Tile Shop (TTSH) logs 2025 operating loss and delists from Nasdaq
Tile Shop Holdings, Inc. is a specialty U.S. tile retailer that operated 140 stores in 31 states and D.C. as of December 31, 2025, generating $336.8 million in net sales and a $5.8 million loss from operations, down from prior-year operating income.
In December 2025 the company executed a reverse stock split at 1-for-3,000 followed by a forward split at 3,000-for-1, paying $6.60 per share and an aggregate of about $32.2 million to stockholders with fewer than 3,000 shares, which eliminated many smaller holders.
Following this “Transaction,” the company delisted from Nasdaq, moved trading to the OTC Pink market under “TTSH,” terminated its Exchange Act registrations, and plans to stop SEC periodic reporting after this Annual Report. It also highlights macro risks such as inflation, housing weakness, tariffs and a recent Supreme Court decision affecting trade measures.
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Insights
Tile Shop is shrinking its public footprint, cutting float, and showing weaker operations.
Tile Shop Holdings reports 2025 net sales of
Strategically, the company executed a reverse split at 1-for-3,000 followed by a 3,000-for-1 forward split, paying
After this Transaction, the stock trades on OTC Pink, and the company states it does not intend to file ongoing SEC reports. This significantly reduces transparency and market liquidity, removes access to national exchange capital markets, and concentrates control among larger holders, who already beneficially own about
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the fiscal year ended
or
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices, including zip code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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None
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐ |
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Non-accelerated filer ☐ | Smaller reporting company |
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| Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately: $
As of February 23, 2026, the registrant had
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DOCUMENTS INCORPORATED BY REFERENCE
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Explanatory Note
On December 17, 2025, Tile Shop Holdings, Inc. (the “Company”) filed a Form 25 with the Securities and Exchange Commission (the “SEC”) to delist the Company’s common stock (the “common stock”) from trading on The Nasdaq Stock Market LLC (“Nasdaq”). On December 27, 2025, the Company’s common stock ceased trading on Nasdaq and is currently quoted on The OTC Markets Pink Limited under the symbol “TTSH.” On January 2, 2026, the Company filed a Form 15 with the SEC to terminate the registration of the common stock under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and suspend the Company’s duty to file reports under Section 15(d) of the Exchange Act. The Company is filing this Annual Report on Form 10-K for the fiscal year ended December 31, 2025 to satisfy its remaining reporting obligation for the fiscal year ended December 31, 2025. The Company does not intend, and does not expect that it will be required, to file current or periodic reports with the SEC following the filing of this Annual Report on Form 10-K.
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TILE SHOP HOLDINGS, INC. FORM 10-K
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TABLE OF CONTENTS | |||
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PART I |
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| ITEM 1. | BUSINESS | 1 |
| ITEM 1A. | RISK FACTORS | 6 |
| ITEM 1B. | UNRESOLVED STAFF COMMENTS | 15 |
| ITEM 1C. | CYBERSECURITY | 15 |
| ITEM 2. | PROPERTIES | 17 |
| ITEM 3. | LEGAL PROCEEDINGS | 17 |
| ITEM 4. | MINE SAFETY DISCLOSURES | 17 |
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PART II |
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| ITEM 5. | MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 18 |
| ITEM 6. | [RESERVED] | 19 |
| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 19 |
| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 29 |
| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 30 |
| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 30 |
| ITEM 9A. | CONTROLS AND PROCEDURES | 30 |
| ITEM 9B. | OTHER INFORMATION | 31 |
| ITEM 9C. | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS | 31 |
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PART III |
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| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | 32 |
| ITEM 11. | EXECUTIVE COMPENSATION | 36 |
| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 49 |
| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 52 |
| ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES | 53 |
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PART IV |
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| ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | 54 |
| ITEM 16. | FORM 10-K SUMMARY | 54 |
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SIGNATURES | 82 | ||
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POWER OF ATTORNEY | 83 | ||
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PART I
ITEM 1. BUSINESS
Overview
The Tile Shop, LLC (“The Tile Shop”) was founded in 1985 and Tile Shop Holdings, Inc. (“Holdings,” and together with its wholly owned subsidiaries, including The Tile Shop, the “Company” or “we”) was incorporated in Delaware in June 2012. We are a specialty retailer of man-made and natural stone tiles, luxury vinyl tiles, setting and maintenance materials, and related accessories in the United States. Our assortment includes over 6,000 products from around the world. Natural stone products include marble, travertine, granite, quartz, sandstone, slate, and onyx tiles. Man-made products include ceramic, porcelain, glass, cement, wood look, metal and luxury vinyl tile. The majority of our tile products are sold under our proprietary Rush River and Fired Earth brand names. We purchase our tile products, accessories and tools directly from our global network of suppliers. We manufacture our own setting and maintenance materials, such as thinset, grout and sealer, under our Superior brand name, as well as work with other suppliers to manufacture private label products. As of December 31, 2025, we operated 140 stores in 31 states and the District of Columbia, with an average size of approximately 20,000 square feet.
We believe that our long-term vendor relationships, together with our design, manufacturing and distribution capabilities, enable us to offer a broad assortment of high-quality products to our customers, who are primarily homeowners and professionals, at competitive prices. We have invested significant resources to develop our proprietary brands and product sources and believe that we are a leading retailer of man-made and natural stone tiles, luxury vinyl tiles, setting and maintenance materials, and related accessories in the United States.
Our net sales and loss from operations were $336.8 million and $5.8 million, respectively, for the year ended December 31, 2025. As of December 31, 2024 and 2023, net sales were $347.1 million and $377.1 million, respectively, and our income from operations were $3.5 million and $16.2 million, respectively. As of December 31, 2025 and 2024, we had total assets of $301.7 million and $319.6 million, respectively.
On December 3, 2025, the Company held a special meeting of its stockholders (the “Special Meeting”). At the Special Meeting the holders of the Company’s issued and outstanding shares of the Company’s common stock, par value $0.0001 per share (the “common stock”), entitled to vote approved, by a majority of the votes cast at the Special Meeting, an amendment to the Company’s certificate of incorporation, as amended (the “Certificate of Incorporation”) to effect a reverse stock split of the common stock, a ratio not less than 1-for-2,000 and not greater than 1-for-4,000 (the “Reverse Stock Split”), followed immediately by a forward stock split of the common stock at the same ratio, but inverse (the “Forward Stock Split,” and together with the Reverse Stock Split, the “Stock Splits”). The Company’s Board of Directors (the “Board” or “Board of Directors”) determined to effectuate (i) the Reverse Stock Split at a ratio of 1-for-3,000 and (ii) the Forward Stock Split at a ratio of 3,000-for-1 (collectively, the “Stock Split Ratios). At the direction of the Board, on December 15, 2025, the Company filed the certificates of amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the Reverse Stock Split at 5:01 p.m., followed immediately by the Forward Stock Split at 5:02 p.m., respectively, on that day.
As a result of the Reverse Stock Split, each share of common stock held by a stockholder of record owning immediately prior to the effective time fewer than the minimum number of shares, which, based on the Stock Split ratio chosen by the Board is 3,000 shares (the “Minimum Number”), was converted into the right to receive $6.60 in cash, without interest (the “Cash Payment”), per whole share and such stockholders are no longer stockholders of the Company. Stockholders owning a number of shares of common stock equal to or greater than the Minimum Number immediately prior to the effective time of the Reverse Stock Split (the “Continuing Stockholders”) were not entitled to receive any cash for their fractional share interests resulting from the Reverse Stock Split, if any. The Forward Stock Split, which immediately followed the Reverse Stock Split, reconverted whole shares and fractional share interests held by the Continuing Stockholders back into the same number of shares of the common stock held by such Continuing Stockholders immediately prior to the effective time. As a result of the Forward Stock Split, the total number of shares of common stock held by a Continuing Stockholder did not change as a result of the Reverse Stock Split. Following the completion of the Reverse Stock Split, the Company paid an aggregate of approximately $32.2 million to stockholders of record owning fewer than 3,000 shares of common stock immediately prior to the effective time of the Reverse Stock Split (the “Cashed-Out Stockholders”), including stockholders who held fewer than 3,000 shares of common stock through banks and brokers.
The Reverse Stock Split reduced the number of record holders of the Company’s common stock to a number below 300 (i.e., the level at or above which the Company was required to file reports with the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). The actions the Company took to suspend, and the events that occurred as a result of such actions that had the effect of suspending, the Company’s reporting obligations under the Exchange Act, including effectuating the Stock Splits, delisting the Company’s common stock from trading on The Nasdaq Stock Market LLC (“Nasdaq”), terminating the registration of the Company’s common stock under Sections 12(b) and 12(g) of the Exchange Act and
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suspending the Company’s reporting obligations under Section 15(d) of the Exchange Act, are collectively referred to as the “Transaction.” The Stock Splits were undertaken as part of the Company’s plan to give effect to the Transaction.
As a result of the Transaction, the Company is no longer subject to the reporting requirements under the Exchange Act or other requirements applicable to a public company, including requirements under the Sarbanes-Oxley Act of 2002 and the listing standards of any national securities exchange. Following the filing of this Annual Report on Form 10-K for the year ended December 31, 2025, therefore, the Company will cease to file annual, quarterly, current, and other reports and documents with the SEC.
Competitive Strengths
We believe that the following factors differentiate us from our competitors.
Broad Product Assortment at Attractive Prices – We offer over 6,000 natural stone, man-made and luxury vinyl tile products, setting and maintenance materials, accessories, and tools. We are able to maintain competitive prices by purchasing tile and accessories directly from producers and manufacturing our own setting and maintenance materials.
Customer Service and Satisfaction – Our sales personnel are highly-trained and knowledgeable about the technical and design aspects of our products. In addition, we provide one-on-one installation training as required to meet customer needs. We accept returns up to two months following the date of the sale, with no restocking fees.
Inspiring Customer Experience – In each store, our products are brought to life by showcasing a broad array of the items we offer in up to 50 different vignettes of bathrooms, kitchens, fireplaces, foyers, and other distinct spaces. Our stores are spacious, well-lit, and organized by product type to simplify our customers’ shopping experience.
Global Sourcing Capabilities – We have long-standing relationships with our tile suppliers throughout the world and work with them to design products exclusively for us. We believe that these direct relationships differentiate us from our competitors.
Proprietary Branding – We sell the majority of our products under our proprietary brand names, which helps us to differentiate our products from those of our competitors. We offer products across a range of price points and quality levels, which allows us to target discrete market segments and to appeal to diverse groups of customers.
Centralized Distribution System – We service our store locations from three distribution centers. Our distribution centers, located in Michigan, Oklahoma, and Virginia, are located to cost effectively service our existing stores.
Strategic Plan
We are committed to carrying an outstanding assortment, offering unsurpassed customer service, and showcasing excellence within our industry. These principles have always been core to our strategy and will continue to be as we move into 2026.
Key elements of our 2026 strategy include:
People First – We pride ourselves on offering the best service in our industry, and our employees are the key to our success. We are committed to continuing to invest in training and development programs to enhance the skill sets of all employees. We are also continuing to take steps to improve engagement, communication and collaboration across our teams.
Focused Retail Execution – We believe profitable growth is tied to our ability to leverage best practices and technology to improve productivity in each of our store locations. We have defined critical success measures, tactics to drive improvement in each area of focus, and reporting processes to monitor progress.
Supply Chain – We strive to increase efficiencies within our distribution channels and transparency of product availability throughout our distribution center and store locations. This enhances our ability to provide the best service in our industry and deliver products our customers desire wherever they may need them.
Assortment Management – We curate an industry leading assortment, which is a foundational aspect of our strategy. Our assortment includes good, better, and best options for our customers within each of the product categories we carry in our stores and online. We continue to focus on maintaining an assortment that differentiates our brand.
Sales Model
We principally sell our products directly to homeowners and professionals. With regard to individual customers, we believe that, due to the average cost and relative infrequency of a tile purchase, many of our individual customers conduct extensive research using
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multiple channels before making a purchase decision. Our sales strategy emphasizes customer service by providing comprehensive and convenient educational tools on our website and in our stores for our customers to learn about our products and the tile installation process. Our website contains a broad range of information regarding our tile products, setting and maintenance materials, and accessories. Customers can order samples, view catalogs, or purchase products from our stores or online. Customers can choose to have their purchases delivered or picked up at one of our stores. We believe this strategy also positions us well with professional customers who are influenced by the preferences of individual homeowners.
Our stores are designed to emphasize our products in a visually appealing showroom format. Our average store is approximately 20,000 square feet, with a majority of the square footage devoted to the showroom. Several thousand square feet is used for warehouse space, which is used primarily to hold customer orders waiting to be picked up or delivered. Our stores are typically accessible from major roadways and have significant visibility to passing traffic. We can adapt to a range of existing buildings, whether free-standing or in shopping centers. All of our stores are leased.
A staffing model for a typical store consists of a manager, an assistant manager, sales associates, and a warehouse leader. Our store managers are responsible for store operations and for overseeing our customers’ shopping experience.
Our website, TileShop.com, supplements our store experience and is designed for consumers to learn about our brand, our value propositions, and our product assortment, installation techniques and additional customer room gallery design inspiration. Our website also gives our customers the ability to complete a purchase online.
Marketing
We utilize a variety of marketing strategies and programs to acquire and retain customers, including both consumers and trade professionals. Our advertising primarily consists of digital media, direct marketing, including email and postal mail, in store events, and mobile advertisements. We continually test and learn from new media and adjust our programs based on performance.
Our website, TileShop.com, supports desktop, tablet, and mobile devices and is designed for consumers, trade professionals and industry stakeholders to learn about our brand, our value propositions, and our product assortment and installation techniques, and to look up our store locations and account information. On social media, #TheTileShop provides current and prospective customers a high level of brand engagement and enables customers to share their finished projects in our inspiration gallery.
Products
We offer an extensive and complete assortment of natural stone, man-made and luxury vinyl tile products, sourced directly from our suppliers. Natural stone products include marble, travertine, granite, quartz, sandstone, slate, and onyx tiles. Man-made products include ceramic, porcelain, glass, cement, wood look, metal and luxury vinyl tile. Our wide assortment of accessories, including trim pieces, mosaics, pencils, listellos, and other unique products, encourages our customers to make a fashion statement with their tile project and helps us to deliver a high level of customer satisfaction and drive repeat business. We also offer a broad range of setting and maintenance materials, such as thinset, grout, sealers, and accessories, including installation tools, shower and bath shelves, drains, and similar products. We also offer customers delivery service through third-party freight providers. We sell most of our products under our proprietary brand names, including Superior Adhesives & Chemicals, Superior Tools & Supplies, Rush River, and Fired Earth. In total, we offer over 6,000 different tile products, setting and maintenance materials, and accessory products. The percentage of our net sales represented by each product category was as follows for the years ended December 31, 2025 and 2024:
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| Years Ended December 31, | ||||
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Man-made tiles |
| 56 | % |
| 54 | % |
Natural stone tiles |
| 19 |
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| 21 |
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Setting and maintenance materials |
| 15 |
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| 15 |
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Accessories |
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| 8 |
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Delivery service |
| 2 |
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| 2 |
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| 100 | % |
| 100 | % |
Suppliers
We have long-standing relationships with our suppliers throughout the world and work with them to design and manufacture products exclusively for us. We believe that these direct relationships differentiate us from our competitors.
We currently purchase tile products from approximately 200 different suppliers. Our top ten tile suppliers accounted for 43.3% of our purchases in 2025. Our largest supplier accounted for approximately 12.7% of our total purchases in 2025. We believe that alternative
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and competitive suppliers are available for many of our products. The percentage of our total purchases from the following continents was as follows for the years ended December 31, 2025 and 2024:
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| Years Ended December 31, | ||||
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North America |
| 44 | % |
| 41 | % |
Europe |
| 31 |
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Asia |
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South America |
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| 6 |
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Africa |
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| 100 | % |
| 100 | % |
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Our inventory balance increased by $3.1 million from $86.3 million to $89.4 million as of December 31, 2024 and December 31, 2025, respectively. The increase in inventory is due to an increase in the costs of products acquired over the last year, which was due in part to an increase in tariffs paid on tile products acquired outside of the United States, as well as the addition of several new product lines over the course of the last year.
Distribution and Order Fulfillment
We take possession of our products in the country of origin and arrange for transportation to our three distribution centers located in Michigan, Oklahoma, and Virginia. We also manufacture many of our setting and maintenance materials in our distribution centers. We maintain a large inventory of products in order to quickly fulfill customer orders.
We fulfill customer orders primarily by shipping our products to our stores where customers can either pick them up or arrange for home delivery. We continue to evaluate logistics alternatives to best serve our store base and our customers.
Competition
The retail tile market is highly-fragmented. We compete directly with regional and local specialty retailers of tile, factory-direct stores, a large number of privately-owned, single-site stores, and online-only competitors. In addition, we compete with large national home improvement centers that offer a wide range of home improvement products, including flooring. We also compete indirectly with companies that sell other types of floor coverings, including wood floors, carpet, and vinyl. The barriers of entry into the retail tile industry are relatively low and new or existing tile retailers could enter our markets and increase the competition that we face. Many of our competitors enjoy competitive advantages over us, such as greater name recognition, longer operating histories, more varied product offerings, and greater financial, technical, and other resources.
We believe that the key competitive factors in the retail tile industry include:
product assortment;
product presentation;
customer service;
store location;
availability of inventory; and
price.
We believe that we compete favorably with respect to each of these factors by providing a highly diverse selection of products to our customers, at an attractive value, in appealing and convenient store locations, with exceptional customer service and on-site instructional opportunities. Further, while some larger factory-direct competitors manufacture their own products, many of our competitors do not maintain their own inventory and instead purchase their tile from domestic manufacturers or distributors when they receive an order from a customer. We also believe that we offer a broader range of products and stronger in-store customer support than these competitors.
Human Capital
We believe that our employees are our strongest competitive advantage and the high-quality service that they provide sets us apart from others in our industry. As of December 31, 2025, we had 1,196 employees, 981 of whom were full-time and none who were represented by a union. This includes 924 employees who work in our stores, 85 who work in corporate, store support, infrastructure or similar functions, and 187 who work in our distribution and manufacturing facilities.
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The Company’s Board of Directors, through its Compensation Committee, provides oversight of human capital matters and reviews the Company’s compensation and benefits programs, as well as management development and succession planning practices and strategies.
Our principal human capital objectives are to attract, develop and retain people who are committed to our goal of providing the best service in our industry. To support these objectives, our human resources programs seek to:
Reward our employees through highly competitive total compensation and benefit programs designed to reward exceptional performance, promote teamwork and support our employees’ total wellbeing.
Provide development opportunities to enhance sales skills, product knowledge, exposure to the latest design trends, safety, teamwork and leadership.
Enhance our culture through efforts aimed at promoting fairness and opportunity throughout the workplace.
Intellectual Property and Trademarks
We have registered and unregistered trademarks for all of our brands, including 25 registered trademarks. We regard our intellectual property as having significant value, and our brands are an important factor in the marketing of our products. Accordingly, we have taken, and continue to take, appropriate steps to protect our intellectual property.
Government Regulation
We are subject to extensive and varied federal, state and local government regulation in the jurisdictions in which we operate, including laws and regulations relating to our relationships with our employees, public health and safety, zoning, and fire codes. We operate each of our stores, offices, and distribution and manufacturing facilities in accordance with standards and procedures designed to comply with applicable laws, codes, and regulations.
Our operations and properties are also subject to federal, state and local laws and regulations relating to the use, storage, handling, generation, transportation, treatment, emission, release, discharge and disposal of hazardous materials, substances, and wastes and relating to the investigation and cleanup of contaminated properties, including off-site disposal locations. We do not incur significant costs complying with environmental laws and regulations. However, we could be subject to material costs, liabilities, or claims relating to environmental compliance in the future, especially in the event of changes in existing laws and regulations or in their interpretation.
Products that we import into the United States are subject to laws and regulations imposed in conjunction with such importation, including those issued and enforced by U.S. Customs and Border Protection. We work closely with our suppliers to ensure compliance with the applicable laws and regulations in these areas.
Financial Information about Geographic Areas
A majority of our revenues and profits are generated within the United States and all of our long-lived assets are located within the United States as well.
Available Information
The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. These materials may be obtained electronically by accessing the SEC’s website at http://www.sec.gov.
We maintain a website at www.tileshop.com. Information contained on or accessible through our website is not a part of, and is not incorporated by reference into, this Form 10-K or any other report or document we file with the SEC. Any reference to our website is intended to be an inactive textual reference only. We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports available on our website, free of charge, as soon as reasonably practicable after such reports have been filed with or furnished to the SEC. Our Code of Business Conduct and Ethics, as well as any waivers from and amendments to the Code of Business Conduct and Ethics, is also posted on our website.
This report includes market data and certain other statistical information and estimates that are based on reports and other publications from industry analysts, market research firms, and other independent sources, as well as management’s own good faith estimates and analyses. We believe these third-party reports to be reputable, but have not independently verified the underlying data sources, methodologies, or assumptions. The reports and other publications referenced are generally available to the public and were not commissioned by us. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances reflected in this information.
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ITEM 1A. RISK FACTORS
The following are material factors known to us that could adversely affect our business, financial condition, or operating results, as well as adversely affect the value of an investment in our common stock. These risks could cause our actual results to differ materially from our historical experience and from results predicted by forward-looking statements. Although the risks are organized by headings and each risk is discussed separately, many are interrelated. All forward-looking statements made by us are qualified by the risks described below. Disclosures of risks should not be interpreted to imply that the risks have not already materialized, and there may be additional risks that are not presently material or known. You should carefully consider each of the following risks and all other information set forth in this report.
Risks Related to Our Growth Strategy
Our ability to grow and remain profitable may be limited by direct or indirect competition in the highly-competitive retail tile industry.
The retail tile industry in the United States is highly competitive. Participants in the tile industry compete primarily based on product variety, customer service, store location, and price. There can be no assurance that we will be able to continue to compete favorably with our competitors in these areas. Our store competitors include large national home centers, regional and local specialty retailers of tile, factory-direct stores, privately-owned, single-site stores and online-only competitors. We also compete indirectly with companies that sell other types of floor coverings, including wood floors, carpet, and vinyl sheet. In the past, we have faced periods of heightened competition that materially affected our results of operations. Certain of our competitors have greater name recognition, longer operating histories, more varied product offerings, and substantially greater financial and other resources than us. Accordingly, we may face periods of intense competition in the future that could have a material adverse effect on our planned growth and future results of operations. Moreover, the barriers to entry into the retail tile industry are relatively low. New or existing retailers could enter our markets and increase the competition that we face. In addition, manufacturers and suppliers of tile and related products, including those whose products we currently sell, could enter the United States retail tile market and start directly competing with us. Further, the retail industry in general is subject to rapid technological change, which may increase the amount of capital we spend in the future as we work to sustain and grow our technological infrastructure and digital commerce capabilities in order to remain competitive. Competition in existing and new markets may also prevent or delay our ability to gain relative market share. Any of the developments described above could have a material adverse effect on our planned growth and future results of operations.
Any failure by us to successfully anticipate consumer trends may lead to loss of consumer acceptance of our products, resulting in reduced revenues.
Our success depends on our ability to anticipate and respond to changing trends in the tile industry and consumer demands in a timely manner. If we fail to identify and respond to emerging trends, consumer acceptance of our merchandise and our image with current or potential customers may be harmed, which could reduce our revenue potential. Additionally, if we misjudge market trends, we may significantly overstock unpopular products and be forced to reduce the sales price of such products, which would have a negative impact on our gross profit and cash flow. Conversely, shortages of products that prove popular, or increases in our pricing as a result of general product shortages, supply chain disruptions and inflationary cost pressure, could cause customers to seek alternative sources of such products, as well as other products they may have purchased from us, which could also reduce our revenues.
If we are unable to effectively manage our online sales, our reputation and operating results may be harmed.
Consumers are increasingly embracing shopping online and through mobile commerce applications. Any failure on our part to provide an attractive, reliable and user-friendly digital platform that offers a wide assortment of merchandise and meets the changing expectations of online shoppers could place us at a competitive disadvantage, result in the loss of e-commerce and other sales, harm our reputation with consumers, and have a material adverse impact on the growth of our e-commerce business and on our business and results of operations. We are vulnerable to certain risks and uncertainties associated with our e-commerce operations, including changes in required technology interfaces, website downtime and other technical failures, costs and technical issues for upgrades of our website software, computer viruses, changes in applicable federal and state regulations, security breaches and consumer privacy concerns. If not managed, these risks could adversely impact our operating results.
Our success depends on the effectiveness of our marketing strategy.
We believe that our growth was achieved in part through the effectiveness of our marketing strategy, which uses a variety of marketing channels, tactics and methods to reach a qualified audience. Our diversified strategy includes traditional media advertising in print and direct mail, digital media through online advertising, social media marketing, search engine optimization, email marketing, influencer marketing and content marketing, which involves creating and distributing brand content such as blogs and videos. If our marketing strategies fail to draw customers in the future, or if the cost of advertising or other marketing materials
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increases significantly, we could experience declines in our net sales and operating results. In addition, our limited use of discount and promotional offers could fail to attract customers, resulting in a decrease in store traffic.
In recent years, there has been a substantial increase in the use of social media platforms by consumers. Negative commentary regarding us or the products we sell may be posted on social media platforms or other electronic means at any time and may be adverse to our reputation or business. Customers value readily available information and often act on such information without further investigation and without regard to its accuracy. Any harm to us or the products we sell may be immediate without allowing us an opportunity for redress or correction.
Risks Related to our Business, Operations and Financial Condition
Numerous economic factors, including inflation, trade policy, our exposure to the U.S. housing industry, and an economic recession or downturn, or a downturn in the U.S. housing industry, could adversely affect us.
Our results of operations are sensitive to changes in macroeconomic conditions that affect consumer spending, including discretionary spending, especially as a substantial portion of the products we offer are products that consumers may view as discretionary items rather than necessities. An overall decline in the health of the economy, the tile industry, consumer confidence and spending, and the housing market, including as a result of high inflation or fluctuating interest rates, tariffs and other trade barriers and restrictions, instability in the global banking system, ongoing supply chain disruptions, unemployment rates, labor shortages, geopolitical instability and/or the possibility of an economic downturn or recession or other macroeconomic factors could adversely impact our business, financial condition and operating results. In addition, difficult macroeconomic conditions also affect our customers’ ability to obtain consumer credit.
The U.S. government announced new global trade tariffs on imports to the U.S. during fiscal 2025, including additional tariffs on various countries from which the Company directly or indirectly imports products. In response, several countries have imposed or threatened reciprocal tariffs on imports from the U.S. and other measures. Various modifications to the U.S. tariffs have been announced, and further changes are expected to be made in the future, including in response to litigation. On February 20, 2026, the U.S. Supreme Court rendered a decision invalidating tariffs imposed under the International Emergency Economic Powers Act. This decision introduces uncertainty regarding potential refund processes and further uncertainty regarding future trade policy actions and could affect the Company’s cost structure and supply chain planning. The ultimate impact of tariffs and other trade policies on the Company’s business will depend on several factors, including future measures implemented by the U.S. government and the governments of other countries, the overall magnitude and duration of these measures, and the Company’s ability to mitigate effects, which could include higher import costs. Accordingly, the Company’s financial position or results of operations may be adversely influenced by political, economic, legal, compliance, social and business conditions in the U.S. and in other countries.
The Company continues to monitor the impacts of various macroeconomic factors, such as inflationary pressure, changes in monetary policy, decreasing consumer confidence and spending, political and social unrest, the introduction of or changes in tariffs or trade barriers, employment rates, and the potential for an economic downturn or recession. Such changes in macroeconomic conditions may lead to increased costs. Additionally, these macroeconomic trends could adversely affect the Company’s customers, which could impact their willingness to spend on the Company’s products and services, or their ability to make payments, which could negatively impact our financial results. While our risk expectation is that these different factors will moderate in the future, the timing and precise outlook for these improvements is uncertain, and we cannot predict the ultimate impact such factors will have on the Company’s business, financial condition, results of operation and cash flows, which will depend largely on future developments.
In addition, we believe that our tile sales are affected by the strength of the U.S. housing industry, and downturns in the U.S. housing industry could have a material adverse effect on our financial results, business, and prospects. The housing industry depends on a number of factors that are beyond our control, including interest rates, inflation, tax policy, trade policy, employment levels, consumer confidence, credit availability, real estate prices, home-price appreciation, existing home sales, demographic trends, weather conditions, natural disasters and general economic conditions. Any one or a combination of these factors could result in decreased demand for our products, reduce spending on homebuilding or remodeling of existing homes or cause purchases of new and existing homes to decline, which could adversely affect our business, financial condition, and operating results.
Our comparable store sales fluctuate due to a variety of economic, operating, industry and environmental factors and may not be a fair indicator of our overall performance.
Our comparable store sales have experienced fluctuations, which can be expected to continue. Numerous factors affect our comparable store sales results, including, among others, the timing of new and relocated store openings, the relative proportion of new and relocated stores to mature stores, cannibalization resulting from the opening of new stores in existing markets, changes in advertising and other operating costs, the timing and level of markdowns, changes in our product mix, weather conditions, which may be exacerbated by the effects of climate change, retail trends, the retail sales environment, economic and geopolitical conditions, inflation, the impact of competition, and our ability to execute our business strategy. As a result, comparable store sales or operating
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results may fluctuate and may cause the price of our securities to fluctuate significantly. Therefore, we believe that period-to-period comparisons of our comparable store sales may not be a reliable indicator of our future overall operating performance.
If customers are unable to obtain third-party financing at satisfactory rates, sales of our products could be materially adversely affected.
Reduced access to credit may adversely affect the ability of consumers to purchase our products and may adversely impact our ability to offer customers credit card financing through third-party credit providers on terms similar to those offered currently, or at all. In addition, economic conditions, including decreases in access to credit, may result in financial difficulties, leading to restructuring, bankruptcies, liquidations and other unfavorable events for our customers, which may adversely impact our industry, business, and results of operations.
The burden of incurring debt under our existing credit facility could adversely affect us and make us more vulnerable to adverse economic or industry conditions.
We entered into a revolving credit facility with JPMorgan Chase Bank, N.A. on September 30, 2022. As of December 31, 2025, we had borrowings outstanding of $25.0 million on our revolving line of credit and had $48.8 million available for future borrowings. The terms of our credit facility could limit our ability to obtain additional financing to fund our working capital, capital expenditures, debt service requirements, expansion strategy, or other needs, which could increase our vulnerability to, and reduce our flexibility in planning for, adverse changes in economic, industry, and competitive conditions.
Our credit facility contains negative covenants that limit our ability to engage in specified types of transactions, including, among other things, our ability to dispose of assets, engage in acquisitions or mergers, make distributions on or repurchases of capital stock, incur additional debt, incur liens or make investments. A breach of any of these covenants (not otherwise waived or amended) could result in an event of default under our credit facility, which would allow the lender to declare all amounts outstanding to be immediately due and payable and terminate all commitments to extend further credit or seek amendments to our debt agreements that would provide for terms more favorable to our lenders, which we may have to accept under the circumstances.
If we are unable to renew or replace current store leases, or if we are unable to enter into leases for additional stores on favorable terms, or if one or more of our current leases is terminated prior to expiration of its stated term and we cannot find suitable alternate store locations, our growth and profitability could be negatively impacted.
