American Outdoor Brands, Inc.

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(1)Organization:

American Outdoor Brands, Inc. and its wholly owned Subsidiaries (our "company," "we," "us," or "our") is a leading provider of outdoor lifestyle products and shooting sports accessories encompassing hunting, fishing, meat processing, outdoor cooking, camping, shooting, and personal security and defense products for rugged outdoor enthusiasts.

We conceive, design, produce or source, and sell our outdoor lifestyle products, including:

•premium sportsman knives and tools for fishing and hunting;

•land management tools for hunting preparedness and for use in the backyard;

•products used while hunting;

•meat processing equipment; and

•outdoor cooking products.

We conceive, design, produce or source, and sell our shooting sports accessories, including:

•rests, vaults, and other related accessories;

•electro-optical devices, including hunting optics, firearm aiming devices, flashlights, and laser grips; and

•reloading, gunsmithing, and firearm cleaning supplies.

We develop and market all our products as well as manufacture some of our electro-optics products at our facility in Columbia, Missouri. We also contract for the manufacture and assembly of most of our products with third parties located in Asia.

We focus on our brands and the establishment of product categories in which we believe our brands will resonate strongly with the activities and passions of consumers and enable us to capture an increasing share of our overall addressable markets. Our owned brands include BOG, BUBBA, Caldwell, Crimson Trace, Frankford Arsenal, Grilla Grills, or Grilla, Hooyman, Imperial, LaserLyte, Lockdown, MEAT! Your Maker, Old Timer, Schrade, Tipton, Uncle Henry, and Wheeler, and we license additional brands for use in association with certain products we sell, including M&P, Smith & Wesson, and Performance Center by Smith & Wesson. In focusing on the growth of our brands, we organize our product development, customer service, and marketing teams into four brand lanes, each of which focuses on one of four distinct consumer verticals – Adventurer, Harvester, Marksman, and Defender – with each of our brands included in one of the brand lanes.

(2)Basis of Presentation:

Interim Financial Information

Our unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of the SEC for interim reporting. As permitted under those rules, certain disclosures and other financial information that normally are required by accounting principles generally accepted in the United States ("GAAP") have been condensed or omitted. Our accounting policies are described in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for our fiscal year ended April 30, 2026. We are responsible for the condensed consolidated financial statements included in this report, which are unaudited but, in our opinion, include all adjustments necessary for a fair presentation of our condensed consolidated balance sheet as of July 31, 2026, our condensed consolidated statement of operations for the three months ended July 31, 2026 and 2025, and our condensed consolidated statement of cash flows for the three months ended July 31, 2026 and 2025. The consolidated balance sheet as of April 30, 2026 was derived from audited financial statements.

The results reported in these condensed consolidated financial statements should not necessarily be taken as indicative of results that may be expected for the entire fiscal year.

Reclassifications

Certain prior-year amounts have been reclassified to conform to the current-year presentation. In connection with the separate presentation of other current assets on the consolidated balance sheets, amounts previously reported as prepaid expenses and other current assets have been reclassified to separate captions for prepaid expenses and other current assets. Corresponding reclassifications were also made within operating activities on the consolidated statements of cash flows. These reclassifications had no effect on previously reported total current assets, total assets, net income, stockholders' equity, net cash provided by operating activities, or net increase (decrease) in cash and cash equivalents.

U.S. Tariff Developments

The current political and economic environment is dynamic and uncertain, as the current U.S. Administration has imposed tariffs such as Section 301 and Section 232 of the Trade Act, modified and paused tariffs, and granted exemptions from tariffs, on different countries and products multiple times recently.

In 2025, the U.S. Administration imposed a series of tariffs on nearly all U.S. trading partners pursuant to the International Emergency Economic Powers Act of 1977 (“IEEPA”). On February 20, 2026, the United States Supreme Court issued a ruling striking down tariffs previously imposed under IEEPA. Immediately following the Supreme Court ruling, the U.S. government initiated new tariffs under Section 122 of the Trade Act ("Section 122 tariffs") which have been in effect since February 24, 2026. We continue to monitor and evaluate these developments and assess their potential impact on our business, financial condition, and results of operations.

