenced to a significant degree by economic, political, legal and social conditions in China or changes in government relations between China and the United States or other governments, including Australia. There is significant uncertainty about the future relationship between the United States and China with respect to taxation, trade policies, treaties, government regulations, import and export tariffs, customcustoms duties, environmental regulations, intellectual property and other matters. China’s economy differs from the economies of developed countries in many respects, including with respect to the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Further, on February 1,in 2025, President Trump announced a new 10% ad valorem duty on goods imported from China and on February 27, 2025, President Trump announced his plan to impose an additional incremental 10%tariff tariffrates on goods imported from China. There can be no assurances that the U.S. or China will not increase tariffs or impose additional tariffs in the future.

In addition, we may not obtain or retain the requisite legal permits to continue to operate in China, and costs or operational limitations may be imposed in connection with obtaining and complying with such permits. In addition, Chinese trade regulations are in a state of flux, and we may become subject to other forms of taxation, tariffs and duties in these jurisdictions. Furthermore, the third parties we rely on in China may disclose our confidential information or intellectual property to competitors or third parties, which could result in the illegal distribution and sale of counterfeit versions of our products. In response to elevated tariffs and trade policy uncertainty, we have begun diversifying our supply chain by sourcing products from suppliers located outside of China. However, these diversification efforts may result in additional expenses, higher costs of goods, potential quality decline or shipping delays from new suppliers and inventory shortages during the transition period. If any of these events occur, our business, financial condition and results of operations could be materially and adversely affected.

We have many initiatives in our marketing programs, particularly with regard to our websites, mobile applications and our social media presence. If our competitors increase their spending on marketing, if our marketing expenses increase, if our marketing becomes less effective than that of our competitors, or if we do not adequately leverage technology and data analytics capabilities needed to generate concise competitive insight, we could experience a material adverse effect on our results of operations. Among other factors, (1) a failure to sufficiently innovate or maintain effective marketing strategies and (2) U.S. and foreign laws and regulations that make it more difficult or costly to digitally market, such as the European Union General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act of 2018 (“CCPA”), may adversely impact our ability to maintain brand relevance and drive increased sales. See “—Risks Relating to Laws and Regulation—Changes in laws or regulations relating to data privacy and security, or any actual or perceived failure by us to comply with such laws and regulations, or contractual or other obligations relating to data privacy and security, could lead to government enforcement actions (which could include civil or criminal penalties), private litigation or adverse publicity and could have a material adverse effect on our reputation, results of operations, financial condition and cash flows.”

Our growth plan includes introducing our brands globally, including in countries and regions where we have no or limited operating experience. Expanding into new countries and regions involves significant risk, particularly if we have no experience in marketing, selling and engaging with customers in the market. For example, we plan to open our first Princess Polly store in New York City in the first quarter of 2025. There is no guarantee that the success of a brand in Australiaone willgeographic translate to the success of that brand in other countries, such as the U.S., and there is no guarantee that our success in certain locations in the U.S.market will translate to success in other locationsmarkets, including within the United States. Consumer preferences, competitive dynamics, marketing effectiveness and operating conditions may vary by region, channel and customer segment, and our success in thecertain U.S.locations or channels may not be indicative of future performance elsewhere. Our efforts to expand into new countries and regions could fail for many reasons, including our failure to accurately or timely identify apparel trends in new markets, different consumer demand dynamics and lack of acceptance of new offerings by existing or new users, our failure to promote the new markets effectively or negative publicity about us or our new markets. In addition, these initiatives may not drive increases in revenue, may require substantial investment and planning and may bring us more directly into competition with companies that are better established, operate more effectively or have greater resources than we do. There is additional complexity associated with local laws, tariffs and shipping logistics in new countries where our brands do not have an established presence. Expanding into new markets will require additional investment of time and resources of our management and personnel. If we are unable to cost-effectively expand into new countries and regions, then our growth prospects and competitive position may be harmed and our business, results of operations, and financial condition may suffer.

