NEIGHBORHOOD INTELLIGENCE, INC.

1. DESCRIPTION OF BUSINESS

Neighborhood Intelligence, Inc. (Nasdaq:NXH), previously Bed Bath & Beyond, Inc., is a data and technology company organized around three interconnected pillars: Omni-Channel Retail, Home Services and Home Ownership. Its portfolio includes Bed Bath & Beyond, Overstock, buybuy BABY, Kirkland's, The Container Store, Elfa and Closet Works, along with its expanding Home Services and Home Ownership businesses. The Company also includes a blockchain asset portfolio inclusive of tZERO, GrainChain, and other assets.

In August 2026, the Company changed its corporate name from Bed Bath & Beyond, Inc. to Neighborhood Intelligence, Inc. and changed the ticker symbol for its common stock from "BBBY" to "NXH". The Company's common stock ceased trading under the ticker symbol "BBBY" on the New York Stock Exchange at the close of market on August 14, 2026, and on August 17, 2026, its common stock began trading under the ticker symbol "NXH" on the Nasdaq Global Select Market. The Company does not distinguish between its prior and current corporate name and refers to its current corporate name throughout these financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The Company has prepared the accompanying unaudited consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”) and the rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. These financial statements should be read in conjunction with the audited annual consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes to the Company's significant accounting policies disclosed in Note 2—Accounting Policies and Supplemental Disclosures, included in Part II, Item 8, Financial Statements and Supplementary Data, of the Company's Annual Report on Form 10-K for the year ended December 31, 2025, except as disclosed below.

The accompanying unaudited consolidated financial statements include the Company's accounts and the accounts of the Company's wholly-owned subsidiaries and other subsidiaries for which the Company exercises control, and reflect all adjustments, consisting only of normal recurring adjustments, which are, in the Company's opinion, necessary for a fair presentation of results for the interim periods presented. All intercompany account balances and transactions have been eliminated in consolidation. The results of operations for the three and nine months ended September 30, 2026, are not necessarily indicative of the results to be expected for any future period or the full fiscal year, due to seasonality and other factors.

Prior to April 2, 2026, June 30, 2026, and July 8, 2026, The Brand House Collective, Inc. (formerly known as Kirkland’s Inc.) ("The Brand House Collective" or “TBHC”), TwoPonds, Inc., a Delaware corporation (“SFV Services”), and The Container Store Holdings, LLC, a Delaware limited liability company (“TCS” or "The Container Store"), respectively, were not consolidated subsidiaries of the Company. Accordingly, transactions between the Company, and TBHC and TCS prior to the acquisition dates, including any related amendments, were accounted for as transactions with a non-consolidated entity and are reflected in the Company’s consolidated financial statements through the acquisition dates in accordance with their nature.

Beginning on the respective acquisition dates, the results of operations, assets and liabilities of TBHC and TCS are included in the Company’s consolidated financial statements. Accordingly, balances and transactions between the Company, TBHC and TCS occurring after the acquisition date of each entity are eliminated in consolidation.

Use of estimates

The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the Company's consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, receivables valuation, revenue recognition, loyalty program reward point and gift card breakage, sales returns, inventory valuation, asset useful lives, equity and debt securities valuation, income taxes, stock-based compensation, performance-based compensation, self-funded health insurance liabilities, contingencies, goodwill, and the fair value of assets acquired and liabilities assumed in acquisitions. Although these estimates are based on the Company's best knowledge of current events and actions that the Company may undertake in the future, the accounting of these estimates may change from period to period. To the extent there are differences between these estimates and actual results, the Company's consolidated financial statements may be materially affected.

Business Combinations

Assets acquired and liabilities assumed as part of a business combination are recorded at their fair value at the date of acquisition. The excess of purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Determining fair value of identifiable assets, particularly intangible assets and liabilities acquired requires management to make estimates, which are based on all available information and in some cases, assumptions, with respect to the timing and amount of future revenues and expenses associated with an asset or liability.

Recently issued accounting standards

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires public entities to disclose disaggregated information about certain income statement line items in the notes to the financial statements. For public entities, ASU 2024-03 is required to be adopted for annual periods beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. This ASU will result in the Company including the additional required disclosures when adopted and does not otherwise have a material impact on the Company's consolidated financial statements.

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, which clarified and modernizes the accounting for costs related to internal-use software. The amendments in ASU 2025-06 remove all references to project stages throughout Subtopic 350-40 and clarify the threshold entities apply to begin capitalizing costs. ASU 2025-06 is effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. This ASU will result in the Company adopting the new threshold to apply to begin capitalizing costs and does not otherwise have a material impact on the Company's consolidated financial statements.

3. BUSINESS COMBINATIONS

Acquisition of The Container Store Holdings, LLC

On July 8, 2026, the Company completed the previously announced acquisition of TCS, pursuant to the Agreement and Plan of Merger (the “TCS Merger Agreement”), dated April 2, 2026, by and among the Company, TCS Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“TCS Merger Sub”) and TCS. Pursuant to the TCS Merger Agreement, upon the terms and subject to the conditions set forth therein, TCS Merger Sub merged with and into TCS, with TCS surviving as a wholly owned subsidiary of the Company (the “Merger”). The acquisition of TCS combines organizing solutions, design services and expertise with the Company's home essentials to provide a more complete home destination that combines organization, essentials, decor and services in one shopping experience.

Pursuant to the terms and conditions of the TCS Merger Agreement, the Company issued an aggregate number of 13,714,287 shares of the Company's common stock and $112.6 million aggregate principal amount of its 5.00% Convertible Senior Notes due 2033 (“2033 Convertible Notes”) to holders of outstanding TCS indebtedness as merger consideration. Please refer to Note 8—Borrowings for additional information regarding these 2033 Convertible Notes.

The results of operations of TCS have been included in the unaudited consolidated financial statements of the Company from July 8, 2026, the TCS Acquisition Date (as discussed further in Note 2—Summary of Significant Accounting Policies). For both the three and nine months ended September 30, 2026, results of operations included $156.4 million in revenues and $30.1 million in net loss attributable to TCS.

(1) Represents the aggregate fair value of 13,714,287 common shares of the Company issued directly to the sellers based on the closing trading price of the Company's common stock of $5.37 per share on the TCS Acquisition Date, adjusted for a discount for lack of marketability of $0.43 due to the unregistered status of the shares issued, resulting in a fair value of $4.94 per share on July 8, 2026.

(2) Represents debt incurred for the issuance of $112.6 million aggregate principal amount of Convertible Notes with a fair value of $108.5 million, reflecting a discount of approximately 3.6% from the principal amount.