We currently lease all of our store locations. Many of our current leases provide us with the unilateral option to renew for several additional rental periods at specific rental rates. Our ability to renegotiate favorable terms on an expiring lease or to negotiate favorable terms for a suitable alternate location, and our ability to negotiate favorable lease terms for additional store locations, could depend on conditions in the real estate market, competition for desirable properties, our relationships with current and prospective landlords, or other factors that are not within our control. Any or all of these factors and conditions could negatively impact our growth and profitability.
Natural disasters, changes in climate, geopolitical and other catastrophic events could adversely affect our operating results.
The threat or occurrence of one or more natural disasters or other extreme weather events, the nature, frequency and severity of which may be negatively impacted by climate change, and the threat or outbreak of terrorism, civil unrest, banking instability, tariffs and other trade barriers or restrictions, political instability, a public health crisis, or other adverse events could materially adversely affect our financial performance. Such events have in the past, and may in the future, disrupt supply chains, resulting in increased costs and shipping delays, increase costs of energy and raw materials, and result in damage to, or destruction or closure of, our stores, distribution centers and other properties or those of our suppliers, customers and other business partners, as well as injuries or loss of life. Such events can also adversely affect our work force and prevent employees and customers from reaching our stores and other properties, can modify consumer purchasing patterns and decrease disposable income, and can disrupt or disable portions of our supply chain and distribution network.
In addition to the foregoing, the impacts of climate change, including changes in weather patterns and the increased frequency, intensity and duration of extreme weather events (such as floods, droughts, wildfires and severe storms), could, among other things, adversely impact the ability to extract natural stones from quarries, which is a key resource for a number of our products, disrupt the operation of our supply chain and the productivity of manufacturers on which we rely, disrupt retail operations and foot traffic in consumer markets, damage or destroy our stores, and increase our product and transportation costs. In addition, the impacts of climate change on global water resources may result in water scarcity, which could in the future impact our ability, and the ability of our suppliers, particularly those involved in quarrying activities, to access sufficient quantities of water in certain locations and result in increased costs, as well as potentially causing supply chain delays, such as previously decreased traffic in the Panama Canal resulting from a drought causing low water levels.
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Although preventative measures may help to mitigate damage from these types of catastrophic events, we cannot provide any assurance that any measures we may take will be successful, and delays in recovery may be significant. In addition, the insurance we maintain may not be adequate to cover our losses resulting from any business interruption, including those resulting from a natural disaster or other severe weather event, and recurring extreme weather events or other adverse events could reduce the availability or increase the cost of insurance.
We are a holding company with no business operations of our own and depend on cash flow from The Tile Shop to meet our obligations.
We are a holding company with no business operations of our own or material assets other than the equity of our subsidiaries. All of our operations are conducted by our subsidiaries, including The Tile Shop. As a holding company, we will require dividends and other payments from our subsidiaries to meet cash requirements. The terms of any future credit facility may restrict our subsidiaries from paying dividends and otherwise transferring cash or other assets to us, although our current facility does not restrict this action. If there is an insolvency, liquidation, or other reorganization of any of our subsidiaries, our stockholders likely will have no right to proceed against their assets. Creditors of those subsidiaries will be entitled to payment in full from the sale or other disposal of the assets of those subsidiaries before we, as an equity holder, would be entitled to receive any distribution from that sale or disposal. If The Tile Shop is unable to pay dividends or make other payments to us when needed, we will be unable to satisfy our obligations.
Our failure or inability to protect our intellectual property rights could diminish the value of our brand and weaken our competitive position.
We attempt to protect our intellectual property rights through a combination of copyright, patent, trademark, trade secret, trade dress and unfair competition laws, as well as confidentiality procedures, and assignment and licensing arrangements. Our failure to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our business, results of operations and financial condition, and might prevent our brands from achieving or maintaining market acceptance. Further, we cannot assure you that competitors or other third parties will not infringe upon our intellectual property rights, or that we will have adequate resources to enforce our intellectual property rights.
Sustainability policies and practices could result in additional costs, and could adversely impact our reputation, consumer perception, employee retention, and willingness of third parties to do business with us.
If our sustainability policies and practices fail to meet regulatory requirements or stakeholders’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship, support for local communities, human capital management, employee health and safety practices, corporate governance and transparency and employing sustainability strategies in our operations, our brand, reputation and employee retention may be negatively impacted, and customers and suppliers may be unwilling to do business with us. At the same time, there also exists anti-environmental, social and governance, including anti-diversity, equity and inclusion, sentiment among certain stakeholders and government institutions, and we may face scrutiny, reputational risk, lawsuits or market access restrictions from these parties. The effects of climate change and increased focus by stakeholders on sustainability matters could have short- and long-term impacts on our business, operations and reputation. Inconsistency of legislation and regulations among jurisdictions, including anti-environmental, social and governance policies or legislation, and any additional regulations may also affect the costs of compliance with such laws and regulations. Any assessment of the potential impact of future sustainability-related legislation, regulations or industry standards, as well as any international treaties and accords, is uncertain given the wide scope of potential regulatory change where we operate.
Risks Related to Our Labor and Supply Chain
If we fail to identify and maintain relationships with a sufficient number of suppliers, our ability to obtain products that meet our high quality standards at attractive prices could be adversely affected.
We purchase flooring and other products directly from suppliers located around the world. However, we do not have long-term contractual supply agreements with our suppliers that obligate them to supply us with products exclusively or at specified quantities or prices. As a result, our current suppliers may not continue selling products to us. In order to retain the competitive advantage that we believe results from these relationships, we need to continue to identify, develop and maintain relationships with qualified suppliers that can satisfy our high standards for quality and our requirements for flooring and other products in a timely and efficient manner at attractive prices. The need to develop new relationships will be particularly important as we seek to expand our operations and enhance our product offerings in the future. The loss of one or more of our existing suppliers or our inability to develop relationships with new suppliers could reduce our competitiveness, slow our plans for further expansion, and cause our net sales and operating results to be adversely affected. In addition, any failure to manage our inventory effectively could have a material and adverse effect on our business, financial condition and results of operations. Our sales could be adversely affected when we experience shortages of key items; further, any inability to meet our customers’ product needs could also adversely affect sales of other related products.
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We source the products that we stock and sell from approximately 200 domestic and international suppliers. We source a large number of those products from foreign manufacturers, including 43.3% of our products from a group of ten suppliers located in Asia, Europe and the United States during 2025. Our largest supplier accounted for approximately 12.7% of our total purchases in 2025. We generally take title to these products sourced from foreign suppliers overseas and are responsible for arranging shipment to our distribution centers.
Our reliance on foreign suppliers increases our risk of not obtaining adequate, timely and cost-effective products and other risks involved in foreign operations.
The risks associated with direct sourcing from overseas manufacturers may be higher than the risks associated with our traditional domestic suppliers. Foreign sourcing subjects us to a number of risks, including long lead times; work stoppages; shipping delays and interruptions; product quality issues; employee rights issues; other social concerns; public health crises; political instability; acts of terrorism or war; economic disruptions; the imposition of tariffs, including those imposed by the United States on goods imported from China, Canada, Mexico and Russia, duties, quotas, import and export controls and other trade restrictions, as well as the possibility of a global trade war; changes in governmental policies, including potential adverse changes in tax laws and regulations; uncertainty surrounding the enforcement of laws (if any) relating to the protection of intellectual property or data security; and other events. Additionally, reductions in the value of the U.S. dollar or revaluation of foreign currencies used, could ultimately increase the prices that we pay for our products.
In addition, all of our products manufactured overseas and imported into the U.S. are subject to duties collected by the U.S. Customs and Border Protection. We may be subjected to additional duties, significant monetary penalties, the seizure and forfeiture of the products we are attempting to import or the loss of import privileges if we or our suppliers are found to be in violation of U.S. laws and regulations applicable to the importation of our products. If duties were to be significantly increased, it could have a material adverse impact on us.
Our ability to offer compelling products, particularly products made of unique stone, depends on the continued availability of sufficient suitable natural products.
Our business strategy depends on offering a wide assortment of compelling products to our customers. We sell, among other things, products made from various natural stones from quarries throughout the world. Our ability to obtain an adequate volume and quality of hard-to-find products depends on our suppliers’ ability to furnish those products, which, in turn, could be affected by many factors, including the exhaustion of stone quarries or the impact of water scarcity, natural disasters or other extreme weather events, which may be exacerbated by climate change, on the ability to access or efficiently extract resources from such quarries. If our suppliers cannot deliver sufficient products, and we cannot find replacement suppliers, our net sales and operating results may be adversely affected.
Our success is highly dependent on our ability to provide timely delivery to our customers, and any disruption in our delivery capabilities or our related planning and control processes may adversely affect our operating results.
Our success is due in part to our ability to deliver products quickly to our customers, which requires successful planning and distribution infrastructure, including ordering, transportation and receipt processing, and the ability of suppliers to meet distribution requirements. Our ability to maintain this success depends on the continued identification and implementation of improvements to our planning processes, distribution infrastructure, and supply chain. We also need to ensure that our distribution infrastructure and supply chain keep pace with our anticipated growth and increased number of stores. The cost of these enhanced processes could be significant, and any failure to maintain, grow, or improve them could adversely affect our operating results. Our business has been, and could continue to be, adversely affected as a result of delays in product shipments due to freight difficulties, strikes, or other difficulties at our suppliers’ principal transport providers, or otherwise, including as a result of ongoing supply chain disruptions and labor shortages and tariffs and other trade barriers and restrictions.
We depend on a few key employees, and if we lose the services of these employees, we may not be able to operate our business effectively.
Our future success depends in part on our ability to attract and retain key executive, merchandising, marketing, and sales personnel who share our values and are able to operate effectively and consistently with our culture. Our inability to effectively integrate newly-hired officers or senior managers into our business processes, controls, systems and culture could have a material adverse effect on us. The loss or unavailability of any of our key employees could have a material adverse effect on us. In addition, ineffective succession planning could result in unexpected costs, reduced productivity and/or difficulties with respect to internal processes and controls. Our ability to successfully hire other experienced and qualified key employees cannot be assured and may be difficult because we face competition for these professionals from our competitors, our suppliers and other companies operating in our industry.
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If we fail to hire, train, and retain qualified store managers, sales associates, and other employees, our enhanced customer service could be compromised and we could lose sales to our competitors.
A key element of our competitive strategy is to provide product expertise to our customers through our extensively trained, commissioned sales associates. We may be constrained in hiring and retaining sufficient qualified employees to support our strategy due to general labor shortages in our industry. In addition, a lack of qualified personnel or increased turnover rates within our employee base could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain qualified employees. If we are unable to attract and retain qualified personnel and managers as needed in the future, including qualified sales personnel, our level of customer service may decline, which may decrease our revenues and profitability.
Our ability to control labor costs is limited, which may negatively affect our business.
Our ability to control labor costs is subject to numerous external factors, including prevailing wage rates, inflationary pressures, the impact of legislation or regulations governing healthcare benefits or labor relations, and health and other insurance costs. If our labor and/or benefit costs increase, we may not be able to hire or maintain qualified personnel to the extent necessary to execute our competitive strategy, which could adversely affect our results of operations.
Our insurance coverage and self-insurance reserves may not cover future claims.
We maintain various insurance policies for employee health and workers’ compensation. We are self-insured on certain health insurance plans and are responsible for losses up to a certain limit for these respective plans. We are also self-insured with regard to workers’ compensation coverage, in which case we are responsible for losses up to certain retention limits on both a per-claim and aggregate basis.
For policies under which we are responsible for losses, we record a liability that represents our estimated cost of claims incurred and unpaid as of the balance sheet date. Our estimated liability is not discounted and is based on a number of assumptions and factors, including historical trends and economic conditions, and is closely monitored and adjusted when warranted by changing circumstances. Fluctuating healthcare costs, our growth rate and changes from our past experience with workers’ compensation claims could affect the accuracy of estimates based on historical experience. Should a greater amount of claims occur compared to what was estimated or employee health insurance costs increase beyond what was expected, our accrued liabilities might not be sufficient, and we may be required to record additional expense. Unanticipated changes may produce materially different amounts of expense than that reported under these programs, which could adversely impact our operating results.
We also maintain third-party insurance coverage against various other liability risks and risks of property loss, including directors’ and officers’ liability insurance coverage. Potential liabilities associated with those risks or other events could exceed the coverage provided by such arrangements, resulting in significant uninsured liabilities, which could have a material and adverse effect on our business, financial condition and results of operations. In addition, claims brought against us have resulted in, and additional claims could further result in, increased directors’ and officers’ insurance premiums and a reduction in coverage, which could negatively affect us, including by increasing our insurance costs and impacting our ability to attract and retain qualified officers and directors.
Legal and Regulatory Risks
Compliance with laws or changes in existing or new laws and regulations or regulatory enforcement priorities could adversely affect our business.
We must comply with various laws and regulations at the local, regional, state, federal, and international levels. These laws and regulations change frequently, and such changes can impose significant costs and other burdens of compliance on our business and suppliers. Any changes in regulations, the imposition of additional regulations, or the enactment of any new legislation that affects employment/labor, trade, product safety, transportation/logistics, energy costs, health care, tax, environmental issues, including the impact of climate change, or compliance with applicable anti-bribery laws could have an adverse impact on our financial condition and results of operations. In addition, changes in enforcement priorities by governmental agencies charged with enforcing existing laws and regulations could increase our cost of doing business. The evolving and at times overlapping regulatory regimes to which the Company is subject may change at any time, including as a result of changes in the U.S. political environment. In addition, a number of legal and regulatory measures and social initiatives have been introduced in an effort to reduce greenhouse gas and other carbon emissions. Any such initiatives, restrictions and requirements could restrict, or require us to make changes to, our operating activities, which could increase our operating costs, require us to make capital improvements to our properties, increase our energy, supply and transportation costs or limit their availability, affect the availability and cost of our products, or otherwise adversely affect our results of operations, liquidity or capital resources, and these effects could be material to us.
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We may also be subject to audits by various taxing authorities. Changes in tax laws in any of the multiple jurisdictions in which we operate, or adverse outcomes from tax audits that we may be subject to in any of the jurisdictions in which we operate, could result in an unfavorable change in our effective tax rate, which could have an adverse effect on our business and results of operations.
If our suppliers do not use ethical business practices or comply with applicable laws and regulations, our reputation could be harmed due to negative publicity and we could be subject to legal risk.
We do not control the operations of our suppliers. Accordingly, we cannot guarantee that our suppliers will comply with applicable environmental, labor, anti-corruption and other laws and regulations or operate in a legal, ethical, and responsible manner. Violation of environmental, labor, anti-corruption or other laws by our suppliers or their failure to operate in a legal, ethical, or responsible manner could reduce demand for our products if, as a result of such violation or failure, we attract negative publicity. Further, such conduct could expose us to legal risks as a result of the purchase of products from non-compliant suppliers.
We are involved in legal proceedings from time to time and, while we cannot predict the outcomes of such proceedings and other contingencies with certainty, some of these outcomes could adversely affect our business, financial condition and results of operations.
We are involved in stockholder, consumer, employment, tort or other litigation from time to time. We cannot predict with certainty the outcomes of these legal proceedings. The outcome of some of these legal proceedings could require us to take, or refrain from taking, actions which could negatively affect our operations or could require us to pay substantial amounts of money, adversely affecting our financial condition and results of operations. Additionally, defending against lawsuits and proceedings may involve significant expense and diversion of management’s attention and resources.
Technology-Related Risks
Our business operations could be disrupted if we are unable to protect the integrity and security of our customer and other personal and/or confidential information.
Like all businesses, we face cybersecurity threats, as we are reliant upon information systems and the Internet to conduct our business activities. For example, in connection with payment card sales and other transactions, including bank cards, debit cards, credit cards and other merchant cards, we process and transmit confidential banking and payment card information. Additionally, as part of our normal business activities, we collect and store sensitive personal information related to our employees, customers, suppliers and other parties. Despite our security measures, our information technology and infrastructure, and that of third parties upon which we rely, may be vulnerable to criminal cyber-attacks or security incidents due to employee or service provider error, third-party action, including actions of foreign actors, which risk may be exacerbated by the current Russia-Ukraine and other geopolitical conflicts and U.S. and international response, insider attacks, phishing or denial-of-service attacks, the introduction of computer viruses and/or malicious or destructive code, ransomware or other malware, social engineering, malfeasance, other unauthorized physical or electronic access, or other vulnerabilities. Any such incidents could compromise our networks, or those of our vendors, or disrupt our or our vendors’ critical systems, and the information stored there, such as personally identifiable information or funds, could be accessed, publicly disclosed, lost, corrupted or stolen. Such incidents could also lead to widespread technology outages, interruptions or other failures of operational, communication or other systems globally and across companies and industries. Third parties may have the technology and know-how to breach the security of this information, and our security measures and those of our banks, merchant card processing and other technology suppliers may not effectively prohibit others from obtaining improper access to this information. The techniques used by criminals to obtain unauthorized access to sensitive data continue to evolve and become more sophisticated and often are not recognized until launched against a target; accordingly, we may be unable to anticipate these techniques or implement adequate preventative measures, and future cyber-attacks could go undetected and persist for an extended period of time. Furthermore, to the extent artificial intelligence capabilities continue to improve and are increasingly adopted, they may be used to identify vulnerabilities and craft increasingly sophisticated cybersecurity attacks, including the use of generative artificial intelligence to conduct more sophisticated social engineering attacks on the Company, suppliers or customers. In addition, vulnerabilities may be introduced from the use of artificial intelligence by us, our financial services providers and other vendors and third-party providers.
Our vendors and others to whom we entrust confidential data, and on whom we rely to provide products and services, face similar threats and growing requirements. While we perform cybersecurity due diligence on our key vendors and service providers, our ability to monitor their cybersecurity is limited. We cannot ensure the cybersecurity measures they take will be sufficient to protect any information we share with them or prevent any disruption arising from a technology failure, cyber-attack or other information or security breach. We depend on such parties to implement adequate controls and safeguards to protect against and report cyber incidents. If such parties fail to deter, detect or report cyber incidents in a timely manner, we may suffer from financial and other harm, including to our information, operations, performance, employees and reputation.
We also incur costs in order to comply with cybersecurity or data privacy regulations or with requirements imposed by business partners. Data privacy and cybersecurity laws in the United States and internationally are constantly changing, and the implementation
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of these laws has become more complex. For instance, many states have enacted laws requiring companies to notify individuals of data security breaches involving their personal data. These mandatory disclosures regarding a security breach often lead to widespread negative publicity, which may cause our customers to lose confidence in the effectiveness of our data security measures. Any security breach, whether successful or not, would harm our reputation and could damage our competitive position and cause the loss of customers. In addition, any such breach, or any material failure on our part to comply with applicable laws, could subject us to litigation, government investigation or enforcement actions or other regulatory sanctions, regulatory penalties or fines, or costly response measures. Any such occurrence could have a material adverse effect on us. Furthermore, in order to comply with current or newly enacted laws, we may be subject to increased costs as a result of continually evaluating our policies and processes and adapting to new requirements that are or become applicable to us. In addition, the implementation of technology changes and upgrades to maintain current and integrate new systems incurs additional costs and may cause service interruptions or system conversion delays and may cause us to fail to comply with applicable laws, all of which could have a material adverse effect on our business.
While we carry cyber insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.
If our management information systems experience disruptions, it could disrupt our business and reduce our net sales.
We depend on our management information systems to integrate the activities of our stores, to process orders, to manage inventory, to purchase merchandise and to sell and ship goods on a timely basis. We may experience operational problems with our information systems, as well as loss of funds, intellectual property or other proprietary information, as a result of system failures, third-party service outages, viruses, computer “hackers” or other causes. We may incur significant expenses in order to repair any such operational problems and could suffer reputational damage. Any significant disruption or slowdown of our systems could cause information, including data related to customer orders, to be lost or delayed, which could result in delays in the delivery of products to our stores and customers or lost sales. Accordingly, if our network is disrupted, we may experience delayed communications within our operations and between our customers and ourselves. Any such occurrence could have a material adverse effect on us.
The selection and implementation of information technology initiatives may impact our operational efficiency and productivity.
In order to better manage our business, we have invested in, and expect to continue to invest in, our information systems. In doing so, we work to select the correct investments and implement them in an efficient manner, but may be unable to do so effectively or at all. The costs, potential problems and interruptions associated with implementing technology initiatives could disrupt or reduce the efficiency of our operations. For instance, we may experience occasional system interruptions and delays, as a result of routine maintenance, periodic updates, implementation of new technology or other factors, that make our information systems unavailable or slow to respond, including the interaction of our information systems with those of third parties. Furthermore, these initiatives might not provide the anticipated benefits or provide them in a delayed or unexpectedly costly manner. Accordingly, issues relating to our selection and implementation of information technology initiatives may negatively impact our business and operating results.
Risks Related to Ownership of Our Common Stock
Our common stock is no longer listed on Nasdaq and we have terminated the registration of our common stock under Section 12(b) and 12(g) of the Exchange Act and suspended our reporting obligations under Section 15(d) of the Exchange Act, which may have an adverse effect on the liquidity of our common stock and the availability of information about the Company and our business and results of operations.
Following the Transaction, we voluntarily delisted our common stock from Nasdaq and terminated its registration under Sections 12(b) and 12(g) of the Exchange Act and suspended our duty to file reports thereunder. As a result:
Except for filing this Annual Report on Form 10-K, we have ceased filing annual, quarterly, current, and other reports and documents with the SEC, and our stockholders will have significantly less information about us and our business, operations, and financial performance than they previously had. While we currently intend to make financial information available to our stockholders on a voluntary basis, there is no assurance that we will continue to do so in the future. We will continue to hold stockholder meetings as required under Delaware law, including annual meetings, but we will no longer have to comply with proxy solicitation rules and related disclosure requirements under the Exchange Act.
The common stock is no longer listed on Nasdaq, which may have an adverse effect on the liquidity of our common stock. Effective December 29, 2025, our common stock is quoted on The OTC Markets Pink Limited (the “OTC”). Any trading in our common stock will only occur in privately negotiated sales and on the OTC, but only if one or more brokers choose to make a market for our common stock on the OTC and comply with applicable regulatory requirements. This may adversely affect the liquidity of our common stock, result in a significantly increased spread between the bid and asked prices of our common stock, and there is no guarantee that a broker will continue to make a market in our common stock or that trading of
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our common stock will continue on the OTC or otherwise. The price of our common stock may experience extensive volatility. Additionally, the overall price of our stock may be significantly reduced due to the potential that investors may view the investment as inherently riskier given the fact that publicly available information about us will be significantly more limited, as well as due to possible limited liquidity of our common stock.
We are no longer be subject to the reporting requirements under the Exchange Act or other requirements applicable to a public company, including requirements under the Sarbanes-Oxley Act of 2022 and the listing standards of any national securities exchange.
Our executive officers, directors, and 10% stockholders are no longer required to file reports relating to their transactions in our common stock with the SEC. In addition, our executive officers, directors, and 10% stockholders are no longer subject to the recovery of profits provision of the Exchange Act, and persons acquiring 5% of our common stock will no longer be required to report their beneficial ownership under the Exchange Act.
We have no ability to access the public capital markets or to use public securities in attracting and retaining executives and other employees, and we will have a decreased ability to use stock to acquire other companies.
We currently do not pay quarterly dividends or have a stock repurchase program; as such, appreciation in the price of our common stock may be the only method to realize a return on your investment.
We have, from time to time, paid special dividends and engaged in stock repurchases. Any future determination with respect to the payment of dividends or stock repurchases is at the discretion of our Board and is dependent upon our financial condition, results of operations, capital requirements, general business conditions, tax treatment of dividends and issuer stock repurchases in the United States, potential future contractual restrictions contained in credit agreements and other agreements and other factors deemed relevant by our Board of Directors. We can provide no assurance that we will pay any dividends to our stockholders in the future, or as to the amount of any such dividends, or that we will engage in stock repurchases. Our election not to pay a quarterly dividend or repurchase stock may negatively impact our reputation, our stock price, and investor confidence in us.
Concentration of ownership may have the effect of delaying or preventing a change in control.
Our directors and executive officers, together with their affiliates, beneficially hold approximately 73% of our outstanding shares of common stock. As a result, these stockholders, if acting together, have the ability to influence the outcome of corporate actions requiring stockholder approval. This concentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of our securities.
Anti-takeover provisions contained in our certificate of incorporation and bylaws and provisions of Delaware law could impair a takeover attempt.
Our certificate of incorporation and bylaws contain provisions that, alone or together, could have the effect of delaying or preventing hostile takeovers or changes in control or changes in our management without the consent of our Board of Directors. These provisions include, among other things, a classified Board of Directors; no cumulative voting in the election of directors; the exclusive right of our Board of Directors to fill a vacancy created by the expansion of the Board of Directors or the resignation, death, or removal of a director; the ability of our Board of Directors to issue shares of preferred stock, including determining the price, voting rights and other terms of such shares, without stockholder approval; requiring approval of certain transactions by the Independent Transaction Committee of the Board; a prohibition on stockholder action by written consent and providing that a special meeting of stockholders may be called only by the chairman of the Board of Directors, the Chief Executive Officer, or the Board of Directors; limiting the liability of, and providing indemnification to, our directors and officers; controlling the procedures for the conduct and scheduling of stockholder meetings; allowing the Board of Directors to postpone or reschedule special meetings of stockholders; providing that directors may be removed prior to the expiration of their terms by stockholders only for cause; and advance notice procedures for nominating director candidates or proposing matters to be acted upon at a stockholders’ meeting. In addition, we are subject to provisions of Delaware law that may impair takeover attempts, including Section 203 of the Delaware General Corporation Law, which generally provides that a corporation may not engage in any business combination with any interested stockholder during the three-year period following the time that such stockholder becomes an interested stockholder, unless certain approval requirements are met. Any provision of our certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.
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Our certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for certain types of lawsuits, which could increase costs to bring a claim, discourage claims or limit the ability of our stockholders to bring a claim in a judicial forum viewed by the stockholders as more favorable for disputes with us or our directors, officers or other employees.
Our certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws, or (iv) any action asserting a claim governed by the internal affairs doctrine. The choice of forum provision may increase costs to bring a claim, discourage claims or limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us or our directors, officers and other employees. Alternatively, if a court were to find this choice of forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions. The exclusive forum provision in our certificate of incorporation will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under the federal securities laws including the Exchange Act or the Securities Act of 1933, as amended, or the respective rules and regulations promulgated thereunder.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Like all businesses, the Company faces cybersecurity threats, as the Company is reliant upon information systems and the Internet to conduct its business activities. For example, in connection with payment card sales and other transactions, including bank cards, debit cards, credit cards and other merchant cards, the Company processes and transmits confidential banking and payment card information. Additionally, as part of its normal business activities, the Company collects and stores sensitive personal information related to the Company’s employees, customers, suppliers and other parties. Businesses, including those in our industry, and third parties on which we rely are frequently confronted with a broad range of cybersecurity threats, from uncoordinated, individual attempts to gain unauthorized access to an organization’s information technology (“IT”) environment to sophisticated and targeted cyberattacks sponsored by foreign governments and criminal enterprises.
Although the Company employs measures to prevent, detect, address, and mitigate these threats, a cybersecurity incident could potentially result in the misappropriation, destruction, corruption, or unavailability of critical data, personally identifiable information, and other confidential or proprietary data (our own or that of third parties) and the disruption of business operations. Any such incidents could compromise the Company’s networks, or those of our vendors, or disrupt the Company’s or our vendors’ critical systems, and the information stored there, such as personally identifiable information or funds, could be accessed, publicly disclosed, lost, corrupted or stolen. Third parties may have the technology and know-how to breach the security of this information, and the Company’s security measures and those of the Company’s banks, merchant card processing and other technology suppliers may not effectively prohibit others from obtaining improper access to this information. The techniques used by criminals to obtain unauthorized access to sensitive data change frequently and often are not recognized until launched against a target; accordingly, the Company may be unable to anticipate these techniques or implement adequate preventative measures.
The potential consequences of a material cybersecurity incident include remediation and restoration costs, reputational damage, and litigation with third parties, which in turn could adversely affect our competitiveness and results of operations. Accordingly, cybersecurity is an important part of the Company’s enterprise risk management program, and the Company seeks to address cybersecurity risks through a comprehensive, cross-functional approach.
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As part of its cybersecurity program, the Company deploys measures to deter, prevent, detect, respond to and mitigate cybersecurity threats, including firewalls, anti-malware, extended detection and response systems, identity and access controls, strong password controls, multi-factor authentication, software patching protocols, and physical security measures. The Company periodically assesses and tests the Company’s policies, standards, processes, and practices that are designed to address cybersecurity (including artificial intelligence-related) threats and incidents, including by assessing current threat intelligence, conducting tabletop exercises, vulnerability scanning, and performing external penetration testing. The Company has a process to report material results of such testing and assessments to the Board, and periodically adjusts the Company’s cybersecurity program based on these exercises. The Company engages third parties to oversee and conduct part of such testing, as well as perform external audits of security protocols and capabilities. The Company seeks to identify and oversee cybersecurity risks presented by third parties and their systems from a risk-based perspective by identifying critical vendors (defined based on capabilities provided and investments required) and reviewing software patching, upgrades and associated changes required to reduce risk. The Company also conducts cybersecurity training for employees, including mandatory training programs for system users. The Company’s training programs require employees to complete a knowledge check prior to completion of the program. Completion of the Company’s training programs is monitored by management.
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ITEM 2. PROPERTIES
As of December 31, 2025, we operated 140 stores located in 31 states and the District of Columbia with an average square footage of approximately 20,000 square feet. The table below sets forth the store locations (alphabetically by state) of our 140 stores in operation as of December 31, 2025.
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State | Stores |
| State | Stores |
| State | Stores |
| State | Stores |
Arizona | 4 |
| Illinois | 12 |
| Minnesota | 7 |
| Oklahoma | 2 |
Arkansas | 1 |
| Indiana | 4 |
| Missouri | 4 |
| Pennsylvania | 5 |
Colorado | 5 |
| Iowa | 1 |
| Nebraska | 1 |
| Rhode Island | 1 |
Connecticut | 3 |
| Kansas | 1 |
| New Jersey | 7 |
| South Carolina | 2 |
Delaware | 1 |
| Kentucky | 3 |
| New Mexico | 1 |
| Tennessee | 4 |
District of Columbia | 1 |
| Maryland | 5 |
| New York | 7 |
| Texas | 16 |
Florida | 5 |
| Massachusetts | 4 |
| North Carolina | 5 |
| Virginia | 6 |
Georgia | 4 |
| Michigan | 7 |
| Ohio | 8 |
| Wisconsin | 3 |
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| Total | 140 |
We lease all of our stores. Our approximately 15,000 square foot headquarters in Plymouth, Minnesota is attached to our store. We own three regional facilities used for distribution of purchased product and manufacturing of setting and maintenance materials, located in Ottawa Lake, Michigan; Ridgeway, Virginia; and Durant, Oklahoma, which consist of 271,000, 134,000, and 260,000 square feet, respectively. We lease an additional 100,000 square feet of warehouse space near our Ridgeway, Virginia distribution center.