In March 2026, the U.S. Court of International Trade ("CIT") issued an order directing U.S. Customs and Border Protection ("CBP") to process refunds of certain IEEPA tariffs. In April 2026, CBP released a new system to process IEEPA tariff refunds, allowing importers to submit refund claims. We believe it is probable that we will recover the IEEPA tariffs previously paid and have recognized IEEPA tariff refund receivables under the loss recovery accounting model. Accordingly, we recorded a receivable of $15.2 million as of April 30, 2026 and an additional receivable of $693,000 for new claims submitted during the three months ended July 31, 2026. As of July 31, 2026, we have received $14.2 million in cash related to these receivables and have a remaining receivable of $1.7 million, which was recorded in other current assets.

The ultimate timing and amount of recoveries for our outstanding receivables and potential future claims remain subject to review and processing by governmental authorities and could be affected by future legal, regulatory, or administrative developments. In addition, there continues to be uncertainty regarding existing and proposed tariff regimes, including the potential imposition, modification, suspension, or invalidation of tariffs under various statutory authorities. We continue to monitor tariff-related developments and assess their potential impact on its business, financial condition, and results of operations.

Revenue Recognition

We recognize revenue for the sale of our products at the point in time when the control of ownership has transferred to the customer and our primary performance obligation is the sale of the finished goods to wholesale, retail, and direct-to-consumer. The transfer of control typically occurs at a point in time based on consideration of when the customer has (i) a payment obligation, (ii) physical possession of goods has been received, (iii) legal title to goods has passed, (iv) risks and rewards of ownership of goods has passed to the customer, and (v) the customer has the ability to direct the use of and obtain substantially all of the benefits from the product. The timing of revenue recognition occurs either on shipment or delivery of goods based on contractual terms with the customer, as this is when transfer of control occurs and the customer has the ability to direct the use of and obtain substantially all the benefits from the product, has title and significant risks and rewards of ownership of the product, and physical possession of the product has been transferred. Revenue recorded excludes sales tax charged to retail customers as we are considered a pass-through conduit for collecting and remitting sales taxes.

The duration of contractual arrangements with customers in our wholesale and retail channels is typically less than one year. Payment terms with customers are typically between 20 and 90 days, with a discount available in certain cases for early payment. For contracts with discounted terms, we determine the transaction price upon establishment of the contract that contains the final terms of the sale, including the description, quantity, and price of each product purchased. We estimate variable consideration relative to the amount of cash discounts to which customers are likely to be entitled. In some instances, we provide longer payment terms, particularly as it relates to extended seasonal payment terms for certain hunting related products, which represent payment terms due in the fall for certain orders of hunting products received in the spring and summer. We do not consider these extended terms to be a significant financing component of the contract because the payment terms are less than one year.

We have elected to treat all shipping and handling activities as fulfillment costs and recognize the costs as distribution expenses at the time we recognize the related revenue. Shipping and handling costs billed to customers are included in net sales.

We sponsor direct-to-consumer customer loyalty programs in which customers earn rewards from qualifying purchases or activities. We defer revenue for a portion of the transaction price from product sales to customers that earn loyalty points.

The amount of revenue we recognize reflects the expected consideration to be received for providing the goods or services to customers, which includes estimates for variable consideration. Variable consideration includes allowances for trade term discounts, volume incentives, chargebacks, and product returns. Estimates of variable consideration are determined at contract inception and are constrained to the extent that the inclusion of such variable consideration could result in a significant reversal of cumulative revenue in future periods. We apply the portfolio approach as a practical expedient and utilize the expected value method in determining estimates of variable consideration, based on evaluations of specific product and customer circumstances, historical and anticipated trends, and current economic conditions. We have co-op advertising program expense, which we record within advertising expense, in recognition of a distinct service that we receive from our customers at the retail level which estimates fair value of the service.

