PETMED EXPRESS INC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share amounts)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for share and per share amounts) (Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1: Description of Business and Summary of Significant Accounting Policies

Organization

Founded in 1996, PetMed Express, Inc. and subsidiaries, d/b/a PetMeds®, and PetCareRx, Inc., d/b/a PetCareRx® (collectively, the "Company", "we", "us", or "our"), is a leading nationwide direct-to-consumer pet pharmacy and online provider of prescription and non-prescription medications, food, supplements, supplies and partner with providers to offer various vet services for dogs, cats, and horses. The Company markets and sells directly to consumers through its websites, customer contact center, and mobile application. The Company offers consumers an attractive alternative for obtaining pet medications, foods, and supplies in terms of convenience, price, speed of delivery, and valued customer service.

The Company’s fiscal year end is March 31, and references herein to fiscal 2027 or fiscal 2026 refer to the Company's fiscal years ending March 31, 2027 and 2026, respectively.

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all of the information and footnotes required by accounting principles generally accepted in the United States ("GAAP") for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of the Company at June 30, 2026, the Statements of Operations for the three months ended June 30, 2026 and 2025, and Cash Flows for the three months ended June 30, 2026 and 2025. The results of operations for the three months ended June 30, 2026 are not necessarily indicative of the operating results expected for the fiscal year ending March 31, 2027. These financial statements should be read in conjunction with the audited financial statements and notes thereto contained in our 2026 Form 10-K. The unaudited condensed consolidated financial statements include the accounts of PetMed Express, Inc. and its direct and indirect wholly owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation.

Liquidity

Management evaluates the Company’s ability to continue as a going concern in accordance with ASC Subtopic 205-40, Presentation of Financial Statements - Going Concern. This assessment considers whether conditions or events raise substantial doubt about the Company’s ability to meet its obligations as they become due within one year of the date these condensed consolidated financial statements are issued.

During the three months ended June 30, 2026, management’s assessment identified certain conditions and events that, when considered in the aggregate, raised substantial doubt about the Company’s ability to continue as a going concern. These included, among other things;

•declining cash and cash equivalent balances from$21.4 million as of March 31, 2026 to$13.1 million as of June 30, 2026,

•declining net sales by approximately 19.9% or$10.2 million, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025,

•negative operating cash flows for the three months ended June 30, 2026, and

•ongoing operating losses.

Management’s assessment also considered the impact of increased competition in the e-commerce pet pharmacy market, operational complexities and the Company’s dependence on the successful execution of strategic cost reductions. Management evaluated the significance of these conditions in relation to the Company’s ability to meet its obligations during the assessment period. In response to these conditions, management has developed a plan intended to alleviate substantial doubt. The primary elements of management’s plan include, among other things;

•advertising and media spend optimization, including the elimination of unproductive media spend and overall reductions in marketing costs,

•strategic reductions in operating expenses, including decreases in professional fees following the resolution of non-recurring matters, and

•reductions in capital expenditures as significant technology initiatives were completed during the year ended March 31, 2026.

Management determined that these plans are probable of being effectively implemented and are probable of mitigating the conditions that raised substantial doubt. As of the issuance of these financials, management has concluded that substantial doubt about the Company’s ability to continue as a going concern for the next twelve months is alleviated by these plans. Accordingly, the accompanying condensed consolidated financial statements have been prepared on a going concern basis of accounting.

Earnings Per Share

Basic net loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share includes the dilutive effect of potential restricted and performance stock and the effects of the potential conversion of preferred shares, calculated using the treasury stock method. Unvested restricted stock and convertible preferred shares issued by the Company represent the only dilutive effect reflected in the diluted weighted average shares outstanding.

For the three months ended June 30, 2026 and 2025,930,604 and 1,174,595 shares issuable upon vesting of restricted stock and 10,125 and 10,125 shares issuable upon conversion of preferred shares, respectively, were excluded from the computation of diluted net loss per common share, as their inclusion would have had an anti-dilutive effect on diluted net loss per common share.

Significant Accounting Policies

There have been no significant changes from the significant accounting policies disclosed in Note 1 of the “Notes to Consolidated Financial Statements” included in the 10-K Report.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates and assumptions.

Long-lived Assets

Long-lived assets, which primarily includes fixed assets, definite lived intangibles, right-of-use assets, and other assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset group to the undiscounted cash flows expected to be generated by the asset group from its use and eventual disposition of that asset group. Assets are considered to be impaired if the carrying amount of an asset group exceeds the future undiscounted cash flows. If impairment is determined to exist, any related impairment loss is calculated based on estimated fair value. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be received, less cost of disposal. The Company determined that all of its long-lived assets are part of a single entity-wide asset group for the purpose of long-lived asset impairment assessment.