(3) Represents the effective settlement of a preexisting relationship for the $7.5 million short-term loan due to TCS.

The Company has provisionally allocated the purchase consideration based on the estimated fair values of the assets acquired and liabilities assumed at the TCS Acquisition Date as follows (in thousands):

The fair values presented were estimated by management, with the assistance of a third-party valuation specialist. Goodwill is the excess over net identifiable assets. The goodwill recognized is attributable to TCS’s assembled workforce and expected synergies from combining the operations of the Company and TCS. None of the goodwill is expected to be deductible for income tax purposes.

In connection with the acquisition, the Company acquired indefinite-lived intangible assets consisting of TCS's trademarks. The acquired trademarks were recorded at fair value using the relief from royalty method.

The Company elected the practical expedient in ASC 805-20-30-29 to recognize and measure contract liabilities assumed from TCS's contracts with customers, consisting of unearned revenue and gift card and store credit liabilities, on the basis of the assessments TCS made in applying ASC 606 to those contracts, rather than performing separate assessments as of the TCS Acquisition Date. As a result, these contract liabilities, which are included within unearned revenue in the table above, were recognized at TCS's carrying value rather than at a remeasured fair value. The Company does not expect the effect of applying this practical expedient, as compared to measuring these contract liabilities at fair value, to be material to the accompanying purchase price allocation.

The initial accounting for the TCS acquisition is incomplete as the valuation of the net assets acquired has not yet been finalized. As such there may be adjustments to the purchase accounting and those adjustments could be material. Management is completing its evaluation during the measurement period, which will not exceed one year from the acquisition date. Any adjustments to the provisional amount arising from new information about facts and circumstances that existed as of the acquisition date will be recognized in the period the adjustment is determined, with a corresponding adjustment to goodwill.

Acquisition of SFV Services

On June 30, 2026 (the “SFV Services Acquisition Date”), the Company, acquired SFV Services and the parent company of SFV-LLGC, LLC, a Florida limited liability company. The integration of SFV Services adds installation, renovation, construction and project-execution capabilities that further differentiates the Company from traditional retailers.

The results of operations of SFV Services have been included in the unaudited consolidated financial statements of the Company from June 30, 2026, the SFV Services Acquisition Date. For both the three and nine months ended September 30, 2026, results of operations included $11.4 million in revenues and $1.2 million in net loss attributable to SFV Services.

(1) Represents the aggregate fair value of 7,200,000 unregistered shares of common stock of the Company issued directly to the sellers at price of $5.15 per share, based on the closing trading price of the Company's common stock of $5.79 per share on June 30, 2026, adjusted for discount for lack of marketability of $0.64 per share due to the unregistered status of the shares issued.

The Company has provisionally allocated the purchase consideration based on the estimated fair values of the assets acquired and liabilities assumed at the SFV Services Acquisition Date, as adjusted for measurement period adjustments, as follows (in thousands):

(1) The measurement period adjustments primarily reflect changes in the estimated fair value of certain assets and liabilities and did not have a material impact on the previously reported results of operations subsequent to the SFV Services Acquisition Date. The measurement period adjustments were recorded to reflect new information obtained from facts and circumstances existing as of the transaction date and did not result from subsequent intervening events.

The fair values presented were estimated by management. The assets acquired and liabilities assumed, other than goodwill, is primarily composed of working capital balances, including cash and cash equivalents, accounts receivable, net, prepaid expenses and other current assets, accounts payable, and unearned revenue. Goodwill is the excess over net identifiable assets. The goodwill recognized is attributable to SFV Services’s assembled workforce and expected synergies from combining the operations of the Company and SFV Services. None of the goodwill is expected to be deductible for income tax purposes.

Acquisition of The Brand House Collective, Inc.

On April 2, 2026, the Company completed the previously announced acquisition of TBHC pursuant to the Agreement and Plan of Merger, dated as of November 24, 2025 (the “TBHC Merger Agreement”), by and among the Company, Knight Merger Sub II, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Knight Merger Sub”), and TBHC. Pursuant to the TBHC Merger Agreement, upon the terms and subject to the conditions set forth therein, Knight Merger Sub merged with and into TBHC, with TBHC surviving as a wholly owned subsidiary of the Company. TBHC is a retailer of home décor and seasonal merchandise with a network of stores located across multiple markets.

Pursuant to the TBHC Merger Agreement, each outstanding share of TBHC common stock was converted into the right to receive 0.1993 shares of the Company's common stock, par value $0.0001 per share. Holders of fractional shares received cash in lieu thereof based on the Company's closing stock price of $4.62 per share on April 1, 2026. In addition, outstanding TBHC stock options and restricted stock units were settled in accordance with the merger agreement, with eligible awards converted into shares of the Company's common stock based on the exchange ratio and certain out-of-the-money options canceled.

The results of operations of TBHC have been included in the unaudited consolidated financial statements of the Company from April 2, 2026, the TBHC Acquisition Date (as discussed further in Note 2—Summary of Significant Accounting Policies). For the three and nine months ended September 30, 2026, results of operations included $61.2 million and $131.7 million in revenues, respectively, and $15.3 million and $34.2 million in net loss, respectively, attributable to TBHC.

(1) Represents the aggregate fair value of 2,705,263 common shares of the Company issued directly to the sellers based on the closing trading price of the Company's common shares of $4.62 per share on April 2, 2026.

(2) Represents the aggregate fair value of 247,793 common shares of the Company issued in exchange for TBHC RSU equity awards that accelerated upon the change in control.

(3) Represents the settlement of TBHC existing indebtedness.

(4) Represents the effective settlement of preexisting relationships comprised of 1) the settlement of Notes payable and accrued interest due to the Company of $43,732 and $473, respectively, 2) Accounts receivable from inventory sales of $3,836, and 3) Collaboration fee receivable of $205.

(5) Represents the reported amount of the Company’s previously held interests in TBHC.

Prior to the Acquisition Date, the Company owned 39.8% of the outstanding ownership interests in TBHC which it accounted for as an equity method security under the fair value option. The TBHC Acquisition Date fair value of the Company’s previously held ownership interest in TBHC was approximately $8.4 million and is included in the measurement of the investment in TBHC. The Company remeasured the previously held equity investment to its fair value, as of the date of acquisition, based on TBHC’s quoted market price as of April 1, 2026. The remeasurement resulted in an immaterial loss. Refer to Note 2—Summary of Significant Accounting Policies, basis of presentation, and Note 7—Equity Securities for further information.