In response to the challenges faced in our industry and continued pressure on our topline results, during 2024, we took steps to close our distribution center located in Dayton, New Jersey that is 163,000 square feet, and have entered into two sublease agreements for this space. Our lease of the distribution space in Dayton, New Jersey expires in September 2026. In addition, during 2025, we closed, and in February 2026, we sold, our former distribution center in Spring Valley, Wisconsin that was 69,000 square feet.
We believe that our material property holdings are suitable for our current operations and purposes.
ITEM 3. LEGAL PROCEEDINGS
We are, from time to time, party to lawsuits, threatened lawsuits, disputes and other claims arising in the normal course of business. We assess our liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that we will incur a loss and the amount of the loss can be reasonably estimated, we record a liability in our consolidated financial statements. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of the loss is not estimable, we do not record an accrual, consistent with applicable accounting guidance. In the opinion of management, while the outcome of such claims and disputes cannot be predicted with certainty, our ultimate liability in connection with these matters is not expected to have a material adverse effect on our results of operations, financial position or cash flows, and the amounts accrued for any individual matter are not material. However, legal proceedings are inherently uncertain. As a result, the outcome of a particular matter or a combination of matters may be material to our results of operations for a particular period, depending upon the size of the loss or our income for that particular period.
ITEM 4. MINE SAFETY DISCLOSURES
None.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock previously traded on Nasdaq under the symbol “TTSH” through December 26, 2025. Beginning December 29, 2025, our common stock has been quoted on the OTC under the symbol “TTSH”; as such, there is currently no established trading market for our common stock. Between December 29, 2025 and December 31, 2025, the highest bid price of our common stock was $3.65, and the lowest bid price of our common stock was $2.96. Any over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions or the value of our securities.
As of February 23, 2026, we had approximately 36 holders of record of our common stock. This figure does not include the number of persons whose securities are held in nominee or “street” name accounts through brokers.
As of February 23, 2026, we had 39,821,741 shares of common stock outstanding.
Dividends
Any future determination with respect to the payment of dividends is at the discretion of our Board of Directors and is dependent upon our financial condition, results of operations, capital requirements, general business conditions, tax treatment of dividends in the United States, contractual restrictions contained in our credit agreement and other factors deemed relevant by our Board of Directors. We can provide no assurance that we will pay any dividends to our stockholders in the future, or as to the amount of any such dividends.
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
As a result of the Reverse Stock Split, the Cashed-Out Stockholders received $6.60, without interest, in cash for each whole share of common stock held by such stockholder at the effective time of the Reverse Stock Split, and such stockholder was no longer a stockholder of the Company. The Company paid an aggregate of approximately $32.2 million for 4,875,290 shares of our common stock in connection with the Reverse Stock Split.
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Period |
| Total Number of Shares Purchased |
| Average Price Paid per Share |
| Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
| Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs | |
October 1, 2025 - October 31, 2025 |
| - |
| $ | - |
| - |
| - |
November 1, 2025 - November 30, 2025 |
| - |
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| - |
| - |
| - |
December 1, 2025 - December 31, 2025 |
| 4,893,260 | (1) |
| 6.58 | (1) | - |
| - |
Total |
| 4,893,260 |
| $ | 6.58 |
| - |
| - |
(1)We cancelled 17,970 shares that were forfeited when vesting conditions were not met, in accordance with the terms of the 2021 Omnibus Equity Compensation Plan and the related award agreements. We did not pay cash to repurchase these shares, nor were these repurchases part of a publicly announced plan or program. We also paid cash in lieu of fractional shares for 4,875,290 shares of our common stock as a result of the Reverse Stock Split for $6.60 per pre-Reverse Stock Split share, or approximately $32.2 million in the aggregate.
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ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis together with our consolidated financial statements and related notes included elsewhere in this report. Among other things, those historical consolidated financial statements include more detailed information regarding the basis of presentation for the financial data than is included in the following discussion. This report contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “depend,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “seek,” “should,” “target,” “will,” “will likely result,” “would,” and similar expressions or variations, although some forward-looking statements are expressed differently. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. The forward-looking statements in this report relate to, among other things, statements about the perceived benefits of the Company’s delisting and deregistration, including our ability to realize the anticipated benefits of the Transaction; our business strengths, marketing strategies, competitive advantages and role in our industry and markets; an overall decline in the health of the economy, the tile industry, consumer confidence and spending, and the housing market, including as a result of high inflation or fluctuating interest rates, tariffs and other trade barriers and restrictions, instability in the global banking system, geopolitical instability, or the possibility of an economic downturn or recession or other macroeconomic factors; the impact of ongoing supply chain disruptions (including tariffs) and inflationary cost pressures, including increased materials, labor, energy, and transportation costs and decreased discretionary consumer spending; our ability to successfully implement and realize the anticipated benefits of our strategic plan; our ability to successfully anticipate consumer trends; any statements with respect to dividends or stock repurchases and timing, methods, and payment of same; the effectiveness of our marketing strategy; potential fluctuations in our comparable store sales; our expectations regarding our and our customers’ financing arrangements and our ability to obtain additional capital, including potential difficulties of obtaining financing due to market conditions resulting from geopolitical conditions, including the impacts of tariffs and other trade barriers and restrictions and resulting volatility in the financial, capital and bond markets, and other economic factors; supply costs and expectations, including the continued availability of sufficient products from our suppliers, risks related to relying on foreign suppliers, and the potential impact of the Russia-Ukraine, Israel/Hamas and other geopolitical conflicts on, among other things, product availability and pricing and timing and cost of deliveries; the impact of U.S. trade tensions, including increased tariffs and retaliatory measures imposed by foreign governments; our expectations with respect to ongoing compliance with the terms of the credit facility, including fluctuating interest rates; our ability to provide timely delivery to our customers; the effect of regulations on us and our industry, and our suppliers’ compliance with such regulations, including any environmental requirements; the impact of corporate citizenship; labor shortages and our expectations regarding the effects of employee recruiting, training, mentoring, and retention on our business; tax-related risks; the potential impact of cybersecurity breaches or disruptions to our management information systems or to third-party information technology systems upon which we rely; widespread outages, interruptions or other failures of operational, communication or other systems; our ability to successfully implement our information technology and other digital initiatives; our ability to effectively manage our online sales; costs and adequacy of insurance; the potential impact of natural disasters and other catastrophic events; risks inherent in operating as a holding company; our ability to maintain effective internal control over financial reporting; the potential outcome of any legal proceedings; and risks related to ownership of our common stock.
These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, many of which are difficult to predict and are outside of our control, that may cause our actual results, performance, or achievements to differ materially from any expected future results, performance, or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to:
the level of demand for our products;
our ability to grow and remain profitable in the highly competitive retail tile industry;
our ability to access additional capital when and as needed;
our ability to attract and retain qualified personnel;
changes in general economic, business and industry conditions, including any economic downturn or recession;
our ability to introduce new products that satisfy market demand; and
legal, regulatory, and tax developments, including additional requirements imposed by changes in domestic and foreign laws and regulations.
There is no assurance that our expectations will be realized. If one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect, actual results may vary materially from those expected, estimated, or projected. Such risks and uncertainties also include those set forth in Part I, Item 1A. “Risk Factors,” of this report. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Our forward-looking statements speak only as of the time that they are made and do not necessarily reflect our outlook at any other point in time. Except as
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required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or for any other reason.
Recent Developments
On December 3, 2025, the Company held the Special Meeting. At the Special Meeting the holders of the Company’s issued and outstanding shares of the common stock, entitled to vote approved, by a majority of the votes cast at the Special Meeting, an amendment to the Certificate of Incorporation to effect the Reverse Stock Split, followed immediately by the Forward Stock Split. The Board determined to effectuate (i) the Reverse Stock Split at a ratio of 1-for-3,000 and (ii) the Forward Stock Split at a ratio of 3,000-for-1. At the direction of the Board, on December 15, 2025, the Company filed the certificates of amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the Reverse Stock Split at 5:01 p.m., followed immediately by the Forward Stock Split at 5:02 p.m., respectively, on that day.
As a result of the Reverse Stock Split, each share of common stock held by a Cashed-Out Stockholder was converted into the right to receive $6.60 in cash, without interest, per whole share and such stockholders are no longer stockholders of the Company. Stockholders owning a number of shares of common stock equal to or greater than the Minimum Number immediately prior to the effective time of the Reverse Stock Split were not entitled to receive any cash for their fractional share interests resulting from the Reverse Stock Split, if any. The Forward Stock Split, which immediately followed the Reverse Stock Split, reconverted whole shares and fractional share interests held by the Continuing Stockholders back into the same number of shares of the common stock held by such Continuing Stockholders immediately prior to the effective time. As a result of the Forward Stock Split, the total number of shares of common stock held by a Continuing Stockholder did not change. Following the completion of the Reverse Stock Split, the Company paid an aggregate of approximately $32.2 million to the Cashed-Out Stockholders, including stockholders who held fewer than 3,000 shares of common stock through banks and brokers.
On December 17, 2025, the Company filed a Form 25 Notification of Removal from Listing and/or Registration, in order to voluntarily withdraw its common stock from listing on the Nasdaq and to deregister the common stock under Section 12(b) of the Exchange Act. Upon delisting from Nasdaq, on January 2, 2026, the Company filed a Form 15 with the SEC to deregister the common stock under Section 15(d) of the Exchange Act.
The Stock Splits had the effect of reducing the number of record holders of the Company’s common stock to a number below 300 (i.e., the level at or above which the Company is required to file reports with the SEC under the Exchange Act). The Stock Splits were undertaken as part of the Company’s plan to give effect to the Transaction (i.e., the actions the Company has taken to suspend, and events that occur as a result of such actions that have the effect of suspending, the Company’s reporting obligations under the Exchange Act, including effectuating the Stock Splits, delisting the Company’s common stock from trading on Nasdaq, terminating the registration of the Company’s common stock under Sections 12(b) and 12(g) of the Exchange Act and suspending the Company’s reporting obligations under Section 15(d) of the Exchange Act).
As a result of the Transaction, the Company will no longer be subject to the reporting requirements under the Exchange Act or other requirements applicable to a public company, including requirements under the Sarbanes-Oxley Act of 2002 and the listing standards of any national securities exchange. Following the filing of this Annual Report on Form 10-K for the year ended December 31, 2025, therefore, the Company will cease to file annual, quarterly, current, and other reports and documents with the SEC.
Introduction
In light of ongoing changes to U.S. trade policy, including the imposition of elevated tariffs on certain imported goods, the threat of new tariffs, and ongoing negotiations between the U.S. and other countries regarding trade arrangements and tariff levels, the Company is evaluating a range of strategic options to manage the anticipated cost pressures including sourcing adjustments and pricing strategies. The degree of our exposure is dependent on (among other things) the type of goods, rates imposed and timing of the tariffs. On February 20, 2026, the U.S. Supreme Court rendered a decision invalidating tariffs imposed under the International Emergency Economic Powers Act. This decision introduces uncertainty regarding potential refund processes and further uncertainty regarding future trade policy actions and could affect our cost structure and supply chain planning. We continue to monitor developments around the Supreme Court’s decision and evaluate its potential impact on our future financial results and business.
These tariffs, any resulting retaliatory tariffs and any related supply-chain disruptions could have a significant impact on the Company’s consolidated statement of operations and statement of cash flows. In response to currently applicable and potential future tariffs, we are continuing to evaluate actions we can take that are intended to minimize the impact of the tariffs on our financial position and results of operations. While we believe that these actions and policies will mitigate a substantial portion of the impact of
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the tariffs, we cannot provide any assurances that the tariffs or any resulting impediments to trade will not have a material effect on our consolidated statement of operations and statement of cash flows.
In addition, there is meaningful uncertainty related to the confluence of different macroeconomic factors that could influence business conditions in the U.S. The Company continues to monitor the impacts of various macroeconomic factors, such as inflationary pressure, changes in monetary policy, decreasing consumer confidence and spending, the introduction of or changes in tariffs or trade barriers, employment rates, the ongoing U.S. federal government shutdown, and the potential for an economic downturn or recession. Such changes in macroeconomic conditions may lead to increased costs. Additionally, these macroeconomic trends could adversely affect the Company’s customers, which could impact their willingness to spend on the Company’s products and services, or their ability to make payments, which could negatively impact our financial results. While our risk expectation is that these different factors will moderate in the future, the timing and precise outlook for these improvements is uncertain, and we cannot predict the ultimate impact such factors will have on the Company’s business, financial condition, results of operation and cash flows, which will depend largely on future developments.
Overview and Recent Trends
We are a specialty retailer of man-made and natural stone tiles, luxury vinyl tiles, setting and maintenance materials, and related accessories in the United States. We offer a wide selection of products, attractive prices, and exceptional customer service in an extensive showroom setting. As of December 31, 2025, we operated 140 stores in 31 states and the District of Columbia, with an average size of approximately 20,000 square feet.
We purchase our tile products and accessories directly from suppliers and manufacture our own setting and maintenance materials, such as thinset, grout, and sealers. We believe that our long-term supplier relationships, together with our design and manufacturing and distribution capabilities, enable us to offer a broad assortment of high-quality products to our customers, who are primarily homeowners and professionals, at competitive prices. We have invested significant resources to develop our proprietary brands and product sources, and we believe that we are a leading retailer of natural stone, man-made and luxury vinyl tiles, setting and maintenance materials, and related accessories in the United States.
The table below sets forth information about our net sales, operating (loss) income and stores opened from 2023 to 2025.
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| For the year ended December 31, | |||||||
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| 2025 |
| 2024 |
| 2023 | |||
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Net sales |
| $ | 336,820 |
| $ | 347,071 |
| $ | 377,146 |
(Loss) Income from operations |
| $ | (5,814) |
| $ | 3,517 |
| $ | 16,158 |
Net cash provided by operating activities |
| $ | 5,792 |
| $ | 27,107 |
| $ | 62,060 |
New stores opened during period |
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| 1 |
We serve customers who seek to undertake a wide range of projects; however, many end customers choose to work with us when they choose to remodel their home. Historically, we have monitored existing home sales trends as a leading indicator of demand in our industry, which remained challenged during 2025. For the year ended December 31, 2025, our comparable store sales decreased by 2.8% due to lower levels of traffic, partially offset by an increase in average ticket value.
Our operating results are heavily dependent upon the prices paid to acquire man-made and natural stone products from our suppliers around the world. Cost increases from our suppliers as well as increases in tariffs paid to import tile products into the United States contributed to a 190 basis points decrease in our gross margin rate from 65.7% in 2024 to 63.8% in 2025.
Selling, general and administrative expenses decreased by $3.5 million, or 1.6%, from $224.4 million in 2024 to $220.8 million in 2025. The decrease was primarily due to a $2.6 million reduction in selling, general and administrative expenses associated with the closure of our New Jersey and Wisconsin distribution centers and a $1.1 million decrease in wages associated with reductions in staffing levels at our corporate offices. Excluding the impact of the New Jersey and Wisconsin distribution center closures, variable expenses decreased by $1.5 million and depreciation expense decreased by an additional $1.3 million, which were partially offset by a $1.1 million increase due to costs incurred in connection with the delisting process as well as an increase in other legal expenses, a $0.7 million increase in shipping, a $0.5 million increase in IT, a $0.5 million increase in operating supplies and a $0.4 million increase in marketing.
In response to the challenges faced in our industry and continued pressure on our topline results, during 2025, we took steps to close our distribution center located in Spring Valley, Wisconsin, reduce staffing levels at our corporate office and closed two store locations. We did not incur any material asset impairment or severance costs in connection with these actions. In February 2026, the Company sold its distribution center in Wisconsin for a total cash consideration of $1.2 million. The distribution center was classified
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as held for sale within other current assets, net in the consolidated balance sheet as of December 31, 2025, with a net book value of $0.4 million. The sale resulted in a gain of $0.8 million, which will be recognized in the first quarter of 2026.
Cash balances decreased by $10.9 million from $21.0 million on December 31, 2024 to $10.1 million on December 31, 2025. The decrease in cash was primarily due to cash disbursements of $32.0 million to fund shares repurchased in 2025 in connection with the Transaction and $9.6 million used to purchase property, plant and equipment that were partially offset by $5.8 million of operating cash flow and $25.0 million of borrowings on our line of credit. Borrowings outstanding on our revolving line of credit were $25.0 million as of December 31, 2025. As of December 31, 2024, we had no borrowings outstanding on our revolving line of credit.
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Selected Financial Data
The following table sets forth selected historical financial information derived from (i) our audited financial statements included elsewhere in this report as of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024, and 2023 and (ii) our audited financial statements not included elsewhere in this report as of December 31, 2023, 2022, and 2021 and for the years ended December 31, 2022 and 2021. The following selected financial data should be read in conjunction with the remainder of this section and the financial statements and the related notes appearing elsewhere in this report.
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Statement of Income Data |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
| $ | 336,820 |
|
| $ | 347,071 |
|
| $ | 377,146 |
|
| $ | 394,702 |
|
| $ | 370,700 |
|
Cost of sales |
|
| 121,800 |
|
|
| 119,197 |
|
|
| 134,085 |
|
|
| 135,765 |
|
|
| 117,570 |
|
Gross profit |
|
| 215,020 |
|
|
| 227,874 |
|
|
| 243,061 |
|
|
| 258,937 |
|
|
| 253,130 |
|
Selling, general and administrative |
|
| 220,834 |
|
|
| 224,357 |
|
|
| 226,903 |
|
|
| 236,328 |
|
|
| 232,520 |
|
(Loss) Income from operations |
|
| (5,814) |
|
|
| 3,517 |
|
|
| 16,158 |
|
|
| 22,609 |
|
|
| 20,610 |
|
Interest expense, net |
|
| (41) |
|
|
| (275) |
|
|
| (2,164) |
|
|
| (1,579) |
|
|
| (656) |
|
(Loss) Income before income taxes |
|
| (5,855) |
|
|
| 3,242 |
|
|
| 13,994 |
|
|
| 21,030 |
|
|
| 19,954 |
|
Benefit (Provision) for income taxes |
|
| 1,361 |
|
|
| (921) |
|
|
| (3,923) |
|
|
| (5,327) |
|
|
| (5,180) |
|
Net (loss) income |
| $ | (4,494) |
|
| $ | 2,321 |
|
| $ | 10,071 |
|
| $ | 15,703 |
|
| $ | 14,774 |
|
(Loss) Earnings per share (diluted) |
| $ | (0.10) |
|
| $ | 0.05 |
|
| $ | 0.23 |
|
| $ | 0.32 |
|
| $ | 0.29 |
|
Weighted average shares |
|
| 43,697 |
|
|
| 43,852 |
|
|
| 43,621 |
|
|
| 49,247 |
|
|
| 51,085 |
|
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 10,120 |
|
| $ | 20,957 |
|
| $ | 8,620 |
|
| $ | 5,948 |
|
| $ | 9,358 |
|
Inventories |
|
| 89,399 |
|
|
| 86,267 |
|
|
| 93,679 |
|
|
| 120,952 |
|
|
| 97,175 |
|
Total assets |
|
| 301,725 |
|
|
| 319,603 |
|
|
| 316,672 |
|
|
| 345,822 |
|
|
| 340,758 |
|
Lease obligations |
|
| 134,845 |
|
|
| 142,580 |
|
|
| 139,962 |
|
|
| 131,219 |
|
|
| 138,451 |
|
Total debt(1) |
|
| 25,000 |
|
|
| - |
|
|
| - |
|
|
| 45,400 |
|
|
| 5,000 |
|
Total stockholders' equity |
|
| 87,239 |
|
|
| 122,912 |
|
|
| 119,687 |
|
|
| 108,769 |
|
|
| 122,224 |
|
Working capital |
|
| 33,795 |
|
|
| 41,428 |
|
|
| 35,813 |
|
|
| 63,112 |
|
|
| 29,369 |
|
Cash Flow Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating |
| $ | 5,792 |
|
| $ | 27,107 |
|
| $ | 62,060 |
|
| $ | 2,715 |
|
| $ | 39,691 |
|
Net cash used in investing activities |
|
| (9,366) |
|
|
| (14,336) |
|
|
| (15,255) |
|
|
| (14,027) |
|
|
| (11,070) |
|
Net cash (used in) provided by |
|
| (7,263) |
|
|
| (503) |
|
|
| (45,928) |
|
|
| 9,114 |
|
|
| (28,902) |
|
Other Selected Financial Data |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per share |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 0.65 |
|
Adjusted EBITDA(2) |
|
| 11,441 |
|
|
| 22,614 |
|
|
| 38,779 |
|
|
| 49,583 |
|
|
| 50,255 |
|
Adjusted EBITDA margin(2) |
|
| 3.4 | % |
|
| 6.5 | % |
|
| 10.3 | % |
|
| 12.6 | % |
|
| 13.6 | % |
Gross margin rate(3) |
|
| 63.8 | % |
|
| 65.7 | % |
|
| 64.4 | % |
|
| 65.6 | % |
|
| 68.3 | % |
Operating (loss) income margin(4) |
|
| (1.7) | % |
|
| 1.0 | % |
|
| 4.3 | % |
|
| 5.7 | % |
|
| 5.6 | % |
Comparable store sales (decline) growth(5) |
|
| (2.8) | % |
|
| (7.8) | % |
|
| (4.1) | % |
|
| 6.5 | % |
|
| 13.8 | % |
Stores open at end of period |
|
| 140 |
|
|
| 142 |
|
|
| 142 |
|
|
| 142 |
|
|
| 143 |
|
23
Table of Contents
(1)Total debt includes current maturities of long-term debt and long-term debt balances.
(2)We calculate Adjusted EBITDA by taking net (loss) income calculated in accordance with accounting principles generally accepted in the United States (“GAAP”) and adjusting for interest expense, income taxes, depreciation and amortization, and stock based compensation expense. Adjusted EBITDA margin is equal to Adjusted EBITDA divided by net sales. For more information about Adjusted EBITDA and Adjusted EBITDA margin, see “Non-GAAP Measures” below.
(3)Gross margin rate is equal to gross profit divided by net sales.
(4)Operating (loss) income margin is equal to (loss) income from operations divided by net sales.
(5)Comparable store sales (decline) growth is the percentage change in sales of comparable stores period-over-period. A store is considered comparable on the first day of the 13th full month of operation. When a store is relocated, it is excluded from the comparable store sales growth calculation. Comparable store sales (decline) growth amounts include total charges to customers less any actual returns. We include the change in the allowance for anticipated sales returns applicable to comparable stores in the comparable store sales calculation. Comparable store sales data reported by other companies may be prepared on a different basis and therefore may not be useful for purposes of comparing our results to those of other businesses. Company management believes the comparable store sales (decline) growth metric provides useful information to both management and investors to evaluate the Company’s performance, the effectiveness of its strategy and its competitive position.
Key Components of our Consolidated Statements of Operations
Net Sales – Net sales represents total charges to customers, net of returns, and includes freight charged to customers. We recognize sales at the time that the customer takes control of the merchandise or final delivery of the product has occurred. We are required to charge and collect sales and other taxes on sales to our customers and remit these taxes back to government authorities. Total revenues do not include sales tax because we are a pass-through conduit for collecting and remitting sales tax. Sales are reduced by a reserve for anticipated sales returns that we estimate based on historical returns.
Comparable store sales (decline) growth is the percentage change in sales of comparable stores period-over-period. A store is considered comparable on the first day of the 13th full month of operation. When a store is relocated, it is excluded from the comparable store sales (decline) growth calculation. Comparable store sales (decline) growth amounts include total charges to customers less any actual returns. We include the change in allowance for anticipated sales returns applicable to comparable stores in the comparable store sales calculation. Comparable store sales data reported by other companies may be prepared on a different basis and therefore may not be useful for purposes of comparing our results to those of other businesses. Company management believes the comparable store sales (decline) growth metric provides useful information to both management and investors to evaluate the Company’s performance, the effectiveness of its strategy and its competitive position.
Cost of Sales – Cost of sales consists primarily of material costs, freight, customs and duty fees, and storage and delivery of product to the customers, as well as physical inventory losses and costs associated with manufacturing of setting and maintenance materials.
Gross Profit – Gross profit is net sales less cost of sales. Gross margin rate is the percentage determined by dividing gross profit by net sales.
Selling, General and Administrative Expenses – Selling, general and administrative expenses consist primarily of compensation costs, occupancy, utilities, and maintenance costs, advertising costs, shipping and transportation expenses to move inventory from our distribution centers to our stores, and depreciation and amortization.
Income Taxes – We are subject to income tax in the United States as well as other tax jurisdictions in which we conduct business.
24
Table of Contents
Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024
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|
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|
|
|
| 2025 |
| % of sales(1) |
| 2024 |
| % of sales(1) | ||||
|
| ($ in thousands) | ||||||||||
Net sales |
| $ | 336,820 |
| 100.0 | % |
| $ | 347,071 |
| 100.0 | % |
Cost of sales |
|
| 121,800 |
| 36.2 | % |
|
| 119,197 |
| 34.3 | % |
Gross profit |
|
| 215,020 |
| 63.8 | % |
|
| 227,874 |
| 65.7 | % |
Selling, general and administrative expenses |
|
| 220,834 |
| 65.6 | % |
|
| 224,357 |
| 64.6 | % |
(Loss) Income from operations |
|
| (5,814) |
| (1.7) | % |
|
| 3,517 |
| 1.0 | % |
Interest expense, net |
|
| (41) |
| (0.0) | % |
|
| (275) |
| (0.1) | % |
(Loss) Income before income taxes |
|
| (5,855) |
| (1.7) | % |
|
| 3,242 |
| 0.9 | % |
Benefit (Provision) for income taxes |
|
| 1,361 |
| 0.4 | % |
|
| (921) |
| (0.3) | % |
Net (loss) income |
| $ | (4,494) |
| (1.3) | % |
| $ | 2,321 |
| 0.7 | % |
(1)Amounts do not foot due to rounding.
Net Sales – Net sales decreased $10.3 million, or 3.0%, in 2025 compared to 2024. Sales at comparable stores decreased by 2.8% during 2025. The decrease in annual sales was primarily due to a decrease in traffic that was partially offset by a modest improvement in average order value.
Gross Profit – Gross profit decreased $12.9 million, or 5.6%, in 2025 compared to 2024. The gross margin rate was 63.8% and 65.7% for 2025 and 2024, respectively. The decrease in gross margin rate was primarily due to an increase in product costs, partially attributable to an increase in tariffs, an increase in customer delivery expenses and higher levels of discounting in 2025.
Selling, General and Administrative Expenses – Selling, general and administrative expenses decreased $3.5 million, or 1.6%, in 2025 compared to 2024. The decrease was primarily due to a $2.6 million reduction in selling, general and administrative expenses associated with the closure of our New Jersey and Wisconsin distribution centers and a $1.1 million decrease in wages associated with reductions in staffing levels at our corporate offices. Excluding the impact of the New Jersey and Wisconsin distribution center closures, variable expenses decreased by $1.5 million and depreciation expense decreased by an additional $1.3 million, which were partially offset by a $1.1 million increase due to costs incurred in connection with the delisting process as well as an increase in other legal expenses, a $0.7 million increase in shipping, a $0.5 million increase in IT, a $0.5 million increase in operating supplies and a $0.4 million increase in marketing.
Provision for Income Taxes – The benefit (provision) for income taxes for 2025 and 2024 was $1.4 million and ($0.9) million, respectively. The change in the provision for income taxes was primarily due to taxable income in 2024 and a pretax loss in 2025. Our effective tax rate was 23.2% in 2025 and 28.4% in 2024. The decrease in effective tax rate was largely due to the impact of permanent differences relative to the pretax income or pretax loss generated in each period.
Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023
A detailed discussion of the fiscal year 2024 performance compared to fiscal year 2023 is set forth in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023,” in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 27, 2025, which discussion is incorporated herein by reference.
Non-GAAP Measures
We calculate Adjusted EBITDA by taking net (loss) income calculated in accordance with GAAP and adjusting for interest expense, income taxes, depreciation and amortization, and stock-based compensation expense. Adjusted EBITDA margin is equal to Adjusted EBITDA divided by net sales. We calculate pretax return on capital employed by taking (loss) income from operations divided by capital employed. Capital employed equals total assets less accounts payable, income taxes payable, other accrued liabilities, lease liability and other long-term liabilities. Other companies may calculate both Adjusted EBITDA and pretax return on capital employed differently, limiting the usefulness of these measures for comparative purposes.
We believe that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, for purposes of determining management incentive compensation, for budgeting and planning purposes, and for assessing the effectiveness of capital allocation over time. These measures are used in monthly financial reports prepared for management and our Board of Directors. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with other specialty retailers, many of which present similar non-GAAP financial measures to investors.
25
Table of Contents
Our management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitations of these non-GAAP financial measures are that they exclude significant expenses and income that are required by GAAP to be recognized in our consolidated financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. We urge investors to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures and not to rely on any single financial measure to evaluate our business.
The reconciliation of Adjusted EBITDA to net (loss) income for the years ended December 31, 2021 through December 31, 2025 is as follows:
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|
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|
|
|
|
| Years Ended December 31, | |||||||||||||
|
| 2025 |
| 2024 |
| 2023 |
| 2022 |
| 2021 | |||||
|
| (in thousands) | |||||||||||||
Net (loss) income |
| $ | (4,494) |
| $ | 2,321 |
| $ | 10,071 |
| $ | 15,703 |
| $ | 14,774 |
Interest expense, net |
|
| 41 |
|
| 275 |
|
| 2,164 |
|
| 1,579 |
|
| 656 |
(Benefit) Provision for income taxes |
|
| (1,361) |
|
| 921 |
|
| 3,923 |
|
| 5,327 |
|
| 5,180 |
Depreciation & amortization |
|
| 15,973 |
|
| 17,759 |
|
| 21,229 |
|
| 25,142 |
|
| 27,379 |
Stock based compensation |
|
| 1,282 |
|
| 1,338 |
|
| 1,392 |
|
| 1,832 |
|
| 2,266 |
Adjusted EBITDA |
| $ | 11,441 |
| $ | 22,614 |
| $ | 38,779 |
| $ | 49,583 |
| $ | 50,255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as a percentage of net sales for the years ended December 31, 2021 through December 31, 2025 is as follows:
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|
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|
|
| Years Ended December 31, | |||||||||||||
|
| 2025 |
| 2024(1) |
| 2023 |
| 2022 |
| 2021 | |||||
|
| % of net sales | |||||||||||||
Net (loss) income |
| (1.3) | % |
| 0.7 | % |
| 2.7 | % |
| 4.0 | % |
| 4.0 | % |
Interest expense, net |
| 0.0 |
|
| 0.1 |
|
| 0.6 |
|
| 0.4 |
|
| 0.2 |
|
(Benefit) Provision for income taxes |
| (0.4) |
|
| 0.3 |
|
| 1.0 |
|
| 1.3 |
|
| 1.4 |
|
Depreciation & amortization |
| 4.7 |
|
| 5.1 |
|
| 5.6 |
|
| 6.4 |
|
| 7.4 |
|
Stock based compensation |
| 0.4 |
|
| 0.4 |
|
| 0.4 |
|
| 0.5 |
|
| 0.6 |
|
Adjusted EBITDA |
| 3.4 | % |
| 6.5 | % |
| 10.3 | % |
| 12.6 | % |
| 13.6 | % |
(1)Amounts do not foot due to rounding.