During the three months ended June 30, 2025, the Company identified impairment indicators and performed a recoverability test for the identified long-lived asset group. The results of the test indicated that the carrying amounts for the long-lived asset group were expected to be recoverable, and no impairment charge was recognized.

During the three months ended June 30, 2026, the Company evaluated whether events or changes in circumstances had occurred subsequent to March 31, 2026 that would require a recoverability assessment. Based on this evaluation, the Company concluded that no additional impairment indicators had arisen, and no impairment charge was recognized.

Goodwill

As of June 30, 2026 and March 31, 2026, the Company had no goodwill recorded on its Condensed Consolidated Balance Sheets.

The Company is required to assess goodwill for impairment annually, or more frequently if circumstances indicate impairment may have occurred. During the three months ended June 30, 2025, the Company identified interim impairment indicators and performed a quantitative goodwill impairment test. As a result of this impairment test, the Company determined the carrying value of the reporting unit exceeded its fair value, resulting in a non-cash impairment charge of $26.7 million during the three months ended June 30, 2025, which represented the entirety of the goodwill balance previously recorded. There was no tax impact to the impairment as goodwill is not tax deductible.

In accordance with ASC 820, Fair Value Measurement, the fair value measurement, on a non-recurring basis, for the goodwill impairment is categorized as a Level 3 fair value measurement. This is due to the significant unobservable inputs used in the valuation, including the forecasted revenues, discount rate, and terminal growth rate, which require significant management judgment and estimation.

Intangible Assets

The Company acquired definite-lived intangible assets in the acquisition of PetCareRx (“PCRx”), that are being amortized based on their estimated useful lives in accordance with ASC Topic 350, Intangibles - Goodwill and Other. These definite-lived intangible assets are being amortized over periods ranging from three toseven years. The acquired trade name is not being amortized, and is subject to a review for impairment on an annual basis, or more frequently if circumstances indicate an impairment may have occurred. If the carrying amount of an indefinite lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

During the three months ended June 30, 2025, the Company identified interim impairment indicators and performed a quantitative impairment test of its indefinite-lived trade name, resulting in a $0.6 million non-cash impairment charge. In accordance with ASC 820, Fair Value Measurement, the fair value measurement, on a non-recurring basis, for the trade name impairment is categorized as a Level 3 fair value measurement. This is due to the significant unobservable inputs used in the relief from royalty valuation, including the royalty rate, forecasted revenues, discount rate, and terminal growth rate, which require significant management judgment and estimation.

During the three months ended June 30, 2026, the Company evaluated whether events or changes in circumstances had occurred subsequent to March 31, 2026 that would require an interim impairment test. Based on this evaluation, the Company concluded that no additional impairment indicators had arisen since the March 31, 2026 assessment, and no impairment charge was recognized.

Recent Accounting Pronouncements

Recently Adopted Accounting Standard

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”) to simplify the estimation of credit losses on current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. The amendments allow all entities to elect a practical expedient to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when developing a reasonable and supportable forecast as part of estimating expected credit losses on these assets. The Company adopted this standard, effective April 1, 2026. The adoption of ASU 2025-05 did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”) to require public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, and may be applied on a retrospective or prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of adopting this Update.

In May 2025, the FASB issued ASU 2025-04, Compensation-Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Customer Share-Based Payment Awards, clarifies how entities account for share-based consideration payable to a customer. The ASU requires customer awards with vesting conditions tied to purchases to be treated as performance conditions, eliminates the forfeiture policy election, and states that the variable consideration constraint under ASC 606 does not apply to these awards. The standard is effective for annual periods beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of this Update and does not expect it to have a material impact on our condensed consolidated financial statements or related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”) to modernize the accounting for internal-use software costs, primarily by simplifying the requirements to capitalize software development costs. This ASU is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years and may be applied using a prospective, retrospective or modified transition approach. Early adoption is permitted. The Company is currently evaluating the impact of adopting this Update.

In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements(“ASU 2025-11”) to improve the guidance in Topic 270, Interim Reporting by improving navigability of the required interim disclosures, clarifying when that guidance is applicable. The amendments also provide additional guidance on what disclosures should be provided in interim reporting periods. The guidance is effective for interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of adopting this Update.

The Company does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, will have a material effect on the Company’s condensed consolidated financial position, results of operations, or cash flows.