The Company has provisionally allocated the purchase consideration based on the fair values of the assets acquired and liabilities assumed at the TBHC Acquisition Date, as adjusted for measurement period adjustments, as follows (in thousands):

(1) The measurement period adjustments reflect changes in the estimated fair values of certain assets and liabilities, primarily related to inventory, property and equipment, and accrued liabilities. The measurement period adjustments were recorded to reflect new information obtained from facts and circumstances existing as of the TBHC Acquisition Date and did not result from subsequent intervening events.

(2) In September 2026, the Company finalized the valuation of acquired inventory. As a result, inventory was adjusted by $9.0 million based on information obtained from the valuation report received in September 2026. The corresponding adjustment of $9.0 million was recognized in cost of goods sold in the consolidated statement of operations, of which the entire amount related to the previous quarter.

The fair values presented were estimated by management, with the assistance of a third-party valuation specialist. Goodwill is the excess over net identifiable assets. The goodwill recognized is attributable to TBHC’s assembled workforce and expected synergies from combining the operations of the Company and TBHC. None of the goodwill is expected to be deductible for income tax purposes.

The initial accounting for the TBHC acquisition is incomplete as the valuation of the net assets acquired has not yet been finalized. As such there may be adjustments to the purchase accounting and those adjustments could be material. Management is completing its evaluation during the measurement period, which will not exceed one year from the TBHC Acquisition Date. Any adjustments to the provisional amount arising from new information about facts and circumstances that existed as of the acquisition date will be recognized in the period the adjustment is determined, with a corresponding adjustment to goodwill.

For the three and nine months ended September 30, 2026, the Company incurred acquisition costs related to the above transactions of $2.6 million and $10.4 million, respectively. These costs are reported in the consolidated statements of operations as general and administrative and relate to professional expenses and other third-party costs.

Pro forma information (unaudited)

The following reflects the unaudited pro forma impact of the current year acquisitions on the Company’s results of operations giving effect to the transactions as though they had occurred on January 1, 2025 (in thousands):

4. FAIR VALUE MEASUREMENT

The Company accounts for fair value measurements in accordance with ASC 820, which defines fair value, establishes a framework for measurement and expands disclosure about fair value measurements. ASC 820 defines fair value 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 (exit price) and classifies the inputs to measure fair value into the following hierarchy:

Level 1: Quoted prices for identical assets or liabilities in active markets.

Level 2: Quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and model-driven valuations whose inputs are observable or whose significant value drivers are observable.

Level 3: Pricing inputs that are unobservable for the assets and liabilities and include situations where there is little, if any, market activity for the assets and liabilities.

The inputs into the determination of fair value require significant management judgment or estimation.

The following tables summarize the Company's assets and liabilities measured at fair value on a recurring basis using the following levels of inputs (in thousands):

(1) Included in other long-term assets, net in the consolidated balance sheets.

(2) Included in other long-term liabilities in the consolidated balance sheets.

The following table provides activity for the Company's Level 3 investments (in thousands):

The following table provides activity for the Company's Level 3 liabilities (in thousands):

The Company utilized the "With-and-Without" method for valuation of the conversion feature. This methodology involves the valuation of the 2033 Convertible Notes: (i) inclusive of all terms, features, and conditions and (ii) exclusive of the benefits provided by the embedded derivatives, and infers the difference in value between (i) and (ii) as reflective of its fair value.

The following table lists the key valuation inputs used in the Company's valuation of the associated conversion feature of the 2033 Convertible Notes as of the following dates (in thousands):

The fair value of the Company's financial liabilities at September 30, 2026 is estimated below (in thousands).

(a) The fair value of the Company's outstanding borrowings under each of these instruments approximates its reported value, because the interest rate is variable and reflects current market rates. See Note 8—Borrowings for additional information.

(b) The table above excludes finance lease obligations and debt discount.

The fair values presented are based on pertinent information available to management as of the respective period end date. The estimated fair values of the Company's debt are classified as Level 2 in the fair value hierarchy, except for the 2033 Convertible Notes, which are classified at Level 3 in the fair value hierarchy. For the 2033 Convertible Notes, the Company applied the discounted cash flow method under the income approach utilizing a market yield assumption. A Monte Carlo simulation was applied to determine the simulated stock price at each payment date and event that may trigger conversion of the notes. In scenarios without forced redemption/conversion, the Company assumed the holder would force the conversion of the notes to maximize economic returns associated with conversion.

5. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following (in thousands):

Depreciation expense is classified within the corresponding operating expense categories on the consolidated statements of operations as follows (in thousands):

6. GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill consist of the following (in thousands):

Goodwill recognized during the nine months ended September 30, 2026, relates to the Company's acquisitions. Refer to Note 3—Business Combinations for additional information.

Intangible assets, net consist of the following (in thousands):

(1) At September 30, 2026, the weighted average remaining useful life for intangible assets subject to amortization, gross was 1.75 years.

7. EQUITY SECURITIES

Equity securities consist of the following (in thousands):

The following table includes the Company's equity securities and related ownership interest as of September 30, 2026:

The carrying amount of the Company's equity method securities was $54.9 million at September 30, 2026, which is included in Equity securities on the consolidated balance sheets, of which $17.1 million was valued under the fair value option (tZERO and Zulily Newco). For the equity method investments, there was no difference in the carrying amount of the assets and liabilities and the maximum exposure to loss, and there was no difference between the carrying amount of the investment in Medici Ventures, L.P., and the amount of underlying equity the Company has in the entity's net assets.

The following table summarizes the net loss recognized on equity method securities recorded in other income (expense), net in the consolidated statements of operations (in thousands):

Upon obtaining control of TBHC, the Company discontinued its application of equity method accounting resulting in a decrease in the carrying amount of equity method securities held under the fair value option of $8.4 million. Refer to Note 3—Business Combinations for further information on consolidation of TBHC.

TZROP Conversion

On April 29, 2026, tZERO, an investee of the Company in which the Company is the largest shareholder, announced that the required majority of holders of its Series A Preferred Equity Tokens ("TZROP tokens") had approved the proposal to convert each outstanding TZROP token into three shares of tZERO's Series B preferred stock andeight shares of tZERO's common stock. As a result of the conversion, the Company's combined direct and indirect ownership in tZERO, decreased from approximately 49.4% to 36.2%. The decrease in the Company's combined indirect and direct ownership did not have a material impact on the carrying value of the Company's investment in tZERO.

