CROWN CRAFTS INC

CROWN CRAFTS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 28, 2025 AND MARCH 30, 2025

(amounts in thousands, except share and per share amounts)

See notes to consolidated financial statements.

CROWN CRAFTS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

THREE- AND SIX-MONTH PERIODS ENDED SEPTEMBER 28, 2025 AND SEPTEMBER 29, 2024

(amounts in thousands, except per share amounts)

See notes to consolidated financial statements.

CROWN CRAFTS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

THREE- AND SIX-MONTH PERIODS ENDED SEPTEMBER 28, 2025 AND SEPTEMBER 29, 2024

See notes to consolidated financial statements.

CROWN CRAFTS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX-MONTH PERIODS ENDED SEPTEMBER 28, 2025 AND SEPTEMBER 29, 2024

(amounts in thousands)

See notes to consolidated financial statements.

CROWN CRAFTS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE- AND SIX-MONTH PERIODS ENDED SEPTEMBER 28, 2025 AND SEPTEMBER 29, 2024

Note1 – Interim Financial Statements

Basis of Presentation:The accompanying unaudited condensed consolidated financial statements include the accounts of Crown Crafts, Inc. and its subsidiaries (the “Company”) and have been prepared pursuant to accounting principles generally accepted in the United States (“GAAP”) applicable to interim financial information as promulgated by the Financial Accounting Standards Board (“FASB”). Accordingly, they donot include all of the information and disclosures required by GAAP for complete financial statements. References herein to GAAP are to topics within the FASB Accounting Standards Codification (the “ASC”), which the FASB periodically revises through the issuance of an Accounting Standards Update (“ASU”) and which has been established by the FASB as the authoritative source for GAAP recognized by the FASB to be applied by nongovernmental entities.

In the opinion of the Company’s management, the unaudited condensed consolidated financial statements contained herein include all adjustments necessary to present fairly the financial position of the Company as of* September 28, 2025and the results of its operations and cash flows for the periods presented. Such adjustments include normal, recurring accruals, as well as the elimination of all significant intercompany balances and transactions. Operating results for thethree*- andsix-month periods ended* September 28, 2025arenot* necessarily indicative of the results that* maybe expected by the Company for its fiscal year ending March 29, 2026.For further information, refer to the Company’s consolidated financial statements and notes thereto for the fiscal year ended March 30, 2025,included in the Company’s Annual Report on Form10*-K filed with the United States Securities and Exchange Commission (the “SEC”).

Fiscal Year: The Company’s fiscal year ends on the Sunday that is nearest to or on* March 31.References herein to “fiscal year2026”* or*“2026”* represent the52-week period ending* March 29, 2026and references herein to “fiscal year2025”* or*“2025”* represent the52-week period ended* March 30, 2025.*

Recently-Issued Accounting Standards:

In* December 2023,the FASB issued ASUNo.* 2023-09, Income Taxes (Topic740*)– Improvements to Income Tax Disclosures*, the objective of which is to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASUNo. 2023-09 are required to be adopted for fiscal years beginning after* December 15, 2024and early adoption is permitted. The Company is evaluating the guidance of ASUNo.* 2023-09 against its existing disclosures related to income tax disclosures.

In* November 2024,the FASB issued ASUNo.* 2024-03,* Income Statement*–* Reporting Comprehensive Income*–* Expense Disaggregation Disclosures (Subtopic220-40) -* Disaggregation of Income Statement Expenses,the objective of which is to enhance the transparency and usefulness of financial statements by requiring public business entities to provide more detailed disclosures about their expenses. The amendments in ASUNo. 2024-03 are required to be adopted for annual reporting periods beginning after* December 15, 2026,and for interim periods within annual reporting periods beginning after December 15, 2027,and early adoption is permitted. The Company is evaluating the guidance of ASUNo.* 2024-03 against its existing disclosures related to income statement expenses.

The Company has determined that all other ASUs issued which had become effective as of* September 28, 2025,or which will become effective at some future date, arenot* expected to have a material impact on the Company’s consolidated financial statements.