Our current growth strategy includes plans to expand our digital marketing and grow our eCommerce and retail presence internationally over the next several years. As we seek to expand internationally, we face competition from more established retail competitors. Consumer demand and behavior, as well as cultures,cultures and tastes and purchasing trends, may differ, and as a result, sales of our merchandise may not be successful, or the margins on those sales may not be in line with our expectations. Our ability to conduct business internationally may be adversely impacted by geopolitical (such as the Russian invasion of Ukraine, relations between China and Taiwan, or trade wars, or relations between the U.S. and Mexicowars), economic, and public health events, the manner in which governments respond to such events, as well as the global economy. Any challenges that we encounter as we expand internationally may divert financial, operational and managerial resources from our existing operations, which could adversely impact our financial condition and results of operations.

We use third-party social media platforms as, among other things, marketing tools. For example, our brands maintain Instagram, Facebook, YouTube, SnapChatSnapchat and TikTok accounts. We also maintain relationships with many social media influencers and engage in sponsorship initiatives. As existing eCommerce and social media platforms continue to rapidly evolve and new platforms develop, we must continue to maintain a presence on these platforms and establish presences on new or emerging popular social media platforms. If we are unable to cost-effectively use social media platforms as marketing tools or if the social media platforms we use change their policies or algorithms, we may not be able to fully optimize such platforms, and our ability to maintain and acquire customers and our financial condition may suffer. Furthermore, as laws, regulations, policies governing platforms and public opinion rapidly evolve to govern the use of these platforms and devices, the failure by us, our employees, our network of social media influencers or third parties acting at our direction to abide by applicable laws, regulations and policies in the use of these platforms and devices or otherwise could subject us to regulatory investigations, class action lawsuits, liability, fines or other penalties and have a material adverse effect on our business, financial condition and operating results. Further, if the use of these platforms areis banned or otherwise limited in significant jurisdictions in which we operate, it could have a material adverse effect on our ability to market and engage in sponsorship initiatives in such jurisdictions. For example, on April 24, 2024, then-President Biden signed a bill that provided for the ban of TikTok in the United States, effective January 19, 2025, if ByteDance Ltd. (“ByteDance”), TikTok’s Chinese-based parent company, did not sell the platform to a non-Chinese owner (the “U.S. TikTok Ban”). On January 20, 2025, President Trump instructed the Attorney General of the United States not to take any action to enforce the U.S. TikTok Ban for a period of 75 days. There can be no assurance that ByteDance will sell TikTok to a non-Chinese owner or that the U.S. TikTok Ban will not be enforced. Although our TikTok accounts are managed by Australian employees and, therefore, we will still have access to TikTok if the U.S. TikTok Ban is enforced, the TikTok ban could have a material adverse effect on our ability to market, and the efficacy of such marketing, and engage in sponsorship initiatives in the U.S., which could have a material adverse effect on our results of operations.

In addition, brand value is based in part on consumer sentiment about merchandise quality and corporate integrity, including our ability to operate responsibly through our commitment to responsible fashion and sustainability. A perception that introducing a high volume of styles and manufacturing and selling of fast fashion at scale results in lower quality or increased textile waste, or that we are not honoring our commitment to responsible fashion, could harm our reputation. Further, we have in the past, and may in the future, change suppliers for our products. The products we purchase from new suppliers may be of lesser quality as compared to the products we purchase from our then-current suppliers and shipping times may be longer, each of which may have a material and adverse effect on our operations and brand. Our reputation could also be adversely affected by negative consumer perception of our sourcing concentration in particular countries.

InWe general,now collect, remit and report sales tax in all states where we have economic nexus. However, prior to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. on June 21, 2018, we did not historically collectedcollect state or local sales, use or other similar taxes in any jurisdictions in which we dodid not have a tax nexus, in reliance on court decisions or applicable exemptions that restrictrestricted or precludeprecluded the imposition of obligations to collect such taxes with respect to online sales of our products. In addition, we have not historically collected state or local sales, use or other similar taxes in certain jurisdictions in which we do have a physical presence, in reliance on applicable exemptions. On June 21, 2018, the U.S. Supreme Court decided, in South Dakota v. Wayfair, Inc., that state and local jurisdictions may, at least in certain circumstances, enforce a sales and use tax collection obligation on remote vendors that have no physical presence in such jurisdiction. A number of states have already begun, or have positioned themselves to begin, requiring sales and use tax collection by remote vendors and/or by online marketplaces. The details and effective dates of these collection requirements vary from state to state. While we now collect, remit and report sales tax in all states that impose a sales tax, itIt is still possible that one or more jurisdictions may assert that we have liability for previous periods for which we did not collect sales, use or other similar taxes, and if such an assertion or assertions were successful it could result in substantial tax liabilities, including for past sales taxes and penalties and interest, which could materially adversely affect our business, financial condition and operating results.