In connection with the proposed conversion, the Company entered into a non-binding Letter of Intent with tZERO pursuant to which the Company has indicated its intent to lead up to $10.0 million in additional financing through a convertible note financing. The proposed financing is expected to be funded in tranches subject to the achievement of specified operational and financial milestones. As of September 30, 2026, the proposed financing has not been funded or approved.

8. BORROWINGS

Long-term debt consists of the following (in thousands):

2033 Convertible Notes

On July 8, 2026, in connection with the Company's acquisition of TCS, the Company issued $112.6 million aggregate principal amount of 5.00% Convertible Senior Notes due 2033 (the "2033 Convertible Notes") to holders of outstanding TCS indebtedness as merger consideration under an indenture, dated as of July 8, 2026 (the “Indenture”), among the Company, the

subsidiary guarantors from time to time party thereto and Computershare Trust Company, National Association, as trustee.

The 2033 Convertible Notes are senior, unsecured obligations of the Company and accrue interest payable semiannually in arrears at a rate of 5.00% per year on April 1 and October 1 of each year, beginning April 1, 2027. The 2033 Convertible Notes mature on July 8, 2033, unless earlier converted or repurchased. The 2033 Convertible Notes are guaranteed on a senior, unsecured basis by certain subsidiaries of the Company.

A holder of 2033 Convertible Notes may, at its option, convert all or any portion of its 2033 Convertible Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date. The Company may, at its election, settle conversions of the 2033 Convertible Notes through physical settlement (i.e., issuance of shares of Company’s common stock, the default settlement method), cash settlement or combination settlement, subject to the terms of the Indenture.

The conversion rate is initially 109.8901 shares of the Company's common stock per $1,000 principal amount of the 2033 Convertible Notes (equivalent to an initial conversion price of approximately $9.10 per share of the Company's common stock). The conversion rate is subject to adjustment upon the occurrence of certain specified events (as set forth in the Indenture), but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) or if the 2033 Convertible Notes are subject to redemption, the Company will in certain circumstances, increase the conversion rate by a number of additional shares of Company common stock (not to exceed 228.8329 shares of Company common stock per $1,000 principal amount of the 2033 Convertible Notes) for a holder who elects to convert its 2033 Convertible Notes in connection with such Make-Whole Fundamental Change or such redemption.

In connection with the issuance of the 2033 Convertible Notes on July 8, 2026, the Company bifurcated the conversion feature from the debt host and accounted for it as a derivative liability measured at fair value, with changes in fair value recognized in earnings. The conversion feature did not initially qualify for the scope exception in Accounting Standards Codification 815, Derivatives and Hedging ("ASC 815") for contracts indexed to, and classified in, the Company’s own equity. Until Company stockholder approval was obtained under applicable stock exchange rules, the number of shares issuable upon conversion was capped at 19.99% of the Company’s outstanding common stock, and any conversion obligation above the cap was required to be settled in cash.

If the Company undergoes certain fundamental changes, holders are entitled to require the Company to repurchase for cash all or any portion of their 2033 Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2033 Convertible Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Indenture provides for customary events of default, which, if any of them occurs, would permit or require the principal, interest and any other monetary obligations on all outstanding 2033 Convertible Notes to become due and payable immediately.

Under the Indenture, the Company agreed to use its reasonable best efforts to obtain the approval of its stockholders that is required under the applicable stock exchange rules in connection with the issuance of the Company's common stock upon conversion of the 2033 Convertible Notes (the “Stockholder Approval”). The Indenture provided that if the Company had not obtained Stockholder Approval on or before the earlier of October 8, 2026 and the date of the first special meeting of the Company’s stockholders held to obtain the Stockholder Approval, the interest payable on the 2033 Convertible Notes would increase to 10.00% per year from that date, and if the Company had not obtained the Stockholder Approval on or before the earlier of January 8, 2027 and the date of the second special meeting of the Company’s stockholders held to obtain the Stockholder Approval, the interest payable on the 2033 Convertible Notes would increase to 12.00% per year until such stockholder approval is obtained.

Because of the settlement limitation described above that applies prior to obtaining the Stockholder Approval, the conversion feature did not, at issuance, qualify for the scope exception to derivative accounting for contracts indexed to the Company's own equity, and therefore required bifurcation as a derivative liability under ASC 815. Using the with-and-without methodology, the Company allocated the $108.5 million acquisition-date fair value first to the derivative liability of $43.4 million and with the residual amount to the debt host of $65.1 million representing the initial net carrying amount. The total debt discount of $47.5 million was created at issuance, representing the difference between the initial net carrying amount of the debt host contract and the principal amount, which will be amortized to interest expense over the term of the 2033 Convertible Notes.

On July 8, 2026, the Company cancelled $1.3 million aggregate principal amount of the 2033 Convertible Notes in connection with the settlement of previously held participation interests in certain TCS loans immediately following the closing of the TCS

Acquisition. The transaction was accounted for as a partial extinguishment of debt, resulting in a loss of approximately $0.1 million.

On September 24, 2026, the Company obtained the Stockholder Approval pursuant to applicable stock exchange requirements, at which point the conversion feature qualified for the scope exception to derivative accounting under ASC 815 and no longer required bifurcation. The derivative liability on the approval date was remeasured to its fair value of $21.9 million and reclassified to additional paid-in capital (Refer to Note 12—Stockholders' Equity).

As of September 30, 2026, the 2033 Convertible Notes had an outstanding principal balance of $111.3 million and unamortized debt discount of $46.0 million, resulting in a net carrying value of $65 million, classified within long-term debt. Interest expense related to the 2033 Convertible Notes, consisting of contractual interest and amortization of the debt discount, was $2.2 million for each of the three and nine months ended September 30, 2026, (effective interest rate of 14.41%). No conversions occurred during the three and nine months ended September 30, 2026.

Eclipse Exit Asset-Based Lending (ABL) Credit Facility

On January 28, 2025, The Container Store, Inc. and certain of their domestic subsidiaries (the “TCS Company Parties") entered into an exit asset-based revolving credit agreement with Eclipse Business Capital LLC, providing for a $140 million aggregate revolving credit commitment, subject to a borrowing base as set forth in the Exit ABL Credit Agreement (the "Exit ABL Credit Facility"). As of September 30, 2026, $22.5 million was available to borrow under the Exit ABL Credit Facility.