In some instances, sales include multiple performance obligations. The most common of these instances relates to sales promotion programs under which customers are entitled to receive a free good or subscription service based upon their purchase of our products, which we have identified as a material right. The fulfillment of these free goods is our responsibility. In such instances, we allocate the revenue of the promotional sales based on the estimated level of participation in the sales promotional program and the timing of the shipment of all of the products included in the promotional program, including the free goods. We recognize subscription revenue ratably over the term of the contract, as the customer simultaneously receives and consumes the benefits of the service throughout the period. The net change in contract liabilities for a given period is reported as increase or decrease in accrued expenses on the balance sheet and an increase or decrease in sales on the statement of operations. During the three months ended July 31, 2026 we recorded an immaterial amount of service revenue and deferred revenue to satisfy certain performance obligations.

Disaggregation of Revenue

The following table sets forth certain information regarding net sales in our shooting sports and outdoor lifestyle categories for the three months ended July 31, 2026 and 2025 (dollars in thousands):

Our shooting sports category includes net sales of shooting accessories and our products used for personal protection. Our outdoor lifestyle category includes net sales of our products used in hunting, fishing, rugged outdoor activities, meat processing, and outdoor cooking.

The following table sets forth certain information regarding trade channel net sales for the three months ended July 31, 2026 and 2025 (dollars in thousands):

Our e-commerce channels include net sales from customers that do not traditionally operate a physical brick and mortar store, but generate the majority of their revenue from consumer purchases at their retail websites. Our e-commerce channels also include our direct-to-consumer sales. Our traditional channels include customers that operate primarily out of physical brick and mortar stores and generate the large majority of their revenue from consumer purchases at their brick-and-mortar locations.

We sell our products worldwide. The following table sets forth certain information regarding geographic makeup of net sales included in the above table for the three months ended July 31, 2026 and 2025 (dollars in thousands):

Warranty

We generally provide either a limited lifetime, four-year, three-year, two-year, orone-year warranty program to the original purchaser of most of our products. We will also repair or replace certain products or parts found to be defective under normal use and service with an item of equivalent value, at our option, without charge during the warranty period. We provide for estimated warranty obligations in the period in which we recognize the related revenue. We quantify and record an estimate for warranty-related costs based on our actual historical claims experience and current repair costs. We make adjustments to accruals as warranty claims data and historical experience warrant.

The following table sets forth the change in accrued warranties, a portion of which is recorded as a non-current liability, during the three months ended July 31, 2026, and 2025 (in thousands):

Recently Adopted Accounting Standards

In July 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which improves transparency to provide all entities with a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. We elected the practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. We adopted this ASU during the three months ended July 31, 2026 and this ASU did not have a material impact on our condensed consolidated financial statements and disclosures.

Recently Issued Accounting Pronouncements

In November 2024, the "FASB" issued "ASU" No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03), which requires disaggregation disclosures on an annual or interim basis, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the statement of operations. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027 and should be applied prospectively, with the option to apply the standard retrospectively. We are currently evaluating the impact of adopting this ASU 2024-03 on our condensed consolidated financial statements and disclosures.

(3)Assets Held for Sale:

On December 12, 2025, our Board of Directors approved a plan to divest our ust branded product line (the “Disposal Group”). The Disposal Group consists primarily of inventory and long-lived intangible assets associated with the brand. We expect to complete the divestiture within twelve months of the date the plan was approved.

The Disposal Group does not represent a strategic shift that will have a major effect on our operations or financial results. We concluded that the Disposal Group met the criteria for classification as held for sale under ASC 360-10 –Property, Plant, and Equipment during fiscal 2026 and does not qualify as discontinued operations under ASC 205-20 –Presentation of Financial Statements. The results of the Disposal Group will continue to be reported within continuing operations.