For the U.S. market, we primarily rely on third-party operated fulfillment centers in California for all brands, but have begun moving our fulfillment operations to Mexico for Petal & Pup and mnml, beginning in the fourth quarter of 2024.brands. Our fulfillment centers include computer-controlled and automated equipment and rely on a warehouse management system to manage supply chain fulfillment operations, which means their operations are complicated and may be subject to a number of risks related to cybersecurity, the proper operation of software and hardware, electronic or power interruptions or other system failures. In addition, because most of our U.S. and Mexico fulfilled products are distributed from twoone primary fulfillment centers,center, our operations could also be interrupted by labor difficulties or changes in the U.S. or Mexican political landscape, or by floods, fires or other natural disasters near our fulfillment centers. For example, in December 2024, the Mexican government issued a presidential decree which prevented us from accepting incoming deliveries to our Mexico fulfillment center. We werealso stillmay ablein the future elect to fulfillhave outour fulfillment centers moved to one or more other locations. Initiatives to transition operations to new fulfillment centers may be subject to shipping delays, cost overruns due to the move or supply chain disruptions, which could result in substantial expense to us, disrupt our operations and divert the attention of the Mexico fulfillment center with the inventory remaining on hand, and were successfully able to divert inventory inbound to Mexico at the time of the decree to our facilitiesmanagement. Additionally, we could face challenges in California.integrating new facilities, which could result in delays in order fulfillment.

We maintain business interruption insurance, but it may not adequately protect us from the adverse effects that could result from significant disruptions to our distribution system, such as the long-term loss of customers or an erosion of our brand image. Moreover, if we or our third-party logistics provider are unable to adequately staff our fulfillment centers to meet demand or if the cost of such staffing is higher than historical or projected costs due to mandated wage increases, regulatory changes, hazard pay, international expansion or other factors, our results of operations could be harmed. In addition, operating fulfillment centers comes with potential risks, such as workplace safety issues and employment claims for the failure or alleged failure to comply with labor laws or laws respecting union organizing activities. Our distribution capacity is also dependent on the timely performance of services by third parties, including the shipping of our products to and from our California distribution facilities. We may need to operate additional fulfillment centers in the future to keep pace with the growth of our business, and we cannot assure you that we will be able to locate suitable facilities on commercially acceptable terms in accordance with our expansion plans, nor can we assure you that we will be able to recruit qualified managerial and operational personnel to support our expansion plans.

It is possible that we could have another impairment charge for goodwill or intangible assets in future periods if (i) overall economic conditions in fiscal 2025year 2026 or future years vary from our current assumptions (including changes in discount rates), (ii) business conditions or our strategies for a specific business unit change from our current assumptions, (iii) investors require higher rates of return on equity investments in the marketplace, or (iv) enterprise values of comparable publicly traded companies, or of actual sales transactions of comparable companies, were to decline, resulting in lower comparable multiples of revenues and earnings before interest, taxes, depreciation and amortization and, accordingly, lower implied values of goodwill and intangible assets. Any future impairment charge for goodwill or intangible assets could have a material effect on our consolidated financial position or results of operations.

In the U.S., various federal and state regulators, including governmental agencies like the Consumer Financial Protection Bureau and the Federal Trade Commission (“FTC”),FTC, have adopted, or are considering adopting, laws and regulations concerning personal information and data security and have prioritized privacy and information security violations for enforcement actions. Certain state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to personal information than federal, international or other state laws, and such laws may differ from each other, all of which may complicate compliance efforts. For example, the CCPA, which increases privacy rights for California residents and imposes obligations on companies that process their personal information, went into effect on January 1, 2020. Among other things, the CCPA requires covered companies to provide new disclosures to California consumers and provide such consumers new data protection and privacy rights, including the ability to opt-out of certain data sharing arrangements of personal information, and the ability to access and delete personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal information. This private right of action may increase the likelihood of, and risks associated with, data breach litigation. We are also subject to international laws, regulations and standards in many jurisdictions, which apply broadly to the collection, use, retention, security, disclosure, transfer and other processing of personal information, such as GDPR.