Note2 – Segment Reporting

The Company’s operations are managed and reported to its Chief Executive Officer, the Company’s chief operating decision maker (“CODM”), on a consolidated basis. The Company operates primarily inone principal segment, infant, toddler and juvenile products. These products consist of infant and toddler bedding, diaper bags, bibs, toys and disposable products. The CODM assesses performance and allocates resources based on the Company’s consolidated statements of income, which requires the CODM to manage and evaluate the results of the Company in a consolidated manner to drive efficiencies and develop uniform strategies. Segment asset information isnot used by the CODM to allocate resources.

5

As a single reportable segment entity, the Company’s segment performance measure is net income. The following table presents information about the Company’s reportable segment (in thousands):

Included in the profit or loss measure above are the following: depreciation expense and amortization expense were $191 thousand and $187 thousand, respectively, for thethree months ended* September 28, 2025while for thethree* months ended* September 29, 2024,depreciation and amortization expenses were $158 thousand and $195 thousand, respectively. Depreciation expense and amortization expense were $389 thousand and $401 thousand, respectively, for thesix* months ended* September 28, 2025while for thesix* months ended* September 29, 2024*depreciation and amortization expenses were $342 thousand and $344 thousand, respectively.

Note3 – Licensing Agreements

The Company has entered into licensing agreements that provide for royalty payments based on a percentage of sales of products covered by the license agreements, subject to certain minimum guaranteed amounts. Royalty expense is calculated based upon sales at contractual rates under the licensing agreements and any applicable minimum guaranteed amounts. Royalty expense is included in cost of products sold in the accompanying unaudited condensed consolidated statements of income and amounted to $1.9 million and $1.7 million for thethree months ended* September 28, 2025and September 29, 2024,respectively, and amounted to $2.9 and $2.8 million for thesix* months ended* September 28, 2025and September 29, 2024,*respectively.

Note4 – Concentrations

Product Sourcing:Foreign and domestic contract manufacturers produce most of the Company’s products, with the largest concentration being in China. The Company makes sourcing decisions on the basis of quality, timeliness of delivery and price, including the impact of ocean freight and duties. Although the Company maintains relationships with a limited number of suppliers, the Company believes that its products maybe readily manufactured by several alternative sources in quantities sufficient to meet the Company’s requirements.

The Company maintains foreign representative offices located in Shanghai and Shenzhen, China, which are responsible for the coordination of production, purchases and shipments, seeking out new vendors and overseeing inspections for social compliance and quality. The Company’s management and quality assurance personnel visit thethird-party facilities regularly to monitor and audit product quality and to ensure compliance with labor requirements and social and environmental standards. In addition, the Company closely monitors the currency exchange rate. The impact of future fluctuations in the exchange rate or changes in safeguards cannot be predicted with certainty.

For the period ended* September 28, 2025,purchases from the Company’sthree largest suppliers accounted for approximately 16%,11% and 11% of purchases. To mitigate the risks associated with supplier concentration, the Company engages in ongoing efforts to identify alternative sources of supply, assess supplier reliability and performance, and negotiate favorable contractual terms where feasible. However, there can beno* assurance that the Company will be successful in reducing its dependence on any single supplier or mitigating the impact of supplier-related risks in the future.

The U.S. government has tariffs on imports from certain countries, including China. During2025, the U.S. government introduced increased tariffs which have increased the cost of the products the Company sources from China and affected shipments from the Company’s Chinese-based suppliers. The Company is evaluating the potential impact of the imposition of new tariffs on imports from China to the Company’s business and financial condition. The impact of the increased tariffs is uncertain because it is subject to a number of factors, including the duration of such tariffs, changes in the amount, scope and nature of the tariffs in the future, any countermeasures that China* maytake and any mitigation actions that may*become available.

6

Licensed Products:Certain products are manufactured and sold pursuant to licensing agreements for trademarks. Also, many of the designs used by the Company are copyrighted by other parties, including trademark licensors, and are available to the Company through copyright license agreements. The licensing agreements are generally for an initial term ofone tothree years and* mayor may**not* be subject to renewal or extension. Sales of licensed products represented 50% of the Company’s gross sales in fiscal year2025, which included 21% of sales under the Company’s license agreements with affiliated companies of The Walt Disney Company, which expire as set forth below:

The Company expects to renew the licenses upon their expiration.