The calculation of pretax return on capital employed is as follows:
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($ in thousands) |
| December 31, | ||||
|
| 2025(1) |
| 2024(1) | ||
(Loss) Income from operations |
| $ | (5,814) |
| $ | 3,517 |
|
|
|
|
|
|
|
Total Assets |
|
| 316,517 |
|
| 322,131 |
Less: Accounts payable |
|
| (25,581) |
|
| (22,842) |
Less: Income tax payable |
|
| (54) |
|
| (375) |
Less: Other accrued liabilities |
|
| (27,222) |
|
| (30,481) |
Less: Lease liability |
|
| (138,181) |
|
| (141,157) |
Less: Other long-term liabilities |
|
| (5,010) |
|
| (4,716) |
Capital Employed |
| $ | 120,469 |
| $ | 122,560 |
|
|
|
|
|
|
|
Pretax Return on Capital Employed |
|
| (4.8)% |
|
| 2.9% |
(1)Income statement accounts represent the activity for the trailing twelve months ended as of each of the balance sheet dates. Balance sheet accounts represent the average account balance for the four quarters ended as of each of the balance sheet dates.
Liquidity and Capital Resources
Our principal sources of liquidity include $10.1 million of cash and cash equivalents at December 31, 2025, cash provided by operating activities and borrowings available under our credit facility. We expect to use this liquidity for maintaining our existing stores, purchasing additional merchandise inventory, and general corporate purposes.
26
Table of Contents
On September 30, 2022, Holdings and its operating subsidiary, The Tile Shop, and certain subsidiaries of each entered into a Credit Agreement with JPMorgan Chase Bank, N.A. and the lenders party thereto, including Fifth Third Bank (as amended, the “Credit Agreement”). The Credit Agreement provides us with a senior credit facility consisting of a $75.0 million revolving line of credit through September 30, 2027. Borrowings pursuant to the Credit Agreement initially bear interest at a rate per annum equal to: (i) Adjusted Term SOFR Rate (as defined in the Credit Agreement), plus a margin ranging from 1.25% to 1.75%; (ii) Adjusted Daily Simple SOFR (as defined in the Credit Agreement), plus a margin ranging from 1.25% to 1.75%; or (iii) the Alternate Base Rate (as defined in the Credit Agreement), plus a margin ranging from 0.25% to 0.75%. The margin is determined based on the Rent Adjusted Leverage Ratio (as defined in the Credit Agreement). Borrowings outstanding as of December 31, 2025 were SOFR-based interest rate loans. The SOFR-based interest rate was 5.72% on December 31, 2025.
The Credit Agreement is secured by virtually all of our assets, including but not limited to, inventory, accounts receivable, equipment and general intangibles. The Credit Agreement contains customary events of default, conditions to borrowing and restrictive covenants, including restrictions on our ability to dispose of assets, engage in acquisitions or mergers, make distributions on or repurchases of capital stock, incur additional debt, incur liens or make investments. The Credit Agreement also includes financial and other covenants, including covenants to maintain a Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of no less than 1.20 to 1.00 and a Rent Adjusted Leverage Ratio (as defined in the Credit Agreement) of no greater than 3.50 to 1.00. The Company was not in compliance with the covenants as of December 31, 2025 but received a waiver by the lenders January 28, 2026, which put the Company in compliance with the covenants.
Borrowings outstanding consisted of $25.0 million on our line of credit as of December 31, 2025. We have standby letters of credit outstanding related to our workers’ compensation and medical insurance policies. As of December 31, 2025, standby letters of credit totaled $1.2 million, leaving $48.8 million available for borrowing on the revolving line of credit, which may be used for maintaining our existing stores, purchasing additional merchandise inventory, and general corporate purposes.
On December 15, 2025, the Company effected the Reverse Stock Split. As a result of the Reverse Stock Split, each stockholder of record owning fewer than 3,000 shares of common stock immediately prior to the effective time of the Reverse Stock Split became entitled to receive $6.60, without interest, in cash for each whole share of Common Stock held by such stockholder at the effective time of the Reverse Stock Split (the “Cashed-Out Stockholders”). Following the completion of the Reverse Stock Split, the Company paid an aggregate of approximately $32.2 million to the Cashed-Out Stockholders, including to stockholders holding through banks and brokers, of which $32.0 million was paid in the fourth quarter of 2025, with the remainder paid during the first quarter of 2026, using a combination of cash on hand and borrowings under the Company’s line of credit.
During 2026, we expect to use cash for maintaining our existing stores, purchasing additional merchandise inventory, and general corporate purposes. Additionally, as described further in Note 6 of the Notes to the Consolidated Financial Statements, as of December 31, 2025, our lease liability under operating leases totaled $134.8 million. Contractual lease payments range from $13.9 million to $39.6 million on an annual basis over the next five years. We are also obligated to fund certain self-insured employee benefits, including our medical and workers’ compensation plans. As of December 31, 2025, accrual balances related to our estimated workers’ compensation claims and medical claims totaled $1.4 million and $0.6 million, respectively. Additionally, we have contractual obligations related to software service arrangements with suppliers for fixed or minimum amounts. Future minimum payments at December 31, 2025 for purchase obligations were $2.7 million. Amounts due under these arrangements in 2026, 2027, and 2028 total $1.2 million, $1.1 million, and $0.4 million, respectively.
We currently believe that our cash and cash equivalents, cash flows from operations and access to cash under our credit facility will be adequate to meet our ongoing operating requirements over the next twelve months and our long-term liquidity requirements.
Capital Expenditures
The following table summarizes our capital expenditures during the years ended December 31, 2025, 2024 and 2023.
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| Years Ended December 31, | |||||||
|
| 2025 |
| 2024 |
| 2023 | |||
|
| (in millions) | |||||||
New store building, existing store remodels and store merchandising investments |
| $ | 6.4 |
| $ | 9.8 |
| $ | 11.9 |
Information technology infrastructure |
|
| 2.3 |
|
| 1.6 |
|
| 1.7 |
Distribution and manufacturing facilities |
|
| 0.9 |
|
| 3.1 |
|
| 1.7 |
|
| $ | 9.6 |
| $ | 14.5 |
| $ | 15.3 |
Our capital expenditure plan includes store refresh and remodels, information technology upgrades or enhancements, and replacing equipment at our stores and distribution centers. Our capital requirements will vary based on the number of stores that we choose to renovate or degree of investment in new technology. Our decisions regarding opening, relocating, or renovating stores, and whether to engage in strategic acquisitions, will be based in part on macroeconomic factors and the general state of the U.S. economy, as well as the local economies in the markets in which our stores are located.
27
Table of Contents
Cash Flows
The following table summarizes our cash flow for the years ended December 31, 2025, 2024 and 2023.
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| For the year ended December 31, | |||||||
|
| 2025 |
| 2024 |
| 2023 | |||
|
| (in thousands) | |||||||
Net cash provided by operating activities |
| $ | 5,792 |
| $ | 27,107 |
| $ | 62,060 |
Net cash used in investing activities |
|
| (9,366) |
|
| (14,336) |
|
| (15,255) |
Net cash used in financing activities |
|
| (7,263) |
|
| (503) |
|
| (45,928) |
Operating Activities
Cash flows from operating activities provide us with a significant source of liquidity. Net cash provided by operating activities was $5.8 million, $27.1 million, and $62.1 million in 2025, 2024 and 2023, respectively. The decrease in operating cash flows in 2025 compared to 2024 was primarily due to an increase in inventory in 2025 compared to a decrease in inventory in 2024, a decrease in net income, and a decrease in depreciation expense.
Investing Activities
Net cash used in investing activities was $9.4 million, $14.3 million and $15.3 million in 2025, 2024 and 2023, respectively. The decrease in investing activities in 2025 was due to lower levels of capital expenditures during 2025 to invest in store remodels, store merchandising, distribution, and internal fleet.
Financing Activities
Net cash used in financing activities was $7.3 million, $0.5 million and $45.9 million in 2025, 2024 and 2023, respectively. The increase in cash used in financing activities was attributable to $32.0 million paid to repurchase shares during 2025 that was partially offset by $25.0 million of borrowings on our revolving line of credit.
Critical Accounting Estimates
Our financial statements are prepared in accordance with GAAP. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions, and judgments that affect the reported amount of assets, liabilities, revenues, costs and expenses, and related disclosures. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances, but all such estimates and assumptions are inherently uncertain and unpredictable. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from those estimates and assumptions, and it is possible that other professionals, applying their own judgment to the same facts and circumstances, could develop and support alternative estimates and assumptions that would result in material changes to our operating results and financial condition. Our most critical accounting estimates are summarized below. For further information on our critical and other significant accounting policies, see the notes to the consolidated financial statements included in this report.
Recognition of Revenue
Description: Revenues are recognized when control of promised goods or services is transferred to our customers, in an amount that reflects the consideration received in exchange for those goods or services. We recognize service revenue, which consists primarily of freight charges for home delivery, when the service has been rendered. We are required to charge and collect sales and other taxes on sales to our customers and remit these taxes back to government authorities. Total revenues do not include sales tax because we are a pass-through conduit for collecting and remitting sales tax.
Judgement and uncertainties involved in the estimate: Net sales are reduced by an allowance for anticipated sales returns that we estimate based on historical returns. Our process to establish a sales return reserve contains uncertainties because it requires management to make assumptions and to apply judgment to estimate future sales returns and exchanges. Merchandise exchanges are not considered merchandise returns and, therefore, are excluded when calculating the sales returns reserve.
Effect if actual results differ from the assumptions: Actual return trends have not varied significantly from estimated amounts in prior periods. However, if the nature of sales returns changes significantly, our sales could be adversely impacted. A 10% change in our sales returns reserves and related return assets at December 31, 2025 would have had a $0.2 million net impact on operating income during fiscal 2025.
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Inventory Valuation and Shrinkage
Description: Our inventory consists of purchased merchandise held for resale and manufactured items. Inventories are stated at the lower of cost (determined using the moving average cost method) or net realizable value. We capitalize the cost of inbound freight, duties, and receiving and handling costs to bring purchased materials into our distribution network. The labor and overhead costs incurred in connection with the production process are included in the value of manufactured finished goods.
Judgement and uncertainties involved in the estimate: We provide provisions for losses related to shrinkage and other amounts that are otherwise not expected to be fully recoverable. These provisions are calculated based on historical shrinkage, selling price, margin and current business trends. These estimates have calculations that require management to make assumptions based on the current rate of sales, age, salability and profitability of inventory, historical percentages that can be affected by changes in our merchandising mix, customer preferences, rates of sell through and changes in actual shrinkage trends.
Effect if actual results differ from the assumptions: We do not believe there is a reasonable likelihood that there will be a material change in the assumptions we use to calculate our inventory provisions. However, if actual results are not consistent with our estimates and assumptions, we may be exposed to losses that could be material. A 10% change in our inventory valuation and shrinkage reserves at December 31, 2025 would have had a $0.1 million net impact on operating income during fiscal 2025.
Impairment of Long-Lived Assets
Description: Property, plant and equipment are carried at cost less accumulated depreciation, which is amortized over the useful life of the assets. Leasehold improvements are amortized over the shorter of their estimated useful lives or lease period (including expected renewal periods). Property, plant, equipment, and right of use assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The evaluation is performed at the lowest level of identifiable cash flows independent of other assets, which typically occurs at an individual store level. An impairment loss is recognized when estimated undiscounted future cash flows from the operations and/or disposition of the assets are less than the carrying amount.
Judgement and uncertainties involved in the estimate: The significant assumption used in developing undiscounted cash flow analyses is the estimate of future sales. Measurement of an impairment loss is based on the excess of the carrying amount of the asset group over its fair value. Fair value is measured using discounted cash flows or independent opinions of value, as appropriate.
Effect if actual results differ from the assumptions: If actual results are not consistent with our estimates and assumptions used in determining future cash flows and asset fair values, we may be exposed to losses that could be material. During the fiscal years ended December 31, 2025, 2024 and 2023, the Company recorded asset impairment charges of $0.3 million, $0.9 million and $1.0 million, respectively, which were classified in selling, general and administrative expenses.
New Accounting Pronouncements
For a summary of recently issued accounting pronouncements, refer to Note 1 of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K for further information.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks in the ordinary course of our business. These risks primarily include inflation, interest rate risk, and credit concentration risk.
Inflation
Inflationary factors such as increases in the cost of our products and overhead costs may adversely affect our operating results. Our operating results are heavily dependent upon the prices paid to acquire man-made and natural stone products from our vendors around the world. Our cost of sales is subject to inflationary pressures and price fluctuations of the raw materials we use and other costs, including freight and labor costs. Higher rates of inflation may have an adverse effect on our ability to maintain historical levels of gross profit and selling, general and administrative expenses as a percentage of revenues if the selling prices of our products do not increase at a consistent rate with these increased costs. Historically, we have generally been able over time to offset, in whole or in part, the effects of inflation and price fluctuations through sales price increases and production efficiencies associated with technological enhancements and volume growth; however, we cannot reasonably estimate our ability to offset any increases in raw material prices or freight or labor costs or other inflationary pressures in the future. Such sustained inflationary pressures may have an adverse effect on our business, financial condition and results of operations if the selling prices of our products do not increase with these increased costs, or we cannot identify cost efficiencies.
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Interest Rate Risk
We are exposed to interest rate risk through the investment of our cash and cash equivalents. Changes in interest rates affect the interest income that we earn in connection with these investments, and therefore impact our cash flows and results of operation. We are also exposed to interest rate risk in connection with borrowings under our credit facility. Borrowings pursuant to our Credit Agreement initially bear interest at a rate per annum equal to: (i) Adjusted Term SOFR Rate (as defined in the Credit Agreement), plus a margin ranging from 1.25% to 1.75%; (ii) Adjusted Daily Simple SOFR (as defined in the Credit Agreement), plus a margin ranging from 1.25% to 1.75%; or (iii) the Alternate Base Rate (as defined in the Credit Agreement), plus a margin ranging from 0.25% to 0.75%. The margin is determined based on the Rent Adjusted Leverage Ratio (as defined in the Credit Agreement). Borrowings outstanding as of December 31, 2025 were SOFR-based interest rate loans. The SOFR-based interest rate was 5.72% on December 31, 2025. Based upon balances and interest rates as of December 31, 2025, holding other variables constant, a one percentage point increase in interest rates for the next 12-month period would decrease pre-tax earnings and cash flow by approximately $0.3 million. Conversely, a one percentage point decrease in interest rates for the next 12-month period would result in an increase to pre-tax earnings and cash flow of approximately $0.3 million.
We currently do not engage in any interest rate hedging activity. We do not, and do not intend to, engage in the practice of trading derivative securities for profit.
Credit Concentration Risk
Financial instruments, which may subject us to concentration of credit risk, consist principally of cash deposits. We maintain cash balances at financial institutions with strong credit ratings. However, the amounts invested with financial institutions are generally in excess of FDIC insurance limits.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our consolidated financial statements and the reports of our independent registered public accounting firm, as listed under Part IV, Item 15. “Exhibits and Financial Statement Schedules,” are included as a separate section of this report beginning on page 54 and are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures.
We have established disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that information relating to the Company is accumulated and communicated to management, including our principal officers, as appropriate to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2025 and have concluded that our disclosure controls and procedures were effective as of December 31, 2025.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) promulgated under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of an issuer’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that an issuer’s receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of an issuer’s assets that could have a material effect on the consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, the application of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that compliance with the policies or procedures may deteriorate.
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As required by Rule 13a-15(c) promulgated under the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2025. Management’s assessment was based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013 Framework). Based on management’s assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2025.
RSM US LLP, our independent registered public accounting firm, has issued a report on our internal control over financial reporting as of December 31, 2025. See “Report of Independent Registered Public Accounting Firm – Opinion on the Internal Control over Financial Reporting” of this report.
Changes in Internal Control over Financial Reporting
There were no changes in internal control over financial reporting (as defined by Rule 13a-15(f) under the Exchange Act) during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, intends that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.
ITEM 9B. OTHER INFORMATION
Rule 10b5-1 Trading Plans
During the quarter ended December 31, 2025, none of the Company’s directors or executive officers
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information about our Directors
The following table provides information about the members of our Board of Directors, including their ages, as of February 23, 2026.
|
|
|
|
|
Name |
| Age |
| Position |
Class I Directors (Term Expires at 2028 Annual Meeting): |
|
|
|
|
Peter J. Jacullo III |
| 70 |
| Director |
Cabell H. Lolmaugh |
| 47 |
| Director, Chief Executive Officer and President |
Class II Directors (Term Expires at 2026 Annual Meeting): |
|
|
|
|
Peter H. Kamin |
| 64 |
| Director, Chairman of the Board |
Mark J. Bonney |
| 71 |
| Director |
Class III Directors (Term Expires at 2027 Annual Meeting): |
|
|
|
|
Benjamin Faw |
| 40 |
| Director |
Deborah K. Glasser |
| 57 |
| Director |
Jonathan Lennon |
| 43 |
| Director |
Class I Directors
Peter J. Jacullo III has served as a member of our Board since August 2012. Previously, Mr. Jacullo served as a member of The Tile Shop, LLC’s board of managers from December 2007 to August 2012. Since July 1987, Mr. Jacullo has been a self-employed investor and consultant, and he currently serves on the board of directors of various privately held companies. Previously, Mr. Jacullo was a Vice President and Director of the Boston Consulting Group from May 1984 to July 1987, where he was also employed in various other capacities from May 1978 to May 1984. Mr. Jacullo holds a B.A. in Economics from Johns Hopkins University and an M.B.A. from the University of Chicago. We believe that Mr. Jacullo is qualified to serve on our Board as a result of the continuity that he provides on our Board and his experience as a professional investor.
Cabell H. Lolmaugh has been our Chief Executive Officer and President and a member of our Board since January 1, 2019. From February 2018 through December 2018, Mr. Lolmaugh was our Senior Vice President and Chief Operating Officer. Mr. Lolmaugh previously served as our Vice President, Retail Stores from October 2017 until February 2018, as our Director – Talent Development, leading our store training programs and strategy, from January 2016 until October 2017, and as our Director of Pro Services, leading our professional customer strategy, from July 2014 through January 2016. Mr. Lolmaugh served in numerous key roles at a store level from 2001 through July 2014. Prior to joining us, Mr. Lolmaugh served in the United States Marine Corps. We believe that Mr. Lolmaugh is qualified to serve on our Board because of his role as our Chief Executive Officer and the connection he provides to the day-to-day operational management.
Class II Directors
Peter H. Kamin has served as a member of our Board since August 2012. Previously, Mr. Kamin served as a member of The Tile Shop, LLC’s board of managers from January 2012 to August 2012. Mr. Kamin is the founder of 3K Limited Partnership, a family limited partnership, and has served as its Managing Partner since January 2012. For the 11 years preceding the formation of 3K Limited Partnership, Mr. Kamin was a founding member and Managing Partner of ValueAct Capital, which grew into a leading investment management organization during Mr. Kamin’s tenure. Prior to founding ValueAct Capital in 2000, Mr. Kamin founded and managed Peak Investment L.P., a limited partnership organized to make investments in a select number of domestic public and private companies. Since August 2022, Mr. Kamin has served as a director of Psychemedics Corporation, which provides hair drug testing. Mr. Kamin previously served as a director of IAA, Inc., then a publicly traded multi-channel vehicle marketplace and former subsidiary of KAR Auction Services, Inc., from June 2019 until its merger in March 2023. Mr. Kamin is also a director of several privately held companies. From May 2012 to October 2019, Mr. Kamin served as a director of MAM Software Group, Inc., then a publicly traded provider of business automation and ecommerce solutions for the automotive aftermarket. Mr. Kamin holds a B.A. in Economics from Tufts University and an M.B.A. from the Harvard University Graduate School of Business. We believe that Mr. Kamin is qualified to serve on our Board due to his significant experience as a director of publicly traded companies and his substantial experience as an investor, including more than 40 years of leading boards and generating returns for investors.
Mark J. Bonney has served as a member of our Board since July 2020. Mr. Bonney currently serves as President and CEO of On Board Advisors, LLC, a financial and strategic advisory firm. Since July 2023, Mr. Bonney has served as a member of the board of directors of Plug Power Inc., a publicly traded provider of green hydrogen solutions. Mr. Bonney previously served on the board of directors of Zix Corporation, a then-publicly traded provider of cloud email security solutions, from January 2013 until its merger in December 2021. Mr. Bonney also previously served as a director of SeaChange International, Inc., a publicly traded provider of end-
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to-end video delivery and management software solutions for cable wireless, OTT and other content providing enterprises, from August 2017 through December 2019, including as Executive Chair and principal executive officer from April 2019 through October 2019, and Independent Chairman from October 2019 through December 2019. From May 2018 until its merger in April 2019, he served as President and Chief Executive Officer and a director of RhythmOne plc, a publicly traded provider of multi-screen digital advertising solutions, where he also served as the Interim Chief Financial Officer from February 2019 to April 2019. Prior to that, Mr. Bonney served as President and Chief Executive Officer of MRV Communications, Inc., a publicly traded supplier of network equipment to the telecommunications industry, from December 2014 until its sale in August 2017 and as a director of MRV Communications, Inc. from April 2013 to August 2017. Mr. Bonney previously served as a director of Sigma Designs, Inc., a provider of system-on-a-chip semiconductor solutions for smart homes, from August 2012 through August 2015; Executive Vice President and Chief Financial Officer of Direct Brands, Inc., a direct to consumer media company, from 2010 to 2012; vice president and general manager of the Authentication Solutions Group of JDS Uniphase Corporation (“JDSU”), an optical technologies and telecommunications firm, from 2008 to 2010; and as a director from 2003 until 2005, and Executive Vice President and Chief Financial Officer from 2005 to 2008, of American Bank Note Holographics, Inc., an optical security device company, which was acquired by JDSU. Mr. Bonney has also previously held executive roles with technology companies, including President, Chief Operating Officer and a director of Axsys Technologies, Inc., a manufacturer of components and subsystems for aerospace, defense, data storage, medical and other high technology applications, from 1999 to 2002, and Chief Financial Officer of Zygo Corporation, a manufacturer of components for semiconductor, data storage and industrial markets, from 1993 to 1999. Mr. Bonney holds a B.S. in Business from Central Connecticut State University and an M.B.A. in finance from the University of Hartford. We believe that Mr. Bonney is qualified to serve on our Board due to his significant experience as a Chief Executive Officer and Chief Financial Officer of several public companies and his substantial experience as a director of public companies.
Class III Directors
Benjamin Faw has served as a member of our Board since January 2026. Mr. Faw has served as a partner at Dynamism Capital, a commerce enablement-focused venture capital fund, since April 2022 and as CEO, Co-Founder and board member of AdVon Commerce, a digital commerce platform, since 2019. Mr. Faw is also an advisor and investor with a focus on companies in the consumer, technology, and media intersection. Mr. Faw is also an entrepreneur in residence at Context Ventures, a venture capital fund focused on consumer startups and startups founded by military veterans. Mr. Faw has served as a board member of Citi Trends since 2026. Mr. Faw is also a Co-Founder and formerly served as Chief Operations Officer at BestReviews. Prior to BestReviews Mr. Faw was at LinkedIn, Tesla, UBS investment banking, the Army Corps of Engineers, and the US Army. Mr. Faw served as an Infantry Platoon Leader with the US Army in Northern Iraq from 2008 to 2009, and is a graduate of several military schools including Ranger and Airborne School. Mr. Faw graduated from the United States Military Academy at West Point with a degree in Economics in 2007 earning awards for excellence including the Superintendent's award. Mr. Faw earned his M.B.A. from Harvard Business School in 2014 earning second year honors. Mr. Faw is also a Vice Chairman of the HBS fund council, a board member Emeritus of the Harvard Business School alumni board, and involved with various other volunteer efforts at Harvard Business School. Mr. Faw is also a passionate philanthropist, supporting causes such as scholarships, veterans, community organizations, and economic empowerment for those in need. We believe that Mr. Faw is qualified to serve on our Board due to his marketing experience and his experience as an entrepreneur, including in scaling company operations and talent management.
Deborah K. Glasser has served as a member of our Board since July 2020. Ms. Glasser currently serves as Principal of PathFinder Consulting, a career coaching advisory firm. Ms. Glasser previously held a variety of senior marketing operations positions, including as the Global Marketing Lead on the Renpure Brand at MAV Beauty Brands Inc., a Canada-based global personal care company, from February 2022 through July 2023. Ms. Glasser also previously served as Director of Marketing, Communications and Special Events for Jewish Family & Children’s Services of Northern New Jersey from 2018 through January 2020. Ms. Glasser was a Senior Director at TRANZACT, a Willis Towers Watson company that provides marketing solutions for insurance companies, from 2015 to 2017; Marketing Director at Tata Global Beverages Limited (now Tata Consumer Products Limited), a consumer products company with a portfolio that includes tea and coffee, from 2007 to 2011; Senior Director at Starwood Hotels & Resorts from 2004 to 2005; and in a variety of roles, including Senior Product Manager and Associate Director, at Colgate-Palmolive Company, a global consumer products company focused on oral care, personal care, home care and pet nutrition, from 1996 to 2004. In addition, Ms. Glasser was the Founder of MarketGWB, LLC, where she served as a self-employed marketing and strategy consultant, from 2011 to 2015. Previously, Ms. Glasser was an Employee Benefits and Compensation consultant with Price Waterhouse from 1992 to 1994. Ms. Glasser holds a B.A. in Economics from Cornell University and an M.B.A. from The Wharton School of the University of Pennsylvania. We believe Ms. Glasser is qualified to serve on our Board due to her operating and management experience, including in talent management, and her expertise in sales and marketing, including customer service and product innovation.
Jonathan Lennon has served as a member of our Board since January 2026. Mr. Lennon is the Founder, Chief Executive Officer and Portfolio Manager of Pleasant Lake Partners LLC, a registered investment adviser. Prior to founding Pleasant Lake Partners LLC in 2012, Mr. Lennon was an analyst at JAT Capital Management, an investment management firm, where he served primarily in a generalist role with a focus in industrials/natural resources, media and consumer sectors and was a sector head in 2010 and 2011. Prior to that time, Mr. Lennon spent three years at Goldman Sachs & Co. LLC, part of The Goldman Sachs Group, Inc., a leading global investment banking, securities, and asset and wealth management firm, where he served as an analyst in the Industrials/Natural
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Resources Department, Investment Banking Division and Equities Legal Division. Mr. Lennon completed his undergraduate education at Boston College and was a Galbraith Scholar at the Kennedy School of Government at Harvard College. Mr. Lennon was appointed to the Board pursuant to the Cooperation Agreement, as described below. We believe that Mr. Lennon is qualified to serve on our Board due to his corporate governance knowledge and experience as an investor. He also brings to the Board the perspective of the Company’s most significant stockholder.
Information about our Executive Officers
The following table provides information about our executive officers, including their ages, as of February 23, 2026. Mr. Lolmaugh’s background is described above.
|
|
|
|
|
Name |
| Age |
| Position |
Cabell H. Lolmaugh |
| 47 |
| Chief Executive Officer, President and Director |
Mark B. Davis |
| 45 |
| Senior Vice President, Chief Financial Officer and Secretary |
Joseph Kinder |
| 60 |
| Senior Vice President, Chief Merchant Officer |
Mark B. Davis has served as our Senior Vice President, Chief Financial Officer and Secretary since April 1, 2024. Mr. Davis previously served as our Vice President, Investor Relations, and Chief Accounting Officer from September 2019 through March 2024. He previously served as our Controller since 2014. Prior to joining us, Mr. Davis worked for Target Corporation for five years in various financial reporting and accounting management positions. Prior to joining Target Corporation, Mr. Davis worked for KPMG LLP for eight years, where he earned his CPA certification. Mr. Davis holds a Bachelor of Science degree in accounting and management from the University of Minnesota - Twin Cities.
Joseph Kinder has served as our Senior Vice President, Chief Merchant Officer since February 2025. Mr. Kinder previously served as our Senior Vice President, Supply Chain and Distribution July 2020 to February 2025, as our Vice President, Purchasing and Chief Supply Chain Officer from October 2017 until July 2020, and as our Senior Vice President - Operations from June 2012 to July 2017. Previously, Mr. Kinder served in several roles at The Tile Shop, LLC, including as Supply Chain Manager from August 1995 until June 2012, Assistant Store Manager from March 1994 to August 1995, and as a salesperson from March 1993 to March 1994. Mr. Kinder holds a B.A. in Business from the University of St. Thomas.
Involvement in Certain Legal Proceedings
During 2020, the Company and the individual defendants (which include certain current and former directors) and plaintiffs entered into the Stipulation of Settlement, dated as of August 7, 2020 (the “Stipulation”), memorializing the terms of the settlement of the litigation brought against the Company and certain current and former directors of the Company by K-Bar Holdings LLC and Wynnefield Capital, Inc. in the Delaware Court of Chancery. On January 10, 2020, our then-serving directors delivered director standstill commitments (as to purchases of shares of our common stock) to us. See “Director Compensation—Standstill Agreements” in Item 11 for further details.
Cooperation Agreement
On December 3, 2025, the Company and Fund 1 Investments, LLC (“Fund 1”) entered into a cooperation and support agreement (the “Cooperation Agreement”). Pleasant Lake Partners LLC serves as the investment adviser of Fund 1. Pursuant to the Cooperation Agreement, the Board agreed to increase the size of the Board and appoint two individuals proposed by Fund 1 as directors, one of whom was to be an employee of Fund 1. Messrs. Faw and Lennon were appointed to the Board in January 2026. The Company further agreed that (A) for so long as Fund 1 continues to beneficially own at least 20% of the then-outstanding shares of common stock, to nominate two Fund 1 nominees as directors, and (B) for so long as Fund 1 continues to beneficially own at least 10% of the then-outstanding shares of common stock, to nominate one Fund 1 nominee as a director, each for election to the Board at each annual meeting of stockholders as directors of the Company for terms expiring at the Company’s next annual meeting of stockholders. Subject to the terms of the Cooperation Agreement, the Company agreed to include such Fund 1 nominees in its proxy statements (or similar materials) for each annual meeting and to support the election of such Fund 1 nominees. Fund 1 also has replacement rights with respect to Fund 1 nominees, subject to certain conditions and procedures.
Family Relationships
There are no family relationships among any of our directors or executive officers.
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Committees of the Board of Directors
During the fiscal year ended December 31, 2025, the Board maintained four standing committees: the Audit Committee, the Compensation Committee, the Governance Committee and the Independent Transaction Committee. Each of our standing committees operates under a written charter, which is available on the “Investor Relations” section of our website, investors.tileshop.com, under the “Corporate Governance—Governance Documents” heading. The following table provides committee membership as of February 23, 2026 for each of the committees of the Board:
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|
|
|
|
|
|
|
|
Name |
| Audit |
| Compensation |
| Nominating and Corporate Governance |
| Independent Transaction |
Mark J. Bonney+ |
| X* |
| X |
|
|
| X* |
Benjamin Faw |
|
|
|
|
|
|
| X(1) |
Deborah K. Glasser |
|
|
| X* |
| X |
|
|
Peter J. Jacullo III |
| X |
| X |
|
|
|
|
Peter H. Kamin |
| X |
|
|
| X* |
|
|
Jonathan Lennon |
|
|
|
|
|
|
|
|
Cabell H. Lolmaugh |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Committee chairperson.