The Exit ABL Credit Facility bears interest at a percentage per annum equal to SOFR plus 4.25% and matures on January 28, 2028. Interest expense related to the Exit ABL Credit Facility was $2.2 million for the three and nine months ended September 30, 2026. The Exit ABL Credit Facility is secured by substantially all assets of the TCS Company Parties (subject to customary exceptions), with a first-priority lien on inventory, accounts receivable (including credit card receivables) and other working capital assets (and proceeds thereof) (the “ABL Priority Assets”) and a second-priority lien on equipment, real property, intellectual property, investment property and other fixed assets (and proceeds thereof) (the “Term Priority Assets"). The Exit ABL Credit Facility contains a number of covenants that, among other things, restrict the Company's ability, subject to specified exceptions, to incur additional debt; incur additional liens and contingent liabilities; sell or dispose of assets; merge with or acquire other companies; liquidate or dissolve ourselves, engage in businesses that are not in a related line of business; make loans, advances or guarantees engage in transactions with affiliates; and make investments. In addition, the financing agreements contain certain cross-default provisions. The Company is required to maintain minimum availability of at least 10% of the greater of the borrowing base and the aggregate commitments (as defined in the agreement). As of September 30, 2026, the Company was in compliance with all covenants under the Exit ABL Credit Facility and no Event of Default has occurred.

2019 Elfa Senior Secured Credit Facilities

Elfa International AB, a wholly owned Swedish subsidiary ("Elfa"), has a master credit agreement with Nordea Bank AB, which consists of (i) an SEK 110.0 million (approximately $11.0 million as of September 30, 2026) revolving credit facility (the “2019 Original Revolving Facility”), (ii) upon Elfa’s request, an additional SEK 115.0 million (approximately $11.5 million as of September 30, 2026) revolving credit facility ( the “2019 Elfa Revolving Facilities”), and (iii) an uncommitted term loan facility in the amount of SEK 25.0 million (approximately $2.5 million as of September 30, 2026), which is subject to receipt of Nordea Bank’s commitment and satisfaction of specified conditions. The term for the 2019 Elfa Senior Secured Credit Facilities matures on September 30, 2028. Loans borrowed under the 2019 Elfa Revolving Facilities bear interest at Nordea Bank’s base rate +1.40%. Any loan borrowed under the Incremental Term Facility would bear interest at Stibor +1.70%. Interest expense related to the 2019 Elfa Senior Secured Credit Facilities was SEK 0.4 million (approximately less than $0.1 million) for the three and nine months ended September 30, 2026.

The 2019 Elfa Senior Secured Credit Facilities are secured by the majority of assets of Elfa. The 2019 Elfa Senior Secured Credit Facilities contains a number of covenants that, among other things, restrict Elfa’s ability, subject to specified exceptions, to incur additional liens, sell or dispose of assets, merge with other companies, engage in businesses that are not in a related line of business and make guarantees. In addition, Elfa is required to maintain (i) a Group Equity Ratio (as defined in the 2019 Elfa Senior Secured Credit Facilities) of not less than 32.5% and (ii) a consolidated ratio of net debt to EBITDA (as defined in the 2019 Elfa Senior Secured Credit Facilities) of less than 3.20. As of September 30, 2026, this facility is fully drawn and Elfa was in compliance with all covenants under the 2019 Elfa Senior Secured Credit Facilities and no Event of Default (as defined in the 2019 Elfa Senior Secured Credit Facilities) had occurred.

BMO Line of Credit

In October 2024, the Company entered into a Loan and Security Agreement (the "Loan Agreement") with BMO Bank N.A. (in such capacity, "BMO"), pursuant to which BMO agrees to lend the Company up to $25.0 million on aone-year revolving line of credit to aid the Company in securing strategic ventures. As of September 30, 2026, the Company had $15.5 million in outstanding borrowings and $9.5 million in outstanding standby letters of credit. Accordingly, no additional borrowing capacity was available under the BMO Line of Credit. In connection with the Loan Agreement, BMO issued a revolving line of credit promissory note (the "Revolving Note") and granted a lien on the cash collateral account specified in the Loan Agreement (the "Cash Collateral Account"). The revolving line of credit bears interest on the unpaid principal balance at an annual rate equal to the Secured Overnight Financing Rate ("SOFR") rate, for aone-month interest period plus 1.00%, established by the Federal Reserve Bank of New York. For the three and nine months ended September 30, 2026, the Company recorded interest expense of $0.2 million and $0.6 million related to the BMO Line of Credit. For the three and nine months ended September 30, 2025, the Company recorded interest expense of $0.2 million and $0.9 million related to the BMO Line of Credit.The Company is obligated to pay certain commitment fees on undrawn amounts under the Loan Agreement in amounts specified in the Loan Agreement. The Loan Agreement and Revolving Note was scheduled to terminate on October 18, 2026, and loans thereunder may be borrowed, repaid, and reborrowed up to such date. In September 2025, the Company and BMO extended the term of the Loan Agreement and Revolving Note by one year to October 2026. In October 2026, the Company and BMO extended the term of the Loan Agreement and Revolving Note for an additional year, which will now terminate in October 2027 (Refer to Note 18—Subsequent Events).

The Loan Agreement is subject to limited affirmative covenants and negative covenants, including the requirement that the Company maintain cash in the Cash Collateral Account in an amount that isthree percent greater than BMO's aggregate commitments under the Loan Agreement. For the three and nine months ended September 30, 2026, the Company was in compliance with its debt covenants and continues to monitor ongoing compliance with the debt covenants.

Bank of America Revolver

On April 2, 2026, following the acquisition of TBHC, TBHC entered into a Sixth Amendment to Third Amended and Restated Credit Agreement (as the same has been amended from time to time, the “2023 Credit Agreement”) with Bank of America, N.A., as administrative agent and collateral agent, and lender, pursuant to which Bank of America, N.A. agreed to lend the Company up to $90.0 million. During the three and nine months ended September 30, 2026, the Company borrowed $19.0 million and $44.9 million, respectively and repaid $3.1 million and $21.2 million, respectively under the 2023 Credit Agreement. For the three and nine months ended September 30, 2026, the Company recorded interest expense of $0.6 million and $1.0 million related to the 2023 Credit Agreement. The 2023 Credit Agreement matures on March 31, 2028 and bears interest at a fluctuating rate per annum equal to the highest of (a) the federal funds rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) Term SOFR plus 1.00%. The fee paid to the lenders on the unused portion of the 2023 Credit Agreement is 25 basis points when usage is greater than 50% of the total commitment amount; otherwise, the fee on the unused portion is 37.5 basis points per annum.

Pursuant to the 2023 Credit Agreement, the Company entered into a pledge and security agreement with the administrative agent to the 2023 Credit Agreement, pledging its equity interests in TBHC. The Company has not guaranteed the obligations under the 2023 Credit Agreement or pledged any assets, other than the pledged equity interests in TBHC as collateral.