Note 2: Revenue Recognition

The Company recognizes revenue from product sales, including certain drop-ship arrangements, when control transfers to the customer which generally occurs upon shipment. Revenue is recorded net of sales taxes, discounts and estimated returns.

Membership fee revenue is recognized fromtwo models: (1) PetPlus membership for PetCareRx customers, and (2) employer-sponsored parter member membership that provides access to the PetPlus program. Membership fee revenue is recognized ratably over the applicable membership term as the Company satisfies its stand-ready performance obligation.

For the three months ended June 30, 2026 and 2025, membership fees earned under the partner programs were $1.2 million and $1.0 million, respectively. Deferred revenue as of June 30, 2026 and March 31, 2026 for these memberships was $0.6 million and $0.7 million, respectively. Revenue recognized during the three months ended June 30, 2026 that was included in the deferred revenue balance at March 31, 2026 was $0.4 million, none of which represented collections for AutoShip products prior to delivery. Revenue recognized during the three months ended June 30, 2025 that was included in the deferred revenue balance at March 31, 2025 was $1.8 million, of which $1.1 million represented collections for AutoShip products prior to delivery.

The Company’s customer loyalty program provides customers with a material right and is accounted for as a separate performance obligation. A portion of the transaction price is allocated to loyalty awards and recognized as revenue upon redemption or expiration. As of June 30, 2026 and March 31, 2026, the related contract liability was $2.3 million and $1.9 million, respectively, which is reflected in “Accrued expenses and other current liabilities” on the Condensed Consolidated Balance Sheets.

The Company has no material contract asset balances as of June 30, 2026 or March 31, 2026.

See Note 2 – Revenue Recognition in the Company’s 2026 Annual Report on Form 10-K for additional information regarding revenue from contracts with customers.

Note 3: Segment Reporting

The Company has a single segment that derives sales from customers through the sale of products which are shipped directly to customers. The accounting policies of the Company's single segment are the same as those described in the Company's Summary of Significant Accounting Policies.

The Company’s chief operating decision maker (“CODM”) is the Interim Chief Executive Officer. The CODM assesses performance for the segment and decides how to allocate resources based on consolidated net income (loss) and Adjusted EBITDA. The table below reconciles GAAP net loss reported on the accompanying Consolidated Statements of Operations to Adjusted EBITDA. The CODM uses consolidated net income (loss) and Adjusted EBITDA to evaluate income generated from segment assets in deciding whether to reinvest profits into the segment or into other parts of the entity. Adjusted EBITDA is used to monitor budget versus actual results and forecast versus actual results and is utilized when establishing management’s compensation in collaboration with the Board of Directors. Adjusted EBITDA should only be considered as supplemental to, and alongside with, other GAAP based financial performance measures, including various cash flow metrics, net income (loss), net margin, and our other GAAP results.

The table below provides a summary of significant expense categories regularly provided to the CODM reconciled to Adjusted EBITDA, as well as a reconciliation of net loss to Adjusted EBITDA, for the three months ended June 30, 2026 and 2025. The CODM does not review segment assets at a different asset level or category than those disclosed within the consolidated balance sheets.

(1) Principally comprised of other operating and non-operating income and expenses including salaries and wages, operating expenses such as utilities, insurance, professional fees, etc., and for the three months ended June 30, 2025, impairment of goodwill and intangible assets.

(2) For the three months ended June 30, 2026 and 2025: $0.4 million and $0.5 million of interest expense related to the sales tax liability, and $0.1 million and $0.3 million of interest income, respectively.

(3) Consists of professional fees related to the completed Audit Committee investigation as previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025.

Note 4: Share-Based Compensation

The Company issues share-based awards through several plans that are described in detail in the notes to the consolidated financial statements within the Annual Report on Form 10-K for the year ended March 31, 2026.

At the Annual Meeting of Shareholders held on August 11, 2026, the shareholders of the Company approved the 2026 Plan Amendment to the PetMed Express, Inc. 2024 Omnibus Incentive Plan (“2024 Omnibus Plan”) to increase the number of shares of common stock reserved for issuance thereunder by 2,650,000 from 850,000 shares. The 2026 Plan Amendment also increased the limit on the number of shares that may be issued upon the exercise of incentive stock options by the same number.

The following table presents the number of common shares issued under each of the Company's plans:

As of June 30, 2026, all shares in the 2022 Employee Plan, 2016 Employee Plan and 2015 Director Plan were issued subject to a restriction or forfeiture or vesting period that lapses ratably on the first, second, and third anniversaries of the date of grant, and the fair value of which is being amortized over aone tothree-year restriction period, with the exception of performance restricted shares which were issued to the Company's former Chief Executive Officer and the Company’s former Chief Financial Officer.