+ Audit committee financial expert.
(1) Mr. Faw was appointed to the Independent Transaction Committee effective January 27, 2026.
Delinquent Section 16(a) Reports
During 2025, we were subject to Section 16(a) of the Exchange Act, which required our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. To our knowledge, based solely on a review of the copies of such reports and representations that no other reports were required, we believe that all Section 16 filing requirements applicable to our executive officers, directors and greater than 10% stockholders were complied with during the fiscal year ended December 31, 2025, except that certain transactions by Fund 1 Investments, LLC were reported untimely, including four purchases of common stock and one acquisition of a cash-settled total return swap arrangement.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to all of our officers, directors and employees and is available on the “Investor Relations” section of our website, at investors.tileshop.com, under the “Corporate Governance—Governance Documents” heading. While we are no longer subject to the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of our Code of Ethics and Business Conduct, we intended to satisfy such requirement by posting such information on our website at the web address and location specified above within four business days following the date of the amendment or waiver.
Insider Trading Policies and Procedures
The Board has
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It is also the Company’s policy that the Company will not engage in transactions in Company securities, or adopt any securities repurchase plans, while in possession of material non-public information relating to the Company or its securities other than in compliance with applicable law, subject to the policies and procedures adopted by the Company.
ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation
Compensation Discussion and Analysis
This section discusses our policies and decisions with respect to the compensation of our executive officers named in the “Summary Compensation Table” below and the most important factors relevant to an analysis of these policies and decisions. The “named executive officers” for fiscal 2025 to whom this discussion applies are:
Cabell H. Lolmaugh, Chief Executive Officer and President;
Mark B. Davis, Senior Vice President, Chief Financial Officer and Secretary; and
Joseph Kinder, Senior Vice President, Chief Merchant Officer (formerly Senior Vice President, Supply Chain and Distribution, until February 25, 2025).
Overview
We recognize that our ability to excel depends on the integrity, knowledge, imagination, skill, and teamwork of our employees. To this end, we strive to create an environment of mutual respect, encouragement, and teamwork that rewards commitment and performance and is responsive to the needs of all of our employees. The principles and objectives of our compensation and benefits programs for our employees generally, and for our named executive officers specifically, are to:
Align compensation and incentives with our corporate strategies, business, and financial objectives, and the long-term interests of our stockholders;
Motivate, reward and retain executives whose knowledge, skills, and performance ensure our continued success; and
Ensure that total compensation is fair, reasonable, and competitive.
Each of the primary elements of our executive compensation program is discussed in more detail below. While we have identified particular compensation objectives that each element of executive compensation serves, our compensation programs are designed to be flexible and complementary and to collectively serve all the executive compensation objectives described above. Accordingly, whether or not specifically mentioned below, we believe that each individual element, to some extent, serves each of our objectives. Further, while each of our named executive officers may not be compensated with all individual compensation elements, we believe that the compensation provided to each individual named executive officer is, and will be, consistent with the overall compensation philosophy and objectives set forth above.
Compensation Determination Process
We review executive compensation annually, including evaluating our philosophy and compensation program as circumstances require. As part of this review process, we apply the values and the objectives outlined above, together with consideration of the levels of compensation that we would be willing to pay to ensure that our compensation remains competitive and meets our retention objectives considering the cost to us if we were required to replace a key employee.
The Compensation Committee has previously engaged Willis Towers Watson as a compensation consultant to assist in the periodic evaluation of our executive compensation programs. During 2022, the Compensation Committee engaged Willis Towers Watson to assist with benchmarking the Company’s executive compensation program and to provide a better understanding of market incentive practices. The Compensation Committee considered the information provided by the compensation consultant together with other information that the Compensation Committee deemed relevant, including the Compensation Committee’s assessments of individual executives’ performance and internal pay equity, in determining executive compensation levels for 2022 through 2025. We believe that such information, together with other information obtained by the members of our Compensation Committee, helps ensure that our compensation program remains competitive and is aligned with performance. We anticipate that our Compensation Committee will continue to adjust executive compensation levels in the future as a result of this market comparison process. Willis Towers
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Watson qualifies as independent, and the Compensation Committee believes that the work Willis Towers Watson performed did not raise a conflict of interest.
In establishing compensation levels for our named executive officers, the Compensation Committee considers competitive market, industry and peer group data, including general industry survey data provided by Willis Towers Watson. The Compensation Committee also considers criteria and recommendations from Willis Towers Watson regarding the composition of the peer group of companies that we use in evaluating the compensation levels of our Chief Executive Officer and our Chief Financial Officer. In selecting our peer group, the Compensation Committee considered companies in retail and distribution industries with revenues below $2.5 billion. The industry peer group used for purposes of the Company’s 2025 executive compensation program included the companies identified in the following table.
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Executive Compensation Peer Group Companies | ||
Bassett Furniture Industries, Incorporated | Global Industrial Company | MarineMax, Inc. |
Boot Barn Holdings, Inc. | Haverty Furniture Companies, Inc. | The Lovesac Company |
Build-A-Bear Workshop, Inc. | Kirkland’s, Inc. | Weyco Group, Inc. |
DXP Enterprises, Inc. |
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Executive Compensation Program Components
The compensation levels of our named executive officers reflect, to a significant degree, the varying roles and responsibilities of such executives.
Base Salary. Base salaries of our named executive officers are initially established through arm’s length negotiation at the time an executive is hired, considering such executive’s qualifications, experience, and prior salary. Base salaries of our named executive officers are reviewed periodically by our Chief Executive Officer and Compensation Committee, and in the case of our Chief Executive Officer’s base salary, by our Board, and adjustments to base salaries are approved based on the scope of an executive’s responsibilities, individual contribution, prior experience, and sustained performance. Decisions regarding salary adjustments may consider the named executive officer’s current salary, equity or equity-linked interests, and the amounts paid to a named executive officer’s peers within our organization. In making decisions regarding salary adjustments, we may also draw upon the experience of members of our Board with other companies. Base salaries are also reviewed in the case of promotions or other significant changes in responsibility. No formulaic base salary increases are provided to our named executive officers. This strategy is consistent with our intent of offering base salaries that are cost-effective while remaining competitive.
During the year ended December 31, 2024, the named executive officers’ base salaries were as follows: Mr. Lolmaugh, $424,360; Mr. Davis, $233,400; and Mr. Kinder, $278,100. In addition, in connection with the appointment of Mr. Davis as Senior Vice President, Chief Financial Officer and Secretary of the Company, effective April 1, 2024, Mr. Davis’s annual base salary was increased to $300,000. On February 25, 2025, the Board, upon the recommendation of the Compensation Committee, approved the following annual base salaries for the named executive officers, effective as of January 1, 2025: Mr. Lolmaugh, $437,000; Mr. Davis, $309,000; and Mr. Kinder, $350,000.
The actual base salaries earned by all our named executive officers in 2025 are set forth in the “Summary Compensation Table” below.
Omnibus Incentive Plans. In June 2012, our Board and stockholders adopted an equity award plan, which became effective on August 21, 2012. The principal purpose of the equity award plan was to attract, retain, and motivate selected employees, consultants, and directors. As initially adopted, the equity award plan provided for stock-based compensation awards. In February 2013, the Compensation Committee and the Board amended the equity award plan to also authorize grants of performance-based cash awards. At the same time, the plan was renamed the 2012 Omnibus Award Plan. The Compensation Committee administered the 2012 Omnibus Award Plan, subject to the right of our Board to assume authority for administration or delegate such authority to another committee of the Board.
In April 2021, our Board adopted the 2021 Omnibus Equity Compensation Plan (the “2021 Omnibus Plan” and, together with the 2012 Omnibus Award Plan, the “Omnibus Plans”) as a successor to the 2012 Omnibus Award Plan, and our stockholders approved the 2021 Omnibus Plan at the Annual Meeting of Stockholders held on July 20, 2021. No further awards were granted under the 2012 Omnibus Award Plan after July 20, 2021, but all awards granted under the 2012 Omnibus Award Plan that were outstanding on that date remain outstanding in accordance with their terms, notwithstanding the termination of the 2012 Omnibus Award Plan.
Under the Omnibus Plans, in the event of a change of control, as such term is defined in each of the Omnibus Plans, the Compensation Committee may, in its sole discretion, accelerate vesting of awards issued under the applicable Omnibus Plan such that 100% of any such award may become vested and exercisable. Additionally, the Compensation Committee has, or had, complete discretion to structure one or more awards under each of the Omnibus Plans to provide that such awards will become vested and exercisable on an
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accelerated basis. The Compensation Committee may also make appropriate adjustments to awards under each of the Omnibus Plans and is authorized to provide for the acceleration, termination, assumption, substitution, or conversion of such awards in the event of a change of control or certain other unusual or nonrecurring events or transactions.
The types of awards we grant under the 2021 Omnibus Plan include the following:
Cash Performance Awards. When granting cash performance award opportunities, the Compensation Committee adopts specific performance targets and payout levels for each executive officer for the applicable fiscal year. Generally, the Compensation Committee reviews and certifies performance following the end of each fiscal year and may also consider discretionary factors when making awards.
In February 2025, the Compensation Committee approved specific performance targets and payout levels for executive officers for the 2025 fiscal year. Under the 2025 plan, Mr. Lolmaugh, Mr. Davis, and Mr. Kinder’s cash incentive targets represented 75%, 50%, and 50% of their 2025 year-end base salaries, respectively. The cash incentive plan for 2025 was tied to the achievement of an Adjusted EBITDA target, calculated in the manner described below, and further adjusted for changes in cash incentive bonus expenses (as adjusted, “further Adjusted EBITDA”). Messrs. Lolmaugh, Davis and Kinder each had the opportunity to receive a partial incentive payment if we achieved at least 90% of the further Adjusted EBITDA performance target and could earn up to 175% the target incentive amount if we achieved 115% of the further Adjusted EBITDA performance target.
We calculate Adjusted EBITDA by taking net (loss) income calculated in accordance with accounting principles generally accepted in the United States and adjusting for interest expense, income taxes, depreciation and amortization, and stock-based compensation expense.
For 2025, the Company’s further Adjusted EBITDA fell below the minimum threshold required for a cash incentive payment. Accordingly, there was no payout of any 2025 cash incentive compensation to any of our named executive officers.
The cash incentive compensation opportunities granted to our named executive officers in fiscal year 2025 are set forth in the “Grants of Plan-Based Awards for Fiscal 2025” table. However, as set forth in the “Summary Compensation Table” below, none of our named executive officers received any cash incentive compensation payments for fiscal year 2025.
Equity and Equity-Linked Incentives. We use equity incentive awards to link the interests of our named executive officers with those of our stockholders. The 2021 Omnibus Plan authorizes the Compensation Committee to grant stock options (nonqualified stock options or incentive stock options) and restricted stock or any combination thereof. Vesting of such equity incentive awards is dependent in whole or in part on continued employment, to encourage the retention of our named executive officers through the vesting period of the awards. In some cases, vesting may also be partially based on certain market conditions such as the annual appreciation of our common stock or upon the attainment of certain performance conditions, such as an EBITDA target. In determining the size of equity awards to our named executive officers, our Compensation Committee considers several internal factors, such as the relative job scope, the value of outstanding equity awards, individual performance history, prior contributions to the Company, and the size of prior awards, as well as external factors such as the levels of unvested equity awards held by our executive officers in relation to their peers at comparable companies. We do not schedule the grant of stock options or other equity awards in anticipation of the disclosure of material non-public information, and we do not schedule the disclosure of material non-public information based on the timing of grants of stock options or other equity awards. We have not adopted any formal policy that would require the Compensation Committee or the Board to grant, or to avoid granting, stock options or other equity awards to our named executive officers or other employees at certain times.
2023 Equity Grants
In March 2023, we granted 18,250, 9,260, and 9,260 shares of time-based restricted stock to Mr. Lolmaugh, Mr. Davis, and Mr. Kinder, respectively and 37,039, 18,519, and 18,519 shares of performance-based restricted stock to Mr. Lolmaugh, Mr. Davis, and Mr. Kinder, respectively. The number of restricted shares granted was determined using the 30-trading day average of the Company’s closing stock price preceding the grant date. The shares of restricted stock were granted pursuant to the 2021 Omnibus Plan. The risks of forfeiture for the time-based restricted stock will lapse in three equal annual installments based on continued service. The performance-based restricted stock will vest in three installments: 30% will vest on the day that the Company files its annual report for the year ended December 31, 2023; 30% will vest on the day that the Company files its annual report for the year ended December 31, 2024; and 40% will vest on the day that the Company files its annual report for the year ended December 31, 2025, in each case subject to (i) the employee remaining in continuous employment with the Company prior to and as of December 31 of the year preceding the applicable vesting date and (ii) further subject to the Company achieving 15%, 20%, and 20% of the profit metric, defined as adjusted pretax return on capital employed (“ROCE”) (as such results are reported in the Company’s annual report for the applicable year), for the
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years ended December 31, 2023, 2024, and 2025, respectively. We calculate adjusted ROCE by taking income (loss) from operations before performance share based compensation expense, divided by capital employed. Capital employed equals total assets less accounts payable, income taxes payable, other accrued liabilities, lease liability and non-interest bearing other long-term liabilities (where income statement accounts represent the activity for the trailing twelve months ended as of each of the balance sheet dates, and balance sheet accounts represent the average account balance for the four quarters ended as of each of the balance sheet dates). Given uncertain macroeconomic conditions following interest rate hikes and projections of slowing demand tied to the housing industry at the time the Compensation Committee set the 2023 performance share incentive targets, the Compensation Committee established adjusted ROCE targets for 2023 that were somewhat lower than the targets for 2022 performance share awards. In establishing adjusted ROCE targets for the 2023 performance share awards, the Compensation Committee sought to create targets that are challenging but obtainable, and aligned with the Company’s guidance and projections regarding market conditions, in order to provide strong incentives for management to continue to focus on efficient capital deployment. To further align executive compensation with performance, two-thirds of the equity incentives for 2023 were based on achieving performance goals. The Compensation Committee determined the levels of equity grants after assessing individual executives’ performance, their role with, and contributions to, the Company, and market compensation data provided by the compensation consultant.
For the year ended December 31, 2023, the Company did not achieve the performance condition required for vesting of the first tranche of the performance-based restricted share awards granted in 2023. Accordingly, 11,112, 5,556, and 5,556 performance-based restricted shares that had previously been granted to Mr. Lolmaugh, Mr. Davis and Mr. Kinder, respectively, were cancelled in February 2024.
For the year ended December 31, 2024, the Company did not achieve the performance condition required for vesting of the second tranche of the performance-based restricted share awards granted in 2023. Accordingly, 11,112, 5,556, and 5,556 performance-based restricted shares that had previously been granted to Mr. Lolmaugh, Mr. Davis and Mr. Kinder, respectively, were cancelled in February 2025.
For the year ended December 31, 2025, the Company did not achieve the performance condition required for vesting of the third tranche of the performance-based restricted share awards granted in 2023. Accordingly, 14,815, 7,407, and 7,407 performance-based restricted shares that had previously been granted to Mr. Lolmaugh, Mr. Davis and Mr. Kinder, respectively, were cancelled in February 2026 upon the filing of this Annual Report on Form 10-K.
2024 Equity Grants
In March 2024, we granted 15,125, 7,562, and 7,562 shares of time-based restricted stock to Mr. Lolmaugh, Mr. Davis, and Mr. Kinder, respectively and 30,249, 15,125, and 15,125 shares of performance-based restricted stock to Mr. Lolmaugh, Mr. Davis, and Mr. Kinder, respectively. The number of restricted shares granted was determined using the 30-trading day average of the Company’s closing stock price preceding the grant date. The shares of restricted stock were granted pursuant to the 2021 Omnibus Plan. The risks of forfeiture for the time-based restricted stock will lapse in three equal annual installments based on continued service. The performance-based restricted stock will vest in three installments: 30% will vest on the day that the Company files its annual report for the year ended December 31, 2024; 30% will vest on the day that the Company files its annual report for the year ended December 31, 2025; and 40% will vest on the day that the Company files its annual report for the year ended December 31, 2026, in each case subject to (i) the employee remaining in continuous employment with the Company prior to and as of December 31 of the year preceding the applicable vesting date and (ii) further subject to the Company achieving 12%, 14% and 15% of the profit metric, defined as adjusted ROCE, for the years ended December 31, 2024, 2025, and 2026, respectively. We calculate adjusted ROCE by taking income (loss) from operations before performance share based compensation expense, divided by capital employed, calculated as described above. Given continued uncertain macroeconomic conditions following projections of slowing demand tied to the housing industry at the time the Compensation Committee set the 2024 performance share incentive targets, the Compensation Committee established adjusted ROCE targets for 2024 that were somewhat lower than the targets for 2023 performance share awards. In establishing adjusted ROCE targets for the 2024 performance share awards, the Compensation Committee again sought to create targets that are challenging but obtainable, and aligned with the Company’s guidance and projections regarding market conditions, in order to provide strong incentives for management to continue to focus on efficient capital deployment. To further align executive compensation with performance, two-thirds of the equity incentives for 2024 were based on achieving performance goals. The Compensation Committee determined the levels of equity grants after assessing individual executives’ performance, their role with, and contributions to, the Company, and market compensation data provided by the compensation consultant.
In addition, in connection with his April 1, 2024 appointment as Senior Vice President, Chief Financial Officer and Secretary, Mr. Davis received a $50,000 equity award in May 2024, consisting of (i) 2,464 shares of time-based restricted stock, for which he risks of forfeiture will lapse in three equal annual installments based on continued service, and (ii) 4,928 shares of performance-based restricted stock, which will vest in three installments: 30% will vest on May 13, 2025, 30% will
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vest on the day that the Company files its annual report for the year ended December 31, 2025, and 40% will vest on the day that the Company files its annual report for the year ended December 31, 2026, in each case subject to (i) Mr. Davis remaining in continuous employment with the Company prior to and as of December 31 of the year preceding the applicable vesting date and (ii) further subject to the Company achieving 12%, 14% and 15% of the profit metric, defined as adjusted ROCE and calculated as described above, for the years ended December 31, 2024, 2025, and 2026, respectively. The number of restricted shares granted was determined using the 30-trading day average of the Company’s closing stock price preceding the grant date. The shares of restricted stock were granted pursuant to the 2021 Omnibus Plan.
For the year ended December 31, 2024, the Company did not achieve the performance condition required for vesting of the first tranche of the performance-based restricted share awards granted in 2024. Accordingly, 9,075, 4,538, and 4,538 performance-based restricted shares that had previously been granted to Mr. Lolmaugh, Mr. Davis and Mr. Kinder, respectively, were cancelled in February 2025 and an additional 1,478 performance-based restricted shares that had previously been granted to Mr. Davis were cancelled in May 2025.
For the year ended December 31, 2025, the Company did not achieve the performance condition required for vesting of the second tranche of the performance-based restricted share awards granted in 2024. Accordingly, 9,075, 6,016, and 4,538 performance-based restricted shares that had previously been granted to Mr. Lolmaugh, Mr. Davis and Mr. Kinder, respectively, were cancelled in February 2026 upon the filing of this Annual Report on Form 10-K.
2025 Equity Grants
In March 2025, we granted 13,542, 9,028, and 9,028 shares of time-based restricted stock to Mr. Lolmaugh, Mr. Davis, and Mr. Kinder, respectively and 27,083, 18,055, and 18,055 shares of performance-based restricted stock to Mr. Lolmaugh, Mr. Davis, and Mr. Kinder, respectively. The number of restricted shares granted was determined using the 30-trading day average of the Company’s closing stock price preceding the grant date. The shares of restricted stock were granted pursuant to the 2021 Omnibus Plan. The risks of forfeiture for the time-based restricted stock will lapse in three equal annual installments based on continued service. The performance-based restricted stock will vest in three installments: 30% will vest on the day that the Company files its annual report for the year ended December 31, 2025; 30% will vest on the day that the Company files its annual report for the year ended December 31, 2026; and 40% will vest on the day that the Company files its annual report for the year ended December 31, 2027, in each case subject to (i) the employee remaining in continuous employment with the Company prior to and as of December 31 of the year preceding the applicable vesting date and (ii) further subject to the Company achieving 10%, 12% and 14% of the profit metric, defined as adjusted ROCE, as described above, for the years ended December 31, 2025, 2026, and 2027, respectively.
For the year ended December 31, 2025, the Company did not achieve the performance condition required for vesting of the first tranche of the performance-based restricted share awards granted in 2025. Accordingly, 8,125, 5,417, and 5,417 performance-based restricted shares that had previously been granted to Mr. Lolmaugh, Mr. Davis and Mr. Kinder, respectively, were cancelled in February 2026 upon the filing of this Annual Report on Form 10-K.
The equity grants made to our named executive officers in fiscal year 2025 are set forth in the “Summary Compensation Table for Fiscal 2025” and the “Grants of Plan-Based Awards for Fiscal 2025” table and are further discussed under “Equity Grants” below.
As a result of the Transaction, the Company does not expect that it will be required to file current or periodic reports with the SEC following the filing of this Annual Report on Form 10-K. Accordingly, the performance-based restricted shares that are intended to vest upon the date the Company files its annual report will vest on the date the Company releases its annual financial statements for the applicable fiscal year.
Retirement Savings. All of our full-time employees, including our named executive officers, are eligible to participate in The Tile Shop 401(k) Retirement Plan. Employees may elect to reduce their current compensation by up to the statutorily prescribed annual limit, which was $23,500 in 2025 (or $31,000 for employees over 50), and to have the amount of this reduction contributed to the 401(k) plan. In fiscal year 2025, we made a matching contribution of $0.50 for every $1.00 that each applicable employee contributed to the 401(k) plan, up to a maximum of 5% of such employee’s salary. Each year, this matching contribution vests as to 20% of the aggregate matching contributions for such employee, such that all past and future matching contributions will be vested after the employee has been employed by us for a period of five years.
Perquisites. From time to time, we have provided certain of our named executive officers with perquisites that we believe are reasonable. We do not view perquisites as a significant element of our comprehensive compensation structure, but we do believe they can be useful in attracting, motivating, and retaining executive talent. We believe that these additional benefits may assist our executive officers in performing their duties and provide time efficiencies for our executive officers in appropriate circumstances. Accordingly, we may consider providing additional perquisites in the future. There are no material perquisites to our named executive
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officers that are contractual obligations pursuant to written agreements. All future practices regarding perquisites will be approved and subject to periodic review by our Compensation Committee.
Clawback Policy
During 2025, our executive officers were subject to our Compensation Recovery Policy, adopted in February 2023, which applied to incentive-based compensation under awards approved, awarded or granted on or after February 28, 2023 and which complied with the requirements for compensation recovery (or “clawback”) policies adopted by the SEC and Nasdaq. Following the Transaction, the policy is no longer in effect.
Risk Assessment of Compensation Policies and Practices
The Compensation Committee is responsible for overseeing the management of risks relating to our compensation policies, plans and arrangements, as well as our strategies related to human capital management. The Compensation Committee addresses risk by monitoring regulatory compliance with respect to compensation matters and by setting compensation in a manner that encourages accountability and is within our range of risk tolerance. The Compensation Committee is not presently aware of any information that would lead it to believe that risks arising from our employee compensation policies and practices are reasonably likely to have a material adverse effect on us.
Compensation Committee Interlocks and Insider Participation
Members of the Compensation Committee during the fiscal year ended December 31, 2025 included Messrs. Jacullo and Bonney and Ms. Glasser. None of our Compensation Committee members has ever been one of our executive officers or employees. None of our executive officers currently serves, nor during the last fiscal year served, as a member of the board or compensation committee (or other board committee performing equivalent functions) of any entity that has one or more of its executive officers serving on our Board or Compensation Committee.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based upon this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Compensation Committee of the Board of Directors:
Deborah K. Glasser, Chair
Mark J. Bonney
Peter J. Jacullo III
Summary Compensation Table for Fiscal 2025
The following table provides information regarding the compensation earned during the fiscal years ended December 31, 2025, 2024, and 2023 by each of the named executive officers for each year in which each individual was a named executive officer. The positions listed are those held as of December 31, 2025.
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Name and Principal Position |
| Fiscal Year |
| Salary ($) |
| Bonus ($) |
| Stock Awards ($) (1) |
| Option Awards ($) (1) |
| Non-Equity Incentive Plan |
| All Other Compensation |
| Total ($) |
Cabell Lolmaugh |
| 2025 |
| 437,000 |
| - |
| 296,969 |
| - |
| - |
| 4,739 | (3) | 738,708 |
Chief Executive Officer and |
| 2024 |
| 424,360 |
| - |
| 301,737 |
| - |
| - |
| 7,022 |
| 733,119 |
President |
| 2023 |
| 412,000 |
| - |
| 270,017 |
| - |
| - |
| 5,150 |
| 687,167 |
Mark Davis |
| 2025 |
| 309,000 |
| - |
| 197,977 |
| - |
| - |
| 8,971 | (3) | 515,948 |
Senior Vice President and |
| 2024 |
| 283,350 |
| - |
| 200,247 |
| - |
| - |
| 7,084 |
| 490,681 |
Chief Financial Officer |
| 2023 |
| 226,600 |
| - |
| 135,006 |
| - |
| - |
| 5,665 |
| 367,271 |
Joseph Kinder |
| 2025 |
| 350,000 |
| - |
| 197,977 |
| - |
| - |
| 9,035 | (3) | 557,012 |
Senior Vice President, |
| 2024 |
| 278,100 |
| - |
| 150,862 |
| - |
| - |
| 6,953 |
| 435,915 |
Supply Chain and Distribution |
| 2023 |
| 270,000 |
| - |
| 135,006 |
| - |
| - |
| 6,750 |
| 411,756 |
(1)The value of stock awards and options in this table represents the fair value of such awards granted or modified during the fiscal year, as computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic
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718 (“Topic 718”). The assumptions used to determine the valuation of the awards are discussed in Note 9 to our consolidated financial statements, included in this Annual Report on Form 10-K.
(2)Represents cash incentive compensation paid based on our achievement of applicable performance goals. None of our named executive officers received any cash incentive compensation payments for the 2025 fiscal year. See “Non-Equity Incentive Plan Compensation” below for additional discussion.
(3)Represents employer 401(k) contributions, employer health savings account contributions, and taxable fringe benefits.
Grants of Plan-Based Awards for Fiscal 2025
The following table sets forth certain information regarding grants of plan-based awards during the fiscal year ended December 31, 2025:
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| All other stock awards: |
| All other option awards: |
| Exercise or base |
| Grant date fair value of stock and option | ||||
Name |
| Grant Date |
| Approval Date |
| Threshold |
| Target |
| Maximum ($) |
| stock or units |
| underlying options (#) |
| awards ($/Sh) |
| awards |
Cabell Lolmaugh |
| 3/3/2025 |
| 2/25/2025 |
| - |
| - |
| - |
| 13,542 | (2) | - |
| - |
| 98,992 |
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| 3/3/2025 |
| 2/25/2025 |
| - |
| - |
| - |
| 27,083 | (3) | - |
| - |
| 197,977 |
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| N/A |
| N/A |
| - |
| 327,750 |
| 573,563 |
| - |
| - |
| - |
| - |
Mark Davis |
| 3/3/2025 |
| 2/25/2025 |
| - |
| - |
| - |
| 9,028 | (2) | - |
| - |
| 65,995 |
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| 3/3/2025 |
| 2/25/2025 |
| - |
| - |
| - |
| 18,055 | (3) | - |
| - |
| 131,982 |
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| N/A |
| N/A |
| - |
| 154,500 |
| 270,375 |
| - |
| - |
| - |
| - |
Joseph Kinder |
| 3/3/2025 |
| 2/25/2025 |
| - |
| - |
| - |
| 9,028 | (2) | - |
| - |
| 65,995 |
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| 3/3/2025 |
| 2/25/2025 |
| - |
| - |
| - |
| 18,055 | (3) | - |
| - |
| 131,982 |
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| N/A |
| N/A |
| - |
| 175,000 |
| 306,250 |
| - |
| - |
| - |
| - |
(1)The cash incentive compensation plan approved by the Compensation Committee in February 2025 included one performance goal, tied to the achievement of the further Adjusted EBITDA target. Messrs. Lolmaugh, Davis, and Kinder each had the opportunity to receive a partial incentive payment if the Company achieved at least 90% of the further Adjusted EBITDA performance target and could earn up to 175% the target incentive amount if the Company achieved 115% of the further Adjusted EBITDA performance target. Under the 2025 plan, Mr. Lolmaugh, Mr. Davis, and Mr. Kinder’s cash incentive targets represented 75%, 50%, and 50% of their base salaries, respectively. In 2025, the Company’s further Adjusted EBITDA fell below the minimum threshold for a cash incentive payment. Accordingly, there was no payout of any 2025 cash incentive compensation to Messrs. Lolmaugh, Davis or Kinder.
(2)Represents shares of time-based restricted stock. The risks of forfeiture for the time-based restricted stock will lapse in three equal annual installments based on continued service.
(3)Represents shares of performance-based restricted stock. The performance-based restricted stock will vest in three installments: 30% will vest on the day that the Company files its annual report for the year ended December 31, 2025; 30% will vest on the day that the Company files its annual report for the year ended December 31, 2026; and 40% will vest on the day that the Company files its annual report for the year ended December 31, 2027, in each case subject to the employee remaining in continuous employment with the Company prior to and as of December 31 of the year preceding the applicable vesting date and further subject to the Company achieving 10%, 12% and 14% of the profit metric, defined as adjusted ROCE, for the years ended December 31, 2025, 2026, and 2027, respectively. Because the adjusted ROCE profit metric for fiscal 2025 was not achieved, 30% of the performance-based restricted stock granted on March 3, 2025 was forfeited.
Offer Letter and Termination Agreements
In February 2018, as the result of arm’s length negotiations, we entered into an offer letter agreement with Mr. Lolmaugh setting forth the terms and conditions of his employment as our Senior Vice President and Chief Operating Officer. Effective January 1, 2019, we updated Mr. Lolmaugh’s offer letter agreement to reflect his new title of Chief Executive Officer and President and to memorialize certain compensation changes related to his promotion. All other terms of his offer letter agreement remained unchanged.
In September 2019, as the result of arm’s length negotiations, we entered into an offer letter agreement with Mr. Davis setting forth the terms and conditions of his employment as our Vice President, Investor Relations, and Chief Accounting Officer. In connection
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with his appointment as our Senior Vice President and Chief Financial Officer, we entered into an amendment to Mr. Davis’s offer letter agreement on March 18, 2024, reflecting Mr. Davis’s new title; providing for annual base salary of $300,000; amending Mr. Davis’s target annual cash incentive compensation opportunity to provide a target of 50% of his base salary; and providing for an additional $50,000 equity award following the issuance of the Company’s first quarter 2024 financial results.