Upon classification as held for sale in the prior fiscal year, we measured the Disposal Group at the lower of its carrying amount or fair value less costs to sell. Based on our estimate of fair value using the income approach, we determined that the carrying value exceeded the fair value less costs to sell and recorded a non-cash impairment charge of $3.4 million during our third quarter of fiscal 2026. The impairment charge was included within operating income in the Condensed Consolidated Statements of Operations. Following the impairment and subsequent sales of inventory, the carrying amount of the Disposal Group was $734,000 and $633,000 as of April 30, 2026 and July 31, 2026, respectively.

The fair value of the Disposal Group used to determine the impairment recognized in fiscal 2026 was determined using Level 3 inputs under the fair value hierarchy in ASC 820 –Fair Value Measurement. Fair values were estimated using discounted cash flow analysis using significant assumptions including projected cash flows of the brand, terminal growth rates, discount rates, and market-based revenue multiples observed in comparable transactions. Estimated costs to sell primarily consist of expected transaction-related fees and other incremental costs directly attributable to the disposal.

We update our estimate of fair value less costs to sell at each reporting date until the transaction is completed. As of July 31, 2026, the estimated fair value less costs to sell exceeded the $633,000 carrying amount of the Disposal Group. Accordingly, no additional impairment loss or reversal of the previously recognized impairment loss was recognized during the three months ended July 31, 2026.

(4)Other Current Assets:

During the year ended April 30, 2026, we submitted claims seeking refunds of certain IEEPA tariffs previously paid. Based on our assessment of the Supreme Court ruling, subsequent legal and administrative developments, and the status of our claim, we concluded that recovery of a portion of such tariffs was probable and reasonably estimable. Accordingly, we recorded a receivable of $15.2 million as of April 30, 2026. For the three months ended July 31, 2026 we recorded an additional receivable of $693,000 for new claims submitted and received $14.2 million in cash related to these claims. As of July 31, 2026, there is $1.7 million of IEEPA tariff refund receivable remaining for these claims. Other current assets also includes inventory deposits and other receivable balances as of July 31, 2026 and April 30, 2026, respectively.

(5)Leases:

We lease real estate, as well as other equipment, under non-cancelable operating lease agreements. We recognize expenses under our operating lease assets and liabilities at the commencement date based on the present value of lease payments over the lease terms. Our leases do not provide an implicit interest rate. We use our incremental borrowing rate consistent with our revolving line of credit based on the information available at the lease commencement date in determining the discount rate for the present value of lease payments. Our lease agreements do not require material variable lease payments, residual value guarantees, or restrictive covenants. For operating leases, we recognize expense on a straight-line basis over the lease term. We record tenant improvement allowances as an offsetting adjustment included in our calculation of the respective right-of-use asset. The vast majority of our leases are for property located in the United States.

Many of our leases include renewal options that can extend the lease term. These renewal options are at our sole discretion and are reflected in the lease term when they are reasonably certain to be exercised. The depreciable life of assets and leasehold improvements are limited by the expected lease term.

The amounts of assets and liabilities related to our operating leases as of July 31, 2026 and April 30, 2026 are as follows (in thousands):

For the three months ended July 31, 2026, we recorded $1.0 million of operating lease costs, of which $78,000 related to short-term leases. For the three months ended July 31, 2025, we recorded $1.1 million of operating lease costs, of which $99,000 related to short-term leases. As of July 31, 2026 and April 30, 2026 , our weighted average lease term and weighted average discount rate for our operating leases was 12.0 years and 6.0%, and 12.5 years and 6.0% , respectively. The operating lease costs, weighted average lease term, and weighted average discount rate, are primarily driven by the lease of our corporate office and warehouse facility in Columbia, Missouri through fiscal 2039. The depreciable lives of right-of-use assets are limited by the lease term and are amortized on a straight-line basis over the life of the lease.