For the three months ended June 30, 2026 and June 30, 2025, the Company recognized compensation expense of $0.2 million and $0.6 million, respectively. All stock-based compensation expense is recognized as a payroll-related expense and it is included within the general and administrative expenses line item within the Company’s Consolidated Statements of Operations, and the offset is included in the additional paid-in capital line item of the Company’s Consolidated Balance Sheets.

Restricted Stock Awards

The fair value assigned to restricted stock awards (“RSAs”) is the market price of the Company’s stock at the grant date. The vesting period ranges fromone tothree years.

For the three months ended June 30, 2026, RSA activity under the Plans was as follows:

For the three months ended June 30, 2026 and 2025, the Company recorded stock-based compensation expense related to RSAs of $0.1 million and $0.1 million, respectively.

Restricted Stock Units

The fair value assigned to Restricted Stock Units (“RSUs”) is the market price of the Company’s stock on the grant date. The vesting period ranges fromone tothree years.

For the three months ended June 30, 2026, RSU activity under the Plans was as follows:

For the three months ended June 30, 2026 and 2025, the Company recorded stock-based compensation expense related to RSUs of $0.1 million and $0.5 million, respectively.

Performance Stock Units

The fair value assigned to performance stock units (“PSUs”) is determined using the market price of the Company’s stock on the grant date for awards with a performance condition, and by using a Monte Carlo simulation for awards with a market condition. The vesting period generally ranges for PSUs with a performance condition or market condition over aone year tothree year period. Stock-based compensation expense associated with PSUs with a performance condition are re-assessed each reporting period based upon the estimated performance attainment on the reporting date until the performance conditions are met. The ultimate number of shares of common stock that are issued to an employee is the result of the actual performance of the Company or individual at the end of the performance period compared to the performance targets.

For the three months ended June 30, 2026, PSU activity under the Plans was as follows:

For the three months ended June 30, 2026 and 2025, the Company recorded stock-based compensation expense, net of forfeitures, related to PSUs of $0 and $43 thousand, respectively.

Note 5: Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Include other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

The carrying amounts of the Company's cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term nature of these instruments in the unaudited Condensed Consolidated Balance Sheets.

At June 30, 2026 and March 31, 2026 the Company had cash and cash equivalents of $13.1 million and $21.4 million, respectively, which includes investments in money market funds which are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices.

The following tables summarize the assets measured at fair value on a recurring basis as of June 30, 2026 and March 31, 2026 by level within the fair value hierarchy (in thousands):

Note 6: Intangible and Other Assets, Net

Intangible assets and other assets, net consisted of the following (in thousands):

Amortization expense for intangible assets was $0.2 million and $0.5 million for the three months ended June 30, 2026 and 2025, respectively.

The indefinite life intangibles are not being amortized and are subject to an annual review for impairment, or more frequently if circumstances indicate an impairment may have occurred, in accordance with the ASC Topic 350, Goodwill and Other Intangible Assets. The Company recognized non-cash impairment charges of $0.6 million as of June 30, 2025, which is reflected in “Impairment of goodwill and intangible assets” on the Condensed Consolidated Statements of Operations.

The Company holds a minority interest in Vetster Inc. (“Vetster”), a Canadian veterinary telehealth company. The minority interest investment is being valued on the cost basis and the investment will be evaluated periodically for any impairment. If certain triggering events occur, we would evaluate these non-financial assets for impairment. If an impairment were to occur, the asset would be recorded at the estimated fair value, using primarily unobservable Level 3 inputs.

Note 7: Commitments and Contingencies

Legal Matters and Routine Proceedings

On April 18, 2024, Plaintiff Timothy Fitchett (“Plaintiff”)filed an action against the Company in the Court of Common Pleas of Allegheny County, Pennsylvania, on behalf of himself and on behalf of a class of others similarly situated. Plaintiff alleges that the Company violated Pennsylvania’s Unfair Trade Practices and Consumer Protection Law by displaying “regular” strikethrough prices which the Company allegedly never charged. On May 13, 2024, the Company removed the matter to the U.S. District Court for the Western District of Pennsylvania in Pittsburgh. The Company successfully opposed the Plaintiff's motion to remand the case back to the Court of Common Pleas. On the face of the Complaint, Plaintiff is seeking damages for himself and he is also seeking a liability determination for members of the proposed class. The matter has been stayed pending a ruling on the motion to vacate that is pending in the case listed below. The Company denies liability in this matter and is defending the action. The Company cannot determine materiality or estimate a range of potential liability, if any, at this time if the Company were determined to be liable.