Pursuant to the respective offer letter agreement, Messrs. Lolmaugh and Davis are entitled to receive severance benefits if their employment is terminated by us without severance cause at any time or if they resign for good reason (as such terms are defined in the offer letter agreements), subject to execution of a full release in our favor. In such an event, Messrs. Lolmaugh and Davis are entitled to continued payment of their base salary for six months and an additional payment in an amount equal to six times our contribution amount for the monthly health insurance premium for them during the month immediately prior to termination. Upon a change of control (as such term is defined in the applicable Omnibus Plans), Messrs. Lolmaugh and Davis are also entitled to full vesting acceleration with respect to any unvested stock options if they are not offered employment by the successor entity, or if they are terminated without cause (as defined in the 2012 Omnibus Award Plan) or constructively terminated prior to the first anniversary of the change of control.
In October 2020, as the result of arm’s length negotiations, we entered into an offer letter agreement with Mr. Kinder setting forth the terms and conditions of his employment as our Senior Vice President, Supply Chain and Distribution. Pursuant to the offer letter agreement, Mr. Kinder is entitled to receive severance benefits of continued payment of his base salary for six months if his employment is terminated by us without severance cause or he resigns for good reason (as such terms are defined in his offer letter agreement) due to a change of control, subject to execution of a full release in our favor. Upon a change of control, Mr. Kinder is entitled to full vesting acceleration with respect to any unvested restricted stock if he is not offered employment by the successor entity, or if he is terminated without cause or constructively terminated prior to the first anniversary of the change of control.
On February 25, 2025, in connection with his appointment to the position of Senior Vice President, Chief Merchant Officer, we entered into an employment agreement with Mr. Kinder, which superseded in its entirety his offer letter agreement described above. The employment agreement with Mr. Kinder documents the agreed terms and conditions of his employment as Senior Vice President, Chief Merchant Officer, as well as his expected subsequent transition, effective January 1, 2027, to non-executive employment as a Purchasing Advisor. Pursuant to the employment agreement, effective on February 25, 2025 and continuing through December 31, 2026 or such earlier date as his employment may be terminated for any reason (the “Officer Employment Period”), Mr. Kinder will receive an annual salary of $350,000 (effective as of January 1, 2025), will be eligible to participate in the Company’s corporate bonus program, with a target bonus opportunity of 50% of his annual salary, will be eligible to participate in the Company’s annual equity award program for executive officers, with an aggregate target annual equity award value of $200,000, and will be eligible for other employee benefits in accordance with the Company’s policies and plans. In the event of a change of control of the Company during the Officer Employment Period, Mr. Kinder generally will be entitled to accelerated vesting and exercisability of unvested restricted stock award grants if he is not offered employment or continued employment by the successor entity, or if his employment terminates within one year after the change of control as a result of his termination by the successor entity without severance cause or his resignation in a constructive termination. Further, if Mr. Kinder’s employment terminates during the Officer Employment Period due to a change of control and as a result of his termination by the successor entity without severance cause or his resignation for good reason, he will be entitled to receive cash severance in an amount equal to his then-current base salary for a six-month period, conditioned upon his provision of an effective release of claims against the Company. Pursuant to the employment agreement, if Mr. Kinder remains employed by the Company as Senior Vice President, Chief Merchant Officer through December 31, 2026, then, effective on January 1, 2027 and continuing through December 31, 2028 or such earlier date as his employment may be terminated for any reason (such period, the “Transition Period”), the Company will employ him as a Purchasing Advisor, which is a non-officer employee position. During the Transition Period, Mr. Kinder will receive an annual salary of $75,000 and will be eligible for other employee benefits in accordance with the Company’s policies and plans.
As defined in the offer letter and employment agreements, “severance cause” means (1) the employee’s willful misconduct in connection with employment or willful failure to perform responsibilities in the best interests of us, as determined by (i) the Board, for each of Messrs. Lolmaugh and Davis, or (ii) the Company’s Chief Financial Officer, for Mr. Kinder; (2) conviction of, or plea of nolo contendere or guilty to, a felony other than an act involving a traffic related infraction; (3) any act of fraud, theft, embezzlement or other material dishonesty by the employee that harmed us; (4) intentional violation of a federal or state law or regulation applicable to our business, which violation was or is reasonably likely to be injurious to us; or (5) the employee’s repeated failure to perform his or her duties and obligations of his or her position with us, which failure is not cured within thirty (30) days after notice of such failure from (i) the Board, for each of Messrs. Lolmaugh and Davis, or (ii) the Chief Financial Officer, for Mr. Kinder. “Good reason” exists if an employee resigns as a result of (1) a material reduction in annual base salary or job responsibility or (2) the relocation of the employee’s principal office location to a facility or location located more than 50 miles from his or her current principal office location. The full definition of “severance cause” and “good reason” is set forth in the offer letter agreements.
For purposes of the Omnibus Plans, subject to exceptions set forth in the respective Omnibus Plans, a “change of control” generally includes (1) the acquisition of more than 50% of our common stock; (2) the incumbent Board ceasing to constitute a majority of the Board during any period of two consecutive years; (3) a merger, consolidation, reorganization or business combination, or a sale of
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substantially all our assets; and (4) stockholder approval of our complete liquidation or dissolution. “Cause,” as defined in the Omnibus Plans, generally means any act or omission the Compensation Committee determines constitutes cause for termination, including (1) a material violation of any of our policies, including the Code of Business Conduct and Ethics; (2) embezzlement from, or theft of, our property; (3) willful failure to perform, or gross negligence in the performance of, assigned duties; or (4) other intentional misconduct, whether related to employment or otherwise, which has, or could potentially have, a material adverse effect on our business. The full definition of “change of control” and “cause” is set forth in each of the Omnibus Plans.
In connection with their offer letter and employment agreements, each of Messrs. Lolmaugh, Davis and Kinder agreed not to compete, directly or indirectly, with us, and not to solicit any of our employees or business contacts, during the term of their employment and for a period of one year thereafter.
Non-Equity Incentive Plan Compensation
In February 2025, the Compensation Committee approved specific performance targets and payout levels for executive officers for the 2025 fiscal year. Under the 2025 plan, Mr. Lolmaugh, Mr. Davis, and Mr. Kinder’s cash incentive targets represented 75%, 50%, and 50% of their 2025 year-end base salaries, respectively. The cash incentive plan for 2025 was tied to the achievement of a further Adjusted EBITDA Target, with Adjusted EBITDA calculated in the manner described above, as further adjusted for changes in cash incentive bonus expenses. Messrs. Lolmaugh, Davis and Kinder each had the opportunity to receive a partial incentive payment if we achieved at least 90% of the further Adjusted EBITDA performance target and could earn up to 175% the target incentive amount if we achieved 115% of the further Adjusted EBITDA performance target. See below for a table setting forth the performance targets and payout levels under the plan:
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Percentage of budgeted further Adjusted EBITDA achieved* | 90% | 95% | 100% | 105% | 110% | 115% |
Percentage of incentive payout level | 0% | 50.0% | 100.0% | 125.0% | 150.0% | 175.0% |
* Payout levels for percentages between the listed ranges are proportionately adjusted.
For 2025, the Company did not attain the level of further Adjusted EBITDA required for payment under the cash incentive plan. Accordingly, the Compensation Committee did not approve a payout of any 2025 cash incentive compensation to Messrs. Lolmaugh, Davis or Kinder.
Equity Grants
All restricted stock awards issued in fiscal year 2025 to named executive officers were issued pursuant to the 2021 Omnibus Plan. Pursuant to the 2021 Omnibus Plan, in the event of a change of control, any unvested equity awards may be accelerated at the sole discretion of the Compensation Committee.
We have also provided for the acceleration of vesting of certain equity awards granted to Messrs. Lolmaugh, Davis, and Kinder in the event of our change of control pursuant to their offer letter agreements. In the event of a change of control, if they are terminated without cause or are otherwise constructively terminated prior to the first anniversary of the change of control, the vesting of such unvested awards will be accelerated in full immediately prior to such termination. We believe that these acceleration opportunities will further align the interests of our executives with those of our stockholders by providing our executives an opportunity to benefit alongside our stockholders in a corporate transaction.
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Outstanding Equity Awards at Fiscal Year-end for Fiscal 2025
The following table sets forth certain information regarding outstanding equity awards held by the named executive officers as of December 31, 2025:
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| Option Awards |
| Stock Awards | ||||||||
Name |
| Grant Date |
| Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option | Option |
| Number of Shares or Units of | Market Value of Shares or Units of Stock That Have not Vested ($)* | Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Unearned Shares That Have Not Vested ($)* | ||
Cabell |
| 11/6/2017 |
| 26,900 | - | 8.50 | 11/6/2027 |
| - |
| - | - |
| - |
Lolmaugh |
| 2/22/2018 |
| 56,000 | - | 5.55 | 2/22/2028 |
| - |
| - | - |
| - |
|
| 2/20/2019 |
| 97,067 | - | 6.26 | 2/20/2029 |
| - |
| - | - |
| - |
|
| 3/6/2023(1) |
| - | - | - | - |
| 6,173 | (2) | 21,729 | - | (1) | - |
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| 3/4/2024 |
| - | - | - | - |
| 10,083 | (4) | 35,492 | 12,099 | (3) | 42,588 |
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| 3/3/2025 |
| - | - | - | - |
| 13,542 | (7) | 47,668 | 18,958 | (6) | 66,732 |
Mark |
| 11/6/2017 |
| 5,400 | - | 8.50 | 11/6/2027 |
| - |
| - | - |
| - |
Davis |
| 3/6/2023(1) |
| - | - | - | - |
| 3,086 | (2) | 10,863 | - | (1) | - |
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| 3/4/2024 |
| - | - | - | - |
| 5,041 | (4) | 17,744 | 6,049 | (3) | 21,292 |
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| 5/13/2024 |
| - | - | - | - |
| 1,642 | (5) | 5,780 | 1,972 | (3) | 6,941 |
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| 3/3/2025 |
| - | - | - | - |
| 9,028 | (7) | 31,779 | 12,638 | (6) | 44,486 |
Joseph |
| 11/6/2017 |
| 26,900 | - | 8.50 | 11/6/2027 |
| - |
| - | - |
| - |
Kinder |
| 7/20/2018 |
| 50,000 | - | 8.80 | 7/20/2028 |
| - |
| - | - |
| - |
|
| 3/6/2023(1) |
| - | - | - | - |
| 3,086 | (2) | 10,863 | - | (1) | - |
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| 3/4/2024 |
| - | - | - | - |
| 5,041 | (4) | 17,744 | 6,049 | (3) | 21,292 |
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| 3/3/2025 |
| - | - | - | - |
| 9,028 | (7) | 31,779 | 12,638 | (6) | 44,486 |
*Based on the closing stock price of our common stock of $3.52 on December 31, 2025, the last trading day of the 2025 fiscal year.
(1)The shares of performance-based restricted stock granted on March 6, 2023 provided for vesting in three installments: 30% to vest on the day that the Company filed its annual report for the year ended December 31, 2023; 30% to vest on the day that the Company filed its annual report for the year ended December 31, 2024; and 40% to vest on the day that the Company filed its annual report for the year ended December 31, 2025, in each case subject to (i) the employee remaining in continuous employment with the Company prior to and as of December 31 of the year preceding the applicable vesting date and (ii) further subject to the Company achieving 15%, 20%, and 20% of the applicable profit metric for the years ended December 31, 2023, 2024, and 2025, respectively. Because the profit metric for fiscal 2025 was not achieved, the final installment of the performance-based restricted stock granted on March 6, 2023 was forfeited as of the date of filing this Annual Report on Form 10-K and is therefore not reported in this table.
(2)The risks of forfeiture for these shares of restricted stock will lapse on March 6, 2026.
(3)The shares of performance-based restricted stock granted on March 4, 2024 and May 13, 2024 provide for vesting in three installments: 30% to vest on the day that the Company files its annual report for the year ended December 31, 2024, except for the shares granted to Mr. Davis on May 13, 2024, for which 30% will vest on May 13, 2025; 30% to vest on the day that the Company files its annual report for the year ended December 31, 2025; and 40% to vest on the day that the Company files its annual report for the year ended December 31, 2026, in each case subject to (i) the employee remaining in continuous employment with the Company prior to and as of December 31 of the year preceding the applicable vesting date and (ii) further subject to the Company achieving 12%, 14%, and 15% of the applicable profit metric for the years ended December 31, 2024, 2025, and 2026, respectively. Because the profit metric for fiscal 2025 was not achieved, the second installment of the performance-based restricted stock granted on March 4, 2024 and May 13, 2024, or 30% of the initial grant, was forfeited as of the date of filing this Annual Report on Form 10-K and is therefore not reported in this table. The remainder of the performance-based restricted stock granted on March 4, 2024 and May 13, 2024, or 40% of the initial grant, is reported in this table at the target level.
(4)The risks of forfeiture for these shares of restricted stock will lapse in two equal annual installments beginning on March 4, 2026.
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(5)The risks of forfeiture for these shares of restricted stock will lapse in two equal annual installments beginning on May 13, 2026.
(6)The shares of performance-based restricted stock granted on March 3, 2025 provide for vesting in three installments: 30% to vest on the day that the Company files its annual report for the year ended December 31, 2025; 30% to vest on the day that the Company files its annual report for the year ended December 31, 2026; and 40% to vest on the day that the Company files its annual report for the year ended December 31, 2027, in each case subject to (i) the employee remaining in continuous employment with the Company prior to and as of December 31 of the year preceding the applicable vesting date and (ii) further subject to the Company achieving 10%, 12% and 14% of the applicable profit metric for the years ended December 31, 2025, 2026, and 2027, respectively. Because the profit metric for fiscal 2025 was not achieved, the first installment of the performance-based restricted stock granted on March 3, 2025, or 30% of the initial grant, was forfeited as of the date of filing this Annual Report on Form 10-K and is therefore not reported in this table. The remainder of the performance-based restricted stock granted on March 3, 2025, or 70% of the initial grant, is reported in this table at the target level.
(7)The risks of forfeiture for these shares of restricted stock will lapse in three equal annual installments beginning on March 3, 2026.
Option Exercises and Stock Vested for Fiscal 2025
The following named executive officers had restricted common stock vest during the fiscal year ended December 31, 2025. No named executive officer exercised stock options during the 2025 fiscal year.
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| Stock Awards | ||
Name |
| Number of Shares Acquired on Vesting (#)(1) |
| Value Realized on Vesting ($)(2) |
Cabell Lolmaugh |
| 16,352 | (3) | 113,418 |
Mark Davis |
| 8,998 | (4) | 61,855 |
Joseph Kinder |
| 8,176 | (5) | 56,709 |
(1)The Company did not achieve the performance conditions required for vesting of the performance-based restricted share awards granted in 2022, 2023, and 2024. Accordingly, an aggregate of 32,516, 17,737, and 16,259 performance-based restricted shares that had previously been granted to Mr. Lolmaugh, Mr. Davis, and Mr. Kinder were cancelled in February 2025 and are not included in this table.
(2)The amounts shown are calculated based on the closing price per share of our common stock on the date the shares vested.
(3)Includes 5,627 shares that were withheld to cover taxes and 10,725 shares that were issued to Mr. Lolmaugh.
(4)Includes 3,233 shares that were withheld to cover taxes and 5,765 shares that were issued to Mr. Davis.
(5)Includes 2,937 shares that were withheld to cover taxes and 5,239 shares that were issued to Mr. Kinder.
Pension Benefits
We did not sponsor any defined benefit pension or other actuarial plan for our named executive officers during the fiscal year ended December 31, 2025.
Nonqualified Deferred Compensation
No nonqualified deferred compensation was paid to or earned by the named executive officers during the fiscal year ended December 31, 2025.
Potential Payments Upon Termination or Change in Control
As discussed above in connection with each named executive officer’s offer letter agreement, Messrs. Lolmaugh and Davis are eligible to receive severance benefits in the event that their employment is terminated by us without cause or by the employee for good reason, and Mr. Kinder is eligible to receive severance benefits in the event that his employment is terminated by us without cause or by him for good reason due to a change of control. Additionally, Messrs. Lolmaugh, Davis, and Kinder are entitled to full vesting of
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certain outstanding equity awards if, in the event of a change of control, they are not offered employment by the successor entity, or they are terminated without cause or are otherwise constructively terminated prior to the first anniversary of the change of control.
Additional information regarding non-competition and non-solicitation provisions is disclosed above under “Offer Letter and Termination Agreements.”
The amounts payable by us to each of our named executive officers, assuming that each individual’s employment had terminated on December 31, 2025, under each scenario are as follows:
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Name |
| In Connection |
| By Company Not |
| By NEO for Good |
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Cabell Lolmaugh |
| 218,500 | (1) | 218,500 | (3) | 218,500 | (3) |
Mark Davis |
| 157,440 | (1) | 157,440 | (3) | 157,440 | (3) |
Joseph Kinder |
| 369,131 | (2) | - |
| - |
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(1)Represents the continued payment of six-months base salary and an additional payment in an amount equal to six times our contribution for the monthly health insurance premium for them during the month immediately prior to termination. Continued payment of base salary for a six-month period would have resulted in payments of $218,500 and $154,500 to Mr. Lolmaugh and Mr. Davis, respectively, as of December 31, 2025. The payment equal to six months of the Company’s contribution for monthly health insurance premiums would have resulted in a payment of $2,940 to Mr. Davis.
(2)Represents continued payment of six-months base salary of $175,000 and a payment equal to six months of the Company’s contribution for monthly health insurance premiums of $6,853, which Mr. Kinder is eligible to receive in the event his employment is terminated by us without severance cause or by him for good reason due to a change of control. Additionally, this amount includes the lapse of the risks of forfeiture on all outstanding shares of restricted stock, equal to $187,278, based on the closing stock price of our common stock of $3.52 on December 31, 2025, the last trading day of the 2025 fiscal year, which Mr. Kinder is eligible to receive in the event of a change of control, as described above.
(3)Represents continued payment of six-months base salary and an additional payment in an amount equal to six times our contribution amount for the monthly health insurance premium for them during the month immediately prior to termination. Continued payment of base salary for a six-month period would have resulted in payments of $218,500 and $154,500 to Mr. Lolmaugh and Mr. Davis, respectively, as of December 31, 2025. The payment equal to six months of the Company’s contribution for monthly health insurance premiums would have resulted in a payment of $2,940 to Mr. Davis.
Pay Ratio
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and related regulations, we are providing the following information about the relationship of the median annual total compensation of our employees and the annual total compensation of Mr. Lolmaugh, who served as our Chief Executive Officer during fiscal year 2025. The pay ratio included below is a reasonable estimate calculated in a manner consistent with the regulations.
For 2025, our last completed fiscal year:
the median of the annual total compensation of all our employees (other than Mr. Lolmaugh) was $52,327; and
the annual total compensation of Mr. Lolmaugh, as reported in the above Summary Compensation Table, was $738,708.
Based on this information, for fiscal year 2025, the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all employees was 14.12 to 1.
To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our Chief Executive Officer, we did the following:
Employee Count. As permitted under Item 402(u) of Regulation S-K, for 2025, we started with the same median employee who was originally identified as our median employee for 2024, because we determined that there has been no change in our employee population or employee compensation arrangements that we believe would significantly impact our pay ratio disclosure. Accordingly, our median employee was identified as of December 15, 2024, on which date our employee population consisted of approximately 1,296 individuals, all located in the United States.
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Median Employee. To identify the median employee from our employee population, we compared the amount of salary, wages, tips and overtime pay of our employees as reflected in our payroll records as reported to the Internal Revenue Service on Form W-2 for 2024 (less severance and settlement earnings). In making this determination, we annualized the compensation of any full-time employees who were hired in 2024 and were working for us on December 15, 2024, but did not work for us the entire fiscal year. We identified our median employee using this compensation measure, which was consistently applied to all our employees included in the calculation. Since all our included employees are located in the United States, as is our Chief Executive Officer, we did not make any cost-of-living adjustments in identifying the median employee.
Upon further review, we noted that the 2025 compensation of the originally identified median employee reflected a change in that employee’s circumstances that could significantly impact the pay ratio calculation. As a result, we selected as our median employee for 2025 an employee whose 2024 compensation was substantially similar to the originally identified median employee. We calculated the 2025 annual total compensation of that median employee in the same manner as described below.
Median Employee Total Compensation. Having identified our median employee, we combined all the elements of such employee’s compensation for 2025 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $52,327. The difference between such employee’s salary, wages, tips and overtime pay and the employee’s annual total compensation represents the value of our matching contributions to participants in The Tile Shop 401(k) Retirement Plan (estimated at $1,275).
Chief Executive Officer Total Compensation. Mr. Lolmaugh had annual total compensation of $738,708 as disclosed in the Summary Compensation Table.
Director Compensation
Each of our non-employee directors receives an annual fee of $100,000. The chairperson of our Board receives an additional annual fee of $75,000, the chairperson of the Audit Committee receives an additional annual fee of $40,000, and the chairperson of each of the Compensation Committee and Governance Committee receives an additional annual fee of $15,000. Beginning in the second quarter of 2025 and ending in the fourth quarter of 2025, the members of the Independent Transaction Committee received a cash retainer of $10,000 per quarter. Cash compensation is payable quarterly. Non-employee directors may elect to have 50% or 100% of their annual compensation paid in the form of restricted stock. The number of shares of our restricted stock granted is equal to the quotient obtained by dividing (i) the amount of the annual fee payable to the non-employee director in the form of restricted stock by (ii) the average closing price on Nasdaq of our common stock over the 30 trading days immediately preceding the date of grant. The annual period for director compensation runs based on the date of the Annual Meeting of Stockholders each year.
Messrs. Faw and Lennon were appointed as directors on January 7, 2026 and will receive $50,000 in cash for their service on the Board between the date of their appointment and the 2026 Annual Meeting of Stockholders.
In June 2024, Messrs. Kamin and Jacullo and Mss. Glasser and Solheid elected to receive compensation fully in the form of restricted stock, and Mr. Bonney elected to receive compensation as one-half restricted stock and one-half cash compensation, payable quarterly. Messrs. Kamin, Bonney, and Jacullo and Mss. Glasser and Solheid received 28,752, 10,593, 15,133, 17,403, and 15,133 shares of restricted stock, respectively. The risk of forfeiture for the restricted stock lapsed on June 3, 2025.
In June 2025, Messrs. Kamin and Jacullo and Ms. Glasser elected to receive compensation fully in the form of restricted stock, and Mr. Bonney and Ms. Solheid elected to receive compensation as one-half restricted stock and one-half cash compensation, payable quarterly. Messrs. Kamin, Bonney, and Jacullo and Mss. Glasser and Solheid received 32,063, 11,813, 16,875, 19,407, and 8,438 shares of restricted stock, respectively. The risk of forfeiture for the restricted stock will lapse on the earlier of the date of the 2026 Annual Meeting of Stockholders or June 3, 2026, contingent upon the applicable non-employee director’s continued service on our Board.
In January 2026, in connection with Ms. Solheid’s resignation, the vesting of Ms. Solheid’s unvested restricted stock was accelerated and she received a cash payment of $12,500, consisting of the portion of her annual Board fee that was payable in cash in March 2026.
Director Compensation Table for Fiscal 2025
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The following table summarizes the compensation paid to each non-employee director who served during the fiscal year ended December 31, 2025. Mr. Lolmaugh does not receive any separate compensation for his service as a director.
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Name |
| Fees Earned |
| Stock Awards |
| All Other Compensation ($) |
| Total ($) |
Peter H. Kamin |
| - |
| 208,410 |
| - |
| 208,410 |
Mark J. Bonney |
| 100,000 | (3) | 76,785 |
| - |
| 176,785 |
Deborah K. Glasser |
| - |
| 126,146 |
| - |
| 126,146 |
Peter J. Jacullo III |
| - |
| 109,688 |
| - |
| 109,688 |
Linda Solheid |
| 67,500 | (4) | 54,847 |
| - |
| 122,347 |
(1)The table reflects the grant date fair value, as computed in accordance with Topic 718, of the director restricted share awards granted in fiscal year 2025. The assumptions used to determine the valuation of the awards are discussed in Note 9 to our consolidated financial statements, included in this Annual Report on Form 10-K.
(2)The aggregate number of shares of restricted stock held by each of the directors listed in the table above as of December 31, 2025 was as follows: Mr. Kamin, 32,063; Mr. Bonney, 11,813; Ms. Glasser, 19,407; Mr. Jacullo, 16,875; and Ms. Solheid, 8,438. These shares of restricted stock were granted on June 3, 2025. The risks of forfeiture for these restricted shares will generally lapse in full on the earlier of the date of the 2026 Annual Meeting of Stockholders or June 3, 2026, contingent upon the applicable non-employee director’s continued service on our Board.
(3)Includes $70,000 of the annual Board fees received in cash and an additional $30,000 pursuant to the quarterly cash retainer earned by members of the Independent Transaction Committee during 2025.
(4)Includes $37,500 of the annual Board fees received in cash and an additional $30,000 pursuant to the quarterly cash retainer earned by members of the Independent Transaction Committee during 2025.
Standstill Agreements
On January 10, 2020, our then-serving directors delivered director standstill commitments (as to purchases of shares of our common stock) to us, as described in our Current Report on Form 8-K filed with the SEC on January 13, 2020, which extended until the later of (i) two years and (ii) the date upon which the director’s service as a member of the Board ends. Messrs. Jacullo and Kamin agreed to extend their standstill commitments until the date upon which each director’s service on the Board ends (which is the later of June 1, 2023 and such date), pursuant to the Stipulation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Equity Compensation Plan Information
The following table presents our equity compensation plan information as of December 31, 2025:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (a) |
| (b) |
| (c) |
|
Plan Category |
| Number of securities to be issued upon exercise of outstanding options, warrants and rights |
| Weighted average |
| Number of securities |
|
Equity compensation plans approved by security holders |
| 295,367 | (1) | 7.07 |
| 2,328,723 | (2) |
Equity compensation plans not approved by security holders |
| - |
| - |
| - |
|
Total |
| 295,367 |
| 7.07 |
| 2,328,723 |
|
(1)Represents shares of common stock to be issued upon exercise of outstanding options to purchase common stock granted pursuant to the Omnibus Plans as of December 31, 2025.
(2)All shares available for future issuance are under the 2021 Omnibus Plan.
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Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of February 23, 2026, information regarding beneficial ownership of our common stock by:
each person, or group of affiliated persons, known by us to beneficially own more than 5% of our common stock;
each of our named executive officers;
each of our directors; and
all our current executive officers and directors as a group.
Beneficial ownership is determined according to the rules of the SEC, and generally means that a person has beneficial ownership of a security if he, she, or it possesses sole or shared voting or investment power of that security, including options that are currently exercisable or exercisable within 60 days of February 23, 2026. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons named in the table below have sole voting and investment power with respect to all shares of common stock shown that they beneficially own, subject to community property laws where applicable. The information does not necessarily indicate beneficial ownership for any other purpose.
Shares of our common stock that are subject to options currently exercisable or exercisable within 60 days of February 23, 2026 are deemed to be outstanding for computing the percentage ownership of the person holding these options and the percentage ownership of any group in which the holder is a member, but are not deemed outstanding for computing the percentage of any other person.
We have based our calculation of the percentage of beneficial ownership on 39,821,741 shares of our common stock outstanding on February 23, 2026.
Unless otherwise noted below, the address for each of the stockholders in the table below is c/o Tile Shop Holdings, Inc., 14000 Carlson Parkway, Plymouth, Minnesota 55441.
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|
|
|
|
|
|
|
|
|
|
Name of Beneficial Owner |
| Number of Shares Beneficially Owned |
| Percent | |
5% Stockholders: |
|
|
|
|
|
Savitr Capital LLC(1) |
| 2,770,535 |
| 7.0 | % |
Cannell Capital LLC(2) |
| 2,453,327 |
| 6.2 | % |
|
|
|
|
|
|
Named Executive Officers and Directors (not otherwise included above): |
|
|
|
|
|
Jonathan Lennon, Director, and Fund 1 Investments, LLC(3) |
| 12,859,012 |
| 32.3 | % |
Peter J. Jacullo III, Director(4)(12) |
| 8,444,707 |
| 21.2 | % |
Peter H. Kamin, Chairman of the Board(5)(12) |
| 7,017,159 |
| 17.6 | % |
Cabell Lolmaugh, Chief Executive Officer, President and Director(6)(12)(13) |
| 409,796 |
| 1.0 | % |
Mark B. Davis, Senior Vice President and Chief Financial Officer(7)(13) |
| 133,215 |
| * |
|
Joseph Kinder, Senior Vice President, Supply Chain and Distribution(8)(13) |
| 183,741 |
| * |
|
Mark J. Bonney, Director(9) |
| 127,627 |
| * |
|
Benjamin Faw, Director |
| - |
| - |
|
Deborah K. Glasser, Director(10) |
| 186,612 |
| * |
|
All Current Executive Officers and Directors as a Group (9 persons)(11)(13) |
| 29,361,869 |
| 73.3 | % |
* Represents beneficial ownership of less than 1% of the outstanding common stock.
(1)Based on a Schedule 13G filed with the SEC on January 28, 2020 by Savitr Capital LLC (“Savitr”), Savitr holds shared voting and dispositive power over 2,770,535 shares of common stock. The business address of Savitr is 600 Montgomery Street, 47th Floor, San Francisco, California 94111.
(2)Based on a Schedule 13G/A filed with the SEC on February 13, 2023 by Cannell Capital LLC and J. Carlo Cannell, Cannell Capital LLC and Mr. Cannell hold shared voting and dispositive power over 2,453,327 shares of common stock. Cannell Capital LLC acts as an investment adviser. Mr. Cannell is the managing member of Cannell Capital LLC. The business address of the reporting persons is 245 Meriwether Circle, Alta, Wyoming 83414.
(3)Based on a Schedule 13D/A and Form 4 filed with the SEC on December 16, 2025 by Fund 1 Investments, LLC and a Form 3 filed by Jonathan Lennon on January 15, 2026, Fund 1 Investments, LLC holds shared voting and dispositive power over
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12,859,012 shares of common stock, of which 11,856,805 shares are held for the benefit of PLP Funds Master Fund LP and 1,002,207 shares are held for the benefit of an unaffiliated private fund. Pleasant Lake Partners LLC serves as investment adviser for these funds. Fund 1 Investments, LLC serves as managing member of Pleasant Lake Partners LLC. Jonathan Lennon serves as managing member of Fund 1 Investments, LLC. Each of Fund 1 Investments, LLC, Pleasant Lake Partners LLC, and Mr. Lennon disclaims beneficial ownership of the shares except to the extent of its or his pecuniary interest therein. The business address of Fund 1 Investments, LLC is 100 Carr 115 Unit 1900, Rincon, Puerto Rico 00677.
(4)Based on a Schedule 13D/A filed with the SEC on January 5, 2026 by JWTS, Inc. (“JWTS”), Peter J. Jacullo III, and the Katherine D. Jacullo Children’s 1993 Irrevocable Trust (the “Jacullo Trust”) and a Form 4 filed by Mr. Jacullo with the SEC on June 5, 2025. JWTS directly holds 3,191,180 shares of common stock and has sole voting and dispositive power with respect to such shares. Mr. Jacullo is the President and sole member of the board of directors of JWTS, holds sole voting and dispositive power over the securities held by JWTS, and may be deemed to beneficially own the securities held by JWTS. The Jacullo Trust directly holds 4,706,489 shares of common stock and has shared voting and dispositive power with respect to such shares. Mr. Jacullo is a co-trustee of the Jacullo Trust, holds shared voting and dispositive power over the securities held by the Jacullo Trust, and may be deemed to beneficially own the securities held by the Jacullo Trust. Mr. Jacullo disclaims beneficial ownership of the shares of common stock held by the Jacullo Trust, except to the extent of his pecuniary interest therein. Mr. Jacullo directly holds 547,038 shares of common stock over which he has sole voting and dispositive power, including 16,875 shares of unvested restricted common stock.