9. LEASES

The Company has operating leases for office space, a data center, distribution centers, manufacturing facilities, retail store locations, warehouses, and certain vehicles and equipment. The Company also leases computer hardware under operating leases and has finance leases within its subsidiary Elfa. The Company's operating leases generally have remaining lease terms ranging fromone year tothirteen years, some of which may provide the Company renewal options to extend the leases, and some of which may include options to terminate the leases withinone year.

The components of lease expenses were as follows (in thousands):

The following table provides a summary of other information related to leases (in thousands):

The following table provides supplemental balance sheet information related to leases:

Maturity of lease liabilities under non-cancellable operating leases as of September 30, 2026, are as follows (in thousands):

During the three and nine months ended September 30, 2026, the Company recognized animmaterial loss and a loss of $4.5 million for impairment related to right-of-use assets and related long-lived store assets arising from store-closure decisions. Impairment expense is recognized in the consolidated statement of operations as other operating expense (income), net.

10. COMMITMENTS AND CONTINGENCIES

Legal proceedings and contingencies

From time to time, the Company is involved in litigation concerning consumer protection, employment, intellectual property, claims under the securities laws, and other commercial matters related to the conduct and operation of the business and the sale of products on the Company's websites. In connection with such litigation, the Company has been in the past and may be in the future subject to judgments requiring the Company to pay significant damages or associated costs. In some instances, other parties may have contractual indemnification obligations to the Company. However, such contractual obligations may prove unenforceable or non-collectible, and if the Company cannot enforce or collect on indemnification obligations, the Company may bear the full responsibility for damages, fees, and costs resulting from such litigation. As a result of such litigation, the Company may also be subject to penalties and equitable remedies that could force the Company to alter important business practices. Such litigation could be costly and time consuming and could divert or distract the Company's management and key personnel from the business operations. Due to the uncertainty of litigation and depending on the amount and the timing, an unfavorable resolution of some or all of such matters could materially affect the Company's business, results of operations, financial position, or cash flows.

The Company establishes liabilities when a particular contingency is probable and estimable which are included in accrued liabilities on the consolidated balance sheets. At September 30, 2026 and December 31, 2025, the Company's established liabilities were not material.

Tariffs

The International Emergency Economic Powers Act ("IEEPA") was used by the Trump administration to impose tariffs on imports. The U.S. Supreme Court ruled on February 20, 2026, that IEEPA does not authorize the President to impose tariffs, and as a result, on March 4, 2026, the Court of International Trade (CIT) ordered the Trump administration to begin refunding all tariffs imposed under IEEPA. On May 29, 2026, the administration appealed the CIT's ruling requiring universal refunds and reliquidation of finally liquidated entries. However, other entries, that are not finally liquidated are already being processed by U.S. Customs and Border Protection ("CBP"). The Company participated in the phase one IEEPA claim submissions, which began on April 20, 2026, and submitted a refund request for tariffs previously paid. During May and June 2026, the Company was informed that entries that paid tariffs of $9.2 million were approved for refunds and that the Company would also be paid $0.3 million of accrued interest. The Company received a nominal initial payment in July 2026 and substantially all remaining consideration in August and September 2026.

The Company applied a loss recovery model to account for the tariff refunds and a gain contingency model to account for the accrued interest, as under the loss recovery model, recovery of previously incurred losses is recognized when probable and reasonably estimable. Interest income was recognized upon resolution of all uncertainties associated with the claim and confirmation of the amounts to be received.

As of September 30, 2026, the Company has received $9.6 million of its tariff refund claims and related accrued interest, with an immaterial receivable remaining outstanding. The Company recognized $9.2 million of tariff refund claims as an offset against cost of goods sold, the financial statement caption in which the original tariff cost was recognized, and the $0.4 million of interest income in interest income, net, on the Company's consolidated statement of operations. The Company received the remaining receivable in October 2026, and accordingly, there are no remaining uncertainties associated with the tariff refund claims and related accrued interest.

11. INDEMNIFICATIONS AND GUARANTEES

During the normal course of business, the Company has made certain indemnities, commitments, and guarantees under which the Company may be required to make payments in relation to certain transactions. These indemnities include, but are not limited to, indemnities to various lessors in connection with facility leases for certain claims arising from such facility or lease, the environmental indemnity the Company entered into in favor of the lenders under its prior loan agreements, customary indemnification arrangements in underwriting agreements and similar agreements, and indemnities to its directors and officers to the maximum extent permitted under the laws of the State of Delaware, and the guarantee of 2033 Convertible Notes by certain subsidiaries of the Company. The duration of these indemnities, commitments, and guarantees varies, and in certain cases, is indefinite. In addition, the majority of these indemnities, commitments, and guarantees do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. As such, the Company is unable to estimate with any reasonableness its potential exposure under these items. The Company has not recorded any liability for these indemnities, commitments, and guarantees in the accompanying consolidated balance sheets. The Company does, however, accrue losses for any known contingent liability, including those that may arise from indemnification provisions, when future payment is both probable and reasonably estimable.

12. STOCKHOLDERS' EQUITY

JonesTrading Sales Agreements

The Company entered into a Capital on Demand TM Sales Agreement (the "June 2024 Sales Agreement") dated June 10, 2024 with JonesTrading Institutional Services LLC ("JonesTrading"), under which the Company has conducted "at the market" public offerings of its common stock. Under the June 2024 Sales Agreement, JonesTrading, acting as the Company's sales agent or principal, had the ability to offer the Company's common stock in the market on a daily basis, or otherwise, as the Company requested, from time to time. The Company had no obligation to sell shares under the June 2024 Sales Agreement.

During the nine months ended September 30, 2026, the Company sold 4,217,044 shares of its common stock pursuant to the June 2024 Sales Agreement and has recognized $15.7 million in proceeds, net of $0.3 million of offering costs, including commissions paid to JonesTrading. During the nine months ended September 30, 2025, the Company sold 12,432,021 shares of its common stock pursuant to the June 2024 Sales Agreement and has recognized $101.7 million in proceeds, net of $2.1 million of offering costs, including commissions paid to JonesTrading. As of September 30, 2026, the Company hadzero remaining available under the June 2024 Sales Agreement.

On August 4, 2026, the Company entered into a Capital on Demand TM Sales Agreement (the "August 2026 Sales Agreement") with JonesTrading, under which the Company has conducted, and may in the future conduct, "at the market" public offerings of its common stock. Under the August 2026 Sales Agreement, JonesTrading, acting as the Company's sales agent or principal, may offer the Company's common stock in the market on a daily basis, or otherwise, as the Company requests, from time to time. The Company has no obligation to sell shares under the August 2026 Sales Agreement.