We rely on a number of third-party suppliers and manufacturers to provide our products, including one supplier that represents approximately 8% of our purchase orders.products. Our suppliers may encounter problems for a variety of reasons, including adverse macroeconomic conditions, unanticipated demand from larger customers, equipment malfunction, environmental factors and public health emergencies, any of which could delay or impede their ability to meet our demand.

•difficulty locating and qualifying alternative suppliers, especially with respect to our 8% suppliersuppliers;

Changes in U.S., Australian or international social, political, regulatory or economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories or countries where we currently sell our products or conduct our business, as well as any negative sentiment toward the U.S. or Australia as a result of such changes, could adversely affect our business. The U.S. and Australian governments have from time to time instituted or proposed changes in trade policies that include the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the U.S. and Australia, economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the U.S., Australia and other countries where we conduct our business. Specifically, President Trump has announced plans to impose broad-based tariffs on imports from many countries, including China, in which many of our third-party suppliers and manufacturers are based. Further, on February 1, 2025, President Trump announced a new 10% ad valorem duty on goods imported from China and on February 27, 2025, President Trump announced his plan to impose an additional incremental 10% tariff on goods imported from China,China. Subsequently, on February 20, 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). The ultimate availability, timing, and thereamount of any potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory and administrative developments. Following the Supreme Court’s decision, the Trump Administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels and whether further additional tariffs or other retaliatory actions may be imposed, modified or suspended. There can be no assurancesassurance thatregarding the U.S. will not increase tariffs or impose additional tariffs in the future, or the manner in whichhow China and its trade partners will respond.respond to these developments. It may be time-consuming and expensive for us to alter our business operations in order to adapt to or comply with any such changes. New tariffschanges, and other changes in U.S. and Australian trade policy have in the past and could continue to trigger retaliatory actions by affected countries,countries could further impact our business. In response to elevated tariffs and certaintrade foreignpolicy governmentsuncertainty, we have institutedbegun diversifying our supply chain by sourcing products from suppliers located outside of China; however, these diversification efforts may result in additional expenses, higher costs of goods, potential quality decline, shipping delays or couldinventory considershortages imposingduring retaliatorythe measurestransition onperiod. certainThe U.S.impact and Australian goods. We, similar to many other multinational corporations, do a significant amounttiming of business that would be impacted bysuch changes to the trade policies of the U.S., Australia, and foreign countries (including governmental action related to tariffs, international trade agreements, or economic sanctions). Such changes have the potential to adversely impact the U.S. and Australian economy or certain sectors thereof, our industry and the global demand for our products, and as a result, could have a material adverse effect on our business, financial condition and results of operations.

We derive a significant portion of our merchandise for our owned brands from third-party manufacturing and supply partners in foreign countries and territories, including countries and territories perceived to carry an increased risk of corrupt business practices. The U.S. Foreign Corrupt Practices Act (“FCPA”) prohibits U.S. corporations and their representatives from offering, promising, authorizing or making payments to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business abroad. Likewise, the SEC, the U.S. Department of Justice, OFAC, the U.S. Department of State, as well as other foreign regulatory authorities continue to enforce economic and trade regulations and anti- corruptionanti-corruption laws, across industries. U.S. trade sanctions relate to transactions with designated foreign countries and territories as well as specially targeted individuals and entities that are identified on U.S. and other government blacklists, and those owned by them or those acting on their behalf. Notwithstanding our efforts to conduct our operations in material compliance with these regulations, our international vendors could be determined to be our “representatives” under the FCPA, which could expose us to potential liability for the actions of these vendors under the FCPA. If we or our vendors were determined to have violated OFAC regulations, the FCPA, the U.K. Bribery Act of 2010 or any of the anti-corruption and anti-bribery laws in the countries and territories where we and our vendors do business, we could suffer severe fines and penalties, profit disgorgement, injunctions on future conduct, securities litigation, bans on transacting certain business and other consequences that may have a material adverse effect on our business, financial condition and results of operations. In addition, the costs we may incur in defending against any anti-corruption investigations stemming from our or our vendors’ actions could be significant. Moreover, any actual or alleged corruption in our supply chain could carry significant reputational harms, including negative publicity, loss of goodwill and decline in share price.