Future lease payments for all our operating leases for the remainder of fiscal 2027 and for succeeding fiscal years, as of July 31, 2026, are as follows (in thousands):

The cash paid for amounts included in the measurement of liabilities and the operating cash flows was $378,000 and $20,000 for the three months ended July 31, 2026 and 2025, respectively.

(6)Intangible Assets, net:

The following table summarizes intangible assets as of July 31, 2026 and April 30, 2026 (in thousands):

We amortize intangible assets with determinable lives over a weighted-average period of approximately five years. The weighted-average periods of amortization by intangible asset class is approximately five years for customer relationships, six years for developed software and technology, andsix years for patents, trademarks, and trade names. Amortization expense amounted to $1.5 million and $2.1 million for the three months ended July 31, 2026 and 2025, respectively.

Future expected amortization expense for the remainder of fiscal 2027 and for succeeding fiscal years, as of July 31, 2026, are as follows (in thousands):

(7)Fair Value Measurement:

We follow the provisions of ASC 820-10, Fair Value Measurements and Disclosures Topic, or ASC 820-10, for our financial assets and liabilities. Certain nonfinancial assets, including assets held for sale, are measured at fair value on a nonrecurring basis when events or changes in circumstances indicate that the carrying value may not be recoverable or when classification as held for sale is appropriate. ASC 820-10 provides a framework for measuring fair value under GAAP and requires expanded disclosures regarding fair value measurements. ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value.

Financial assets and liabilities recorded on the accompanying condensed consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows:

Level 1 — Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that we have the ability to access at the measurement date (examples include active exchange-traded equity securities, listed derivatives, and most U.S. Government and agency securities).

Cash and cash equivalents are reported at fair value based on market prices for identical assets in active markets, and therefore classified as Level 1 of the value hierarchy. Our cash and cash equivalents, which are measured at fair value on a recurring basis, totaled as below as of July 31, 2026 and April 30, 2026 (in thousands) which would be the maximum amount of loss subject to credit risk.

Level 2 — Financial assets and liabilities whose values are based on quoted prices in markets in which trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets. Level 2 inputs include the following:

•quoted prices for identical or similar assets or liabilities in non-active markets (such as corporate and municipal bonds which trade infrequently);

•inputs other than quoted prices that are observable for substantially the full term of the asset or liability (such as interest rate and currency swaps); and

•inputs that are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability (such as certain securities and derivatives).

Level 3 — Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect our assumptions about the assumptions a market participant would use in pricing the asset or liability. The fair value of the Disposal Group is a non-recurring fair value measure as disclosed in Note 3 -Assets Held for Saleand the table below (in thousands), was determined using Level 3 inputs under the fair value hierarchy. Fair values were estimated using discounted cash flow analysis using significant assumptions including projected cash flows of the brand, terminal growth rates, discount rates, and market-based revenue multiples observed in comparable transactions.

(8)Inventories:

The following table sets forth a summary of inventories, stated at lower of cost or net realizable value, as of July 31, 2026 and April 30, 2026 (in thousands):

(9)Debt:

On August 24, 2020, we entered into a financing arrangement consisting of a $50.0 million revolving line of credit secured by substantially all our assets. On March 25, 2022, we amended our secured loan and security agreement, or the Amended Loan and Security Agreement, increasing the revolving line of credit to $75 million, secured by substantially all our assets, maturing in March 2027, with available borrowings determined by a borrowing base calculation. The amendment also includes an option to increase the credit commitment by an additional $15 million. The amended revolving line bears interest at a fluctuating rate equal to the Base Rate or Secured Overnight Financing Rate, or SOFR, as applicable, plus the applicable margin. The applicable margin can range from a minimum of 0.25% to a maximum of 1.75% based on certain conditions as defined in the Amended Loan and Security Agreement. The financing arrangement contains covenants relating to minimum debt service coverage.