Customers:The Company’s customers consist principally of mass merchants, large chain stores, mid-tier retailers, juvenile specialty stores, value channel stores, grocery and drug stores, restaurants, internet accounts and wholesale clubs. The Company doesnot enter into long-term or other purchase agreements with its customers. The table below sets forth those customers that represented at least10% of the Company’s gross sales:

Note5 – Inventories

The basis of accounting for inventories is cost, which includes the direct supplier acquisition cost, duties, taxes and freight, and the indirect costs to design, develop, source and store the product until it is sold. Once cost has been determined, the Company’s inventory is then stated at the lower of cost or net realizable value, with cost determined using thefirst-in,first-out method, which assumes that inventory quantities are sold in the order in which they are acquired. The determination of the indirect charges and their allocation to the Company’s finished goods inventories requires management judgment and estimates. If management made different judgments or utilized different estimates, then differences would result in the valuation of the Company’s inventories and in the amount and timing of the Company’s cost of products sold and the resulting net income for the reporting period. The Company’s inventory is nearly all finished goods.

On a periodic basis, management reviews its inventory quantities on hand for obsolescence, physical deterioration, changes in price levels and the existence of quantities on hand which* may**not* reasonably be expected to be sold within the Company’s normal operating cycle. To the extent that any of these conditions is believed to exist or the market value of the inventory expected to be realized in the ordinary course of business is otherwiseno longer as great as its carrying value, an allowance against the inventory value is established. To the extent that this allowance is established or increased during an accounting period, an expense is recorded in cost of products sold in the Company’s consolidated statements of income.

As of* September 28, 2025and March 30, 2025,*the Company’s balances of inventory were $32.6 million and $27.8 million, respectively, net of an inventory obsolescence reserve of $967 thousand and $997 thousand, respectively.

7

Note6 – Property, Plant and Equipment

Net property, plant and equipment consisted of the following (amounts in thousands):

Depreciation expense amounted to $191 thousand and $158 thousand for thethree months ended* September 28, 2025and September 29, 2024,respectively, and amounted to $389 thousand and $342 thousand for thesix* months ended* September 28, 2025and September 29, 2024,*respectively.

Note7 – Financing Arrangements

Factoring Agreements: To reduce its exposure to credit losses, the Company assigns the majority of its trade accounts receivable to The CIT Group/Commercial Services, Inc. (“CIT”), a subsidiary of First Citizens Bank, pursuant to factoring agreements, which have expiration dates that are coterminous with that of the financing agreement described below. Under the terms of the factoring agreements, CIT remits customer payments to the Company as such payments are received by CIT. As such, the Company doesnot take advances on the factoring agreements.

CIT bears credit losses with respect to assigned accounts receivable from approved shipments, while the Company bears the responsibility for adjustments from customers related to returns, allowances, claims and discounts. CIT* mayat any time terminate or limit its approval of shipments to a particular customer. If such a termination or limitation occurs, then the Company either assumes (and mayseek to mitigate) the credit risk for shipments to the customer after the date of such termination or limitation or discontinues shipments to the customer. Factoring fees, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income, amounted to $110 thousand and $94 thousand for thethree*-month periods ended* September 28, 2025and September 29, 2024,respectively, and amounted to $180 thousand and $168 thousand for thesix*-month periods ended* September 28, 2025and September 29, 2024,*respectively.

Credit Facility: The Company’s credit facility includes a revolving line of credit and a term loan of $8.0 million under a financing agreement with CIT. The Company* mayborrow up to $40 million under the revolving line of credit, which includes a $1.5 million sub-limit for letters of credit, bearing interest at prime minus 0.5% or the Secured Overnight Financing Rate (“SOFR”) plus 1.6%, and is secured by afirst* lien on all assets of the Company. The financing agreement for the revolving line of credit matures on* July 19, 2029.On September 28, 2025,*the Company elected to pay interest on balances owed under the revolving line of credit under the SOFR option, which was 5.9%. The financing agreement also provides for the payment by CIT to the Company of interest at prime as of the beginning of the calendar month minus 2.0% on daily negative balances, if any, held at CIT.