Our liability insurance may not cover potential claims of this type adequately or at all. Further, we may be unable to successfully resolve these typetypes of conflicts to our satisfaction and may be required to enter into costly license agreements, if available, pay significant royalty, settlementssettlement costs or damages or rebrand our products or be prevented from selling some of our products. The terms of such a settlement or judgment may require us to cease some or all of our operations or pay substantial amounts to the other party. Even if we have an agreement to indemnify us against such costs, the indemnifying party may be unable or unwilling to uphold its contractual obligations. In addition, we may have to seek a license to continue practices found to be in violation of a third-party’s rights. If we are required, or choose to enter into royalty or licensing arrangements, such arrangements may not be available on reasonable terms, or at all, and may significantly increase our operating costs and expenses. Such arrangements may also only be available on a non-exclusive basis, such that third parties, including our competitors, could have access to use the same intellectual property to compete with us. We may also have to redesign our products so they do not infringe, misappropriate or otherwise violate third-party intellectual property rights, which may not be possible or may require substantial monetary expenditures and time, during which our products may not be available for commercialization or use. Such outcomes would increase our operating expenses, and if we cannot redesign our products in a non-infringing manner or obtain a license for any allegedly infringing aspect of our business, we may be forced to limit our product offerings, which could decrease our sales, reduce our operating margins and adversely affect our ability to compete effectively.

We may use artificial intelligence (“AI”) and machine learning in our business to, among other things, facilitate personalized customer journeys, predict shopping behaviors, optimize marketing, and streamline inventory planning and operational workflows. Issues relating to our potential use of new and evolving technologies such as AI may cause us to experience brand or reputational harm, competitive harm, legal liability and new or enhanced governmental or regulatory scrutiny, and to incur additional costs to resolve such issues. For example, AI algorithms are based on machine learning and predictive analytics, which can include unexpected biases and lead to discriminatory outcomes. In addition, perceived or actual technical, legal, compliance, privacy, security, ethical or other issues relating to the use of AI could undermine the decisions, predictions or analysis that AI applications produce and create additional risks, such as risks of cybersecurity incidents, all of which could adversely affect our business and operating results. The use of AI involves significant technical complexity and requires specialized expertise. Any disruption or failure in AI-based systems or technology infrastructure could result in delays or errors in our operations, which could harm our business and operating results. Moreover, developing, testing and deploying AI systems may also increase our operating expenses due to the nature of the computing costs involved in such systems. Additionally, the regulatory landscape for AI is rapidly evolving, and new laws or regulations governing the use of AI could require us to modify our practices, increase compliance costs or limit our ability to use AI tools that benefit our operations.

We entered into a credit facility in September 2021.2021, which we amended and restated in 2025. Any indebtedness we may incur under our credit facility, or any other indebtedness we may incur in the future, could require us to divert funds identified for other purposes for debt service and impair our liquidity position. If we cannot generate sufficient cash flow from operations to service our debt, we may need to refinance our debt, dispose of assets or issue equity to obtain necessary funds. We do not know whether we will be able to take any of these actions on a timely basis, on terms satisfactory to us or at all.

•We haddid not designeddesign and implementedmaintain effective controls to maintain appropriate segregation of duties in our manual and IT-dependent business processes, including journal entries, and with respect to certain information technology general controls (“ITGCs”) for information systems relevant to the preparation of our financial statements, specifically, (i) program change management controls to ensure that program and data changes are identified, tested, authorized and implemented appropriately; (ii) user access controls to adequately restrict user and privileged access to appropriate personnel; (iii) computer operations controls to ensure that processing and transfer of data, and data backups and recovery are monitored; and (iv) program development controls to ensure that new software development is tested, authorized and implemented appropriately.

We could remain an “emerging growth company” until the fiscal year ended December 31, 2026 or until the earliest of (a) the last day of the first fiscal year in which our annual gross revenue exceeds $1.07 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, and (c) the date on which we have issued more than $1 billion in non-convertible debt securities during the preceding three- yearthree-year period.