On February 14, 2025, Plaintiffs Ashley Bird, Tyler Dvornski, and Tiffany Hughes (“Plaintiffs”) filed an action in the Northern District of New York on behalf of themselves and a class of others similarly situated alleging that the Company misrepresented that its products were on sale by showing a “regular” strikethrough price, when the products were never sold for the strikethrough price. Plaintiffs allege that by using this “false reference price” or “false discount,” the Company artificially inflated its prices and charged consumers more than it otherwise could. Plaintiffs allege that these purported practices violate New York General Business Law §§ 349 and 350 as well as California’s Unfair Competition Law and California’s False Advertising Law. After the Company made a motion to dismiss the Complaint, Plaintiffs filed an Amended Complaint, which the Company moved to dismiss. The motion to dismiss the Amended Complaint was granted. Thereafter, Plaintiffs filed a motion to vacate the dismissal Order and amend the Amended Complaint. That motion has been fully briefed and remains pending.

In addition to the matters described above, the Company may from time to time be involved in various other claims and lawsuits in the ordinary course of business, which could include claims related to products, product warranties, contracts, employment, intellectual property, consumer protection, pharmacy and other regulatory matters. The Company records a liability in its financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated.

Note 8: Changes in Shareholders’ Equity

Changes in Shareholders’ Equity for the three months ended June 30, 2026 is summarized below (in thousands):

Changes in Shareholders’ Equity for the three months ended June 30, 2025 is summarized below (in thousands):

There were 2,817 and 6,843 shares of common stock that were purchased or retired in the three months ended June 30, 2026 and 2025.

On December 2, 2024, the Board of Directors adopted a Rights Agreement, as amended on November 26, 2025, extending the expiration date of the Rights through December 2, 2026. The Rights Agreement provides for a dividend distribution of one right for each outstanding share of common stock, subject to certain exercise, redemption, and expiration terms. There have been no material changes to the terms and conditions of the Rights Agreement from those previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2026.

Note 9: Income Taxes

For the three months ended June 30, 2026 and 2025, the Company recorded an income tax provision of $13 thousand and $9 thousand, respectively. The effective tax rate for the three months ended June 30, 2026 was approximately (0.2)%, compared to approximately 0.0% for the three months ended June 30, 2025. The effective tax rate for the three months ended June 30, 2026 differs from the statutory rate primarily as a result of the Company maintaining a valuation allowance against its deferred tax assets.

As of June 30, 2026, the Company maintained a valuation allowance against the majority of our deferred tax assets for which realization cannot be considered more likely than not at this time. Management assesses the need for the valuation allowance on a quarterly basis. In assessing the need for a valuation allowance, the Company considers all positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and past financial performance.

Note 10: Unsolicited and Non-Binding Acquisition Proposal

In June 2026, the Company received a public unsolicited and non-binding acquisition proposal from SilverCape Investments Limited (“SilverCape”) to acquire all of the outstanding shares of the Company at a price of $3.00 per share in cash, subject to various conditions such as due diligence and the execution of a mutually acceptable definitive agreement, but not subject to any financing contingency. The proposal followed SilverCape’s prior unsolicited non-binding acquisition proposal of $4.00 per share made on December 11, 2025. On June 30, 2026, the Company announced that the Company’s Board, consistent with its fiduciary duties and in consultation with its financial and legal advisors, are carefully reviewing and considering the acquisition proposal to determine the course of action that it believes is in the best interests of the Company and its stockholders and that the Company has not reached a determination regarding SilverCape’s proposal and does not intend to comment further unless and until the Board completes its review or determines that additional disclosure is appropriate or required.

Note 11: Contract to Enter into a Sale-Leaseback Transaction

Subsequent to quarter end, on July 23, 2026, the Company, through a wholly-owned subsidiary, entered into a purchase and sale agreement, under the which the Company agreed to sell its properties located at 410 and 420 South Congress Avenue, Delray Beach, Florida, which includes the Company's headquarters and Florida distribution center buildings, for an aggregate purchase price of $37.0 million. The contract also provides that, upon the closing of the sale, the Company will enter into a 10-year triple-net lease agreement with the Buyer to lease back 100,519 square feet of space at 420 South Congress Avenue.

The Company anticipates the transaction to close in the third quarter of fiscal 2027, subject to a customary due diligence period, execution of a definitive lease agreement, and other customary closing conditions.