At* September 28, 2025and March 30, 2025,*the balances on the revolving line of credit were $10.7 million and $11.9 million, respectively, there wasno letter of credit outstanding and $13.7 million and $13.8 million, respectively, was available under the revolving line of credit based on the Company’s eligible accounts receivable and inventory balances. The financing agreement contains usual and customary covenants for agreements of that type, including limitations on other indebtedness, liens, transfers of assets, investments and acquisitions, merger or consolidation transactions, transactions with affiliates, and changes in or amendments to the organizational documents for the Company and its subsidiaries.

8

On* June 23, 2025,the Company and CIT amended the Company’s financing agreement with CIT to: (i) provide that, until the Company’s term loan is paid in full, the Company shall maintain at all times Excess Availability (as defined in the financing agreement) equal to or the greater of (a) the sum of the balance outstanding under the Company’s term loan plus $1.0 million or (b) $4.0 million (the “Availability Covenant”); and (ii) reinstate the fixed charge coverage ratio; provided however, that the fixed charge coverage ratio shallnot* be tested at any fiscal quarter end in which, during the immediately preceding fiscal quarter, the Company at all times has been in compliance with the Availability Covenant. As of* September 28, 2025,*the Company was in compliance with the Excess Availability requirements.

The balance on the $8.0 million term loan as of* September 28, 2025was $5.7 million, including $2.0 million classified as current. The term loan was issued July 19, 2024,is payable by the Company in 48 equal monthly installments and bears interest at SOFR plus 2.25% (6.5% at September 28, 2025).*

Credit Concentration:The Company’s accounts receivable at September 28, 2025amounted to $18.4 million, net of allowances of $2.0 million. Of this amount, $16.1 million was due from CIT under the factoring agreements, which represents the maximum loss that the Company could incur if CIT failed completely to perform its obligations under the factoring agreements. The Company’s accounts receivable at* March 30, 2025*amounted to $24.5 million, net of allowances of $1.7 million. Of this amount, $21.9 million was due from CIT under the factoring agreements, which represented the maximum loss that the Company could have incurred if CIT had failed completely to perform its obligations under the factoring agreements.

Fair Value:The Company evaluates the fair value of its debt using thethree level fair value heirarchy. Fair value should be based on the assumptions market participants would use when pricing the liability and establishes a fair value hierarchy that prioritizes the inputs used to develop those assumptions and measure fair value. The hierarchy requires companies to maximize the use of observable inputs and minimize the use of unobservable inputs. Thethree levels of inputs in the fair value hierarchy are as follows:

The carrying value of financial instruments reported in the accompanying condensed consolidated balance sheets for cash, which is considered Level1, accounts receivable, accounts payable, accrued expenses and other liabilities, which are all considered Level2, approximate fair value due to the immediate or short-term nautre of these financial instruments.

The following table presents fair value of debt as of* September 28, 2025:*

The Company uses a valuation model to determine the fair value of its revolving line of credit and the term loan with CIT. The Company uses a discounted cash flow model to project the future principal and interest payments over the remaining life of the loans. The significant inputs used in the model are observable market data including SOFR Forward Curves.

The aggregate maturities of long-term debt for each of thefive years subsequent to* September 28, 2025are: $1.0 million in fiscal2026,* $2.0 million in fiscal2027, $2.2 million in fiscal2028, $500 thousand in fiscal2029 and $10.7 million in fiscal2030.