Pursuant to our certificate of incorporation, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (3) any action asserting a claim against us arising pursuant to any provision of the DGCL, our certificate of incorporation or our bylaws or (4) any other action asserting a claim against us that is governed by the internal affairs doctrine; provided that for the avoidance of doubt, the forum selection provision that identifies the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation, including any “derivative action”, will not apply to suits to enforce a duty or liability created by the Securities Act, the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Our certificate of incorporation also providedprovides that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolutionsresolution of any complaint asserting a cause of action arising under the Securities Act.

•Expanded gross margin by 20030 basis points to 57% from 55%

Adjusted EBITDA,earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), Adjusted EBITDA margin and Free Cash Flow are non-GAAP measures. See “Non-GAAP Financial Measures” below for information regarding our use of Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow and their reconciliation to net income (loss), net income (loss) margin and net cash provided by (used in) operating activities, respectively.

21 Non-routine items include severance from headcount reductions; one time supply chain sourcing costs and sales tax penalties; and insured losses, net of recoveries.penalties.

The following table presents a reconciliation of Free Cash Flow to net cash provided by (used in) operating activities, the most directly comparable financial measure prepared in accordance with GAAP:

For the year ended December 31, 2024,2025, net cash provided by operating activities decreasedincreased by $32.8$15.8 million compared to net cash provided by operating activities for the year ended December 31, 2023.2024. This was attributable primarily to more cashsell usedthrough to purchaseof inventory in 2024,2025, as compared to 2023,2024, toas supportnet growthsales grew by 4%, as well as an increase in thelease U.S.,incentive partiallypayments offset by the timing of payments.received.

For the year ended December 31, 2024,2025, Free Cash Flow decreasedincreased by $38.4$10.3 million compared to Free Cash Flow for the year ended December 31, 2023.2024. This was attributable primarily to more cashsell usedthrough to purchaseof inventory in 20242025, andas compared to 2024, as well as an increase in lease incentive payments received, partially offset by additional capital expenditures related to new stores, as compared to 2023, to support growth in the U.S.,U.S. partiallyand offset by the timing of payments.Australia.

The macroeconomic environment in which we operate impacts consumer behavior and may have a significant impact on our business. While positive conditions in the economy generally promote customer spending on our sites and in our stores, any economic weakness can result in a reduction of customer spending and have a significant negative impact on our results of operations. Specifically, many of our products may be viewed as discretionary items rather than necessities. Consequently, our results of operations tend to be sensitive to changes in the macroeconomic environment that impact consumer discretionary spending. Macroeconomic factors that could cause significant negative impacts on our results of operations include, but are not limited to: inflationary pressures on consumers globally and on our supply chain; elevated interest rates; employment rates; business conditions; changes in the housing market; changes in stock markets; adverse developments affecting the financial services industry; the availability of credit, both for us and for our customers; foreign currency exchange rates; fuel, energy and raw materials costs; supply chain challenges; wars and geopolitical tensions; and the effects of tariffs.tariffs and other trade policies. On February 20, 2026, the U.S. Supreme Court struck down certain tariffs imposed under IEEPA. It is unclear at this time what impact this decision will have on our business, including whether we will be able to obtain refunds of amounts previously collected for such tariffs or the level of replacement tariffs the Trump Administration imposes through other means.

SeniorAmended Securedand CreditRestated Syndicated Facility

Refer to Note 7, “Debt,” in the notes to our consolidated financial statements included in this Annual Report on Form 10-K for additional information regarding ourthe seniorAmended securedand creditRestated facility.Credit Agreement.

Net Cash Provided by (Used in) Operating Activities

Cash provided by (used in) operating activities consists primarily of net income (loss) adjusted for certain non-cash items, including depreciation, amortization, equity-based compensation, the effect of changes in working capital and other activities.

In 2024,2025, net cash provided by operating activities decreasedincreased $32.8by $15.8 million. This increase was attributable primarily to more cashsell usedthrough to purchaseof inventory in 2024,2025, as compared to 2023,2024, toas supportnet growthsales grew by 4%, as well as an increase in thelease U.S.,incentive partiallypayments offset by the timing of payments.received.

In 2023,2024, net cash provided by operating activities increaseddecreased $33.7by $32.8 million. This decrease was attributable primarily to amore decreasecash used to purchase inventory in inventory2024, as compared to 2022,2023, whichto wassupport drivengrowth byin reducedthe inventory buying and sell-through of aged inventory,U.S., partially offset by lowerthe earnings.timing of payments.