On March 10, 2026, we amended our secured loan and security agreement, or the Third Amended Loan and Security Agreement, secured by substantially all our assets. The Third Amended Loan Agreement extended the maturity date to March 2031, increased the limits on permitted acquisitions, and reduced the covenant trigger threshold. Borrowing availability under the facility is subject to a borrowing base calculation. The financing arrangement also contains financial covenants, including a minimum debt service coverage ratio. We were in compliance with all financial covenants as of July 31, 2026.

As of July 31, 2026, we hadno borrowings outstanding on the revolving line of credit. If we would have had borrowings at July 31, 2026, those borrowings would have borne interest at approximately 5.16%, which is equal to SOFR plus the applicable margin.

As of July 31, 2026, we have irrevocable standby letters of credit totaling $5.4 million to collateralize duty drawback bonds. During the three months ended July 31, 2026, no amounts have been drawn on the letters of credit.

(10)Equity:

Treasury Stock

On September 25, 2024, our Board of Directors approved a program to purchase up to $10.0 million of our common stock, subject to certain conditions, in the open market, in block purchases, or in privately negotiated transactions. This authorization expired on September 30, 2025. On September 30, 2025, our Board of Directors approved a program to purchase up to $10.0 million of our common stock, subject to certain conditions, in the open market, in block purchases, or in privately negotiated transactions, commencing on October 1, 2025 and executable through September 30, 2026. During the three months ended July 31, 2026 we didnot repurchase any shares of our common stock under these authorizations. During the three months ended July 31, 2025, we repurchased 240,437 shares of our common stock for $2.5 million utilizing cash on hand.

Earnings/(Loss) Per Share

We calculate basic and diluted earnings/(loss) per share in accordance with the provisions of ASC 260-10, Earnings Per Share. Basic earnings per common share equals earnings/(loss) divided by the weighted average number of common shares outstanding during the periods presented. Diluted earnings per common share equals earnings/(loss) divided by the weighted average number of common shares outstanding during the periods presented, after giving effect to all potentially dilutive stock awards that are outstanding, if their effect is dilutive.

Due to the loss from operations for the three months ended July 31, 2026, and 2025, there are no common shares added to calculate dilutive earnings per share because the effect would be anti-dilutive. Had there been income from operations for the three months ended July 31, 2026, and 2025, all of our performance-based restricted stock units, or PSUs, and restricted stock units, or RSUs, would have been included in the computation of diluted earnings per share and could potentially dilute earnings per share in the future.

Incentive Stock and Employee Stock Purchase Plans

We have a stock incentive plan, or 2020 Incentive Compensation Plan, under which we can grant new awards to our employees and directors.

We grant RSUs to employees and directors. The awards are made at no cost to the recipient. An RSU represents the right to receiveone share of our common stock and does not carry voting or dividend rights. Except in specific circumstances, RSU grants to employees generally vest over a period ofthree orfour years with one-third or one-fourth of the units vesting on each anniversary of the grant date, respectively. RSU grants to directors generally vest over a 12-month period with one-twelve of the units vesting on each month anniversary of the grant date. We amortize the aggregate fair value of our RSU grants to compensation expense over the vesting period. Awards that do not vest are forfeited.

We grant PSUs to our executive officers and certain other employees from time to time. We granted PSUs to our executive officers in fiscal 2027 and 2026 that include internal performance metrics. These PSUs are earned and vest based on two internal performance metrics that include 1) athree-year average return on invested capital, or ROIC, and 2) athree-year cumulative Adjusted EBITDA. The grant date fair value of the fiscal 2026 awards was estimated using the closing share price of our common stock on the date of grant. The total quantity of PSUs eligible to vest under these awards range from zero to 200% of the target based on actual average ROIC and cumulative Adjusted EBITDA performance during the performance period. As such, the fiscal 2027 and 2026 awards are subject to performance conditions and compensation cost is recognized over the service period based on the amount of awards that we believe is probable that will vest. To the extent we estimate changes, we will recognize a cumulative catch up in subsequent reporting periods.