During the nine months ended September 30, 2026, the Company sold 781,021 shares of its common stock pursuant to the August 2026 Sales Agreement and has recognized $2.6 million in proceeds, net of $0.1 million of offering costs, including commissions paid to JonesTrading. As of September 30, 2026, the Company had $197.3 million remaining available under the August 2026 Sales Agreement. On October 5, 2026, the Company signed an amendment to the August 2026 Sales Agreement, reducing the dollar amount of common stock permitted to be sold under the agreement to $75 million (refer to Note 18—Subsequent Events).

Warrants

On September 22, 2025, the Company announced that its Board of Directors had declared a warrant dividend distribution (the "Warrant Distribution") to the record holders of the Company's common stock, in the form of warrants to purchase the common stock (the "Warrants"). Holders of common stock at the close of business on October 2, 2025 (the "Record Date") received one warrant for each ten shares of common stock then owned, rounded down to the nearest whole number. The Warrants were distributed to holders of common stock on the terms and conditions described in the Warrant Agreement, dated as of October 7, 2025, between the Company, Computershare, Inc., a Delaware corporation, and its affiliate, Computershare Trust Company, N.A., as Warrant Agent. The Warrants have a cash exercise price of $15.50. As the Early Expiration Price Condition (as defined in the Warrant Agreement) was not met, all outstanding Warrants expired on October 7, 2026 (refer to Note 18—Subsequent Events).

During the nine months ended September 30, 2026,219 warrants were exercised. As of September 30, 2026,6,884,121 warrants remained outstanding.

Reclassification of Convertible Note Derivative Liability

On September 24, 2026, the Company’s stockholders approved the issuance of shares of common stock upon conversion of the 2033 Convertible Notes in excess of that cap. Upon approval, the share cap was removed and physical settlement became the default settlement method. As a result, the conversion feature met the criteria for equity classification and no longer required bifurcation as an embedded derivative. On the approval date, the Company remeasured the derivative liability to its fair value of $21.9 million, recognized a gain on the change in the fair value of the derivative liability, and reclassified the derivative liability to additional paid-in capital. See Note 8—Borrowings for more information.

13. ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss ("AOCL") consists of pension liability adjustments and foreign currency translation. The components of AOCL, net of tax, were as follows:

Amounts reclassified from AOCL to earnings for the pension liability adjustment category are generally included in cost of goods sold or general and administrative expenses in the Company’s consolidated statements of operations.

14. STOCK-BASED AWARDS

Stock-based compensation expense is classified within the corresponding operating expense categories on the consolidated statements of operations as follows (in thousands):

The Company had performance share option forfeitures during the three months ended September 30, 2026 that resulted in a $5.9 million reversal of previously recognized stock-based compensation expense. The reversal is included in general and administrative expense in the consolidated statements of operations.

Restricted stock unit awards

The Company's Amended and Restated 2005 Equity Incentive Plan (the "Plan") provides for the grant of restricted stock units and other types of equity awards to employees and directors of the Company. The Compensation Committee of the Board of

Directors approves grants of restricted stock unit awards to the Company's officers, board members, and employees. These restricted stock unit awards generally vest over a period ofthree years tofour years, subject to the recipient's continuing service to the Company.

The cost of restricted stock units is determined using the fair value of the Company's common stock on the date of the grant and compensation expense is either recognized on a straight-line basis over the vesting schedule or on an accelerated schedule when vesting of restricted stock awards exceeds a straight-line basis. The cumulative amount of compensation expense recognized at any point in time is at least equal to the portion of the grant date fair value of the award that is vested at that date.

Performance Shares

Performance-based shares ("PSUs") granted to the Company's executive management team under the Plan are eligible to vest based on achieving specific performance metrics. To the extent any of the PSUs become earned based on the Company's achievement of the aforementioned performance metrics, such earned PSUs will vest equally over three years orfour years, on the annual anniversary of the grant date, subject to the recipient’s continued service through the vesting date. To be eligible to vest in any tranche of the PSUs, the Company must meet the threshold performance metrics established for the performance period. Expense is recognized as compensation cost based on the fair value on the date of grant over the performance period, taking into account the probability that the Company will satisfy the performance goals.

Stock-based compensation related to the PSUs is included in the stock-based compensation expense table above combined with the expense associated with the Company's restricted stock units, performance share options, and employee stock purchase plan. Due to staff-related reductions, stock-based compensation related to the PSUs was a credit of $0.7 million and a credit of $1.0 million for the three months ended September 30, 2026 and 2025, respectively, and credits of $1.6 million and $0.4 million due to staff-related reductions for the nine months ended September 30, 2026 and 2025, respectively.

The following table summarizes restricted stock unit and PSU award activity (in thousands, except per share data):

(1) Includes 662,251 performance share units awarded during the nine months ended September 30, 2026 for which a grant date under ASC 718, Compensation—Stock Compensation, had not been established as of September 30, 2026. These units are included in the number of units granted and outstanding above and are reflected in the weighted-average grant-date fair value at $4.50. The fair value of these units will be remeasured and finalized on the date a mutual understanding of the performance targets is reached.

Share Options

Stock-based compensation related to the Performance Share Option is included in the stock-based compensation expense table above combined with the expense associated with the Company's restricted stock units, PSUs, and employee stock purchase plan. Stock-based compensation related to the performance share options was a net reversal of $5.6 million for the three months ended September 30, 2026 , and an expense of $0.7 million for the three months ended September 30, 2025. For the nine months ended September 30, 2026 and 2025, stock-based compensation related to the performance share options was a net reversal of $4.7 million and an expense of $2.5 million, respectively. The net reversal for the three and nine months ended September 30, 2026 was primarily attributable to the forfeiture of all 2,250,000 then outstanding options with a weighted average exercise price per share of $53.33, which resulted in a $5.9 million reversal of previously recognized stock-based compensation expense.

Employee Stock Purchase Plan

Purchases under the 2021 Employee Stock Purchase Plan (the "ESPP") during the nine months ended September 30, 2026 and 2025 were 110,979 shares and 137,966 shares, respectively, at an average purchase price per share of $4.06 and $5.32, respectively. At September 30, 2026,2,430,373 shares of common stock remained available under the ESPP.

Stock-based compensation related to the ESPP is included in the stock-based compensation expense table above combined with the expense associated with the Company's restricted stock units, PSUs, and performance share options. Stock-based compensation related to the ESPP was $0.1 million and $0.2 million for the three months ended September 30, 2026 and 2025, respectively and $0.4 million and $0.6 million for the nine months ended September 30, 2026 and 2025, respectively.