In 2024,2025, net cash used in investing activities increased $5.6by $5.5 million. This increase was attributable to additional capital expenditures related to new stores.

Net Cash Provided by (Used in) Provided by Financing Activities

In 2023,2025, net cash used in financing activities increased $86.1by $19.9 million as compared to net cash provided by financing activities in 2022.2024. This increase was primarily attributable to the combined $50.7$17.9 million in principal payments,borrowings, net of borrowings,repayments, on our senior secured credit facility in 20232024 and the $34.4$1.4 million in borrowings,debt netissuance of repayments,costs, under our seniorAmended securedand creditRestated facilityCredit Agreement in 2022.2025.

In August 2023, due to elevated interest rates and unfavorable demand in Australia, we reduced our forecasts and expectations for the Culture Kings and Petal & Pup reporting units. This reduction was identified as a triggering event and a subsequent quantitative test concluded that the carrying value of the Culture Kings and Petal & Pup reporting units exceeded their fair values as of August 31, 2023. As a result, we recorded a non-cash goodwill impairment charge of $68.5 million during the third quarter of 2023. As of December 31, 2023, $11.3 million of goodwill related to Petal & Pup remained on our balance sheet, while the goodwill related to Culture Kings was fully impaired. Additionally,In June 2025, due to a continued period of uncertain trade policy and the impact of increased tariffs and duties between countries, we revised our forecasts for each of our reporting units. These revisions and a continued decrease in our stock price were identified as triggering events and a subsequent quantitative test concluded that the fair value of each of our reporting units exceeded their carrying values as of DecemberJune 31,30, 2024,2025. As of the testing date, the estimated fair value of the mnml reporting unit exceeded the carrying value by 11.2%,4.6% and the carrying value of the related goodwill was $30.0 million. Holding all other assumptions used in the fair value measurement of the mnml reporting unit constant, a 60 basis points increase in the selected discount rate would result in impairment. No impairment was identified as part of the annual goodwill impairment test conducted in 2024.2025.

For the threesix months ended MarchJune 31,30, 2026, net cash usedprovided inby operating activities increased by $2.0$8.7 million compared to net cash usedprovided inby operating activities for the threesix months ended MarchJune 31,30, 2025. This was attributable primarily to the receipt of IEEPA tariff refunds offset by increased inventory purchases and timing of payments.

For the threesix months ended MarchJune 31,30, 2026, Free Cash Flow decreasedincreased by $1.1$9.7 million compared to Free Cash Flow for the threesix months ended MarchJune 31,30, 2025. This was attributable primarily to timingthe receipt of payments,IEEPA offsettariff byrefunds and less capital expenditures related to opening new stores, compared to the prior year.year, offset by increased inventory purchases and timing of payments.

Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025

Net sales increaseddecreased by $3.8$0.5 million, or 3%,million for the three months ended MarchJune 31,30, 2026 as compared to the same period in 2025. The increasedecrease in net sales was primarily driven by a 4% increasedecrease in the number of orders we processed in the three months ended June 30, 2026 compared to the same period in 2025, partiallywhich offsetwas driven by alower decreasedemand in ourAustralia averageand orderNew value of 1%, from $78 in 2025 to $77 in 2026.Zealand. On a constant currency basis, net sales and average order value for the three months ended MarchJune 31,30, 2026 would have increased 1% andeach decreased 3%, respectively,5%, compared to the same period in 2025.

Selling expenses increased by $2.8$2.4 million, or 7%,5%, for the three months ended MarchJune 31,30, 20262026, as compared to the same period in 2025. This increase was driven by the opening of additional stores,increase, as well as the 3% increase in net sales for the three months ended March 31, 2026. The increase in selling expenses as a percentage of net salessales, was primarilydriven due toby the opening of additional stores.

Marketing expenses increased by $1.6$1.4 million, or 10%,7%, for the three months ended MarchJune 31,30, 20262026, as compared to the same period in 2025.

OtherTotal other expense decreased by $0.1$1.7 million, or 5%,54%, for the three months ended MarchJune 31,30, 2026 compared to the same period in 20252025. This increase as well as the increase to the change in other expense as a percentage of sales was primarily due to lowera $1.0 million increase in interest expenseincome from aIEEPA decreasetariff in our long-term debt balancerefunds and interest rates partially offset by the impact of foreign currency.