9

Note8 – Goodwill and Other Intangible Assets

Goodwill:Goodwill represents the excess of the purchase price over the fair value of net identifiable assets acquired in business combinations. For the purpose of presenting and measuring for impairment of goodwill, the Company hastwo reporting units:one that produces and markets bedding and diaper bags and another that produces and markets bibs, toys and disposable products. The Company measures for impairment annually as of thefirst day of the Company’s fiscal year. The Company reported goodwill net of impairment charges of $13.2 million at* September 29, 2024.For the fiscal year ended March 30, 2025,the Company determined that a triggering event occurred in relation to the depressed market price of the Company’s common stock and corresponding significant decline in the Company’s market capitalization. As a result, the Company performed a quantitative goodwill impairment test. Based on the goodwill impairment analysis performed, the Company determined that the estimated fair values of its reporting units were lower than the carrying value, indicating the goodwill within these reporting units had been impaired. Consequently, the Company recorded a non-cash goodwill impairment charge of $13.8 million during thethree*-month period ended* March 30, 2025.The Company reportedno goodwill at September 28, 2025.*

Intangible Assets:Our finite-lived intangible assets consist primarily of the fair value of identifiable assets acquired in business combinations. The gross amount, accumulated amortization and net balances of the Company’s intangible assets as of September 28, 2025and* March 30, 2025,*are as follows (in thousands):

Amortization expense, which is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income, amounted to $187 thousand and $195 thousand for thethree-month periods ended* September 28, 2025and September 29, 2024,respectively, and amounted to $401 thousand and $344 thousand for thesix*-month periods ended* September 28, 2025and September 29, 2024,*respectively.

Note9 – Acquisition

On* July 19, 2024 (*the “Closing Date”), NoJo Baby & Kids, Inc., a wholly-owned subsidiary of the Company acquired substantially all of the assets, and assumed certain specified liabilities, of Baby Boom Consumer Products, Inc. (“Baby Boom”) (the “Acquisition”), for a purchase price of $18.0 million in cash, subject to a working capital adjustment. The Acquisition was funded by the Company using the proceeds of an $8.0 million term loan from CIT and additional borrowings under the Company’s revolving line of credit with CIT.

The Acquisition has been accounted for in accordance with FASB ASC Topic805, Business Combinations. The identifiable assets acquired were recorded at their estimated fair value, which has been preliminarily determined based on available information and the use of multiple valuation approaches. The estimated useful lives of the identifiable intangible assets acquired were determined based upon the remaining time that these assets are expected to directly or indirectly contribute to the future cash flow of the Company. The Company considers the measurement period to have ended as of* June 25, 2025*and further considers all measurement period adjustments to be final.

The acquisition cost paid on the Closing Date amounted to $16.3 million, which included net working capital adjustment. The following table represents the Company’s allocation of the acquisition cost (in thousands) to the identifiable assets acquired and the liabilities assumed based on their respective estimated fair values as of the Closing Date. The excess of the acquisition cost over the estimated fair value of the identifiable net assets acquired is reflected as goodwill.

10

Based upon the initial allocation of the acquisition cost, the Company recognized $5.3 million of goodwill as of the Closing Date, the entirety of which was assigned to the reporting unit of the Company that produces and markets infant and toddler bedding and diaper bags, and the entirety of which is expected to be deductible for income tax purposes. The goodwill recognized primarily consists of synergies expected from combining operations of Baby Boom and the Company and intangible assets acquired that donot qualify for separate recognition. The following table represents adjustments made to the amount of goodwill during the fiscal year ended* March 30, 2025 (*in thousands):

Amortization expense associated with the acquired amortizable intangible assets was $88 thousand and $65 thousand for thethree months ended* September 28, 2025and September 29, 2024,respectively, and $176 thousand and $65 thousand for thesix* months ended* September 28, 2025and September**29,2024,* respectively, which is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income. Amortization is calculated using the straight-line method over the estimated useful lives of the assets, which are 15 years for the tradename,14 years for the customer and licensing relationships and 14 years on a weighted-average basis for the grouping taken together.

Note10 – Advertising Costs

Advertising expense is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income and amounted to $431 thousand and $133 thousand for thethree months ended* September 28, 2025and September 29, 2024,respectively, and amounted to $827 thousand and $260 thousand for thesix* months ended* September 28, 2025and September 29, 2024,*respectively

11