(5)Based on a Schedule 13D/A filed with the SEC on December 31, 2025 by Peter H. Kamin and a Form 4 filed by Mr. Kamin with the SEC on June 5, 2025. Includes (i) 1,695,320 shares of common stock held by the Peter H. Kamin Revocable Trust dated February 2003, of which Peter H. Kamin is the trustee; (ii) 1,033,733 shares of common stock held by the Peter H. Kamin Childrens Trust dated March 1997, of which Mr. Kamin is the trustee; (iii) 117,453 shares of common stock held by the Peter H. Kamin Family Foundation, of which Mr. Kamin is the trustee; (iv) 328,711 shares of common stock held by the Peter H. Kamin GST Trust, of which Mr. Kamin is the trustee; (v) 333,495 shares of common stock held by 3K Limited Partnership, of which Mr. Kamin is the general partner; and (vi) 3,508,447 shares of common stock directly held by Mr. Kamin, including 32,063 shares of unvested restricted common stock. Mr. Kamin has sole voting and dispositive power over all such shares.
(6)Includes 92,870 shares of unvested restricted common stock held by Mr. Lolmaugh and options to purchase 179,967 shares of common stock that are currently exercisable.
(7)Includes 58,296 shares of unvested restricted common stock held by Mr. Davis and options to purchase 5,400 shares of common stock that are currently exercisable.
(8)Includes 53,204 shares of unvested restricted common stock held by Mr. Kinder and options to purchase 76,900 shares of common stock that are currently exercisable.
(9)Includes 11,813 shares of unvested restricted stock held by Mr. Bonney.
(10)Includes 19,407 shares of unvested restricted stock held by Ms. Glasser and 3,383 shares of common stock directly owned by Ms. Glasser’s spouse.
(11)Includes 265,121 shares of unvested restricted common stock and options to purchase 262,267 shares of common stock that are currently exercisable.
(12)On January 10, 2020, the then-serving directors delivered Director Standstill Commitments to us, as described above under the heading “Director Compensation—Standstill Agreements” in Item 11.
(13)Mr. Lolmaugh, Mr. Davis and Mr. Kinder’s holdings include 32,015, 18,840, and 17,362 performance-based restricted shares, respectively, for which the performance condition was not achieved. Such shares were cancelled in February 2026 upon the filing of this Annual Report on Form 10-K, which is after the date of this table.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Independence of the Board of Directors
Because we are quoted on the OTC and not listed on a national securities exchange, we are currently not subject to certain corporate governance requirements that apply to exchange-listed companies. For purposes of evaluating the independence of our directors, our Board uses the rules of the SEC and Nasdaq. Based upon information requested from and provided by each director concerning his or her background, employment, and affiliations, including family relationships, and all other facts and circumstances the Board deemed relevant, including the Cooperation Agreement and Mr. Lennon’s relationship with the Company’s largest stockholder, the Board determined that Messrs. Bonney, Faw, Jacullo, Kamin and Lennon and Ms. Glasser do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and that each of these directors is independent. The Board also determined that Ms. Solheid, who served on the Board during 2025, was independent. The Board has further determined that each current member of each committee, and each member of each committee during 2025, meets or met the relevant independence standards for service on each committee. Mr. Lolmaugh, our Chief Executive Officer and President, is not an independent director by virtue of his employment with us.
Certain Relationships and Related Transactions
Other than as described below, since the beginning of our 2024 fiscal year, there have been no transactions, or series of transactions, to which we were a participant or will be a participant, in which:
the amounts involved exceeded or will exceed the lesser of $120,000 or 1% of the average of our total assets at year end for the last two completed fiscal years; and
any of our directors, executive officers, holders of more than 5% of our common stock or any immediate family member of any of the foregoing, as defined in Item 404 of Regulation S-K of the Exchange Act and interpreted by the SEC in related guidance (individually, a “related person” and, collectively, the “related persons”), had or will have a direct or indirect material interest.
Compensation arrangements with our named executive officers and directors are described elsewhere in this report. From time to time, we employ related persons and other family members of our officers and directors. Consistent with the policy described below, all such employment arrangements involving amounts exceeding $120,000 are reviewed by the Audit Committee. We may also sell products to related persons, and related persons may purchase products or services from our suppliers for individual use. If such arrangements fall within the terms of the policy described below, they will also be reviewed by the Audit Committee.
Policies and Procedures for Related Person Transactions
Our Board has in place a written related person transaction policy that sets forth the policies and procedures for the review and approval or ratification of related person transactions. This policy is administered by our Audit Committee and covers any transaction, arrangement, or relationship, or any series of similar transactions, arrangements, or relationships, in which we were or are to be a participant, the amount involved exceeds $120,000 and a related person had or will have a direct or indirect material interest. Pursuant to this policy, our Audit Committee will consider (a) the relevant facts and circumstances of the related person transaction, including if the related person transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third-party, (b) the extent of the related person’s interest in the related person transaction, (c) whether the related person transaction contravenes the conflict of interest and corporate opportunity provisions of our Code of Business Conduct and Ethics, (d) the input of the Chief Financial Officer following due consultation, (e) whether the relationship underlying the related person transaction at issue is believed to serve the best interest of us and our stockholders, and (f) the effect that a director’s related person transaction may have on such director’s status as an independent member of the Board and eligibility to serve on committees of the Board.
Each related person will present to our Audit Committee each proposed related person transaction to which such related person is a party, including all relevant facts and circumstances relating thereto, and will update the Audit Committee as to any material changes to any related person transaction. All related person transactions may only be consummated if our Audit Committee has approved or ratified such transaction in accordance with the guidelines set forth in the policy. Related party transactions do not include: (i) the payment of compensation by us to our executive officers or directors; (ii) a transaction in which the interest of the related person arises solely from ownership of a class of our securities where all holders of that class of securities receive the same benefit, on a pro-rata basis, from the transaction; or (iii) a transaction in which the rates or charges involved are determined by competitive bids. Additionally, certain types of transactions have been pre-approved by our Audit Committee under the policy as not involving a material interest. These pre-approved transactions include transactions in the ordinary course of business where the related party’s interest arises only: (i) from his or her position as a director of another entity that is party to the transaction; (ii) from an equity interest
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of less than 5% in another entity that is party to the transaction (other than a partnership); or (iii) from a limited partnership interest of less than 5%, subject to certain limitations. No director will be permitted to participate in the approval of a related person transaction for which he or she is a related party.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table presents the fees for the professional services provided by RSM US LLP for fiscal years 2025 and 2024:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2025 |
| 2024 |
| ||
Audit Fees(1) |
| $ | 942,431 |
| $ | 819,500 |
|
Audit-Related Fees(2) |
|
| - |
|
| - |
|
Tax Fees(3) |
|
| - |
|
| - |
|
All Other Fees(4) |
|
| - |
|
| - |
|
|
| $ | 942,431 |
| $ | 819,500 |
|
(1)Audit Fees were principally for services rendered for the audit and/or review of our consolidated financial statements.
(2)Audit-Related Fees includes fees for services rendered in connection with accounting and reporting consultations, as well as other audits required by contract or regulation.
(3)Tax Fees consist of fees billed in the indicated year for professional services with respect to tax compliance, tax advice and tax planning.
(4)All Other Fees consist of fees billed in the indicated year for other permissible work that is not included within the above category descriptions.
Pre-Approval Policies and Procedures
Pursuant to its written charter, the Audit Committee is required to pre-approve the audit and non-audit services performed by our independent auditors. Notwithstanding the foregoing, during 2025, separate Audit Committee pre-approval was not required (a) if the engagement for services was entered into pursuant to pre-approval policies and procedures established by the Audit Committee regarding our engagement of the independent auditor (the “Pre-Approval Policy”) as to matters within the scope of the Pre-Approval Policy or (b) for de minimis non-audit services that were approved in accordance with applicable SEC rules. The Audit Committee has determined that the rendering of the services other than audit services by its principal accountant is compatible with maintaining the principal accountant’s independence. All services performed by RSM US LLP for fiscal years 2025 and 2024 were pre-approved in accordance with the Pre-Approval Policy.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of report
1. Financial Statements
The following consolidated financial statements of the Company and its subsidiaries are filed as part of this Form 10-K:
|
|
|
|
| # |
(i) | Reports of Independent Registered Public Accounting Firm (PCAOB ID: | 55 |
(ii) | Consolidated Balance Sheets as of December 31, 2025 and 2024 | 58 |
(iii) | Consolidated Statements of Operations for the years ended December 31, 2025, 2024, and 2023 | 59 |
(iv) | Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2025, 2024, and 2023 | 60 |
(v) | Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025, 2024, and 2023 | 61 |
(vi) | Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024, and 2023 | 62 |
(vii) | Notes to Consolidated Financial Statements | 63 |
2. Financial Statement Schedules
The information required to be disclosed within Schedule II – Valuation and Qualifying Accounts is provided within the Consolidated Financial Statements of the Company filed as part of this Form 10-K.
3. Exhibits
See “Exhibit Index” immediately preceding the signature page of this Form 10-K, which is incorporated herein by reference.
ITEM 16. FORM 10-K SUMMARY
None.
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Tile Shop Holdings, Inc. and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Tile Shop Holdings, Inc. and Subsidiaries (the Company) as of December 31, 2025 and 2024, related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity and cash flows, for each of the three years in the period ended December 31, 2025 and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated February 26, 2026 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Retail Store Asset Impairment Assessment
As discussed in Notes 1, 3 and 6 to the consolidated financial statements, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The Company evaluates potential impairment indicators at the individual retail store level, which is the lowest level at which cash flows can be identified. When events and circumstances indicate that store assets may be impaired, the Company compares the undiscounted future cash flows estimated to be generated by the retail store, which includes estimates of future store revenue growth rates, to the store’s asset group carrying amount. If the estimated undiscounted future cash flows are less than the carrying value of the store’s asset group, the Company performs an analysis to estimate the fair value of the store’s asset group. An impairment may be recorded when the fair value of the store’s asset group is less than its carrying value. The Company’s long-lived assets consisted of consolidated property, plant and equipment, net of $54.3 million and consolidated operating lease right of use assets of $126.3 million as of December 31, 2025. For the year ended December 31, 2025, the Company recorded an impairment charge of $0.3 million.
We identified management’s estimates of future store revenue growth rates included in the undiscounted future cash flows to be generated by the retail stores with impairment indicators as a critical audit matter due to the high degree of subjectivity used by management in developing the estimates. Auditing management’s estimates of future store revenue growth rates, which can be affected by expectations about future consumer spending behaviors, housing market trends and other economic conditions, involved a
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high degree of auditor judgment and an increase in the nature and extent of audit effort due to the impact the estimates could have on management’s conclusion.
Our audit procedures related to management’s estimates of future store revenue growth rates used in the impairment analyses included the following, among others:
We obtained an understanding of the relevant controls related to management’s development of undiscounted cash flow forecasts to be used in the impairment analyses and tested such controls for design and operating effectiveness, including controls over management’s development and review of the significant assumptions used in estimating future store revenue growth rates.
We tested the Company’s estimates of future store revenue growth rates by comparing them to historical results and current industry and economic trends.
We tested the mathematical accuracy of the Company’s cash flow models and tested the underlying data used by management for completeness and accuracy by agreeing it to source data.
/s/ RSM US LLP
We have served as the Company's auditor since 2023.
Minneapolis, Minnesota
February 26, 2026
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Tile Shop Holdings, Inc. and Subsidiaries
Opinion on the Internal Control Over Financial Reporting
We have audited Tile Shop Holdings, Inc. And Subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of December 31, 2025 and 2024, and the related consolidated statement of operations, comprehensive (loss) income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025 of the Company and our report dated February 26, 2026 expressed an unqualified opinion.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/
February 26, 2026
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Tile Shop Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
As of December 31, 2025 and 2024
(dollars in thousands, except per share data)
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| December 31, |
| December 31, | ||
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| 2025 |
| 2024 | ||
Assets |
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Current assets: |
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|
Cash and cash equivalents |
| $ | |
| $ | |
Receivables, net |
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| |
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| |
Inventories |
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| |
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| |
Income tax receivable |
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| |
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| |
Other current assets, net |
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| |
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| |
Total Current Assets |
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| |
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| |
Property, plant and equipment, net |
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Right of use asset |
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| |
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| |
Deferred tax assets |
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Other assets |
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| |
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| |
Total Assets |
| $ | |
| $ | |
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Liabilities and Stockholders' Equity |
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Current liabilities: |
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Accounts payable |
| $ | |
| $ | |
Income tax payable |
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| |
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| |
Current portion of lease liability |
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| |
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| |
Other accrued liabilities |
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| |
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| |
Total Current Liabilities |
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| |
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| |
Long-term debt, net |
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| |
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| - |
Long-term lease liability, net |
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| |
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| |
Other long-term liabilities |
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| |
Total Liabilities |
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Stockholders’ Equity: |
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Common stock, par value: $ |
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| |
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| |
Preferred stock, par value: $ |
|
| - |
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| - |
Additional paid-in capital |
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| |
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| |
Accumulated deficit |
|
| ( |
|
| ( |
Total Stockholders' Equity |
|
| |
|
| |
Total Liabilities and Stockholders' Equity |
| $ | |
| $ | |
|
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|
|
|
|
|
See accompanying Notes to Consolidated Financial Statements.
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Tile Shop Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
For the years ended December 31, 2025, 2024 and 2023
(dollars in thousands, except per share data)
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| 2025 |
| 2024 |
| 2023 | |||
Net sales |
| $ | |
| $ | |
| $ | |
Cost of sales |
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| |
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Gross profit |
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| |
Selling, general and administrative expenses |
|
| |
|
| |
|
| |
(Loss) Income from operations |
|
| ( |
|
| |
|
| |
Interest expense, net |
|
| ( |
|
| ( |
|
| ( |
(Loss) Income before income taxes |
|
| ( |
|
| |
|
| |
Benefit (Provision) for income taxes |
|
| |
|
| ( |
|
| ( |
Net (loss) income |
| $ | ( |
| $ | |
| $ | |
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Income per common share: |
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Basic |
| $ | ( |
| $ | |
| $ | |
Diluted |
| $ | ( |
| $ | |
| $ | |
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Weighted average shares outstanding: |
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Basic |
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Diluted |
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| |
See accompanying Notes to Consolidated Financial Statements.
59
Table of Contents
Tile Shop Holdings, Inc. and Subsidiaries
Consolidated Statements of Comprehensive (Loss) Income
For the years ended December 31, 2025, 2024 and 2023
(dollars in thousands)
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| 2025 |
| 2024 |
| 2023 | |||
Net (loss) income |
| $ | ( |
| $ | |
| $ | |
Currency translation adjustment |
|
| - |
|
| |
|
| ( |
Other comprehensive income (loss) |
|
| - |
|
| |
|
| ( |
Comprehensive (loss) income |
| $ | ( |
| $ | |
| $ | |
See accompanying Notes to Consolidated Financial Statements.
60
Table of Contents
Tile Shop Holdings, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity
(dollars in thousands)
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| Common stock |
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| Shares |
| Amount |
| Additional |
| Accumulated deficit |
| Accumulated other |
| Total | |||||
Balance at January 1, 2023 |
| |
| $ | |
| $ | |
| $ | ( |
| $ | ( |
| $ | |
Issuance of restricted shares |
| |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Issuance of common stock upon exercise of options |
| |
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| - |
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| |
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| - |
|
| - |
|
| |
Cancellation of restricted shares |
| ( |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Stock based compensation |
| - |
|
| - |
|
| |
|
| - |
|
| - |
|
| |
Tax withholdings related to net share settlements of stock based compensation awards |
| ( |
|
| - |
|
| ( |
|
| - |
|
| - |
|
| ( |
Foreign currency translation adjustments |
| - |
|
| - |
|
| - |
|
| - |
|
| ( |
|
| ( |
Net income |
| - |
|
| - |
|
| - |
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| |
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| - |
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| |
Balance at December 31, 2023 |
| |
| $ | |
| $ | |
| $ | ( |
| $ | ( |
| $ | |
Issuance of restricted shares |
| |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Cancellation of restricted shares |
| ( |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Stock based compensation |
| - |
|
| - |
|
| |
|
| - |
|
| - |
|
| |
Tax withholdings related to net share settlements of stock based compensation awards |
| ( |
|
| - |
|
| ( |
|
| - |
|
| - |
|
| ( |
Foreign currency translation adjustments |
| - |
|
| - |
|
| - |
|
| - |
|
| |
|
| |
Net income |
| - |
|
| - |
|
| - |
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| |
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| - |
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| |
Balance at December 31, 2024 |
| |
| $ | |
| $ | |
| $ | ( |
| $ | - |
| $ | |
Issuance of restricted shares |
| |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Repurchase of common stock |
| ( |
|
| - |
|
| ( |
|
| - |
|
| - |
|
| ( |
Cancellation of restricted shares |
| ( |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
Stock based compensation |
| - |
|
| - |
|
| |
|
| - |
|
| - |
|
| |
Tax withholdings related to net share settlements of stock based compensation awards |
| ( |
|
| - |
|
| ( |
|
| - |
|
| - |
|
| ( |
Net (loss) |
| - |
|
| - |
|
| - |
|
| ( |
|
| - |
|
| ( |
Balance at December 31, 2025 |
| |
| $ | |
| $ | |
| $ | ( |
| $ | - |
| $ | |
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See accompanying Notes to Consolidated Financial Statements.
61
Table of Contents
Tile Shop Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the years ended December 31, 2025, 2024 and 2023
(dollars in thousands)
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| For the years ended, | |||||||
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| 2025 |
| 2024 |
| 2023 | |||
Cash Flows From Operating Activities |
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Net (loss) income |
| $ | ( |
| $ | |
| $ | |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
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Depreciation and amortization |
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Amortization of debt issuance costs |
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Gain on disposals of property, plant and equipment |
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| ( |
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| ( |
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| ( |
Impairment charges |
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Non-cash lease expense |
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Stock based compensation |
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Deferred income taxes |
|
| ( |
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Changes in operating assets and liabilities: |
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Receivables |
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| ( |
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| ( |
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Inventories |
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| ( |
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Other current assets, net |
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Accounts payable |
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Income tax receivable / payable |
|
| ( |
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| ( |
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Accrued expenses and other liabilities |
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| ( |
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| ( |
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| ( |
Net cash provided by operating activities |
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Cash Flows From Investing Activities |
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Purchases of property, plant and equipment |
|
| ( |
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| ( |
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| ( |
Proceeds from insurance |
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| |
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| |
|
| - |
Proceeds from the sale of property, plant and equipment |
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| |
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| |
Net cash used in investing activities |
|
| ( |
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| ( |
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| ( |
Cash Flows From Financing Activities |
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Payments of long-term debt |
|
| - |
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| ( |
|
| ( |
Advances on line of credit |
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| |
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| |
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| |
Proceeds from exercise of stock options |
|
| - |
|
| - |
|
| |
Repurchases of common stock |
|
| ( |
|
| - |
|
| - |
Employee taxes paid for shares withheld |
|
| ( |
|
| ( |
|
| ( |
Net cash used in financing activities |
|
| ( |
|
| ( |
|
| ( |
Effect of exchange rate changes on cash |
|
| - |
|
| |
|
| ( |
Net change in cash and cash equivalents |
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| ( |
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| |
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| |
Cash and cash equivalents beginning of period |
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| |
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Cash and cash equivalents end of period |
| $ | |
| $ | |
| $ | |
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Supplemental disclosure of cash flow information |
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Purchases of property, plant and equipment included in accounts payable and accrued expenses |
| $ | |
| $ | |
| $ | |
Cash paid for interest |
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| |
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| |
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| |
Cash paid (received) for income taxes, net of refunds |
|
| |
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| |
|
| ( |
See accompanying Notes to Consolidated Financial Statements.
62
Table of Contents
Tile Shop Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The Tile Shop, LLC (“The Tile Shop”) was founded in 1985 and Tile Shop Holdings, Inc. (“Holdings,” and together with its wholly owned subsidiaries, including The Tile Shop, the “Company”) was incorporated in Delaware in June 2012. The Company is a specialty retailer of man-made and natural stone tiles, luxury vinyl tiles, setting and maintenance materials, and related accessories in the United States. The Company’s assortment includes over
Delisting and Deregistration
On December 3, 2025, the Company held a special meeting of its stockholders (the “Special Meeting”). At the Special Meeting the holders of the Company’s issued and outstanding shares of the Company’s common stock, par value $
As a result of the Reverse Stock Split, each share of common stock held by a stockholder of record owning immediately prior to the effective time fewer than the minimum number of shares, which, based on the Stock Split ratio chosen by the Board is
The Reverse Stock Split reduced the number of record holders of the Company’s common stock to a number below 300 (i.e., the level at or above which the Company was required to file reports with the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). The actions the Company took to suspend, and the events that occurred as a result of such actions that had the effect of suspending, the Company’s reporting obligations under the Exchange Act, including effectuating the Stock Splits, delisting the Company’s common stock from trading on The Nasdaq Stock Market LLC (“Nasdaq”), terminating the registration of the Company’s common stock under Sections 12(b) and 12(g) of the Exchange Act and suspending the Company’s reporting obligations under Section 15(d) of the Exchange Act, are collectively referred to as the “Transaction.” The Stock Splits were undertaken as part of the Company’s plan to give effect to the Transaction.
As a result of the Transaction, the Company is no longer subject to the reporting requirements under the Exchange Act or other requirements applicable to a public company, including requirements under the Sarbanes-Oxley Act of 2002 and the listing standards of any national securities exchange. Following the filing of this Annual Report on Form 10-K for the year ended December 31, 2025, therefore, the Company will cease to file annual, quarterly, current, and other reports and documents with the SEC.
63
Table of Contents
Tile Shop Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The consolidated financial statements of Holdings include the accounts of its wholly owned subsidiaries and variable interest entities for which the Company is the primary beneficiary. All significant intercompany transactions have been eliminated in consolidation.
The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. The Company’s estimates and judgments are based on historical experience and various other assumptions that it believes are reasonable under the circumstances. The amount of assets and liabilities reported on the Company's balance sheets and the amounts of income and expenses reported for each of the periods presented are affected by estimates and assumptions, which are used for, but not limited to, the accounting for revenue recognition and related reserves for sales returns, useful lives of property, plant and equipment, determining impairment of property, plant and equipment and right of use assets, accounting for leases, valuation of inventory, and income taxes. Actual results may differ from these estimates.
The Company had cash and cash equivalents of $
Trade receivables are carried at original invoice amount less an estimate made for doubtful accounts. Management determines the allowance for credit losses on a specific identification basis and by leveraging information on historical losses, current conditions, and reasonable and supportable forecasts of future conditions. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. The allowance for doubtful accounts was $
The Company’s inventory consists of manufactured items and purchased merchandise held for resale. Inventories are stated at the lower of cost (determined using the moving average cost method) or net realizable value. The Company capitalizes the cost of inbound freight, duties, and receiving and handling costs to bring purchased materials into its distribution network. The labor and overhead costs incurred in connection with the production process are included in the value of manufactured finished goods.
Inventories were comprised of the following as of December 31:
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| 2025 |
| 2024 | ||
|
| (in thousands) | ||||
Finished goods |
| $ |
| $ | ||
Raw materials |
|
|
|
| ||
Total |
| $ |
| $ | ||
The Company provides provisions for losses related to shrinkage and other amounts that are otherwise not expected to be fully recoverable. These provisions are calculated based on historical shrinkage, selling price, margin and current business trends. These estimates have calculations that require management to make assumptions based on the current rate of sales, age, salability and profitability of inventory, historical percentages that can be affected by changes in our merchandising mix, customer preferences, rates of sell through and changes in actual shrinkage trends. The provision for losses related to shrinkage and other amounts was $
64
Table of Contents
Tile Shop Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company estimates the degree to which tax assets and credit carryforwards will result in a benefit based on expected profitability by tax jurisdiction. A valuation allowance for such tax assets and loss carryforwards is provided when it is determined to be more likely than not that the benefit of such deferred tax asset will not be realized in future periods. If it becomes more likely than not that a tax asset will be used, the related valuation allowance on such assets would be reduced.
The Company records interest and penalties relating to uncertain tax positions in income tax expense. As of December 31, 2025 and 2024, the Company has
Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration received in exchange for those goods or services. The Company recognizes service revenue, which consists primarily of freight charges for home delivery, when the service has been rendered. The Company is required to charge and collect sales and other taxes on sales to the Company's customers and remit these taxes back to government authorities. Total revenues do not include sales tax because the Company is a pass-through conduit for collecting and remitting sales tax. Sales are reduced by an allowance for anticipated sales returns that the Company estimates based on historical returns.
The Company generally requires customers to pay a deposit when purchasing inventory that is not regularly carried at the store location, or not currently in stock. These deposits are included in other current accrued liabilities until the customer takes possession of the merchandise.
Customers may return purchased items for an exchange or refund. The process to establish a sales return reserve contains uncertainties because it requires management to make assumptions and to apply judgment to estimate future returns and exchanges. The customer may receive a refund or exchange the original product for a replacement of equal or similar quality for a period of
The primary costs classified in each major expense category are:
Cost of Sales
Materials cost;
Shipping and transportation expenses to bring products into the Company's distribution centers;
Customs and duty expenses;
Customer shipping and handling expenses;
Physical inventory losses;
Costs incurred at distribution centers in connection with the receiving process; and
Labor and overhead costs incurred to manufacture inventory
Selling, General & Administrative (sometimes referred to as “SG&A”) Expenses
All compensation costs for store, corporate and distribution employees;
Occupancy, utilities and maintenance costs of store and corporate facilities;
Shipping and transportation expenses to move inventory from the Company's distribution centers to the Company's stores;
Depreciation and amortization; and
Advertising costs
65
Table of Contents
Tile Shop Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The Company recognizes expense for its stock based compensation based on the fair value of the awards on the grant date. The Company may issue incentive awards in the form of stock options, restricted stock awards and other equity awards to employees and non-employee directors. Compensation expense is recognized on a straight-line basis over the requisite service period, net of actual forfeitures. Certain awards are also subject to forfeiture if the Company fails to attain its Adjusted EBITDA or Pretax Return on Capital Employed targets. The Company adjusts the cumulative expense recognized on awards with performance conditions based on a probability of achieving the performance condition.
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and bank deposits. By their nature, all such instruments involve risks, including credit risks of non-performance by counterparties. A substantial portion of the Company's cash and cash equivalents and bank deposits are invested with banks with high investment grade credit ratings.
Supplier Concentration
The Company purchases merchandise inventories from approximately
During the year ended December 31, 2025, the Company purchased materials from
The Company’s operations consist primarily of retail sales of natural stone, man-made and luxury vinyl tiles, setting and maintenance materials, and related accessories in stores located in the United States. The Company’s chief operating decision maker only reviews the consolidated results of the Company and accordingly, the Company has concluded it has
Advertising costs were $
The Company’s pre-opening costs are those typically associated with the opening of a new store and generally include rent expense, compensation costs and promotional costs. The Company expenses pre-opening costs as incurred which are recorded in selling, general and administrative expenses. During both the years ended December 31, 2025 and 2024, the Company did
Property, plant and equipment and leasehold improvements are recorded at cost. Improvements are capitalized while repairs and maintenance costs are charged to selling, general and administrative expenses when incurred. Property, plant and equipment are depreciated or amortized using the straight-line method over each asset’s estimated useful life. Leasehold improvements and fixtures at leased locations are amortized using the straight-line method over the shorter of the lease term or the estimated useful life of the asset. The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts and any gain or loss thereon is included in other income and expense.
66
Table of Contents
Tile Shop Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
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| Asset life (in years) | ||
Buildings and building improvements |
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| |
Leasehold improvements |
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| |
Furniture and fixtures |
| – | ||
Machinery and equipment |
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| |
Computer equipment and software |
| – | ||
Vehicles |
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| |
The Company evaluates potential impairment losses on long-lived assets used in operations at the individual retail store level, which is the lowest level at which cash flows can be identified, when events and circumstances indicate that the assets may be impaired, and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. If impairment exists and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets, an impairment loss is recorded based on the excess of the carrying value of the asset group over its fair value. Fair value is measured using discounted cash flows or independent opinions of value, as appropriate. During the fiscal years ended December 31, 2025, 2024 and 2023, the Company recorded asset impairment charges of $
The Company capitalizes software development costs incurred during the application development stage related to new software or major enhancements to the functionality of existing software that is developed solely to meet the Company’s internal operational needs and when there are no plans to market the software externally. Costs capitalized include external direct costs of materials and services and internal compensation costs. Any costs during the preliminary project stage or related to training or maintenance are expensed as incurred. Capitalization ceases when the software project is substantially complete and ready for its intended use. The capitalization and ongoing assessment of recoverability of development costs requires judgment by management with respect to certain external factors, including, but not limited to, technological and economic feasibility, and estimated economic life. As of December 31, 2025 and 2024, $
The Company licenses software for internal use from third parties. The Company accounts for costs associated with software contracts considered cloud computing arrangements as operating expenses. If a software contract gives the Company the right and it is feasible to take possession of the software, the Company recognizes an asset for the entire contractual cost and recognizes a liability for future payments under the license agreement.
The Company determines if an arrangement is a lease at inception. Operating leases are included in right of use assets and lease liabilities on the consolidated balance sheets. The right of use assets and lease liabilities are recognized as the present value of the future minimum lease payments over the lease term at commencement date. As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The right of use asset is also adjusted for any lease incentives received pursuant to the lease agreement. The Company’s lease terms may include options to extend or terminate the lease typically at its own discretion. The Company regularly evaluates the renewal options and when such options are reasonably certain of exercise, the Company includes the renewal period in its lease term. The Company does not apply the recognition requirements to short term leases.
Certain lease arrangements contain provisions requiring the Company to restore the leased property to its original condition at the end of the lease. The fair values of these obligations are recorded as liabilities on a discounted basis, which occurs at the time the Company enters into the lease arrangement. In the estimation of fair value, the Company uses assumptions and judgements regarding such factors as the existence of a legal obligation for an asset retirement obligation, estimated amounts and timing of settlements, discount rates and inflation rates. The costs associated with these liabilities are capitalized and depreciated over the lease term and the liabilities are accreted over the same period. Asset retirement obligations attributable to leases with a remaining lease term of 12
67
Table of Contents
Tile Shop Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
months or less are presented as other accrued liabilities. As of both December 31, 2025 and 2024, asset retirement obligations classified as other accrued liabilities was $
The Company is self-insured for certain employee health and workers’ compensation claims. The Company estimates a liability for aggregate losses below stop-loss coverage limits based on estimates of the ultimate costs to be incurred to settle known claims and claims not reported as of the balance sheet date. The estimated liability is not discounted and is based on a number of assumptions and factors including historical trends, and economic conditions. As of December 31, 2025 and 2024, an accrual of $
The Company has standby letters of credit outstanding related to the Company's workers’ compensation and employee health insurance policies. As of both December 31, 2025 and 2024, the standby letters of credit totaled $
The Company is at times subject to various legal actions, claims, and proceedings arising in the ordinary course of business, which may include claims related to general liability, workers’ compensation, product liability, and employment-related matters resulting from its business activities. As with most litigation actions, an estimation of any possible liability cannot always be determined. The Company establishes reserves for specific legal proceedings when it determines that the likelihood of an unfavorable outcome is reasonably probable, and the amount of loss can be reasonably estimated. If the Company determines the probable estimate is a range of losses, if no point in the range is more probable, the low end of the range is recorded as a liability on the date the loss is considered probable.