2026 Employment Inducement Equity Incentive Plan

On August 4, 2026, the board of directors of the Company adopted the Neighborhood Intelligence, Inc. 2026 Employment Inducement Equity Incentive Plan (formerly the Bed Bath & Beyond, Inc. 2026 Employment Inducement Equity Plan) (the "Inducement Plan") to facilitate the recruitment and retention of key employees through equity-based compensation awards. The Inducement Plan permits the grant of non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance share awards, performance unit awards, and deferred stock units to newly hired employees as a material inducement to employment with the Company. The Inducement Plan was adopted without stockholder approval in reliance on an exemption available under the NYSE Listed Company Manual for awards granted as a material inducement to employment and provides for a maximum of 4,500,000 shares of common stock to be issued thereunder.

On August 5, 2026, the Company filed a Registration Statement on Form S-8 registering 4,500,000 shares of its common stock for issuance under the Inducement Plan. Awards granted under the Inducement Plan must be approved by either the Compensation Committee of the board of directors, provided the committee is composed solely of independent directors, or by a majority of the Company's independent directors. During the three and nine months ended September 30, 2026, the Company granted 1,935,689 of restricted stock units and 662,251 performance share awards under the Inducement Plan, covering an aggregate of 2,597,940 shares of common stock, resulting in share-based compensation expense of $1.9 million recognized during each of the three and nine month periods then ended. As of September 30, 2026, total unrecognized compensation cost related to unvested awards granted under the Inducement Plan was $9.7 million, which is expected to be recognized over a weighted-average period of approximately 1.96 years.

15. REVENUE AND CONTRACT LIABILITY

Unearned Revenue

The following table provides information about unearned revenue from contracts with customers, including significant changes in unearned revenue balances during the periods presented (in thousands):

Unearned revenue consists primarily of customer orders shipped but not yet delivered, gift cards, store credits, and loyalty program rewards. At September 30, 2026 and December 31, 2025, the Company had an additional $2.3 million and $2.4 million, respectively, of unearned contract revenue classified within other long-term liabilities on the consolidated balance sheets. The Company's total unearned revenue related to outstanding loyalty program rewards was $4.5 million and $4.1 million at September 30, 2026 and December 31, 2025, respectively. Breakage income related to loyalty program rewards and gift cards is recognized in net revenue in the consolidated statements of operations. Breakage recognized in revenue was $0.7 million and $2.0 million for the three months ended September 30, 2026 and 2025, respectively and $2.3 million and $9.7 million for the nine months ended September 30, 2026 and 2025, respectively. The timing of revenue recognition of these reward dollars is driven by actual customer activities, such as redemptions and expirations. The increase due to business combinations represents unearned revenue assumed in acquisitions of TCS, SFV, and TBHC. Refer to Note 3—Business Combinations for additional information.

Sales returns allowance

The following table provides additions to and deductions from the sales returns allowance, which is included in the Accrued liabilities balance in the consolidated balance sheets (in thousands):

16. NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per share of common stock for the periods indicated (in thousands, except per share amounts):

The following shares were excluded from the calculation of diluted shares outstanding as their effect would have been anti-dilutive (in thousands):

(1) Represents shares issuable upon the conversion of the 2033 Convertible Notes issued pursuant to the TCS Merger Agreement to holders of TCS indebtedness. See Note 8—Borrowings for further information.

17. BUSINESS SEGMENTS

The Company currently hasone reportable segment, which is its Retail business consisting of Bed Bath & Beyond, Overstock.com, TCS, TBHC, and SFV Services.

The accounting policies of the Retail segment are the same as those described in the summary of significant accounting policies. The Chief Operating Decision Maker (CODM), who is the Company's Principal Executive Officer, makes resource allocation decisions based on reports that focus predominantly on Net Revenues, Gross Profit, as well as Operating Income (Loss) measured under GAAP, as reported on the Consolidated Statement of Operations. The CODM also receives the Consolidated Cash and Cash Equivalents balance as a measure of liquidity as reported on the Consolidated Balance Sheet. The CODM uses Operating Income (Loss) to evaluate income generated from segment resources in deciding whether to reinvest profits into the retail segment or into other parts of the entity, such as to make acquisitions or investments. The CODM also uses Operating Income (Loss) to monitor budget versus actual results. The monitoring of budgeted versus actual results is used in assessing performance of the segment and in establishing bonus metrics.

18. SUBSEQUENT EVENTS

Termination of Merger Agreement with Fathom

On October 5, 2026, the Company and Fathom Holdings, Inc. mutually agreed to terminate the previously announced Fathom Merger Agreement (the "Fathom Merger Agreement Termination"). Upon such termination, the Fathom Merger Agreement became immediately null and void, and each of the parties to the Fathom Merger Agreement were relieved of their duties and obligations arising under the Fathom Merger Agreement after the date of such termination.

Amendment No. 1 to August 2026 Sales Agreement

On October 5, 2026 the Company signed an amendment to the August 2026 Sales Agreement reducing the dollar amount of common stock permitted to be sold under the agreement from $200.0 million to $75.0 million.

Registered Direct Offering

On October 6, 2026, the Company completed the purchase and sale of an aggregate of 10,881,192 shares of its common stock and pre-funded warrants to purchase up to 5,241,997 shares of common stock in a registered direct offering generating gross proceeds of approximately $45.5 million and net proceeds of approximately $43.0 million, after deducting placement agent fees and other offering expenses. In addition, the Company issued warrants to purchase up to 16,123,189 shares of common stock at an exercise price of $3.45 per share. The warrants are exercisablesix months following the initial issuance date, and will expire five years following the initial exercise date. The Company intends to use the net proceeds from the offering to accelerate merger synergies and build inventory. Any remaining proceeds will be used for working capital and general corporate purposes.

Expiration of Warrants

On October 7, 2026, all 6,884,121 Warrants then outstanding under the Warrant Agreement expired.

Sale of Domain Name

On October 15, 2026, the Company entered into an agreement to sell its Tokens.com domain name to Abraham Strategies Limited for $5.0 million in cash. The transfer of the domain name was completed prior to the issuance of these financial statements, and the Company received the related cash proceeds on October 23, 2026.

BMO Debt Amendment

On October 18, 2026, the Company entered into the second amendment to loan and security agreement with BMO Bank N.A. ("BMO"), extending the maturity date from October 18, 2026 to October 18, 2027. Please refer to Note 8—Borrowings for additional information regarding this loan agreement.