During the three months ended July 31, 2026, we granted an aggregate of 95,781 PSUs to our executive officers. We also granted 216,048 RSUs during the three months ended July 31, 2026, including 95,785 RSUs to executive officers and 120,263 to non-executive officer employees and directors under our 2020 Incentive Compensation Plan. During the three months ended July 31, 2026,76,251 PSUs were cancelled, at target, as a result of the performance condition not being met, and 1,126 RSUs were cancelled as a result of the service condition not being met. In connection with the vesting of RSUs, during the three months ended July 31, 2026, we delivered common stock to our employees, including our executive officers, and directors with a total market value of $2.4 million.

During the three months ended July 31, 2025, we granted an aggregate of 79,730 PSUs to our executive officers. We also granted 175,015 RSUs during the three months ended July 31, 2025, including 79,729 RSUs to executive officers and 95,286 to non-executive officer employees under our 2020 Incentive Compensation Plan. In addition, in connection with a 2022 grant, we vested 52,277 market-condition PSUs (i.e., the target amount granted), which achieved 200% of the maximum aggregate award possible, resulting in awards totaling 104,554 shares to certain of our executive officers. During the three months ended July 31, 2025,620 RSUs were cancelled as a result of the service condition not being met. In connection with the vesting of RSUs, during the three months ended July 31, 2025, we delivered common stock to our employees, including our executive officers, and directors with a total market value of $3.2 million.

We recognized $737,000 and $651,000 of stock-based compensation expense for the three months ended July 31, 2026 and 2025, respectively.

We record stock-based compensation expense primarily in general and administrative expenses.

A summary of activity for unvested RSUs and PSUs under our 2020 Incentive Compensation Plan for the three months ended July 31, 2026 and 2025 is as follows:

As of July 31, 2026, there was $3.2 million of unrecognized compensation expense related to unvested RSUs and PSUs. We expect to recognize this expense over a weighted average remaining contractual term of 1.6 years.

(11)Accrued Expenses:

The following table sets forth other accrued expenses as of July 31, 2026 and April 30, 2026 (in thousands):

(12)Income Taxes:

The income tax expense included in the condensed consolidated statements of operations is based upon the estimated effective tax rate for the year, adjusted for the impact of discrete items which are accounted for in the period in which they occur. We recorded income tax expense of $1,000 and $52,000 for the three months ended July 31, 2026 and 2025, respectively. The effective tax rate for the three months ended July 31, 2026 and 2025 was 0.0% and (0.8)%, respectively.

(13)Commitments and Contingencies:

Litigation

From time to time, we are involved in lawsuits, claims, investigations, and proceedings, including those relating to product liability, intellectual property, commercial relationships, employment issues, and governmental matters, which arise in the ordinary course of business.

For the three months ended July 31, 2026 and 2025, we did not incur any material expenses in defense and administrative costs relative to product liability litigation. In addition, we did not incur any settlement fees related to product liability cases in those fiscal periods.

(14)Segment Reporting:

We have evaluated our operations under ASC 280-10-50-1 – Segment Reporting and have concluded that we are operating asone segment based on several key factors, including the reporting and review process used by the chief operating decision maker, or CODM, who reviews only consolidated financial information and makes decisions to allocate resources based on those financial statements. Our CODM is our Chief Executive Officer.

We analyze revenue streams in various ways, including customer group, brands, product categories, and customer channels. See also Note 2 – Summary of Significant Accounting Policies for more information on how we disaggregate our net sales.

The CODM uses consolidated net income to set budgets, evaluate margins, review actual results and decide whether to reinvest profits and cash flows into our business, repurchase our stock, pursue acquisitions, or make any other capital management decisions. Consolidated net income is the measure of segment profit most consistent with U.S. GAAP that is regularly reviewed by the CODM to allocate resources and assess performance.

Significant segment level expense information provided to the CODM is consistent with our consolidated statements of operations, as presented on the accompanying consolidated statements of operations.

The measure of segment assets is reported on the accompanying consolidated balance sheet as total assets.