Recently Adopted Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this ASU improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The Company adopted ASU 2023-09 prospectively for the year ended December 31, 2025. The standard did not have a material impact on the Company’s consolidated financial statements. Prior-period disclosures have not been retrospectively adjusted.
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.” This ASU requires public business entities to disclose, for interim and annual reporting periods, additional information about certain income statement expense categories. The requirements are effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. ASU 2024-03 applies only to public business entities. Because the Company is no longer a public business entity following its voluntary delisting and deregistration, the guidance is not applicable to the Company.
Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration received in exchange for those goods or services. Sales taxes are excluded from revenue.
68
Table of Contents
Tile Shop Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The following table presents revenues disaggregated by product category:
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| Years Ended December 31, | ||||
|
| 2025 |
|
| 2024 |
|
Man-made tiles |
| % |
| % | ||
Natural stone tiles |
|
|
|
| ||
Setting and maintenance materials |
|
|
|
| ||
Accessories |
|
|
|
| ||
Delivery service |
|
|
|
| ||
|
| % |
| % | ||
The Company generates revenues by selling tile products, setting and maintenance materials, accessories, and delivery services to its customers through its store locations and online. The timing of revenue recognition coincides with the transfer of control of goods and services ordered by the customer, which falls into one of three categories described below:
Revenue recognized when an order is placed – If a customer places an order in a store and the contents of their order are available, the Company recognizes revenue concurrent with the exchange of goods for consideration from the customer.
Revenue recognized when an order is picked up – If a customer places an order for items held in a centralized distribution center, the Company requests a deposit from the customer at the time they place the order. Subsequently when the contents of the customer’s order are delivered to the store, the customer returns to the store and picks up the items that were ordered. The Company recognizes revenue on this transaction when the customer picks up their order.
Revenue recognized when an order is delivered – If a customer places an order in a store and requests delivery of their order, the Company prepares the contents of their order, initiates the delivery service, and recognizes revenue once the contents of the customer’s order are delivered.
The Company determines the transaction price of its contracts based on the pricing established at the time a customer places an order. The transaction price does not include sales tax as the Company is a pass-through conduit for collecting and remitting sales tax. Any discounts applied to an order are allocated proportionately to the base price of the goods and services ordered. Deposits made by customers are recorded in other accrued liabilities. Deferred revenues associated with customer deposits are recognized at the time the Company transfers control of the items ordered or renders the delivery service. In the event an order is partially fulfilled as of the end of a reporting period, revenue will be recognized based on the transaction price allocated to the goods delivered and services rendered. The customer deposit balance was $
The Company extends financing to qualified professional customers who apply for credit. The accounts receivable balance was $
Customers may return purchased items for an exchange or refund. The Company records a reserve for estimated product returns based on the historical returns trends and the current product sales performance. The Company presents the sales returns reserve as an other current accrued liability and the estimated value of the inventory that will be returned as an other current asset in the Consolidated Balance Sheet. The components of the sales returns reserve reflected in the Consolidated Balance Sheet as of December 31, 2025 and 2024 are as follows:
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| December 31, |
| December 31, | ||
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| 2025 |
| 2024 | ||
|
| (in thousands) | ||||
Other current accrued liabilities |
| $ | |
| $ | |
Other current assets |
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| |
|
| |
Sales returns reserve, net |
| $ | |
| $ | |
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Tile Shop Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 3: Property, Plant and Equipment
Property, plant and equipment consisted of the following at December 31:
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| 2025 |
| 2024 | ||
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| (in thousands) | ||||
Land |
| $ | |
| $ | |
Building and building improvements |
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| |
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| |
Leasehold improvements |
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| |
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| |
Furniture and fixtures |
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| |
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| |
Machinery and equipment |
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| |
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| |
Computer equipment and software |
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| |
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| |
Vehicles |
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| |
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| |
Construction in progress |
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| |
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| |
Total property, plant and equipment |
|
| |
|
| |
Less accumulated depreciation |
|
| ( |
|
| ( |
Total property, plant and equipment, net |
| $ | |
| $ | |
Depreciation expense on property and equipment, including financing leases, was $
Other accrued liabilities consisted of the following at December 31:
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| 2025 |
| 2024 | ||
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| (in thousands) | ||||
Customer deposits |
| $ |
| $ | ||
Sales returns reserve |
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| ||
Accrued wages and salaries |
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Payroll and sales taxes |
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| ||
Other current liabilities |
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| ||
Total other accrued liabilities |
| $ |
| $ | ||
Long-term debt, net of debt issuance costs, consisted of the following at December 31:
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| 2025 |
| 2024 | ||
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| (in thousands) | ||||
Total debt obligations |
| $ | |
| $ | - |
Less: current portion |
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| - |
|
| - |
Debt obligations, net of current portion |
| $ | |
| $ | - |
On
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Tile Shop Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The Credit Agreement is secured by virtually all of the assets of the Company, including, but not limited to, inventory, accounts receivable, equipment and general intangibles. The Credit Agreement contains customary events of default, conditions to borrowing and restrictive covenants, including restrictions on the Company’s ability to dispose of assets, engage in acquisitions or mergers, make distributions on or repurchases of capital stock, incur additional debt, incur liens or make investments. The Credit Agreement also includes financial and other covenants, including covenants to maintain a Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of no less than
The Company leases its retail stores, certain distribution space, and office space. Leases generally have a term of ten to
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Leases (in thousands) | Classification |
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| December 31, 2025 |
|
| December 31, 2024 |
Assets |
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Operating lease assets | Right of use asset |
| $ | |
| $ | |
Total leased assets |
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| $ | |
| $ | |
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Liabilities |
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Current |
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Operating | Current portion of lease liability |
| $ | |
| $ | |
Noncurrent |
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Operating | Long-term lease liability, net |
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| |
Total lease liabilities |
|
| $ | |
| $ | |
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| Year Ended December 31, | |||
Lease cost (in thousands) | Classification |
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| 2025 |
|
| 2024 |
Operating lease cost | SG&A expenses |
| $ | |
| $ | |
Variable lease cost(1) | SG&A expenses |
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| |
Short term lease cost | SG&A expenses |
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| |
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| |
Sublease income | SG&A expenses |
|
| ( |
|
| - |
Net lease cost |
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| $ | |
| $ | |
(1) Variable lease costs consist primarily of taxes, insurance, and common area or other maintenance costs for the Company’s leased facilities.
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Maturity of Lease Liabilities (in thousands) |
| Operating Leases | |
2026 |
| $ | |
2027 |
|
| |
2028 |
|
| |
2029 |
|
| |
2030 |
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| |
Thereafter |
|
| |
Total lease payments |
|
| |
Less: interest |
|
| ( |
Present value of lease liabilities |
| $ | |
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|
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Tile Shop Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
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| Year Ended December 31, | |||
Other Information (in thousands) |
|
| 2025 |
|
| 2024 |
Cash paid for amounts included in the measurement of lease liabilities |
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|
Operating cash flows from operating leases |
| $ | ( |
| $ | ( |
Lease right-of-use assets obtained or modified in exchange for lease obligations |
| $ | |
| $ | |
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Lease Term and Discount Rate |
|
| December 31, 2025 |
|
| December 31, 2024 |
|
Weighted average remaining term (years) |
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Operating leases |
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| |
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| |
|
Weighted average discount rate |
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Operating leases |
|
| | % |
| | % |
Fair value is the price that would be received to sell 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. To measure fair value, the Company uses a three-tier valuation hierarchy based upon observable and non-observable inputs:
Level 1 – Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.
Level 2 – Significant other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:
Quoted prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets or liabilities in non-active markets;
Inputs other than quoted prices that are observable for the asset or liability; and
Inputs that are derived principally from or corroborated by other observable market data.
Level 3 – Significant unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment.
The following table sets forth by level within the fair value hierarchy the Company’s financial assets that were accounted for at fair value on a recurring basis at December 31, 2025 and 2024 according to the valuation techniques the Company uses to determine their fair values. There have been no transfers of assets among the fair value hierarchies presented.
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| Pricing |
| Fair Value at | ||||
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| Category |
| December 31, 2025 |
| December 31, 2024 | ||
Assets |
|
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| (in thousands) | ||||
Cash and cash equivalents |
| Level 1 |
| $ | |
| $ | |
Cash and cash equivalents consist of cash on hand, bank deposits, and money market funds. The value was measured using quoted market prices in active markets. The carrying value approximates fair value. There have been no changes in the valuation techniques used by the Company to value the Company’s financial instruments.
The carrying value of accounts receivable and accounts payable approximates their estimated fair values due to the short maturities of these instruments.
Fair value measurements also apply to certain non-financial assets and liabilities measured at fair value on a nonrecurring basis. Property, plant and equipment and right of use assets are measured at fair value when an impairment is recognized and the related assets are written down to fair value. During the year ended December 31, 2025, the Company recognized changes of $0.3 million in
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Table of Contents
Tile Shop Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
selling, general, and administrative expenses to write-down property, plant, and equipment to their estimated fair values. During the years ended December 31, 2024 and 2023, the Company recognized charges of $
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2025: |
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| Fair Value |
| Valuation Technique |
| Category |
| Input |
| Range |
Property, plant and equipment (1) |
| $ | - |
| Discounted cash flow |
| Level 3 |
| Revenue growth rate |
| |
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| Level 3 |
| Discount rate |
| |
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2024: |
|
| Fair Value |
| Valuation Technique |
| Category |
| Input |
| Range |
Right of use assets (1) |
| $ | |
| Discounted cash flow |
| Level 2 |
| Market rental rates |
| $ |
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|
| Level 2 |
| Discount rate |
| |
Property, plant and equipment (1) |
| $ | - |
| Discounted cash flow |
| Level 3 |
| Revenue growth rate |
| |
|
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|
| Level 3 |
| Discount rate |
|
(1)The fair value specifically relates to only those locations which had impairment charges during the twelve months ended December 31, 2025 and 2024.
During the twelve months ended December 31, 2025, the Company recorded a $
Basic (loss) earnings per share is calculated by dividing net (loss) income by the weighted average number of shares outstanding during the period. Diluted (loss) earnings per share is calculated by dividing net (loss) income by the weighted average number of common shares outstanding, after taking into consideration all dilutive potential common shares outstanding during the period. In periods of net losses, all potentially dilutive outstanding stock awards are excluded from the Company’s calculation of earnings per share as their inclusion would have an anti-dilutive effect.
Basic and diluted net (loss) income per share was calculated as follows:
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| 2025 |
| 2024 |
| 2023 | |||
|
| (in thousands, except share and per share data) | |||||||
Net (loss) income |
| $ | ( |
| $ | |
| $ | |
Weighted average shares outstanding - basic |
|
| |
|
| |
|
| |
Effect of dilutive securities attributable to stock based awards |
|
| - |
|
| |
|
| |
Weighted average shares outstanding - diluted |
|
| |
|
| |
|
| |
Basic net (loss) income per share |
| $ | ( |
| $ | |
| $ | |
Diluted net (loss) income per share |
| $ | ( |
| $ | |
| $ | |
Anti-dilutive securities excluded from earnings per share calculation |
|
| |
|
| |
|
| |
73
Table of Contents
Tile Shop Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Equity Plans:
On July 20, 2021, the stockholders of the Company approved the Tile Shop Holdings, Inc. 2021 Omnibus Equity Compensation Plan (the “2021 Plan”). The 2021 Plan replaced the 2012 Omnibus Award Plan (the “Prior Plan”). Awards granted under the Prior Plan that were outstanding on the date of stockholder approval remained outstanding in accordance with their terms. The maximum number of shares that may be delivered with respect to awards under the 2021 Plan is
Stock Options:
During the years ended December 31, 2025, 2024 and 2023, the Company did
The following table summarizes stock option activity during the years ended December 31, 2025, 2024 and 2023:
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| Shares |
| Weighted |
| Weighted Avg. Grant Date Fair Value |
| Weighted Avg. |
| Aggregate | |||
Balance, January 1, 2023 |
| |
| $ | |
| $ | |
| |
| $ | - |
Granted |
| - |
| $ | - |
| $ | - |
|
|
|
|
|
Exercised |
| ( |
| $ | |
| $ | |
|
|
|
|
|
Cancelled/Forfeited |
| ( |
| $ | |
| $ | |
|
|
|
|
|
Balance, December 31, 2023 |
| |
| $ | |
| $ | |
| |
| $ | |
Granted |
| - |
| $ | - |
| $ | - |
|
|
|
|
|
Exercised |
| - |
| $ | - |
| $ | - |
|
|
|
|
|
Cancelled/Forfeited |
| ( |
| $ | |
| $ | |
|
|
|
|
|
Balance, December 31, 2024 |
| |
| $ | |
| $ | |
| |
| $ | |
Granted |
| - |
| $ | - |
| $ | - |
|
|
|
|
|
Exercised |
| - |
| $ | - |
| $ | - |
|
|
|
|
|
Cancelled/Forfeited |
| - |
| $ | - |
| $ | - |
|
|
|
|
|
Balance, December 31, 2025 |
| |
| $ | |
| $ | |
| |
| $ | - |
Exercisable at December 31, 2025 |
| |
| $ | |
| $ | |
|
|
| $ | - |
Vested and expected to vest, December 31, 2025 |
| |
| $ | |
| $ | |
|
|
| $ | - |
The aggregate intrinsic value is the difference between the exercise price and the closing price of the Company’s stock on December 31.
74
Table of Contents
Tile Shop Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Restricted Stock:
The Company awards restricted common shares to selected employees and non-employee directors. Recipients are not required to provide any consideration upon vesting of the award. Restricted stock awards are subject to certain restrictions on transfer, and all or part of the shares awarded may be subject to forfeiture upon the occurrence of certain events, including employment termination. Certain awards are also subject to forfeiture if the Company fails to attain its Adjusted EBITDA or Pretax Return on Capital Employed performance targets. The restricted common stock is valued at its grant date fair value and expensed over the requisite service period or the vesting term of the awards. The Company adjusts the cumulative expense recognized on awards with performance conditions based on the probability of achieving the performance condition.
The following table summarizes restricted stock activity during the years ended December 31, 2025, 2024 and 2023:
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|
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| Shares |
| Weighted Avg. | |
Nonvested, January 1, 2023 |
| |
| $ | |
Granted |
| |
| $ | |
Vested |
| ( |
| $ | |
Forfeited |
| ( |
| $ | |
Nonvested, December 31, 2023 |
| |
| $ | |
Granted |
| |
| $ | |
Vested |
| ( |
| $ | |
Forfeited |
| ( |
| $ | |
Nonvested, December 31, 2024 |
| |
| $ | |
Granted |
| |
| $ | |
Vested |
| ( |
| $ | |
Forfeited |
| ( |
| $ | |
Nonvested, December 31, 2025 |
| |
| $ | |
The total expense associated with restricted stock for the years ended December 31, 2025, 2024, and 2023 was $
Each fiscal year, the Company grants restricted share awards subject to forfeiture on the date the Company files its annual report on Form 10-K for each of the three fiscal years starting with the fiscal year of grant, if the Company fails to attain certain performance targets in each year. In 2025, the Company granted restricted share awards subject to forfeiture on the date the Company files its annual report on Form 10-K for each of the 2025, 2026 and 2027 fiscal years if the Company fails to attain certain Pretax Return on Capital Employed performance targets in 2025, 2026 and 2027. The Company did not attain any of the Pretax Return on Capital Employed performance measures in 2025, and accordingly, did not record any expense in connection with the performance share awards in 2025.
As of December 31, 2025, there was $
75
Table of Contents
Tile Shop Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures, primarily related to the effective tax rate reconciliation and income taxes paid.
The Company adopted ASU 2023-09 prospectively for the year ended December 31, 2025. The standard did not have a material impact on the Company’s consolidated financial statements. Prior-period disclosures have not been retrospectively adjusted.
Income before income taxes consisted of the following:
Current Year - ASU 2023-09 (Prospective Adoption)
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| Years Ended December 31, | |||||||
| 2025 |
| 2024 |
| 2023 | |||
| (in thousands) | |||||||
Domestic | $ | ( |
| $ | |
| $ | |
Foreign |
| - |
|
| ( |
|
| ( |
Total (loss) income before income taxes | $ | ( |
| $ | |
| $ | |
The components of the provision for income taxes consisted of the following:
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|
| Years Ended December 31, | |||||||
|
| 2025 |
| 2024 |
| 2023 | |||
|
| (in thousands) | |||||||
Current |
|
|
|
|
|
|
|
|
|
Federal |
| $ | ( |
| $ | ( |
| $ | ( |
State |
|
| ( |
|
| ( |
|
| ( |
Total Current |
|
| ( |
|
| ( |
|
| ( |
Deferred |
|
|
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|
|
|
Federal |
|
| |
|
| ( |
|
| ( |
State |
|
| |
|
| ( |
|
| ( |
Total Deferred |
|
| |
|
| ( |
|
| ( |
Total Benefit (Provision) for Income Taxes |
| $ | |
| $ | ( |
| $ | ( |
|
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|
|
|
|
|
| 2025 | ||
|
| Amounts (in thousands) | % of Statutory Tax | |
Tax at US federal statutory rate | $ | | | % |
State and local income taxes, net of federal benefit* |
| | | % |
Other |
| ( | ( | % |
Benefit (Provision) for Income Taxes | $ | | | % |
*State taxes in Texas, Illinois, Minnesota, Michigan, Virginia, Maryland, and Pennsylvania made up the majority (greater than 50 percent) of the tax effect in this category.
The following table reflects the effective income tax rate reconciliation for the years ended December 31, 2024 and 2023 (ASU 2023-09 (Prospective Adoption)):
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|
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|
|
|
|
| 2024 |
| 2023 | ||
Federal statutory rate | | % |
| | % |
State income taxes, net of the federal tax benefit | |
|
| |
|
Stock based compensation | ( |
|
| |
|
Non-deductible meals and entertainment | |
|
| |
|
Tax credits | ( |
|
| ( |
|
Foreign rate differential | |
|
| |
|
Other | |
|
| ( |
|
Effective tax rate | | % |
| | % |
76
Table of Contents
Tile Shop Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The Company’s effective tax rate was
Income taxes paid, net of refunds received, were as follows for the year ended December 31, 2025 (ASU 2023-09 (Prospective Adoption)):
|
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|
|
|
|
| 2025 | |
| (in thousands) | |
Federal | $ | |
State and local: |
|
|
Illinois |
| |
Texas |
| |
Other state and local jurisdictions |
| |
Foreign |
| - |
Total Income taxes paid | $ | |
Components of net deferred income taxes were as follows at December 31:
|
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|
|
|
|
|
|
|
|
|
|
|
|
| 2025 |
| 2024 | ||
|
| (in thousands) | ||||
Deferred income tax assets: |
|
|
|
|
|
|
Section 743 carryforward |
| $ | |
| $ | |
Inventory |
|
| |
|
| |
Operating lease liabilities |
|
| |
|
| |
Other |
|
| |
|
| |
Total deferred income tax assets |
| $ | |
| $ | |
|
|
|
|
|
|
|
Deferred income tax liabilities |
|
|
|
|
|
|
Depreciation |
| $ | |
| $ | |
Operating lease right-of-use assets |
|
| |
|
| |
Other |
|
| |
|
| |
Total deferred income tax liabilities |
|
| |
|
| |
Net deferred income tax assets |
| $ | |
| $ | |
As of December 31, 2025, the Company had tax effected net operating loss carryforwards of approximately $
The Company closed its foreign operations in 2024 and, as such, there are
The Company records interest and penalties through income tax expense relating to uncertain tax positions. As of December 31, 2025, 2024 and 2023, the Company has not recognized any liabilities for uncertain tax positions nor has the Company accrued interest and penalties related to uncertain tax positions.
The Company’s Chief Executive Officer is the Chief Operating Decision Maker (“CODM”). The CODM utilizes the Company’s annual budget planning process, which includes Company-wide initiatives, as a key input to resource allocation. The CODM makes decisions on resource allocation and evaluates financial performance on a total Company basis; therefore, the Company has
77
Table of Contents
Tile Shop Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
reportable segment. The Company earns most of their revenue in the United States. Long-lived assets, which consist of property and equipment, net and operating lease right of use assets, are all located in the United States.
The Company has concluded that consolidated net (loss) income is the measure of segment profitability. The following table presents the Company’s segment revenue and gross profit, significant segment expenses, segment (loss) income from operations and net (loss) income provided to the CODM:
|
|
|
|
|
|
|
|
|
|
(in thousands) |
| 2025 |
| 2024 |
| 2023 | |||
Net sales |
| $ | |
| $ | |
| $ | |
Cost of sales |
|
| |
|
| |
|
| |
Gross profit |
|
| |
|
| |
|
| |
Stock based compensation |
|
| |
|
| |
|
| |
Depreciation and amortization |
|
| |
|
| |
|
| |
Adjusted selling, general and administrative expenses* |
|
| |
|
| |
|
| |
(Loss) Income from operations |
|
| ( |
|
| |
|
| |
Interest expense, net |
|
| ( |
|
| ( |
|
| ( |
(Loss) Income before income taxes |
|
| ( |
|
| |
|
| |
Benefit (Provision) for income taxes |
|
| |
|
| ( |
|
| ( |
Net (loss) income |
| $ | ( |
| $ | |
| $ | |
|
|
|
|
|
|
|
|
|
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Note 12: Retirement Savings Plan
Quarterly results of operations for the years ended December 31, 2025 and 2024 are summarized below (in thousands, except per share amounts):
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Net income (loss) |
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Basic earnings (loss) per share |
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78
Table of Contents
TILE SHOP HOLDINGS, INC.
EXHIBIT INDEX
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Exhibit No. | Description |
3.1 | Certificate of Incorporation of Tile Shop Holdings, Inc. – incorporated by reference to Exhibit 3.1 to the Company’s Form S-4 (Reg. No. 333-182482) dated July 2, 2012. |
3.2 | Certificate of Amendment to the Certificate of Incorporation of Tile Shop Holdings, Inc. – incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed July 21, 2021. |
3.3 | Certificate of Amendment to the Certificate of Incorporation of Tile Shop Holdings, Inc. to effect the 1-for-3,000 Reverse Stock Split, effective on December 15, 2025 – incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed December 15, 2025. |
3.4 | Certificate of Amendment to the Certificate of Incorporation of Tile Shop Holdings, Inc. to effect the 3,000-for-1 Forward Stock Split, effective on December 15, 2025 – incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed December 15, 2025. |
3.5 | Bylaws of Tile Shop Holdings, Inc. – incorporated by reference to Exhibit 3.2 to the Company’s Form S-4 (Reg. No. 333-182482) dated July 2, 2012. |
4.1 | Specimen Common Stock Certificate – incorporated by reference to Exhibit 4.1 of Amendment No. 1 to the Company’s Form S-4 (Reg. No. 333-182482) dated July 23, 2012. |
10.1* | Tile Shop Holdings, Inc. 2012 Omnibus Award Plan (f/k/a 2012 Equity Award Plan) – incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 26, 2013. |
10.2* | Amended and Restated Amendment No. 1 to the Tile Shop Holdings, Inc. 2012 Omnibus Award Plan (f/k/a 2012 Equity Award Plan) – incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed July 26, 2013. |
10.3* | Form of Indemnification Agreement by and between Tile Shop Holdings, Inc. and each of its directors and executive officers – incorporated by reference to Exhibit 10.13 of Amendment No. 1 to the Company’s Form S-4 (Reg. No. 333-182482) dated July 23, 2012. |
10.4* | Tile Shop Holdings, Inc. Form of Incentive Stock Option Agreement (2012 Plan) – incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed July 26, 2013. |
10.5* | Tile Shop Holdings, Inc. Form of Nonstatutory Stock Option Agreement (2012 Plan) – incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed July 26, 2013. |
10.6* | Tile Shop Holdings, Inc. Form of Stock Restriction Agreement (2012 Plan) – incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed July 26, 2013. |
10.7* | Tile Shop Holdings, Inc. Form of Stock Restriction Agreement (2012 Plan) – incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017. |
10.8* | Employment Agreement, dated February 19, 2018, between Tile Shop Holdings, Inc. and Cabell Lolmaugh – incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed February 21, 2018. |
10.9* | Employment Agreement, dated September 6, 2019, by and between Tile Shop Holdings, Inc. and Mark Davis – incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019. |
10.10* | Amendment to Employment Agreement, dated as of March 18, 2024, by and between Tile Shop Holdings, Inc. and Mark Davis – incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 18, 2024. |
10.11* | Employment Agreement, dated as of February 25, 2025, by and between Tile Shop Holdings, Inc. and Joseph Kinder – incorporated by reference to Exhibit 10.11 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. |
10.12* | Tile Shop Holdings, Inc. Form of Performance-Based Stock Restriction Agreement – incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. |
10.13* | Tile Shop Holdings, Inc. 2021 Omnibus Equity Compensation Plan – incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 21, 2021. |
10.14* | Form of Nonqualified Stock Option Agreement (2021 Plan) – incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed July 21, 2021. |
10.15* | Form of Incentive Stock Option Agreement (2021 Plan) – incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed July 21, 2021. |
10.16* | Form of Stock Restriction Agreement (2021 Plan) – incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed July 21, 2021. |
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10.17* | Form of Performance-Based Stock Restriction Agreement (2021 Plan) – incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed July 21, 2021. |
10.18* | Form of Stock Restriction Agreement (2021 Plan) (2023) – incorporated by reference to Exhibit 10.19 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. |
10.19* | Form of Performance-Based Stock Restriction Agreement (2021 Plan) (2023) – incorporated by reference to Exhibit 10.20 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. |
10.20* | Nondisclosure, Confidentiality, Assignment and Noncompetition Agreement, dated July 22, 2024, by and between Cabell Lolmaugh and Tile Shop Holdings, Inc. – incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. |
10.21* | Nondisclosure, Confidentiality, Assignment and Noncompetition Agreement, dated July 22, 2024, by and between Mark Davis and Tile Shop Holdings, Inc. – incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. |
10.22* | Nondisclosure, Confidentiality, Assignment and Noncompetition Agreement, dated July 22, 2024, by and between Joseph Kinder and Tile Shop Holdings, Inc. – incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. |
10.23*** | Credit Agreement, dated as of September 30, 2022, by and among The Tile Shop, LLC, as borrower and loan party, Tile Shop Holdings, Inc., Tile Shop Lending, Inc., and The Tile Shop of Michigan, LLC, as guarantors and loan parties, each lender from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, sole bookrunner and sole lead arranger – incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September 30, 2022. |
10.24*** | Pledge and Security Agreement, dated as of September 30, 2022, by and among The Tile Shop, LLC, Tile Shop Holdings, Inc., Tile Shop Lending, Inc., and The Tile Shop of Michigan, LLC, as grantors, and JPMorgan Chase Bank, N.A., as administrative agent – incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed September 30, 2022. |
10.25 | Amendment No. 1 to Credit Agreement and Waiver, dated as of January 28, 2026, by and among The Tile Shop, LLC, as borrower and loan party, Tile Shop Holdings, Inc., Tile Shop Lending, Inc., and The Tile Shop of Michigan, LLC, as guarantors and loan parties, each lender from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, sole bookrunner and sole lead arranger – filed herewith. |
10.26 | Cooperation and Support Agreement, dated as of December 3, 2025, by and between Tile Shop Holdings, Inc. and Fund 1 Investments, LLC – incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 3, 2025. |
19.1 | Tile Shop Holdings, Inc. Insider Trading Policy (last amended February 28, 2023) – incorporated by reference to Exhibit 19.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. |
21.1 | Subsidiaries of Tile Shop Holdings, Inc. – filed herewith. |
24.1 | Power of Attorney (included on the “Signatures” page of this Annual Report on Form 10-K) – filed herewith. |
31.1 | Certification by Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – filed herewith. |
31.2 | Certification by Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – filed herewith. |
32.1** | Certification by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – furnished herewith. |
32.2** | Certification by Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – furnished herewith. |
97.1 | Tile Shop Holdings, Inc. Compensation Recovery Policy (effective February 28, 2023) – incorporated by reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. |
99.1 | Director Standstill Commitment – incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on January 13, 2020. |
101 | The following financial statements from the Annual Report on Form 10-K for the year ended December 31, 2025 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive (Loss) Income, (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements – filed herewith. |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) – filed herewith. |
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* Management compensatory plan or arrangement.
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** These certifications are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference in any filing we make under the Securities Act of 1933, as amended, or the Exchange Act.
*** Certain schedules and exhibits have been omitted pursuant to Regulation S-K, Item 601(a)(5). The Company will provide a copy of any omitted schedule or exhibit to the Securities and Exchange Commission or its staff upon request.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| TILE SHOP HOLDINGS, INC. |
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Date: February 26, 2026 | /s/ CABELL H. LOLMAUGH |
| Cabell H. Lolmaugh |
| Chief Executive Officer |
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POWER OF ATTORNEY
Each person whose signature appears below constitutes CABELL H. LOLMAUGH and MARK B. DAVIS, or any of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
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Signature |
| Title |
| Date |
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/s/ CABELL H. LOLMAUGH |
| Chief Executive Officer, Director |
| February 26, 2026 |
Cabell H. Lolmaugh |
| (Principal Executive Officer) |
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/s/ MARK B. DAVIS |
| Senior Vice President, Chief Financial Officer |
| February 26, 2026 |
Mark B. Davis |
| (Principal Financial Officer and Principal Accounting Officer) |
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/s/ PETER H. KAMIN |
| Director and Chairman of the Board of Directors |
| February 26, 2026 |
Peter H. Kamin |
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/s/ MARK J. BONNEY |
| Director |
| February 26, 2026 |
Mark J. Bonney |
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/s/ BENJAMIN FAW |
| Director |
| February 26, 2026 |
Benjamin Faw |
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/s/ DEBORAH K. GLASSER |
| Director |
| February 26, 2026 |
Deborah K. Glasser |
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/s/ PETER J. JACULLO, III |
| Director |
| February 26, 2026 |
Peter J. Jacullo, III |
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/s/ JONATHAN LENNON |
| Director |
| February 26, 2026 |
Jonathan Lennon |
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83
FAQ
What were Tile Shop Holdings (TTSH) key financial results for 2025?
What was the reverse and forward stock split Tile Shop executed in 2025?
How did the 2025 Transaction affect Tile Shop’s stock listing and SEC reporting?
What is Tile Shop Holdings’ debt position under its revolving credit facility?
How many Tile Shop stores were operating at the end of 2025 and where are they located?
What major macro and tariff-related risks does Tile Shop highlight?
Where does Tile Shop’s common stock trade now and how many shares are outstanding?