Provision for income taxes changed by $0.2$0.1 million for the threesix months ended MarchJune 31,30, 2026 compared to the same period in 2025. This change was primarily due to projected full-year pre-taxtaxable income in the U.S.U.K. and New Zealand in the current year, compared to a projected full-year pre-tax loss in the same period in 2025.year.

As of MarchJune 31,30, 2026, our principal sources of liquidity were cash and cash equivalents totaling $12.9$21.1 million, our revolving line of credit and our term loan accordion provision.

As of March 31, 2026, mostMost of our cash was held for working capital purposes. We have historically financed our operations and capital expenditures primarily through cash flows generated by operations, the incurrence of debt and through the issuance of equity. We believe that our existing cash, together with cash generated from operations and available borrowing capacity under our credit facilities and lines of credit, will be sufficient to meet our anticipated cash needs for the next 12 months. We believe that cash generated from ongoing operations and continued access to debt markets will be sufficient to satisfy our cash requirements beyond 12 months. However, our liquidity assumptions may prove to be incorrect, and we could exhaust our available financial resources sooner than we currently expect. We may seek to borrow funds under our credit facility or raise additional funds at any time through equity, equity-linked or debt financing arrangements. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described in the section of our 2025 Form 10-K captioned “Risk Factors.” We may not be able to secure additional financing to meet our operating requirements on acceptable terms, or at all. The inability to raise capital if needed would adversely affect our ability to achieve our business objectives.

The Amended and Restated Credit Agreement extends the maturity date of (i) the revolving credit facility commitments to October 14, 2028 and (ii) the term loans to October 14, 2028. We are required to make mandatory amortization payments in respect of the term loans in an amount equal to (a) commencing with the fiscal quarter ending on December 31, 2025 and until the fiscal quarter ending on December 31, 2027, a principal amount of term loans equal to the aggregate outstanding principal amount of term loans made on the date of the execution of the Amended and Restated Credit Agreement, multiplied by 1.875% and (b) commencing with the fiscal quarter ending on March 31, 2028, a principal amount of term loans equal to the aggregate outstanding principal amount of term loans made on the date of the execution of the Amended and Restated Credit Agreement, multiplied by 2.50%. As of MarchJune 31,30, 2026, principal payments of our term loan for the next twelve months are anticipated to total $6.4 million.

Under the Amended and Restated Credit Agreement, we are subject to certain financial covenant ratios and certain annual mandatory prepayment terms based on excess cash flows, as defined in the Amended and Restated Credit Agreement, based on our net leverage ratio. If we are unable to comply with certain financial covenant ratios, which include provisions that are not precisely defined and are subject to interpretation, and terms requiring mandatory prepayment based on a percentage of excess cash flows, our long-term liquidity position may be adversely impacted. Furthermore, the variable interest rates associated with our senior secured credit facility could result in interest payments that are higher than anticipated. We were in compliance with all debt covenants as of MarchJune 31,30, 2026, and expect to be in compliance beyond the next 12 months, although our ability to meet these financial ratios and tests can be affected by the interpretation of certain provisions in our Amended and Restated Credit Agreement, macro-economic factors and the seasonality of our business.

Net Cash UsedProvided inby Operating Activities

Net cash usedprovided inby operating activities consists primarily of net income (loss) adjusted for certain non-cash items, including depreciation, amortization, equity-based compensation, the effect of changes in working capital and other activities.

During the threesix months ended MarchJune 31,30, 2026, net cash usedprovided inby operating activities increased by $2.0$8.7 million as compared to the same period in 2025. This was attributable primarily to the receipt of IEEPA tariff refunds offset by increased inventory purchases and timing of payments.

During the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities decreased by $0.9$1.0 million, as compared to the same period in 2025. This was attributable to less capital expenditures related to opening new stores compared to the prior year.

Net Cash (Used in) Provided by Financing Activities

During the threesix months ended MarchJune 31,30, 2026, net cash used in financing activities increased by $9.4$8.1 million, as compared to the same period in 2025. This was primarily attributable to no borrowings on our line of credit in 2026, as compared to the prior period.

During the three and six months ended MarchJune 31,30, 2026, no shares were repurchased under the Share Repurchase Program.